The United States appeals from a judgment against it for $14,236.04. December 3, 1920, the Philadelphia & Reading Railway Company, to which plaintiff, the Reading Company, is successor, brought this action to recover its charges for transportation of troops and military impedimenta by that company and connecting carriers prior to federal control of railroads. When the railroads were taken over, the United States owed the company $24,900.01 for that transportation.
Federal control of railroads commenced December 28, 1917, and ended March 1, 1920. Pursuant to the Federal Control Act, approved March 21, 1918 (chapter 25, 40 Stat. 451 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 3115 3/4 a-3115 3/4 p)), the Director General, February 18, 1920, entered into the standard form contract with the Philadelphia & Reading and its affiliated companies. It was agreed that the President took the company's accounts receivable as of midnight, December 31, 1917; that all amounts collected by the Director General on account of receivables should be credited by him to the company; that he was authorized, to the extent of cash realized upon the company's assets then on hand, to pay and charge to the company expenses arising out of operation prior to federal control, including reparation claims; that, unless objected to by the company, he might pay and charge to the company expenses and claims in excess of the cash so realized; and that at the end of federal control, the Director General should return to the company all uncollected accounts.
Prior to June 14, 1918, there was paid by the disbursing officer of the army to the Director General $26,157.20 on account of the bills for transportation before federal control. February 18, 1920, the Auditor of the War Department deducted $1,257.19-as to which there is no controversy-from the Director General's bills for transportation during federal control, and the latter reimbursed himself by deducting that amount from the $26,157.20 paid him by the disbursing officer, leaving in his hands a balance of $24,900.01.
June 18, 1918, the Comptroller ruled (24 Comp. Dec. 774) that, for each 25 officers and enlisted men traveling the United States was entitled to a free car for the transportation of camp equipment and property. But that decision was erroneous, and it was so held June 13, 1921. Missouri Pacific R. R. Co. v. United States, 56 Ct. Cl. 341, 348.
At different times in 1920, prior to July 16, the Auditor of the War Department, in order to adjust payments to the basis of the Comptroller's ruling, disallowed as overpayments items aggregating $14,236.04 of the amount paid by the disbursing officer to the Director General, and took that amount from pending Railroad Administration bills for transportation during federal control. The Director General deducted the same amount from the $24,900.01 remaining in his hands, leaving a balance of only $10,663.97 which was credited to the company in the account 'Assets, December 31, 1917, Collected.' February 24, 1920, the Director General promulgated General Order No. 66 providing for account incident to the termination of federal control. This order (section 5a) directed that, where there were paid out of federal funds overcharge freight claims in respect of traffic, the revenues from which were included in corporate revenue, the amounts should be charged on the federal books to the corporation in the account 'Corporate Transactions,' and on the corporate books such amounts should be charged to an appropriate suspense account and credited to the United States in a corresponding account. This required the amount of the deduction, $14,236.04, so to be charged and credited.
Argust 25, 1920, the War Department paid the Railroad Administration a large sum in full settlement for all transportation during federal control. Thereupon the Director General issued Accounting Circular 152, which announced the settlement, and stated, 'Special attention is directed to the fact that the settlement above referred to involves the War Department only, * * * and does not include bills rendered in the federal accounts for transportation service performed prior to federal control,' and directed that unpaid bills for such transportation 'shall not be closed into the account 'War Department Transportation Charges,' but instead shall be charged to the corporation through the account '(Name of Corporation)-Corporate Transactions."