U.S. Supreme Court Illinois Central R. Co. v. United States, 265 U.S. 209 (1924)
Illinois Central Railroad Company v. United States
Argued April 28, 1924
Decided May 26, 1924
265 U.S. 209
APPEAL FROM THE COURT OF CLAIMS
For the purpose of securing the reduced rates for transportation of its property over land-grant railroads, the government purchased goods for prices f.o.b. at place of shipment, paid the freight, and had shipment made by the sellers with government bills of lading. Held, that title passed at place of shipment, although the contracts of sale reserved to the government the right of inspection and rejection at the place of destination and imposed certain duties there upon the sellers, and that goods so transported and accepted by the government were entitled to the reduced rates of transportation. P. 265 U. S. 213 .
57 Ct.Clms. 277 affirmed.
Appeal from a judgment of the Court of Claims rejecting claims for additional compensation for transportation of freight.
MR. JUSTICE McKENNA delivered the opinion of the Court.
The question in the case is whether, in certain shipments of property for use by the United States, title to the property passed at the place of shipment or at the place of delivery, or, to state the question another way, whether the shipments while in transit were the property of the United States and properly transported at land grant rates, or did not become the property of the United States until after receipt at destination, and subject to commercial rates. The latter is the contention of the railroad company, although it rendered bills for and accepted payment of them upon the other view. Its explanation is: it believed that that view was correct -- that is, believed the shipments were the property of the United States, and, so believing, rendered bills for $40,000 less than it was entitled to, and, so believing, accepted payment of them. For that $40,000 this action was brought. The Court of Claims decided against the railroad company, and dismissed its petition.
There is no contest of the findings or of the decision of the Court of Claims other than that expressed in the contention above stated.
It appears from the findings that the railroad company is a corporation, and, in the operation of a system of railways, those on which the shipments with which this case is concerned were transported. Three of the railways of the system were constructed with the aid of public lands granted by Congress.
The shipments consisted of certain articles for use in government improvements of the Missouri River.
The contention seems to be that the shipments were to be tested or inspected at or beyond destinations and accepted or rejected there, but, while in course of transportation, were not to belong to the United States. To sustain this view, Clarkson v. Stevens, 106 U. S. 505 , is cited. The case does not sustain the contention. It was decided that the intention of the parties was determinative, not an arbitrary rule of construction. In the case at bar, the findings of the court demonstrate that the government especially intended to avail itself of the effect that the shipments were to be transported over land grant roads, and that it, the government, was entitled to deductions from the commercial rates.
The years of the shipments and the roads over which they were to be transported are given in finding V, and the finding recites:
"These materials and supplies were all purchased on invitation to bidders, proposals of bidders, and vouchers, on which payments were made to the sellers. The form of invitation on which bids were made invariably read:"
"The prices will be for the articles delivered f.o.b. cars at [the place of shipment]. The successful bidder will procure the cars, but the United States will pay the freight and furnish shipping instructions and bills of lading. This arrangement is made to enable the government to take advantage of land grant rates, and will not operate to relieve the dealer of any responsibility as shipper that would attach if the delivery had been at destination."
"This form of invitation was only used over land grant or bond-aided roads, and was never used where delivery was to be made at point of use."
And the finding states that:
"The shipments were all made on government bills of lading, which were accomplished, the articles inspected and accepted at points of use by the proper government officials."
We agree with the Court of Claims that "the United States and the contractors were privileged to write into their contracts such terms as they saw fit," and that
for a final inspection at point of delivery or for the rendering of a further service by the contractor at that point were not inconsistent with, and could not be invoked to nullify, a specific provision under which the title . . . passed to the United States by delivery at the initial point of shipment to the carrier as agent. Land grant rates were applicable."
As we have seen, the railroad company made land grant deductions from commercial rates in the bills it rendered. It does not now show fraud or mistake of fact; its only excuse is that its "officers believed that the shipments belonged to the United States." It is not charged that the belief was engendered by any practices or artifices of the officers of the United States, and it seems to have had continuity for a long time. A finding of the Court of Claims is that:
"part of the claim presented, amounting to $2,511.68, relating to shipments from October 30, 1911, to March 7, 1912, was barred by the statute of limitations when this suit was commenced, March 23, 1918."
The government dealt with the consignors as if the property was its -- dealt with the railroad company as if the property was its (the government's) -- and, as we have seen, the railroad company dealt with the government on that assumption, and the contractors dealt with it on that assumption. The incidental regulations between it and the contractors cannot divest that ownership in the interest of the railroad company.