*

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General Order No. 1 is directed to "every carrier for hire, common or contract, operating in whole or in part by railroad, by motor vehicle, by inland waterways (including coastal canals), or as a freight forwarder"; and provides that beginning May 1, 1942, "No Carrier by railroad shall accept for shipment or forwarding, load or forward from the city or town at which such car is originated, * any railway closed car containing less than" a specified weight of "Merchandise," this last term including "less-than-carload, any quantity, and freight forwarder shipments, except shipments carried in passenger train cars." (Italics supplied.) The order further provides that under certain conditions the weight limitations will not be applicable and that

No carrier by railroad shall hold, carry over, store, or warehouse any shipment of merchandise at any one station, except the final destination of the shipment, for longer than 36 hours, or at two or more such stations for an aggregate period of more than 48 hours, except where there is no other common carrier or carriers capable of transporting the shipment consistently with the provisions hereof.

Under further provisions of General Order No. 1, where necessary to further the purposes thereof, every "carrier by railroad," is authorized and directed to depart from or disregard the routing specified in the bill of lading and whenever any such carrier is unable to hold, load, or forward any shipment of merchandise consistently with the provisions of the order such carrier by railroad is directed to divert such shipment to "another carrier" (including, apparently, a "freight forwarder") and such "other carrier" is directed to accept such shipment and to "load, forward, and deliver" it "as the agent of the diverting carrier" under the "tariff rates, rules, and regulations and upon the billing of the bill-of-lading carrier." It would seem clear, therefore, that to the extent that Government shipments are handled by forwarders as a consequence of a diversion pursuant to this general order the service so furnished is one that ordinarily would not be available at the regular tariff rates of common carriers by railroad.

As to shipments handled by forwarders otherwise than in consequence of a diversion under the general order, it would appear that the unsatifactory situation to which you refer relates mainly to transportation by rail involving, in many instances, delays in transit often inherent in less-than-carload service but largely avoided in carload service. The operations of freight forwarders are indicated to be that they engage in assembling, forwarding, and distributing shipments of freight which move between points in the United States by rail, by highway motor truck, or by water, or partly by truck and partly by rail or water. Ordinarily the forwarder determines in each instance the character of transportation facilities to be employed, as well as the route of movement, and where the traffic is handled by rail the for

warders apparently have attained average loads in excess of 13 tons per car or well in excess of the minimum prescribed in General Order No. 1. Generally, the freight forwarder assembles into carload lots numerous shipments of merchandise from individual consignors, tenders the shipments to the rail lines as a carload for transportation at the carload rate, and at destination distributes the individual consignments to the ultimate consignees. The railroads apparently give such consolidated carloads of freight-forwarder shipments as expedited service as they give straight carload shipments of other shippers; and the charges assessed their customers by the freight forwarders generally are based on rates somewhere between the lessthan-carload and carload rates of the rail carriers.

The question of forwarder's charges for transportation service, as affected by the right of the Government otherwise to deduction for land grant, was considered in a decision of a former Assistant Comptroller of the Treasury in June 1921, published as 27 Comp. Dec. 1043. The facts there involved were indicated to be that a Government bill of lading, duly issued by a Government official and furnished a contractor for procuring transportation of property of the United States, was used apparently by the contractor as a basis for engaging a forwarder to effect the transportation service required. In its claim growing out of said transaction the forwarder asserted that it was not a common carrier, that it had paid full tariff rates for the transportation involved, and that payment to the forwarder on the basis of land-grant rates would mean a handling by the forwarder at a loss. The decision disposed of the contention so raised on the basis that, as to the shipment there concerned, the forwarder was merely an agent of the Government, that as such agent, it was required to exercise, within the scope of its employment, ordinary care and prudence in the advancement of the principal's business, acting in conformity with instructions issued by the principal, and that, consequently, reimbursement to the agent should not be made by the Government in excess of the amount that would have been required to have been paid by the Government directly to the railroads involved. The conclusion was stated as follows:

The claimant is therefore not entitled to receive more for this service than it would have cost the Government had the shipment been forwarded in accordance with the bill of lading by common carriers authorized to render such service.

The claim in that case apparently was based upon the view that only a transportation service was involved. There apparently was no request by the Government, or its representative, for any special service from the forwarder which could not have been furnished as readily by the common carriers concerned and no contention by the forwarder that any such special service was involved.

While the decision disposed of the claim on the basis that the duties and obligations of the forwarder, as agent, were inconsistent with an attempt to impose upon the Government, as principal, a higher charge for a transportation service than would have been collectible therefor upon procurement directly by the Government rather than through the instrumentality of the forwarder, it seems questionable whether any different conclusion would have been required if the transaction between the Government and the forwarder had been viewed as a contractual undertaking on the part of the forwarder to transport the shipment to destination on its own account, utilizing for that purpose the facilities of common carriers operating in interstate commerce over land-grant roads, there being involved, apparently, no special service not procurable by the Government itself directly from the common carriers concerned. In other words, if the arrangement had been viewed as a contract with the forwarder as a transportation facility, responsible on its own account for the carriage of the property to destination, rather than merely as an agent for procuring a transportation service on behalf of the Government, there would be for consideration the fact that the Congress, in granting certain lands to aid in the construction of railroads, had made said grants subject generally to the condition that the transportation of property and troops of the United States over said roads should be free of toll or other charge or subject to such regulations as Congress might impose restricting the charges therefor; and these conditions have been held to be in the nature of covenants running with the land, applicable not merely with respect to the grantees and their successors in interest but, also, to any others using the road for such purposes. Thus, it was said in Astoria & Columbia River R. R. Co. v. United States, 41 Ct. Cls. 284, which involved a carrier operating under a trackage agreement over the lines of an aided carrier:

The right to the use of the railroad by the Government as a post route and military road is a right annexed to and forms a part of the grant, in the nature of a covenant running with the land-the roadway-and that right cannot be waived or separated from the railroad without the consent of Congress by appropriate legislation.

and in the case of The Chicago, St. Paul, Minneapolis, and Omaha Railway Company v. United States, 217 U. S. 180, which involved a similar situation, the courts stated:

The opposite contention to that of appellant is, therefore, what it was decided to be by the Court of Claims, that the obligation is upon the property of an aided company, and attaches to all of the uses of the property, whether by the "owned and aided companies" or any other company. ** *

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Of course, the statute did not deal with companies or with deductions. It would be very strange if it had. It either imposed a service on the companies or on the road as well. If on the companies alone, there would necessarily be exclusion of all others. If on the roads as well, it would comprehend all that used them. If a difference in degree of use or a participation

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in the use by other companies than the aided ones, had been intended it would have been expressed. * * * As we have already said, the obligation is either upon the aided companies, to be enforced by remedies against them, or it is on the property as well, and if on the property, necessarily on it by whatever company or person it is used.

In this connection, while it appears that forwarders have been considered as shippers, rather than common carriers, within the requirements of the Interstate Commerce Act, as was held in 173 I. C. C. 377, it was said in 8 M. C. C. 211, 223, as in amplification of "the essential nature of a forwarding company, such as applicant” that: What applicant undertakes to do is to see to it that goods are carried from a point of origin to a point of destination, and to utilize for this purpose the services of carriers by rail, by water, or by motor vehicle, separately or in combination, in whatever way will accomplish the purpose most economically and expeditiously. In this undertaking it is a common carrier under the common law, as we have found.

If forwarders are properly to be regarded as common carriers at common law when undertaking to see that goods are carried from a point of origin to a point of destination, it is not apparent why the principles stated in the cases of the Astoria & Columbia River R. R. Co. v. United States, supra, and the Chicago, St. Paul, Minneapolis, & Omaha Railway Company v. United States, supra, would not be applicable to so much of the charges of such common carrier as accrues for transportation over land-grant roads, if properly subject to the conditions of the land-grant acts. In this connection there is for consideration, also, the following provision appearing in the act of June 7, 1924, 43 Stat. 486:

*

* Provided, That hereafter payment shall be made at such rates as the Secretary of War shall deem just and reasonable and shall not exceed 50 per centum of the full amount of compensation, computed on the basis of the tariff or lower special rates for like transportation performed for the public at large, for the transportation of property or troops of the United States over any railroad which under land-grant acts was aided in its construction by a grant of land on condition that said railroad shall be and remain a public highway for the use of the United States, and for which adjustment of compensation is required in accordance with decisions of the Supreme Court construing such land-grant acts, or over any railroad which was aided in its construction by a grant of land on condition that such railroad should be a post route and military road, subject to such regulations as Congress may impose restricting the charge for such Government transportation, and such payment shall be accepted as in full for all demands for such service.

As to the matter of arriving at the amount of the land-grant carrier's earnings on shipments moved in forwarder service over landgrant railroads, it would appear that no difficulty in this respect would be presented since, in view of the fact that the forwarders take the status of shippers within the meaning of the Interstate Commerce Act, the amount payable by the forwarder to the common carrier for transportation in interstate commerce can be neither more nor less than that chargeable against other shippers except insofar as a deviation may be permitted or required by reason of the status of the

shipment as being Government property moving for Government, as distinguished from ordinary commercial, purposes.

In view, therefore, of the pertinent statutory requirements applicable to charges for the transportation of Government property over land-grant roads, it does not appear that where, as apparently was the case in 27 Comp. Dec. 1043, the service of the forwarder was not requested by the Government and afforded no material or required service not available directly to the Government from the railroads concerned, the payment of full commercial charges, without deductions as required otherwise by the land-grant statutes, would be authorized merely because the transportation concerned was obtained through the operation of a forwarder.

There is for consideration, however, in connection with the present matter, the circumstance, as indicated in your submission, that by reason of the current acute demand upon available transportation facilities, the employment of forwarder services is imperative if the needs of the Government for immediate transportation of materials vital to the national defense are not to be frustrated through the delays that would be incident to their shipment without the intervention of such forwarders. In other words, it seems to be inferred that the transportation services available from other facilities, including the land-grant railroads, do not afford the expedition of movement requisite for the Government's purposes and that, as a consequence, recourse to the service of forwarders is necessary.

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Where the Government has had occasion to require carriers to perform for it necessary services, not available to the public at large at regularly filed tariff rates, agreements with carriers to perform such services at agreed rates have been held to be valid. Thus, where carriers have been called upon to furnish special equipment in order to transport Government shipments, an agreement for the payment of special rates, stated as being "net cash and not subject to any further land-grant or bond-aid deduction," was upheld in Atchison, Topeka & Santa Fe Ry. Co. v. United States, 59 C. Cls. 275. Likewise, a special rate made available to and accepted by the Government as applying, without deduction for land grant, for transportation of certain freight in passenger train or expedited train service was held in Yazoo & Mississippi Valley Railroad Company v. United States, 54 C. Cls. 165, as requiring payment at said rates rather than at other rates less land grant. Also in Mo. Pac. R. R. Co v. United States, 56 C. Cls. 341, it was held, quoting from the syllabus:

Where the Government enters into a contract with a railroad company by which it secures special rates and other benefits not applicable to the general public, it is bound by its contract, notwithstanding there are published tariffs of said railroad in effect covering similar service.