275 U.S.

415
48 S.Ct. 198
72 L.Ed. 345

UNITED STATES SHIPPING BOARD EMERGENCY

FLEET CORPORATION
v.
WESTERN UNION TELEGRAPH CO.
No. 113.
Argued Dec. 2-5, 1927.
Decided Jan. 3, 1928.

The Attorney General and Mr. Gardner P. Lloyd, of New York City, for
petitioner.
Messrs. John W. Davis and Francis R. Stark, both of New York City, and
Paul E. Lesh, of Washington, D. C., for respondent.
Mr. Justice BRANDEIS delivered the opinion of the Court.

By Post Roads Act July 24, 1866, c. 230, 14 Stat. 221, Rev. Stat. 5263-5266
(47 USCA 1-3, 6; Comp. St. 10072-10075), the United States offered
privileges of great value to any telegraph company which should elect to accept
its provisions. In return, it required, by section 2 of the act (now 47 USCA 3;
Comp. St. 10075):

'That telegraphic communications between the several departments of the

government of the United States and their officers and agents shall, in their
transmission over the lines of any of said companies, have priority over all
other business, and shall be sent at rates to be annually fixed by the Postmaster
General.'

Each year since the passage of the act the government rates have been so fixed.
For the fiscal years beginning July 1, 1921 and July 1, 1922, they were fixed
for domestic telegrams substantially at 40 per cent. of the commercial rate, and
for cablegrams at 50 per cent. of the commercial rate.

The Western Union accepted the provisions of the act on June 8, 1867.
Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U. S. 1, 4, 24 L.
Ed. 708; Telegraph Co. v. Texas, 105 U. S. 460, 26 L. Ed. 1067. The Fleet
Corporation was organized April 16, 1917. From that date to May, 1922, it was
accorded, without question, the government rate on all messages sent by it.
Then the Western Union claimed the right to the commercial rates for all its
messages. The claim was resisted. Thereafter messages of the Fleet Corporation
continued to be marked by it 'Government Rate'; but they were received under
an agreement that the acceptance of the message and of payment therefor at the
government rate should be without prejudice to the right of the Western Union
to recover the additional amount claimed. This suit was brought, in the
Supreme Court of the District of Columbia, to recover, for the months of June
and July, 1922, the difference between the amount paid and the commercial
rate. Of this amount, $1,071.16 was for messages sent to some official or agent
of the Fleet Corporation or of the Shipping Board or to some other department
or official of the government; $336.43, for messages addressed to private
persons. A stipulation waiving the jury was filed; the case was heard on an
'agreed statement of facts'; the court found the facts to be as there stated; and a
judgment entered for the full amount was affirmed by the Court of Appeals for
the District. 56 App. D. C. 337, 13 F.(2d) 308. This court granted a writ of
certiorari. 273 U. S. 681, 47 S. Ct. 236, 71 L. Ed. 837.

The question whether messages transmitted for the Fleet Corporation after May
31, 1922, shall be paid for at the commercial rates or at the lower government
rates is one of statutory construction. The Post Roads Act had been in force,
without amendment, more than 55 years before the transactions here involved.
Throughout that period, the rights of the government and the Western Union
concerning the transmission of messages had been governed by the act,
unaffected by any special contract, and there had been a uniform practice in
applying it. That practice should be stated before discussing the specific facts
relating to the Fleet Corporation. For the construction given to the act by the
United States, and acquiesced in by the Western Union, having been both
contemporaneous and thereafter consistently and widely applied, is not only
persuasive, but, in our opinion, decisive of the case. United States v. Alabama
Great Southern R. R. Co., 142 U. S. 615, 12 S. Ct. 306, 35 L. Ed. 1134.
Compare District of Columbia v. Gallaher, 124 U. S. 505, 510, 8 S. Ct. 585, 31
L. Ed. 526.

Continuously since June 8, 1867, the Western Union has extended the right of
priority in transmission and the government rate, not only to each of the great
Executive Departments presided over by a member of the Cabinet (and to the
several bureaus, divisions, and officers thereof), but also to the judicial and the

legislative branches, to the government of the District of Columbia, and to the

following corporations existing at the time of the passage of the Post Roads
Act: The Smithsonian Institution, organized pursuant to Act Aug. 10, 1846, c.
178, 9 Stat. 102, and the National Home for Disabled Volunteers, organized
pursuant to Act March 3, 1865, c. 91, 13 Stat. 509, and Act March 21, 1866, c.
21, 14 Stat. 10. The Western Union has also extended, from time to time, the
same preferences to at least the following minor independent departments
established after the date of the acceptance by it of the provisions of the Post
Roads Act: Civil Service Commission, Act Jan. 16, 1883, c. 27, 22 Stat. 403;
Interstate Commerce Commission, Act Feb. 4, 1887, c. 104, 24 Stat. 379, 383;
Bureau of American Republics (now the Pan-American Union), Act July 14,
1890, c. 706, 26 Stat. 272, 275; Panama Canal, Act April 28, 1904, c. 1758, 33
Stat. 429; Federal Reserve Board, Act Dec. 23, 1913, c. 6, 38 Stat. 251, 260;
Federal Trade Commission, Act Sept. 26, 1914, c. 311, 38 Stat. 717 (15 USCA
41-51); Inter-American High Commission, United States Section, Act Feb.
7, 1916, c. 20, 39 Stat. 8; Bureau of Efficiency, Act Feb. 28, 1916, c. 37, 39
Stat. 14, 15 (Comp. St. 3286c, 3286d); United States Shipping Board, Act
Sept. 7, 1916, c. 451, 39 Stat. 728, 729; United States Employees'
Compensation Commission, Act Sept. 7, 1916, c. 458, 39 Stat. 742, 748; United
States Tariff Commission, Act Sept. 8, 1916, c. 463, 39 Stat. 756, 795; Federal
Board for Vocational Education, Act Feb. 23, 1917, c. 114, 39 Stat. 929, 932;
Alien Property Custodian, Act Oct. 6, 1917, c. 106, 40 Stat. 411, 415 (Comp.
St. 3115 1/2 cc); United States Railroad Administration, Act March 21, 1918,
c. 25, 40 Stat. 451, 455; War Finance Corporation, Act April 5, 1918, c. 45, 40
Stat. 506 (15 USCA 331 et seq.); United States Interdepartmental Social
Hygiene Board, Act July 9, 1918, c. 143, 40 Stat. 845, 886 (Comp. St. 9188
1/4 (a)); Railroad Labor Board, Act Feb. 28, 1920, c. 91, 41 Stat. 456, 470;
Federal Power Commission, Act June 10, 1920, c. 285, 41 Stat. 1063 (16
USCA 792 et seq.); General Accounting Office, Act June 10, 1921, c. 18, 42
Stat. 20, 23 (31 USCA 41 et seq.); Veterans' Bureau, Act June 7, 1924, c.
320, 43 Stat. 607, 608 (38 USCA 425, 426). So far as appears by the record,
there has been no denial of the government rate at any time to any department,
office, or division of the government as organized, except that to the Fleet
Corporation here in question.
7

The extension of the government rate to each of the above-named departments

was made by the Western Union, as a matter of course, upon application
therefor by the government, and has been continued ever since. The
government rate was applied to all messages sent on official business of the
government and chargeable to any of the departments named, whatever the
nature of its organization, whatever its functions, and whatever the character of
the official business. In extending priority and the lower rates, no distinction

has ever been made between messages sent to persons within the several
departments and those outside. And, obviously, the importance to the United
States of securing both priority and the lower rate for official messages sent by
it, is the same whoever the addressee. Messages sent by the government, but
not on official business exclusively, have been paid for by the private person
interested; and the payment has been made at the commercial rate.1
8

The Western Union has never questioned the right of the Shipping Board to the
government rate on any official messages sent by it. It concedes that all the
messages here in question relate to activities which the Shipping Board itself
might legally have conducted; that all the messages were sent on its official
business; that the Board was authorized by Congress to employ the Fleet
Corporation as its agency to perform the particular activities in connection with
which they were sent; that the messages were not to be paid for out of any
segregated portion of Fleet Corporation money; that payment of the commercial
rates would involve, indirectly, as additional charge on the public treasury; and
that, so far as concerns the character of the message or of the business, the
government rate was chargeable for all the messages, if for any of them. The
claim that the government rates do not apply to messages of the Fleet
Corporation is rested in part upon the fact that it is, in form, a private
corporation; in part upon the fact that it is an agency of the Shipping Board, as
distinguished from a bureau or division; in part upon the fact that, to a
considerable extent it is engaged in a business which involves competition with
private shipowners. These arguments do not support the claim; but they make
necessary a statement of the facts concerning the organization and activities of
the Fleet Corporation.

The Fleet Corporation was organized by the United States Shipping Board
pursuant to specific authority conferred by the Act of September 7, 1916, c.
451, 11, 39 Stat. 728, 731 (46 USCA 810; Comp. St. 8146f). The
legislation concerning it, its relation to the Shipping Board, its character and
the scope of its activities are shown in the Lake Monroe, 250 U. S. 246, 39 S.
Ct. 460, 63 L. Ed. 962, United States v. Strang, 254 U. S. 491, 41 S. Ct. 165, 65
L. Ed. 368, Sloan Shipyards Corporation v. United States Shipping Board
Emergency Fleet Corporation, 258 U. S, 549, 42 S. Ct. 386, 66 L. Ed. 762,
United States v. Walter, 263 U. S. 15, 44 S. Ct. 10, 68 L. Ed. 137, and United
States ex rel. Skinner & Eddy Corporation v. McCarl, 275 U. S. 1, 48 S. Ct. 12,
72 L. Ed. 131. Besides powers conferred upon the Fleet Corporation by the
General Corporation Law of the District of Columbia (31 Stat. 1280 et seq., as
amended), it was vested, by delegation from the President, with the powers
conferred upon him by Act June 15, 1917, c. 29, 40 Stat. 182, Act April 22,
1918, c. 62, 40 Stat. 535, and Act Nov. 4, 1918, c. 201, 40 Stat. 1020, 1022

(Comp. St. 3115 1/16 d). Executive Orders No. 2664, July 11, 1917; No.
2888, June 18, 1918; No. 3018, December 3, 1918; No. 3145, August 11, 1919.
These specific powers and duties were transferred to the Shipping Board by
Merchant Marine Act, 1920, June 5, 1920, c. 250, 41 Stat. 988.
10

Since the passage of the Merchant Marine Act, 1920, the Fleet Corporation has
been the agency through which the Shipping Board has performed its principal
functions. The activities have consisted largely of maintaining and liquidating
property acquired for the United States during the World War, of settling
claims arising therefrom, and of operating, or causing to be operated, vessels
not disposed of. Besides other activities, the Fleet Corporation has operated
directly, and has been interested in the operation of, vessels owned by the
United States. Some of these government vessels have been operated in
competition with American vessels privately owned. But in operating vessels,
as in making sales, the Shipping Board and the Fleet Corporation were required
by the Merchant Marine Act to proceed with a view to aiding in the
development of an adequate merchant marine to serve, among other things, 'as a
naval or military auxiliary in time of war or national emergency, ultimately to
be owned and operated privately by citizens of the United States.' Section 1 (46
USCA 861; Comp. St. 8416 1/4). These services of the Fleet Corporation
were obviously of a public nature. It has never done any business, or conducted
any operation, except on behalf of the United States.

11

First. It is argued that the government rate should be denied because the Fleet
Corporation is a private corporation. In form, it is such. But all of its
$50,000,000 capital stock was subscribed and paid for by the Shipping Board
on behalf of the United States. All has been so held by it ever since. The United
States alone has had a financial interest in its capital stock. The United States
alone has contributed the additional money needed from time to time for the
conduct of its business. The Fleet Corporation has, of course, received from
others moneys in payment for property sold, as charter hire, for shipping
services, or in settlement of claims. But, as the business of the Fleet
Corporation has been conducted continuously at a large loss, the sums so
received did not supply capital. They served merely to reduce, to that extent,
the amount of the deficit being incurred and, hence, the amount of the
additional money which the United States was required to contribute.2 Payment
by the Fleet Corporation of the commercial rate for messages would necessarily
increase the charges upon the public treasury to the same extent, and in the
same manner, as would the charge of the commercial rate in respect to the
business done for the United States directly by the Shipping Board or that done
for it by some other department of the government. An important, if not the
chief, reason for employing a corporate agency was to enable the government to

employ commercial methods and to conduct the operations with a freedom

supposed to be inconsistent with accountability to the Treasury under its
established procedure and with its control over the financial operations of the
United States. United States ex rel. Skinner & Eddy Corporation v. McCarl,
275 U. S. 1, 48 S. Ct. 12, 72 L. Ed. 131. It obviously was not the intention of
the government in employing a corporate agency to deprive itself of the right of
priority of transmission and of the lower rate secured through the Post Roads
Act.
12

Second. It is argued that in sending a message the Fleet Corporation contracted

on its own behalf; that this contract gave to the Western Union the right to sue
the corporation; and that by such contract there was secured the right to rely
upon the credit of the corporation and to satisfy the debt out of its properties.
All this may be admitted; but if affords no reason for denying that the Fleet
Corporation is a department of the United States within the meaning of the Post
Roads Act. Actually, the Fleet Corporation had no individual credit. As an
agency of the Shipping Board it had control of certain properties and moneys
required in the conduct of its business. But it had no actual capital. Long before
June 1, 1922, the $50,000,000 which the United States supplied in payment of
the capital stock, had been sunk in the business. 3 By, and pursuant to, Merchant
Marine Act, 1920, the title to most of the property used by the Fleet
Corporation was transferred to the Shipping Board or to the United States. All
moneys other than amounts needed for current operation are required to be
covered into the Treasury of the United States. The Fleet Corporation has had
no means of paying either the large outstanding claims against it or of paying
the deficits continuously being incurred, other than the moneys supplied by the
United States through the annual appropriations. It is, of course, immaterial that
the charge upon the public treasury is an indirect one; and the fact that the
Fleet Corporation receives some gross income from shipping services is also
without legal significance. Many departments receive fees, or some other form
of compensation, for services rendered to private persons. See 14 Ops. Attys.
Gen. 278.

13

Third. It is argued that the Fleet Corporation should be denied the government
rate, because it competes, in respect to some of its operations, with private
shipping. But in operating ships it is performing a function of the government.
The conduct of business in competition with private interests may, of course, be
for a public purpose. Standard Oil Co. v. City of Lincoln, No. 91, 275 U. S.
504, 48 S. Ct. 155, 72 L. Ed. , decided December 5, 1927. Other departments
which compete with private business have long enjoyed the government rate
without question. The post office has since 1872 competed with bankers
through money orders; since 1910 with savings banks by receiving deposits on

interest; since 1913 with express companies through the parcel post. The War
Finance Corporation has since 1918 competed with the private bankers. The
War Department has by its Mississippi river barge lines competed since 1920
with the railroads. Equally with all of these, the Fleet Corporation is acting for
and on behalf of the United States.
14

Fourth. It is faintly argued that the Western Union is entitled to the commercial
rates, because, since Act June 18, 1910, c. 309, 7, 36 Stat. 539, 544, which
broadened the scope of the Act to Regulate Commerce so as to include
telegraph companies, telegraph rates are no longer a matter of contract; that
they have the force of law (Western Union Telegraph Co. v. Esteve Brothers &
Co., 256 U. S. 566, 41 S. Ct. 584, 65 L. Ed. 1094); and that any deviation from
the lawful rate would involve an undue preference to the government and an
unjust discrimination against its competitors, the private shipping concerns. It
may be doubted whether the prescribed rule requiring equality of treatment
would ever be violated by giving to the government preferential rates. Compare
Nashville, Chattanooga & St. Louis Ry. v. Tennessee, 262 U. S. 318, 43 S. Ct.
583, 69 L. Ed. 999. But it is a sufficient answer to say that it clearly was not the
intention of Congress by the act of 1910 to abrogate or modify the scope or
affect the application of the Post Roads Act.

15

Fifth. It is urged that, if the Fleet Corporation is granted the government rate, it
may likewise be claimed by every instrumentality of the government.
Instrumentalities like the national banks or the federal reserve banks, in which
there are private interests, are not departments of the government. They are
private corporations in which the government has an interest. Compare Bank of
the United States v. Planters' Bank, 9 Wheat. 904, 907, 6 L. Ed. 244. The Fleet
Corporation is entitled to the government rate, not because it is an
instrumentality of the government, but because it is a department of the United
States within the meaning of the Post Roads Act. In respect to messages sent,
on the government's business, no distinction can properly be made between
those of the Shipping Board and those of the Fleet Corporation.

16

Reversed.

Thus, a Treasury Regulation, adopted April 2, 1918, provides: '(10)

Government telegraph rates, established conformably to law, are intended to
apply to official government business exclusively, and no private individual,
association, company, or corporation should in any way be benefited thereby.
In cases where it becomes necessary to use the telegraph on any business in the

special interest of any private person or persons, in which the government has
no interest, the party for whom the service is performed will be required to pay
for the messages both ways at commercial rates.' T. D. 37588.
2

For the fiscal year ending June 30, 1921, the Shipping Board reported a total
excess of outgo over income (exclusive of appropriations) of $188,291,441.05.
Annual Report of United States Shipping Board, 1921, p. 321. For the year
ending June 30, 1922, the Board's excess was $56,374,951.22; that of the Fleet
Corporation, $81,547,600.86. Annual Report 1922, p. 238. In the year ending
June 30, 1923, the excess for the Shipping Board and all its subsidiaries was
$15,231,630.30; that for the Fleet Corporation, taken alone, $41,682,514.86.
Annual Report, 1923, p. 168.

The total receipts from appropriations and allotments to June 30, 1921, were
$3,310,170,576.98. The net assets then on hand (after deducting current and
capital liabilities, reserves for depreciation, etc.) were $1,929,847,381.84. Thus,
the loss to date, as estimated by the Shipping Board, was $1,380,323,195.14.
Annual Report of United States Shipping Board, 1921, pp. 309-321. By June
30, 1923, the total appropriated and allotted had grown to $3,491,912,648.01,
while the Shipping Board's estimate of the net worth of the assets belonging to
it and its subsidiaries had shrunk to $292,405,200.17 showing a loss of
$3,199,507,447.84. Annual Report, 1923, pp. 192-196. The estimates for June
30, 1927, show a net worth of $290,461,593.91, making a net loss of
$3,271,021,167.61 on the total appropriations ($3,561,482,761.52) to that date.
Annual Report, 1927, pp. 121-124.