See Chicago, B. & Q. Railway Co. v. United States, 220 U. S. 559, 31 Sup. Ct. 612, 55 L. Ed. 582; United States v. Kansas City Southern Railway Co., 202 Fed. 828, 121 C. C. A. 136; Delano et al. v. United States, 220 Fed. 635, 136 C. C. A. 243; United States v. Boston & M. Railroad Co. (D. C.) 168 Fed. 148.

Counsel for the railroad company argue that the statute makes a clear distinction between officers and agents who may require or permit an employé to work in excess of the periods therein prescribed, and such employé; that by part of section 1 the provisions of the act apply to any common carrier or carriers, their officers, agents, and employés, and by other words the term "employés," as used in the act, "shall be held to mean persons actually engaged in or connected with the movement of any train." They then argue that, as it is provided by section 3 of the act that "any such common carrier, or any officer or agent thereof, requiring or permitting any employé to go, be, or remain on duty in violation of the second section hereof, shall be liable to a penalty," it must be that officers and agents who may require or permit such employés to remain on duty in violation of the statute. are on a different footing from the employés. They say that, as a carrier cannot require or permit the employés to be on duty except by direction or consent of an officer or agent, permission to do the thing inhibited "must flow from some superior source, and cannot come from an inferior, or one of equal rank, and therefore authority to violate the statute cannot reside in the employé himself." As we understand it, the essence of this position is that neither the carrier nor any of its officers or agents can be adjudged guilty, unless it is first found that one of such officers or agents charged with the duty of supervising and regulating hours of service of "employés" has required or permitted the employé to work in excess of the prescribed time.

It is not to be denied that the train dispatcher who gives orders to other men with relation to the movements of trains is an employé, as are the men who obey his orders; nor is it to be disputed that service by such dispatcher in excess of the prescribed hours for service would be a violation of the provisions of the act; but so would service in excess of prescribed hours by one of the men working under him, and, being a violation of the act, both being employés, the carrier would become responsible for the acts of both. The statute in its comprehensive terms is applicable to carriers, their officers, agents, and employés employés, of course, being as defined. Our example may be brought closer to the present case. The superior-say the head or division telegrapher of a carrier-may become personally liable if he allows one of his subordinate railroad telegraphers to work about train operations in excess of the prescribed limit, although the operator employé who sends and delivers the message may not be. The liability in the one instance springs from the fact that the superior has authority to supervise and direct, and in the exercise of such authority he may require or permit a subordinate to work in excess. service; while the subordinate, often performing duties in obedience to orders, has no power or control over any person other than himself,

148 C.C.A.-23

and may not "require or permit" another to do so. Nevertheless, bo.h such persons are employés; both may be delivering and receiving orders pertaining to or affecting train movements; and as employés, when so engaged, both superior and subordinate, are fairly in relationship of agency to their employer, the carrier.

In thus giving to the word "agents," as Congress has used it in the statute, a broad interpretation, we harmonize the letter and purpose of the statute by holding it to be practically and vigorously remedial in promoting safety. The evident spirit of the law, as gathered from its terms, is to impose upon the carrier positive duty, for in case of prosecution it expressly imputes to the carrier knowledge of all acts of all its officers and agents. We find no room for a construction other than that defense of actual lack of knowledge is foreclosed to the carrier. It "shall be deemed to have had knowledge of all acts of all its officers and agents." Manifestly Congress, in making this rule of interpretation, had in mind the difficulties which would confront prosecutions if actual knowledge by the carrier through its superior representatives had to be proved. Suppose that a telegraph operator, through physical fatigue due solely to working for his employer carrier hours beyond what a man ought reasonably to be able to work, fails to receive and deliver a train order, and that as a result there is a collision and life is lost; is it the intent of the law that the carrier will not be held liable because it has given orders that no employé should work excessive hours, and because its officers or superiors in charge have had no actual knowledge that the operator who failed to receive and deliver the message was working in excess of hours? Such a construction would well-nigh destroy the avowed object of the statute by taking away the obligation which we believe it imposes upon the carrier to see to it that none of its employés engaged in the movement of its trains shall work in excess of prescribed hours, except where emergency conditions, not here relevant, are presented.

The rule of absolute liability logically follows the command that knowledge of all acts of all agents shall be deemed to have been had by the carrier; and as aiding in arriving at the intent to impose absolute liability in general, it is important to note the special proviso of section 3, which withdraws the general applicability of the act from "any case of casualty or unavoidable accident or the act of God," or "where the delay was the result of a cause not known to the carrier or its officer or agent in charge of such employé at the time said employé left a terminal, and which could not have been foreseen," and also makes it inapplicable to the crews of wrecking trains. By these special exclusions of liability of the carrier, and by specific reference to instances where lack of knowledge by the carrier or its officers or agents in charge may avail, and by expressly excluding employés on wrecking crews from the operation of the statute, emphasis is given to the reasonableness of the construction which, when considered with imputed knowledge, makes liability absolute.

To require or permit an employé to work ordinarily implies knowledge by the employer, who exacts or consents to the doing of the work.

Upon this point reference to the history of the passage of the act is relevant. În the report to the House of Representatives, Fifty-Ninth Congress, May 31, 1906, which accompanied the bill to promote the safety of employés and travelers upon railroads by limiting the hours of service of employés thereon, the opinion of the committee was expressed that it ought not to be left to the discretion of the men themselves as to whether they should work excessive hours or not, and the opinion of the committee was that:

"The law itself should fix the maximum limit and provide sufficient penalties for any violation thereof. Neither the cupidity of the men nor of railroad managers should control in a matter of such vital interest to the public safety."

The Congressional Record also shows that the word "knowingly" was inserted in the bill during the earlier stages of its progress in the House of Representatives. Congressional Record, Fifty-Ninth Congress, February 18, 1907, p. 3251.

Section 3 of the House Bill originally read:

"That any such common carrier, or any officer or agent thereof, requiring or knowingly permitting any employé to go, be, or remain on duty in violation of the second section hereof."

Thereafter (Congressional Record 1907, p. 3755) the committee on rules reported to the House of Representatives that the bill entitled "An act to promote the safety of employés and travelers upon railroads by limiting the hours of service of employés thereon" should be taken up for consideration, and that the amendment recommended by the committee on interstate and foreign commerce should be agreed to, with an amendment which would strike out the word "knowingly" in section 3 just heretofore referred to; and on March 4, 1907, when the bill was finally enacted into the law now on the statute books, the word "knowingly" had been stricken out in accordance with the recommendation of the committee on rules. We attach very great significance to the action of Congress in expressly excluding the word "knowingly," for, in our opinion, it overthrows the force of the contention of the carrier, and sustains the interpretation which we have put upon the statute.

As sustaining our conclusions we cite these opinions of the Supreme Court construing the Safety Appliance Act: St. Louis, I. M. & S. Ry. Co. v. Taylor, 210 U. S. 281, 28 Sup. Ct. 616, 52 L. Ed. 1061; Chicago, B. & Q. Ry. Co. v. United States, 220 U. S. 559, 31 Sup. Ct. 612, 55 L. Ed. 582; Delk v. St. Louis & San Francisco Railroad Co., 220 U. S. 580, 31 Sup. Ct. 617, 55 L. Ed. 590—and the opinions of other federal courts construing the Hours of Service Act: United States. v. Oregon-Washington Railroad & Navigation Co. (D. C.) 218 Fed. 925; San Pedro, L. A. & S. L. Railroad Co. v. United States, 213 Fed. 326, 130 C. C. A. 28. United States v. Oregon-Washington Railroad & Navigation Company (D. C.) 213 Fed. 688, was reviewed by this court in 223 Fed. 596, 139 C. C. A. 142, and the judgment affirmed. While the court rested its decision upon somewhat different facts from those here presented, the doctrine of imputed knowledge was recognized.

[2] We find no substantial ground for the suggestion that the construction which we have put upon the law would deny to this defendant due process of law and equal protection guaranteed by the Fifth and Fourteenth Amendments to the Constitution of the United States. Chicago, B. & Q. Railway Co. v. United States, 220 U. S. 559, 31 Sup. Ct. 612, 55 L. Ed. 582.

The fault of the carrier having been established by the pleadings, liability followed, and judgment was properly ordered.

Affirmed.

(234 Fed. 590)

NEW YORK MAIL & NEWSPAPER TRANSP. CO. et al. v. ANDERSON, Internal Revenue Collector.

(Circuit Court of Appeals, Second Circuit.

April 11, 1916. On Motion for Interest, May 9, 1916.)

No. 153.

1. CORPORATIONS 459-POWERS-LEASE OF PROPERTY.

A corporation, unless prohibited by explicit terms in its grant of power, may let its property for a limited term of years.

[Ed. Note.-For other cases, see Corporations, Cent. Dig. §§ 1811, 1812; Dec. Dig. 459.]

2. CORPORATIONS 459-INTERNAL REVENUE 9-EXCISE TAX ON CORPORATIONS-LEASE OF PROPERTY-VALIDITY.

Two corporations, chartered by special acts of the New York Legislature to construct and operate pneumatic tubes between places in the state for the conveyance of mails, newspapers, and parcels, each owned and operated tubes connecting the general post office in Manhattan with branch offices and different places, and used exclusively for transportation of mails. By the action of the Post Office Department bids were invited for carrying of mails by pneumatic tubes, but subject to the requirement that but one bid should be made for the service of the tubes owned by such two corporations, whereupon one company leased all of its property for a term of years to the other, which secured the contract and performed the required service. Held, that such lease was not ultra vires on the part of the lessor, but was valid, and that on its execution the lessor ceased doing business, within the meaning of Corporation Tax Law Aug. 5, 1909, c. 6, § 38, 36 Stat. 112 (Comp. St. 1913, § 6300), and was not subject to the excise tax thereby imposed.

[Ed. Note. For other cases, see Corporations, Cent. Dig. §§ 1811, 1812; Dec. Dig. 459; Internal Revenue, Cent. Dig. §§ 13-28; Dec. Dig. 9.] 3. INTERNAL REVENUE 38-SUIT TO RECOVER TAX-LIMITATION.

Under Rev. St. §§ 3226-3228 (Comp. St. 1913, §§ 5949-5951), a suit for recovery of an internal revenue tax alleged to have been erroneously or illegally assessed or collected cannot be maintained, unless a claim for refunding of the tax is presented to the Commissioner of Internal Revenue within two years after its payment.

[Ed. Note. For other cases, see Internal Revenue, Cent. Dig. §§ 83, 84; Dec. Dig. 38.]

4. INTERNAL REVENUE 38-RECOVERY OF TAX PAID-JUDGMENT-INTEREST. On recovery of a judgment against a collector of internal revenue for the amount of an internal revenue tax illegally collected, the plaintiff is entitled to have the judgment state that it is with interest.

[Ed. Note. For other cases, see Internal Revenue, Cent. Dig. §§ 83, 84; Dec. Dig. 38.]

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

In Error to the District Court of the United States for the Southern District of New York.

Action at law by the New York Mail & Newspaper Transportation Company and the New York Pneumatic Service Company against Charles W. Anderson, Collector of Internal Revenue for the Second District of New York. From the judgment, both parties bring error. Affirmed.

The parties will be referred to as the Mail Company, the Pneumatic Company and the Collector. Mail Company and Pneumatic Company (plaintiffs below) brought an action against the Collector of Internal Revenue for the recovery of corporation excise taxes alleged to have been erroneously collected. The complaint contains four causes of action, for taxes paid, respectively, for the years 1912, 1911, 1910, and 1909. By stipulation the case was tried without a jury, and after the trial the court filed an opinion, and also findings of fact and conclusions of law. Thereupon judgment was entered for plaintiffs on the first and second causes of action, and for defendant on the third and fourth causes of action. The first and second causes of action (for 1912 and 1911 taxes) raised the single question whether the Mail Company was carrying on or doing business within the meaning of section 38 of the act of August 5, 1909 (36 Stat. 112). The court below held that the Mail Company was not doing business during the years in question, and was therefore not taxable, and to review this ruling defendant brings error. The court below dismissed the third and fourth causes of action (for 1910 and 1909 taxes) on the ground that the time of the applicable statute of limitations had expired, and on the judgment of dismissal plaintiffs assign error.

A. O. Townsend, of New York City, for plaintiff New York Mail & Newspaper Transp. Co.

H. Snowden Marshall, U. S. Atty., and B. A. Matthews, Asst. U. S. Atty., both of New York City, for defendant.

Before COXE and ROGERS, Circuit Judges, and MAYER, District Judge.

MAYER, District Judge (after stating the facts as above). The material part of the statute is as follows:

"Every corporation

engaged in business in any state or territory of the United States * shall be subject to pay annually a special excise tax with respect to the carrying on or doing business by such corporation ** * equivalent to one per centum upon the entire net income over and above five thousand dollars received by it from all sources during such year." Comp. St. 1913, § 6300.

In October, 1906, the Mail Company made a 10-year lease (with optional renewal for 10 or 20 years) with the Pneumatic Company, by which it demised all of its plant, property, and franchises, excepting only its right to be a corporation and its interest in the reversion and in the covenants of the lease. If this lease was valid, the Mail Company was not taxable, for the District Court correctly found as a fact that it was not doing business. Flint v. Stone Tracy Co., 220 U. S. 107, 31 Sup. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312; McCoach v. Minehill, etc., Railway Co., 228 U. S. 295, 33 Sup. Ct. 419, 57 L. Ed. 842.

It is contended that the lease was void, because ultra vires and against public policy. Whether the lease can be attacked in this action. on the ground that it is ultra vires need not be determined, because