Emergency Fleet Corp. v. Western Union Telegraph Co.

Background

A long-standing federal law (the Post Roads Act) gave the Government priority on telegraph lines and lower “government” rates when the telegraph company accepted the law’s terms. Western Union had accepted those terms in 1867 and had long applied the government rate to many federal departments. The Fleet Corporation, created and owned by the United States Shipping Board to run and liquidate ships after World War I, had received the government rate until Western Union began demanding commercial rates in mid-1922. The Fleet Corporation sued to recover the difference for June and July 1922, and lower courts awarded it the money.

Reasoning

The Court addressed whether the Fleet Corporation’s official messages must be charged at the lower government rate. The majority relied on the long, consistent practice under the Act, the Fleet Corporation’s creation, ownership, financing, and public duties, and the fact that its losses and operations were effectively borne by the United States. The Court concluded that, despite its corporate form, the Fleet Corporation acts as a department or agency of the United States for purposes of the Post Roads Act. Therefore its official messages are entitled to priority transmission and the reduced government telegraph rates.

Real world impact

The decision prevents Western Union from charging commercial rates for the Fleet Corporation’s official messages and limits additional charges on the public treasury for those messages. It upholds long-standing government telegraph preferences and signals that similar government corporations performing public functions may also receive the government rate.