United States v. Atchison, Topeka & Santa Fe Railway Co.

Background

A railway company that carried mail under contracts made in 1910–1911 sued after the Government changed postal rules. Those contracts measured pay by weight and ran through 1914 and 1915. Congress created a parcel-post service in 1912 that greatly increased mail weight but did not specify extra pay. In March 1913 Congress authorized the Postmaster General to add up to five percent to railroad compensation, with certain exceptions and a readjustment starting July 1, 1913. The Postmaster General chose to apportion increases among routes by a formula and never exceeded five percent. The railway sued for the difference it said it would have gotten if every route had received a full five percent increase.

Reasoning

The key question was whether the statute required an automatic five percent increase for every route or instead let the Postmaster General decide how to distribute increases. The Court read the statutory language as giving the Postmaster General discretion to apportion the additional compensation. The Court disagreed with the Court of Claims, which had ordered uniform five percent increases, and found no abuse of the Postmaster General’s discretion on the record. As a result, the Court reversed the lower judgment and directed dismissal of the railway’s claim.

Real world impact

Rail carriers who carried mail under existing weight-based contracts cannot force a uniform five percent boost across all routes after the parcel-post change. The ruling leaves adjustment decisions to the Post Office’s official and approves use of an apportionment formula so long as the discretionary power is not shown to be abused. The judgment ends this particular claim against the Government.