Missouri Pacific Railroad v. Ault

Background

An Arkansas railroad worker sued after being discharged and not paid wages and a state law required full pay within seven days or a continuing wage penalty until paid. He obtained a judgment against the Missouri Pacific Railroad Company and the Director General of Railroads. At the time, the President had taken the railroad into federal control and the Director General was operating the railroad under national wartime railroad administration and the Federal Control Act. The state courts had enforced both the unpaid wages and the statutory penalty against both the company and the Director General.

Reasoning

The Court addressed who could be held responsible for wages and for the extra state-imposed penalty while the railroad was under federal control. It explained that Congress and the President treated each transportation system as an entity run by the federal administration, and that General Order No. 50 required suits to be brought against the Director General rather than the private companies. The Court said private companies were relieved of ordinary common-law liability while the Government operated the systems. It also said the United States consented to be sued only for compensatory claims (like unpaid wages), not to be punished by fines or penalties imposed by a State. General Order No. 50 itself excluded actions for fines, penalties, and forfeitures.

Real world impact

Because of that reasoning, the Court reversed the judgment against the private railroad and reversed the part of the judgment that sought the punitive state penalty from the Director General. Workers can recover ordinary unpaid wages from the federal operator but cannot collect state-imposed punitive penalties from the United States while it operates the railroad.