Opinion
F. S. Bayley, of Seattle, Wash., for receiver.
F. M. Dudley and A. J. Laughon, both of Seattle, Wash., for James C. Davis, Director General, as Agent.
NETERER, District Judge (after stating the facts as above).
The Supreme Court, in Leigh Ellis & Co. v. Davis, 260 U.S. 682, 43 Sup.Ct. 243, 67 L.Ed. 460, has held that a stipulation in a bill of lading that actions for loss, damage, or delay shall be instituted only within two years and one day after delivery of the goods, or in case of failure to make delivery then within two years and one day after a reasonable time for delivery has elapsed, is reasonable and valid. If this were an action prosecuted on the part of the receiver to recover, the provisions in the bill of lading would determine the issue, irrespective of statute. The Eldridge (D.C.) 295 F. 696.
The Supreme Court, in E. I. Du Pont de Nemours & Co., Petitioner, v. James C. Davis, etc., 44 Sup.Ct. 364, 68 L.Ed. . . ., decided April 7, 1924, says that the period of limitation fixed by Transportation Act, Sec. 206 (Comp. St. Ann. Supp. 1923, Sec. 10071 1/4cc), relates only to actions, suits, and proceedings brought against an agent to be designated by the President for that purpose, and fixes as the period of limitation that now prescribed by state or federal statutes, but not later than two years from the passage of the act. It seems clear from this that the purpose of this section was clearly to fix a limitation in which actions shall be brought. It is not a statute of creation, fixing a limit within which the right created must be asserted. It fixes the limitation as that prescribed by the state within which the claim arose, or federal statutes, but not longer than two years from the passage of the act. While action could not be brought upon the claim, the right to offset the demand, however, is given by state statute. Pierce's Code, Sec. 8353, Rem. Codes & Stats. of Wash. Sec. 266. The Supreme Court of Washington, in Buck v. Equitable Life Ins. Co., 96 Wash. 683, 165 P. 878, held that statutes of limitation bar actions, but not defenses to actions; if a cause of action exists in favor of a party, the debtor may offset any demand within the provisions of law. The money due from the receiver belongs to the government of the United States. In re Tidewater Coal Exchange (C.C.A.) 280 F. 648.
Under the Federal Control Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, Secs. 3115 3/4a-3115 3/4p) the railroads were operated as one national system of transportation. The President, under the authority vested, took possession and assumed control by proclamation December 28, 1917, appointed a Director General, and on December 31, 1917, the railroads passed under the control of such Director General. Under the Act of March 21, 1918, 40 Stat. 450 (section 3115 3/4a et seq., supra, it was provided that the roads should be subject to all laws and liabilities as common carriers, whether created by common law, state, or federal law, and claims could be enforced in the courts provided by law. On October 28, 1918, a general order was issued requiring all suits to be brought against the Director General. After the assumption by the government it was responsible for its operation,
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liable for the negligence of its employees; negligence on the part of the employees of any road was in law the negligence of the Director General, and hence of the government. By the Act of February 28, 1920, 41 Stat. 456 (Transportation Act 1920 (Comp. St. Ann. Supp. 1923, Sec. 10071 1/4 et seq.)), federal control ceased on March 1, 1920. The act sets apart funds for the settlement of all disputes and judgments incident to federal control.
It is apparent the money from the receiver is due to the United States. The claim of the receiver is obviously against the government, and a fund is created to liquidate it when established. The claim of the government arises out of the relation of the defendant company to the railroads during its control, and the claim of the receiver arises out of the same transactions, and obviously it should be offset against claims held by the government against the receivership. Davis v. Alexander (Okl. Sup.) 220 P. 358.