carrying into effect the known powers of the government. Wainwright v. Pennsylvania R. Co. (D. C.) 253 Fed. 459; Legal Tender Cases, 12 Wall. 457, 539, 20 L. ed. 287, 308. We do not question the power of Congress to enact the laws above recited, nor the power of the President, directly or through the Director General, to issue the orders he has issued, if not inhibited by congressional legislation.

It seems clear, however, that if the act of Congress and an order of the Director General are in conflict, the act of Congress must prevail. A majority of the court are of the opinion that § 10 of the Act of March 21, 1918, gives to one having a cause of action action against arising out of the Director General operation of a railroad while under Federal control, the right to sue the railroad company thereon, and that Order No. 50, in so far as it denied to a plaintiff the right to pursue the

Railroad

-validity.

railroad company, was beyond the power of the Director General, and was void.

Order reversed.

NOTE.

General Order No. 50 promulgated by the Director General of Railroads, which the court, in the reported case (LAVALLE V. NORTHERN P. R. Co. ante, 1659), holds invalid in so far as it purports to prohibit the maintenance against the railway companies of actions for death or injury growing out of the possession, control, or operation of the roads by the Director General, is the subject of subdivision II. d, 3, of the annotation beginning at page 1680, on the general subject of Federal control of public utilities. An examination of that subdivision discloses a diversity of opinion among the courts as to the validity and effect of that order.

rates for telephone service free from interference by the commonwealth of Massachusetts.

Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U. S. 1, 24 L. ed. 708; Selective Draft Law Cases (Arver v. United States) 245 U. S. 366, 62 L. ed. 352, L.R.A.1918C, 361, 38 Sup. Ct. Rep. 159, Ann. Cas. 1918B, 856; Hoffman v. Charlestown Five Cents Sav. Bank, 231 Mass. 324, 121 N. E. 15; Marbury v. Madison, 1 Cranch, 137, 2 L. ed. 60; M'Culloch v. Maryland, 4 Wheat. 316, 4 L. ed. 579; Legal Tender Cases, 12 Wall. 457, 20 L. ed. 287; Marshall Field & Co. v. Clark, 143 U. S. 649, 36 L. ed. 294, 12 Sup. Ct. Rep. 495; Minnesota Rate Cases (Simpson v. Shepard) 230 U. S. 352, 57 L. ed. 1511, 48 L.R.A. (N.S.) 1151, 33 Sup. Ct. Rep. 729, Ann. Cas. 1916A, 18; Houston, E. & W. T. R. Co. v. United States, 234 U. S. 342, 58 L. ed. 1341, 34 Sup. Ct. Rep. 833; United States v. Pierce, 245 Fed. 878; United States v. Casey, 247 Fed. 362; Moore & Tierney v. Roxford Knitting Co. 250 Fed. 278; Pappens v. United States, C. C. A. —, 252 Fed. 55; United States v. Nagler, 252 Fed. 217; Wainwright v. Pennsylvania R. Co. 253 Fed. 459; Rhodes v. Tatum, Tex. Civ. App. 206 S. W. 114; State ex rel. Tod v. Fairfield Common Pleas Ct. 15 Ohio St. 377.

The joint resolution of July 16, 1918, conferred upon the President, acting by and through the Postmaster General, power to fix rates for telephone service during the period of Federal operation.

Selective Draft Law Cases (Arver v. United States) 245 U. S. 366, 377, 62 L. ed. 352, 353, L.R.A.1918C, 361, 38 Sup. Ct. Rep. 159, Ann. Cas. 1918B, 856, 32 Harvard L. Rev. 299, 300.

The phrase "police regulations," used in the joint resolution, is confined to regulations which have to do with public health, safety, and morals, and therefore by necessary implication excludes rate fixing.

Com. v. Libbey, 216 Mass. 356, 49 L.R.A. (N.S.) 879, 103 N. E. 923, Ann. Cas. 1915B, 659; Bogni v. Perotti, 224 Mass. 152, L.R.A.1916F, 831, 112 N. E. 853; Freund, Pol. Power, 1904, S 10; Hockett v. State, 105 Ind. 250, 55 Am. Rep. 201, 5 N. E. 178; Sligh v. Kirkwood, 237 U. S. 52, 59, 59 L. ed. 835, 837, 35 Sup. Ct. Rep. 501; Western U. Teleg. Co. v. Pendleton, 122 U. S. 347, 359, 30 L. ed. 1187, 1189, 1 Inters. Com. Rep. 306, 7 Sup. Ct. Rep. 1126; Western U. Teleg. Co. v. Foster,

247 U. S. 105, 114, 62 L. ed. 1006, 1016, 1 A.L.R. 1278, P.U.R.1918D, 865, 38 Sup. Ct. Rep. 438, reversing 224 Mass. 365, P.U.R.1916F, 176, 113 N. E. 192; Manigault v. Springs, 199 U. S. 473, 481, 50 L. ed. 274, 279, 26 Sup. Ct. Rep. 127; New Orleans Gaslight Co. v. Louisiana Light & H. P. & Mfg. Co. 115 U. S. 650, 666, 29 L. ed. 516, 522, 6 Sup. Ct. Rep. 252; Salem v. Eastern R. Co. 98 Mass. 431, 96 Am. Dec. 650; Sawyer v. Davis, 136 Mass. 239, 49 Am. Rep. 27; State ex rel. Wisconsin Teleph. Co. v. Sheboygan, 111 Wis. 23, 86 N. W. 657; St. Louis v. Bell Teleph. Co. 96 Mo. 623, 2 L.R.A. 278, 9 Am. St. Rep. 370, 10 S. W. 197; Munn v. Illinois, 94 U. S. 113, 24 L. ed. 77; Budd v. New York, 143 U. S. 517, 534, 537, 36 L. ed. 247, 252, 253, 4 Inters. Com. Rep. 45, 12 Sup. Ct. Rep. 468.

Under what is known as the welfare clause in municipal charters, giving to municipalities broad powers of police, it is uniformly held that the municipalities do not receive power to control rates of public utilities.

State ex rel. Wisconsin Teleph. Co. v. Sheboygan, 111 Wis. 23, 86 N. W. 657; St. Louis v. Bell Teleph. Co. 96 Mo. 623, 2 L.R.A. 278, 9 Am. St. Rep. 370, 10 S. W. 197; Bluefield Waterworks & Improv. Co. v. Bluefield, 69 W. Va. 1, 33 L.R.A. (N.S.) 759, 70 S. E. 772; Mills v. Chicago, 127 Fed. 731; Jacksonville v. Southern Bell Teleph. & Teleg. Co. 57 Fla. 374, 49 So. 509.

The authority of the President, acting by and through the Postmaster General, to fix telephone rates, was in full effect when the telephone toll rates involved in this case were established, and said authority is still in full effect.

Salamandra Ins. Co. v. New York L. Ins. & T. Co. 254 Fed. 852; Commercial Cable Co. v. Burleson, 255 Fed. 99; Barber v. Burleson (1919; U. S. Dist. Ct. N. J.); State of Mississippi v. Burleson (1919; 1st Jud. Dist. Miss.); Ribas y Hijo v. United States, 194 U. S. 315, 323, 48 L. ed. 994, 996, 24 Sup. Ct. Rep. 727.

Whatever may be the power of this commonwealth to regulate telephone rates during Federal operation, the Public Service Commission possesses no jurisdiction in the premises.

United States v. Hill, 248 U. S. 420, 63 L. ed. 337, 39 Sup. Ct. Rep. 143; Erie R. Co. v. New York, 233 U. S. 671, 681, 58 L. ed. 1149, 1153, 52 L.R.A. (N.S.) 266, 34 Sup. Ct. Rep. 756, Ann. Cas. 1915D, 138; Re Debs, 158 U. S.

564, 39 L. ed. 1092, 15 Sup. Ct. Rep. 900; Ex parte Siebold, 100 U. S. 371, 25 L. ed. 717; People v. Hudson River Connecting R. Corp. 104 Misc. 19, 171 N. Y. Supp. 971; Atchison, T. & S. F. R. Co. v. United States, 225 U. S. 640, 649, 56 L. ed. 1236, 1239, 32 Sup. Ct. Rep. 702; Missouri Pub. Utilities Co. v. Poplar Bluff (Mo.) P.U.R.1915D, 974; White Oak Light, Heat & P. Co. v. Benson (Pa.) P.U.R.1916A, 811; Re South Side Gas & E. Co. (Ariz.) P.U.R. 1918A, 493; Re Southern California Mountain Water Co. 11 A. T. & T. Co. Com. L. 83.

Messrs. C. M. Bracelin for the Postmaster General, and T. J. Boynton, United States District Attorney, amici curiæ.

Rugg, Ch. J., delivered the opinion

of the court:

This is a bill in equity brought under Stat. 1913, chap. 784, § 28, to enforce by injunction an order of the Public Service Commission dated January 20, 1919, relative to toll telephone rates within the commonwealth. The case comes before us by reservation for determination upon the bill and

Pleadingequity causeallegation

taken as true.

answer. The case must be considered upon the footing that the averments of the answer are true where in conflict with those of the bill and that the allegations of the bill are true only so far as admitted or not at variance with facts well pleaded in the answer. Perkins v. Nichols, 11 Allen, 542; American Carpet Lining Co. v. Chipman, 146 Mass. 385, 16 N. E. 1. The pertinent facts thus ascertained are that before July 31, 1918, the defendant was a corporation operating within the commonwealth an extensive system for the transmission of intelligence by telephone. July 16, 1918, during the continuance of the great war, the Congress of the United States in the exercise of its war powers passed a resolution empowering the President during the war "to supervise or to take possession and assume control of any telegraph, telephone, marine cable, or radio system or systems, or any part thereof, and to operate the same in such manner as may be 4 A.L.R.-105.

On

needful or desirable for the duration of the war." [40 Stat. at L. 904, chap. 154, Comp. Stat. § 3115x.] The President exercised the power thus conferred by his proclamation of July 22, 1918. Its relevant provisions were that "I do

hereby take possession and assume control and supervision of each and every telegraph and telephone system, and every part thereof, within the jurisdiction of the United States, including all equipment thereof and appurtenances thereto whatsoever and all materials and supplies. It is hereby directed that the supervision, possession, control, and operation of such telegraph and telephone systems hereby by me undertaken shall be exercised by and through the Postmaster General, Albert S. Burleson. Said Postmaster General may perform the duties hereby and hereunder imposed upon him, so long and to such extent and in such manner as he shall determine, through the owners, managers, boards of directors, receivers, officers, and employees of said telegraph and telephone systems. Until and except so far as said Postmaster General shall from time to time by general or special orders otherwise provide, the owners, managers, boards of directors. receivers, officers, and employees of the various telegraph and telephone systems shall continue the operation thereof in the usual and ordinary course of the business of said systems, in the names of their respective companies, associations, organizations, owners, or managers, as the case may be. From and after 12 o'clock midnight on the 31st day of July, 1918, all telegraph and telephone systems included in this order and proclamation shall conclusively be deemed within the possession and control and under the supervision of said Postmaster General without further act or notice." [40 Stat. at L. 163].

On August 1, 1918, the Postmaster General issued a bulletin wherein he declared: "Pursuant to the proclamation of the President of

the United States, I have assumed possession, control, and supervision of the telegraph and telephone systems of the United States.

Until further notice the telegraph and telephone companies shall continue operation in the ordinary course of business through regular channels. Regular dividends heretofore declared and maturing interest on bonds, debentures, and other obligations may be paid in due course, and the companies may renew or extend their maturing obligations unless otherwise ordered by the Postmaster General. All officers, operators, and employees of the telegraph and telephone companies will continue in the performance of their present duties, reporting to the same officers as heretofore and on the same terms of employment."

The proclamation of the President and the bulletin of the Postmaster General have been put into effect and operation according to their terms, and are still in force unrevoked and unmodified. The answer avers further that, pursuant to this proclamation and bulletin, the entire telephone system of the defendant, including all its equipment, appurtenances, material, supplies, and property of every description, has been taken possession of by the government of the United States and is vested in the President and is controlled and operated exclusively by him, and that in consequence thereof the defendant has been devested of all its telephone system and all its property of every kind thereto appertaining and of all power, management, and control over the same, and retains only the legal title thereto. Just compensation for the supervision, possession, control, and operation by the government of the United States of the defendant's telephone system in an amount satisfactory to it has been determined upon and awarded to and accepted by it, and an agreement has been entered into whereby the entire compensation to be received by it from July 31, 1918, to the end of the period of governmental control has been fixed, and

the amount of such compensation is not in any respect dependent upon the financial result of the operation of its system by the United States government, and the defendant has no pecuniary interest in the profits or losses resulting from such operation. The resolution of Congress of July 16, 1918, conferred ample power upon the President to determine the amount of just compensation to be paid to the owner for such possession, supervision, control, and operation.

The defendant has pleaded that the United States, the President, the Postmaster General, or some one or more of them, are necessary parties to this proceeding, and further that the proceeding is in substance against the United States, and that the relief prayed for, which relates exclusively to toll rates for intrastate telephone service, will in effect restrain the United States in its control, possession, and operation of the telephone system belonging to the defendant and formerly operated by it, and that it has not been since July 31, 1918, a common carrier or otherwise furnishing as a corporation any service for public use so as to be subject to the jurisdiction of the Public Service Com mission under Stat. 1913, chap. 784.

It is conceded by both parties hereto that the resolution of Congress of July 16, 1918, was a constitutional exercise of the war powers of the Federal government, and that the proclamation of the President and the bulletin of the Postmaster General have been pursuant thereto and are operative according to their terms.

The order of the Public Service Commission here sought to be enforced purported to suspend the taking effect of substantial increases in the rates of toll charges to users of the telephone between places within the commonwealth, in accordance with a "basic toll-rate schedule" issued by an order of the Postmaster General of the United States.

It seems manifest from this narration of facts and recital of official documents that the United States is