DANIEL SEARLE & CO.

[To accompany bill H. R. 762.]

FEBRUARY 23, 1855.

Mr. D. T. JONES, from the Committee on the Post Office and Post Roads, made the following

REPORT.

The Committee on the Post Office and Post Roads, to whom was referred the memorial of Daniel Searle & Co., report:

That they concur in and adopt the report of the Hon. Elisha Whittlesey, First Comptroller of the Treasury, hereto appended, by which it appears that the memorialist was required by the Postmaster General to carry the mail on the routes therein named four additional trips per week for two winters, and that he is legally entitled to pro rata pay for said extra services. The committee therefore report a bill for his relief.

THE CASE OF DANIEL SEARLE & CO.

TREASURY DEPARTMENT, Comptroller's Office, March 4, 1852.

This case is before me on an appeal from the decision of the Hon. J. W. Farrelly, Auditor of the Treasury for the Post Office Depart

ment.

The facts are set forth in the decision of the Auditor, the argument of Charles G. Sherman, esq., and in an abstract of evidence offered by Daniel Searle & Co.

Daniel Searle, J. J. Ray, Miller Harton, John H. Avery, Richard C. Stockton, and William B. Stokes, composed the firm of Daniel Searle & Co. A. Morgan, Isaac Thompson, Richard C. Stockton, William B. Stokes, John H. Avery, and Erastus Hathaway composed the firm of A. Morgan & Co. Daniel Searle & Co., in 1835, contracted to carry the mail on route No. 956, from New York to Morristown, in New Jersey. Also, on route No. 979, from Morristown to Milford, in the State of Pennsylvania. Also, on route No. 1157, from Milford to Owego, New York. So that these three routes made a continuous line of communication from the city of New York to Owego. The mail, by these contracts, was to be carried tri-weekly on routes Nos. 956, 979, and 1157.

A. Morgan & Co. were contractors for transporting the mail daily on route No. 774, which extended from Newburg, on the Hudson river, Owego. As the navigation of the Hudson river was interrupted by

ice in the winter season, it was a matter of interest to increase the trips on routes No. 979 and No. 1157, and to accomplish it, the Postmaster General solicited improved bids. Daniel Searle & Co. made proposals accordingly, at the compensation of $3,000 per annum, as follows:

"Or we will make the following improvement on the line from Jersey City to Owego, New York, to wit: We propose to convey the mail by an express line of post coaches, from Jersey City to Newark, on No. 956, from Newark to Morristown, on No. 979, from Morristown to Milford, on 1157, from Milford to Owego; thence connecting with the line from Owego to Genesee, to be run daily from the 1st day of December to the 1st day of April, and through in 44 hours, for the compensation of $3,000, in addition to the foregoing sum of $5,980, on

the same routes.

John H. Avery was a partner in each company. It is stated, and I think correctly, that when this improved bid was under consideration, the said John H. Avery suggested or proposed verbally to the Postmaster General, to transfer four trips weekly from route No. 774 on to routes No. 956, 979 and 1157 during the suspension of navigation. The improved bid was not accepted, but the suggestion or the verbal proposition was favorably received by the Postmaster General.

The letter of acceptance of S. R. Hobbie, Assistant Postmaster General, to Messrs. Daniel Searle & Co., on route No. 1157, is dated the 27th of October, 1835, and states on its face to be a conditional acceptance, and on the back leaf of the printed acceptance is written as follows:

"N. B. The following condition is annexed to this acceptance, viz: that route No. 774, from Newburg, New York, to Owego, shall be reduced to a tri-weekly route during the suspension of steamboat navigation on the North river, in each year, and that the four weekly trips curtailed on that route shall be transferred to and performed on routes No. 979 and 1157, making a daily mail over those routes to Owego. "Your answer is requested immediately.

"NOVEMBER 7, 1835.

"Respectfully,

"S. R. HOBBIE, Assistant Postmaster General.”

The contract for route No. 1157 is dated October 27th, 1835, the date of the acceptance as mentioned above; but across the outer margin, on the first page, is written the condition copied above.

The 13th article of the contract is as follows:

"That the Postmaster General may curtail the service or dispense with it entirely, he allowing one month's extra pay upon the amount deducted, in case he wishes to place on the route a higher degree of service than is contracted for, first offering the privilege to the contractor on the route of performing such higher service on the terms that can be obtained; or whenever he shall deem it expedient to lessen the service, or to leave such route, or any part of it, out of operation, or to convey the mail by steamboat or railroad cars, provided that reduction or compensation, in consequence of reduction of service, shall not exceed the exact proportion which the service dispensed with bears to the whole service."

The contracts for transporting the mail of the United States are so drawn as to leave the Postmaster General the full discretion to curtail or to add to the service, or to dispense with it altogether.

If the grade of service was lessened, the Postmaster General was restricted not to reduce the rate of compensation below the rate of service that was curtailed. He might keep the rate of compensation above the rate of reduction if he thought proper to do so. If he increased the rate of service, he was obliged to offer the service to the contractor for the compensation that another one would do the service for.

Within these limits the discretion of the Postmaster General is sovereign, and, in a machine so extensive and complicated, involving the convenience and interests of the people of the United States, it must necessarily be so.

It is to be observed, that neither in the note written on the acceptance copied above, nor in the condition written on the margin of the contract, also copied, is anything said about compensation. That is left to be decided according to the terms of the contract. Both were based on the supposition, as I think, that the two companies mentioned had an equal and joint interest in routes No. 774, and in Nos. 979 and

1157.

The contracts of Daniel Searle & Co., on routes Nos. 956, 979, and 1157, commenced January 1, 1836, and ended December 31, 1839. On December 23, 1835, the following instruction was given to the postmaster in New York:

POST OFFICE DEPARTMENT, NORTHERN DIVISION,
December 23, 1835.

SIR: During the winter season, or the suspension of steamboat navigation, you will forward the Owego mails via Jersey city and Milford.

Respectfully, yours,

G. L. GOUVENIER, Esq.,

Postmaster, New York city.

S. R. HOBBIE, Assistant Postmaster General.

No instructions during the winter of 1835-'36 were given to A. Morgan & Co. to transfer four trips from route No. 774 to routes Nos. 979 and 1157; but that company continued their daily trips from Newburg to Owego, and Daniel Searle & Co. increased their trips to daily trips, as designated in the note on the acceptance of their bid or proposal, and on the margin of the contract; but this was done by their own stock, and not by any transfer from route No. 774.

On December 2, 1836, Mr. Hobbie, First Assistant Postmaster General, wrote three letters to Daniel Searle & Co. By one of them they were informed they must run a seventh weekly trip between Newark and Morristown. It appears by a diagram obtained from the Auditor, Mr. Farrelly, that there were two routes between these places-one was No. 956, and the other must have been numbered 955. This seventh day trip was to be on these routes jointly, for which a compensation of $50 was to be allowed per annum.

By another letter they were to run four additional trips weekly on route No. 979, from Morristown to Milford, and a compensation of $266 66 per annum was to be allowed.

The increased trip in both instances was confined to the suspension of steamboat navigation, which was supposed to be about three months each year.

The other letter was as follows:

POST OFFICE DEPARTMENT,

Contract Office, December 2, 1836.

GENTLEMEN: By the condition annexed to your contract four trips a week are to be transferred from the Newburg and Owego route to No. 1157, Milford to Owego, during the suspension of navigation. This it is presumed will embrace about a half a month in the last, and two and a half months in the first quarter of every year. This arrangement will secure a daily mail on route No. 1157. It is expected you will make the necessary provisions to carry the above into effect. The contractors on No. 774 are directed to transfer four of their weekly trips for a distance of 100 miles to route 1157.

Very respectfully, your obedient servant,

Messrs. DANIEL SEARLE & Co.

S. R. HOBBIE.

A. Morgan & Co. proposed to transfer their stock from No. 774 on to No. 1157, if Daniel Searle & Co. would furnish them stables, which being declined, they continued their daily trips from Newburg to Owego, on route No. 774, and Daniel Searle & Co. increased their service so as to make a daily trip from New York to Owego, on routes No. 956, 979 and 1157.

If the Postmaster General had not supposed the two companies were joint stock owners of both routes, he would not have noted on the bid or inserted on the contract that service was to be "transferred" from one route to another, nor would he have given the order to transfer, which is contained in the letter of December 2, 1836, copied above.

By the terms of the contract, if he wished to increase the service on Daniel Searle & Co.'s routes, he was bound to pay them for doing it, if they would transport the mail as cheap as any other company or person. Until they had refused to do it, the Postmaster General had no right to order A. Morgan & Co. thus to transfer their stock, nor to contract with any other person or persons to perform the increased service on Daniel Searle & Co.'s routes. The contract of A. Morgan & Co., to transport the mail on route No. 774, terminated two years before the contracts of Daniel Searle & Co.

There was no writing on the contract of A. Morgan & Co. for route No. 774, that they were to transfer four trips weekly to the routes of Daniel Searle & Co., or to any part or portion of them; nor did they, in any manner or form, agree so to transfer any service whatever from route No. 774; but inasmuch as the note was written on the acceptance of the bid, and on the margin of Daniel Searle & Co.'s contract, that the transfer was to be made from said route 774 to routes 979 and 1157, it has been said that such notes, memorandums and endorsements, entered