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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,

S. R. HOBBIE,

Assistant Postmaster General. G. L. GOUVENIER, Esq.,

Postmaster, New York city. 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 ļast, 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,

S. R. HOBBIE. Messrs. DANIEL SEARLE & Co.

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 10 routes 979 and 1157, it has been said that such notes, memorandums and endorsements, entered

into and formed a part of the contract of Daniel Searle & Co., and therefore that he was not entitled to any additional compensation for those four extra weekly trips. _If they formed a part of said contracts, they continued to the 31st of December, 1839, when the contracts terminated, and Daniel Searle & Co., if bound at all, were obligated to perform said four extra weekly trips during the suspension of navigation, regardless of who were the contractors on route No. 774. Instead of compelling them, however, to perform this extra service without compensation, they were paid for it after the 1st day of January, 1835.

Daniel Searle & Co. had not conveyed the mail daily on routes Nos. 956, 979, and 1157 during the suspension of steamboat navigation. A. Morgan & Co. could not have been subjected to any fine or forfeiture for such delinquency, because they had not contracted to do any service on those routes, nor to transfer any service from route No. 774.

The contracts with Daniel Searle & Co. were, to run four-horse post coaches three times in a week on route No. 1157, at the compensation of $5,000 annually. They performed that service for that compensation, and when they put in an improved bid, at the suggestion of the Postmaster General, to run a daily line during the suspension of steamboat navigation, at $3,000 annually, the same was not accepted, and why? Because the Postmaster General believed the two companies were jointly interested, and therefore the said sum of $3,000 might be saved to the department; and yet, by the transfer as suggested by Mr. Avery, there would be a daily mail from New York to Owego in the winter season. If this was not his understanding, he should not have paid A. Morgan & Co. after he ordered the postmaster at New York to send the mail daily on the route of Daniel Searle & Co.

Mr. Kendall declined to make any additional allowance to Searle & Co., because he had not ordered any additional service.

That does not sustain the note on the acceptance of the bid, nor the endorsement on the contract. These were intended to mean something, and what that something was, is well established by the proof, that the Postmaster General intended, according to the wishes of the inhabitants, to run a daily line in the winter from New York to Owego, on the routes of Searle & Co. This he accomplished. He had no right to expect this, without paying an adequate or ratable compensation. John H. Avery did not own or control either line as principal or agent, and he had no right or authority to pledge either company to do, or to abstain from doing, any act or service.

When Searle & Co. transported the mail daily, they must have supposed they were doing so for a compensation. The postmaster at New York had been instructed from the General Post Office Department to give them the mail daily, and could they have come to any other conclusion under what had taken place—that the mail being delivered to them daily, they were by the same order instructed to carry it daily?

I cannot doubt Mr. Kendall was mistaken in regard to the authority of Mr. Avery to act for the companies. That was the basis of bis decision. An application was made to Congress, and an unfavorable report was made by the Committee on Post Offices and Post Roads, on the decision of Mr. Kendall. The subsequent Postmaster Generals

have declined to reverse the first decision. It was under these circumstances, and after these repeated decisions, that the question was submitted to Mr. Farrelly, the Auditor, to state an account, and to find the amount due to Daniel Searle & Co. for the four extra daily trips during the suspension of steamboat navigation the two first years of their contract, as above mentioned. After briefly referring to the facts and the law, and after presenting various considerations for his conclusion, the Auditor says:

“As, therefore, there is no provision in the contract to pay Searle & Co. for carrying the mail the four additional trips, the claim is not an account which I have any authority to settle.”

From this decision an appeal was taken to this office. I am to say whether that decision is right or wrong. I have stated the facts more at large than may be necessary, but my motive was to attract the attention of the Postmaster General to those that are the most prominent, without subjecting him to the labor of collating them from the papers if he should think proper to re-examine the case; and if he should not, then that the same service might be rendered to a committee of Congress, if application should be made them for relief.

By the act of July 2, 1836, all contracts on behalf of the Post Office Department are to be made by the Postmaster General, and all debts for the department are to be created by him. This includes the compensation or money to be paid, as well as the thing that is to be done. Take this very case.

The Poftmaster General contracted with Daniel Searle & Co. to transport the mail on route No. 1157, from Milford, in Pennsylvania, to Owego, in New York, three times a week in fourhorse post coaches, at the rate of $5,000 per annum. In making the contract he reserved to himself the right to increase the service, alter the route, he making adequate compensation for any expense occasioned thereby, not however to exceed the exact proportion of the original amount to the additional duties required. This left with the Postmaster General himself, and with no other person, to say what would be an adequate compensation. This is the agreement of the parties to the contract. The contractors say they were ordered to perform additional service. The Postmaster General denies he ever gave such an order. If resort is had to the writing on the acceptance of the bid, or to the endorsement on the margin of the contract, to prove that additional service was to be performed, neither contained a provision that a compensation is to be paid, and the rate of compensation is left by the law, and by the contract, to the discretion of the Postmaster General.

When the Postmaster General perfects a contract, then the duty of the Auditor commences.

It is said by Mr. Sherman that a data is given by which the Auditor can ascertain what should be paid to Searle & Co., by taking, 1st, the contract price, and paying for the additional mail service at the rate of compensation stipulated by the contract; or 2d, by taking the rate of allowance made by the Postmaster General to Messrs. Searle & Co. for the iwo years succeeding the first of January, 1837, for performing the like service after the expiration of the contract of A. Morgan & Co.

, on route No. 774. By resorting to either or any other mode of ascertaining what this additional service is worth pre-supposes that the Au

ditor can fix the compensation, which, in my opinion, is erroneous. That power is with the Postmaster General and with Congress, and not with the Auditor nor with the Comptroller.

Having examined the facts and the law presented in this case, and duly considered the same, I concur with the Hon. J. W. Farrelly in the decision he has made, and affirm the same. I do not doubt that Daniel Searle & Co. are entitled to compensation for the additional service performed as mentioned above, but that they can only find relief at the hands of the Postmaster General, or at the hands of Congress, if he thinks he is not permitted to act in the matter by reason of the decisions of his predecessors.

ELISHA WHITTLESEY.

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