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Thousands of lawsuits were commenced against the Railway Administration. Liability for the damage was denied, and a period of litigation ensued. It would make this report too long to discuss it in detail. The rule of law laid down by the trial courts was sustained in the Supreme Court of Minnesota, in the case of Anderson v. Minneapolis, St. Paul & Sault Ste. Marie Railway Co. reported in volume 179, Northwestern Reporter, page 45 (p. 129, hearing), where the supreme court holds the following instruction to the jury by H. A. Dancer, trial judge, was correct:

"If you find that other fires not set by one of the defendant's engines mingled with one that was set by one of defendant's engines, that may be difficult in determining whether you should find that the fire set by engine was material or substantial factor in causing plaintiff's damage. If it was, the defendant is liable; otherwise, it is not. (P. 130 of printed hearing.)"

It is significant that H. A. Dancer, one of the judges during the trial of these cases, but not now on the bench, appeared before your committee. His testimony was not controverted. In discussing the rule of law, and speaking of the

trial of this case before him as a judge, he says:

"I laid down this rule of law to the jury: 'If a man is burned out by a combination of fires in which a fire set by a locomotive forms a substantial element, that man is entitled to recover from the railroad company his full loss.' That is not a new or unusual law. (See p. 90 of the printed hearing.)"

In the Peterson case, called the Cloquet case, the five district court judges, trying the case without a jury, found as a fact that the Railway Administration started certain fires, and that these fires burned the city of Cloquet. (See pp. 144-148 of the printed hearings.) There were the same results in the Lans case (p. 153 of printed hearings) and in the Hall case (p. 156 of printed hearings).

To summarize the situation briefly, lawsuits affecting the liability of the Govvernment in various "areas" were tried as the litigation progressed. The Govvernment was held liable in this litigation. The Government then made offers to settle for 40 or 50 per cent of the loss, as determined by it, in these various "areas." It made no settlement of claims of doubtful liability.

As Mr. Davis, Director General of Railroads, said in his letter to President Harding (p. 28 of printed hearing) and in his proposition of settlement (p. 29 of printed hearing), only claims were settled where they had a legal claim against the Government. We quote his exact language:

"This right to adjust and settle is based only upon legal demands which would ordinarily be enforceable in a court of justice. (See p. 29 of printed hearings.)" We stress this fact, because the bill, H. R. 5660, affects only those claimants who suffered loss, and who were recognized by the Railway Administration as having legal demands, and who received a part payment on that account. In no cases were any settlements made, unless the legal liability of the Government was recognized.

As heretofore indicated, several thousand lawsuits were pending. The trial of individual cases would be expensive. In the cases that were actually tried, and a decision adverse to the Government rendered, the cost to the litigant was very large. The trial of the cases occupied several weeks or months, numerous witnesses were necessary. If the cases were to be tried one by one, the expense in an individual case of a moderate claim might exceed the amount of recovery. The courts were congested. Former Judge Dancer very accurately tells about the situation, relative to the fairness of the settlements, and the circumstances under which they were made:

"There is no question but that they (the fire sufferers) were under compulsion in accepting that settlement of 50 cents on the dollar. Two years after the fire the five judges met and signed a letter and sent it to the Railroad Administration. It was dictated by Judge Cant. He wrote and we subscribed to it, and it was to the effect that it would take all of the judges of the State 10 years to try all those cases. We spent several months listening to the testimony on one case. That did not include all the damages, but only the damages of one man. It would have taken months and years to hear all the testimony and decide how much each citizen was entitled to receive. Those districts were prostrated, and the people could not wait. (P. 95 of printed hearing.)"

Again Judge Dancer says:

"I realize, however, that if every such individual were compelled to bring suit against the Government to establish his claims, the result would be complete denial of practical justice. The large number of witnesses required to trace the fires, the vast amount of time consumed in trying each individual case, and the expense made necessary by these factors would, in all cases, except possibly in

cases of a few corporations and municipalities, more than equal the entire loss of the individual. I realized that it was in the power of the Government to so defeat justice and deny these individuals the relief to which they were entitled merely by thus insisting upon trying each case, and I could see no reason why the Government should do that thing. (P. 101 of printed hearing.)"

It does not seem that there can be any question that the fire sufferers were in straitened circumstances. Their losses in most cases had been complete. They had to accept the offer of the Railway Administration or else wait a long time, perhaps years, before their cases could be tried. The evidence clearly shows this. There is no dispute as to the Government's attitude that the fire sufferers would have to try their cases or else accept a settlement. Mr. Davis, who made the settlements, and who testified, said:

"Of course you gentlemen know that I made a written proposition. I said: 'Gentlemen, this is the best I can do; take it or leave it.' If they preferred to take 50 per cent in cash, I did not deprive them of any legal right. They had their choice. If that is coercion, there was coercion. (P. 46 of printed hearing.) "

As appears from the testimony of Judge Dancer, and from undisputed facts, both in the Government testimony and from the other witnesses, your committee can not find that the settlements were fair to the fire sufferers, and does not believe they should be bound by the releases executed by them in order to receive partial payment of their loss.

ATTITUDE OF RAILROAD ADMINISTRATION

The testimony of the various witnesses who appeared before the subcommittee indicated very clearly that before there was any litigation the United States Railroad Administration took the position that it was either liable for all of the damage or else liable for none of the damage. It had various defenses, claiming, for example, that "other fires" were responsible for the damage.

The Railroad Administration had unlimited funds at its command with which to fight the fire sufferers and proceeded to do so, resisting all suggestions as to compromise or settlement and taking the position that there was no liability on the part of the Railroad Administration for any of the damage.

Consequently the fire sufferers organized their association and proceeded to employ attorneys for the purpose of having the courts determine their rights, if any. As a result, several thousand lawsuits were commenced and the ligitation described in the hearings ensued.

In the Peterson case, which was the so-called Cloquet case, the Railroad Administration stipulated and agreed that 277 other cases should abide the result of this case on the question of liability. In other words, if the Railroad Administration should receive a favorable decision in this case, there would be no liability on the part of the Railroad Administration in the other 277 cases. On the other hand, if the decision in the Peterson case should be adverse to the Railroad Administration, then the other 277 claimants covered by the stipulation would be entitled to payment of their loss in full. This stipulation is found on page 144 of the hearings.

It was agreed in this case the five district court judges, none of whom lived at the city of Cloquet or in Carlton County, where the claimants lived, should try the case, a jury should be waived, and the judges should make the findings of fact and conclusions of law.

It is apparent that the Railroad Administration was completely surprised when the five judges rendered a decision favorable to the fire claimants in this

area.

Other litigation ensued in various areas and test cases were tried. The Government would select a case in some particular area where it considered the facts most favorable to the Government, and this case would either be submitted to the judges or to a court and jury.

In the various areas, as adverse decisions were rendered against the Railroad Administration, its attitude then began to change and there began to be heard suggestions as to compromise and settlement.

It should be noted that the Supreme Court of Minnesota sustained the decision of the lower courts. The transportation act of 1920 expressly provided that litigation against the Railroad Administration should be had in the State courts and that the Government should be bound by the decisions of those courts.

in the above Peterson case, or Cloquet case, under the stipulation the fire sufferers were entitled to payment of their loss in full. The record shows very clearly that the 278 claimants were required to accept a 50 per cent payment of

their losses. In other words, as the record stands, and there can be no escape from the facts, the Railroad Administration in this case, after agreeing in a written stipulation, refused to follow the terms of that stipulation and practically forced the fire sufferers to accept a percentage of a valid and legal demand against the Railroad Administration.

Judge Dancer, who testified before the subcommittee, stated, at one point of his testimony, in calling attention to the attitude of James C. Davis, Director General of Railroads, relative to the Cloquet settlement, as follows:

"Mr. Davis's argument has been based upon these fundamental propositions: First, he declined to accept the Minnesota law, and, second, he has refused to accept the decisions of the courts of the State of Minnesota. He has only been able to say that the Government denied liability by refusing to accept either the Minnesota law or the Minnesota court decisions; and in doing that he violates the law of Congress under which he was appointed agent of the President, because the act of Congress under which Mr. Davis received his appointment and under which the Government took over and operated the railroads during the period of the war expressly provided that those railroads should be operated subject to all the statutes of the various States through which they pass, and while Mr. Davis might criticize our law and the decisions of our courts-it is always the privilege of an unsuccessful litigant to go outside of the courthouse and cuss the jury and court and criticize the law, and we generally do it amongst ourselves yet we pay just the same.

"Mr. Davis has a right to criticize the Minnesota law, but he had no right to disobey it, because it is the law, regardless of his criticism. And he was acting under an act of Congress which provided, in part, that the railroads while in Federal control 'shall be subject to all laws and liabilities as common carriers, whether arising under State or Federal laws.'

"When Mr. Davis refused to pay that judgment after it had been affirmed and only paid 50 cents on the dollar, he violated that law of Congress."

The record is clear, and, in fact, Mr. Davis admits in his testimony that he laid down the terms and conditions of settlement (all of which took place after the courts had decided against the Government), and he told the fire sufferers, in fact, that they would have to accept his terms or else he would not recognize the stipulation for settlement and would not make payment.

While this condition shows great fidelity on the part of Mr. Davis to his Government, there is no escape from the conclusion that it amounted to a breach of faith with the fire sufferers. The Government should be the last one to break its word contained in the written stipulation which governed the trial of those cases. The Government did, however, repudiate and refuse to carry out that stipulation.

This attitude of the Railroad Administration, coupled with the fact that the fire sufferers had been rendered destitute and were not able to carry on litigation, as disclosed by the evidence, is a controlling and leading reason for the favorable report of the Claims Committee.

SUBCOMMITTEE'S REPORT

The subcommittee which heard testimony on March 16, 17, 28, and 29, 1930, in connection with these matters, submitted their findings to the full Committee on Claims so that the entire testimony might be before every member of the Committee on Claims for study and action on the part of the full committee.

It is significant, in these findings, that every member of the subcommittee recognized the main question for determination by the entire Committee on Claims to be the question of whether or not the fire sufferers had been unfairly treated or were virtually compelled to accept a part payment of an admitted loss. Judge Butler, a member of the subcommittee, in writing his report, uses this language:

"In conclusion, it is my opinion and belief that no misrepresentation or fraudulent conduct can be charged to the director general and his agents and representatives, and that the only question is: Did he act fairly in taking legal advan tage of the misfortunes of the claimants when he realized that the long years it would take to litigate the cases would deprive the majority of them of receiving any considerable portion of what they might be justly entitled to should they refuse to accept his offer?"

The report submitted by Mr. Johnson of Nebraska to the entire Committee on Claims also reached the same conclusion as was reached by Judge Butler and Congressman Clark on the facts developed by the testimony relative to the attitude of the Railroad Administration.

COMMITTEE HEARING, JANUARY 16, 1931

The Committee on Claims took up for consideration this measure at its regular meeting on January 16, 1931. At this meeting, every Congressman from the State of Minnesota was present for the purpose of discussing the measure with the committee. Matters were gone into fully and completely. Various alleged objections were made at this time, and many of those objections have been taken care of by the amended bill which this report accompanies.

Some points were raised which might be confusing. One of them had to do with the question of "other fires" and the impression might be created that the loss was not caused by fires of railroad origin, while under operation of the Government. It is submitted that this question was fully litigated in various court actions, where the Railroad Administration attempted to show that fires of other origin were responsible for the damage.

There were, of course, other small fires, but the claimants in these test cases were able to show that the fire which had its origin on the railroad right of way was the one which swept across the country and which caused the damage in question. As one witness put it, in substance:

"The big fire, of railroad origin, swallowed up and swept over the little ones and continued on its course of destruction."

At any rate, the testimony clearly indicates that the responsibility and legal liability of the United States Railroad Administration was settled by the courts and is not an issue so far as the merits of this bill are concerned. Any attempt to try to raise that issue is simply an attempt to say that the courts were wrong and, as Judge Dancer pointed out, under the law, the Government was bound by the decision of the courts.

There has also been objection raised in connection with these cases because if Congress should open up and make additional payments in the Minnesota fire area, it would establish a precedent for reopening other cases against the Railroad Administration.

It is thought that this objection comes about due to the fact that many people who did not file claims against the Railroad Administration before those claims were barred by the statute of limitations may come to Congress for relief.

These objections are easily met. In the first place, every claimant who is benefited by the provisions of H. R. 5660 commenced his case against the Railroad Administration before the statute of limitations ran and barred the filing of the claim. The facts relevant to other claims against the Railroad Administration do not exist in connection with these matters.

Objection has further been suggested along the line that the fire sufferers should have made claims before the railroads were turned back to the private owners. There is nothing substantial to this objection. All of the fire sufferers included in this legislation had already made claims against the Railroad Administration and all of those claims were pending before the railroads were turned back to private owners. Further, all of the claimants covered by this bill had no claims against the private owners of the railroads because the private owners were not operating the railroads when the loss occurred. The railroads were being operated by the Government, and the Government alone was responsible. Consequently the provisions of the transportation act of 1920 had no application to the fire sufferers' claims, which were already pending in the courts when the railroads were turned back to their owners.

IN CONCLUSION

The testimony developed in the hearings on this case is uncontroverted as to the situation which resulted in part payment of the losses suffered by the fire claimants. The testimony leads to the conclusion that the fire sufferers were practically forced to accept such payments as the Director General of Railroads was willing to make. When he made those part payments, it is true that the fire sufferers had no other alternative, except to comply with his pronouncements. He required that a legal release of all claims against the Government be executed; he required that a legal stipulation for the entry of judgment be executed; he required that a legal satisfaction of judgment be signed and executed. He took all of these steps so as to forever bar any claimant from having any legal or equitable causes of action against the United States in any of its courts. The only redress therefore, which the claimants in this bill have is a bill in Congress.

The Government is still indebted to them, in spite of these legal instruments, for the balance of a loss which was ascertained by the Government, on a liability that was established by the courts of Minnesota, and on which only partial payment has been made.

The United States insists that its citizens discharge their duties and obligations fully. In collecting income taxes, it does not accept a percentage of the amount due. This Government should, therefore, recognize its just obligations and, through Congress, ought to treat fairly with its citizens. Either the Government owed the fire sufferers the amount of loss which each of them sustained or else it owed them nothing. It recognized liability in making part payments on these claims. The only way that justice can be done is to pass this bill and pay the balance.

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