|Telegraph :: 1866 :: Post Roads Act Litigation|
What rights the Post Roads Act in fact bestowed on telegraph companies, and how they should be properly classified, would be litigated over the next six decades.
All of these cases consider the Post Roads Act as authority for federal restraint on state authority. In analyzing the issues before the Court, the Court considers:
- The Commerce Clause of the Constitution
- The Constitutional authority of Congress over post-offices and post roads, which the Court referred to as "interstate intercourse" or "interstate transmission of intelligence." This rationale appeared in the early Court decisions but quickly vanishes in favor of the Interstate Commerce rationale
- The Reserve Power Clause of the Constitution
- The Post Roads Act.
|Federal Jurisdiction: Exclusive||Congress' authority preempts state authority||Congressional authority over interstate commerce and post-offices is supreme over state authority [Philadelphia, 190 U.S. at 162 (Congressional authority over interstate commerce is "exclusive")] [Pendleton, 122 U.S. at 357 ("states may exercise a concurrent authority until Congress intervenes and assumes control")] [Leloup, 127 U.S. at 645] [Pensacola Telegraph, 96 US at 9 ("A law of Congress made in pursuance of the Constitution suspends or overrides all State statutes with which it is in conflict.")]|
|Federal Jurisdiction: Post Offices||Congress has authority over Post Offices and Post Roads. [Const. art. 1, sect. 8, pars. 3 & 7] [Leloup, 127 U.S. at 645] [Pensacola Telegraph, 96 US at 9 ("Both commerce and the postal service are placed within the power of Congress, because, being national in their operation, they should be under the protecting care of the national government.")] [Joyce at 66]|
|Telegraphs are "Posts" (a.k.a. Transmission of Intelligence)||
telegraphs were "posts" and therefore fell under Congress' authority over post offices and post roads. [Pensacola Telegraph, 96 US at 10]
|Therefore Congress has authority over telegraphs||[PA RR I, 195 U.S. at 562] [Pensacola Telegraph, 96 US 1 (The Post Roads Act "is appropriate legislation to carry into execution the powers of Congress over the postal service")]|
|State authority over telegraph (Post Roads Act)||Post Roads Act preempts state authority. Western Union itself was a federal agency - or franchised by the federal authority [Richmond, 224 U.S. at 165 ("The bill is brought wholly on the ground that the appellant has such rights that no state legislation can touch.")] [Gottlieb, 190 U.S. at 413 (WU's franchise was "derived from the United States under certain acts of the Congress"")] [Call Publishing Co., 181 U.S. at 94] [Charleston, 153 U.S. at 694 ("no State or municipal authority can exact a license for the privilege of conducting its business, thus restraining the powers possessed by it under its franchises and under the acts of Congress")] [Massachusetts, 125 U.S. at 548 (WU's franchise was "derived from the United States by virtue of the" Post Roads Act)]||Rejected. Post Roads Act is permissive. Authority of corporation is derived from state law. is permissive; the Post Roads Act did not create corporate rights [Richmond, 224 U.S. at 169 ("the statute is only permissive, not a source of positive rights")] [Gottlieb, 190 U.S. at 424 ("the statute is merely permissive")] [Talladega, 226 U.S. 404] [St. Louis, 148 U.S. at 102] [Massachusetts, 125 U.S. at 548] [City of Portland, 228 Fed. 254]|
|Eminent Domain (take property with compensation) (Post Roads Act)||Post Roads Act gives telegraph the power of eminent domain [PA RR II, 195 U.S. at 596 (seeking to maintain telegraph lines along the private property of a railroad company)] [PA RR I, 195 U.S. at 559]||[Richmond, 224 U.S. at 169 (citing Pennsylvania RR)] [Philadelphia, 190 U.S. at 163 ("No corporation, even though engaged in interstate commerce, can appropriate to its own use property, public or private, without liability to charge therefor.")] [PA RR I, 195 U.S. at 569 ("the Act of July, 1866, there is not a word which provides for condemnation or compensation")] [PA RR II, 195 U.S. at 597] , or the right to enter private property without the consent of the owner. [PA RR I, 195 U.S. at 563] [Ann Arbor, 178 U.S. at 243 ("that statute did not confer on telegraph companies the right to enter on private property without the consent of the owner")] [Pensacola Telegraph, 96 US at 1 ("If private property is required, it must, so far as the present legislation is concerned, be obtained by private arrangement with its owner. No compulsory proceedings are authorized.")] The Court had "no occasion to consider the validity of the act of 1866 as an attempt to grant the power of eminent domain." If it granted such power, judicial review of the constitutionality of the Post Roads Act would have to be reconsidered. [PA RR I, 195 U.S. at 571]|
|Exclude Others (Post Roads Act)||Post Roads Act
||Preempted States from excluding telegraph companies or establishing a state telegraph monopoly [Richmond, 224 U.S. at 169 (citing Pensacola)] [PA RR I, 195 U.S. at 571 (citing Pensacola, stating "We decide the act to be an exercise by Congress of its power to withdraw from state interference interstate commerce by telegraph")] [Adams, 155 U.S. at 696 ("But a State cannot exclude from its limits a corporation engaged in interstate or foreign commerce, or a corporation in the employment of the general government, either directly in terms or indirectly by the imposition of inadmissible conditions.")] [Massachusetts, 125 U.S. at 548] [Pensacola Telegraph, 96 US 1]
|Federal Jurisdiction Interstate Commerce (Commerce Clause)||Congress has jurisdiction over Interstate and Foreign Commerce. [Const. art. 1, sect. 8, pars. 3 & 7] [Leloup, 127 U.S. at 645] [Pensacola Telegraph, 96 US at 9 ("Both commerce and the postal service are placed within the power of Congress, because, being national in their operation, they should be under the protecting care of the national government.")] [Joyce at 66]|
|Telegraph is interstate commerce (Commerce Clause)||States have no authority over interstate telegraph service. [Call Publishing Co., 181 U.S. at 95]||Telegraph service is interstate commerce [Leloup, 127 U.S. at 645 ("communication by telegraph is commerce ... and if carried on between different States, it is commerce among the several States, and directly within the power of regulation conferred upon Congress, and free from the control of state regulations, except such as are strictly of a police character.")] [Texas, 105 U.S. at 464 ("telegraph was an instrument of commerce")] [Ratterman, 127 U.S. at 425 (citing Pensacola)] [Pendleton, 122 U.S. at 356 ("intercourse by the telegraph between the states is interstate commerce")] [Pensacola Telegraph, 96 US at 9 ("commercial intercourse is an element of commerce")]|
|common carriage||[No Argument]||
NOTE: It's not clear what the point of the Court is here. These are not common carrier cases. No one is making a claim about liability or discrimination. It appears to be that the Court is arguing that Congress' authority over telegraph as commerce is justified in the same way Congress has established authority over these other industries. Judicial consideration of whether telegraph falls under common carrier obligations will not come till later. See Pimrose 154 U.S. 1 (1894) (telegraph is not a common carrier); Call Publishing Co., 181 U.S. at 99 (1901) (reversing the holding of the Court, telegraph is common carriage)
|State Taxes - all telegraph service||Post Roads Act franchise means states cannot tax telegraph service. [Gottlieb, 190 U.S. at 417 (franchises "having derived solely from the Federal government are exempt from taxation")][Ratterman, 127 U.S. at 427 ("the telegraph company have argued that this statute secures the corporation from taxation of any kind whatever")] [Massachusetts, 125 U.S. 530 ("It was alleged that the defendant company, having accepted the provisions of that law, was entirely exempt from taxation by the State")]
See also WU Report 1869 at 26 ("A serious obstacle to the reduction of rates is the extent and variety of taxation to which our property and business are subjected... If they were removed we could afford materially to reduce our rates for the transmission of messages, and still earn the same profits.")
|State Taxes, intrastate telegraph service||[Alabama, 132 U.S. at 473 ("such taxes may be levied upon all messages carried and delivered exclusively within the state.")] [Ratterman, 127 U.S. at 425 (quoting Texas)] [Massachusetts, 125 U.S. at 548 (citing Texas)] [Texas, 105 at 466 ("Any tax, therefore, which the State may put on messages sent by private parties, and not by the agents of the government of the United States, from one place to another, exclusively within its own jurisdiction, will not be repugnant to the Constitution of the United States.")]|
|State Taxes, property in state||WU Report 1869 at 28 (WU valued its property at the cost of construction of the line - it did not reflect the value of the property in the market. Thus, WU property value does not reflect the value of access to public lands)||telegraph company property within a state [Philadelphia, 190 U.S. at 163 ("This immunity does not prevent a State from imposing ordinary property taxes upon property having a situs within its territory and employed in interstate commerce")] [Adams, 155 U.S. at 696 ("property in a State belonging to a corporation, whether foreign or doniestic, engaged in foreign or interstate commerce, may be taxed"; affirming state tax apportioned based on value of property in state measured by miles of network)] [Charleston, 153 U.S. 692] [City of Portland, 228 Fed. 254] [Massachusetts, 125 U.S. at 536 (where WU attempted to argue, in order to avoid taxes, that the value of its property in Massachusetts was zero; "the company receiving the benefit of the laws of the state for the protection of its property and its rights is liable to be taxed upon its real or personal property as any other person would be.")] [Texas, 105 U.S. at 464 ("Its property in the State is subject to taxation the same as other property, and it may undoubtedly be taxed in a proper way on account of its occupation and its business.")]|
|State Fees, Use of State Property||States may not charge telegraph for use of Post Roads [St. Louis, 148 U.S. at 100]||its own property and may appropriately charge telegraph companies for use and condition such use [Richmond, 224 U.S. at 170 ("When the appellants, without the right to exercise the power of eminent domain, desires to occupy land belonging to others, prima facie it must submit to their terms" affirming municipal construction code and Fire Chief inspection )] [Southern Bell, 174 U.S. at 773 ("when an appropriation of any part of this public property to an exclusive use is sought ...it is within the competency of the State, representing the sovereignty of that local public, to exact for its benefit compensation for this exclusive appropriation.")] [St. Louis, 148 U.S. at 97]|
|State Taxes / Fees, Assessment (Commerce Clause)||State method of assessment of taxes amounts to an interference with interstate commerce [New Hope, 187 U.S. at 419 (local fee upon poles and wires was excessive and therefore "void because a regulation on interstate commerce")] [Adams, 155 U.S. at 691 (state tax apportioned based on miles of network in state is unconstitutional)]||Appropriateness of assessment of legitimate state taxes is a matter for the state courts to resolve.|
|State Taxes of Federal Govt||States may not tax government use of telegraph service||Affirmed: States may not tax government use of telegraph service. [Texas, 105 U.S. at 466 ("As to the government messages, it is a tax by the State on the means employed by the government of the United States to execute its constitutional powers, and, therefore, void.")] When telegraph companies provided service to the US Government, the telegraph companies acted as agents or agencies of the U.S. government [Charleston, 153 U.S. at 693 (agreeing to the Post Roads Act, the telegraph company "has put its lines at the service of the United States for postal, military, and other purposes")] [Texas, 105 U.S. at 464 ("as to government business, companies of this class become government agencies.")] [Joyce at 78 ("such accepting telegraph companies become, however, by virtue of their acceptance of the terms of the grant in said Post Roads Act, Federal agenicies as to Government business...")]|
|State Police Powers (Post Roads Act) (Constitution, Amendment X, Reserve Powers)||States lack authority pursuant to Post Roads Act to have oversight of construction of telegraph network with codes of safety inspections [Richmond, 224 U.S. at 165 (objecting to compliance with local ordinance that city engineer review construction, poles must be shared with third party companies upon reasonable compensation, and inspection of poles by Fire Chief)] [Southern Bell, 174 U.S. at 764 ("that under the act of Congress of 1866 it was and is entitled to maintain and operate its lines through and over the streets and alleys of the city of Richmond, "without regard to the consent of the said city, and it did in fact locate many of its poles and wires and begin the operation of its business without applying to the said city for permission to do so")] See also [Egan at 132 (WU Pres. Egan, 1947, still kvetching about having to comply with local authority: "It is true you had the right to use post roads, subject however to the police power of the municipalities through which those roads passed.")]||Police power (Constitution Tenth Amendment): [Richmond, 224 U.S. at 170 ("When the appellants, without the right to exercise the power of eminent domain, desires to occupy land belonging to others, prima facie it must submit to their terms" affirming municipal construction code and Fire Chief inspection )] [Richmond, 224 U.S. at 171 ("The requirement that space be left in the conduits for wires of third parties, to be used upon permission by the city and compensation is merely another incident of the necessity for insisting upon a single system. It would seem not to be unreasonable for legislation... to require that a single conduit should contain all the wires under a street. ") [Philadelphia, 190 U.S. at 164 ("the city of Philadelphia had power to pass such an ordinance as this, requiring the company to pay a reasonable license fee for the enforcement of local governmental supervision.")] [Hope, 187 U.S. 419 ("a charge in the enforcement of local governmental supervision [is] not in itself obnoxious to the clause of the Constitution relied on.")] [Pendleton, 122 U.S. at 359 ("under the reserved powers of the state which are designated under that somewhat ambiguous term of "police powers," regulations may be prescribed by the state for the good order, peace, and protection of the community. The subjects upon which the state may act are almost infinite, yet in its regulations with respect to all of them there is this necessary limitation: that the state does not thereby encroach upon the free exercise of the power vested in Congress by the Constitution. Within that limitation, it may undoubtedly make all necessary provisions with respect to the buildings, poles, and wires of telegraph companies in its jurisdiction which the comfort and convenience of the community may require")]|
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The tone of the Supreme Court decisions suggests that even the Court was taken aback by the brazenness of Western Union's claims - particularly in the context of Western Union's claim of the power of eminent domain.
"It is a misconception, however, to suppose that the franchise or privilege granted by the act of 1866 carries with it the unrestricted right to appropriate the public property of a State. It is like any other franchise, to be exercised in subordination to public as to private rights... It never could have been intended by the Congress of the United States in conferring upon a corporation of one State the authority to enter the territory of any other State and erect its poles and lines therein, to establish the proposition that such a company owed no obedience to the laws of the State into which it thus entered, and was under no obligation to pay its fair proportion of the taxes necessary to its support." [St. Louis, 148 U.S. at 100]
Responding to Western Union's argument that railroads had morphed into "public highways" and that Western Union could therefore enter railroad land without restraint, the Court retorted "Counsel, in advancing the argument, exhibits a consciousness of taking an extreme position". [PA RR I, 195 U.S. at 573] [PA RR II, 195 U.S. at 597 ("they have carried the analogies between ordinary highways and railroads too far; indeed, have gone beyond analogy, and have contended for almost legal coincidence in attributes and effect.")] See also [Gottlieb, 190 U.S. at 425 ("Every one of the fundamental propositions, therefore, contended for by [Western Union, was] unsound.")] [Massachusetts, 125 U.S. at 549 ("It never could have been intended by the Congress of the United States, in conferring upon a corporation of one state the authority to enter the territory of any other state and erect its poles and lines therein, to establish the proposition that such a company owed no obedience to the laws of the state into which it thus entered, and was under no obligation to pay its fair proportion of the taxes necessary to its support.")]
Of the 20 Post Roads Act litigations* which reached the Supreme Court, telegraph company interests won five (25%) and lost 15 (75%) of the cases. In the first five years of Supreme Court cases, telegraph won 71% of the cases. After 1889, telegraph interests lost every case. Telegraph companies initially were successful on interstate commerce cases. Having learned their lesson from these and similar railroad cases, states were careful to have their jurisdiction end at the state border. After 1889, litigations generally involved telegraph companies seeking to avoid state taxes or oversight - and losing each round. Post Road Act Supreme Court cases were frequent for 35 years (with an odd outlier in 1928 concerning whether the Emergency Fleet Corp. qualified for the government telegraph rate under the Post Roads Act); thats an average of a case every two years.
Western Union had become the dominant telegraph company and this is reflected in who the stakeholders were in these litigations. Seventeen of the cases (85%) involved Western Union (or its officers or affiliates) as a party; two cases involved Postal Telegraph (a company which did not exist at the time the Post Roads Act was enacted), and one case involved a Bell Telephone company seeking to take advantage to the benefit of access to right of way bestowed by the Post Roads Act.
* Note that this is an analysis of Supreme Court cases that considered the Post Roads Act. It does not include any of the other litigations raised on other statutes or other grounds - such as the transcontinental acts or litigation considering common carrier obligations.
See also Telegraph Reference Caselaw
Post Roads Act Supreme Court Litigation Outcome
Relative to telegraph
Emergency Fleet Corp. v. Western Union Telegraph Co., 275 US 415 - Supreme Court 1928 (whether plaintiff should be charged the government rate or the commercial rate, stating that "For the fiscal years beginning July 1, 1921, and July 1, 1922, they were fixed for domestic telegrams substantially at 40 per cent of the commercial rate; and for cablegrams at 50 per cent of the commercial rate.") [Emergency Fleet, 275 U.S. at __] Lose Town of Essex, Appt. v. New England Telegraph Company of Massachusetts, 239 U.S. 313 (1915) (New England Telegraph might be a Postal Telegraph Company; appears Town of Essex improperly tried to object to construction of NETC's lines in violation of the Post Roads Act) Win Williams v. Talladega, 226 U.S. 404, 416, 33 Sup. Ct. 116, 57 L. Ed. 275 (1912) ("the privilege given under the terms of the act to use the military and post roads of the United States for the poles and wires of the company is to be regarded as permissive in character and not as creating corporate rights and privileges to carry on the business of telegraphy, which were derived from the laws of the State incorporating the company,") [Talladega, 226 U.S. 404] Lose Western Union Telegraph Co. v. Richmond, 224 U.S. 160 (1912) (The act of Congress of course conveyed no title and did not attempt to found one by delegating the power to take by eminent domain) [Richmond, 224 U.S. at __] [k] Lose
Western Union Telegraph Co. v. Pennsylvania Railroad, 195 U.S. 594 (1904) ("does not confer upon telegraph companies, the right to enter upon private property without the consent of the owner or grant them the right of eminent domain") [PA RR II, 195 U.S. 594, __]
Western Union Tel. Co. v. Pennsylvania R. Co., 195 U.S. 540 (1904) [PA RR I, 195 U.S. at __] [k] (PP RR I addresses primarily WU's arguments concerning the Post Roads Act; PP RR II addresses primarily WU's rights under state law as a lessee, finding that the rights belonged to the lessor not the lessee)
Lose Western Union Telegraph Co. v. Gottlieb, 190 U. S. 412, 23 Sup. Ct. 730, 47 L. Ed. 1116 (1903) (WU sought to avoid state tax assessment, repeating now resolved argument that it is franchised by USG pursuant to the Post Roads Act and that the tax was excessive. Held, the Post Roads Act "was merely permissive" and was not authority for the establishment of the corporation and does not give WU the ability to avoid state taxes; and whether state taxes are excessive is appropriately reviewed by the state judiciary)" [Gottlieb, 190 U.S. at __] Lose Atlantic and Pacific Telegraph Company v. Philadelphia, 190 U.S. 160 (1903) (a license fee for police supervision of property, "the municipality is not bound to furnish such supervision for nothing, and may, in addition to ordinary property taxation, subject the corporation to a charge for the expense of the supervision." Atlantic and Pacific Telegraph had acquired WU) [Philadelphia, 190 U.S. __] Lose Western Union Telegraph Company v. Borough of New Hope, 187 U.S. 419 (1902) (local "license fee upon telegraph poles and wires within its limits" "was a charge in the enforcement of local governmental supervision, and as such not itself obnoxioous to the" Constitution) [New Hope, 187 U.S. at __] [k] Lose Western Union Tel. Co. v. Ann Arbor Railroad Co., 178 U.S. 239 (1900) (Post Roads Act "did not confer on telegraph companies the right to enter on private property without the consent of the owner, and erect the necessary structures for their business; `but it does provide that, whenever the consent of the owner is obtained, no state legislation shall prevent the occupation of post roads for telegraph purposes by such corporations as are willing to avail themselves of its privileges.'") [Ann Arbor, 178 U.S. 239 ] Lose Richmond v. Southern Bell Telephone and Telegraph Co., 174 U.S. 761 (1899) [Southern Bell, 174 U.S. at __] [k] Lose United States v. Union Pacific Railway Co. & Western Union Telegraph Co., 160 U. S. 1 (1895) (Pursuant to the Post Roads Act, "no railroad company operating a post-road of the United States, over which interstate commerce is carred on, can bind itself, by agreement, to exclude from its roadway any telegraph company") [Union Pacific, 160 U.S. at __] [k] Lose Postal Cable Telegraph Company v. Adams, 155 U.S. 688 (1895)(Mississippi's tax on telegraph company, "according to the amount and value of the property measured by miles," in lieu of other taxes, was within the power of the state to charge) [Adams, 155 U.S. at ] [k] Lose Postal Telegraph Cable Co. v. Charleston, 153 U.S. 692 (1894) (affirming authority of Charlestown to impose license fee on telegraph companies for business conducted within Charleston excluding interstate commerce and U.S. government business ) [Charleston, 153 U.S. __] Lose St. Louis v. Western Union Telegraph Company, 148 U.S. 92 (1893) (rejecting WU's argument that the Post Roads Act WU was entitled to occupy the streets of St Louis without charge to the city - WU objecting to a charge of $5 per pole for purposes of upkeep and maintenance of the road and sidewalk where the pole was installed. 99: The court anticipates the streets of cities becoming overwhelmed with telegraph and telephone lines: "By sufficient multiplication of telegraph and telephone companies the whole space of the highway might be occupied, and that which was designed for general use for purposes of travel entirely appropriated to the separate use of companies and for the transportation of messages.") [St. Louis, 148 U.S. at ] Lose Western Union Tel. Co. v. Alabama State Board of Assessment, 132 U.S. 472 (1889) (Alabama tax on gross receipts of all telegraph business done in the state, including "receipts from messages carred partly within and partly without the state," held the gross receipts for intra and interstate telegraphs can be separated, and Alabama courts's affirmation of the tax is reversed)[Alabama, 132 U.S. at __] [k] Win Leloup v. Port of Mobile, 127 U.S. 640, 645 (1888) (state license tax on telegraph company's right to do business in state, "a large part of whose business is the transmission of messages from one State to another and between the United States," held to be unconstitutional. Leloup was WU agent.) [Leloup, 127 U.S. at __] [k] Win Ratterman v. Western Union Telegraph Co., 127 U.S. 411 (1888) ("A single tax, assessed under the laws of a State upon receipts of a telegraph company which were partly derived from interstate commerce and partly from commerce within the State, and which were capable of separation but were returned and assessed in gross and without separation or apportionment, is invalid in proportion to the extent that such receipts were derived from interstate commerce, but is otherwise valid." Leloup was an agent of WU) [Ratterman, 127 U.S. at ][k] Lose
Western Union Telegraph Co. v. Massachusetts, 125 U.S. 530 (1888) (rejecting WU's attempt to operate within Massachusetts under the authority of the Post Roads Act exempt from state taxation - a tax imposed by the laws of Massachusetts upon the Western Union Telegraph Company, a corporation of the State of New York, on account of the property owned and used by it within Massachusetts, was valid.) [Massachusetts, 125 U.S. __] [k]See alsoMass. v. Western Un. Tel. Co., 141 U.S. 40 (1891) (a follow up litigation where parties quibbled over how Western Union could pay for the taxes due, and whether WU "was entitled to the benefit of the sum paid into court.")
Lose Western Union Telegraph Co. v. Pendleton, 122 U.S. 347 (1887) (Complaint based on Indiana law, for failure to deliver in Iowa a telegraph originated in Indiana addressed to plaintiff in Iowa - holding that whatever jurisdiction a state may have over telegraphs in its own state, it does not extend into another state) [Pendleton, 122 U.S. at __] [k] Win Telegraph Co. v. Texas, 105 U.S. 460 (1882) (464 A Texas tax on all telegraphs, "so far as it operates on private messages sent out of the State, it is a regulation of foreign and inter-state commerce and beyond the power of the State. ... As to the government messages, it is a tax by the State on the means employed by the government of the United States to execute its constitutional powers, and, therefore, void.") [Texas, 105 U.S. at ] [k] Win Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S. 1 (1877) (states may not franchise state telegraph monopolies: The Post Roads Act "substantially declares, in the interest of commerce and the convenient transmission of intelligence from place to place by the Government of the United States and its citizens, that the erection of telegraph lines shall, so far as state interference is concerned, be free to all who will submit to the conditions imposed by Congress, and that corporations organized under the laws of one State for constructing and operating telegraph lines shall not be excluded from prosecuting their business within its jurisdiction, if they accept the terms proposed by the National Government for this national privilege.") [Pensacola Telegraph, 96 US at] [k] Win
Western Union Telegraph Co. v. American Union Telegraph Co., ALR Vol. 28, No. 3, p. 173 (Mar. 1880) [American Union, Cir. Court at 173] In 1870 Wabash RR entered into an exclusive contract with WU. Gould took control of Wabash; Wabash agreed to let Gould's American Union Telegraph build lines. WU sued for injunction pursuant to contract agreement. J. Harlan held pursuant to Pensacola, Post Roads Act does not permit exclusive contracts with railroads. Lose.
Postal Telegraph Co. v. City of Portland, 228 Fed. 254 (D.Or. 1915) ("The privilege granted by Congress under the Post Roads Act to use the military and post roads of the United States for the poles and wires of the company is permissive in character only, and is not to be regarded as creating corporate rights or privileges to carry on the business of telegraphy. Those rights and privileges are derived from the laws of the state under which the company is incorporated, and the state is not, by reason of the Post Roads Act, prevented from taxing the real or personal property belonging to the company within its borders, nor from imposing a license tax upon the right to do a local business within the state.") [City of Portland, 228 Fed. 254]