This action was brought by the United States, on August 23, 1929, in the federal court for Montana to recover the sum of $487,116.31 paid to Butte, Anaconda & Pacific Railway Company, on March 26, 1925. The payment was made pursuant to a certificate of the Interstate Commerce Commission for that amount, issued March 20, 1925, and addressed to the Secretary of the Treasury. Deficit Settlement with Butte, Anaconda & Pacific Ry., 94 I.C.C. 617. The Secretary, after receiving from the Comptroller General his certificate approving the payment, issued a warrant for that sum and transmitted it to the Treasurer of the United States. The Treasurer paid the railway.
The proceeding before the Commission originated in a claim for $600,527.35 filed with it by the railway under section 204 of Transportation Act 1920, 41 Stat. 460 (49 USCA § 73) entitled 'Reimbursement of deficits during Federal control.' Upon due hearing, the Commission concluded that the railway was entitled to $487,116.31; and it offered to issue a certificate for that amount on condition that the railway sign a release accepting the amount 'in settlement of all claims against the Government under said section 204.' This condition was agreed to. About two years after the money received had been disbursed by the railway, partly in dividends to stockholders, partly in the expenses of operation, the Commission issued an order purporting to reopen the proceeding; and set a hearing 'for the purpose of affording the Railway opportunity to show cause why the certificate issued on March 20, 1925, should not be revoked and its claim dismissed.' The railway, appearing specially, protested against the action of the Commission in attempting to reopen the proceeding; and challenged its power to do so. On March 7, 1927, the Commission entered an order purporting to cancel the certificate of March 20, 1925, and to dismiss the railway's claim. Deficit Settlement with Butte, Anaconda & Pacific Railway, 117 I.C.C. 780. On June 8, 1928, the Under-Secretary of the Treasury demanded of the railway repayment of the $487,116.31 received by it. Repayment was refused. Fourteen months later, this action was begun to recover the money.
The case was first heard upon defendant's demurrer to the complaint. That demurrer was overruled. The defendant set up by answer the terms on which the payment had been made and the disposition of the money received. Then the case was heard upon the plaintiff's demurrer to the answer; that demurrer was sustained; and judgment for the government was entered in the sum of $487,116.31, with interest at 8 per cent. from the date of the demand and costs. The Circuit Court of Appeals affirmed the judgment. 61 F.(2d) 587. This Court granted certiorari, 289 U.S. 717, 53 S.Ct. 656, 77 L.Ed. 1470.