an “unjustifiable strain" on domestic operations if the latter were required to carry the international operations. Second, it concluded that regulatory ends would be better served by maintaining "the comparative status between those domestic operators which have foreign routes as against those which do not have foreign routes."

On the Postmaster General's petition for review the Court of Appeals reversed the Board. 92 U. S. App. D. C. 256, 207 F. 2d 207. The cases are here on certiorari, 346 U. S. 811, and were argued with Nos. 224 and 225, decided this day, ante, p. 67.

As we have already noted in the companion cases, § 406 (a) of the Civil Aeronautics Act, 52 Stat. 998, 49 U. S. C. § 486 (a), directs the Board to fix "fair and reasonable rates of compensation for the transportation of mail by aircraft." Section 406 (b) provides that the Board in determining those rates

"shall take into consideration, among other factors,

the need of each such air carrier for compensation for the transportation of mail sufficient to insure the performance of such service, and, together with all other revenue of the air carrier, to enable such air carrier under honest, economical, and efficient management, to maintain and continue the development

able to analyze the operations of each carrier within a class in the light of the results achieved by others within the same class. The comparison technique of rate-making has proved to be the most satisfactory and practicable available to the Board. If we were required to fix rates for both domestic and international operations at the same time, it would be difficult, if not impossible, to find a suitable basis for a comparison technique of analysis.

"In view of the foregoing, we find that the earnings from C&S' domestic routes should not be used to offset the 'need' resulting from the carrier's international routes. This conclusion stems from considerations of economic policy; we are not deciding the question of our legal power to make such an offset." 14 C. A. B., at 683.

Opinion of the Court.

347 U.S.

of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the national defense."

The mandate is that the Board "shall take into consideration" what "the need" of the carrier is. The Act thus poses as the initial question for the Board whether the financial condition of the carrier is such that it needs a subsidy or has no need for one. The Board did not find that Delta had a "need" for an additional $654,000. It merely concluded that those excess domestic profits should not "as a matter of economic policy" be taken into account in computing a subsidy for international operations. In that posture the decision of the Board seems not in conformity with the law.

The Board answers to the effect that under § 406 (b) it "may fix different rates for different air carriers or classes of air carriers, and different classes of service." It may, therefore, fix a rate for international service. Since it may do that, it may, consistently with rate-making decisions (see, e. g., American Toll Bridge Co. v. Railroad Commission, 307 U. S. 486, 494), fix the rate at a level which will sustain the particular unit. Therefore the Board need do no more under § 406 (b) when it fixes a rate for international service than offset revenue attributable to the class of service for which the rate is made. That is the argument.

There are aspects of traditional rate-making that are carried over into the Act. Thus we held in T. W. A. v. Civil Aeronautics Board, 336 U. S. 601, that rates under the Act are made retroactive only to the date of the application. We also noted in that case that the "need" clause in § 406 (b) is not wholly at war with traditional rate-making functions. Id., p. 604. But the application of the "need" clause which the Board has made in this case is at war with the language of § 406 (b). The stand

74

Opinion of the Court.

ard is "the need of each such air carrier." The "need" of the carrier is measured by the entirety of its operations, not by the losses of one division or department. The measure of "the need" is an amount of compensation necessary to carry the mail and "together with all other revenue of the air carrier" adequate for maintenance and development. And the Act defines "air carrier" as "any citizen of the United States who undertakes . . . to engage in air transportation . . . ." §1 (2). Thus the wording of the Act precludes measuring "the need" of the carrier by any other unit than the carrier as an entity.

As we read the Act, Congress has established a special formula for the fixing of a subsidy rate. While the rate may be for a class of service, the return in form of a subsidy must be computed with reference to the entire operations of the carrier. The requirement is that the Board offset all of a carrier's revenues in determining the subsidy; there is no discretion in the Board to disregard any portion of the revenue because of economic or other policy considerations. In other words, an air carrier's subsidy need is an amount which, "together with all other revenue" of the carrier, will enable it to meet and maintain the objectives of the Act. The carrier's "need" is therefore a limiting factor in the sense that the subsidy may not exceed it. Since the Board did not construe and apply the Act in that manner, the Court of Appeals was correct in reversing the rate order.

The Board makes an extended argument of policy against that position in elaboration of the reasons it advanced for not offsetting the excess earnings from domestic operations against the international subsidy rate.2 It maintains that maximum operating efficiency on the part of air carriers and the development of air transpor

2 See note 1, supra.

Opinion of the Court.

tation-prominent objectives of the Act

347 U.S.

will be better

served by setting subsidy rates on a divisional rather than on a system basis. This may be so. But that is a matter of policy for Congress to decide. As we read § 406 (b), Congress adopted in the present Act a rate formula based on "the need" of the carrier as measured by its entire operations, even when a rate was being fixed for a class of service.

Affirmed.

3 Section 2 of the Act provides:

"In the exercise and performance of its powers and duties under this Act, the [Board] shall consider the following, among other things, as being in the public interest, and in accordance with the public convenience and necessity—

"(a) The encouragement and development of an air-transportation system properly adapted to the present and future needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense;

"(b) The regulation of air transportation in such manner as to recognize and preserve the inherent advantages of, assure the highest degree of safety in, and foster sound economic conditions in, such transportation, and to improve the relations between, and coordinate transportation by, air carriers;

"(c) The promotion of adequate, economical, and efficient service by air carriers at reasonable charges, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices;

"(d) Competition to the extent necessary to assure the sound development of an air-transportation system properly adapted to the needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense;

"(e) The regulation of air commerce in such manner as to best promote its development and safety; and

"(f) The encouragement and development of civil aeronautics."

Syllabus.

UNITED STATES v. CITY OF NEW BRITAIN ET AL.

CERTIORARI TO THE SUPREME COURT OF ERRORS OF
CONNECTICUT.

No. 92. Argued December 1, 1953-Decided February 1, 1954.

Foreclosure sales under two mortgages on real estate of a delinquent taxpayer in Connecticut produced less than enough to satisfy all claims, which included a federal lien created by § 3670 of the Internal Revenue Code for unpaid withholding and unemployment taxes and insurance contributions and a City's liens for delinquent real-estate taxes and water rent. Connecticut laws provide that real-estate tax liens "shall take precedence of all transfers and incumbrances" in any manner affecting the property subject to the lien and that water-rent liens take "precedence over all other liens or incumbrances except taxes" on the property subject to the liens. The record did not establish that the taxpayer was insolvent. Held: Since § 3670 of the Internal Revenue Code does not in terms confer priority upon the lien created thereby and no other federal statute does so in the circumstances of this case, the priority of each statutory lien here involved must depend on the time it attached to the property in question and became choate. Pp. 82-88.

(a) The City gains no priority by the fact that its liens are specific while the federal liens are general. P. 84.

(b) United States v. Security Trust & Savings Bank, 340 U. S. 47, and United States v. Gilbert Associates, 345 U. S. 361, distinguished. Pp. 86-87.

(c) That § 3672 of the Internal Revenue Code makes the federal lien invalid as to the prior recorded mortgages and the judgment in this case, and that the mortgagee could have paid the delinquent real-estate taxes and water rent with the amount so paid becoming part of the mortgage debt covered by the mortgage lien, does not require a different result. Pp. 87-88.

139 Conn. 363, 94 A. 2d 10, judgment vacated and cause remanded.

A Connecticut state court directed that, in the distribution of the proceeds of certain mortgage foreclosure sales of real estate, certain municipal tax and water-rent liens should take priority over certain federal tax liens.