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The CHAIRMAN. Mr. Lea? Mr. LEA. Mr. Lawrence, in reference to the suits for reparations, will a suit lie for reparation for a rate that has been approved by the Commission at one time, and subsequently was held unlawful because it was too high?

Mr. LAWRENCE. I do not know, sir. I do not think so if it was approved originally.

Mr. LEA. Yes. I take it that the cases where the suit lies is where there is a rate that is uncontested goes into effect, and is published without being contested, and subsequently when complaint is made it is held to be unlawful because it is too high. That is my understanding. Mr. LAWRENCE. That is my understanding, Mr. Lea.

Mr. LEA. Your position, as I take it, is that the rate being uncontested should be regarded as a legal rate until it is held otherwise?

Mr. LAWRENCE. That is correct, sir. Then it can be ordered changed. But we do not like the idea of having all that "portal to portal pay,” as it were, going back on a rate which had been honestly abided by when folks thought that it was the correct rate.

Mr. LEA. Have you any information that would disclose the extent of the hardship that may be involved by the present method of apportioning reparations? Any information for the committee to show the extent of the injustice due to the recovering for rates which were charged when they were not known to be illegal?

Mr. LAWRENCE. I do not, other than certain information we found in various reports of the Interstate Commerce Commission, and on which I believe Mr. Morrow will touch on in his presentation. But we do find constantly and particularly in the 1916 and 1930 annual reports of the Interstate Commerce Commission definite recommendations from the Commission that they felt that that work cluttered up the files of the Commission, and unduly burdened their staff. There were thousands of cases before the Commission at that time.

I think in summarizing the limited amount of reading that I was able to do on that score, here is about the way the Commission's recommendation went.

1. That the power to award reparations be placed wholly in the court.

2. Before an award for reparation by a court the Commission be required to find that the rates were unreasonable as of a particular time.

3. That the law recognized that private damages do not necessarily follow a violation of the act.

4. That before recovery is allowed the claimant be required to show that he has suffered damage, because apparently from reading those reports, the Commission raised its eyebrows at the fact that the fellow who obtained the reparations had very often passed that charge along to somebody else, and it was really a windfall for him when years later he recovered this overpayment, as it were.

Mr. LEA. What is the limitation now on reparations for motor carriers?

Mr. LAWRENCE. There is no limitation, no Federal limitation, sir. It would depend on all of these varied State statutes covering limitations, running, as I said before, from about 2 to 10 years, depending on the State.

Mr. LEA. So I take it there is no recognition of the varying price of a rate that could be imposed at different periods due to the changes in economic conditions. In other words, we have our high-price period and our low-price period. Sometimes a 2-cent rate might be all right today, but justify a 3-cent rate a year from now.

This system of reparations as it stands does not allow any distinction between those rates.

Mr. LAWRENCE. That is correct. Everybody might have been satisfied with such a rate a year or two ago, or 3 years ago, but now conditions have changed and if the Commission, in view of present circumstances, changes it, you lay the carrier open to reparations going way back.

Mr. LEA. As I understood the recommendations of the Commission as you read it, they would in part take care of that situation. Is that right? Mr. LAWRENCE. I think so. They were struggling with it.

There were a whole series of Commission reports which I understood Mr. Morrow will refer to in detail in his testimony, and that was a sort of a summation of what, in our view, the comments of the Commission added up to through those reports.

Mr. LEA. That is all, Mr. Chairman.
The CHAIRMAN. Any further questions, gentlemen?
Mr. CARSON. One question.
The CHAIRMAN. Mr. Carson.

Mr. CARSON. Is it not a fact that oftentimes you are required to haul certain materials and shipments on which there is no definite established rate? That it is almost impossible to find the established rate on certain materials that you get?

Mr. LAWRENCE. There have been cases of that kind. I think I would say during the war, sir, where a new commodity came in, there was a difficulty in finding its classification, for instance.

Mr. CARSON. That is what I referred to, particularly.
Mr. LAWRENCE. That is right.

Mr. Carson. I know in my experience, representing the railroads, one of our most troublesome things was an attempt to find a definite rate on several articles which seemingly were not established.

I had a shipment from Indianapolis to Canton, Ohio, one time, of several large tanks, upon which every effort was made to determine a definite rate; the railroads took the rate as established and given to them by the Interstate Commerce Commission. A year or so later they informed us that they had made a mistake and it was an undercharge, rather, on it, and we were faced with the possibility of going back to collect from the consignee, or paying it ourselves, of course, as the case may be.

It always resulted in a lawsuit because the man presents a receipt, fully paid for the freight bill, and brings it into the court, and there is absolutely no defense under the Interstate Commerce Act. He either has to pay it or the railroad has to pay it. There are a great many examples of that kind that you will run into, especially during the war.

That is all, Mr. Chairman.
The CHAIRMAN. Any further questions, gentlemen?
(No response.)

The CHAIRMAN. If not, we will adjourn the hearings until tomorrow morning at 10 o'clock.

(Whereupon, at 12:20 p. m. the committee adjourned until the following day at 10 a. m.)

TO AMEND THE INTERSTATE COMMERCE ACT

UNDERCHARGES AND OVERCHARGES

WEDNESDAY, MARCH 19, 1947

HOUSE OF REPRESENTATIVES,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The committee met at 10:50 a. m., pursuant to adjournment, in room 1334, New House Office Building, Hon. Charles A. Wolverton (chairman) presiding.

The CHAIRMAN. The committee will come to order.

Our first witness this morning will be Giles Morrow, executive secretary and general counsel of the Freight Forwarders Institute, who will express the viewpoints of that organization.

Mr. Lawrence, do you have that amendment with you that you referred to yesterday?

STATEMENT OF JOHN V. LAWRENCE-Resumed

Mr. LAWRENCE. I have copies of it here, Mr. Chairman.

We mailed last night every member of the committee a copy of a letter to you, and I have copies of that.

The CHAIRMAN. Is there any statement that you would like to make in connection with the amendment other than what you stated yesterday?

Mr. LAWRENCE. I do not think so.

The CHAIRMAN. Then I will ask that the committee take into consideration that amendment as having been offered by Mr. Lawrence yesterday, as a part of his statement.

Mr. LAWRENCE. Thank you.

The CHAIRMAN. May I ask that the reporter put into the record at this point a copy of the amendment offered by Mr. Lawrence. (The letter and amendment referred to are as follows:)

AMERICAN TRUCKING ASSOCIATIONS, INC.,

Washington 6, D. C., March 18, 1947. Hon. CHARLES A. WOLVERTON, Chairman, Interstate and Foreign Commerce Committee,

United States House of Representatives, Washington, D. C. MY DEAR CHAIRMAN WOLVERTON: At this morning's hearing on H. R. 2324, to amend the Interstate Commerce Act with respect to the liability of common carriers and freight forwarders, you will recall that Congressman Hinshaw asked me whether we had any amendments to suggest to the bill which would reflect the position we took in the hearing.

You will likewise recall that while I stated time had not permitted sufficient study to present those amendments then, I, at the same time, indicated that we would gladly furnish that information.

We are accordingly enclosing suggested amendments to take care of our suggestions insofar as common carriers by motor vehicle are concerned. Respectfully submitted.

AMERICAN TRUCKING ASSOCIATIONS, INC.,
John V. LAWRENCE, Managing Director.

31

SUGGESTED AMENDMENTS OF AMERICAN TRUCKING ASSOCIATIONS, INC., TO

H. R. 2324, A BILL TO AMEND THE INTERSTATE COMMERCE ACT WITH RESPECT TO THE LIABILITY OF Common CARRIERS BY MOTOR VEHICLE, Common CARRIERS BY WATER, AND FREIGHT FORWARDERS FOR PAYMENT OF DAMAGES TO PERSONS INJURED BY THEM THROUGH VIOLATIONS OF Such ACT

We suggest that the hill H. R. 2324 be amended by striking all of the new section 204 (a) beginning at line 6 on page 1 and extending to line 6 on page 6, and substituting the following new section therefore:

"Sec. 204 (a) (1) All actions at law by common carriers subject to this part for recovery of their charges, or any part thereof, shall be begun within two years from the time the cause of action accrues, and not after.

“(2) For recovery of overcharges action at law shall be begun against common carriers subject to this part within two years from the time the cause of action accrues, and not after, subject to paragraph (3) of this section, except that if claim for the overcharge has been presented in writing to the carrier within the two-year period of limitation said period shall be extended to include six months from the time notice in writing is given by the carrier to the claimant of disallowance of the claim, or any part or parts thereof, specified in the notice.

"(3) If on or before expiration of the two-year period of limitation in paragraph (2) of this section a common carrier subject to this part begins action under paragraph (1) of this section for recovery of charges in respect of the same transportation service, or without beginning action, collects charges in respect of that service, said period of limitation shall be extended to include ninety days from the time such action is begun or such charges are collected by the carrier.

“(4) Tbe cause of action in respect of a shipment of property shall, for the purposes of this section, be deemed to accrue upon delivery or tender of delivery thereof by the carrier, and not after.

“(5) The term 'overcharges' as used in this section shall be deemed to mean charges for transportation services in excess of those applicable thereto under the tariffs lawfully on file with the Commission.

“(6) The provisions of this section shall extend to and embrace only cases in which the cause of action may accrue on and after the date of the enactment of this section."

STATEMENT OF GILES MORROW, EXECUTIVE SECRETARY AND

GENERAL COUNSEL, FREIGHT FORWARDERS INSTITUTE, ,
WASHINGTON, D. C.
The CHAIRMAN. You may proceed, Mr. Morrow.

Mr. MORROW. Mr. Chairman and members of the committee. My name is Giles Morrow, and I appear in behalf of the Freight Forwarders Institute of which I am the executive secretary and general counsel. The Freight Forwarders Institute is a national organization composed of and representing freight forwarders subject to the Interstate Commerce Act.

I am here under instructions of the Institute to express opposition to that portion of bill H. R. 2324 which provides for an award of damages against freight forwarders. We do not oppose the provisions of the bill which provide that actions at law by freight forwarders to recover undercharges, and actions against freight forwarders for recovery of overcharges shall be begun within 2 years from the time the cause of action accrues.

Apparently the purpose and general effect of the bill is to amend the Interstate Commerce Act so as to make applicable to motor carriers, water carriers, and freight forwarders, substantially the same provisions as to award of damages and limitation on actions for overcharges and undercharges as now apply in the case of railroads.

Section 5 of the bill, on page 8, amends the language of section 406 (a) of the Interstate Commerce Act, but does not appear to make any substantial change in that section as it now stands. However, section 6 of the bill, beginning on page 8 and continuing through page 12, will, if adopted, give the Commission and the courts, for the first time, the authority to award damages against freight forwarders to persons injured by any act of omission or commission which violates the provisions of the act. The person claiming to be injured is given the right of electing whether to institute a suit in the court for damages or file a complaint with the Commission.

We feel that the provisions of the bill authorizing an award of damages, generally referred to as reparations, against freight forwarders, are neither necessary nor desirable. I shall undertake to set out our reasons for that belief.

First, a provision for award of damages, if included in part IV, even though it be in the same language as used in part I of the act, will have an entirely different and more hurtful effect in the case of freight forwarders than it now has in the case of railroads. This is true because of the very material difference in conditions to which the law would be applied in the case of the respective industries. The Commission has had power to prescribe maximum reasonable rates, insofar as railroads are concerned, since 1906, or for more than 40 years. During that period it has exercised such power extensively. In its forty-fifth annual report to Congress, for the year 1931, the Commission sạid, at page 94 of that report:

We have had occasion to pass upon the reasonableness of rates generally in all sections of the country. Pursuant to the Hock-Smith resolution we have made numerous Nation-wide investigations and have prescribed reasonable maximum class and commodity rates for general application.

The Commission made the foregoing statement in support of its recommendations for a change in the law as to reparations, and I will discuss those recommendations in due course. The point I wish now to emphasize is that the great majority of rail rates have been prescribed or approved by the Commission. In the Arizona Grocery Co. case (284 U. S. 370), decided in December 1931, the Supreme Court held unequivocally that the Commission may not award reparation on shipments which moved under rates prescribed or approved by it. In that case the Supreme Court held that in prescribing a reasonable rate for future application the Commission is exercising a legislative function, and that it may not thereafter require the railroad to pay damages or reparation if upon reconsideration, based upon the same or additional evidence, it should find that a still lower rate is justified. It will thus be seen that, as to the vast body of rates which the Commission has prescribed or approved with respect to railroad traffic, it is estopped from awarding damages.

Freight forwarders have been regulated only since 1942, and the Commission has had no occasion to prescribe maximum reasonable rates as to forwarder traffic. It will doubtless be many years before the Commission will have had occasion to prescribe maximum reasonable forwarder rates, and it may never have occasion to prescribe such rates to the extent that it has in the case of rail rates. I say this because of the close relationship between forwarder rates and the railroad rate structure, which has already been the subject of extensive regulation. Therefore, the doctrine in the Arizona Grocery Co. case, which has the effect, in large degree, of preventing reparation awards in the case of rail traffic, would have no application in the case of forwarder traffic.

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