We also pointed out that as its awards of reparation are only prima facie evidence in the court and as they must be enforced in the courts, if not paid by the carrier, the rights of a shipper might be sufficiently protected by amending the law so as to place the power to award reparation exclusively with the courts.

The Supreme Court has since dealt with the rights of shippers to reparation where the rates are found to be unreasonable in Southern Pacific Company v. Darnel-Taenzer Lumber Company (245 U. S. 531). The defense of the carriers in that case was that the complainant was not damaged and that it had in fact passed the unreasonable charge along to the consumer in the price of his goods. As to this the court said:

"The general tendency of the law, in regard to damages at least, is not to go beyond the first step. As it does not attribute remote consequences to a defendant so it holds him liable if proximately the plaintiff has suffered a loss. The plaintiffs suffered losses to the amount of the verdict when they paid. Their claim accrued at once in the theory of the law and it does not inquire into later events. If it be said that the whole transaction is one from a business point of view, it is enough to reply that the unity in this case is not sufficient to entitle the purchaser to recover, any more than the ultimate consumer who in turn paid an increased price. He has no privity with the carrier. The carrier ought not to be allowed to retain his illegal profit, and the only one who can take it from him is the one that alone was in relation with him, and from whom the carrier took the sum. * * * Behind the technical mode of statement is the consideration well emphasized by the Interstate Commerce Commission, of the endlessness and futility of the effort to follow every transaction to its ultimate result (13 I. C. C. 680). Probably in the end the public pays the damages in most cases of compensated torts.

* * *

"The cases like Pennsylvania Railroad Co. v. International Coal Mining Co. (230 U. S. 184), where a party that has paid only the reasonable rate sues upon a discrimination because some other has paid less, are not like the present. There the damage depends upon remoter considerations. But here the plaintiffs have paid cash out of pocket that should not have been required of them, and there is no question as to the amount of the proximate loss. See Meeker v. Lehigh Valley Railroad Co. (236 U. S. 412, 429). Mills v. Lehigh Valley Railroad Co. (238 U. S. 473)."

Under the act to regulate commerce there are three principal public wrongs: (a) To exact an unreasonable rate is unlawful under section 1; (b) to unjustly discriminate is unlawful under section 2; (c) to practice undue preference or undue prejudice is unlawful under section 3. Section 8 of this act provides that the carrier "* * shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this act * *

*

Section 16 provides:

"That if, after hearing on a complaint made as provided in section 13 of this act, the Commission shall determine that any party complainant is entitled to an award of damages under the provisions of this act for a violation thereof, the Commission shall make an order directing the carrier to pay to the complainant the sum to which he is entitled on or before a day named.'

Section 9 gives the person claiming to be damaged the right to file his suit for the damages in a court. These provisions empower us and the courts to award damages growing out of violations of the act.

That damages in a pecuniary sense must be proven upon an allegation of unjust discrimination or undue preference under section 2 and 3 of the act, and that no such proof is required upon an allegation of unreasonableness under section 1 of the act allows the cause, character, and measure of the wrong rather than the proof of injury to determine whether damages should be awarded. That is to say damages are presumed by the payment of an unreasonable charge, and the measure of damage is a question of law instead of a question of fact. The statute does not fix the measure of damages to be the difference between a reasonable and an unreasonable rate, as a matter of law or otherwise. 211 Fed., 810. On the contrary, it was decided in L. & N. v. Ohio Valley Tie Co. (242 U. S. 277), that the damage resulting from the payment of unreasonable rates might be the difference between the rates or it might be the damage to the complainant's business following as a remoter result of the same cause; and that the latter must be taken to have been considered in the award of the Commission and compersated when that award was paid.

We have often said that there is no presumption of damage under the act, and that the distinction is plain between a carrier's unlawful act and the shipper's

right to damage, if any, caused thereby. Oregon Fruit Co. v. S. P. Co. (50 I. C. C. 719).

The distinction between the rule of damage of the International Coal case in respect to the discriminatory rates and the rule of damage in the Darnell-Taenzer case in respect to unreasonable rates is apparently based upon what is said to be the common-law principle that an unreasonable charge is equivalent to an extortion or overcharge. But there appears to be no real analogy between an action to recover an extortion or overcharge at common law and an action to recover an unreasonable charge under the act to regulate commerce. The common-law action is more nearly analogous to an action to recover a charge over and above the published rate. At common law the overcharge was often in fact an extortion. But the exaction of a published charge which is legal under the statute, and which is afterwards found to be unreasonable, is in no proper sense an extortion, inasmuch as the law itself requires the payment of the published rate or charge. In publishing rates in the first instance carriers have no way of knowing that a regulating commission will subsequently find a particular rate to be unreasonable. It is understood that common-law cases were rare and were usually based upon a breach of contract, i. e., where the carrier forced the shipper to pay a rate or price that exceeded the contract rate or price and was thereby guilty of extortion. In Anadarko Cotton Oil Co. v. A. T. & S. F. Ry. Co. (20 I. Č. C. 43), cited by the Supreme Court in Baer v. D. & R. G. (233 U. S. 479), we said:

"A rate reasonable in view of the circumstances and conditions when it is established may, in the course of time, become unreasonable by virtue of changed circumstances and conditions. It is manifestly impracticable for the carriers and the Commission in such a case to determine at what exact time in the gradual process of changes a rate becomes unreasonable. It follows that the Commission is not justified in awarding damages in any case except on a basis as certain and definite in law and in facts as is essential to the support of a final judgment or decree requiring the payment of a definite sum of money by one party to another." The fact suggested by the Court in the Darnell-Taenzer case, that in the end the public probably pays the damages in most cases of compensated torts and that the ultimate consumer who may have been actually damaged by the unreasonable charge cannot recover, appears to be an insufficient reason upon principal why the shipper, who eventually has not been damaged, should be allowed to recover. The exaction of an unreasonable charge by a carrier is a public wrong; but there is a clar distinction between a public wrong and private damages. International Coal case. If the law provided that no recovery shall be allowed for any violation of the act unless the party claiming reparation can show that he suffered pecuniary loss or damage, it would probably result that in some cases the damages could not be proved and the unreasonable charge would be retained by the carrier. If it be felt that it would be against public policy to permit carriers to retain charges found to be unreasonable, it would seem preferable that the carrier be required to pay the unreasonable charge into the Public Treasury than to continue the policy which permits a private individual who has not really suffered damage to recover.

Incidentally, the law now permits carriers to retain certain unreasonable charges. Where rates are found to be unreasonable reparation is awarded only to parties claiming it within the statutory period. The unreasonable charges exacted from others are retained by the carrier. As already pointed out, an unreasonable rate under existing conditions is in the last analysis a matter of judgment, and in a legal sense is not generally an extortion. If the amendment suggested by us in 1916 were adopted, provisions should be made to the effect that reparation for unreasonable rates or charges were unreasonable as of a particular time and during a particular period. Otherwise, different courts might reach different conclusions as to the amount of the reparation, and the results would be unfortunate.

The law might well affirmatively recognize that private damages do not necessarily follow a violation of the act; and provide that sections 8, 9, and 16 of the act shall be construed to mean that no person is entitled to reparation except to the extent that he shows that he has suffered damage. The close analogy between a relatively unreasonable or unjust rate and an unjustly discriminatory or unduly prejudicial rate, and the difficulty of determining just when a rate becomes unreasonable or that it is unreasonable per se, suggest that the law should provide that if a rate is found to be unreasonable the rule of damages laid down in the International Coal case should control.

What is said herein is not intended to relate to discriminations knowingly planned or practiced which may be the subject of prosecutions before the courts.

I noticed after I had this statement prepared that I did not include in the foregoing excerpt the summary of the Commission's recommendations. After they made this statement they made a recommendation to Congress, in their thirty-third annual report in 1919. It is very brief and I should like to read the summary of the recommendations which follow the statement quoted above:

That consideration be given to our recommendation in the 1916 annual report that the power to award reparation be placed wholly in the courts; that a condition precedent to an award of reparation by a court for unreasonable rates or charges be that we have found such rates or charges unreasonable as of a particular time; that the law affirmatviely recognize that private damages do no necessarily follow a violation of the act; that provision be made that sections 8, 9, and 16 of the act to regulate commerce shall be construed to mean that no person is entitled to reparation except to the extent that he shows he has suffered damage; and that the law should provide that if a rate is found to be unreasonable the rule of damages laid down in the International Coal case (230 U. S. 184) should control.

That concludes my statement, Mr. Chairman.

Mr. GILLETTE. Are there any questions?

Mr. Lea?

Mr. LEA. To what liability is a freight forwarder subjected at present for operations?

Mr. MORROW. There is no provision at the present moment, Mr. Lea, for reparation awards against freight forwarders. However, all of the ordinary penalty provisions that are applicable for violations of the act in other parts are also included in part IV of the Interstate Commerce Act.

Mr. LEA. Would that authorize a suit to recover damages for an overcharge?

Mr. MORROW. In the case of an overcharge there is clearly the right and always has been the right to sue for a violation of the tariff, which has been repeatedly held to have the force of a statute.

I might also explain a little further the right which a shipper has to obtain damages from forwarders. I refer you to a motor carrier case, known as the Bell Potato Chip case, decided in 1944. The full citation, for the record, is Bell Potato Chips Co. v. Aberdeen Truck Line (43-MCC-337, decided April 4, 1944). In that case, the Interstate Commerce Commission, having before it a complaint against certain motor carrier rates, held that those rates were unreasonable, and it went further and said that it had the authority, and it exercised that authority, to declare that the rates had been unreasonable in the past. It made that finding for the specific purpose of providing a basis for suit in the courts. The doctrine of the Bell Potato Chips case has not been attacked in the courts. It is the law today.

And in two complaint cases against forwarder rates, since the Forwarder Act was passed, both of which I might add, have been dismissed, the Commission referred to the doctrine in the Bell Potato Chips case and said that if it had occasion it could determine that forwarder rates had been unreasonable in the past as a basis for a suit in the courts for an award of damages. So that the forwarders are subject to that doctrine, and damages could be obtained by shippers through that doctrine.

Mr. LEA. That would be wherever the rate charged was in accordance with the advertised schedule, would it?

Mr. MORROW. That is correct. Yes, sir.

Mr. LEA. So, as I understand it, what you want us to do is permit no suits where the charges are in accordance with the advertised schedules? That is what you prefer?

Mr. MORROW. I think if my first suggestion were carried out, that is, to eliminate the authority which would be conferred by this bill for the Commission and the courts to award damages, the effect would be that shippers would still have their rights in cases where published tariff rates had been observed. If the Commission finds that the rates have been unreasonable in the past, damages may be obtained under the law as it stands today.

So I do not think the effect of my recommendation is to prevent suits in justified cases at all. Under the second recommendation I have made the Commission and the courts would be authorized to award damages but they would be required as a condition precedent to find that the shipper had actually been damaged.

As I pointed out, under the law as it stands today, under part I, all the shipper has to do is to prove that the rate was unreasonable. He does not have to prove that he suffered any damage at all. I think that is wrong in principle, and if you are going to give the Commission jurisdiction and the court jurisdiction to award damages, by specific statute, under the Interstate Commerce Act, then I think you ought to define what you mean by damages and ought to provide that the shipper must show that he has actually suffered a loss as a result of the unreasonable charge or public wrong.

Mr. LEA. I take it in substance that what you want is in the first place no change in the law, but if there is a change that the amendments to be embodied as the Interstate Commerce Commission has recommended?

Mr. MORROW. Yes, sir. I am recommending that you leave in the provisions for statutory limitation on overcharges and undercharges. But as for reparations, you have stated correctly what I am asking. Mr. LEA. That is all, Mr. Chairman.

Mr. PRIEST. The question that I had in mind was pretty well cleared by the last question Mr. Lea asked you, Mr. Morrow. You feel, to boil it down, that if a rate has been approved by the Commission on the part of forwarders, and published as a scheduled tariff, that if later the Commission should find that it was unreasonable that a person who had been paying that rate, a shipper who had been paying that rate, should not receive reparations merely on the ground that it later has been found to be an unreasonable rate, unless he could show damages?

Mr. MORROW. Yes, sir.

Mr. PRIEST. That was my understanding of your answer, and that was the point that I wanted to have very clear in my mind. Is that correct?

Mr. MORROW. Yes, sir. That is correct, sir.

Let me illustrate how this will work out if you do not do something like that: In the case of Adams v. Mills, which was reported in 286 U. S. 396, decided by the Supreme Court in 1932, certain commission merchants in Chicago to whom livestock, I believe it was, was consigned for sale-they were merely agents of the owners of the livestock-were permitted to recover reparations merely because they paid the charges in the first instance. They deducted the charges

from the proceeds of the sale of the livestock and the unreasonable charges were passed on to the owners.

.But these commission merchants who did nothing more than pay the bills, were permitted to recover reparations. We submit that that is wrong in principle.

Mr. PRIEST. Thank you, Mr. Morrow. I also want to express a personal appreciation. In all of your appearances before this committee in the past, and this is another instance. You have always been very helpful and reasonable in assisting the committee. I think all the committee members appreciate it.

Mr. MORROW. Thank you.

Mr. PRIEST. That is all.

Mr. GILLETTE. Mr. Beckworth?

Mr. BECKWORTH. Mr. Chairman, I wanted an example of a rate that might be declared unreasonable if no one suffered any damages. That example given is about what I would have requested.

That is all, Mr. Chairman.

Mr. HARRIS. Mr. Chairman?
Mr. GILLETTE. Mr. Harris.

Mr. HARRIS. Mr. Morrow your answer to Mr. Lea's question is not clear to my mind on your position and recommendation regarding this proposed legislation. As I understand the proposed legislation would provide a limitation by which suits, claims, overcharges, reparations, and so forth, could be brought.

Mr. MORROW. Yes.

Mr. HARRIS. Is that correct?

Mr. MORROW. It would provide a time limitation against the carriers suing for undercharges.

Mr. HARRIS. That is what I meant.

Now, as I understand, under the present law there is no limitation. at all in part IV of the Interstate Commerce Act.

Mr. MORROW. That is correct.

Mr. HARRIS. That is the part of the Act that applies to forwarders? Mr. MORROW. Yes, sir.

Mr. HARRIS. Should claims of that nature be brought, they would have to rely on the statute of limitations in the various States wherein a claim might be demanded.

Mr. MORROW. That is very generally correct. I might say this: That the freight forwarders have published limitation provisions in their tariffs as to overcharges. They have published a 2-year limitation on the theory that if it is sound for part I it is sound for part IV.

That question is being litigated before the Interstate Commerce Commission to determine whether the forwarders have a right to publish in their tariffs a statute of limitations. We have a favorable proposed report from an examiner of the Commission saying that the forwarders have a right to publish a statute of limitations in their tariffs, and that it has the effect of a law.

However, we are not questioning the soundness or wisdom of providing for a 2-year statute of limitations in the case of overcharges and undercharges. That part of the bill we approve.

Mr. HARRIS. But as to other parts, you do not wish the committee or the Congress to indicate at all by implied or expressed action that we were legalizing the right of reparations wherein actual damage was not shown?