Mr. MORROW. That is correct, sir.

Mr. HARRIS. That is a correct statement?

Mr. MORROW. Yes, sir.

Mr. HARRIS. As a matter of law, you then would favor the provisions of the bill, of the 2-year limitation

Mr. MORROW. Yes, sir.

Mr. HARRIS On those claims which you think would be just, and for which the damaged party would have a right to go into court and sue?

Mr. MORROW. Yes, sir. I think probably we ought to limit that to overcharge and undercharge claims. That is a clear distinction in my mind, at least.

Mr. HARRIS. Of course, you would have the question there of determining when a charge was overcharge, and undercharge, and when one was reparation, would you not?

Mr. MORROW. Well, there is a very clear and definite line of demarcation. A question of overcharge or undercharge is simply a question of finding out whether the amount paid by the shipper is precisely the amount provided for in the tariff of the carriers.

In the case of reparation it is admitted in the first instance that the exact amount of the published charge was paid, but it is alleged that it was unreasonable to have paid that amount, or that the rate was discriminatory, or for some other reason the charge itself was unlawful. There is an attack against the rates. In the case of an overcharge claim there is merely the allegation that the exact rate was not collected.

Mr. HARRIS. Did I understand you to say in your statement here that it was a rule of law that if the Commission had approved a rate and then later it had found that that rate was unreasonable, that no damages could be claimed?

Mr. MORROW. That is right. Under the doctrine of the Arizona Grocery case, the United States Supreme Court said that the Commission is acting in a legislative capacity when it fixes a reasonable rate, and if at a later date it decides it did not act properly and that it should fix a lower rate, then it cannot award damages because it made a mistake in the first instance.

Mr. HARRIS. Does that not eliminate the problem that you just mentioned with reference to the demarcation between an overcharge and an undercharge, and reparations?

Mr. MORROW. Not in our case. As I pointed out in my statement, Mr. Harris, that doctrine can only apply where the Commission has fixed the reasonable rates.

Now, the Commission has not fixed maximum reasonable rates or precise rates in the case of freight forwarders under part IV. It has had no occasion to, may never have occasion to. And I want to point out that the mere granting of a general increase in rates proposed by the carriers does not mean that the Commission fixes those rates within the doctrine of the Arizona Grocery company case. See Brimstone Ry v. U. S., 276 U. S. 104. That is firmly established and as a matter of fact the Commission in permitting general increases, which they have done, in one instance, in the case of the forwarders, puts a proviso in its order that it is not fixing the rates within the meaning of the doctrine in the Arizona Grocery case. So that the Arizona Grocery case would not protect the freight forwarders from suits.

Mr. HARRIS. That is the point that I am trying to make. You have no rule whatsoever as to the reasonableness of a rate insofar as forwarders are concerned.

Mr. MORROW. Except that as the doctrine in the Bell Potato Chip case might apply.

Mr. HARRIS. Of course, that would be questionable at this time. There were two cases you referred to a moment ago against forwarders, and I believe you said both cases were dismissed.

Mr. MORROW. The cases were dismissed because the shippers did not prove that the rates were unreasonable. But the Commissioners did throw in gratuitously a statement that if the shippers had prevailed and the rates had been found unreasonable, the Commission under the doctrine in the Bell Potato Chip case could have found that they were unreasonable in the past as well as at the present moment, and that based on that finding the shipper could go into court and use the Commission's decision as a basis for recovery of damages.

Mr. HARRIS. I appreciate the study that you have made of this problem, and I know it is highly technical. In my own mind I feel that you know perhaps as much about it as anyone who has been before this committee. That is the reason I am trying to find out if it is your position that freight forwarders should be permitted to proceed to charge a rate without any rule as to it being reasonable or unreasonable, and that you then say that because we have no rule to go by we are permitted to make this charge, and if, perchance later on, it is held to be unreasonable, that there should be no recourse unless actually shown there are damages involved.

Mr. MORROW. Yes, sir.

Mr. HARRIS. Is that your position?

Mr. MORROW. Yes, sir. Perhaps unfortunately I stated my position in the alternative. I said first I think that the provisions as they exist today are all right without any provision for reparations at all. But if you are going to provide for reparation in all parts of the act, then do not provide that reparation awards may be made merely upon a showing of unreasonableness of a rate, and that the measure of damages be simply the difference between the reasonable and unreasonable rate, without any showing of injury on the part of the person claiming the damages.

Perhaps my second alternative would work out better than the first. In the first instance you would have only the doctrine in the Bell Potato Chip case, and any other decisions of the courts that might apply. But under my second alternative you would have a fixed rule but you would provide that the shipper could not recover unless he proved actual damages in all cases.

Mr. HARRIS. Of course, the point I wanted to make clear is whether or not the forwarders felt that they could be given a different consideration in the question of rates, and relieved of certain liability that other forms of transportation would not have.

Mr. MORROW. No, sir, that is not our position. Everything that I have said about what I consider unfair interpretation of this law would apply equally in the case of all carriers.

Mr. HARRIS. I know. But other forms of carriers have those rates already fixed. The maximum rates, the reasonableness of the rate, as I understand, and freight forwarders do not have.

Mr. MORROW. The freight forwarders in the first instance have the duty under the law of determining for themselves and filing a reasonable rate. It is unlawful for them to file a rate that is unreasonable. It is a question of who determines the reasonableness. The freight forwarders have rates on file which the Commission has accepted, but it has had no occasion to prescribe the precise level of the rate. But under the law it is presumed that the forwarders' rates today are just, reasonable, and nondiscriminatory, and that presumption has the force of law until somebody attacks them and proves that they are not.

Mr. HARRIS. I understand that. I was wondering if that was not where the windfall might be, that later on someone will come in and question the reasonableness of those rates, and find that there is a pretty serious problem ahead.

Mr. MORROW. That could be. I have pointed out that the forwarders rates are patterned very closely after the rate structure of the railroads, which has been the subject of extensive regulation over a period of very many years. The forwarders operate on such a small margin of profit that in the very nature of things, that has to be.

Mr. HARRIS. You mentioned a moment ago I believe that there was a clear demarcation between overcharges, undercharges and reparations. What do you consider the test to determine whether or not there are damages in any given case?

Mr. MORROW. Whether or not there are damages in a case where the published rate has been observed?

Mr. HARRIS. Yes.

Mr. MORROw. I think the test should be the test laid down by the Supreme Court in the International Coal case, which was one of the cases I referred to, that is, whether the shipper has actually suffered loss from the payment of the unreasonable charges. I do not think that somebody like these commission merchants who charged back the whole trasportation charge to the farmers who shipped the livestock to Chic go should be entitled to recover.

Mr. HARRIS. Do you think the farmer should be entitled to recover?

Mr. MORROW. Yes, sir; if they show pecuniary loss I think the farmer should be entitled to recover.

Mr. HARRIS. That is all, Mr. Chairman.

Mr. HINSHAW. Are there any further questions by the committee? Mr. CARSON. I have a question.

Mr. HINSHAW. Mr. Carson.

Mr. CARSON. Carrying further Mr. Harris' questioning, as I understand this situation at the present time, even though the Commission has not prescribed any maximum reasonable rates they have nevertheless almost made the rates identical with the freight rates. Is that not true?

Mr. MORROW. No, sir. The Commission has not done that.

Mr. CARSON. I do not mean the Commission did it. But the rates are almost identical.

Mr. MORROW. Yes, sir; the forwarders filed their rates which are almost identical with the rail rates in many instances.

Mr. CARSON. Going a little further, if the Commission should establish a definite rate in your particular case of freight forwarders, you would have no protection under this bill on these reparations that they are bringing forth.

Mr. MORROW. Unless the Commission specifically made a finding or prescribed the rate, we would have no protection. If they simply accepted the rate as we filed it, then we would have no protection.

Mr. CARSON. Is it also your contention that if the rate has been approved and published, and later on there is a different rate determined, that it should not be made retroactive? Would that not help the situation, if they changed the rate later on and could not make it retroactive? That would eliminate these reparations cases, would it not?

Mr. MORROW. There is a rather fine distinction there between making the rate retroactive and finding that it has been unreasonable in the past. They do not, as a matter of fact, prescribe the rate retroactively. They simply say that it has been unreasonable for a certain period in the past. They can say it is unreasonable under the provisions of this bill and under the provisions of part I for 2 years. They may have been in effect for 20 years, but damages can only be awarded for a period going back 2 years from the date of suit.

Mr. CARSON. There has always been the law of torts, damage about injury. It does not give any cause of action. That has been the established law of torts ever since I have known anything about law. Mr. MORROW. Yes, sir.

Mr. CARSON. I do not see any reason why it should not apply to this just as well.

Mr. MORROW. I certainly agree.

Mr. CARSON. If there is an action or the complainant does have an action, I am somewhat disturbed about the language on page 3 as to the venue. That is in section 4:

The complainant or any person for whom such order was made may file in the district court of the United States, the district in which he resides or in which is located the principal operating offices of such carrier, or in a State court of general jurisdiction of the parties.

That gives a very broad venue. I am particularly interested in H. R. 1639, filed February 3, 1947, by Congressman Jennings, from Tennessee, in which he is attempting to limit the venue in actions brought in either the United States district court or in the State courts. It seems to me it would be very appropriate if we can secure the passage of this bill, 1639, limiting this venue in actions; it would be very appropriate to sustitute that language to the language of section 3, because you will run into the same difficulties that most of the people who have claims, that they will always try to file the claims, or their attorneys will, in those courts where they will get the largest verdicts.

H. R. 1639 limits the actions in that they may only be brought in the district court of the United States, or in a State court of competent jurisdiction, in the district or county or the parish, respectively, in which the action occurred, or in which the employee suffering injury or death resided at the time when the accident occurred.

Have you had occasion to study that venue act No. 1639?

Mr. MORROW. No; I am sorry, Mr. Congressman, I have not. I think that your point is perhaps very well taken. I would point out that if it should be thought desirable to apply that language to this bill you will have to go back and amend part I of the Interstate Commerce Act, because this language was taken from section 16 (3), for the most part.

Mr. CARSON. That is all, Mr. Chairman.

Mr. HINSHAW. Are there any further questions?

Mr. ROGERS. Mr. Chairman.

Mr. HINSHAW. Mr. Rogers.

Mr. ROGERS. Suppose you freight forwarders follow a schedule. That is presumed to be reasonable and legal and everything else until it is set aside, is it not?

Mr. MORROW. Yes, sir.

Mr. ROGERS. Do you mean to say that some shipper can come in and file suit, and recover until they first come in under the present set-up?

Mr. MORROW. Not under the present law; no, sir.

Mr. ROGERS. Would this law that we are considering now authorize him to do that?

Mr. MORROw. Yes, sir. I believe that there is a doctrine in the Abilene Cotton Oil case that if an attack is made on the rate on the ground of unreasonableness the Commission would first have to say what is a reasonable rate, as a measure of damages.

Mr. ROGERS. Could they go back now, prior to the time they attacked the rate that you set as being unreasonable, and recover for something that has already been done, or for goods already shipped under your rates which have already been established and published?

Mr. MORROW. Yes, sir; for 2 years from the time they start suits. It might be 5 or 6 years by the time they got a judgment, and for all that time they may be able to recover, under the theory of the law that has been built up, not what they lost, but the actual difference between the rate found reasonable and the rate found unreasonable, for that period of time.

Mr. ROGERS. That is all, Mr. Chairman.

Mr. HALE. I have a question.

Mr. HINSHAW. Mr. Hale.

Mr. HALE. Is there anything in H. R. 2324 which, in your opinion, would enable a consignee or even a purchaser from a consignee to recover for an overcharge, or, rather, an unreasonable rate?

Mr. MORROW. To enable the consignee to recover?

Mr. HALE. You make the point that the shipper ought not to recover unless he suffers damage.

Mr. MORROW. Yes, sir.

Mr. HALE. Which I think is perfectly sound.

Mr. MORROW. The consignee, to answer your question, if he actually stood the charges, paid the charges, could recover today or under this bill.

Mr. HALE. This bill does not affect the law as to that?

Mr. MORROW. No, sir. This does not change that.

Mr. HALE. What section of H. R. 2324 providing for reparations do you particularly complain of?

Mr. MORROW. I am talking altogether about that portion of the bill which begins on page 8. You will find very similar provisions in an earlier part relating to motor carriers. But I am confining my discussion to that portion of the bill which begins on page 8. All of page 8, all of page 9, and down to paragraph 5 on page 10, relates solely to reparations, and I am opposed to that.

Section 5 on page 10, I think, is a good section. Section 6 on page 11 relates only to damages, and we are opposed to it.