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2759, hearings on which were held on March 30 and March 31, 1948. These hearings also embraced S. 935 and S. 1194. These bills propose to establish either new or different time limitations on the commencement of actions by and against carriers subject to parts I, II, III, and IV of the Interstate Commerce Act, as amended.
As you will recall, this Department has no objection to enactment of H. R. 2759 but I have by letter of March 30, 1948, expressed opposition to the opinion of Congressman Wolverton, chairman of the House Committee on Interstate and Foreign Commerce, that the period of limitations proposed in H. R. 2759 would apply to the United States as a shipper, although not mentioned therein. The 25-year-old decision of the Interstate Commerce Commission in United States v. Director General (80 I. C. C. 143 (1923)) was cited by Congressman Wolverton in support of his position (94 Congressional Record 137).
In view of the well-established principle of law that the United States is not bound by any statute of limitation in the absence of clear evidence of legislative intention to the contrary, I suggested in my prior letter that an amendment to the proposed law specifically exempting the Government from the application of the limitations provision would appear to be superfluous. However, I also suggested that appropriate statements should be made for the record in the Senate indicating a clear intent on the part of the Senate that the limitations proposed in H. R. 2759 are not intended to apply to the Government.
Notwithstanding this well-established principle of law, Mr. J. Carter Fort, vice president and general counsel of the Association of American Railroads, in his testimony before your committee, placed special emphasis upon the proposition that the proposed time limitations would apply to claims of the United States.' The daily attendance of railroad representatives and Mr. Fort's testimony suggest that the record made before the committee might be used as evidence of a legislative intent to repudiate the prior interpretation placed by the courts upon section 16 (3) of the act, that the time limitations applicable to claims against railroads do not apply to the United States.
The Department of Justice, at the request of the armed forces, has commenced a series of proceedings before the Interstate Commerce Commission against the railroads seeking to recover damages sustained by the Government on account of alleged overcharges on its wartime traffic. These cases resulted from the findings made by a special committee appointed by the Director of the Bureau of the Budget at the request of Senator Wheeler, formerly chairman of your committee. The general tenor of the committee's findings is illustrated best by its findings that, "the Government has
paid excessive charges in a stupendous amount before and since Pearl Harbor
(report of the committee at p. 123).
Most of these cases seek to recover damages sustained by the Government for the period commencing on January 1, 1942, or in some cases even earlier, up to and including July 1, 1946, and in some cases, December 31, 1947. The first of these cases was commenced on April 28, 1947, and the other cases have been filed thereafter as rapidly as preparation would permit. Thus, if section 16 (3) of the Interstate Commerce Act were applicable to the claims made by the Government against the railroads, no recovery would be made on traffic that moved prior to April 28, 1945. In other words, the Government will be barred from attacking the rates and charges paid by it during the period when military and naval traffic was moving in its greatest volume.
It is understood that certain witnesses suggested to your committee that the fact that the Department of Justice took no appeal from the Commission's decision in United States v. Director General, the 1923 case, is especially significant and indicates acquiescence on the part of the Government since that time. We believe there is no substantial basis for any such views. As previously pointed out both by the Department of Justice and the Comptroller General, the later decisions by both the Supreme Court and the Court of Claims and certain district courts clearly indicate that for all practical purposes, the interpretation of section 16 (3) of the act made by the Commission in the case of United States v. Director General was overruled the following year of 1924. Thus, Du Pont de Nemours v. Davis (264 U. S. 456), was decided in 1924 and Southern Pacific Company v. United States (62 Ct. Cls. 391), was decided in 1926. Both of these decisions interpreted section 16 (3) as inapplicable to claims made by the Government against carriers and for this reason, they clearly indicate that United States v. Director General had no validity as a precedent on the point after 1924. Furthermore, the Commission itself adopted the view that the Government is immune from the statute of limitations in Excess Income of Richmond, F. & P. R.
Co. (170 I. Ç. C. 451), decided in 1931, where it held that “the Government is not bound by any statute of limitations in the absence of congressional enactment clearly and specifically imposing it,” çiting in support of this decision the Du Pont case.
There is an additional reason why no significance can be attached to the fact that the Government took no appeal from United States v. Director General, the 1923 case. Until the Supreme Court's decision in Rochester Telephone Corp. v. United States (307 U. S. 125), decided in 1939, the law was firmly established that the courts had no jurisdiction to review orders of the Commission dismissing complaints seeking to recover damages from railroads. Although some recovery was made by the Government in United States v. Director General, supra, a substantial portion of the Government's claim was denied and during the entire period between 1923 and 1939, the so-called negative order doctrine, repudiated by the Supreme Court in the Rochester case, precluded the Government from securing review of the Commission's denial in United States v. Director General, supra. In other words, at the time the decision in United States v. Director General was not applicable.
The Department of Justice has also learned as a result of its experience in bringing cases against the railroads that a substantial time must be afforded in order that relevant information may be developed before a complaint can be filed with the Commission against the railroads and, of course, it is well established that only the filiņg of a complaint within the period of limitation will toll the running of statutes of limitation. Among other things, the records of shipping departments and agencies must be reviewed in advance of preparing a complaint for filing with the Commission. Frequently this step requires examination of the records of several departments and agencies of the Government. These records frequently are located at widely dispersed points throughout the United States, which results in further delays. In addition, it is imperative that the audit records of the General Accounting Office be examined prior to the commencement of a proceeding, for otherwise it is impossible to learn the extent of the damages sustained by the Government. After all this and other information has been assembled, time must be made available for drafting a complaint. It is apparent that delays which have no parallel in private business occur in preparing complaints on behalf of the Government in reparation proceedings. If a short period of limitation were established for application to the Government's claims of this character, such limitations would effectively bar recovery in a large number of instances.
It is understood that Mr. Fort, on behalf of the railroads, testified that the Commission's decision in United States v. Director General, the 1923 case, generally has been regarded in railroad circles as controlling since that time. This testimony is contradicted by the testimony given in 1944 by Mr. R. V. Fletcher, vice president and general counsel of the Association of American Railroads, before the Committee on Interstate and Foreign Commerce on H. R. 4184, Seventy-eighth Congress, second session. That bill proposed to relieve the railroads from their land-grant obligations to the Government, and Mr. Fletcher was testifying with respect to the long-standing practice of the Government to collect overpayments to the carriers 4 or 5 years after the transportation in question had been performed. Mr. Fletcher referred to the provisions of section 322 of the Transportation Act of 1940, which gives the Government the right to deduct overpayments from other sums due the carriers, and Congressman Boren asked him : “Judge, is there any limitation as to the period of time?”' Mr. Fletcher replied, “None.” Congressman Boren continued, “That sort of thing could be carried over?” Mr. Fletcher stated, “None, Mr. Chairman, and the statutes of limitation, as you well know, ordinarily do not run against the Government unless there is an express provision to that effect” (hearings, pp. 15, 16).
Moreover, since 1926, when the Southern Pacific Company case was decided by the Court of Claims, both the railroads and the Government have been adjusting freight charges on Government traffic long after the period of limitation has expired. Thus, railroads have presented claims for payment of freight charges more than 2 years after the cause of action therefor has accrued and the Government has made deductions on account of overpayments including overpayments resulting from damages for violations of the Interstate Commerce Act, more than 2 years after the cause of action therefor has accrued.
In sum, it is the considered view of the Department of Justice, after a thorough study of the law applicable to the provisions of these bills as now drafted, that the periods of limitation proposed in the bills would not apply to the United States with respect to its påst or future claims as a shipper against railroads. It is the desire of the Department that Congress be fully aware of this proper interpretation of these bills which, of course, is not altered by the statements of witnesses as to their views of the existing law nor by the statements of any Member of Congress as to his particular view concerning a desirable interpretation of the proposed legislation. If it is the intention of the Congress that the United States should be bound by any period of limitations, then the Congress should insert into the bill adopted an amendment which will make the period of limitations specifically applicable to the United States by name. However, the Department does not recommend but is opposed to any such amendment because of the interest of the people of the United States and of the Government's interest in pending and future litigation against railroads arising out of overcharges.
It is respectfully requested that a copy of this communication be made part of the record of the hearings on these bills. Sincerely yours,
ASSOCIATION OF AMERICAN RAILRŐADS,
Washington, D. C., April 16, 1948. Hon. WALLACE H. WHITÊ, Jr. Chairman, Committee on Interstate and Foreign Commerce,
United States Senate, Washington, D. C. DEAR SENATOR WHITË: There has come to my attention a letter of April 6, 1948, addressed to you by Mr. Peyton Ford, the Assistant to the Attorney General, concerning H. Ř. 2759. The record of hearings before your committee on March 30 and 31, 1948, answers most of the points presented in that letter, but certain of Mr, Ford's statements call for further answer.
His statement that the 1923 decision of the Interstate Commerce Commission in United States v. Director General (80 I. C. C. 143) was later overruled is, in our view, clearly erroneous. In support of his statement, Mr. Ford refers to Du Pont de Nemours v. Davis, Director General, 264 U. S. 456, but that case did not turn upon à construction of the limitation provisions in section 16 of the Interstate Commerce Act. It dealt with a claim of the Director General of Railroads, asserted after the termination of Federal control, for demurrage charges against à commercial shipper. The Court held that the Director General was not a "carrier" within the meaning of section 16 of the Interstate Commerce Act and that the claim involved in the case was governed by a different statute dealing mith the liquidation of liabilities arising out of Federal control of railroads in World War I.
Mr. Ford refers also to Excess Income of Richmond, F. & P. R. Co. (170 I. C. C. 451). That case, like the Du Pont case, did not involve the construction of section 16. It held only that the 4-month period mentioned in section 15a of the act, in connection with the ascertainment and recovery by the Commission of excess profits, was a period of voluntary payment by the carrier, and was not in any sense a period of limitations.
A further discussion of the cases seems unnecessary in view of the fact the Interstate Commerce Commission itself, in a letter of June 6, 1947, addressed to Hon. Charles A. Wolverton, chairman, Committee on Interstate and Foreign Commerce, House of Representatives, made the following forthright statement with reference to its decision in United States v. Director General:
“This holding by the Commission has never been overruled by the Commission itself or reversed by the courts. Until this time, so far as we can recall, it has never been charged that the holding is harmful or unfair to the Government."
Mr. Ford's effort to explain away the Government's acquiescence in the decision of the Commission in United States v. Director General by claiming that no court review was available cannot be reconciled with the following statement from the Attorney General's opinion of May 15, 1946, addressed to Hon. Harold D. Smith, Director, Bureau of the Budget :
"In any event, if the Commission should reject claims by the Government upon the ground that they are barred by the limitation period of section 16 (3), the validity of this ruling could be tested by bringing mandamus proceedings in the United States District Court for the District of Columbia. Louisville Cement Co. v. Interstate Commerce Commission (246 U. S. 638).”
The Louisville Cement case, relied on by the Attorney General as authority for the proposition that a decision of the Commission holding section 16 (3) applicable to the Government is reviewable by the courts, was decided in 1918, or a number of years before the decision in United States v. Director General.
The position now asserted by the Assistant to the Attorney General that suits for reparations by the United States may be prosecuted without regard to the 2-year period provided by Congress in section 16 (3) of the Interstate Commerce Act not only is opposed to the controlling decision in United States v. Director General, but is directly contrary to the position consistently taken by the Attorney General throughout the years from that decision down to the filing of the recent reparation complaints now pending before the Commission. In all suits prior to these recent complaints, the Government, as well as the Commission, has fully recognized the application of the 2-year period to Government claims for reparations. For an example, in the Armour Plate Cases (Forrestal y. Abilene & S. Railway Co. et al. (263 I. C. C. 457, 716, 1945), the complaints on behalf of the Navy Department and the War Department, which were filed on separate dates, sought reparation only for the respective 2-year periods prior to the filing of each complaint. The final settlement agreement, dated November 28, 1945, between the United States and the defendant railroads in that case, recites that those complaints were filed “seeking reparation on shipments which moved within the period of limitation provided in section 16 of the Interstate Commerce Act.
[Italics added.] That agreement was formally executed by the Attorney General on behalf of the United States.
In the wartime reparations suit brought by the War Department and reported in Stimson v. A. C. & Y. Railway Co. (262 I. C. C. 418, 419, 1945), the decision refers to the fact that the War Department asked the Commission “to award reparation on shipments moved during the statutory period and during the pendency of this proceeding.” [Italics added.]
Other wartime reparation suits filed by the United States and its departments also sought reparation for shipments which moved within the statutory 2-year period.
The repeated and expressed recognition by the Attorney General and other Government counsel of the application of the 2-year statutory period to Government reparation suits, down the years until the filing of the pending postwar complaints, affords a standard by which to judge the present assertion of the Assistant to the Attorney General that the decision in United States v. Director General was overruled many years ago.
If Mr. Ford's letter of April 6 is to be incorporated in the record of hearings which your committee held on H. R. 2759, we respectfully request that this letter be incorporated in the record also. Respectfully yours,
J. CARTER FORT.
TO AMEND THE INTERSTATE COMMERCE PACT, AS
FRIDAY, APRIL 2, 1948
UNITED STATES SENATE,
Washington, D. C. The subcommittee met at 2 p. m., pursuant to call, in the Interstate and Foreign Commerce Committee room, the Capitol, Senator Clyde M. Reed, chairman of the subcommittee, presiding.
Present: Senator Reed (chairman of the subcommittee).
Senator REED (chairman of the subcommittee). The committee will come to order.
We are met today to consider S. 2426, which has superseded S. 290. Both bills will be made a part of the record at this point.
(The bills under consideration, S. 290 and S. 226, are as follows:)
[S. 290, 80th Cong., 1st sess.)
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That paragraph 5 of section 1 of the Interstate Commerce Act be amended by striking out the (a) thereafter in the first paragraph, and further amended by substituting (a) for the (b) which now follows the second paragraph thereof; to read section 1 (5) and section (5) (a) instead of section 1 (5) (a) and section 1 (5) (b).
SEC. 2. That paragraph (22) of section 1 of the Interstate Commerce Act, as amended, is amended to read as follows:
“(22) The authority of the Commission conferred by paragraphs (18) to (21), both inclusive, shall not extend to the extension, construction, acquisition, operátion, or abandonment of spur, industrial, team, switching, or side tracks, located or to be located wholly within one State, or to the extension, construction, acquisition, operation, or abandonment of street, suburban, or interurban electric railways, except those which are operated as a part or parts of a general steam railroad system of transportation or are engaged in the general transportation of freight or interchange standard steam railroad freight equipment with steam railroads for transportation in interstate or foreign commerce to or from points on their lines : Provided, That such paragraphs (18) to (21), both inclusive, shall apply to the extension, construction, acquisition, operation, or abandonment of a street, suburban, or interurban electric railway, or any portion thereof, by a standard steam railroad."
Sec. 3. That the first sentence of paragraph (2) of section 3 of the Interstate Commerce Act, as amended, is amended to read as follows: i “(2) No carrier by railroad and no express company subject to the provisions of this part shall deliver or relinquish possession at destination of any freight' or express shipment transported by it until all tariff rates and charges thereon have been paid, except under such rules and regulations as the Commission may from time to time prescribe to govern the settlement of all such rates and charges and to prevent unjust discrimination : Provided, That the provisions of this paragraph shall not be construed to prohibit any carrier or express company from