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mediately subsequently to the passage of the act, it would remain alive only for a period of 2 years. While the foregoing may sound like a theoretical example, we wish to assure the committee that this is by no means an academic question. As orally stated to the committee, we represent two breweries in the State of Rhode Island which market their products through distributors. These distributors ship by motor vehicle. The carriers are small trucking companies.
The truckers through their agents filed and published with the Interstate Commerce Commission certain tariffs known as commodity rates. Charges were made on the basis of these commodity rates for a good many years. The commodity rates were canceled in 1941 but the truckers apparently continued to charge the commodity rates which were lower than the new rates which were on file. The shippers in good faith paid the rates requested and in our opinion the truckers charged rates which they deemed to be lawful.
The shippers are faced with possible claims covering the entire 6 year period, which if the claims are pressed will place most of them in a state of financial ruin and bankruptcy. Equally important is the fact that the distributors are left in a state of uncertainty and chaos, as to the overhanging charges which could be brought against them.
From the point of view of these shippers and others similarly situated, the most equitable solution would be to amend the act so that no claims which accrued prior to 2 years before the passage of the act would be recoverable. We believe that Congress has the power to amend the act as above suggested. If, however, there is any doubt in the minds of the committee on this point, we respectfully suggest the following language be used:
If the cause of action shall have accrued for more than 2 years prior to the date of the enactment of this act suit on that portion of the accrued action over 2 years shall be barred unless it is commenced within 120 days after the date of the enactment of act, unless at the time commenced it is barred by an applicable State statute of limitations.
If the committee desires a precedent for such action, we respectfully direct its attention to the statute limitation provision as found in the Portal-to-Portal Act, so called. Section 225 of the act provides:
"Any action commenced on or after May 14, 1947, to enforce any cause of action for unpaid minimum wages, unpaid overtime compensation, or liquidated damages, under the Fair Labor Standards Act of 1938, as amended, the WalshHealey Act, or the Bacon-Davis Act
(a) if the cause of action accrues on or after May 14, 1947, may be commenced within 2 years after the cause of action accrued, and every such action shall be forever barred unless commenced within 2 years after the cause of action accrued;
(b) if the cause of action accrued prior to May 14, 1947 may be commenced within whichever of the following periods is the shorter: (1) 2 years after the cause of action accrued, or (2) the period prescribed by the applicable State statute of limitations; and, except as provided in paragraph (c), every such action shall be forever barred unless commenced within the shorter of such two periods;
(c) if the cause of action accrued prior to May 14, 1947, the action shall not be barred by paragraph (b) if it is commenced within 120 days after May 14, 1947, unless at the time commenced it is barred by an applicable State statute of limitations. (May 14, 1947, c. 52, par. 6, 61 Stat. * **)."
The reasons which justified the passage of the Portal-to-Portal Act are equally compelling here.
The constitutionality of the Portal-to Portal Act has been considered and upheld in recent decisions. In Hart v. Aluminum Co. of America, decided October 8, 1947, by the United States District Court, Western District of Pennsylvania (reported in C. C. H. Labor Cases, vol. 13, par. 64,046), the court declared: "The Portal-to-Portal Act of 1947, is, in effect, an amendment of the Fair Labor Standards Act of 1938, which applied to industries, employers and employees engaged in interstate commerce; U. S. v. Darby (312 U. S. 100). In other words the act of 1947 is an act designed to regulate a phase of interstate commerce. In passing upon the present motions to dismiss the complaints, the constitutional power of Congress over commerce must be considered.
"The power of the Congress in the regulation of interstate commerce is wide. In the exercise of such power it may act even though the effect of its action may destroy existing rights under contracts. North American Co. v. S. E. C. (327 U. S. 686); Norman v. B. & O. R. R. Co. (294 U. S. 240) ; Louisville & N. R. R. Co. v. Motley (219 U. S. 467).
"In the instant cases none of the plaintiffs rely upon a contract but each claims that prior to the approval of the Portal-to-Portal Act he had a vested right by virtue of the Fair Labor Standards Act. The contention to this effect is unsound. By a subsequent statute Congress may withdraw rights granted by a statute without violating any provision of the Constitution. Kline v. Burka Construction Co. (260 U. S. 226); Louisiana v. Mayor (109 U. S. 285); Ex Parte McArdle, (7 Wall. 506); Norris v. Crocker (13 Howard 429); U. S. ex rel. Rodriquez v. Weekly Publications (144 F. (2d) 186); U. S. v. Hammond (99 F. (2d) 557)."
In order to put the shippers by motor carrier on parity with the shippers by rail and to avoid the obvious discriminations which now exist, we strongly urge you to consider and include our proposals which we have herein set forth.
We respectfully submit that the Act should seek to outlaw insofar as possible stale claims whether they accrued prior or subsequent to the passage of the act. Respectfully submitted,
FRANCIS X. LA FRANCE.
Senator REED. The next witness is Mr. Teichner.
STATEMENT OF HARRY TEICHNER, ATTORNEY AT LAW, REPRESENTING THE PUBLIC SERVICE TRAFFIC BUREAU, INC., THE MERCA TRAFFIC SERVICE BUREAU, AND THE AMERICAN FREIGHT BUREAU, NEW YORK CITY
Mr. TEICHNER. Mr. Chairman and Members of the Committee: My name is Harry Teichner. I am a member of the New York Bar and a registered practitioner before the Interstate Commerce Commission. I represent three organizations engaged in the auditing of freight bills for approximately 3,000 shippers located throughout the United States of America.
These organizations are the Public Service Traffic Bureau, Inc., the Merca Traffic Service Bureau and the American Freight Bureau, all of New York City.
We respectfully urge the passage of Senate bill 935.
Mr. TEICHNER. Yes, sir.
Senator REED. Is that the one that Doctor Splawn marked up for us! Senator MYERS. Is that similar in all major respects to H. R. 2759? Mr. TEICHNER. This is the bill that provides for the amendment of the Interstate Commerce Act so as to increase the statute of limitations from 2 years to 3 years on the recovery of undercharges and overcharges.
The first branch of the bill provides for the amendment of the Interstate Commerce Act so as to increase from 2 to 3 years the period of limitation on actions for undercharges or overcharges by or against railroad carriers. The shippers do not object to the increasing of the period on actions for undercharges.
Senator HAWKES. You meant motor carriers, did you not?
Mr. TEICHNER. It is likely that the carriers do not require more than the existing 2-year period to effect collection of undercharges in view of the fact that they are well staffed with traffic experts in specially created departments who are equipped to make early audits of freight bills to discover whether undercharges exist, so that immediate steps. may be taken to collect them.
However, the shipping public does not possess the same facilities to act quickly in asserting its claims for overcharges as the carriers have in proceeding upon undercharges.
Tariffs are complicated documents and are not readily understood by the inexperienced shippers. In a great many instances they become aware that they have unwittingly paid illegal overcharges only after they have had their freight bills audited by traffic experts who maintain organizations throughout the country to render an auditing service to shippers who must rely upon them for advice as to the lawfulness of the freight charges that have been exacted from them by carriers.
Upon an analysis of the method of processing of freight bills by these shippers and by these freight bureaus, it becomes apparent at once that a 2-year period of limitation does not furnish sufficient time within which the shipper can have the opportunity to discover the existence of overcharges and to initiate proceedings to recover them. It is not practicable for the ordinary shipper to have his paid freight bills audited by experts in quantities of 5 or 10 bills. He must ordinarily accumulate his bills for a period of 1 or 2 years before he can retain the services of a traffic expert to audit these bills. He should not be denied the protection of the Interstate Commerce Act just because he is a small shipper.
We dare say that most of the shippers in this country are small shippers. If overcharges are discovered by a shipper or his auditor, a claim is filed with the interested carrier. Experience shows that the claim is declined almost as a matter of course in what we believe is an effort to discourage the shipper. He then has 6 months within which to bring action upon his claim.
Senator MYERS. Is this at the expiration of the 2 years?
Mr. TEICHNER. Yes, sir. In the interim, if he files a claim, the act provides that he has 6 months after it is declined if the 6 months extend beyond the 2 years.
Senator MYERS. If he files his claim at the end of the 2-year period, and it is denied, and then he has an additional 6 months in which to proceed.
Mr. TEICHNER. Yes, sir. He then has 6 months within which to bring action upon his claim. It has been found that when declined claims are resubmitted to the carrier for reconsideration, many of them are satisfied after an exchange of correspondence between the shipper and the carrier. That is actual experience.
However, if the expiration of the 6 months' period is imminent at the time when the declined claim is under reconsideration, the shipper must protect the claim from the bar of the statute of limitations. Here is what he does. As a matter of practice he is compelled to seek refuge in a procedure which has thrown a heavy burden upon the machinery of the Interstate Commerce Commission. The shipper in conformity with the rules of practice before the Commission will file an informal complaint with the Commission, and thereupon the claim is processed through the medium of the Commission and the Commission must open its dockets to participate in the litigation of a controversy which might otherwise have been disposed of between the shipper and the carrier alone if more than 2 years had been at their disposal.
Many shipments are sold delivered and the consignee pays any amount of freight charges which the carrier's delivery agent may ask.
In the ordinary course of business where credit periods of 90 days and 6 months are involved, information as to the amount of transportation charges paid does not reach the shipper who has to bear the charge until long after the shipment has been delivered.
We have experienced numerous cases where members of the shipping public were victims of overcharges and by limitation of the 2year period they lost their remedy to recover the amount illegally assessed and collected by the carrier.
These shippers were not indifferent in asserting their rights. There was not sufficient time for them to learn that they had paid charges assessed by carriers which they were not legally obligated to pay. Among the critical factors that result in rendering it impossible for many shippers to act upon overcharges within 2 years are the following:
In the first place, the complexity of freight tariffs. In the second. place, annual accounting practices. Thirdly, the necessary employment of outside agencies to audit their freight bills and the resulting completion of the audit more than 1 or 2 years after payment, the delay being unavoidable for commercial reasons.
Fourthly, on shipments sold delivered the shipper in many instances is not aware of the amount of transportation charges, paid by the consignee until a long time after the delivery of the shipments.
The Interstate Commerce Act declares that it is unlawful for a carrier to exact an overcharge unless a reasonable opportunity is afforded a shipper to prosecute a claim for the recovery of an overcharge, the statute denouncing overcharges as unlawful is rendered nugatory.
Parenthetically, we fail to perceive any theory that may be advanced by the carriers in opposition to the bill. The 2-year period of limitation renders them immune in too many cases to enforcement of the provisions of the Interstate Commerce Act prohibiting them from charging shippers more than the lawfully applicable rate.
None of the reasons that justifies the statutes of limitations exists that would prejudice carriers of the period were extended from 2 to 3 years.
The United States Supreme Court in the case of Missouri, Kansas and Texas Railway Company v. Harriman, reported in 227 U. S. 657, said at page 672 that:
The policy of statutes of limitation is to encourage promptness in the bringing of actions so that the parties shall not suffer by loss of evidence from death or disappearance of witnesses, destruction of documents, or failure of memory.
To paraphrase the expression of the Supreme Court, it is obvious that a carrier's defense of an overcharge claim is not susceptible to a loss of evidence from death or disappearance of witnesses, destruction of documents, or failure of memory.
The contents of a bill of lading or a freight bill are usually the only focal point of evidenciary investigation in litigation involving overcharge claims insofar as the carrier is concerned. Certainly a 3-year statute of limitation would impose no hardship upon the carrier in making it necessary for the carrier to preserve such evidence for 3 years instead of 2 years.
Before passing to the other phases of Senate bill 935, the attention of the committee is respectfully invited to the following facts:
1. The limitation period covering freight overcharges in the various States is usually three or more years.
2. On Interstate Commerce via water carriers, the time limit for recovery of overcharges is 3 years.
3. The usual limitation period governing adjustment of freight accounts between common carriers is 3 years.
4. In the Seventy-ninth Congress the Senate passed S. 356 and S. 432, making the recovery period 3 years via all carriers, but those bills died with the adjournment of Congress.
The other branches of Senate bill 935 provide limitations on the time within which actions may be brought for the recovery of undercharges and overcharges by or against common carriers by motor vehicle and freight forwarders. We respectfully submit that the proposed 3-year period is justified upon the same rationale that supports our endorsement of the proposed increase of the period of limitation from 2 to 3 years on actions for undercharges and overcharges by or against railroad carriers.
The provisions of Senate bill 935 are salutary. They are essential for the preservation of the equitable concepts upon which the Interstate Commerce Act was founded and developed, and they are necessary for the protection of the large group comprising the shipping public throughout the Nation. The bill should be enacted into law. Senator REED. Any questions, Senator Hawkes?
Senator HAWKES. Nothing further.
Senator MYERS. I have none.
Senator REED. Are there any other witnesses from out of town? We will recess at this time and, if agreeable, will reassemble at 10 o'clock tomorrow morning.
(Thereupon, at 12:25 p. m., the subcommittee recessed, to reconvene at 10 a. m., Wednesday, March 31, 1948.)