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Those who favor application of a reparations provision to motor carriers usually make much of the fact that such a provision is applied to railroads. Without attempting to discuss justification of such a provision as applied to the railroads, it should be pointed out that from the standpoint of the practical results there are vast differences between railroads and motor carriers.
It bears repeating that the motor carrier industry is made up of literally thousands of small business concerns. By way of contrast, the Interstate Commerce Commission does not consider a railroad to be a class I carrier unless its annual gross revenue exceeds $1,000,000. A truck operator is considered a class I carrier if its annual gross revenue exceeds, $100,000.
About 2,100 motor carriers, or only 7 percent of the total, are class I carriers. Even these large carriers operate an average of only 29 trucks each.
All the remaining thousands of motor carriers are much smaller. Twenty-six percent of them operate only one truck; 44 percent of them operate only one or two trucks; 56 percent of them operate only one to three trucks, and 92 percent of them operate fewer than 10 trucks. This is little business in the true sense of the word. The owner frequently drives a truck himself. He has no trained legal department to handle all his regulatory and other legal problems; no traffic department to handle all his rate and tariff problems. He is just a little fellow trying to earn a living, and if he has other drivers working for him he frequently has found in recent years that he was getting less out of his business than his employees.
These little fellow's woke up one day in 1935 to find that they were subject to one of the most comprehensive laws ever applied to any business of any kind. In its fifty-second annual report to Congress, the Interstate Commerce Commission stated flatly that the regulation provided for motor carriers was, if anything, more comprehensive than the regulation provided for railroads. Virtually overnight these little motor carriers were subjected to regulation of a type that had been fed to the big railroads in small doses over a period of half a century, and it would not be surprising if a few of them still are not aware of the fact that virtually everything they do is subject to a law administered in Washington by an agency they didn't know existed.
These truck lines are small business, just like the little corner grocery store. The difference is that their operations are to some extent competitive with big railroad corporations which Congress long ago decided must be regulated in the public interest, so Congress decided in 1935 that they should be regulated, too.
As already stated, the law is comprehensive and not always easy to interpret and follow. Some of the best lawyers in the country have disagreed vigorously as to the proper meaning of many of its provisions. Different courts have held different views, and members of the same court, including the United States Supreme Court, have differed frequently.
Is it not understandable that a truck driver might fail to interpret a provision of the law in the same way it ultimately is interpreted by a regulatory body or a court?
That is why we believe Congress owes it to these motor carriers to at least give them the protection of a 2-year statute of limitations with respect to violations of the law.
That is why we believe Congress also should refuse to subject them to the constant threat of overnight destruction by enacting a reparations clause.
In theory, the reparations clause might sound perfectly logical and reasonable. But how does it work? Under regulation, the motor carrier must publish the exact rates he is going to charge. He then must file his rates with the Interstate Commerce Commission, usually to become effective within 30 days after filing. If someone-almost anyone protests the rates, the Commission can suspend them pending an investigation and ruling as to their reasonableness. Even lacking a protest, the Interstate Commerce Commission can suspend the rates on its own initiative if it believes the rates appear to be unreasonable. If the rates are not suspended and are allowed to go into effect, it is a good bet that they are pretty well in line with the rates of other transportation agencies or the carrier is not going to get much business with them. The problem for the last 10 or 15 years has not been protection of the public from unreasonably high rates, but rather protection of transportation agencies from unreasonably low rates. As long as competition is the way it is, with shippers in a position to play one carrier against the other, it is not the shipper but the carriers who really need protection. Adequate proof of that statement is the record of the Interstate Commerce Commission for the last 10 years.
There is another marked difference in effect of the reparations provision now applied to the railroad industry and that which would result from a reparation provision applied to motor carriers of property. The Interstate Commerce Commission has had the power to prescribe maximum reasonable rates, insofar as railroads are concerned, since 1906, or for a period of 42 years. It has had that power with respect to motor carriers of property since 1936, a period of 12 years.
By 1931, in its annual report to the Congress the Commission stated that it had had occasion to pass upon the reasonableness of railroad rates generally in all sections of the country. This action was taken pursuant to the Hoch-Smith resolution.
In the 12 years it has had the power to prescribe rates for motor carriers of property no such end has resulted. For the first half-dozen or more years of this motor-carrier regulation the Commission, because of chaotic conditions that existed, was prescribing minimum rates. Only in the more recent years has it ruled upon the maximum reasonableness of motor-carrier rates to any extent and so far more than a majority of those rates have never been ruled on in that respect.
In the Arizona Grocery case decided by the Supreme Court in 1931, it was held that the Commission could not award reparation or shipments which had moved under rates prescribed or approved by it.
So, it will be seen that, as to the vast body of rates which the Commission has prescribed or approved with respect to railroad traffic, it may not award damages. On the other hand, it could award damages on the greater part of the rates of motor carriers of property, which rates the Commission has never prescribed or approved with respect to their maximum reasonableness.
In othe words, existence of the reparations provision in part I today has little effect on the railroads. If a reparations provision was incorporated in part II as provided for in S. 1194, the effect on these small motor carriers could be ruinous.
Another point which indicates the unfairness of a reparations provision under these circumstances arises from interpretations of the provision in part I which flows from various decisions of the Commission and the courts. Originally decisions held that before any person could recover damages under the Interstate Commerce Act he must show not merely a wrong by the carrier, but that the wrong has in fact operated to his injury.
Subsequent decisions, however, made a distinction between where a rate was found to be unreasonable and damages claimed where a rate was found to be unjustly discriminatory.
In the first instance, the Supreme Court held that in such a claim the claimant was entitled to the difference between the reasonable and the unreasonable rate as the measure of his damages and the Commission was not required to look beyond to determine whether the complainant was actually injured or wh er he passed the unreasonable charge on to others. In other words he could recover by merely proving he paid the freight charges even though he had passed them on to others and suffered no injury.
On the other hand, where a claim of unjust discrimination is made, the Court has held that the complainant cannot recover unless he proves he has suffered a loss in a pecuniary sense.
In its reports to Congress in 1916, 1919, 1930, 1931, and 1932, the Commission discussed this situation with respect to reparations in part I and recommended a change that would remove this distinction and require the party alleging unreasonableness to prove that he was injured.
We ask that the Congress do not visit this unhealthy situation upon us by enacting at this time the reparations provision as set up in S. 1194.
S. 935 AND H. R. 2759
Insofar as these two bills apply a statute of limitations on overcharge and undercharge claims in part II of the Interstate Commerce Act, they are almost identical with one exception. S. 935 provides a limitation period of 3 years while H. R. 2759 provides for 2 years.
We favor the form of either of these bills but we recommend strongly that the 2-year period be provided, a period now provided in part I and about which we have never heard any complaint.
Senator Reed. Mr. Lacey, are you ready?
STATEMENT OF EDWARD F. LACEY, EXECUTIVE SECRETARY,
THE NATIONAL INDUSTRIAL TRAFFIC LEAGUE, WASHINGTON, D. C.
Mr. LACEY. Senator Reed and gentleman, my name is Edward F. Lacey, and I am the executive secretary for the National Industrial Traffic League, with offices at 450 Münsey Building, Washington, D. C.
I may say that Mr. Ott, who is the chairman of our committee on motor-carrier rate and classification, had expected to fly in to appear on behalf of the league; but he was taken ill. Consequently, our president, Mr. Schwietert, has asked me to present this statement on behalf of the National Industrial Traffic League, which is the sponsor of your bill, Mr. Senator, S. 1194. I will read the statement. Mr. Ott says:
My name is W. H. Ott, Jr., my residence, Chicago, Ill., and I appear on behalf of the National Industrial Traffic League as chairman of its motor-carrier rate and classification committee. The league urges early enactment of S. 1194; it opposes S. 571, S. 935, also H. R. 2759, to the extent that it does not provide for reparation.
The National Industrial Traffic League, I believe, is well known to the committee members. In brief, it is a national organization whose members, as shippers and receivers of freight, are interested in transportation by all of the various transportation agencies, including rails, motor carriers, water carriers, and freight forwarders. Its membership includes both individual industries and associations thereof and includes some of the largest as well as many of the smallest of business enterprises.
Individually, I am general traffic manager of Kraft Foods Co., and over a period of years have had contact with various transportation agencies, particularly rail and motor carriers, on subject matters within the scope of these bills.
S. 1194 is a bill to amend the Interstate Commerce Act by adding thereto provisions with respect to the liability of common carriers by motor vehicle, common carriers by water, and freight forwarders, for payment of damages through violations of certain portions of the act and with respect to limitation periods of such payment.
The bill contains two subject matters ; first, a provision for a 2-year limitation period covering bills for undercharges by carriers against shippers and claims for overcharges by shippers against carriers; second, a grant of power to the Interstate Commerce Commission to award reparation to parties injured by violations of the act and providing a 2-year limitation period within which claims for such reparation must be presented.
Generally, both provisions are necessary and proper to achieve equality as between different transportation agencies, all operating under substantially similar regulatory requirements; to eliminate the present confusion due to the application of varying State statutes; to eliminate discrimination between shippers, particularly as between large shippers with substantial transportation volume and adequate transportation personnel on the one hand and on the other the small or occasional shipper; and to simplify the remedies which are now available and the procedures which must now be followed for recovery of damages due to violations of the act.
As to those portions of the bill dealing with the period of limitations on overcharges and undercharges there seems to be substantial agreement among all parties concerned. The 2-year period is now in effect for rail carriers in section 16 of the act, and it appears to be generally satisfactory and should be extended to the other transportation agencies.
The limitation statutes of the individual States now provide periods ranging from 2 to 10 years--and I might say 15 in some States—and this situation in itself is an undesirable discrimination between shippers in differing States. It is desirable with highway carriers, water carriers, and freight forwarders equally with rails that liability for transportation charges be definitely determined within a reasonable time after the movement occurs, rather than requiring location of documents and settlement of controversies on transactions which may have occurred as long as 10 years ago. Recent activities of motor carrier publishing agencies seeking to incorporate a 2-year limitation period by means of publication of a tariff rule, particularly those applying such a limitation period on overcharges only, rather than on both overcharges and undercharges, make final settlement of the question by statutory provision highly desirable.
I might say, Mr. Chairman, that attached to this statement is a compilation of the State statutes of limitations in the different States, and I would appreciate it if that compilation could be incorporated as a part of my remarks, also.
I think that it would be very enlightening to the committee.
M. LACEY. It is attached to the statement. You will note that the statute of limitations varies from 2 years to as high as 20 years in one instance, but the average is about 6 years.
(The tabulation referred to follows:)
6 3 5 5 10 20 210 10 5
343.1 102-6. GSCC 320 and sec.
1420, 1481. 5131. Sec. 12–201. 95.09, .11, .24. 5-202-24. 83–17. 2-601-6-3. 2-6234-5.2 C. 614. 60-304-306. KRS 413.010,
KRS 94.330 et
413.090 241 Ky.
541. 1914 Act. 223. C. 99, sec. 90. Art. 57, sec. 1. 260, sec. 2. 5 (41.05). Sec. 13976; 1937,
No. 21. 722. 1013. 9029. 25-204, 205. 8538. C. 385, secs. 3, 10. Title 2, c. 24, sec. 1. 27-103, 124. CPA, sec. 47a. 1-52. 28-0116. Sec. 11221. 12-93-5; 1945, title
12, c. 3.
6 10 8 5 6 6 6 6 6 3 6 15 5
6 6 6 6 6
See footnotes at end of table.
1 On written contracts made outside of the State the limit is 4 years.
6 2 years on any action brought on claim under Federal statute, order, rule or regulation when no Federal period of limitation is prescribed. 330.21.
7 2 years on liability other than forfeiture or penalty created by Federal statute which prescribes no lim. itation. 1943 c. 77.
Mr. Lacey. Controversy with respect to the bill seems to have centered on the grant of power to the Interstate Commerce Commission to award reparation. The record of prior committee hearings on similar subject matter, H. R. 2324 and H. R. 2295, hearings before the Committee on Interstate and Foreign Commerce, House of Representatives, Eightieth Congress, contain strong objections from both motor carriers and freight forwarders. Such objections, however, apparently are based upon a theory that no comparable procedure is now provided by the act, that the bill would substantially enlarge the potential liability of the carriers involved, and that the burden of probable payments would impair the financial stability, particularly of smaller motor carriers.
This is a completely erroneous conception of the present situation. In Bell Potato Chip Company v. Aberdeen Truck Lines, et al. (43 MCC 337), decided April 4, 1944, the Interstate Commerce Commission, in a full Commission report, found that it then—and nowpossessed the authority to determine the unreasonableness on unlawfulness otherwise of charges collected by motor carriers on shipments which had moved in the past.
The Commission said further, however, that the shipper, having obtained such a finding from the commission, must bring a court action for the recovery of the money involved, using the finding of the Commission in that action.
Further, however, the Commission said that to avoid frivolous or moot complaints it would not proceed to the determination of past unlawfulness unless such a court suit had already been instituted. . As a practical matter, therefore, the shipper would file his suit, ask the court to hold it in abeyance pending determination of a Commission case, file and prosecute his complaint with the Commission, and having obtained a favorable holding there use it in his court proceeding.
This procedure, while cumbersome and undesirable, possessed a degree of certainty, but the Commission later in Victory Granite Company v. Central Truck Lines, et al. (44 MCC 320), in commenting on the Bell case stated that it
did not intend to, and did not, prescribe an inflexible rule requiring that in all proceedings such as this the complainant must show that a suit