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has been instituted in court before we may exercise our jurisdiction to make an administrative finding respecting the lawfulness of motor carrier rates charged on past shipments.
The Commission stated that "generally speaking" such a proceeding should not be brought prior to the institution of a court suit, and in so doing merely added further confusion so that at the present time no clear and precise statement or required procedure is possible.
Regardless of this lack of preciseness, however, it is evident that under the act as it exists today recovery of damages for violations in connection with past shipments is possible if the necessary procedure is followed; furthermore, the limitation period on such recovery is that of the State statutes, and therefore the potential carrier liability is many times that which would be possible under S. 1194.
It is true that under the cumbersome and expensive machinery now provided for recovery many small complaints will never be filed. Many complaints will never be filed because of lack of knowledge on the part of the shippers as to his rights with respect thereto.
On the other hand, the large shipper and the large complaints will proceed through both Commission and court action and it is such liabilities over a period running to 10 years or more, which constitute the only real threat to carrier financial stability.
In hearings before the House Committee on March 18, 1947, above referred to, pages 15 to 22 of the printed report, a witness for the league, Mr. A. H. Schwietert, set out a number of specific examples of the type of situation with which this reparation provision is intended to deal. There is no point in repeating those examples here or in citing others involving exactly the same principles.
Suffice it to say that motor-carrier rate structures, for example, are full of instances of through rates which exceed the aggregate of intermediates over the same route and via the same carriers; of rates for shorter distance which exceed those for longer distances over the same route; of rates resulting in charges for shipment of one size which exceed those on a shipment of greater weight.
Generally, such situations have been held unjustified, and recovery of charges thereunder on past shipments via rail carriers has been by reparation award; by motor carriers and freight forwarders it must now be by a contemporaneous Commission complaint and court proceeding.
Of particular importance is the fact that there is not now contained in the act any provision requiring the observance by motor carriers of shippers' routing instructions.
Differing measures of the charges by different combinations of motor carriers making up joint routes between two particular points are common, almost the rule rather than the exception. When a shipper instructs movement of a shipment via carriers A and B at one rate and later finds, after movement has occurred, that due to failure of carrier A to observe the routing instructions the shipment was actually handled by carriers A and C at a higher rate, his remedy is in award of damages rather than an overcharge claim; and it is a practical remedy for the damages, be the amount large or small, arising out of situations of the character just enumerated, that this bill is intended to provide.
I want to stress, Mr. Chairman, that under part II of the act no provision is made for the shipper to route his own goods. Part I
carries that provision so far as ra hipments are concerned. We believe that the lack of the routing provision in part II is another very good convincing argument in favor of this provision of your bill providing for reparation where s'ipments might be misrouted. I do commend for your reading the statement which we submitted in the House hearing wherein Mr. Schwiertert gave five or six different illustrations, one of which was related to misrouting. It is very enlightening.
I might say also the league's testimony directly on the House bill H. R. 2324 will be found on pages 8 to 15 and pages 52 and 53 of the House committee hearings.
In conclusion as to S. 1194, we urge passage of the bill because it will bring about equality among carriers and among shippers; it will eliminate the confusion of differing State statutes; it will strengthen rather than weaken the financial position of carriers by lessening the potentiality of large recoveries extending over long periods of time; and it will simplify and rationalize the present unwieldy procedure necessary for the recovery of damages for violations of the act.
H. R. 2759 is objectionable by reason of its omission of the reparation provisions contained in S. 1194. The scope of the latter is allinclusive of subject matters which should be treated together, and S. 1194 should be given preference.
S. 571 and S. 935 provide a 3-year statutory period for motor-carrier overcharges and undercharges and extend the present rail period from 2 years to 3 years. We believe the present 2-year period to be a reasonable one, and it has proved satisfactory in connection with rail operations. We believe that the provisions of S. 1194 are preferable. Mr. Chairman, we earnestly urge that your committee give the bill, S. 1194, your favorable attention and consideration and that you recommend its passage.
Senator REED. This table showing the statute of limitations in different States is quite interesting.
Mr. LACEY. It disclosed a lot of pertinent information. It is very interesting, Mr. Senator.
Senator REED. Has anybody used the present procedure available in motor-carrier cases by instituting a case in court and then asking the Commission to make an administrative finding and then go back to the court?
Mr. LACY. I really can't say, other than in the instance already cited. Mr. Lawrence might know.
Senator REED. Mr. Lawrence?
Mr. LAWRENCE. I don't know, Mr. Chairman, any more than Mr. Lacey has cited in his statement.
Senator REED. Do you know whether or not the Commission has done that?
Mr. SPLAWN. Very few cases. The Potato case which was cited was a leading case, but there were not so many followers.
Mr. LACEY. I did refer to one other case on page 3 of my statement, at the bottom of the page, the Victory Granite Company v. Central Truck Lines (44 MCC 320), wherein the Commission did elaborate upon its views a little. The Bell Potato case is recognized as the governing case and does afford shippers a measure of relief, as I explained (p. 52-53 of House committee hearings) in my statement of the House committee.
Unfortunately, many shippers, unless they have well-organized traffic departments and commerce counsel, are unaware of that provision, and I suspect the little fellow, whom we all want to protect, does not know his rights and he probably is the one who would be hurt rather than the larger shipper.
Senator REED. Does that conclude your statement?
Mr. LACEY. That concludes my statement.
Senator REED. Thank you.
Mr. LACEY. Thank you, sir.
Senator REED. Mr. Fort.
STATEMET OF CARTER FORT, VICE PRESIDENT AND GENERAL COUNSEL, ASSOCIATION OF AMERICAN RAILROADS, WASHINGTON, D. C.
Mr. FORT. Mr. Chairman and Senator Myers, my name is Carter Fort, and my residence is in Washington. I appear here for the Association of American Railroads, which is known to your committee and which includes in its membership for which we speak, railroads operating more than 95 percent of the class I mileage of the country and receiving more than 95 percent of the class I revenues.
Mr. Chairman, I have no prepared statement for distribution, although I do have certain notes here which I shall refer to from time to time, if I may.
We are concerned with the bills which are now before your committee, H. R. 2759, S. 571, S. 935, and S. 1194, only insofar as those bills deal with the limitation of rights to sue for the collection of undercharges and the recovery of overcharges.
So far as the period of limitations is concerned, it is the purpose of these bills to provide for uniform periods applicable to the railroads, subject to part I of the act and the other carriers subject to part I, to the motor carriers subject to part II, to the water carriers subject to part III, and to freight forwarders subject to part IV.
H. R. 2759 would acomplish this purpose with respect to the recovery of undercharges and overcharges by providing a 2-year period for the carriers subject to part II and for the carriers subject to part IV, as to which no Federal period is now provided, and by providing for a period of 2 years in connection with carriers subject to part III where a 3-year period is now provided.
That bill does not deal with the carriers subject to part I because with respect to them a 2-year period is already provided.
We have no objection to the uniformity proposed by H. R. 2759 and no objection to the 2-year period therein provided.
S. 571 provides a 3-year period for motor carriers subject to part II and freight forwarders subject to part IV, where no period is now proposed. It makes no change with respect to water carriers subject to part III for which a 3-year period is now provided, and no change with respect to railroads subject to part I where a 2-year period is now provided.
Thus, S. 571 would not accomplish uniformity with respect to the limitation period.
However, I take it that that bill has been supplanted by S. 935, which was introduced by the same Senator, Mr. Cordon, who introduced
S. 571. S. 935 would provide uniformity on a 3-year basis by covering the same ground which is covered in S 571 and by substituting a 3-year period for the 2-year period now provided for railroads and other carriers subject to part I.
S. 1194 contains some features in addition to that with respect to the limitation period. However, as I have already said, we are not concerned with those other features. As to the period of limtiation, this bill would accomplish uniformity with respect to the several kinds of carriers on a 2-year basis, just as the House bill would. When I speak of a period of limitations, I speak of a period applicable to the overcharge and undercharge claims. To accomplish this purpose of uniformity on the 2-year period, S. 1194 does not find it necessary to deal with carriers subject to part I, because they are already on a 2-year basis, but does provide a 2-year basis for carriers subject to parts II and IV where there is no limit now prescribed and to part III where the 3-year limit is now prescribed.
As I have stated, we have no objection to the theory of uniformity reflected in all of these bills nor to the 2-year period reflected in all of the bills except S. 935.
In our view, 2 years is ample time within which to file claims involving overcharges or undercharges, and we feel certain that there is no serious dissent from this view on the part of any of the carriers subject to the act or on the part of any substantial number of shippers. The Interstate Commerce Commission has repeatedly stated its view that the period should not be greater than 2 years. I understood Mr. Lacey a moment ago in testifying for the National Industrial Traffic League, an organization which represents the great bulk of the shippers in the United States, to say that he was in favor of the 2-year period. This committee will recall that the period prescribed by the statute with respect to railroads was 3 years prior to the amendments of 1940 and was reduced to 2 years at that time because it was the consensus of view that a shorter period would afford ample opportunity to both shippers and carriers fully to protect their interests.
Indeed, there has been considerable feeling at one time or another on the part of the Interstate Commerce Commission and others that the 2-year period is too long for overcharge and undercharge claims. During the hearing on S. 2009, which I believe was known as the Transportation Act of 1939, before this committee during 1939, Senator Reed suggested in the record that 18 months would be an appropriate period and, to use his language, would be fair for everybody.
It will not be overlooked by this committee that there are special reasons why the period of limitations applicable to claims against regulated carriers should not be unduly long. I shall call attention to these special reasons later in my statement.
Senator HAWKES. Mr. Chairman, may I ask, what have I missed in your statement? I wanted very much to hear it but I was tied up in another meeting.
Mr. FORT. Senator Hawkes, very little. I stated at the outset that the railroads I represent have no concern in these bills except insofar as they deal with the period of limitations, that we are in favor of uniformity as to all carriers subject to parts I, II, III, and IV, which is one objective of the bills, and that we were in favor of the 2-year period which is specified in the House bill and in Senator Reed's bill rather than the 3-year period specified in Senator Cordon's bill.
Senator HAWKES. Thank you very much, indeed.
Mr. FORT. These special reasons to which I have referred, applicable to transportation, are well known and no doubt are responsible in large measure for the general concurrence by both shippers and carriers in the belief that a 2-year period for filing overcharge and undercharge claims is long enough and perhaps too long.
The question then arises as to whether any special exceptions should be made concerning overcharge claims by the Government. Repre sentatives of the General Accounting Office appeared here yesterday and took the position, as I understood it, that the 2-year period would be too short as applied to Government shipments because of peculiar difficulties encountered by the General Accounting Office which are not encountered by other shippers.
You heard that testimony just as I did, and you know as well as I do what those witnesses said. I gathered from the testimony that the chief distinction between the Government and other shippers was that the Government is by far the largest shipper and that fact results in certain auditing complications.
Senator HAWKES. May I interrupt there, Mr. Fort. There seems to be a lack of harmony and agreement on that thing. For instance, we heard yesterday from several gentlemen that the small shipper needed more time than the large shipper because he was not efficient and because he was not organized and did not have the manpower and the technical skill.
Now, we hear that a fellow needs more time because he is the largest shipper in the United States. I repeat what I said yesterday. I hope you will go more in detail into this question of the Government needing more time than anybody else to do business. I do not know whether you are going to or not, but I would not want to leave it with just what you said.
Mr. FORT. I will have a good deal more to say, sir.
Mr. FORT. When you speak of the reason advanced by small shippers for special treatment and the same reason advanced by large shippers for special treatment, I think that you often find that the same fact can be used by the large and the small and the fat and the lean, each to serve his particular purpose if there is any occasion to do so. It was also stated by the Government witnesses that on an average the Government does not receive transportation bills for about 3 months after delivery of shipments. This is a matter as to which I have no personal knowledge, but after leaving the hearing yesterday I consulted with some railroad accountants who do have personal knowledge, and I was told by them that the 3-months estimate was entirely too large and that a more accurate estimate would be about 3 weeks.
The witnesses for the General Accounting Office also said that at times it was then necessary for them, in order to determine whether or not a claim should be filed, to obtain information with respect to shipments in addition to that shown on the bills of lading. They said it was necessary because of "indefinite descriptions on bills of lading."
I suppose that is a relatively rare occurrence. However that might be, the description on the bills of lading are placed there by Government agents, and if those agents are at fault by making indefinite descriptions, this would not seem to furnish any valid basis for a claim