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That is, an amendment to remove the Government

* would not be desirable. In United States v. Director General (80 I. C. C. 143) the question was presented whether the limitation provision in section 16 (3) (b), now in part 1 of the Interstate Commerce Act was applicable to the United States Government. On that point the Commission said (pp. 150–151) : “We have no jurisdiction to award reparation against the Wharton (which was the name of the railroad] on interstate shipments delivered or intended for delivery more than 2 years prior to the dates on which the complaints were filed with us, and we make no finding with respect to the rates charged thereon. It is fundamental that we act only under the jurisdiction conferred upon us by the Congress. The power to award damages for violations of the act created rights as well as remedies. Failure to assert the right within the statutory period not only bars the remedy but destroys the right. Phillips v. Grand Trunk Railway (236 U. S. 662), Louisville Cement Co. v. Int. Com. Comm., (246 U. S. 638). In this respect the statute differs from the ordinary statute of limitations which when invoked bars only the remedy. The United States Government was not specifically excepted from the statutory requirement with respect to the time within which complaints for the recovery of damages must be filed with us, although it is specifically excepted from other provisions of the act.”

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. Manifestly, it would not be desirable merely to exempt the Government without fixing some period of limitations, for under our regulations the records of the carriers may be destroyed after a prescribed period and relevant evidence may of course.become unavailable because of death of witnesses and other causes. We see no reason for allowing the Government more time for presentation of its claims than is granted to other shippers.

We are particularly opposed to any amendment which could be interpreted as reviving claims which are now barred under the present statute. That is the end

of the quotation from the letter. Later, when House bill H. R. 2759 was before the House for passage, Mr. Wolverton expressed views similar to those expressed by the Commission in the letter from which I have quoted. He also developed the theme somewhat further. If I may, because I believe it is so important, be permitted, I should like to read from what Mr. Wolverton said. I quote from the Congressional Record of January 13, 1948, page 138:

I think it clear that the limitations for which the bill provides would apply to the United States as a shipper, just as to any other shippers. The Interstate Commerce Commission so held 25 years ago with respect to similar provisions then in the act-United States v. Director General (80 I. C. C. 143).

The Government did not seek review of that decision by the courts, and it has stood all these years without challenge in the Congress. I think, too, that there is every reason why these limitations should apply to the United States the same as to any other shipper.

The Interstate Commerce Commission has expressed the same view in the letter to the committee, from which I quote one paragraph :

Manifestly it would not be desirable merely to exempt the Government without fixing some period of limitations, for under our regulations the records of the carriers may be destroyed after a prescribed period, and relevant evidence may, of course, become unavailable because of the death of witnesses and other causes. We see no reason for allowing the Government more time for presentation of its claims than is granted to other shippers. That is the same letter that I have already quoted to your committee.

Mr. Wolverton continues :

The purpose of the limitations is to relieve both carriers and shippers of the intolerable uncertainties that they would face if constantly confronted with possible liability undisclosed claims running back over long periods of years and involving sums of money which cannot be 'calculated or estimated. This purpose would be to a large extent, defeated if an exception were made with



respect to the Government which is one of the largest shippers in the country. Certainly ordinary justice demands that carrier and shipper alike be protected from stale claims, long undisclosed because of the failure of the claimant to exercise reasonable diligence. In a commercial transaction, such as transportation for hire, there is no conceivable ground for distinction between the Government as a shipper and any other shipper, so far as concerns a reasonable limitation of the time within which a claim should be asserted.

Speaking of limitations of the character provided in this bill, the Supreme ('ourt has said that they “are vital to the welfare of society”; that “they promote repose by giving security and stability to human affairs”; that "an important public policy lies at their foundation” Wood v. Carpenter (101 U. S. 135, 139).

The promotion of security and stability of the kind to which the court referred is of the greatest importance in the field of transportation. It is essential that carriers be able to determine, with a reasonable measure of accuracy, their financial condition at any given time. It is of the utmost importance that they have information concerning their resources and liabilities. Otherwise they cannot be in a position to program expenditures for maintenance, improvements, and so forth, or to make decisions with respect to their rates and charges. The Interstate Commerce Commission would likewise be handicapped in the exercise of its rate-making power, and the other powers which have been confided to it, by a situation which would make it possible to recover from carriers large sums of money on old claims concerning which there had been no notice or warning of any kind. Thus I believe it can be said that the failure to provide a period of limitation for claims by such a large shipper as the Government would result in a situation of uncertainty which would adversely affect the national transportation policy as declared by Congress in the Interstate Commerce Act. That is the end of the quotation from Mr. Wolverton. It sets forth those special considerations to which I referred earlier in my statement as applicable to transportation, which make it especially important that the respose and stability which a limitation statute is designed to bring should be attained in transportation.

Senator HAWKES. Mr. Fort, even one of your little cardinal rules in equity is that equity aids the diligent and not the slothful. That is the basis of all American life. If that were not carried through in all of our laws and statutes and acts, I do not know how the American system could proceed. So I want to put myself in agreement with what Mr. Wolverton has said.

Mr. FORT. Of course, the rate level of the carriers at any given time rests to a large extent upon the current earnings of the carriers.

Senator MYERS. Might I interrupt you there, Mr. Fort. From the letter that you just read, the Commission letter, as I understand it, under the present law the Commission has held that the Government is bound by the 2-year statute of limitations in filing its claims against railroads for overcharges.

Mír. FORT. That is correct, sir.

Senator MYERS. All that you are asking today is that motor carriers and water carriers and freight forwarders be bound, that we enact a statute extending the same statute of limitations to those other carriers. Is that not so?

Mr. FORT. One thing in addition, Senator, that you reject the suggestion made by the General Accounting Office, that the Government be removed from that limitation.

Senator MYERS. I understand that. I am speaking of the bills to which we are now giving our attention. The General Accounting Office now can only file a claim against a railroad within the 2-year statute of limitations. Is that not so?

Mr. Fort. Yes, sir; that is what the Commission has held.

Senator MYERS. The Commission has held that and the Government today is bound by that.

Mr. Fort. Yes, sir; that is our belief.

Senator HAWKES. Mr. Chairman, might I ask Mr. Fort this: Is it not a fact that the Government is again asking for an amendment which excludes it from the 2-year or 3-year statute of limitations! Is that not in fairly good evidence that the Government recognizes that the rule established by the Interstate Commerce Commission some 25 years ago is the rule that has been followed in the ordinary relationship in transportation between the shippers and the Government?

My point is this: Why would they be asking for an amendment to the law if they did not recognize that you had an established set of principles ?

Mr. FORT. I think they undertook to give the reasons which they regarded as sufficient to ask for that, Senator.

Senator HAWKES. From your experience, you feel very strongly that there is an established set of principles which was laid down by the Interstate Commerce Commission?

Mr. FORT. Yes, sir.

Senator MYERS. Not only an established set of principles, it is the Commission's interpretation of the act, is it not?

Mr. FORT. That is correct.
Senator HAWKES. Yes. That is what I meant. That is better put.

Mr. FORT. We think it would be a ruinous situation that would be created if the Government should be exempted from the application of any period of limitation.

Senator MYERS. Do you know whether the Government ever initiated any legislation to extend the period of time?

As I understand, the Government has come in to ask for an amendment of the bills which are now before us, which are not bills that have been sponsored by the Government or by any agency of government.

Mr. Fort. Not during the time that I have been familiar with transportation legislation, and that is a good many years.

Senator MYERS. They have not?
Mr. Fort. No, sir.

Senator MYERS. So for a great number of years the Government has not come in. The General Accounting Office has not come in and presented to this committee or asked this committee or any committee of the Congress, as far as you know, to amend this statute which now through the Commission's interpretation binds them to the 2-year statute as well as any other shipper?

Mr. FORT. That is correct.
Senator MYERS. Thank you, sir.

Mr. Fort. So much for the proposal that the Government be removed from the application of the period of limitations. The proposal that the limitation be enlarged so far as the Government is concerned is, of course, quite a different one.

I have already discussed that at some length and have said that we can see no justification for any such period as has been suggested, namely, 6 years, and in fact we can see no real necessity for any expansion of the 2-year period. But, as I have already stated, if the committee should reach the conclusion that there are special circumstances surrounding Government auditing which would justify a special 3-year limitation for Government overcharge claims, of course you could readily amend the bill to accomplish that purpose.

Senator REED. Mr. Fort, before you leave this question, will you let the committee have the benefit of your discussion of the relation of section 22 to the contention of the General Accounting Office ?

Mr. FORT. I could not follow that reasoning, Senator. Section 22, of course, is a special section applicable to the Government. The Government is named in that connection.

Senator REED. It is broader than that, Mr. Fort. It is applicable to various agencies, charitable organizations, municipalities, as well as the Government. They may receive special consideration or for that matter, receive free transportation.

Mr. FORT. In other words, presumably the law would bind the Government to the payment of published rates, except for that special exception mentioning the Government by name, which permits agreed rates less than the published rates for the Government. If that has any significance, the significance would seem to be that when the statute intended to treat the Government specially, it did so specially by name.

Senator REED. My interpretation of the application of section 22 has always been that a carrier could lawfully and legally, under section 22, grant special rates or as a matter of fact give free transportation in certain cases, but that should be agreed upon or arranged beforehand, not afterward.

What is your interpretation of the application of section 22?

Mr. FORT. As to whether the rate could be agreed upon after the transportation?

Senator REED. Whether it should be.

Mr. FORT. Oh, should be. I think clearly the answer to that is clear enough, that the arrangement should be made and the agreement made before the shipment.

Senator Reed. That always has been my interpretation of section 22.

Senator HAWKES. Mr. Chairman, may I clarify that for my own mind? The Government under section 22 can enter into a voluntary agreement with the transportation company. The Government should not do this, but I take it likewise that section 22 would make it legal for the transportation company to agree with the Government, if the transportation company voluntarily agreed to a lower rate than the tariff, even after the shipment had been made.

I do not think that has been the practice in business, but I think it could be. On the other hand, I do not think that statute gives the Government any power to demand a lower rate than the tariff after the shipment has been made, and I use the word "demand" advisedly. You correct me if I am wrong, Mr. Fort.

I do not think the section gives them any power to enforce a lower rate.

Mr. FORT. No, sir.
Senator HAWKES. Unless the transportation company agrees to it.

Mr. FORT. Section 22 does not give the Government any right to demand a rate lower than the published rate applicable, generally. It merely gives the railroads the right to agree with the Government as to special rates.

Senator REED. I was interested, Mr. Fort, yesterday in the suggestion by the General Accounting Office that they had recovered some $250,000,000 from the carriers in the way of overcharges.

Have you any information on that?

Mr. FORT. I haven't any definite information, but I would assume that a large part of that would represent recoveries under the landgrant provisions. You will recall that there was much difference of opinion and much uncertainty as to the application of the land-grant rates, and a number of cases have been in the courts. It may well be that in many instances the railroads did not in the original billing give the land-grant rates, and the General Accounting Office upon an audit of the bills reached the conclusion that the land-grant rates were applicable, billed the railroads for the difference, and the railroads in many instances may at that stage have agreed that the difference was due and made the refund.

I can't understand why the refund would have reached any such amount as was mentioned by the General Accounting Office witness unless that should have been a large factor in those refunds.

Senator REED. They also said, you recall, that there were still pending and even in process some $100,000,000 additional of that character.

Mr. Fort. I think you will find that probably a large part of that represents disputes under the land-grant provision.

Senator REED. I was wondering whether your association had information on both of these things, as to what constituted the $250,000,000 and the nature of the additional $100,000,000 they talk about.

Mr. FORT. No; I am not at all sure that we would have, Senator, but I will find out this afternoon.

Senator REED. I wish you would find out. I can understand that you may not have.

Mr. Fort. I am sure, though, a very large factor is the land-grant situation.

Senator REED. There are some other situations that might enter into that. During the war years the Government was a tremendous shipper. It shipped enormous quantities of goods, machinery, and raw materials, from points where previously there had been no rates published.

For example, at my home town there was an ordnance plant built, and the freight revenues of the railroad there jumped to a million dollars a month largely because of that plant out there. Up to that time there had been no movement of that character. In getting rates into effect, I can see there might have been a lag or a delay up to the time the rates got into effect and were understood.

There might have been a great deal of material billed perhaps under some improper or inaccurate—which is a better term=classification.

Mr. FORT. Of course, many of the commodities shipped were of unusual character and it may be that the descriptions on the bills of lading were insufficient, and that may have resulted in a good many claims of this character. I still believe you will find that land-grant was at the bottom of it.

Senator REED. If you can help us on that point, I wish you would, Mr. Fort.

Senator MYERS. Mr. Fort, almost 3 years have elapsed since the end of the war, and I surmise the Government claims during the war period have been litigated by now, or at least claims have been filed by now.

Mr. FORT. There may have been shipments, Senator, after the war, postwar Government shipments.

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