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the Commission in such a case to determine at what exact time in the gradual process of changes a rate becomes unreasonable. It follows that the Commission is not justified in awarding damages in any case except on a basis as certain and definite in law and in facts as is essential to the support of a final judgment or decree requiring the payment of a definite sum of money by one party to another.”

The fact suggested by the court in the Darnell-Taenzer case, that in the end the public probably pays the damages in most cases of compensated torts and that the ultimate consumer who may have been actually damaged by the unreasonable charge cannot recover, appears to be an insufficient reason upon principle why the shipper, who eventually has not been damaged, should be allowed to recover. The exaction of an unreasonable charge by a carrier is a public wrong; but there is a clear distinction between a public wrong and private damages (International Coal case). If the law provided that no recovery shall be allowed for any violation of the act unless the party claiming reparation can show that he suffered pecuniary loss or damage, it would probably result that in some cases the damages could not be proved and the unreasonable charge would be retained by the carrier. If it be felt that it would be against public policy to permit carriers to retain charges found to be unreasonable, it would seem preferable that the carrier be required to pay the unreasonable charge into the Public Treasury than to continue the policy which permits a private individual who has not really suffered damage to recover.

Incidentally, the law now permits carriers to retain certain unreasonable charges. Where rates are found to be unreasonable reparation is awarded only to parties claiming it within the statutory period. The unreasonable charges exacted from others are retained by the carrier. And as already pointed out, an unreasonable rate under existing conditions is in the last analysis a matter of judgment, and in a legal sense is not generally an extortion. the amendment suggested by us in 1916 were adopted, provisions should be made to the . effect that reparation for unreasonable rates or charges should be awarded in the courts only upon finding by the Commission that such rates or charges were unreasonable as of a particular time and during a particular period. Otherwise, different courts might reach different conclusions as to the amount of the reparation, and the results would be unfortunate.

The law might well affirmatively recognize that private damages do not necessarily follow a violation of the act; and provide that sections 8, 9, and 16 of the act shall be construed to mean that no person is entitled to reparation except to the extent that he shows that he has suffered damage. The close analogy between a relatively unreasonable or unjust rate and an unjustly discriminatory or unduly prejudicial rate, and the difficulty of determining just when a rate becomes unreasonable or that it is unreasonable per se, suggest that the law should provide that if a rate is found to be unreasonable the rule of damages laid down in the International Coal case should control,

What is said herein is not intended to relate to discriminations knowingly planned or practiced which may be the subject of prosecutions before the courts.

The Commission concluded as follows: "That consideration be given to our recommendation in the 1916 annual report that the power to award reparation be placed wholly in the courts; that a condition precedent to an award of reparation by a court for unreasonable rates or charges be that we have found such rates or charges unreasonable as of a particular time; that the law affirmatively recognize that private damages do not necessarily follow a violation of the act; that provision be made that sections 8, 9, and 16 of the act to regulate commerce shall be construed to mean that no person is entitled to reparation except to the extent that he shows he has suffered damage, and that the law should provide that if a rate is found to be unreasonable the rule of damages laid down in the International Coal case (230 U. S. 184) should control.”.

Senator REED. Mr. Krebs, of the National Federation of American Shipping

STATEMENT OF ALFRED U. KREBS, COUNSEL, NATIONAL

FEDERATION OF AMERICAN SHIPPING

Mr. KREBS. Mr. Chairman, I do not have a prepared statement for general distribution. I do have copies for the members of the committee and the reporter. The statement is very short and in view of the fact that there is some quoted material in it I would, prefer to read it if it is all right with you.

I am counsel for the National Federation of American Shipping, Inc., an organization representing approximately two-thirds of the active privately owned dry cargo merchant ships under the American flag.

I am appearing before your committee in connection with H. R. 2759 and S. 1194.

Section 2 of each bill would amend subsection (a) of section 308 of the Interstate Commerce Act, which relates to reparation awards against certain water carriers, so as to provide that for the purposes of section 308"the term 'carrier' means a common carrier by water.'

Subsection (a) of such section presently provides that "the term 'carrier' means a water carrier engaged in transportation subject to this part (1) by way of the Panama Canal, or (2) as a common carrier by water on the high seas or the Great Lakes on regular routes from port to port.”

Proponents of the bills state that the purpose of the amendment is “to make section 308 applicable to all common carriers by water subject to part III.” The proponents point out that carriers by water on inland waterways, not being named in section 308 are exempt, and add that there is no reason for the exception since these carriers become subject to similar liability under section 16 of part I when they participate in joint rates with rail carriers, as they generally do.

The proponents of the bills also state that they believe the present wording of section 308 (a) apparently subjects contract carriers by water by way of the Panama Canal to liability for damages, but that there appears to be no good reason why they should be included.

We do not object to the purposes to make section 308 applicable to all common carirers by water subject to part III. However, we do not think that the legislative history of the bill should have to be resorted to in order to ascertain this purpose.

Furthermore, there are many “common carriers by water” who are not subject to the Interstate Commerce Act, and the absence of the phrase "subject to this part” would result in an inference that such carriers are subject to the provisions of section 308.

We respectfully urge, therefore, that subsection (a) of section 308 as amended by section 2 of the subject bills include the phrase "subject to this part."

I would like to add that we filed a letter with the chairman of the committee under date of February 19 in which we expressed approval of H. R. 2759, subject to the amendment which we suggest here.

I would like to have that letter made a part of the record, and I would also like to say that we have no objection to S. 1194, subject to the amendment which we suggest.

Senator REED. Thank you, Mr. Krebs.
Mr. KREBS. Thank you.
(The letter follows:)

NATIONAL FEDERATION OF AMERICAN SHIPPING, INC.

Washington 6, D. C., February 19, 1948. Hon. WALLACE H. WHITE, Jr. Chairman Interstate and Foreign Commerce Committee,

United States Senate, Washington, D. O. DEAR SENATOR WHITE: We note that H. R. 2759, a bill to amend the Interstate Commerce Act, as amended, so as to 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, common carriers by water, and freight forwarders, had been referred to your committee.

This bill would, among other things, amend section 308 of the Interstate Commerce Act so as to provide a 2-year statute of limitations both against a carrier who may seek to recover his charges and against a shipper claiming either damages or overcharges. The bill would also amend section 308 so as to define "carrier” to mean a common carrier by water. Section 308 of the act now defines a "carrier” to mean "a water carrier engaged in transportation subject to this part [III] by way of the Panama Canal or (2) as a common carrier by water on the high seas or on the Great Lakes on regular routes from port to port."

The federation favors enactment of this bill but urges that it be amended to continue the present definition of "carrier" as used in the act so as to limit it to "a common carrier by water subject to this part” (part III of the Interstate Commerce Act). In the event that your committee schedules hearings on this bill, we shall greatly appreciate it if you will afford us an opportunity to be heard.

As you no doubt know, the federation is composed of four associations representing steamship companies owning and operating approximately 70 percent of American-flag ocean-going vessels. Very trúly yours,

A. U. KREBS, Counsel. Senator REED. Now, Mr. Splawn. Will you proceed, Doctor?

STATEMENT OF WALTER M. W. SPLAWN, CHAIRMAN, LEGISLATIVE

COMMITTEE, INTERSTATE COMMERCE COMMISSION, WASHINGTON, D. C.—Resumed

Mr. SPLAWN. Mr. Chairman and gentlemen of the committee:

In response to your query, Mr. Chairman, a while ago, concerning reparations cases under part II, I have checked for the exact number, which have been decided and find there have been 26 such cases, 12 of them being prior to the Bell Potato Chip case which was referred to.

Senator REED. Of course, they have to go through the procedure of going to the court as well as the Commission; is that not right?

Mr. SPLAWN. That is right. And I assume that is

Senator REED. Would there be an increase in the number, do you think, Doctor, if we passed this bill?

Mr. SPLAWN. I do not know. I listened attentatively to Mr. Lawrence and, like you, I am impressed by what he says about these little carriers with a few trucks.

As you recall, the entire motor-carrier industry insofar as reparations are concerned was exempt in part II in 1935. We referred to that and expressed the opinion that they have now progressed so far in working out their rates and in understanding regulations that since this bill is directed solely toward the future, they will have no difficulty insofar as the bill is concerned if it becomes law, that is, they will not be bankrupt or anything like such dire and terrible predictions.

As to their being under reparation provisions now in part I, the provision is rather clear that there is no liability unless there has been an injury through a violation of the act, and it is our observation and belief that these motor carriers generally are conscientious and diligent in conforming to the act.

The law assumes that they file their tariffs and carry on their operations and adopt their practices within their organization in conformity with the law of the land.

Of course, there is occasionally someone against whom some prosecution has to be filed. That is always true, unhappily, where there is a large number of human beings. Someone finds himself in conflict with the penal statutes. But the record of he inotor-carrier industry, so far as regulation is concerned, is a very creditable one, and I have no fear that they will be subject to an undue number of suits by reason of their violation of the terms of the Interstate Commerce Act.

I understand the fear of both the motor carriers and the forwarders is that their rates not having been fixed by the Commission, as has been the case of the railroads, the Arizona doctrine will not apply, and therefore they may find that many of the rates they now believe to be just and reasonable upon a test might turn out to have been unjust and unreasonable.

Senator REED. May I ask you for a suggestion here?
Mr. SPLAWN. Yes.

Senator REED. Without undertaking to prejudge anything, could you give the committee a suggestion as to how to make a distinction how to write a distinction in a bill that would make that distinction between motor carriers that are large enough to carry on their business in a systematic and businesslike way, and these small carriers to which Mr. Lawrence referred ?

Mr. SPLAWN. I assume you could make it applicable only to class I carriers. I do not know, because no such proposal has been considered, either by the class I carriers or the others.

Of course, those exempt, I am sure, would not object to it. How happy the class I carriers would be, and what complications they might point out, I would not undertake to speculate. I believe that you have heard a fair and very sincere presentation of all the objections that can be thought of by these very able and experienced counsel, and with these statements before you, I believe you are in a position to determine what is the public policy, whether you merely take the House bill and limit your legislation to undercharges and overcharges, or whether you will at this time go the whole way and make reparations applicable to all carriers under all parts of the act.

That is an important question, but you have given the country more than a year—and it has been almost a year since you introduced S. 1194—to consider the matter, and you have had these clear and sincere presentations.

I believe that all parties will be willing to abide by the judgment of this subcommittee after you read this record.

Senator REED. Have you any information that you could give the committee as to the nature of these overcharge collections mentioned by the General Accounting Office yesterday?

It was Mr. Fort's theory that they were perhaps land-grant charges. How does that appeal to you u ?

Mr. SPLAWN. I have no definite information, but that appeals to me as a reasonable explanation. There is probably something, too, to the suggestion that you offered that for some shipments they had not only class rates, and when they came to audit by that time they had worked out with the carrier a rate on that particular shipment and made the adjustment down to such a rate.

On section 332 of the Transportation Act of 1940, my information is that that operates as a sort of open account, and has been quite satisfactory on the whole, and that both the Government and the carriers have cooperated in a very satisfactory manner, and that in general there has not been undue delay. There has been fair promptness in paying the carriers, and the adjustments have been worked out in a satisfactory way.

We have had more informal expression of dissatisfaction from individual motor carriers than we have from rail carriers about the handling of these settlements under section 322. Individual motor carriers have said that they had been paid for a service, and then they get a check for another shipment with a deduction on the ground that their rate had been too high on a previous shipment.

They complain that was their first notice. But during the past year the number of those complaints has fallen off, and we have not heard so much about this. Probably that is because the war shipments are over and the Government is not using motor carriers to anything like the extent that it did during the war.

The War Department, we understand, in their shipments and the Navy in their shipments were rather prompt in paying. The Commodity Credit Corporation, I understand, operates as though it were an individual shipper, and pays quite promptly.

On the matter of time, it seems that since the payments are fairly prompt, not much time elapses between the delivery and the payment to the carrier.

The Accounting Office, I think, calls one of these transportation bills current if it has not been around more than a year, and naturally, we all sympathize with that and understand it takes time for a group of men to audit all these bills. Say that on an average it is a year after the delivery of the shipment.

Then there is another year in which to determine whether or not the Government has any claim. If, during that year, a letter is written to the carrier, that automatically prolongs the period of limitations until 6 months after the carrier disallows the claim. Usually there is a good deal of correspondence.

I have an idea that a good many weeks and, in some cases, even months, will elapse before the carrier eventually writes a letter disallowing the claim of the Government. Then there are 6 months under the statute within which the claim can be filed with the Commission, which then stays the running of the statute of limitations.

I have listened attentively, and I think with sympathy, because being in the Government, I naturally understand some of the problems of those who are operating under statutes. I was not convinced from listening to the testimony and rereading the statement afterward that 2 years is too short a time within which to audit and make the postaudit of these bills, particularly those which will arise in the future.

It was all worked out at the beginning of the war between the carriers and the agencies and the General Accounting Office. They worked out a unit bill of lading, prescriptions for the waybills, and for the memoranda to be retained by the shipper. With these papers it has been possible to determine the amount that the agent should pay the carrier, and that has greatly facilitated, as I understand it, the postaudit.

On the whole, with the exceptions I have mentioned as to operating unled section 322, it is my information that it has been quite a credit

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