Earl Warren: Number 18, on calendar, the United States, Petitioner, versus The Western Pacific Railroad Company. Mr. Hollander.
Morton Hollander: May it please the Court. This case, Number 18 is here on certiorari to the United States Court of Claims. Petitioner is the United States. Respondents are three rail carriers, the Western Pacific, Bangor and Aroostook and Seaboard. These three carriers instituted this litigation by filing suits against the United States in the Court of Claims contending that they had been underpaid for certain shipments transported by the Government over the lines of these carriers during World War II and the Korean conflict. The next case which will be called on the calendar, Number 19, United States against Chesapeake and Ohio emerges out of a somewhat similar factual background in the sense that that case too represents a carrier claim for underpayment against the United States. That case came out of the District Court and is here on certiorari to the Court of Appeals for the Fourth Circuit. Both of these cases present this basic question as to the effect to be given Section 16 (3), the Section of the Interstate Commerce Act which prescribes a two-year period of limitation. We believe that the Court of Claims, Number 18 and that the Court of Appeals for the Fourth Circuit in Number 19, applied this statute in a fashion which was unjust and discriminatory as far as the United States, as a shipper is concerned. Now, let me give you the factual background in Number 18, the Western Pacific case. In 1944, in 1948 and in 1950, the Government shipped over the lines of these three carriers about 200 shipments of steel bomb body cases filled with napalm gel. I'd like to explain exactly what these shipments consisted of because the -- the makeup and the ingredients of these particular shipments account -- accounted for the original filing of these suits against the United States in the Court of Claims. The shipment says, I have said consisted of steel bomb body cases filled with napalm gel. Napalm gel is ordinary liquid gasoline that has been solidified or thickened by the addition of a soap powder known in the trade as napalm. The addition of the soap powder to the gasoline does not work any chemical change in the net product; the thickened gasoline, it simply changes its physical state by converting it from a liquid to a solid, thickened and adhesive form. The addition of this napalm to the gasoline in no way makes the gasoline any more hazardous certainly than it was before. In fact, the addition of the napalm that thickened it to the gasoline by solidifying the liquid gasoline makes these shipments relatively far safer from a transportation as they point their view because there is eliminated any possibility of leakage. There is eliminated any possibility of spillage and of course there isn't anywhere as near as much vaporization from the thickened, solidified gel as there is from the liquid gasoline. Our basic position with respect to the appropriate classification rate at which these shipments are eligible to travel is that the shipments should not -- the shipments were eligible for transportation at a rate denominated in the freight tariffs as a fifth-class rate. We base our position on the fact that steel bomb body cases themselves are regularly carried at the fifth-class rate, gasoline has always been carried at the fifth-class rate and the napalm itself is aluminum soap powder which is used as the thickener has always been carried at the fifth-class rate. Since all of these items were eligible for carriage at the fifth-class rate, our position has been that when the gel is added or poured into the steel bomb body cases, the transportation rate should be no higher than fifth-class. Especially, since the addition of the thickener to the gasoline as I have pointed out actually makes the shipment far safer from the transportation point of view.
Speaker: (Inaudible)
Morton Hollander: Oh, no, Your Honor. No -- no, there is -- it's -- it's not in dispute in this case that the only items shipped in these cases, the only ingredients shipped in these cases were the empty steel shell and into which was poured this thickened gasoline. There were no fuses. There were no bursters. A completed incendiary bomb in order for it to function effectively on the field must have the fuse and must in addition have a burster which includes both an incendiary agent as well as an explosive, TNT. Now, it's conceded in this case that the burster charge which includes both the explosive and the incendiary agent, the white phosphorous were not included within these shipments. All we have in these shipments is this thickened gasoline plus the steel bomb body cases and we say that since a gasoline itself should be -- is always transported at fifth, the napalm concededly is transported at fifth and the steel bomb body case is transported at fifth-class rate, that's the rate that we were entitled to and we paid the carriers on that basis either originally or by deductions from later bills submitted by them. The carriers on the other hand consistently have maintained that what were shipped in these cases should have been shipped at the relatively higher first class rate, a rate approximately three times in dollars and cents higher than the fifth-class rate which the Government paid. Their position -- their position is that the -- the closest -- the closest way you can describe these articles is by calling them incendiary bombs because -- and it is not disputed that that was the ultimate use to which they were going to be put in the field of battle after however the incendiary agent; the white phosphorus was added after the explosive element, the TNT was added and after the fuse was added but none of these latter three component parts necessary to the effective functioning of these commodity as an incendiary bomb were included in any of these shipments.
Felix Frankfurter: Is the question whether it comes from one tariff rather than another one?
Morton Hollander: That -- that -- that is one of the two questions --
Felix Frankfurter: Is that -- is that were -- was that for initial determination by the Court?
Morton Hollander: Yes, Your Honor. We believe that it was a question and --
Felix Frankfurter: I'm wondering what they're asking.
Morton Hollander: Yes. And we argued in the Court of Claims. In the Court of Claims the carrier is asserting that this higher firstclass rate applies moot for summary judgment. We resisted the motion for summary judgment. First of all, on the ground that there was actually a genuine issue of fact as to what was involved in these shipments. They said that these were incendiary bombs. We pointed out that no they're not incendiary bombs. We had uncontroverted affidavits, at least a dozen of them we presented --
Felix Frankfurter: But your position that -- that the I.C.C. should determine this question initially?
Morton Hollander: That was one of -- that was not -- not initially, Your Honor. Our position was that if the Court was of the view that the higher first class rates applied even though there was nothing explosive, nothing hazardous, nothing incendiary about these shipments, we felt that the potential application of the high first class rates to this relatively innocuous shipments posed a question of reasonableness of the application of these high first class rates --
Felix Frankfurter: Never been an issue.
Morton Hollander: -- to this shipment and -- yes, that was an issue.
Felix Frankfurter: Was that an issue and initial question under what tariff it comes. After you decided that, namely the tax, (Inaudible) particular tariff under which purportedly some is unreasonable.
Morton Hollander: Yes, Your Honor that was --
Felix Frankfurter: But I what I want to know is whether it is common ground that in this case the determination of which tariff is applicable was the matter for the Court without the intervention, the prior intervention of the I.C.C.
Morton Hollander: Yes, Your Honor. I think -- I think that is the matter of common --
Felix Frankfurter: I can decide up by looking at the tariffs and -- and considering what this stuff is?
Morton Hollander: We --
Felix Frankfurter: I'm just telling --
Morton Hollander: Yes, Your Honor.
Felix Frankfurter: All right.
Morton Hollander: We -- we believe that -- we believe that the -- the clear language -- the -- the clear language of -- of the item governing the high first class rates by definition excluded this shipments because we argue that this weren't incendiary, they were relatively so free from any hazard that the Bureau of Explosives carrier organization which polices the Interstate Commerce Commissions' regulations on explosives and other dangerous articles has ruled that the type of shipment involved here does not even come within the purview of the I.C.C. regulation.
Felix Frankfurter: What your saying is, this is a Great Northern case, not an Abilene Oil case, is that it?
Morton Hollander: With respect -- with respect, Your Honor, to the initial question as to whether or not the low fifth-class rate or the higher first class rate applies. Yes, Your Honor. That is true. However -- however, we argued in the Court of Claims that if the Court was of the view that the high first class rate must upon a reading of the tariff be applied to these particular shipments then we argue that there was a question of reasonableness. And at that point we suggested that the Court of Claims was -- was obligated to suspend the judicial proceedings and give us an opportunity to go before the Interstate Commerce Commission to establish the unreasonableness of applying this high first class rates to the relatively safe and innocuous shipments involved.
Speaker: Isn't that really -- doesn't that really involved the same question as to whether the -- these un-fused bombs come under the tariff, under a particular tariff? What's the difference between "s" and "s's" between those two questions? If reasonableness is a matter for the Commission, why is it the question of the tariff -- proper tariff application also a matter?
Morton Hollander: Well, if -- if on the -- if on the face of the tariffs without resorting to any extrinsic aids, it's possible for the -- for a court to place one tariff in juxtaposition with another and come to the conclusion that tariff rate A rather than tariff rate B applies. We believe that this is a -- an appropriate question for a resolution by a court. It need not be referred to the Interstate Commerce Commission.
Speaker: Isn't really a question of extrinsic aid, it's a question of informed knowledge. Questions like that are to be determined by the I.C.C. I'm not suggesting this is, not because they had extrinsic aid that the Court doesn't. I think that's something that the average court have.
Morton Hollander: Well, in this case -- in this case we -- we did agree, both sides were in agreement that it would be possible to read this tariff for a court, to read this tariff and come to the correct conclusion.
Harold Burton: And if --
Morton Hollander: And we felt however -- I'm sorry. Your Honor?
Harold Burton: If the Court on its summary judgment found that the lower rate applied then could the Railroad Code of the Interstate Commerce Commission for -- on the question of reasonableness it ought to be the higher rate?
Morton Hollander: The -- I -- I think the carrier -- it could have moved in the Court of Claims for a suspension of the judicial proceedings in order to allow the Court of Claims to refer the question of -- of possible unreasonableness of the application of the low fifth-class rates to these shipments. However, that was never suggested in this case and there has never been any contention in this case by the carriers that it would be unreasonable to apply the lower fifth-class rates. Their -- their argument is, I think Judge Madden quite accurately points out in his dissent is simply this that the nearest way you can describe these shipments is to call them incendiary bombs ergo the high rate applies. Judge Madden pointed out in his dissenting opinion that it is really was the -- the extreme literal reading of any tariff rate which took into account, not at all, the purpose for which these high rates were originally designed namely to actually work and give the carrier benefit of an insurance premium against the tremendous risk of potential liability entailed in the carriage of articles which are truly hazardous, truly explosive and truly incendiary. And he points out in his opinion that by applying the fifth -- the first class rates as the Court of Claims did in this case to these shipments, the carriers are -- are getting a pure win for they're being paid for expenses they do not incur, expenses ordinarily required to be incurred by carriers when they are carrying goods which are subject to the Interstate Commerce Commission's regulations on explosives and other dangerous articles. When they are carrying goods, which have to be packed, which have to be stored, which have to be braced, which have to be blocked in a certain way, articles from which only the finest type of -- of rolling equipment can be used. All of those expenses were not and are not incurred by the carriers in this case. Judge Madden's dissent very firmly points out that the only justification for these high first class rates are these extraordinary expenses which are not entailed here. For that reason, Judge Madden concluded in his dissenting opinion that the carriers are really getting something for nothing.
Felix Frankfurter: But the more -- the more you invoke the purpose of a tariff, the more you invoke consideration, the relevance of consideration beneath the surface of the actual tariff --
Morton Hollander: Well, we believe --
Felix Frankfurter: -- the more -- the more you will find there being, you push the problems into the competence of the Commission not the Court.
Morton Hollander: Well, that of course, Your Honor, that our basic position -- our basic position in the Court of Claims as I say was first, that as a matter of tariff construction, the Court of Claims could find that the lower fifth-class rates applied. We also argued that if they were of the view that these high first class rates applied then they should have suspended proceedings and referred the case to the Interstate Commerce Commission. Now, what the Court of Claims did was this. They said, “No we disagree with you. The high first class rates applied and we will not refer this case to the Interstate Commerce Commission.” We recognize that ordinarily when a question of reasonableness is posed during litigation of this order, it's all together appropriate, it's mandatory for the Court to stay its hand, hold the judicial proceedings in advance and refer the reasonableness question to the Interstate Commerce Commission. Here the Court of Claims did not see fit to do that. Instead they said, “While we recognize that ordinarily you, the Government, the shipper in this case would have a right to have your claim of unreasonableness determined by the Interstate Commerce Commission.” Here, they told us, “You came in too late. You came in too late.” Two-year period of Section 16 (3) of the Interstate Commerce Act which is set forth in page 3 of our brief, bars any reference to the Interstate Commerce Commission even though this is ordinarily a matter appropriate for Commission determination. And that ruling -- that ruling actually forms the -- forms the framework for the principal question on appeal here. We believe that the Court of Claims -- the Court of Claims committed not only reversible but egregious error in this rule -- in ruling that we were barred from going to the I.C.C. because of the passage of that two-year period. We believe first that the unfairness of the result reached by the I.C.C. actually condemns the ruling. We also believe that there's absolutely nothing in Section 16 (3), not a -- not a word, not a syllable in Section 16 (3) which compels the unfair result arrived at by the Court of Claims. Finally, we believe that the ruling of the Court of Claims completely ignored the special position occupied by the United States in its traditional sovereign immunity from statute of limitations of all sorts. And I would like at the present time to address my argument to that branch of the case. First of all, the unfairness of the result, the Court of Claims has consistently ruled since 1926 that despite the language in Section 16 (3) (a) of the Interstate Commerce Act, the section which imposes a two-year limitation on carriers when they want to file suit against shippers for underpayments which was what was involved in this case, the carrier suit against the shipper for an underpayment. Section 16 (3) (a) says, the carrier has two years to do that. What has the Court of Claims done with that section? It's ignored it and ripped it off the books completely. It says that this section which by its terms applies to all actions that law by carriers has no application to suits by carriers against the United States. Against the United States, the carrier has a much longer period, three times as long, six years. Now, when the United States comes into Court and has to defend as it did in this case, suits filed almost six years, suits filed by the carriers almost six years after the causes of actions accrued. In Western Pacific for example, the shipments took place in 1948 and 1950. Payment was promptly made at that time at the lower fifth-class rate contended by the Government to apply. The carriers held back, not for two years, not for four years but for almost six years and in 1954, they filed these suits against the United States far later than the two-year period which ordinarily would have barred their actions against us in the Court of Claims. The Court of Claims says, “Well, that doesn't make any difference to the carrier. You have a much longer period.” But when we raised the question of reasonableness, I think, this is of crucial significance because everybody concedes, both parties concede, the Court of Claims recognized that if we were able to establish our defense of unreasonableness of the application of the high first class rates to these shipments, there is no question -- there is no question a judgment would ultimately have had to go for the United States in these cases. Everybody concedes it. Everybody concedes furthermore that the question of reasonableness is one exclusively for I.C.C. determination. We're on common ground there. We're also on common ground that it is the duty of the Court that -- and this is -- this is where I'm common ground with respondents and with the Court of Claims, it's the duty of the Court to refer. We have a right to have the question of reasonableness referred to the Commission whenever the question is raised during pendency of a judicial proceeding. Notwithstanding the fact that all those principles are well-established, there's no dispute. The Court of Claims says to the Government, “No. You're too late for a referral. Two-year period prescribed by Section 16 (3) (b) of the Interstate Commerce Act which applies to complaints by shippers against carriers, that two-year period has gone by. You're out of luck.” And -- and the Court of Claims -- the -- the Court of Claims' reasoning -- the Court of Claims' reasoning is -- is actually -- actually comes down to nothing more than that. The opinion makes very plain that the only reason the Court of Claims refused to let us go to the Commission for a determination of the reasonableness question was because this same two-year period which they have refused to invoked against the carriers to bar their suits against us. They say that, “That two-year period nevertheless prevents you from establishing the defensive unreasonableness before the I.C.C.” The only body authorized to pass on such a question of unreasonableness. Now, we believe that as I said before that the very result, the very unfairness of this result condemns it. Now perhaps, if there was something in the language of Section 16 (3) which compelled, which -- which actually compel that -- that conclusion it might as the respondents say; “Be a matter for -- for a legislative -- for a legislative consideration for potential legislative remedy.” Perhaps, if the language were really as strong as that maybe the Court's hands are tight. But if -- if Your Honors would read Section 16 (3) (b), the section relied on by the Court of Claims, you will see that first of all it doesn't refer at all to anything but independent reparation proceedings filed by a shipper against the carrier. Not a syllable, as I pointed out before, covers the situation we have here where on the assumption of the Court of Claims itself, the action was timely filed and we were trying to get a referral on the basis and as an incident of this timely filed judicial proceeding. Nothing in Section 16 (3) (b), Your Honors, in anyway impinges upon the power of a court as an incident of a judicial proceeding, timely filed before it and that of course was the view of the Court of Claims, carrier's actions were timely filed before it. Nothing in Section 16 (3) (b) in anyway impinges on the right of the Court to make a referral. Actually, if the Court is entertaining the affirmative claim by the carrier against the shipper, it -- it would seem to us to follow it as a necessary corollary that that the Court must give us an opportunity to establish our defenses, not this --
Felix Frankfurter: If -- if this had been a private shipper, Mr. Hollander --
Morton Hollander: There would not be this problem --
Felix Frankfurter: -- what is your -- pardon me?
Morton Hollander: There would not be this problem. I'd like to address myself to that --
Felix Frankfurter: What is -- what is your view of that?
Morton Hollander: Well, I would like to address myself to that problem because this is how the carriers meet our argument -- our argument of unfairness or they say, “Well, we're not being unfair to you.” Why? They're private shippers in the same box. Now, even if that were so, I don't think that the fact that the private shippers as at disadvantage requires the -- the perpetuation of the injustice by extension to the United States as a shipper. But the fact is that that is not so because as against the private shipper, the carrier would have to file within two years. If the carrier filed against the private shipper within two years even respondents concede that their action would be thrown out as being barred by Section 16 (3) (a). So, the carrier has the filing as to private shipper in two years that affords the opportunity to the private shipper to go before the Commission within that same period of time.
Felix Frankfurter: Is this because the Government can go -- is this because they can go to the Court of Claims?
Morton Hollander: This -- this Your Honor is because the Court of Claims has refused to apply the Section 16 (3) (a) --
Felix Frankfurter: I understand but -- but the difference is --
Morton Hollander: Right. It's not only the Court of Claims.
Felix Frankfurter: Simply because -- because the carrier can go against the Government in the Court of Claims, they can't go -- those carriers in the Court of Claims, is that it?
Morton Hollander: Well, we have the same result following in the other case next to be considered, Number 19. The carrier there went to the District Court, same result. Two years --
Felix Frankfurter: Yes. I know the result but I want to know the position of the shipper, is it any different?
Morton Hollander: It's radically different, Your Honor. This unfair result cannot possibly materialize in the case of a private shipper because first of all, as I say, the private shipper can use as a shield in defending an action filed against him the two-year limitation period of Section 16 (3) (a). If the carrier files after the two-year period, the private shipper has a perfect defense.If the carrier files against the United States after the two-year period, no defense. Now, Section 16 (3) goes even further to protect the --
Speaker: Why -- why is that -- why is that? I don't --
Morton Hollander: Why is the Court of Claims --
Speaker: What's the difference between the position of the private shipper when sued by a carrier and the United States Government?
Morton Hollander: Well, that's something I've been trying to figure out, Your Honor.
Speaker: Well, you say there is a complete difference that the private shipper wouldn't be faced with this situation, why is that?
Morton Hollander: Well, the private shipper wouldn't be faced with this situation simply for this. The carrier must file its suit against the private shipper within two years. As against the United States, the carrier has a much longer period of time, six years, the carrier if it wishes it.
Felix Frankfurter: Is that by statute?
Speaker: Why is that?
Felix Frankfurter: That's by statute?
Morton Hollander: This is -- this is the Court of Claims' interpretation of Section 16 (3) (a) of the Interstate Commerce Act as well as the six-year limitation period of the Tucker Act.
Hugo L. Black: Would you mind pointing out the language on which the Court of Claims says -- the Court of Claims says, “Bars the Government.”
Morton Hollander: Well, we filed two petitions for certiorari, Your Honor, several years ago pointing out that there -- all of the language in Section 16 (3) requires applications of its limitation period to suits by carriers against the United States. There certainly is no language in Section 16 (3) in anyway indicating that the United States is not entitled the same benefit of the two-year limitation period any private shipper is entitled to. There's absolutely nothing in Section 16 (3). What the Court of Claims says that we can ignore that because this is the United States, as far as United States is concerned, we prefer to give the carriers an opportunity to come in any time within six years. I -- I say too that this -- this basic unfairness that Your Honors is -- is taken account of in Section 16 (3) itself as far as a private shipper is concerned because even if the carrier should wait in an action against the private shipper to the last day of the two-year period to file his action against the shipper Section 16 (3) give the shipper a locus poenitentiae of 90-days beyond the expiration of that two-year period in which to file a proceeding before the Commission.
Hugo L. Black: Would you mind telling me if it doesn't disturb you too much. What is reading the language on which the Court of Claims rests its conclusion that there can be six years, a suit filed against the Government within six years or a suit against the carrier or a private person to be filed in two years? What -- what is the language on which they rely? I have --
Morton Hollander: The -- the language which they ignore, Your Honor.
Hugo L. Black: Is that the statute before the end on page 3 of your brief?
Morton Hollander: Yes, Your Honor.
Hugo L. Black: Where --
Morton Hollander: And that says all actions at law by carriers.
Hugo L. Black: But where does it say anything about six years?
Morton Hollander: The six-year period that the Court of Claims has ceased upon in order to escape the impact of this two-year period in carrier suits against the United States is found in the Tucker Act, in the Tucker Act.
Harold Burton: And also in the --
Morton Hollander: The general statute authorizing suits on contract claims and generally against the United States, they ignored --
Harold Burton: But were they --
Morton Hollander: -- the specific provision that has --
Harold Burton: The -- the specific provision in the Court of Claims isn't it, 2501 which gives six years in -- in the Court of Claims and the 2401 give six years on the Tucker Act but both of them --
Morton Hollander: Yes.
Harold Burton: -- say six years.
Morton Hollander: Yes, Your Honor. They -- they rely on that and they say that --
Hugo L. Black: And you -- you're saying that this should be governed by this particular section but you put -- printed on page 3 and not by those other six years actually, is that it?
Morton Hollander: Yes. That's -- well, Your Honor, yes. We -- we argue that certainly if the Court of Claims ignores this section as far as we're concerned, prevents us from using it as a shield to ward off a late suit filed by the carrier beyond the two-year period. They certainly have no business in invoking this very same two-year limitation period to prevent us from establishing a defense and --
Hugo L. Black: The -- the suit was filed --
Morton Hollander: In 1954.
Hugo L. Black: -- against the Government -- in 1934 --
Morton Hollander: 1954.
Hugo L. Black: -- when did the claim arise?
Morton Hollander: 1954, Your Honor. The shipments took place in 1948 and in 1950, payment by the Government was made promptly at those times to the carriers in the --
Hugo L. Black: The railroad sued the Government?
Morton Hollander: And the railroad sued the Government --
Hugo L. Black: Claiming what?
Morton Hollander: For -- pardon? Yes, Your Honor.
Hugo L. Black: Claiming what?
Morton Hollander: Claiming that they had been overpaid in 1948 and in 1950.
Hugo L. Black: You mean underpaid?
Morton Hollander: They're claiming -- I'm sorry, Your Honor, claiming that they had been underpaid.
Hugo L. Black: And the Government --
Morton Hollander: We paid them on the basis --
Hugo L. Black: And the Government pleaded that we have not underpaid them.
Morton Hollander: The Government's basic position, yes. We haven't underpaid you. We paid you every cent you were entitled to.If the Court of Claims is of the view that the higher first class rate applies then we want to establish an --
Hugo L. Black: And the Court of Claims has held that you cannot plead there as an offset or a recoupment or a defense of any kind at all --
Morton Hollander: Because of the expiration --
Hugo L. Black: Because they didn't sue you until after -- until the -- about five years?
Morton Hollander: In short, Your Honor, all the carrier has to do to collect unreasonable charges against the United States as a shipper with impunity is to wait for the two-year period to go by then file the suit, then under the theory of the Court of Claims were stuck. I'd like to reserve my --
Speaker: Could I ask -- could I ask you one question? Is the question of whether the six-year statute, Tucker Act limitation or the state commerce two-year limitation whether the -- whether which one governs the -- whether the Court -- whether the Tucker Act properly governs this case, this suit by the railroad carriers, is that before the Court?
Morton Hollander: Your Honor, we did not raise that question in either the petition or in the brief on the merit.
Speaker: Well, we've got to -- we've got to assume for this purpose at least unless we --
Morton Hollander: If this Court, we -- this Court we feel on -- on its motion may inquire into the validity of the underlying assumption of the Court of Claims and its on the basis of that underlying assumption that you have consequences spawned of the type that we confronted within this case. Its only because of the Court of Claims' consistent holding that the carrier had the benefit of the six rather than the two-year period that it was able to deprive the Government of its right to establish a defense of unreasonableness because of the passage of the very same two-year period which the Court of Claims has held does not apply for the carrier's affirmative suit against the United States.
Felix Frankfurter: May I ask whether you are challenging what I gather from looking at your brief I've got only this morning, has been the position of the Court of Claims since 1926, that the six-year general statute applies in favor of a suit by a carrier against the Government as against the specific two-year. Do you challenge that -- that series that settled doctrine of the Court of Claims since 1926?
Morton Hollander: We -- Your Honor, we did not raise that as a question --
Felix Frankfurter: Well, you don't challenge it?
Morton Hollander: We -- we fear, Your Honor, we challenge it in the sense that we are firmly convinced that those decisions are plainly wrong and that --
Felix Frankfurter: I don't care about that. What I want to know is whether if they govern by a rule which has prevailed in the Court of Claims since 1926. I can understand, you are saying you think it's so wrong. We should throw it out of the window. But if you don't -- if you don't question it then you don't challenge it for my purpose, is that right?
Morton Hollander: No, Your Honor. I think that is an unfair inference.
Felix Frankfurter: Well, I don't mean to make any brief statement categorically what the Government position is --
Morton Hollander: We believe that this Court --
Felix Frankfurter: -- on that question.
Morton Hollander: Yes, Your Honor. We believe --
Felix Frankfurter: On that question.
Morton Hollander: Yes, Your Honor. We believe that this Court in its consideration of the referral issue in weighing the arguments pro and con may recognize on its own motion that the -- the real source of this difficulty is the Court of Claims' insistence on applying a much longer period of limitations to carrier suits against the United States. And we believe -- we believe that this Court if it is so inclined may examine to the validity of that underlying assumption of the Court of Claims and -- and if it does, if it seeks to examine the validity of the underlying assumption, we have set forth as appendices to our briefs, we've set forth of all the arguments we've presented to this Court in filing two petitions for certiorari, both of which were denied by this Court on that question. So, that if the Court want to examine into the validity of that underlying assumption --
Speaker: To put -- to put --
Morton Hollander: -- the materials are therefore --
Speaker: To put the matter another way, you think you can achieve your position up here without challenging the applicability of the six-year statute?
Morton Hollander: Yes, Your Honor. It's -- it's not essential --
Felix Frankfurter: And is that (Voice Overlap) --
Morton Hollander: -- for this Court --
Felix Frankfurter: I think you can't then you want the Court sua sponte to look into that interceding problem, is that right?
Morton Hollander: Well, we want the Court to look in to their problem if it bothers the Courts --
Felix Frankfurter: All right.
Morton Hollander: -- sufficiently in its consideration of the case as it bothers us.
Speaker: Mr. Hollander, your position is the Court does not have to overrule those cases in order to (Inaudible)
Morton Hollander: Yes, Your Honor. That is our position.
Earl Warren: Colonel Wiener.
Frederick Bernays Wiener: The Court please. In this case as in the (Inaudible) case argued last week, the Government comes before this Court asserting that it is not like other shippers. That it is not bound by the provisions of the Interstate Commerce Act, that it is not bound by the rules of this Court which forbids the smuggling of additional questions into the case after certiorari is granted, that it can shift its position on the classification issue and that it can welsh on the stipulation solemnly entered into at the trial of this case. I shall deal first with the question of procedure, the administrative law question arising out of the request for a reference and then with the question of classification. Now, there is one difference between the Government's position in the (Inaudible) and here. In the North appears it only sought one advantage over other shippers. Here it has several advantages over ordinary shippers now and at once another. Where a shipper, the ordinary shipper brings suit in Court for overcharges seeking to recover overcharges it's bound by limitations. But this Court has held and the lower courts following it have held that where the Government sues for overcharges it is not barred by limitations because it is the sovereign. And similarly, it has been held in the Court of Claims that where the Government counterclaims are on alleged overcharges that accrued before the period of limitations, it isn't bound by limitations. And the Government has an additional advantage and that is the Comptroller General's unilateral power of settle where as in the Bangor and Aroostook and Seaboard cases in this Number 18, the Government has paid the carriers at the billed rates. The Comptroller General has the power to say, “That was a wrong payment. I will deduct from your subsequent bills the additional amount that I think you were overpaid.” And that was done here and that is a power that can be exercised without any limitation as to time. Now, here as in so many other cases when that arbitrary exercise of the Comptroller General's power has been judicially condemned now, the Government wants to go to the Commission. Before then it was perfectly -- it is satisfied to invoke the administrative meet acts of the General Accounting Office. Now, it wants to resort to the expertise in the scope of the Commission.
Felix Frankfurter: On -- on what basis may the Comptroller General not honor the bill that's presented by the carrier since he got it?
Frederick Bernays Wiener: He will simply say and apply as here an erroneous rule of transportation law and say, “This wasn't the proper rate. These are different articles. You can't get this much.”
Felix Frankfurter: Did you say as here? What did they in here?
Frederick Bernays Wiener: In this rate, in this case, the articles were billed as incendiary bombs. I will show that under accepted theories of rate classification that was the correct classification. The Comptroller General said, they should have been billed as combination articles under the combination rule and simply deducted.
Felix Frankfurter: That's a rate -- is neither one nor the other that the Government spoke of, is that it?
Frederick Bernays Wiener: Yes. The Government's position here -- I mean they started out by saying that this isn't an incendiary bomb. And then they wanted a reference and with the petition for certiorari they said it is not an incendiary bomb because it is not covered by the explosives regulations. In the brief on the merits they said; “Well, anyway we should have -- should have been awarded summary judgment against it.” Now, in their reply brief and in their oral argument they reverted to the Comptroller General's notion that the combination rule applies and of course as I will point out later, it doesn't.
Felix Frankfurter: But, I still haven't got it included in my opinion. I understood from you that the Comptroller General in fact deducted the freight bill presented by the carrier.
Frederick Bernays Wiener: He did, yes. First, they were paid --
Felix Frankfurter: I just want to know is to -- to what will be deducted?
Frederick Bernays Wiener: The subsequent bills for the same carriers.
Felix Frankfurter: Not -- what subject matter -- on -- and on what basis did he say, doesn't fall under the incendiary case?
Frederick Bernays Wiener: He said -- he -- he did it on the basis of the combination rule. Rule, I think --
Felix Frankfurter: That's -- that's the different one from --
Frederick Bernays Wiener: Rule 17.
Felix Frankfurter: -- either one that we encountered here, is it?
Frederick Bernays Wiener: Well the -- the Government now, have to -- on its third position has got around to saying that the arguing that the combination rule was proper because all the ingredients for fifth class, therefore, the entire entity was fifth-class which of course hasn't been the law.
Earl Warren: How long -- how long after the -- the deduction was made by the Comptroller General? Was it before the action was brought by the carriers?
Frederick Bernays Wiener: Within the six years. I don't know exactly.
Earl Warren: I beg your pardon?
Frederick Bernays Wiener: Within the six-year period.
Earl Warren: But was that over to?
Frederick Bernays Wiener: I don't know. I think it may have been. But at any rate the -- the deduction, the instant -- the deduction, I think, was more than two years after the shipments had -- had been made. The record is silent as to the exact date of the deductions. All the record shows is that the deductions were made less than six years before the time this suit was brought.
Felix Frankfurter: Am I to infer from your answer to Chief Justice's question, you do not know the time period that that is irrelevant in that the settlement by the Comptroller General, unilateral action by him as it were quite clean up the whole slate, is that your position?
Frederick Bernays Wiener: Yes. I mean it's -- it's without limitations as this Court has held. The Comptroller General can come along five, six, 10 years later and say; “You were overpaid and we will set off this overpayment against your current bill.” And that's the way the Comptroller operates. Now, if another shipment wants to attack the reasonableness of the rate, and that goes to all questions of hazard, any question of reasons, he must apply to the Commission within two years. Now, the Government wants forever to apply. They had a remedy which they didn't invoke so we come to the central issue in this case which is, what is the nature of the limitation provision on the limitation for applying to the Commission for a determination as to the alleged unreasonableness of a rate.
Felix Frankfurter: When does the Government know that the rate which they are now claiming and this suit claim was unreasonable? When did they know that the carrier was insisting on that unreasonable rate?
Frederick Bernays Wiener: Well, I would say when the bill was presented.
Felix Frankfurter: And -- and?
Frederick Bernays Wiener: Which was well within two years of the time that the shipment was made I -- I assume that because railroads don't ordinarily wait two years to bill shippers so they knew it then and they could have -- they could -- so the -- the heart of the case is what is the nature of the limitations provision on applying to the Commission for determination of reasonableness vel non. What Mr. Hollander says there's nothing in the statute on it. But there's a great deal in the decisions of this Court and the rulings of the Commission and they are uniformly to the effect that the expiration of the statutory period is a limitation on the power of the Commission that in the language of Mr. Justice Brandeis's jurisdiction. In other words this is the limitation going not to the standing of the litigant but a limitation going to the power of the tribunal. And therefore, the Interstate Commerce Commission has held for years that when the United States seeks repatriation on the basis of an alleged unreasonableness of the rate, if they come in more than two years, later they can't succeed and they can't maintain the action. And the same rule has been applied to the ordinary shipper in this Court in the Morrisdale case. That was a case back in the 230th U.S. when the concept of the exclusive Commission jurisdiction over questions of reasonableness was first being formulated and the Morrisdale case came up at about the same time as the Mitchell case to which is of course a leading case. And Morrisdale's lawyers seeing their cause of action going glimmering said, “Well, all right. If we can't have the District Court, the Circuit Court as it then was determine the question of reasonableness at least let us suspend so that we can go back to the Commission.” And this Court said, “Sorry. Your time for going to the Commission has expired.” Now, it is said by the Government here, while the Government is different. This is a judicial reference. Well, now supposed that the Court of Claims had exceeded to my Brother's request had suspended the proceedings said “Okay. You ask the Commission.” Well, what would the Commission have done when the Government had come in there for a determination? It would have thrown the Government out on its sovereign here because under a long line of cases the Government stood in no different position. “Well,” says the Government, but here the -- the -- this is different, the shippers in these other cases were seeking affirmative relief. We are not seeking a affirmative relief, we are defending, Wrong. Here, the Government is seeking affirmative relief in three different aspects. In the first place, as I have indicated if there was such a suspension and they went over to the Commission, they'd be asking affirmative relief. In fact, I think whenever anyone assails the lawfulness of a published rate which until set aside as of course the legal rate, he is seeking affirmative relief and more specifically, the Court of Claims and only very recently the First Circuit have held that where the issue before the Court has to do with the lawfulness of the deductions made by the General Accounting Office, it is the Government which is in the position of seeking affirmative relief because it is seeking to justify the set offs it has made. Now, there's a lot of talk about unfairness. I don't know if we advanced analysis by bonding about epithets like unjust, unfair, discriminatory, I propose every losing litigant feels that he was dealt with unfairly otherwise he wouldn't try to take it up farther. But is it unfair? Is it unfair to say that the Government that if you invoke the -- the -- the blunt techniques of the General Accounting Office and I will show in a minute just how blunt they are. If you invoke those -- those techniques in cases which you say are so important that they're a fit subject to this Court on certiorari. Is it unfair that when you get licked on it and you've waived your right to go to the Commission a court says, “You can't go to the Commission”? And of course on the question of the six-year statute of limitations, I think, the answer there is that the Government could have raised it on the petition for certiorari. They didn't raise it. It isn't open here. Its not jurisdiction -- jurisdictional in the constitutional sense, these are rulings that have stood for 30 years just as the contrary rulings of the Government isn't bound by limitations when it sues for overcharges twice. Seven years ago, the petition was denied. If the Government can now reopen denied petitions after seven years, I dare say that a lot of other litigants would like to be in that position. I come now to the question of classification. It was stipulated at the trial of these three cases. It was at the pre-trial conference in one case, in the Western Pacific and the -- request for admissions in the other two that these articles were just the same as those shipped in the earlier incendiary bomb case, the Union Pacific Case in 125th Court of Claims. Now, the Government says after we have pointed to the findings in the Union Pacific case, the present cases are therefore entirely different from Union Pacific and respondents attempt to rely on the decision rendered on the record as developed in the latter case is plainly unwarranted. I would like to know when it is unwarranted to rely on the stipulation that's in the record.
Earl Warren: Where is the stipulation Colonel?
Frederick Bernays Wiener: The stipulation as to the Western Pacific case is record 5, item 2.
Earl Warren: Thank you.
Frederick Bernays Wiener: The -- in the other cases we've been -- I mentioned it in the brief. It's in the -- it's in the request for admissions. Never -- never until the -- the reply brief here was it ever suggested that that stipulation was of no validity. In the -- in its petition for certiorari, the Government attacked the classification made by the Court of Claims on the ground that the --
Earl Warren: May I ask you --
Frederick Bernays Wiener: Yes, Your Honor.
Earl Warren: -- what -- what did you say the effect of the stipulation was?
Frederick Bernays Wiener: The effect of the stipulation was that in determining the nature of the shipments here and in determining whether there was any question of fact left open by reason of the affidavits filed below in response -- in opposition to the carriers' motion for summary judgment whether there was any question of fact. And we show in the brief that every factual -- relevant factual finding made by the Court of Claims in the UP case is covered by the affidavits so that therefore there is no question of the fact open. And we also say that the question whether there is question of fact open, not having been brought -- raised in the petition isn't open here but were -- were answering it because were not afraid of it.
Earl Warren: Well, as I read -- as I read this, all the stipulation does is to say that the articles transported in these cases, in these instances are like the articles transported in Union Pacific --
Frederick Bernays Wiener: Yes.
Earl Warren: -- case number --
Frederick Bernays Wiener: Yes.
Earl Warren: -- 49505. Now, does the Government claim at this time that the articles in this case were transported are different from those?
Frederick Bernays Wiener: That -- that's the substance of -- of good deal of the reply brief, I say that the present cases are entirely different from Union Pacific and respondents attempt to rely on the decision rendered on the record as developed in the latter case is plainly unwarranted.
Earl Warren: Now, Colonel, that -- that doesn't quite meet the point I -- I make. They say the cases are different but are they -- are they saying any place in their brief or did he say -- did Mr. Hollander say on his argument here that the articles transported in these instances were unlike those transported in the Union Pacific case?I didn't so understand it?
Frederick Bernays Wiener: Well that's -- that's the way I read his brief.
Earl Warren: Well, where in his brief does he say that? That's what I'd like to see because that's rather substantial thing in the case, it seems to me (Voice Overlap) --
Frederick Bernays Wiener: That's on page 8. And it says obviously, the Court of Claims -- opinion in Union Pacific does not justify deprivation of the Government's right to a day in Court and to a trial on the merits of the instant cases in which an entirely different record was developed.
Earl Warren: Well, Colonel, isn't that entirely different from saying that the -- that the items transported were similar to those --
Frederick Bernays Wiener: Well --
Earl Warren: -- in the two cases? I -- it seems to me that that's only the difference.
Frederick Bernays Wiener: The only points urged for differences are points that are covered in the Union Pacific case. One of the great -- one of the chords of this crescendo waive is that napalm gel, the jellied gasoline is not incendiary in the sense of not being self-igniting. Well, that was the finding of fact in the Union Pacific case. Another point is that the safety regulations don't apply and that I take it is a question of law. Now, if I may briefly turn to the issues --
Felix Frankfurter: +Before you -- before you do that. On page 6 of the record, paragraph three, I should think unless I misread what the Commissioner certified as having been at least as in the (Inaudible) The difference between the charge claimed by the plaintiff and the charges made by the defendant as reported by the General Accounting Office and on the basis of the Court's decision in the Union Pacific case is in dollars paid --
Frederick Bernays Wiener: Yes.
Felix Frankfurter: -- as follows.
Frederick Bernays Wiener: Yes. Well, the articles are the same --
Felix Frankfurter: It seems to me to mean anything except that the Union Pacific case is controlling in determining the recovery in this case?
Frederick Bernays Wiener: Yes, yes. Now, I turn now --
Hugo L. Black: I do not -- I do not understand how can read that conclusion --
Speaker: Neither do I.
Hugo L. Black: -- from the Union Pacific case --
Frederick Bernays Wiener: How what?
Hugo L. Black: -- controlling investment. Just from that it doesn't say that.
Frederick Bernays Wiener: Well, there's a stipulation that the articles are the same --
Hugo L. Black: What it says that the difference is so many dollars --
Frederick Bernays Wiener: I know, but the --
Hugo L. Black: -- in the way they figured the difference in the Union Pacific case.
Frederick Bernays Wiener: They --
Hugo L. Black: It doesn't say that you could be governed in everything about the case.
Frederick Bernays Wiener: No. I -- I'm not -- all I'm saying is that the articles are the same in fact. And now, I'll address myself to the proposition that the Union Pacific decision is correct. And --
Earl Warren: Well, but what I want to know is did -- did it -- did the Government either in its brief or in its argument here contend that the articles were not the same in fact as to Union Pacific. If they did, I'd like to --
Frederick Bernays Wiener: That is --
Earl Warren: I'd like to see it.
Frederick Bernays Wiener: That is the way --
Earl Warren: And I think that's important.
Frederick Bernays Wiener: -- I read their point brief, beginning at page 8 --
Earl Warren: Of their brief?
Frederick Bernays Wiener: Of their reply brief.
Earl Warren: Would you read the language that you think encompasses that?
Frederick Bernays Wiener: Well, it's about -- it's about -- it's several pages, Your Honor. It begins at --
Earl Warren: Well --
Frederick Bernays Wiener: -- 3 (A) on page 8 of their reply brief and it runs over -- it runs over to the middle of page 11 and that's a rather a long piece to read out of the 30 minute allotment for time.
Earl Warren: All right, go ahead.
Frederick Bernays Wiener: But it's -- it's --
Earl Warren: Go ahead.
Frederick Bernays Wiener: -- its there. Now --
Felix Frankfurter: I don't mean to suggest that it isn't open to the Government to challenge the Union Pacific case in this -- in this argument. I do mean to suggest and adhere to the suggestion of their veteran bodies that that sentence means nothing unless it means that on the basis of the classification to Union Pacific. In fact, if the circumstances being to say it amounts to $14,000 (Voice Overlap) --
Frederick Bernays Wiener: Exactly. I -- I don't read that as --
Felix Frankfurter: Is there anything else unless it means that?
Frederick Bernays Wiener: I don't read -- read that as precluding they're arguing the law and that's the point I would like -- and I would like to address myself to. Now, the basic principle followed by the Court of Claims is a well-settled principle, namely, that the absence of essential parts not affecting the identity of an article offered for transportation doesn't destroy its fundamental character from the tariff's standpoint. Also, the Court of Claims held that the combination rule didn't apply. There is a very compelling reason why the combination rule doesn't apply and it's this. The combination rule applies -- does not apply to articles having the characteristic of an entity and these incendiary bombs without bursters or fuses do have the characteristic of an entity for two reasons. In the first place, you cannot accept with great difficulty, get the jellied gasoline out of the bomb case once it has been put in and second there is no known method by which the jellied gasoline can be separated into its component parts of napalm soap powder and liquid gasoline. Therefore, the articles have the characteristic of an entity and therefore, the combination rule does not apply. There is another argument made by the Government that these articles as shipped are not subject to the I.C.C.'s safety regulations. We think they are because the I.C.C. safety regulations cover a great many classes of articles not only the highly hazardous but also those lesser. If it is material we can file a supplemental memorandum tracing this particular item through some seven titles, a very complicated and involved I.C.C. regulations published in 49 C.F.R. but it doesn't ask for this reason. This Court has held in the case characteristically not cited or discussed by the Government that whether or not a particular article is subject to the safety regulations has absolutely no bearing on its classification for tariff purposes. That's the Gulf Refining case from the 268th United States. So that applying -- applying those set of rules of classification that first that the absence of essential parts doesn't affect the character of the shipment. Second, that the combination rule is not applicable to articles having the characteristic of many. And third, that the applicability or otherwise of the safety regulations has noting to do with tariff classification, the answer is clear of the Court of Claims correctly classified these shipments as incendiary bombs.
Felix Frankfurter: What do you say by venue that I.C.C. is much more competent in raising validity of those three arguments than I have?
Frederick Bernays Wiener: I think this is a simple question of classification and as a matter of fact, this is the -- the Court of Claims or the District Court under the Tucker Act is the only place where the railroads could go to recover the deductions because the I.C.C. has no power to -- has no jurisdiction to award judgment for undercharges. I mean this is not the -- this is not the -- a dispute between the shipper and the railroad over a bill. The bill has been presented, the bill has been paid. The Comptroller General has made the deduction and the only remedy the -- the -- carrier has is to sue the Government to recover the deductions and when it's a -- and there are only two tribunals one would be the District Court and since these -- these claims are an excess of $10,000 they've got to go to the Court of Claims and that jurisdiction has never been questioned but it doesn't --
Felix Frankfurter: And the question of the jurisdiction of the Court getting enlightenment on the -- on the classification from the Commission in order to exercise it?
Frederick Bernays Wiener: Well, but -- but that's simply under the Great Northern case, the question of an interpretation and there are tools at hand. These rules of classification that had been developed by the Commission which we have set out at, perhaps, undue length in our brief because of the Government's silence on them doesn't make it possible to arrive at a conclusion. And the only point that isn't open to the Court is whether having regard to the admittedly less hazardous feature of these bombs shipped the way they were, the rate is or is not reasonable and as to that there's a limitation. Now there's also an estoppel point but --
Earl Warren: Suppose these -- suppose these casings were not filled with that jelly, would you still be entitled the rate?
Frederick Bernays Wiener: No, Your Honor. Because then they would be empty bombs -- bomb cases. There's a special rate tariff for that.
Earl Warren: Do you -- do you contend that this jelly is more volatile and more dangerous than gasoline which is its principal component part?
Frederick Bernays Wiener: Well, they were certainly more dangerous than gasoline when they were dropped from our airplanes on enemy cities. But --
Earl Warren: I know but they had --
Frederick Bernays Wiener: But --
Earl Warren: -- fuses, they had fuses and explosive --
Frederick Bernays Wiener: Well --
Earl Warren: -- characteristics and didn't even -- were not here.
Frederick Bernays Wiener: I don't know whether it is -- whether this gel, this fearsome napalm gel is more dangerous or less dangerous than the -- than the plain gasoline, I don't know. That would be a question for -- that's a question of a -- a factor of hazard to be considered by the Commission in a proper proceeding along with all the other complex and multifarious factors that go to make up the -- the reasonableness of the record. And -- and if -- if as the Government said in its petition this -- this is such a recurring problem, this involved so many shipments, this is so vital to the Government they could have gone to the Commission the moment the first bill was presented back in 1944.
Hugo L. Black: Colonel Wiener where is the -- that precise language for this rate in the record? Does it say incendiary bombs or what did it say?I -- I haven't seen that in either records.
Frederick Bernays Wiener: It says incendiary bombs but I think it is more fully covered in our brief.
Hugo L. Black: The language --
Frederick Bernays Wiener: Oh, its --
Hugo L. Black: The language is what I wanted to be -- of the tariff's.
Frederick Bernays Wiener: Well, the language of the tariff appears in the Government's brief at pages 30 and 31 and it's items -- it's item 1820.
Felix Frankfurter: On your mind, loose or in packages?
Frederick Bernays Wiener: Yes. These were in packages. 1820 is and 1800 is ammunition explosive or incendiary.
Hugo L. Black: Now, which one is it, do you think governs this one?
Frederick Bernays Wiener: Well, this is incendiary. This is incendiary ammunition at --
Hugo L. Black: Number which -- what number which was?
Frederick Bernays Wiener: 1820.
Hugo L. Black: 1820.
Frederick Bernays Wiener: 1820 which is a subhead under item 1800.
Hugo L. Black: Do you -- your contention is that these were explosive incendiary. They're incendiary?
Frederick Bernays Wiener: It was an incendiary bomb. The Court of Claims found it had no purpose other than incendiary bombs now. And the Court of Claims in the Union Pacific case held that is was incendiary even though it found as a fact that it wasn't self-igniting because it was an explosive ammunition that would be shrapnel high explosive. It wasn't a gas smoke, it wasn't tear-producing. Incendiary was the only classification.
Hugo L. Black: The reason --
Hugo L. Black: I don't --
Hugo L. Black: The reason I asked was in connectin with Judge Madden's dissent (Voice Overlap) --
Frederick Bernays Wiener: Well, Judge Madden's dissent with all deference simply comes down to a -- to a feeling. Well, let's look into the question of the reasonableness of the rate and that's all in the world (Voice Overlap) --
Hugo L. Black: Did I misunderstand him? I thought he said that you people agreed it was not incendiary --
Frederick Bernays Wiener: Oh, no.
Hugo L. Black: -- except they've given the name incendiary.
Frederick Bernays Wiener: Oh, no. We never agreed --
Hugo L. Black: That is not correct.
Frederick Bernays Wiener: We -- we agreed it wasn't self-igniting. We don't question the findings. It's not self-igniting but as a matter of tariff classification that's an incendiary bomb, all you have to do to make it work is for a GI out in the field to screw in the first term fuse and take off the arming wire and there it is.
Hugo L. Black: Out in the field --
Frederick Bernays Wiener: Out in the field.
Hugo L. Black: -- they add -- add something to it to get ignited.
Frederick Bernays Wiener: That's right. But under a -- under an unbroken line of ruling, the absence of essential parts doesn't destroy the character of an article offered for transportation even though it won't work without those articles.
Hugo L. Black: Well, you're saying that the meaning given here is that even though it is not incendiary in the sense that it will explode but nevertheless is to be considered as such --
Frederick Bernays Wiener: That is correct.
Hugo L. Black: -- under the -- under the ruling.
Frederick Bernays Wiener: Under the -- under the -- under a long line of -- of ruling is in accordance and the Commission. As a matter of fact you can reach it two ways. One, the absence of incendiary -- of essential parts doesn't affect its character and the second is analog -- the rule of analogy, it's more nearly analogous to an incendiary bomb than it is to an empty bomb.
Hugo L. Black: Well, was this -- is this anymore explosive than -- I think someone asked you that question, I'm not sure, they're just plain gasoline?
Frederick Bernays Wiener: Well it -- it -- burns much more fiercely. It burns (Voice Overlap) --
Hugo L. Black: Is it more explosive and more incendiary, more easier to explode?
Frederick Bernays Wiener: But I would say probably about the same except there may not be that the -- the fumes.
Hugo L. Black: Now, what's -- what's the rate on gasoline?
Frederick Bernays Wiener: The rate on gasoline I think is fifth-class and the rate on napalm powder is fifth-class and the rate on -- on the empty cases is fifth-class, none constant that the rate on the combination which has the characteristic of an entity should be fifth-class also.
Hugo L. Black: That -- that -- that's the difference. I'm just trying to get what it is --
Frederick Bernays Wiener: Yes.
Hugo L. Black: -- the real difference here.
Frederick Bernays Wiener: Yes. Well --
Hugo L. Black: It is that even though this might not be within the classification of being more incendiary explosives and gasoline nevertheless, under the practice and the classification is to be treated as an incendiary bomb within the meaning of 1800.
Frederick Bernays Wiener: That's right. Yes. And -- and that's perfectly clear and -- and if -- if that is thought to be an -- an unreasonable rate, the way was open but the way to -- the way to deal with unreasonable rates is not to have the Comptroller General say it that the combination rule applies when it doesn't. I mean against that kind of administrative arbitrariness the carrier is entitled to resort to a court.
Hugo L. Black: You haven't discussed one thing and I -- I don't like to interrupt you but I am interested in it and I -- I don't understand it fully yet, I don't understand the answer. If the Government is given six years in which to file this suit --
Frederick Bernays Wiener: The carrier I think, Your Honor.
Hugo L. Black: The carrier and the Government can be sued at anytime within six years, actually action motive, why -- on what basis should the Government be denied the right to offset or to set up as a defense or to recoup or whatever it is, if -- if a suit is actually brought against it even though the two years for bringing an affirmative action has expired?
Frederick Bernays Wiener: Because this Court and the Commission have said for many, many years going back to about 1910 that the limitation for going to the Commission on a claim of unreasonableness bars the power of the Commission. Now, it may be -- it may be that that is something Congress ought to look in to but here for -- for nearly 50 years its been held without even a recorded dissenting vote that this is jurisdiction, it bars the power of the Commission.
Hugo L. Black: Well, I understand but --
Frederick Bernays Wiener: Yes.
Hugo L. Black: May I ask you this? Has there been any case yet that passed on this point?
Frederick Bernays Wiener: Yes. The -- I would say the Morrisdale case from the 230th of U.S. have --
Hugo L. Black: You think it held that you cannot set it up as a defense?
Frederick Bernays Wiener: Yes. When it -- when you -- when it come --
Hugo L. Black: Even though it arises out of the same transaction and it's purely --
Frederick Bernays Wiener: That's our precise case.
Hugo L. Black: That's the Morrisdale.
Frederick Bernays Wiener: Morrisdale case, 230 U.S. --
Hugo L. Black: Is that the only case?
Frederick Bernays Wiener: That's the only case I know of but it has never been questioned and it was explained later on in the footnote as saying, “Well, no reference was ordered there because no rights could be saved thereby. The reason being at the time had expired and the Commission was powerless to do anything about it.”
Hugo L. Black: Morrisdale?
Frederick Bernays Wiener: Morrisdale Coal Company against the Pennsylvania, 230 U.S.204 at 214 to 215.
Felix Frankfurter: If the Government here knows that the railroad should claim these bombs that come under -- what is it 1840?
Frederick Bernays Wiener: Well, the --
Felix Frankfurter: Did the Government -- I'm going to --
Frederick Bernays Wiener: Pardon me.
Felix Frankfurter: If the Government know that tariff 1820, isn't it?
Frederick Bernays Wiener: Yes, Your Honor.
Felix Frankfurter: When was that filed originally?
Frederick Bernays Wiener: Oh, I don't know, it hasn't changed much. I mean it's filed and re-filed but I -- it's -- it's been -- it was --
Felix Frankfurter: But what I want to know if the Government have means of contesting a known claim by the railroad that that tariff covers these kind of bombs in ample time to protect itself against claims by the Commission, a collection by the Commission which would be barred --
Frederick Bernays Wiener: Yes. I -- I think the answer is “yes” because the bills, the carrier's bills which are in the record show the shipment of so and so many crates of incendiary bombs, NP1 without bursters or fuses and was billed in item 1 --1820.
Felix Frankfurter: As of what date?
Frederick Bernays Wiener: Back in 1944 when the shipments were made.
Felix Frankfurter: Well then, the Government then and there, from your point of view to the broader proceeding before the Commission, challenging the reasonableness of that rate and seeking to have it declared unreasonableness -- unreasonable insofar as apply to this kind of commodity?
Frederick Bernays Wiener: Yes, Your Honor.
Hugo L. Black: Well, may I ask you this in that connection because this gets to a little more than just I think, of claims decision on cases heretofore. The Government did know, we'll say that there had been cases it held that it had to sue within two years.
Frederick Bernays Wiener: Yes, sir.
Hugo L. Black: But --
Frederick Bernays Wiener: Beginning at 80 I.C.C.-- U.S. v. Director General in 80 I.C.C.
Hugo L. Black: Yes. But the Government knew that it -- the Government that the railroad had not filed any suit, had it notified the Government that it was going to try to collect the -- I -- I presume (Voice Overlap) --
Frederick Bernays Wiener: Well in -- in -- in all --
Hugo L. Black: The Government doesn't file suits because it would take it as -- acquiesced it.
Frederick Bernays Wiener: In -- in all three cases, the carriers billed the Government at the higher rate. In the Western Pacific case, the Government paid at the lower rate. In Bangor and Aroostook and Seaboard the Government paid at the higher rate and then sometime later the Comptroller General made or authorized deductions against subsequent bills.
Hugo L. Black: Well that -- that raises a different question.
Frederick Bernays Wiener: Yes.
Hugo L. Black: Litigants put it up in different --
Frederick Bernays Wiener: Yes.
Hugo L. Black: -- different charges.
Frederick Bernays Wiener: But -- but under the -- under the Saint Louis and Brownsville, the mere fact of waiting for the period of limitations does not constitute gross acquiescence so as to bar the carrier.
Felix Frankfurter: Either four or five Union Pacific case, which is the one that you referred in the so-called stipulation?
Frederick Bernays Wiener: 125 Court of Claims, I think its 393.
Earl Warren: Mr. Hollander, I asked Colonel Wiener, what was the date of the deduction made by the Government and how long thereafter was it before the railroad company filed its lawsuit? Do you know those dates?
Morton Hollander: Your Honor, there are three cases involved in this litigation. In the first case, Western Pacific, there were no deductions. The Government was billed in 1948 and in 1950 at the high first class rate. The Government paid promptly the lower fifth-class rate in 1948 and in 1950. Suit was filed by the carrier in 1954, four years after the latest payment and six years after the earliest payment. And the other two cases of Bangor and Aroostook and Seaboard, all of the shipments took place in 1944. The suit was filed by the carrier in 1954 but in that -- in those two cases the Government did as Colonel Wiener has pointed out, did pay the carriers originally in 1944 at the higher first class rate. Later the G.A.O. it's only in these two cases that the G.A.O. took any action of -- the G.A.O. did make a deduction when, the record is not indicated whether it was within two years prior to 1954 or within six years prior to 1954 that those deductions were effected and those two cases the record does not show.
Felix Frankfurter: The Government paid promptly in the Aroostook and the Seaboard?
Morton Hollander: Yes. Yes, Your Honor.
Felix Frankfurter: That is to say in 1944 (Inaudible)
Morton Hollander: Yes, Your Honor. In 1944, they've paid at the higher first class rate promptly then they exercised the statutory right to recoupment.
Felix Frankfurter: The shipment was in 1944 when the payments were made?
Morton Hollander: Yes., Your Honor.
Earl Warren: Mr. Hollander, are these deductions made by the Government under this permissive act isolated instances or does it happen as a matter of daily routine, do you know?
Morton Hollander: I -- I don't know the -- the answer to that question, Your Honor. I don't know what the percentage of cases in which it is necessary for the Government to exercise this right of recoupment. Actually this is really a provision that the carriers were insisting on putting in the 1940 Transportation Act because before that time the carriers did not get prompt payment, they had to wait until final audit by the General Accounting Office that they complained took too long a period. They were able to persuade Congress to require the Government to pay promptly, even if the Government had some doubt as to the appropriate classification. And then the carriers told the Government, “Well, G.A.O. can come at anytime it wants to in post audit and we'll even make a refund or you can deduct.” And that's precisely what happened in the Transportation Act of 1940. Congress directed the Government whenever it gets a carrier bill to pay it promptly then if -- then if you want to, if you have these hundreds of thousands of vouchers, bills of lading to examine that did accumulate during the war then the G.A.O. could examine those -- those vouchers in their due course and make the necessary deduction whenever they finally reach that particular stack of vouchers. What the -- what the respondents really are asking for here by insisting that we go to the Interstate Commerce Commission within two years by saying that we slipped in our rights by not going to the Interstate Commerce Commission within two years. What they're really trying to do is to strip the Government completely of the post audit protection, Congress expressly reserved to it in this Transportation Act of 1940 as consideration for this prompt payment that the Government was required to make to the carriers.
Felix Frankfurter: Well, you would admit, don't you that the I.C.C. is a more informed body to determine what classification tariff, what classification apply to the General Accounting Office. The Government thinks that -- that a bill that is presented and under these classification with all -- with all great respect to that on (Inaudible) offer, General Accounting Office are usually the I.C.C. the better place to fight this out than General Accounting.
Morton Hollander: Well, I -- I agree, Your Honor. That certainly on the reasonableness question it is. But the fact that -- the fact that Congress entrusted the G.A.O. with this right to make a -- the initial deduction that that certainly leaks the view from a reading of the Transportation Act --
Felix Frankfurter: I didn't question what Congress has ordered --
Morton Hollander: And -- and the -- the Government notwithstanding the First Circuit decision that Colonel Wiener relies on, the -- the Government is never before had to establish the correctness of the deduction or the illegality of an overpayment before these deductions are effected. That was true before the Transportation Act in 252 U.S., Justice Brandeis's writing for a unanimous court and that has been the law ever since right through the Transportation Act of 1940, he pointed in a -- a case very closely important because in that case the -- the Government had the carrier claimed underpaid it and by virtue of the fact that the Government in 1912 had effected the deductions against the carriers' account for the prior 12-year period.
Speaker: Mr. Hollander are you going to say anything more about the Morrisdale case?
Morton Hollander: I'd like very much, Your Honor if I may to address myself to that case. But I was just about to say, Your Honor, that in this justice -- in Justice Brandeis's case, the Government -- it was the Government's right to effect these deductions in 1912, was attacked and Justice Brandeis bluntly rejected the argument that the Government has to come in first into Court or before a committee to establish the legality of the deductions or the illegality of the overpayment. Now, Morrisdale, Your Honor, we feel is -- is not at all even in point in this case. It is not true that Morrisdale in response to Mr. Justice Black's question precluded the consideration of a defense asserted by this shipper. That, Your Honor, is not true. Morrisdale -- Morrisdale typifies the situation where a plaintiff or a claimant having an affirmative claim has an opportunity to go before an administrative tribunal within a fixed period of time. He let's that fixed period of time go by, the right --
William O. Douglas: That's -- that's true to here.
Morton Hollander: Well here -- here, Your Honor, the people who let the fixed period of time go by originally was the carrier, the plaintiff --
Felix Frankfurter: Not under six -- not if the -- not if the six-year rule prevail.
Morton Hollander: Well --
Felix Frankfurter: You can't blow hot and cold on this.
Morton Hollander: No. I -- I certainly realized that and I don't want to attempt to. I would like to point out however though that in Morrisdale, the situation was this. The -- the shipper in that case filed suit in the District Court. He had no business under the Abilene case.He had no business even filing that suit in the District Court until he had theretofore obtained an I.C.C. determination. That -- that there are no -- no question in that case. He had no right to go into Court in to the primary jurisdiction until he had obtained the I.C.C. determination.
Felix Frankfurter: He didn't know --
Morton Hollander: He had little --
Felix Frankfurter: -- how the courts decided that.
Morton Hollander: Well, the Court -- the Court -- the --
Felix Frankfurter: He didn't know that until the Court decided that.
Morton Hollander: The Court's opinion indicates that he should've been wiser before their decision. The -- the shipper in that case left a period of time go by. He had two years to go before the I.C.C. The shipper left that period of time go by. He let's the two year period of time go by and then he comes into Court and the Court says, “Well, what you should have gone first to the I.C.C. and you let that period of time go by. We're not going to let you come into Court now after the two-year period of time in which you could have gone to Commission has gone by.”
Felix Frankfurter: But you -- could you not have gone to the Commission to just prove the reasonableness of this rate?
Morton Hollander: No, Your Honor. There was no need. There was no what.
Felix Frankfurter: Why not?
Morton Hollander: Well, let me tell you why, Your Honor. In the Western Pacific case for example, we take promptly in 1948 and in 1950 on the basis of the lower fifth-class rates and so far as the record in this case is concerned -- so far as the record in this case is concerned that it was paid -- complete at that time. The -- the account was settled. We did not know until six years later in 1954 that when suit was filed in the Court of Claims that our -- a deduction was being -- that our alleged underpayment was being attacked by the carrier and we would have been thrown out, I think, it's quite properly so by the Interstate Commerce --
Felix Frankfurter: That wasn't true --
Morton Hollander: -- Commission if we had gone as so prematurely.
Felix Frankfurter: That wasn't true of Bangor and Aroostook I gather?
Morton Hollander: In Bangor and Aroostook, Your Honor, in Seaboard I think there are even more decisive considerations militating against the possibility of the Government going to the Interstate Commerce Commission within two years after 1944 because if as I had pointed out before the Government is required to go to the Interstate Commerce Commission within two years after 1944 that means that that statutory reservation of post audit protection is completely thrown out of the window its -- its been made meaningless.
Felix Frankfurter: As I understand this deduction was made the same year?
Morton Hollander: No, Your Honor. In the Western -- in the Bangor and Aroostook and in Seaboard, the record is silent as to when the deductions were effective. All we know is that prompt payment of the higher amount was made at the carriers' request in 1954, a deduction was made sometime in the next 10 year period of time and at the end of that 10 year period of time in 1954 the carrier comes into Court and files this suit.
Felix Frankfurter: But, if you had -- if the Government has gone, I take it you're in an (Inaudible), aren't you?
Morton Hollander: Yes, Your Honor. If I assume I'm not using the time of that case.
Earl Warren: Had not heard that yet.
Felix Frankfurter: It's what they (Voice Overlap) --
Morton Hollander: Well, I thought in that wherever we represent --
Felix Frankfurter: (Voice Overlap)
Morton Hollander: Yes, Your Honor. I thought it --
Felix Frankfurter: I've just -- just the same question now, is it?
Morton Hollander: Yes, Your Honor.
Earl Warren: But we're still in this, I've got a question I'd like to ask in this case for within it?
Felix Frankfurter: In this -- in this case, would you have been thrown out if you've brought up an action for the I.C.C. saying the Government has billed us at a rate on a wrong class on -- they claim this is the classification and we think that this is an unreasonable classification. Would you have been thrown out by the I.C.C.on 1945 or 1944?
Morton Hollander: Well, Your Honor there -- first of all, Your Honor, there -- there was no basis. Actually, I don't know where in the Government we -- we --
Felix Frankfurter: Isn't that a bill presented on the -- under the -- first on --
Morton Hollander: Congress?
Felix Frankfurter: -- classification.
Morton Hollander: Yes, Your Honor. But in 1940, Congress said at the carriers' request they told us, Congress told the Government, “Now look, you get those bills, pay them. Pay them on presentation. That's the way the statute reads.” All right. We pay those bills on presentation. They go over to G.A.O. G.A.O.'s machinery has to start to function. As I say they were -- the -- an enormous amount of bills naturally accumulating during the world war period when there were so, so many thousands, hundreds of thousands of shipment of military supplies over to domestic carriers.
Felix Frankfurter: But you know what the carriers' position was and the carrier isn't going to render you a bill and the next they change his mind, is it? What I want to know -- (Voice Overlap) --
Morton Hollander: Well, I don't know, Your Honor. I think --
Felix Frankfurter: What I want to know is whether the I.C.C. had jurisdiction to entertain a suit, a proceeding by -- by the shipper with the United States or any other shipper saying, this tariff is unreasonable.
Morton Hollander: I think -- I think -- they all -- I -- I can only answer, Your Honor, in this way. I take it was imperfectly justifiable for the I.C.C. to throw us out and to tell us, “Now look, you have the statutory right reserved to you in the Transportation Act in 1940 to effect the deduction of any amount you claim is unfair.” Now, you exercise that right and then come running to us if again any difficulty but if you are able to settle this through the -- through the exercise of this explicitly reserved right well than -- than of course --
Felix Frankfurter: You think -- you think if I have been under the Interstate Commerce Commission I could have said to you no mater what the General Accounting Office judge, they can't determine the relevant and reasonable tariff. That's the business with the permission with oversight by the Court. You don't think I could have said that instead of course that I won't take it.
Morton Hollander: I --
Felix Frankfurter: All right.
Earl Warren: Well, Mr. Hollander, two of these cases, the railroad charged the low-rate didn't it?
Morton Hollander: No -- no, Your Honor. In all three cases the record shows that the railroad --
Earl Warren: Oh, I beg your pardon.
Morton Hollander: -- did demand a higher rate.
Earl Warren: The higher rate.
Morton Hollander: But in --
Earl Warren: May I ask you this then that's (Inaudible)
Morton Hollander: But we paid in two of the -- in the Western Pacific case --
Earl Warren: Yes.
Morton Hollander: -- which is 1948 -1950. We paid initially the lower rate.
Earl Warren: Yes. May I ask you this? Bearing upon the question of reasonableness as to the Government going to the Interstate Commerce Commission to ask advice on each one of these deductions, do you think you could get for us a number of deductions that were made say since --
Morton Hollander: Oh, yes.
Earl Warren: -- of the present time since these cases --
Morton Hollander: I'm sure --
Earl Warren: -- since these shipments were made --
Morton Hollander: I be delighted to --
Earl Warren: -- just so we know --
Morton Hollander: -- furnish a supplemental memorandum --
Earl Warren: All right. If you will please.
Morton Hollander: -- to show the (Voice Overlap) the burden under which G.A.O. operated.
Earl Warren: All right.
Morton Hollander: May I, Your Honor, have the Court's indulgence to answer Mr. Justice Harlan's question?
Earl Warren: Yes. If it -- has your question been answered?
Speaker: Well, I thought of that and maybe there's one little at that point. [Laughter]
Morton Hollander: Well, I -- I wanted to distinguish that Morrisdale --
Earl Warren: Well, I think we better get on to the next case now. It's in your brief I take Mr. Hollander?
Morton Hollander: Oh, yes, Your Honor, we're content to rely on the distinctions in the brief.
Speaker: I would like to ask you --
Earl Warren: Yes.
Speaker: -- why -- why did you pay the lower rate on Western Pacific case?
Morton Hollander: Why did we, Your Honor?
Speaker: When the Congress have told you to pay the --
Morton Hollander: Well, the -- the answer to that, Your Honor, is that by the time 1948 law, these shipments took place in the Korean conflict in Western Pacific. The -- the shipments in the other two cases took place in World War II. By the time the shipments in Korean conflict took place in 1948 and 1950 the administrative agency, the War Department of the Army had already been alert as to the fact that the carriers were charging the higher first class rates for these good which should have been shipped at the relatively lower fifth-class rates.
Speaker: So (Voice Overlap) --
Morton Hollander: So, the problem had already been aired, it was a matter of common knowledge and it was possible -- it was possible for the -- for the Army to -- to realize what the true situation was at the time of presentation in the bills and the record shows that they were paid promptly, its just that they were able to cash the error in the bill before it was processed administratively. It never did go on to the G.A.O. where any post (Voice Overlap) --
Speaker: Not -- not until they told you to pay the higher amount --
Morton Hollander: No. That they told us only --
Speaker: (Inaudible)
Morton Hollander: They told us only, Your Honor, to pay promptly on presentation before audit by the General Accounting Office and that -- that mandate was complied with in order with the pay system and there hasn't been any challenged that we pay promptly prior to audit by the G.A.O.