Reply Brief — Phoenix-El Paso Express, Inc. v. National Carloading Corp.

4

not made until May 12, 1941. During the period from Au-

gust 9, 1935, the date the Federal Motor Carrier Act was

approved, until May 12, 1941, Craig conducted himself and

complied with the rules, regulations and requirements of

that act as applied to a contract carrier. The provisions

of section 206 (a) and of section 209 (a) of the Interstate

Commerce Act to the effect that ‘‘Pending the determina-

tion of any such application the continuance of such oper-

ation shall be lawful’’ were designed to protect applicants

during the interim period against charges of illegality.

Section 217 (a) of the Interstate Commerce Act provides,

among other things:

‘‘Any tariff so rejected by the Commission shall be

void and its use be unlawful.’’

As the joint tariffs of the respondent and the Phoenix-

El Paso Express were never rejected by the Commission,

it follows that such tariffs were not void and without force

and effect during the period the shipments in question

moved. As was stated in Toy Toy v. Hopkins, 212 U.S.

540, 547, it rarely happens that things are wholly void and

without force and effect as to all persons and for all pur-

poses. To the same effect are A. C. L. v. Florida, 295 U.S.

301; and Chicot County Drainage Dist. v. Baxter, 308 U.S.

371.

The Phoenix-El Paso Express assigned its assets, includ-

ing all choses in action, to the Phoenix-Kl Paso Express,

Inc., the petitioner. The latter brought suit as assignee of

the partnership, Phoenix-El Paso Express, against the re-

spondent for the difference between the charge of 45 cents

per hundred lbs., the amount of the division of the joint

through rate which the partnership agreed to accept, and

the local rate of 85 cents applicable to traffic from El Paso

to Phoenix, as published in the local tariffs of the partner-

ship. Judgment was rendered in the District Court in

favor of petitioner on the theory that although the par-

ties had agreed to a division of the through rate, the local

rate of 85 cents was legally applicable and that petitioner

5

was entitled to recover on that basis. An appeal was then

taken by respondent to the Court of Civil Appeals of the

8th Supreme Judicial District of Texas.

While the appeal was pending, Congress passed Public

Law No. 558, Seventy-seventh Congress, Second Session,

approved May 16, 1942, known as Part IV of the Interstate

Commeree Act. This Act of May 16, 1942, contained See-

tion 419, which reads as follows:

‘‘Section 419. No person shall be subject to any

punishment or liability under the provisions of this

Act on account of any act done or omitted to be done,

prior to the effective date of this part, in connection

with the establishment, charging, collection, receipt, or

payment of rates of freight forwarders, or joint rates

or divisions between freight forwarders and common

carriers by motor vehicle subject to this Act.’’

The Court of Civil Appeals held that by reason of the

passage of the Act of May 16, 1942, any cause of action

which plaintiff might have had no longer existed. (Opin-

ions of Court of ‘Civil Appeals pages 41 to 50, and page 59,

in Transcript.) } The Supreme Court of Texas came to

the same conclukion. (Opinion of Supreme Court pages

63 to 73 in Transcript.)

B. ARGUMENT.

I. The report of the Committee on Interstate and For-

eign Commerce, House of Representatives, Seventy-seventh

Congress, First Session, Report 1172, supports the con-

struction given to Section 419 by the Supreme Court of

Texas, and confirms the view of that Court with reference

to the constitutionality of Section, 419. The following

statements are taken from that Report:

‘‘Srortion 419. Liapimiry ror Past Acts anp

OMISSIONS

‘As has been previously explained in this report,

freight forwarders and common carriers by motor ve-

hicle subject to part I] have been for a number of

7

years operating under joint rates which, by reason of

the decision of the Commission in the Acme case, and

in the other freight forwarder cases, they probably

had no authority to establish and observe, even though

the Commission’s orders in those cases have not yet

become effective. As a result of this, various persons

may have subjected themselves to penalties and lia-

bilities under Federal statutes, even though during

the period of operation under such joint rates there may

have been no deliberate intention to violate the law,

and no way of knowing for certain whether they were

violating the law. Freight forwarders may be liable

on account of failure to pay the regular published

tariff rates of common carriers by motor vehicle. Com-

mon carriers by motor vehicle may be subject to lia-

bility because of failure to collect from freight for-

warders their regularly published local rates. It is

possible that shippers may also technically be subject

to liabilities.

‘“‘This section relieves freight forwarders, common

carriers by motor vehicle, and other persons from

penalties and liabilities under the Interstate Commerce

Act or any other Federal Statute on account of any-

thing done or omitted to be done, prior to the enact-

ment of part IV, in connection with the establishment,

charging, collection, receipt or payment of rates of

freight forwarders, or joint rates or divisions between

freight forwarders and common carriers by motor ve-

hicle subject to part II.

‘‘Mommon law and contractual rights, remedies and

liabilities are not affected by this provision.

“The validity of this section, insofar as it relieves

persons of liability to fines, penalties, and forfeitures

running to the United States is beyond doubt, and in-

sofar as it relieves persons of liability to individuals

good authority exists for such action.

“The courts are generally agreed that rights of ac-

tion based upon purely statutory grounds may be abol-

ished by the legislature even after they have accrued

(16 C. J. S. Constitutional Law See. 254; Ewell v.

Daggs, 108 U. S. 143 (1883); Hazzard v. Alexander,

36 Del. 212, 173 A. 517 (1934); Wilson v. Head, 184

Mass. 515, 69 N. E. 317 (1904); ef. Carson v. Gore-

Meenan, 229 Fed. 765, 767 (1916). The courts have

6

» al

7

been particularly uniform in reaching this conclusion

where the right of action is in the nature of a claim

by an individual for the recovery of a statutory fine,

penalty, or forfeiture (Fwell v. Daggs, 108 U. S. 143

(1883); Lemon v. Los Angeles Terminal Co., 38 C. A.

(2) 659, 102 P. (2) 387 (1940); Anderson v. Byrnes,

122 Calif. 272, 54 P. 821 (1898); Denver & R. G. Ry.

Co. v. Crawford, 11 Col. 598, 19 P. 673, 674 (1888).

The authority of Congress or a State legislature to

validate voluntary transactions between parties which

at the time they were entered into were by statute in-

valid or illegal has been upheld by the United States

Supreme Court in several cases (West Side R. R. v.

Pittsburg Construction Co., 219 U. S. 92 (1910); Me-

Nair v. Knott, 302 U. S. 369, 372 (1937).”’

(See also Gross v. U. S. M. T. G. Co., 108 U. 8. 477, 27 Law

Ed. 795; Lewis v. F. € D. Co., 292 U. S. 559, 54 Sup. Ct.

848.)

II. Part IV of the Interstate Commerce Act, if Construed

to Prevent Plaintiff from Recovering Rates in Excess

of Those Agreed Upon at the Time of the Shipments, is

Not in Violation of the Constitution of the United

States.

1. When Congress, in the exercise of its constitutional

power to regulate Interstate Commerce, establishes a

policy, existing conditions which would conflict with

the execution of that policy, are not protected by the

Fifth Amendment.

The Constitution of the United States provides:

‘*The Congress shall have power. . .

‘“To regulate Commerce with foreign Nations and

among the several States, and with the Indian Tribes;

. . — And

‘*To make all Laws which shall be necessary and

proper for carrying into Execution the foregoing Pow-

ers, and all other Powers vested by this Constitution

in the Government of the United States, or any De-

partment or Officer thereof.’’

8

(Article I, Section 8, Clauses 3, 18.)

The pertinent provisions of Amendment V to the Con-

stitution of the United States are as follows:

‘¢ | . nor (shall any person) be deprived of life,

liberty, or property, without due process of law; nor

shall private property be taken for public use, without

just compensation.’’

In passing Section 419 of the Act approved May 16, 1942,

Congress was exercising a power conferred upon that body

by the Constitution of the United States, namely the power

to regulate interstate commerce. The decisions of the Su-

preme Court conclusively establish that the provisions of

the Fifth Amendment may not be invoked to frustrate or

obstruct the carrying out of a national policy which Con-

gress has the power to adopt.

No better statement with reference to the power of Con-

gress in such a situation can be found than the statement

contained in the opinion in Norman v. B. € O. R. Co., 294

U.S. 240.

Chief Justice Hughes, speaking for the Court, said (pp.

307-308) :

‘‘This argument is in the teeth of another estab-

lished principle. Contracts, however express, cannot

fetter the constitutional authority of the Congress.

Contracts may create rights of property, but when con-

tracts deal with a subject matter which lies within the

control of the Congress, they have a congenital. in-

firmity. Parties cannot remove their transactions

from the reach of dominant constitutional power by

making contracts about them. See Hudson Water Co.

v. McCarter, 209 U. S. 349, 357.

‘‘This principle has familiar illustration in the exer-

cise of the power to regulate commerce. If shippers

and carriers stipulate for specified rates, although the

rates may be lawful when the contracts are made, if

Congress through the Interstate Commerce Commis-

sion exercises its authority and prescribes different

rates, the latter control and override inconsistent stip-

ulations in contracts previously made. This is so, even

9

if the contract be a charter granted by a State and

limiting rates, or a contract between municipalities and

carriers. New York v. United States, 257 U. 8S. 591,

600, 601. See, also, Armour Packing Co. v. United

States, 209 U. S. 56, 80-82; Union Dry Goods Co. v.

Georgia Pub. Serv. Corp., 248 U. 8. 372, 375.”

In L. & N. R. Co. v. Mottley, 219 U. S. 467, the Court

said (pp. 485-486) :

‘‘We forbear any further citation of authorities.

They are numerous and are all one way. They sup-

port the view that, as the contract in question would

have been illegal if made after the passage of the com-

merce act, it cannot now be enforced against the rail-

road company, even though valid when made. If that

principle be not sound, the result would be that individ-

uals and corporations could, by contracts between

themselves, in anticipation of legislation, render of

no avail the exercise by Congress, to the full extent

authorized by the Constitution, of its power to regulate

commerce. No power of Congress can be thus re-

stricted. The mischiefs that would result from a dif-

ferent interpretation of the Constitution will be read-

ily perceived.”’

Philadelphia, B. d W. R. Co. v. Schubert, 224 U.S. 603,

arose under the Federal Employers’ Liability Act of April

22,1908. A contract executed prior to the effective date

of that Act was involved. The contention was made that

the Act could not have the effect of changing previously

existing relationships and agreements. In overruling this

contention, the Supreme Court said (pp. 613-614) :

‘‘Nor can the further contention be sustained that,

if so construed, the section is invalid. The power of

Congress, in its regulation of interstate commerce,

and of commerce in the District of Columbia and in

the territories, to impose this liability, was not fet-

tered by the necessity of maintaining existing arrange-

ments and stipulations which would conflict with the

execution of its policy. To subordinate the exercise of

the Federal authority to the continuing operation of

previous contracts would be to place, to this extent,

10

the regulation of interstate commerce in the hands of

private individuals, and to withdraw from the control

of Congress so much of the field as they might choose,

by prophetic discernment, to bring within the range

of their agreements. The Constitution recognizes no

such limitation. It is of the essence of the delegated

power of regulation that, within its sphere, Congress

should be able to establish uniform rules, immediately

obligatory, which, as to future action, should trans-

cend all inconsistent provisions. Prior arrangements

were necessarily subject to this paramount authority.”

In Brotherhood of Railroad Shop Crafts v. Lowden, 86

F. (2d) 458, the contention was made that Section 2 of the

Railway Labor Act of 1934 could not abrogate an existing

contract, because this would be in violation of the Fifth

Amendment. The Court said (p. 461):

‘“‘The fact that the parties here were bound by an

existing contract at the time the act became effective

is no basis upon which to invoke the due process clause

of the Fifth Amendment. The privilege of contract

is not unrestricted. The right to make contracts which

relate to interstate commerce must be exercised sub-

ject to the paramount power of Congress to enact ap-

propriate legislation touching the subject matter. Any

other rule would proseribe Congress in the exercise

of its constitutional prerogative to regulate commerce

among the states. The contract here was subject to

the exercise of that power . . .”’

(a) The only restriction imposed by the Fifth Amendment

upon Congress in the exercise of its constitutional

powers is that its actions shall not be arbitrary, ca-

pricious and unreasonable, and that the means selected

shall have a real and substantial relation to the end

sought to be achieved.

The above rule is illustrated and sustained by the fol-

lowing quotation from the opinion in Norman v. B. € O. R.

Co., 294 U. S. 240, at p. 311:

‘¢ . the Congress is entitled to its own judgment.

We may inquire whether its action is arbitrary or ca-

PPE Sp SO RN

11

pricious, that is, whether it has reasonable relation to

a legitimate end. If it is an appropriate means to such

an end, the decision of the Congress as to the degree

of the necessity for the adoption of that means, is final.

M’Culloch v. Maryland, supra, (4 Wheat. 421, 423);

Legal Tender Case (Julliard v. Greenman), supra,

(110 U.S. 450) ; Stafford v. Wallace, 258 U.S. 495, 021;

James Everard’s Breweries v. Day, 265 U. S. 545,

559, 562.”’

(b) Section 419 bears a real and substantial relation to the

end sought to be achieved, and is not an arbitrary, ca-

pricious or unreasonable exercise of Congressional

power.

Prior to the enactment of the Motor Carrier Act, 1935,

the freight forwarding industry performed a recognized

and useful function in the national transportation system.

The declaration of policy adopted by Congress Septem-

ber 18, 1940, and set forth in Section 1 of the amendment to

the Interstate Commerce Act of that date, stated the policy

of Congress to be ‘‘to promote safe, adequate, economical

and efficient service and foster sound economic conditions

in transportation and among the several carriers . . .—all

to the end of developing, coordinating, and preserving a

national transportation system by water, highway, and rail,

as well as other means, adequate to meet the needs of the

commerce of the United States, of the Postal Service, and

of the national defense. All of the provisions of this Act

shall be administered and enforced with a view to carrying

out the above declaration of policy.’’ This policy of Con-

gress could not be realized effectively so long as the doubt

and confusion resulting from the decision in the Acme case

existed.

What would be the purpose of, or advantage in, the pas-

sage by Congress of Part IV of the Interstate Commerce

Act regulating freight forwarders if the financial structure

of the freight forwarders should be so weakened by claims

such as those involved in this case that they could no longer

perform their proper function? That Congress recognized

PVF REE LE LIE RE ES LN ET I ay Oe TIT

12

the existence of the problem, and Section 419 was in-

tended to provide a final solution is abundantly clear from

the Congressional reports.

It is apparent from the language of Section 419 that

Congress adopted as the solution of the problem the com-

prehensive policy of settling definitely and for all time

every question of criminal and civil liability that had

arisen by granting complete immunity from all liability to

every person involved.

2.In order to fall within the protection of the Fifth

Amendment, rights must be founded either in con-

tract or in grant, and they must consist in something

more than the mere expectation of a benfit to be de-

rived from the continued existence of a statute.

While petitioner contends that its suit for recovery is

based upon a contractual right and not upon the statute,

it is clear that as the rate which was the subject of the

contract made at the time the shipments moved has been

paid petitioner, and the contract therefore fulfilled, that

petitioner has no standing to maintain the suit unless the

right of action is found in section 217 (b) of the Interstate

Commerce Act. That section imposes upon every common

carrier subject to the provisions thereof the duty to collect

the published tariff charges applicable to a particular ship-

ment. The rate of such a carrier as to interstate commerce

is not properly the subject of a contract. Therefore, peti-

tioner did not acquire the right to maintain the action by

virtue of any rate that might be the subject of a contract,

express or implied. Nor did the existence of the contract

or the performance of the service contemplated thereby

give the petitioner any vested right to exact a particular

rate or charge. On the contrary, the only charge that was

the subject of a contract was the charge of 45 cents per

hundred lbs. accepted by petitioner. As Congress by sec-

tion 217 created the obligation on the part of a common

carrier to collect the legally applicable published rates, it

13

follows that Congress can modify or abolish such obliga-

tions. That is precisely what Congress did by section 419

of the Interstate Commerce Act. This Court has held that

Congress has the right to make legal, actions and trans-

actions which may have been illegal. Rafferty v. Smith,

Bell & Co., 257 U. S. 226; Dinsmore v. Southern Express

Co., 183 U. S. 115; United States v. Heinszen, 206 U. &.

370; Charlotte Harbor Ry. v. Wells, 260 U. 8. 8; Isbrandt-

sen-Moller Co. v. United States, 300 U.S. 139.

Section 217(b) of the Motor Carrier Act does not give

the Plaintiff or other common carriers by motor vehicle a

‘‘rieht”? of action for the recovery of their rates and

charges. This Section simply imposes upon common car-

riers by motor vehicle a ‘‘duty’’ to collect the ‘charges

specified in the tariffs in effect at that time’’ (49 U.S. C.

A., Section 317(b)). The provisions of Section 217(b) are

almost identical with those of Section 6(7) of Part I of the

Interstate Commerce Act. It is clear from the decisions of

the Supreme Court arising under the latter section that the

right of action for the recovery of charges specified in the

applicable tariffs is inferred by necessary implication from

the duty imposed by the statute, and is not created by the

express language of the statute itself. L. & N. R. Co. v.

Maawell, 237 U. S. 94, 97-98.

In G. H. & 8. A. Ry. Co. v. Webster, 27 Fed. (2d) 765, the

Court, in speaking of the right of the carrier to sue for

undercharges, said: ‘‘Its right to sue is given by the In-

terstate Commerce Act.”’

The right of action is merely a necessary corollary of

the duty imposed upon the carrier to collect the charges

prescribed by law. If the right did not exist, the duty

could be nullified, and the policy of the Act defeated. L. &

N. R. Co. v. Maxwell, 237 U. S. 94, 97-98; L. € N. R. Co. v.

Mottley, 219 U. S. 467, 482-483.

Section 217(b) of the Act does not exist primarily for

the benefit of the Plaintiff. The primary purpose of this

Section was to prevent the charging of unreasonable rates,

and to prohibit unjust discrimination between shippers, and

14

any benefits which might accrue to Federal motor carriers

are merely incidental consequences of the achievement of

the principal objective of this Section.

Section 419 of Part IV of the Interstate Commerce Act

has relieved the Plaintiff of any duty which may have ex-

isted to charge and collect the rates which they now claim

to be due. Since the duty no longer exists, any right which

the Plaintiff may have had to sue for the recovery of those

rates falls.

Even though the rights asserted by the Plaintiff should

be considered as in some sense ‘‘contractual’’, the contract

is with respect to a subject over which Congress has power

to act, and the contractual rights are, therefore, subject to

a ‘“‘eongenital infirmity’’. (Norman v. B. € O. R. Co., 294

U. S. 240, 308.)

(b) Where the sovereign power of the Government has, by

statute, created or sanctioned the existence of a right

which otherwise would not exist, such right may be

taken away by a subsequent statute.

In Graham v. Goddcell, 282 U. S. 326, the Court, speak-

ing through Chief Justice Hughes, said (pp. 429-430) :

‘It is apparent, as the result of the decisions, that a

distinction is made between a bare attempt of the leg-

islature retroactively to create liabilities for transac-

tions which, fully consummated in the past, are deemed

to leave no ground for legislative intervention, and the

case of a curative statute aptly designed to remedy

mistakes and defects in the administration of govern-

ment where the remedy can be applied without injus-

tice. Where the asserted vested right, not being linked

to any substantial equity, arises from the mistake of

officers purporting to administer the law in the name of

the government, the legislature is not prevented from

curing the defect in administration simply because the

effect may be to destroy causes of action which would

otherwise exist.”’

The claims which the Plaintiff is asserting are strictly

analogous to a claim for the refund of a tax which has been

paid through mistake. In such a case, the taxpayer is not

entitled to a refund in the absence of a statute authorizing

a recovery. If such a statute is repealed during the pend-

eney of an action to secure a refund, and before a final

judgment has been recovered and collected, the taxpayer

has no redress. People, ex rel. Eitel v. Lindheimer, 371 Il.

367, 371-375; Southern Service Co. v. Los Angeles County,

15 Calif. (2d) 1, 11-18, 97 Pac. (2d) 963.

In the Lindheimer case, the Court said (p. 373) :

15

“That the legislature cannot pass a retrospective law

impairing the obligation of a contract, nor deprive a

citizen of a vested right, is a principle of general juris-

prudence, but a right, to be within its protection, must

be a vested right. It must be something more than a

mere expectation based upon an anticipated continuance

of the existing law. It must have become a title, legal

or equitable, to the present or future enjoyment of

property or to the present or future enjoyment of the

demand, or a legal exemption from a demand made by

another. If, before rights become vested in particular

individuals, the convenience of the State induces amend-

ment or repeal of the laws, these individuals have no

‘ause to complain.”’

The same result was reached by the Supreme Court of

California after an exhaustive consideration of the Consti-

tutional question in Southern Service Co. v. Los Angeles

County, supra. In that case, an appeal to the Supreme

Court of the United States was dismissed in 310 U. S. 610,

and a petition for re-hearing was denied, 310 U. 8. 658.

An analogous ease is U. S. v. Standard Oil Co. of Cali-

fornia (D. C. Cal.), 21 F. Supp. 645, affirmed 107 F. (2d)

402, Certiorari denied 309 U.S. 654, petition for re-hearing

denied 309 U. 8. 697.

Section 419 leaves the parties in exactly the same position

as they were at the time Plaintiff’s assignor transported

the shipments for the Defendant and was paid in full for

ee CEL VEN PSF RONAN Y STAI MORSE OSTREE E RGSS RTA ACEP IR: SRNR, SRE TREE SRST

16

such transportation on the basis of the agreements between

the parties for a division of joint rates. The effect of Sec-

tion 419 is, therefore, to validate the agreements for divi-

sion of rates between the partnership and the Defendant,

if indeed such agreements were invalid.

In McNair v. Knott, Treasurer of the State of Florida,

302 U. S. 362, the Supreme Court, in an opinion by Mr.

Justice Black, said:

‘‘There is nothing novel or extraordinary in the pas-

sage of laws by the Federal Government and the States

ratifying, confirming, validating, or curing defective

contracts. Such statutes, usually designated as ‘rem-

edial’, ‘curative’, or ‘enabling’, merely remove legal

obstacles and permit parties to carry out their con-

tracts according to their own desires and intentions.

Such statutes have validated transactions that were

previously illegal relating to mortgages, deeds, bonds

and other contracts. Placing the stamp of legality on

a contract voluntarily and fairly entered into by par-

ties for their mutual advantage takes nothing away

from either of them. No party who has made an il-

legal contract has a right to insist that it remain per-

manently illegal. Public policy cannot be made static

by those who, for reasons of their own, make contracts

beyond their legal powers. No person has a vested

right to be permitted to evade contracts which he has

illegally made.”’

It is significant that in its report on the scope and effect

of Section 419 the House Committee on Interstate Com-

merce cited both McNair v. Knott, 302 U. 8. 362, and West

Side Belt R. Co. v. Pittsburgh Construction Co., 219 U.S. 92.

In Ewell v. Daggs, 108 U. S. 143, the Supreme Court said:

‘‘The effect of the usury statute of Texas was to

enable the party sued to resist a recovery against him

of the interest which he had contracted to pay, and it

was, in its nature, a penal statute inflicting upon the

lender a loss and forfeiture to that extent. Such has

been the general, if not uniform, construction placed

upon such statutes. And it has been quite as generally

decided that the repeal of such laws, without a saving

17

clause, operated retrospectively, so as to cut off the

defense for the future, even in actions upon contracts

previously made. And such laws, operating with that

effect, have been upheld as against all objections, on

the ground that they deprived parties of vested rights,

or impaired the obligation of contracts. The very

point was so decided in the following cases (citing a

number of cases).

‘« And these decisions rest upon solid ground. Inde-

pendent of the nature of the forfeiture as a penalty

which is taken away by a repeal of the Act, the more

general and deeper principle on which they are to be

supported is, that the right of a defendant to avoid his

contract is given to him by statute, for purposes of its

own, and not because it affects the merits of his obliga-

tion; and that, whatever the statute gives, under such

circumstances, as long as it remains im fiert, and not

realized, by having passed into a completed transac-

tion, may by a subsequent statute be taken away. It

is a privilege that belongs to the remedy, and forms no

element in the rights that inhere in the contract. The

benefit which he has received as the consideration of

the contract, which contrary to law he actually made is

just ground for imposing upon him, by subsequent leg-

islation, the liability which he intended to incur. That

principle has been repeatedly announced and acted

upon by this Court (citing a number of cases).

“The right which the curative or repealing Act takes

away in such a case is the right in the party to avoid

his contract, a naked legal right which it is usually un-

just to insist upon, and which no constitutional provi-

sion was ever designed to protect.”’

In Gross v. U. 8S. Mortgage Company, 108 U.S. 477, the

Supreme Court said:

“That the act in question is not repugnant to the

Constitution, as impairing the obligation of a contract

is, in view of the settled doctrines of this court, entirely

clear. Its original invalidity was placed by the court

below upon the ground that the statutes and public

policy of Illinois forbade a foreign corporation from

taking a mortgage upon real property in that State to

secure a loan of money. Whether that inhibition should

Ga oe eke eee

18

be withdrawn was, so far at least as the immediate

parties to the contract were concerned, a question of

policy rather than of constitutional power. When the

legislative department removed the inhibition imposed,

as well by the statute as by the public policy of the

State, upon the execution of a contract like this, it can-

not be said that such legislation, although retrospective

in its operation, impaired the obligation of the con-

tract. It rather enables the parties to enforce the con-

tract which they intended to make. It is, in effect, a

legislative declaration that the mortgagor shall not in

a suit to enforce the lien given by the mortgage, shield

himself behind any statutory prohibition or public

policy which prevented the mortgagee, at the date of

the mortgage, from taking the title which was intended

to be passed as security for the mortgage debt.”’

III. Part IV of the Interstate Commerce Act, When Prop-

erly Construed, Prevents Plaintiff From Recovering in

This Case.

There is no warrant for the Plaintiff’s assertion that the

word ‘“‘liability’’, as used in Section 419, is limited solely

to the criminal liabilities and penalties imposed by the In-

terstate Commerce Act. There is nothing in the language

of this section, or in the reports of the Congressional Com-

mittees, to indicate that the term ‘‘liability’’ was intended

to be confined to criminal liabilities and penalties. It must

be conceded that the term ‘‘liability’’ is broad enough to

comprehend both civil and criminal liability. The plain

language of Section 419 will not tolerate the construction

for which Plaintiff is contending.

The exact language of the section is:

‘¢Tyapitiry ror Past Acts AND OMISSIONS

‘*See. 419. No person shall be subject to any punish-

ment or liability under the provisions of this Act on ac-

count of any act done or omitted to be done, prior to

the effective date of this part, in connection with the

establishment, charging, collection, receipt, or payment

of rates of freight forwarders, or joint rates or divi-

Se RRP EEC ana yees RE He _

19

sions between freight forwarders and common carriers

by motor vehicle subject to this Act.’’

Certainly the heading, ‘‘ Liability for Past Acts and Omis-

sions’’ is comprehensive enough to include any civil liabil-

ity of the Defendant to the Plaintiff under the Interstate

Commerce Act. The precise words used in the text itself

are ‘punishment or liability’’. It does not require resort

to the dictionary to establish that the word ‘‘punishment?’’,

in accepted uses, implies the pains and penalties, both im-

prisonment and fines, imposed for violation of a criminal or

penal statute, while the word ‘‘liability’’ is used more

often to describe an obligation imposed by law for the pay-

ment of sums of money, and the use of the disjunctive ‘‘or”’

indicates that Congress had this distinction in mind.

Moreover, the immunity granted by Section 419 extends

specifically to liabilities arising ‘‘in connection with . . .

joint rates or divisions between freight forwarders and

common earriers by motor vehicle subject to this Act’’.

The proceedings before the Committees of Congress show

clearly that the Act was intended to relieve freight for-

warders of liability on claims of the very character asserted

by the Petitioner in this case. The Committee reports leave

no doubt about the construction which should be placed

upon Section 419.

IV. The Fact That Plaintiff had Recovered a Judgment in

the Trial Court, From Which an Appeal was Being

Prosecuted, Will Not Save Plaintiff’s Alleged Cause of

Action From the Blight of Section 419.

A number of the cases which we have already cited sus-

tain our position.

In the case of West Side Belt R. Co. v. Pittsburgh Con-

struction Co., 219 U. S. 927, to which we have referred, a

suit had already been brought, and had finally terminated

with a judgment denying a recovery on the contract which

was illegal under the laws which existed at the time the

20

contract was made, and at the time the suit was brought.

Thereafter, the bar of the statute was removed by new leg.

islation. Another suit was brought on the contract, and re-

covery was permitted.

In the case of Galveston H. & H. R. Co. vy. Anderson, 29

S. W. 998 (Court of Civil Appeals, Galveston, Writ Ref.),

the Court said:

‘“We think this contention should be sustained. |

1 Lewis’ Sutherland’s Stat. Cons. Sec. 282, p. 544, the

general rule affecting causes of action arising upon a

law, but tried after the repeal of such law, is stated as

follows:

‘The general rule is that where an act of the Leg

islature is repealed without a saving clause it is con-

sidered, except as to transactions passed and closed,

as though it had never existed.’

‘*Again, in section 285, p. 552, the author further

states the rule as follows:

‘When a cause of action is founded on a statute,

the repeal of the statute before final judgment de-

stroys the right, and the judgment is not final in this

sense so long as the right of exception thereto re-

mains.’

“In State v. T. d N. O. R. R. Co., 58 Tex. Civ. App.

528, 125 S. W. 53, heretofore cited, it is stated:

‘By the repeal of a statute by a later statute on the

same subject, all acts ¢° omissions in violation of the

former statute are pardoned, and the penalties in-

curred thereunder are no longer enforceable.’

‘‘We quote from Goodrich v. Wallis, 143 S. W. 285:

‘The fact that the plaintiff’s suit was pending at

the time of the passage of the last act could make no

difference; for it is well settled that if a statute, giv-

ing a special remedy, is repealed without a saving

clause in favor of pending suits, all suits must stop

where the appeal finds them; and, if final relief has

not been granted before the repeal goes into effet, it

21

cannot be granted thereafter.’ (Citing a number of

cases. )

‘In Norris v. Crocker, 13 How. 429, 14 L. Ed. 210,

referred to in Ex parte MeCardle, it is stated:

\« the plaintiff's right to recover depended en-

» the statute, its repeal deprived the court of

licti over the subject-matter. And in the

Pixt place, as the plaintiff had no vested right in the

'y, the Lewislature might discharge the defen-

t ty repealing the law.’ ”’

ln Decheow otal. v. Navarro County Levee Imp. Dist. No.

of al, 189-8. W. (2d) 257, the Supreme Court of Texas

adopted an opinion by Judge German, Commissioner, in

which the following language appears:

‘“We have reached tie conclusion that the effect of

the Act of September 28, 1937, was to work an abate-

ment of this suit, and that this makes it unnecessary to

discuss other questions. It is almost universally recog-

nized that if a statute giving a special remedy is re-

pealed without a saving clause in favor of pending

suits, all suits must stop where the repeal finds them,

and if final relief has not been granted before the

repeal goes into effect, it cannot be granted thereafter.

A like general rule is that if a right to recover depends

entirely upon a statute, its repeal deprives the court

of jurisdiction over the subject matter.’’

If, as petitioner insists, the joint published rate on file

with the Commission during the time the shipments in ques-

tion moved violated the provisions of Part II of the Inter-

state Commerce Act, Petitioner would be subject to the

criminal penalties provided in section 222 of that act (49

U. S. C. A. 322) except for section 419. Under its own

theory and by its own admission, Petitioner is particeps

criminis. Its position is that it should be free to mulet the

respondent, or any other freight forwarder similarly sit-

uated, in a civil action for what it claims to have been the

legal charges, while at the same time relying on section 419

PLING, LEE VEIT By Lar eye SEE A OT PONE IU RTE MCT I iy! AT

22

for exoneration from the penalties provided in section 222

of the Interstate Commerce Act. Neither justice nor rea-

son lend any support to the proposition that section 419 may

or should be construed so as to permit Petitioner to enrich

itself at the expense of respondent and at the same time

receive immunity from all criminal penalties provided in

the Interstate Commerce Act.

We respectfully submit that the petition should be denied.

Pau J. CoveH.in,

19 Rector Street,

New York City,

Rosert E. Quirk,

Investment Building,

Washington, D. C.,

THornton Harpie,

Bassett Tower,

El Paso, Texas,

Attorneys for Respondent.

Rosert L. Hotimay,

Harovp L. Sis,

Attorneys for Petitioner.

May 12, 1944.

PME EL DEEN AL MEETS ELE OP UNION RE i YTS iy