PENNSYLVANIA R. CO. v. MIDSTATE HORTICULTURAL CO., INC.*
The facts of this case are fairly and clearly stated in the opinion prepared by Mr. Justice pro tem. SCHOTTKY and need not be repeated here. He also cites the leading cases on the question presented though we believe a somewhat closer examination of some of them is advisable.
The sole question involved in this appeal is this: Can the limitation provided in sub–paragraph (a) of paragraph (3) of section 16 of the Interstate Commerce Act, vol. 49 U.S.C.A. § 16(3) (a), be waived by the shipper by a written agreement executed on sufficient consideration before the statute has run? This subsection, in effect at the time here involved, provided as follows:
“§ 16 * * * (3) Limitation of actions. (a) All actions at law by carriers subject to this chapter for recovery of their charges, or any part thereof, shall be begun within three years from the time the cause of action accrues, and not after.”
It is too well settled to need citation of supporting authority that, generally, a debtor can waive a statute of limitations either by a sufficient writing or by failure to plead it as a defense to the action against him.
An important exception to this rule is clearly stated in 34 Am.Jur., page 16, as follows:
“A statute of limitations should be differentiated from conditions which are annexed to a right of action created by statute. A statute which in itself creates a new liability, gives an action to enforce it unknown to the common law, and fixes the time within which that action may be commenced, is not a statute of limitations. It is a statute of creation, and the commencement of the action within the time it fixes is an indispensable condition of the liability of the action which it permits. The time element is an inherent element of the right so created, and the limitation of the remedy is a limitation of the right. Such a provision will control, no matter in what form the action is brought. The statute is an offer of an action on condition that it be commenced within the specified time. If the offer is not accepted in the only way in which it can be accepted, by a commencement of the action within the specified time, the action and the right of action no longer exist, and the defendant is exempt from liability. Whether an enactment is of this nature, or whether it is a statute of limitations, should be determined from a proper construction of its terms.”
In Walsh v. Mayer, 111 U.S. 31, 4 S.Ct. 260, 262, 28 L.Ed. 338, it is held that where a right of action is created by statute and a limitation on the time in which to commence the action is imposed, the limitation is a condition attached to the right itself and is not a part of the law of remedy; that if the remedy “is not asserted within the permitted period, it ceases to exist, and cannot be claimed or enforced in any form.” The same conclusions were reached in The Harrisburg (Lewis v. Rickards), 119 U.S. 199, 7 S.Ct. 140, 30 L.Ed. 358; Davis v. Mills, 194 U.S. 451, 24 S.Ct. 692, 48 L.Ed. 1067, and the same rule was announced in United States ex rel. Texas Portland Cement Co. v. McCord, 233 U.S. 157, 34 S.Ct. 550, 552, 58 L.Ed. 893, as follows:
“By this statute a right of action upon the bond is created in favor of certain creditors of the contractor. The cause of action did not exist before, and is the creature of the statute. The act does not place a limitation upon a cause of action theretofore existing, but creates a new one upon the terms named in the statute. The right of action given to creditors is specifically conditioned upon the fact that no suit shall be brought by the United States within the six months named, for it is only in that event that the creditors shall have a right of action and may bring a suit in the manner provided. The statute thus creates a new liability and gives a special remedy for it, and upon well–settled principles the limitations upon such liability become a part of the right conferred, and compliance with them is made essential to the assertion and benefit of the liability itself. Pollard v. Bailey, 20 Wall. 520, 526, 527, 22 L.Ed. 376, 378; Fourth Nat. Bank [of City of New York] v. Francklyn, 120 U.S. 747, 756, 7 S.Ct. 757, 30 L.Ed. 825, 829; Globe Newspaper Co. v. Walker, 210 U.S. 356, 28 S.Ct. 726, 52 L.Ed. 1096; United States to Use of Gibson Lumber Co. v. Boomer, [8 Cir.], 183 F. 726, 106 C.C.A. 164.”
The cited authorities support the foregoing rule stating the exception to the general rule and it should not be necessary to review them in detail here.
It follows that the only question necessary for consideration is whether plaintiff's right of action to recover its bill for freight was created by the Interstate Commerce Act or whether it existed independent of that act.
Counsel for both parties have been diligent in their search of the law and have cited a large number of cases. They agree that the case of Pennsylvania R. Co. v. Susquehanna Collieries Co., D.C., 23 F.2d 499, is the only decided case with facts exactly paralleling those of the instant case. In no other case had the carrier and shipper signed a written contract in which the shipper expressly waived the statute of limitations set forth in the Interstate Commerce Act. While that case was decided by a United States District Court, it is entitled to due respect and consideration here as it is the only federal decision on the construction to be given the Interstate Commerce Act where the precise question is presented which confronts us and under exactly similar facts. In that case the court held that the right of action grew out of a contract and was not created by statute. Having reached that conclusion no other result could have been reached than to hold that the bar of the statute had been waived.
While it is true that it is generally held that there is no national common law in the United States in the sense that there is a common law in the various states that have adopted it, this does not mean that the federal Constitution and statutes are to be interpreted without reference to the rules of the common law. Under this theory federal statutory construction has been so closely related to the rules of common law construction that in some cases it has been said that in this respect there is a national common law resting upon national authority.
An instructive case on this question is Murray v. Chicago & N. W. R. Co., C.C., 62 F. 24, 42, written by a United States district judge who courageously refused to follow prior holdings of other courts on this question. That action was brought by a shipper to recover alleged discriminatory overcharges for freight shipped over a common carrier commencing in 1875 and continuing a number of years thereafter so the shipments were made before and after the adoption of the first Interstate Commerce Act on February 4, 1887. The action was commenced on August 25, 1892, and the court held all claims for discriminatory overcharges paid prior to the statutory limitation period barred by the statute. In the course of the opinion it is said:
“In determining the obligations assumed by a common carrier engaged in interstate commerce, the court has the right to apply the rules of the common law, unless the same have been changed by competent legislative action, and therefore, in the present case, all shipments made before the adoption of the interstate commerce act are governed by the common law, and those made since the adoption of that act by the common law as modified by that act.”
The opinion in the Murray case was expressly approved by the Supreme Court of the United States in Western Union Tel. Co. v. Call Publishing Co., 181 U.S. 92, 21 S.Ct. 561, 565, 45 L.Ed. 765, which was a case brought to recover discriminatory charges alleged to have been wrongfully collected by the common carrier for telegraphic services rendered. It was there said:
“But this question is not a new one in this court. In Interstate Commerce Commission v. Baltimore & O. R. Co., 145 U.S. 263, 275, 12 S.Ct. 844, 847, 36 L.Ed. 699, 704, 4 I.C.R. 92, 96, a case which involved interstate commerce, it was said by Mr. Justice Brown, speaking for the court:
“ ‘Prior to the enactment of the act of February 4, 1887, to regulate commerce, commonly known as the Interstate Commerce Act (24 Stat. at L. 379 chap. 104 [49 U.S.C.A. § 1 et seq.]), railway traffic in this country was regulated by the principles of the common law applicable to common carriers.’ ” See, also, Parkersburg & O. R. Transp. Co. v. Parkersburg, 107 U.S. 691, 2 S.Ct. 732, 27 L.Ed. 584; United States v. Wong Kim Ark, 169 U.S. 649, 18 S.Ct. 456, 42 L.Ed. 890; State of Kansas v. State of Colorado, 206 U.S. 46, 27 S.Ct. 655, 51 L.Ed. 956.
The conclusion follows from these cases that unless the Interstate Commerce Act created a right of action in the carrier to collect transportation charges, independent of the common law right of action to recover those charges on its written contract, if there was a bill of lading, or on an implied contract to pay for the services rendered, if there was no bill of lading, the limitation on the carrier's cause of action affected the remedy and not the right of action where, as here, the shipper had paid no part of the freight charges.
In considering this question it should not be out of place to consider the causes that led up to the enactment of the Interstate Commerce Act and the abuses it sought to correct before adverting to the provisions of the act itself. These are set forth at some length in the case of Texas & P. Ry. Co. v. Interstate Commerce Commission, 162 U.S. 197, 16 S.Ct. 666, 672, 40 L.Ed. 940. It is there said:
“While shippers of merchandise are under no legal necessity to use railroads, practically they are. The demand for speedy and prompt movement virtually forbids the employment of slow and oldfashioned methods of transportation, at least in the case of the more valuable articles of traffic. At the same time, the immense outlay of money required to build and maintain railroads, and the necessity of resorting, in securing the rights of way, to the power of eminent domain, in effect disable individual merchants and shippers from themselves providing such means of carriage. From the very nature of the case, therefore, railroads are monopolies, and the evils that usually accompany monopolies soon began to show themselves, and were the cause of loud complaints. The companies owning the railroads were charged, and sometimes truthfully, with making unjust discriminations between shippers and localities, with making secret agreements with some to the detriment of other patrons, and with making pools or combinations with each other, leading to oppression of entire communities.
“Some of these mischiefs were partially remedied by special provisions inserted in the charters of the companies, and by general enactments by the several states, such as clauses restricting the rates of toll and forbidding railroad companies from becoming concerned in the sale or production of articles carried, and from making unjust preferences. Relief, to some extent, was likewise found in the action of the courts in enforcing the principles of the common law applicable to common carriers,––particularly that one which requires uniformity of treatment in like conditions of service.
“As, however, the powers of the states were restricted to their own territories, and did not enable them to efficiently control the management of great corporations, whose roads extend through the entire country, there was a general demand that congress, in the exercise of its plenary power over the subject of foreign and interstate commerce, should deal with the evils complained of by a general enactment, and the statute in question was the result.”
The opinion goes on to consider the act itself and the conclusion is reached that it was intended to limit the power of the common carriers to fix their rates and to put an end to discriminations among and preferences to shippers. Thus the burden was placed on the carrier and the benefit was given to the shipper. This was recognized in Central R. Co. of New Jersey v. Anchor Line, 2 Cir., 219 F. 716, 135 C.C.A. 388, where it was held that the act was not for the benefit of the carrier but for the protection of the shipper.
A study of the act leaves the conclusion that it lacks appropriate language to create in the common carrier a right of action to collect its transportation charges, where no part of them has been paid, separate and distinct from its common law right to bring such an action. Of course, such right of action is recognized, but hardly created, and recovery is limited to the rates established by the Interstate Commerce Commission.
The conclusion follows that in a case such as we have here where no part of the transportation charges had been paid and the carrier brings its action to recover all of those charges based on rates established by the Interstate Commerce Commission, the cause of action is one in contract given by the common law to the carrier long before any Interstate Commerce Act was adopted and is not a right of action created by that act. Therefore the limitation in that act does not destroy the right of action by reason of lapse of time, but is merely a limitation on the remedy which may be waived by the shipper.
There is nothing in any of the cases cited to us that in any manner conflicts with this conclusion. With one exception all of those cases were either by the carrier to recover the difference between the rate paid by the shipper and the higher rate fixed by the commission or by the shipper to recover the difference between the rate paid by the shipper and the lower rate fixed by the commission. There was no such right of action known to the common law. The cause of action was created by statute.
A further ground of distinction between all of those cases and this case rests in the fact that there was no contract waiving the statute between the carrier and the shipper. The time fixed by the statute of limitations had run. The limitation was pleaded. The actions were held barred. No other results could have been expected under those circumstances. By what we have just said we do not intend to intimate that where there has been an under or over payment of the freight rates fixed by the Interstate Commerce Commission, a contract waiving the statute would be given effect. That question is not involved here.
It is at once apparent from this statement that none of those actions could have been maintained at common law. Under the common law the parties were bound by their contracts, the actions were upon those contracts and the amounts of recovery were fixed by those contracts.
The distinction here made is recognized in the case of Button v. Atchison, T. & S. F. Ry. Co., 8 Cir., 1 F.2d 709, which was an action by the carrier to recover the difference between an undercharge paid it by the shipper and rates fixed by the commission. The court said:
“It is plain upon these facts that at common law the carrier could not have recovered of the shipper any additional sum as freight. Its right to maintain the present suit is created by the Interstate Commerce Law (Comp.St. § 8563, et seq. [49 U.S.C.A. § 1 et seq.]). It arises out of the provision of that act which requires the carrier to collect, and the shipper to pay, the full charge named in the tariffs filed by the carrier with the Interstate Commerce Commission. Pittsburgh [C., C. & St. L.] R. Co. v. Fink, 250 U.S. 577, 581, 40 S.Ct. 27, 63 L.Ed. 1151; New York Central & H. R. R. Co. v. York & Whitney Co., 256 U.S. 406, 408, 41 S.Ct. 509, 65 L.Ed. 1016.”
The one case cited in which it does not appear that the carrier brought the action to recover the difference between the undercharge paid by the shipper and the rate fixed by the commission is Galveston, H. & S. A. R. Co. v. Webster Co., D.C., 27 F.2d 765. From the facts set forth in the opinion this question cannot be determined. As the question presented here was not considered there we cannot regard that case as conflicting with the conclusions reached here.
The distinction between the two lines of cases may be briefly summarized. When no part of the freight has been paid the action is on the contract and is based in the common law and is not created by statute. In those cases the effect of the statute important here is to fix the amount of recovery. When the action is to recover the difference between an undercharge or an overcharge and the legal rates fixed by the Interstate Commerce Commission, the right of action is created by the statute as no such cause of action existed at the common law. In the first case where no part of the freight had been paid the limitation is on the remedy only and does not extinguish the cause of action so it may be waived by the parties to the contract. In the second case where part of or more than the rates established by the Interstate Commerce Commission have been paid, the cause of action is created by the statute and the limitation is a condition to maintaining the action and lapse of time destroys the right of action.
To advert again to the purposes of the Interstate Commerce Act we quote from A. J. Phillips Co. v. Grand Trunk Western Railway Co., 236 U.S. 662, 35 S.Ct. 444, 446, 59 L.Ed. 774, as follows:
“To have one period of limitation where the complaint is filed before the Commission, and the varying periods of limitations of the different states, where a suit was brought in a court of competent jurisdiction; or to permit a railroad company to plead the statute of limitations as against some, and to waive it as against others, would be to prefer some and discriminate against others, in violation of the terms of the commerce act, which forbids all devices by which such results may be accomplished. The prohibitions of the statute against unjust discrimination relate not only to inequality of charges and inequality of facilities, but also to the giving of preferences by means of consent judgments, or the waiver of defenses open to the carrier.”
If the purpose of the Interstate Commerce Act is to prohibit unjust discrimination by the carrier and to protect the shipper, then certainly the judgment in this case should be affirmed. To do otherwise would be to permit a carrier to give preference to a large shipper by the very procedure here followed. It would not only open the gate but would signpost the way to discriminations and preferences.
Defendant in its brief virtually has conceded that there was no error in sustaining the demurrer to its fourth affirmative defense, so that question need not be considered except to say that under the federal rule governing these actions it seems to be established that there cannot be an estoppel against the collection of freight charges that will result in discriminations or preferences which will amount to rebates of legal freight charges.
The judgment is affirmed.
Appellant shipper appeals from a judgment in favor of respondent railroad company in an action to recover transportation charges for grapes shipped by appellant during the 1932 season from points in Fresno County, California, to a consignee in the city of New York. There is little dispute as to the facts and I will summarize them briefly.
During October and November, 1932, appellant, as shipper and consignor, shipped from points in Fresno County over the various lines of connecting railroads, including those of respondent, a number of cars of fresh grapes, which were consigned to and delivered to the consignee Jerome Distributing Company (hereinafter called Jerome Company). None of the transportation charges were prepaid. At the time of the delivery of the grapes, the transportation charges were neither demanded by respondent nor paid by the Jerome Company. On November 19, 21 and 22, 1932, the Jerome Company delivered to respondent three checks covering the transportation charges involved in this action, and other items not involved here, and respondent receipted the freight bills and delivered said receipted bills to Jerome Company which, within a few days thereafter transmitted them to appellant. These checks were not paid and respondent endeavored unsuccessfully to enforce payment on them from the Jerome Company. Appellant did not learn until the summer of 1933 that the Jerome Company had failed to meet the transportation charges. Shortly before the expiration of three years after delivery to Jerome Company of the various shipments of grapes, demand was made upon appellant for the unpaid transportation charges and litigation threatened unless payment was made. In order to enable appellant to make such investigation as it deemed essential with respect to the basis of respondent's claim, and to avoid the immediate commencement of the threatened action, appellant, on October 25, 1935, signed and delivered to respondent an extension of time for the bringing of such action. This agreement recited that appellant agreed that respondent was urging against appellant a claim for certain specified transportation charges; that respondent proposed to bring suit against appellant; that appellant desired additional time to investigate and consider the claim, and requested respondent to withhold filing suit until January 1, 1936; that respondent, in the hope that appellant would conclude to pay without litigation, was willing to defer commencement of suit until January 1, 1936; and said agreement then concluded as follows:
“Now, therefore, in consideration of the forebearance of The Pennsylvania Railroad Company to bring such a suit against the Mid State Horticultural Company, Inc. prior to October 28, 1935, the said Mid State Horticultural Company, Inc. hereby agrees that if and when The Pennsylvania Railroad Company may find it necessary to bring such an action, it, the said Mid State Horticultural Company, Inc., will not plead in any such suit the defense of any general or special statute of limitations.
“This agreement is not an admission of the alleged debt by the Mid State Horticultural Company, Inc., and is made without prejudice to any other defenses which the said Mid State Horticultural Company, Inc. may have to said claim.”
Appellant notified respondent prior to January 1, 1936, that it would not pay said transportation charges and the action was filed on December 31, 1935.
Appellant in its amended answer to the amended complaint set up the provisions of section 16(3) (a) of the Interstate Commerce Act, contending that the three–year lapse of time before suit was commenced destroyed the right asserted by respondent to recover the transportation charges, and deprived the court of jurisdiction, notwithstanding the agreement hereinbefore referred to; and appellant further set up in its fourth affirmative defense the facts relied upon by it to establish that respondent, by its silence respecting the Jerome Company's failure to meet the transportation charges, which silence continued during the period in which appellant ignorantly settled its account with the Jerome Company, estopped respondent to look to appellant for payment thereafter. The trial court sustained respondent's demurrer to the fourth affirmative defense and granted respondent's demurrer to strike out said defense.
Appellant's principal contention is that the trial court erred in giving effect to the extension agreement of October 25, 1935, which appellant contends, “was void and of no effect and could not and did not serve to avoid the operation of the limitation provision of the Interstate Commerce Act, which upon the expiration of the three–year period, destroyed the liability of appellant and deprived the court of jurisdiction of this action.” Appellant contends further that “irrespective of how our primary contention that the action is governed by the limitation of section 16(3) (a) may be determined upon this appeal, the inconsistency between the trial court's conclusion with respect to that proposition and its exclusion of the defense of estoppel must compel a reversal of the judgment, so that if, as the trial court necessarily held, the action was not barred by limitation, the defendant and appellant may be afforded an opportunity to establish the defense of estoppel.”
By the enactment of the Interstate Commerce Act, Congress assumed exclusive jurisdiction over interstate carriers and shipments. As was said by the Supreme Court of the United States in the case of Adams Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 152, 57 L.Ed. 314, 44 L.R.A.,N.S., 257:
“That the legislation supersedes all the regulations and policies of a particular state upon the same subject results from its general character. It embraces the subject of the liability of the carrier under a bill of lading which he must issue, and limits his power to exempt himself by rule, regulation, or contract. Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it. Only the silence of Congress authorized the exercise of the police power of the state upon the subject of such contracts. But when Congress acted in such a way as to manifest a purpose to exercise its conceded authority, the regulating power of the state ceased to exist.”
And as stated by our own Supreme Court in New York Central R. Co. v. Frank H. Buck Co., 2 Cal.2d 384, 41 P.2d 547, 549: “The shipments being interstate, the rights and liabilities of the parties are governed by the acts of Congress as interpreted by the federal tribunals. Cincinnati, N. O. & T. P. R. Co. v. Rankin, 241 U.S. 319, 36 S.Ct. 555, 60 L.Ed. 1022, L.R.A.1917A, 265.”
It is apparent from the act itself and from the decisions rendered since its enactment, that the principal purposes sought to be achieved by the enactment of the Interstate Commerce Act were to secure just and reasonable charges for transportation, to prohibit unjust discrimination in the rendition of like services under similar circumstances and conditions, and to prevent preferences to and discriminations among persons, firms, corporations and localities.
As was well said in the case of L. M. Kirkpatrick Co. v. I. C. R. Co., 190 Miss. 157, 195 So. 692, 693, 135 A.L.R. 607: “The outstanding purpose of the Commerce Act was to absolutely uproot and destroy all discriminations in interstate commerce regardless of how conceived or by what plan, scheme or device they may be sought to be accomplished. To that end, the carrier is without power to waive any valid provision of the contract constituting a defense.”
Appellant's position is as follows: First, respondent's cause of action is one created by the Interstate Commerce Act, and as such is destroyed by the lapse of time provided in section 16, paragraph (3) (a). Therefore, it is beyond the power of the parties to waive those provisions, and the court lacked jurisdiction to enforce payment of the freight charges. Respondent's answer to this argument is that the cause of action is not one created by the Interstate Commerce Act, but is a common law action based upon a contract of shipment between the parties; that as to such a cause of action, section 16, paragraph (3) (a), is a mere statute of limitations and may be waived.
Appellant's second position is that to permit a waiver of section 16, paragraph (3) (a), invites discriminations and preferences, and therefore any such attempted waiver is illegal and void. Respondent's answer to this argument is that the agreement resulted in no discrimination; that if any preference could be said to have resulted from such waiver, it was not an undue or unreasonable preference forbidden by the act; and that to permit appellant thus to entirely avoid payment of the freight charges would result in the most exaggerated and reprehensible type of discrimination which the act seeks to prevent.
We believe it may fairly be stated that the right of a transportation company engaged in interstate commerce to collect its transportation charges existed prior to the Interstate Commerce Act, and that in that sense it was not created by the act, but it must also be stated that a transportation company engaged in interstate commerce cannot enter into a contract for transportation except upon the rates, terms and conditions set forth in the act, and that the act, and every part thereof, must be considered a part of the contract.
In the case of Chicago & N. W. Ry. Co. v. J. I. Case Plow Works, 173 Wis. 237, 180 N.W. 846, 847, the court said: “The right to private contract between shipper and carrier is wholly abrogated by the Interstate Commerce Act, and the rates fixed by law are enforceable by the carrier by force of law.”
And in Chicago, I. & L. Co. v. Peterson, 168 Wis. 193, 169 N.W. 558, 559, the court said: “The relations between common carriers and shippers are no longer mere matters of contract, but are fixed by the laws and rules regulating such interstate commerce and partake of the nature of statutory obligations.” (Citing cases.)
We are, therefore, unable to agree with the respondent's contention that respondent's cause of action is not one created by the Interstate Commerce Act but is a common–law action of shipment between the parties, because it is clear to us that under the authorities the cause of action as it existed and as it must necessarily be enforced, was one created by said act. But whether it is considered that the cause of action is one at common law, or is one created by the Interstate Commerce Act, we think it must be conceded that section 16(3) (a) of the act applies to this action, because it is certainly an action at law by a carrier, subject to the act, for the recovery of its charges.
One of the things that we must decide is the proper interpretation of section 16(3) (a) which reads as follows: “All actions at law by carriers subject to this chapter for recovery of their charges, or any part thereof, shall be begun within three years from the time the cause of action accrues, and not after.”
If said provision is a mere statute of limitations, then, in accordance with the general rule that such a statute may be waived, it must be held in this case that appellant by said written waiver extended the time for filing the action. If, on the other hand, the section must be construed to mean that upon the expiration of three years from the delivery of the shipments involved, the right to collect charges thereon was utterly destroyed by operation of the section, and thereafter the court lacked jurisdiction to enforce the payment of such charges, then such written waiver could not confer jurisdiction upon the court, and appellant would not be estopped from relying upon such defense by reason of such waiver.
In construing and interpreting the statute, the purpose sought to be accomplished must always be kept in mind, and the various provisions of the statute should be construed and interpreted with due regard to the manifest purpose of the entire statute. In the construction of an act of Congress we must, of course, look to and be guided by the decisions of our federal courts, and we will therefore refer to a number of such decisions.
Before doing so we think it proper to state that while subdivision (a) of paragraph (3) of section 16 is the only part of said paragraph applicable to this case, it is to be noted that with respect to each type of action referred to in said paragraph (3), the same language as to limitation, namely, “within three years * * * and not after,” is used except as to time, because some of the decisions that will be referred to deal with other subdivisions of the paragraph.
In the case of A. J. Phillips Co. v. Grand Trunk W. R. Co., 236 U.S. 662, 35 S.Ct. 444, 445, 59 L.Ed. 774, the Supreme Court of the United States said: “It is argued, however, that under the conformity act (Rev.Stat. § 914, Comp.Stat.1913, § 1537 [28 U.S.C.A. § 724]), the case is to be governed by the Michigan practice, which does not permit a defendant to take advantage of the statute of limitations by a general demurrer to the declaration. But that rule does not apply to a cause of action arising under a statute which indicates its purpose to prevent suits on delayed claims, by the provision that all complaints for damages should be filed within two years, and not after. Under such a statute the lapse of time not only bars the remedy, but destroys the liability (Finn v. United States, 123 U.S. 227, 232, 8 S.Ct. 82, 31 L.Ed. 128, 130), whether complaint is filed with the Commission or suit is brought in a court of competent jurisdiction. This will more distinctly appear by considering the requirements of uniformity which, in this, as in so many other instances, must be borne in mind in construing the commerce act. The obligation of the carrier to adhere to the legal rate, to refund only what is permitted by law, and to treat all shippers alike, would have made it illegal for the carriers, either by silence or by express waiver, to preserve to the Phillips Company a right of action which the statute required should be asserted within a fixed period.”
In the case of Kansas City Southern Ry. Co. v. Wolf, 261 U.S. 133, 43 S.Ct. 259, 261, 67 L.Ed. 571, the Supreme Court, referring to the Phillips case, supra, said:
“True it is that the claim of Phillips & Co. was based upon schedule tariff charges theretofore declared to be unreasonable by the Interstate Commerce Commission, while here the payments demanded are said to exceed the published rates when properly applied. But the doctrine of the Phillips case and the reasoning advanced to support it, we think, are applicable to the circumstances of the instant cause. The lapse of time had destroyed any liability by the carrier to the shipper or his assignee for the alleged overcharges, and the demurrer should have been sustained.”
In the case of William Danzer & Co. v. Gulf & S. I. R. Co., 268 U.S. 633, 45 S.Ct. 612, 613, 69 L.Ed. 1126, it was said: “It is settled by the decisions of this court that the lapse of time not only barred the remedy, but also destroyed the liability of defendant to plaintiff. [A. J.] Phillips Co. v. Grand Trunk W. R. Co., 236 U.S. 662, 666, 35 S.Ct. 444, 59 L.Ed. 774; [U.S. ex rel.] Louisville Cement Co. v. Interstate Commerce Commission, 246 U.S. 638, 642, 38 S.Ct. 408, 62 L.Ed. 914; Kansas City Southern Ry. v. Wolf, 261 U.S. 133, 139, 43 S.Ct. 259, 67 L.Ed. 571. On the expiration of the two–year period, it was as if liability had never existed.”
The case of Galveston, H. & S. A. R. Co. v. Webster Co., D.C., 27 F.2d 765, was an action by a carrier to recover charges from a shipper and his surety, and the defendants relied upon the provisions of section 16(3) (a). The court said, at page 766 of 27 F.2d: “The single subject–matter of the suit is the recovery by the carrier of its charges for freight in interstate transport. Its right to sue is given by the Interstate Commerce Acts. The federal law governs. That statute provides something more than a limitation of the time within which suit is to be brought. By its terms, failure to sue within the time fixed absolutely destroys further right of action. There can be no saving exception accorded the surety by the local law. Principal and surety stand on the same footing in this case. The action is destroyed by the supreme law. The cause of action no longer exists against either principal or surety.”
In the case of Button v. Atchison, T. & S. F. R. Co., 1 F.2d 709, at pages 711, 712, likewise an action by a carrier to recover charges from a shipper, the Circuit Court of Appeals, Eighth Circuit, said: “There is another ground upon which the case may be rested. Plaintiff's right of action is given by statute. It was not created for its enrichment but to protect the public against secret rebates and discriminations. It is not a right of contract or of property. The right, therefore, is at all times under the full control of the legislature. It may limit it in any way without impairing any constitutional right of the plaintiff. [Citing cases] * * *
“As to such a right the time limited for its enforcement is a constituent part of the right itself. The lapse of time not only bars the remedy, but destroys the liability. Theroux v. Northern P. R. Co. [8 Cir.], 64 F. 84, 12 C.C.A. 52; [A. J.] Phillips Co. v. Grand Trunk [Western] R. Co., 236 U.S. 662, 667, 35 S.Ct. 444, 59 L.Ed. 774; Kansas City S. Ry. Co. v. Wolf, 261 U.S. 133, 43 S.Ct. 259, 67 L.Ed. 571.”
In the most recent case upon this subject, Wisconsin Bridge & Iron Co. v. Illinois Terminal Co., 7 Cir., 88 F.2d 459, 461, the court said:
“As to the third count, which was in the form of the consolidated common counts, the court overruled the demurrer, and the case went to trial on this count before a different judge. The facts were stipulated. Appellant again pleaded the statute of limitations, and the court held that it was estopped from setting up this defense inasmuch as it was at its own request that the question was submitted to the Commission, thereby causing the period to run while it was there pending. Judgment was thereupon rendered in favor of the carrier, and from that judgment this appeal is prosecuted by the shipper.
“Section 16(3) of the Interstate Commerce Act, 49 U.S.C.A. § 16(3), lays down certain rules as to limitations of actions, providing, inter alia, that ‘All actions at law by carriers subject to this chapter for recovery of their charges, or any part thereof, shall be begun within three years from the time the cause of action accrues, and not after.’ 49 U.S.C.A. § 16(3) (a). The Supreme Court has in numerous cases construed these limitations as jurisdictional, and held that the lapse of time not only bars the remedy but also destroys the liability. See A. J. Phillips Co. v. Grand Trunk Western R. Co., 236 U.S. 662, 35 S.Ct. 444, 59 L.Ed. 774; Kansas City Southern R. Co. v. Wolf, 261 U.S. 133, 43 S.Ct. 259, 67 L.Ed. 571; William Danzer & Co. v. Gulf & S. I. R. Co., 268 U.S. 633, 45 S.Ct. 612, 69 L.Ed. 1126; United States ex rel. Louisville Cement Co. v. I. C. C., 246 U.S. 638, 38 S.Ct. 408, 409, 62 L.Ed. 914. In the last named case, the Court said ‘* * * the two–year provision of the act is not a mere statute of limitation, but is jurisdictional––is a limit set to the power of the Commission as distinguished from a rule of law for the guidance of it in reaching its conclusion.’ This being true, we think that the defense of limitations was not subject to estoppel, and that it could properly be raised by demurrer or plea, and even if appellant had failed to plead it, it would not thereby have conferred jurisdiction upon the court over the claim which had already been barred at the time the action was brought. Cf. Pennsylvania R. Co. v. Carolina Portland Cement Co. [4 Cir.], 16 F.2d 760; Arkansas Fertilizer Co. v. United States, Com.Ct. 193 F. 667.” See, also, Pennsylvania R. Co. v. Carolina–Portland Cement Co., 4 Cir., 16 F.2d 760; Louisville & Nashville R. Co. v. Cory, 6 Cir., 54 F.2d 8; Zang v. Railway Express Co., 130 Ohio St. 17, 196 N.E. 901.
Respondent, in reply to the foregoing authorities cited by appellant, asserts correctly that not one of such cases involves an action by a carrier to recover freight or demurrage charges in which the shipper has waived or extended the provisions of section 16, paragraph (3) (a), and respondent cites the case of Pennsylvania R. Co. v. Susquehanna Collieries Co., D.C., 23 F.2d 499, as being the only decision on the precise facts, and contends that that decision should amount to binding authority upon this court. In view of the fact that practically the entire argument of respondent is based upon this case, we will quote the brief opinion in full:
“Westenhaver, District Judge. This cause is before me on defendant's demurrer to plaintiff's petition. Plaintiff's action is to recover demurrage charges. The point urged in support of the demurrer is that paragraph 3, § 16, of the Interstate Commerce Act, as amended by Transportation Act 1920, § 424 (Comp.St. § 8584 [49 U.S.C.A. § 16(3)]), requires that all actions at law by carriers subject to that act for the recovery of their charges or any part thereof shall be begun within three years from the time the cause of action accrues and not after. Plaintiff's action was not commenced within three years. In excuse, it is pleaded that within three years, and before the cause of action was barred, plaintiff and defendant entered into an agreement to waive the defense of the statute of limitations on condition that suit should not be brought within the statutory period, and that this agreement is still open and subsisting. Plaintiff admits that under the Ohio practice the defense of the statute of limitations may be made by demurrer, if, on the allegations of the petition, the statute is applicable.
“Defendant urges that the right to recover demurrage charges is a right conferred by statute, to which is annexed as a condition that suit to recover must be brought within the statutory period, and hence that the right of action is barred, and cannot be prolonged or kept alive by an agreement such as would apply to an ordinary action.
“Upon due consideration, I am of opinion that plaintiff's action to recover demurrage charges is not a right conferred by the Interstate Commerce Act, and is not within the authorities relied on by defendant. On the contrary, I am of opinion that plaintiff's right of action grows out of contract. This is none the less true, even though demurrage charges, like tariff rates, must be prescribed in a tariff filed with the Interstate Commerce Commission, and cannot be departed from or varied by the parties, either before or after the service is performed. The cases cited, arising under other provisions of the same section, have no application. In those cases the right of action did not grow out of contract, but out of the statute. No right of action existed except until and as the Interstate Commerce Commission made a finding of certain facts.
“In view of this conclusion, it is unnecessary to consider whether a right created by statute, with a condition annexed that it shall be enforced within a limited period, as suits for wrongful death, or actions on a reparation award of the Interstate Commerce Commission, may be kept alive by a voluntary agreement of the parties. It is difficult, however, to perceive any sound reason why it may not. Certainly none of the cases cited so hold.
“The demurrer will be overruled, and an exception may be noted.”
The decision just quoted was rendered by the District Court, Northern District of Ohio. No authority is cited in the opinion and there is no reference to any of the decisions of the United States Supreme Court hereinbefore cited. The author of the opinion held that the right to sue for demurrage charges was not a right conferred by the Interstate Commerce Act but was a right which accrued out of contract, and that the statute of limitations could be waived. The opinion does not discuss the object intended to be achieved by the statute and emphasized in other decisions. It is worthy of note that this case has not been cited in any subsequent case.
We are convinced from the authorities that the conclusion reached by the court in the Susquehanna case is opposed to the great weight of authority. We believe that it was the intention of Congress in fixing the limitation of “within three years * * * and not after” to guard against the circumvention of one of the chief purposes sought to be achieved by the enactment of the Interstate Commerce Act, namely, the prevention of preferences and discriminations among persons, firms, corporations and localities. We believe further that under the decisions of the United States Supreme Court and various United States circuit courts and district courts, we are compelled to hold that when Congress provided in the Interstate Commerce Act that “all actions at law by carriers subject to this chapter for recovery of their charges, * * * shall be begun within three years from the time the cause of action accrues, and not after,” it meant that carriers should not grant preferences for delaying for a long period of time the enforcement of the payment of charges, and therefore intended to provide, and did provide, that unless the action was commenced within the three–year period, the carrier would lose the right to collect them by action. In construing this section we must have in mind the paramount purpose of the Interstate Commerce Act, and when we have that purpose in mind that it was an act to protect the public against rebates and discriminations, it is not difficult to understand why the federal courts have, with the single exception of the Susquehanna case, held that the period provided for the commencement of actions thereunder was different from the ordinary statute of limitations created for the benefit of the debtor, who could waive it, because it was simply a matter which concerned the parties to the action.
It may be that in some cases the waiver of the statute will not result in undue or unreasonable preference or discrimination. However, that is a question that goes to the wisdom or policy of the act, and, as was said by Mr. Justice Field, later a justice of the Supreme Court of the United States, in Ex parte Newman, 9 Cal. 502, 520, “It is not the province of the judiciary to pass upon the wisdom and policy of legislation; and when it does so, it usurps a power never conferred by the Constitution.”
We conclude, therefore, that under the provisions of section 16(3) (a), upon the expiration of the period therein prescribed within which action must be taken by the carrier, the cause of action is destroyed and the court's jurisdiction over the matter is terminated; and that neither the carrier nor the shipper can legally waive the provisions of said section, nor extend the period within which an action must be instituted, and that any such waiver or agreement to forbear is contrary to the plain policy of the act and is therefore against public policy and void.
It follows that the trial court erred in giving effect to the extension agreement of October 25, 1935, and in holding that plaintiff was entitled to judgment.
In view of the fact that appellant concedes that under the authorities the trial court was correct in its view that a shipper cannot assert an estoppel against a claim for transportation charges, it is unnecessary to discuss the question as to whether or not the court erred in sustaining respondent's demurrer to appellant's fourth affirmative defense and in striking out said defense.
In view of the foregoing the judgment should be reversed.
BARNARD, P. J., concurred.