The defendant challenges this whole proceeding on the ground that, although in form a civil action, it is in reality a criminal prosecution and that its enforcement by summary judgment would deny to the accused the Constitutional guarantees of the Fifth Amendment.
Whether a sanction is civil or criminal is a question of statutory construction. United States v. Norfolk, Baltimore and Carolina Line, Inc., 382 F.2d 208 (4th Cir. 1967).
The main reason urged by the defendant in support of this position is that the terminology used in Section 16(8) of the statute is penal in nature. However, Section 16(9) of the Interstate Commerce Act, 49 U.S.C. § 16(9) refers to the $5,000.00 forfeiture and provides that such shall be recoverable in a civil suit. It is equally within the power of Congress to impose both a criminal and a civil sanction with respect to the same act or omission. A forfeiture of goods or their value and the payment of fixed or variable sums of money are sanctions which have been recogized as enforcible by civil proceedings. See United States v. Western Pacific Railroad Company, and United States v. Denver & Rio Grande Western Railroad Company, 385 F.2d 161 (10th Cir. 1967), cert. denied, sub nom. Denver & Rio Grande Western Railroad Company v. United States, 391 U.S. 919, 88 S. Ct. 1805, 20 L. Ed. 2d 656 (1968); Helvering v. Mitchell, 303 U.S. 391, 58 S. Ct. 630, 82 L. Ed. 917 (1937); United States v. Regan, 232 U.S. 37, 34 S. Ct. 213, 58 L. Ed. 494 (1914).
Count 1 of the Complaint charges, in paragraph 4, that the defendant, during the period of June 1962, through December 1963, frequently and knowingly engaged in the practice of extending credit in excess of 120 hours for tariff charges applicable to interstate carload shipments of freight to certain shippers, namely, Murphy Plywood Corporation and Morris Fishman and Sons, Inc.
Despite defendant's denials of the conclusionary allegations, defendant admits the correctness and accuracy of certain copies of the Railroad Company's books of account which disclose that defendant, on numerous occasions, delivered freight to Murphy Plywood Corporation and to Morris Fishman and Sons, Inc. without collecting the freight charges thereon, and that such freight charges stood unpaid in excess of 120 hours.
It is undisputed that no action was taken by the defendant to cancel the credit of the two delinquent shippers.
Defendant attempts to explain its failure to collect freight charges from Murphy Plywood Corporation within the 120 hour credit period because of an offsetting claim by this shipper for damages to the shipment. While it is true that when suit has been brought by the carrier or the shipper, claims for damage may be set off or the subject of a counter-claim in accordance with the law of the forum, a shipper may not deduct the amount of claimed damage from freight charges owed to the carrier, nor may the carrier set off debts owed by that carrier to a shipper against debt accruing from freight charges owed by the shipper to the carrier. Chicago & North Western Railway Company v. Lindell, 281 U.S. 14, 50 S. Ct. 200, 74 L. Ed. 670 (1930).
Section 16(8) of the Statute provides a penalty for "knowingly" failing or neglecting to obey an order of the Commission. The order which plaintiff alleges was disobeyed, Ex Parte No. 73, as amended, authorizes the carrier to extend credit up to 120 hours. The defendant contends that the plaintiff has failed to present sufficient evidence to establish a knowing violation. It would seem, however, that the offense charged in extending credit is one which can only be committed knowingly. The very concept of extending credit imparts a voluntary act involving an exercise of free will. Also, while the Complaint does claim damage for only three specific violations, paragraph 4 of Count 1 sets forth a course of conduct to show the frequency of the offenses and the failure of the carrier to take effective precautions as required by the Commission's credit order. This allegation is corroborated by the defendant's own records, admittedly accurate, which disclose ample evidence of knowledge of such violations. These records also show that at the very time credit was extended on each of the three occasions specified in the Complaint, the two shippers in question were delinquent in payment of other credit charges. These facts taken together are sufficient to establish that the defendant's failure to obey the order of the Commission was done knowingly. See Riss & Co. v. United States, 262 F.2d 245 (8th Cir. 1958).
The final point upon which the court must focus attention involves the defendant's contention that the Government must establish proof of unjust discrimination before defendant may be considered in violation of the Commission's order.
In support of this contention the defendant relies upon Continental Shippers Association v. United States, 328 F.2d 966 (9th Cir. 1964) which was a criminal prosecution charging a violation of the Elkins Act, 49 U.S.C. § 41(1) (1959). However, in Continental, supra, the action was against a non-paying shipper rather than against a non-collecting carrier. In that case the court was faced with a factual situation in which once a delay existed in payment of tariff charges by the shipper, the carrier had taken prompt collection measures, suspending credit privileges on future shipments by the shipper in an attempt to avoid an unlawful concession or discrimination. Therefore, the situation in that case involving the violation of Section 41(1) of the Elkins Act, supra, is significantly different from that presently facing the court.
In issuing the credit order Ex Parte No. 73 pursuant to Section 3(2) of the Statute, the Interstate Commerce Commission established a standard of 120 hours as the maximum period within which it was permissible to extend credit on freight charges and within which those charges upon which credit had been extended had to be collected. Therefore payment of these charges within the established standard is required "to prevent unjust discrimination". Discriminations are departures from fixed standards for the benefit of one to the prejudice of another. The discrimination in this case is the departure by the defendant from the credit order and the use by the shipper of the defendant's capital, without interest, which advantage other shippers, who paid their freight bills within the standard 120 hour maximum credit period did not receive.
Unlike Section 3(1) of the Interstate Commerce Act, 49 U.S.C. § 3(1), which does not have an established standard as Section 3(2) has and which does require Commission hearings to determine undue and unreasonable preferences or discriminations, Section 3(2) by its very language indicates that the timely collection of charges upon delivery of freight or under Commission order is necessary "to prevent unjust discrimination". Any deviation beyond the authorized maximum standard of 120 hours constitutes a discrimination in favor of the party obtaining a longer credit period than that prescribed by the Commission's order.
The Interstate Commerce Commission in Ex Parte 73, 57 I.C.C. 591 (June 4, 1920), when originally considering the issuance of credit regulations pursuant to the authority of then Section 405,
stated as follows:
"Section 405 provides that, after July 1, 1920, no railroad shall relinquish possession of freight at destination until all rates and charges thereon have been paid, except under such rules as the Commission may prescribe to assure prompt payment and to prevent unjust discrimination. The latter provision virtually continues the operation of General Order No. 25 of the Railroad Administration, as supplemented relating to the extension of credits by railroads."
It is therefore apparent that the standard established by the Commission's order had as its purpose the prevention of unjust discrimination, and that an extension of credit by the carrier beyond the 120 hour maximum, in effect, furnishes to the non-paying shipper working capital without interest and, thereby, effects a discrimination of the type which the Commission and Congress intended to prevent.
This court, therefore, concludes that for the reasons included herein, no genuine issue as to any material fact exists and that plaintiff's motion for summary judgment should be granted.