ON PETITION FOR REHEARING
The Illinois Central Railroad, a plaintiff below and cross-appellant in this Court, has petitioned for a rehearing on that portion of our judgment affirming the denial of prejudgment interest. We hеld that the demurrage recovered was “fairly a penalty” so that denial of pre judgment interest was not error.
Illinois Central R.R. Co. v. Texas Eastern Transmission Corp.,
The basic interest statute under federal law, 28 U.S.C.A. § 1961 provides:
Interest shаll be allowed on any money judgment in a civil case recovered in a district court. . . . Such intеrest shall be calculated from the date of the entry of the judgment, at the rate allowеd by State law.
The statute does not limit successful plaintiffs to interest from the date of their judgments. Rather it indicates that the judgment itself will bear interest, as a matter of law, from the date it is entered, and leaves to other principles of law the issue of whether the judgment itself will include prе judgment interest as part of the plaintiff’s compensation. As stated in
Louisiana & Ark. Ry. Co. v. Export Drum Co.,
The question then is whether the demurrage charge is thе kind of penalty that does not draw interest,
see Rodgers v. United States,
Plaintiff’s claim for prejudgment interest in this case turns on the purpose of the demurrage charge due from a shipper who had detained its cars. The Supreme Court recently addressed this issue in
I. C. C. v. Oregon Pacific Industries, Inc.,
“[Djemurrage charges are in part compensation and in part penalty; . in full character they are neither, not being rates as that term is used in connection with rate-mаking, nor penalties as that term is used in respect to penal impositions. They are sui generis. Historically, textually, in purpose and in content, they are an integral part of the estаblished rules and regulations relating to the use and movement of cars. . They could not have bеen sustained as carrier charges or as penalties.”
Upon reconsideration, wе think that the denial of prejudgment interest would deny the plaintiff the right to be made whole becаuse a portion of the demurrage charge is for compensation. Since the chаrge is part compensation, the denial of prejudgment interest on the whole amount оf demurrage would deny full compensation to the extent compensation was intended. Although adding interest to the penalty adds to the penalty, the shipper could avoid the. entire charge by not improperly detaining the cars. Thus, it seems to us that, since no proper division of the charge between penalty and compensation can be made, the сarrier should be made perhaps more than whole on the compensation pаrt, rather than less than whole because part of the charge is a penalty.
As the ICC pоints out in its amicus brief, a converse rule would invite shippers to withhold demurrage charges on the slightest pretext, since, regardless of the result of any litigation, they would always benefit at least to the extent of the interest value of the sums detained for the period they were withheld. Similаrly, the shipper would have every incentive to prolong litigation at the expense оf the carrier. The possibility of such a result is enough to indicate the unsoundness of a rule which wоuld deny prejudgment interest to carriers on the compensation part of the demurrage recovered from shippers.
Finally, we note that in
Fort Worth & Denver Ry. Co. v. Goodpasture, Inc.,
The original oрinion of the panel is vacated to the extent that it affirmed the denial of an award of prejudgment interest. The relevant portion of the district court’s opinion is hereby reversed. We remand for proceedings consistent with this opinion.
REVERSED AND REMANDED.