Amicus Curiae Brief — United States Ex Rel. Kansascity Southern Ry. Co. v. Interstate Commerce Commission

Supreme Court brief1920

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Text

DEC 8 1919

JAMES D, MAHER,

ML EIPK,

In the Supreme Court of the United Staies

OcToBER TERM—1919.

No. 413.

THE UNITED STATES OF AMERICA on

the relation of Kansas City Southern Rail-

way Company,

Plaintiff-in-Error,

Vs.

INTERSTATE COMMERCE COMMISSION

In ERROR TO THE CouURT OF APPEALS OF THE

DistTRicT OF COLUMBIA.

BRIEF AS AMI/C/ CURIAE ON BEHALF OF

NUMEROUS RAILROAD COMPANIES

W. G. BRANTLEY,

SANFORD ROBINSON,

LESLIE CRAVEN,

of Counsel,

Presidents’ Conference Committee.

PRINTED BY THE

SECRETARY, PRESIDENTS’ CONFERENCE COMMITTEE

PHILADELPHIA, PA.

Point 1. The Valuation Act plainly

requires the investigation, as-

certainment and report of the

Present Costs of Acquisition of

Railroad Lands...........................

Point 2. Since the language of the

Act clearly requires that the

Commission ascertain the cost of

acquisition, the Commission can-

not question the wisdom of Con-

gress, nor can it refuse to per-

form the duty imposed unless

such performance is absolutely

Point 3. The Ruling in the Min-

nesota Rate Cases, considered

as a Ruling upon a Principle

of Constitutional Law, does not

affect the duty of the Commis-

sion to perform the Act specified

in the Valuation Act................

Point 4. The nature of the prob-

lem of ascertaining the present

cost of acquisition of railroad

PAGE

Point 5. The present cost of con-

demnation and damages or of

purchase of railroad lands can

be readily and accurately as-

certained in accordance with

established legal precedents...... 40

ill

CASES AND AUTHORITIES CITED.

Beebe v. Johnson, 19 Wend., 500

Cohens v. Virginia, 6 Wheaton, 264

County of Blue Earth v. St. P.& S.C. R. R.

Co., 28 Minn., 503

15 Cye. 722-3

Faulk v. Missouri River & N. W. Ry. Co.,

132 N. W., 233 (8S. D.)........................

Hare on Contracts, 639

Harriman, The, 9 Wall., 172

Kansas City Southern Railway Co. (1 Val.

U. S., 423

Lewis, Eminent Domain (Third Edition)..42, 48

Lincoln v. Commonwealth, 164 Mass., 368,

41 N. E., Rep. 489

Minnesota Rate Cases, 230 U. S., 352, 451.. 10

Northern Pacific Railway Co. v. North

American Telegraph Co., 230 Fed.,

347 ’ a

R. I. & E. I. Ry. v. Gordon, 184 IIl., 456,

56 N. E., 810

Smythe v. Ames, 169 U. S., 466

Sutherland on Damages, Paragraph 1083.... 48

Texas Midland Case, 1 Val. Rep. 53, 54,

1:170

U.S. v. Grizzard, 219 U. S., 180, 183, 184.8, 42

Winston-Salem Southbound Ry. Co., 1 Val.

Rep. 176 17

Inthe Supreme Court of the United States

OcTroBER TeERM—1919.

No. 413.

THE UNITED STATES OF

AMERICA, on the relation of

The Kansas City Southern

Railway Company,

Plaintiff-in-Error,

vs.

THE INTERSTATE COM-

MERCE COMMISSLON

BRIEF AMIC/ CURIAE.

Statement

An order having been entered, granting per-

mission to file a brief as amici curiae, this brief

is filed by counsel on behalf of the Presidents’

Conference Committee, an organization of the

executives of the railroad companies, repre-

senting the ownership of approximately 224,000

miles or 85 per cent. of the railroad mileage

of the country.

The Interstate Commerce Commission, in the

enforcement of the Act approved March 1, 1913,

amendatory to the Act to Regulate Commerce,

and providing for the valuation of the properties

of carriers subject to said Act, has declined, in

the case of the Kansas City Southern Railway,

to ascertain and report the present cost of con-

demnation and damages or of purchase of the

carrier lands of said company, basing its dec-

lination upon the ground that it is impossible

as matter of law to ascertain and report the

present cost of condemnation and damages or

of purchase of the carrier lands of any railroad

company. The interest of the Presidents’ Con-

ference Committee in the pending case arises

by virtue of its representation in matters in-

volving the valuation of the properties of the

various railroad companies embraced within

its organization, and the said committee

believing that the conclusions reached by the

Interstate Commerce Commission as stated are

erroneous, it has sought, through its counsel,

permission to file a brief on the question

involved, and such permission being granted,

this brief is now submitted.

Argument.

Point 1. The Valuation Act plainly

requires the investigation, ascertain-

ment and report of the present costs of

acquisition of railroad lands.

The duty of the Commission with relation to

the execution of the Valuation Act is prescribed

by its terms. There is no dispute as to what

the Act prescribes. It requires, in plain and

implicit language, the investigation, ascertain-

ment and report of the present cost of acquisition

and also the present value of railroad lands.

These requirements are found in paragraph

“First,” in the language: ‘Said Commission

shall ascertain and report in detail as to each

piece of property owned or used by the said

common carrier for its purposes as a common

carrier, * * * the cost of reproduction

new, * * *,” and paragraph “Second,”

which applies solely to land, providing that:

“Such investigation and report shall state in

detail, and separately from improvements,

* * * the present value * * * and sepa-

rately the * * * present cost of condemna-

tion and damages, or of purchase * * *.”

The Commission makes no denial of these

requirements. It has admitted in its decision

in the Texas Midland case, 1 Val. Rep. 54,

that the Act requires the investigation, ascer-

tainment and report of the present cost of

acquisition of railroad lands. The Commis-

sion says (page 54): “* * * the direction

in paragraph entitled ‘Second’ for the ascer-

tainment of the present cost of condemnation

and damages, or of purchase, in effect calls for a

finding as to the cost of reproduction of these

lands.”

On page 163, the Commission says: “This,

however, is not of much practical importance,

for paragraph ‘Second’ requires the Commis-

sion to report, if not the cost of reproduction,

at least what amounts to the same thing.”

On page 164, the Commission says:

“The right of way of a carrier is fre-

quently donated, but in so far as the carrier

must acquire this by purchase or condem-

nation the cost generally exceeds the acreage

value of the lands taken. This is partly

due to the peculiar shape of the piece

acquired and partly to other causes. This

excess cost to the carrier is a thing of

importance in the actual production of

its railroad, and the carrier claims that

it ought to be given weight in the estimate

of reproduction. Evidently this was the

fact for which Congress intended to inquire.

What did it cost and what would it now

cost the carrier to procure its right of way

and other operative lands in excess of the

market value of such lands by the acre?

If this construction is correct, the Com-

mission is required to report as to the

operative lands of a carrier the following

facts:

1. Original cost.

2. Present value.

3. Cost of procuring right of way in

excess of acreage value at the time of

dedication to public use.

4. Cost of procuring right of way at

the present time in excess of present

acreage value.”

The Commission thus recognizes that the

Act requires the ascertainment of the present

PETA ANSTEY Hi MOTO NTE RIS OE, PA IAL

cost of acquiring the carrier’s lands, and that

this cost of acquisition ‘‘generally exceeds the

acreage value of the lands taken.” By “acreage

value of the lands taken” it mean’ their value,

for example, upon the basis of the value per

acre of the 160 acre farm through which the

right of way passes, and from which its area

is carved. The Commission, refusing to esti-

mate these costs of acquisition in excess of

this “acreage value,” finds a “present value’”’

which is limited solely to the so-called “acreage

value.” The refusal of the Commission to

find the higher cost of acquisition and its

reasons for restricting its investigation to the

so-called ‘acreage value’”’ are explained in

detail in the Texas Midland decision (1 Val.

Rep. 53). In defining the “present value”

which it reports for carrier lands, it says:

“Present value is arrived at by ascer-

taining the number of acres of land owned

or used by the carrier for its purposes as a

common carrier, and multiplying this acre-

age by a market value determined from

the present market value of similar and

adjoining lands.”

On page 167, it says:

“Present value as reported by the Com-

mission is nearly synonymous with market

value. What is done is to ascertain the

number of acres of carrier land, to deter-

Italics ours.

REO ITE NER FRE oS LBP ESRI RT ILE ELLIE SMG IL OE

mine the market value of similar land

adjoining or in the immediate vicinity

per acre and to apply that price to the

number of acres.”

The Commission thereby reports a ‘“ value”

derived by applying to the acres of land owned

by the carrier, a market value determined from

the present acreage market value of adjacent

and adjoining lands in the sizes and shapes in

which those adjoining lands exist and which,

by reason of the fact that they are devoted to

other than railroad uses, are not similar in size

and shape to the lands owned by the railroad.

The railroad lands, and particularly rights of

way, are peculiar in that there must be a con-

tinuity of title in strips of narrow area located

with particular reference to conditions of topog-

raphy and community development. Being

devoted to a peculiar use requiring such areas

in shapes and sizes dissimilar to those of the

lands devoted to ordinary agricultural or indus-

trial purposes, railroad lands cannot be acquired

upon the basis of the market value of land in

the shapes and sizes usable for such agricul-

tural or industrial purposes. The universal

experience of the carriers in the acquisition of

their lands demonstrates this fact, and its

recognition is found throughout the authorities

in which the legal principles underlying the

acquisition of such lands are outlined. Not

only must the carrier pay for the area which

it secures, but additional amounts must be

paid for the damages to the adjacent property

Italics ours.

RE ERE PRS POT

from which the railroad areas of peculiar shapes

are taken, due to the injury done to such prop-

erty both by the severance of the land taken

and by the inconvenience and annoyance caused

by the operation of trains once the railroad

is constructed. The carrier thus acquires not

only the title to the area actually taken, but

certain rights in the adjoining lands which are

analagous to easements, by virtue of which the

carrier has the right in the construction and

operation of its railroad to damage continuously

the adjoining property. The Commission in the

excerpt above quoted from the Texas Midland

case admits these things. The Commission in

its decision also says (1 Val. Rep. 1, 170):

“Tt cannot be denied that frequently

the cost to a railroad of acquiring its right

of way with respect to parcels which must

be purchased materially exceeds the acreage

value of the land taken. Previously to

the decision of the Supreme Court in the

Minnesota Rate Cases it seems to have

been understood by many commissions

and valuators that the proper method of

determining the present value of the oper-

ative lands of a carrier was to inquire what

it would cost to acquire those lands upon

the basis of present prices. For the pur-

pose of determining the excess of such

cost over acreage value many studies were

made of pieces of construction where the

known cost could be compared with the

acreage value, and from these investiga-

tions were deduced percentages which

varied for rural right of way from 150 to

300 per cent., being less in case of city

lands.”

These excess costs arise from the fact that the

carrier acquires not only the acreage actually

occupied by his right of way, but in addition

must pay amounts for the damages done to the

residue of the tract of which the land taken

formed a part, thereby securing rights, analo-

gous to easements, over the adjoining property.

In U. S. vs. Grizzard, 219 U. S., 180, 183, 184, the

Court said:

“Whenever there has been an actual

physical taking of a part of a distinct tract

of land, the compensation to be awarded in-

cludes not only the market value of that

part of the tract appropriated, but the

damage to the remainder resulting from the

taking, embracing of course, injury due to

the use to which the part appropriated is

to be devoted. Thus in Sharp vs. United

States, 191 U. S. 341, 353, damage result-

ing to adjacent but distant parcels was

denied because there had been no actual

appropriation of any part of such separate

parcel, but the principle was conceded as to

injury, from the character of the use of that

taken, to that untaken of the same tract.

Upon this distinction the court said: ‘Upon

the facts which we have detailed we think

the plaintiff in error was not entitled to re-

LER IINI NORIRY BE SLEDS ENE NO EEE IER 9 SE ORL TM

cover damages to the land not taken because

of the probable use to which the Govern-

ment would put the land it proposed to take.

If the remaining land had been part of the

same tract which the Government seeks to

condemn, then the damage to the remaining

portion of the tract taken, arising from the

probable use thereof by the Government,

would be a proper subject of award in these

condemnation proceedings. But the Gov-

ernment takes the whole of one tract.’ To

the same effect see Cooley’s Constitutional

Limitations, pp. 565-566.”

From these facts it clearly appears that rail-

road lands normally are secured at a cost of

acquisition which is in excess of the market

value of the land taken; that these costs arise

by virtue of established legal precedents pursuant

to which the carrier is required to incur them;

that the Commission has recognized the fact of

the existence of such costs, and that the Act

intends to require and does require their re-

porting, but that the Commission refuses to

report them.

The reason for the incorporation of these

requirements in the Valuation Act lies in a

number of considerations. The Act requires

the investigation, ascertainment and report

of the value, not only of the land, but of all

the property of the railroads, and requires

in addition a study and report of certain im-

portant facts which are relevant to the ques-

tion of value. The value of railroad property

is a question of fact. As was stated in the

Minnesota Rate Cases (230 U. S. 352): “It

is not a matter of formulas, and there must be

a reasonable judgment having its basis in a

proper consideration of all relevant facts.”

The Court, in defining the scope of this in-

quiry as to the facts, quoted the language of

Smythe vs. Ames (169 U. S. 466), which has

become a cornerstone of valuation precedent:

“In order to ascertain that value, the

original cost of construction, the amount

expended in permanent improvements, the

amount and market value of its bonds

and stock, the present as compared with

the original cost of construction, the prob-

able earning capacity under particular rates

prescribed by statute, and the sum required

to meet operating expenses, are all matters

for consideration, and are to be given

such weight as may be just and right in

each case. We do not say that there may

not be other matters to be regarded in

estimating the value of the property. What

the company is entitled to ask is a fair

return upon the value of that which it

employs for the public convenience.”

An examination of the legislative history of

the Valuation Act shows the intent of the framers

of the bill to require the ascertainment and

reporting of all these facts pertaining to value

which were mentioned by the Court, each one

of which, among numerous others, is specified

in its provisions, and each of which constitutes

a prescribed field of inquiry.

One of the facts pertaining to value which is

mentioned by the Court in the language above

quoted, is the “present as compared with the

original cost of construction.” The “present

cost of construction’? must be complete, other-

wise it is misleading. Its completeness neces-

sarily requires the inclusion of the present cost

of acquiring the carrier lands as well as its

other property. Clearly the cost of acquiring

those lands is as important as the cost of

constructing the roadway and buildings upon

them. It cannot be doubted that what would

have to be paid today to acquire those lands,

in accordance with the present day practises

and the experience of the carriers in so doing,

and pursuant to the principles of law governing

such acquisitions and the amounts payable

in such cases, is not only relevant to the present

value of such lands, but would in the normal

case be a predominating and controlling con-

sideration. Clearly such costs would be more

controlling than the alleged “acreage value’”’

now determined by the Commission, and which

it admits is incomplete in that there are ex-

cluded certain items of cost covering elements

of value which normally and almost inevitably

attend such purchases. The reason is there-

fore clear why Congress included this impor-

tant requirement in the Valuation Act. With-

out such evidence, the basis for determining

valuation would be essentially defective.

Aside from the necessity of the ascertainment

of the cost of acquiring railroad lands with

relation to the determination of value, the

intent of Congress was obvious also to insure

the marshalling of all of the information,

statistics and data, in which it was thought

there could be found a foundation upon which

to rest a scientific regulation of various railroad

problems. Information was desired as to what

it would cost to produce this property today

under modern conditions, thus affording infor-

mation relative not only to the question of

value, but thought to be possibly desirable for

such purposes as affording a check of the

reasonableness of the carrier’s plant accounts,

the fairness of capitalization, the adequacy of

depreciation annuities, and other kindred mat-

ters. The complete present costs of construct-

ing the railroads, as distinguished from a partial

estimate of such costs, is essential for such

purposes.

PRESSE RIES LIES I LLANE DEOL TE DY BM EEN

Point 2. Since the language of the

Act requires that the Commission ascer-

tain the cost of acquisition, the Com-

mission cannot question the wisdom of

Congress, nor can it refuse to perform

the duty imposed unless such perform-

ance is absolutely impossible.

The Valuation Act orders an investigation,

ascertainment and report of definitely specified

matters. A large part of the Act is a bill of

specifications detailing with exactness the facts

which are ordered to be investigated, ascertained

and reported. Under these circumstances,

several propositions would seem to be manifest,

and not subject to reasonable question. In

the first place, the Commission has no discretion

as to whether it shall perform the duties imposed.

While judgment may be exercised by it, as the

expert agency to whom these duties are

delegated, in making its determination within

the specified issues, it is not for the Commission

to substitute its judgment for that of Congress,

and to question the wisdom of Congress in

legislating as it did, and as a result of a difference

of opinion to refuse to enter the fields of investi-

gation which Congress prescribed. The

language of the Act is mandatory. It is the

mandate of sovereignty. It is the law of the

land and made so by the legislative branch of

the government, within the proper exercise of

the functions of that branch. It is a direction

to an inferior and subordinate agency of the

cad

LIISA EN AGRE ER, SPE RETIREE EO BOLE PRR Ca RO, DEBE:

state, which is itself the mere creature of the

state, which exercises its authority only as a

result of the certain prescribed and delegated

powers and duties which give it life. One of

the duties imposed by the sovereign state upon

its servant is prescribed by the Act as the

determination of a certain specified fact. It

is not within the scope of the powers of the

Commission to test the wisdom or expediency

of that delegation of duty and authority.

In the second place, if from the very nature of

things, the duty imposed is impossible, in that

it cannot be accomplished by anyone possessing

the utmost skill and knowledge, the Commission

is excused from the performance of its duty.

But in this relation, impossibility is to be dis-

tinguished from impracticability or from in-

advisability. Questions of expediency, incon-

venience or hardships are not relevant to the

issue. It matters not how much effort the

ascertainment will require, what expenditures

are necessary, or what may be done with the

results or conclusions once they are derived.

If the estimate of the cost of acquisition can in

any possibility be made, any considerations

going to the hardship or difficulty of making the

ascertainment or of the worth of the results

when ascertained, are not material to the issue.

The Commission’s refusal to follow the mandate

of the law can only be justified if it is established

that in the very nature of things the Commission

cannot make the estimate of probable costs of

acquisition which the Act requires, which

incapability arises because such costs of acqui-

sition under any method or theory do not lie

within the limits of rational determination.

This means impossibility of rational determin-

ation under every hypothesis consistent with

reasonable valuation theory and legal precedent.

The following cases are pertinent:

The Harriman, 9 Wall., 172.

Beebe vs. Johnson, 19 Wend., 500.

Hare on Contracts, 639.

We contend that it is practicable to ascertain

such costs, that they can be reasonably ascer-

tained, and that their ascertainment is necessary

to the ascertainment of the value of the railroads

and the execution of the Valuation Act.

Point 3. The ruling in the Minnesota

Rate Cases considered as a ruling upon

a principle of constitutional law does

not affect the duty of the Commission

to perform the acts specified in the

Valuation Act.

Prima facie the conditions which we have

heretofore outlined point so clearly to the pro-

priety of compliance by the Commission with

the law, that we may with profit next examine

the grounds of the Commission’s refusal. Its

refusal is based primarily upon its interpreta-

tation of the decision of the Court in the

Minnesota Rate Cases, 230 U. 8S. 452. This

ground is stated by the Commission in its

answer in this proceeding and is the foundation

of the decision of the Commission in the Texas

Midland case. It is the Commission’s position

that the position of the Court in the Minnesota

Rate Cases establishes that the ascertainment of

the present cost of condemnation and damages

or of purchase of railroad lands has no lawful

nor rational basis.

In this connection, the fact must not be over-

looked that the refusal of the Commission to

comply with the Act is entire. It declines to

report the present cost of acquisition of the rail-

road lands, even where that ascertainment can

be made with complete accuracy. For example,

it would seem clear that where the actual

acquisition of such property had been so recent

that the conditions obtaining at the time of

purchase were substantially those of the date of

valuation assumed by the Commission in making

its report, the “ present cost of condemnation and

damages or of purchase” would be substantially

the same as that original cost. Therefore, the

findings required by the Valuation Act could be

made accurately and without the exercise of any

assumptions. The Commission, however, refuses

to make any findings of the cost of acquisition of

railroad lands under such circumstances. It is

alleged in the amended petition, and the allega-

tion is not denied, that certain lands were ac-

quired by the plaintiff for right of way purposes

shortly before the date of valuation through

condemnation proceedings, at an actual cost of

$180,000, but that the Commission has reported

Se ee Tee

the so-called “present value” of these lands at

$60,000 (Record pages 34, 35).

The Commission thus declines to report the

present costs of acquisition. The decision of the

Commission in the Teras Midland Case and in

the cases decided subsequent thereto is absolute

and unqualified (Winston-Salem Southbound Rail-

way Company, 1 Val. Rep. 187, Kansas City South-

ern Railway Company, 1 Val. Rep. 223). It there-

fore appears that the position of the Commission,

founded upon the decision of the Minnesota Rate

Cases, assumes that that decision established as

a matter of law the impossibility of the ascer-

tainment. In view of the reliance of the Com-

mission upon the doctrine of the Minnesota Rate

Cases, we may therefore properly direct our-

selves to the consideration of the relationship of

that decision to the duties of the Commission

prescribed by law.

The Minnesota Rate Cases did not involve the

Valuation Act. They were submitted for de-

cision before the Act was passed. The crux of

the issue presented in these cases was the con-

stitutionality of state-made rates, which the

carriers asserted were confiscatory in that they

did not permit a fair return upon the value of

the property devoted to public service. The

Court at the beginning of its discussion reiter-

ated the established principle of law that the

rates must pay a reasonable compensation upon

the fair value of the property devoted to public

service. Whether confiscation had been effected

by the regulation under attack, depended upon

the relationship of the returns under the pre-

scribed rates to the value of the property used.

This was the announcement of a substantive

rule of constitutional law. The Court then

said that this value was to be determined as a

question of fact:

“In determining whether that right

(i. e., the right of receiving ‘just compensa-

tion’) had been denied, each case must

rest upon its special facts. * * * The

ascertainment of that value is not con-

trolled by artificial rules. It is not a

matter of formulas, but there must be a

reasonable judgment, having its basis in a

proper consideration of all relevant facts.”

(Page 434.)

The Court, having laid down as a proposition

of constitutional law that value was the test,

thus defined the issue of fact and considered in

detail the testimony regarding the cost of

acquisition and “railway value” of the lands

in question. The Court said:

“The constitutional invalidity must be

manifest, and if it rests upon disputed

questions of fact, the invalidated facts

must be proved.” (Page 452.)

It decided that the necessary facts were not

proved. It pointed to certain defects in the

proof, and repudiated the value founded upon

this evidentiary basis. At the conclusion of the

Court’s discussion it uses language which clearly

indicates that its consideration is confined

solely to the issue of fact. It said:

“Finding this defect in the proof, it is

not necessary to consider the objections

which relate to the sources from which the

property was derived or its mode of ac-

quisition. * * *” (Page 456.)

Value as a question of fact, was thus passed

upon in the light of the evidence submitted,

but there is nothing in the opinion indicative

of a holding that the present cost of acquisition

of the railroad lands in question, properly ascer-

tained, was not relevant to the issue of value.

From these considerations it is entirely clear

that the Court did not decide that the test of

confiscation, as a question of substantive law,

is not the value of the carrier lands, based upon

a consideration of their estimated cost of ac-

quisition among other relevant facts, provided

that this cost was ascertained on other bases

than those hypotheses which the Court con-

demned. It would have been inconsistent with

the entire trend of judicial precedents upon this

question, and with the opinion of the Court

itself, as expressed in the language which we

have quoted, for the Court to have prescribed

as a rule of law that the utility was not entitled

to a return upon a value ascertained by a

consideration of such relevant facts as an

CORT ae SR Tee?

estimate of the present cost of acquisition,

since the principle has been long and firmly

established, as the opinion itself states, that

the test of confiscation in a case involving rates

is value, the determination of which is a question

of fact. The error of the Commission lies in the

fact that it takes dicta from the discussion of

issues of fact and elevates it to the position of

a pronouncement of a substantive rule of con-

stitutional law. This alleged substantive rule,

that the carrier is entitled to a return only upon

the value of its lands determined upon the

basis of the acreage value of the adjoining tracts

of dissimilar size and shape and without any

consideration of the cost of acquisition of the

carrier’s lands, is inconsistent with the funda-

mental proposition of constitutional law first

announced, to wit: that the carrier is entitled

to a return upon the fair value of its property,

which, as a question of fact, is to be determined

by a consideration, not of any one class of in-

formation, but of all of the relevant facts.

In the case of Cohens vs. Virginia, 6 Wheaton,

264, Chief Justice Marshall said:

“The counsel for the defendant in error

urge, in opposition to this rule of con-

struction, some dicta of the court, in the

case of Marbury vs. Madison.

It is a maxim not to be disregarded,

that general expressions, in every opinion,

are to be taken in connection with the

case in which those expressions are used.

If they go beyond the case, they may

be respected, but ought not to control

the judgment in a subsequent suit when

the very point is presented for decision.

The reason of this maxim is obvious.

The question actually before the Court

is investigated with care, and considered

in its full extent. Other principles which

may serve to illustrate it, are considered

in their relation to the case decided,

but their possible bearing on all other

cases is seldom completely investigated.

(Pages 399-400.)

The maxim of the law is so familiar to the

courts and lawyers that a statement of it

is seldom necessary. Occasionally when law-

yers in the zeal of advocacy seek to press

too far mere language or dicta the courts

allude to this well known rule. For example,

see the Kansas City Southern case, 231 U. S.,

423, where it is said:

“The expressions quoted were properly

employed with respect to the questions

then presented for decision.” (Page 447.)

Recently the Circuit Court of Appeals of

the Eighth Circuit found it necessary to fully

restate the rule and apply it. See Northern

Pacific Railway Company vs. North American

2. Ree eh NT fe an a BE ak a. Ba al

Telegraph Company, 230 Fed., 347, where it

is said:

“As the facts upon which the opinions

in the cases cited rest are materially

different from those in the case at bar,

it is indispensable to a just appreciation

of these decisions and of the opinions

in these cases, and of their bearing upon

the crucial question in the case at bar,

that in their examination and discussion

these familiar rules announced by Chief

Justice Marshall be borne constantly in

mind.” (Page 355.)

The Circuit Court then repeats the language

of Chief Justice Marshall in the case of Cohens

vs. Virginia, above quoted.

Even had the Court held in a rate case, as

a matter of law, that the cost of acquisition

of the carrier lands could not be used to de-

termine their value, is such a holding upon

such an issue and in such a case relevant to

the duties prescribed by the Act of Congress?

The impossibility, because of a declared rule

of law in a case involving the issue of con-

fiscation by rate regulation, of using such

information in such a case, cannot relieve the

Commission from its duties under the mandate

of Congress. As heretofore suggested, Con-

gress has ordered the marshalling of a variety

of information thought to be desirable as

the groundwork for possible methods of solu-

tion of various phases of the railroad prob-

lems. Assuming that this erroneous construc-

tion of the decision of the Court in the rate

case in question is proper (which we emphati-

cally deny), it has been urged that there are

other and diverse uses of such facts and infor-

mation in critical lines of inquiry and investi-

gation, aside from that of testing whether

rate regulation is confiscatory. The impossibility

of the lawful use of such facts in one of various

fields of investigation is no justification for

refusing to do what Congress ordered done,

and which may be useful for other important

purposes. The desire of Congress, and its judg-

ment as to the matters regarding which it desires

information, is supreme. It is not within the

power of the Commission as a servant of the

government to substitute its desire or judg-

ment for that of the government. Irrespective

of the relevancy of such information in a case

involving the issue of confiscation by rate

regulation, Congress had the power to require

the ascertaining and reporting of such infor-

mation, or of any other information, which it

desired.

An examination of the Minnesota Rate Cases

discloses that there was properly repudiated a

value based upon assumptions which were so

inconsistent with law and fact, that the results

derived were entirely excessive and unreason-

able. But this criticism of the conclusions of

fact based upon such assumptions cannot justify

the refusal of the Commission to make such

estimates based upon assumptions which are

consistent with law and fact.

In the first place, it is clear from the language

of the opinion as a whole, as we have already

suggested, that the consideration of the cost

of acquisition of railroad lands in that case

was a consideration of the facts upon which the

finding of value of the court below was based.

Having opened its discussion with a statement

of the fundamentals upon which it proceeded,

by defining the issue of the ascertainment of

value as a judgment based upon a proper con-

sideration of all relevant facts, the proof was

considered, the opinion stating that “‘the con-

stitutional invalidity must be manifest, and if

it rests upon disputed questions of fact, the

invalidating facts must be proved.” After a

critical analysis of the testimony, and because

of specified defects in the proof, the Court con-

cluded:

“By reason of the nature of the esti-

mates, and the points to which testimony

was addressed, the amount of the fair value

of the company’s land cannot be separately

determined from the evidence, but it suffi-

ciently appears for the reasons we have

stated that the amounts found were largely

excessive.”

Clearly the estimated cost of acquisition of

railroad land is a fact relevant to the deter-

mination of its value. The decisions of the

courts indicate that in a preponderance of cases,

the cost of reproduction of the physical prop-

erty other than land has been recognized as

a controlling factor in the determination of

value, and the relevancy of such cost is univer-

sally recognized. It cannot be seriously con-

tended that this court could have attempted

to prescribe any rule for the ascertainment of

value, as a question of fact. Its intent to do

so was specifically denied when it said:

“The ascertainment of that value is not

controlled by artificial rules. It is not a

matter of formulas, but there must be a

reasonable judgment, having its basis in a

proper consideration of all relevant facts.”

(434.)

Clearly, therefore, the Court did not hold

that the ascertainment of value could be lim-

ited to any certain designated facts. The

language above quoted negatives any possible

attempt to restrict the scope of consideration

to any certain class of information, or to exclude

from consideration any facts which are relevant,

provided that they are properly established on

dependable and logical grounds.

The Court was therefore merely passing upon

the questions of fact as those questions were

presented by the testimony which had been

offered. The general language used in this

consideration must be interpreted, having in

mind the point to which the Court addressed

itself. The methods which were condemned

were the methods in issue, and used in that

snp Reet © ES Te aad sity

a ener es POP PRET STE RL GEE LILY OME RELD i a

case. An examination of the decision shows

that there is continual reference to the specific

testimony which the Court was considering,

and that any general observations which the

Court made can refer only to the specific problem

then under consideration. The present cost of

acquisition of lands now owned is an estimate

resting on certain assumptions. In the range

of the possible assumptions which in the exer-

cise of judgment, might be adopted, the Court

of necessity could consider only those which

were in issue in the testimony then under

consideration.

For example, examination of the opinion dis-

closes (Page 450), that the Court condemned the

offered estimate of acquisition costs, in that it

rested upon a “supposed compulsory feature of

acquisition,” and contemplated ‘‘that the com-

pany would be compelled to pay more than fair

market value” and thus would be deprived of its

lawful right of the exercise of the powers of emi-

nent domain under the established principles

of law controlling that exercise. The Court

likewise condemned the assumption used, that

the company would be bound to pay an exces-

sive ‘‘railway value of its property,’’ and pointed

to the fact that this assumption was directly in

conflict with the established principles of law,

enunciated in condemnation cases and restrict-

ing the allowance to the market value. The

Court specifically stated (Page 452) that there

is no evidence before us from which the amount

which would “ properly be allowable in such con-

demnation proceedings can be ascertained,”

thereby manifestly implying that had the esti-

mate been based upon correct assumption, and

had there appeared what “would properly be

allowable in such condemnation proceedings, ”’

such market value determined in accordance

with legal precedents would have been properly

the basis of the fixing of value. Similarly, the

Court said (Page 452) that the contemplation

of the complete removal of the road and a read-

justment of its values because of such oblitera-

tion, was “to indulge in mere speculation.”

So again the Court condemned the assumption

that “all the difficulties which might be imagined

as incident to such a ‘reproduction’ were con-

sidered,” and that the “increase sought for

‘railway value’ in these cases * * * ig an in-

crement which cannot be referred to any known

criterion, but must rest on a mere expression of

judgment which finds no proper test or standard

in the transactions of the business world.”

(Pages 453-455.)

Applied to the testimony there under con-

sideration, and the important parts of which

were quoted in the Court’s opinion, such criti-

cism of the evidence then before the Court was

unquestionably fair. But as the basis for the

refusal to consider facts based on reasonable

and lawful assumptions and resting upon known

criterions, not founded in imaginative conjec-

ture, but finding a test and standard in the cur-

rent and common business transactions of the

railroad companies generally in the purchase of

lands, it wholly fails.

ELE ee Oe ea eee ee

Specific criticism by the Court of specific

testimony cannot foreclose the investigation

or ascertainment of facts in that same field of

thought, if that investigation or ascertainment is

prescribed on the basis other than the one con-

demned, and avoiding the vice specified. To

so hold is to destroy the fundamental proposi-

tion announced in the opinion that value is to be

derived by a consideration of all relevant facts,

and makes impossible the formation of a sound

judgment since the basis of judgment is not as

broad as the subject considered.

In the Commission’s decision of this question

in the Texas Midland decision (page 54) it states

the necessity of assumptions and states what

these assumptions shall be. In that decision, it

erroneously assumes the necessity of the maxi-

mum assumptions, and states that the Act in

requiring the cost of reproduction of the carrier

lands requires the assumption that the property

in question “is to be taken as non-existent.”” It

states that it is sophistry to contend that the

lands of the railroad can be reproduced “without

first making the assumption that they are no

longer lands of the railroad; and this necessary

assumption carries with it the mental obliteration

of the railroad itself.’”” The Commission then

discusses, as decisive of the issue, the language of

the Minnesota Rate Cases, in which was con-

demned the use of assumptions based upon inad-

missible and speculative hypotheses, as though

such hypotheses were the only possible hypoth-

eses, and the Commission repudiates evidence

introduced by the carrier upon the ground that

its method was not distinguishable from that

condemned in the Minnesota Rate Cases. That

the Commission kept continually in mind as-

sumptions of the most extreme sort, such as

those condemned in the Minnesota Rate Cases,

is clear from the following language (page 61):

“Not alone do the uncertainties that we have

referred to surround what would be the condi-

tions of ownership, of improvement and of value

of nearby property and of general industrial

development, but there can be no certainty as to

what land would have to be acquried at a cost to

the carriers upon reproduction or a present

acquisition,’” and the Commission then pro-

ceeds to discuss the difficulty of ascertaining what

percentage of the carrier’s land would be donated

to it by communities or individual owners. Then

the Commission states its inability to determine

with accuracy what conditions would exist if

these maximum assumptions were made, which

contemplate the entire ‘‘mental obliteration” of

the railroad itself, and the changed conditions

of the ownership of adjoining property, the

changed status of the improvement of the prop-

erty adjoining the railroad and of the community

generally, the different value of the nearby prop-

erty and a new status of the general industrial

development of the community, resultant from

the complete elimination of the railroad from the

community and the removal of its influence

upon such general conditions as the conditions

of ownership, value, improvement and general

community industrial development. (Texas

Midland decision, page 61.) We feel that Con-

gress could not have intended to require the de-

termination of an estimated cost of acquisition

based upon any such processes. But can the

statement by the Commission of the possible

exercise of unreasonable judgment in the making

of an estimate effect a nullification of the law

requiring it to make such an estimate in the

exercise of reasonable judgment?

The Commission in its erroneous interpre-

tation of the opinion of this court in the Min-

nesota Rate Cases has gone-so far as to assume

that the opinion in that case condemned the

cost of reproduction method as applied to

lands as being an “impossible hypothesis.”’

In the Brief of the Commission now before the

Court it is said, page 10:

“This Court clearly states, in substance,

that the estimate of present cost of con-

demnation or damages, or of purchase,

which appellant is asking the Court to

compel the Commission to make, is an

estimate which is wholly beyond reach of

any process of rational determination. In

this connection it points out that the

appraisers of the lands involved in the

Minnesota Rate Cases, in an attempt to es-

timate the cost of acquiring the lands, were

presented with an impossible hypothesis.”

This Court in the Minnesota Rate Cases,

page 453, said:

“Presented with an impossible hypo-

thesis, and endeavoring to conform to it,

the appraisers—men of ability and ex-

perience—were manifestly seeking to give

their best judgment as to what the rail-

road right of way was worth.”

The hypothesis here referred to was that

presented by the specific assumptions upon

which the witness proceeded in the specific

testimony which the Court then had under

consideration. It cannot be assumed that

reference could be made to the hypothesis

presented by other assumptions, or by assump-

tions based upon such reasonable and legal

grounds, as would avoid the vices which were

the basis of the Court’s criticism of the specific

testimony which it considered.

Careful consideration of the opinion points

clearly to the fact, furthermore, that the

“impossible hypothesis” to which the Court

refers was, in fact, not the determination of

the cost of acquisition, but the determination

of a ‘railway value.” The Court said on

page 452:

“The cost of reproduction method is of

service in ascertaining the present value

of the plant, when it is reasonably applied,

and when the cost of reproducing the

property may be ascertained with a proper

degree of certainty. But it does not justify

the acceptance of results which depend

upon mere conjecture.”’

What the opinion condemned as an “impos-

sible hypothesis,” was the assumption of the

existence of a peculiar railway value which the

appraisers sought to determine. The court said

of this character of value, that it “must rest on

& mere expression of judgment which finds no

proper test or standard in the transactions of

the business world.”

The opinion, page 445, contains this state-

ment:

“In the latter part of 1906 the State

notified the company to report the value

of its properties, requiring a statement in

one column of the ‘market value’ and in

another column of the ‘value for railway

purposes.’ Mr. Cooper was instructed to

prepare the valuation for this report.’’

The entire opinion in so far as it relates to

land values is devoted to a criticism of the re-

quirement thus made by the State that “value

for railway purposes,” or “railway value” be

reported. This character of value, the court

condemned as an “impossible hypothesis.”’

The reasoning of the Commission that it

cannot determine the cost of reproduction of

lands because it has no way of ascertaining or

fixing the proportion of the railroad lands

which would be donated in a reproduction,

finds no support in the opinion of this Court

in the Minnesota Rate Cases. This Court

there declared, page 454:

“The property is held in private owner-

ship and it is that property, and not the

original cost of it, of which the owner may

not be deprived without due process of

law.”

The fundamental inquiry which the Com-

mission is to make under the Valuation Act is

as to the value of the property of the railroad,

including the value of its lands. In the determi-

nation of the “present value” of carrier lands

the fact that the carrier originally paid little

or nothing for them is of no consequence. It

is not the original cost of the lands of which

the carrier may not be deprived without due

process of law; but it is their value at the time

of the deprivation. The estimated present cost

of acquiring the lands is one of the elements

named for consideration in the determination

of their present value, and in the ascertainment

of such present cost of acquisition the fact that

certain of the lands may have been donated is

entirely irrelevant. In paragraph “Second,”

the Act requires the investigation and report

of the “present cost of condemnation and dam-

ages or of purchase.”’ This provision contem-

plates the ascertainment of the cost of acquir-

ing by condemnation or purchase the land in

question. It contemplates this acquisition at a

cost. It does not contemplate acquisition by

donation free of cost.

Point 4. The nature of the problem

of ascertaining the present cost of ac-

quisition of railroad lands.

The “present cost of condemnation and

damages or oi purchase” of the lands of the

calrier is necessarily an estimate. It is the

present cost of acquiring something which is

already owned, and which cannot, therefore,

be actually again acquired. The requirement

of ascertaining this cost therefore contemplates

a cost under conditions which are contrary to

the existing fact, and requires a theoretical

ascertainment of the cost of property, the title

of which is assumed for purposes of the calcula-

tion to be not in the carrier, but in someone

else from whom acquisition is to be made.

Congress therefore necessarily contemplated the

making of assumptions, when it delegated this

theoretical task to the Commission. Congress

did not designate what the assumptions should

be. That determination is delegated to the

Commission under the natural expectation that

the assumptions will be fixed on a basis so con-

sonant with practical experience that the results

derived will afford information of the present

cost of establishing these properties and of what

the investment under present day conditions

would be as compared with the actual or original

investment, thus’ afferding information per-

taining not only io the question of value, but

desirable for various other purposes contem-

plated by Congress, and in the determination

of which information regarding what investment

would be required to establish these properties

today, and under present conditions, is desirable.

Necessarily, there is latitude in establishing

these assumptions. The subject does not per-

mit of the didactic pronouncement of fixed

rules. Valuation is not an exact science. Value

and estimated costs lie in zones of reasonable-

ness, and are matters of sound judgment based

upon a consideration of the controlling circum-

stances. The determination, however, is not

one of mere conjecture. It is a matter con-

trolled by sound judgment. Congress con-

templated that the entire ascertainment should

be made in the exercise of such judgment, and

with conscientious skill. Estimated costs are

of frequent service in the ascertainment of

value. Congress could require the making of

skilled estimates.

The position of the Commission is not con-

sistent with this broader view of the problem,

but is affected by a literal interpretation of

certain dicta in the opinion of the Minnesota

Rate Cases, of which a fetish is made, and which

are even quoted almost in verbatim form in its

amended answer. The position is based pri-

marily upon the proposition that the assump-

tions condemned in that opinion are those which

it should apply in the exercise of its skilled

judgment, and that the determination of these

estimated costs is no* possible without the

indulgence of that cor.jectural reasoning which

was there properly condemned and upon which

condemnation the refusal of the Commission

to obey the law is based.

As just stated, within the latitude of the

possible assumptions resting in judgment, Con-

gress contemplated that the Commission would

exercise sound judgment. The problem being

the estimate of the present cost of acquiring

what the carrier owns, and therefore, in fact,

need not acquire, there is necessitated, at least,

the assumption of a changed condition to the

extent of the status of title. This would seem

to be a minimum of assumption. In the widest

range of assumption, as distinguished from this

minimum, it would be possible to assume the

non-existence of the road, that it has never

been built, that the community development

which has resulted from its existence has not

occurred, that the resultant value now existing

in the community could not therefore exist,

and that under this mental obliteration of the

road, there would be necessary a hypothetical

readjustment of the community values, which

are now the result of its existence. The Com-

mission assumes the necessity of such specula-

tion, and predicates its refusal upon the impossi-

bility of doing the obviously unreasonable.

Need skilled judgment, however, go to this

degree?

The error of the position of the Commission

is that it recognizes no degrees of reasonableness,

and places all estimates of the cost of acquisition

of railroad land on the plane of the estimates

which the Court criticised. Where Congress

has ordered the reporting of facts in the exercise

of reasonable judgment, the Commission now

refuses to act because of the fact that the Court,

in the criticism of certain testimony, has con-

demned estimates which were not based upon

reasonable judgment. Where the Court criti-

cised certain assumptions in a certain case as

unwarranted, the Commission now refuses to

enter the field of the investigation involving

any assumptions, not on the ground that a

reasonable judgment cannot be formed on a

minimum assumption, but that to enter such

field it must adopt assumptions justified neither

by fact nor law, and which for those reasons

the Court condemned. This position is plainly

fallacious. It is founded upon a misconception

of the duties imposed by the Act, the applica-

bility of certain obiter dicta to the problem in

question, and the scope of judicial precedent.

Among the decisions of courts and com-

missions may be found language critical of

estimates of the cost of reproduction of public

utility property other than land. This criticism

is directed merely to the facts of the par-

ticular case. Fantastic overheads have been

included, based on highly theoretical and im-

aginative conceptions of how the property

would be reproduced, and every contingency

and difficulty of construction which could pos-

sibly be met in the building of the property,

has been included and reflected in excessive

costs. The Commission, relying upon the de-

cisions of such courts and commissions in

passing upon those issues of fact, might as

well refuse to report the cost of reproducing

the buildings and other structures of the rail-

roads, as to refuse here to report the cost

of acquisition of the railroad lands. Judicial

criticism of the proof of the facts relied upon

by the parties in litigation involving the issue

of the confiscation of property by rate regu-

lation, cannot establish a lawful basis for the

refusal of the Commission to ascertain rightly

certain facts, when that action is ordered

by Congress. If the Commission is justified

in refusing to estimate the cost of acqui-

sition of these lands, because it is possible

to indulge in unreasonable conjecture and

to form erroneous judgments, it may with

equal justification refuse to make any esti-

mates, since all estimates involve the use

of judgment in the making of the necessary

basic assumptions.

The Commission is now engaged in making

an estimate of the present cost of reproduction

of all of the railroads in the United States,

it being assumed that all of these roads would

be reproduced between the years 1914 and 1920.

When the work is completed, it will purport

to show for all of the railroads in the country

the cost of reproduction during that period

of their property. This estimate is neces-

sarily based upon a foundation of assump-

tions. The assumptions employed by the Com-

mission and the methods of cost ascertain-

ment are explained in the opinion in the

Texas Midland case (pages 11, et seqg., 108,

et seq.). But it is not possible for the human

mind to grasp the status of the conditions

affecting the costs of construction, the price

of msterials, land values, and the wages of

labor, which would exist in this country during

those years were all of the railroads of the

country to be obliterated during that period

and then reconstructed. The business life of

the nation would be disorganized. The in-

crease in the demand for materials and labor

would place their cost on so high a plane as

to make the reconstruction of these properties

a financial impossibility, even were their re-

construction a physical possibility (and it is

not a physical possibility). The reproduction

hypothesis therefore, if applied to a theoretical

and logical finality, brings the estimator to

problems which are beyond rational deter-

mination. This difficulty is avoided by the

use of common sense, by approaching the

problem in a spirit of scientific inquiry, and

by the use of that judgment necessary to

make the results of the work of practical weight.

The determination of the cost of acquisition

of railroad lands is susceptible of a like so-

lution.

ES, SPST UARRLAE NA YE RNS RANTE ET BIVENS ET CET ‘a. ah

Point 5. The present cost of con-

demnation and damages or of purchase

of railroad lands can be readily and

accurately ascertained in accordance with

established legal precedents.

The problem of the ascertainment of the

present cost of acquisition of railroad lands is

merely the application of the principles which

have become well established by legal prece-

dents governing the rights of the parties in

cases involving the acquisition of such property.

As stated in an earlier portion of the brief ,

what Congress has required is an estimate of

the cost of obtaining property, the title of

which is already held. Assumptions must there-

fore be made, and the judgment of the Commis-

sion must be formed based upon these assump-

tions, and with a careful statement of them in

order that the report will disclose the exact na-

ture of the fact reported. A brief considera-

tion of the nature of the problem and the legal

precedents which are applicable to it leads to a

conclusion that an estimate of the cost of ac-

quisition of railroad lands can be made with

accuracy, with the use of reasonable assump-

tions which in no way impair the accuracy of

the results, and that the law can thus be com-

plied with.

We have heretofore suggested that the cost

of securing railroad lands can be resolved into

two general elements. The first of these is the

acreage value of the area which is actually taken

for railroad purposes. The second is the element

of damage to the adjoining lands which the

railroad does not take. The former is merely

ascertainment of the value of the area of which

the owner is doprived. The latter is an ascer-

tainment of the diminishment in value of the

lands of which the owner retains title and

possession. The issue in each instance is an

issue of value, the former being the value of

the land taken, the latter being the decrease in

value of the land not taken. Both of these

determinations are of matters which lie in

sound judgment based upon a consideration

of the facts. Both of these problems are com-

monly presented to juries in cases which are

common in every court of the land. These

determinations are made pursuant to the es-

tablished precedents which protect the owner of

property against the taking or the damaging of

any part of it. The damages, as the cases

heretofore cited disclose, consist usually of

those injuries due to the division or separation

of the owner’s land, and the severance of its

parts by virtue of the alienation of title to

particular strips desired for the right of way,

and in addition, of those injuries arising from

the use of the lands taken for railroad operation,

and of such character as the annoyance and

inconvenience caused by noise and smoke and

the hazards which arise from the possibility of

injury to property by fire and to person by

accident. This law is clearly defined and well

established. The following authorities are in

point:

Lewis, Eminent Domain (Third Edition)

Chapter XX.

U. S. vs. Grizzard, 219 U. §., 180, 183-4.

Lincoln vs. Commonwealth, 164 Mass., 368,

41, N. E., Rep. 489.

R. I. & E. 1. Ry., vs. Gordon, 184 lll., 456,

56 N. E., 810.

Clearly it cannot be said that any insuperable

difficulty is presented by the ascertainment of

these items of value and damages as to property

which is not yet acquired or which is in the

course of acquisition, since that problem is one

which is commonly solved by juries in con-

demnation cases. If there is any proper basis

for the refusal of the Commission to make the

ascertainment which is thus commonly made

by courts and juries, the refusal must proceed

from the fact that there is a difference between

the problem presented by the ordinary con-

demnation case and that which arises in the

determination of the cost of property which is

already acquired. The reason must be that the

difference in the conditions existing in the prob-

lem which confronts the jury, and the prob-

lem which confronts the Commission, as to

property now owned by the railroad, presents

an insuperable obstruction.

The refusal of the Commission to comply

with the Act, is, as has been said, entire. It

declines to report the cost of acquisition of

railroad lands in any case. It is clear that in

cases where the property has in fact been ac-

quired recently and the lapse of time has pro-

duced no conditions making the problem pre-

sented by the Act different from that which

is presented to the juries, nothing prevents the

Commission from forming the same judgment

which a jury would form. Thus where the

actual acquisition of the property has been so

recent that the conditions obtaining at the

time of purchase were substantially those at

the valuation date assumed by the Commission

in making its report, the “present cost of

condemnation and damages or of purchase’’

would be substantially the same as that original

cost. Therefore the findings required by the

Valuation Act can be made without any as-

sumptions other than that the carrier has not

title. The judgment in such an instance does

not differ from the judgment which a jury

would make without hesitation.

The Commission, however, declines under

such circumstances to ascertain the present

cost of acquisition. It is alleged in the amend-

ed petition, and it is not denied in the Com-

mission’s answer, that certain lands were

acquired by the plaintiff for right of way

purposes shortly before the valuation date,

by the means of eminent domain and at an

actual cost of $180,000, and that the Commis-

sion has reported the so-called ‘‘present value”

of these lands at $60,000 (Record, pages 34,

rr i eS al il Tait 7 ”

35). This “present value,” as above explained,

is merely the acreage value of the area taken,

upon the basis of the acreage value of the

adjoining property, and with no consideration

of the damages to the adjoining property

represented by a difference between this

partial cost and the total price required by

the law to be paid. It cannot be seriously

urged that the Commission in such a case

cannot comply with the Act, or that the

present value of such lands can justifiably be

reported by the Commission as less than

would be determined by a jury in such con-

demnation proceedings, in accordance with the

principles of eminent domain which are firmly

established as a part of the law of the land.

The Commission, by reporting as the “present

value” of such property a mere fraction of.

the cost of securing it, covering only part of

the elements of value which attach to the

property and for which the carrier under

established law was required to pay, by refus-

ing to comply with the terms of the Act which

require the reporting of these complete costs

and of all elements of value of the lands, has

proceeded in clear disregard of the terms of

the Act and of the basic law governing the

cost and value of such property. The injustice

of this position, and the injustice of reporting

such misleading information, is manifest when

it is recognized that the attitude of the Com-

mission results in its reporting as the “present

value” of lands which the carrier has just

acquired, a sum which is one-third of the

amount which the carrier was required to pay

under the laws of eminent domain as the cost

of acquisition of the property, which cost

Congress has ordered to be reported, and which

cost the Commission can report, since it is

certainly capable of forming the same judg-

ment which in fact the juries in the recent

condemnation proceedings have just formed.

The foregoing considerations point conclu-

sively to the fact that the ascertainment legally

can be made, where the property has been recent-

ly acquired. Does a lapse of time between the

date of its original acquisition and valuation

date make impossible the legal ascertainment

of its present cost of acquisition and damages or

of purchase? Here again it is clear that the

problem which the Commission declines to in-

vestigate is commonly investigated and solved

by the courts and juries. The Commission re-

fuses to comply with the Act because of the sup-

posed chaotic condition of facts attendant upon

the assumption of the obliteration of the rail-

road and the annihilation of the community

development which has arisen because of the

existence in the community of the railroad

facility. But the making of this estimate of the

cost of acquisition of lands which are now held

and are now used for railroad purposes does not

necessitate any such impractical process. If the

problem were presented to a jury, the court

would be impressed by no such difficulty in

instructing the jury as to how it should proceed.

The Court would not in reliance upon the Minne-

sota Rate Cases come to the Commission’s con-

clusion that because of the impossibility of in-

dulging in these speculative hypotheses said to

be referable to no criterion or standard of reason,

the farmer would be restricted to the mere

market value of the area taken, determined upon

the basis of the acreage value of the adjoining

farm, and with no consideration nor regard for

the elements of value and the items of damage in

excess of this meager amount. This exact prob-

lem is commonly presented to juries under in-

structions embodying the established principles

of law, and decided by such juries, and no such

theoretical or hypercritical objections are, or can

be, directed to the procedure. In such cases,

the amount which the land owner recovers is

not, and lawfully cannot be, limited to the mere

acreage value of the area taken, and the cost of

acquisition which the railroads are paying is not

lawfully confined to the partial cost which the

Commission now reports and beyond which it

finds it lawfully impossible to go. Such cases

are of numerous varieties and are common in

every court in the land. They are presented in

the instance of railroads which have completed

their construction upon the railroad lands in

question, and which are now under operation, in

such circumstances as these: It frequently

occurs that the title to the land employed for

right of way purposes is not secured in advance

of the actual occupation of the property and the

construction of the line thereon. The lands are

occupied by mere license or under adverse pos-

session, and thereafter it is necessary to obtain

the legal title in condemnation proceedings

brought for that purpose. In other cases, a

right is secured by leasehold or by license and the

necessity subsequently arises after occupation

and operation for the varrier to convert its lease-

hold or license into a fee. In other cases, a title

is secured merely from a life tenant and it is

necessary to condemn the rights of the remain-

derman. In other cases, where a title has been

secured by the carrier from an owner, the holder

of an outstanding mortgage forecloses the

owner’s title, and the carrier therefore must

bring condemnation proceedings to perfect its

title. Cases of the failure of title for any one of

a great variety of possible defects and in which

the carrier must again secure title by condem-

nation proceedings, are common in every state.

In these cases the courts have not found them-

selves confronted with an insuperable problem,

which prevents the owner of the land which is

sought to be condemned, from securing the full

protection of his legal rights and just compen-

sation for the deprivation of his property and of

every element of its value. The present cost of

acquisition which Congress has ordered to be

reported, is accurately and justly determined in

accordance with the law. The law in such cases

is merely an application of the general principles

of the law of eminent domain to the problem at

hand. In this regard, attention is directed to

the following authorities:

15 Cyc. 722-3.

Lewis, Eminent Domain (Third Edition)

705, and the cases cited.

Sutherland on Damages, Paragraph 1083.

Faulk vs. Missouri River & N. W. Ry.

Co., 132 N. W. 233 (S. D.)

County of Blue Earth vs. St. P. & S. C.

R. R. Co., 28 Minn., 503.

The cases heretofore cited indicate that the

elements of the cost of acquisition are of two

general classes, the acreage value of the land

taken, and the damages due to severance and

operation to the remainder of the owner's

property. The Commission has reported the

first element in its report of the so-called

“value.” The carrier does not dispute the

accuracy or reasonableness of the sums reported.

This partial determination is one of the elements

upon which a jury under such circumstances

would be required to make a determination.

The carrier now insists that the process shall

be completed. The Act so requires. As we

have heretofore indicated, the position of the

Commission, in that it bases its refusal upon an

interpretation of the Minnesota Rate Cases, is

clearly erroneous in that it involves a miscon-

ception of the doctrine of those cases and the

proper scope of judicial precedent. In fact,

the Court in the Minnesota Rate Cases mani-

festly implied after its criticism of the erroneous

legal assumptions upon which the testimony

was based, that had there appeared the costs

of condemnation determined in accordance with

established legal principles those facts would

have been worthy of consideration. It is not

to be assumed, as the Commission does assume,

that the determination of value or cost of the

property, is to be conducted on a basis apart

from the established principles governing the

determination of the value of the identical

property where the right of eminent domain is

exercised. The following language from the

Minnesota Rate Cases is significant: (230 U. S.,

451):

“Tt is urged that, in this view, the com-

pany would be bound to pay the ‘railway

value’ of the property. But, supposing the

railroad to be obliterated and the lands to

be held by others, the owner of each parcel

would be entitled to receive on its condem-

nation its fair market value for all its avail-

able uses and purposes. (United States vs.

Chandler-Dunbar Water Power Co., decided

May 26, 1913.) If, in the case of any such

owner, his property had a peculiar value or

special adaptation for railroad purposes,

that would be an element to be considered.

(Boon Company vs. Patterson, 98 U. S., 403;

Shoemaker vs. United States, 147 U. S., 282;

United States vs. Chandler-Dunbar Co.,

supra.) But still the inquiry would be as to

the fair market value of the property, as to

what the owner had lost, and not what the

taker had gained. (Boston Chamber of Com-

merce vs. Boston, 217 U.S8., 189, 195.) The

owner would not be entitled to demand

payment of the amount which the property

might be deemed worth to the company; or

of an enhanced value by virtue of the pur-

pose for which it was taken; or of an

increase over its fair market value, by

reason of any added value supposed to

result from its combination with tracts

acquired from others so as to make it a

part of a continuous railroad right of way

held in one ownership. (United States vs.

Chandler-Dunbar Co., supra; Boston Cham-

ber of Commerce vs. Boston, supra.) There

is no evidence before us from which the amount

which would properly be allowable in such

condemnation proceedings can be ascer-

tained.” (Italics ours).

In the pending case, however, the Com-

mission plants itself squarely upon the propo-

sition that the testimony which would be

properly received by a court in a case involving

the identical problem which is before the Com-

mission, would not be competent evidence of

value. The amended petition of the carrier

alleges (Record, page 35):

“Whatever may have been the difficulties

inhering in or incident to the manner of

proof offered in said Texas Midland case,

the relator says that no such difficulty

exists with respect to the ascertainment

of said present cost of condemnation and

damages or of purchase in the relator’s

case, and that relator is prepared and has

offered to establish definite competent proof

respecting each parcel of land owned or

used by it, in the following manner, to wit:

Relator accepts, as a basis for such

ascertainment, the present market value

of its lands as found and determined by

the respondent, and assumes that each

parcel of land, having reverted to adjoin-

ing owners as it would at common law

upon its abandonment, would be re-acquired

by the relator by purchase or condemna-

tion during the theoretical reconstruction

period. Relator will prove such cost of

purchase or condemnation by the testimony

of competent expert witnesses familiar with

each parcel of property, having knowledge

of its value, and thoroughly experienced

in the acquisition of private property for

public use by purchase or condemnation.

Where an entire parcel is thus acquired

the cost of its acquisition will be its market

value as determined by the respondent as

aforesaid, plus certain incidental costs,

such as court costs, and the like; where a

part only of an entire parcel is taken the

cost of acquisition will be the market

value of the part taken as determined by

the respondent as aforesaid, plus the dam-

age to the residue of the tract, the market

value of which would also be as determined

by the respondent, plus the incidental

costs as aforesaid.”

The Commission in its answer (Record,

page 26) denies that the evidence thus tendered

is competent proof of the present cost of con-

demnation and damages or of purchase. We

submit that this position is conclusively wrong.

Respectfully submitted,

W. G. BRANTLEY,

SANFORD ROBINSON,

LESLIE CRAVEN.

December 8, 1919.

SUBJECT INDEX.

STATEMENT... 1

ARGUMENT:

To estimate the present cost of condemnation and dam-

ages or of purchase of lands included in appellant’s railroad

is impossible, because it necessarily involves unwarrantable

and unlawful assumptions... === a 4

OP Oe rte e iter cererewsrcennnmunneess...... 12

The court will not, by issuing a writ of mandamus, re

quire something to be done which it is impossible to do___ 12

The meaning of paragraph entitled “Second” of the val-

uation act is not entirely clear ............ ilevainnisieaedin 13

The decision of this court in The Minnesota Rate cases

is directly in point and should be given controlling in-

ED eeeeniermasinnmeaeesitermpemeeenvénieiese+-.......... lt

This court has approved the Commission's interpretation

of the court’s decision in The Minnesota Rate cases_______ 18

Appellant's contention that the Commission may properly

base estimates of present cost of condemnation and dam-

ages or of pyrchase upon the present market value of the

lands involved, as estimated by the Commission, is un-

scandens eae ea 21

Appellant’s contention that it will lose something to

which it is entitled, unless the remedy it asks for is ap-

plied, is based upon speculation, and is not justified by

I err rtrennenememenmreteeneenee......... 22

Appellant is asking the court to assist it in obtaining for

its common-carrier lands a special railway value, in ex-

cess of the amount invested in them and beyond the value

of similar property owned _f a ae 26

TABLE OF CASES CITED.

Page

Ann Arbor R. Co. v. Fellows et al., 236 Fed. 387... 17-18

Chicago & North Western Railicay Company v. Smith, 210 Fed.

SR teint eeemeatniiwenneninpmenenqimseienmesnecie... 15, 16-17

City and County of Denver y. Denver Union Water Co.,

Se Wie TE Mi eniieninmsienitettitisisannemeeenbeinaibainiieie seas... 18-19, 2u

In the Matter of the Valuation of the Property of the Kansas

City Southern Railway Co. et al., 11. C. C. Val. se 1,3

Louisville € Nashville R. Co. v. Railroad Commission of Ala-

Sp NN SN rsrcnsttdaaicsntinsspninareninciaisiesiie, wun aici.) vane 17

NSilsby Manufacturing Co. vy. City of Allentown, 26 Atl.

EERSTE Se TA Ptlaiperes ete tath itinidnindis lees a 13

Smyth v. Ames, 169 U.S. 466

18, 19, 20

The Minnesota Rate cases, 230 U. 8. 3562_....... ----. 2,49,

10, 12, 14, 15, 16, 17, 18, 20, 22, 27-29, 30-31, 34

(11)

Inthe Supreme Court of the United States,

Ocroser Terr, 1919.

UNITED States or AMERICA, AT THE RE- )

lation of Kansas City Southern Rail-

way Company, appellant No. 413.

INTERSTATE COMMERCE COMMISSION OF

the United States, eppeHee- J

BRIEF FOR INTERSTATE COMMERCE COMMISSION.

STATEMENT.

Plaintiff in Error, hereinafter called appellant,

4 common carrier subject to the act to regulate

commerce, requests the court to issue a writ of

mandamus commanding defendant in error, herein-

after called the Commission, to receive certain evi-

dence which it has retused to receive in a proceed-

ing now pending before it, entitled In the Matter of

the Valuation of the Property of the Kansas City

Southern Railway Company et al.

By section 19a of said act, commonly called the

valuation act of March 1, 1913, the Commission ig

150522 (1)

required, among other things, to “ investigate, as-

certain, and report the value of all the property

owned or used by every common carrier subject to”

the act to regulate commerce, and paragraph en-

titled “Second” of the valuation act reads:

Second. Such investigation and report

shall state in detail and separately from im-

provements the original cost of all lands,

rights of way, and terminals owned or used

for the purposes of a common carrier, and

ascertained as of the time of dedication to

public use, and the present value of the

same, and separately the original and pres-

ent cost of condemnation and damages or of

purchase in excess of such original cost or

present value.

To the extent the commission is required by said

paragraph to ascertain and report separately the

“present cost of condemnation and damages or of

purchase in excess of original cost or present

value” of the lands included in the rights of way,

yards, and terminals of common carriers, it has

never been able to comply therewith. It has, how-

ever, permitted appellant and other carriers, in-

cluding the Texas Midland Railroad, to introduce

in proceedings before it a large volume of evi-

dence, the effect of which was to prove what had

previously been demonstrated by this court in its

decision in the Minnesota rate cases (230 U. 8.

352) namely, that it is impossible to comply with

this requirement of the valuation act, because no

lawful or reasonable basis upon which to rest an

estimate of such cost can be discovered.

After the commission had rendered its decision

in the Texas Midland case (1 I. C. C. Val. Rep. 1),

in which evidence of the character mentioned had

been submitted to it for consideration, appellant

asked for and was given permission to introduce

in the Kansas City Southern case before an ex-

aminer of the commission at Kansas City evidence

which appellant claimed would tend to establish

the present cost of condemnation and damages or

of purchase of the lands included in the rights of

way, yards, and terminals of the railroad used by

appellant as a common carrier in serving the gen-

eral public. At the hearing before said examiner,

appellant introduced such evidence to the extent

that it was then prepared to do so, all of which was

received by the examiner. Thereafter, however,

appellant asked the commission to permit it to in-

troduce additional evidence of the same character

and this request was denied for the reason stated

by the con.mission in its decision in said Texas

Midland case, whereupon appellant brought this

action and asked for a writ of mandamus as above

stated.

In the Supreme Court of the District of Columbia

appellant filed a demurrer to the answer of the

Commission, which was overruled, and upon ap-

peal the ruling of the Supreme Court was affirmed

by the Court of Appeals. From these rulings ap-

pellant appeals to this court.

Re EET ATEN Oe

ARGUMENT.

To estimate the present cost of condemnation and dam-

ages or of purchase of lands included in appellant’s

railroad is impossible, because it necessarily involves

unwarrantable and unlawful assumptions.

The valuation act was approved by the President

and became effective on March 1, 1913. At that

time there were pending in this court, on appeal

from the Circuit Court for the District of Minne-

sota, The Minnesota Rate cases above mentioned,

wherein an attempt had been made to estimate the

present cost of acquiring the lands included in the

rights of way, yards, and terminals of certain com-

mon-carrier railroads. To this method of proce-

dure, which this court characterized as an attempt

to apply the cost-of-reproduction method in deter-

mining the value of said lands (id. 450), and to the

result thereof the appellants excepted, and in stat-

ing and sustaining the exception this court, speak-

ing through Mr. Justice Hughes, said:

It is contended that the valuation was

made upon a wrong theory ; that it is a specu-

lative estimate of ‘‘cost of reproduction”’;

that it is largely in excess of the market value

of adjacent or similarly situated property;

that it does not represent the present value;

in any true sense, but constitutes a conjecture

as to the amount which the railway company .

would have to pay to acquire its right of way,

yards, and terminals, on an assumption, it-

self inadmissible, that, while the railroad did

not exist, all other conditions, with respect

to the agricultural and industrial develop-

ment of the State, and the location, popula-

tion, and activities of towns, villages, and

cities, were as they are now. (Id. p. 444.)

* * * * *

* * * It is at onee apparent that, so

far as the estimate rests upon a supposed

compulsory feature of the acquisition, it ean

not be sustained. It is said that the com-

pany would be compelled to pay more than

what is the normal market val¥@of property

in transactions between private parties; that

it would lack the freedom they enjoy, and, in

view of its needs, it would have to give a

higher price. It is also said that this price

would be in excess of the present market val-

ues of contiguous or similarly situated prop-

erty. It might well be asked, who shall de-

scribe the conditions that would exist, or the

exigencies of the hypothetical owners of the

property, on the assumption that the rail-

road were removed? But, aside from this, it

is impossible to assume, in making a judicial

finding of what it would cost to aequire the

property, that the company would be com-

pelled to pay more than its fair market value.

It is equipped with the governmental power

of eminent domain. In view of its public

purpose, it has been granted this privilege in

order to prevent advantage being taken of

its necessities. It would be free to stand

upon its legal rights and it can not be sup-

6 _

posed that they would be disregarded. (Id.

450-451.)

+ * * * *

Moreover, it is manifest that an attempt to

estimate what would be the actual cost of ac-

quiring the right of way, if the railroad were

not there, is to indulge in mere speculation.

The railroad has long been established ; to it

have been linked the activities of agricul-

ture, industry, and trade. Communities

have long been dependent upon its service,

and their growth and development have been

conditioned upon the facilities it has pro-

vided. The uses of property in the com-

munities which it serves are to a large degree

determined by it. The values of property

along its line largely depend upon its ex-

istence. It is an integral part of the com-

munal life. The assumption of its nonex-

istence, and at the same time that the values

that rest upon it remain unchanged, is im-

possible and can not be entertained. The

conditions of ownership of the property and

the amounts which would have to be paid

in acquiring the right of way, supposing the

railroad to be removed, are wholly beyond

reach of any process of rational determina-

tion. The cost-of-reproduction method is of

service in ascertaining the present value of

the plant, when it is reasonably applied and

when the cost of reproducing the property

may be ascertained with a proper degree of .

certainty. But it does not justify the accept-

ance of results which depend upon mere con-

jecture. * * * (1d.

x * x vA * *

The evidence in these cases demonstrates

that the appraisements of the St. Paul and

Minneapolis properties which were accepted

by the master were in substance appraisals

of what was considered to be the peculiar

value of the railroad right of way. Efforts

to express the results in the terms of a theory

of cost of reproduction fail, as naturally they

must, to alter or obscure the essential charac-

ter of the work undertaken and performed.

Presented with an impossible hypothesis,

and endeavoring to conform to it, the ap-

praisers—men of ability and experience—

were manifestly seeking to give their best

judgment as to what the railroad right of

way was worth. And doubtless it was be-

lieved that it might cost even more to acquire

the property, if one attempted to buy into the

cities as they now exist and all the difficulties

that might be imagined as incident to such a

‘‘ reproduction ’’ were considered, The rail-

road right of way was conceived to be a prop-

erty sui generis, ‘‘a large body of land in a

continuous ownership,” representing one of

the ‘‘ highest uses ’’ of property and possess-

ing an exceptional value. The estimates be-

fore us, as approved by the master, with his

increase of 25 per cent in the case of the Du-

luth property, must be taken to be estimates

of the ‘‘railway value’’ of the land; and

whether or not this is conceived of as paid to

other owners upon a hypothetical reacquisi-

tion of the property is not controlling when

we come to the substantial question to be

decided.

141224—19-—__2

That question is whether, in determining

the fair present value of the property of the

railroad company as a basis of its charges to

the public, it is entitled to a valuation of its

right of way not only in excess of the amount

invested in it, but also in excess of the market

value of contiguous and similarly situated

property. * * * (Id. 453.)

* * *

* *

Assuming that the company is entitled to

a reasonable share in the general prosperity

of the communities which it serves, and thus

to attribute to its property an increase in

value, still the increase so allowed, apart

from any improvements it may make, can

not proper!y extend beyond the fair aver-

age of the normal market value of land in

the vicinity having a similar character.

Otherwise we enter the realm of mere con-

jecture. We therefore hold that it was error

to base the estimates of value of the right

of way, yards, and terminals upon the so-

called ‘‘ railway value ’’ of the property.

The company would certainly have no

ground of complaint if it were allowed a

value for these lands equal to the fair aver-

age market value of similar lands in the

vicinity, without additions by the use of

multipliers, or otherwise, to cover hypotheti-

cal outlays . The allowances made below for

a conjectural cost of acquisition and conse-

quential damages must be disapproved; and,

in this view, we also think it was error to

add to the amount taken as the present

value of the lands the further sums, caleu-

lated on that value, which were embraced

in the items of ‘‘ engineering, superintend-

ence, legal expenses,’’ ‘‘ contingencies ’’ and

‘‘ interest during construction.’’ (Id. 455.)

It will be observed that this court entertained the

opinion that an estimate of the present cost of ac-

quisition of the lands included in the right of way,

yards, and terminals of a carrier could be made only

upon the theory that the railroad of the carrier

would be removed before the estimate would be

made, and it is apparent that no other theory would

be tenable. The court points out that upon the

assumption of the nonexistence of the railroad it is

impossible for anyone to describe either the con-

ditions that would exist or the exigencies of the

hypothetical owners of the property, and says in

emphatic language that an attempt to estimate what

would be the actual cost of acquiring the right of

way under such circumstances would be to indulge

inmere speculation. In other words, this court says

that what appellant is asking the court to require

the Commission to do can not, as a matter of law,

be done. The court, however, does not stop here.

It proceeds to demonstrate why such an estimate

can not be made. It shows that the uses and values

of lands in the vicinity of the railroad are largely

the result of the construction and operation of the

railroad; that it would be impossible to determine

the extent to which such uses and values have been

so influenced, and that to assume that they would

not be affected if the railroad were removed, and

base upon that theory an estimate of reacquiring

the lands, or its equivalent, an estimate of the pres-

ent cost of condemnation and damages, or of pur-

chase, would be improper and unjustifiable and

produce a result which could not be accepted as

evidence by a court. This court clearly states, in

substance, that the estimate of present cost of con-

demnation and damages, or of purchase which ap-

pellant is asking the court to compel the Commis-

sion to make is an estimate which is wholly beyond

reach of any process of rational determination. In

this connection it points out that the appraisers of

the lands involved in The Minnesota Rate cases,

in an attempt to estimate the cost of acquiring

the lands, were presented with an impossible

hypothesis.

As shown in the answer herein, the evidence in-

troduced before the Commission in connection with

the valuation of the lands included in appellant’s

railroad establishes that at the time the railroad

was constructed a portion of said lands was donated

to, and another portion purchased by, appellant,

and that appellant obtained title to still another

portion through condemnation proceedings. It is

evident that, upon the assumption of the removal

of the railroad and its reproduction, it is impossible

to ascertain the portion of said lands which would

be so donated, or the portion thereof which would

have to be purchased by appellant, or the portion -

thereof appellant would have to acquire title to

through condemnation proceedings.

It is further apparent that the removal of the

railroad and its immediate reproduction would not

lands adjoining or adjacent to the railroad or the

owners of such adjoining or adjacent lands.

It is also clear that to determine, upon the as-

sumption of the removal of the railroad, that the

title to the lands included therein would revert to

or be vested in the owners of said adjoining lands,

would be unjustifiable and improper. In this con-

nection the Commission states, by way of illustra-

tion, that chapter 8 of article 6532 of the Statute

Laws of the State of Texas, which is the law in force

at the present time in that State, provides as fol-

lows:

The right of way secured or to be secured

to any railway company in this State, in the

manner provided by law, shall not be so con-

strued as to include the fee simple estate in

lands either public or private, nor shall the

same be lost by the forfeiture or expiration

of the charter, but shall remain subject to an

extension of the charter or the grant of a new

charter over the same way without a new

condemnation.

IL.

The word estimate is erroneously applied to an opinion

expressed which has no reasonable foundation upon

which to rest.

It is said the contention that it is impossible

to estimate the present cost of condemnation and

damages or of purchase is unsound; that such esti-

mates have been made in the past, and that what

has been done once may be done again. This court,

however, has demonstrated in The M innesota Rate

cases, supra, that the so-called estimates were not

estimates in fact within a proper definition of that

term, because they had no reasonable foundation

upon which to rest. It expressed the view that be-

fore such an estimate could be made the railroad,

in imagination at least, must be removed, and

pointed out the unreasonableness of assuming that

if such removal should take place no changes in the

values now existing would result. In this connection

it said: ‘‘It might well be asked, who shall describe

the conditions that would exist, or the exigencies

of the hypothetical owners of the property, on the

assumption that the railroad were removed?”’ (Id.

451.)

IIT.

The court will not, by issuing a writ of mandamus,

require something to be done which it is impossible

to do.

It is further contended that the language in said

paragraph entitled ‘‘Second”’ of the valuation act

shows that Congress intended to require the Com-

mission to ascertain and report separately the pres-

ent cost of condemnation and damages or of pur-

chase, and that for this reason it must attempt to

do so. In this connection, however, we do not deem

it necessary to make a lengthy argument because a

well-known maxim is that the law never requires

the impossible.

In Silshy Manufacturing Company vy. City of

Allentown (26 At). 646) it was held that *‘ The re-

quirement that proposals to furnish a city with

materials needed shall be advertised for need not

be complied with where the thing needed is part of

a patented article which can be bought at only one

place.’’ In support of this holding the court said:

“The law does not insist on what is impossible or

absolutely useless. ”’

If the court reaches the conclusion that on ae-

count of matters herein set forth it would be im-

possible to discover any lawful or reasonable basis

upon which to rest an estimate of the present cost

of condemnation and damages or of purchase of

the lands included in appellant’s railroad it will

not issue a writ of mandamus in accordance with

appellant’s request.

IV.

The meaning of paragraph entitled “Second” of the

valuation act is not entirely clear.

Thus far we have been discussing matters here-

in upon the assumption that the meaning of para-

graph entitled ‘‘ Second ”’ of the valuation act is

clear, but we are obliged to admit that this might

reasonably be regarded as a violent assumption.

It has been said that the latter portion of this

paragraph calls for the original and present costs

of acquisition, exclusive of the value of the land

taken at the time of its acquisition by the carrier;

but, on the other hand, it has been argued that the

acquisition costs called for include the value of the

land taken.

It is also contended that in its language in The

Minnesota Rate cases above quoted this court was

speaking of the present cost of acquisition, includ-

ing the value of the land taken, and not of the pres-

ent cost of acquisition exclusive of such value.

According to our view, however, these differences

as to interpretation are of no importance whatever.

The matter of consequence in this connection is that

this court expressed the view that an estimate of the

present cost of acquisition could be made only by

indulging in mere speculation, and, with this as a

premise, held that an estimate so made could not

properly be used in determining the fair present

value of the carrier’s lands.

The decision of this Court in The Minnesota Rate cases

is directly in point and should be given controlling

influence.

Notwithstanding the plain language used by this

court in its decision in The Minnesota Rate cases,

it has been contended that the decision has no appli-

cation in a case of this kind, because it was rendered

in a case where the fair average of the normal mar-

ket value of lands similar to the lands included in the

rights of way, yards, and terminals of the carriers

had not been shown.

In some instances this argument would perhaps

have force, but in this instance there is no necessity

for resorting to inference in order to determine

what the court intended to, and did, decide. As

above shown, in advance of announcing its decision,

“the court stated the question it intended to decide,

and then decided that question in plain and unam-

biguous language. Also it will be seen that the

court represented that question to be the substantial

question presented for determination, which, of

course, it was.

A contention exactly like the contention of coun-

sel for the carriers, above mentioned, was made in

the ease of Chicago d& North Western Railway

Company v. Smith (210 Fed. 632), decided on Jan-

uary 20, 1914. Up to the time of final hearing

in the Chicago &: North Western case, both par-

ties—that is, the State of South Dakota and repre-

sentatives of the carrier—had proceeded upon the

theory that it was proper to attempt to estimate the

present cost of acquisition of the carrier’s lands

and use that estimate in determining the fair pres-

ent value of the lands, but on final hearing the State

objected to the estimate and such use thereof upon

the ground that the decision of this court in the

Minnesota Rate cases had shown the making and

use of the estimate to be improper. In sustaining

the contention of the State in this regard, the court,

141224—19-—3

speaking through District Judge Willard, and after

reviewing the pertinent evidence, said:

From this evidence the company argues

that it is unfair to say that for a strip of land

100 feet wide through the middle of a 160-

acre farm it should be allowed no more as

the cost of reproducing it than the price per

acre if the whole farm were to be bought;

that it is a matter of common knowledge

that, if a private individual wanted to buy

such a strip, it would cost him much more per

acre than the value per acre of the whole

farm.

It is true that the evidence in this case

does differ from that in the Minnesota Rate

cases, and there is much force in the com-

pany’s argument. But the defendant’s claim

in this respect is disposed of by what the

Supreme Court, in the Minnesota Rate cases

(230 U. S. on page 455, 33 Sup. Ct. on page

763, 57 L. Ed. 1511), said:

‘The company would certainly have no

ground of complaint if it were allowed a

value for these lands equal to the fair aver-

age market value of similar land in the vicin-

ity, without additions by the use of multi-

pliers, or otherwise, to cover hypothetical

outlays. The allowances made below for a

conjectural cost of acquisition and conse-

quential damages must be disapproved ; and,

in this view, we also think it was error to add

to the amount taken as the present value of

the lands the further sums, calculated on

that value, which were embraced in the items

of ‘engineering, superintendence, legal ex-

penses,’ ‘ contingencies,’ and ‘ interest dur-

ing construction.’ ”’

I, accordingly, adopt the valuation placed

upon these lands by the State before any

multiplier is used, * * *. (Id. 639.)

In pointing out the difference concerning evi-

dence of market value in the Minnesota Rate cases

on the one hand as compared with the Chicago &

North Western case on the other, statements of

District Judge Willard were as follows:

* * * Nowhere in that case did the

market value of contiguous lands appear.

That does appear in this case, both in the evi-

dence of the State and in that of the com-

pany. (Id. 638.)

To the same effect see L. & N. R. Co. v. Railroad

Commission of Alabama (208 Fed. 35, 42-44) and

Ann Arbor R. Co. v. Fellows et al. (236 Fed. 387,

392). In the latter case, the court, speaking

through Sessions, district judge, said:

* * * The valuation placed upon the

right of way and station grounds, exclusive

of all improvements thereon, is $397,104, to

which sum has been added more tnan 14 per

cent thereof for so-called “ overheads.”’

This basic valuation has been reached by ap-

plying to the right of way without improve-

ments the estimated values of adjacent lands,

including all buildings and other improve-

ments. It is sufficient to say that this method

of computing values and the practice of add-

ing *‘ overheads ’’ to actual values are con-

trary to the letter and the spirit of the rule

laid down by the Supreme Court in the Min-

nesota Rate cases (230 U.S., 352) * * *,

In its decision in the Texas Midland case, supra,

the Commission shows several instances where

State authorities have placed a like interpretation

upon the decision of this Court in The Minnesota

Rate cases and have refused to apply the cost-of-re-

production method in determining the value of

lands used by common-earrier corporations in serv-

ing the general public. (Id. 61.)

Vi.

This Court has approved the Commission’s interpreta-

tion of the Court’s decision in the Minnesota Rate

cases.

In the case of City and County of Denver v. The

Denver Union Water Company (246 U. S. 178),

this court had occasion to, and did, pass upon and

approve an interpretation of its decision in The

Minnesota Rate cases which had been made by a

special master and approved by the District Court

for the District of Colorado. In this connection

the master said:

The measure of value of lands adopted in

considering the evidence is the present nor-

mal market value of similar lands in the

same locality. (Minnesota Rate cases, 230

U. S. 352, at 449-456.) It follows from this

rule that the original cost of the lands is not

necessarily the controlling factor, though

such original cost has been considered along

with all the other evidence in determining

the value. It likewise follows from this

measure of value that when the present nor-

mal market value of similar lands in the

same locality has been determined, nothing

ean be added to such value on account of the

actual or estimated consequential or sever-

ance damages—if any—paid by the water

company when it originally acquired its

lands or on account of the company’s actual

or estimated overhead expenses in connec-

tion with the purchase of these lands. These

expenses represent original costs of the

lands and not their present market value.

In considering the evidence concerning the

value of these lands I have assumed that

we may take into consideration their adapt-

ability or availability for any useful pur-

pose, provided the evidence shows that

lands possessing such adaptability or avail-

ability have any special market value on

account thereof; but the final question, in

my judgment, always is, What is the pres-

ent market value of similar lands in the

same locality, and not what are these lands

worth now to the water company for the

purposes for which they are now used ?

(Texas Midland case, supra, p. 69.)

After reviewing several matters involved in the

ease, this court, speaking through Mr. Justice Pit-

ney, annoanced its conclusion concerning the spe-

cial master’s aforesaid interpretation of its de-

cision in The Minnesota Rate cases. In this con-

nection the court said:

What we have said establishes the pro-

priety of estimating complainant’s property

on the basis of present market values as to

land, and reproduction cost, less deprecia-

tion, as to structures. (Id. 191.)

The method of procedure adopted and followed

by the Commission in determining the present value

of lands included in the rights of way, yards, and

terminals of common carriers is described by it in

its decision in said Texas Midland case as follows:

Present value * * * is arrived at by

ascertaining the number of acres of land

owned or used by the carrier for its purposes

as a common carrier and multiplying this

acreage by a market value determined from

the present market value of similar adjacent

and adjoining lands. Due allowance is made

for any peculiar value which may attach by

reason of the peculiar adaptability of the

land to railroad use.

Nothing is included for the expense of ac-

quisition, nor for severance dame yes, nor for

interest during construction. (Id. 53.)

It will be observed that the Commission is acting

in accordance with the decision of this court in The

Minnesota Rate cases as interpreted by the court

itself in the Denver Union Water Company case,

and if the Commission should act instead in accord-

ance with the method of procedure appellant is ask-

ing this court to compel it to pursue it would com-

mit thereby an error of law. If the Commission

should make estimates of the present cost of con-

demnation and damages or of purchase of appel-

lant’s common-earrier lands, notwithstanding that

no reasonable or lawful basis upon which to rest

such estimates can be discovered, and then consider

and give weight to the estimates in determining the

value of appellant’s property for rate-making pur-

poses it would necessarily result that the value thus

fixed could not be sustained in court.

VIL.

Appellant’s contention that the Commission may prop-

erly base estimates of present cost of condemnation

and damages or of purchase upon the present market

value of the lands involved, as estimated by the Com-

mission, is unsound.

Appellant says it has accepted the estimate of

the present market value of its lands made by the

Commission, and that therefore the Commission,

using this estimate as a basis, can easily find the

present cost of condemnation and damages or of

purchase. The unsoundness of this proposition,

however, is readily observable. In finding the pres-

ent market value of appellant’s common-carrier

lands, as measured by the ‘‘fair average of the nor-

mal market value of lands in the vicinity having a

similar character’’, the Commission must of course

consider conditions as they now are, including the

existence of the railroad, but in estimating what it

would cost to reaequire such lands, that is, the re-

production cost, or the present cost of condemna-

tion and damages or of purchase, of the lands, the

Commission would have to treat the railroad as

nonexistent and speculate, enter into the realm of

mere conjecture, as to what the market value of the

lands would be under such circumstances. This is

necessarily true, first, because it is impossible to

reproduce a thing which is in existence, and second,

because it would be improper for the Commission

to assume the nonexistence of the railroad and ‘‘at

the same time that the values that rest upon it re-

main unchanged”’, as stated by this court, as above

shown, in the Minnesota Rate cases. It is also true,

as stated by this court in said cases, that an attempt

to estimate what would be the conditions of owner-

ship of said lands or the exigencies of the hypotheti-

cal owners thereof, upon the assumption that the

railroad were removed, would be an attempt to ac-

complish the impossible.

VIII.

Appellant’s contention that it will lose something to

which it is entitied, unless the remedy it asks for is

applied, is based upon speculation, and is not justified

by the facts.

For the purpose, evidently, of indicating that its

rights have not been properly protected appellant

avers that it paid $180,000 for lands the present

market value of which as estimated by the Commis-

sion is only $60,000, and that the cost of reproduc-

ing its lands and those of its associated companies

would be more than twice as much as the sum the

Commission has included as their present value in

its tentative valuation. When we compare these

averments with appellant’s assertion that it has °

accepted the present market value of its lands as es-

timated by the Commission, it is apparent that the

injury appellant is talking about is based upon its

belief that when the commission fixes une ultimate

value of its properties for rate-making purposes, or

for some other purpose, it will include therein as the

value of appellant’s lands only their present value,

as measured by the fair average of the normal mar-

ket value of similar lands in the same vicinity.

This belief, however, is necessarity based upon

speculation, and is not justified by the facts, because

it is simply appellant’s conjecture concerning ac-

tion to be taken by the Commission, if taken at all,in

the future. Up tothe present time the Commission

has not fixed for any purpose the ultimate value of

appellant’s eommon-carrier property, or the ulti-

mate value of any othe1 eommon-carrier property,

and when it does so it will of course have to consider

and give proper weight to, not only the present

value of the lands as measured by the fair aver-

age of the normal market value of lands in the

vicinity having a similar character, but also the

amount of money paid by the carrier for the lands

and all other pertinent facts and circumstances.

In Smyth v. Ames, 169 U. 8. 466, in announcing its

conclusion concerning the matters to be considered

in fixing an ultimate value for rate-making pur-

poses this court, speaking through Mr. Justice

Harlan, said:

We hold, however, that the basis of all

calculations as to the reasonableness of rates

to be charged by a corporation maintaining a

highway under legislative sanction must be

the fair value of the property being used by

it for the convenience of the public. And in

order to ascertain that value, th: orginal cost

of construction, the amount expended in

permanent improvements, the amount and

market value of its bonds and stock, the pres-

ent as compared with the original cost of

construction, the probable earning capacity

of the property under particular rates pre-

scribed by statute, and the sum required to

meet operating expenses, are all matters for

consideration, and are to be given such

weight as may be just and right in each

ease. * * * (Td. 546-547.)

Appellant does not aver, and it could not truth-

fully aver, that the Commission has refused to per-

mit it to show the amount of the investment made in

its common-carrier lands when they were acquired

and dedicated to the service of the public, and while

it avers that it paid $180,000 for lands the present

market value of which was estimated by the Com-

mission as only $60,000, it carefully refrains from

comparing the total investment made in all its com-

mon carrier lands with their present value, as meas-

ured by the fair average of the normal market value

of lands in the vicinity having a similar character. If

in the future the Commission fixes, for a particular

purpose, the ultimate value of appellant’s common-

carrier properties and includes therein as the value

of its lands less than the amount invested in the

lands at the time they were acquired and dedicated

to the service of the public, appellant will be free to

challenge the validity of the Commission’s action,

but we respectfuly submit that until that time ar-

rives it will have no standing in court in a ease like

the one now under consideration.

In its brief in this case in the Court of Appeals

appellant said: ‘‘ Neither the effect of the land re-

production schedule when once ascertained nor the

use to be made of it, can be considerd by the court

in this proceeding.”’

If these assertions of appellant are correct it

necessarily follows, we submit, that the court can

not comply with appellant’s request for a writ of

mandamus; because, if appellant is unable to show

that it will sustain a legal injury if the writ is not

issued, it can not establish its right thereto, and it

goes without saying that unless the court may corn-

sider the effect of the land reproduction schedule

and the use to be made thereof, it can not determine

whether such an injury will result from the Com-

mission’s refusal to receive and consider the evi-

dence, so-called, which is in question here.

IX.

Appellant is asking the Court to assist it in obtaining

for its common-carrier lands a special railway value,

in excess of the amount invested in them and beyond

the value of similar property owned by others.

Notwithstanding its admission that the Commis-

sion has correctly estimated the present value of its

common-carrier lands, as measured by the fair av-

erage of the normal market value of similar lands

in the same vicinity, and without attempting to

show that this value is less than the amount of

money invested in the lands when they were ac-

quired and dedicated to the service of the public,

appellant is trying to induce the court to assist it in

securing a greater value by compelling the Com-

mission to use, in valuing the lands, what is known

as the cost-of-reproduction method. The mental

route traveled by the Commission in reaching con-

clusions concerning values of lands is the same re-

gardless of the purpose for which the lands are

used, but while appellant is contending that the

Commission should use the cost-of-reproduction

method in valuing its common-earrier lands it does

not advance a like claim concerning lands owned

by it and used for purposes other than those of a

common carrier. This means, if it means any-

thing, that appellant is contending it is entitled te

a special railway value, that is, a value of its com-

mon-earrier lands in exeess of the amount invested

in them and beyond the value of similar property

owned by others, solely by reason of the fact that

they are used in the public service.

In this regard the method of procedure appellant

is endeavoring to compel the Commission to adopt

and follow is exactly like the procedure of the Cir-

cuit Court, which was condemned by this court, in

the Minnesota Rate cases, supra, where pertinent

language of the court was as follows:

The evidence in these cases demonstrates

that the appraisements of the St. Paul and

Minneapolis properties which were accepted

by the Master were in substance appraisals

of what was considered to be the peculiar

value of the railroad right-of-way. Efforts

to express the results in the terms of a theory

of cost of reproduction fail, as naturally they

must, to alter or obscure the essential char-

acter of the work undertaken and _ per-

formed. Presented with an impossible hy-

pothesis, and endeavoring to conform to it,

the appraisers—men of ability and experi-

ence—were manifestly seeking to give their

best judgment as to what the railroad right-

of-way was worth. And doubtless it was he-

lieved that it might cost even more to acquire

the property, if one attempted to buy into

the cities as they now exist and all the diffi-

culties that might be imagined as incident

to such a ‘“‘reproduction’’ were considered.

The railroad right-of-way was conceived to

be a property sui generis, ‘a large body of

land in a continuous ownership,”’ represent-

ing one of the “ highest uses ”’ of property

and possessing an exceptional value. The

estimates before us, as approved by the

Master, with his increase of 25 per cent in

the case of the Duluth property, must be

taken to be estimates of the ‘‘railway value”’

of the land; * * *,

* 7 * * -

* * *. And where the inquiry is as to

the fair value of the property, in order to

determine the reasonableness of the return

allowed by the rate-making power, it is not

admissible to attribute to the property owned

by the carriers a speculative increment of

value, over the amount invested in it and

beyond the value of similar property owned

by others, solely by reason of the fact that it

is used in the public service. That would

be to disregard the essential conditions of the

publie use, and to make the public use de-

structive of the publie right.

The increase sought for ‘‘railway value’’

in these cases is an increment over all out-

lays of the carrier and over the values of

similar land in the vicinity. It is an inere-

ment which can not be referred to any known

criterion, but must rest on a mere expression

of judgment which finds no proper test or

standard in the transactions of the business

world. It is an increment which in the last

analysis must rest on an estimate of the value

of the railroad use as compared with other

business uses; it involves an appreciation of

the returns from rates (when rates them-

selves are in dispute) and a sweeping gen-

eralization embracing substantially all the

activities of the community. For an allow-

ance of this character there is no warrant.

(Id. 453, 454-455.)

Appellant misconstrues the paragraph of the Valuation

Act with which it is asking the Court to compel the

Commission to comply.

Appellant’s brief in this case in the Court of Ap-

peals contains a paragraph which reads: ‘* That

certain of relator’s lands were acquired by dona-

tion presents no difficulty in the way of ascertain-

ing their present cost of condemnation and dam-

In support of this conelu-

ages or of purchase.

sion appellant pointed out that, as to structures,

the Commission estimates the cost of reproduction

regardless of the fact that some of them were do-

nated to the carriers originally, and then said:

‘But two questions are presented; first, what

lands, rights of way and terminals did the relator

own or use for the purpose of common carrier, and

secondly, what is the present cost of condemnation

and damages or of purchase of those lands? The

provision is not ambiguous. There is no room for

speculation or conjecture as to what lands are in-

volved, because the requirement of the statute op-

erates upon all lands, whether originally acquired

by purchase or condemnation, or gift or by op-

eration of the statute of limitations or in any other

conceivable manner

;

| 30

It is true that the Commission estimates the cost

of reproducing common-carrier structures, but this

can be done, because the market prices to be paid

for the materials which enter into the structures do

not depend upon the places in which the structures

are to be located or upon the circumstances and con-

ditions surrounding such places. In attempting to

estimate the cost of reproducing common-carrier

lands, however, the estimator is immediately con-

fronted with difficulties which are insurmouut-

able. Of course the lands could not be reproduced,

and in order to estimate what it would cost to reac-

guire them it would be necessary to know what the

conditions of their ownership and the exigencies of

their owners would be if the vailroad were not

there, and, as stated by this court in the Minnesota

Rate cases, supra, neither of said elements is capa-

ble of rational ascertainment. The pertinent lan-

guage of the court was:

* * *, It might well be asked, who shall

describe the conditions that would exist, o-

the exigencies of the hypothetical owners of

the property, on the assumption that the rail-

road were removed? * * *, (Id. 451.)

* * *, The assumption of its non-exist-

ence, and at the same time that the values

that rest upon it remain unchanged, is impos-

sible and can not be entertained. The condi-

tions of ownership of the property and the

amounts which would have to be paid in

acquiring the right-of-way, supposing the

railroad to be removed, are wholly beyond

reach of any process of rational determina-

tion. * * *. (Ud. 452.)

But even if it could overcome these difficulties,

the Commission would still find it impossible to

make the estimates in question. It will be observed

that in and by the first part of said paragraph en-

titled ‘‘ Second ’’ the Commission is required to

find the original cost and present value of common-

carrier lands, and thet having done this it is re-

quired by’ the latter portion of the paragraph to

state in detail the present cost ‘‘ of condemnation

and damages or of purchase in excess of such origi-

nal cost or present value.’’ This is not a call for the

present costs of acquisition in the aggregate; it is

instead a call for the present costs of condemna-

tion and damages in one sum and the present costs

of purchase in.another sum, and in order to deter- .

mine either of said sums it would be necessary to

know how much of the land would be donated to the

carrier, how much it would have to purchase, and

the portion thereof it would have to acquire through

condemnation proceedings. To the extent that

donations were made it would be unnecessary for

the carrier to prosecute condemnation proceedings

and make purchases, and no one will claim that,

especially where the sum paid for the land itself is

‘ not included, the cost of acquiring it by purchase

is as great as, or even approximates, the cost of ob-

taining title to it through condemnation proceed-

ings.

It is a matter of common knowledge that when

the railroads of this country were constructed a

very large portion of the lands included in the

rights of way, yards and terminals thereof was do-

_ nated to the carriers, and that only a comparatively

small portion of said lands was acquired by the car-

riers through condemnation proceedings. Under

these circumstances, and for the reason that if a

person were compelled to speculate as to what would

happen in the future he would naturally resort to

a study of what had happened in the past, we think

appellant’s contentions that, for the purpose of

estimating the cost of reproducing the 1 » lroads, it

would be proper and lawful to assume thet, at the

time of reproduction, the lands included therein

would be worth as much per acre as they are at the

present time; that they would be owned by par-

ties other than the carriers, and that the latter

would have to obtain title to them in every in-

stance through condemnation proceedings prose-

euted against such owners, are clearly unsound.

The speculative costs appellant is endeavoring to

secure the advantage of are costs it never did incur

and never will, because no stretch of the imagina-

tion is sufficient to justify the conclusion that such

costs can ever be incurred by anybody. Neverthe-

less, appellant insists that unless it is accorded such

an advantage, and the Commission is compelled to

make the estimates in question and use them in

valuing appellant’s property, its rights under the

Constitution of the United States will be violated.

* the fair value of the property used by the carriers in _

e — the services. In other words, the ad-

appellant is contending for would, if

ae ees Se ee Oe

jury to the general public.

XI.

The real difficulty.

In said brief in the Court of Appeals, under the

heading of ‘‘The Real Difficulty,” appellant in-

dulged in considerable speculation concerning the

reasons which prompted the Commission to deny

it the advantage it is endeavoring to obtain, and

expressed the view that one reason for such denial

was the conviction of the Commission that, in re-

quiring it to ascertain and report separately the

“present cost of condemnation and damages or of

purchase” of common-carrier lands, Congress

Of course the Commission repudiates the intima-

tion that it has in this case based, or that it ever

bases, action taken by it upon its opinion concern-

ing the wisdom of Congress as manifested by the

provisions of any law it may enact.

In this connection, however, the Commission

states: That the valuation act was passed on March

’ tempt to apply the cost-of-reproduction method in

1, 1918; that the decision of this court in the Min-

lic on June 9, 1918; that prior to said June 9 the

lower courts and some of the state commissions had

proceeded upon the theory that it was proper to at- _

determining the present value of common-carrier

lands, and ‘that while said theory was being ad-

vanced and acted upon favorably, and before the

unsoundness of that theory had been demonstrated

by this court, Congress inserted in said act the re-

quirement here in question.

Under these circumstances it seems reasonable

to believe, and the Commission does believe, that if

the publication of said decision had preceded the

passage of the valuation act said requirement would

never have existed, because it feels certain Con-

gress would have endeavored to act in accordance

with. the. principles of law as announced: by the

court of last resort.

The action of the Commission complained of by .

appellant, however, is not based upon this belief,

but is based instead upon the Commission’s convic-

tion that compliance with said requirement is, as a

matter of law, impossible.

For the reasons above set forth we respectfully

submit that the appeal in this case should be dis-

missed.

P. J. FARRELL,

For Defendant in Error.

CR ROLE na AI Rees KS

KANSAS CITY SO. RY. v. INT. COM. COMM. 179

178. Argument for Defendant in Error.

or the difficulties involved in so doing, and that a railroad company

whose interests were affected was entitled to the writ of mandamus.

P. 187.

Reversed.

Tue case is stated in the opinion.

Mr. Lowis Marshall and Mr. Samuel W. Moore, with

whom Mr. Samuel Untermyer was on the brief, for plain-

tiff in error.

Mr. P. J. Farrell for defendant in error:

To estimate the present cost of condemnation and dam-

ages or of purchase of lands included in plaintiff in error’s

railroad is impossible, because it necessarily involves un-

warraniable and unlawful assumptions.

In the Minnesota Rate Cases, 230 U. 8. 352, this court

entertained the opinion that an estimate of the present

cost of acquisition of the lands included in the right of way,

yards, and terminals of a carrier could be made only upon

the theory that the railroad would be removed before the

estimate would be made, and it is apparent that no other

theory would be tenable. The court points out that upon

the assumption of the nonexistence of the railroad it is

impossible for anyone to describe either the conditions

that would exist or the exigencies of the hypothetical

owners of the property, and says in emphatic language

that an attempt to estimate what would be the actual cost

of acquiring the right of way under such circumstances

would be to indulge in mere speculation. In other words,

this court says that what plaintiff in error is asking the

court to require the Commission to do cannot, as a matter

of law, be done. The court, however, does not stop here.

It proceeds to demonstrate why such an estimate cannot

be made. It shows that the uses and values of lands in the

vicinity of the railroad are largely the result of the con-

struction and operation of the railroad; that it would be

Argument for Defendant:in Error. 252 U. 8.

impossible to determine the extent to which such uses and

valies have been so influenced, and that to assume that

they would not be affected if the railroad were removed,

and base upon that theory an estimate of reacquiring the

lands, or its equivalent, an estimate of the present cost of

coridemnation and damages, or of purchase, would be

improper and unjustifiable and produce a result which

could not be accepted as evidence by a court. This court

clearly states, in substance, that the estimate of present

cost of condemnation and damages, or of purchase, which

plaintiff in error is asking the court to compel the Commis-

sion to make is an estimate which is wholly beyond reach

of any process of rational determination. In this connec-

tion it points out that the appraisers of the lands involved

in the Minnesota Rate Cases, in an attempt to estimate

the cost of acquiring the lands, were presented with an

impossible

hypothesis.

As shown in the answer herein, the evidence introduced

before the Commission in connection with the valuation

of the lands included in plaintiff in error’s railroad estab-

lishes that at the time the railroad was constructed a por-

tion of said lands was donated to, and another portion

purchased by, plaintiff in error, and that plaintiff in error

obtained title to still another portion through condemna-

tion proceedings. It is evident that, upon the assumption

of the removal of the railroad and its reproduction, it is

impossible to ascertain the portion of said lands which

would be so donated, or the portion thereof which would

have to be purchased by plaintiff in error, or the portion

thereof plaintiff in error would have to acquire title to

through condemnation proceedings.

It is further apparent that the removal of the railroad

_and its immediate reproduction would not damage in any

manner or to any extent any of the lands adjoining or

‘or adjacent lands.

proper.

The court will not, by issuing a writ of mandamus, re-

quire something to be done which it is impossible to do.

Sileby Mfg. Co. v. Allentown, 153 Pa. St. 319.

The decision of this court in the Minnesota Rate Cases

is directly in point and should be given controlling influ-

ence. Chicago & Northwestern Ry. Co. v. Smith, 210 Fed.

Rep. 632; Louisville & Nashville R. R. Co. v. Railroad

Commission, 208 Fed. Rep. 35; Ann Arbor R. R. Co. v.

Fellows, 236 Fed. Rep. 387.

This court has approved the Commission’s interpreta-

tion of the court’s decision in the Minnesota Rate Cases.

See Denver v. Denver Union Water Co., 246 U. 8. 178.

In finding the present market value of plaintiff in error’s

cominon-carrier lands, as measured by the “fair average

of the normal market value of lands in the vicinity having

a similar character,” the Commission must of course con-

sider conditions as they now are, including the existence

of the railroad, but in estimating what it would cost to

reacquire such lands, that ir, the reproduction cost, or the

present cost of condemnatior. and damages or of purchase,

of the lands, the Commission would have to treat the rail-

road as nonexistent ahd speculate, enter into the realm

of mere conjecture, as to what the market value of the

lands would be under such circumstances.

Plaintiff in error’s contention that it will lose something

to which it is entitled, unless the remedy it asks for is ap-

plied, is based upon speculation, and is not justified by

the facts. It is asking the court to assist it in obtaining

excess of the amount invested in them and beyond the

value of similar property owned by others.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.