Appendix — Baltimore & Ohio R. Co. v. United States

Supreme Court brief1928

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APPENDIX A

(R. 27, 28)

Order of the Commission entered July 12, 1926

No. 16697

The Chicago, Rock Island & Pacific Railway Com-

pany, Missouri-Kansas-Texas Railroad Com-

pany, Missouri Pacific Railroad Company, and

St. Louis-San Francisco Railway Company

Vv.

The Baltimore and Ohio Railroad Company and

numerous other railroad companies including

the appellants

This case being at issue, upon complaint and

answers on file, and having been duly heard and

submitted by the parties, and full investigation of

the matters and things involved having been had,

and the commission having, on the date hereof, made

and filed report containing its finding of fact and

conclusions thereon, which said report is hereby

referred to and made a part hereof:

It is ordered, That the above-named defendants,

according as they participate in the transportation,

be, and they are hereby, notified and required to

cease and desist, on or before October 12, 1926, and

thereafter to abstain from the practice of requiring

the above-named complainants, together with the

(51)

Chicago, Burlington & Quincy Railroad Company

and the Wabash Railway Company, to bear the

charges for transfer services from East St. Louis,

Ill., to St. Louis, Mo., on westbound freight traffic

passing through both points on combination rates

which are the same on St. Louis as on East St. Louis.

It is further ordered, That said defendants, ac-

cording as they participate in the transportation,

be, and they are hereby, notified and required to

establish, on or before October 12, 1926, upon notice

to this commission and to the general public by not

less than 30 days’ filing and posting in the manner

prescribed in section 6 of the interstate commerce

act, and thereafter to maintain and apply to the

transportation of westbound freight traffic passing

through both East St. Louis, Ill., and St. Louis, Mo.,

on combination rates which are the same on St.

Louis as on East St. Louis, and delivered to com-

plainants, or the Chicago, Burlington & Quincy

Railroad Company or the Wabash Railway Com-

pany, the practice of bearing or absorbing on such

traffic the charges for transfer services from de-

fendants’ lines in East St. Louis, Ill, to the lines

of complainants, or of the Chicago, Burlington &

Quincy Railroad Company or the Wabash Railway

Company in St. Louis, Mo.

And it is further ordered, That this order shall

continue in foree until the further order of the

commission.

APPENDIX B

In Terminal Railroad Association vy. United

States, 266 U.S. 17, the East Side Lines, who were

represented by at least one of the learned counsel

who appears for them here and who subscribed to

their briefs in both cases, said in their main brief

in that case (p. 27):

WHAT ARE THE POWERS OF THE INTERSTATE COMMERCE COMMISSION

IN REFERENCE TO THE MATTER HERE IN CONTROVERSY?

It would be tedious and altogether unnecessary

to cite the many cases determined by this Court,

holding that where a matter is within the cogni-

zance of the Interstate Commerce Commission no

appeal can be made to the Courts until and unless

application has been first made to the Commission.

Teras & Pacific Railroad Co. vy. Abilene Cotton Oil

Co., 204 U. S. 426, is of course the leading case on

that subject, and it has been followed by many

decisions such as Robinson v. B. & O. R. R. Co.,

222 U.S. 506; 7.C.C.v. I. C. R. R. Co., 215 U.S.

452; B. d& O. R. R. Co. vy. Piteairn Coal Co., 215

U.S. 408; Precter d&} Gamble v. United States, 225

US. 282; Southern Railway Co. v. Reid, 222 U.S.

425,

The Interstate Commerce Act has given from

time to time broad and still broader powers over

the railroad system. We mention the following as

examples of this control:

Section 1, Par. 4, makes it the duty of every

common carrier to establish through routes and

(53)

just and reasonable rates, fares, and charges ap-

plicable thereto, and to provide reasonable facili-

ties for operating through routes and to make rea-

sonable rules and regulations with respect to the

operation of through routes; and in case of joint

rates, fares, or charges, to establish just, reason-

able, and equitable divisions thereof as between the

carriers participating therein.

The term ‘‘car service’ is by Section 1, Par. 10,

defined to be, among other things, the interchange

of cars and other vehicles used in the transporta-

tion of property.

And by Section 1, Par. 11, it is made the duty of

every carrier to establish, ovserve, and enforce just

and reasonable rules, regulations, and practices

with respect of car service.

By Section 3, Par. 3, it is provided that all car-

riers engaged in the transportation of passengers

or property shall afford all reasonable, proper, and

equal facilities for the interchange of traffic between

their respective lines, and for receiving, forward-

ing, and delivering passengers or property to and

from their several lines and those connecting there-

with.

By Section 15, Par. 2, it is provided that the

Commission may establish through routes, joint

classifications and joint rates, fares, or charges,

and the divisions of such rates, fares, or charges,

and the terms and conditions under which such

through routes shall be operated.

By section 15, Par. 6, it is provided that the Com-

mission finding that the divisions of joint rates,

fares, or charges is unjust, unreasonable, inequit-

able, or unduly preferential may, by order, pre-

ei nail nina eae ae ee ee ew rr ee ey Se ee PP OES

scribe the just, reasonable, and equitable divisions

thereof to be received by the several carriers.

By section 208 of the Transportation Act, 1920, it

is provided that all rates, fares, and charges, and

all classifications, regulations, and practices, which

on February 29, 1920, were in effect, should con-

tinue in force and effect until thereafter changed

by State or Federal authority, respectively, or pur-

suant to authority of law.

And by Par. (b) of said Section 208 it was pro-

vided that all divisions of joint rates, fares, or

charges, which on February 29, 1920, are in effect

between the lines of carriers subject to the Inter-

state Commerce Act, shall continue in foree and

effect until thereafter changed by mutual agreement

between the interested carriers or by State or Fed-

eral authorities, respectively.

What are the powers of the Interstate Commerce

Commission in reference to the matter here in con-

troversy and what was the purpose of passing the

Transportation Act is stated concisely in the opin-

ion of this Court, delivered January 7, 1924, in the

case of Dayton Goose Creek Ry. Co. v. The United

States. We make the following extract :

The new Act seeks affirmatively to build

up a system of railways prepared to handle

promptly all the interstate traffic of the

country. It aims to give the owners of the

railways an opportunity to earn enough to

maintain their properties and equipment in

such a state of efficiency that they can carry

well this burden. To achieve this great pur-

pose, it puts the railroad systems of the

country more completely than ever under

the fostering guardianship and control of

the Commission which is to supervise their

issue of securities, their car supply and dis.

PapeRIT er ene UN TREO AS

tribution, their joint use of terminals, their

construction of new lines, their abandonment

of old lines, and by a proper division of joint

rates, and by fixing adequate rates for inter-

state commerce, and in ease of discrimina-

tion, for intrastate commerce, to secure a fair

return upon the properties of the carriers

engaged.

A very large part of these powers had been con-

ferred on the Interstate Commerce Commission

prior to the passage of the Transportation Act and

the amendments at that time made in the Inter-

state Commerce Act. But if we appeal to the law

as it was written before or since the passage of the

Act, practically the same result would be reached.

We have had no hesitancy, however, in reciting the

terms of the present law, for the reason that in

matters of public concern, decrees of Courts and

their execution are to be governed by laws in force

when the decree is called in question.

Hodges v. Snyder, 261 U.S. 600, and the

Wheeling Bridge case therein referred to.

Thus while the Commission has had jurisdiction

to prescribe divisions of joint rates since 1906 (34

Stat. L. 584, approved June 29, 1906), the scope of

that power has been extended and emphasized by

the Transportation Act, 1920 (41 Stat. L. 484, ap-

proved February 28, 1920). The Commission, un-

der the direction of Congress in this latter act, has

divided the carriers of the United States into

groups for rate-making purposes. (Section 15a,

Interstate Commerce Act, 41 Stat. L. 488, approved

February 28, 1920.) The Mississippi River was

made the dividing line between the Eastern, West-

ern and Southern groups. (Increased Rates, 1920,

. - CRAGIN LOVEE LT IONE

PPG CLINI GE IO ELIT SO anita evo oe 3 2

Eee

ose

58 I. C. C. 220, at 225.) In the same proceeding the

Commission also prescribed rate levels for groups

thus created. In prescribing rate levels for groups

it is an important adjunct of the Commission’s au-

thority for it to apportion revenue resulting from

joint rates among groups of carriers so as to pro-

vide ‘‘as nearly as may be’’ a fair return for

each group. The New England Divisions Case, 261

U.S. 184. In the present case the West Side Lines

are in the rate group denominated by the Comm‘s-

sion in Increased Rates, 1920, supra, as the Western

group, while the East Side Lines are, generally

speaking, either in the Eastern or Southern Group.

Consequently the apportionment of divisions of

joint rates as between carriers and the decision

as to which set of carriers should pay for transfer

charges on traffic moving from one rate group to

another, has more than ever become a matter of

administrative discretion for the Interstate Com-

merce Commission, which is directed by Congress

to prescribe rates that shall yield for each group

the ‘‘fair return’’ provided by the Act. (Section

lda, Interstate Commerce Act.)

Obviously such a fair return can not be deter-

mined without also exercising an authority in

respect to the division of earnings under joint rates

and the apportionment of expense that shall be

made in respect to traffic moving between the

groups established by the Commission. Hence,

while the division of joint rates has for eighteen

years been a matter within the exclusive primary

jurisdiction of the Commission, the new law has

emphasized the necessity for guarding the juris-

diction thus conferred by Congress as exclusive at

least until after the Commission shall have acted.

- 7 ¥ > . ei

PRA NIS EUT HT IS REEL ILE IES EOE Reo

Be Os hy Mehl ied gee eS ee esta

In their reply brief the same learned counsel fur-

ther maintained (p. 25):

THE ACTIVITIES OF TERMINAL ASSOCIATION ARE SUBJECT TO THE

EXCLUSIVE CONTROL OF THE INTERSTATE COMMERCE COMMISSION

UNDER THE TRANSPORTATION ACT OF 1920

The appellees argue that the Transportation Act

of 1920 does not apply to the regulation and con-

trol of the Terminal Association, since they say

that they and the East Side Lines have agreed upon

the use of the terminal properties, and the appellees

seem to contend that the Interstate Commerce Com-

mission would only have jurisdiction over this ter-

minal situation in the event of a disagreement.

(Brief for appellees, p. 22.)

In the light of the controversy that is now raging

both over the use of the terminal properties as well

as the payment for such use, we are utterly at a

loss to understand how the appellees conceive that

no such disagreement exists at present between

themselves and the East Side Lines.

The Terminal Association insisted in its brief,

and again reiterates, that the Transportation Act

of 1920 vested exclusive jurisdiction in the Inter-

state Commerce Commission to control the relations

between these Terminal Companies and all the user

lines, whether Proprietary or Nonproprietary, and

that if the West Side Lines are not satisfied with

the present method and practice under which the

terminal charges are * posed, then their remedy

lies before the Interstate Commerce Commission

and can not be invoked as growing out of the viola-

tion of any Court decree.

We further contended, and still contend, that this

Court has no jurisdiction to disturb rate conditions

which have existed here since 1877, and the destruc-

MAS a yy Pee Satin oS -

tion of which would not profoundly disturb the

revenues of other eastern carriers at this gateway

not parties to these proceedings, but would affect

the rate structures now in effect at other crossings

of the Mississippi River.

It seems to us too clear for much argument that

this action is but an effort on the part of the West

Side Lines to obtain by indirection and through an

order of Court a change in a matter which is origi-

nally and exclusively within the power and author-

ity of the Interstate Commerce Commission.

It is difficult to understand why the West Side

Lines, if they feel themselves unfairly treated, have

not taken this controversy to the Interstate Com-

merce Commission, where their right to relief is

perfectly clear, provided their cause be just.

7 ease KMS Heer OD ante aa AE Ie eee eT

LESAGE SLY LEEDS AEP BOS AEE IOI ES ONL OE FE DOERR PT Pe ay a ¥ DAL

APPENDIX C

Representative Mann (Illinois) on April 12, 1910,

moved that the House resolve itself into the Com-

mittee of the Whole House for the consideration

of the bill H. R. 17536, the railroad-rate bill.

(Cong. Ree. Vol. 45, Pt. 5, 61st Cong., 2d Sess., p.

4571.) Speaking to the bill, Representative Mann

said (pp. 4572, 4573, 4578, 4579) :

Broadly speaking, the propositions in-

' volved in the pendiig bill may mostly be

covered under three general heads:

* * * * *

Second. Enlarging the statutory duties of

the railways and the rights of shippers and

increasing the powers of the Interstate Com-

merce Commission; so that classifications,

regulations, and practices shall be just and

reasonable and enforceable as such, whether

affecting the rates charged or not.

* * * * *

Mr. Mann. We have conferred upon the

Interstate Commerce Commission the broad-

est kind of powers now so far as railway

vates are concerned, and we are proposing

in this bill to greatly enlarge their power

by giving them the same power over classifi-

cations, regulatiens, and practices which

they now have over rates. That power is

in the way of a legislative power which can

not be conferred upon the courts, and we

(60)

have, so far as that is concerned, I think, in

the law restricted the power of the courts

just as far as it is possible for legislation

to restrict it. And I sometimes think pos-

sibly we have restricted it too much, and

yet there has been no injury from that cause

as yet.

* * * +

REGULATIONS AND PRACTICES

Just how far that term goes—regulations

and practices affecting rates—has never been

fully determined by the courts. The Inter-

state Commerce Commission exercises the

power over the rates. They have never ex-

ercised the power over classification of

freight, although classification of freight is

just as important as rates, because by mov-

ing a particular article from one class to an-

other you affect the rates. They have never

exercised the power over certain practices of

the railroads or regulations of the railroads

which may seem apart from the question of

rates. The practice of the law is that Con-

gress first declares the duty of the railroad

companies and, under existing law, declares

that rates must be just and reasonable. The

rest is conferring power upon the commis-

sion to ascertain the fact; but the jurisdic-

tion of the commission depends, first, upon

the declaration by Congress that it is the

duty of the railroads to make rates just and

reasonable.

SPORE ITE AAA PLT EAE EBS eee

AMENDMENT PROPOSED

That is contained in section 1 of the exist-

ing law, and we propose an amendment to

that law, as follows:

And it is hereby made the duty of all com-

mon carriers subject to the provisions of this

act to establish, observe, and enforce just

and reasonable classifications of property for

transportation, with reference to which rates,

tariffs, regulations, or practices are or may

be made or prescribed, and just and reason-

able regulations and practices affecting clas-

sifieations, rates, or tariffs, the issuance, form

and substance of tickets, receipts, and bills of

lading, the manner and method of present-

ing, marking, packing, and delivering prop-

erty for transportation, the facilities for

transportation, the carrying of personal,

sample, and excess baggage, and all other

matters relating to or connected with the re-

ceiving, handling, transporting, storing, and

delivery of property subject to the provisions

of this act which may be necessary or con-

venient to secure the safe and prompt re-

ceipt, handling, transportation, and delivery

of property subject to the provisions of this

act upon just and reasonable terms, and

every unjust and unreasonable classifica-

tions, regulation, and practice is prohibited

and declared to be unlawful.

This is a distinct step forward in the con-

trol of the railroads. It undertakes to re-

quire, when carried out in the rest of the

bill, the duty on the part of the railroads to

ENGEL LEIP RIL BE EER ORE EEN TE LEI NON OE IEE SO OE NI aaa

make just and reasonable regulations and

practices, and gives to the commission in suc-

ceeding sections of the bill the power, if the

railroads do not make just and reasonable

classifications, regulations, and practices, to

make them and to enforce them on the rail-

roads.

+ * * * *

We cover part of them under existing law,

but there are a great many provisions, as the

gentleman can understand, arising from the

countless transactions throughout the United

States where regulations and practices are

agreed to by railroads, where they have one

practice on one railroad and another practice

on another road, practices affecting the same

matter not now controlled by the commission,

but under these provisions of the law the

commission will have control over these

matters.

Representative Mann (Illinois), on May 5, 1910,

moved that the House resolve itself into the Com-

mittee of the Whole House for further considera-

tion of the bill H. R. 17546, the railroad rate bill.

(Cong. Ree. Vol. 45, Pt. 6, 61st Cong. 2d Sess.,

p. 5839.) In the course of the remarks the follow-

ing occurred (p. 5852) :

Mr. Mann. Mr. Chairman, so far as I

could learn from the reading of the amend-

ment, everything in it is now covered in the

bill. It would be too dangerous to reinsert it

a second time in different language. Sec-

tion 6a of the bill, amending section 1, makes

it the duty of common carriers to establish

just classifications, regulations, and _prac-

tices in reference to a number of things that

are enumerated in the bill, and practically

covering everything in connection with the

receipt, handling, transporting, storage, and

delivery of property subject to the provisions

of the act which may be necessary or con-

venient to secure the safe and prompt re-

ceipt, handling, transportation, and delivery

of property upon just and reasonable terms;

and every unjust and unreasonable classifi-

cation and practice is prohibited and de-

clared to be unlawful. That is all in section

1. It imposes that duty on railway carriers,

and section 13 of the act provides that if

this is not done complaint can be filed before

the commission, or the commission, on its

own initiative, may make the investigation.

Section 15 of the act to regulate commerce,

which is section 9 of this bili now under econ-

sideration, gives to the commission, if the

railway company does not establish these

just and reasonable regulations, practices,

classifications, and rates, the power to estab-

lish them, and require the railway company

to enforce and observe them.

That language is carefully worked out in

connection with the existing law so as to be

sure it is constitutional. I do not know what

the effect of the gentleman’s amendment

would be, but it would duplicate language,

possibly, in a form which would not meet

the approval of the courts. In the language

which we have employed we lave followed the

provisions as to form of the existing law,

which has been construed by the commission

and the courts. We are on safe ground. We

give to the commission under this bill the

authority to enforce upon the railroad com-

panies any reasonable regulations and prac-

tices, classifications, or rates which may be

necessary in the handling, receiving, stor-

age, or transportation of property, and noth-

ing further can be done. The gentleman’s

amendment is unnecessary, and I fear it

would be dangerous to insert it in the bill.

CONTENTS

Page

STATEMENT OF THE CASE____--------------- 1

Proceedings Before the Commission___--__--___- 2

a tani dele nantirnenants 12

Proceedings in the Court Below_.____._-.---- 29

I CGD nacccacnacmoasnsmace 29

_ EES EAE CO 29

ee eee en 99

Il. The Order Is Within the Power Conferred Upon

EE Se aes ee ae eee 30

Il. The Order Is Supported By Substantial Evi-

Ts cid csighehecbts en cnitehiibncisadnaniloneseneatiandian ebaiiionatttelttbite 49

I, isha it stateichini Gicnenidainscinnbahdilieaiinininn ttitarenie 54

CASES CITED

Alabama 4 Vicksburg Ry. Co. vy. Jackson & Eastern Ry. Co., 271

OL ES a 44, 45

Birmingham Sou. R. R. Co. vy. Ala. Great Sou. Ry., 61 I. C. C.

I cecesaie ig teenies inh areijnnenioenicmniiiiindnitsaaaiaaniininiaeineimaaiatenpincvaldblaitbianen 21

Brimstone R. R. & Canal Co. vy. United States, —U. 8.—, not

yet officially reported, decided Feb. 20, 1928_...-.---------- 52

oe a Conse Geele Case, @ 1. CO. CO. B06 nce cccccceccenseces 28

Central R. R. Co. v. United States, 257 U. 8. 247_---------- 44, 47, 50

Chicago, Indpls. 4 Louisv. Ry. Co. vy. United States, 270 U. 8.

EE ee 43, 45

Chicago, Mil. & St. P. Ry. Co. vy. Un. Pac. R. R. Co., 88 LI. C. C.

Ee a ee ee ae ee a ee eN 44

ee US 28

Jndastriel Reilwaye Case, 29 1. C. C. 212...........-..--.--- 21

Lowisvilie 4 Nashville R. R. v. United States, 238 U. 8. 1.------ 45

Missouri Pac. R. R. Co. vy. Reynolds-Davis Grocery Co.. 268 U. 8.

| EE RE ee Se a ee eR | Le a 21, 47

Myrick v. M’chigan Central R. R. Co., 107 U. 8. 102_--------- 47

New England Divisions Case, 261 U. 8. 184.......-...-.------- 52

Peoria 4 Pekin Union Ry. Co. v. United S/ates, 263 U. 8. 528__- 45

Penna. Co. v. United States, 236 U. 8. 351.........-.-_-.-_---_- 43, 45

Railroad Commission of Calif. v. Sou. Pac. Co., 264 U. 8. 331_-- 4A

Routing on Coal from Western Maryland Mines, 66 I. C. C. 103;

Page

St. Louis 8. W. Ry. Co. v. United States, 245 U. S. 136____ 44,50

Sou. Pac. Co. v. I. C. C., 200 U. 8. 536 43

Terminal R. R. Assn. v. United States, 266 U. S. 17____ 16, 29, 30, 48

United States v. Abilene & Sou. Ry. Co., 265 U. S. 274________ 52

United States v. Amer. Ry. Exp. Co., 265 U. S. 425_-___________ 44

United States v. Mich. Port. Cement Co., 270 U. S. 521_________ 45

United States v. N. Y. Cent. R. R., 272 U 8. 457_-_________ 43, 44, 47

United States v. P. R. R. Co., 266 U. 8. 191 44, 45

United States v. St. Louis Terminal, 224 U. S. 383; 236 U. S.

Pil iataiica sabcibeceacicsceraa sa aiictepdeikchaaaainatep telbsteiatekdheciedainaensadanainapssatanio 13, 14, 30, 47

Virginian Ry. Co. v. United States, 272 U. 8S. 658______________ 51

Inthe Supreme Court of the Wnited States

OctToBER TERM, 1927

No. 404

Toe BALTIMORE AND OHIO RarmrRoaD COMPANY

et al., appellants

Tue UNITED STATES OF AMERICA, INTERSTATE ComM-

merce Commission, et al., appellees

BRIEF FOR INTERSTATE COMMERCE COMMISSION

STATEMENT OF THE CASE

This is an appeal under the Act of October 22,

1913, 38 Stat. 219, from a decree of the District

Court for the Northern District of Illinois, Eastern

Division (Anderson, Circuit Judge, and Wilkerson

and Cliffe, District Judges), dismissing, for want

of equity, a bill brought by thirteen railroad com-

panies * to enjoin and set aside an order of the In-

*Baltimore & Ohio R. R. Co.; Chicago & Alton R. R. Co.;

Chicago & Eastern Illinois Ry. Co.; Cleveland, Cincinnati,

Chicago & St. Louis Ry. Co.; Illinois Central R. R. Co. ; Illi-

nois Traction, Inc. ; Litchfield & Madison Ry. Co.; Louisville

& Nashville R. R. Co.; Mobile & Ohio R. R. Co.; New York,

Chicago & St. Louis R. R. Co.; Pennsylvania R. R. Co.;

Southern Railway Company; Wabash Railway Company.

(1)

Oe es Fes

terstate Commerce Commission requiring them to

bear or absorb the charges for transfer services

from their lines in East St. Louis, Lilinois, to the

lines of six railroad companies’ in St. Louis, Mis-

souri, on westbound freight traffic passing through

both East St. Louis, Illinois, and St. Louis, Mis-

souri, on combination rates which are the same on

St. Louis as on East St. Louis. (R. 27-29.)

No opinion was delivered by the court below.

The Commission’s order was entered in a pro-

ceeding entitled Chicago, Rock Island d&: Pacific

Ry. Co. et al. v. Baltimore & Ohio R. R. Co. et al.,

the report in which is published at 113 I. C. C. 681.

The order (R. 27-28) was directed against 39 rail-

road companies but only the 13 who are appellants

herein joined as plaintiffs in the suit to annul the

order. (R. 1.)

Proceedings Before the Commission

The complaint (R. 30) was filed February 5,

1925. Hearing was held at St. Louis September 21

to 26, 1925, before an examiner of the Commission,

in which all parties participated (R. 75-392). A

proposed report by the examiner was issued, to

which certain exceptions were taken; briefs were

filed and the case was orally argued before the Com-

* The four who were complainants before the Commission,

viz, The Chicago, Rock Island & Pac. Ry. Co.; Missouri-

Kansas-Texas R. R. Co.; Missouri Pacific R. R. Co.; St.

Louis-San Francisco Ry. Co.; and two who were cross com-

plainants, viz, the Chicago, Burlington & Quincy R. R. Co.;

and the Wabash Railway Company.

mission. July 12, 1926, the Commission rendered its

report and order. August 14, 1926, defendants

petitioned the Commission for reargument and re-

consideration, which was denied. The effective date

of the order was October 12, 1926, but by supple-

mental order (R. 30) it was postponed until De-

cember 11, 1926, when it became operative.

The four complainant railroad companies op-

erate lines which extend westward from St. Louis,

Missouri, and are called west-side lines. The ap-

pellants were among the principal defendants.

They operate lines on the east side of the Mis-

sissippi river, terminating at East St. Louis, Hli-

nois, and they are called east-side lines.

None of the steam lines, either west side or east

side, has its own rails across the Mississippi river

between St. Louis and East St. Louis, and there is

no direet physical connection between any west-

side line with any east-side line in the St. Louis-

East St. Louis District. In all instances connee-

tion is made through the intermediary of the Ter-

minal Railroad Association of St. Louis and its sub-

sidiaries, all of whieh are collectively referred to

herein as the Association. (Ex. 4.) *

The Association is a terminal transfer and

switching eompany with faeilities on both sides of

the Mississippi river, conneeted by two bridges, the

*This statement is correct in reference to all steam lines.

The Ilinois Traction System, an electric line, has rails over

its own bridge inte St. Louis, and it imterehanges traffie with

the west-side lines in St. Louis. (R. 90.)

Eads and the Merchants. It has connections with

all railroads on both sides of the river. The Asso-

ciation is a cooperative enterprise, being owned

jointly by 15 of the east-side and west-side car-

riers. (R. 76; Ex. 4.) It operates under contract

with the various proprietary and tenant carriers,

and under those contracts the carriers have track-

age rights over the rails of the Association between

St. Louis and East St. Louis. (Ex. 51.) These

trackage rights are exercised by all carriers for

passenger traffic, and by two carriers, the Chicago

& Eastern Illinois and the Wabash, for freight.

(R. 90; 192; 200; 297; Ex. 4, p. 50.) The other

carriers utilize the services of the Association for

transferring freight. Under the contracts men-

tioned, the properties of the Association constitute,

in effect, an extension of the rails of the east-side

lines into St. Louis, and, at the same time, an ex-

tension of the rails of the west-side lines into East

St. Louis. By virtue of this joint facility the routes

of the east-side carriers to St. Louis and of the

west-side carriers from East St. Louis overlap be-

tween St. Louis and East St. Louis.

As stated in the Commission’s report, in addition

to the facilities that the Association affords them,

several of the east-side lines own or lease other

facilities in St. Louis, such as depots and team

tracks, where they receive and deliver in their own

names traffic moving between St. Louis and points

on their lines. The east-side lines advertise through

service to and from St. Louis, and in their tariffs

show St. Louis as a point on their lines. In ap-

parently all respects as to both freight and passen-

ger traffic the east-side lines individually recognize

St. Louis as a station on their lines. (R. 81-86; 89;

205-206 ; 211-218; 239; Exs. 4; 21-24; 30-47; 49.)

The transfer charges of the Association vary

according to the commodity, ranging from 13 cents

per 100 pounds on low-grade commodities like coal

and iron ore to 5 cents per 100 pounds on commodi-

ties taking first-class rates. These charges are not

collected by the Association directly from the ship-

pers, but in all instances are paid to the Associa-

tion by the line-haul carriers. Their rates include

the transfer, and they pay the Association’s

charges out of those rates. The proceeding before

the Commission presented the question whether the

east-side lines or the west-side lines should pay and

bear the Association’s transfer charges on west-

bound through freight.

The complaint of the west-side lines alleged that

for many years the east-side lines had refused to

pay any part of these charges on through freight,

either eastbound or westbound; that they had com-

pelled the west-side lines to pay such charges on

all freight in both directions; that their action in

refusing to pay the charges on through traffic in

one direction (westbound) constituted a practice

which was unjust and unreasonable, unjustly dis-

criminatory, and unduly preferential and prejudi-

cial, in violation of sections 1, 2, and 3, respectively,

of the Interstate Commerce Act. The west-side

lines were willing to continue to pay the transfer

charges on eastbound traffie, and for that reason

they sought relief only im respect of westbound

_ traffie.

The complaint further alleged ‘‘ that under a

proper, just, reasonable, lawful, nonprejudicial and

nonpreferential practice, the point of interchange

as to all through westbound traffie should be on the

west side of the Mississippi river ’’ (R. 35-36) ; and

that the east-side lines had ‘‘failed, negleeted, and

refused * * * to provide reasonable facilities

for operating through routes and to make reason-

able rules and regulations with respect to the oper-

ation of through routes, all in violation of the duties

imposed upon them by the Interstate Commerce

Act ’’ (R. 36). Reparation was asked.

The Chicago, Burlington & Quiney Railroad

Company and the Wabash Railway Company each

has a line which enters East St. Louis from the east

and a line which enters St. Louis from the west.

Both were named as defendants and both filed eross-

complaints with respect to trans-Mississippi trafhe

moving over their lines west of the river and inter-

changed with each other or with any of the other

east-side lines through the St. Louis-East St. Louis

gateway, and, to the extent that they were cross-

complainants, sought whatever relief was aceorded

complainants.

St. Louis is one of the important gateways of

transportation between the east and the west and

southwest. The eastern and western carriers

whose lines are joined by the Association maintain

through routes between points on their lines, and,

with other carriers with whom they in turn con-

nect, between practically all points in the United

States. A large part of the traffic over these

through routes via this gateway moves on joint

rates; where joint rates are not in effect the traffic

moves on combinations of separately established

rates, and, as a rule, the applicable combination is

the one made on St. Louis or East St. Louis. Sub-

ject to but few exceptions, the combination made

on St. Louis is the same as that made on East St.

Louis. This is due to the fact that both the east

side and the west side lines accord like rates to both

points. As an example, the rate of the east-side

lines on wrought pipe from Youngstown, Ohio, to

East St. Louis and to St. Louis is 21.6 cents and

the rate of the west-side lines from East St. Louis

and from St. Louis to Augusta, Kansas, is 33.5

eents. Therefore, whether the combination be

figured on St. Louis or on East St. Louis, the

through combination rate is the same, viz, 55.1

cents. (Ex. 73.)

In all such cases the east-side lines followed the

practice of applying the East St. Louis combination

and refusing to apply the St. Louis combination.

The purpose and effect of this practice was to com-

pel the west-side lines to pay the charge for trans-

ferring the traffic across the river. The application

of the East St. Louis combination put the west-side

line under the necessity of paying the transfer

90630—28——_2

charge out of its rate to or from East St. Louis.

Of course, if the St. Louis combination were ap-

plied, instead of the East St. Louis combination, the

necessity of paying the transfer charge would fall

upon the east-side lines. To prevent the application

of the St. Louis combination and to compel the ap-

plication of the East St. Louis combination, the

east-side lines carried a provision in their published

tariffs to the effect that where no joint rate was

provided and the combination was the same on 8t.

Louis as on East St. Louis, the through rate would

be made on the East St. Louis combination. (R.

261.) In this regard the Commission stated in its

report as follows:

‘‘On traffic in both directions, where the

combination is the same on St. Louis as on

Fast St. Louis, the east-side lines apply their

St. Louis-East St. Louis rates only to or from

East St. Louis, leaving it to the west-side

lines to protect the combination rates by ap-

plying the St. Louis-East St. Louis rates to

or from East St. Louis. This, of course, com-

pels the west-side lines to pay the cost of

the transfer, and leaves the full St. Lovis-

East St. Louis rates for the east-side lines.

The entire practice above outlined is in ae-

cordance with the tariffs of the east-side

lines, which contain a provision to the effeet

that where no joint rates are provided and

the combinations are the same on St. Louis

as on East St. Louis, through rates will be

made on the East St. Louis combinations.

This provision is intended to mean that the

east-side lines’ local rates to and from St.

Louis may not legally be used as proportional

or basing rates on traffic coming from or des-

tined to points beyond. It has no effect on

the amount of the through rates, nor does

it create joint rates, but it is a direction to

agents and accounting forces to use the east-

side lines’ factors in the combination rates

only to or from East St. Louis.’”’ (R. 19.)

The Commission found that for the future the

practice of the east-side lines in requiring the west-

side lines to bear the transfer charges on west-

bound freight traffic moving through St. Louis and

East St. Louis on combination rates which are the

same on St. Louis as on East St. Louis will be un-

just and unreasonable, and that the just and

reasonable practice with respect to such traffie will

be for the east-side lines to bear or absorb all such

transfer charges. In making this finding the

Commission said:

“As a rule, the carrier which performs

the inbound haul, the delivering carrier,

switches or trucks the freight to its connec-

tion, or pays the expense of that service if

performed by a third party. * * *

Among the few instances throughout the

country in which reciprocity does not pre-

vail is the situation here presented. * * *”’

‘*Defendants’ practice is contrary to the

generally accepted practice throughout the

country. The usual practice among rail car-

riers is to divide the switching expenses

when the services of an intermediate carrier

are utilized in effecting interchange, the

switching charge being absorbed by the car-

rier that delivers the traffic to its connection.

There is a generally recognized obligation on

part of all carriers on through traffic to

make delivery on the rails of their connec-

tions, either direct or by bearing the charges

of the intermediate-switching line, and this

is the general practice of railroads through-

out the country. We believe this to be a

just, fair, and reasonable practice for gen-

eral application, and one which should be

followed by the carriers serving the St.

Louis-East St. Louis district. We are not

unmindful of the fact that such a practice,

if applied at St. Louis and East St. Louis,

ean not bring about exact reciprocity be-

cause the volume of the through traffic is

considerably greater eastbound than west-

bound, but complainants are not asking for

exact reciprocity ; moreover, we believe that

adoption of this practice at interchange

points generally would distribute the costs

of interchange switching among the respec-

tive carriers as a whole in a fair and equita-

ble manner.”’

With respect to traffic moving on joint rates,

the Commission said:

**As to this traffic the carriers’ divisional

arrangements provide that the joint rates,

eastbound and westbound, shall break on

East St. Louis; that is, that certain propor-

tions shall accrue up to that point and cer-

tain proportions beyond. Generally speak-

-—

ing, the divisional arrangements make no

specific provision regarding the payment or

disposition of the transfer expense. How-

ever, as the joint rates break on East St.

Louis and as the transfer takes place west

of that point the east-side lines have always

left the transfer expense in connection with

both eastbound and westbound through traf-

fic moving on joint rates to be borne by the

west-side lines. Apparently, in only one in-

stance, affecting a relatively small volume of

traffic, do the divisional arrangements make

any specific provision respecting the trans-

fer. In this instance provision is made for

deducting, before prorating, an amount in

excess of the transfer expense and adding it

to the proportion accruing to the west-side

lines. The deduction, of course, has the ef-

fect of apportioning the expense between the

east-side and the west-side lines.’’

The Commission made no definite finding in re-

spect to westbound tr: ffic moving on joint rates.

It said:

‘“* * * we are not convinced that the

reception for a number of years by the west-

side lines of divisions of such joint rates in

which the transfer charge was included does

not constitute an acquiescence by the west-

side lines in such divisions which is tanta-

| mount to an agreement on their part to pay

| the transfer charge on such traffic. As to

traffic moving under joint rates, therefore,

we are not prepared at this time to make a

definite finding upon the issues and record

before us. We commend to the interested

carriers, however, a careful study of the

divisions of joint rates on westbound traffic,

with a view to readjustment thereof if and

where necessary to conform to the just and

reasonable practice in respect of interchange

switching hereinabove approved for general

application. If this is not done within a

reasonable time complainants are at liberty

to again bring this matter to our attention.”

Accordingly, the Commission’s order has no ap-

plication whatever to the transfer charges on traffic

moving on joint rates. It is expressly confined to

the transfer charges on traffic moving on combina-

tion rates and then only when the St. Louis combina-

tion is the same as the East St. Louis combination.

The allegations of the complaint of unjust dis-

crimination and undue prejudice and preference

in violation of sections 2 and 3 of the Act were not

sustained; and the prayer for reparation was

denied.

The Evidence

In addition to the evidence supporting the above-

stated facts, the record contains much other im-

portant evidence, and in view of the appellants

contention that the evidence was insufficient, a fur-

ther statement of the facts established by the record

is here set out.

The stock of the Association is held in equal pro-

portions by 15 of the east-side and west-side car-

riers. (R. 76-77.) Five of the 15 are west-side car-

riers, the remaining 10 are east-side carriers. The

east-side carriers hold a majority of the shares. (R.

93.) Representatives of the east-side carriers have

always constituted a majority of the Board of Di-

rectors of the Association. (R. 93.) It was testi-

fied that through this domination and control of the

Association’s Board of Directors, the east-side lines

for many years have been able to force the west-

side lines to pay and bear the transfer charges on

through traffic in both directions. (R. 95.)

The Association is a common carrier, but may

not legally operate in all respects as a railroad

transportation company, having been perpetually

enjoined from operating otherwise than as a ter-

minal and interchange facility for railroads in

United States vy. St. Louis Terminal, 224 U. S.

383, and 236 U.S. 194. Exhibit No. 50 is a copy of

the final decree in that proceeding, filed March 2,

1914, as amended by the decree of January 29, 1917.

The charges for the transfer and other services

performed by the Association are fixed at a figure

which is sufficient only to pay its operating and

other expenses. No profit has ever been made out

of the operation of its properties and no dividend

has ever been declared on any of its outstanding

stock. The 15 railroads which constitute the As-

sociation are guarantors of the bonds and other

obligations of the Association and are its sponsors.

(Ex. 58.)

Exhibit No. 51 is a copy of the various agree-

ments between the Association and its proprietary

companies. The original agreement was made in

1889; it was amended Sept. 21, 1914, to conform to

the decree in United States v. St. Louis Terminal,

supra. The exhibit consists of 145 printed pages.

As found by the Commission these agreements con-

template that all carriers shall have equitable treat-

ment in the matter of service, rights, accommoda-

tions, benefits, burdens, charges, and expenses. This

exhibit was introduced by the west-side lines to show

that through their payment of the transfer charges

on nearly all traffic in both directions they are con-

tributing in major part to the Association’s ex-

penses and that, therefore, its expenses are not

equitably apportioned, although the contracts con-

template that they should be.

The east-side lines operate their passenger trains

in their entirety to and from the Union Station in

St. Louis, usually hauling them with their own

locomotives. (R. 200.)

Passenger, mail, and express traffic passing

through St. Louis is interchanged between the east-

side and west-side carriers at the Union Station in

St. Louis. (R. 202.)

The Chicago & Eastern Illinois (an east-side

line) interchanges its through traffic direct with the

Frisco and Missouri Pacific (west-side lines) at

23d St., St. Louis, handling its freight with its own

power over the tracks of the Association, using the

Merchants bridge, but the west-side lines pay and

pear the transfer expense just As though the service

had been performed by the Association. (R. 90,

197.)

A history of the efforts nade by the west-side

lines; beginning in 1905, to obtain relief from the

transfer expense on traffic in one direction is given

at R. 91-95, 237-238, and 343-344. Only part of

this need be referred to. In August, 1914, the west-

side lines attempted to change the practice by de-

tlining to pay the transfer expense on eastbound

traffic. The eastern lines refused to accept the

freight unless the transfer was paid by the west-

side lines. (R. 268-269.) As a result several hun-

dred cars were handled between the western and

eastern lines many times. Congestions followed;

the Terminal became blocked. (R.92:) At a meet-

ing of the Board of Directors of the Association

held at this time it was voted to refuse to handle

the traffic unless the western lines guaranteed the

transfer charge. (R. 92-93.) At that meeting the

eastern lines were in a majority. (R. 93.) Mean-

while, many complaints had been made to the Com-

thission by shippers because of delay to their freight,

and the Commission took the matter up informally

with the carriers. Thereupon, the western lines, in

order to prevent further hardships upon their pa-

trons, yielded and resumed their old practice of pay-

ing the transfer charge on eastbound as well as on

westbound traffic. (R. 343-344.) In August, 1920,

90630—28——_3

the west-side lines instituted the contempt proceed-

ings referred to in Terminal R. R. Asso. v. United

States, 266 U.S.17. This court there held that the

subject should be first submitted to the Commis-

sion and thereupon the west-side lines filed the

complaint which began the present proceedings.

(R. 94.)

There was much evidence to support the finding

of the Commission regarding the generally ac-

cepted practice of carriers throughout the country

of reciprocally assuming the expenses of inter-

change service. This evidence consisted of a com-

prehensive and detailed statement of the practice

prevailing at a great many points of interchange

in the United States where investigation has been

made, supplemented by the testimony of experi-

enced railway traffic and operating officials who

were familiar with the general practice. (R. 104

182 ; 207-211 ; 220-223 ; 224-234 ; 238-239 ; 362-363;

385-386. )

This testimony shows that the following practice

generally prevails:

Where two carriers connect directly, the line

carrying the freight to the point of interchange, i.

e., the delivering carrier, delivers the freight upon

the joint interchange tracks. (R. 104-105, 107.)

Where no direct physical connection exists and it

is necessary to use the services of an intermediate

switching line, the customary practice is for the de-

livering line to assume and bear the expense of

making delivery of its freight to the receiving line,

using the intermediate switching line in order to

effect that delivery. (R. 105-107.)

Witness James E. Hutchison, Vice President in

charge of operations of the St. Louis—San Francico

Railway, described the practice as follows:

‘‘* * * The principle has been uni-

versal that a railroad bringing traffic to a

terminal which is to be delivered to another

railroad, either for placement at industries

on that line of road or for movement out

over that line of railroad, stands the expense

incident to such delivery.

In many cases the railroads do not have

direct connection one with the other and an

intermediate line of some description is

used. In such cases it has been the practice

that the line that originates the business or

brings it into a terminal for delivery to an-

other line compensates the intermediate line

for any service it may render, either by the

use of its rails or switching service which it

may perform in effecting the delivery.’’

(R. 220.)

In some instances the receiving line, instead of

the delivering line, pays the expense of intermedi-

ate switching, ‘‘But in any event, the practice is

always reciprocal between the lines.”’ (R. 222.)

The Car Service Rules of the American Railway

Association, an association representing practically

all the railroads of the United States, recognize

that there is an obligation on the part of carriers to

make delivery of through traffic to the receiving

carrier in its yard and on its designated track for

receipt of the traffic, either by direct delivery with

the power of the delivering line or by using an

intermediate-switching line to act as its agent in

effecting delivery of the through shipment. (R.

224.) The obligation of the inbound carrier has

not been fulfilled when the shipment has reached

the end of its rails; there is a further obligation,

that of placing the shipment in the proper channel

for its continuous movement to fina] destination.

This can be done only by the delivery of the ship-

ment in the yard of the outbound carrier. Whether

this is accomplished direct by the use of the in-

bound carrier’s power, or through the agency of

an intermediate-switching line, or through a recip-

rocal arrangement between the carriers whereby

the receiving line performs for the delivering line

the service for which the delivering line is respon-

sible, the principle is the same. Rule 6 of the code

of Car Service Rules of the American Railway

Association reads in part:

‘* Cars shall be considered as having been

delivered to a connecting railroad when

placed upon the track agreed upon and

designated as the interchange track for such

deliveries, accompanied or preceded by

proper data for forwarding and to insure

delivery, and accepted by the car inspector

of the receiving road.’’ (R. 225.)

Further obligation of the delivering line is rec-

ognized in American Railway Association Car

Servive Rule 14, which rule places upon delivering

line the responsibility for cost of transfer of ship-

ments delivered in cars which ean not be forwarded

by receiving line because of (a) defeetive equip-

ment; (b) improper loading or overloading; (e)

when delivering line does not desire its equipment

to go beyond junctions; (d) when ears ean not pass

approved clearances. Under these sections of rule

14 it is the recognized obligation of the delivering

earrier to not only make delivery in the yard of

the outbound carrier but to insure the through

and uninterrupted movement of the shipment by

the outbound earrier, or assume the costs of plac-

ing the shipment in condition for such forwarding

by the outbound line. (R. 225.)

Regarding traffie delivery at destination, there

is a recognized obligation on the part of the inbound

carriers to effect final delivery to consignee at billed

destination, either upon the rails of the inbound

carrier or upon the rails of a terminal switching

line within designated switching limits. The obli-

gation is further assumed when it is necessary to

effect delivery to a consignee on a terminal switeh-

ing line through an intermediate switching line.

(R. 226.)

In accepting a shipment at point of origin for

transportation to final destination there is no dif-

ference in principle between the obligation of the

carrier to make final delivery at destination and the

obligation to effect delivery to the outbound carrier

at the junction point where shipment leaves its line

in the through movement to destination. In the

first instance the inbound carrier assumes the ex-

pense of effecting actual delivery to consignee on

its own rails, on the rails of a terminal switching

line, or through an intermediate switching line and

a terminal switching line, and in addition recognizes

the terminal switching line and intermediate switch-

ing line as its agents. This is evidently the intent of

the American Railway Association Per Diem Rule

5 which reads in part:

*‘An amount for each car in switching

service may be reclaimed by each individual

switching road from the road for which the

service was performed. This amount shall

be based upon the average number of days,

not to exceed 5, for cars handled in terminal

switching service. * * *” (R. 227.)

(Italies ours.)

The Association makes a per diem reclaim as to

east and westbound through traffic moving across

the Mississippi river at St Louis and East St. Louis.

The reclaim made by the Association where west-

bound through traffic is involved is made upon the

delivering carrier, viz., the east-side line. Where

eastbound traffic is concerned the reclaim is like-

wise made against the delivering line which in this

instance is the west-side line. The practice of mak-

ing a per diem reclaim on the east-side lines as to

westbound traffic has been in effect at the St. Louis

terminal for 10 or 15 years. (R. 241-242.) This

evidence was adduced to show that, while the west-

side lines have paid the Association’s transfer

charge, nevertheless there was a recognition by the

east-side lines of the fact that the Association was

their agent in performing the transfer service in

that they honored the Association’s per diem

switching reclaims, under rule 5 of the Car Service

Rules of the American Railway Association, which

provides that such per diem shall be paid by the

line ‘‘for which the service was performed.”’ *

The situation at St. Louis as between the east-

side lines, on the one hand, and the west-side lines,

on the other hand, is entirely divorced from the gen-

eral practice, in that the west-side lines are required

to assume the intermediate switching expense on

through traffic in both directions. (R. 228.)

The practice between carriers in the method of

interchange—reciprocity in taking care of the

switching charges—is in effect at junctions where

the rates are on combinations of locals, as well as

where the rates are joint through rates. (R. 373;

375 ; 385-386. )

It was shown that the east-side carriers them-

selves follow the above practice generally when

*Compare Mo. Pac. R. R. Co. v. Reynolds-Davis Grocery

Co., 268 U.S. 366. In regard to per diem reclaims see /ndus-

trial Railways Case, 29 I. C. C. 212, 231; Birmingham So.

R. R. Co. y. Ala. Great So. R. R. Co., Director General,

Agent, 61 I. C. C. 551. Section 15 (8) of the Interstate Com-

merce Act, giving shippers the right to route traffic under

certain circumstances, recognizes that it is the duty of

each carrier in a through route to transport the property

over its own line “and deliver the same to a connecting line

eta * ° °°

interchanging traffic other than that passing be-

tween them and the west-side lines through East St.

Louis-St. Louis. For example, at Hast St. Louis

the east-side lines interchange traffic with each

other (traffic not crossing the river) through the

intermediary of the Association and the inter-

change expenses are borne reciprocally. (R. 137-

153.)

The evidence regarding the interchange practice

of carriers was practically undisputed; and only

two exceptions to the general practice were shown

(1) interchange at St. Louis between the Illinois

Traction System and the west-side lines, through

the intermediary of the Association, where the ex-

pense is borne by the Traction System on traffic in

both directions (R. 153-156), but this is no doubt

due to the fact that the service performed by the

Traction System in handling traffic over its bridge

into St. Louis is paid for by the west-side lines on

traffic in both directions (R. 90); (2) interchange

between certain carriers at Cincinnati, Ohio-Cov-

ington, Ky. There the expense of interchange be-

tween the Big 4 and the L. & N. is borne by the

L. & N. on traffic in both directions, but this is not

in fact an exception to the general rule because

the rails of the Big 4 do not extend to Covington.

(R. 199.)

Based on a test period of 28 months on west-

bound traffic, and of 17 months on eastbouna traf-

fic, the carload movement between the four west-

side lines and the east-side lines at St. Louis and

-_—

East St. Louis was divided, on the average per

month, 29 per cent westbound and 71 per cent east-

bound (R. 242-246 ; 247-248 ; 250-251; Exhibits 52,

53, 55, and 56.) On that basis the transfer charges

of the Association on this traffic during 12 months

embraced within both of those periods would have

divided $1,746,016.55 on eastbound traffic and

$713,161.69 on westbound traffic. These were the

aggregate transfer charges of the Association on

all traffic interchanged between the east- and west-

side lines, including traffic moving on joint rates

as well as on combination rates.

Evidence Regarding Rates

The evidence showed the various rate territories

between which joint rates are in force and those

between which the St. Louis-East St. Louis combi-

nations apply. (R. 279, 281, 283, 291, 292, 298,

329, 339, 342, 343.) In the opinion of one witness,

a traffic official, not over 15% of the traffic moves

on combination rates which are the same on St.

Louis as on East St. Louis. (R. 390.)

From all territory east of the Mississippi river,

except a zone within 100 miles east of East St.

Louis, the rates of the east-side lines are the same

to St. Louis as to East St. Louis. This has been

true since 1908. (R. 267.) From the 100-mile

zone mentioned, which includes a large bituminous

coal producing area, the rates are higher to St.

Louis than to East St. Louis. (R. 267.) Through

traffic from this zone to points west of St. Louis

90630—28——4

moves on joint rates and therefore the order in

question does not apply thereto. (R. 281, 283, 292,

298. )

On all traffic from the territory east of the Mis-

sissippi destined to St. Louis, and on all traffic

originating at St. Louis and destined to that ter-

ritory, the east-side lines pay and bear the transfer

charges of the Association. (R. 297.)

To territory within about 100 miles west of St.

Louis the rates of the west-side carriers from East

St. Louis are higher than from St. Louis, sometimes

to the extent of the Association’s transfer charge.

(R. 364.) No joint rates are in effect to this terri-

tory on traffic from points east of the Mississippi

(except from the 100-mile zone east of East St.

Louis) and this traffic moves on combination rates.

The St. Louis combination, and not the East St.

Louis combination, is applicable, because the St.

Louis combination is the lower, due to the fact that

the St. Louis-East St. Louis rates of the east-side

carriers are on a common level, while the rates of the

west-side lines from East St. Louis to this 100-mile

territory are higher than from St. Louis. With re-

spect to this traffic there is no question as to who

must bear the transfer expense, as it is included in

only one of the rate factors, i. e., the factor of the

east-side lines to St. Louis. On this traffic, there-

fore, the east-side lines have paid and borne the

transfer expense. (R. 99-102; 482; Ex. 7.)

To all territory west of the Mississippi (except

the 100-mile zone) the rates of the west-side lines

from East St. Louis are the same as from St. Louis.

(R. 364-365.)

On traffic from eastern points to western points

beyond the last-mentioned 100-mile zone, on which

the St. Louis and East St. Louis combinations are

equal, the east-side lines have refused to apply the

St. Louis combination, have forced the application

of the East St. Louis combination, and have thus

compelled the west-side lines to pay the transfer

expense out of their rate factor from East St. Louis.

As a result, the east-side lines receive a greater

net revenue on through traffic than they do on local

St. Louis traffic. As previously shown, St. Louis

is a station on the lines of the east-side carriers, and,

with the exception of the 100-mile zone east of

East St. Louis, their rates are the same to St. Louis

as to East St. Louis. Through the agency of the

Association their rails reach and serve industries

in St. Louis. The east-side lines absorb all switch-

ing and other charges necessary to effect such de-

liveries in St. Louis at the St. Louis rate. (R.

297.) Of course, on this traffic the east-side lines

pay the Association’s charge for transferring the

traffic across the river, but when the traffic is trans-

ported to a point on a west-side line beyond the

St. Louis switching district and beyond the 100-

mile zone, the east-side line refuses to pay the

transfer expense. Thus, on such through traffic the

east-side lines obtain a greater revenue (the full

St. Louis-East St. Louis rate, undiminished by ab-

sorption of transfer or switching expense) than it

would on the same traffic delivered locally in St.

Louis. (R. 345, 347.)

This is illustrated by Exhibit No. 73, a statement

of shipments from eastern points to Kansas, on

which the St. Louis-East St. Louis combinations

were equal. On each shipment the East St. Louis

combination was applied, consequently the east-side

line received and retained its full St. Louis-Kast

St. Louis rate ; and the west-side line was compelled

to pay the transfer charge out of its factor. The

testimony shows that on these shipments the east-

side lines received $3,471.64; that the transfer

charges (paid by the west-side lines) were $260.02,

whereas had the same shipments been billed and

delivered locally at St. Louis the transfer charges

would have been paid by the east-side lines and

therefore the net revenue would have been $3,-

211.62, or about 7.4 per cent less than they actually

received. (R. 345-347.)

There was much other evidence regarding the

rates of both the east-side and west-side carriers

directed to the opposing contentions that each

group of carriers had adjusted their St. Louis-East

St. Louis rates so as to compensate for the transfer

expense. This evidence shows, in general, that, due

principally to competitive conditions, the west-side

lines extended their St. Louis rates to East St.

Louis in the first instance without any increase to

compensate them for the transfer expense which

they were thereby obliged to assume, and that the

force of these competitive conditions have com-

pelled a continuance of that original adjustment,

while the east-side lines have been able to effect sev-

eral increases in revenue to offset the transfer ex-

pense which they necessarily assumed when they

equalized their St. Louis-East St. Louis rates.

This evidence is here summarized.

Due to the competition of the Alton, the west-

side lines extended their St. Louis rates to East

St. Louis in the first instance without any increase.

(R. 87-88 ; 254-257 ; 324.) Competition of the Cot-

ton Belt, the Illinois Central, the Missouri Pacific,

and the Burlington, as well as the Alton, each of

which has a line which reaches East St. Louis from

the east side, and which name the same rates from

East St. Louis as from St. Louis, yia other cross-

ings, has compelled a continuance of the original

adjustment, and has prevented the west-side lines

from increasing their St. Louis-East St. Louis rates

to an extent sufficient to cover the Association’s

transfer charges. (R. 354-358.) Action by State

commissions and the Interstate Commerce Commis-

sion in rate cases has also exerted an influence upon

the matter. (R. 235; 354-356.)

On the other hand, the evidence shows that when

the east-side lines equalized their St. Louis-East

St. Louis rates in 1908 they first increased their

East St. Louis rates and then extended the in-

creased rates to St. Louis. At the same time, sim-

ilar increases were made in their proportional

rates to upper Mississippi River crossings, and

these rates applied on traffic from all eastern points

to the western territory, except on transcontinental

traffic, a tremendous volume of through traffic,

vastly larger than the St. Louis traffic. (R. 265-

266; 342-343.) Further, in revising their rates

under the authority of the Commission’s order in

C.F. A. Class Scale Case, 45 I. C. C. 254, the east-

side lines added three miles to the actual East St.

Louis mileage in computing their rates to St. Louis,

this, of course, for the purpose of covering the ex-

pense of the river transfer. (R. 267, 273, 280.)

The scale of distance rates there prescribed re-

sulted in material increases. Before the revised

rates were made effective they were further in-

creased 15%, under the authority of The Fifteen

Per Cent Case, 45 I. C. C. 308. (R. 342-348.)

It is evident that whenever the local rates of the

east-side lines to St. Louis, thus increased to offset

the transfer expense, were applied to through traf-

fic, those lines received revenue for a service which

they did not perform and for which they did not

pay, but which was borne by the west-side lines.

The above is far from a complete statement of the

evidence submitted to the Commission. It is, how-

ever, illustrative of the general character of the evi-

dence and appears to be sufficient to indicate there

was substantial evidence to support the Commis-

sion’s order.

Proceedings in Court Below

On November 12, 1926, the 13 railroads, appel-

lants herein, filed their bill in the United States

District Court for the Northern District of Illinois,

Eastern Division, seeking to enjoin and set aside

the Commission’s order. (R. 1.) The United

States was named as defendant. The Commission

and the four west-side lines intervened as defend-

ants. All defendants filed answers. (R. 59, 62, 65.)

Final hearing was held before the three-judge court

November 29, 1926. (R. 74.) December 8, 1926,

the court entered its order dismissing the bill for

want of equity. (R. 68.)

Appellants’ Contentions

The various contentions of the appellants are

reducible to two propositions, viz.,

I. That the Commission had no power to make

the order.

II. That the order is not supported by substan-

tial evidence.

ARGUMENT

SUMMARY

I. The order is within the power conferred upon

the Commission. This court so held in Terminal

Railroad Asso. vy. United States, 266 U.S. 17.

II. The order is supported by substantial evi-

dence. Evidence required by section 15 (6) of

the Act in cases relating to divisions of joint rates

was not necessary in this case, because the order

does not prescribe divisions of joint rates. The

ania

reasonableness of the level of the rates was not in

issue and absence of evidence relating thereto does

not affect the validity of the order.

The Order Is Within the Power Conferred Upon the

Commission

The question whether the Commission has the

power to make an order fixing liability for the

transfer charges here under consideration is no

longer open to debate, because that particular ques-

tion was decided in the affirmative by this court in

Terminal R. R. Asso. v. United States, 266 U. S. 17.

In August, 1920, the four west-side lines who

were complainants before the Commission in the

ease at bar filed a petition and motion in the Dis-

trict Court of the United States for the Eastern

District of Missouri to have the east-side lines and

the Association adjudged guilty of contempt of

court for violating the decree entered in pursuance

of the mandate of this court in United States v.

St. Louis Terminal, 224 U. S. 383 and 236 U. S.

194, a proceeding brought by the United States

against the Association, the east- and west-side

lines, which owned its capital stock, and certain

others, alleging a combination in violation of the

Sherman Anti-Trust Act.

The substance of the decree referred to is stated

in the opinion of this court, 266 U. S. at pp. 23-25,

as follows:

*€1, The Terminal Railroad Association of

St. Louis is an unlawful combination con-

trary to the Anti-Trust Act of July 2, 1890

(26 Stat. 209), when it and the various bridge

and terminal companies composing it are op-

erated as railroad transportation companies.

The combination may, however, exist and

continue as a lawful unification of terminal

facilities upon abandoning all operating

methods and eharges as and for railroad

transportation and confining itself to the

transaction of a terminal business such as

supplying and operating facilities for the

interchange of traffic between railroads and

to assist in the collecting and distributing

of traffic for the carrier companies, switch-

ing, storing, and the like, and modifying its

contracts as herein specified. An election

having been made to continue the combina-

tion for terminal purposes, the defendants

are therefore perpetually enjoined from in

anywise managing or conducting the said

Terminal Railroad Association or any of its

constituent companies and from operating

any of the properties belonging to it or its

constituents otherwise than as terminal facil-

ities for the railroad companies using the

same, and from making charges otherwise

than for and according to the nature of the

services so lawfully authorized to be ren-

dered. Provided, however, that the right of

said Terminal Railroad Association as an

accessory to its strictly terminal business to

carry on transportation as to business exclu-

sively originating on its lines, exclusively

moving thereon, and exclusively intended for

delivery on the same is hereby recognized,

and nothing in this decree shall be construed

to deny such rights.”’

‘*‘ Paragraph 2 of the decree directs a re-

organization of the contracts between the de-

fendant railroad companies and the Terminal

Association by providing for the admission

of any railroad to joint ownership and con-

trol of the combined terminal properties on

terms of equality with the then proprietary

companies, and for the use of the terminal

facilities by any railroad not a joint owner

upon such terms as will, in respect of use,

character, and cost of service, place every

such railroad upon as nearly an equal plane

as may be, with respect to expenses and

charges, as that occupied by proprietary com-

panies, and by eliminating from the existing

agreement any provision which restricts any

proprietary company to the use of the facili-

ties of the Terminal Association.

‘¢ Paragraph 3 abolishes the practice of

billing to East St. Louis or other junction

points and then rebilling traffic destined to

St. Louis or points beyond.

‘‘Paragraph 4 abolishes any special or so-

called arbitrary charge for the use of the

terminal facilities in respect of traffic origi-

nating within the so-called 100-mile area that

is not equally applied in respect of traffic

originating outside of that area.

‘‘Paragraph 5 extends the effect of the

decree to all railroad companies thereafter

admitted to ownership or use of the terminal

facilities.

‘*Paragraph 6 is as follows: ‘Nothing in

this decree shall be taken to affect in any

wise or at any time the power of the Inter-

state Commerce Commission over the rates

to be charged by the Terminal Railroad As-

sociation, or the mode of billing traffic pass-

ing over its lines, or the establishing of joint

through rates or routes over its lines, or any

other power conferred by law upon such

commission.’ ”’

The proceedings in the District Court in the

contempt suit and the decree entered therein are

stated at pp. 26-27 of the opinion of this court, as

follows:

‘*. . . The parties so complained of (ap-

pellants here) appeared and moved to dis-

miss the petition and also filed answer. An

examiner was appointed, and, after the tak-

ing of evidence and a hearing, the court de-

nied the motion to dismiss and entered its

decree that the appellants ‘have continuously

since the entry of said final order and de-

cree, in contempt of this court, violated the

terms thereof and are still violating its said

terms—

***(a) In that defendants, the Terminal

Railroad Association of St. Louis and its

subsidiary companies are not acting in good

faith as the impartial agents of the various

proprietary lines.

‘**(b) In that the proprietary lines other

than the petitioners, through the domination

and control of the Board of Directors of de-

fendant, the Terminal Railroad Association

of St. Louis and its subsidiaries, compelled

the petitioners to pay the Terminal Rail-

road Association its transfer charges for

supplying and operating facilities for the

interchange of both through east bound and

through west bound freight traffie between

the east-side lines and the west-side lines.

** *(¢) In that the defendants [the east side

lines above named] . . . have not paid and

are not now paying the reasonable trans-

fer charges of defendant, the Terminal Rail-

road Association of St. Louis and its sub-

sidiary companies on west bound through

freight to the rails’ of the petitioners and

other defendants whose lines enter St. Louis

from the West. ...

‘* And the decree commands that within

60 days the appellant companies cease vio-

lating the final decree in the respects above

set forth, and that the east side lines ‘ be and

they are hereby required to pay within 60

days after the amount of same shall have

been ascertained and determined for the use

and benefit of said west side lines . . . the

total amount of the transfer charges of de-

fendant Terminal Railroad Assoeiation of

St. Louis and its subsidiary companies paid

by said west side lines on west bound through

freight of said east side lines to the rails of

said west side lines at St. Louis, Missouri;

from the date of the entry of said final de-

cree, to wit; March 2, 1914, to the date of

—

this order .. .’ And the decree prescribed

and directed how such total amount should

be determined. ”’ ‘

It is obvious from the above quotations that the

transfer charges referred to in the contempt pro-

_ ceedings were the same as those under considera-

| tion in the ease at bar. That the controversy there

was the same as here is shown by the following

quotation from page 27 of this court’s opinion:

“The proceedings were instituted by the

west side lines, not to vindicate the author-

ity of the court, but to enforce rights _

', claimed by them under the original decree. | |

| | The controversy is between them and the | |

east-side lines as to whether the former or

the later shall bear transfer charges on west-

bound through freight.”

This court reversed the decree of the lower court,

holding that the refusal of the east-side lines to

pay the transfer charges was not a violation of the

decree in the Anti-Trust suit.

This court further held that the subject matter

of the suit, which obviously was the same as in the

ease at bar, was one within the jurisdiction of the

Interstate Commerce Commission. In so holding

this court said:

‘‘ The making of rates is a legislative and

not a judicial function. Keller v. Potomac

Electric Co., 261 U. 8. 428, 440; Ohio Valley

Co. v. Ben Avon Borough, 253 U. 8S. 287, 289;

Louisville d& Nashville R. R. Co. v. Garrett,

231 U. 8. 298, 305; Interstate Commerce

Commission v. Humboldt S. S. Co., 224 U. 8.

474, 483; Prentis v. Atlantic Coast Line Co.,

211 U. S. 210, 226. The division of joint

rates is also legislative in character. The

Interstate Commerce Commission is author-

ized to establish through routes and joint

rates and to prescribe conditions upon which

such routes shall be operated and to fix divi-

sions of such rates among carriers. Section

15(1), (3), (6), Interstate Commerce Act,

Section 418, c. 91, 41 Stat. 485, 486. It is well

settled as a general rule that the question of

the reasonableness of rates or of divisions of

joint rates will not be considered by the

courts before application has been made to

the Commission. Texas & Pacific Ry. v.

Abilene Cotton Oil Co., 204 U. S. 426, 440;

Robinson v. Baltimore & Ohio R. R., 222

U.S. 506; Mitchell Coal Co. v. Pennsylvania

R. R. Co., 230 U.S. 247, 254-261; Skinner &

Eddy Corporation v. United States, 249 U.

S. 557, 562; United States v. Abilene d:

Southern Ry. Co., 265 U. 8. 274.. The Termi-

nal Association and its subsidiaries are com-

mon carriers by railroad and, like the pro-

prietary companies, are subject to regula-

tion by the Commission. The origina

“cree doés not purport to regulate rates or

prescribe divisions of joint rates, or fix lia

bility for such transfer charges. “On the

other hand, it expressly provides that it

shall not affect in any wise or at any time

the power of the Commission over charges to

be made by the Terminal Association or its

subsidiaries, or any power conferred by law

upon the Commission. In the exercise of its

powers under existing law, the Commission

is untrammeled by the decree and may make

and regulate rates on through freight and

the divisions thereof.’’ (Ibid. 30-31.)

Examination of the transcript of record in that

ease shows that the evidence therein was largely

the same as that adduced before the Commission in

the case at bar. As here, there was a full explana-

tion of the basis of making and applying rates

through the St. Louis-East St. Louis gateway, and

it was fully explained what traffic moved through

that gateway on joint rates and what moved on the

St. Louis-East St. Louis combinations. At pp.

440-441 of the record in that case (No. 425, October

Term, 1923) is a comprehensive statement of the

traffic which moved through that gateway on joint

rates, followed by a statement which reads:

WAN of the foregoing traffic is covered by

joint through rates.) On all other traffic than

that above described, the rates are made on

combination of rates published separately to

and from the Mississippi River. Such other

traffic embracing that moving between points

east of the Indiana-Illinois State Line, and

Lake Michigan, upon the one hand, and all

territory west of the Mississippi River, and

on, and north of the Arkansas, Missouri, and

Oklahoma-Kansas State Lines, including

New Mexico and Arizona, but exclusive of

Trans-Continental traffic, upon the other

hand. As to this traffic where the rates make

upon the Mississippi River combinations,

the current custom, and that heretofore fol-

lowed has been to allow the lines east of

Kast St. Louis their local rate. To the state-

ment made in this paragraph, the following

exception exists:

‘‘A—The Burlington interchanges eastern

traffic with western roads at St. Louis.

‘*B—In a comparatively few instances, the

lowest combination of locals make on 8t.

Lowtis, and not on East St. Louis; in such

instances the eastern lines absorb the bridge

tolls.

‘“‘C—On traffic moving between Llinois

and Missouri points within a short radius

east and west of St. Louis and East St. Louis,

the rates make on the Mississippi River

combination, with bridge tolls added.’’

See also pp. 265, 269, and 430 of that record.

In view of the facts in the case, it is evident that

the holding of the court that the subject matter of

the suit was within the jurisdiction of the Commis-

sion applies with equal force to instances in which

the traffic moves on combination rates as as to in-

stahees in which it moves ves on joint rates, 3, No dis-

tinction was made in the opinion as between the

two traffics. It follows, therefore, that the holding

of this court was that the entire subject matter is

within the jurisdiction of the Commission. After

the decision of this court therein—rendered Octo-

ber 14, 1924—the west-side lines filed their com-

plaint with the Commission.

POLAR LTC IP SLT PL PRI B PORES OLE AO ETN -

Appellants concede that the Commission has jur-

isdiction under section 15(6) but contend that the

order can not be sustained under that provision

because of lack of evidence. This contention will

be discussed under section II hereof. Appellants

also contend that the subject matter of this suit

“is not a ‘practice’ within the meaning of that word

as used in the Interstate Commerce Act, but if it

were a ‘practice,’ would be a practice not of the

plaintiffs but of the West Side Lines * * *”

We think it is clear that the practice was one within

the contemplation of the Act and that the evidence

shows it was a practice of the east-side lines.

Various provisions of the Act vest the Commis-

sion with jurisdiction over practices of carriers,

viz., Section 1, par. (6), read in connection with

par. (3), and Section 15, pars. (1) and (3), per-

tinent provisions of which read as follows:

‘*Section 1 (6) : It is hereby made the duty

of all common carriers subject to the pro-

visions of this Act to establish, observe, and

enforce ... just and reasonable regu-

lations and practices affecting all...

matters relating to or connected with the re-

ceiving, handling, transporting, storing, and

delivery of property subject to the pro-

visions of this Act which may be necessary

or proper to secure the safe and prompt

receipt, handling, transportation, and de-

livery of property subject to the provisions

of this Act upon just and reasonable terms,

and every unjust and unreasonable classifi-

ETE RE TT NE NE aS

cation, regulation, and practice is prohibited

and declared to be unlawful.’’

**(3) The term ‘transportation’ as used

in this Act shall include. , . all services

in connection with the receipt, delivery,

. . and transfer in transit . . . and han-

dling of property transported.”’

** Section 15(1): That whenever, after

full hearing, upon a complaint made as pro-

vided in section 13 of this Act, .. . the

Commission shall be of opinion .. . that

any individual or joint classification, regula-

tion or practice whatsoever of such carrier

or carriers subject to the provisions of this

Act, is or will be unjust or unreasonable

. or otherwise in violation of any of the

provisions of this Act, the Commission is

hereby authorized and empowered to deter-

mine and prescribe . . . what individual or

joint classification, regulation, or practice is

or will be just, fair, and reasonable, to be

thereafter followed, and to make an order

that the carrier or carriers shall cease and

desist from such violation to the extent to

which the Commission finds that the same

does or will exist, . . . and shall adopt the

classification and shall conform to and ob-

serve the regulation or practice so pre-

seribed.’’

**(3) The Commission may, and it shall

whenever deemed by it to be necessary or

desirable in the public interest, after full

hearing upon complaint . . . establish

through routes, joint classifications, and

joint rates, fares, or charges, applicable to

the transportation of... property,...

and the divisions of such rates, fares, or

charges as hereinafter provided, and the

terms and conditions under which such

through routes shall be operated; ... The

Commission shall not, however, establish any

through route, classification, or practice, or

ary rate, fare, or charge, between street elec-

tric passenger railways not connected in the

general business of transporting freight in

addition to their passenger and express busi-

ness, and railroads of a different character ;

nor shall the Commission have the right to

establish any route, classification, or practice,

or any rate, fare, or charge when the trans-

portation is wholly by water. . . .’’ (Italies

ours. )*

In the case at bar the east-side lines have followed

a very definite practice for many years respecting

all shipments interchanged by them with the west-

side lines and passing through St. Louis and East

St. Louis at combination rates made the same on

both points, and that is, in each instance they have

applied the East St. Louis combination and have

refused to apply the St. Louis combination, to the

The last sentence of this paragraph, prohibiting the Com-

mission from establishing any practice as between certain

types of carriers, is persuasive that in the absence of such a

provision the Commission would have such power and infers

that the Commission may establish practices as between other

carriers not within the prohibition, an inference which is

strengthened by the fact that this sentence was amended by

Transportation Act, 1920, by the insertion of the word

“ practice.”

end that the transfer charge would not be included

in the rate factor accruing to them and would be

included in the west-side lines’ factor. This prac-

tice was published by the east-side lines in the form

of a provision in their tariffs which were posted and

filed with the Commission. It was published in

the tariffs of all the east-side carriers applying to

and from St. Louis and East St. Louis. (R. 261.)

In the language of Witness Sudborough, General

Traffic Manager of the Pennsylvania System,

**To make the point clear, the provision

that I have read has the effect of preventing

the use of the St. Louis combination in mak-

ing rates where the East St. Louis combina-

tion is the same, that is, produces the same

through rate that would be produced by the

use of the St. Louis combination.’’ (R. 262.)

This tariff provision was published in 1914 after

the west-side lines had declined to pay the transfer

| eharges on eastbound traffic, and its intended effect

was to control the application of the rates so as to

cast the burden of the transfer charges upon the

west-side lines. (R. 343-344.)

Thus, the practice is one directly concerned with

the application of rates. The Commission’s order

/) regulates the > application of the existing rates; its

effect is to require the application of the St. Louis

combination on westbound through traffic, instead

of the East St. Louis combination, to the end that_

ansfer_ charge will have tobe paid by the—

east-side lines out of their rate factor to St. Lous.

i eel oe eo” “

\ }

— :

Its further effect is to require the cancellation of

the above-mentioned tariff provision of the east-

side lines. The order does not change the present

practice in respect of eastbound traffic, but on that

traffic leaves the East St. Louis combination appli-

cable; nor does it change the practice where the

St. Louis combination is the lower, as in the case of

traffic from eastern points to the 100-mile zone

west of St. Louis.

As a result of this practice the west-side car-

riers were damaged, and they had the right to com-

plain under section 13 (1) of the Act, which pro-

vides that any common carrier may complain to the

Commission of anything done or omitted to be done

by any common carrier in contravention of the pro-

visions of the Act. Penna. Co. v. United States,

236 U. 8S. 351; Chgo., Indpls. & Louisv. Ry. Co. v.

United States, 270 U.S. 287; United States v. N.Y.

Cent. R. R., 272 U. 8. 457, 462.

We think that this practice, closely related as it

is to the application of interstate rates of carriers

subject to the provisions of the Act, is one within

the contemplation of the provisions of the Act

quoted above and within the jurisdiction of the

Commission.

But the question of importance is not whether

the subject matter is a ‘‘practice’’ but whether

it is one within the power of the Commission under

any provision of the Act. Sou. Pac. Co. v. Inter-

state Commerce Com’n, 200 U. 8S. 536, 556-557.

We think that the matter is within the control of

the Commission under the comprehensive powers

conferred upon it (1) to require extensions of lines,

section 1 (21), Railroad Commission of California

v. Sou. Pac. Co., 264 U. 8. 331, Ala. & Vicksb. Ry.

Co. v. Jackson & Eastern Ry. Co., 271 U. 8. 244;

United States v. P. R. R. Co., 266 U. S. 191; (2)

to control the matter of physical connections be-

tween main lines of railroads, section 1 (18) to (21),

section 1 (4) and section 15 (3), Ala. & Vicks. Ry.

Co. v. Jack. & East. Ry. Co., supra; (3) to establish

through routes, section 15 (3), United States v.

Amer. Ry. Exp. Co., 265 U. 8. 425, St, Louis S. W.

Ry. Co. v. United States, 245 U. S. 136; (4) to

require carriers to make reasonable rules and regu-

lations with respect to the operation of through

routes, section 1 (4), Cent. R. R. Co. v. United States,

257 U. S. 247, 257; (5) to fix the terms and condi-

tions under which through routes shall be operated,

section 6 (13) and section 15 (3), United States v.

Amer. Ry. Exp. Co., supra, United States v. N.Y.

Cent. R. R. Co., 272 U. 8. 457, and, incidentally to

fix the point of interchange of traffic as between car-

riers forming the through route, Routing on Coal

from Western Maryland Railway Mines, 66 I. C. C.

103 and 74 I. C, C. 127, Chgo. Mil. & St. P. Ry. Co.

v. Un. Pac. R. R. Co., 88 I. C. C. 312; (6) to control

the movement, exchange and interchange of cars

used in the transportation of property and to en-

force just and reasonable rules, regulations, and

practices with respect to car service, section 1 (10)

to (17), Peoria & Pekin Union Ry. Co. v. United

States, 263 U. S. 528, United States v. Mich. Port.

Cement Co., 270 U. 8. 521, Ala. & Vick. v. J. & E.,

supra; (7) to require carriers to afford reasonable,

proper, and equal facilities for the interchange of

traffic, section 3 (3), Chgo. Indpls. & Louisv. Ry. Co.

vy. United States, 270 U. 8. 287, Penna. Co. v. United

States, 236 U. S. 351, Louisv. d& Nash. R. R. v.

United States, 238 U.S. 1, United States v. P. R. R.

Co., 266 U. 8. 191.

Of special relevancy is the power to require car-

riers to make reasonable rules and regulations with

respect to the operation of through routes, to fix the

terms under which through routes shalk be op-

erated, and to fix the point of interchange of traf-

fie as between carriers forming the through route.

As previously stated, the east- and west-side lines

maintain and operate through routes via the St.

Louis gateway. By virtue of their joint owner-

ship of the Association and their trackage rights

over its rails, the routes of the east-side lines ex-

tend to St. Louis and those of the west-side lines to

East St. Louis and consequently there is an over-

lapping of their routes between St. Louis and East

St. Louis. In a real sense the question presented

to the Commission was, In the operation of such

an overlapping through route, what should be the

point of interchange of the traffic, St. Louis or East

St. Louis? Would a reasonable rule or regulation

with respect to the operation of such a through

route require the east-side line to carry its traffic

to the point of interchange with the west-side line

in St. Louis, and, conversely, require the west-side

line to carry its traffic to the point of interchange

with the east-side line in East St. Louis?

As a matter of physical handling there have

been two points of interchange, one in East St.

Louis between the east-side line and the Associa-

tior, the other in St. Louis between the Association

and the west-side line, but East St. Louis has been

considered the point of interchange as between the

east- and west-side lines on through traffic in both

directions because the west-side lines have borne

the transfer charge on all such traffic. The west-

side lines urged that under a reasonable rule or reg-

ulation with respect to the operation of the through

routes the point of interchange of westbound traf-

fic should be at St. Louis.

Under its power to fix the terms and conditions

under which such a through route should be oper-

ated, the Commission would have authority to re-

quire that on westbound traffic the east-side line

should take the traffic to the point of interchange

with the west-side line in St. Louis. In effect, the

order of the Commission requires this to be done; it

requires that on westbound traffic the east-side car-

rier shall transport the traffic to the end of its line,

St. Louis, and there interchange it with the west-

side line, or, what is equivalent, pay the transfer

charge of the Association.’

The duty on the part of a common carrier, when

it had received goods for transportation beyond the

terminus of its line, to make delivery to the next

succeeding carrier in the route, was recognized by

the common law. Myrick v. Michigan Central R. R.

Co., 107 U. S. 102. The duty is now imposed by

the Interstate Commerce Act. Under the decree in

United States v. St. Louis Terminal, supra, the As-

sociation is enjoined from operating its properties

otherwise than as terminal facilities for the rail-

roads using the same—as their agent in performing

the intermediate switching service in the terminal.

When the east-side line delivers westbound traffic to

the Association for transfer across the river,

whether for delivery to a consignee in St. Louis or

to a west-side earrier for further transportation,

it engages the Association as its agent. Missouri

Pae. v. Reynolds-Davis, 268 U.8., supra. In such

case the only connection between the east-side line

and the west-side line is in St. Louis. Therefore,

it is the duty of the east-side line to make delivery

to the west-side line in St. Louis, and it is its duty

The fact that the through routes were already in existence

by the voluntary act of the carriers, and that they were not

established by the Commission, does not affect the power of

the Commission to require reasonable rules and regulations

with respect to the operation of them. Central R. R. Co. v.

United States, 257 U. S. 247, 257-258; cf. United States v.

N.Y. Central R. R., 272 U.S. 457.

to pay its agent for the transfer service which it

performs for it.

Of course, under section 15 (6) the Commission

has power to fix the divisions of joint rates. There-

fore, in respect of traffic moving on joint rates, it

could, upon proper evidence, have fixed liability for

the transfer charges by adjusting the divisions as

between the east- and west-side lines. This it did

not do, but confined its order to traffic moving on

the Mississippi River combination. It would not

seem to be a reasonable or logical construction of

the Interstate Commerce Act that the Commission

would have power to decide which of the two groups

of carriers should bear the transfer expense in

instances where the traffic moves on joint rates and

would lack that power in instances where the traffic

moves on combination rates. This court said

plainly in Terminal R. R. Assn. v. Umted States,

supra, that the Commission has power over the sub-

ject matter of the transfer charges under pars. (1),

(3), and (6) of section 15. The Commission’s

power over divisions of joint rates, including the

power to make an order, is complete under par. (6)

of section 15. If the court had been referring only

to divisions of joint rates, reference to pars. (1)

and (3) of section 15 would have been surplusage.

The language of the court is:

‘The Interstate Commerce Commission

is authorized to establish through routes

and joint rates and to prescribe the terms

and conditions upon which such routes shall

be operated and to fix divisions of such rates

among carriers. Section 15 (1), (3), (6),

Interstate Commerce Act.” (Ibid. 31.)

On the same page, the court pointed out that the

original decree did not purport to (1), regulate

rates or (2) prescribe divisions of joint rates, or

(3) fix liability for such transfer charges. ‘On

the other hand,’’ the opinion continues, ‘‘it ex-

pressly provides that it shall not affect in any wise

or at any time the power of the Commission over

charges to be made by the Terminal Association or

its subsidiaries, or any power conferred by law

upon the Commission.”’

It seems that the language above quoted must be

construed as saying that where joint rates are in

effect the Commission can control the question as

to what group of carriers shall bear the transfer ex-

pense by fixing the divisions of the joint rates under

section 15 (6); and where combination rates are

applicable, the Commission can control that ques-

tion under section 15 (1) or (3) or (1) and (3).

The Order Is Supported By Substantial Evidence

We have hereinbefore referred to some of the

important evidence adduced before the Commis-

sion. The evidence fully supports all the facts

found by the Commission; and this is not denied.

The evidence was ample to support the order.

Evidence required by section 15 (6) of the act in cases relating to

divisions of joint rates was not necessary in this case because the

order does not prescribe divisions of joint rates

Section 15(6) requires that in ‘“‘preseribing and

determining the divisions of joint rates,’’ the Com-

mission shall give due consideration to certain speci-

fied matters, such as the efficiency with which the

carriers concerned are operated, the amount of rey-

enue required to pay their respective operating ex-

penses, taxes, ete., ‘‘ and any other fact or circum

stance which would ordinarily, without regard to

the mileage haul, entitle one carrier to a greater or

_less proportion than another carrier of the joint

rate, fare, or charge.”’

Appellants assert there was no evidence upon

these matters and therefore the order is void. But

this provision has no application to the case at bar,

because the order does not preseribe divisions of

joint rates. The order has no reference to joint

rates and no application whatever to traffie moving

on joint rates. On the contrary, it unmistakably

applies only to traffic moving on combination rates.

These combination rates are through rates—that is,

they are combinations of separately established rates

applied to through transportation—but they are not

joint rates. The distinction between joint rates, on

the one hand, and through rates made by combining

separately established rates, on the other hand, is

clear, and has often been noted by this court. (St

Louis S. W. Ry. Co. v. United States, 245 U. S.

136, 139, note 2; Central R. R. Co. v. United States,

257 U. S. 247, 258; Virginian Ry. v. United States,

272 U.S. 658, 666.) If there were any doubt as to the

meaning of the term ‘‘joint rates’’ as used in sec-

tion 15(6), it could easily be resolved by reference

to other provisions of the Act, especially section

6(1) which reads in part as follows:

“That every common carrier subject to the

provisions of this Act shall file with the Com-

mission created by this Act and print and

keep open to public inspection schedules

showing all the rates, fares, and charges for

transportation between different points on

its own route and between points on its own

route and points on the route of any other

carrier by railroad, by pipe line, or by water

when a through route and joint rate have

been established. If no joint rate over the

through route has been established, the sev-

eral carriers in such through route shall file,

print and keep open to public inspection as

aforesaid, the separately established rates,

fares, and charges applied to the through

transportation.”’

It follows indubitably that section 15 (6) has

reference only to joint rates and not to separately

established rates applied to through transportation.

The through rates in question being made on the

Mississippi River combination, there is, of course,

no occasion for and no possibility of the Commis-

sion fixing ‘‘divisions’? of them as between the

east-side and west-side carriers, for each neces-

sarily receives its separately established rate to or

from the river. For these reasons, the absence of

evidence upon the matters refered to in section

15 (6) would have no effect upon the validity of this

order. Compare New England Divisions Case, 261

U. 8. 184; United States v. Abilene & So. Ry. Co.,

265 U. 8. 274; Brimstone R. R. & Canal Co. vy.

United States, — U. 8. —, decided Feb. 20, 1928.

The reasonableness of the level of the rates was not in issue and

absence of evidence relating thereto does not affect the validity

of the order

It is further contended that there should have

been a showing of the services performed by the

east-side carriers as compared with those per-

formed by the west-side carriers under their re-

spective rates, including evidence of distances and

the like. But such evidence would not have con-

tributed to a decision of the issue presented, and

was unnecessary as a matter of law, in view of the

showing that the rates of both groups of carriers

applied to both St. Louis and East St. Louis, and

that, therefore, the rates of both groups of car-

riers included the transfer services. Stated differ-

ently, the rates of the east-side lines to St. Louis

included the transportation service to St. Louis and

delivery in St. Louis, and under those rates, when

applied to joral St. Louis traffic, the east-aide lines

paid and bore the transfer expense, that expense

being included in their rates. Likewise, the rate

of the weet-cide lines from Kast St. Louie included

the transfer expense Heme, in the came of through

shipments moving on the 81 Lowe Bast 84 Louk

combination, the situation is presented of a two-

factor combination, ei‘her factor of which, if ap-

plied separately, would include the transfer charge.

In determining which carrier, under these circum-

stances, should pay the transfer charge, there would

be no necessity of considering the measure of those

rates. Raising or lowering the St. Louis-East St.

Louis rates of either group of carriers would not

affect the question at issue, i. e., which of the two

groups of carriers should bear the transfer charges

on through shipments.

Under these circumstances it was not necessary

that the Commission have before it evidence bear-

ing on the question of the reasonableness of the

rates, and even if there was a total absence of such

evidence, which we do not concede, the validity of

this order would not be affected. The order, as

previously explained, relates to the application of

existing rates and does not raise or lower the level

of those rates. If as a result of the Commission's

requirement that they pay the transfer charges on

westbound traffic, the revenues of the east-side lines

thould be impaired, they are at liberty to propose

readjustments of their rates, subject of course, to

review by the Commission.

The evidence shows, it may be added, that the

tart side lines, as a group, are in a more prosperous

Seancial condition than the west-cide lines (Ex.

TT), amd therefore they are better able to bear the

burden of thee tranm|efer charges, whech burden se

Might fully theirs than the weet cide limes

CONCLUSION

We respectfully submit that the decree of the

District Court should be affirmed.

J. Stantey Payne,

For Interstate Commerce Commission.

P. J. FaRRew.,

Of Counsel.

MAR 6 }:

can ae i

fig, hdl

EA pti

ay i

IN THE

i |

TABLE OF CONTENTS.

Page

Suceinct and Accurate Summary of Salient Facts

in Record and Résumé of Contentions of West

and East-side Lines With Respect Thereto....

IL.

As the Terminal is a Jointly Owned Facility for

Interchanging Traffic, Law Requires that Its

Sr 4 ag) wid be — Borne by East and

Statute Empowers Commission to Order FEast-

Side Lines to Make P and Lawful Delivery

and to Participate in Burden and Expense of

Interchange Without saan or Adjudica-

Appellants Admitted Before this Court that Fun.

damental Question Involved Here is the Point

of Interchange and that the Commission Has

Sey GP REED BO ecsccsoccdocesevessees

ii Table of Contents Continued.

VIL. ”

Order of Commission is Valid and is a Lawful Ex-

ercise of Power Even Though the Interchange

Arrangements Condemned Did Not Constitute

a ‘‘Practice’’ Within the Meaning of that Term

i ee EE ASO coco ce recdsereseuesecins 49

ED oboe -nbcndenbcocadesnepedvssioes cess 55

INDEX OF CASES.

Associated Jobbers of Los Angeles v. Atchison, T.

OG FS Gn BOE OG BBs oc vec ccccens.

Atchison, T. & S. F. Ry. Co. v. United States, 232

Si SU EM MA cccvevcndcinccecocaaves 54

Business Men’s League of St. Louis v. A. T. &

8. F. By. Co., 44 LC. C. 308, 1. c. 311........ 15, 55

Central R. Co. of N. J., et al., v. United States, et

* £9 &§ APY Aree 54

Chicago Junction Case, 264 U.S. 258, 1. c. 267.... 50

Chicago, M. & St. P. Ry. Co. v. Des Moines U. Ry.

Co., 254 U. 8. 196, l. c. 204............6- 25, 28, 56

Chicago, M. & St. P. Ry. Co. v. Minneapolis Civic

Pv) % gs F See Prerrrerires

Chicago, R. I. & P. Ry. Co. v. Baltimore & O. R.

Se ee ie Ms Oe Ono ons cectccccoccsceces 33

Class and Commodity Rates, 32 L. C. C. 471, L. ¢.

UE 4 cdnkoneacessatooduae abeteashecccens 15, 55

Control of Subsidiaries by Terminal R. Ass’n, 99

Ee Ms MR cckc ccecespnenndecoeeenpeseten 2

Interstate Commerce Commission v. Atchison, T.

& 8. F. Ry. Co., 234 U.S. 294...........0005- 32

Louisville & Nashville R. Co. v. United States, 238

Ws A GED cbeccccoccvcecsceseccesscers 54

Manufacturers Ry. Co. v. St. L., I. M. & 8. Ry. Co.,

oo BSE err ee 14, 55

Myrick v. Michigan C. R. Co., 107 U. 8. 102, L e.

Dt da cheadnedesncenceudnesueanesaceus 33, 52, 55

Table of Contents Continued. iii

Page

National Wholesale Grocery Co. v. Dir. Gen., 62

os Fey Perri te 32

New England Divisions Case, 261 U. S. 184; 62

LO GO Gib: OB 1. GG GBR. oc cccccccccccess. 31

Northern Pacific v. Solum, 247 U. S. 477, 1. ¢c.483.. 54

113 I. C. C. 681, 1. ¢. G82, GOO... .cccccccccccees 4,49

Pennsylvania Co. Vv. United States, 236 U.S. 318.. 54

Peoria & Pekin U. Ry. Co. Case, 115 IL. C. C. 469... 27

Peoria & Pekin U. Ry. Co. Case, 93 L C. C. 3,

RE oc ckn csc ueneseenkeaseucscewuesaees 33, 27

Postal Telegraph-Cable Co. v. Western Union Tele-

graph Co., 59 L. C. C. 512, 1. c. 516............ 54

Richmond C. of C. v. Seaboard A. L. Ry. Co., 44

5k ee se koe ed kokbesiccensbuss 26, 51

St. Louis C. of C. v. Dir. Gen., 74 L. C. C. 308,

a rn cadens Kuesserensceuhvapebassedndses 3

St. Louis Terminal Case, 34 I. C. C. 453, 1. ¢. 456. .15, 55

State of Oklahoma v. State of Texas, 256 U. S.

CI EN schoo puhaeees si bube bees seeneehes 44

Swift & Co. v. Dir. Gen., 56 I. C. C. 309, l.e. 312... 14

Tap Line Cases, 234 U. 8. 1, 1. c. 29...........«- 50

SD COP FUTIS GEG wc ec veccccccvevccsenes 33, 52, 55

Terminal R. Ass’n of St. L. v. United States, 266

U. 8. 17, lc. 27..........-. +20, 26, 35, 36, 43, 53, 56

Co SR pene 33, 52

236 U. S. PC eee eet 14, 24

Vicksburg v. Henson, 231 U. 8S. 259, 1. ¢. 269, 273.. 43

Wharton Steel Co. v. Dir. Gen., 59 T. C. C. 11, 1. ¢. “

errr errr re rr ree Tr rer

Whitaker-Glessner Co. v. Baltimore & O. R. Co.,

Se ys es ko cee coeccvessoescsetas

IN THE

Supreme Court of the United States

Ocroser Term, 1927.

No. 404.

The Baltimore & Ohio Railroad Company; William W.

Wheelock and William G. Bierd, Receivers of the

Chicago & Alton Railroad Company; Chicago &

Eastern Illinois Railroad ~_y @ The Cleve-

land, Cincinnati, Chicago & St. Railway

Company; Illinois Traction, Inc.; Lllinois Central

Railroad Company; Litchfield & Madison Railway

Company; Louisville & Nashville Railroad Com-

pany; Mobile & Ohio Railroad Company; The New

York, Chicago & St. Louis Railroad Company; the

Pennsylvania Railroad Company; Southern Rail-

road Company, and Wabash Railway Company,

Appellants,

vs.

The United States of America, The Interstate Com-

merce Commission; The Chicago, Rock Island &

Pacific Railway Company; Missouri-Kansas-Texas

Railroad Company; Missouri Pacific Railroad

Company, and St. Louis-San Francisco Railway

Company,

| Appellees.

| BRIEF FOR WESTERN CARRIERS, APPELLEES.

Succinct and Accurate Summary of Salient Facts in

Record and Resume of Contentions of West and

East-side Lines With Respect Thereto.

This brief is filed by the Appellees who were com-

plainants in the proceeding before the Interstate Com-

PDS ARE ETD CSRS GE SPS FOS OL TT EAE, IRL IIS COLETTE I ES

merce Commission and they will be hereinafter re-

ferred to as the west side lines.

A tremendous amount of through trans-river traffic,

carload as well as less-than-carload, is interchanged

between the east and the west-side lines in the St.

Louis-East St. Louis switching district; for the mile-

age of the carriers entering that gateway from all di-

rections is 80,000, or about 30 per cent of the entire

mileage in the United States (Ex. No. 4, p. 6)... The

interchange facilities, therefore, provided (the Ter-

minal Railroad Association of St. Louis and its sub-

sidiary companies) are large, valuable and extremely

expensive to maintain. The Terminal’s* investment

in road and equipment and improvements on leased

properties in 1924 amounted to $45,463,369.45 (Ex. No.

80, p. 5). Its capital (stock and funded debt) amount-

ed to $48,848,100.00. It operates 372.35 miles of track

solely in switching and terminal service (Ex. No. 80,

pp. 1, 7; Ex. No. 58, pp. 3, 18, 21). Its properties, in-

cluding two bridges across the Mississippi River, are

operated as one comprehensive terminal facility per-

forming terminal and interchange service for the

twenty-eight lines with which it connects. It has over

6,000 employees (Control of Subsidiaries by Terminal

R. Ass’n, 99 I. C. C. 698). Its operating expenses for

‘the year 1924 amounted te $9,096,413.70 (Ex. No. 80,

p.6) It interchanged with its connections during 1924

a total of 3,883,116 cars, or more than 10,000 ears a day.

(Control of Subsidiaries by Terminal R. Ass’n, 99

I. C. C. 698.) The distance between St. Louis and

East St. Louis across the Mississippi River is usually

1 The exhibits referred to in this brief are those introduced in the

hearing before the Interstate Commerce Commission or filed thereafter

by agreement of parties.

2 When we refer to the Terminal herein the subsidiary operating com-

panies are included.

figured on a three-mile basis (St. Louis Chamber of

Commerce v. Dir. Gen., 74 I. C. C. 308, 1. ec. 310). The

through trans-river freight traffic involved herein is

interchanged in switching service (Ex. No. 58, pp. 3,

13, 21).* Some of the less than-carload through traffic

is interchanged by certain transfer companies (Ex. No.

52, pp. 1, 2).

Prior to the order of the Interstate Commerce Com-

mission (Rec. 27-29), the four west side lines, Appel-

lees herein, were exclusively saddled with the con-

tinuous duty of producing the large and heavy oper-

ating expenses (Rec. 288, lines 31-35) of the Terminal

in interchanging this through trans-river traffic with

their eastern road-haul connections. It involved an

annual expense of approximately $3,000,000 to these

four west side lines and the thirteen east side trunk

lines shared no part of the burden and bore no part of

the expense. Based upon a test period of 28 months

on westbound, and 17 months on eastbound traffic, the

eastbound through traffic constituted 71 per cent and

the westbound traffic 29 per cent, of the total inter-

changed in both directions. The east side lines, there-

fore, receive about three times more traffic than they

give to the west side lines. If the transfer charges,

during one year embraced within the foregoing period,

sUnder the decree of the United States District Court the Association

was permitted to exist and continue ‘‘as a lawful unification of terminal

facilities upon abandoning all operating methods and charges as and

for railroad transportation and confining itself to the transaction of a

terminal business such as supplying and operating facilities for the in-

terchange of traffic between railroads and to assist in the collecting and

distributing of traffic for the carrier companies, switching, storage and

the like, and modifying its contracts as herein specified’’ (Ex. No. 50,

p. 2). The proprietary companies were enjoined ‘‘from in anywise

managing or conducting the said Terminal Railroad Association or any

of its constituent companies and from operating any of the properties

belonging to it or its constituents otherwise than as terminal facilities

for the railroad companies using the same, and from making charges

otherwise than for and according to the nature of the services so law-

fully authorized to be rendered’’ (Ex. No. 50, p. 2).

EPMO IE, TENET LLL foe EAM, AR Seo OTM SDL

Ee on Rey RAT Ca RAR RD RE AS a? . ae. os

had been borne by the east side lines on westbound

traffic, and by the west side lines on eastbound traffic,

the thirteen eastern carriers combined would only

have paid $713,161.69, while the west side lines would

have paid $1,746,016.55. These figures included car-

load but not 1. ¢. 1. traffie (113 I. C. C. 681, 1. ¢. 682, 3rd

Par.; Friseo’s Ex. No. 52; Rock Island’s Ex. No. 53;

Missouri Pacifie’s Ex. No. 55; Katy’s Ex. No. 56).

- However, the Commission’s order involved here covers

;

}

only that part of the westbound through traffic moving

on a combination of locals and a subsequent order

covering westbound traffic Moving under joint rates

undoubtedly largely depends upon the decision of this

Court in this ease (113 I. C. C. 681, 1. ¢. 690, 3rd Par.);

so that, as a result of this long-continued litigation,

if the west side lines are accorded the legal redress to

which they are entitled, and which they are asking for

(the assumption of the burden of interchange by the

east side lines on westbound traffic only) the four west-

ern roads will still be assuming the burden and expense

of interchanging approximately 71 per cent of the total

traffic, and the remaining 29 per cent of the total traf-

fic will be borne by the thirteen east side trunk lines

as they participate in the movement. The Appellants

contend that they should not even b compelled to as-

sume the burden and bear the expense of this com-

paratively small amount of the total, notwithstanding

the fact that during the year 1924 their railway op-

erating revenues and their net railway operating in-

come averaged $32,593 and $4,944, respectively, per

mile of road, while the same revenues and income for

the four west side lines averaged only $16,900 and

2.826, respectively, per mile of road (Press’ Ex. No.

77; Ree. 387).

ecratngy Ravens : Pons OR

Furthermore, the east side lines since 1906 have as-

sumed the burden and expense of delivering traffic

consigned to St. Louis proper, including all freight to

industries on the rails of these west side lines in the

St. Louis switching district, but from 1906 to the ef-

fective date of the order herein in 1926 they persist-

ently refused to so deliver traffic consigned to points

beyond St. Louis, although their rates on the traffic des-

tined beyond St. Louis, are exactly the same as their

rates on traffic consigned locally to St. Louis. In 1906

when the east side lines recognized St. Louis and East

St. Louis as one community, entitled to the same

rates and the same_ services of delivery and

transfer, they increased their East St. Louis rates from

116 to 117 per cent, and applied the East St. Louis

rates thus increased to St. Louis. From that time on,

they absorbed the transfer charges on traffic consigned

to or from St. Louis proper. However they appliec

these increased rates not only to the local traffic but

also to the traffic involved herein and moving to points

beyond St. Louis but refused to assume the same bur-

den and expense of delivery with reference thereto that

they assumed on local St. Louis traffic. No explana-

tion whatever was made in the record by the east side

les as to why they applied the increased rates in

1906 to the traffic consigned to points beyond St. Louis

which is many, many times more than the local St.

Louis traffic, and then refused to perform thereon the

same service that they did on freight for St. Louis

proper. They continued to compel the west side lines

to receive the traffic going beyond St. Louis at East St.

Louis, notwithstanding the fact that their East St.

Louis rates were increased. No law justified such ac-

tion except the law that might makes right and the fact

ERIE NN SIR

Sen at

te Leta ey arias

lata ht hag ale hs hgh ee Dalat

rae a

that there are thirteen trunk lines on the east side and

four trunk lines on the west side with equal represen-

tation on the board of directors of the Terminal Rail-

road Association. The eastern carriers have thereby

perpetuated this unjust burden on the western car-

riers long after the initial cause which compelled the

west side lines to absorb the charges in both directions

had lost all its force, for in 1877 when the west side

lines were forced through the compulsion of competi-

tion to meet the action of the Chicago and Alton by

absorbing the transfer in both directions, the railroads

themselves controlled the routing of traffic and there

was no interchange and terminal facility serving both

the west and the east banks of the River and jointly

owned, controlled and used by the east and the west

side lines with supposedly equal rights, benefits and

burdens.

The rates of the east side lines to St. Louis—East St.

Louis have received a series of increases since 1906

and they are today approximately and on the average

100 per cent higher (Appendix A, infra; Exhibit No.

72), so that the volume and measure of their rates

are, according to the undisputed data in this record,

ample and adequate for them to participate recipro-

cally as the law requires them to do in the burden and

expense of interchanging through traffic with their

western road-haul connections.

The legal issues and contentivns of the respective

parties.

The ultimate legal question involved herein is

whether the Commission has the power under the Act

: Ee at ee DA GS Te A Pers wr ‘

TK sitet fo A4 Kid (Pv

(a) to adjudicate and order the precise point

of interchange or delivery between road-haul car-

riers in handling through freight,

(b) to compel carriers to share and participate

in the burden and expense of interchanging

through vroad-haul traffic, and

for through routes on traffic destined to points be-

yond their own rails.

The Commission’s order requires the east side lines

to share in the burden and_expense of interchanging

such through traffic involved by compelling them to

absorb the transfer or switching charges of the joint

agencies in one direction only and thereby deliver

westbound through traffic on the west bank of the river

(St. Louis).

Appellants contend that this order is invalid be-

cause :

(a) The former method of interchanging and

delivering through freight by which the west side

lines assumed the burden and expense of inter-

changing and delivering in both directions, did

not constitute a ‘‘practice’’ within the meaning

of the Act, and

(b) That the Commission cannot either compel

a carrier to make a lawful and proper delivery

as a part of its road-haul duties, or participate in

the burden and expense of interchanging through

traffic upon which it enjoys road-haul revenue,

unless the complainant also raises an issue as to

the level, measure or volume of the rates and di-

visions under which such traffic happens to move.

Appellees contend that these legal issues so raised

are without merit because:

(a) The order of the Commission herein is a

valid and lawful exercise of its power under those

provisions of the act which do not relate to prac-

tices. It is, therefore, immaterial whether the in-

terchange arrangements condemned and corrected,

constitute a ‘‘practice’’ within the meaning of that

term as used in certain other provisions of the

act. The provisions of the Act not relating to

practices relied upon by Appellees before the com-

mission are hereinafter discussed. (Chapter VII,

infra.)

(b) The Commission can compel a carrier to per-

form such services and incur such expenses

as are a part and parcel of its road haul transpor-

tation duties under existing rates, such as making

a delivery of through traffic to its road haul con-

nections and participating reciprocally in the bur-

den and expense of interchanging freight, without

considering rates and divisions; because the obli-

gation of a carrier under its line-haul rates includes

such services and expenses, irrespective of the

measure, volume or level of the line-haul rates. The

carrier is thereby simply fulfilling the law’s re-

quirements as to service under those rates. (Chap-

ter ITI, infra.)

(ec) That the provisions of the Act relied upon

by Appellees (paragraphs (3), (4), (6), (10),

and (11) of Section 1, paragraphs (1) and (.:) of

Section 3, and paragraphs (1) and (3) of Section

15 of the Act) may be enforced without a ecneur-

rent issue being raised under paragraph (6) of

Section 15 of the Act relating to divisions; because

the former are distinct, separable and independent

of the provisions relating to rates and divisions.

(Chapter III, infra.)

(d) That even if complainants before the Com-

mission were required to raise an issue as to the

level or measure of the rates and divisions in con-

nection with the enforcement of duties that are in-

herently a part of a carrier’s obligation under ez-

isting line-haul rates, maximum or minimum, to

wit, proper and lawful delivery, the east side lines

are foreclosed and estopped from raising such a

question for the reason that they formally ten-

dered in their answers before the Commission an

issue as to rates and divisions as an affirmative

defense to the complaint (Chapter V, infra).

Having thus attempted to state tersely the legal

questions raised and the contention of the parties with

reference thereto, we will now endeavor to briefly sum-

marize the pertinent facts of record. Having in mind

the issues as aforesaid, the relevancy of the facts here-

inafter set forth will be readily grasped.

Force of competition compelled west side lines to as-

sume burden of transfer in both directions without

compensation therefor.

For many years after the entrance of railroads into

St. Louis and East St. Louis, the shippers paid the

river transfer charges on through and local traffic in

both directions (Ex. No. 5, p. 92). When the Chicago

and Alton completed its line from East St. Louis to

Kans..s City, Missouri, over the Mississippi River at

Louisiana, Missouri, in 1877, it accepted westbound

traffic from, and delivered eastbound traffic to, the

east-side lines at East St. Louis. In order to partic-

ipate in the business, the west-side lines were forced

to take similar action. They, in turn, accepted west-

bound traffic from, and delivered eastbound traffic to,

the east-side lines at East St. Louis by absorbing the

transfer or bridge charges on through trans-river

traffic in both directions. When the west-side lines so

assumed the burden and expense of performing the

interchange service between the west and east bank of

the river in both directions, they did so without any

increase or inflation in their rates to compensate them

for the additional service.

Said Mr. Maxwell, Vice-President of the Wabash,

and a leading witness for the east-side lines (Ree.

274):

‘*In 1877 when the Chicago & Alton completed

its bridge at Louisiana, Missouri, it entered the

traffic between St. Louis and the west via Louis-

iana, thus establishing the St. Louis rates between

East St. Louis and points west of St. Louis, with

the exception of a small portion of nearby terri-

tory west of the Mississippi River. All other west-

ern roads at St. Louis voluntarily met the action

of the Chicago & Alton, and thus established be-

tween East St. Louis and all points west the St.

Louis basis of rates, which basis is still in effect.

* * * Conditions as to the western roads under

which St. Louis rates were made voluntarily by

them from East St. Louis have also remained un-

changed to this day.”’

Pic SOE EEOC EL TS NET

Under the compulsion of competition, therefore,

East St. Louis became the poiut of interchange be-

tween the two sets ot carriers. It has continued to be

the point of interchange on such through trans-river

traffic to the effective date of the order of the Com-

mission herein. It is this practice which the Appellees

sought to have reformed because of the radically

changed conditions at the St. Louis-East St. Louis ter-

minal. Having become the point of interchange, it

thereby became the rate-breaking point between the

east and the west-side lines for which the west-side

lines received no additional compensation, because they

merely extended their rates to East St. Louis without

any increase or inflation therein to cover the additional

service. The west-side lines concede that as to east-

bound through trans-river traffic the point of inter-

change of delivery should remain at East St. Louis

because by virtue of their joint ownership and control

of the Terminal, their rails terminate there. On the

other hand, the west-side lines contend that the point

of interchange as to the westbound through trans-river

traffic should properly be at St. Louis, Missouri, where

the rails of the east-side lines, by virtue of their con-

trol, ownership or use of the Terminal, terminate.

Radically changed conditions at St. Louis since west

side lines first assumed burden of delivery in both

directions.

When the practice of interchanging freight in both

directions on the east bank of the river was initiated in

1877 and for many years thereafter, the east-side lines

had no freight terminals in St. Louis; but in 1889 the

first radical change in the relationship of the east and

west-side lines took place when they jointly executed

4 NN EA Tet A ne NE TE te Me MM 8M PR Ee re + tb coon ea

are

a contract creating the Terminal Railroad Association,

Through their ownership, control and perpetual right

to the joint use of the bridges, rails and all other facil.

ities of the Terminal, the east-side lines then and there-

by acquired freight terminals in St. Louis, Missouri.’

The Terminal was created and organized for the pur-

pose of securing to all the railroads entering St. Louis

and East St. Louis an efficient and economical method

of interchanging passenger and freight traffic at the

points named (Ex. No. 51, pp. 6, 28), and to furnish to

all the proprietary and nonproprietary carriers ade-

quate terminal facilities in St. Louis and East St,

Louis (Ex. No. 51, pp. 15, 141). The Terminal is a

cooperative enterprise (Hx. No. 4) owned and con-

trolled, or used and enjoyed jointly by all of the east

and weat-side lines in common, Its fixed charges are

guaranteed by all of the owners and they are pledged

to make up any deficit in ite operating expenses, The

Terminal in the St, Louis terminal of all the onat-alde

lines, Likewise, it is the eastside terminal of all the

‘The contract of October 1, 1880, between the proprietary companies

and the Terminal Association recites that the Association, at the in

stunce and request of the proprietary companies had obtained the prop:

erty of other terminal companios in both St, Louis and Bast St, Louis,

‘fto the end that such properties may be held in perpetuity as a unit,

and developed and improved in the interest of the proprietary com:

pean for the purpose of furnishing adequate terminal facilities in St,

suis and East St, Louis; and, whereas, the several proprietary com-

panies do now wish to secure in proper form and in perpetuity a right

to use said terminal properties of the first party now held and hereafter

to be acquired, Therefore, it is agreed between the parties as follows:

In consideration of the covenants and payments hereinafter stipulated

to be performed and paid by the proprie(ary companies, severally, but

not jointly, the first party hereby grants to each of the proprietary com-

panies, its successors and assigns, forever, a right of joint use with each

other and with such other companies as may be admitted as proprietary

lines to joint use thereof, of all said terminal properties of the first

party now held or that may hereafter be acquired in St, Louis, Missouri,

and East St, Louis, Mlinois, including herein the St, Louis bridge and

tunnel for passenger and freight, express and mail business and for

interchange of the same between each other and with the publie’’ (Bx,

No, 51, pp, 14, 15),

Mtoe ow

woat-alde lines, Kvery trunk line carrier entering the

St, Louis-Hast St, Louis awitehing distriet on either

side ia either a joint owner of, or uses, and has the

perpetual right to use as an appurtenant’? to its own

railroad, all of the rails and facilities of the Terminal

in St. Louis as well as in Bast St. Louis for the inter-

change of freight traffic (ix. No, 51, pp. 15, 80, 139-

141; Ex. No. 50, pp. 5, 6).

Under the contract of 1889 between the east and

the west-side lines creating the Terminal Railroad As-

sociation, as amended in 1914, (Ex. No. 51, pp. 136-

145), all of the proprietary and using companies have

the right in perpetuity to the joint use of all of the

terminal facilities of the Terminal for the interchange

of freight and passenger traffic ‘between each other’

(ix, No, 51, p. 15). The joint use so granted to all of

the proprietary and using companion ia to “remain as

an appurtenant to the railroad’? owned by each of the

proprietary and using companion (18x, No, 51, pp, 15,

80, 140, Idd; Kx, No, 50, p, 6), The contract as

amended also provides that every proprietary com.

pany shall have ‘fequal rights of joint ownership and

control of the combined terminal facilities of said As-

sociation upon such just and reasonable terms as shall

place such applying company upon a plane of equality

in respect of benefits and burdens of the parties hereto

(Ex. No, 51, pp. 189, 141; Ex. No. 51, p. 5). The con-

tract as amended further prescribes that any carrier

not electing to become ‘‘a joint owner,’’ but desiring

the use of the terminal facilities of the Terminal, ‘‘may

enjoy the use thereof upon such just and reasonable

terms and regulations as will, in respect of use, char-

acter and cost of service, place it upon as nearly an

equal plane as may be, with respect to expenses and

charges, aa that oceupled by the proprietary com.

panios (Bx, No, 51, p. 140), The deeree of the United

States District Court entered pursuant to the decision

of the United States Supreme Court in the Terminal

Railroad ease (224 U.S, 383, 236 U.S. 194) orders that

all of the provisions of the decree shall extend to and

embrace all railroad companies now or hereafter ad-

mitted to joint ownership or use of the facilities of

the Terminal Railroad Association and to all its facil-

ities present and future acquired (Ex. No. 50, p. 6).

The amended contract entered into pursuant thereto

further states that the benefits and burdens of the

agreement shall inure to and rest upon all future pro-

prietary and using companies, respectively (Ex. No,

51, p. 141). The Terminal, therefore, is today the St,

Louis terminal of all of the east-side lines (Ex, No, 4,

p. 21). Its rails are properly regarded aa the indi

vidual terminala of each of the conetituent lines”

(Swift & Co, v. Dir, Gen, 56 1, CG. GC, 800, 1 e812),

The Terminal conatitutes the united terminals of all

the trunk lines entering the eity’’ (Manufacturers Ry,

Co, v, St, L, 1, M, & 8, Ry, Co,, 28 1, C, C, 98, 1, @, 105),

Rates of east side lines on traffic involved herein raised

when they entered St. Louis.

Another radical change in the relationship of the

east and the west-side lines with respect to the St.

Louis-Kast St. Louis terminals took place in 1905 and

ending in 1908, when the east-side lines publicly ree-

ognized that their rails for all purposes (except that

of interchanging through trans-river traffic) reached

St. Louis, Missouri, Although the east-side lines ae-

quired freight terminals in St, Louis, Missouri, through

their ownership, control and perpetual right to the use

of the facilitios of the Terminal in 188), they clung ten

aciously for years thereafter to the fletion that they

had no such terminals and that their rails and termi-

nals ended at Kast St. Louis. For sixteen years they

pretended not to see what everybody else saw. Finally,

in 1905, they capitulated. Up to that time they con-

tended they had no terminals west of the river, and,

therefore, refused to deliver traffic destined locally to

St. Louis by absorbing or paying the switching charge

of the Terminal (Ree., p. 38). Having in 1905 recog-

nized St. Louis as a station on their lines for the ae-

ceptance and delivery of local traffic, the east-side

lines ‘‘laid themselves under the obligation of receiv.

ing trafie for through movements to and from that

point (St. Louis) under through bills of lading’? (St.

Louis Terminal Case, 34 1, C. OC. 458, Le, 466), St,

Louie and Bast St, Louis were, therefore, placed upon

the same basin with the same rates from trunk line ter

ritory (Clase and Commodity Rates, $2.1, C, C. 471,

le, 475), Ineidentally, when they recogniged their

duty to accept local outbound traffic at St, Loula and

to deliver local inbound traffie at St, Louis, they raised

their rates to East St, Louis to the 117 per cent basis

(Ree, p. 842) and applied the same basis of rates to

St. Louis. In addition they also applied and do now

apply the increased East St. Louis rates to the rela-

tively greater amount of traffic involved herein, that is,

traffie destined to and from points beyond St. Louis

(Ree., pp. 367, 342; Ex. No. 49, p. 56).

Concerning the effect of the foregoing adjustment,

this Commission said (Business Men’s League of St.

Louis v, A. T, & 8S, F. Ry,, 44 1, C, C, 308, 1, ¢, 311);

pe Na ASE NA EE DO De REN LE LIEN LDN BLE ons RS a PM Pre Se EE EROS

‘*By this readjustment St. Louis, Missouri, East

St. Louis, Madison and Granite City, Lllinois,

were treated as one community.’’

Concerning its effect, we also quote from an exhibit

introduced by Mr. W. C. Maxwell, vice-president of the

Wabash and one of the witnesses for the eastern lines

herein (Ex. No. 59, p. 23):

‘This adjustment means that, so far as freight

traffic is concerned, East St. Louis, Madison and

Granite City will be merely divisions of St. Louis,

just as North St. Louis, South St. Louis and Car-

ondelet are divisions of St. Louis. It means that

St. Louis will be the freight rate basing point, not

only for business between the East, but between

the East and most of the ~7-t territory west of the

Mississippi River’’ (Fourth Report of Municipal

Bridge and Terminal Commission).

By reason of the readjustment described in the fore-

going paragraph, we have this wholly unjustifiable

situation at St. Louis-East St. Louis today:

The east-side lines furnish the facilities for and

operate through routes to and from St. Louis, Mis-

souri, on local traffic, but they refuse to furnish the

facilities for and to operate through routes to St. Louis

on traffic destined beyond, although their rates to the

two towns are exactly alike. They will deliver the

traffic consigned to a shipper at St. Louis by absorb-

ing the transfer charges; but on traffic consigned to

a point beyond St. Louis, they deliver it to the west-

side lines at East St. Louis. They give and perform

less service on traffic to a point beyond St. Louis than

they do on traffic consigned to and delivered at St.

Louis under exactly the same rates. It is the conten-

i a a enema el ae a EE ak ie = OTE

tion of the west-side lines that they should make the

same delivery to the west-side lines at St. Louis that

they make to the shippers at St. Louis; for their com-

pensation in both cases is alike.

Admissions of executives of east side lines that present

practice is unfair.

Immediately after this readjustment in 1905 the

west-side carriers requested the east-side lines to re-

adjust the interchange of through traffie (Ree., p. 393-

405). In response to the changed situation, a traffic

executive of one of the eastern lines (Mr. George H.

Ross, vice-president and general traffic manager of the

Toledo, St. Louis & Western R. R. Co., now a part of

The New York, Chicago and St. Louis R. R. Co., one of

the appellants herein), wrote to Mr. W. B. Biddle, third

vice-president of the Rock Island System, the following

letter in which he stated that, in his opinion, it would

be ‘‘eminently fair’’ for the receiving line to absorb

the bridge charges on through traffic routed via the St.

Louis gateway in either direction (Ex. No. 9):

‘*Toledo, St. Louis & Western Railroad Company.

Toledo, Ohio, December 13, 1905.

“Mr. W. B. Biddle,

Third Vice-President, Rock Island System,

Chicago.

‘*Dear Sir:

‘**T enclose herewith a memorandum in regard to

carrying out an understanding with the Municipal

Bridge and Terminal Commission of St. Louis in

relation to bridge tolls at St. Louis on St. Louis

traffic, in which you will note it was recommended

Ae Rt RR NE a nll DN eg tei ty Eee Titik Cy alibi a de a blah

that St. Louis rates be made as per the figures

stated in the memorandum attached.

‘*T beg to advise that at a meeting held today

by the Central Freight Association lines the sub-

ject matter was fully approved and a committee

was instituted to take the matter up with the

Trunk Lines, New England lines and the Canadian

lines, and get their concurrence; in all probability,

the subject will go through as stated in the memo-

randum.

‘*This now brings to my mind very prominently

the question of absorption of bridge tolls on

through traffic; as, for instance, traffic from Mis-

souri River points destined to any point on our

line of road, or, so far as that is concerned, to any

Eastern point, Trunk Line, New England, Cana-

dian or Central Freight Association.

‘*There should be, in my opinion, some under-

standing existing as between the lines west of St.

Louis and the lines east of St. Louis on through

traffic routed via the St. Louis gateway in either

direction; as, for instance, any traffic that the

Clover Leaf Road delivers to your line, through

the Terminal Association, your line would absorb

the bridge tolls as published, and, in a like man-

ner, any traffic which your line delivers to the

Clover Leaf, we would absorb the bridge charges.

**This seems to me to be fair, and furthermore,

it seems to me of necessity to have an understand-

ing, and I would like very much to have you bring

this matter up in the proper way before the West-

ern Trunk Line Committee, so that the subject

may reach the constituted committee of the East-

ern roads, i.e., the Central Freight Association.

‘*You understand that at the present time the

Western roads absorb the bridge tolls in both di-

rections; this by reason of their making rates to

and from St. Louis and East St. Louis the same,

and I assume that you would like to get out of some

of this disability in the manner stated by me,

SLE PELE OT EY EO ON HEY

which appears, by studying into the situation, to be

eminently fair.

‘Will you kindly favor me with your views in

this matter and if you are disposed to take the

matter up in the manner suggested by me?

Yours truly,

(Signed) Geo. H. Ross,

2nd V. P. & G. T. M.

Copy to

J. W. Brazon, F. T. M., C. & A. Ry.

D. Mriier, Ist V. P., C. B. & Q. Ry. Co.”’

The Chicago, Burlington & Quincy Railway Com-

pany also operates a line on the east side of the river.

On April 7, 1908, Mr. George H. Crosby, freight traffic

manager of that railroad, wrote, in part, to Mr. W. B.

Biddle, vice-president of the Frisco Lines, as follows

(Ex. No. 5):

**T think this whole question of transfer between

St. Louis and East St. Louis should be disposed

of on an equitable basis. As the matter stands to-

day the western line pays the transfer on both

eastern and western business, which is manifestly

unfair, and we are ready to cooperate with the

other interested lines in bringing about a reforma-

tion in this respect.’’

At a meeting of the representatives of the east and

west side lines, held at St. Louis on June 25, 1908, the

following recommendation was unanimously adopted

(Mr. Maxwell’s Ex. No. 59, p. 34):

**Recommended, That a subcommittee of three

be appointed by the east-side lines to confer with a

similar committee to be appointed by the west-side

il nattninceaiameinettimaibee cnet ninteeniees cies anode docebiin na cia ee Te

lines, to recommend a method of settlement of the

question of disposition of, or dividing the bridge

toll and switching between St. Louis and East St.

Louis on through traffic moving in either direction

via East St. Louis to and from points, both of

which are outside of the limits of St. Louis and

East St. Louis. Said joint committee to report to

an adjourned meeting of this general committee

as soon as possible.’’

At a meeting of the representatives of all the east

and west-side lines, held on September 28, 1914, the

following resolution was submitted by representatives

of the western lines:

‘‘In order that the cost of interchange between

eastern and western lines at St. Louis and East St.

Louis may be equitably divided, it is agreed by the

parties here represented that on and after this

date the expense of bridge and ferry tolls, or

charges, of other transportation companies, be-

tween St. Louis and East St. Louis, shall be paid

by the line receiving the traffic.’’

Upon a vote the resolution was defeated, five votes

being cast in favor of, and twelve opposed to, its pas-

sage (Mr. Maxwell’s Ex. No. 59, p. 39).

The futile and persistent efforts of the west-side

lines during the last twenty years to change the exist-

ing practice of interchange and to require the east-

side lines to bear a fair share of the burdens thereof,

is graphically described in the record (Ex. No. 5). The

controversy was carried t» the courts where it re-

mained for several years. (Terminal Railroad Asso-

ciation v. United States, 266 U. S. 117.)

Today the east-side lines interchange passengers

with the west-side lines at St. Louis. They inter-

change mail with the west-side lines at St. Louis.

They interchange express traffic with the west-side

lines at St. Louis (Ree., 200-202).

Carriers generally recognize obligation to participate

in expense and burden of interchange.

The record further shows that under the generally

recognized custom and obligation among carriers pur-

suant to the code of car-service rules published by the

American Railway Association, the delivering line as-

sumes the burden of making delivery in the yard of and

on the designated tracks therein for the receipted

traffic of the receiving line either by direct delivery

with the power of the delivering line, or by using an

intermediate switching line to act as its agent in effeet-

ing delivery of the through shipments (Rec., pp. 227).

The following testimony before the Commission was

not denied or contradicted by the defendants (Rec.,

pp. 220-228) :

‘“‘With regard to general practices of inter-

change:

‘*The general practices among carriers with re-

gard to the interchange of traffic are, in principle:

‘*(a) Road-haul carrier effects delivery to con-

signee at destination, assuming cost of terminal

expense incident to such delivery;

‘*(b) Outbound road-haul carrier assumes ter-

minal expense of terminal switching line and in-

termediate switching line incident to effecting de-

livery to its line of shipments on which the out-

bound road-haul carrier secures the road haul;

‘*(e) Road-haul carrier, inbound, effects delivery

of through shipments to outbound carrier, either

with its own power or through the agency of an

intermediate switching line, where such intermedi-

ate line is necessary; assumes per diem expense of

intermediate line; insures the through movement

ee . Seth MEE We - : 2a SD owe te

of the shipment or assumes responsibility of plac-

ing the car and shipment in proper condition for

movement by outbound carrier.

‘‘While there are at different junctions certain

local agreements which deviate from the general

principle outlined herein, it is the general practice

to insure the expense of interchange of traffic being

effected on a reciprocal basis, each line so inter-

changing traffic to bear an equitable share of the

cost of interchange.’’

Practice approved by Commission here in effect

throughout the United States.

The record further shows without any evidence to

the contrary, that all line-haul carriers throughout the

United States reciprocally bear and share the cost and

expense of interchanging through traffic, whether that

interchange is made direct or through the medium of

switching lines or service (Rec., pp. 227). The tran-

script is replete with hundreds of illustrations in the

East, South and West. To support and show the truth

and correctness of the foregoing statement, the wit-

nesses described in detail the method and manner of

interchanging through traffic at the following major

junction points:

Dubuque, Iowa Bridge Junction, Ark.

East Dubuque, Il. Helena, Ark.

Savannah, II. Vicksburg, Miss.

Clinton, Iowa Natchez, Miss.

Rock Island, Ill. Vidalia, La.

Burlington, Iowa Baton Rouge, La.

Ft. Madison, Iowa Anchorage, La.

Hamilton, Il. New Orleans, La.

Quincy, Ill. Paducah, Ky.

Hannibal, Mo. Evansville, Ind.

Louisiana, Mo. Jeffersonville, Ind.

Chaffee, Mo. New Albany, Ind.

Memphis, Tenn. Louisville, Ky.

Sees =

Cincinnati, Ohio Omaha, Nebr.

Detroit, Mich. South Omaha, Nebr.

Toledo, Ohio Wichita, Kansas

Cleveland, Ohio Ft. Worth, Texas

Columbus, Ohio St. Paul-Minneapolis,

Ft. Wayne, Ind. Minn.

Springfield, Il. Des Moines, Iowa

East St. Louis, Ill. (not Moline, Tl.

trans-river traffic) Indianapolis, Ind.

St. Louis, Mo. (not trans- Oklahoma City, Okla.

river traffic ) Dallas, Texas

Chicago, Ill. San Antonio, Texas

Kansas City, Mo.

The Court will observe that the foregoing list of

junction points described in the record includes all the

Mississippi River crossings from Dubuque, Ia., to

New Orleans, La. (Ree., pp. 377-386). At none of

these crosings do the carriers maintain a joint facility

serving both banks of the river except at Natchez,

Miss., where a ferry is used to make the interchange.

The expense of interchange at Natchez is reciprocally

borne by the east and the west side lines (Rec., pp.

381-382). However, wherever traffic is interchanged

between trunk lines at these and all other junction

points mentioned, the burden and expense of inter-

change is on a reciprocal basis (Stanage’s testimony,

Rec., pp. 86-200; pp. 377-386).

The transcript of the testimony before the Commis-

sion fully supports the finding of the Commission on

this same question in another case (In re Practices of

Peoria & Pekin Union Ry. Co., 93 I. C. C. 3, 1. ¢. 9):

‘In the interchange of traffic between carriers

it is the ordinarily accepted practice for the re-

ceiving line to designate tracks within a reason-

able distance of the intersection of its rails with

‘

ERR RRS NEAT a ae

those of a connecting carrier where cars will be

received from the delivering line, and the latter

places the cars on the tracks so designated.’’

East-side lines admit Terminal is their agent in per.

forming switching service on westbound through

traffic.

The record further shows that the east-side lines

concede that the Terminal Railroad Association is

their agent in performing the interchange switching

on westbound through traffic. In performing the ser-

vice, the Terminal does not act as a road-haul carrier.

The traffic is interchanged in switching service (Ex.

No. 58, pp. 3, 13, 21).°. Although it is a common ear-

rier, it can only operate as a terminal and interchange

facility for the east and west-side lines (United States

v. St. Louis Terminal, 224 U. S. 383, 236 U. S. 194).

The east-side lines recognize that the Terminal is their

agent in delivering west-bound through traffic, because

for each car handled they reimburse the Terminal for

its per diem charges and expenses (Ree., p. 241). Rule

Five of the Code of Per Diem Rules of the American

Railway Association provides (Rec., p. 241):

5 Under the decree of the United States District Court the Terminal

was permitted to exist and continue ‘‘as a lawful unification of ter-

minal facilities upon abandoning all operating methods and charges as

and for railroad transportation and confining itself to the transaction of

a terminal business such as supplying and operating facilities for the

interchange of traffic between railroads and to assist in the collecting

and distributing of traffic for the carrier companies, switching, storage

and the like, and modifying its contracts as herein specified’’ (Ex. No.

50, p. 2). The proprietary companies were enjoined ‘‘from in anywise

managing or conducting the said Terminal Railroad Association or any

of its constituent companies and from operating any of the properties

belonging to it or its constituents otherwise than as terminal facilities

for the railroad companies using the same, and from making charges

otherwise than for and according to the nature of the services so law-

fully authorized to be rendered’’ (Ex. No. 50, p. 2).

ARM TE ON AIRE ROLLIE NG PIN LI PP Se

‘‘An amount for each car in switching service

may be reclaimed by each individual switching

road from the road for which the service was

performed.’’

No such reclaims are made when the cars are han-

dled in road-haul service. The east-side lines pay these

reclaims on westbound traffic. It is the contention of

the west-side lines, therefore, that the east-side lines

should assume all of the expenses incident to a proper

and lawful delivery on their rails by absorbing not

only the Terminal’s per diem charges, but its switch-

ing charges as well. The ordinary principles of law

governing the relationship of principal and agent

should be applied. When an agent performs a ser-

vice for its principal the latter is hiable and must pay.

A third person should not be compelled to make a

vicarious sacrifice for him.

As the Terminal is a Jointly Owned Facility for In-

terchanging Traffic, Law Requires That Its Up-

keep Should be Jointly Borne by East and West

Side Lines.

As the Terminal Railroad Association is a joint fa-

cility of the east and west side lines owned, or used

and enjoyed, by all of them in common, for the inter-

change of freight in both directions, the law requires

that its corporate powers be exercised for the com-

mon benefit of all of its stockholders (Chicago, M. &

St. P. Ry. Co. v. Des Moines U. Ry. Co., 254 U. S.

196, 1. ec. 204). Prior to the order herein, the east

side lines enjoyed the benefits of their joint facility

and participated in none of the burdens incident to

GL OY SSR RES A ET Ge LTB ed Ue EST TCU RAR OR ed beads ee) A

the handling of this traffic; for the west side lines

paid and bore the entire cost of interchanging the

traffic. While it is true that the Terminal published

a charge for performing this switching service, the

owning carriers who happened to be on the west side

contributed exclusively to the expenses of operation

by absorbing these charges. This absorption of switch-

ing charges was and is simply a financial method of

prorating the cost of the Terminal’s maintenance and

operation (Richmond C. of C. v. Seaboard A. L. Ry.

Co., 44 I. C. C. 455, 1. ec. 460); but the court will ob-

serve that the east side lines under the method of

‘‘prorating the cost’? condemned by the Commission,

enjoyed the benefit and use of this facility without

the expenditure of a single penny for the maintenance

and upkeep involved in the transfer of this traffic.

If this were initially a court proceeding, it could

well be denominated a bill in equity by minority stock-

holders to compel the majority stockholders to parti-

cipate in the common burden of maintaining a joint

subsidiary owned and used ‘‘for the common benefit

of all the stockholders’’; but as this court has held

; (Terminal Railroad Association v. United States, 266

U.S. 17) that the procedure for compelling them to so

share in the burden of maintenance and upkeep, 1s

arena Tr o.-~ ee

\ within the jurisdiction of the Commission, the west-

side lines pursued their only legal means_of redress.

Having previously taken the position’ that tis Sontte>

versy involved matters exclusively for the Commission,

the east-side lines now take the position that the order

herein involved is beyond the power of the Commis-

sion. The Commission made the only order that it

could have made in the premises to compel the appel-

lants to share in the upkeep of the joint property.

= ERISA RILEY TS a PT Le Te HCN

Appellants contend that the order is contrary to

the decision in the Peoria & Pekin Union Railway

Company case, 115 I. C. C. 469; 93 I. C. C. 3, in that

the Commission in that case compelled one set of

carriers to ‘‘bear the charges of the intermediate

switching line in both directions’’ (Appellant’s brief,

p. 79, lines 1-3). It is true that the Commission in

that case required the east side lines to bear the

charges of the intermediate switching line in both di-

rections, but the switching facility used, the Peoria

& Pekin Union Railway, was owned exclusively by

three east side lines at Peoria. It was their switch-

ing facility and it was not owned jointly by the east

and west side lines at Peoria. In this case the Ter-

minal Railroad Association is owned jointly by the

east and west side lines with supposedly equal rights,

privileges, benefits and burdens. The distinction in

facts reveals the Commission’s consistency in judg-

ment. In both cases it applied the principle that a

purely arbitrary fiction (Chicago, M. & St. P. Ry. Co.

v. Minneapolis Civie Ass’n, 247 U. 8S. 490, 1. e. 501)

should not be allowed to obscure the actual individual

facts nor to serve as an instrument for injustice.

The Terminal is a cooperative enterprise (Jonah’s

Ex. No. 4, p. 19) of the east and the west side lines.

Its fixed charges are guaranteed by all the owners,

and they are pledged to make up any deficit in its

operating expenses. As stated by Mr. Maxwell, the

leading witness for the eastern lines, the moneys paid

to the Terminal are treated as expenses and not as

revenues (Rec., 288) ; because practically all of its in-

come is derived from the road-haul carriers by way

of switching absorptions. Its upkeep should, there-

fore, be equitably prorated among the trunk lines.

ORT aR ES BY fo SPT Ne are hee

— —_ ak ae ee er

The operating contracts as amended in 1914 under

the provisions of which the Terminal was permitted

by this court to continue its existence as a lawful en-

tity (Ex. No. 51, pp. 14, 136) prescribes that every

owner thereof in the interchange of freight traffic shall

be placed upon a plane of equality in respect of ben-

efits and burdens (Ex. No. 51, p. 139); that every

nonproprietary company shall enjoy and use the rails

and facilities thereof upon an equal plane with respect

to expenses and charges (Ex. No. 51, p. 140); that the

expenses incident to the maintenance and operation

of the property shall be distributed as equitably as

possible (Ex. No. 51, p. 19) ; that the bridge tolls levied

shall at no time be so great as to place any company

using said terminal at a disadvantage (Ex. No. 51, p.

23); that the Terminal Railroad Association shall not

discriminate in any manner whatever in favor of any

company (Ex. No. 51, p. 4), and that each of the own-

ing and using companies shall have equal facilities and

accommodations with any other companies (Ex. No.

51, p. 24).

In Chicago, M. & St. P. Ry. Co. v. Des Moines U.

Ry. Co., 254 U. S. 196, 1. ¢. 204, this court considered

the relationship of the railroads involved to a ter-

minal company. The terminal company had the title

to the properties and entered into operating contracts

with the railroad companies. Afterwards the termi-

nal company asserted that it was the absolute owner

of the terminal properties, and that the railroad com-

panies were merely stockholders in the usual and cus-

tomary sense; that the terminal was entitled to its

surplus earnings, and that the railroads as stockholders

of the terminal company, should not be permitted to

deny the absolute ownership of the properties stand-

fate ol

LEER EEO LITRES RIES ONS SSF PLETE EE

REESE No ST Sil eT A EAL Da

ing in the name of the terminal company. It was the

contention of the railroad companies that the terminal

company was merely an instrumen‘ality or trustee of

the proprietary companies, and taat they were the

owners of the equitable title to such properties. This

Court said:

‘‘Upon a review of all the evidence, construing

the writings in the light of the circumstances and

the manifest purpose and intent of the parties,

we are clear that the effect of the transactions

thus far recounted was to establish a terminal

company, being invested as trustee with complete

legal title, but without beneficial ownership, and

subject to a duty to maintain and operate the

property and exercise all its corporate powers for

the common use and benefit of the three railroad

companies, their suecessors and assigns, and such

other companies as might be admitted by them to

a proprietary participation in the terminal.’’

The Commission’s order herein prescribing the

manner and method of interchanging through freight,

is but a fulfillment of the law’s requirement that joint

owners of a subsidiary corporation maintained for

their common benefit shall participate jointly also in

the burdens of maintenance.

Ill

Statute Empowers Commission to Order East-Side

Lines to Make Proper and Lawful Delivery and to

Participate in Burden and Expense of Interchange

Without Considering or Adjudicating Rates and

Divisions.

Before the Commission the Appellees, as complain-

ants therein, invoked the powers of the Commission

under paragraphs (3), (4), (6), (10) and (11) of See-

tion 1; paragraphs (1) and (3) of Section 3; and para-

graphs (1) and (3) of Section 15 of the Act. These

provisions may be enforced without a concurrent issue

being raised under paragraph (6) of Section 15 of the

Act relating to div

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