Transcript of Record — Beaumont, Sl & W. Ry. v. United States

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Supreme Court of the United States

OCTOBER TERM, 1909" / FZ 4/

& WESTERN RAILWAY COMPANY, ..

DENVER CITY RAILWAY COMPANY,

THE UNITED STATRS OF AMERICA, THE INTERSTATH COMMERCE

_ COMMISSION, ET AL,

’

THE UNITED STATES OF AMERICA AND THE INTERSTATE

COMMERCE COMMISSION, APPELLANTS,

APPEALS FROM THE DISTRICT COURT OF THH UNITED STATES

. FOR THE WESTERN DISTRICT OF MISSOGHe

: FILED FEBRUARY 8, 1930

| GA793, 34,774)

(34,773, 34,774)

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1929 ©

No. 642

THE BEAUMONT, SOUR LAKE & WESTERN RAILWAY COMPANY,

THE FORT WORTH AND DENVER CITY RAILWAY OOMPANY,

ET AL., APPELLANTS,

v8.

THE UNITED STATES OF AMERICA, THE INTERSTATE COMMERCE

COMMISSION, ET AL.

No. 643

THE UNITED STATES OF AMERICA AND THE INTERSTATE

COMMERCE COMMISSION, APPELLANTS,

v8.

THE BEAUMONT, SOUR LAKE & WESTERN RAILWAY COMPANY,

THE FORT WORTH AND DENVER CITY RAILWAY COMPANY,

ET AL.

APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE WESTERN DISTRICT OF MISSOURI

VOL. I

INDEX

Original Print

Record from district court of the United States, Western

UN -o00¢need000e0s6e00 pine ocdseceudoceedekesesesea a 1

Citations and service.......... (omitted in sstatied’ .. a

Record entry of filins of petition...... doecucedsuresess 1 1

Record entry of filing of intervention of I. C. C......... 1 2

Onn Ge Gs Gs Doe ce cdovccuceteceses cecccsecesés 2 2

BE GE Se Gh Dic cde cect ccusetccececcscoses edcestes 3 2

REITER GE TRIS Bean cbc ccccccocececectocesoeseess 6 5

Notice of application for leave to intervene, William W.

Weeeeer GS Ghee cewescosesuess éedevceeen beeasesdeus 9 8

Jupp & Derwetter (INnc.), Printers, WasHINGTON, D. C., Apriz 1, 1980

li INDEX.

: Original Print

Petition for leave to intervene, Wiliam W. Wheelock

GB Ghecccceccesevesoccocccceceveeecebecosocececesse 11 9

Order granting leave to intervene, William W. Wheelock °

i CTT ETT TCT TTT Te TERE CTT LL TTT TTT 14 11

Notice of motion for leave to file amended petition...... 16 12

Motion for leave to file amended petition.............. 17 13

Order granting leave to file amended petition.......... 17 13

BEREESE DETER on cece cccccccescesescoesecoceveccecs 19 14

Appendix 1—Order of I. C. C., October 8, 1923..... 44 49

Appendix 2—Petition for order making other car-

riers respondents before I. C. C............000-s 45 51

Appendix 3—Report of I. C. C., December 10, 1928. 49 55

Appendix 4—Report and order of I. C. C. on recon-

SE, Bee TR BORD. ccciccccceseccceccooss 93

Appendix 5—Order amending report of June 10,

SEA Ee ee Ue cb vasdenccecouacrececceescesoceeesss 51° 113

Order designating judges, etc............cceeceeeees 52 1m

Motion re answer of United States. TTTITOTTL ITT TT TTT te 53 116“

Order re answer of United States...............s0.05- 53 116

Order permitting Wm. W. Wheelock et al. to file answer. | 117

Joint and separate answer of Wm. W. Wheelock et al.. 54 117

Argument and submission...... (omitted in printing) .. 59

See Or ee GE Be Ge Ge cncecevccveccccesecccoscess 59 121

Order dismissing petition............. Reccedcesecoeose 60 121

BR. GaP GIG, Fe ec cccccccccdsccccccccccccccocse 61 122

Assignments Of CTTOr. ... 2.2.60. cece ecw ence ce seeeeeees mt 123

‘Petition for stay of order of I. ©. C..... 2.2.6 -.e denne 17 133

Order allowing appeal... ...... 6... -cccccccdeccccccees sos “’*eoeom

staying order of I: C. CC... 2.2... cece eceeeeeecees 8i 136

Bond on appeal..............+. (omitted in printing) 85 '

Bond on stay order............ ee. ee. “.3 89

Supplemental ‘bond............. Si ee ee 7 ©

Notice of Goss-appeal.................+ EeePC) Aa ele 90 139

Petition for cross-appeal..............eeceeceeecceees 100 139

Assignment of error, cross-appeal. ............-seeees- 102 142

Order allowing cross-appeal............ wabbevieenesese 108 143

Order extending time... .........0--ccececcceceeesence 104 143

Notice of appeal............--e+ee0- pGbbdadeescaeysse 106 14

Minute entries. ... 2.2... eee eee cece cece ec eceeceees - 106 145

Notice of lodgment of statement of evidence paveekeebed 106 ° 145

Motion for order to certify origingi exhibits............ * 109 | 147

Precipe for transcript of record...... Khédeseeocnsevers 111

Notice to respondents to furnish tariffs................ 115

Notice of hearing on motion to certify criginal exhibits, 117

Narrative statement of evidence..................-- oe

COMtHOM 2 ccc cccanccccccccccccewecvcccccccccees - 119

Appearances of counsel... ......--------eeeeeeeees 120

Offers in evidence.......... cetepeus evedbveswwates.: wae

INDEX.

Exhibit No. 1—Narrative statement of evidence

before I. ©. C., No. 5284... 6. cc cece cee wecuee

Appearances of counsel... .. 6.666 cc ccccncuwuns

6 PPT TTTILITITITITITILITTTTTIT OL

Exhibit “A-38"—Comparison of railway

operating revente, @1C......6cceeeccnuns

Exhibit “A-30"—Statement of miles of road

operated, tons carried, etc.........++++-

Agreement re Exhibit “A-B”... 2... ccc cccceues

Testimony of Clifton F. Balch...........6+.5..

Exhibit “A-50"—Statement showing density

of traffic, tons per mile, etc, ..........+.-

Testimony of B. F. Parsons (recalled ) PTTTTTT

Exhibit “A-51"—Statement of operating and

Exhibit “A-55”"—-Statement of average miles

operated, revenues, etc., for period ending

August BY, 1025... 6. cece cece een eewnnee

Testimony of J. A. Behrie (recalled)...........

BE. J. Schmidt, (recalled).........

Testimony of B. F. Parsons (recalled) eebnne i Tf

We, Dhtelb.. s.ecccekcee Pd °

Original Print

122 150

122 1%

124 161

127 6168

1238 16

133 «= «167

i”

28 86220

214 222

220 228

246 245

28 86247

25 250

2700-257

2720258

282 480s (2

288 4

24 266

3080-24

322

3390s,

“1 0s 27

352 486-308

364—Cti«é«SS

380 «= - 825

391 4-888

4020s BAL

48 8 345

415 9-850

421

4300s «361 r

488 489s 368

6 se -*

473 8 8=- 387

soo 411

5190 419

533 480

V INDEX.

Criginal Print

Testimony of J. A. Shepherd.................. 550 445

Ey Gb Ms cevcocoecodscesecss 557 449

Et» Ge Gaic ccccccccccceccccccoes 560 451

Be Bb Biles cocccctoccccecccesees 586 471

Wee Gs Sc cece cee cceeees 506 479

> Ee EEE covecccoeccesecceces 610 490

Be Ge BeBe cccosccececovccevsees 623 500

Be We SUMED ccodccecccccececcses 640 Sil

Exhibit “A-124"—Statemert of financial,

operating, and traffic statistics for class 1

GEE eeeetcccsesedocdoocececosoeces: 41 512

ey Ge Gee Bia cocceccecececeesooede 730 538

Exhibit “A-129"—Statement of freight traffic

GH GBocccocecccesecoctieccecccecses 752 4

Exbibit “A-120j"—Statement of freight

Se CS nec ceddeescesosscccsees 76 566

Testimony of L. J. Sickel........ pesecesseesens 803 5%

Ey ie ive ccceescoccesecer 1029 766

i ah Pe pevdeuceuesececcsceees 1045 777

2 Wee. Ws DS censecucucetecesors 1066 793

B. H. Stanage.. 1L06D 7%

i Gs PS oc cccesceacceoce: 1128 S43

is de Bn eebeconseseseococecoes 117% SHS

Charlies W. Morrow.............. 1197 RAG

C. C. Dana (recalled)........... 1215 00

B. F. Parsons (recalled)......... 1220 908 e

‘ Exhibit “A-241"—Statement of financial,

operating, and traffic statistics.......... 1244 022

Testimony of 8S. G. Grace (recalied)............ 1268 928

E. J. Schmitt (recalled)........ 1286 M1

E. J. Schmidt (recalled)......... 1331 976

Ws Gb Sescccecdocccetccce 1333 77

S. H. Gillette (recalled)......... 1364 G02

J. A. Behrle (recalled).......... 1369 1003

GS, B, Bev ceccsececeeccces 13% 1020

‘ B. F. Parsons (recailed)........ 1409 1080

J. A. Behrie (recalled).......... 1411 1032

C. C. Dana (recalled)............ 1415 1034

P A. J. Lehmani (recalled)....... 1424 1041

B. H. Stanage (recalled)........ 1443 1056

Letter, Behrle to Alexander, November 9,

BD ccc cccccocacccocccoceséeceeeseesces 1453 1064

Testimony of R. ©. Trovillion (recalled)........ 1471 1078

L. J. Sickel (recalied)........... 1561 1108

* UW. W. Press (recalled).......... 1580 1165

Exhibit 2—Orders of I. C. C., Docket No 15 cose Te 1169

Exhibit 3—Petition for order making various car-

riers respondents, I. C. C.......... Sdeseceobecse 1592 1175

Appendix “A”—List of carriers.,............ 1507 1179

INDEX. \

Original

Exhibit 4—Proposed report of I. C. C 104

Appendix 1—Statement of operating statistics. 1629

Appendix 2—Statement of operating statistics. 1634

Offers in evide..ce

Exhibit 8—Order of I. C. C. postponing effective

date, etc

Testimony of S. H. Bone

Exhibit 10—Statement showing result of study of

divisions, etc

Testimony of W. G. Buechner

Exhibit 14-—Statement showing estimated annral

increased and decreases which wil! accrue

Testimony of T. A. Gray

Exhibit 16—Statement showing estimated effect on

M., K. T. lines

Exhibit 19—Drawing showing relation of rates....

Testimony of L. J. Hensley

Exhibit 20—List showing all railroads in West-

ern Trunk Line region, etc

Exhibit 22—Argument before I. C. C., Docket No.

Testimony of F. A. Leland

Testimony of Clarence E. Day

Ofiers in evidence

Order approving statement of evidence

Record entry of filing of order re origina! exhibits, etc. .

Order to certify original exhibits

Stipulation re Exhibit “A-9”

Motion for order vacating order staying order of I. C. C.

Statement of showing to be made upon hearing of

motion to vacate stay order

Notice of hearing on motion to vacate stay order

Statement of showing to be made in opposition to motion

to vacate stay order, etc

Affidavit of L. J. Sickel

Affidavit of W. G. Buechner

1750.

Order overruling motion to set exits order staying

order of I. C. C......66-.4. eocbececesvaecescoesoe «++ 1751

Supplemental preecipe for transcript of record 1755

Memorandum opinion, Gardner, J............«++. 1758

Clerk's certificate........... ... (omitted in printing) .. 1791

Orders extending time. (omitted in printing).. 1792

Statement of points to be relied upon and designation to

print entire record, No. G42............ eecccceccescoooes 1795

Statement of points to be relied upon and designation to

print entire record, No. G43.....6..sssseecceeceeeeeeeees 1798

[fols.a-d] Citations, in usual form, showing service on

Elmer B. Collins, E. T. Miller, et al., omitted in printing.

. [fol. 1]

IN UNITED STATES DISTRICT COURT, WESTERN

DISTRICT OF MISSOURI

No. 1363

Tue Beaumont, Sour Laxe & Western Ratiway Company,

The Fort Worth and Denver City Railway Company, The

Galveston, Harrisburg, and San Antonio Railway Com-

pany, Houston and Shreveport Railroad Company, Hous-

ton & Texas Central Railroad Company, The Houston

East and West Texas Railway Company, International.

Great Northern Railroad Gompany, The Kansas~City

Southern Railway Company, Louisiana & Arkansas Rail-

way Company, Louisiana Railway & Navigation Com-

pany, Louisiana Western Railroad Company, Missouri-

Kansas-Texas Railroad Company, Missouri-Kansas-

Texas Railroad Company of Texas, Missouri Pacific Rail-

road Company, Morgan’s Louisiana and Texas Railroad”

and Steamship Company, New Orleans, Texas & Mexico

Railway Company, The St. Louis, Brownsville and

Mexico Rajlway Company, St. Louis-San F cisco Rail-

way Company, St. Louis, San Francisco arfd Texas Rail-

> way Company, St. Louis Southwestern Railway Com-

pany, St. Louis Southwestern Railway Company of

Texas, San Antonio & Aransas Pass Railway Company,

Texas and New Orleans Railroad Company, and The

Texas and Pacific Railway Company, Petitioners,

vs.

THe Unrrep States or America, Defendant

Recorp Entry—July 22,'1929 Z

This day come petitioners by attorneys and file Petition.

1—642, 643 |

‘2

In Unrrep States District Court

Recorp Entry or Fmine or INTERVENTION OF INTERSTATE

ComMERcE Commission—July 29, 1929

This day comes the Interstate Commerce Commission by

its attorneys and files Intervention and Answer herein.

[fol. 2] In Unitep States District Court

INTERVENTION oF LnTERSTATE ComMERCE Commission—Filed

July 29, 1929

To the Honorable Judges of said Court:

In accordance with the provisions of section 212 of the

Judicial Code, 36 Stat. L. 1150, we hereby enter the appear-

ance of the Interstate Commerce Commission, as a party

defendant, and of ourselves as its counsel, tm the above-

entitled suit.

Daniel W. Knowlton, Edward M. Reidy.

[File endorsement omitted. ]

[fol. 3] In Unitep Srates District Court

Answer or INTERSTATE ComMmMERCE Commission—Filed July

29, 1929

The Interstate Commerce Commission, intervening de-

fendant in the above-entitled suit, now and at all times

hereafter saving and reserving to itself all and all manner

of benefit and advantage of exception to the many errors

and insufficiencies in the petitioners’ petition contained, for

answer thereunto, or unto so much or such parts thereof as

it is advised that it is material for it to answer, answers

and says:

Answering Paragraphs I and II of the petition, the Com-

mission admits, for the purposes of this suit, that the alle-

gations therein contained are true.

Answering subdivisions 3 to 24, inclusive, of the petition,

the Commission admits and alleges that it made and en-

tered the order dated June 10, 1929, referred to in sub-

division 8 of the petition, and made a part thereof as Ex-

hibit 4, in a proceeding then pending before it entitled

Docket 15234, In the Matter of Divisions of Freight Rates

in Western and Mountain-Pacific Territories; that said

proceeding was instituted by the Commission upon its own

motion by order dated October 8, 1923, referred to in sub-

division 3 of the petition, and attached thereto as Appendix

1, by which certain wailroad companies operating in the

territories mentioned, including the petitioners herein,

were made respondents; that full hearings were had and

thereafter the Commission made and entered and served

upon all the parties in said proceeding, the report of De-

cember 10, 1928, 148 I. C. C. 457, referred to in subdivision

6 of the petition, and made a part thereof as Appendix 3,

to which the Commission respectfully refers the Court for

information concerning its findings and requirements in

the premises; that following the service of the Commis-

sion’s said report of December 10, 1928, petitioners herein,

referred to as Southwestern Lines, filed petition for re-

hearing, reargument and reconsideration; that pursuant to

{fol.4] said application the proceeding was reopened for

reconsideration; and that subsequently the Commission

made and entered and served upon all the parties in said

proceeding report and order of June 10, 1929, referred to

and made a part of the petition as Appendix 4, to which the

Commission respectfully refers the Court for information

concerning its findings and requirements in the premises;

that in said proceeding the parties thereto, including the

petitioners herein, were, and each of them was, accorded

the full hearing provided for by the Interstate Commerce

Act; that in said hearings a large volume of testimony and

other evidence bearing upon the matters covered in said

reports and order was submitted to the Commission for

consideration, including testimony and other evidence sub-

mitted on behalf of petitioners herein by their counsel; that

at said hearings and subsequently, both orally and in briefs

filed in said proceeding, questions relating to said matters

were fully argued and submitted to the Commission for

determination on behalf of said parties by their respective

counsel, including many of the particular questions raised

by petitioners in this suit, whereupon the Commission de-

termined said matters and entered and served upon all the

parties to said proceeding, including the petitioners herein,

its said reports and order; that said reports and order in-

cluded the Commission’s findings of fact, decision, conclu-

sions, order and requirements in the premises, and that,

upon the evidence aforesaid, and as shown in and by said

reports, the Commission made the findings and stated the

conclusions upon which said order is based.

The Commission further alleges that the findings and

conclusions in said reports were and are, and that each of

them was and is, fully supported and justified by the evi-

dence submitted in said proceeding as aforesaid.

The Commission further alleges that in making said re-

ports it considered and weighed carefully, in the light of

its own knowledge and experience, each fact, circumstance,

and condition called to its attention-on behalf of the par-

[fol.5] ties to said proceedings by their respective coun-

sel, including matters covered by the allegations of the peti-

tion herein.

The Commission further alleges that said order of June

10, 1929, was not made or entered either arbitrarily or un-

justly, or contrary to the relevant evidence, or without evi-

dence to support it; that in making said order the Com-

mission did not exceed the authority which had been duly

conferred upon it, and the Commission denies each of and

all the allegations to the contrary contained in the petition.

Further answering Paragraph IV of the petition, the

Commission denies that its said order of June 10, 1929, is

invalid for any of the reasons set forth ip said paragraph,

or for any other reason; and denies that the petitioners will

suffer irreparable damage, or any damage, if its said order

of June 10 is not stayed and enjoined.

Except as herein expressly admitted, the Commission

denies the truth of each of and albthe allegations contained

in the petition in so far as they conflict either with the alle-

gations herein, or with either the statements or conclusions

of fact included in said reports and order of December 10,

1928, and June 10, 1929, which repevts and order are hereby

“referred to and made a part hereof. .

All of which matters and things the Commission is ready

to aver, maintain, and prove as this Honorable Court shall

direct, and hereby prays that said petition be dismissed.

Interstate Commerce Commission, by E. M. Reidy,

Assistant Chief Counsel‘ Daniel W. Knowlton,

of Counsel.

{fol.5a] Duly sworn to by Joseph B. Eastman. Jurat

omitted m printing.

[File endorsement omitted.]

[fol. 6] In Untrep States District Court

ANSWER OF THE Unitep States—Filed Aug. 17, 1929

United States for answer to the petition filed herein

against it says:

United States admits for the purpose of this suit the

allegations contained in paragraphs numbered 1 and 11 of

the petition.

United States, for answer to paragraphs numbered III

and IV of the petition, and the several subdivisions of

those paragraphs, admits and alleges that the Interstate

Commerce Commission made and entered the order dated

June 10, 1929, referred to in subdivision 8 of the petition

and made a part thereof as Exhibit 4, in a proceeding then

pending before it entitled Docket 15234, In the Matter of

Divisions of Freight Rates in Western and Mountain-

Pacific Territories; that said proceeding was instituted by

the Commission upon its own motion by order dated Oc-

tober 8, 1923, referred to in subdivision 3 of the petition,

and attached thereto as Appendix 1, by which certain rail-

road companies, including the petitioners herein, operating

in the territories mentioned were made respondents; that

full hearings were had and thereafter the Commission made

and entered and served upon all the parties in said pro-

ceeding, the report of December 10, 1923, 148 I. C. C. 457,

referred to in subdivision 6 of the petition, and made a part

thereof as Appendix 3, to which the Court is respectfully

referred for information concerning the Commission’s find-

ings and the requirements thereof; that following the serv-

ice of the Commission’s said report of December 10, 1928,

petitioners herein, referred to as Southwestern Lines, filed

petition for rehearing, reargument and reconsideration;

that pursuant to said application the proceeding was re-

opened for reconsideration; and that subsequently the Com-

mission made and entered and served upon all the parties

in said proceeding report and order of June 10, 1929, re-

[fol.7] ferred to and made a part of the petition as Ap-

pendix 4, to which the Court is respectfully referred for

information ¢ acerning the Commission’s findings and the

requirements of said order; that in said proceeding the par-

ties thereto, including the petitioners herein were, and each

of them was, accorded the full hearing provided for by the

Interstate Commerce Act; that in said hearings a large

volume of testimony and other evidence bearing upon the

matters covered in said reports and order was submitted

to the Commission for consideration, including testimony

and other evidence submitted on behalf of petitioners herein

by their counsel; that at said hearings and subsequently,

both orally and in briefs filed in said proceeding, questions

relating to said matters were fully argued and submitted to

the Commission for determination on behalf of said parties

by their respective counsel, including many of the par;

icular questions raised by petitioners in this suit, where-

u the Commission determined said matters and entered

and served upon all the parties to said proceeding, includ-

ing the petitioners herein, its said reports and order; that

said reports and order included the Commission’s findings

of fact, decision, conclusions, order and requirements in

the premises, and that, upon evidence aforesaid, and as

shown in and by said reports, the Commission made the

findings and stated the conclusions upon which said order

is based. a

The United States further alleges that the Commission’s

findings and conclusions in said reports are, and each of

them is, fully supported and justified by the evidence sub-

“mitted in said proceeding as aforesaid.

The United States further alleges that in making said

reports The Commission considered and weighed carefully,

in the light of its own knowledge and experience, each fact,

circumstance, and condition called to its attention on behalf

of the parties to said proceedings by their respective coun-

sel, including matters covered by the allegations of the

petition herein.

United States expressly denies that in making and enter-

[fol.8] ing said order of June 10, 1929, the Commission

acted arbitrarily, or contrary to relevant testimony or in °

excess of its authority, or otherwise unlawfully.

United States further denies that said order of June 10,

1929, is unlawful or invalid for any of the reasofs set forth

in the petition or for any other reason; and denies further

that petitioners will suffer irreparable or other damage if

said order is not suspended or enjoined.

United States denies, except as herein expressly ad-

- mitted, the truth of each and every allegation of the. peti-

tion, in so far as it or they conflict with the allegations

herein, or the statements and conclusions of fact contained

in said reports and orders of the Commission.

William L. Vandeventer, United States Attorney.

John Lord O’Brian, Assistant to the Attorney

General. Elmer B. Collins, Special Assistant to

the Attorney General.

Duly sworn to by Elmer B. Collins. Jurat omitted im

printing.

’

[fol.9] [File endorsement omitted. ]

«dé

In Unrrep States District Court

Notice oF APPLICATION FoR LEAVE To INTERVENE—Filed

Aug. 31, 1929

To Messrs. F. H. Moore, W. E. Davis, E. T. Miller, M. G.

Roberts, G. H. Muckley, H. H. Larimore, C S. Burg, J.

R. Turney, Robert Thompson, Solicitors for Petitioners;

William L. Vandeventer, John Lord O’Brian, Elmer B.

Collins, Solicitors for the United States of America; D.

W. Knowlton, E. M. Reidy, Solicitors for Interstate Com-

merce Commission: .

Please take notice that on August 31, 1929, at the opening

of Court, or as soon thereafter as Counsel can be heard, we

shall appear before his Honor, Judge Reeves, in the court

(fol. 10] room usually occupied by him in the Federal Court

Building at Kansas City, Missouri, or before such other

Judge as is then and there in his stead sitting, and shall

present to the Court a petition for an order granting leave

to William. W. Wheelock and William G. Bierd, Receivers

of the Chicago and Alton Railroad Company; Chicago and

Eastern Illinois Railway Company; Chicago and North

Western Railway Company; Chicago, Burlington and

Quincy Railroad Company; Chicago Great Western Rail-

road Company; Chicago, St. Paul, Minneapolis and Omaha

Railway Company; Illinois Central Railroad Company; W.

H. Bremner, Receiver of Minneapolis & St. Louis Railroad

_ Company; Minneapolis, St. Paul & Sault Ste. Marie Rail-

road Company, and Wabash Railway Company, to inter-

' vene in the above entitled cause as parties defendant, and

for leave to file instenter their joint and separate answer to

the petition filed by petitioners herein, copies of which peti-

tion, érder and answer are attached hereto; at which time

and place you may appear if you see fit.

/ Silas H. Strawn, K. L. Richmond, P. F. Gault, Ken-

neth F’. Burgess, Ralph M. Shaw, A. H. Lossow, J.

Carter Fort\M. M. Joyce, L. H. Strasser, F, H.

Towner, Solitors for Interveners,

Received a copy of the foregoing notice and of the peti-

tion, order and answer therein referred to, this Slst day of

August, 1929. ‘

F. H. Moore, W. E. Davis, E. T. Miller, M. G.

[fol. 11] Roberts, G. H. Muckley, H. H. Larimore,

C. S. Burg, J. R. Turney, Robert Thompson, Solici-

tors for Petitioners. Elmer B. Collins, Special As-

sistant to the Attorney General, Solicitor for

United States of America. J. Stanley Payne,

Solicitor for the Interstate Commerce Commission.

[File endorsement omitted. ]

In Unitep States District Court

Petition For Leave To INTERVENE—Filed Aug. 31, 1929

To the Honorable Judges of said Court:.

Now come William W. Wheelock and William G. Bierd,

Receivers of Fhe Chicago and Alton Railroad Company;

Chicago and Eastern Illinois Railway Company; Chicago

and North Western Railway Company; Chicago, Burling-

ton and Quincy Railroad Company; Chicago Great West-

ern Railroad Company ; Chicago, St. Paul, Minneapolis and

Omaha Railway Company; Illinois Central Railroad Com-

pany; W. H. Bremner, Receiver of Minneapolis & St. Louis

Railroad Company; Minneapolis, St. Paul & Sault Ste.

Marie Railway Company, and Wabash Railway Company ;

and respectfully show to the Court:

That your petitioners, William W. Wheelock and William

G. Bierd, are the duly qualified and acting Receivers of The

Chicago and Alton Railroad Company, an Illinois corpora-

tion, with their principal office at Chicago, Illinois; that

your petitioners, Chicago and Eastern Illinois Railway

Company, Chicago and North Western Railway Company,

Chicago, Burlington and Quincy Railroad Company, Chi-

cago Great Western Railroad Company and Illinois Central

{fol. 12} Railroad Company, are corporations organized

and existing under the laws of the State of Illinois, with

their principal offices at Chicago, Illinois; that your peti-

tioner, Chicago, St. Paul, Minneapolis and Omaha Railway

- ‘.

Company is a corporation organized and existing under the

laws of the State of Wisconsin, with its principal office at

St. Paul, Minnesota; that your petitioner, W. H. Bremner,

is the duly qualified and acting Receiver of Minneapolis &

St. Louis Railroad Company, an-towa-eerporation, with his

principal office at Minneapolis, Minnesota; that your peti-

- tioner, Minneapolis, St. Paul & Sault Ste. Marie Railway

Company, is a corporation organized and existing under

the laws of the State of Minnesota, with its principal office

at Minneapolis, Minnesota; and that« your petitioner,

Wabash Railway Company, is a corporation organized and

existing under the laws of the State cf Indiana, with its

principal office at St..Loujis, Missouri; that all of your peti-

tioners are now and have been in possession of and operat-

' ing railroads engaged in interstate commerce.

That this proceeding is a suit to enjoin, suspend, set aside

and annul a certain order entered by the Interstate Com-

mere Commission in a proceeding before it entitled, ‘‘In

atter of Divisions of Freight Rates in Western and

Mountain-Pacific Territories,”’ its Dogket No. 15234; that

your petitioners are and were at all times during the pend-

ency of said proceeding, parties in interest thereto before

said Interstate Commerce Commission, within the meaning

of the statutes of the United States; that they participated

in said proceedings before the Interstate Commerce Com-

mission, introducing evidence, filing briefs and arguing the

same; that your petitioners are entitled by law to intervene

in this cause; that the purpose of this suit is to deprive

your petitioners of valuable and substantial rights, to the

great benefit and advantage of the petitioners therein; that |

your petitioners cannot adequately protect said rights and

interests unless permitted to intervene herein, and that

unless said rights and interests are protected your peti-

' [fol. 15) tieners will suffer great and irreparable damage

and injury.

Wherefore your petitioners pray that an order be entered

permitting your petitioners to intervene in this cause and

file instanter their joint and separate answer to the petition

filed herein, in the same manner and with like effect as if

your petitioners had been named in said original petition as

sea defendant.

William W. Wheelock and William G. Bierd, Re-

ceivers of the Chicago and Alton Railroad Com-

Le)

pany; Chicago and Eastern Illinois Railway Com- |

pany, Chicago and North Western Railway Com-

pany, Chicago, Burlington and Quincy Railroad

Company, Chicago, Great Western Railroad Com-

pany, Chicago, St. Paul, Minneapolis and Omaha’

* Railway Company, illinois Central Railroad Com-

pany, W. H. Bremner, Receiver of Minneapolis &

St. Louis Railway Company, Minneapolis, St. Paul

& Sault Ste. Marie Railway Company, Wabash

Railway Company, by Silas H. Strawn, K. L. Rich-

mond, P. F. Gault, Kenneth F. Burgess, Ralph M.

Shaw, J. Carter Fort, M. M. Joyce, A. H. Lossow, -

L. H. Strasser, Frank H. Towner, Their Solicitors.

[fol. 14] Duly sworn to by J. A. Behrle. Jurat omitted in

printing. .

[File endorsement omitted. ]

cha States District Court

Ornper Grantino Leave to Iwrenvens—Filed Aug. 31, 1929

This cause comihg on to be heard upon the petition of

William W. Wheelock and William G. Bierd, Receivers of

The Chicago and Alton Railroad Company; Chicago and

Eastern Illinois Railway Compasy; Chicago and North

Western Railway Company ; Chicago, Burlington and Quincy

Railroad Company ; Chicago Great Western Railroad Com-

pany; Chicago, St. Paul, Minneapolis and Omaha Railway

Company ; Illinois Central Railroad Company; W. H. Brem-

ner, Receiver of Minneapolis & St. Louis Railroad Com-

pany; Minneapolis, St. Paul & Se=it Ste. Marie Railway

Company, and Wabash Railway Company, for leave to in-

tervene herein as parties defendant; and the Court having

heard the argument of counsel and being fully advised in

the premises :

It is hereby ordered that said William W. Wheelock and

William G. Bierd, Receivers of the Chicago and Alton Rail-

road Company ; Chicago and Eastern Illinois Railway Com-

pany; Chicago and North Western Railway Company ; Chi-

. mak

cago, Burlington and Quincy Railroad Company; Chicago

Great Western Railroad Company ; Chicago, St. Paul, Min-

neapolis and Omaha Railway Company; Illinois Central

Railroad Company; W. H. Bremner, Receiver of Minne-

apolis & St. Louis Railroad, Company; Minneapolis, St.

[fol: 15] Paul & Sault Ste. @ Railway Company,\ and

Wabash Railway Company, be and they are hereby /er-

mitted to intervene in said cause as parties plefendant.

_ And it is further ordered that said interveners may

file herein instanter their joint and separate answer to the

petition filed herein.

Enter:

i Albert L, Reeves, Judge.

Dated Aug. 31, 1929.

[File endorsement omitted. ]

{fol. 16] In Untrep States District Court

Notice or Motion ror Leave to Fine AMENDED Petirion—

¢ Filed Sept. 17, 1929 .

To Messrs. William L. Vandeventer, John Lord O'Brian,

Elmer B. Collins, Solicitors for the United States of

America; D. W. Knowlton, Solicitor for the Interstate

Commerce Commission; Frank H. Towner, Chas. M.

Miller, Solicitors for William W. Wheelock and William

G. Bierd, receivers for the Chicago & Alton Railroad

Company et al., Interveners:

Please take notice that on the 17th day of September,

1929, at the opening of Court, gr as soon thereafter as coun-

sel can be heard, counsel for petitioners will appear before

the Honorable A. L. Reeves, Judge.in the court room

usually oceupied by him ifi the Federal Court Building at

Kansas City, Missouri, or before such other judge as is then

and there in his stead sitting, and will present to the said

court a motion for leave to fil 1ended petition in the

above entitled cause, a copy of which is hereto attached.

¥. H. Moore, W. E. Davis, Solicitors for Petitionerg

Received a copy of the foregoing notice and of the above

described amended petition this 17 day of September, 1929. -

Wm. L. Vandeventer, U. 8. Atty.; Elmer B. Collins,

[fol.17] D. W. Knowlton, by C. E. Curtis, Asst.

U. 8. Atty., Solicitors for United States of Amer-

ica. F. H. Towner, Charles M. Miller, Solicitors ;

for William W. Wheelock and William G. Bierd,

Receivers for the Chicago & Alton Railroad Com-

pany, et al., Interveners. D. W. Knowlton, by C. E.

Curtis, Solicitor for the Interstate Commerce Gom-

mission.

[File endorsement omitted.]

+e)

In Unrtrep States District Court

Motion For Leave To Fire AMENDED Petirion—Filed

Sept. 17, 1929

Now come petitioners in the above entitled cause and ask

leave to file therein an amended petition, a copy of whichris

hereto attached. -

F. H. Moore, W. E. Davis, Solicitors for Pétitioners.

[File endorsement omitted. ]

In Unrrep States District Court

Orper Grantine Leave to Fitz AMENDED Petirion—Filed

Sept. 17, 1929

Now on this day the motion of petitioners for leave to file

an amended petition having been heard and considered:

It is hereby ordered that leave is granted petitioners to

file said amended petition and that a copy of said amended

petition without attachment of appendices 1 to 4 inclusive,

[fol. 18] attached to the original petition, shall be served

upon defendant and interveners herein.

Albert L. Reeves, Judge.

[File endorsement omitted.]

[fol. 19] In Unrrep States Disrsictr Court

[Title omitted]

AmenvbeD Petition—Filed Sept. 17, 1929

To the Honorable the Judges of the District Court of the

United States for the Western Division of the Western

District of Missouri:

The petitioners, on behalf of themselves, and of such

other persons or companies as may have an interest herein,

and may, by proper proceedings, become parties hereto, by

leave of court first obtained, file this, their amended peti-

tion against the United States of America to enjoin, set

aside, annul and suspend a certain order hereinafter set

forth, of the Interstate Commerce Commission (herein

called the ‘‘Commission’’), which is a commission existing

under and by virtue of the Interstate Commerce Act (Title

49, Sections 1-27, United States Code, 1926), and thereupon

petitioners complain and say:

Parties

1. The petitioners are corporations duly organized and

existing under the laws of the following states: The Beau-

mont, Sour Lake & Western Railway Company, under the

laws of the State of Texas; The Fort Worth and Denver

City Railway Company, under the laws of the State of

Texas; The Galveston, Harrisburg, and San Antonio Rail-

way Company, under the laws of the State of Texas; Hous-

ton and Shreveport Railroad Company, under the laws of

the State of Louisiana; Houston & Texas Central Railroad

Company, under the laws of the State of Texas; The Hous-

ton East and West Texas Railway Company, under the laws

of the State of Texas; Ipternational-Great Northern Rail-

road Company, under the laws of the State of Texas; The

Kansas City Southern Railway Company, under the laws

of the State of Missouri; Louisiana & Arkansas Railway

Company, under the laws of the State of Delaware;

Louisiana Railway & Navigation Company, under the laws

[fol. 20] of the State of Louisiana ; Loyisiana Western Rail-

road Company, under the laws of the State of Louisiana;

Missouri-Kansas-Texas Railroad Company, under the laws

of the State of Missouri; Missouri-Kansas-Texas Railroad

Company of Texas, under the laws of the State of Texas;

Missouri Pacific Railroad Company, under the laws of the

State of Missouri; Morgan’s Louisiana and Texas Railroad

and Steamship Company, under the laws of the State of

Louisiana; New Orleans, Texas & Mexico Railway Com-

pany, under the laws of the State of Louisiana; The St.

Louis, Brownsville and Mexico Railway Company, under the

laws of the State of Texas; St. Louis-San Francisco Rail-

way Company, under the laws of the State of Missouri; St.

Louis, San Francisco and Texas Railway Company, under

the laws of the State of Texas; St. Louis Southwestern Rail-

way Company, under the laws of the State of Missobri; St.

Louis Southwestern Railway Company of Texas, under the

laws of the State of Texas; San Antonio & Aransas Pass

Railway Company, under the laws of the State of Texas;

Texas and New Orleans Railroad Company, under the laws

of the State of Texas; and The Texas and Pacific Railway

Company, under the laws of the United States of America.

During the pendency of this proceeding, petitioner, the

Texas and New Orleans Railroad Company acquired con-

trol by lease of and now operates the properties of petition-

ers The Galveston, Harrisburg, and San Antonio Railway

Company, Houston and Shreveport Railroad Company,

The Houston East and West Texas Railway Company,

Louisiana Western Railroad Company, Morgan’s Louisiana

and Texas Railroad and Steamship Company, and San

Antonio & Aransas Pass RaiJway Compafty, and petitioner

Louisiana & Arkansas Railway Company (which was not

included as a respondent), acquired control by lease of and

now operates the property of petitioner, the Louisiana Rail-

way & Navigation Company. Subject to the above explana-

tion, petitioners and all the other railroad companies here-

inafter referred to, at all the times herein mentioned, were

and now are common carriers engaged in the business of

operating railroads for the transportation of ‘passengers

and freight in interstate and foreign commerce, and they are

all subject to the provisiogss of the Interstate Commerce Act

i 6 a es re oa ee Eee

and the acts supplemental thereto and amendatory thereof

(Title 49, Sections 1 to 27, United States Code, 1926).

The defendant, the United States of America, is being

sued by express authority of the Congress of the United

States as set forth in an act of October 22, 1913, known as

the Urgent Deficiencies Appropriations Act (38 Stat. L.&

219, Chapter 32; Title 28, Sections 43-48, United States *

Code, 1926).

As hereinafter set forth, this suit is brought for the pur-

pose of enjoining and setting aside an order of the Inter-

state Commerce Commission entered upon its own initiative

for the purpose of investigating, under the provisions of

sub-division (6) of Section 15 of the Interstate Commerce

Act, the reasonableness of divisions of the joint through

freight rates as between certain carriers in the Southwest-

ern Region of the United States, which term was defined,

[fol.21] in said proceeding, as embracing the states of

Texas, Arkansas, Oklahoma, Louisiana west of the Mis-

sissippi River, and Missouri south of the main line of the

Missouri Pacific Railroad Company between Kansas City

and St. Louis, and certain carriers in Western Trunk Line

Territory, which term was defined as embracing the states

of Iowa, Minnesota, Wisconsin, Illinois, North Dakota,

South Dakota, Missouri on and north of the main line of

the Missouri Pacific Railroad Company between Kansas

City and St. Louis, and the upper peninsula of Michigan.

As stated, the Commission instituted the proceeding upon

its own initiative (148 I. C. C. 457, a copy of which is at-

tached designated Appendix 3. A copy thereof is attached °

as Appendix 3 to the original petition), but in its report

(148 I. C. C. 458) it referred to the Western Trunk Lines

respondents, which, as it said, were actively seeking in-

creases in divisions, as complainants, and the Southwestern

Line respondents, as defendants. As so termed, the com-

plainants were the following Western Trunk Line railroads;

The Chicago and Alton Railroad Company, William W.

Wheelock and William G. Bierd, Receivers; Chicago and

North Western Railway Company, Chicago, Burlington &

Quincy Railroad Company; Chicago Great Western Rail-

road Company; Chicago, Milwaukee and St. Paul Railway

Company; Chicago, Saint Paul, Minneapolis and Omaha

Cc)

a ee, ee ~eat a emsemaeep toy. bass ye ee

Railway Company; Illinois Central Railroad Company;

The Minneapolis & St. Louis Railroad Company, W. H.

Bremner, Receiver; Minneapolis, St. Paul & Sault Ste.

Marie Railway Company; Quincy, Omaha & Kansas City

Railroad Company; Chicago and Eastern Illinois Railway

Company; and Wabash Railway Company; and the defend-

ants, the following railroads: The Atchison, Topeka and

‘Santa Fe Railway Company; The Beaumont, Sqnr Lake &

Western Railway Company; The Chicago, Rock Island and

Gulf Railway Company; The Chicago, Rock Island and Pa-

cific Railway Company ; Fort Worth and Denver City Rail-

way Company; The Galveston, Hargisburg,and San Antonio

Railway Company; Gulf Colorado and Santa Fe Railway

Company; Houston and Shreveport Railroad Company;

Houston & Texas Central Railroad Company ; The Houston

East and West Texas Railway Company; International-

Great Northern Railroad Company; The Kansas City,

Mexico and Orient Railway Company ; Kansas City, Mexico

and Orient Railway Company of Texas; The Kansas City

Southern Railway Company; Kansas, Oklahoma & Gulf

Railway Company ; Kansas, Oklahoma & Gulf Railway Com-

pany of Texas (this respondent was not included in the

Commission’s order prescribing divisions) ; Louisiana Rail-

way & Navigation Company; Louisiana Railway & Naviga-

tion Company of Texas (this respondent was not included

in the Commission’s order prescribing divisions) ; Louisiana

Western Railroad Company; Missouri-Kansas-Texas Rail-

road Company; Missouri-Kansas-Texas Railroad Company

of Texas; Missouri Pacific Railroad Company; Morgan’s

Louisiana and Texas Railroad and Steamship Company;

New Orleans, Texas & Mexico Railway Company ; Panhandle

and Santa Fe Railway Company; The St. Louis, Browns-

ville and Mexico Railway Company ;St. Louis-San Francisco

[fol. 22] Railway Company; St. Louis, San Francisco and

Texas Railway Company; San Antonio & Aransas Pass Reil-

way Company; The Texas and Pacific Railway Company

St. Louis Southwestern Railway Company; St. Louis South- ™~

western Railway Company of Texas; Texas and New Or-

leans Railroad Company; and Vicksburg, Shreveport &

Pacific Railway Company. The Commission in its original

2—642, 643

report (148 I. C. C. 459), and in its order of June 10, 1929,

prescribing divisions, erroneously included the Texarkana

and Fort Smith Railway Company, which had not been made

a party to the proceeding. By order dated July 25, 1929, the

Commission amended its said order of June 10th, and

omitted the Texarkana and Fort Smith Railway Company

therefrom. The Commission erroneously included in its

said order of June 10th, the Chicago, Milwaukee, St. Paul

& Pacific Railroad Comphnny, which had not been made a

party to the proceeding. Its predecessor, the Chicago, Mil-

waukee & St. Paul Railway Company was a party to the

said proceeding.

Jurisdiction and Venue

9. One of the petitioners, The Kansas City Southern

Railway Company has its principal office, as well as its

principal operating office, in the City of Kansas City in thegy

Western Division of the Western District of Missouri; and

the order of the Commission which is the subject matter of

this petition does not relate to transportation or to a mat-

ter complained ef in a petition before the Commission, but

is the result of a proceeding instituted by the Commission,

on its own motion, in pursuance of the provisions of sub-

division (6) of Section 15 of the Interstate Commerce Act.

Suit is brought in the said district in accordance with the

provisions of the said Urgent Deficiencies Appropriations

Act of October 22, 1913; and petitioners invoke the jurisdic-

tion of this court under the provisions of the said act, of

Section 207 of the Judicial Code (Title 28, Sec. 41 (28)

United States Code 1926), of the Interstate Commerce Act,

and of the Constitution of the United States, and particu-

larly Section 8 of Article 1 thereof, which gives to Congress

the power to regulate interstate and foreign commerce, and

the fifth amendment of the said Constitution, which pro-

vides that no person shall be deprived of life, liber or

property, without due process of law.

Proceedings Before the Commission

3. On to-wit, the 8th day of October, 1923, the Commis.

sion, upon its own initiative, promulgated an order it which

it was recited that:

The Commission having under consideration the mat-

ters of divisions of freight rates and charges in western

and mountain-Pacific territories as defined in Increased

Rates, 1920; 58 I. C. C., 220, 58 I. C. C. 302, and 58 I. C. C.,

489. :

«lt is ordered, that.a proceeding of inquiry and investiga-

tion be, and it is hereby, instituted for the purpose of de-

termining whether the divisions of said rates or charges

are and for the future will be unjust, unreasonable, in-

equitable, or unduly preferential or prejudicial as between

or among the respondent carriers hereinafter named,

[fol. 23] within the meaning of paragraph (6) of section

15 of the Interstate Commerce Act, with a view to prescrib-

ing just, reasonable and equitable divisions of rates and

charges to be received by the several carriers in the event

that existing divisions are determmMed to be unjust, unrea-

sonable, inequitable or unduly preferential or prejudicial.

The order further provided that the petitioners and cer-

tain other carriers were made respondents, and that the

case should be assigned for hearings at such times and

places as the Commission might thereafter direct. A copy

of the said order is hereto attached and marked ‘‘ Appendix

1,’’ and is prayed to be taken and considered a part of this

petition as fully as,if set out in full herein. (A copy thereof

is attached as Appendix 1 ‘of the original petition.)

4. The above order of the Commission of October 8, 1923,

did not make all of the railroads in the Southwestern region

parties to the above investigation. On to-wit, the 23rd day

of September, 1925, the Commission entered an order mak-

ing the following additional railroads in the Southwestern

Region respondents:

St. Louis Southwestern Railway Company, a railroad

corporation organized and existing under the laws of the

State of Missouri; Louisiana Railway & Navigation Com-

20 ,

pany, a railroad corporation organized and existing under

the laws of the State of Louisiana; Vicksburg, Shreveport

& Pacific Railway Company, a railroad corporation organ-

ized and existing under the laws of the State of Louisiana;

Morgan’s Louisiana & Texas Railroad & Steamship Com-

pany, a railroad corporation organized and existing under

the laws of the State of Louisiana; Louisiana Western Rail-

road Company, a railroad corporation organized and ex-

‘isting under the laws of the State of Louisiana ; and Texas

and New Orleans Railroad Company, a railroad corpora-

{ion organized and existing under the laws of the State of

Texas. :

5. The petitioners filed a petition with the Commisison

in the said proceeding setting forth that there were one

hundred and thirty-seven additional railroad companies

operating in the Southwestern Region which had not been

made parties to the above proceeding, and asking that said

companies be made parties. A copy of the said petition is

hereto attached, marked ‘‘ Appendix 2,’’ and is prayed to

be taken and considered as a part of this petition as fully

as if set forth in full herein. (A copy thereof is attached

as Appendix 2 of the original petition.) The Commission,

however, on to-wit, the 28th day of November, 1925, entered

an order denying the said motion, without any statement

of its reasons therefor.

6. The Commission, on December 10th, 1928, rendered

its decision (148 I. C. C. 457) in this proceeding. It recited

that adjustments had been made by the interested carriers

as to divisions on certain traffic, including some traffic be-

tween the Western Trunk Line Region and the Southwest-

ern Region, and that (excluding the traffic as to which ad-

justments in divisions had been made by agreement of car-

riers) its report dealt with the divisions in the aggregate

north and south of Kansas City and St. Louis, Mo., and

East St. Louis, Cairo, Gale and Thebes, Ill., respectively,

(fol. 24] of the joint rates between points in Western

Trunk Line Territory generally east of the Missouri River,

and points in the Southwest; also the divisions of the west-

ern lines’ (that is, Western Trunk Lines’ and Svuthwest-

ern Lines’) shares or portions of the joint rates applying

on traffic moving between points in the southwest and points

Pat ee eet leak wie TR et NS BOI pi? ME , ee eee —

in territory east of the Illinois-Indiana state line and on

and north of the Ohio River and the line formed by the

Chesapeake & Ohio, Norfolk & Western, and Virginian rail-

roads between Cincinnati, Ohio, and Norfolk, Virginia, in-

cluding New England and the lower peninsula of Michigan.

The Commission further stated (148 I. C. C,. 459):

Complainants and defendants alike admit that the divi-

sions in question conform to no systematic and consistent

plan, but they are not particularly interested in the re-

vision of individual divisions. What complainants seek

and defendants oppose is primarily a finding that the

former are entitled to substantially increased revenue in

the aggregate out of the traffic under consideration, and a -

fixation of divisions appropriate to that end.

The Commission made substantially the following find-

ings and conclusions:

(a) That, judged by the average revenue per ton per

mile received, in the year 1924, by the Class I carriers

(Class I carriers are those whose gross operating revenues

equal or exceed one million dollars per year), the general

level of rates is somewhere in the n-ighorhood of 25 per

cent higher in the Southwestern Territory than in the West-

ern Trunk Line Territory, (148 I. C. C, 469).

(b) That there was no great difference in the average

hauls, in the two regions, during the year 1924 (148 I. C.

C. 469).

sity of traffic was more than 50 per cent greater in Western

Trunk Line Territory than in the Southwest (148 I. C. C.

470-472). 1.

(d) That it is not shown that expense of operation by

any means decreases in ratio to increase in traffic density;

that it is probable that the chief benefit of heavy density

is that overhead costs, such as return on investment are

lower per unit of traffic (148 I. C. C. 473).

(e) That the vital thing to ascertain is the relative cost

of service in the two groups (148 I. C. C, 473).

‘*) That, based on the average freight operating ex-

penws per ton mile in 1924 of Class I carriers operating

within the two groups, it cost about 15 per cent more per

ton mile to haul freight in the Southwest than in Western

Trunk Line Territory (148 I. C. C. 473).

(g) That a better basis for comparison is the amounts

needed to cover operating charges, taxes, and a fair return

on investment. That the following table shows for 1924

the book investment in the two groups, the net railway

operating income and its per cent on investment, the amount

of such income which would have been necessary to pro-

duce a 5.75 per cent return, and the amount by which the

actual income fell short of this return:

gic‘sol‘sz $ 980°F#9'L8 $ 9ze‘czc'st $ gg lillian aa ted lh Rati tii Aouewygod

CHO'6PL‘SZIS 1€2'409'90Z$ L¥0°90T‘00Z$ ore 1960s = ' wInyer queso Jed ¢)'¢

tt tes 9¢°F TAB Bae eh 9 }UEUI}SEAUT UO yUe0 Jeg

ZEC'0F0'LE IST‘096'8TT 122 08¢TST OFS'66F'ELI | °° eMmooUT Zuteredo AvmiTel JON

CI6‘6S6'98T'$ SLI‘Ltt‘ses‘'s$ oLt‘cor‘ost'ss szr‘zscosst$ “OO jueUTseATT Yoo

SOUT] UISSOATINGG SOT] FINAL W19jS9M += SIU AISoMqINY SUT] AUNIL, W199

sdnoa¥ q0q Uy puvisy Yooy paw ay sdnoi¥ 4309 Uy puLisy YooY puv ag

wavy Zuypajoxg BjU¥g ZUypNyjouy ° ; (9¢ £03)

(In the above statement and certain other statements,

computations were made by both including and excluding

the Santa Fe and the Rock Island railroads, for the reason

*® that those railroads have extensive mileage in both groups. )

After apportioning a part of the ‘‘deficiency’’ to passen-

ger service, the Commission found that, in 1924, the con-

structive freight revenue per ton mile needed to pay ex-

penses of operation, including a return of 5°4 per cent, was

12.01 mills in Western Trunk Line Territory and 14.29 mills

in the Southwest, and, conSequently, that the cost of service,

including a fair return on investment, was in the neighbor-

hood of 20 per cent greater per ton per mile in the South-

west than in the Western Trunk Line group, based on

averages of 1923 and 1924 operations. The Commission

stated that such percentage, while open to the criticism

that it was either based upon the operations of systems

‘which extended in some instances beyond the group bound-

aries, or in the case of the strictly group lines, upon an in-

complete showing of group operations, was not unfair to

the Southwestern railroads for the reason (1) that while

both groups contain systems which extend beyond their

western boundaries into territory with less favorable op-

erating conditions, the Western Trunk Line group also con-

tains systems, such as the Wabash and Illinois Central,

which extend beyond its eastern boundary into Official Ter-

ritory, with its more favorable operating conditions, and in

the case of the Illinois Central, into the Mississippi Valley

portion of Southern Territory; (2) that the book values of

the Southwestern Region are on a much less conservative

basis than those of the central western and northwestern

regions, (3) that the computations are not confined to the

interchange traffic between complainants and defendants

but cover all traffic and there is evidence indicating that a

somewhat larger proportion of low grade heavy loading

traffic is carried by complainants than by defendants; and

(4) that the trend of changing conditions is more favorable.

to defendants than to complainants (148 I. C. C. 475-6).

(h) That (148 I. C. C. 476) the relative financial condi-

tion of the two groups of carriers in indicated by the fol-

lowing table showing net railway operating income stated

in percentages of aggregate book investments:

. _

{

Including Excluding

Santa Fe Santa Fe

and Rock Island and Rock Island

in both h groups from beth groups

~ Strictly Strictly

" Western South- "Seger South- Western South-

Trunk western Trunk western Trunk western

lines, lines, lines, lines, lines, lines,

per cent percent percent percent percent per cent

Oa Se 5.74 4.82 5.57 4.03

. . eae 4.94 5.19 4.68 4.92

Co a: era 2.96 3.98 2.14 3.25

PES ee 3.42 3.54 3.16 3.12

OSS er 3.73 3.87 3.47 3.53 eee or

| i ere 3.55 4.36 3.31 4.44 2.23 4.81

UE ie cca yack exe 3.90 4.55 3.59 4.438 oe rare

Average ..<......: 3.8 4.30 3.65 3.95 2.23 4.81

[fol.26] That (148 I. C. C. 476) the rates of return for in-

dividual carriers, viz, the principal Chicago-St. Louis and

Chicago-Kansas City lines and the prominent Southwest-

ern lines were as follows in 1922 to 1925, inclusive

1922, 1923, 1924, 1925,

; percent percent percent percent

Western Trunk Lines:

Cifenae @& AMOR. ....c.ccse 1.05 3.59 2.86 2.87

Re Se ee rore eee 3.03 3.82 1.62 2.37

SF 5 ee ee 4.52 4.29 4.80 4.60

aS See .19 1.54 1.59 1.48

Of fe SE ee 1.90 2.81 2.57 2.27

Winots. Comtral. ....cccccces 5.92 tJ 4.76 4.76

io, Seer 1.7 =. 3.85 4.84

Southwestern Lines:

Pg Oak, Eee 4.61 5.17 4.63 5.16

. So8 8 Se Ae ne 6.05 5.67 9.04 7.55

Be UN OCG Wes Gi wiveksveent 4.30 4.44 5.28 4.33

BE CME WN Ss Beavc ave wN See eue 2.26 1.75 1.91 Tok

EE Ee vocsCanwuees is veuws 2.87 4.98 5.63 4.52

ie Me ie ME Sv ec acwneeedus's Deficit 22 Deficit .24-

B. GC. BB @ O. Of TeB. vesccs Deficit Deficit 2.41 47

ee, Se era te 2.88 2.60 2.85 3.49

DS a ere a 4.72 3.78 4.29 4.96

BE GE WOR s vow sew eves 1.63 1.56 5.03 3.28

Pe WONG ia rive eeee wisn ews ov, 2.09 a 3.81 4.14

le Sa sen Geswos wr aveues 3.99 4.72 5.05 5.23

SS a ee 7.05 7.44 4.97 4.81

ee Ge ee le SE Sei vevecess Deficit Deficit 1.33 1.46

SeTen E& PACH... 00000008 2.72 3.84 4.15 4.11

(i) That the cost of operation per ton mile, including all

expenses, charges, and a fair return on investment, in all

probability does not average as much as 20 per cent higher

in the Southwestern than in the Western Trunk Line group

(148 I. C. C. 478).

a | 4

(j) That the financial condition of complainants, on the

whole, is not as good as that of defendants.

Finally, the Commission found (148 I. C. C. 478) that the

divisions in issue were not just, reasonable and equitable,

and t pi there must be a readjustment, which readjustment

it stated should be as follows:

Such a readjustment will, we think, be accomplished if

-the joint rates are divided, south and north of the gateways,

in proportion to assumed rates for the two hauls, the as-

sumed rate for the distance covered by the haul south of the

gateway to be the first-class rate for that distance under

the present southwestern scale, and north of the gateway

to be 80 per cent of the first-class rate for that distance

under the same scale in the case of traffic to or from points

in Illinois and Wisconsin and 87 per cent in the case of

traffic to or from other points in the western trunk-line

group. Where differentials are added in either territory in

making the rates, such differentials should be deducted

before prorating and added to the divisions of the lines in

the region in which they apply. In the case of traffic to or

from points in official territory east of the Indiana-Tlinois

State line, the assumed rate used in determining complain-

ants’ proportion of the revenue accruing to the western

lines should be 80 per cent of the first-class rate under the

southwestern scale for the distance covered by complain-

ants’ haul minus 10 cents because of the absence of originat-

ing or delivering service.

(The ‘‘southwestern scale’’ referred to is a system or

‘‘seale’’ of mileage rates prescribed by the Commission for

application on certain traffic between, points within the

Southwestern Region in Consolidated Southwestern Cases,

123 I. C. C. 203, which was decided subsequent to the close

of the evidence in this divisions proceedings. ) -

The Commission s{ated further:

It should be borne in mind that under the 80 per cent

basis the assumed rates used south of the gateways are 25

per cent greater relatively than those used north thereof,

and that under the 87 per cent basis they are 15 per cent

greater.

[fol.27] No order was centered at that time, the respond-

ents being given sixty days’ time within which to agree

upon an adjustment substantially in accordance with the

Commission’s findings.

A copy of the said report of the Commission is hereto at-

tached as Appendix 3, and is prayed to be taken and con-

sidered as a part of this petition. (A copy thereof is at-

tached as Appendix 3 of the original petition.)

7. Petitioners, and other Southwestern carriers, filed a

petition for rehearing, which contained many statistical

tables and appendices, calling attention to the large amount

of revenue which, by the Commission’s decision, would be

transferred from the Southwestern carriers to the Western

Trunk Line carriers, including such prosperous Western

Trunk Line carriers: 4s the Illinois Central Railroad Com-

pany, and Chicago, Burlington & Quincy Railroad Com-

pany; setting forth many alleged errors, including the con-

tention that the basis proposed by the Commission would

not result in a division of revenues in accordance with the

Commission’s findings, and that the Commission’s decision

was contrary, in certain particulars to its previous deci-

sions, and asking, on account thereof, as well as the grave

questions involved, that the Commission grant a rehearing,

reargument and reconsideration of the case. The peti-

tioners offered to prove the additional facts alleged in their

petition for rehearing.

8. The Commission on June 10, 1929, modified its report

by providing that when the gateway through which the

traffic moves is St. Louis, East St. Louis, Cario, Gale or

Thebes the Western Trunk Line respondents, shall receive

a proportion determined by taking 75 per cent of the first-

class rate under the said Southwestern scale instead of 80

per cent as provided in the original report and that when

the Western Trunk Line tespondents are intermediate

carriers, 15c shall be deducted on account of terminal ex-

pense instead of 10c, as provided in the original report.

With these modifications of its report the Commission

denied the petition for rehearing and reargument, and

entered an order requiring that the said basis of divisions

be established.

The order further provided that the respondents, accord-

7 ingly as they participate in the transportation, are required

to cease and desist on and after August 1, 1929, and there-

after abstain from asking, demanding, collecting or receiv-

ing divisions of the aforesaid joint rates upon other bases

than those prescribed by the Commission.

A printed copy of the said report and order designated

‘* Appendix 4,’’.is hereto attached and made a part hereof.

(A mimeographed copy of the same document is attached

as Appendix 4 to the original petition.)

On July 25, 1929, the Commission made an order amend-

ing the second paragraph of its order of June 10, 1929, and

omitting the Texarkana and Fort Smith Railway Company

from the list of respondents contained in the said para-

graph. It further provided that the effective date of the

said order of June 10, 1929, should be postponed from

[fol. 28] August 1, 1929, to October 1, 1929. A copy of the

said order, designated Appendix 5, is hereto attached and

made a part hereof. ;

Grounds for Relief

9. Petitioners allege that, as shown by a test, based on

revenues of the month of September, 1928, as was fully set

forth in the said petition for rehearing, the basis prescribed

in the Commission’s report of December 10, 1928 (148 I. C.

C. 457) for dividing joint revenues between the Western

Trunk Lines and the Southwestern Lines, would increase

the amounts received by the Western Trunk Lines, and re-

duce the amounts received by the Southwestern Lines, in an

aggregate amount of not less than $3,000,000 per annum;

that with the modifications prescribed in the Commission’s

report and order of June 10, 1929, the increase to the West-

ern Trunk Line respondents, and the corresponding de-

crease to the Southwestern Line respondents, would be not

less than $2,900,000.00 per annum; and that for the reasons

herein stated, the order of the Commission. which takes this

large amount of revenue to which, under their existing

agreements with the Western Trunk Lines, the Southwest-

ern carriers are entitled, and grants it to the Western Trunk

Lines, is unconstitutional, unlawful and void.

10. That the Commission found in its original report that

the general level of rates was about 25 per cent higher in

REE aR a ERE OS OE SIME > - : ~ és ges x

the Southwestern Region than in the Western Trunk Line

Region (148 I. C. C. 469) and that the vital thing to be

ascertained in this proceeding is the rélative cost of service

including a reasonable return on the aggregate investments

in the two groups; that the Commission, for this purpose,

undertook to ascertain the amount of freight revenue which

would be required to pay expenses and yield said reasonable

return, and divided such aggregate revenue by the ton miles

of freight transported by each group to ascertain the aver-

age revenue per ton per mile which was required to yield

such reasonable return in each group; that thereby the Com-

mission found that the carriers in the Southwestern group

are entitled to 20 per cent more revenue, per ton per mile

out of the joint rates involved, than are the carriers in the

Western Trunk Line group; that, for the purpose of divid-

ing the revenues from the said joint rates between the

Western Trunk Line group and the Southwestern group, in

accordance with said findings, the Commission in its original

report, directed that the Western Trunk Line carriers

should receive such adivision of the revenue derived from

the joint rates, as would be obtained by dividing the said

joint rates in proportion to assumed rates for the hauls

performed by the Western Trunk Line carrier and South-

western carrier respectively, the assumed rate for the dis-

tance covered ky the haul south of the gateway to be the

first class rate for that distance under the Southwestern

scale of rates (established by the Commission, effective on

July 14, 1928) and the assumed rate for the distance cov-

ered by the haul north of the gateway to be 80 per cent in

the case of traffic, to, from oathrough the States of Illinois

and Wisconsin, and 87 per cent.im the case of traffic, to, from

(fol. 29] or through other portions of Western Trunk Line

territory, of the first class rate for that distance under the

same scale. The Commission stated ® its report (148 I. C.

C. 479), that it should be borne in mind that under the 80

per cent basis, the assumed rates used south of the gate-

ways are 25 per cent greater relatively than those used

nerth thereof, and that under the 87 per cent basis they are

15 per cent greater, plainly indicating the assumption of

the Commission that' the prescribed formula would yield to

the Southwestern carriers a share of the revenue equal to

their greater financial needs as found by the Commission;

that the said first class rate under the Southwestern scale

is not the scale upon which the said joint rates are based,

but is on a higher and different level and bears no definite

relatiéf! bhereto ; that the Commission, without any notice to

petitioners of its intention to use he said formula, based on

the said seale and said percentages, without any evidence

being introduced or issue made with regard thereto, and

contrary to the facts, arbitrarily and unwarrantedly as-

sumed that the use of the aforesaid formula would produce

the result required by its said findings of facts. Peti-

tioners allege that the first knowledge they had of the pro-

posed use of the said formula was when the Commission

promulgated its original report in this matter on December

10, 1928; that petitioners thereupon made an exhaustive

and careful study of the working of the said formula, by

applying the same to the revenues from the joint rates in-

volved, for the month of September, 1928; that, as shown by

the said test, the use of the said formula will yield to peti-

tioners very much less than 20 per cent more revenue for

the units of service performed by them; that the South-

western carriers’ proportion of the revenues for the month

of September, 1928, upon the existing basis of divisions was

$3,854,007.02 ; that upon a mileage prorate (that is, dividing

the revenue in proportion to the number of miles the ship-

ments were transported by each group of carriers) it would

amount to $3,511,081.08; that the amount which the South-

western carriers would receive under the formula pre-

scribed by the Commission would be $3,592,503.37, an

amount only slightly in excess of such mileage prorate;

that the Southwestern carriers would thereby suffer a loss

of $261,503.65, or more than $3,000,000 per year under the

Commission’s proposed bases of divisions as compared with

the existing bases; and that the “sateen carriers,

under the Commission’s proposed bases of divisions, in-

stead of receiving greater revenue in the proportion of 20

per cent more per mile than the Western Trunk Lines,

would actually receive only 5.8 per cent more. | Petitioners

further allege that these facts were set forth clearly and at

great length by petitioners in the petition for rehearing and

in appendices attached thereto, but that the Commission re-

fused to grant a petition for rehearing; that the Commis-

sion. in denying the petition for rehearing, made some slight

modifications in the formula, reducing the percentage from

80 per cent to 75 per cent of the‘assumed rate in the’ for-

5 ee em were * . fe , 7 — ——

mula, as to traffic to, from and through the States of Illinois

and Wisconsin, via the gateways of St. Louis, Cairo, Gale

[fol. 30] and Thebes, and permitting the Southwestern car-

riers to deduct 15 cents instead of 10 cents, where the West-

ern Trunk Line carriers perform, no terminal service, but

did not materially change the situation above described;

that petitioners have made a test @f the effect of the modi-

fied formula prescribed by the Commission as applied to

the revenues for the month of September, 1928, and that

such test shows that, taking the, revenue from the joint

rates which are specifically covered by the Commission’s

said order of June 10, 1929, (as elsewhere more fully ex-

plained, the order covers divisions of joint rates on ship-

ments between points on the lines of Southwestern respond-

ents and points on the lines of Western Trunk Line re-

spondents, and also on shipments between points on the

lines of the Southwestern respondents and certain Hastern

territory which pass over the line of a Western Trunk Line

respondent, as an intermediate carrier, but there are nu-

merous Southwestern and Western Trunk Line railroads

which were not made respondents, so that the order does

not apply to divisions of joint rates on shipments originating

or having destination at points on the lines of the latter),

such revenue of the respondents under the divisions agreed

upon by the carriers was divided in the following propor-

tions: $1,632,593 to the Western Trunk Line respondents,

and $3,320,756 to the Southwestern respondents; that under

the said order of the Interstate Commerce Commission the

- Western Trunk Line respondents would receive $1,875,485

and the Southwestern respondents $3,077,864, a loss to the

Southwestern respondents of $242,892 per month, or $2,-

914,704 per annum, which amount is arrived at by multiply-

ing the figures for the month of September, 1928, by twelve;

that if the said revenue is divided in the manner in which

the Commission purported to ascertain the respective reve-

nue needs of the Western Trunk Lines and ~ abla

Lines, that is, by dividing the said revenue so that the

Southwestern Lines would receive 20 per cent greater reve-

nue per ton per mile than the Western Trunk Lines, the

Western Trunk Line respondents would receive $1,765,705

per month and the Southwestern Lines $3,187.644 per

month, instead of the above amounts produced by the Com-

mission’s order, and consequently the Sou‘hwestern re-

OOF I EN NM UF 6 A ITN ee Re RR ET ER RRM OE arenes:

spondents would receive $109,780 per month, or $1,317,360

per annum less revenue than according to the Commission’s

findings they are entitled to; that the said test shows that

the Southwestern respondents, instead of receiving 20 per

cent greater revenue per ton mile than is received by the

Western Trunk Lines, would receive under the Commis-

sion’s formula only a fraction more than 9 per cent greater

revenue per ton mile; that the said order of the Commission

will deprive certain of the petitioners of a much larger

amount of revenue than their proportionate parts of the

said sum of $2,914,704 per annum; that the action of the

Commission in prescribing the said formula was based upon

issues and assumptions of fact concerning which no evi-

dence was introduced nor any issue tendered in the proceed-

ing before the Commission; that the said conclusions and

assumptions were wholly erroneous; that the action of the

{fol. 31] Commission in basing its order thereon will result

in according to the petitioners substantially less revenue

than that to which they are entitled under the Commission’s

findings, and much less than they are justly, lawfully and

equitably entitled to; and that by reason thereof, as well as

of the failure and refusal of the Commission to remedy the

said error when its attention was called thereto in the peti-

tion for rehearing, and to grant a rehearing for that pur-

‘pose, the aforesaid order of the Commission is erroneous,

arbitrary, unreasonable and unlawful, and constitutes a

denial of due process of law, in violation of the fifth amend-

ment to the Constitution of the United States.

11. Petitioners further allege that the Commission, for

the purpose of ascertaining the basis upon which the joint

revenues should be divided between the Western Trunk

Line carriers and the Southwestern carriers, undertook to

ascertain the financial condition of certain railroads in the

Western Trunk Line group and the Southwestern group

respectively, including the amount necéssary to yield a re-

turn of 5% per cent upon the aggregate,pook values of the

said respondents, in order to divide the said joint revenues

between the said carriers in accordance with the alleged

average financial needs of the two groups; that no provision

was made, however, by which the increase in the divisions

to the Western Trunk Lines prescribed by the Commission

should go to, or be commensurate with, or be limited to the

needs of those individual Western Trunk Line carriers, if

any, whose need of additional revenue was greater than

that of the individual Southwestern carriers, nor that it

should be borne by the Southwestern carriers to the extent

of and in proportion to their financial ability. The result of

the Commission’s profosed basis of divisions will be to

compel carriers in the Southwestern Territory, whose re-

turns upon their investments are far bel§wa_reasonable

return, and far below even a return of 5%4 per out fer an-

num, as shown by the Commission’s findings, to contribute

a portion of their revenues to certain Western Trunk Line

carriers, whose financial condition is much better than that

of such Southwestern carriers. For example, The Kansas

City Southern Railway Company, one of the petitioners,

whose average rate of return for the years 1922 to 1925,

inclusive, upon the basis adopted by the Commission, was

2.95 per cent per annum, will, according to the test which

was made of the revenues for the monthof September, 1928,

be compelled to contribute tothe Chicago, Burlington &

Quincy Railroad Company, whose average rate of return,

as found by the Commission, was 4.55 per cent, the addi-

tional sum of approximately $19,322.52 per annum on the

traffic specifically covered by the Commission’s order, or

$26,878.08, per annum, if the effect of the Commission’s

order is to change the divisions on all the traffic between the

railroads in the said groups; to the Illinois Central Railroad

Company, whose average race of return, upon the same

basis, was 5.15 per cent, the additional sum of approximately

$974.28 per annum, under said order, or $834.84 on all of

said traffic; to the Wabash Railway Company, whose aver-

age rate of return was 3.57 per cent, the additional sum of

(fol. 32] approximately $46,360.20 per annum under the

specific terms of the Commission’s order, or $67,544.88 on

all of said traffic; to the Atchison, Topeka & Santa Fe Rail-

way Company, which opposed any change in the divisions,

and whose average rate of return, as shown by the Com-

mission, was 4.89 per cent per annum, the sum of approxi-

mately $1,767.96 per annum, under said order, or $8,913

per annum, on all of said traffic; and to the Chicago, Rock

Island & Pacific Railway Company, as to whose rate of re-

3—642, 643

turn the Commission made no finding whatever, in its re-

port, the sum of approximately $36,664.32 per annum under

the strict terms of said order, or $51,108.84 per annum, on

all of said traffic; that the total amount which the said Kan-

sas City Southern Railway Company will be required to

contribute under the said order, in large measure to car-

riers more prosperous than it is, will be in excess of $200,-

000.00 per annum under the strict terms of said order, or

in excess of $360,000 per annum, on all of the said traffic.

Petitioners allege that a similar situation exists as to each

of said petitioners, and that the said result is so arbitrary

and unreasonable, so inconsistent with and contrary to the

purposes of the said proceeding, and to the spirit and intent

of the Interstate Commerce Act, that the said order is un-

lawful and void, and in violation of the due process clause of

the 5th Amendment to the Constitution of the United States.

2. Petitioners further allege that the plan adopted in

the said proceeding, being based upon the financial condi-

tion and necessities of the various carriers, is/misconceived, -

and contrary to the spirit and intent of the Interstate Com-

merce Act, for the reason that, if it is necessary to furnish

financial assistance to less prosperons carriers, such as the

Chicago & Alton Railroad Company and the Chicago Great

Western Railroad Company, the proper course is to fix

divisions as between those lines and all their connections,

adjusting the burden to each contributor in proportion to

the latter’s financial ability, as was done tu the Missouri and

North Arkansas Divisions case, 68 I. C. C. 47, 98 L. C. C. 118,

and the Orient Divisions case, 73 I. C. C. 319, 96 I. C. C. 378.

Petitioners further allege that subdivision (6) of Section

15 of the Interstate Commerce Act, which provides for the

fixing of divisions as between carriers, does not contemplate

or authorize the fixing of divisions as between groups of

carriers, in cases like the present one, where neither typical

evidence nor the Commission's findings show that the finan-

cial, operating and other conditions, affecting the amount of

divisions, of the individual carriers in a group, are sub-

stantially identical, and where, on the contrary, the evi-

dence and findings show that conditions are very dissimilar,

and that if it did authorize such action it would be uncon-

stitutional; that the present plan, the result of which is to

—e ;

transfer a large amount of the revenues of weak carriers in

the Southwestern group to stronger carriers in the West-

ern Trunk Line group, in order to afford some financial as-

sistance to such carriers as the Chicago & Alton Railroad

Company, and Chicago Gréat Western Railroad Company,

(fol. 33] is/arbitrary, unreasonable and unlawful, in viola-

tion of the provisions of the Interstate Commerce Act and

of the due process clause of the said Fifth Amendment. /

13. Petitioners further allege that if the said proceeding

before the Commission were for the purpose of establishing

uniform divisions as between the carriers in the South-

western Region and the Western Trunk Line Region, and if

the Commission had authority to change the divisions for

that purpose, all of which they deny, the order is unlawful

and void for the reason that the Commission failed and

refused, after a motion had been made by petitioners, to

make parties to the said proceeding all the carriers in the

Southwestern Region; and for the further reason that not

all of the railroad companies in Western Trunk Line terri-

tery were made parties. Petitioners further allege that as

stated by the Commission neither the so-called complain-

ants nor defendants desired a revision of the divisional

bases to make them more systematic and consistent (148

I. C, C, 459); that the Commission has no authority under

the Interstate Commerce Act to make such revision unless

such divisions are unjust, unreasonable, inequitable or un-

duly preferential or prejudicial as between the carriers par-

ties thereto; that there was no proof that such divisions

were repugnant to the act in any respect, or of any public

interest requiring such revision, unless it were shown that

such’ revision was required (which petitioners deny) on

account of the financial condition of certain respondents,

in which latter event the order was void for the reasons

stated in paragraphs 11 and 12 hereof; that in the absence

of a showing of violation of the provisions of the act, the

Commission had no power or authority to act; that the said

division order does not, according to its terms, apply to all

earricrs nor to all traffic passing between the Southwestern

Region and the Western Trunk Line Region, but only to

such traffic as has its origin and destination upon the lines

of respondents and to the shares of respondents in such

traffic between points on the lines of respondents in the

Southwest and points in the territory east of the Illinois-

Indiana State Line and on and north of the Ohio River,

and the line formed by the Chesapeake & Ohio, Norfolk &

Western and Virginian Railways between Cincinnati, Ohio,

and Norfolk, Virginia; that many of the Western Trunk

Line carriers and Southwestern carriers were omitted from

the proceeding by the Commission and the order does not,

by its terms, apply to traffic originating or having destina-

tion at points on the lines of the latter; that the order of the

Commission instead of simplifying the divisional arrange-

ments will make them confused, complicated and unsys-

tematic, since the Commission’s basis is made to apply to

only.a portion of the joint traffic, and uses an assumed scale

of rates, and petitioners allege that for these reasons, the

said order of the Commission is arbitrary, discriminatory,

and unlawful, and denies to petitioners the due process of

law, which is guaranteed by the Fifth Amendment to the

Constitution of the United States.

14. Petitioners further allege that although the Com-

mission found that the level of rates in the Southwestern

fol. 34] Region is materially higher than in the Western

Trunk Line Region (148 [. C. C. 467-468), the general level

of rates being estimated by the Commission at about 25 per

eent higher in the Southwestern Region (148 I. C. C. 469),

the cost of service in the Southwestern Region is corre-

spondingly higher so that the higher level of rates was justi-

fied by the higher cost of service. Petitioners further allege

that it is against the public interest and contrary to the

spirit and intent of the Interstate Commerce Act that the

freight rates paid by the shippers of the Southwestern

Region-shall be transferred, as the Commission has en-

deavored to do in this case, to the railroads of the Western

Trunk Line Region where a lower level of rates and a lower

cost of service prevail; that the proper remedy is for the

Commission to increase the rates in the Western Trunk Line

Region so far as is necessary for the support of the car- —

riers in that region; and that the said order of the Com-

mission is, on that account, arbitrary, unlawful and void and

contrary to the provisions of the Interstate Commerce Act

and to the due process clause of the Fifth Amendment to

the Constitution of the United States.

15. Petitioners further allege that neither the Commis-

sion nor the complainants introduced in evidence or sub-

mitted to petitioners the proposed basis of divisions which

the Commission has now ordered to be established, and

petitioners’ first knowledge of it was when the Commis-

sion’s report was served; that petitioners consequently had

no opportunity to meet the said basis by the introduction

of testimony to show its practical workings or other-

wise; that petitioners particularly called this fact to

the attention of the commission at pages 10 and 140 of their

petition for rehearing and asked that the case be reopened

on that account; that as has already appeared from the

allegations in this petition, the Commission used chiefly the

operating statistics of the year 1924; that petitioners in

their petition for rehearing protested against the use

mainly of such statistics for the single, and now remote,

year 1924, and requested that the Commission reopen the

hearing in order that statistics for later years, including

the year 1928, might be introduced and used by the Com-

mission. The Commission in its report of June 10, 1929,

states that no definite offer of proof was made by peti-

tioners, in their petition for rehearing, but petitioners

allege that on page 3 of the petition for rehearing it was

stated that if the Commission granted the request for a re-

hearing and reopening of the case, the facts as set forth in

Appendix 1, attached to the petition for rehearing, which

gives the result of a test of the divisions proposed by the

Commission, as applied to revenues for the month of Sep-

tember, 1928, and which, as already stated, in paragraph 10

hereof, where the results of said test are set forth, showed

that‘the formula adopted in the Commission’s original re-

port would yield to the Southwestern carriers very much

less than the proportion of the revenue due to the South-

western carriers on account of their greater cost of service,

including return on investment, would be introduced in evi-

dence; that on pages 50 et seq. of the petition for rehearing

[fal. 35] a number of tables were printed showing that in

numerous instances under the proposed basis of divisions

the Western Trunk Lines would receive divisions in excess

of the amount of their local rates, and it was stated that if _

a rehearing was granted the Southwestern Lines would

undertake to show these and a great many more instances

where the proposed divisions of the Western Trunk Lines

would exceed their local rates; that the petition for rehear-

ing was devoted to contesting the fairness and lawfulness

of the basis of divisions proposed by the Commission of

which, as stated, the petitioners had no notice or knowledge

until the report of the Commission was published, and that

for all the above reasons, as well as the large amount of

revenue involved, it was an abuse of discretion and a denial

of due process of law for the Commission to render a deci-

sion based on such incomplete data, and to refuse to grant

‘o petitioners ai rehearing and a reopening of the case for

the purpose of the introduction of further testimony and

reargument. That such refusal was highly prejudicial to

petitioners is shown by the facts elsewhere set forth herein,

and also by the fact that during recent years, the regions

in which the Western Trunk Lines are located, have shown

a constantly improving financial condition, their condition

now being better than that of the carriers in the South-

western Region. That the return on book value, which was

the basis used by the Commission in its report (148 I. C. C.

476), has been as follows:

First six

months of

1925 1926 1927 1928 year 1929

Northwestern Region........... 3.60 3.83 3.40 4.05 5.08

Central Western Region........ 4.41 4.86 4.26 4.53 5.83

Southwestern Region........... 4.37 4.56 3.92 4.47 4.69

That the Western Trunk Line Region is situated in the

eastern part of what are termed the Northwestern and

Central Western Regions, which contain, in their western

_ portions, such sparsely settled states as Montana, Wyo-

‘ming, Idaho, Nevada, Utah, Arizona and New Mexico. That

the condition of the carriers in the said Central Western

Region, however, was, during all the said years, better than

that of the carriers in the said Southwestern Region, and

that the condition of the carriers in said Northwestern

Region is constantly improving, and is now better than that

of the Southwestern carriers.

16. Petitioners further allege that the Commission based

its decision in the present case upon alleged facts and data

which were not submitted in evidence before the Commis-

sion, which petitioners did not know were to be used, upon

which they had no opportunity to cross examine or intro-

duce testimony, and which were considered and treated by

the Commisison, as shown by its reports, as relevant and

material, to-wit:

(1) The Commission found that the book values of the

railroads in the Southwestern Region are on a much less

conservative basis than those of the railroads in the Central

Western and Northwestern Regions (148 I. C. C. 475), al-

(fol. 36] though no evidence to this effect was introduced in

the proceeding before the Commission, and no such issue

was made by any party to the proceeding;

(2) The Commission, in its report on reconsideration

(156 I. C. C. 104) referred to and considered the average

operating revenues, average operating expenses and

average hauls for the year 1924 of the Northern Pacific

Railroad, the Great Northern Railway, the Western Pacific

Railroad and the Union Pacific Railroad, although evidence

with reference thereto had not been introduced in the pro-

ceeding before the Commission ;

(3) The Commission found, in effect, that the operating

conditions on those portions of the Wabash Railroad and

the Illinois Central Railroad which extend beyond the east-

ern boundary of Western Trunk Line Territory as de-

scribed by it, into Official Classification Territory, and in

ease of the Illinois Central Railroad, into the Mississippi

valley, are and were more favorable than the operating con-

ditions on the portions of said railroads which are within

Western Trunk Line Territory, although there was no evi-

dence in the preteeding before the Gommission with refer-

ence to the operating conditions in said Official Classifica-

tion and Mississippi Valley territories ;

(4) The Commission referred to and considered the

alleged traffic density for the year 1927 within the Western

Trunk Line Territory and Southwestern territory, segre-

gated by states (148 I. C. C. pp. 472-3), although said data

was not introduced in evidence in the proceeding before the

Commission ;

(5) The Commission referred to, considered and used as

the basis of the prescribed divisions of the rates between

respondents ‘‘the first class Southwestern scale,’’ although

said scale was not introduced in evidence in the proceeding

before, the Commission ;

(6) The Commission by its report and order of June 10,

1929, prescribed divisions of rates which now apply upon a

substantial portion of the traffic interchanged between re-

spondents via the gateways involved in this proceeding,

although the present rates were prescribed in Consolidated

Southwestern Cases, 123 I. C. C. 203, and became effective

subsequent to the close of the evidence in the proceeding

before the Commmission and were not in evidence therein;

(7) The Commission assumed and used as the basis for

prescribing a so-called ‘‘rate pro-rate’’ of joint rates apply-

ing on traffic interchanged by respondents via the gateways

involved in this proceeding, assumed rates within Western

Trunk Line Territory, which were not introduced in evi-

dence, which do not exist, and which are higher than the

actual rates within that territory;

(8) The Commission found or assumed that cost per unit

of handling traffic diminishes progressively with the in-

crease in the distance of the haul in the same manner and

in the same ratio as the rate per mile diminishes under the

first class Southwestern mileage scale of rates, although no

evidence to this effect was introduced in this proceeding,

and petitioners respectfully allege that it is not a fact;

[fol.37] (9) The Commission found or assumed that just,

reasonable, and equitable divisions of the joint rates in-

volved would be arrived at by dividing the revenues there-

from in the following proportions, to-wit: The -proportion

to respondents in the Southwestern Territory to be upon

the basis of the first class Consolidated Southwestern rates

for the distance the traffic is transported by such respond-

ents, and the proportions to the Western Trunk Line re-

spondents to be a stated percentage of the said first elass

rate under the Consolidated Southwestern scale applicable

to the distance the traffic was hauled by said Western Trunk

Lines respondents, all as more particularly set out herein-

before. Petitioners allege that neither the Commission nor

the complainants introduced in evidence or submitted to

petitioners this proposed basis of the divisions of said joint

rates; that there was no evidence introduced in the pro-

ceedings before the Commission showing or tending to

show that such basis of divisions would be just, reasonable

and equitable, or showing or tending to show that such

basis of divisions would accord to respondents in either

group, nor to the individual respondents in either group,

that portion of the joint revenues to which they were en-

titled, and no evidence was introduced in the proceeding

before the Commission to show what effect the use of such

a basis of divisions would have upon the revenues of your

petitioners and other carriers in the Southwestern Region,

either in the aggregate, or individually ; that the petitioners’

first knowledge of the aforesaid basis or formula, or of

the intention of the Commission to use or prescribe such

basis or formula, was when the Commission’s original re-

port was served upon them; and that petitioners have not

had any opportunity to introduce evidence or testimony,

or to show by cross examination or otherwise the practical

workings or effect of the use of said formula, or to show

whether or not the formula in fact accords to them just,

reasonable and equitable divisions of the joint rates in-

volved.

Your petitioners further allege that the consideration

by the Commission of the aforesaid matters arid things

which were not in evidence, and each of them, was unlaw-

ful and in violation of the due process clause of the Fifth

Amendment to the Constitution of the United States, and

that by reason thereof the aforesaid order of the Commis-

sion is null and void. 7

17. Petitioners further allege that the Western Trunk

Line carriers, in connection with this proceeding, had se-

cured by negotiation increases in divisions which it was

estimated would yield additional revenue of about $3,000,-

000 per annum (148 I. C. C. 458), and the Commission

failed to add that amount to the revenues of the Western

Trunk Line carriers, or to otherwise take it into considera-

tion, in computing the relative ‘‘costs of service, including

a fair return on investment’’ in the two groups, and for

that reason the said order of the Commission is arbitrary,

unreasonable, and void, in conflict with the said statutes,

and wih the due process clause of the said Fifth Amend-

ment.

18. Petitioners allege that although the Commission

found that the relative cost of service within the West-

ern Trunk Line group and the Southwestern group

[fol. 38] is the vital factor, neither the Commission nor

any of the so-called complainants presented any evidence

in the proceeding before the Commission as to cost of

operation upon or the revenues derived from that portion

of the lines of the complainants within Western Trunk Line

Territory as described in the Commission’s report, and the

only evidence before the Commission with reference to such

costs and revenues was the average cost of operation and

revenues for the entire systems of the Western Trunk Lines,

many of which have substantial mileage extending into

other territories where the cost of operation is greater than

the cost of operation in that portion of their lines in West-

ern Trunk Line Territory as hereinbefore described; that

on pages 90 and 91 of the said petition for rehearing the

Commission’s attention was called to the fact that witnesses

for complainants had testified that cost of operation was

considerably greater on portions of their lines west of

Western Trunk Line Territory, but the Commission per-

sisted in using such evidence as to cost of operation upon

said entire systems; and that, by reason of the foregoing,

the reports and order of the Commission are not based

upon any proper, competent or substantial evidence and

are arbitrary, unreasonable and unlawful and in violation

of the provisions of the Fifth Amendment of the Constitu-

tion of the United States.

19. Petitioners further allege that the action of the Com-

mission in making an order, the effect of which is to abro-

gate divicions agreements voluntarily entered into between

the Western Trunk Line carriers and the Southwestern

carriers, and to deprive the Southwestern carriers, the

majority of which are receiving much less than a fair re-

turn on their investments, and which carriers as a whole

are receiving much less than a fair return on their invest-

ments, of a large amount of revenue, (which will be net

revenue, since the amount of service to be performed: will

not be reduced), upon the incomplete and insufficient data

used by the Commission, against the protests of petitioners,

for example, in using revenue and other statistics of the

entire railroad systems, as above explained, instead of tlre

portions thereof which are located in said Western Trunk

Line and Southwestern Regions, in failing to secure and

use statistics for the year 1925, 1926, 1927 and 1928, in fail-

ing to ascertain the condition of each individual respond-

ent, and to make its order in accordance therewith, and in

failing to provide in the order for adjustments or excep-

tions as to individual carriers, in whole or in part, on

proper showing, was so arbitrary, unreasonable and-unlaw-

ful, that the said order is nl and void. «

20. Petitioners further allege that the order of June 10,

1929, osders and requires the respondents in the proceed-

ing before the Commission to establish and to maintain

after August 1, 1929, (the effective date was afterward

postponed to October 1, 1929) and thereafter (until further

order of the Commission) to ‘abstain from asking, demand-

ing, collecting or receiving divisions of the joint rates in-

volved upon any bases other than the bases specifically pre-

scribed by the Commission in said order, and that the Com-

[fol. 39] mission thereby fixed and prescribed not only the

maximum divisions to be paid to the Western Trunk Line

respondent, but also the minimum division which the said

Western Trunk Line respondents may hereafter receive,

and denied to said respondents the right to agree upon or

voluntarily accept any lower bases of divisions than those

prescribed by said Commission; that the said order applies

to all the railroad companies which are made respondents in

road companies in the Southwestern Territory and West-

ern Trunk Line Territory which are not made respondents;

and which are eompetitors of petitioners. Petitioners fur-

ther allege that the Commission has no lawful power or au-

thority to fix or prescribe the minimum divisions of joint

rates which common carriers may pay or receive, and that

by the issuance of the aforesaid order the Commission ex-

ceeded the powers conferred upon it by law, and that said

order is unlawful, discriminatory, null, void and of no

effect. _—

: —

21. Petitioners further allege that the Commission by

its order requires the Southwestern respondents to pay and

— ry ~

the Atchison, Topeka and Santa Fe Railway Company and

the Chicago, Rock Island and Pacific Railway Company to

accept and receive increased divisions out of the joint rates

involved, notwithstanding the fact that the Chicago, Rock

Island and Pacific Railway Company did not participate

in the proceeding before the Commission, introduced no evi-

dence, and demanded no increase in divisions, and further

that the Commission in its report made no finding as to the

financial condition of said carrier; and notwithstanding the

fact that the Atchison, Topeka and Santa Fe Railway Com-

pany did not demand any increase in divisions from the

Southwestern respondents, but at all times actively and

vigorously opposed any change in the divisional basis, and

contended that the existing divisions were and are just, rea-

sonable, equitable and non-prejudicial ; that the Commission

in its order requires petitioners to pay increased divisions

to the Chicago, Milwaukee, St. Paul & Pacific Railway Com-

pany, although it was not a party to said proceeding, and

had not been substituted for the Chicago, Milwaukee & St.

Paul Railway Company, whose property it purchased at

foreclosure sale; and that by reason of the foregoing, the

order of the Commission insofar as it requires the South-

western respondents to pay and the Chicago, Rock Island

and Pacific Railway Company, Chicago, Milwaukee, St.

Paul and Pacific Railway Company, and/or the Atchison,

Topeka and Santa Fe Railway Company to accept and re-

ceive divisions upon the bases prescribed by the Commis-

sion, is not in accord with the issues in the proceeding be-

fore the Commission, is not supported by the Commission’s

findings and is arbitrary, unlawful, in violation of the In-

terstate Commerce Act and in violation of the due process

clause of the Fifth Amendment to the Constitution of the

United States.

22. Petitioners further allege that the traffic to or from |

points on the lines of carriers operating in Central Freight

Association and Official Classification Territories (herein-

after called Eastern Lines), from or to points in the South-

[fol. 40] west, when moving via the lines of the Western

Trunk Line respondents, is a very substantial proportion

of the traffic covered by the report and order of the Com-

mission; that the joint rates on said traffic are first divided

with reference to the total hauls east and west of the Mis-

yf 45

sissippi River; that the divisions west of the Mississippi

River are subdivided between the Western Trunk Line

carriers and the Southwestern carriers; that the divisions

east of the River are sub-divided between the Western

Trunk Line carriers and the Eastern Lines; that the South-

western carriers have no voice in or control over fhe sub-

divisions accorded the Western Trunk Lines for service

performed by them east of the River but such sub-divisions

are determined and agreed upon by and between the West-

ern Trunk Line carriers and the Eastern Lines; but that

notwithstanding these facts, the Commission, by its report

and order of June 10, 1929, preseribed divisions between

the Western Trunk Line respondents and Southwestern re-

spondents based upon the total revenue received by the

Western Trunk Lines (for the hauls both east and west of

the Mississippi River) and upon the totel hauls performed

by them; that the Commission did not make the said Kastern

Lines parties to the proceeding before it and made no in-

vestigation to determine whether the alleged failure of the

Western Trunk Line respondents to receive just, reasonable

and equitable divisions is the result of the basis of divisions

accorded them by the Eastern Lines; that no evidence show-

ing the aforesaid subdivisions east of the Mississippi River

was introduced in the proceeding before the Commission;

that the Commission failed and refused to make all of the

direct connections of the Western Trunk Line respondents,

parties to the proceeding before it; and that by reason of

the foregoing, the order of the Commission is arbitrary,

unlawful and in violation of the Interstate Commerce Act,

and the said Fifth Amendment.

23. Petitioners allege that the Commission’s formula for

dividing the joint rates involved is based upon an assumed

level of rates for the carriers in Western Trunk Line terri-

tory which is materially higher than the level of retes

actually maintained within that territory; that if this

assumed level of rates is the proper level for appli-

cation within Western Trunk Line territory, the car-

riers within that territory are lawfully entitled to an

increase in their rate level, but if such inerease in

rates were accorded them, then their financial condition

would be materially improved and the Commission has no

means of ascertaining what basis of divisions should be

accorded the carriers in the two groups if the assumed level

of rates were established in Western Trunk Line territory;

that the class rates within Western Trunk Line territery

are now under investigation in a proceeding before the

Commission; and that, by reason of the foregoing, the re-

ports and order of the Commission are based upon insuffi-

cient evidence, and are arbitrary, unreasonable and un-

lawful.

24. That the Commission could not lawfully make an

order fixing divisions of the said joint rates without taking

into consideration the situation, financial and otherwise, of

[fol.41] each individual carrier which was a party to the

joint rates; that such requirement was not satisfied by the

statements of averages for groups of carriers which were

used by the Commission; that the tables used by the Com-

mission in its opinion, showing the return upon investment

of the various carriers, showed that the tinancial conditions

of the different carriers in the Southwestern Group were

widely dissimilar, some of said carriers earning nearly a

reasonable return and some earning practically no return,

or a small return, so that the tables and data used by the

Commission not only did not show by typical evidence that

conditions in the Southwestern Group were so similar that

a common divisional order could be made whicl would re-

sult in substzntial justice to all respondents in the said

group, but, on the contrary, the tables and data used by the

‘“‘ommission conclusively showed that conditions were so

dissimilar that no common divisional order could be made

which would result in substantial justice to all the respond-

ents affected by the said order, and the same thing was

true as to the respondents in the Western Trunk Line

group. For the above reason, the said order of the Com-

mission is null and void and denies to petitioners due

process of law.

25. All the evidence, and the findings of the Commission,

show that none of the petitioners herein is earning a rea-

sonable return upon its investment, and the order of the

Commission which takes from each of the said petitioners

a portion of its revenue is, consequently, confiscatory, null

and void, and.a deprivation of the property of each of said

petitioners without due process of law.

26. That the burden of proof in this proceeding was upon

the Interstate Commerce Commission which instituted the

proceeding upon its own initiative, and upon the Western

Trunk Line respondents which were termed complainants

by the Commission; that the said parties have failed to sus-

tain the burden of proof, and the order of the Commission

is therefore arbitrary and void.

27. The examiner of the Interstate Commerce Commis-

sion who presided at the taking of the testimony in this pro-

ceeding repeatedly stated that this proceeding was not a

financial case; that is, that it was not to be decided accord-

ing to the financial condition of the various respondents, or

of the two groups. The vital point upon which the Com-

mission decided the matter was the financial necessities

and abilities of the two groups of railroads. The petition-

ers therefore had no notice of the issue upon which the case

was decided, and the order of the Commission is therefore

arbitrary, null and void, and in conflict with the due process

clause of the Constitution of the United States.

28. That the Commission made an order requiring the

following respondents: The Beaumont, Sour Lake & West-

ern Railway Company, The Fort Worth & Denver City

Railway Company, The Galveston, Harrisburg & San An-

tonio Railway Company, Llouston & Shreveport Railroad

Company, Kansas, Oklahoma & Gulf Railway Company,

{fel. 42] Louisiana.Railway & Navigation Company, Loui-

siana Western Railroad Company, Morgan’s Louisiana &

Texas Railroad & Steamship (Company, New Orleans, Texas

& Mexico Railway Company, The St. Louis, Brownsville &

Mexico Railway Company, St. Louis, San Francisco &

Texas Railway Company, San Antonio & Aransas Pass

Railway Company, Texas & New Orleans Railroad Com-

pany, and Vicksburg, Shreveport & Pacific Railway Com-

pany, so-called defendants, to pay increased divisions to

the Western Trunk Line respondents, although there are no

facts stated or findings or conclusions by the Commission

as to the individual financial condition, or other facts bear-

ing upon the proper basis of divisions as to any of the

said respondents, and the Commission ordered the pay-

ment of increased divisions to the following so-called com-

plainants among the respondents: Chicago & Northwestern

er -* mr), > a ee ee ee) ee oY Oa Tegnentee wrens

BPcteinicacitcriace Sink Nate vee

Railway Company, The Chicago, Rock Island & Pacific

Railway Company, The Chicago, Rock Island & Gulf Rail-

way Company, Chicago, St. Paul, Minneapolis & Omaha

Railway Company, The Minneapolis & St. Louis Railroad

Company and W. HH. Bremner, Receiver, and Minneapolis,

St. Paul & Sault Ste. Marie Railway Company, although

no facts are stated or findings or conclusions made by the

Commission in its said reports as to the individual financial

condition, or other facts bearing upon proper divisions as

to any of the said complainants; and that the facts stated

as to the other individual respondents are entirely insuffis

cient to base any conclusion or order on. Petitioners allege

that for the above reason also, the said order of the Com-

mission is null and void.

29. The findings and conclusions of the Commission, and

all the evidence introduced in the said proceeding, are in-

sufficient to sustain the said order, and the same is there-

fore arbitrary, unlawful and void, and deprives petitioners

of their property without due process of law, in violation

of the said Fifth amendment,

All of the matters herein alleged petitioners offer to

prove.

For all of the reasons above stated, the said order of the

Commission is arbitrary, unreasonable, unlawtul and void

and in violation of the provisions of the Interstate Com-

merce Act and of the due process clause of the Fifth amend-

ment to the Constitution of the United States.

Petitioners allege that some of the so-called complain-

ants are insolvent and unable to respond in damages or to

make refunds of any of the divisions which would come into

their possession, should the said order of the Interstate

Commerce Commission take effect and later be judicially

held to have been unlawfully made and entered. Petition-

ers further allege that said order will take so much of the

net revenues of some of the said petitioners as to seriously

endanger their ability to pay their operating expenses,

taxes, interest and dividends. The said order of the In-

terstate Commerce Commission provides that it shall take

effect on October 1, 1929, and, unless it be suspended or set

aside by an order of this Court, will work irreparable dam-

age to each and all of the petitioners.

Wherefore, petitioners pray that upon the filing and

presentation of this petition, a temporary’or interlocutory

(fol.43] injunction suspending, restraining and enjoining

the operation of the said order of the Interstate Commerce

Commission herein complained of, be made by the Court,

after a notice of five days to the Interstate Commerce Com-

mission and the Attorney General of the United States, be-

cause of the irreparable damage which will result to peti-

tioners unless suchssuspension be made or such temporary

or interlocutory injunction be granted, and that the Com-

mission be restrained from taking any steps or instituting

any proceedings to enforce the said order, pending a hear-

ing on this petition; that upon the hearing of this cause a

decree be entered setting aside and annulling the said order

of the Interstate Commerce Commission and perpetually

enjoining and restraining the enforcement of the said order,

and that petitioners may be granted such other and fur-

ther relief as to the Court may seem meet and proper.

F. H. Moore, W. KE. Davis, EK. T. Miller, M. G.

Roberts, J. R. Bell, G. H. Muckley, H. H. Lari-

more, C. 8S. Burg, J. R. Turney, Robert Thompson,

Solicitors for All Petitioners.

Duly sworn to by H. A. Weaver. Jurat omitted in print-

ing.

————————

[fol. 44] APPENDIX 1 TO AMENDED PETITION

Order

At a GENERAL SESSION ‘OF THE INTERSTATE CoMMERCE Com-

Mission, HeLp at Its Orrice, 1x Wasuineron, D. C., on

THE 8TH Day or Octoser, A. D. 1923

No. 15234

In the Matter of Divisions of Freight Rates in Western

and Mountain-Pacific Territories

The Commission having under consideration the matter

of divisions of freight rates and charges in Western and

4—642, 643

Mountain-Pacifie territories as defined in Increased Rates,

1920; 58 I. C. C. 220, 58 I. C. C. 302, and 58 I. C. C. 489;

It is ordered, that a proceeding of inquiry and investiga-

tion be, and it is hereby, instituted for the purpose of de-

termining whether the divisions of said rates or charges

are and for the future will be unjust, unreasonable, inequit-

able, or unduly preferential or prejudicial as between or

among the respondent carriers hereinafter named, within

the meaning of paragraph (6) of section 15 of the Interstate

Commerce Act, wich a view to prescribing just, reasonable

and equitable divisions of rates and charges to be received

by the several carriers in the event that existing divisions

are determined to be unjust, unreasonable, inequitable or

unduly preferential or prejudicial ;

It is further ordered, that The Atchison, Topeka and

Santa Fe Railway Company; The Beaumont, Sour Lake &

Western Railway Company; The Chicago and Alton Rail-

road Company, William W. Wheelock and William G. Bierd,

Receivers; Chicago & North Western Railway Company;

Chicago, Burlington & Quiney Railroad Company ; Chicago

Great Western Railroad Company; Chicago, Milwaukee

and St. Paul Railway Company; The Chicago, Rock Island

and Gulf Railway Company; The Chicago, Rock Island and

Pacific Sarasa Chicago, St. Paul, Minneapolis

and Omaha Railway Company; The Colorado and Southern

Railway Company; The Denver and Rio Grande Western

Railroad Company, T. H. Beacom, Receiver; Kl] Paso and

Southwestern Company; Fort Worth and Denver City Rail-

way Company: The Galveston, Harrisburg and San Antonio

Railway Company; Great Northern Railway Company;

Gulf, Colorado and Santa Fe Railway Company; Houston

and Shreveport Railroad Company; Houston & Texas Cen-

tral Railroad Company; The Houston Kast and West Texas

Railway Company, Illinois Central Railroad Company;

International-Great Northern Railroad Company ; The Kan-

sas City, Mexico & Orient Railroad Company, Wm. T.

Kemper, Receiver; Kansas City, Mexico and Orient Rail-

(fol. 45] way Company of Texas; The Kansas City South-

ern Railway Company; Kansas, Oklahoma & Gulf Railway

Company; Los Angeles and Salt Lake Railroad Company;

The Minneapolis & St. Louis Railroad Company, W. H.

Pere |

ba Ne tnts

i Bone”

pore

Sie DERI Cais os Ces aa este eG et ane?

51]

Bremner, Receiver; Minneapolis, St. Paul & Sault Ste.

Marie Railway Company; Missouri-Kansas-T'exas Railroad

Company; Missouri-Kansas-Texas Railroad Company of

Texas; Missouri Pacific Railroad Company; New Orleans,

Texas & Mexico Railway Company; Northern Pacifie Rail-

way Company; Northwestern Pacific Railroad Company ;

Oregon Short Line Railroad Company; Oregon-Washing-

ton Railroad & Navigation Company; Panhandle and Santa

Fe Railway Company; Quincy, Omaha & Kansas City Rail-

road Company; The St. Joseph and C rand Island Railway

Company; The St. Louis, Brownsville and Mexico Railway

Company; St. Louis-San Francisco Railway Company; St.

Louis, San Francisco and Texas Railway Company; St.

Louis Southwestern Railway Company of Texas; The

San Antonio and Aransas Pass Railway Company; San

Diego and Arizona Railway Company; Southern Pacific

Company; Spokane International Railway Company:

Spokane, Portland and Seattle Railway Company; The

Texas and Pacific Railway Company, J. L. Lancaster

and Charles L, Wallace, Receivers; Union Pacific Railroad

Company and ‘The Western Pacifie Railroad Company be,

and they are hereby, made respondents in this proceedings ;

And it is fvrther ordered, that this case he assiened for

hearing at such times and plaees as the Commission may

hereafte” direct.

By the Commission:

George B. McGinty, Seeretary. (Seal.)

[fol. 46} APPENDIX 2 To AMENDED PETITION

BEForRE THE INTERSTATE COMMERCE CoM MISSION

I. C. C. Docket No. 15234

In the Matter of Divisions of Freight Rates in Western and

Mountain-Pacifie Territories

Petition of Respondents in Southwestern Territory for an

Order Making Various Other Carriers in Southwestern

Territory Respondents in This Proceeding

Now come Missouri-Kansas-Texas Railroad Company,

Missouri-Kansas-Texas Railroad Company of Texas, Mis-

Pe er ee

ete S >

souri Pacific Railroad Company, St. Louis-San Francisco

Railway Company, St. Louis Southwestern Railway Com-

pany, St. Louis Southwestern Railway Company of Texas,

Kansas City Southern Railway Company, Galveston, Har-

risburg & San Antonio Railway Company, Houston &

Shreveport Railroad Company, Houston Kast & West

Texas Railroad Company, Morgan’s Louisiana & Texas

Railroad & Steamship Company, Texas & New Orleans

Railroad Company, The Texas & Pacific Railway Company,

respondents herein, on behalf of themselves and such other

respondents similarly situated as may desire to join herein,

and respectfully request this Commission to issue an order

making the carriers, hereinafter referred to, respondents

in this proceeding, and in support of this petition represent

and show unto this Commission as follows:

On October 8, 1923, this Commission, having under con-

sideration the matter of divisions of freight rates and

charges in Western and Mountain-Pacifie Tercitories, en-

tered an order herein upon its own motion dire-ting that an

inquiry and investigation be instituted for the purpose of

determining whether the divisions of said reies or charges

were and for the future would be unjust, unreasonable, in-

equitable or unduly preferential or prejudicial as between

or among the respondent carriers named in said order

within the meaning of paragraph six of section 15 of the

Interstate Commerce Act, with a view to prescribing just,

reasonable and equitable divisions of rates and charges to

be received by the several carriers in the event that the

existing divisions were determined to be unjust, unreason-

able, inequitable or unduly preferential or prejudicial. By-

this order various carriers were made respondents in this

proceeding, including a number of the principal linés op-

erating in Southwestern territory. Originally the hearings

in this proceeding were confined to the divisions of rates

[fol. 47] between the transcontinental lines and the West-

ern Trunk Lines. On June 17, 1925, however, this (‘ommis-

sion issued a notice assigning this proceeding for further

hearing at Chicago, July 7, 1925, before Examiner Disque,

at which time it was stated in said notice testimony would

be received with reference to the matter of divisions of joint

rates between Western Trunk Line territory and South-

western territory. On July 6, 1925, this Commission issued

a notice canceling the hearing set for July 7, 1925, at Chi-

ago. On August 26, 1925, notice was issued assigning this

proceeding for hearing October 14, 1925, at Chicago, before

Examiner Disque, when evidence would be received only

with respect to divisions between Western Trunk Line ter-

ritory and Southwestern territory. On September 23, 1925,

this Commission issued an order naming certain additional

Southwestern carriers as respondents herein. At the hear-

ing on October 14, 1925, the Western Trunk Line carriers

introduced a part of their testimony in chief but did not

complete their evidence and the hearing was adjourned to

November 16, 1925, at Chicago, to enable them to complete

their case.

Respondents attach hereto, marked ‘‘ Apnendix A,’’ a list

of carriers in Southwestern territory not now parties

hereto which they request this Commission by an appro-

priate order to make respondents in this proceeding. Re-

spondents state that said carriers unite with them in the

publication of joint rates, the divisions of which are in-

volved herein, participate in the transportation of the

traffic to which said joint rates apply and receive substan-

tial divisions and earnings out of said joint rates. Many

of the divisions in Southwestern territory have been fixed

by this Commission, such as those between the so-called tap

lines and trunk lines, between the Missouri & North Ar-

kansas Railway Company and its immediate connections

and between the Kansas City, Mexico & Orient lines and

their immediate connections, but the present proportions

should not remain stationary if the primary divisions are

readjusted. As the record now stands, however, no order

can be made by this Commission affecting their revenues.

Respondents further state that since this is an investiga-

tion of divisions instituted by the Commission on its own

motion it should not content itself with dealing with the

main or primary divisions of the joint rates between the

immediately connecting Western Trunk Lines and South-

western lines north and south of the gateways of Kansas

City, St. Louis, Cairo, Thebes, ete., but should also deal

with and prescribe the necessary readjustment of divisions

which apply in subdividing the revenue accruing to all lines

participating in the joint rates in Southwestern territory.

Respondents further allege that if, as a result of this in-

quiry and investigation, the Western Trunk Lines are ac-

eee

hye

—

0 eh

Oe ee eee ee

corded increases in their divisions, and the carriers listed

in Appendix A are not made respondents herein, these re-

spondents will be compelled to absorb the entire increases

out of their divisions. The result will be that these respond-

lfol. 48] ents will receive divisions of rates which are un-

just, unreasonably low, inequitable and inadequate for the

service performed by them. Moreover, if the divisions of

these respondents are reduced and the shares of all other

lines which participate in the joint rates and the transpor-

tation of the trafie in Southwestern territory, including the

lines named in Appendix A hereto, are left unchanged, con-

troversies will immediately arise as to a readjustment of

the divisions between these respondents and said carriers,

and this Commission will be called upon to determine and

prescribe the divisions which shall be received by the vari-

ous carriers within Southwestern territory. Such contro-

versies will result in a multiplicity of proceedings before

this “ommission, TTenee, these respondents contend that

in justice and fairness to them any readjustment of the

primary divisions as between the Western Trunk Lines and

Southwestern lines should be aecompanied by a simulta-

neous readjustment of the divisions between all lines par-

ticipating in the joint rates and transportation of the

traffic in Southwestern territory, and that such readjust-

ment shonld not be left to future proceedings before this

Commission, but should be determined and_ prescribed

herein. Respondents state that it is entirely practicable to

fix the subdivisions of the rates in Southwestern territory

in this proceeding and that no delay will result from mak-

ing the carriers listed in Appendix A parties to this case-

Wherefore, respondents pray that an order issue mak-

‘ing the carriers listed in Appendix A hergto respondents in

this proceeding.

Missouri-Kansas-Texas Railroad Company, Mis-

souri-Wansas-Texas Railroad Company of Texas,

by C. 8S. Burg, Their Attorney. Missouri Pacific

Railroad Company, by H. H. Larimore, Its Attor-

ney. St. Louis-San Francisco Railway Company,

by M. G. Roberts, Its Attorney. St. Louis South-

western Railway Company, St. Louis South-

western Railway Company of Texas, by J. R.

Turney, Their Attorney. Kansas City Southern

Railway Company, by W. E. Davis, Its Attorney.

Galveston, Harrisburg & San Antonio Railway

Company, Houston & Shreveport Railroad Com-

pany, Houston Kast & West Texas Railroad Com.

pany, Morgan’s Louisiana & Texas Railroad &

Steamship Company, Texas & New Orleans Rail-

road Company, by Baker, Botts, Parker & Gar-

wood, J. R. Bell, G. WH. Muckley, Their Attorneys.

—_——— -—--

[fol. 49] Aprenpix 3 to" \Menpep Petition

14028

InTersTaTeE Commence ComMMISSION

? No. 15234

In the Matter of Divisions of Freight Rates in Western and

Mountain-Pacifie Territories

Submitted danuary 13, 1928. Decided December 10, 1928

Basic formulas prescribed for the determination for the

future of the just, reasonable, and equitable divi-

sions in the aggregate which shall accrue to respond-

ents north and south of the gateways of Kansas City

and St. Louis, Mo., and East St. Louis, Cairo, Gale,

and Thebes, Ill., of the joint rates applying via said

gateways ou freight traffic between points in western

truuk-line territory and points in the Southwest, and

also of the western Jines’ share of the joint rates

applying on freight tfaffic via said gateways between

points in the Southwest and points in the territory

east of the Illinois-Indiana State line and on and

north of the Ohio River and the line formed by the

Chesapeake & Ohio, Norfolk & Western, and Vir-

ginian railways between Cincinnati, Ohio, and Nor-

folk, Va.

Silas H, Strawr, Ralph M. Shaw, R. N. VanDoren, H. T.

Dick, J. N. Davis, M. N. Joyce, K. F. Burgess, L. H.

uh we

: ee .

Strasser, R. V. Fletcher, and Frank H. Towner for western —

trunk lines.

(.S. Burg, M. G. Roberts, Il, H. Larimore, W. E. Davis,

J. R. Turney, J. R. Bell, G. H. Muekley, T. D. Gresham,

Kilmer Westlake, Ff. KE. Andrews, and R. 8S. Outlaw for

southwestern lines,

Report of the Commission

MASTMAN, Commissioner:

quiry into the propriety of the divisions of the joint rates

of the principal carriers in the territory covered by the

western and mountain-Pacifie groups, as defined in In.

creased Rates, 1920, 58 TL. C. C. 220.

After extended hearings an agreement was reached by |

respondents, with the aid of our examiner, with respect to

the divisions in the aggregate east and west of St. Paul,

Minneapolis, and Minnesota Transfer, Minn., and of the

Missouri River crossings, Kansas City, Mo., to Sioux: City,

lowa, inclusive, of joint rates between Chicago and Peoria,

Ill., St. Louis, Mo., and related points in western trunk-line

territory, on the one hand, and points in Pacifie coast terri-

tory, on the other. These revised divisions became effec-

tive July 1, 1925. In connection with this agreement, re-

vised divisions, east and west of the Minnesota and Mis-

[fol. 49a] souri River gateways mentioned, of joint rates

hetween Chicago, Peoria, St. Louis, and related points in

western trunk-line territory, on the one hand, and points in

trans-Missouri territory, on the other, including, via Kan-

sas City, points in Oklahoma on the Atchison, Topeka &

Santa Fe,' Chicago, Rock Island & Pacific? and Missouri

Pacific, were also agreed upon and made effective on the

same date, without having been made the subject of a hear-

‘ Hereinafter called the Santa Fe.

* Hereinafter called the Rock Island,

*Embracing the States of Iowa, Minnesota, Wisconsin,

Illinois, North Dakota, South Dakota, Missouri, on and

north of the main line of the Missouri Pacific between Kan-

sas City and St. Louis, and the Upper Peninsula of

Michigan.

ing. The readjustment of divisions under these settlements

is yielding the lines east of the gateways amounts variously

estimated of record, the maximum estimate being about

$3,000,000 per year, —>

This report deals only with the divisions in the aggre-

gate north and south of Kansas City and St. Louis, Mo.,

and Kast St. Louis, Cairo, Gale, and Thebes, IIl., respec-

tively, of joint rates between points in western trunk-line

territory generally east of the Missouri River * and points

in the Southwest.*

Our order of investigation included divisions via Missis-

sippi River crossings south of Cairo, but no question is

presented with respect thereto at this time. Divisions on

traffic to and from points in western Louisiana within the

switching limits of New Orleans, La., and on traffie via

Kansas City to and from points in Oklahoma on the Santa

Fe, the Rock Isiand, and the Missouri Pacific, covered by

the agreement as to trans-Missouri divisions, are likewise

eliminated from present consideration. The divisions un-

der consideration relate net only to traftie having origin and

destination in the territories mentioned, but also include

divisions of the western lines’ portions of the joint rates on

traffic moving between points in the Southwest and points

in territory east of the Illinois-Indiana State line and on

and north of the Ohio River and the line formed by the

Chesapeake & Ohio, Norfolk & Western, and Virginian be-

tween Cincinnati, Ohio, and Norfolk, Va., including New

England and the Lower Peninsula of Michigan.

For convenience the western trunk lines, actively seeking

increases in their divisions, will be referred to as com-

plainants, and the southwestern lines, in the main seeking

merely to hold what they have, will be spoken of as de-

fendants. Complainants* are principally the important

‘Embracing the States of Texas, Arkansas, Oklahoma,

Louisiana, west of the Mississippi River, and Missouri,

south of the main line of the Missouri Pacific between Kan-

sas City and St. Louis.

“Chicago & Alton; Chicago & North Western; Chicago,

Burlington & Quincy; Chicago Great Western; Chicago,

Milwaukee & St. Paul; Chicago, St. Paul, Minneapolis &

oT ee ae

eh”

lines in western trunk-line territory that have little or no

[fol. 49b] trackage in the Southwest, and defendants ® are

principally the important lines in the Southwest that have

little or no trackage in western trunk-line territory. The

Santa Fe, operating important lines in both territories,

chooses to regard itself for the purposes of this proceed.

ing as a southwestern line. The Rock Island, however,

likewise having important lines in both territories, appar.

ently is neutral, although when the divisions to and from

the Pacific coast territory were considered it aligned itself

with the western trunk lines.

Complainants and defendants alike admit that the divi-

sions in question conform to no systematic and consistent

plan, but they are not particularly interested in the re-

vision of individual divisions. What complainants seek

and defendants oppose is primarily a finding that the

former are entitled to substantially increased revenue in

Omaha; Illinois Central; Minneapolis & St. Louis; Minne.

apolis, St. Paul & Sault Ste. Marie; Quincy, Omaha & Kan-

sas City; Chicago & Eastern Lllinois; and Wabash. The

Minneapolis, St. Paul & Sault Ste. Marie, however, took no

part in the proceeding.

* Atchison, Topeka & Santa Fe; Beaumont, Sour Lake &

Western; Chicago, Rock Island & Gulf; Chicago, Rock

Island & Pacific; Fort Worth & Denver City; Galveston,

Harrisburg & San Antonio; Gulf, Colorado & Santa Fe;

Houston & Shreveport; Housteu & Texas Central; Hous-

ton East & West Texas; International-Great Northern;

Kansas City, Mexico & Orient; Kansas City, Mexieo &

Orient of Texas; Kansas City Southern; Kansas, Okla-

homa & Gulf; Kansas City, Oklahoma & Gulf of Texas;

Louisiana Railway & Navigation; Louisiana Railway &

Navigation of Texas; Louisiana Western; Missouri-Kan-

sas-Texas; Missouri-Kansas-Texas of Texas; Missouri Pa-

cific; Morgan’s Louisiana & Texas; New Orleans, Texas &

Mexico; Panhandle & Santa Fe; St. Louis, Brownsville &

Mexico; St. Louis-San Francisco; St. Louis, San Francisco

& Texas; San Antonio & Aransas Pass; Texas & Pacific;

St. Louis Southwestern; St. Louis Southwestern of Texas;

Texas & New Orleans; Texarkana & Fort Smith; and Vicks-

burg, Shreveport & Pacific.

the aggregate out of the traffic under consideration, and a

fixation of divisions appropriate to that end.

The present divisional bases are so numerous and vary

so widely that an attempt to describe them would unduly

extend this report and serve no useful purpose. They are

shown of record in great detail. There are so-called mer-

chandise divisions, applying on trallic in general, and vari-

ous special divisions for a number of commodities, of which

lumber and oil are by far the most important. By oil we

mean petroleum and its products. Most of the bases were

established during the period from 1892 to 1896, inclusive,

but the divisions on oil from Oklahoma via Kansas City

are the result of arbitration as late as 1916. The bases

generally apply betw een large groups of points. Just how

they were arrived at iS not disclosed and probably is not

now known. No doubt they were the result of bargain and

trade and plainly they are net definitely related to any of

the criteria which we must éonsider in determining just,

reasonable, and equitable divisions.

In the aggregate these divisions yield the southwestern

lines considerably more than they would receive under a

mileage prorate. Complainants contend that the- record

justifies the use of such a prorate and, subject to certain

exceptions noted below, they seek relief on that basis. The

resulting increase in their revenues would probably amount

to between $2,000,000 and $2,500,000 per year. They are

willing that the southwestern lines should deduct their

[fol.49c] usual differentials before dividing the rates on

traffic to and from Texas differential territory; and as to

traffic via Kansas City to and from points in Oklahoma and

southwestern Missouri on the Kansas City Southern, Mis-

souri-Kansas-Texas, and St. Louis-San Francisco, they are

willing to accept in lieu of a mileage prorate an increase in

the merchandise divisions of 14 per cent, special divisions

on particular commodities to remain unchanged. This

would be in harmony with the increase granted them by the

Santa Fe, the Rock Island, and the Missouri Pacifie in con-

nection with the trans-Missouri and transcontinental agree-

ments of 1925. The 14 per cent increase would still yield

s the western trunk lines substantially less than they would

get under a mileage prorate, but they are willing to forego

that basis on this traffic in their desire not to interfere with

the agreement made with the Oklahoma lines named.

REN ONT ES OIL L EDN IY TNR IOVERRS MEN TLE IIE LONE OEE TIED

ey ee . aa e a ot ata

Complainants are willing to eliminate from the case the

divisions on lumber. The rates on lumber from the South-

west to destinations in Iowa, Minnesota, and other States

were originally based on the Cairo, Gale, or Thebes com-

binations, and via those gateways were divided as made.

The combinations on St. Louis and East St. Louis have

generally been higher, but joint rates were provided via

those gateways equal to the combinations on the lower

crossings named. In the division of these joint rates the

lines south of St. Louis and East St. Louis for years re-

ceived 18 cents per 100 pounds, or 1 cent less than the corre-

sponding locals, but later, when the St. Louis Southwestern

extended its line into St. Louis, it demanded its local of 19

cents. A dispute immediately arose and in Rates on Lum-

ber and Other Forest Products, 31 I. C. C. 673, we required

the St. Louis Southwestern to accept 18 cents, the same as

its competitors did Subsequently, the carriers themselves

adopted 18 cents as the division of the joint rate to destina-

tions in Illinois and Wisconsin. As modified by the subse-

quent general increases and reduction this basis still stands.

To some extent, dve to carrier competition, it has influenced

the divisions via Kansas City. A mileage prorate on lum-

ber would yield complainants some additional revenue, but

the present basis produces results sufficiently close to be

reasonably satisfactory to them. Complainants are also

willing to eliminate the divisions on oil from Oklahoma via

Kansas City, in view of the agreement with the Santa Fe,

the Rock Island, and the Missouri Pacific above mentioned.

Defendants are not willing that the divisions on lumber

and oil be eliminated, either in whole or in part. They ex-

pect their divisions on these gommodities to be increased if

they suffer any reductions in the merchandise and general

commodity divisions. ~~

[fol.49d] Two tests of the carload traffic involved were

made, one’ by complainants in the month of June, 1924, and

the other * by defendants in the month of October of the

"Embraces all carload traffic between points in the South-

west, not including points in Texas differential territory or

on short lines, and points on the Chicago & Alton, Chicago &

Kastern Illinois, Chicago & North Western, Chicago, Great

VIS EI RRO AEE EE RR me ON . . ea on teen » - aa — |

same year. There are no similiar data of record as to the

less-than-carload traffic. More than two-thirds? the car-

load traffic is northbound. In the October test out of a total

of 21,964 cars, 15,630 moved northbound and 6,334 south-

bound. This is accounted for by the predominance of the

oil and lumber traffic, as is indicated by the following table:

Ton-miles Revenue

= os

ar 7?

Amount Percent Amount Per cent

June test: ?

eres 41,012,592 18.6 $356,402 . 35 16.1

eer eare 126,505,604 57.4 1,104,798 .14 49.9

Other traffic........... 53,625,285 24.0 753,683.88 34.0

October test:

MY “vesveteaacxece 99,480,075 22.5 784,419.00 17.2

eee err 130,781,749 29.7 1,108,404 .00 24.3

Otier trafic. ......<.es 211,252,424 47.8 2,666,445 .00 58.5

Combined :

SOE su kv ecudeaccs 140,492,667 21.2 1,140,821 .35 16.8

ra ree 257,287,353 38.9 2,213,202 .14 a

Ctier treme. ......005. 264,277,709 39.9 3,420,128. 88 50.5

Most of the oil moves from Oklahoma via Kansas City

and much of the lumber from Louisiana via East St. Louis.

The remainder of the carload traffic is mainly northbound

mineral and agricultural products, and southbound mineral,

agricultural, and industrial products. About two-thirds of

the carload traffic moves via Kansas City and most of the

Western, Chicago, Milwaukee & St. Peul, Chicago, St. Paul,

Minneapolis & Omaha, Illinois Central, Minneapolis & St.

Louis, and Wabash. It also includes traffic to and from

points in official territory east of the Indiana-Illinois State

line in which the carriers named participated.

“Embraces all carload traffic between points in the South-

west and points in western trunk-line territory, not includ-

ing North Dakota and South Dakota, and also all carload

traffic between points in the Southwest and points in official

territory east of the Indiana-Illinois State line in which the

western trunk lines participated. It includes traffic to and

from points in Texas differential territory and movements

of forest products from points on southwestern short lines.

‘Excluding traffic to and from points in official territory

east of Indiana-Illinois State line.

Joatiiedild Uanapraiaiod Wd

a Pe ail allie iting i ui ETN Nites iSO On ta a BE ld AT li BO La

balance via East St. Leuis, the proportion via Cairo, Gale,

and Thebes being rather light. The following table shows

the amount of the carload tonnage, the average hauls per ton

and the number of ton-miles via the several gateways for

the month of June, 1924, except as otherwise noted:

Average haul Ton-miles

Cc — \ cr HA : ne,

; Tons North South North South

June test :a Miles Miles

Via Kansas City. 172,120 472 418 81,202,133 72,002,275

Via East St.Louis 81,780 274 508 22,427,320 41,555,117

Via Cairo, Gale,

and Thebes.... 6,204 290 251 1,796,229 1,560,407

Via all gateways. 200,104 405 443 105,425,683 115,107,799

October test:

Via all gateways. 542,197 348 466 188,605,531 252,908,717

[fol.49e] Of the traffic in the June test 76.8 per cent origi-

nated in, was destined to, or passed through Illinois. The

corresponding figure in the October test was 66.9 per cent.

Of the traffic in the June test, also, 36.7 per cent of the cars

moved to and from points in official territory, the western

trunk lines performing only an intermediate service. The

corresponding figure in the October test was 13.5 per cent.

The traffic covered by both tests was analyzed in order to

determine how the existing divisions compare with those

which would result from the application of a mileage pro-

rate basis. The following table summarizes these compari-

sons in the case of the June test, eliminating the traffic to

and from points in official territory east of the Indiana-

Illinois State line. In the first column the average hauls of

complainants and defendants are shown; in the second, these

hauls are stated in terms of percentage of total haul, these

being the percentages which would be applied under a mile-

age prorate; in the third column, the actual percentages of

revenue which complainants and defendants receive under

existing divisions are shown; while in the last column,

headed ‘‘Ratio,’’ the revenues thus received are stated in

terms of percentage of what would accrue, in each case,

under a mileage prorate:

“4

— ™

“Excluding traffic to and from points in official territory

east of the Indiana-Illinois State line.

Propor-

Average tion of

haul totalhaul Revenue’ Ratio

~- Lumber: Miles Percent Percent Percent

Western trunk lines. ..........6.<< 1 38.40 35.68 92.9

Southwestern lines............... 508 61.60 64.32 104.4

Oil:

. Western trunk lines.............. 447 52.90 50.00 94.5

Southwestern lines............... 398 47.10 50.00 106.2

Other carload freight:

Western trunk lines.............. 375 42.86 ol. to 74.0

Southwestern lines............... 500 57.14 68.27 119.5

All carload freight:

Western trunk lines.............. 405 47.76 41.48 86.8

Southwestern lines............... 443 52.24 58.52 112.0

In the table which follows, the same information is shown

for the October test after eliminating the traffic between of-

ficial territory and the Southwest in which the western

trunk lines participate only as intermediate carriers and

also eliminating the traffic to and from points in Texas dif-

ferential territory and lumber from points on short lines in

the Southwest:

Propor-

Average tion of

haul totalhaul Revenue’ Ratio

Lumber: Miles Percent Percent Percent

Western trunk lines.............. 283 36.95 35.47 96.0

Southwestern lines............... 482 63.05 64.53 102.3

Oil:

Western trunk lines.............. 421 50.83 47.06 72.6

Southwestern limes............... 407 49.17 52 4 107.7

Other carload freight:

Western trunk lines.............. 315 42.56 32.65 76.7

Southwestern lines............... 425 57.44 67.35 117.35

All carload freight:

Western trunk lines.............. 346 44.74 37.48 83.8

Southwestern lines............... 428 55.26 2.52 113.1

fol. 49f] These tables indicate that the divisions on the

oil and lumber traffic are considerably more favorable to

complainants than the divisions on other carload traffic.

They also show that defendants are receiving, on the aver-

age from all of the traffic, divisions which exceed what they

would obtain under a mileage prorate by from 12 to 13 per

cent. This showing, however, must be considered in con-

nection with the fact that complainants received divisions

on the same traffic which were less than they would have re-

ceived under a mileage prorate by from 13 to 16 per cent.

The following table shows, upon the basis of each of the

ee oe

ee eee

tests, the percentage by which it would be necessary to in-

crease the mileage of the southwestern lines in order to

give them their existing divisions under a strict mileage

prorate:

Octo-

Junetest ber test

Percent Percent

OE AAPL on Rona dane ais 12.4 6.8

Re alae RS SN TL eat SRR ID rah .. was 16.4

Other carload freight... e 52.9

BO I os ESS 28.9 34.8

Stated differently, under the existing divisional bases and

judged by a mileage prorate, a mile in southwestern terri-

tory is worth on the average from 129 to 135 per cent of a

mile in western trunk-line territory. Nor does this fully

indicate the relative advantage of the southwestern lines,

for a mileage prorate is by no means a perfect method of

dividing joint rates, even where transportation and other

conditions do not differ materially. It results in the same

ton-mile revenue for each participating carrier, regardless

of the length of haul and of the principle that, other things

being equal, ton-mile yields should decrease as distance in-

creases. New England Divisions, 126 I. C. C. 579, 667. It

is for this reason that rate prorates or block-mileage plans

are often used in preference or that provision is made for

minimum divisions of not less than 25 per cent, or some

similar percentage. This may be illustrated by the results

shown for the lumber traffic in the June test. There the

divisional bases appear at first glance to be relatively favor-

able to the western trunk lines, since the southwestern lines

received only 4.4 per cent more revenue than they would

have received under a mileage prorate. However, the aver-

age hauls were 317 miles for complainants and 508 miles for

defendants. Assuming transportation conditions to be the

same in both territories and using the southwestern class

scale as a measure, a rate prorate would have given com-

plainants 43.7 per cent of the revenue and defendants, 56.3

[fol. 49g] per cent, whereas they actually received 35.7 and

64.3 per cent, respectively. The following table illustrates

this point in greater detail:

Mileage Rate

June Test Revenue prorate prorate

Lumber: Percent Percent Percent

GE SI cv iicncs sdccaceen cane 35.68 38.40 43.67

Southwestern NOB... scccccescccssescores 64.32 61.60 56.33

Oil:

Ty SE So rd Oe 50.00 52.90 51.54

moutnweatern Hes... .vcccessccccccéocce 50.00 47.10 48 .46

Other carload freight:

Po A | Si.ta 42.86 46.62

mOUrn western [Ines. ...cccvcccccvcccccecs 68.27 57.14 53.37

All carload freight: :

ut a a a 41.48 47.76 49.00

PD CEN es vote cecbccaelces, 58.52 52.24 50.91

October Test

Lumber:

Wremeerm trek: WON. oss oacccccvcceicacce 35.47 36.95 43.32

WOME WeNtOTM BOS. oon cc cccccctcccccece 64.53 63.05 56.68

Oil:

Wrembore trek Gees... co sccccsecccesesca 47.06 50.83 50.46

mut erenterm TOS... vcs ccoscccccveven 52.94 49.17 49.54%

Other carload freight:

Wwemterm trumk Hes... .c.cccccccccccccce 32.65 “42.56 45.70

a ee 67.35 “57.44 54.30

All carload freight:

Westerm trumk lnes.....ccccccccceccces 37.48 44.74 47.27 4

Southwestern lines..............-.ccece 62 .52 55.26 52.73

As has been stated, most of the present divisional bases

were established more than 30 years ago. Assuming that

they were just and reasonable when first established, com-

plainants undertake to show that relative conditions have

since that time changed very materially, to the great ad-

vantage of defendants. The latter, on the other hand,

undertake to show that conditions are still much less favor-

able in the Southwest than in western trunk-line territory,

and that this difference nmply justifies the divisions which

they now receive.

The proposed report of the examiner contained the follow-

ing statement, to which no exceptions were filed:

During the last 30 years both western trunk-line territory

and the Southwest have enjoyed a substantial increase in

population, but the increase in the Southwest has heen some-

what greater than in western trunk-line territory. Railroad

mileave also has substantially increased in both territories,

but the increase in the Southwest has been particularly pro-

nounced. As an agricultural region the Southwest has had

o—642, 643

WS a Dt ch a Ai SRS ew I, he kN RA AM RA PTO RN abe Ce PR cnet

edt agit T CR atehtsi ihii Mbit

—— ss

a growth that has far surpassed that of western trunk-line

territory. The development of the oil business in the South-

west is of outstanding importance and has no counterpart

in western trunk-line territory. Industrial growth, how-

ever, has been of less consequence in the Southwest than in

western trunk-line territory. These changed conditions

have operated to change materially the relative positions of

the two groups of carriers to the advantage of those serv-

ing the Southwest.

For purposes of more specific comparison, two groups of

States may be used, the western trunk-line group including

[fol. 49h] Illinois, Wisconsin, lowa, Minnesota, and Mis-

souri and the southwestern group including Texas,

Louisiana, Arkansas, Oklahoma, Kansas, and Missouri.

Both groups include Missouri, since it is divided in this

proceeding between the two opposing territories. North

Dakota and South Dakota are not included in the western

trunk-line group, as these States were omitted in the ex.

hibits, apparently because there is litle interchange of traf-

fic on joint rates between them and the Southwest. Their

inclusion would operate in the comparisons to the advantage

of complainants. Kansas is included in the southwestern

group, because much of the traffic from the southwestern

States here involved passes through Kansas. The follow-

ing table shows the increase in property and in railroad

mileage for the two groups between certain periods:

Increase Increase

in population in railroad mileage

"2s ms ot ‘\

1890-1920 1900-1920 1890-1920 1900-1920

Group Percent Percent Percent Percent

Western trunk line.............. 51.6 22.9 31.3 15.4

Western trunk line eliminating

DEE Kebeuceevaneeaweeees* ~« 42.6 18.2 36.1 17.1

Southwestern ........... ccbhoues 74.2 38.5 76.5 49.3

It will be observed that while population has increased

more xapidly in the southwestern group, so has railroad

mileage, and that the disparity is greater in the latter case.

The result has been that while the population per mile of

railroad \ncreased 7.3 per cent in the western trunk-line

group be et 1900 and 1920, it decreased 7 per cent in

the southwestern group. Population per square mile of

area and per mile of railroad continued to be larger in the

former group in 1920, as shown by the following table:

Population Population per

per square mile mile of railroad

o mate \ TT.

100 1920 1900 1920

Western trunk line.............. 44.2 4.7 344.9 370.1

Western trunk line eliminating

ON reer rier Teer e TT Tee 35.2 41.6 310.1 313.0

Ce er 18.2 26.6 328.5 305.4

Population, however, is an imperfect index of railroad

traffic, as small populations may under certain circum-

stances produce a large volume of traffic. The value of farm

products in the western trunk-line group increased 170.1

per cent between 1909 and 1919, whereas the similar increase

in the southwestern group was 222.6 per cent. Comparing

1909 and estimates for 1923, the increases were 51.6 and

124.2 per cent, respectively. The production per acre, how-

ever,is materially larger inwestern trunk-line territory than

[fol. 491] in the Southwest. Persons engaged in industry

increased 44.3 per cent in the southwestern group eliminat-

ing Kansas, between 1904 and 1921, as compared with an

increase of 36.8 per cent in the western trunk-line group,

and the similar increases in the case of the value of manu-

factured products were 237.7 and 173.1 per cent, respec-

tively. The supremacy of the western trunk-line group,

however, was very marked, for in 1921 it had 1,258,261 per-

sons engaged in industry and pieducts valued at $7,454,140,-

000, whereas the corresponding figures for the southwestern

group were 466,582 persons and $2,886,337,000, On the

other hand there has been an immense increase in the pro-

duction of oil in the Southwest. For example, in 1900 only

836,000 barrels of crude petroleum were produced in Texas,

whereas the production in 1923 was 128,415,000 barrels.

The similar figures for Oklahoma were 6,000 barrels in

1900 and 159,873,000 in 1923,

As we have already suggested, the above comparisons

measure only imperfectly the extent to which changing con-

ditions have improved the situation of defendants as com-

pared with that of complainants. A better measure is af-

forded by the increase in density of traffic, although that test

arene |

Se ee ON

ao Pe aalte Srew ah ind

OD eli ew ae

also has its limitations. Unfortunately the record does not

show the traffic densities which existed in the njneties when

the present divisions were largely established. It does, how-

ever, show the change between 1916 and 1924. In this show-

ing Class I carriers operating in both groups are used as

the basis, and the comparison is made in two forms, one’ in-

cluding the Santa Fe and the Rock Island in both groups

and the other eliminating them from both. Some of the

carriers, such as the two just mentioned and the Missouri

Pacific, the Burlington, the Milwaukee, and the Illinois

Central, extend beyond the boundaries of either group, and

to this extent the comparisons lack strict accuracy ; but they

“are informative as indicating the general trend. They are

given in the following table in terms of ton-miles per mile of

road:

Western

Southwestern group trunk-line group

a —_— ‘ - ——_——_,

\ Per Per

Ton- cent of Ton- cent of

miles increase miles crease

Including Santa Fe and Rock

Island in both groups:

We A ian vase ek as p> er B,3ae ee oc

(Ce. ere o:--+ O8.28 24.9 1,240,176 9.5

Excluding Santa Fe and Rock

Island in both groups: o

WU Tes 56 bk 6 see sadness ri: hy) Sere kt

BON Bidets ccauestceceeed 4S 053 32.8 1,304,820 9.0

[fol. 49j] There can be little doubt but that traffic density

has increased during the past 30 years in much greater ratio

in the Southwest than in western trunk-line territory.

As aforesaid, however, defendants contend that despite

the change which has taken place in recent years, transpor-

tation conditions are still sufficiently less favorable in the

Southwest to justify amply the divisions which they receive.

So far as physical characteristics are concerned, the pro-

posed report contained the following summary to which no

exceptions were filed:

The physical characteristics of the two territories are

quite similar. The terrain in both is generally flat or roll-\

ing. The most broken country is that in the Ozark regions

of southern Missouri and northwestern Arkansas. The

Southwest is the more subject to floods, washouts and otier

incidents of wet weather, but western trunk-line territory

suffers the handicaps of more severe winters. Upon the

whole, there is no great difference in operating conditions,

except as results from the greater traffit density in western

trunk-line territory.

As proof of the less favorable conditions in the South-

west much evidence was offered to show that the rates in

that territory are on a materially higher level than the

rates in the western trunk-line region. Particular empha-

sis was laid upon the class rates, which are much higher in

the Southwest. In the following table are shown represen-

tative rates in that portion of Illinois where rates are sub-

ject to the western classification, established as a result of

Illinois Classification, 56 I. C. C. 202, and increased under

Intrastate Rates within Illinois, 60 I. C. C. 92; similar rates

prescribed in certain portions of Minnesota and North

Dakota in Fargo Commerce al Club v. A. & W. Ry. Co., 98 I.

C. C. 691, and similar rates recently prescribed in the

Southwest in the general sotuhwestern revision, the rates

being shown in this table in the above order:

Class 1 Class 5 Class &

Cents Cents Cents

CN i So cho a 46 16 9

RN rts Ge pene 49 18 9

Th SRI a ese 58 22 10

100 miles \ 54 19 11

Do 64 23 12

Do y 79 30 14

150 miles ... 5 63.5 22 12.5

Do 79 28 14

Do S 7 37 17

200 miles 72.5 25.5 14.5

Do - 4 34 17

Do 109 41 19

250 miles 77.5 27 15.5

Do 108 39 19

Do... 123 47 22

300 miles g2 28.5 16.5

Do 116 42 21

Do 133 51 23

350 miles “a 87 30.5 17.5

Do 129 47 23

Do 147 56 26

Class 1 Class 5 Class E

Cents Cents Cents

91 32 18

137 49 25

157 60 27

96.5 34 19.5

147 53 26

167 63 29

S G@Omiiles ............... 100.5 35 20

4 eee Teer 157 a7 28

eee eee 174 66 30

The rates prescribed in the general southwestern re-

vision for the so-called Kansas-Missouri territory, which is

* in part here included in the southwestern group, are about

‘ 7 per cent lower than those shown above for the Southwest

- [fol. 49k] proper. It should be stated, also, that the [linois

rates shown above have not been approved by us as maxi-

* mum reasonable rates. The class rates in western trunk-

line territory proper, of which the rates shown above which

\ were prescribed in the Fargo case are illustrative, differ

widely anc are ~how upon any consistent basis. They

> are under review in Ex parte 87 (Sub No. 1), Class Rates

Within Western Trunk Line Territory, and the carriers are

there proposing substantial increases.

It should also be said that our general class-rate investi-

/ gations have made it clear that class rates within different

territories are often not fairly comparable and that they

afford very inaccurate measures of the differences in gen-

eral rate level. This is so because of differences in the un-

derlying theories upon which they have been constructed.

In some territories class rates move carload traffic in con-

siderable volume and are relatively low. This is particu-

larly true of official territory, of which Illinois is really a

part. The class rates in that State which are subject to

the western classification have been designed to harmonize

with these official-territo

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