chise values, and rights in public domain, and other elements of value. It is respondent's contention that from a proper consideration of this evidence a value of $77,500,000 for the property as a whole, and $60,000,000 for the property used by petitioner, is derived. Evidence of cost of reproduction new, cost of reproduction less depreciation, original cost, value of land, rights in public domain, and working capital was likewise presented by petitioner. It is petitioner's contention that from a consideration of the evidence a value of $41,041,317 for the property as a whole, and $29,925,391 for the property used by petitioner, should be determined.

Before proceeding to discuss the evidence and our conclusions relative thereto, we repeat it is our interpretation of the statute that the principles controlling compensation in condemnation cases are fully applicable and appropriate to determine the value of the property for the use of which compensation is to be made. Insofar as the rules, methods, and principles laid down by us in our valuations under section 19a of the act are applicable, we shall be controlled thereby. At the same time we recognize the distinction between the controlling principles applicable for the ascertainment of values for rate-making purposes and those applicable in condemnation cases. We do not perceive, however, why the principles applicable for the determination of individual elements, such as cost of reproduction, cost of reproduction less depreciation, and original cost, should be any different in the instant case from those in a rate-making case. It is true that certain facts-earnings for instance-may be relevant in condemnation cases while irrelevant in rate-making cases, but if the facts are relevant the controlling principles in their ascertainment should be the same. It is our duty to ascertain the fair value In Los Angeles Gas & Electric Corp. v. Railroad Comm. of Calif., 289 U.S. 287, the court said:

of respondent's property.

1

As the property remains in the ownership of the complainant, the question is whether the complainant has been deprived of a fair return for the service rendered to the public in the use of the property. This Court has repeatedly held that the basis of calculation is the fair value of the property; that is, that what the complainant is entitled to demand, in order that it may have "just compensation" is "a fair return upon the reasonable value of the property at the time it is being used for the public." In determining that basis, the criteria at hand for ascertaining market value, or what is called exchange value, are not commonly available. The property is not ordinarily the subject of barter and sale and, when rates themselves are in dispute, earnings produced by rates do not afford a standard for decision. The value of the property, or rate base, must be determined under these inescapable limitations. And mindful of its distinctive function in the enforcement of constitutional rights, the Court has refused to be bound by any artificial rule or formula which changed conditions might upset. We have said that the judicial ascertainment of value for the purpose of deciding whether rates are confiscatory

"is not a matter of formulas, but there must be a reasonable judgment having its basis in a proper consideration of all relevant facts."

In the instant case the criteria for ascertaining market value are not available because property such as respondent's is not ordinarily the subject of sale, and since the property is operated as a joint facility, it has in reality no earnings. We proceed, therefore, to a consideration of all relevant evidence presented which may be of assistance to us in determining the fair value of the respondent's property.

COST OF REPRODUCTION NEW

PROPERTY OWNED BY KANSAS CITY TERMINAL RAILWAY COMPANY

Three estimates of the cost of reproduction were presented at the hearing. These differ both as to the items of property included and the method of ascertaining the cost of reproduction. Respondent estimates the cost of reproduction new of all of its facilities exclusive of land as of July 1, 1929, to be $50,254,323, and of the facilities the use of which is sought by the Missouri-Kansas-Texas, $37,872,052. The corresponding estimates by petitioner are $44,472,330 and $35,129,812. Similar estimates of cost of reproduction prepared by our Bureau of Valuation, hereinafter called the bureau. were introduced by petitioner. These show cost of reproduction for the entire terminal property to be $43,391,491, and for the property used by petitioner, $33,797,460. On brief petitioner accepts the estimates of the bureau, with certain modifications, as the best evidence of the cost of reproduction new. Hence petitioner's estimates of cost of reproduction new will not be further discussed.

Unit prices. In the estimates by respondent the reproduction cost for the respective classes of property were obtained by the application, in some instances, of unit prices, and in others by index numbers. The unit prices applied were obtained by inquiry of local dealers, by correspondence, and also by quotations from firms from whom respondent obtains materials. Respondent's valuation engineer testified that the unit prices applied represent his opinion as to fair prices as of July 1, 1929. Where unit prices were not applied to the items of property the cost of reproduction was obtained by applying to the historical cost-index numbers developed by us for the year 1927. The unit prices of the bureau's estimate are current prices as of July 1, 1929, based on a consideration of prevailing construction costs for similar items of property on railroads in this vicinity. Although differences in unit prices developed by these different methods are numerous, in only a few instances was any testimony presented regarding specific prices and the record does not

198 I.C.C.

contain cost data supporting the respective prices. In this situation we shall adopt the unit prices applied by the bureau, these having been developed according to principles approved by us in numerous decided cases.

Engineering. Respondent estimated the cost of reproduction new of engineering at 5 percent of the total of the other road accounts. The bureau used 4.5 percent. In support of the higher percentage used by it respondent refers to its expenses during original construction and the fact that in our primary valuation of respondent's property, Kansas City Term. Ry. Co., 25 Val. Rep. 82, division 1 included for engineering the actual cost thereof which is equivalent to 4.875 percent of the total of the other road accounts, and that in Missouri, K. & T. Ry. Co., 34 Val. Rep. 293, division 1 computed the cost of engineering for that carrier's terminal property at Kansas City at 5 percent. Respondent asserts that the amount included for engineering in Kansas City Term. Ry. Co., supra, does not include any of the preliminary engineering expenses incident to the property acquired by respondent upon its organization, and that the inclusion of reasonable amounts therefor would bring the total amount for engineering to at least 5 percent of the total of the other road

accounts.

The witness testifying regarding the bureau's estimate of cost of reproduction new stated that following our decisions in numerous valuation cases nothing was included for reconnaissance and preliminary surveys.

The evidence does not indicate the amount included in respondent's estimate for preliminary surveys, but it is apparent from the record as a whole that the issue here is whether the percentage applied for engineering shall reflect the costs incident to such surveys. We have in numerous valuation cases decided similar issues adversely to respondent's contention. The use of 4.5 percent for computing engineering is approved.

Grading. Respondent estimates the cost of reproduction new of the items included in this account to be $5,705,825 for its entire property. The corresponding estimate by the bureau is $5,522,679. These estimates, however, are not strictly comparable because of differences in the quantities reported. Both estimates include approximately $1,500,000 for the cost of reproducing O.K. Creek sewer, a large masonry structure more than a mile long, and for the greater part of its length off of respondent's right-of-way. By ordinance no. 2336 respondent was obligated to convey to Kansas City a right-of-way for and to construct at its own expense, an extension of the existing O.K. Creek sewer which drains an extensive part of

Kansas City. The record indicates that respondent neither owns nor maintains this sewer, to which drainage from respondent's rightof-way is delivered through intercepting sewers. Upon completion of O.K. Creek sewer, the city conveyed to respondent the right-of-way formerly condemned for said sewer and so much of the banks and bed of O.K. Creek as were within the limits of respondent's property. The location of this sewer is such that it would not be disturbed if the terminal were obliterated, hence we find that this sewer should be excluded from the estimate of cost of reproducing the property of respondent. The expenditures by the latter for this construction properly are a part of the historical cost of respondent's property. Other items included in respondent's estimate of cost of reproduction relate to grading which is not on the right-of-way. These are summarized in an exhibit of record showing costs included in the reproduction estimate of the primary valuation and excluded from the bureau's estimate in this proceeding in order to make the latter conform to our findings in other valuation cases. In this proceeding we approve the exclusion of these items.

Bridges, trestles, and culverts.-For some of the structures included in this account the bureau's estimate includes the cost of changes which at time of construction were made in water, gas, and sewer lines, and other utilities. We have uniformly held that where grade crossings have been eliminated by depressing the street, with accompanying changes in pipe lines, etc., on reproduction these utilities are assumed to be in their relocated position and nothing is included in the reproduction estimate on this account. Such costs are part of the cost of rights in public domain. Chicago & W. I. R. Co., 29 Val. Rep. 1. All such costs will be excluded from the estimates of cost of reproduction.

Rail and other track materials.-Respondent's estimate of cost of reproduction new for these accounts exceeds the estimate by the bureau by $125,329 for rail and $98,104 for other track material exclusive of ties. On brief, respondent states that these differences are due chiefly to the bureau having priced certain items as re-lay, or secondhand, while respondent followed our primary valuation and priced as new all material in these accounts. The record as a whole supports the conclusion that some of respondent's rail and other track material had as of July 1, 1929, been removed from the location where originally installed and relaid in a new location. The pricing of such material as re-lay is proper, and we approve the estimates by the bureau for these accounts.

Tracklaying and surfacing.-Respondent estimates the cost of reproduction new of this account at $708,908 and the bureau estimates

it at $133,661 less. Most of this difference is attributable to differences in the unit prices applied to tracklaying and surfacing and to the placing of ballast. On brief, respondent asserts that considering the difference in current wages the unit prices applied by it are no higher than actual costs during original construction. We have repeatedly held that original cost is not necessarily indicative of what it would cost to reproduce a property. The bureau's estimates of the cost of tracklaying and surfacing are not shown to be unreasonable and are approved.

Station and office buildings.-Respondent's estimate of cost of reproduction new for this account exceeds that of the bureau by $146,384. Approximately one half of this difference is said to be due to the exclusion by the bureau of the old Grand Avenue passenger station. It appears that about 12.33 percent of this building is used for railroad purposes and the remainder is leased to a wholesale grocery company. Our estimate of cost of reproduction new will include that portion of this building used for railroad purposes estimated at 12.33 percent of the whole.

Shop machinery and power-plant machinery.-The aggregate of respondent's estimate of cost of reproduction new for these accounts exceeds that of the bureau by $141,426. Part of the difference is said to be due to omissions from the estimate by the latter, but most of the difference is attributed by respondent to the lower prices used by the bureau. These latter prices are said by respondent to be too low to include the cost of installation. No evidence in support of this allegation was presented by respondent. The bureau prices are supposed to include installation costs and we are satisfied that they do. General criticisms of this nature unsupported by identification of the items alleged to have been omitted, or by cost data, do not warrant any change in the bureau's estimate for this account, and that estimate will be adopted.

Work equipment.-The difference of $25,474 between the two estimates of cost of reproduction new for this account is due to the use of lower prices by the bureau and also to its pricing as secondhand certain outfit cars which respondent priced as new. The record does not support prices higher than those used by the bureau, nor does it justify any modification in our practice of pricing converted work equipment as secondhand. The bureau's estimate of cost of reproduction new for this account is approved.

General expenditures.-The bureau computed general expenditures at 2 percent of the road accounts, while respondent used 3 percent. In Kansas City Term. Ry. Co., supra at page 92, upon due consideration division 1 found that general expenditures should be computed at