No. 25184

GEORGE THOMPSON ET AL. v. BALTIMORE & OHIO RAILROAD COMPANY ET AL.

Submitted September 22, 1933. Decided January 19, 1934

Rates on horses and mules, in straight and mixed carloads, from points in Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, and Wyoming to destinations in official territory and Kentucky, found unreasonable for the future but not unreasonable in the past. Reasonable rates

prescribed.

P. R. Wigton for complainants.

Herman L. Bode, J. C. Winter, John E. Benton, and D. L. Kelley for Board of Railroad Commissioners of State of South Dakota, intervener.

H. S. Harr, A. P. Donadio, P. F. Gault, and Walter McFarland for defendants.

REPORT OF THE COMMISSION

DIVISION 5, COMMISSIONERS FARRELL, TATE, AND MAHAFFIE BY DIVISION 5:

Defendants filed exceptions to the proposed report and the case was orally argued. Our conclusions differ somewhat from those recommended by the examiner.

Complainants, George Thompson and George Hefner, individuals, Elmer G. Risk and Wilmer G. Johnson, copartners, and the Sioux City Horse and Mule Company, a corporation, allege by complaint filed March 14, 1932, that the rates charged on horses and mules, in straight and mixed carloads, shipped on and after March 14, 1930, from points in Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, and Wyoming to destinations in Indiana, Michigan, Ohio, Kentucky, Pennsylvania, West Virginia, Maryland, the District of Columbia, Delaware, New Jersey, New York, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine were and are unreasonable. Reasonable rates for the future and reparation are sought. The Board of Railroad Commissioners of the State of South Dakota intervened in behalf of complainants. Rates will be stated in amounts per 100 pounds.

The shipments of such complainants as offered evidence originated in South Dakota and Iowa, and consisted principally of

horses and colts averaging about 21 animals to the car. Charges were collected at the minimum weight of 23,000 pounds per standard car of 36 feet 6 inches in length. The rates assailed are combinations composed of commodity rates from the origin points to Chicago, Ill., and, under exceptions to the classification, second-class rates therefrom to destinations in central territory, and specific commodity rates somewhat lower than second class from Chicago to destinations in trunk-line territory and New England. To points in interior Kentucky the rates are composed of commodity rates to Chicago, plus the second-class rate thence to the lowest rated Ohio River crossing, plus commodity rates thence to destinations. The commodity rates here considered from South Dakota to Chicago were prescribed in South Dakota R. Commissioners v. C. & N. W. Ry. Co., 77 I.C.C. 451, and were required to be made 115 percent of the rates on fat cattle therein prescribed. These rates apply only on ordinary livestock (horses and mules) but not on breeding, racing, and show horses. In Livestock-Western District Rates, 176 I.C.C. 1, hereinafter called the Western Livestock case, the rates on horses and mules were not considered, but the rates on cattle in western trunk-line territory were quite generally increased, hence the relation in the western factors between the rates on horses and mules and those on cattle has been altered. The eastern class-rate factors, unlike the western factors, apply on all classes of horses and mules. Although the through rates are assailed, complainants consider the western factors reasonable and center their attack on the eastern factors. They seek reparation to the basis of rates composed of the present factors to Chicago, plus factors made 115 percent of the rates on fat cattle from that point to destinations in effect at the time the shipments moved. For the future they seek rates made 115 percent of the contemporaneous fat-cattle rates.

The rates under the scale prescribed in South Dakota R. Commissioners v. C. & N. W. Ry. Co., supra, are, for example, 17.5 cents for 50 miles and 59 cents for 900 miles, while 115 percent of the cattle rates in effect since January 25, 1932, for these distances would be 17.5 and 66.5 cents. The second-class rates in effect since December 3, 1931, in official territory and presecribed in the eastern classrate case, are 37 cents for 50 miles and 132 cents for 900 miles. The latter rates are, roughly speaking, 7 percent and 14 percent, respectively, higher than those in effect prior to that date within central and trunk-line territories. The rates sought as eastern factors, which range from 14 cents for 50 miles to 54 cents for 800 miles, are 115 percent of the proportional rates prescribed in the report on further hearing in Eastern Livestock Cases of 1926, 165 I.C.C. 277, which rates became effective October 15, 1930. The rates prescribed

in the latter case are somewhat higher than those prescribed on fat cattle in the original report in Eastern Livestock Cases of 1926, 144 I.C.C. 731. The proposed eastern factors are from 23 to 74 cents less, or approximately 44 percent lower, than the present secondclass rates in official territory.

Rates on fat cattle have been prescribed by us for application in all parts of the country. Livestock-Western District Rates, supra; Livestock, Southern Territory Rates, 171 I.C.C. 721; and Eastern Livestock Cases of 1926, supra. The rates prescribed in official territory are approximately 10 percent lower than those in western trunk-line territory, and for distances over 100 miles are lower than those in other sections of the country. The present rates on horses and mules either prescribed by us or voluntarily established by the carriers are said to be from 105 to 127 percent of the rates on fat cattle in transcontinental territory, 115 to 120 percent in the Southwest, and less than 115 percent in western trunk-line territory. Rates on horses and mules in official territory have never been considered in a general way by us. The second-class rates now applicable in central territory average, for distances up to 800 miles, about 252 percent of the local rates on fat cattle.

Complainants contend that the present rates on horses and mules in official territory are out of line with those in other sections of the country and the established percentage relation between the rates on horses and mules, on the one hand, and those on fat cattle, on the other, in higher rated territory.

Horses and mules, as well as fat cattle, move in stock cars and all are subject to the same regulations. The farm value of horses and mules in February 1932, for the United States, was given as about $1,225 per car for horses and $1,400 per car for mules. The South Dakota farm value in January 1932 was $1,219 for a double-deck car of hogs weighing 12.7 tons, and $1,160 for a car of cattle weighing 11.4 tons. The volume of movement of fat cattle is greater than that of horses and mules, and the loss and damage claims on the latter are in excess of those on the former.

In their attack on the eastern factors complainants introduce numerous rate comparisons. The following examples will suffice as illustrative. The present second-class rates in central territory are 85 percent, and the commodity rates on horses and mules from Chicago to points in trunk-line territory range from 67 to 74 percent, of first class; while the rates on horses and mules in western trunkline and southern territories and in the Southwest are from 32 to 34 percent of the corresponding first-class rates. Taking 36 shipments from Sioux City to Ohio, Michigan, and Indiana, and 41 shipments from points in South Dakota to Ohio, Michigan, and Kentucky, with

average hauls of 517 and 743 miles, respectively, west of Chicago, the per car and car-mile revenues yielded by the western factors are $103.50 and 20 cents, and $122.12 and 16.5 cents, respectively. The per car and car-mile earnings derived under the factors east of Chicago for the remainder of the hauls, averaging 307 and 328.5 miles, are $167.50 and 54.6 cents, and $172.60 and 52.6 cents, respectively. Under the proposed eastern proportional rate factors these earnings would be $73.60 and 23.9 cents, and $77.05 and 23.4 cents, respectively. The present through rates for such average hauls of 824 and 1,072 miles yield per car and car-mile earnings of $271 and 32.8 cents, and $294.72 and 27.5 cents, respectively. The proposed through rates would produce earnings of $177.10 and 21.4 cents, and $199.17 and 18.5 cents. This situation is shown in more detail by specific rate comparisons. The second-class rate on horses and mules from Chicago to Traverse City, Mich., 320 miles, is 77 cents, and yields per car revenue of $177.10 and car-mile earnings of 55.3 cents; and a standard-car charge of $103.50 from Macy, Iowa, to Chicago, 321 miles, produces a car-mile earning of 32.2 cents. Under a commodity rate of $1 from Chicago to Philadelphia, Pa., 854 miles, per car and car-mile earnings of $230 and 28.1 cents, respectively, are derived. From Gordon, Nebr., to Chicago, 856 miles, a charge of 161.50 per standard car yields 18.8 cents per car-mile.

It is pointed out that the assailed rates present a departure from the usual rule that as distance increases car-mile earnings decrease, and that the fact that this is a haul from a higher rated to a lower rated territory affords an added reason why there should be no departure from the usual rule as to these shipments. The average revenue of $271 per car for the 824-mile average haul above mentioned from Sioux City to 36 points in central territory is contrasted with the average revenue of $328.60 per car under the rates from Chicago, St. Louis, and Kansas City, Mo., Omaha, Nebr., and Sioux City, to Los Angeles, Calif., average distance 1,933 miles, the latter extending through the highest rated territory in the United States. As a further illustration, $309.30 was assessed on a minimum carload from Onida, S.Dak., November 14, 1931, to Gallipolis, Ohio, 1,307 miles, of which 498 miles were east of Chicago, while the charge from Sioux City, 1,853 miles, Omaha, 1,810 miles, and Kansas City, 1,748 miles, to Los Angeles, is $309.50 per standard car. It is shown also that the present through rates on horses and mules from Sioux City to representative points in central territory and the resultant per car and car-mile earnings are in excess of the rates and earnings on higher valued and lighter loading commodities, such as apples, potatoes, cabbage, butter, eggs, and live and dressed poultry, from the same origin points to the same destinations. Complainants

show that articles classified second class in the consolidated classification are generally subject to a minimum weight of 10,000 or 12,000 pounds.

Defendants point out that second-class rates on horses and mules in official territory have been in effect for a long period and that this traffic has moved freely under these rates. They contend that this basis, although higher than in other territories, is proper because of the different transportation conditions incidental to the movement of horses and mules in official territory. The different conditions shown are that in 1930 the total horse-and-mule traffic in central territory constituted only 1.5 percent of the total livestock tonnage handled in that territory, whereas the horse-and-mule traffic in the whole of the United States for that year was 3 percent of the total movement of livestock. It is shown that the earnings under the rates assailed were much lower than those produced for similar hauls by the rates from western trunk-line territory to official territory on such commodities as liquid milk, iron and steel articles, candy bars, and chocolate coating. These articles have a higher value and load far in excess of horses and mules. Consequently, these comparisons are of little value.

Defendants contend that the rates on horses and mules in other territories, especially western trunk-line territory, are extraordinarily low and not a proper yardstick with which to measure those in official territory. But that question was recently decided in Western Horse and Mule Rates, 195 I.C.C. 417, decided July 24, 1933, which embraced a group of cases involving the rates on horses and mules in western trunk-line and southwestern territories. Included in the group were South Dakota R. Commissioners v. C. & N. W. Ry. Co., supra; also Nebraska Livestock Case, 89 I.C.C. 444, a case dealing with rates from points in Nebraska to Omaha and South Omaha, Nebr. In both of those cases we had found reasonable on horses and mules 115 percent of the rates therein found reasonable on fat cattle. In Western Horse and Mule Rates we found that maximum reasonable carload rates for the transportation of horses, mules, burros, and asses between points in western trunk-line and southwestern territories would be 115 percent of the rates on cattle from and to the same points, prescribed in the western livestock case, subject to a minimum of 23,000 pounds, and that rates in excess thereof were and for the future would be unreasonable. The findings in the South Dakota case and the Nebraska Livestock case were modified accordingly.

In opposition to complainants' request for rates in official territory made 115 percent of the rates on fat cattle, defendants say that such a basis would disrupt the rate structure in that territory by