portation of perishable freight can hardly be claimed, so far as the orange traffic is concerned, to have been added to their general equipment solely because that traffic of necessity demanded high-speed trains and unusual conveniences of delivery. The more probable reason is found in the competition between the different lines and their desire to secure a business so important in volume and so desirable in character."

589. Less than usual care required.

9917

Conversely, where the commodity requires less than ordinary care that fact is to be considered in lowering its classification. In Denison Light & Power Company v. Missouri, Kansas & Texas Railway,18 the question was as to the proper classification and rating of coal. Mr. Commissioner Prouty said: "Coal is among the most desirable kinds of traffic. The reasons for this have been several times stated by the Commission and need not be repeated here in detail. The cost of receiving, transporting and delivering that commodity is less than in case of almost any other article of freight. Its value is not great, the hazard of loss in transit is insignificant, it is an article of universal necessity in daily life, and as a steam fuel it furnishes the basis of many other industries. Coal rates in this country are usually highly competitive, and this fact, together with its desirability as traffic, and the large quantities which are moved have produced on the average a very low late."

Similarly in Tift v. Southern Railway, both before the Cimmission 19 and in the Circuit Court,20 stress was laid on the fact that lumber could be carried without special equipment on any car to justify a low rating for that commodity.21.

17 Railroad Com. of Florida v. Savannah, F. & W. R. R., 3 Int. Com. Rep. 688, 700, 5 I. C. C. Rep. 13 (1891.)

18 10 I. C. C. Rep. 337 (1904).

19 10 I. C. C. Rep. 5 (1904).

20 138 Fed. 753 (1905).

21 Acc. Central Y. P. Assoc. v. Illinois C. Ry., 10 I. C. C. Rep. 505 (1904).

TOPIC E-VALUE OF THE GOODS.

§ 590. Value of the goods as an element in determining classification.

The element of value in the commodity transported forms a proper consideration to be taken into account in the establishment of rate, since the greater the value the greater the carrier's liability as an insurer of freight, and the greater, therefore, the risk to the carrier in the transportation. Since the risk is greater, the cost of carriage increases by the amount of compensation for the greater risk; and it is therefore proper to give more valuable goods a higher classification than less valuable goods.1

But the increased rating given to articles because of greater value must be not much more than is proper for the increased risk; when value is brought in as an element in classification, the classification cannot, nevertheless, be determined arbitrarily. "Value is undoubtedly an element which should be considered in the fixing of rates. It is often a most important element, but plainly cannot be made an arbitrary standard independent of all other considerations." 2

§ 591. Difference between values justifies difference in classification.

So where two similar articles are compared, a difference in classification may be justified merely because of a difference in value. Thus where a complaint was made because other cereal products were given a higher classification than flour, the Commission said: "The question presented by complainant is, whether the other cereal products exceeding flour in value, the

1 Howell v. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. 272 (1888); Interstate Commerce Comm. v. Delaware, L. & W. R. R., 64 Fed. 723 (1894).

2 Prouty, Com. in Grain Shippers' Assoc. v. Illinois Cent. R. R., 8 I. C. C. Rep. 158 (1899).

highest 68.2 per cent., the lowest 9.1 per cent., and giving an average excess in value of 33.4 per cent., should take the same classification, and therefore the same rate, as flour, values alone being considered?

"It is a conceded rule of classification that value, on account of enhanced risk and ability to pay a greater proportion of the aggregate return upon investment, may justify a higher classification, and in view of this rule the difference in values here shown is sufficiently great to justify the conclusion that the comparison as to value alone furnishes no sufficient reason for a classification with flour." 29 3 And upon the same principle, when it was claimed that a different classification on milk and cream, carried in the same sized can, could not be reasonable, the Commission pointed out that the element of value in the commodity transported forms a proper consideration to be taken in to the account in the establishment of a rate, and justified the difference because of the great difference in value between milk and cream.4

§ 592. Different classification of anthracite and bituminous coal.

Upon the ground of difference in value a different classification of bituminous and anthracite coal has been justified. Thus in the case of Cox Brothers & Co. v. Lehigh Valley Railway,5 Mr. Commissioner Morrison said: "The grounds upon which we are asked to find these two coals to be the same freight, a like kind of traffic, is that they are loaded, unloaded and transported in the same way and substantially at the same expense to the carrier, and are largely used for the same purposes, though one half or more of the anthracite is used for domestic purposes.

3 McDill, Com. in Schumacher Milling Co. v. Chicago, R. I. & P. R. R., 6 I. C. C. Rep. 61 (1895).

4 Howell v. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. Rep. 272 (1888).

53 Int. Com. Rep. 460, 4 I. C. C. Rep. 535 (1891).

"Ordinarily there is no better criterion for reasonable charges than that which is in proportion to the service rendered; and if the cost and expense of the carrier was the only test of a reasonable charge the claim might well be made that all coals should be classed together as one freight and be subject to the same transportation charges.

"Carriers in making separate classifications, or rates for dif ferent coals, take into consideration, not only the expense of transportation, but the value of the freight and worth of the transportation to the shipper; the exceptional qualities which fit the more valuable anthracite for domestic and special uses and cause its large consumption in less distant markets; the shorter distance from the mines to the principal markets rendering the transportation proportionately more expensive, and the necessity for so apportioning the transportation charges between the anthracite of different sizes and values that the more valuable may bear the greater charge."

593. Market value rather than intrinsic value.

It is not the cost to the manufacturer or the intrinsic value of the product that is considered in determining classification, but the value in the market; both because that would furnish the measure of the carrier's liability in case of loss, and because that is the only value which the carrier can know. This doctrine was applied to justify the higher classification of patent medicines as compared with ordinary bottled liquors. In the case of Warner v. New York Central & Hudson River Railroad the 63 Int. Com. Rep. 74, 4 I. C. C. Rep. 32 (1890).

complainant insisted that the classification of his remedies should be the same as that of ale, beer and mineral waters. This contention he based on two general grounds. One was that the mode of packing, the convenience in handling and the risks in transportation were substantially the same. The other was that the intrinsic value of the remedies was no greater than the intrinsic value of the other articles with which he claimed they should

be classified. He claimed that while the market value of the remedies was about four times greater than that of mineral water and the other articles, about three-fourths of the market value was the result of skill in advertising the remedies.

Mr. Commissioner Schoonmaker said: "Whatever the fact may be in the case of these medicines, it can hardly be expected of carriers that they should disregard the market value of the articles they carry, and what their manufacturers give the public to understand concerning them, and enter upon the difficult and expensive task of an analysis of freight to ascertain its intrinsic value as distinguished from its market value. If a rule of this kind were possible and should be generally applied, it would result in most injurious consequences to some of the most important articles of commerce of large actual value, but on account of their abundance, of low market value, such as grain and other food products, coal and lumber.

"The value of an article to a manufacturer is the price it commands, and it seems only reasonable that carriers should take into account the market value, a thing generally known and easily ascertained, as one of the considerations in arranging their classifications and fixing the rates that a commodity should bear. It is not seen how the relations that any specific commodity should bear to other commodities for classification purposes can be arrived at in any other practicable way. The wide difference in the market value of ale, beer and mineral water on the one hand, and the remedies of the complainant on the other hand, is, so far as can be seen under the evidence in this case, a reasonable ground for a difference in the classification of these respective articles."

8594. Differing value of same kind of freight.

As has been seen, classification is not to be made too minute; and in general a difference of value between articles of the

7 Ante, § 557.