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system was practically destroyed by the Commission.617 It almost completely gave way as a result of the decision in the Southern Class Rate Investigation.618

§ 116. Breaking Rates at the Territorial Gateways. It has been the system adopted by the carriers in different sections. of the country to make rates to a river crossing and thence to the point of destination, the through rate being a combination of the two. In some places this system, called the ratebreaking system, is applied at inland points, although "such an adjustment is unusual, because it is at points and on the banks of rivers, where a transfer is necessary, that rates ordinarily break." And, "to have rates break at a particular point is not an inherent right. '619 While the system of breaking rates at particular points may not be the best, the Commission cannot at once overcome such a system but can, when necessary to prevent discrimination, control this method of rate-making. Speaking of the system in a case where the complainants insisted "that the system of basing rates to the Missouri River cities and points beyond upon the Mississippi River crossings is improper," Mr. Commissioner Clark, for the Commission, said: "We are not impressed with the view that the system of making rates on certain basing lines should be abolished. No system of rate-making has been suggested as a substitute for it, except one based upon the postage-stamp theory, or one based strictly upon mileage. Either of these would create revolution in transportation affairs and chaos in commercial affairs, that have been builded upon the system of rate-making now in effect. It must not, however, be assumed that a basing line for rates may be established and be made an impassable barrier for through rates, or that cities or markets located at or upon such basing line have any inviolable possession of, or hold upon, the right to distribute traffic in or from the territory lying beyond. Development of natural resources, increase in population, growth of manufacturing and producing facilities, and increased traffic on

617 Fourth Section Violations in the Southeast, 30 I. C. C. 153.

618 Southern Class Rate Investigation, 100 I. C. C. 513.

619 Mr. Commissioner Harlan, in

Commercial Club of Duluth v. Baltimore & O. R. Co., 27 I. C. C. 639, 650, 657. See also Sioux City Terminal Elevator Co. v. Chicago, M. & St. P. Ry. Co., 27 I. C. C. 457, 463.

railroads create changed conditions which may warrant changes in rates and in rate adjustments in order to afford just and reasonable opportunity for interchange of traffic between points of production and points of large consumption."620 The order of the Commission in the case in which the above announcement was made coming before the Supreme Court, this declaration was quoted by the court and, replying to the contention that the Commission had adopted illegal principles in arriving at its conclusions effective in the order, the court said: "As we have said, the Commission is the tribunal that is intrusted with the execution of the interstate commerce law, and has been given very comprehensive powers in the investigation and determination of the proportion which rates charged shall bear to the services rendered, and this power exists, whether the system of rates be old or new. If old, interests will have probably become attached to them and, it may be, will be disturbed or disordered if they be changed. Such circumstance is, of course, proper to be considered and constitutes an element in the problem of regulation, but it does not take jurisdiction away to entertain and attempt to resolve the problem. And it may be that there cannot be an accommodation of all interests in one proceeding.' The opinion of the court refers to the force "due to the judgments of a tribunal appointed by law and informed by experience.' '622

19621

Breaking rates at rivers grew out of the fact that many roads ran only to the river and other roads took the commodity thence, there being no physical connection between the roads. Another reason was that, in some instances, one of the hauls was by water and the water carrier had no physical connec

620 Burnham, Hanna, Munger Dry Goods Co. v. Chicago, R. I. & P. Ry. Co., 14 I. C. C. 299, 303, 312, 313.

621 Int. Com. Com. v. Chicago, R. I. & P. Ry. Co., 218 U. S. 88, 107, 108, 110, 54 L. Ed. 946, 30 Sup. Ct. 651, reversing the lower court in Chicago, K. I. & P. Ry. Co. v. Int. Com. Com., 171 Fed. 680, and sustaining the Commission in Burnham, Hanna, Munger

Dry Goods Co. v. Chicago, R. I. & P.
Ry. Co., 14 I. C. C. 299.

622 Illinois C. R. Co. v. Int. Com. Com., 206 U. S. 441, 454, 51 L. Ed. 1128, 27 Sup. Ct. 700, citing Louisville & N. R. Co. v. Behlmer, 175 U. S. 648, 44 L. Ed. 309, 18 Sup. Ct. 502; East Tennessee, Va. & Ga. Ry. Co. v. Int. Com. Com., 181 U. S. 1, 27, 45 L. Ed. 719, 21 Sup. Ct. 516.

tion with the rail carrier which performed the other part of the through haul. The carriers, as a matter of preference, or to enable one city to enjoy advantages similar to a more favorably located city, extended the principle.623 There is now no justification for refusing through rates merely because the haul crosses the Mississippi, Ohio or some other river. The principle of charging as a through rate the aggregate of two local rates is illogical and conflicts with the evident legislative purpose to make all the roads one aggregate system.

This system of making rates is being broken up under decisions of the Commission.624

§ 117. Comparisons Between Different Lines as a Means of Determining Correct Rates.-It is competent to compare rates, distances and general conditions on one road with those on another when considering the adjustment of rates, but, in connection therewith, all other factors which enter into the question of what constitutes a reasonable rate must be considered.625 Rates should be relatively, as well as absolutely, reasonable, and a locality not widely dissimilar from another is prima facie entitled to the same rate.626 When the circumstances and conditions are substantially dissimilar, comparisons of rates are valueless.627 Comparisons of "transportation rates in force on lines of rival companies or on different branches or lines of the same company have a bearing upon, and are entitled to consideration in conection with, the question of reasonable charges for transportation services rendered

623 Nashville Lumbermens Club v. L. & N. R. Co., 40 I. C. C. 59, 60, 61; Live Stock from Nashville, 48 I. C. C. 277, 281.

624 See Southern Class Rate Investigation, 100 I. C. C. 513; Consolidated Southwestern Cases, 123 I. C. C. 203; Western Trunk Line Class Rates, 164 I. C. C. 1; Eastern Class Rate Investigation, 164 I. C. C. 314.

625 Cannon v. Mobile & O. R. Co., 11 I. C. C. 537, 543; Lincoln Creamery Co. v. Union Pac. R. Co., 5 I. C. C.

156, 3 I. C. R. 794; Re Tariffs of Transcontinental Lines, 2 I. C. C. 324, 2 I. C. R. 203.

626 Manufacturers' and Jobbers' Union v. Minneapolis & St. L. R. Co., 4 I. C. C. 79, 3 I. C. R. 115.

627 Business Men's Asso. v. Chicago & N. W. R. Co., 2 I. C. C. 73, 2 I. C. R. 48; Evans v. Union Pac. R. Co., 6 I. C. C. 520; Marten v. Louisville & N. R. Co., 9 I. C. C. 581, 597, 12 I. C. C. 223.

under like conditions."628 And, as said by Mr. Commissioner Harlan:629

"But while the revenue per ton per mile over other routes on other lines and to other destinations is often suggestive in arriving at a proper estimate of the reasonableness of a rate over a route complained of, it is by no means conclusive. Varying conditions existing on different lines must of necessity justify differences in rates for hauls of the same distance. The real question in any such complaint is the reasonableness of the particular rate on the particular line between the points in question. In testing such a rate the rates on the same or adjacent lines in the immediate territory where the same conditions exist are of much greater significance and afford a much more accurate basis for our action."

A mere comparison of the rates attacked with rates in other parts of the country is not sufficient evidence upon which the Commission may condemn a rate.

Nor does the mere fact that a lower rate is in force by a competing line "of itself establish the unreasonableness" of the rate by the line under investigation.630

As stated by the Commission: "There is no evidence that the rate charged was unreasonable, except that there was a lower rate to a nearby point via another line. This, of itself, has never been held sufficient to establish that the rate over a particular line is unreasonable."631 While this is true, there is some probative value in evidence showing that between the same points there is another line over which a lower rate exists, and this evidence when supported by the fact that the rate complained of yields a comparatively high rate per tonmile may justify a finding that such rate is unreasonable.632

628 Morrell v. Union Pacific R. Co., 6 I. C. C. 121, 4 I. C. R. 469. See discussion of question in Freight Bureau of Cincinnati v. Cincinnati N. O. & T. P. Ry. Co., 6 I. C. C. 195, 4 I. C. R. 592, 610, 611.

629 Dallas Freight Bureau v. Gulf C. & S. F. Ry. Co., 12 I. C. C. 233, cited and followed, Clark & Co. v. Buffalo & S. Ry. Co., 18 I. C. C. 380.

630 Delray Salt Co. v. Michigan Cent. R. Co., 18 I. C. C. 245.

631 Snyder-Malone-Donahue Co. v. Chicago, B. & Q. R. Co., 18 I. C. C. 498, 499. Also see Pankey & Holmes v. Central New England Ry. Co., 18 I. C. C. 578.

632 Parfrey v. Chicago, M. & St. P. Ry. Co., 20 I. C. C. 104.

Comparing one rate with another is but a method of arriving at the fair value of a particular service. The underlying principle applied in making such comparisons is the same as is used when the market value of property is sought to be determined by comparisons with the value of other property similarly situated, and which value is indicated by prices that have been paid therefor in the open market. The method of judging rates by comparison is one that has been applied since tribunals have considered the question of what are reasonable charges.633

§ 118. Carload and Less-than-Carload Movements as Affecting the Rate.-It has been hereinbefore shown that cost and value of service both enter into the question of what constitutes a reasonable rate. "The hazard involved ''634 must also be considered in determining that question. It is indisputable that it costs more per hundred pounds to haul freight in less than carloads than it costs to haul the same freight in carload quantities. Among other reasons, this is true because the shipper loads and the receiver or consignee unloads carload shipments, while the carrier loads and unloads articles shipped in less than carloads. Usually a carload shipment is sealed by the consignor and unsealed by the consignee, and, in the absence of the seals, showing that it has been tampered with, or that the car is in any way defective, there can be no such thing as a concealed loss chargeable to the carrier. The clerical expense of billing and the expense of delivering is much less in carload than in less-than-carload shipments, and the loss and damage on less-than-carload shipments is greater than on carload movements. This principle is recognized by the Commission. In the Thurber case,635 the Commission said: "It is a sound rule for carriers to adapt their classifications to the laws of trade. If any article moves in sufficient volume,

633 Bacon's Abridgment, p. 243, title Carriers, 1 Com. Dig. C., citing 1 Sid. 36; Hutchinson on Carriers (2d Ed.), Sec. 447; 4 Elliott on Railroads, Secs. 1560 et seq.

634 Kindel v. Adams Express Co., 13 I. C. C. 475, 485.

635 Thurber v. New York C. & H. R. R. Co., 3 I. C. C. 473, 2 I. C. R.

742, 752. See also Harvard v. Pennsylvania Co., 4 I. C. C. 212, 3 I. C. R. 257; Schultz-Hansen Co. v. Southern Pac. Co., 18 I. C. C. 234, 237; when the carrier does unload or load it must be without discrimination, Empire Fuel Co. v. Pennsylvania R. Co., 16 I. C. C. 219, 224.

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