We are called upon to determine whether there is any reason to believe that the designing and construction by the construction company of the railroad's New North Station and other terminal facilities in the city of Boston, Mass., constituted a violation of this law as alleged.

The facts are these: On June 5, 1926, the construction company made a proposal to the railroad for designing and constructing "such yard and terminal facilities, freight houses and other structures as the railroad might direct. A copy of the proposal is filed as an exhibit in this case. The proposal was accepted and signed by the chief construction engineer of the railroad and two vice presidents of the construction company on June 9, 1926. On June 16, 1926, the executive committee of the board of directors of the railroad, according to an exhibit of record, ratified the action of its chief construction engineer. The first work under the above agreement was performed on June 23, 1926. This work amounted to more than $50,000 in the aggregate in the year 1926.

Defendant Homer Loring was a member of the board of directors of the railroad at the time the proposed agreement was made and consummated and for some time thereafter. Of the total of 9,000 shares of common stock and 20,000 shares of preferred stock issued by the construction company Loring held 1,500 shares of the common, Loring & Company held 1,035 shares of common and 435 shares of first preferred, 100 shares of first preferred was held in trust by Loring, and members of his family held 395 shares of the first preferred.

Loring testified that about June 1, 1926, he started negotiations with Robinson, president of the construction company, for the sale and purchase of all the stock of the construction company held by Loring and his family. Our investigation developed that all the stock held by Loring and Loring & Company was sold, assigned, and transferred to Harry E. Essley on June 4, 1926. Payment for the stock held by Loring, Loring & Company, the trust, and members of the Loring family was made by Dwight P. Robinson & Company on June 9, 1926. The stock referred to immediately above was canceled on June 14, 1926. Harry E. Essley, into whose name all of the above stock was transferred, was and is treasurer of Dwight P. Robinson & Company. By affidavit, Essley states:

The purchaser of said stock was Dwight P. Robinson & Company, Incorporated, and the stock is in my name because I am the treasurer of that company. The said stock has been since the above purchase and is now treasury stock of the Dwight P. Robinson & Company, Incorporated, belonging to that company. No dividends have been paid on said stock since it was transferred into my name, and it has not been voted at any meeting of the stockholders

of said company. I have not now and never have had any individual interest of any kind in said stock, and I hold the same solely and exclusively for Dwight P. Robinson & Company, Incorporated.

Our investigation, made subsequent to the last hearing of this case which was on February 6, 1929, confirms the dates and transactions set forth in the preceding paragraphs.

Loring testified that his interest in the construction company terminated at the time the agreement for the sale of stock was made; that he received full payment for all of the stock in which he was interested on June 9, 1926; and that neither he nor any of his family has since derived any profit from the construction company. He further testified that the sale of his stock was made at a sacrifice price to enable the railroad lawfully to enter into an advantageous contract with the construction company. It appears, therefore, that the divestment of stock was bona fide and that no further profit accrued to Loring from his previous association with the construction company.

We find that Loring was interested substantially in the construction company prior to June 4, 1926, but do not find that he was interested directly or indirectly substantially or otherwise in the construction company after June 14, 1926. As indicated, the contract between the railroad and the construction company was ratified on June 16, 1926.

Section 10 of the Clayton Antitrust Act requires us, whenever we have reason to believe that said section has been violated, to transmit to the Attorney General all papers and documents together with our views or findings. After investigation and consideration of all the evidence we are of the opinion that there is no reason to believe that the said section has been violated as alleged. The complaint will be dismissed.

157 I. C. C.

No. 21203

TRAFFIC BUREAU OF SIOUX FALLS CHAMBER OF COMMERCE v. GREAT NORTHERN RAILWAY COMPANY ET AL.

Submitted May 8, 1929. Decided October 3, 1929

Class rates from Sioux Falls, S. Dak., to destinations in Minnesota on the Minneapolis & St. Louis found unreasonable but not unduly prejudicial. Reasonable rates prescribed for the future.

R. D. Springer for complainant.

G. M. Swanstrom and W. D. O'Brien for defendants.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS AITCHISON, TAYLOR, AND PORTER BY DIVISION 3:

Exceptions were filed by defendants to the report proposed by the examiner.

Complainant is a voluntary association of persons, firms, and corporations at Sioux Falls, S. Dak. By complaint filed July 2, 1928, it alleges on behalf of certain of its members that the class rates from Sioux Falls to certain destinations in Minnesota were and are unreasonable and unduly prejudicial to complainant and preferential of its competitors at Watertown, S. Dak., Minneapolis and St. Paul, Minn., and other points. We are asked to prescribe reasonable and nonprejudicial rates for the future. The prayer for reparation was withdrawn at the hearing. Rates will be stated in cents per 100 pounds.

The points of destination are in Minnesota on the Minneapolis & St. Louis between Madison and Franklin, Minn., both inclusive. Shipments from Sioux Falls to those destinations move over the Great Northern to Hanley Falls, Minn., thence over the Minneapolis & St. Louis.

The complainant relies on the findings in Watertown Chamber of Commerce v. C. & N. W. Ry. Co., 101 I. C. C. 441, hereinafter referred to as the Watertown case, in support of its allegations. The primary question is whether or not division 2 prescribed maximum reasonable class rates in that case from Sioux Falls to the destination points herein under consideration.

In the Watertown case, complainants alleged that the class rates from Watertown to points in Minnesota were unreasonable, unduly preferential of Sioux Falls and Sioux City, Iowa, and unjustly discriminatory against interstate commerce to the extent that they exceeded, for like distances, the contemporaneous class rates from St. Paul and Minneapolis, Winona, Albert Lea, Mankato, Pipestone, Rochester and St. Cloud, Minn., to the said Minnesota destinations in violation of sections 1, 3 and 13 of the interstate commerce act. The destination points in the instant case are within the destination territory considered in the Watertown case, in which we found that: the assailed rates from Watertown to the Minnesota destinations are not unreasonable, but that they are, and for the future will be, unduly prejudicial to Watertown, and unduly preferential of Sioux Falls, Sioux City, the Twin Cities, Winona, Albert Lea, Mankato, Pipestone, Rochester, and St. Cloud, to the extent that they exceed, or may exceed, the corresponding rates contemporaneonsly maintained from the said preferred points to the same destinations by more than the differences that would exist between the rates from said preferred points, on the one hand, and from Watertown on the other, to said Minnesota destinations under the scale of class rates shown in Appendix 2 to the report in the Fargo case, supra, less 12 per cent for the distances on and east of the main line of the Omaha from Sioux City through Worthington and Mankato, Minn., applied in the manner indicated in note 1, and that any greater difference or disparity between the aforesaid rates from Watertown and from the said preferred points results, and would result, in unjust discrimination against interstate commerce from Watertown.

We further found that:

the class rates from Sioux Falls, Sioux City, and the Minnesota points of origin above named to the said Minnesota destinations are less than reasonable maximum rates, and that reasonable maximum rates from and to said points. are, and for the future will be, those in the scale of class rates shown in Appendix 2 to the report in the Fargo case, supra, less 12 per cent for the hauls on and east of the line of the Omaha from Sioux City through Worthington and Mankato, determined in the manner indicated in note 1.

case.

The order in the Watertown case required the defendants to publish rates which would reflect the same spread as would result from the use of the distance rates prescribed in Fargo Commercial Club v. A. & W. Ry. Co., 98 I. C. C. 691, herein referred to as the Fargo We stated in the former case that there were no "circumstances and conditions of transportation which warrant the existing disparities in the class rates from Watertown and from the competitive points alleged to be preferred." We then found that the then existing rates from Sioux Falls, among others, were less than maximum reasonable rates and that maximum reasonable rates would be those prescribed in the Fargo case. It is true that no allegation of violation of section 1 was made in the Watertown case, with respect to the rates here in issue, but they were necessarily before us under the

section 3 allegation and it was within our province, in disposing of that allegation, to determine the manner in which the undue prejudice found to exist should be removed. It is also true that the order did not specifically direct the carriers to establish rates from Sioux Falls on the basis of the Fargo scale but the report clearly indicates that the Fargo scale was to be used as the measure of the rates from the preferred points.

There are no joint rates in effect from Sioux Falls to points on the Minneapolis & St. Louis. The present rates are combinations of locals over Hanley Falls. The factors are the same as the distance rates prescribed in the Fargo case, and consequently the combination rates are higher than the joint-line distance rates prescribed in that case.

The rates in effect from Sioux Falls to the destinations here under consideration, prior to the decision in the Watertown case, were less than the present rates and, as stated above, with the exception of the rates to Hanley Falls, are now higher than the distance rates prescribed in the Fargo case. In this respect the situation differs from that considered in the Watertown case, as in the latter case it was shown that the rates from Sioux Falls to some of the destinations there concerned were less than the rates under the Fargo scale. The rates from Watertown to the destinations under consideration in the Watertown case were reduced to the basis of the Fargo scale in strict compliance with the order therein entered, but as indicated the rates from Sioux Falls were increased after the entry of that order. In the following table the rates in effect prior to the decision in the Watertown case, those under the Fargo scale for the same distances, and the present rates, are stated for the first four classes:

There is insufficient evidence upon which to base a finding of undue prejudice.

Complainant directs our attention to an alleged violation of the long-and-short-haul clause of the fourth section. The destination points here under consideration are intermediate via Watertown to points in Iowa to which lower rates are maintained by defendants.