No. 12596

PRESSED STEEL CAR COMPANY v. DIRECTOR GENERAL, AS AGENT, BALTIMORE & OHIO RAILROAD COMPANY ET AL.

Submitted July 3, 1929. Decided October 8, 1929

Upon further hearing findings in 93 I. C. C. 224, and 109 I. C. C. 75, that rates to and from points of unloading and loading at complainant's plants at McKees Rocks and Allegheny, Pa., were not unreasonable, affirmed. Complaint dismissed.

John S. Burchmore, Luther M. Walter, and Nuel D. Belnap for complainant.

Sidney F. Andrews and M. G. de Quevedo for defendants.

REPORT OF THE COMMISSION ON FURTHER HEARING

BY THE COMMISSION:

Exceptions were filed by complainant to the report proposed by the examiner and the case was orally argued.

In the original report herein, 93 I. C. C. 224, decided October 27, 1924, division 1 found that the rates charged on inbound shipments of iron, steel, coal, lumber, machinery, and other commodities, and outbound shipments of new and repair cars, car trucks, car parts, and miscellaneous commodities, in carloads, and in less than carloads, from and to complainant's plants at McKees Rocks and Allegheny, Pa., were not unreasonable during the period of Federal control; that no damage was shown to have resulted from any undue prejudice which may have existed, and dismissed the complaint. On February 9, 1925, upon petition of complainant, the case was reopened for reargument. Thereafter, in 109 I. C. C. 75, decided March 2, 1926, we affirmed on reargument the findings made in the original report. On May 7, 1928, the case was reopened on our own motion for further hearing for proof of reasonableness. The facts are stated fully in our former reports and will be reiterated herein only in so far as they are pertinent to the issue now before us. Except as noted, rates will be stated in cents per 100 pounds.

Complainant's plants are located at McKees Rocks and Allegheny, Pa., on opposite sides of the Ohio River, the former about 3.5 miles from the Pittsburgh & Lake Erie passenger station in Pittsburgh, Pa., and the latter about 4 miles from the Pennsylvania passenger

station and within the city limits of Pittsburgh. These plants are served by the Pittsburgh, Allegheny & McKees Rocks, hereinafter called the P., A. & McK., a terminal and switching carrier owned by complainant, which was found in P., A. & McK. R. R. R. Co. v. Director General, 57 I. C. C. 1, to be a common carrier engaged in interstate commerce and as such entitled to participate in joint rates with other carriers or have its charges absorbed under tariff provisions published by the line-haul carriers. At McKees Rocks it connects with the Pittsburgh & Lake Erie and the Pittsburgh, Chartiers & Youghiogheny.

The trunk lines provided for absorption of the applicable switching charges of the P., A. & McK., between all industries, sidings, and junctions with connecting lines to the extent of 4.27 cents per ton, net or gross, as rated, on practically all carload revenue shipments and on less-than-carload revenue shipments of 10,000 pounds or more, minimum absorption computed on the basis of 20,000 pounds on which the trunk lines obtained line hauls. With two exceptions, the trunk lines provided for an absorption of 50 cents per car on new cars and 25 cents per car on cars repaired or to be repaired moving on their own wheels. Prior to February 15, 1918, these absorptions accorded complainant the benefit of the flat Pittsburgh rates. No absorptions were authorized on ex-lake ore or in connection with certain switching movements. On that date the P., A. & McK. increased its interchange switching rates on all freight, except ashes, slag, and other refuse materials on which there was no charge, to 10 cents per ton, net or gross as rated, and to 10 cents per net ton on new and repair cars. The resulting increases were not absorbed by any of defendants, which were then operated by the director general, and they were consequently added to the line-haul rates.

Before the original hearing the corporate defendants satisfied the complaint against them by making reparation upon the basis of an absorption of 10 cents per ton on traffic moving after the period of Federal control, and they also established a provision authorizing that amount of absorption of the P., A. & McK. charges for the future. No reparation, however, was made on new and repair cars. This settlement had our approval. A reparation settlement was also agreed upon between complainant and the director general under the terms of which complainant was to receive reparation, without interest, in the sum equivalent to the amount paid by it in excess of the flat Pittsburgh rate, namely, 5.73 cents per ton on all traffic to and from its plants, exclusive of new and repair cars. Accordingly, a special docket application was filed requesting authority for this payment. This application did not contain the usual admission of unreasonableness of the applicable charges and it was denied pending hear

ing of this formal complaint. Complainant then sought and now seeks reparation for the period extending from February 15, 1918, to February 28, 1920. The increase of 5.73 cents per ton on freight and the resulting increases on cars represent the measure of reparation sought.

The so-called Pittsburgh district varies according to the origin and destination of the traffic. For distances of 500 miles and over, class and commodity rates are the same to the territory comprising an area of approximately 40 miles around Pittsburgh. For distances of 200 miles and over the Pittsburgh district comprises a territory of approximately 15 miles around Pittsburgh. For shorter distances the rates to and from Allegheny and McKees Rocks are slightly higher or lower than the rates to Pittsburgh proper. It is stated that about 97 per cent of the traffic of the Pittsburgh industries similarly situated as complainant is handled inbound and outbound without additional charges for switching to and from the industries. This, however, is generally accomplished by routing, for there is no general reciprocal absorption of switching charges in the Pittsburgh district. In presenting this case at the former hearing complainant relied mainly upon decided cases wherein reparation had been awarded in similar situations on the theory that the line-haul rates included plant movements such as are here considered. Such presentation was made on the theory that the unreasonableness of the rates to and from complainant's plants was measured exactly by the amounts complainant had to pay over and above the flat Pittsburgh rate. Complainant did not undertake to apply the usual and accepted tests of reasonableness to the various combinations of line-haul rates of the trunk lines and the interchange switching charges of the P., A. & McK. as applied to traffic to and from complainant's industries during the period here considered. The line-haul rates applied were not shown of record. As stated, this case was reopened for further proof of reasonableness. At the further hearing complainant undertook principally to show that the rates applied on shipments inbound and outbound were unjust and unreasonable. In support thereof, it instances representative inbound shipments of lumber, coke, fire clay, brick, fuel oil, and scrap iron, and outbound shipments of car wheels, made during the period here in issue between complainant's plants and numerous points. The following illustrate the rates applied on shipments of lumber from the points named to McKees Rocks: 38 cents from Laurel and Mendenhall, Miss., and Holts, Fla., 38.5 cents from Lufkin, Tex., 29.5 cents from Honaker, Va., 20 cents from Burkeville, Va., 25.5 cents from Prospect, Va., and 14 cents from West Springfield, Pa. A rate of $1.20 per net ton applied on inbound shipments of coke from Brownsville, Crystal, and Smithfield, Pa., to

complainant's plants. Numerous shipments moved under that rate. Similar representative rates on fire clay, brick, oil, and scrap iron are also instanced. In addition to the line-haul rates, the 10-cent charge of the P., A. & McK. was applied on all these shipments, of which only 4.27 cents was absorbed by the trunk lines.

The following rates are typical of those applied on outbound shipments of car wheels to the points named from complainant's plants: 24.5 cents to Weehawken, N. J., and 27 cents to Hammond, Ind. Upon all outbound shipments of car wheels the unabsorbed portion of the P., A. & McK. switching charge was also collected, while on like shipments under the same rates from the Schoen works of the Carnegie Steel Company, which plant adjoins complainant's plant at McKees Rocks, a spotting allowance of 55 cents per ton was made. This was due to the fact that the Pennsylvania by tariff authority provided for the application of the flat Pittsburg rates to the Schoen works without proper concurrence of the P., A. & McK., which performed the spotting service, or provision for the absorption of the charges for such service. That tariff complication was found unlawful in P., A. & McK. R. R. R. Co. v. Director General, 69 I. C. C. 223, 224. The charges due to that unlawful situation can not in any way indicate that the charges applicable to complainant's shipments were excessive.

As before observed, the amounts of the unabsorbed portion of the P., A. & McK. switching charges represent the measure of reparation sought. To illustrate, on the foregoing shipments of lumber from Laurel, Mendenhall, Holts, Lufkin, and Burkeville, which weighed, respectively, 44,800, 41,400, 51,700, 52,300, and 48,360 pounds, total charges of $171.52, $171.43, $197.92, $204.36, and $98.11, respectively, were collected and the amounts of reparation sought thereon are, respectively, $1.28, $1.19, $1.46, $3, and $1.39. But in International Harvester Co. v. N. Y. C. R. R. Co., 101 I. C. C. 89, decided July 1, 1925, which case dealt with an allegation of unreasonableness based upon similar grounds, it was said:

An award of reparation to complainant upon the ground of unreasonableness such as is sought would necessarily involve the conclusion that the line-haul rates from and to Auburn were in each and every instance up to the limit of reasonable maximum rates, and that the addition of the relatively small switching charges of the Owasco was sufficient, in each and every case, to carry the rates over the line of maximum reasonableness by the exact amount of the switching charge. Such a conclusion is repugnant to common sense.

The charges collected on the shipments instanced above are compared with charges on similar shipments of like commodities which moved during the same period under class and commodity rates to and from the plants of the Jones & Laughlin Company at Wood

lawn, Pa., the Carnegie Steel Company at Neville Island, Pa., and the latter company's Schoen works at McKees Rocks. The tariffs of the carriers serving these plants at Woodlawn and Neville Island provided for charges to or from the point of unloading in addition to the line-haul rates to Woodlawn and Neville Island. In Jones & Laughlin Steel Co. v. Director General, 60 I. C. C. 325, decided January 13, 1921, and Carnegie Steel Co. v. Director General, 80 I. C. C. 269, 101 I. C. C. 638, decided June 2, 1925, it was found that the rates on carload traffic, except iron ore and except local movements in connection with defendant trunk lines at switching rates, moving to or from points of loading or unloading at complainant's plants, were unreasonable and unduly prejudicial to the extent they exceeded the rates contemporaneously in effect to Woodlawn and Neville Island. Reparation was awarded. Woodlawn and Neville Island are within the so-called Pittsburgh district. Complainant contends that under the facts stated it also is entitled to an award of reparation and that it should be accorded treatment similar to that given the complainants in the cases cited. Concerning those cases, we said in the report on reargument herein, 109 I. C. C. 75, that "we are persuaded that in so far as prior decisions may lend themselves to the support of complainant's contentions they should not be followed."

Complainant refers to what it terms "retroactive " fourth-section violations which our decisions in this case have caused. It shows that shipment to and from the industries at Woodlawn and Neville Island pass through McKees Rocks, the junction point of the trunk lines and the P., A. & McK. However, the complaint does not allege a violation of section 4 of the interstate commerce act. The absorption provisions published by the trunk lines and now in effect have removed any section 4 departure which may have existed and, in so far as past shipments are concerned, the evidence of record clearly rebuts any presumption of unreasonableness which may have arisen out of the tariff situation under consideration. The fact that the corporate defendants are now absorbing the full amount of the P., A. & McK. switching charge and that they made reparation for the period following Federal control are also urged to show that the rates assailed were unreasonable. The significance of these facts is dealt with in our former reports.

It is shown that the cost of performing the switching service of the P., A. & McK. was in excess of 4.27 cents per net ton and that under the charge of 10 cents per net ton, the P., A. & McK. did not earn a return on its investment in property held for and used in the service of transportation. These facts, complainant contends, establish the reasonableness of the switching charge of 10 cents. It takes the position that the burden of justifying the charges here assailed