is upon the director general. In support of this position reference is made to Jones & Laughlin Steel Co. v. P. & L. E. R. R. Co., 91 I. C. C. 300, and Carnegie Steel Co. v. Director General, supra. But in the instant case, it must not be overlooked that here the trunk lines were absorbing the switching charges of the P., A. & McK. in full prior to February 15, 1918, the date upon which the switching charges were increased, and that the increase in the through charges which here represent the measure of reparation sought was brought about by the direct action of the P., A & McK. Under these facts, if the increases in issue carry with them the burden of proof, that burden is upon the P., A. & McK., and not upon the director general. The P., A. & McK., while nominally a defendant here, is in interest a complainant by reason of the fact that it is owned and controlled by complainant. Under these circumstances, the burden is upon complainant to show that the increased rates resulted in unreasonable charges. In view of the slight excess charged over the flat Pittsburgh rates, and the lack of evidence establishing that the flat Pittsburgh rates were the proper measure of maximum reasonableness, it can not be said that the through charges were unreasonable.

Upon this record we affirm our former findings that the rates to and from points of unloading and loading at complainant's plants were not unreasonable. The complaint will be dismissed.

CHAIRMAN LEWIS and COMMISSIONERS BRAINERD and FARRELL dissent.

157 L. C. C.

INVESTIGATION AND SUSPENSION DOCKET No. 3280

RULES FOR CONSTRUCTING COMBINATION

RATES

ON LIVESTOCK TO AND FROM POINTS IN SOUTH DAKOTA

Submitted August 10, 1929. Decided October 9, 1929

Proposed cancellation of the application of the combination rule to rates on livestock, in carloads, from certain points in South Dakota west of Mobridge to interstate destinations east thereof, found not justified. Suspended schedules ordered canceled and proceeding discontinued.

O. H. Timm for respondents.

D. L. Kelley for Board of Railroad Commissioners of State of South Dakota.

REPORT OF THE COMMISSION

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

A proposed report was served upon the parties by stating it of record at the close of the hearing. Exceptions were filed by protestant to the report proposed by the examiner. Our conclusions differ from those recommended by him.

By schedules filed to become effective April 22, 1929, respondents proposed to cancel the application of the combination rule to rates on livestock, in carloads, from certain points in South Dakota on the Chicago, Milwaukee, St. Paul & Pacific west of Mobridge, S. Dak., to interstate destinations east thereof. Upon protest of the Board of Railroad Commissioners of the State of South Dakota, the schedules were suspended by us until November 22, 1929. The Chicago, Milwaukee, St. Paul & Pacific undertook the defense of the suspended schedules, and it will be referred to hereinafter as respondent.

As is quite commonly known, the purpose and effect of the socalled combination rule is to apply certain general increases to the through combination rates rather than to the separate factors. This is accomplished by deducting a specific amount from each factor and adding the same amount to the sum of the factors thus obtained. Where a carrier's tariff does not contain a reference to the rule it is entitled to its full local or proportional rate in making combination

rates and the carrier or carriers publishing the rule must bear the entire reduction.

The reasons assigned by respondent for the proposed change are that the applicable commodity rates from the designated shipping points to the Middle West primary markets, such as Chicago, Ill., and South St. Paul, Minn., are those prescribed in South Dakota R. R. Commissioners v. C. & N. W. Ry. Co., 77 I. C. C. 451, decided February 13, 1923, hereinafter referred to as the South Dakota case; that for substantially the 5-year period preceding November 1, 1928, these rates were not subject to the combination rule; that during this period and at present, the rates prescribed in the South Dakota case from points on respondent's lines east of Mobridge were not and are not subject to the combination rule; that on November 1, 1928, respondent by mistake omitted from its tariff the specific clause which theretofore had expressly exempted these livestock rates from the operation of the combination rule; that the schedules here under suspension propose merely to restore the rates which were prescribed in the South Dakota case, and which have been maintained apparently without complaint for practically half a decade; and that the proposed change was solely for the purpose of correcting the demonstrated error.

Protestant asserts that respondent's tariff in effect prior to November 1, 1928, did make the rates here under consideration subject to the combination rule; that if notice had been taken before of the fact that livestock rates from east of Mobridge were not subject to that rule, complaint would have been made; and that if respondent would establish a joint-line scale of rates based on the South Dakota case to all destinations, reasons no longer would exist for protesting against the elimination of the combination rule.

The applicable tariff for the period prior to November 1, 1928, specifically states that the designated "rates are not subject to item 5." That item is the tariff clause which makes the rates generally subject to the combination rule. The exempting clause relating to these particular rates was published for the first time on November 10, 1923, and continued in effect until November 1, 1928.

If the suspended schedules become operative the rates on livestock from stations west of Mobridge as far as Lemmon, S. Dak., will be increased 8.5 cents per 100 pounds or approximately $20.40 per car of 24,000 pounds. Numerous fourth-section departures would be created as respondent has not canceled the application of the combination rule to the rates on livestock from stations west of Lemmon into Montana. Protestant believes that inasmuch as the entire livestock situation in this territory is now before us in No. 17000, Part 9, the rates should remain unchanged pending decision

therein. Some of the carriers in this territory as well as some of those east of Chicago refer in their tariffs to the combination rule, and where those tariffs are used to make up combination rates on jointline movement there would be no increase in the rates if respondent were permitted to cancel from its tariff the reference to the rule. But in those instances where the tariffs of connecting lines do not refer to the rule increased rates would result. In Combination Rule on Sand, 136 I. C. C. 219, and in other cases, we have expressed disapproval of the combination rule as a method of rate making, but the burden of justifying the increased rates is on respondents, and on this record this has not been done. The rates fixed in the South Dakota case were based on a distance scale, and. as respondent shows only a few distances, we are unable to determine on this record whether the rates under consideration are on the level there prescribed. Respondent urges that cancellation of the suspended schedules will result in a continuation of existing fourth-section violations but, as indicated above, if the schedules are approved other fourthsection violations will be created. Even though it is the purpose of respondents to place the rates on a basis approved by us, it is obvious. that we can not approve their taking such action in a piecemeal manner, which will necessarily result in departures from the fourth section.

We find that the suspended schedules have not been justified. An order will be entered requiring their cancellation and discontinuing this proceeding. Respondents will be expected to promptly remove any existing fourth-section violations.

157 I. C. C.

No. 19516

ARIZONA CORPORATION COMMISSION ET AL. v. ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY ET AL.

Decided September 30, 1929

On reconsideration findings in former report, 156 I. C. C. 418, with respect to rates on petroleum products, in carloads, from points in southern California to Arizona destinations modified in so far as the rates to such destinations on the Clifton branch of the Southern Pacific Company are concerned Wm. D. Claypool, Loren Vaughn, Amos A. Betts, L. G. Reif, W. O. Banks, Chas. E. Blaine, and F. W. Turcotte for complainants. B. H. Carmichael, Glensor, Clewe, Van Dine & Turcotte, R. S. Sawyer, Roland Johnston, D. B. Wiley, P. C. Steinel, Earl K. Cone, J. L. O'Connell, and Charles E. Blaine for various interveners.

J. R. Bell, G. H. Muckley, Elmer Westlake, Platt Kent, J. E. Lyons, F. E. Mielke, A. Burton Mason, R. S. Outlaw, and R. K. Minson for defendants.

REPORT OF THE COMMISSION ON RECONSIDERATION

BY THE COMMISSION:

In the former report herein, 156 I. C. C. 418, we found the rates on petroleum products, commonly termed refined oils, in carloads, from southern California to destinations in Arizona, and to certain destinations in New Mexico as described in the report, unreasonable to the extent they exceeded 70 cents and 80 cents, respectively. The rates on distillate, in carloads, were found unreasonable to the extent they exceeded 80 per cent of the rates prescribed on refined oils. The rates prescribed were the same to main and branch line destinations. On August 22, 1929, the effective date of the order entered on July 1, 1929, in so far as it required the publication of the rate of 70 cents on petroleum products commonly termed refined oils, and rates 80 per cent thereof on distillate, to destinations on the Globe and Clifton branches of the Southern Pacific Company was postponed to November 30, 1929, on 30 days' notice. On petition of the Southern Pacific Company for modification of the order as to the rates prescribed to destinations on the branches mentioned the case was reopened for reconsideration with respect to the rates to destina