In re Arkansas R. Rates
| Decision Date | 03 September 1908 |
| Citation | 163 F. 141 |
| Parties | In re ARKANSAS R. RATES. |
| Court | U.S. District Court — Eastern District of Arkansas |
John M Moore, for complainants.
William F. Kirby, Atty. Gen., George B. Rose, and Morris M. Cohn, for defendants.
The matter now under consideration is an application in each of four suits against the Railroad Commissioners of the state of Arkansas and others for a temporary injunction restraining the enforcement of the prescribed rates for the transportation of freight and passengers in intrastate commerce in that state; it being contended on the part of the complainants that these rates are unreasonable noncompensatory, and therefore confiscatory. The matter was first brought on for hearing on July 28th last, when, at the request of the defendants, the hearing was postponed until August 31st that they might be better prepared to meet the contention of the complainants.
On the latter date the parties appeared, and three days were consumed in the presentation of proofs and in the arguments of the counsel. Each of the four railroad companies is operating an interstate railroad, and is engaged in the transportation over such railroad of freight and passengers both intrastate and interstate, in the state of Arkansas, and each has made a practical and extended application or test of the rates in question. The freight rates were prescribed by the Railroad Commissioners while acting under the state statutes, and the passenger rate, which is two cents per mile, was prescribed by statute. The proofs disclose the revenues actually derived by each railroad, upon the application of these rates, from its business in the state the revenues from each class of traffic being stated so as to show separately the earnings from intrastate freight, interstate freight, intrastate passengers, and interstate passengers, and also disclose the value of the property employed by each road in the traffic within the state, the taxes paid thereon, the actual cost of conducting the freight traffic, and the actual cost of conducting the passenger traffic.
The first question for consideration is: How shall this cost be apportioned between the intrastate and interstate traffic? The proofs make it quite plain that the production of a given amount of revenue is attended with greater cost in intrastate business than in interstate business; and that this is a generally recognized fact is attested by the decisions in other cases where the reasons which make it so are fully stated. Chicago, etc., Co. v. Tompkins, 176 U.S 167, 178, 20 Sup.Ct. 336, 44 L.Ed. 417; Minneapolis, etc., Co. v. Minnesota, 186 U.S. 257, 262, 22 Sup.Ct. 900, 46 L.Ed. 1151; Northern Pacific Ry. Co. v. Keyes (C.C.) 91 F. 51, 53. Here the additional cost is shown to be at least 100 per cent. in freight traffic and at least 15 per cent. in passenger traffic, and this is not more than what has been shown in other cases. Undoubtedly these differences furnish a standard by which to apportion the total cost between the traffic which is intrastate and that which is interstate. Other standards are suggested, but the proofs indicate that none of them is as satisfactory or accurate as is the difference in cost in its relation to the revenue. That standard must, therefore, be applied, and this may be done in this way, taking the freight and passenger traffic separately: Increase the intrastate earnings by the ascertained percentage representing the difference in cost, thereby ascertaining what would have been earned by the same actual expenditure in conducting the intrastate traffic, had it been attended with the same relative cost as the interstate traffic. Then add the intrastate earnings, as so increased, to the interstate earnings, thereby ascertaining what would have been earned by the actual expenditure in conducting both the intrastate and the interstate traffic, had the former been attended with the same relative cost as the latter. Then ascertain what proportion of this total represents the intrastate earnings, as so increased, and what proportion represents the...
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