Valley & Siletz R. Co. v. Flagg

• Decision Date: 13 August 1952
• Citation: 195 Or. 683,247 P.2d 639
• Parties: VALLEY & SILETZ R. CO. v. FLAGG et al.
• Court: Oregon Supreme Court

Page 639

247 P.2d 639

195 Or. 683

VALLEY & SILETZ R. CO. v. FLAGG et al.

Supreme Court of Oregon, En Banc.

Argued and Submitted Sept. 6, 1951.

Decided Aug. 13, 1952.

Fletcher Rockwood, Portland, argued the cause for appellant. On the brief were Hart, Spencer, McCulloch, Rockwood & Davies, Portland.

Wallace G. Mills, Asst. Atty. Gen., argued the cause for respondent. With him on the brief was George Neunder, Atty. Gen.

Dean Ellis, Portland, argued the cause for interveners. On the brief were Ellis & Ellis, Portland.

ROSSMAN, Justice.

This is an appeal by Valley & Siletz Railroad Company from a decree of the circuit court which affirmed an order entitled No. 25218 entered July 7, 1950, by George H. Flagg, Public Utilities Commissioner. Order No. 25218 prescribed rates for intrastate log shipments on the line of the appellant railroad. The appellant claims that the rate is confiscatory and will result in an annual loss of revenue by it of $25,000. The respondents are three in number. One is the Public Utilities Commissioner, who, at the time of the appeal, was Mr. George H. Flagg, but who now is Mr. Charles H. Heltzel. The second and third respondents entered the case as interveners. They are Western Logging Company and Leadbetter Logging & Lumber Company. The three have joined in the brief submitted to this court.

The appellant's railroad is 41 miles long and extends from a connection with the Southern Pacific Company at Independence westerly to Valsetz. The latter, which is at the summit of the Coast Range of mountains, is the site of a large lumber manufacturing plant. The appellant is a common carrier and its entire line is in this state. In Valley & Siletz R. Co. v. Thomas, 151 Or. 80, 95, 48 P.2d 358, 364, Mr. Justice Bailey gave a description of the road.

Upon the Willamette river, at a point near Independence, is a log dump which the Western Logging Company owns and operates. It is served by a spur of the Valley & Siletz Railroad.

The appellant is owned by the same corporation which owns the lumber manufacturing plant in Valsetz. Lumber produced in that plant is shipped out of this state and travels its first 41 miles upon the tracks of the appellant.

In the vicinity of Valsetz is a very large stand of timber much of which, as felled, moves out as logs and lumber upon the appellant's line.

In addition to the mill at Valsetz which we have mentioned, other, but smaller, mills are located along the appellant's line. Much of the lumber manufactured in them and some of the logs produced in the area contiguous to the railroad are shipped upon it. The mainstay of the return movement is the equipment and supplies required by the mills and logging operations which we have mentioned. The appellant runs over its tracks daily a motor-driven car which carries passengers, mail and express.

The intervener, Leadbetter Logging & Lumber Company, owns timber in the vicinity of Valsetz. At the time of the hearing before the commissioner, and likewise at the time of the trial in the circuit court, that concern was not a shipper upon the appellant's road, but indicated that it might become one if attractive rates were offered. It is the present owner of the properties which were owned by Charles K. Spaulding Logging Company when Valley & Siletz Railroad Company v. Thomas, supra, was decided and which are described in the opinion filed in that case. During the times covered by the record Leadbetter logs were not moving to the Spaulding mill, to which reference is made in the decision just mentioned, but were taken to other mills owned by Leadbetter. The logs moved in part by motor truck and in part upon the surface of streams.

In 1943, or prior thereto, the Western Logging Company, to which we shall hereafter refer as Western, became the contract purchaser of a large quantity of timber which stands in the Valsetz region. Western's purpose was to convert the timber into logs and sell the latter in the available market. The appellant's line is the most practical means of reaching the market with logs produced from the timber which Western purchased.

Before Western began its logging operations it applied to the appellant for a rate governing shipments from Valsetz to Independence, and in response appellant published the tariff which underlies this suit. The latter exacted $2.55 per thousand board feet for movements between the two places, provided Western shipped not less than 35 cars daily. The tariff accepted 7,000 board feet as minimum for a car's load. In the event less than 35 cars were shipped daily, when averaged in three-months periods of time, the applicable rate was $3.08 per thousand board feet. The rate required the shipper to furnish the cars.

Although the rate which the appellant announced was unsatisfactory to Western, it nevertheless began to ship logs and before long its logging operations attained their expected capacity.

We shall now take notice of the character of the appellant's traffic. Its mail, express and passenger business is negligible. Likewise, the return movement of freight, that is, from Independence westward, is unimportant. As one can readily infer, logs and lumber are the major commodities that the line hauls. An important difference exists between the log and the lumber traffic: few of the logs are shipped outside the state, but virtually all of the lumber is destined to points in other states. In the period 1944 to 1949, both inclusive, only 2.02% of the carrier's total traffic, when expressed in terms of carloads, consisted of intrastate items other than logs and lumber. In addition, there was 0.40% interstate items other than logs and lumber, making a total of 2.42% exclusive of logs and lumber.

In the period 1944 to 1949, both inclusive, only 0.44% of the appellant's total traffic consisted of logs carried in interstate commerce. Upon the other hand, only 0.84% of its total traffic was made up of lumber carried in intrastate movement. In the period just indicated, the carrier's traffic, expressed in terms of carload units, consisted of:

76.72% logs--76.28% intrastate; 0.44% interstate;

20.86% lumber--0.84% intrastate; 20.02% interstate;

2.42%--all others.

In 1944 to 1949, both inclusive, 98.91% of the appellant's total log traffic was composed of intrastate logs and 97.84% of the lumber carried by it moved in interstate commerce.

As just indicated, virtually all of the lumber moved by the appellant goes out of this state. Referring to it, the commissioner's findings state:

'The income received from hauling lumber is derived by using a through rate from Valsetz to the point of destination; for instance, Valsetz to Chicago or Valsetz to San Francisco. The Valley & Siletz Railroad receives a division of those rates through agreement with other carriers involved in the through movement. This division is a matter of contract between the carriers over which the commissioner has no jurisdiction or control.'

We set forth the above facts because they bear upon the extent of the Public Utilities Commissioner's jurisdiction over the rates and traffic of the carrier. Logs, as we have seen, constituted 76.72% of the total traffic and 98.91% of that traffic was intrastate. Lumber constituted 20.86% of the total traffic, but 97.84% of the limber moved interstate.

December 18, 1944, Western and Charles K. Spaulding Logging Company [now, through change of name, Leadbetter Logging & Lumber Company] instituted a proceeding before the commissioner which attacked as unreasonable the tariff which the appellant had published. In addition to asking that it be decreed invalid, they prayed for reparations extending back to 1943. While the matter was pending before the commissioner, rate increases became effective January 1, 1947, October 13, 1947, and January 26, 1948, with the result that the rate became $3.67 per thousand board feet for multiple car shipments [35 cars daily] and $4.44 for single cars. The three rate increases paralleled general increases granted by the Interstate Commerce Commission. July 22, 1949, the commissioner entered an order, identified as No. 22422, which adjudged that the tariff employed by the appellant was unreasonable. It ordered reparations, but, since that phase of the order is not the subject of specific attack, we need not pause upon it. Order No. 22422 prescribed rates, not only for the future, but also for the period running back to September 1, 1943. The order reduced the 35-car requirement to 25 cars and granted the shipper an allowance of 22 cents per thousand board feet as compensation if it provided the car. Other revisions made by the commissioner's order to the carrier's tariff are virtually the same as those accomplished by Order No. 25218, which we will presently summarize.

Upon promulgation of the commissioner's rate, the appellant availed itself of the procedure offered by § 112-4119, O.C.L.A., and filed a complaint which challenged the commissioner's rate as confiscatory. Thus, was begun the suit under review. Presently Western and Ladbetter intervened in the suit with a pleading which sought a rate even lower than the one presented by Order No. 22422.

May 15, 1950, the circuit court began the trial of the issues in the suit just mentioned. Although a large volume of evidence was received during the hearing over which the commissioner presided, testimony was taken in the circuit court which, as transcribed, covers 725 pages; in addition, the parties presented to the court a wealth of data in the form of maps, summaries, analyses, studies and comparisons. The statistical material just mentioned represented the work of H. O. Berger and H. G. Butler. The trial in the circuit court concluded May 24, 1950. Obedient to the requirements of § 112-4121, O.C.L.A., the court certified the additional evidence to the commissioner and July 7, 1950, that official substituted for Order No. 22422 Order No. 25218. That having been done, the suit...