In the official and southern classifications cottonseed hull shavings pulp, in carloads, was and is rated sixth and eighth class, or 27.5 and 30 percent of first class, respectively. At the time of the southern class-rate revision there existed numerous commodity rates within the South and between the South and official-classification territory. In order to provide a uniform level of rates on various commodities and to prevent departures from section 4 of the Interstate Commerce Act, the railroads serving those parts of the country established on certain commodities ratings based on percentage relations to first class, which ratings were in addition to those prescribed by the Commission in the southern class-rate revision. Within the South this was done by means of exceptions to the classifications. The class rates from Hopewell to Kingsport were and are governed by the southern classification and exceptions thereto.1 Effective August 15, 1935, an exception to the southern classification provided for 22.5 percent of first class, on cottonseed hull shavings pulp, in carloads, which level approximated that then existing in the South on that commodity. Effective December 20, 1937, following the general commodity rate increases of 1937 authorized by the Commission, the rating in the classification exceptions on this pulp was changed by the carriers to 25 percent of first class. Effective January 14, 1939, they again changed the rating to 25 percent of the first-class rates not increased the 10 percent authorized by the Commission on March 8, 1938, in the general rate increases.

When the 22.5-percent basis became effective it applied in connection with the first-class rate of $1.38 prescribed in the southern classrate revision for the short-line distance of 378 miles from Hopewell to Kingsport, a rate of 31 cents thus resulting. The 31-cent rate remained in effect until November 5, 1936. By what defendants describe as a tariff error, the 22.5-percent basis was then made to apply in connection with the hereinafter-discussed rate of $1.04, a rate of 23 cents being thus produced. However, owing to a tariff rule established pursuant to the Commission's findings in East Tennessee Border Traffic Assn. v. Akron, C. & Y. Ry. Co., 214 I. C. C. 316, the official-territory sixth-class rate of 25 cents in effect at that time from Hopewell to Bristol applied instead of the 23-cent rate. By a subsequent tariff change, the rating of 22.5 percent used with the first-class rates prescribed in the southern class-rate revision alternated, the lower to apply, with the official-classification rating of 27.5 percent used with the first-class rates prescribed in East Tennessee Border Traffic Assn. v. Akron, C. & Y. Ry. Co., supra, as mod

In the southern class-rate revision the main line of the Norfolk & Western was treated as the northern boundary of southern territory, and from a border point to a point in the interior of the South, such as Kingsport, the haul was considered intraterritorial.

ified by Commonwealth of Kentucky v. Ahnapee & W. Ry. Co., 229 I. C. C. 20, 231 I. C. C. 453.2 In those proceedings, the first-class rate for 378 miles was fixed at $1.04, 30 percent of which is 31 cents. From March 10 to December 20, 1937, the 31-cent rate, here assailed, was made 22.5 percent of $1.38. From December 20, 1937, to March 28, 1938, as a result of the alternative provision of the tariff, the applicable rate assailed of 31 cents was made 30 percent of $1.04, instead of the rate of 35 cents, made 25 percent of $1.38. Effective March 28, 1938, a rate of 34 cents, here also assailed, was established, the increase over the 31-cent rate being the result of the before-referred-to general rate increases authorized March 8, 1938. The 34-cent rate is 30 percent of a first-class rate of $1.14, which is the rate of $1.04 increased 10 percent following the general rate increases. The 34-cent rate applied because it was less than the 35-cent rate. The rate of 34 cents continued in effect until March 16, 1939, when the applicable rate became 35 cents, owing to the cancelation of the alternative provision of the tariff. Since the hearing, defendants have informed the Commission that the alternative provision would be restored November 1, 1939, again making applicable the 34-cent rate. They also advised that the cancelation apparently was the result of a tariff error, that no greater rate than 34 cents should have been established, and that they are willing to consider payment of reparation to the basis of the 34-cent rate on claims properly presented to them.

The rates sought, based on the short-line distance, are 23 cents prior to December 20, 1937, and 26 cents thereafter, the 3-cent increase resulting from the general commodity rate increases of 1937. The rates of 23 and 26 cents are 22.5 and 25 percent, respectively, of the rate of $1.04, and, incidentally, 22.5 percent of $1.14 also produces 26 cents. The first-class rate of $1.38, increased 10 percent, amounts to $1.52, and 22.5 percent of $1.52 is 34 cents. Stated briefly, complainant seeks rates based upon the ratings in the southern-classification exceptions applied in connection with the so-called border first-class rates of $1.04 and $1.14 for the periods within which they were effective, the level of the rates on this pulp within official territory to apply as minima from Hopewell to Kingsport.

Freight charges were collected on 42 of the 252 shipments at the assailed rate of 25 cents. On 141 of them the 31-cent rate was charged, and on the remainder the rate charged was 34 cents. The

2 In those proceedings, together with North Carolina Corp. Comm. v. Akron, C. & Y. Ry. Co., 213 I. C. C. 259, and Commonwealth of Kentucky v. Ahnapee & W. Ry. Co., 213 I. C. C. 297, the Commission, instead of continuing to deal with the haul from Hopewell to Kingsport as an intraterritorial southern adjustment, which had been in effect since the southern class-rate revision, considered it as an interterritorial border adjustment, and class rates lower than the then-existing southern class rates were prescribed, that part of the movement within the lower-rated official territory being given consideration.

respective average weights of the 42, 141, and 69 shipments were 43,687, 43,207, and 41,321 pounds. The rates of 25, 31, and 34 cents. produce approximately respective per-car revenues of $109.22, $133.94, and $140.49, and over the route of movement the revenue would be 26.5, 32.4, and 34 cents per car-mile, and 12, 15, and 16.5 mills per ton-mile. Of the 252 shipments, 172 moved before December 20, 1937, and 80 of them thereafter. Those which moved before December 20, 1937, averaged 43,441 pounds; those which moved thereafter averaged 41,328 pounds; and the rate sought of 23 and 26 cents, based respectively on those amounts, would yield $99.91 and $107.45 per car. Over the route of movement the respective revenue would be 24.2 and 26 cents per car-mile, and 11.1 and 12.6 mills per ton-mile. The revenue from both the rates assailed and the rates sought would be about 8 percent greater if based on the short-line distance than if based on the distance over the route of movement.

Complainant instances numerous commodity rates on cottonseed hull shavings pulp, in carloads, in effect from Hopewell to scattered points in official territory in Massachusetts, New York, Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and West Virginia averaging 25.4 percent of first class. Commodity rates are also instanced on this pulp applying from Hopewell to 11 Ohio and Michigan points in official territory, averaging 24.4 percent of first class. Distances are not shown in those various comparisons. From Hopewell to 6 rayonproducing points in official territory in New York, Maryland, Virginia, and Ohio, the commodity rates in effect average 20.8 percent of first class, for short-line distances ranging from 145 to 574 miles. Complainant also refers to certain commodity rates which apply from Memphis and Chattanooga, Tenn., producing points for cottonseed hull shavings pulp, to official-territory points in Vermont, New Hampshire, Massachusetts, Connecticut, New York, Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and the District of Columbia. Those rates average 19.7 percent of first class; distances are not shown. The amount of traffic moved under all the rates instanced or the circumstances under which they were established or maintained are not given.

Defendants refer to 152 carloads of this pulp which were hauled from Hopewell to Port Rayon, between December 1, 1936, and November 30, 1938. The shipments moved over two routes, of 363 and 448 miles. The short-line distance is 356 miles. The rates charged were 25, 30, and 33 cents, depending upon the date of movement. The average weights of the shipments ranged from 41,996 to 44,073 pounds, and over the route of movement the respective average per

car revenues ranged from $104.99 to $145.02. The respective average car-mile and ton-mile revenues ranged from 23.4 to 40 cents and from 11.2 to 18.2 mills. The revenue return would be slightly greater over the short-line distance. They also refer to 26 shipments from Hopewell to Rome, Ga., moved during the same period, for 612 miles, which is also the short-line distance. The rates charged, according to date of shipment, were 39 and 42 cents, the respective average weights were 40,838 and 43,935 pounds, resulting in $159.27 and $184.53 per car, 26 and 30.2 cents per car-mile, and 12.7 and 13.7 mills per ton-mile. During 1938 there were 506 carloads of this pulp transported from Hopewell to points in official territory in Massachusetts, New York, Pennsylvania, New Jersey, Maryland, Virginia, Ohio, Illinois, Michigan, and Wisconsin for an average short-line distance of 484 miles. The average rate of 30.8 cents was 25.9 per

cent of the average first-class rate of $1.23.

At the oral argument defendants' counsel stressed the following statement appearing at page 23 of the Commission's report on further hearing in Commonwealth of Kentucky v. Ahnapee & W. Ry. Co., 229 I. C. C. 20:

As the complaints in the class-rate cases brought in issue the rates between official territory and the southern border territory in their relation to the rates within the former territory, there is no good reason for requiring that the new interterritorial class rates apply in connection with classification exceptions in force only within southern territory which did not govern the former rates and were presumably established to meet conditions affecting only southern intraterritorial traffic.

Counsel also referred to the finding beginning on page 26 of the report in that proceeding, wherein the Commission granted the carriers' petition authorizing the nonapplication of the rates prescribed in that proceeding on certain commodities listed on page 22 of the report. In behalf of defendants, it is argued that on the present record there is no more reason, with respect to cottonseed hull shavings pulp, why a classification exception confined to southern territory should be applied to the class rates prescribed for application between official and southern border territory than in the case of any other commodity which has an exception rating lower than the regular classification rating within the South. In the third report of the Commission on further consideration in Commonwealth of Kentucky v. Ahnapee & W. Ry. Co., supra, the carriers were granted permission not to apply the classification exceptions relating to certain commodities listed in their petition.

We find that the rates assailed are not shown to have been or to be unreasonable. The complaint will be dismissed.

No. 9200

RAILWAY MAIL PAY

IN THE MATTER OF APPLICATION OF THE NEW JERSEY & NEW YORK RAILROAD COMPANY FOR CLASSIFICATION AS A A SEPARATELY OPERATED

RAILROAD

Submitted September 21, 1939. Decided November 18, 1959

Upon further hearing, the New Jersey and New York Railroad Company (C. E. Denney and John A. Hadden, trustees) found not to be a separately operated railroad within the meaning of the findings and orders in Railway Mail Pay, 144 I. C. C. 675 and 165 I. C. C. 774. Prior report, 198 I. C. C. 504.

J. P. Canny for applicants.

Vincent M. Miles and William C. O'Brien for Postmaster General. REPORT OF THE COMMISSION ON FURTHER HEARING

DIVISION 3, COMMISSIONERS MAHAFFIE, ALLDREDGE, AND PATTERSON BY DIVISION 3:

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

In the prior report, 198 I. C. C. 504, division 5 found that The New Jersey and New York Railroad Company was not a separately operated railroad within the meaning of the findings and orders in Railway Mail Pay, 144 I. C. C. 675 and 165 I. C. C. 774, and was therefore not entitled to the higher rates for the transportation of mail established for separately operated railroads less than 50 miles in length. Upon application of C. E. Denney and John A. Hadden, trustees of the property of the New Jersey & New York, averring that there has been a material change in the facts and conditions relative to that property since the prior report and praying for a revision of the order therein, the proceeding has been reopened for further hearing with respect to the classification of The New Jersey and New York Railroad Company (C. E. Denney and John A. Hadden, trustees), hereinafter referred to as the New Jersey & New York, to determine whether the prior finding and order should be modified. The facts are stated in the prior report and will be repeated herein only to the extent considered necessary.