No. 27954 1

OSCAR MAYER & COMPANY v. BALTIMORE & OHIO RAILROAD COMPANY ET AL.

Submitted April 7, 1939. Decided November 14, 1939

Upon reargument, findings in prior reports, 231 I. C. C. 147 and 267, that rates on fresh meats, in carloads, from Madison, Wis., to certain destinations in central territory, and to points throughout trunk-line and New England territories, had not been shown to be unreasonable, reversed. Reasonable rates to central-territory points and a basis of reasonable rates to the East prescribed.

Appearances shown in prior reports.

REPORT OF THE COMMISSION ON REARGUMENT

BY THE COMMISSION:

In the prior reports, 231 I. C. C. 147 and 267, division 2 found that the rates on fresh meats, in carloads, from Madison, Wis., to eight principal destinations and certain points grouped therewith 2 in central territory east of the Indiana-Illinois State line, and to points throughout trunk-line and New England territories, had not been shown to be unreasonable. Upon petitions filed by complainant, the proceedings were reopened and were reargued together. Rates and differences in rates will be stated in amounts per 100 pounds, and those referred to in connection with No. 27866 do not reflect the general increases authorized by us on March 8, 1938. Except as noted, the distances used herein are those shown of record.

General.-Over the shortest possible route Madison is 79 miles, and over the short tariff route it is 82 miles, west of Milwaukee, Wis.; it is 130 miles northwest of Chicago, Ill. Complainant, operating a meatpacking plant at Madison, meets the competition of packers throughout the Middle West. Shipments of fresh meats are high-grade traffic, requiring refrigeration and expedited service. The value of a minimum carload of 21,000 pounds is about $3,500. The officialclassification rating on fresh meats is third class, but commodity rates

1 This report also embraces No. 27866, Oscar Mayer & Company v. Alton Railroad Company et al.

Buffalo, N. Y., Detroit, Mich., Toledo, Columbus, Cleveland, and Youngstown, Ohio, Indianapolis, Ind., and Pittsburgh, Pa., and Akron and Canton, Ohio, taking Cleveland rates, Flint and Jackson, Mich., taking Detroit rates, New Castle, Pa., taking Youngstown rates, and Wheeling, W. Va., taking Pittsburgh rates.

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bearing no relation to the class basis generally are available. The third-class rate from Madison to New York, N. Y., for example, is $1.13, or 70 percent of first class, while the commodity rate of 87 cents is 54 percent of first class. In central territory the commodity rates average 50.5 percent of first class.

The rates from Madison to all destinations considered are the same as those from Dubuque, Iowa, and other north Mississippi River cities, that relation having been established responsive to the findings of division 3 in Oscar Mayer & Co. v. New York Central R. Co., 172 I. C. C. 221. Fresh meat is the only commodity as to which Madison is grouped with Dubuque for rates to central, trunk-line, or New England territories. In Oscar Mayer & Co. v. Chicago & N. W. Ry. Co., 85 I. C. C. 549, division 1 prescribed reasonable maximum rates on this traffic, reducing the rate from Madison to New York, for example, from $1.06 to 98 cents. In John Morrell & Co. v. New York Central R. Co., 104 I. C. C. 104 and 120 I. C. C. 537, we reduced the rates from Chicago and Milwaukee to New York from 87 cents to 79 cents, which brought about a rate of 92 cents from Madison. We also prescribed rates from Mississippi River points to trunk-line and New England territories 8 cents over the rates from Chicago, which made them 110 percent of the Chicago rates, although the usual basis for rates from the river cities had been 117 percent of the Chicago rates. In Oscar Mayer & Co. v. New York Central R. Co., supra, division 3 prescribed the 8-cent differential basis from Madison to the East and found the rates to Buffalo, Pittsburgh, and points in central territory east of the Indiana-Illinois State line unreasonable to the extent that they exceeded the rates contemporaneously maintained from Dubuque to the same destinations. The rate from Chicago to New York being 79 cents, the prescribed basis resulted in a rate of 87 cents from Madison and the Mississippi River cities. Through the reductions required in the proceedings cited, which were designed to bring about rate equality and to remove and avoid undue preference and prejudice among packing centers of the Middle West, including Chicago and Milwaukee, complainant now has rates from Madison to central territory which average 5.3 cents lower, and a rate to New York which is 19 cents lower, than those maintained in 1924. It contends, however, that its evidence here shows it to be entitled to further relief.

No. 27866.-The complaint in No. 27866 (prior report, 231 I. C. C. 267) concerns rates on fresh meats from Madison to points in trunkline and New England territories. As stated, these rates are on the Mississippi River basis, 8 cents over the rates from Chicago and Milwaukee. Complainant contends that Madison is improperly grouped with Mississippi River cities and that, considering principally distances and rates on other traffic, it should be given an equal

split of the 8-cent differential, or differentials of 4 cents over Chicago and 4 cents under the river cities.

The distances shown by complainant and used in its comparisons are those over the shortest possible routes. Except to destinations in the southern part of trunk-line territory, such routes extend across Lake Michigan and through Canada. Defendants object to the use of any distances over routes through Canada and urge that if such distances are ignored Madison naturally falls into the Mississippi River group. As we cannot require rates over routes through a foreign country, it would be unreasonable to base rates entirely on distances over the Canadian routes. As division 2 stated, however, such distances may be considered along with other facts.

In the view of defendants, complainant is seeking to gain by indirect means that which it cannot gain directly In other words, although we cannot prescribe rates through Canada, complainant asks us to prescribe rates over routes within this country based on conditions affecting the Canadian routes, with the expectation that the latter will meet the rates we prescribe In John Morrell & Co. v. New York Central R. Co., supra, we required the United States lines to establish rates from Milwaukee the same as those prescribed from Chicago. The distances through Canada from Milwaukee to the principal eastern cities are about the same as those from Chicago over routes within this country, but the latter routes are 85 miles longer from Milwaukee than from Chicago As Milwaukee was given the same rates as Chicago, in disregard of its geographical location with respect to routes within this country, there is abundant ground in reason and fairness for according Madison relatively the same treatment.

The question of the use of the distances through Canada affects almost two-thirds of the traffic. The distances from Madison to Philadelphia, Pa., Baltimore, Md., and other points in the southern part of trunk-line territory are the only ones computed by adding 130 miles to the Chicago distances. In Oscar Mayer & Co. v. New York Central R. Co., supra, the distances to New York are stated to be from Chicago 908 miles, from Madison 961 miles through Canada and 1,038 miles within this country, and from Dubuque 1,080 miles. These are understood to be the approximate distances over normal short tariff routes, except that over the line of the Pennsylvania Railroad Company from Chicago the distance is about 900 miles. The short tariff-route distances from the other north Mississippi River cities do not appear of record, but they are no doubt reasonably close to the Dubuque distance.

One method of approach is to determine approximately how much should be added to the Chicago-Milwaukee rates for the additional

hauls from Madison of 82 miles on about two-thirds of the traffic and 130 miles on the balance, the weighted average being 98 miles; also to determine how much the rates from the Mississippi River cities should be graded down for application from Madison. To New York the haul from Dubuque apparently is 180 miles longer than that from Chicago and 82 miles longer than the weighted-average haul from Madison. On this basis Madison is slightly west of the half-way point between Dubuque and Lake Michigan.

Defendants show that the two principal Wisconsin carriers have less than half the traffic density in Wisconsin that they have in Illinois. That affords no justification for singling out fresh meat as the only commodity as to which Madison is grouped with Mississippi River cities; the class rates and all other commodity rates are lower from Madison. They offered some evidence of their poor financial condition. This is not a revenue proceeding, and the showing made is no bar to a readjustment of unlawful rates or rate relations. Defendants urge, finally, that complainant has not made a showing substantially different from that on which the present rates were prescribed as reasonable and nonprejudicial. With this we do not agree. The other pertinent facts are sufficiently summarized in the original report.

No. 27954.-By the complaint in No. 27954 complainant assailed the rates from Madison to all points in central territory east of the Indiana-Illinois State line, but at the hearing it narrowed the issue to embrace only rates to the eight principal destinations and the six points grouped therewith named in footnote 2.

Both in its petition and in reargument complainant confined its criticism of the prior report, 231 I. C. C. 147, to the conclusions reached. It does not claim that the division's review of the evidence is incomplete or erroneous in any material respect but contends that an examination of the report demonstrates that complainant is entitled to the relief sought. Except as may prove necessary in the interest of clarity, facts set forth in the prior report will not be restated.

Complainant reiterates its position that the rates assailed are relatively unreasonable as compared with rates on like and related traffic from competitive meat-packing centers east and west of Madison, particularly Chicago, Milwaukee, and Dubuque; that Madison is improperly grouped with the north Mississippi River cities and is entitled to rates reflecting its location approximately midway between Lake Michigan and the river; and that as class rates and rates on commodities generally, including packing-house products and dairy products, are lower from Madison, no justification exists for singling out fresh meats as the only commodity to be charged rates from Madison that are the same as those maintained from

Dubuque. Counsel stresses the fact that the readjustment of the class and commodity rates from Madison, resulting in its being accorded rates to central territory and the East which are lower than the corresponding rates from north Mississippi River cities, was required by our orders in proceedings decided since division 3 found in Oscar Mayer & Co. v. New York Central R. Co., supra, that Madison was "at least" entitled to rates on this traffic no higher than the rates contemporaneously maintained from Dubuque.

Concerning the statement of division 2 that the rates considered are alined with rates from competitive meat-packing centers, complainant points out that the complaint is founded upon the claim, which it submits is sustained by the evidence, that the assailed rates are not properly so alined. It contends that Madison is entitled to rates on fresh meats alined as are the rates on packing-house products, as to which rates from Madison to the eight principal destinations range from 3 to 7 cents over the rates from Chicago and from 1 to 5 cents under those from Dubuque. The assailed rates are the same in all instances as the Dubuque rates and range from 9 to 10.5 cents higher than the rates from Chicago to the same points.

The present and proposed rates from Madison, the rates from Dubuque, Chicago, and Milwaukee, and the short-line distances from Madison, Chicago, and Milwaukee to the eight principal destinations, with other data, are shown in the appendix to the prior report. In the following table are shown the differences in the distances and present rates from and to the same points, as well as the rate spreads based on the rates from Madison proposed by complainant:

Buffalo is the only one of the eight principal destinations to which the short-line route from Madison is through Canada. Only