Traffic which respondents seek to recover under the proposed rate aggregates 5,000 to 6,000 pounds daily and originates at a private sidetrack on the line of respondent Boston & Albany. The shipments now move wholly by the Old Colony Forwarding Company either by water over the Eastern Steamship Company's line or by Stone's Express, a motortruck operation. The shipper trucks its shipments from its industry a distance of about 3 miles to the steamship pier, at an estimated outlay of about 8 cents per 100 pounds, and pays a rate of 53 cents, any quantity, for transportation and delivery to its industry in New York City south of Twenty-third Street. The proposed rail charges would approximate the present cost to the shipper of a consignment of the same weight transported by the forwarding company.

The terminal-to-terminal motor-carrier rate from Boston to New York is 50 cents and that of the Old Colony Forwarding Company is 49 cents, any quantity. From the Boston terminal to New York, including delivery to points between the Battery and Twenty-third Street, the motor-carrier rate is 55 cents. Motor-carrier rates from Boston to New York City and related territory range fom 75 to 105 cents, dependent upon the place of delivery, and include pick-up at origin and delivery at destination, whereas the less-than-carload rail rate on boots and shoes from Boston to substantially the same destination area in New York City is 95 cents and does not include pick-up or delivery service. The minimum motor-carrier rate upon the basis prescribed by us for this territory, including pick-up in Boston and delivery in New York, is 75 cents. The motor-carrier rates apply on any quantity.

The motor carriers have conceded to the Old Colony Forwarding Company a differential rate under that of the motor carriers from Boston to New York. This company maintains an overnight service to New York City that is faster than that of the rail carriers. The motor carriers make the run in about 11 hours.

Respondents instance rates, carload and less-than-carload, of 50 cents applicable over the New York, New Haven & Hartford from New Bedford and Fall River, Mass., to New York City stations. From Boston, New Bedford, and Fall River to Harlem River, N. Y., the respective distances over the New York, New Haven & Hartford are 207, 223, and 199 miles. Over the Boston & Albany and the New York Central the distance from Boston to St. Johns Park, N. Y., is approximately 315 miles.

Protestant stresses the fact that the proposed rate would apply also to intermediate points such as Poughkeepsie and Albany, N. Y., to which higher motor-carrier rates apply from Boston. The latter rates generally are on a class basis.

Respondents here are attempting the justification of a practice of making a less-than-carload commodity rate on a high-grade article, from a single point to a single destination, practically available for a single shipper. This is a pronounced departure from the usual practice of maintaining for all shippers reasonable classifications of property for transportation, for which reasonable rates are prescribed. The result quite likely would be the giving of undue preference to one shipper, at least temporarily, and the breaking down of the established class-rate structure by the extension of the reduced basis to intermediate points and a later extension to other points that may be subjected to undue prejudice by the establishment of the proposed rate. It does not appear that the gain in revenue from the traffic that would be recovered would exceed the losses which would result from the extension of the proposed basis to other traffic now transported by rail.

We find that the rates whose application has been suspended are, upon this record, below the level of minimum rates and therefore have not been justified. An order requiring cancelation of the schedules and discontinuing this proceeding will be entered.

SPLAWN, Commissioner, dissenting:

As there is nothing in the record which warrants condemnation of the proposed rate, the majority resort to conjecture to support their conclusion, thus denying respondents an opportunity to meet the competition of a superior service by another agency which now handles the traffic.

The proposed rate is 64 percent of the present first-class rate. It is subject to a minimum of 5,000 pounds and is 8 cents higher than the present any-quantity rate of the competing forwarder. No relief from the long-and-short-haul provision of section 4 was requested by respondents in connection therewith. This division has recently authorized temporary relief from that provision to enable several important rail carriers to establish class and commodity rates between some of the larger centers of population in official territory where competition of forwarders was present the same as those maintained by the forwarders, with the provision, inter alia, that such relief should not apply to rates less than 45 percent of the first-class rates over the same lines or routes.

The proposed rate and minimum are reasonable and otherwise lawful, and we should permit them to become effective without further delay.

235 I. C. C.

No. 280301

COMMERCIAL MILLING COMPANY ET AL. v. PERE MARQUETTE RAILWAY COMPANY

Decided January 8, 1940

Upon reconsideration:

1. Finding in former report, 232 I. C. C. 39, that the rates on grain, in carloads, from points in Michigan, milled in transit at Detroit and Grand Rapids, Mich., and the products forwarded to destinations in central and trunk-line territories, were unreasonable, affirmed.

2. Finding in former report, 226 I. C. C. 443, that the rates, rules, and regulations governing transit on grain at Allegan, Detroit, Flint, Grand Rapids, Ionia, and Portland, Mich., were not unreasonable or otherwise unlawful, reversed to the extent indicated. Reasonable rates prescribed for the future. Horace L. Walker for defendants.

Other appearances as shown in prior reports.

REPORT OF THE COMMISSION ON RECONSIDERATION

BY THE COMMISSION:

In the original report in the title proceeding, 232 I. C. C. 39, hereinafter called No. 28030, division 2 found rates on grain, in carloads, from points in Michigan, milled in transit at Detroit and Grand Rapids, Mich., and the products forwarded to destinations in central and trunk-line territories, unreasonable to the extent that they resulted in charges which exceeded or might exceed those which would accrue on basis of the through rates from and to the same points, plus a transit charge of 0.5 cent, but not otherwise unlawful. Rates in purported compliance with that finding have been established. In J. P. Burroughs & Sons v. Pere Marquette Ry. Co., 226 I. C. C. 443, hereinafter called No. 27695, division 4 found the rates, rules, and regulations governing transit on grain, grain products, and grain byproducts at Allegan, Detroit, Flint, Grand Rapids, Ionia, and Portland, Mich., originating at various points and shipped throughout the United States, not unreasonable or otherwise unlawful, and it dismissed the complaint. Reparation was sought on past shipments. Rates and transit charges herein, unless otherwise indicated, are per 100 pounds and are those in effect prior to the increases authorized in the general commodity increases of 1937.

1 This report also embraces No. 27695, J. P. Burroughs & Sons et al. v. Pere Marquette Railway Company.

216338-40-vol. 235- -46

We reopened these proceedings for reconsideration upon petition of defendant pointing out an apparent conflict between the finding made by division 2 in No. 28030 and the finding of division 4 in No. 27695.

The complainants in No. 28030 are also complainants in No. 27695, but the latter group of complainants also includes several other milling concerns. Complainants' mills or elevators at Portland, Flint, and Allegan are on defendant's lines, but those at Detroit, Grand Rapids, and Ionia are on connecting lines.

In both of the prior reports it was pointed out that complainants' allegations of undue prejudice rested on the contention that competing millers on other railroads may ship grain from points common to those on defendant's line, mill it, and ship the product to destination at a less total cost than can complainants, and in each report it was found that, as defendant has no control over transit granted at points on other lines, the facts urged did not constitute a violation of section 3 of the Interstate Commerce Act. Central R. Co. of New Jersey v. United States, 257 U. S. 247. We affirm that finding. No evidence was offered in either proceeding with respect to the allegation of unjust discrimination. Those allegations, therefore, will not be further considered.

Defendant's transit tariff provides that, upon arrival of a shipment of grain at the transit point, charges are to be based on the local rate applicable from point of origin to the transit point, and, when the product moves out, a refund is to be made on the in-bound movement on basis of what are termed net rates, the latter being more or less on a distance basis, and the applicable local rate on the product from transit point to ultimate destination is charged. This transit method is called the refund basis, as distinguished from the so-called throughrate basis, which applies generally throughout central territory over the lines of other carriers, including those operating in Michigan.

Charges under the through-rate plan are ultimately collected on basis of the through rate on the in-bound commodity or the product, whichever is higher, from origin of the grain to destination of the product, in effect via the milling point at time of initial shipment, plus a transit charge of 0.5 cent, minimum $3.60 per car prior to the general percentage increases and $3.96 per car subsequent thereto. Under this method the rate on the grain is charged when the shipment moves into the transit point, and when the product moves out charges are based on the difference between the grain rate already paid and the applicable through rate, plus the transit charge. Although the prior reports showed the net results by application of the refund and through-rate

bases on certain of complainants' shipments, we deem it appropriate for the purpose of this report to explain their application in greater detail.

The local carload rate on wheat from Holland, Mich., to Portland was 14 cents, and the local rate on the product from Portland to Buffalo, N. Y., was 21 cents, but, under the refund basis, when the product was forwarded from Portland the charges on the in-bound wheat were reduced from 14 to 5.5 cents, thus making the through transit rate from Holland to Buffalo 26.5 cents. Contemporaneously defendant published a through rate on grain, or the product, of 22.5 cents from Holland to Buffalo. Under the through-rate basis, not applicable on this traffic at points on defendant's line, the usual transit charge of 0.5 cent would be added, making the through charge 23 cents. On wheat from both Holland and Reed City, Mich., to Detroit the rate was 15.5 cents, and on the product from Detroit to Buffalo and Pittsburgh, Pa., the rates were 16 and 19.5 cents, respectively, but under the refund bases, when the product was forwarded from Detroit, the charges on the in-bound wheat from Holland and Reed City were reduced from 15.5 cents to 7 and 7.5 cents, respectively, thus making the through rates from Holland and Reed City to Buffalo 23 and 23.5 cents, respectively, and from Holland and Reed City to Pittsburgh, 26.5 and 27 cents, respectively. Contemporaneously defendant published through rates on grain, or the product, of 22.5 cents from Holland to Buffalo, 23 cents from Reed City to Buffalo, 23 cents from Holland to Pittsburgh, and 25 cents from Reed City to Pittsburgh, and these rates plussed 0.5 cent under the through-rate basis would produce rates of 23, 23.5, 23.5, and 25.5 cents, respectively.

The described basis is not observed, however, on shipments of grain or grain products originating at, or rated from, Chicago, Joliet, or East Joliet, Ill., or from Kewaunee, Manitowoc, or Milwaukee, Wis. On such traffic, defendant's tariff provides that when the grain is milled in transit at Portland and the product is destined to Virginia cities (including Norfolk), on traffic moving via Toledo, Ohio, or Carleton, Mich., the through rate (local or reshipping) from Chicago, Joliet, East Joliet, Kewaunee, Manitowoc, or Milwaukee to final destination will be applied, plus a charge of 1.5 cents. Contemporaneously defendant published a reshipping rate of 22 cents from Chicago to Norfolk, which, added to the in-bound charge of 1.5 cents, made the through rate on shipments milled in transit at Portland 23.5 cents. But, under the through-rate basis, transit at Portland on shipments moving over defendant's line would involve an out-of-route movement, and the charges would be based on rates of 8 cents to the transit point and 28.5 cents beyond, or a total of 36.5 cents, 13 cents higher