proceeding showed a wide variance as to the actual costs of this service, but the Commission observed that the costs of the service of bedding livestock cars introduced by the carriers naturally would vary with conditions prevailing in different parts of the country and considered the respective average costs. In the approval of a general scheme of charges for country-wide application, cost of service is but one of the elements to be considered, and is not necessarily a reliable measure of the reasonableness of rates and charges for such an auxiliary or incidental service as herein considered. The bedding charges assailed on the considered traffic exceeded those contemporaneously applicable at Lexington, and at contiguous points, as well as generally throughout western and central territories, and were unreasonable, as found in the original report.

Upon reconsideration, we affirm our findings in the original report.

ALLDREDGE, Chairman, dissenting in part:

I concur in the finding that the charges collected were applicable but disagree with the finding that such charges were unreasonable.

256 I. C. C.

No. 288591

COOPERATIVE MILLS, INC., ET AL. v. PENNSYLVANIA RAILROAD COMPANY

Submitted May 7, 1943. Decided July 15, 1943

1. Line-haul charges on grain and grain products, in carloads, originating chiefly west of the Mississippi River and in Illinois, converted at Baltimore, Md., into prepared animal and poultry feeds and reshipped in mixed carloads with prepared feeds to destinations in Maryland, Delaware, Virginia, and New York, found not unreasonable. Allegation of damage due to undue prejudice not sustained.

2. Floatage charges from and to complainants' transit house at Baltimore, on similar traffic from the West and central territory, found not unreasonable or otherwise unlawful. Complaints dismissed.

J. R. Ayers, J. W. Harnach, and C. W. Ludwig for complainants. Joseph F. Eshelman and R. R. Bongartz for defendants.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS MILLER, PATTERSON, AND JOHNSON BY DIVISION 3:

These two proceedings cover similar shipments and will be considered in one report. Exceptions were filed to the reports proposed by the examiners, and the proceedings were orally argued. Our conclusions differ in part from those recommended.

By complaint in No. 28832, filed May 12, 1942, as amended on June 20, 1942, complainants alleged that the charges on grain and grain products, originating chiefly west of the Mississippi River and in Illinois, converted at Baltimore, Md., into prepared animal and poultry feeds and reshipped in mixed carloads with prepared feeds to destinations in Maryland, Delaware, Virginia, and New York, were unreasonable and unduly prejudicial to complainants and unduly preferential of their competitors at Buffalo, N. Y., and other transit points in the East. Satisfactory charges were made applicable on August 25, 1941. Reparation is sought on shipments originating prior to August 25, 1941, and moving within the 2-year period preceding the filing of this complaint.

Complainants' transit house is within the switching and lighterage limits of Baltimore, on the tracks of The Baltimore and Ohio Rail

This report also embraces No. 28832, Cooperative Mills, Inc., et al. v. Pennsylvania Railroad Company, et al.

road Company and served by The Pennsylvania Railroad Company by means of car floats. By complaint in No. 28859, filed July 21, 1942, complainants allege that the floatage charge of 3.75 cents inbound and out-bound, or 7.5 cents in all, assessed by the Pennsylvania on the above described traffic, in addition to the line-haul rates, from western and central territories to the peninsula were and are unreasonable, unjustly discriminatory in favor of a competitor with transit house on the Pennsylvania's rails at Baltimore, and unduly preferential of competitors with transit houses located on rails of the Pennsylvania at Lancaster, Pa., the Western Maryland Railway Company at York, Pa., and Hagerstown, Md., The New York Central Railroad Company at Buffalo (Black Rock), N. Y., and the Norfolk and Portsmouth Belt Line Railroad Company at Portsmouth, Va. We are asked to prescribe reasonable charges and lawful relations for the future and to award reparation. Rates and charges are stated in cents per 100 pounds, unless otherwise indicated, and do not include the general increase of 1942.

The modern feed industry has seen its greatest development in the past 20 years. It uses byproducts from the manufacture of wheat flour, beer, whisky, corn sirup and starch, vegetable oils, fish cuttings, cheese, casein, meat, gelatin, glue, and cane sugar, also alfalfa meal. A large proportion of mixed animal feeds consists of grain feeds.

No. 28832.-More than 90 percent of complainants' shipments, in No. 28832, are destined to the Del-Mar-Va peninsula south of Wilmington, Del. Tariffs of the Pennsylvania govern transit at Baltimore on that line. They provide that the Pennsylvania shall receive in-bound shipments at or west of Pittsburgh, Pa. That line received most of complainants' shipments at Chicago or Peoria, Ill., and St. Louis, Mo. When in-bound freight bills are tendered, 2.5 percent or over of the out-bound shipment must be identical with, or representative of, the in-bound commodities. The same rates apply whether moved direct to ultimate destination or stopped in transit for milling, although a transit stop requires two additional complete terminal services, subject to an 0.5-cent transit charge.

Rates from points west of the Mississippi River and from Illinois generally break on Chicago, Peoria, Milwaukee, Wis., Mississippi River crossings, or points taking the same rates. Through rates are assailed in this proceeding, but no complaint is made against the factors west of the rate-break points. The tariff lists numerous commodities taking (1) grain rates, (2) grain-products rates, and (3) rates on byproducts of grain. The rates on grain are usually 0.5 cent per 100 pounds less than the rates on grain products. Rates on grain products are 2 cents lower than on byproducts of grain.

Strictly, the question of retroactive transit is not presented in No. 28832. Transit arrangements were provided before August 25, 1941, as well as on and after that date. However, prior to August 25, 1941, the transit tariff in effect provided for the application of rates on grain byproducts on complainants' shipments from rate-break points to final destination of the products, whereas on and after August 25, 1941, the lower rates on grain products became applicable. Complainants seek reparation to the subsequently established basis. The reparation sought is 2 cents per 100 pounds on about 433 in-bound carloads, or 11,051 tons of freight. For example, on February 3, 1942, a carload of wheat bran, weighing 50,375 pounds, was billed by way of Chicago to Baltimore. This billing was matched against 3 outbound shipments of prepared feeds. One from Baltimore to Selbyville, Del., February 13, 1942, weighed 45,338 pounds. The rate on grain byproducts of 28.75 cents from Chicago to Selbyville was collected. Reparation is sought upon the basis of the rate subsequently made applicable, namely, the rate on grain products, or 26.75 cents per 100 pounds.

During the reparation period, the Pennsylvania accorded transit services to complainants' competitors at Buffalo, Hagerstown, Md., and Lancaster and York, Pa., upon the basis sought, namely at the rates on grain products from the rate-breaking point to final destination. In Beacon Milling Co., Inc., v. New York Central R. Co., 157 I. C. C. 635, decided October 10, 1929, division 4 found transit rules on grain, grain products, and grain byproducts from central, southern, and western territories to Cayuga, N. Y., there manufactured into mixed feed for shipment to eastern territory and New England, unreasonable. Reasonable rules were prescribed and charges in the past were adjusted to the basis of the so-called central-territory rule,2 contemporaneously in effect. Complainants herein also seek reparation based upon the central-territory rules. See also John W. Eshelman & Sons, v. Director General, 118 I. C. C. 441, and American Feed Mfrs. Assn. v. Abilene & S. Ry. Co., 129 I. C. C. 157.

The average loading of wheat on the Pennsylvania, in 1940, was 98,135 pounds as compared with 51,172 pounds on complainants' inbound shipments of grain products and byproducts and as compared with 45,594 pounds on their out-bound shipments. Complainant's receipts included no whole grain.

Under the central-territory rule, the rate on the out-bound commodity is that applicable to the in-bound commodity from original point of origin to ultimate destination, less the in-bound charges already paid, except that, when the in-bound commodity is grain or grain screenings, the through rate to be applied on the out-bound shipment is that applicable on grain products in effect when the grain or grain screenings originated.

Defendants state that transit rules generally provide for the application of the through rate on the out-bound products. An exception generally applies if the rate on the out-bound products is lower than the rate on the in-bound commodity. In the latter situation, the higher of the two rates is generally applicable. The transit tariff here considered so provided. In considering the lawfulness of such tariff provisions, we must also consider the level of the charges thereunder.

From Chicago to Del-Mar-Va peninsula, the reshipping rate on grain products was 26.75 cents as compared with the local rate of 35.25 cents. The reshipping rate on grain products from Chicago to Baltimore between 1910 and August 25, 1941, was increased from 13.7 to 23.5 cents, or 71.5 percent, as compared with an increase of 113.9 percent in first-class rates. Between 1915 and a date just prior to the general increases of 1942, the rate on grain products from Chicago to New York, N. Y., was increased 58.7 percent as compared with increases of 72.7 to 159.3 percent on numerous other commodities. On July 1, 1934, or subsequent to Beacon Milling Co., Inc., v. New York Central R. Co., supra, defendants reduced the eastern rate structure on these commodities including the rate on grain products from Chicago to Baltimore which was reduced from 27.5 cents to 22 cents. These rates were reduced to meet water competition through the Great Lakes and New York State Barge Canal. A similar reduction was voluntarily extended to the Del-Mar-Va peninsula.

The distance from Chicago to Salisbury, Md., on the Del-Mar-Va peninsula over the direct route of the Pennsylvania is 902 miles as compared with 956 miles by way of Baltimore. Based on 902 miles, the revenue on wheat flour at the rate sought of 26.75 cents is only 15.87 cents per car-mile as compared with 39.39 to 18.04 cents on various compared commodities.

The routes from Chicago to 20 representative destinations in New York, Maryland, Delaware, and Virginia, by way of Baltimore, average 6.32 percent longer than the direct routes to such destinations. No charge is made for the out-of-line haul to Baltimore. As compared with this, effective March 28, 1941, from and to the same points. with transit at Wilmington, Del., the Pennsylvania established an out-of-line charge of 0.525 cent for excessive distances averaging only 2.93 percent. Out of 11 transit points, out-of-line charges ranging from 0.2 to 4.5 cents were collected at 5 points. The percent of excess distance by way of Baltimore exceeds that by way of the 6 other transit points paying no out-of-route charge.

The local rate on bran is 38.75 cents from Havana, Ill., to Bishop, Md., 1,095 miles from Peoria. As compared with this, complainants