#### SOUTHERN PACIFIC COMPANY v. THE UNITED STATES.

[No. 23701.

Decided March 24, 1913.]

*On the Proofs.*

The railroad carries Government property and troops from Portland to San Francisco without breaking freight at Roseville Junction. From Roseville Junction to San Francisco the defendants pay for the service at through rates. The railroad seeks to recover at local rates. The only question in the case is as to the proper rate to he applied on through shipments to the service from Roseville Junction to San Francisco.

I. A part of the claimant’s transportation route (i. e., from Portland to Roseville Junction) was constructed under the *Act 25th July, 1862*(14 Stat. L., 239), which provided that, in consideration of Government aid, Government property and troops should he transported free of charge. The remainder of the route (i. e., from Roseville Junction to San Francisco) was constructed under the *Act 1st July, 1862*(12- Stat. L., p. 489), which provided that the Government should have the use and service of the road at “ *fair «and reasonable rates of compensation.”*The freight service rendered being over both roads by a party operating both, and being in fact through service from Portland to San Francisco, the freight must rest upon a proportionate mileage basis.

II. It is settled that where railroad service is rendered to the Government by ihe land-grant roads, “ *through service ”*is to be computed at through rates and “ *local service*” at local rates; but where the service was in fact through service, an unbroken shipment from Portland to San Francisco, the fact that the service from Portland to Roseville Junction was a “ *free-haul*” service, under the act 25th July, 1866, did not convert the service from Roseville Junction to San Francisco into a local service nor did it entitle the railroad to the local rate.

*The*Reporters’ statement of the ease:

The following are the facts of the case as found by the court:

I. The claimant, the Southern Pacific Co., is a corporation duly created, organized, and existing under and by virtue of the laws of the State of Kentucky, and was such corporation at the several times of performing all the services embraced *228in this suit; and now is, and during all the times hereinafter mentioned was, engaged as a common carrier, of both passengers and freight, in operating, as lessee, the line of railroad from San Francisco, Cal., to Ogden, Utah., via Roseville Junction, Cal.; that part of the line from San Francisco to Sacramento being owned by the Southern Pacific Railroad Co. of California, and the remaining part of said line from Sacramento to Ogden having been formerly owned by the Central Pacific Railroad Co., but since July, 1899, owned by the Central Pacific Railway Co.; and also operating, as lessee, the line of railroad from said Roseville Junction to. the State line between California and Oregon, said line having been formerly owned by said Central Pacific Railroad Co., under consolidation between that company and the California & Oregon Railroad Co., but since July, 1899, owned by said Central Pacific Railway Co.; and, in connection with said last-named line, from said California-Oregon State line to Portland, Oreg., the latter line being likewise operated by claimant as lessee of the Oregon & California Railroad Co., owner. (R., 68, 64,’69.)

II. By section six (6) of act of Congress approved July 1, 1862 (12 Stats., 489), and amendatory acts, under which said Central Pacific Railroad was constructed, and the line of road from San Francisco to Ogden operated, it was provided that the United States should, at all times have the use of said road, at fair and reasonable rates of compensation, not to exceed the amounts paid by private parties for the same kind of service.

By section five (5) of act of Congress approved July 25, 1866, under which the line of road from Roseville Junction to Portland was constructed, and has been and is operated, it was provided that the property and troops of the United States should be transported free of charge to the United States, and at the cost, charge, and expense of the corporation owning or operating said line of road from Roseville Junction to Portland, when so thereunto required by the Government of the United States. (14 Stats., 239.)

Under the above provisions of law, the services for which claim is made herein were performed and rendered by claimant to and for the United States.

*229III. Claimant during all the times embraced in this suit (August, 1897, to March, 1902) operated as lessee,, as aforesaid, said several lines of railroad from, to, and between the points herein above named; and it duly and lawfully established, published, and promulgated rates of fare for persons and rates of freight for property, both “ local ” and “ through,” from all points on its said lines to all other points thereon.

TV. The distance from San Francisco to Roseville is 108.03 miles (R., 32, 63) ; and during all the times embraced herein the lawfully established “ local ” first-class freight rate between said points was 26 cents per hundred pounds; which rate was low, the same being compelled by water competition- — commonly called a *compelled*rate.

The distance from Roseville Junction to Portland is 663.91 miles (being 296.58 miles from Roseville Junction to California-Oregon State line, and 367.33 miles from said State line to Portland); and the lawfully established “ through ” first-class freight rate from San Francisco to Portland, during all the times aforesaid, was 51 cents per hundred pounds; which rate was also low, the same being compelled by water competition. The above rates are reasonable.

The distance from San Francisco to Portland is 771.94 miles.

V. The established “ through ” rates between the points aforesaid, as well as from and to seaboard and other competitive points, were less than the aggregate of the established “local” rates; and all said rates, both “through” and “ local,” were the same to the United States as to individuals for like service.

VI. The claimant, between August, 1897, and March, 1902, and at and upon the several and respective dates set forth in the schedule attached to the petition herein, on due requisition by the proper officers of defendant, transported for the United States persons and property, as therein stated, over said lines of railroad, via Roseville Junction, from points on either side thereof to points on the other side; thus, from San Francisco, Ogden, and other points, as indicated in said schedule, to Portland via Roseville Junction. *

*230The shipments in question did not originate at Roseville Junction nor terminate at Roseville Junction, but were carried through on one continuous transit over both the free haul and the nonfree haul portions of the road precisely as any through shipment is carried for a private shipper.

VII. Upon performance of such several and respective services, claimant presented to the proper accounting officers of defendant, for allowance and payment, its several bills for such services, based upon the “ local ” rate to Roseville Junction and free haul beyond that point north to Portland; said several bills aggregating the sum $56,259.20 and being the amount claimed by it as compensation for the services so rendered.

VIII. Defendant, however, would and did not allow and pay claimant for said services upon the basis contended for by it as aforesaid, but would and did only allow claimant compensation based on a mileage proportion of the “through ” rate, San Francisco to Portland, and payment of such mileage proportion between Roseville Junction and points south, with no allowance (being free haul) for the Roseville Junction-Portland mileage; in other words, the mileage proportion of the amount which the Government would be obliged to pay for the entire service, if not entitled to the free service, thus resulting in payments by defendant to claimant for the services so rendered, as herein aforesaid, aggregating $30,627.26, and deductions aggregating $25,632.06, made by defendant from the bills so presented by claimant, said deductions representing the differences in amount between said two methods of computing the compensation for the services rendered; with the exception of $1,652.06 of said deductions, which latter were based, either in whole or part, upon reasons other than the mere matter of method of computing the charge, as above, and, therefore, said last-named amount is deducted (and conceded by claimant for the purposes of this suit only) from the aggregate deductions set forth and found herein (finding xm, post).

IX. Under the measure of compensation contended for by claimant herein, it would be entitled to receive said “ local ” rate- of 26 cents per hundred pounds for the transportation *231of freight for defendant between San Francisco and Rose-ville Junction.

Under the measure of compensation insisted upon and applied by defendant between the points named, claimant would only be entitled to receive (in round numbers) 108/772ds of said lower (compelled) “ through ” rate of 51 cents per hundred pounds, San Francisco to Portland, or (in round numbers) 7.14 cents per hundred pounds for the haul from San Francisco to Roseville Junction, instead of said “ local ” rate of 26 cents per hundred pounds between said points.

X. The same method of computing the compensation of claimant was likewise applied and used by defendant in respect of adjusting its accounts for passenger transportation, via Roseville Junction, covering the items set forth in detail in the schedules attached to the petition herein, namely, a mileage prorate of the entire “ through ” fare; thus for the transportation of a passenger for defendant, San Francisco to Portland, the “ local ” fare to Roseville Junction was $3.05, the remainder of the transportation being “ free haul but defendant only allowed and paid claimant therefor the mileage prorate of the “ through ” fare of $20, namely, $2.80;

XI. Claimant has not in any manner or way assented to or acquiesced in the certain reduced compensation aforesaid;but, on the contrary, has at all times objected to settlement of these accounts on the basis used by the Government in that behalf and has repeatedly protested against the same to defendant, but without avail, and the several amounts set forth herein and claimed by claimant have not been paid by defendant, nor any part thereof.

XII. Claimant is the sole owner of the claims sued on herein and has made no transfer or assignment thereof.

XIII. The aggregate amount of deductions made by de-fendant, in respect of the services so rendered by claimant,' by reason of the allowance and payment of a mileage proportion of the “ through ” rate, instead of allowance and pay-' ment of the *“*local ” rate to or from Roseville Junction and' points on the south, is the full sum of $23,980 (eliminating from the amounts claimed in the schedule attached to the *232petition certain items of deduction based in whole or in part upon reasons other than the mere basis of computing compensation to and from Roseville Junction, as above, the same amounting to the sum of $1,652.06, made up as follows: War Department settlements, $742.67; Interior Department settlements, $899.89; and Agricultural Department settlement, $10).

XIV. The mileage basis of division has been adopted from the beginning by the highest administrative officials of the Government and consistently adhered to. The mileage basis of division is one of the methods adopted by all railroads in the case of transportation, partly over nonland grant and partly over 50 per cent land-grant lines. Where the connecting lines are owned by separate corporations, the division of through rates is a subject of negotiations between them. They are usually divided upon an agreed commercial per cent on mileage pro rata basis, in accord with the relative cost of transportation.

XV. The practice of issuing two bills of lading, one over the free-haul and one over the nonfree-haul portion of the line, was adopted merely for convenience in accounting, and had nothing to do with the “ through ” character of the haul. A continuous unbroken transit, without even the form of retaking possession by the Government at Roseville Junction, was contemplated by both parties, and in fact existed.

*Mr. A. A. Hoehling*for the claimant.

*Mr. Thurlow M. Gordon*(with whom was *Mr. Assistant Attorney General John Q. Thompson)*for the defendants.

Booth, J.,

delivered the opinion of the court:

The Southern Pacific Co. operates as lessee a railroad line from San Francisco, Cal., via Roseville Junction, Cal., to Portland, Oreg., the complete distance between the termini being 771.49 miles. From San Francisco, Cal., to Roseville Junction it is 108.08 miles, leaving 663.46 miles between Rose-ville Junction and Portland, Oreg. The road from Roseville Junction to Portland is what is known as a free-haul road, having been originally constructed under the act of July 25, 1866 (14 Stat. L., 239), whereby in consideration of Govern*233ment aid Government property and troops were to be transported free of charge. The line from Roseville to San Francisco is part of the main line extending from San Francisco to Ogden, Utah, constructed under the act of July 1, 1862 (12 Stat. L., 489), by the Central Pacific Co. under Government aid, specifically agreeing that the Government should have the use of said road “ at fair and reasonable rates of compensation, not to exceed the amounts paid by private parties for the same kind of service.”

From August, 1897, to March, 1902, the defendants frequently caused the transportation of both merchandise and troops over said line, paying therefor the published tariff for local transportation and the through tariff rates for through transportation. The adjustment of the proper amount due for through transportation provokes this controversy, on all. through shipments consigned to Portland from San Francisco, or vice versa. The proper accounting officers of the Government have paid the claimant company for the haul from Roseville to San Francisco upon a proportionate mileage basis; i. e., the through rate from Portland to San Francisco is 51 cents per hundred pounds, which amount divided by 108/772, relative differences in mileage, gives, in round numbers, 7.14 cents per hundred pounds. The claimant company contends that it is entitled to the published local rate of 26 cents per hundred pounds from Roseville to San Francisco, which it asserts is just and reasonable and paid by all other shippers. There is but the one issue in the case and that is the proper rate to be applied on through shipments from Roseville Junction to San Francisco. Claimant company concedes that the through rate of 51 cents per hundred pounds would be applicable in this case if the shipment concerned private parties alone; the alleged distinction as against the defendants is predicated upon the difference in the statutory provisions affecting the Government’s rights as to free transportation on one line of road and pay transportation on the other. If the case involved diverse ownership of connecting lines the record fully establishes the fact that a through rate would be established and published by mutual’ negotiations dependent for its proper division upon the rela*234tiye cost of the transportation over each line, taking into consideration the general contour of the territory traversed and other details of expense. If physical conditions are similar and the cost of transportation approximately equal over each line the rate is divided upon what is commonly called a mileage prorate basis, the exact method employed by the Government in this case. Of course the identity of ownership in this case precluded the above arrangements, and it is readily discernible that the case is exceedingly important because applicable to similar cases involving large amounts and almost daily accountings.

In the case of the Atchison, *Topeka & Santa Fe R. R. Co.*v. *United States*(15 C. Cls. R., 126) the court held that “ through service is to be computed at through rates, local at local rates.” The act of July 25, 1866 (supra), under which the line from Eoseville Junction to San Francisco was constructed, by its express terms put the defendants as respects rate for transportation of property upon exactly the same basis as a private shipper. Their rights were no more and no less; while the transportation service from Portland to Eoseville was commonly designated “ a free haul ” it was not so in fact; it was not gratuitous. As well said in defendants’ brief, “ it had been paid in advance,” for the large grant of public lands was at least considered a full and complete consideration for the privilege. To say that because the defendants were compelled to pay freight on the short haul from Eoseville to San Francisco converted the shipment from through transportation to local is to overlook the fact that the defendants were not exempt from payment of freight for a through shipment. It had been previously paid over one line of railroad and they therefore became under the law entitled to all the rights of a private shipper transporting property over the entire route. The only question possibly involved is the proper division of the through rate. It is difficuit to perceive how the local rate from Eoseville Junction to San Francisco is at all applicable, for it must be conceded that if a private shipment only was involved no more than 51 cents per hundred pounds would have been exacted.

The method adopted by the accounting officers in the settlement of this case has been uniform and long continued. The *235railroads with very few exceptions have acquiesced in its justness and accepted payments in accordance therewith.

The Comptroller of the Treasury, in a very exhaustive opinion covering the entire subject, found in 8 Comp. Dec., p. 598, held adversely to claimant’s contention. The opinion cites and analyzes the various decisions upon the subject and so completely covers the entire controversy that we cite it with our entire approval.

The petition is dismissed. It is so ordered.