Reporter and farmer. [volume] (Webster, Day County, Dakota [S.D.]) 188?-1946, 1900-02-08
WAS OVER BONDED.

uOllk tudt buOilISoc N"atHo
four years and the actual cost OF doing
that business during each or those
years; also the gross receipts from the
business done in South Dakota, ana
separately the amount which was re-
ceived in that state from interstate
business and that from local. III the
schedule of rates prescribed by he de-
PENDANTS had been in force during me
four years, and the same amount OF
business had been done by the COM
pany. the reduction Of gross receipts
from the passenger business would
have been fifteen per cent, and from
the freight business seventeen per cent.
OF course, the cost of doing the bust
ness would be substantially the same.
The court found the value OF the
plaintiffs property in South Dakota to
be $40, 600, 900, although, according to
the testimony, it was bonded for over
sig. 600, 900. 1t held that 1t was not
fair to consider that sum, $40, 900 900,
the value of the property employed in
doing local business, for it was also
used in doing interstate business; and
that the true way to determine the
value of the property which could be
regarded as employed in local business
was by dividing the total value of $1O,-
900 900 in the same proportion that ex-
listed between the amount OF gross re-
ceipts from interstate business ana
that from local business, each OF which
amounts was, as we have seen, accu-
rately shown by the testimony.
Upon that basis of division 1t found
that the value of the company's prop
erty employed in local business was
by dividing the total value OF $4,000
600 in the same proportion that exist
ed between the amount of gross re-
ceipts from interstate business and
that from local business, each of which
amounts was, az we have seen, accu-
rately shown by the testimony.
Upon that basis of division it found
that the value of the company's prop
erty employed in local business was
for the first year, s. 1900, 900; the second
year, $4,000, 900; the third year 81, 100,-
600, and the last year 81, 900, 900, and
also that the gross receipts from local
business were for the first year, 1875
per cent of the valuation; for the sec
ond year, 1927 per cent; for the third
year, 15.6 per cent, and for the last
year, 1863 per cent.
QUESTION OF EARNINGS.
In other words, for these several
years the company received as compen-
sation for doing its local business the
per cent named of the real value Of the
property used in doing that business.
Then, proceeding on the superstition
that the defendants schedule had been
in force and the rates reduced as there
in prescribed during these four years,
1t divided the valuation of $40, 000, 900
OIL the like proportion of the receipts
from interstate business to the receipts
from local business as thus diminished,
and upon such division found that the
valuation Of the plaintiffs property
engaged in local business would have
been, for the first year, 81, 900, 900; for
the second year, $4,000, 900; for the
third year, 81, 500, 900; and the last
year, $1,000, 900; and upon such basis
that the gross receipts from local bust
ness would have amounted to IS per
cent Of the value of the property for
the first year, 12.1 for the second, 1913
for the third, and 1872 for the last. Up
on this it held that the difference be-
S"NOh hO pCl UNI VI lCSClpLS III IlC
two cases was slight, and that there
was no change in what may rightfully
be called the earning capacity Of the
property sufficient to justify a declara-
ton that the reduced rate prescribed
were unreasonable. In other words, ii
was Of the opinion that the earning
capacity was so slightly reduced that
1t would not be affirmed that the new
rates were unreasonable.
FALLACY IN REASONING.
But that there was some fallacy In
this reasoning would seem to be sug-
gested by the fact that although the
defendants schedule would have re-
duced the actual receipts is per cent
on the passenger, and II per cent on
the freight business, the earning ca
pacity for the last year was diminish
ed only one-tenth OF one per cent. Such
a result indicates that there is some
thing wrong in the process by which
the conclusion is reached. That there
was, can be made apparent by further
computations, and in them we will
take even numbers as more easy oil
comprehension. Suppose the total
value of the property in South Dakota
was $40, 900 900, and the total receipts
both from interstate and local bust.
ness were 81, 200, 900, onehalf fro1n
each. Then, according to the method
pursued by the trial court, the value
OF the property used in earning local
receipts would be $4,000. 900, and the
per cent of receipts TO value would be
10 per cent. The interstate receipts
being unchanged, let the local receipts
by a proposal schedule be reduced to
one-fifth of what they had been, SC
that instead of receiving $500, 900 the
company only receives 500, 900.
The total receipts for interstate and
local business being then 5000, 900, the
valuation of $10,0 00, 900, divided be-
tween the two, would give to the prop
erty engaged in earning interstate re-
ceipts in round numbers So, 1898, 900
and to that engaged in earning local
receipts, 1857 600. But If 1867, O0O
worth OF property earns 500, 900 il
earns six per cent. In other words
although the actual receipts from 10,
cal business are only one-ifth of what
they were, the earning capacity is
three-ffths of what it was. And turn.
ing to the other side of the problem
1t appears that If the value of the
property engaged in interstate bust.