Court Opinion

ID: 4722093
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:37:16.782009+00
Date Added: 2024-06-11T08:07:40.854218
License: Public Domain

Pemberton, J.
The public service commission, now the board of public works, on its own petition, seeks to establish just and proper rates on logs within the state of Washington. The rates were originally established by the carriers themselves, and were discriminating and preferential and lacking in uniformity. On January 25, 1918, by order No. 28, the director general increased the freight rates twenty-five per cent throughout the United States. In the transportation act of February 28, 1920 (41 Stat. 456), providing for the termination of Federal control, Congress recognized the necessity for higher freight rates, and authorized the Interstate Commerce Commission to establish rates which would earn a fair return upon the value of the railway property. A fair return was declared to be five and one-half per cent of such aggregate value and one-half of one per cent for improvements. Under the power so granted and after an investigation, the Interstate Commerce Commission, on July 29, 1920, entered Ex Parte 74, found in 58 I. C. C. p. 220, in which the railways of the United States were divided into four groups, and increases in rates were allowed as follows: Eastern group, forty per cent; Southern group, twenty-five per cent; Western group, thirty-five per cent; Mountain Pacific group, twenty-five per cent.
The state of Washington being in the Mountain Pacific group and having an increase of twenty-five per cent, the public service commission, in cause No. 5092, for the sake of uniformity, to meet the critical emergency then existing, and to carry out the intent of the 1920 transportation act and the order of the Interstate Commerce Commission, granted an increase of twenty-five per cent on all intrastate freight rates, and called the attention of the carriers to the discriminatory *587rates and directed the carriers to readjust the rates upon a proper basis.
No action having been taken by the carriers to adjust the rate, the public service commission filed its complaint charging that the rates, rules, regulations and charges were unreasonable, unjust, discriminatory, prejudicial and preferential, and ordered that hearings be had to determine what rates should be prescribed for the intrastate movement of logs within the state. After hearing the testimony, the department of public works entered its findings of fact and order establishing a uniform distance scale of rates for the intrastate transportation of logs within the state of Washington. The same was ordered to remain in effect during an experimental period of twelve months, or until further order of the department.
Being dissatisfied with the order of the board of public works, the carriers secured a writ of review from the superior court of Thurston county. That court, after a hearing, entered judgment affirming the order of the commission, from which judgment the carriers have prosecuted this appeal.
It is first contended that the court erred in holding that the carriers had the burden of proof. The record shows that there was sufficient evidence introduced to make a prima facie showing that the rates were discriminatory and unlawful, and the carriers were properly required to sustain the burden in support of their new proposed tariff No. 29, under § 10424, Bern. Comp. Stat. [P. C. § 5609], which provides as follows:
“At any hearing involving any change in any schedule, classification, rule or regulation the effect of which is to increase any rate, fare, charge, rental or toll theretofore charged, the burden of proof to show that the changed schedule, classification, rule or regulation, or the increased or proposed increased rate, fare, *588charge, rental or toll is just and reasonable shall be upon the public service company.”
It is contended that the board of public works erred in basing its findings upon the cost of transportation determined by an average of the transportation costs of the four appellant railroads; that, in determining what are fair, just, reasonable and sufficient rates for services by any carrier, the costs, revenues, etc., of that particular carrier must be considered, and not the average or combined costs and revenues of a number of carriers ; that the department took, as a basis of its calculation of transportation costs, a unit operating cost supposed to represent the average unit cost upon four different systems, and then sought to determine upon that basis what rates were necessary to give to the individual carrier just, reasonable, and sufficient return for its services, and thus attempted to do that which was an impossibility in logic and prohibited by law. •
It is admitted that the cost and revenue of one road would not be the same as the cost and revenue of another road. It is a fact, however, that the four carriers serve practically the same territory and they themselves submitted a uniform distance tariff rate. Railroads serving the same territory must have the same rate. Otherwise, the one having the lower rate would secure a larger portion of the traffic. The carriers would not seriously object to a uniform distance tariff rate if it would fully compensate them for their services. This objection will, therefore, be removed, if it is determined that the proposed rates are compensatory.
It is next contended that the department erred in basing its findings as to the cost of transportation of logs upon the average cost of transportation per ton mile upon the systems of the carriers. The mileage of *589the carriers in the state of Washington, as found by the department of public works, is about eighteen per cent of the entire mileage, and the log traffic does not move over all of the Washington mileage.
It is contended that the average system cost of transportation of one thousand tons per mile is much below the average cost of transportation of one thousand tons per mile within the state of Washington, and still farther below such cost upon divisions carrying the great bulk of the logs.
It is admitted that it is impossible to determine the exact cost of transporting any one commodity. It is claimed that the most approved method of apportioning the entire cost as between different commodities is the car mileage or ton mile basis. The object is to obtain, as accurately as possible, the actual cost of the transportation. By including the entire system, there is included the transportation of every commodity on every part of the system. The transcontinental freight, by virtue of its long haul, and the transportation within the Mississipi valley where level grades prevail and fuel is cheap, moves with comparative cheapness as compared with the transportation in the state of Washington. And it is claimed that the use of such cost, included in determining the system ton mile cost as factors to determine the cost within the state of Washington, is inadmissible.
It is also claimed that the cost of all transportation includes two factors: First, the cost of picking up and delivering the freight at points of origin and destination known, as the initial and delivery costs; and second, the line haul; that the initial and delivery costs are unaffected by the length of the haul; that the cost per ton mile increases as the length of haul decreases. It is admitted, however, that the exact ratio between *590initial and delivery costs and line haul costs has not been determined.
Respondent claims that the branch lines and expense incurred thereon are peculiarly a feature of terminal division operation; that their existence is essential to afford sufficient volume of traffic to render main line operation possible and profitable; that the intrastate commerce is essentially an aggregation of short hauls, while interstate commerce predominates in transcontinental movements; that, so far as revenues are concerned, the carriers recognize the composite character of the freight receipts in any state, and by mileage assignments spread these receipts, which flow from the operation as a whole over the entire system, and insists that the expense particularly incurred within the state of Washington in interstate assembly and distribution should be extended over the entire system.
It must be conceded that intermediate divisions of transcontinental systems, where' such divisions originate little traffic, would be almost devoid of traffic were it not for originating and terminal divisions, and the relations between intrastate and interstate commerce are interdependent, so far as receipts and expenses are concerned; that the Washington branch line costs are not out of proportion to other branch line costs, and that the expense of moving logs is approximately the same as that for any other traffic moving in large volumes.
- The board found, also, that as a whole more manufactured lumber is being handled by the carriers than the carriers are transporting in the form of logs.
The rate on a branch line cannot be determined by the revenue and expense of operation upon the branch line alone, since such a rate would be prohibitive. The relation of a branch line to the main line is valuable in *591originating and delivering traffic to and from the main line, as stated in the case of St. Louis and San Francisco R. Co. v. Gill, 156 U. S. 649, 39 L. Ed. 567, wherein the court said:
‘ ‘ The company cannot claim the right to earn a net profit from every haul, section, or other part into which the road might be divided, nor attack as unjust a regulation which fixed a rate at which some such part would be unremunerative. ’ ’
And in the case of Chesapeake & Ohio R. Co. v. Public Service Comm., 83 S. E. (W. Va.) 288, the supreme court of West Virginia said:
“While the line in question may not and perhaps will not as a segment yield a net profit to the operator on the passenger traffic, it will serve as a feeder to the main lines, and add a valuable'increment to the gross returns of the system.”
We are satisfied that the board of public works proceeded upon a fundamentally right basis in determining that the costs of the entire system should be taken into consideration in determining the cost in the state of Washington, since interstate and intrastate commerce are interdependent upon each other. One could not exist extensively without the other.
' The fourth assignment, addressed to finding No. 12, claims error by reason of the fact that the income tax is not included as part of the operating expenses- in estimating the net income in preserving to the carriers six per cent return'upon the amount invested. The'Interstate Commerce Commission, in its rate reduction order of May 16, 1922 (68 I. C. C. 676), in which it determined that five and three-quarters per cent of the aggregate value of the railway property of carriers would constitute a fair return thereon and after March 1, 1922, amending Ex Parte 74, 58 I. C. C. 220, allowing six per cent, found as follows:
*592“We may observe that a fair return of 5.75 per cent, representing an aggregate annual net railway operating income arrived at after deducting, among other things, the Federal income tax on a return of 6 per cent, would be approximately the equivalent of a fair return of 6 per cent, out of which the Federal income tax was payable.”
The allowance of the board of public works of six per cent to the carrier is sufficient to pay the 5.75 per cent, including the income tax as part of the operating expenses.
It is contended that the department erred in prescribing a penalizing lower rate for failure to furnish cars equipped with patent bunks.
Section 9 of the public service law (ch. 117, Laws of 1911, pp. 546-547) provides as follows:
“Every common carrier shall construct, furnish, maintain and provide safe, adequate and sufficient service facilities, . . . and equipment to enable it to promptly, expeditiously, safely and properly receive, transport and deliver all persons or property offered to or received by it for transportation, and to promote the safety, health, comfort and convenience of its patrons, employees and the public.” Rem. Comp. Stat., § 10345.
We are satisfied that, under this provision, the board of public works was authorized to direct that the carrier provide the log bunks as part of the equipment to enable the carrier to promptly, expeditiously, safely and properly receive, transport and deliver the logs.
The balance of the thirty-four assignments of error involve questions of fact, and these findings are controlling unless they have been arbitrarily reached without full and due consideration of all the facts or have been arrived at upon a manifestly wrong basis. We said in the case of Puget Sound Elec. R. v. Rail*593road Commission, 65 Wash. 75, 117 Pac. 739, Ann. Cas. 1913B 763:
“The inquiry was of such a nature as to call largely for expert testimony, and the findings made are necessarily of the same nature. In such a case great consideration should be given the findings of that body to whom the state has primarily given the right and authority to determine questions of this character. Such findings should not be disturbed unless they bear evidence of having been arbitrarily reached and without a full and due consideration of all the controlling facts. Their determination calls for the exercise of economic as well as legal principles. Courts may well review the questions submitted, in so far as they suggest the application of legal principles. In so far as they suggest the enunciation of proper economic rules, they must defer largely to those'who, by study, experience, and calling, are in a better situation to determine what is and what is not a proper method of determination.”
We also said in State ex rel. Great Northern R. Co. v. Public Service Comm., 76 Wash. 625, 137 Pac. 132:
“Such decisions are peculiarly within the province of the commission to make, and ‘its findings are fortified by presumptions of truth due to the judgments of a tribunal appointed by law and informed by experience’. Interstate Commerce Commission v. Chicago, R. I. & P. R. Co., 218 U. S. 88. ”
In this case, the board of public works has attempted to establish reasonable rates to supersede the discriminatory and unreasonable rates and, in its order, provides for a test period within which the reasonableness or unreasonableness of the rates can be established.
The difficulty in attempting to measure the reasonableness of the charges by reference to the cost of transportation is admitted, and the only true test is the actual operation under the proposed rates, and as *594stated in Landon v. Public Utilities Comm., 234 Fed. 152:
“It has frequently been the practice of courts when one came to it to ask such equitable relief as is here sought to require as a condition to listening to the application, that the rates fixed by the commission should be first tested, and then the matter should be determined as to whether or not they were confiscatory. ’ ’
And in the case of Des Moines Gas Co. v. Des Moines, 238 U. S. 153, it was said:
“Nor do we think there was error in refusing an injunction upon the conclusion reached that a return of six per cent per annum on the valuation would not be confiscatory. This is especially true in view of the fact that the ordinance was attacked before there was opportunity to test its results by actual experience.”
We find that the rule laid down in the ease of Northern Pac. R. Co. v. North Dakota, 216 U. S. 579, 54 L. Ed. 624, is properly applicable, to this ease, wherein it was said:
“The great difficulty in the attempt to measure the reasonableness of charges by reference to the cost of transporting the particular class óf freight concerned is well known and often has been remarked. It seems to us that the nearest approach to justice that can be made at this time is to follow the precedent of Wilcox v. Consolidated Gas Co., 212 U. S. 19, as nearly as may be, and affirm the decree, but without prejudice to the right of the railroad company to reopen the case by appropriate proceedings if, after adequate trial, it thinks it can prove more clearly than at present the confiscatory character of the rates . . .”
We find that there is proper evidence to support the order of the board of public works. The court has not the authority or right to substitute itself for the rate-making body and attempt to perform such functions. *595“Bate making is no function of the courts and should not he attempted either directly or indirectly.” Newton v. Consolidated Gas Co., 258 U. S. 165. Neither is it within the province of the court to consider the weight of the evidence or wisdom of the order.
As stated hy the supreme court of the United States in the case of Akron, Canton & Youngstown R. Co. v. United States, U. S. Adv. Ops. 1922-23, p. 308:
“To consider the weight of the evidence, or the wisdom of the order entered, is beyond our province. ’ ’
The order complained of provides for an experimental period, and if the tariff is found by actual trial to be oppressive or confiscatory, a rehearing may be had at any time before the board of public works!
The judgment is affirmed.
Parker and Tolman, JJ., concur.
Bridges and Mitchell, JJ., concur in the result.