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extravagance or loss from mismanagement, be so large that no reasonable rate would enable the road to pay interest on such debts.— Missouri Pac. R. Co. v. Smith, 60 Ark. 221, 29 S. W. 752.

The Georgia railroad commission may, in fixing rates, consider economic conditions existing at various points, and adjust its schedule to meet the same.- Southern R. Co. v. Atlanta Stove Works, 128 Ga. 207, 57 S. E. 429.

The factors and circumstances stated which should be taken into account in determining what is reasonable compensation for a carrier. Boston & W. R. Co. v. Western R. Co., 14 Gray (Mass.), 253.

All debts incurred by the directors for a railway corporation, which would be allowed in a suit for taking the account as between them and their cestuis que trust, are debts to be paid before profits can be ascertained. Corry v. Londonberry & E. R. Co., 7 Jurist N. S. Pt. 1 (Eng.) 508.

[39] Interests of carrier and shipper must be considered. Investments and expenditures by shippers as justification for discriminatory rates, see ante, § 31, note [52].

Rates cannot be arbitrarily fixed in the mere discretion of the carrier, but must be adjusted in the interest of the public as well as of the carrier.— Lehmann v. So. Pac. R. Co., 2 Inters. Com. R. 548, 3 Inters. Com. R. 80, 4 I. C. C. R. 1.

The word "reasonable," as applied to facilities means reasonable for the company as well as the public, and "reasonable facilities" does not mean those furnished at a loss to the carrier.- Darlaston Local Board v. London & N. W. R. Co., 1894, 2 Q. B. D. 694.

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The fair rental value of the car is not the proper basis for computing a demurrage charge, which is rather in the nature of a penalty, to insure that the consignee will not congest traffic by delaying unloading his freight.- Kehoe v. Charleston & W. C. R. Co., 11 Inters. Com. R. 166.

[41]

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Consideration of interstate or foreign business in determining as to intrastate rates.

The reasonableness of rates prescribed by a state for transportation within its limits must be determined without reference to the interstate business done by the carrier, or to the profits derived from it.Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct. R. (U. S.) 418, affg. 64 Fed. 165.

Where rates are prescribed for transportation only within the limits. of a state, their reasonableness must be determined without reference to the interstate business done by the carrier, or to the profits derived from that business.- Seaboard Air L. R. Co. v. R. R. Commission, 155 Fed. 792.

A state cannot justify unreasonably low rates for domestic transportation considered alone, on the ground that the carrier is earning large profits upon interstate business, over which, so far as the rates are: concerned, the state has no control; nor can a carrier justify unreason-ably high rates on domestic business on the ground that it will be: able, in that way to meet the losses on its interstate business.- Seaboard Air L. R. Co. v. R. R. Commission, 155 Fed. 792.

In determining whether local rates fixed by a state commission are unreasonably low, the earnings from the portion of the carrier's interstate traffic which takes place within the state, cannot be taken into account.- Northern Pac. R. Co. v. Keyes, 91 Fed. 47.

It is not a defense to an action to restrain an unreasonable rate, that the railroad operates also in states where rates are not fixed by law and so the road can make a reasonable profit on all its business. Robbing Peter to pay Paul has never received judicial sanction.- Chicago & N. W. Ry. Co. v. Dey, 35 Fed. 866, 1 L. R. A. 744n.

In ascertaining the reasonableness of rates fixed by a commission, interstate and foreign business should be considered in determining the proportion of the value of the property assignable to domestic business, but no part of the earnings or loss from interstate or foreign business can be charged to or against the income account of the company.- State v. Seaboard Air L. R. Co., 48 Fla. 129, 37 So. 314; affd. 203 U. S. 261, 27 Sup. Ct. R. (U. S.) 109.

In fixing the rates for intrastate transportation, it is proper for a state railroad commissioner to include in his computation the amount of the interstate fares collected by the portion of the road lying within the state.-Commissioner of Railroads v. Wabash R. Co., 126 Mich. 113, 85 N. W. 466, affg. s. c. 123 Mich. 669, 82 N. W. 526.

[42] · Consideration of joint rates and the division thereof.

In deciding as to the reasonableness of a rate on shipments over twa or more railroads, it is competent for the Interstate Commerce Commission or the courts to consider the through rate, however composed.Illinois Cent. R. Co. v. Interst. Com. Commission, 206 U. S. 441, 27 Sup. Ct. R. (U. S.) 700.

Where two connecting carriers unite in putting in force a joint through tariff between given points, such joint tariff is not the standard by which the reasonableness under Interstate Commerce Act, §§ 3, 4,

of the local tariff on either line is to be determined.- Parsons v. Ch. & N. W. R. Co., 63 Fed. 903; affd. 167 U. S. 447, 17 Sup. Ct. R. (U. S.) 887.

The apportionment of a rate to different parts of a through line does not determine the charge to the public, but it may be significant on the question of a reasonable rate for the whole distance.- James v. C. P. R. Co., 4 Interst. Com. R. 45, 110, 274, 5 I. C. C. R. 612; Brady v. Pa. R. Co., 2 I. C. C. R. 131, 2 Inters. Com. R. 78.

For purposes of rates, the several auxiliary roads should not be looked on as wholly independent lines which may separately establish rates looking only to a satisfactory ledger account of each separate road. A rate for continuous transportation over a route consisting of the main line and a branch is one entire charge, and how it may be divided or apportioned among the constituent corporations is not important to the public, which is concerned with the reasonableness of the total rate. Delaware Grange v. N. Y. P. & N. R. Co., 3 Inters. Com. R. 554, 4 I. C. C. R. 588.

What division of joint rates is made by the carriers, is not without significance in determining what are reasonable rates for the whole distance on the lines in question.-R. R. Com. of Florida v. Savannah F. & W. R. Co., 3 Inters. Com. R. 414, 688, 5 I. C. C. R. 13.

The through rate and the divisions of such through rate between the carriers, furnish no fair or just criterion for the intermediate local rates on the same line. Other considerations besides mere mileage may legitimately be taken into account.- McMorran v. Grand Trunk R. Co., 2 Inters. Com. R. 604, 3 I. C. C. R. 252.

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When by legislation and consolidation, a railroad which was originally all in one state becomes a part of a system or line embracing roads in other states, and the state originally incorporating it enacts laws to regulate the rates on the consolidated road within its borders, the proper test as to the reasonableness of these rates is their effect upon the consolidated line as a whole.- St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 15 Sup. Ct. R. (U. S.) 484, affg. s. c. 54 Ark. 101, 15 S. W. 18.

In deciding whether rates fixed by legislative authority deprive a railroad of property without due process of law, courts do not rest their judgment on one set of rates for specific articles, but they take into consideration all the rates on all articles, and decide whether, as a whole, the result is unreasonable.- Matthews v. Board of Corp. Comrs., 106 Fed. 7.

The reasonableness of the passenger fare upon a particular part of a carrier's system must be determined with some reference to the system as a whole.- Artz v. Seaboard Air L. R. Co., 11 Inters. Com. R. 458.

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The amount actually and necessarily invested in the enterprise is to be considered in determining as to reasonableness of rates.-Milwaukee Elect. R. & L. Co. v. Milwaukee, 87 Fed. 577.

The money actually invested in a railway is not a basis on which the proper return may be calculated.-Matter of Proposed Advances in Freight Rates, 9 Inters. Com. R. 382.

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If a railroad corporation has bonded its property for an amount that exceeds its fair value, or if its capitalization is largely fictitious, it may not impose upon the public the burden of such increased rates as may be required for the purpose of realizing profits upon such excessive valuation or fictitious capitalization; and the apparent value of the property and franchises used by the corporation, as represented by its stocks, bonds and obligations, is not alone to be considered when determining the rates that may be reasonably charged.- Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct. R. (U. S.) 418, affg. s. c. 64 Fed. 165.

The capitalization of a railroad is not a basis on which a proper return may be calculated.- Matter of Proposed Advances in Freight Rates, 9 Inters. Com. R. 382.

Those who have conceived and executed a railroad enterprise have no right to exact a return upon an extravagant capitalization.- Danville v. So. R. Co., 8 Inters. Com. R. 409.

To make the capital account of our railroads the measure of their legitimate earnings would place, as a rule, the corporation, which has been honestly managed from the outset under enormous disadvantages.— Grain Shippers' Assn. v. Ill. Cent. R. Co., 8 Inters. Com. R. 158.

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The basis of all calculations as to the reasonableness of rates to be charged by a corporation maintaining a public highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public. In order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable earning capacity of the property under particular rates prescribed by statute, the sum required to meet operating expenses, are all matters for considera

tion, to be given such weight as may be just and right in each case.Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct. R. (U. S.) 418, affg. s. c. 64 Fed. 165.

The basic fact which furnishes the test of the reasonableness of a rate is the value of the property devoted to the public use.- - Louisville & N. R. Co. v. R. R. Comm., 157 Fed. 944.

The basis of all calculations as to the reasonableness of rates charged must be the fair value of the property being used by it for the convenience of the public.- Seaboard Air L. R. Co. v. R. R. Commission, 155 Fed. 792.

In estimating the value of the property of a railroad, the estimate must not be based on what was its value in the past, nor what it cost, nor what it would cost to duplicate it, nor its probable future value, but must be based on its present value.- Matthews v. Board of Corp. Comrs., 106 Fed. 7.

The basis of calculations as to the reasonableness of rates is not the cost of the railroad, but its value as a producing factor, taking into consideration its location, the character of the country through which it passes, and the reasonable expectation of business coming to it.Matthews v. Board of Corp. Comrs., 106 Fed. 7.

The method of arriving at a true and just valuation upon which to figure local earnings is to ascertain what per cent. the local earnings constitute of the gross income, and to take the same per cent. of the total value of its property in the state as the capital stock which is invested to produce the local earnings.- Ch. M. & St. P. R. Co. v. Tompkins, 90 Fed. 363; explained, 91 Fed. 47.

The value of a railway system does not depend on the mere cost of its embankment or equipment. It is rather a question of location, by connections, of terminal facilities, of enterprises along its line.- Matter of Proposed Advances in Freight Rates, 9 Inters. Com. R. 382.

The value of the entire property of a railroad employed for the public convenience can shed but little light on the question whether the rate upon a single commodity yields its proper proportion of a fair return on that value. Central Y. P. Assn. v. Ill. Cent. R. Co., 10 Inters. Com. R. 505.

The fact that the business is established is material in determining the value of the plant of a public service corporation.- Cedar Rapids W. Co. v. Cedar Rapids, 118 Iowa, 234, 91 N. W. 1081; Brunswick W. Dist. v. Water Co., 99 Me. 371, 59 Atl. 537.

The faithfulness or unfaithfulness of a public service corporation in the performance of its public duty has no bearing upon the present value of its property.- Kennebec Water Dist. v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856.

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