234 U.S. Argument for the Government. The Commerce Court was right in disregarding the testimony taken before it, and in striking it from the record. I. C. C. v. Un. Pac. R. R. Co., 222 U. S. 541, 550; I. C. C. v. Louis. & Nash. R. R. Co., 227 U. S. 88; United States v. Balt. & Ohio R. R. Co., 225 U. S. 306, 323. The Commission had the right to look behind the fact of separate incorporation to ascertain the actual relations of the parties. The tap lines are not bona fide common carriers of the traffic of the lumber companies, but they are mere devices created for the purpose of taking over the switch tracks and logging equipment of the several lumber companies, and converting allowances, which would otherwise be bald rebating transactions, into private divisions between the appellee tap lines and the trunk lines, in order to evade the provisions of the Act to Regulate Commerce, and simultaneously to maintain advantages over other shippers of lumber. Miller & Lux v. Canal Co., 211 U. S. 293; So. Pacific Co. v. I. C. C., 219 U.S. 498, 521; United States v. Union Stock Yard, 226 U. S. 286, 304; United States v. Lehigh Valley R. R. Co., 220 U. S. 257; Fourche River Co. v. Lumber Co., 230 U. S. 316; Crane Iron Works v. United States, 209 Fed. Rep. 238. The particular preferences and advantages to the lumber companies may be thus summarized: 1. The allowance of 12c to 5c per 100 pounds from the freight rate, and the resultant advantages of these lumber companies over their competitors in the transportation and sale of lumber in the markets. Some of the mills turn out 2,500 cars per year; 4c per 100 pounds, on the basis of 50,000 pounds to the car, would amount to $50,000 to a single company within a single year. 2. The use by the lumber companies of the tracks, switches and sidings as holding yards for loaded and empty cars, which enables them to evade all demurrage and car service charges. The tap lines hold for the lumber companies the cars of the trunk lines on the basis of 50c a day after 6 days Argument for the Government. 234 U.S. free time, instead of the lumber companies paying the usual $1 and $2 per day over 48 hours free time. 3. The use of free interstate transportation over the trunk lines distributed wholesale to the officers and agents of the lumber companies and used by them in travelling in the interest of the lumber companies, or in their own interest. In order to gain these preferences and discriminations, the lumber companies are making the transportation of their enormous traffic a matter of bargain with all of the trunk lines, and the sale of it to the one or two which pays the highest allowances. With the power wielded in controlling the routing, the lumber companies are forcing the trunk lines to make allowances to the tap lines, of which the stockholders of the lumber companies are getting the benefit. The conclusions reached by the Commission did not proceed upon arbitrary and unlawful distinctions and are supported by substantial evidence. The switching service within 3 miles of the trunk line, being one which the trunk line held itself out to perform under the through rate, was a service "connected with transportation" when performed by the shipper or its agent. Switching for a greater distance so performed was purely an accessorial service. Taenzer & Co. v. C., R. I. & P. Ry. Co., 191 Fed. Rep. 543; C. & A. Ry. Co. v. United States, 156 Fed. Rep. 558; affirmed, 212 U. S. 563; Central Yellow Pine Association v. V. S. & P. R. Co., 10 I. C. C. 193; Fourche River Co. v. Bryant Lumber Co., 230 U. S. 316, 322; United States v. B. & O. R. R. Co., 231 U. S. 274; I. C. C. v. Diffenbaugh, 222 U. S. 42; Matter of the Transportation of Hutchinson Salt, 10 I. C. C. 1, 9; Star Grain Co. v. A., T. & S. F. Ry. Co., 17 I. C. C. 338; Fathauer Co. v. St. L., I. M. & S. Ry. Co., 18 I. C. C. 517; Industrial Lumber Co. v. S. L. W. & G. Ry. Co., 19 I. C. C. 50; Santa Fe Ry. v. Grant Bros., 228 U. S. 234 U.S. Argument for the Government. 177, 185; Crane Iron Works v. United States, 209 Fed. Rep. 238; Kaul Lumber Co. v. Central of Georgia Ry. Co., 20 I. C. C. 450; United States v. B. & O. Ry. Co., 231 U. S. 274; General Electric Co. v. N. Y. C. & H. R. R. R. Co., 14 I. C. C. 237; Solvay Process Co. v. D., L. & W. R. R. Co., 14 I. C. C. 246; Re Allowances for Sugar Transfer, 14 I. C. C. 619; C. & O. Ry. Co. v. Standard Lumber Co., 174 Fed. Rep. 107; Industrial Railways Case, 29 I. C. C. 212; Le Roy Fibre Co. v. C., M. & St. P. Ry. Co., 232 U. S. 340, 354; Am. Sugar Co. v. D., L. & W. R. R. Co., 200 Fed. Rep. 652, 656; Mitchell Coal Co. v. Penna. R. R. Co., 230 U. S. 247, 264. A plant facility tap line performing this service within the 3 mile limit was entitled to an allowance under § 15, but to no division out of the through rate. A common carrier tap line was entitled to a division or allowance out of the through rate on a haul of either more or less than 3 miles. The movement of the logs from the forest to the mill was not a transportation service to be paid for out of the through rate, but an accessorial service for which the shipper should pay. Any allowance for switching within 1,000 feet of a trunk line was a mere device to effect an unlawful payment. These findings are within the principles approved by this court in Mitchell Coal Co. v. Penna. R. R. Co., 230 U. S. 247, 265, to the effect that an allowance to a tap line under § 15 "is lawful only when the trunk line prefers, for reasons of its own and without discrimination, to have the lumber company perform the service." The Commerce Court affirmed in all respects the report and order of the Commission, with the single and sole exception that the Commission had arbitrarily found the tap lines to be plant facilities of the lumber companies, and impliedly recognized them as common carriers of an insignificant amount of traffic of a few other shippers, amounting to only 1 or 2 per cent of the whole. Argument for the Government. 234 U.S. The tap lines, the lumber companies, and the trunk lines, in all of their arrangements among themselves, and in various forms, carefully and clearly separated the traffic of the proprietary companies from the traffic of other shippers, and the Commission simply treated the case as the parties themselves had made it. The preferences and discriminations found by the Commission do not arise out of the insignificant amount of traffic handled for shippers other than the proprietary companies. Such shippers do not receive the allowance of 112c to 5c, or free demurrage and car service, or free passes. Rebates are not paid to the public on insignificant amounts of traffic, but they are paid to private parties on large volumes of traffic. Any allowance whatever to as many as 57 tap lines was stricken down as unlawful, and the petitions were dismissed by negative orders. To 35 other tap lines the Commission allowed either a small division of the rate or an arbitrary switching charge, in the amounts which the Commission found they were entitled to receive for the service which they rendered. To 5 other tap lines the Commission refused any allowance on the traffic of the proprietary companies. No trunk line has come forward to challenge the validity of the order. Those which were brought in by summons have answered that they would allow the United States to defend. Out of a total of 97 tap lines against which the order was directed, 92 have accepted its terms. Only 5 have objected. Twice the report of the Commission has been sanctioned by this court to the extent of citing it as authority. Mitchell Coal Co. v. Penna. R. R. Co., 230 U. S. 247, 264, 265; Fourche River Co. v. Bryant Lumber Co., 230 U. S. 316, 322. The five objecting parties are met with the powerful presumptions of validity which accompany the order, which are reënforced by the nonaction of the great majority of the interested parties, and the sanction which this court 234 U.S. Argument for Trunk Line Railways. has already given to the report in the cases already cited. Mr. Robert Dunlap and Mr. James L. Coleman, with whom Mr. T. J. Norton and Mr. Gardiner Lathrop were on the brief, for the Atchison, Topeka & Santa Fe Railway Company, and other trunk line railway companies, appellants in Nos. 830, 832, 834 and 836: The tap line division is a rebate and the various steps taken by appellees in their attempts to legalize such rebate are mere devices to evade the payment of the published tariff rate in full. The incorporation of the various tap line railroads and the other steps taken by them were for the sole purpose of continuing under the name of a division the old open rebate which was paid direct to the lumber companies. Masquerading as railroads, the lumber companies were making their traffic a matter of bargain and sale and by the device of a secret division were compelling the trunk lines to bid against each other in the dark for such business. Such was the proper finding of the Interstate Commerce Commission. The points raised by appellees before the Commerce Court and before the Interstate Commerce Commission are without merit. The facts of record and the law are that: The service performed by each of the appellee railroads herein is not a service of transportation by a common carrier railroad within the meaning of the Act to Regulate Commerce, but is an industrial service to the plant; the appellee railroads are plant facilities and perform a plant facility service for the proprietary lumber companies; there was abundant evidence upon which the Commission could base its finding that the participation by the appellee railroad in joint rates upon the logs and lumber of the proprietary lumber companies constitutes an undue and unreasonable preference and subjects other shippers to VOL. CCXXXIV-2 |