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The Green Bag
devoted to the public service — the market value and taxes, was less than the company was entitled of stocks and bonds representing the entire to earn. property therefore does not indicate the value "Missouri Rate Cases" — Federal and State of the property on which the carrier is entitled Powers — Valuation Improperly Determined by to earn compensation, through its rates. Nor Multiplying State Assessment. U. S. may the value of the land devoted to the public Nine suits, known as the "Missouri rate service, figured on the basis of reduplication cases," were decided by the Supreme Court in cost, include the estimated excess over market accordance with the principles of the Minne value which the carrier might be forced to pay sota decision, June 16, Mr. Justice Hughes for contiguous or similarly situated land, nor an again announcing the decision. The suits were allowance for consequential and severance dam brought to restrain the enforcement of the freight ages and for improvements that might possibly rate and passenger fare acts of 1907 of Mis be found on the land taken. Apart from the souri. The courts below enjoined the rates as cost of reduplicating a railway, its value as it confiscatory. On appeal, the Supreme Court stands shall not include the supposed value of sustained the rates as to the Chicago, Burling its property for railway purposes in excess of the ton & Quincy, the Atchison, Topeka & Santa Fe, fair market value of contiguous or similarly and four other companies. On the contrary the situated property. Again, the fair present value rates were held confiscatory in the cases of the of a railway must not be figured by adding to it three other appellants, the St. Louis & Hanni the outlays during the period of construction bal, the Kansas City, Clinton & Springfield, for engineering, superintendence, legal expenses, and the Chicago Great Western. contingencies, and interest. Furthermore, if the Taking up the Burlington case first, the carrier claims that its property has appreciated Court pointed out that the assessment value the courts cannot take notice of such appreciation had been multiplied by three to reach a value when, instead of being specifically stated, it is for rates. He declared that if that basis were alleged in general terms to more than offset extended to the whole Burlington system the depreciation, so as to make the cost of repro value upon which rates were to be based would duction not a fair test of present value. The exceed by §115,000,000 the capitalization of the obvious tendency of these holdings is to limit system. The Court declared that the revenue the factors which may be taken into account in basis adopted by the lower court to apportion the valuation of railways with a view to the the cost of interstate and intra-state business determination of fair rates. was too general, but actual tests could be made. On the subject of the apportionment of state In the St. Louis & Hannibal case the Court said and interstate business the Court took care to neither the experts for the railroads or for the define the correct principles controlling such an state could find a basis on which the rates would apportionment. Either the share of the ex be remunerative. penses attributable to intra-state business must The decision brought out the leading con be clearly shown, or the value of the property siderations that the evidence must be "appro employed in such business, before the intra priately specific" as to the value of the lands, state rates fixed by statute can be pronounced improvements, structures, equipments and other confiscatory, and general estimates made with properties owned by the company, and that the out the aid of accurate data will not be suffi testimony must disclose an adequate basis for cient. In apportioning the value of the prop definite findings of value. The company cannot erty, the division (in a close case at least) must rely, with safety, upon the assessment values not be made in accordance with the revenue made by the state officials for taxation. derived from intra-state and interstate business, The West Virginia two-cent passenger law but in accordance with the use of the property, was also upheld as valid by the Supreme Court assigning to each business that proportion of June 16, affirming the Supreme Court of Ap the total value of the property within the state peals of West Virginia. that which corresponded to the extent of its The Court upheld as valid the rates imposed employment in that business. by the Oregon Railroad Commission out of As to the rate of compensation which a rail Portland, affirming the decision of the federal way is entitled to earn on the property devoted court of that state. to the public service, the Court said that a The Arkansas maximum freight rate law and revenue of only about four per cent from all the two-cent passenger fare law were upheld as business, after paying only operating expenses valid.
