*1 quеstion, operating; of a is in “Act, participating or effect would not be x>roeess working, action, work; operation doing performing or of the device? influence; of or agency, exertion I think can be no doubt that there such working; method, way operating of or participation operation is no less in than activity.” of action or form of mode in aeronautics or aviation. entering meaning various shades of In the case Gits York of v. New Life Ins. dictionary of definitions make them into the (C. A.) F.(2d) 7, 9, Co. C. relied little value. by plaintiff, language suggests used opinion plaintiff’s word I court’s inclination toward insist am “oxierations” with “aer- contract in connection here. be used in the ence will seen a careful ex opinion as unrea- and excludes amination of the onautic submarine” the decision par- physical uj)on “engaging,” though the construction turned the word sonable operation ticipation very suggest of the instrumen- said: “The court words in- quality insurer tality. continuity frequency, he conceived us Can it and degree passenger participation a submarine insure a as well as some tended partici- instrumentality.” ship passenger physically the use Jack unless could (the situation son Case Masonic Ins. Such Accident v. pated ox>eration? certainly made anticipated Jackson) hardly Leona Ind. 164 N. E. bo liability. A. subject assumption L. R. reviews the authorities and ax)proved in the Gits Ca.se. With the Gits provision ambiguity I cannot see agree, Caso I cannot if must be understood liability for is no that there must decide deciding question hero in favor of assuming insured indemnity, even double plaintiff’s insistence. met he passenger when casual tо have been a penalty need not be dis- death. cussed. sought construction strained Under the judgment agreed A for defendant be liability if be no would by plaintiff, there prepared lodged upon or with the clerk crash, was, of the fatal at the lime insured the rules court. under operation aero- partieixmting may participato opera- One plane. yet aeroplane perfonn tion keej) required to set in motion. act plaintiff's construction rea- Under liability soning there be in eases where movement move- directed passenger pilot, UNION STOCK YARD CO. conduct ment, the DENVER or where et UNITED STATES al. engaged passenger in the business of navi- No. 9568. air, long as his gating the so connection physical was short of actual Court, D. District Colorado. operation. Nothing short participation April 4, 1932. insistence would include the facts of this present participate operat- case. To ing devices, partici- one need not aeronautic performing in the sense acts incident pate keeping setting or them in am motion. I flight directs opinion one who when the interposes judg- made and who is to he his finality as a with reference condi- ment flight may indicate that a tions which bo safe- otherwise, is, judges ly made as to weather, a rnxportant most the fitness entering aviation, may into be said element operation. participated in have Could reasonably urged sitting that one beside flying directing device and pilot directing attained and wheth- altitude encountered, be circumvented or a storm er deciding plane whether the descend or safety when the course stay aloft either *3 hearings extensive an ex- were held before aminer, hearings the record of those consist- ing 2,023 pages, together with 82 exhib- July 28,
its. Dunlap, On Hon. R. W. Acting Secretary Agriculture, entered the order litiga- which is under attack in this tion, accompanied by carefully prepared and comprehensive By findings or- of fact. der, yardage charges pe- imposed titioner substantially were reduced. petition- Prior to its date, effective *4 er filed permanent- this suit to set aside and enjoin ly the enforcement of said Is- .order. sues were joined,'and the cause came on for hearing judge before a three re- court as quired by section 316 of the Packers and Stockyards (7 Act USC 217 § USCA [7 217]). evidence offered was the record Secretary made Agri- before the alleges culture. bill existing its rates unreasonable; were not find- ing Secretary to that effect is with- support out evidence, and that Secretary was power therefore without any rate; establish Secretary statutory without prop- to value the erties of petitioner, or to determine the reasonableness upon of a return that val- ue; that the notice insufficient;' .is that, in SYMES, Judge, dissenting District determining the reasonableness the re- park turn, Secretary many erred- in respects; by reason thereof the has been deprived of its property without process due of law.
Scope of Review.
parties
disagreement
are in
as to the
Bosworth,
Robert G.
Norman A. Hutch-
scope
judicial
review,
Pershing,
inson,
Nye,
Tallmadge, Bos-
contending
duty
that it is the
of this court
Dick,
Denver, Colo.,
worth &
all of
pe-
for
try
novo,
ease de
and to exercise our
titioner'.
independent judgment upon
ques-
all of Asst,
O’Brian,
Lord
Atty.
John
to the
of fact submitted
tions
to the
Gen., William Davis and
Berge,
G.
Wendell
determination.
respondent,
his
on the
Atty.
Sp.
Gen.,
Assts. to the
Ralph
L. contrary, contends that our review is limited
Carr,
Atty.,
Denver,
Colo.,
U. S.
Elton
whether the
n L.
Marshall, Sol., Department
Agricul-
scope
within
acted
statutory
his
pow-
G,
Miles,
ture,
E.
Dagger,
C.
N.
all of ers, and as to whether there is substantial
Washington,
C.,
respondents.
D.
support
findings
evidence
of the Sec-
retary.
McDERMOTT,
Before
Judge,
Circuit
KENNEDY and SYMES,
and
Judges.
District
(7
Section 316 of the act
217)
USCA §
provides
provisions
of the Interstate
Commerce Commission “are
applica
made
McDERMOTT,
Judge.
Circuit
jurisdiction, powers,
ble to
and duties
Agriculture, pursuant
enforcing
provisions
Stockyards
title,
to the Packers and
person subject
Act
1921 of this
and to
(7
provisions
181
seq.),
§
USCA
et
entered into
this title.”
an in-
Stafford v.
quiry
512,
into the
Wallace,
495,
lawfulness and
258 U.
42
397,
reasonableness
S.
S. Ct.
Bros,
charges
by
229; Tagg
made
L. Ed.
33 A. L.
the Denver Union 66
R.
States,
Company
Stock Yard
420, 443,
United
280 U.
services rendered v.
S.
50
by
patrons.
it to
notice,
Pursuant
Ct.
Ed.
S.
524. The authorities
questions
sions of
court
be rec-
of fact. This
may perhaps
parties
by the
cited
oppor-
upon
‘a fair
the held
owner to be entitled to
attack
ground of the
onciled, if the
tunity
judicial
submitting
of the Sec-
that issue to
order
An
considered.
order is
in-
upon
on either
its own
tribunal for determination
in court
retary may
attacked
dependent
judgment as
both law
or both.
grounds,
of two
one
”
facts.’
upon
be based
attack
(a) The
an erro
upon
order “rests
ground that
rights may he as success
Constitutional
Com
law, Interstate Commerce
rule of
neous
fully
seriously
and as
invaded
mistakes
S.
Diffenbaugh,
U.
mission
cit
of fact as mistakes of law. When a
up
based
Ed.
or is
22, 56 L.
rights guaranteed him
izen asserts thаt the
evidence, Chi
without
finding made
on a
invaded, the
the Constitution have been
258, 263,
Case,
cago Junction
responsibility
upon
courts to hear
rests
upon evi
667, or
317, 68 L. Ed.
Ct.
S.
hearing
him,
denied
and he cannot be
support it, In
clearly does not
dence
ques
ground
claim
that his
rests
Pa
v. Union
Commission
terstate Commerce
made,
tion
fact. Where such a
claim
S.
Co., 222 U.
R.
cific R.
present all of
is entitled to
England Di
308; New
56 L.
hearing him) it
the material
facts. After
*5
203, 43 S. Ct.
184,
Case, 261 U. S.
visions
may be determined
and hear
notice
605;
v.
Colorado
United
270, 67 L. Ed.
ing which ho has had before an administra
452,
166,
153,
46 S.
States, 271 U. S.
Ct.
complied
of
tive tribunal
with the essentials
Tagg
United
878.”
Bros. v.
70 L. Ed.
Murray
Ho
process.
due
Den ex dem.
v.
220,
420, 442,
Ct.
280
S.
50 S.
States,
U.
Improvement Co., 18
boken Land &
How.
524.
Ed.
225, 74 L.
372;
272, 15 L. Ed.
States v. Ju
United
up-
644,
25
Toy,
253, 263,
must be determined
198
S. Ct.
49
attack
U. S.
Such an
proceedings before the
we
of the
L. Ed. 1040. But
in the case
bar
record
on the
competent
dealing
for a
Secretary, and it is not
with an administrative hear
are
judicial
ing
nature,
evidence.
of
the de
receive additional
matters
court
rights
existing
of
facts.
termination
on
We
up
be
order
attacked
(b) Or an
dealing
legislative
with an
of
are
exercise
deprives
petition
ground
power. The
hearing,
has had no
process
duo
property without
its
er of
any tribunal,
before
leg
to whether the
upon con
is made
the attack
Where
law.
Secretary
order of
islative
invades its
required
grounds,
court
stitutional
rights.
compelled,
We are
therefore, to hear
judgment
independent
as to both
its
exercise
evidence and to
decide for ourselves
Railways West,
United
v.
facts.
law
Secretary
whether the order of the
deprives
123,
234, 50
Ct.
74 L.
S.
Ed.
U. S.
280
without due
Lehigh Valley R. R.
Commission
390;
v.
process
(Const.
of law
14).
Amend.
24, 26,
69,
49
Ct.
S.
73 L.
ers, 278 U. S.
805; Chicago,
R.
161, 62 A. L.
B. &
Ed.
However,
presumption
there is a
14,
Osborne,
v.
265 U. S.
44
Q.
R.
S.
R.
findings of
are correct.
878;
431, 68
Ed.
Bluefield Co. v.
L.
Ct.
Ry.,
Belt
268
v.
Line
U.
413,
Banton
S.
679,
Comm.,
683,
262 U.
43
S.
Serv.
Pub.
422,
534,
45
Ct.
69
S.
L.
1176; Georgia Ry.
675, 67 L. Ed.
Ct.
S.
Cotting
City
v. Kansas
Stock
Co.,
Yards
183
Comm.,
625,
262
43
U. S.
R. R.
v.
79, 91,
30, 35,
S.
U. S.
Ct.
46 L. Ed.
Valley
1144;
680,
L. Ed.
Ohio
Co. v.
92, Mr. Justice Brewer said: “It
Su
[the
287,
Borough,
289,
Avon
Ben
preme
has also ruled that
the de
Court]
527,
908;
64 L. Ed.
Lincoln Gas
Ct.
40 S.
legislature
pre
termination
is to be
Lincoln,
223 U. S.
v.
S.
Co.
Ct.
just,
upheld
to be
be
sumed
must
un
Ed. 466.
271, 56 L.
clearly appears
enforcing
less
to result in
Benson, 52
unjust
Crowell
See,
unreasonable
rates.”
also,
Hughes, speak-
Ed.- Chief
Justice
Cambridge
Light
Electric
(D.
v. Atwill
majority
eo-urt,
said:
ing-for
“In
F.(2d)
C.)
cases therein cited.
brought
to enforce
evidentiary
constitutional
rule is
cases
This
a branch of the ac
power
judicial
rights,
legislative
United cepted
doctrine that
acts will necessarily
independent
extends to the
held
States
unconstitutional
he
unless
questions,
all
legal
both of
clearly
presumption
fact
so. This
determination
necessary
law,
performance
strengthened
to the
by
this case
the fact
supreme function. The
report
case
confisca-
bears
internal
illustrative,
investigation
ultimate
conclusion al-
of the careful
tion
evidence
made'
invariably depending upon
him,
disposition
and his
by
most
deci-
to be fair.
power
pe-
to value the
The Notice.
account,
titioner,
at least
nor to take into
under
petitioner contends
factor,
upon
val-
a dominant
the return
powerless
was
served,
notice
sup-
property.
petitioner-
ue
,
yard
inquire
the reasonableness
as to
by
ports
excerpts
contention
inquiry
age charges,
limited to an
opinion
Judge
Cotting v. Kan-
Brewer in
charges made
into the reasonableness
supra, in which
City
Co.,
sas
Stock Yards
hearing
that a
recited'
feed. The notice
justice
to be
the learned
stated that rates
“upon
reasonableness
had
charged by stockyard companies
their
pro
charges as
of the rates and
lawfulness
by the same
services were not to be measured
amended
by
Tariff No.
said
vided
by
govern
rules
the consideration
sup
2.” The
Supplements Nos. 1 and
by
exer-
rates exacted
utilities which
those
charges
Tariff
for feed.
plements dealt with
and dis-
cise the
of eminent domain
notice, concerns
to in the
No.
referred
charge
purely public
The deci-
service.
yardage charges,
face the notice
and on its
upon an
sion of the court in that ease was
in
petitioner that an
ample
to advise
entirely
ground,
different
and six
yardage charges.
quiry would be' made into
join
justices
part
declined to
yard
argument of
is that.the
opinion
pe-
petitioner.
relied on
2, were
age charges
No.
contained
tariff
supports this contention
titioner further
yardage charges
contained
with'
identical
to the order made
the Secre-
reference
tary
published
which had been
in tariff No.
Agriculture, as
before';
many
tariff No.
years
that therefore
Paul,
rates at St.
Minn. The
change
yardage charges.
as to
2 made no
required
hold
there held that he was not
petitioner contends that the
sec-
yielded more
unreasonable because it
Secretary to in-
tion which authorizes the
percentage
given
than a
of return
*6
inquiry
an
into
“lawfulness” of
stitute
the
involved;
that
the
property
value of the
(7
a rate is section
USC
USCA
[7
evil,
an
act did not treat financial success as
207]),
that
exclu-
and that
seсtion deals
§
prevent it;
that,
while
cost
nor seek
the
sively
changed rates;
or
the
new
rendering
or
large,
of
the service
being neither,
rates in tariff No.
the Sec-
determining
controlling
factor in
the
even
power
inquire
retary without
is
the
rates,
reasonableness of
should
consideration
n their lawfulness. Section 310
(7
USC
given to
other factors.
211]) gives
Secretary pow-
§
USCA
the
[7
complaint
petitioner’s
The burden of the
upon
er either on his own initiative or
com-
order,
Secretary deprives
is that the
of the
just
plaint
prescribe a
and reasonable rate
upon
property.
fair return
its
Un-
it of a
services, upon
finding
existing
duty
doubtedly
Secretary,
it is the
of the
“unjust, unreasonable,
rates are
or discrim-
rate,
fixing a
to avoid confiscation.' Con-
inatory.”
power,
Secretary
The
of the
un-
Secretary
Agriculture
ceding that the
of
ample,
der this section is
and is not confined
power
many
to consider
in ar-
the
elements
changed
rates.
to new
The
(objection
word
rate,
riving at a ’reasonable
it is nevertheless
section does not use
this
“lawful-
duty to
to it that the rate fixed does
his
see
ness,” while the notice does contain such
petition-
of
not confiscate
word,
hypercritical
is
in the extreme. No
’
Secretary
discharge
er.
Just how the
can
surprise
claimed,
is
and no further mention
duty
prop-
without a valuation of the
matter,
need be made of the
other than to
urged
erty
petitioner is not clear.
It is
suggest that
the notice is sufficient if the
not in express
statute does
terms
word “lawfulness” is
surplusage.
treated as
Secretary
to ascertain
val-
authorize
Secretary
power of the
inquire
The
properties
usеd
useful in the
uation
into the
time
reasonableness of existing
service; many persuasive
public
authorities
upon
charges,
complaint
either
upon
his
proposition
power
cited to
that such
initiative,
own
is conferred
the statute
upon
conferred should not rest
is here
express terms,
and has been sustained
'
But
implication.
the conclusion
not
does
Tagg
courts.
Bros.
States,
v. United
power
upon
The
is conferred
follow.
74 L. Ed.
Secretary to establish reasonable rates. No
confiscatory.
is reasonable which
is
The Power of
Secretary.
Secretary eannot determine what rate is rea-
further contends
until he has first
wheth-
sonable
determined
power
to establish
it would result in' confiscation.
a er
He ean-
reasonable rate does not
upon
question
confer
him
determine the
of confiscation
not
evidence,
expert
conflict
volved the usual
properties
a valuation
without
same
reading
record leaves the
and a
petitioner.
wake
generally is left
confusion that
of the Sec-
upon
order
reliance
petitioner employed
of such evidence.
Paul case
the St.
retary
in.
Agriculture
made
qualified
dealers, who
rea.1estate
three
judi-
legislative and
a confusion
indicates
independent investigation
proper-
is-
Secretary Javdinc
When
cial functions.
of each
ties,
arrived at a valuation
ease, was
he
Paul
St.
his order
sued
tracts after consultation. The
tlie
the exer-
exercising
power.
legislative
very highest
witness,
one
a man of the
called
Jardine
power,
cise of such
unquestioned integrity, and of
standing, of
rights
giving considera-
his
well within
evidеnce
long experience. There was
factors;
value
tion to various
vicinity,
general
of real estate
sales
exacted
rates
rendered, competition,
service
comparatively
periods,
within
recent
situations, and
comparable
yards in
other
finding of the Secre-
support
tends to
suggested by Jus-
other considerations
tary.
vigorously contended that such
It
is
Cotting
this
But
Case.
tice Brewer
prop-
not
as the
as valuable
were
power.
legislative
exercise
does not
court
petitioner.
It
con-
is likewise
erties
it de-
when
power
exhausts
This court
tended that the witnesses for
validity
made.
the order
termines
factors,
give proper weight to certain
did not
an in-
is limited
of review
power
Our
just
it
contended that the witnesses
is
the or-
whether
into the
quiry
gave weight
to factors
hy
granted
der
is within
made
unduly
he considered.
It
aft-
order was made
statute, whether the
opinion,
pur-
extend this
and serve no useful
evidence, and
upon
substantial
er notice
whether,
respective
pose, to discuss these
contentions
petition-
confiscatory of the
say
in detail.
will sufficeto
that we
have
urges that
Petitioner
property.
er’s
read the abstract of the
this
evidence
of reason-
the test
“value
the service”
point, and,
unquestionably
true
while
value of
rate exceeds the
If
ableness.
justified
the evidence would
have
a con-
service,
patrons.
will be
there
siderably larger valuation,
pre-
arewe
proposi-
argument
comes to
pared
say
Secretary’s
finding
that the
charge all that the
entitled to
tion that
clearly
respect
erroneous. We are
object
regula-
But the
trafilе will bear.
govern-
not satisfied that
witness for the
industry from
prevent
tion
an essential
*7
adopted
theory
opposition
in
ment
charge
exacting
for its serv-
unreasonable
Gases,
rules laid down
the Minnesota Rate
prefer
ices,
though
patron
even
352, 445,
230 U. S.
33 S.
729,
Ct.
pay
charge
rather
do
exacted
than
1511,
(N. S.)
48 L.
1151,
R. A.
Ann.
A reasonable rate lies
without the service.
1916A, 18.
Cas.
within a field
has the val-
somewhere
extreme,
as one
and confisca-
ue of a service
Value of Structures.
A
rate must
tion
the other.
reasonable
as
structures,
In the valuation of
the Sec-
pay
fair return
at least be sufficient to
retary
present
determined the
value of the
use,
property
public
on
with
devoted to
structures, and not the investment therein.
proper allowance for
ob-
deterioration and
arriving
present value,
at the
he received
solescence,
-which
and
must allow for the
reproduction
evidence as to
cost of
as
particular
hazards involved in the
business.
inquiry,
of the
applied
time of
and
allowed,
capital
If
will
such a rate
new
cent,
figure
per
the then
condition of
security
bonds,
from the
bo attracted
and
properly.
fairness of
inquiry
necessary public
service can be con-
by
the fact
the re-
demonstrated
only
tinued. We
conclude
was
production figures
government
engi-
right,
duty,
Secretary,
but the
correspond
exactly
almost
neer
with those
passing upon
the reasonableness of the
engineer
petitioner.
for the
rates, to determine whether such rates were
figures
substantial difference between the
confiscatory
petition-
engineers
general
on
the two
overheads con-
er.
during
cerned the item interest
construc-
Value of! Real Estate.
government engineer
tion.
allowed
earnestly and vigorously
It is
on
contended interest
the value of
real
dur-
estate
arriving
ing
period,
erred
the construction
at the
but the Secre-
tary
item,
of the real
petition-
valuation
estate of the
did allow such
with
accordance
upon
engineer
evidence
er. The
in-
the evidence
for
peti-
Id.,
346,
See,
difference between
Pa.
A.
(cid:127)tioner.
was also a
There
affirmed.
also, Montana,
Morley
period of
W.
R.
v.
engineers
probable
& S.
Co.
as
(D.
Secretary’s
C.) 198
finding of the
F. 991. Ohio Utilities
construction. The
fol- Pub.
Comm.,
is as
Utilities
S.
reproduction
of the structures
cost
.
prelim
Ct.
69 L Ed.
held that
:
lows
inary legal
organization
and
expenses must
.$2,393,796.00
Totals materials
labor.
allowed;
be
but these are
the item
covered in
contingencies...
97,551.00
Omissions and
$20,486
hand,
in our ease. On the other
Engineering
superintend-
(cid:127) in the
Case, supra,
Galveston
said:
it was
102,429.00
ence .....................
by
“The other item
included
master
Expense............... n
20,486.00
Legal
determining
value,
by
disallowed
base
40,972.00
General Office................
court,
$67,078
brokerage
for
fees.
Liability
21,616.00
Insurance.........
any
There is no evidence that
sum was in
34,050.00
during
Taxes
construction.....
paid
fact
brokerage,
and there was in-
during
construction
Interest
cluded, as
shown,
above
sum $73,281'
(7% property
on
than
other
organization
for
management
land for one-half construc-
calculating
reproduction
historical
tion period)..........
77,221.00
cost.
finding
upon
the master rests
(7%
on land
value
Interest
on
testimony
customarily get,
that bankers
used
useful
land for
form, compensation
some
equal
per
to 4
year)........
40,991.00
one
cent, on
money procured by
them for
enterprisеs.
compensation
But
reproductions
Total
new cost of
bankers’ services is
paid
often
in the lessened
respondent’s used and useful
price
at which
company’s
take the
se-
equipment..
structures and
.$2,829',112.00
curities,
represented
and is
higher
thus
paid
interest or dividend
the mon-
Expense.
Promotion
ey
by
actually
company
cap-
received
contends that
these
sums
added
should be
given
ital. The reason
$26,790
an item of
master for
promotion”;
for “initial
including the
$18,982.65
“organization”
allowance
an assumed bro-
$160,-
kerage fee,
brokerage
that a
is ‘a
“assembling capital.”
721.95 for
fee
nor-
There is
of large
mal incident
industrial
investments
any
no evidence that
sum
expended
with
amortized,’
and has
been
sinee ‘the record
respect
items.
these
Galveston
plant
shows that
operated
has been
Galveston,
Elec. Co. v.
258 U. S.
a loss.’
If base value were to
fixed
be
743 42 395, 351, 354, 678, S. 66 Ed. Ct. L. this theoretical quite fair to assume utility a said: “The fact reach a 3930, is constructed plant, built all, financial in time cash, success mythical man with phantom allowing is a reason for return on an liberal allow addi- unnecessary to would make money enterprise; invested in the but apocryphal an on account tional value past it does not losses an element to make bonds. paid hypothetical commission deciding ho considered in the base val- what arriving at After Per Condition. Cent. confiscatory.” ue is whether the rate is properties, reproduction new cost government The introduced no witness were properties found that the gave opinion going concern who his as to cent, again there Here per condition. in 83.8 history value; value engineers. Both between the a conflict was Secretary, stoekyards were before from inspected properties, and engineers judgment as to them form a he could judgment made informed skilled their accept líe was not hound to that value. cent, per con present to the an estimate opinion offered. The evidence Secre engineer for properties. The dition of the recognized value to tary there is a estimated that going is not concern that reflected cent, Henrici, Mr. per 95 condition. were approxi physical structures, allowed unquestionably engineer, government cent, mately 10 per physical values. standing and Ids profession, in his man of exists, such a value which should That undoubtedly deliberate reflects his evidence recognized, abundantly McCardle settled. engineers ap Both followed opinion. Co., 47 Indianapolis 400, 272 U. S. v. S. arriving at their conclu method proved 144, 316; 71 Co. Ct. L. Ed. Bluefield v. Public Service Gas Co. v. Wichita sions. 679, 43 Pub. 262 U. S. Serv. Comm. 220, 268 Commission, 126 P. 111. Kan. 675, 1176; 67 Ct. Ed. Missou L. State of many of the struc it is considered When rel. Bell v. ri ex Southwestern Tel. Co. Pub. old, years 40 more than Sec tures are 276, Comm., 544, 262 43 Serv. U. S. S. Ct. appears finding respect retary’s 981, 67 L. Ed. 31 807; A. L. Denver R. entirely fair. bo Co., 178, v. Denver Union Water 246 U. S. 191, 192, 278, 649; 38 62 Ed. S. Ct. L. Des To these val Going Concern Value. Moines, Moines Gas Des 238 Co. v. U. S. 1.43,000 $of ues, added sum 153, 165, 811, 1244; 59 35 Ed. L. working capital, $295,000 the sum of City of Cо., v. Omaha Water Omaha going value. The concern 30 S. L. should have al contends (N. R. S.) 1084; A. Na going $807,000 con lowed the sum tional City (C. Waterworks v.Co. Kansas value. introduced the cern 8) A. 827; C. 62 F. L. R. A. engineer evidence of who undertook to Michigan Telephone Bell (D. Co. v. Odell compute going from num concern value Mich.) F.(2d) 180, C. 185; Whittaker assumptions. engineer assumed ber Mfg. (C. Brictson F.(2d) C. 8)A. stoekyards completed, hut with 485; Telephone Illinois Moyni Bell Co. v. attached. He then undertook to no business (D. Ill.) F.(2d) han C. procure what it would cost ihe estimate stoekyards enjoys. which the now situation in the McCardle Case is engineer exactly men interviewed five Cor the almost similar the situation here getting opinion engineers their purpose presented. company for the years regain going would take to their number the made estimate of concern value. *9 ranged engineer These business. estimates from 7 to The the commission no made engineer years. appraisal 12 The believed that these of such value. The commission al- cent, too high, going (cid:127)estimates were with lowed a concern per started value of 9% assumption years that within five of physical property. of the values This Upon finding be business would attached. sustained, these as was respect and in there- computed sumptions, going Supremo ho said, concern page Court at 415 of by S., 144, value. This buttressed 47 evidence 272 U. S. Ct. 150: “The evi- past of witnesses certain dence is than certain more sufficient to sustain 9.5 cent, -expenditures were advertising, per going made for value. reported And the n by land, aggregate of donations which ap showing amounts generally cases by included proximately same аmount. Supreme The intangible commissions and courts to cover cent, the United Court of States in Galveston of indicate per Elec. elements value that 10 Galveston, 388, 258 page Co. physical v. of the value of the elements would 744 impressive reported when the facts property in low condition to service. render The by in- engineer the commission this case are taken and the govern accountant for the
(cid:127)to account.” ment were more liberal to the estimating the life Supreme proper of Court the United States various involved, ties approved going adopted fund, has of concern sinking allowances value, by following compound as indicated table: theory depreeia interest McCardle Bluefleld Denver Georgia Omaha Knoxville 43 S. Ct. 38 S. Ct. S. Ct. [53] L. Ed. 615, v. Denver Union v. 680, Railway 54 L. Ed. v. 278, Omaha Water 371. Indianapolis v. Water L. Ed. [62] Pub. v. R. R. L. Ed. L. Ed. 991, Co., Serv. 1144. [48] 649. 212 U. 1176. Water Water L. Co., Comm., Comm., R. [218] A. S. Co., Co., (N. U. 1, [246] 272 U. 29 S. Ct. U. S. U. S.) S. U. 180, S. 1084. 625, S. 30 S. 148, 178, $ 14,904,000 10,617,782 6,250,000 5,700,583 Repro- duction Cost 324,428 538,000 Por Going $ 1,366,000 Amount Concern allowed 562,712 441,629 800,000 Value 32,442 60,000 Concern Value Reproduction Per to cost of 10.0 11.1 Going 9.17 9.9 cent, 8.4 7.5 conclu may tion, arrived at the There which businesses in which it $42,014 in year, with possible compute that the sum of a degree sion with some a fund accumulations, would create accuracy terest but, value; element of even as and properties to restore computation if sufficient possible, accurate is not The In their usefulness terminated. actually value when which exists should not be adopted terstate Commission ignored Commerce difficulty because of the of its meas depreciation straight line re basis urement. There is no rule which the telephone com serves in and steam railroad leg accurately value of a arman can be 14,700 15,000, decided panies. Dockets cents, in dollars and nor measured which theory compound July, 1931. interest pain suffering computed; yet can be justice may work out substantial before things. By triers fact do evaluate such necessary replace fund struc use the token, difficulty the same of measurement pur tures. As soon as used for that it is right. should amount to a denial of If utility to take pose, has a new structure erroneously had not excluded place that has worn out one properties, base, certain from the rate we longer public service, but it .has disposition would have no to disturb the age part properties fund. Secretary’s finding going as to concern val computation varying life, the difficulties ue; since the rate quite apparent base was utility serious; that, if it would seem finding ly going a factor his concern charged income, any, actual if with the value, addition to an the rate base would arising from investment of funds in the re necessarily increase this value. purpose. serve, would answer the But we Depreciation Deserve. Secre unnecessary to into discus deem it enter tary $47,000 allowed expense an annual straight sion the relative merits purpose establishing item for the a de compared compound line as inter preciation reserve. The contends figuring depreciation. theory of es est $73,320 that he have allowed at least engineer an probable timate of as to the life purpose. petitioner’s for such engineer bearing aof structure is some evidence certain of ascribed to de decided, of fact to be life; length terminate estimаted the of that is, amount that What should be allowed as depreciation life; and calculated the charge reserve operating provide for the re straight basis, is, line he calculated placement become amount which, if useless, the annual collected each physical either on account of de *10 not; life, estimated equal of its year would the terioration or obsolescence? We do un property the at value of the end of esti engineer’s that such derstand estimates is life, only allowance competent mated for interest evidence which it is petitioner’s fund so created. on the to en the trier of the facts consider. In Smith gineer property ascribed to certain other Co., an v. Illinois Bell Tel. 133, 51 life, 65, 72, indeterminate estimated that Supreme $15,000 require year keep a would the United Court of States held that “the *** evidence that introduced Company Illinois experience as property of such a capital judgment structure basis a sound afford preferred bonds, petitioner’s involve would both in fairness amount which to the as and, com- stock; a common stock, and allowed should be private interest public and dividend rates pilation of the interest and depreciation.” charge for annual as an a,ll securities, necessary on would be that Frey Com Gender, & Paeschke anything less that at the conclusion arrived F.(2d) (C. 7)A. missioner C. cent, would per on full valuation than 10 had Reverme of Internal Commissioner unreasonably means low rate. This be an per depreciation the rate of allowed carrying risk stock, common that straight basis. line computed cent., on much investment, would receive of the entire certain machines was evidence There per cent. But we do not in excess years, long as 45 in use as had been upon properties used think that return rendering proper service. Con still wore be increased or decreased and useful should “Theoretical cerning this court said: capital par- because structure a ab quite procedure in ly a safe this is ,We Secretary’s owner. think the ticular par evidence; in this of better sence allowing percentage upon method a had were machines case there ticular property value of the used and useful in forty-five years and long as in use been business, respect public without service, due rendering proper wore still capital structure, permissible. Otherwise good repair promptly keeping them properties the rates of two identical making such parts, and replacing all broken accordingly vary as one owner issued had fact necessary. This were renewals as preferred bonds or stock and the other own- can conclusively no rule or rate proves 7y2 per not. It a er had cent, seems to us that accurately deprecia measure all instances is a re- return minimum. It must may a basis form safe tion. While it assured; that no at all is membered return give way to the prima case, it a facie must grant permis- the effect order is to particular case if those facts in each facts sum, sion if to earn that the owner is able presented are inconsistent with are so to do. We have doubt whether, some rate.” presently, capital conditions аre could be at- In addition evidence of the en- tracted from investments which assure gineers, Secretary had him before the 6 per cent., large a margin backed replace- fact that the cost retirements and an safety, enterprise which offers during of property preceding ments nine permission to earn maximum per of 7% years averaged annually. had $4,371 True, history cent. The of the petitioner discloses amount of property replaced considerable in earning fluctuations years hearing prob- one two has no on its year year. While we have doubt life; but, vary- property able whore the is of cent, permissive 7y2 whether a per rate of ing ages and nature, experience an of nine capital, is sufficient to attract is, after year’s evidentiary have some value. The all, opinion, a matter and we resolve Secretary had evidence that much of the Secretary’s doubt favor of finding’. susceptible of maintenance knows what a vital service repairs minor which were properly charged particular these render to his expense capital. ap- rather than to charges, the cattlemen; farmers and the he peared had, period for a the hardship knows that it would if entail years, up of twelve on set its books an av- deprived they were of the services of such erage depreciation $45,000 of about year. institutions. has no desire made an allowance strangle petitioner, and, if doubt ex- depreciation charge annual $47,000 ability survive, ists as to its he must have year. Considering the fact that the Secre- resolved those doubts in its favor. tary found property, great after a event, not disposed we are to hold fils or- many years life, of useful is still in 83.8 der invalid account of the rate of re- cent, per condition, and considering-the small turn. amounts had been actually expended Complaint is also made because, in re- replacements thereon for during past stating expenses of the petitioner, years, opinion nine we that the Secretary disallowed certain paid items Secretary's supported by allowance is bonds. interest on This provid- amount is evidence. for in the ed rate of return allowed Bate Beturn. The entire value peti- cent, 7y2 per ihat found was a fair return. tioner. *11 ques- situation, can be came acute. this there three This leaves for consideration question business from no sound properties but that it was (a) tions: exclusion income, judgment, corporation charging rev- interest of the base; the (b) the rate acquire adjacent re- real Secretary patrons, be and its this held should enue which the cheap unimproved; traders estate while it and rendered to was from services ceived Secretary and To have propriety predicat- the so found. dealers; (e) the has and im- experience adjacent property waited until was upon the ing the future the rates for taken proved, or until the could have single year. owners of a advantage need, be imperative of its Bate Base. from the Properties Excluded upon extravagant patrons to saddle this unnecessary and Confronted with load. from the excluded Secretary situation, petitioner acquired at a rea- petition- which the properties certain base price ground, sonable of vacant suit- tracts exer- faith and in the acquired good er reasonably expansions able for that were judgment, for the business of sound cise necessary reasonably to be soon. deemed By denying the business. of its purposes prepared Plans had construction thereon, been for right a return to earn petitioner tract and on anoth- matter, on one of 19.825 acres has, practical as a acres; ac- er of 12.64 other had been them, tracts petitioner right to own denied the quired yards for material increase and to that, if mathematically certain it is for trackage facilities for and railroad car permitted to earn a return is not discussing Without the tracts ex- storage. it can- properties,. upon value such say detail, cluded in it is sufficient to must keep them. Some one not afford to dispute that the evidence discloses without and some pay properties, on these the taxes investment, acquired good faith, all and of them were upon pay a return one must purposes expansion for of such of its permitted petitioner is not If the therein. rea- facilities as the directors believed to be from busi- funds to earn sufficient sonably no owned carrying imminent. has, pay these ness which expansion.1 other land available for them, for the own charges, then it cannot question right expected impair cannot be stockholders properties the rate base exclude these from on this account. capital their investment classes., record,'a question is, on this of law. There up into three Thеse divide n doubt, no counsel for as contended Acquired Expan (a) Vacant Land for respondents, that has some stockyards favorably located are sion. The power how to decide much additional land highways, to railroads with reference property may acquired expansion for olfactory regard senses and with due and, acquire if purposes, the directors more Packing houses residents of Denver. reasonably be said to be than.can grown enterprises have other business purposes expansion necessary for the for undisputed up it. The evidence is around any period future, reasonable the Sec- history, during years of its while retary power has to disallow But it. years cycles good there have been presented by this 'such record. gen years, nevertheless there has been bad contrary, proceed- has On upward The ev trend business. eral theory upon the that no land can be in- ed undisputed pe likewise idence is base, in the rate unless it is in cluded ac- about, quite, if reached the not titioner quote Secretary’s We use. tual present During facilities. limit of findings: respondent “If deems it the load, peak the facilities are times management to hold part of sound adequate. peti directors of the now possible expansion, pol- future land for undoubtedly realized that land must tioner questioned in icy proceeding. is not acquired expansion in the immediate be future, brought that land is into use as a When re- adja that such land must be additional business the rates sult charged presept plant, and that cent compensate for services will then adjacent of such and vacant land amount respondent use the land limited; the directors was further realized had no 'of eminent plots area there are 1In the numerous they domain, .that, aggregating if waited until the occupied, are not which acres. 4% there improved plots, district are such any 'In absolute, they would be at the demand deliberately purpos either» left are owners; mercy of the realized further light ventilation, or for the reason that es of plot is such that some might shape space waste improved- vacant land many interspersed plots These unavoidable. owners; time which would add expansion, nor suitable and the not available (cid:127) greatly necessity when the cost be- so .Secretary does ^find. *12 customary for impossible, pub- it been brought into has is the time it value of as foresight pur- in lic to exercise utilities use.” points, surplus and chase of land crucial in this We think the erred of opinion in the it in the the Committee undoubtedly respect. and must The rule property interest of both owner of rates does not regulate to power that the be purchased public land, and of the such man power of Secretary the confer good in faith in for future and held reserve agement corporation. of the tho affairs of use, valuation, should in even ho included telephone facilities to a new providing for though portions not in a time active lay a addition, part wisdom to is the of it use. provide customers cable that will services for “It poor judgment to business build reasonably may expected bo to at he gas plant, a plant, shop electric railroad a constructing future; office in tached yard, just or other property, like on land buildings, buildings, federal and school buildings sufficient to hold im- and other deliberately buildings, public authorities provements immediately necessary, without an buildings to accommodate plan such provision expansion. reasonable oth future. To do ticipated of the needs history of all that have been built short-sighted and wasteful. erwise to response to reasonable demand for their of law that denies is no rule There history growth, services been a of de- of company or a directors of a velopment, expansion. and Good business ordinary right to telephone company the use provide expansion would policy for this so judgment in conduct of af business reasonably as it can anticipated, far and corporation. rule law of the fairs property all should bo included which is not deny adopted by would a in excess aof reasonable amount for devel- company right include in telephone opment of the business over a reasonable that was the value of cable its rate base period of time in advance of the valuation. every inwire the cable was in laid, unless a Such determination is not matter pure deny service; it would to an electric actual speculation. investigation An into his- right company the include tory of growth, expansion business, power plant, un base the value expansion physical property of the operated being to its maximum less together company, with a consideration of does not conform capacity. Such rule existing conditions at each site, easily methods, nor the rules of sound determine the reasonableness inclu- as laid down the courts. law sion. Special report of the Committee of “In most of tho commission decisions Society Engineers, American Civil laid on the necessity stress is of providing dealing public utilities, the valuation adequately for future needs in order that pp. (volume 81, 1341-1349): states satisfactory may service be furnished con- “Clearly is a narrow construction of tinuously, and it is stated it is de- not claim, as done, has sometimes been law general sirable interest of consumers actively property not in use at all discourage reasonably provision liberal valuation should be excluded. time for the future. desirable, policy both broader A judgment “It is the of the Committee property owner tho of tho interests that there should not be reduction in the public. considered to valuation account of excessive size or ca- public use, devoted and therefore he except pacity, when the excess is great so include, valued, should not he clearly to be unreasonable and is the every-day re- operations, active use * * * using proper foresight. sult properly reasonably that which hut opposite is pursued, If course sufficiency corpora- insure tho in reserve to held making he deterred tions from continuity the service. wise future, thereby for the provision increasing “Recognizing that the erection of man- investor, probably hazard increas- buildings, opening other ufactories ing the premature ultimate cost reason of laying- streets, the out of parks, new duplication, retirement, piecemeal con- customary other making improve- struction, ultimately and hence increasing neighborhood public utilities, ments public.” of service to cost adjoin- value of increases well acquisi- will Texas Midland make the Railroad ing property, future Valuation Case, “Any C. was held: expanding lands for the needs of I. C. tion discourage if railroads expensive, difficult and rule which public utilities *13 74.8 exercising proper foresight purchase awith view to enforcing reasonable rates and charges, lands which be needed for terminal will it is not property the owner of the development public facilities in the future of their of utility companies, and is not unfortunate, be most clothed manage- general power pro- prevent it would not tend to -ment ownership.” incident to viding requisite when nec- facilities To the same effect see Banton v. Belt essary but expense would much increase the Ry., Line 413, 421, 534, 268 U. 45 S. S. Ct. provided.” of those terminals when 69 1020; Chicago, L. Ed. M. P. R. & St. in The authorities are accord. It Wisconsin, 491, R. v. 238 501, U. 35 S. S. yet repeatedly 869, been held not in that “land 59 L. 1423, Ed. 1916A, L. R. A. reasonably acquired use, use, 1133; Ry. for future Northern Dakota, Pac. v. North 236 may part 585, 595, U. 429, be allowed as rate base.” S. 35 S. Ct. 59 L. Brooklyn Prendergast 735, Ed. Borough Gas v. R. 1917F, 1148, Co. L. A. Ann. Cas. (D. Y.) (2d) 615, 626; 1916A, 1; N. 16 F. South C. Interstate Commerce Comm. v. Chicago Telephone Telegraph Ry., ern Bell & Co. v. Rail G. W. 209 U. S. 28 (D. C.) 77; C. 5 S. Ct. 52 F.(2d) 493, road Comm. L. Ed. 705. Consolidated Gas Co. New York v. Opposed to imposing array of au- Y.) (D. 231; Newton N. 267 C. F. Whit thorities, counsel for cite
ten-Wilcox, Valuation Public Service Com United Gas Co. v. Railroad Commission of
(2d
vol.
Ed.)
1, p.
mission
Kentucky,
300,
278 U. S.
49
150,
S. Ct.
73
Telephone
In Pacific
L.
Telegraph
390,
Ed.
v.
and United
&
Gas Co. v. Public
(D. Wash.)
Whitcomb
279,
C.
12 F.(2d)
Service Commission
Virginia,
278
West
288,
Denney
affirmed in
Telephone
322,
v. Pacific
157,
402,
S. Ct.
73 L. Ed.
Co.,
&
affirming