Wiley Blount Rutledge

“ But, for determining the cost of service in respect to the further allocation and apportionment of passenger-train service among its three components, the Commission, having determined upon the space basis for this initial stage in fixing 'fair and reasonable rates,' was faced with the problem of what should be done with unused space. ”

“ Railroad accounting, however, does not, and concededly cannot, accurately reflect actual operating costs of each type of service rendered, or the proportionate amounts of capital employed in rendering each service. The Commission therefore sought a method or methods for making such allocations tentatively as the initial stage of performing its rate-making function. ”

“ Space ratios were determined on the data secured, applied to expenses, and the resulting expense ratios used to apportion investment, all under Plan 2. After adjustments made to reflect the year's operations for 1931, the Plan 2 formula worked out to show a net operating deficit for mail service of $4,945, which, together with a return of 5.75 per cent on the capital allocated by the formula to mail service, brought the carrier's claim for increased compensation for that year to $31,227. ”

“ Apartment-car service involves authorized use of thirty- or fifteen-foot apartments partitioned off from the remaining portion of the car. Closedpouch service involves handling by railroad employees where full or apartment railway post-office cars are not authorized and where space authorizations are for units of seven feet and three feet in space, unenclosed, on both sides of the car.↑ See note 6.↑ The amended petition and the brief assign both grounds. Nevertheless, respondent insists that his case is in fact grounded upon the constitutional basis. ”

“ They are, in effect, (1) that the Commission's orders denying any increase are confiscatory, in that the rates prescribed by the general rate order on July 10, 1928, and continued in effect specifically as to this carrier by the orders of May 10, 1933, and February 4, 1936, do not afford just compensation under the Fifth Amendment on the ground that they do not provide for payment of the cost of the service rendered plus a reasonable return upon invested capital allocated to that service ”

“ Mixed cars contain no partitions or 'apartments,' but are used for several different services, e.g., baggage, express and mailpouch services. See note 2; 144 I.C.C. at 679.↑ See Railway Mail Pay, 144 I.C.C. at 688-689. Plan 3, the Commission said in that general rate proceeding, would result in a 'net railway operating income from mail of $18,759,056 instead of a deficit of $1,104,744 under plan 2, and a net income of $12,844,643 under plan 1,' id. ”

“ There is no alternative, at least no satisfying alternative. Of course there were other methods of computing cost, but the Commission, put to the choice, selected Plan No. 2.' 77 F.Supp. at page 205, 110 Ct.Cl. at page 370.
Then followed rejection of the factors considered by the Commission in qualifying the computations obtained under Plan 2 as 'not convincing or even persuasive.' 77 F.Supp. at page 206, 110 Ct.Cl. at page 372. According to the court: 'It was for the Commission to demonstrate that the general rates prescribed gave the plaintiffs a fair and reasonable return. ”

“ This required, first, segregating freight service from passenger train service; then dividing the latter into three categories: passenger service proper (including baggage service) , express service, and mail service.
The problem arose both in the proceedings culminating in the first general rate order, 56 I.C.C. 1, and in those resulting in the general rate increase of 1928. 144 I.C.C. 675. In the latter the initial separation of total operating expenses between freight and passenger services was made on the basis of the Commission's rules governing such separation on large steam railways. ”

“ Through all these years the carrier and the Commission have been at odds over whether the railroad is entitled to an increase in the rates prescribed for its service for the period beginning April 1, 1931, and ending, as covered by the present suit, February 28, 1938. [1] The case is now here on certiorari to the Court of Claims, 335 U.S. 883, 69 S.Ct. 231, which had rendered a judgment awarding respondent $186,707.06 as increased compensation due for the years 1931 to 1938, Griffin v. ”