Leicester, N. Y., 354 miles. About 10 per cent of the total revenue was from shipments in Pennsylvania, and, approximately, 83 per cent was collected on traffic originating beyond Binghamton, N. Y., 206 miles from Hoboken. A little less than 2 per cent came from the Elmira, Cortland & Northern connection, and about 13 per cent from the Delaware & Hudson, including the Cooperstown & Charlotte Valley traffic, which is first delivered to the Delaware & Hudson. The remainder arose from shipments mostly upon the Syracuse & Utica Division, including the Richfield Springs Branch. The rates are divided with connections as follows: Elmira, Cortland & Northern, 10 cents a can, whether milk or cream; Delaware & Hudson, 42 per cent. A can of milk from the Elmira, Cortland & Northern is carried by the Lackawanna for 22 cents from Cortland, N. Y., 259 miles, and if the can comes from the Delaware & Hudson at Binghamton, the Lackawanna receives 18.56 cents for carriage from Binghamton.

19. Under a contract now in force between the Lackawanna Company and Robert E. Westcott, of New York City, Westcott has charge of the milk and cream business on the Lackawanna line, and by the terms of the agreement he receives 20 per cent of the gross receipts. This contract, bearing date July 9, 1886, provides that it shall continue in force ten years, subject to revision after three years, and at the end of any one year thereafter, on three months' notice. Mr. Westcott sent the following request to the company on November 25, 1887: "I have established 12 creameries up to this date on different points.of the road, and propose still further materially increasing the number, but before doing so must ask whether section 12 of my contract with your company may be modified, striking out the option of revision after 3 years and substituting 5 years from this date' instead, as the construction of buildings, likely to be 35 to 50 additional and 3 large ice houses, will not admit of my being subject to the revision as now contained in the contract." It was thereupon agreed in writing by the parties on November 28, 1887, that the revision clause should not take effect until 5 years from this date instead of the 3 years in section 12 of the contract, "it being understood the number is increased to at least 20." On September 30, 1892, about 5 years later, the parties agreed in writing that the

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duration of the contract should be extended until July 9, 1901. On April 1, 1872, Robert F. Westcott, father of Robert E., entered into a contract with the Lackawanna to "increase, facilitate, build up and develop the transportation of milk over the Morris & Essex Railroad" (a division of the Lackawanna in New Jersey). It was provided in that contract that the milk rates charged shall be from time to time "fixed by said Robert F. Westcott subject to the approval of the president of the railroad company," but not to exceed 55 cents per can of 40 quarts, and Westcott's compensation under that contract was also 20 per cent of the transportation charge. This contract ran 5 years, was extended for 5 years longer, and then extended to April 25, 1884, "so as to expire with a similar contract of Sussex Railroad," another portion of the Lackawanna system in New Jersey. In March, 1884, two new contracts were made by the elder Westcott, one with the Sussex Railroad Company and another with the Lackawanna, each to run 5 years from February 1, 1884. Under this contract with the Lackawanna, Westcott was to develop and handle milk traffic on the Morris & Essex and on the Lackawanna from Stroudsburg, Pa., fix the rates subject to approval by the president, and receive 20 per cent of the charges. Afterwards, in July, 1886, the present contract with the younger Westcott was made whereby he agrees "to use his best efforts and efficiently do and cause to be done all within his ability to build up, develop, increase, facilitate and conduct the business of transportation of milk over all the lines of the party of the second part, whether owned, controlled or leased by it," and to "charge for the transportation of such milk rates not in excess of those charged by competitive railroads for similar service." Westcott under this agreement is responsible for loss and damage claims connected with the milk business, excepting such loss and claims as may arise through accidents or casualties to the train or negligence of the company or its employees. He collects the freight charges and pays 80 per cent thereof to the company, retaining the remainder as full compensation for all his services, and renders a monthly account. He also undertakes to save the company harmless from all liability for loss of life or injury to "any of the persons doing business over the lines of the party of the second part (company) for or on account of the

party of the first part" (Westcott). The railroad company undertakes that it will not do or permit to be done by its agents or servants any act which will prevent or interfere with Westcott in developing, building up and conducting said business, and grants him "the exclusive privilege of transporting milk over its said lines" so far as it is permitted so to do by law. It agrees to receive, load and transport from all its said stations all the milk furnished at said stations upon a train or trains leaving the same severally at such time or times as may be best calculated to promote the business; to run an extra train upon application to and at the option of its president and general manager; to receive milk at stations not served by milk trains and transport the same on passenger trains, have its agents at such stations collect. the charges, waybill the milk, and ship it in the baggage car of such trains, the baggage master to take the same on the car and put it off therefrom; to furnish depot accommodations at stations where milk trains run for the convenient conduct of the business; to render such assistance to the "messengers" of Westcott upon the milk trains by its train hands as may be necessary for the prompt loading and unloading of milk from the trains; to promptly retransport and return empty milk cars to the severa stations; to accept 80 per cent of the charges as full compensation for all claims against Westcott for service rendered by it, including the free transportation of Westcott's agents and messengers engaged in the milk business. Arbitration is provided. for in case of differences arising between the parties as to matters connected with the contract or the business therein referred to. The contract only refers to milk, but it appears that Westcott also handles cream, butter and cheese. He also gets 20 per cent from the revenue of the Lackawanna connections. His compensation for 1894 out of $489,631.37, the total earnings, amounted to $97,926.27. His expenses during that year were about $78,000, but what portion of this was spent in the erection of creameries and otherwise "developing" the business and what expenses incident to handling, transportation and delivery of milk were actually incurred by him are not definitely shown. Westcott has built about 100 creameries on the line. This creamery cost in 1894 is stated at about $35,000, but the creameries are mostly sold to dealers and other outside parties, and they yield some re

turn. The remaining $43,000 of expenses includes some loss on ice furnished to shippers, traveling expenses of milkmen whom he induced to go out into Lackawanna territory, and other items which do not pertain directly to transportation. His salary account for superintendents, messengers on trains and employees at the terminal was about $30,000. The item of damages paid for spilled milk, lost through delays or accidents and similar causes, is trifling in any year. Westcott obtains and furnishes free passes to milkmen entitling them to transportation over the Lackawanna and connections to points in the milk territory. The passes are countersigned by him and not good otherwise. The Lackawanna receives and transports the milk, pays all train expenses, cleans the cars, and its agents do the billing, waybills being sent to Westcott. Westcott ices the milk cars when the season requires. His duties in reference to transportation appear to be refrigerating the cars, furnishing one or more messengers on each train, doing all the terminal milk business, including handling and delivery, looking after empty cans and securing their prompt return, collecting the freight, keeping an account thereof, paying over 80 per cent to the company, and paying loss and damage claims not chargeable to the company under the contract. Under the figures above given, the cost to Westcott was apparently little if anything in excess of $40,000 in 1894, leaving about $58,000 for "developing" the business and his profit.

Westcott operates individually under the title of "Produce Despatch," but that is a name merely. It is not an express company, nor is the business done by Westcott analogous to that of such a company. All of the duties performed by him in connection with this special fast freight business are done by the other defendant lines (except the Lehigh Valley) for themselves. He neither gathers the milk at the farms nor delivers it to dealers' places of business in New York. The railroad company, on account of the volume of the traffic, furnishes trains for a business which when small in amount is usually done by other carriers in baggage or other cars in passenger trains. Concerning the transportation and delivery at the railroad terminal, he is an agent of the railroad company,and for this and for developing the Lackawanna milk traffic he receives the compensation stated. Westcott is authorized by the company in the present milk contract to fix the rate

from all stations under the sole limitation that such rates shall not be greater than "those charged by competitive railroads for similar service." It was Westcott who at a meeting of agents in relation to the milk rate insisted upon the reduction from 35 to 32 cents, and his action was finally assented to by the other lines, but notwithstanding his contract authority Westcott did not make this reduction on the Lackawanna until it had received the approval of the president of that company.

20. After deducting Mr. Westcott's 20 per cent, there remained of total earnings in 1894 on milk carried on the Lackawanna line about $391,705.10. On the basis of train mileage the assistant auditor of the company testified that the share of total operating expenses, including taxes, chargeable against the milk business, for the calendar year 1894 was 3.13 per cent, amounting to $478,754.28. This is within $10,877.09 of the sum given as total milk earnings. Counsel for the company in their brief also use the train-mileage basis and compute cost of transportation and maintenance at $327,147.54, leaving out of this item Westcott's 20 per cent, and such operating expenses as the milk traffic share of general expenses and of station expenses outside of Hoboken. The difference between such cost and the Lackawanna milk earnings is $162,483.83, and deducting therefrom the amount paid to Mr. Westcott leaves a balance of $64,557.56 for the omitted expenses and the company's profit from operation.

The average Lackawanna receipts per ton from freight in the year ending June 30, 1894, were $1.3031. It is testified that the average load for each milk car to Hoboken was 8 tons, and that 8 was the average number of milk cars to the train, making a train load of 64 tons and 256 tons for the 4 daily trains to Hoboken, or 93,440 tons for the year. Dividing such estimate of total tonnage into gross receipts results in a milk revenue per ton of about $5.24, four times the average receipts per ton for all freight. For the fiscal year to June 30, 1894, the average number of tons in each loaded freight car on the Lackawanna was 16; the average number of tons to the train was 575; the average number of freight cars in a train was 30; the average number of loaded cars in a train was 25, and the average for empties was 22. About 43 per cent of the total car mileage was empty.