[CIRCULAR.]

CHICAGO AND NORTHWESTERN RAILWAY,
Office of General Manager,

CHICAGO, November 9, 1874.

To Station Agents of Chicago and Northwestern R. R. Company in the State of

Wisconsin:

As errors have arisen in the charges for transportation of freight in classes D. E. F. G. H. I. and J. from one station to another, both within the state of Wisconsin, which said freight passes in part over connecting roads, and in part over the roads operated by C. & N. W. Co., your attention is particularly directed to tariff of the Railroad Commissioners of the said State, dated Madison May 14, 1874, in which is the following:

"In all cases distances are to be computed from localities where freight is received, notwithstanding it may pass from one railroad to another."

You will hereafter way-bill freight from your station to the junction point with such roads as are included in classes "A" and "B" at the strict mileage pro rate of the roads, as allowed by the commissioners' table and which is the same as our tariff of October 1st, for the whole distance, noting in the body of the way-bill the total miles from station of shipment to station of destination, and showing the number of miles to be transported by this company, and the number of miles by connecting railroads.

Station agents at junction points will show this circular to the agents of connecting roads, and ask them to deliver to them expense bills for freight consigned to our road, with similar information entered thereon, and agents of this company must not receive any such freight destined for our road, from any connecting roads unless the charges are first corrected to their pro rata proportion of the whole charge for carriage from point of shipment to point of destination, when both are within the state of Wisconsin.

COMMISSIONER OSBORN TO GENERAL MANAGER, H. H. PORTER.

OFFICE OF RAILROAD COMMISSIONERS,
MADISON, November 10, 1874.

H. H. PORTER, Esq., General Manager C. & N. W. R. R. Co.:

DEAR SIR: Yours of the 9th is at hand. The case referred to as an example was not intended to be presented as having actually occurred, but only for the purpose of illustration.

Your information that the commissioners or courts had decided that compensation for through carriage of freight should be pro rated is not correct, and is probably based upon the contents of a letter from this board to W. G. Swan, Esq., of the West Wisconsin Railway, and from which I make the following quotation, both for the purpose of placing the Commissioners correctly, and also for the purpose of more particularly explaining the Commissioners' understanding of the law:

"From the wording of the last clause of section 5 of chapter 273, to wit: 'In computing the rates for carrying any freight, according to the provisions of this act, the distance for carrying such freight shall be computed from where it is received, notwithstanding it may pass from one road to another,' it would seem to be inferred that, should a company elect to receive freight for forwarding to points beyond its corporate jurisdiction, that it would do so with the understanding that it assumed the responsibility of adjusting compensation with its connecting companies, equally with that for the delivery of the goods. The law provides for the manner of computing distance when freight passes over more than one road, and inferentially, also, for carrying at the maximum charges for the whole distance."

"The law seems to make provision for each road separately, leaving the adjustment of compensation as heretofore existing between connecting companies to themselves, defining only the conditions between each separate road and the people, and fixing the limitation of charges."

"We are led to the conclusion that although no part of the law provides directly that the companies shall pro-rate with one another, yet it would seem that an absolute necessity for adjustment between them would arise both as to compensation for carriage as well as equipment, or else they would be constrained to refuse freights for destinations beyond the limits of their own lines and stations."

You will notice from the above that the commissioners do not assume that the roads should, or should not, pr-orate between themselves; the cammissioner understanding that the proportionate adjustment of rates between connecting roads is entirely within the roads themselves; the law only designing that when a company accepts freight for a destination beyond its corporate jurisdiction, the rates charged shall be ascertained by compu tation for the whole distance from where it is received to its destination, "notwithstanding it may pass from one railroad to another."

Hence the commissioners would not desire to have the circular you propose to issue, and which will amount to a specific mode of dividing compensation between connecting roads, to be understood as their interpretation of law.

ATTY GEN. SLOAN TO SOLICITOR B. C. COOK.

B. C. Cook, Esq., Solicitor C. & N. W. R. R.:

MADISON, Nov. 10, 1874.

DEAR SIR: Complaint is made that your company is charging for transporting lumber by the car-load, received from the West Wisconsin Railroad and carried over your road, higher rates than allowed by the "Potter Law." That you charge in such cases $8 per car for the first 25 miles carried over your road, treating it as originally shipped on your road, and making no allowance for the fact that the lumber had come to you from the West Wisconsin Railroad.

I think this a violation of chapter 273, Laws of 1874, which provides that the distance for carrying freight shall be computed from where it is received, notwithstanding it may pass from one railroad to another.

If this complaint is well founded, we shall be compelled to take proceedings against the officers of your company for a violation of the injunction. I deem it proper to inform you of this complaint, in the hope that you may

make such explanations as may save the necessity of further legal proceedings.

Yours truly,

A. SCOTT SLOAN,

Att'y General.

SOLICITOR B. C. COOK TO ATTORNEY GEN. SLOAN.

CHICAGO AND NORTHWESTERN RAILWAY Co.,
Office of the Gen. Solicitor,

Hon. A. SCOTT SLOAN, Att'y Gen. of Wisconsin.

CHICAGO, NOV. 11, 1874.

DEAR SIR: Yours of the 10th inst. is received. I thank you for calling my attention to the matter of complaint. By referring to the communication sent yesterday by H. H. Porter, our General Manager, to Mr. Osborn, Railway Commissioner, you will see that the over-charge, to which you refer, was a mistake. It is impossible to prevent mistakes occurring at any time, much more is it impossible now, when the rates of freight and the manner of doing business have been entirely changed by the Potter Law, so as to produce very great confusion, especially when freight is received from other roads.

In the matter referred to in Mr. Osborn's letter to Mr. Porter, instructions were issued from the General Manager's office to refund the amount claimed to be an over charge. There is no design on the part of this company to charge any higher rates than allowed by the Potter Law. In case where such charges are made, they will be immediately refunded.

There is a question to which I wish to cali your attention particularly. When freight is delivered from one road to another, is the rate to be computed by the second road only at the lower price fixed by the Potter Law, and is one road to be paid one price for carrying freight, say fifty miles, and the other road to be paid a far less sum for carrying the same freight fifty miles over its road, or should the whole amount of the freight for 100 miles be pro-rated between the two roads?

I will be glad to have an official construction of the law upon this point, in order that we may avoid any question in relation to over charges on goods received from another. I freely confess to you that I cannot determine what the meaning of the Potter Law is in this regard. I am anxious, and so are all the officers of this company, to avoid any just or reasonable ground of complaint. It is said that the supreme court have decided in the Oconomowoc case what the principle shall be. If they have done so, and if the question is settled, we shall abide by it, however injuriously it may affect our interests. Will you please give me the substance of the Oconomowoc decision in brief statement.

I also wish to direct your attention to the whole correspondence between Mr. Porter and Mr. Osborn, and to say, that the circular, a copy of which was sent to Mr. Osborn by Mr. Porter, will be withdrawn in compliance with a

dispatch just received from Mr. Osborn, until the receipt of Mr. Osborn's letter, and until a fuller understanding can be had.

DEAR SIR:-Yours of the 11th inst. duly received, and is satisfactory in regard to the case mentioned. The St. Paul Company has, in some instances, charged higher rates than the Potter Law allows, where freight is transferre to their roads, claiming that their receipt of it was a new receipt, and that they had the right to charge as for a first haul. But Messrs. Mitchell, Cary and Merrill were here yesterday and they agreed to adopt the construction held by the supreme court in Ackley and Vilas vs. Chicago, Milwaukee and St. Paul Railway Company. The court simply held in that case that where freight is carried by two or more roads the rates are to be computed in the same way as though carried upon but one road. They do not decide what would be a proper division of the freight earned by the connecting roads. On this subject they say: "We are aware of no statute which assumes to give the whole freight to one company and thus compel the other to render services without compensation. We are of the opinion that $15 per car load is the highest rate of freight that can lawfully be demanded for the whole carriage, and that the same should be divided between the two railway companies, on some equitable principle, to be determined by the courts in case the companies invoke the aid of the courts in the premises."

Nobody is perhaps at liberty to assume what that equitable principle of division of freight earnings, to which the court refers, will be. But if the Milwaukee and St. Paul Company would adopt your circular on its roads, I do not see why all cause of embarrassment and difficulty would not be removed; and, without intending to express an opinion on that subject, my impression is that the division on the principle stated in your circular, that is, a pro-rata of freight earnings according to distance carried, is as equitable as any that could be applied.

Very truly yours,

A. SCOTT SLOAN,
Attorney General.

GEN. MANAGER H. H. PORTER TO COMMISSIONER OSBORN.

CHICAGO AND NORTHWESLERN RAILWAY,

Office of General Manager,

CHICAGO, Nov. 18, 1874.

DEAR SIR: I have to acknowledge the receipt of your favor of the 16th

inst., and must again request a more definite answer to the questions asked in my former communication.

It is true I named the Milwaukee and St. Paul Company as an example, but the same questions occur with all our other connecting roads, and whe have not agreed to anything.

It seems to me that it devolves upon the commission to give me instructions in this respect, or to decline to do so. I do not wish to appear discourteous, but if this company is to be governed in its transportation by a law, the interpretation of which law is left to the commissioners, is it not right and fair that they should give us their interpretation of it to guide us?

Yours, truly,

J. H. OSBORN, Railroad Commissioner, Madison.

H. H. PORTER,

General Manager.

COMMISSIONER OSBORN TO GENERAL MANAGER PORTER.

OFFICE OF RAILROAD COMMISSIONERS,

MADISON, Nov. 24, 1874.

H. H. PORTER, General Manager C. & N. W. R. R. Co.:

DEAR SIR: Your favor of the 18th was duly received, and would have been answered before, but for absence. In my communication of the 10th, I endeavored to make clear our interpretation of the law, and beg leave to call your attention to the fact that such interpretation is by no means the interpre. tation rendered by your proposed circular, which you desire the commission to adopt as authoritative.

The position of the Commissioners, as expressed in my letter of the 10th, containing an extract from a reply to Mr. Swan of the West Wisconsin, was arrived at understandingly after consultation; the same question being there raised by him, as by yourself. If the law makes it imperative on this board to adjust the several amounts to be received for services by connecting roads, we should be glad to know it. It is understood that the supreme court did not touch this question, although adjusting the one as to the entire charge for services. The question of adjusting amounts for services between connecting roads, although not now required by law, is perhaps a proper subject for the Railroad Commissioners; but to arrive at just conclusions, and to act understandingly, I am also of opinion that the whole matter should be inquired into by the board, and the former basis of adjustment as practiced by the roads, subjected to investigation before we could arrive at an equitable decision. Such a course, I think you would agree with me as being necessary, and that it would require time and a collection of testimony from different sources bearing upon practical methods heretofore suggested, perhaps, by experience.

Very truly yours,

J. H. OSBORN, Railroad Commissioner.