1. Mandamus will not issue to compel an act as a statutory duty
if the existence of the duty be uncertain. Pp.
287 U. S. 191,
287 U. S.
203.
2. Public policy forbids that the work of the Interstate
Commerce Commission in valuing the railroads should be hampered by
writs of mandamus except where departure from the statute is clear.
P.
287 U. S.
204.
3. By virtue of contracts with owner and lessee railroads, the
New Haven system has the perpetual right to haul its trains over
tracks entering New York City, provided it pay an agreed price per
passenger carried and an agreed part of its receipts from mail and
express, and the perpetual right to use a New York terminal station
up to 50% capacity with an equal voice in the selection and
discharge of the station manager, provided it pay a part,
proportionate to such use, (1) of interest on the cost of building
the terminal and (2) of the cost of maintaining and operating it;
also a perpetual right to use in common with other railroads
terminal tracks and a station in Boston that are owned by a
terminal company of which it owns 80% of the stock, provided it pay
a share, proportionate to use, of the cost of maintaining and
operating the terminal, of the interest on the terminal company's
bonds and of dividends on that company's stock. In valuing the New
Haven's property under § 19a of the Interstate Commerce Act, the
Commission, following its practice in like cases, made no specific
appraisal of these trackage and terminal rights, but it reported
them in the inventory, and may be assumed to have considered them
in the appraisal of the system as a whole, the total value assigned
to it being more than the aggregate values assigned to its physical
parts.
Held:
That whether the trackage and terminal rights are to be classed
as licenses or as easements, the duty to value them specifically,
if it exists under the statute, is not so clearly and certainly
imposed as to be enforceable by mandamus. Pp.
287 U. S. 191
et seq.
Page 287 U. S. 179
4. A command to value all the property owned or used by a
carrier cannot mean that a separate and specific value must be
allocated to every kind of property interest embraced within the
whole. To what extent a group of property interests shall be
resolved into its elements is a question of degree involving
legislative intention and administrative judgment. Pp.
287 U. S. 192,
287 U. S.
194.
5. In providing, § 19a, subdivision (b), that every " piece of "
property shall be inventoried, and that, in respect of each, the
Commission shall ascertain original and reproduction costs, the
statute does not impose a plain and certain duty to appraise in
terms of cost if the interest to be appraised be such that the cost
of the thing is without relevance as a criterion of the value of
the interest. P.
287 U. S.
194.
6. That clause of subdivision (b), par. "First" of § 19a which
requires the Commission to ascertain and report separately "other
values, and elements of value, if any," of the carrier's property,
with the reasons for any differences between such values and the
cost values, does not impose a duty, inflexible and certain, to
appraise and value a use which is unrelated to the value of what is
subject to the use. P.
287 U. S.
199.
7. The valuation report is the exercise solely of the function
of investigation, and, though final valuations are to be
prima
facie evidence against the carrier in proceedings under the
Commerce Act, the opportunity to contest them, if at any time
introduced in evidence, is fully preserved to the carrier, and any
error therein may be corrected at the trial. P.
287 U. S.
204.
60 App.D.C. 403, 55 F.2d 1028, reversed.
Supreme Court, D.C. affirmed.
Certiorari, 286 U.S. 535, to review the reversal of a judgment
dismissing a petition for mandamus.
Page 287 U. S. 184
MR. JUSTICE CARDOZO delivered the opinion of the Court.
The New York, New Haven & Hartford Railroad Company, and
other railroad companies subject to its control, the group making
up together the New York, New Haven & Hartford System, and
collectively described as "the carrier," petitioned the Supreme
Court of the District of Columbia for a writ of mandamus directed
to the Interstate Commerce Commission and commanding the Commission
to include the value of the carrier's interests in the tracks of
the New York & Harlem Railroad Company from Woodlawn to
Forty-Third street in the City of New York, in the Grand Central
Terminal in that city, and in the land and buildings of the Boston
Terminal Company as part of the inventory and valuation required by
§ 19a of the Interstate Commerce Act. 37 Stat. L. 701, c. 92, as
amended, 49 U.S.C. § 19a. The Supreme Court of the District
dismissed the petition. Its judgment was reversed by the Court of
Appeals, 60 App.D.C. 403, 55 F.2d 1028, and a writ of certiorari
brings the case here.
The carrier operates lines of railroad in Massachusetts, Rhode
Island, Connecticut, and New York. Its tracks enter the State of
New York at or near Portchester, and, at Woodlawn, connect with the
tracks of the New York & Harlem Railroad Company, now operated
under lease by the New York Central System. From Woodlawn south to
the Grand Central Station, a distance of about twelve miles, the
carrier's passenger trains run over the Harlem tracks, and the
carrier and the Central use the station in common. At Boston,
Massachusetts, the carrier's tracks connect with those of the
Boston Terminal Company, the owner of the South Station in Boston,
and
Page 287 U. S. 185
the carrier has the use of that station in common with other
lines. The facts bearing upon its interest in the Harlem tracks and
the Grand Central Terminal will be considered first, and afterwards
those bearing upon its interest in the terminal at Boston.
On March 17, 1848, an "agreement and contract of transportation"
was entered into between the New York & Harlem Railroad Company
and the New York & New Haven, a predecessor of the carrier. By
this contract, the Harlem granted to the New Haven the right
"to run their trains, engines and cars for the transportation of
passengers, mails, expresses, freight, etc., over the track or
tracks of the road of the New York and Harlem Railroad Company from
the point of junction aforesaid to and into the city of New
York."
The New Haven was to furnish its own haulage, and to pay the
Harlem, "as full compensation for the use and occupation of their
track or tracks as aforesaid, a certain sum for each passenger
transported," and a portion of the tariff rates received for the
transportation of express matter and the mails. Compensation was to
be adjusted every five years by agreement, or, in the event of
failure to agree, by arbitration. Following the execution of this
contract, and on March 29, 1948, the Legislature of New York passed
an act to amend the charter of the New York and Harlem Railroad
Company. In § 6 of that act, it confirmed the validity of the
contract with the carrier's predecessor.
"The New York and New Haven Railroad Company is hereby
authorized to enter upon and run their cars and engines for
passengers, freights, mails, expresses and other business, over the
road of the New York and Harlem Railroad Company, from the point of
junction of the roads of said companies at or near William's
Bridge, in the County of Westchester, to the City of New York, and
as far into the said city as the said Harlem Railroad may extend,
upon such terms, and to such point as has been or may
Page 287 U. S. 186
hereafter be agreed upon by and between said companies, a copy
of such agreement or agreements to be duly authenticated and filed
in the office of the Secretary of this state."
Promptly upon the enactment of this statute, the New Haven
connected its line with the tracks of the Harlem, and ever since
that time has run its trains over them into the City of New York.
The Harlem, on April 1, 1872, leased its road to the New York
Central for a term of 401 years, the lease reciting that it was
subject to the contract between the Harlem and the New Haven.
From a statement of the facts as to the carrier's interest in
the tracks south of Woodlawn, we pass to a consideration of its
interest in the Grand Central Terminal. An agreement described as a
"tripartite lease" was entered into on November 1, 1872, between
the Harlem, the Central, and the New Haven whereby the Harlem
leased to the other roads the use of certain parts of the Grand
Central Depot (a building since then destroyed) and the adjacent
yards. On July 24, 1907, this agreement was superseded by another
tripartite lease between the same parties. The Central agreed at
its sole expense to acquire the lands and make all the changes
necessary for the construction of a new station, the present Grand
Central Terminal. Acting for itself and the Harlem, it leased to
the New Haven during the term of the New Haven's Charter
(
i.e., in perpetuity) the
"use, in common with the Central Company, subject to all the
provisions of this agreement, of the said Railroad Terminal for the
accommodation of the traffic on the New Haven Company, other than
freight traffic,"
with the proviso that the New Haven's right to the use of the
terminal should in no event exceed 50 percent of the maximum
capacity. As "compensation for the premises hereby demised," the
New Haven was to pay to the Central that proportion of 4 1/4
percent interest on the cost of construction and of the annual
expenses for
Page 287 U. S. 187
maintenance and operation "which the use of the Railroad
Terminal by the New Haven Company bears to the entire use thereof."
The terminal was to be under the direction of a terminal manager
appointed by the presidents of the Central and New Haven Companies
and removable by either.
Next in order is a statement of the interest of the carrier in
the terminal at Boston. By an act of the Massachusetts Legislature,
approved June 9, 1896 (St. 1896, c. 516), the Boston Terminal
Company was incorporated with power to construct and maintain a
union passenger station in the southerly part of the city of
Boston, and to provide and operate adequate terminal facilities for
the five railroad companies entering the city and for the
accommodation of the public. Section 1. These railroad companies,
including the New Haven, were severally authorized to subscribe for
the capital stock in equal amounts. Upon the completion of the
proposed improvements, the five railroads were to use the station
and its terminal facilities for all their terminal passenger
business in Boston, and were to pay to the Terminal Company the
amounts necessary to satisfy the expenses of the corporate
administration and of the maintenance and operation of the station
and other facilities, together with interest on the bonds and a
dividend not to exceed 4 percent on the capital stock. The payments
by the several roads were to be proportioned to the use, and were
to be deemed to be a part of their operating expenses. At the time
of the trial, the New Haven, having succeeded to the interests of
some of the other roads, held in its ownership or subject to its
control 80 percent of the Terminal stock, the remaining 20 percent
being controlled by the Central.
With this statement of the facts as to the carrier's interests
in the tracks and terminals, we reach the question whether the
Commission was under a clear duty, enforceable
Page 287 U. S. 188
by mandamus, to include those interests with a specific
valuation in the statutory inventory.
By § 19a of the Interstate Commerce Act (49 U.S.Code, § 19a, Act
March 1, 1913, c. 92, 37 Stat. 401, as amended), there is laid upon
the Commission the colossal task of preparing an inventory and
valuation of the property of the railroads of the United States.
[
Footnote 1]
Subdivision a of the section is sweeping in its extension.
"The commission shall . . . investigate, ascertain, and report
the value of all the property owned or used by every common carrier
subject to the provisions of this chapter."
It
"shall make an inventory which shall list the property . . . in
detail, and show the value thereof as hereinafter provided, and
shall classify the physical property, as nearly as practicable, in
conformity with the classification of expenditures for road and
equipment, as prescribed by the Interstate Commerce
Commission."
Subdivision
b contains directions as to the method of
showing values, and thus fulfills the promise of subdivision
a that such directions as to form will be "hereinafter
provided."
The provisions are distributed into five classes.
Under the heading "first," there is a command to the Commission
to
"ascertain and report in detail as to each piece of property,
other than land, owned or used by said common carrier for its
purposes as a common carrier, the original cost to date, the cost
of reproduction new, the cost of reproduction less depreciation,
and an analysis of the methods by which these several costs are
obtained, and the reason for their differences, if any."
For convenience of reference. this part of the directions that
are grouped under the heading "first" will be described as number
one.
Page 287 U. S. 189
Under the same heading, there is, however, another part which
will be identified as number two.
"The commission shall in like manner ascertain and report
separately other values, and elements of value, if any, of the
property of such common carrier, and an analysis of the methods of
valuation employed, and of the reasons for any differences between
any such value and each of the foregoing cost values."
The division described as "second" contains directions for a
report of the original cost and present value of lands, rights of
way, and terminals separately from improvements.
The "third" division deals with the valuation of property held
for purposes other than those of a common carrier; the "fourth"
with the financial history and corporate structure of the carriers,
and the "fifth" with the ascertainment and valuation of
governmental aids or gifts.
By subdivision
c, the Commission is empowered, except
as otherwise provided,
"to prescribe the method of procedure to be followed in the
conduct of the investigation, the form in which the results of the
valuation shall be submitted, and the classification of the
elements that constitute the ascertained value."
The Commission, at an early stage in its labors, was confronted
with the problem as to the proper method of valuation where there
was a division of interest between the ownership and the use. The
first exposition of its views upon that subject will be found in a
decision made July 31, 1918, in the matter of the valuation of the
Texas Midland Railroad, 75 I.C.C. 1, 20, 121, 122. The substance of
its ruling there was that, where property is jointly used by two
owners, the details will appear in the inventory of each; that,
where property is owned by one carrier, and exclusively used by
another, the details will appear in the inventory of the owner, but
in addition
Page 287 U. S. 190
the value will be shown in the inventory of the user; that,
where a carrier owns and uses property but gives to some other
carrier not the exclusive use, but only a qualified use in common
with itself, such as the right to use its tracks, the fact and
nature of the use will be described in the inventory of both the
owner and the user, but the value of the property will be reported
in the inventory of the owner solely. "The physical property," said
the Commission (p. 124), "is not changed by this dual use." "The
law requires the ascertainment of values for property owned or
used, but not the value of the use." 75 I.C.C. 24. Despite the
comprehensive command to report the value of all the property owned
or used by any common carrier subject to the act, there is still,
so the Commission held, some latitude of judgment as to the extent
to which the component elements of worth are to be separated, and a
specific valuation allocated to each.
The Commission has steadfastly adhered to these principles in
the fulfillment of its task. Along the lines there charted, a
thousand inventories and reports have been made, it is said, during
the nineteen years that have gone by since the Valuation Act was
passed.
Cf. Report of the I.C.C. for 1931, p. 68. In only
one instance, except this, has the method, so far as we are
informed, been challenged in the courts as a departure from the
statute, and there mandamus was refused.
Kansas City Southern
Ry. Co. v. Interstate Commerce Commission,6 F.2d 692.
Cf. Matter of Kansas City Southern Ry. Co., 75 I.C.C. 223,
234. What was done in this inventory has at least that sanction of
validity which is born of long administrative practice.
United
States v. Moore, 95 U. S. 760,
95 U. S. 763;
Logan v. Davis, 233 U. S. 613,
233 U. S. 627;
Brewster v. Gage, 280 U. S. 327,
280 U. S. 336;
Fawcus Machine Co. v. United States, 282 U.
S. 375,
282 U. S. 378.
In conformity with that practice, the Commission overruled the
protest of the
Page 287 U. S. 191
carrier, and held that the trackage rights over the Harlem
roadbed and the rights of user in the New York and Boston terminals
would be reported in the inventory as valuable rights or interests
belonging to the carrier, but without assigning to them a specific
value separate from the value given to the system as a whole. Like
"going concern value" and that of many other intangibles, the value
of these qualified privileges of user, falling short of ownership
or full possession of the physical thing, was not excluded
altogether as an element to be reflected in the ultimate appraisal.
Cf. Texas Midland R. case, 75 I.C.C. 1, 69. What was held
was no more than this, that the contribution of such factors was
not a separate thing of value to be segregated from all the other
values inhering in a unified system of railroad operation, and
ticketed by itself.
"We report all the costs which are specifically named in the
valuation act, on which we can obtain tangible data, and we find a
single sum value after a consideration of those tangible costs and
the intangible elements of value which inhere in a fully organized
and operating property."
Cf. Des Moines Gas Co. v. Des Moines, 238 U.
S. 153,
238 U. S. 165;
McCardle v. Indianapolis Water Co., 272 U.
S. 400,
272 U. S. 414.
These are the words of the Commission in answering the carrier's
objection that the going concern value had not been separately
stated. Its answer might have been the same if it had been meeting
the objection that privileges of user, incapable of appraisal in
terms of the cost of the thing used, had been described in the
inventory without specific appraisal of the value of the use.
We are thus remitted to the question whether this method of
classification, accredited to us, as it is, with all the authority
springing from administrative practice, is a departure from any
duty created by the statute, or, more accurately, from any duty so
peremptory and unmistakable as to be enforceable by mandamus. True
indeed it
Page 287 U. S. 192
is that, by the express direction of the statute, there is to be
a valuation of all the property owned or used by any carrier
subject to the act. We do not travel very far upon the road to a
solution of our problem by repeating that command. A valuation
there is to be, for so it is commanded in § 19a, subdivision
a, but only "as hereinafter provided," and, to discover
what is "hereinafter provided," we must look to subdivision
b. If there is nothing in subdivision
b calling
for the separate classification and appraisal of the value of a
right to use, then the duty so to classify and appraise is not
created by the statute, and certainly not created in any clear and
peremptory way.
We must distinguish between the ultimate result to be attained
by the preparation of the inventory and the details of form and
method prescribed for its attainment. To admit that there must be a
valuation of the whole is not equivalent to admitting that a
separate and specific valuation must be allocated to every kind of
property interest embraced within the whole. To what extent a group
of interests shall be resolved into its elements is thus a question
of degree. If a barren literalism were to guide us, subdivision
could be carried down to the dimensions of an atom. We are not to
push the mandate to "a drily logical extreme."
Noble State Bank
v. Haskell, 219 U. S. 104,
219 U. S. 110.
A roadbed and a terminal are property, but so are license
privileges, and contracts for supplies, and rights
in
personam as well as those attaching to a
res. Was it
the meaning of the lawmakers that rights and interests such as
these were to have a value specifically assigned to them apart from
their relation to the "going value" of the business? Not even
counsel for the carrier would have us go so far. By concession,
there are forms of property which are to be considered by the
Commission as contributions to a larger whole, and not as things
apart. We were told upon the argument that the interests in the
Harlem tracks might have been omitted from the inventory
Page 287 U. S. 193
if they had been licenses, and nothing more. Specific valuation
became necessary because, in the view of counsel, the interests had
their basis in a franchise or an easement. A like distinction was
drawn in respect of the interests in the terminals. They might have
been omitted from the inventory, however great their value, if the
privilege of use had been derived from a contract giving rise to a
mere license. The omission of a specific valuation became wrongful,
it was argued, if the interests amounted to a title or estate. The
Commission declined to go into these niceties.
"It is . . . not necessary for us to determine whether the right
of use in the carrier is best defined by reference to it as a
license to use, an easement or a trackage right."
We shall practice a like restraint, observing only in passing
that the proper classification is obscure (
Union Pacific Ry.
Co. v. Chicago, Rock Island & Pacific Ru. Co.,
163 U. S. 564,
163 U. S. 582,
583;
Union Pacific Ry. Co. v. Mason City Railroad Co.,
222 U. S. 237,
222 U. S.
247-248), and that the carrier, by its own conduct, has
admitted the obscurity. In its annual reports to the Commission,
starting in 1888 and including the year preceding the beginning of
this suit, its interests in the Harlem tracks and in the New York
and Boston terminals are reported under "class 5," which is
described in the report as including
"all tracks operated and maintained by others, but over which
the respondent has the right to operate some or all of its trains.
In roads of this class, the respondent has no proprietary rights,
but only the rights of a licensee."
What concerns us at the moment, however, is not the fitness or
the unfitness of one classification or another. What matters for
present purposes is the carrier's concession that the command to
prepare an inventory in which all the property shall be valued does
not mean that every property interest shall be separately valued.
Something, then, is to be abated from the dictates of an implacable
literalism allowing no exceptions.
Page 287 U. S. 194
At one point or another, a line of division has to be drawn
between the property to go in and the property a stay out. The
location of the line will involve considerations of legislative
intention and administrative judgment. Division being necessary,
did the members of the Commission ignore a plain and certain duty
in making it where they did?
In our summary of the statute, the provisions under the heading
"first" of subdivision
b were separated into two parts,
described as numbers one and two. Part number one was intended to
procure the valuation of a railroad considered as a physical thing.
Every "piece of property" is to be inventoried, and, with reference
to every "piece" so inventoried, the Commission is to ascertain the
investment in the thing, and the cost of producing it anew. The
factors have been made familiar by historic litigations.
Smyth
v. Ames, 169 U. S. 466;
St. Louis & O'Fallon Railway Co. v. United States,
279 U. S. 461. But
the statute does not mean that there shall be a duty to appraise in
terms of cost if the interest to be appraised is such that the cost
of the thing is without relevance as a criterion of the value of
the interest. There can be no plain and certain duty, enforceable
by mandamus, to proceed to a valuation that will be a snare or a
deception. Here, the New Haven has not invested anything in the
roadbed or the terminals. It is not affected for good or ill by
fluctuations in the cost of building them anew. Whatever the legal
category in which its interests are to be placed, the value is
independent of the cost of the thing in which those interests
inhere. Plainly untenable is its contention that the amount to be
allowed to it is the proportion of the cost value of the property
that would result from a division of such value between itself and
the Central in the ratio of use. Matter of New York, New Haven
& Hartford R. Co., 30 I.C.C.Val.Rep. 1 at 31, 33. Such a method
of appraisal ignores the millions of dollars payable year by year
in perpetuity to keep
Page 287 U. S. 195
the privilege alive. It treats as an investment what is merely a
contingent debt. The value of the trackage rights, whether one
views them as amounting to a license or an easement, is not the
cost of the roadbed, but the difference between the value of the
use and the rent to be paid therefor. The value of the interests in
the terminals, whatever the proper name for them, must be measured
in the same way. Today, under the Transportation Act of 1920, the
Commission may compel a carrier owning terminal facilities to grant
to other carriers the use of such facilities, including main line
tracks for a reasonable distance, in return for a compensation
prescribed as just and reasonable. 49 U.S.Code, § 3(4). For all
that appears the rights now in controversy might continue to be
enjoyed though the agreements set forth in the record were to be
rescinded or annulled, and enjoyed at a smaller cost if a rental
lower than the existing one were to be fixed by the Commission. Be
that as it may, the value for the New Haven is not the value of the
thing or piece of property owned or used, or of any fractional
interest therein. The value for the New Haven is the value of the
use, which is measured by the difference between the rent payable
under the lease and the fair and reasonable rent that would be the
compensation payable to the owner in the absence of agreement.
There is nothing to indicate that the carrier laid testimony before
the Commission as to what this difference would be.
Cf.
Texas Midland Railroad Case, 75 I.C.C. 1, 24. It took its stand
upon the position that
pro tanto, in proportion to its
use, it was the owner of the fee.
The argument will be made, however, that the Commission is
inconsistent. Appraisal on the basis of cost has been thought to be
suitable where the lessee has a possession exclusive of the owner.
Why, then, is it not suitable also where the interest of the lessee
is in common with the owner, and this though the interest
fluctuates from
Page 287 U. S. 196
day to day with the measure of the use? No doubt the practice of
the Commission has been what the argument assumes. The practice has
been, as we have already pointed out, when the possession of a
lessee is exclusive of the possession of the owner, to inventory
leased property in the name of each of them, setting down for each
the original and the reproduction cost of the subject matter of the
lease, setting down the fact of use, and making allowance
thereafter for any increase or deduction due by reason of such use
when costs are readjusted and corrected to express the final
values. [
Footnote 2] Never upon
the face of the inventory has there been a specific valuation of
the interest of the lessor and that of the lessee considered as
estates in the land and structures, and apart from the valuation of
the property demised. The Commission has been unfaltering in its
adherence to the principle that the value to be reported is the
value of the thing, and not of every interest connected with the
thing. Whenever the nature of a lease is such that the cost of what
is leased may appropriately be taken as an index of the value of
the leasehold, the inventory and the valuation have been made upon
that basis. Whenever the interest has been such that cost is not an
index, the test of cost has been rejected. In the application of
these methods, there has been no discrimination between this
carrier and others. In the inventory now in controversy, there are
properties owned by the New Haven, and wholly leased to other
lines, and properties owned by other lines, and wholly leased to
the New Haven. For all these properties, the reproduction cost is
set forth in the inventory of the New Haven System without specific
appraisal of the value of the reversion as an interest subject to
the lease, or the value of the lease as an interest distinct from
the reversion.
Page 287 U. S. 197
The New Haven itself is thus the beneficiary of the principle
that the inventory is to set forth the value of the thing, and not
of every interest touching the enjoyment of the thing.
We recur, then, to the question why the method of appraisal that
has been thought to be appropriate where a lessee has the sole use
may not be followed here also where, in common with the owner, the
lessee has an undivided interest in the use of tracks and terminals
in return for yearly payments. Perhaps a sufficient answer is that
it is never mandatory on the Commission to value the interest of
any lessee on the basis of the cost, though such a method may in
certain circumstances be appropriate as an exercise of discretion.
But other answer are available, if this be thought inadequate.
There can be no doubt that, even in its application to a sole
lessee, the method of valuing a lease on the basis of the cost of
the property demised is, at best, a rough and ready approximation.
Even so, the formation of a rate base by treating a lessee as owner
and measuring a fair return of income as a percentage of the cost
may yield a reasonable average of accuracy where the interest of
the lessee is constant, and the rentals that it pays are excluded
from the computation of its operating expenses. Such exclusion is
required by the accounting rules of the Commission where the lessee
has the sole use. The practice is different, however, where a
carrier has the benefit of joint facilities. There, the rentals
paid for the use of the facilities are part of the operating
expenses, and were so treated in the case at hand. This treatment
of them has the support of statute (Transportation Act 1920; 49
U.S.C., § 15a(1)) [
Footnote 3]
as well as of administrative practice. A carrier
Page 287 U. S. 198
receives a duplication of benefits if it is permitted to include
its rentals as an operating expense while earning a return upon the
value of an unencumbered fee. [
Footnote 4] Aside from this objection, a lease which gives
to the lessee not exclusive possession of the property demised, nor
even a fixed share, but a share fluctuating from time to time with
the variations of the business, is too uncertain and inconstant to
be valued with even approximate correctness by the test of the cost
of the property subjected to the use. The Commission was satisfied
to adopt the formula of cost where the lease was such as to lead it
to believe that the margin of error would not be inordinately
large. [
Footnote 5] Nothing in
the statute makes it mandatory to apply the same formula,
inaccurate at best, to leases of a different nature if the margin
of error would thereby be increased. [
Footnote 6] Nor is there anything in the objection that,
by force of § 15a of the Transportation Act 1920, a form of
inventory permissible under § 19a of the valuation act of 1913 is
permissible no longer. The Act of 1920
Page 287 U. S. 199
authorizes the Commission to "utilize the results of its
investigation under § 19a" of the Interstate Commerce Act for
certain additional purposes "insofar as deemed by it available." 49
U.S.C., § 15a(4). There is nothing in the new statute to suggest
that earlier inventories are to be revised, or that forms of
valuation lawful in the past are to be unlawful in the future.
What has been written serves, we think, to show that the
interests in controversy are not affected by that part of
subdivision
b, § 19a, of the statute which we have
identified as number one. The question remains whether a specific
valuation is made mandatory by the provisions of the part
identified as number two.
"The commission shall in like manner ascertain and report
separately other values, and elements of value, if any, of the
property of such common carrier, and an analysis of the methods . .
. employed, and of the reasons for any differences between any such
value and each of the foregoing cost values."
The carrier did not build its case on that command in making
proof to the Commission. It took the position, on the contrary,
that it was an owner of the roadbed and the terminals in proportion
to its use and made its proof accordingly.
See Matter of
New York, New Haven & Hartford R. Co., 30 I.C.C.Val.Rep. 1, 31,
32, 33. There can surely have been no breach by the Commission of
an inflexible and certain duty in omitting from an inventory a
separate and specific estimate of the difference between the value
of the use and the rents reserved to the lessors when the protest
of the carrier was silent as to what the valuation ought to be. The
result will be the same, however, though this defect be overlooked.
The command to report other elements of value does not impose a
duty, inflexible and certain, to appraise the value of a use which
is unrelated to the value of what is subject to the use. The ends
to be attained are different.
Page 287 U. S. 200
They can be gathered from a report of the Senate Committee on
Interstate Commerce submitted to the Senate in February, 1913. 62nd
Congress, 3rd Session, No. 1290, p. 8. The report begins with a
consideration of the three criteria of value that are stated in
part one of subdivision
b: first, original cost; second,
cost of reproduction new; third, cost of reproduction, less
depreciation. From these it passes to a consideration of the effect
and purpose of part two, prefacing the discussion with the title
"other values and elements of value, that is, intangible values."
"This classification," the report continues,
"provides for going value, goodwill value, and franchise value.
Whether any or all of these values will be considered by the
Commission or the courts in determining the fair value of the
property, and if so, what importance shall attach to them is a
matter for the Commission and the courts. Especially as to
intangible values, the Commission and the courts are in a
transition period. The elements of value which will finally
constitute fair value for ratemaking purposes are steadily
narrowing. They are not expanding. No decision by Commission or
court will stand which is ultimately found to be unfair to the
public or to the common carrier. The committee has, it is believed,
provided for ascertaining every element of value which, upon
recognized authority, should be considered."
Congress had no thought to tie the hands of the Commission by
imposing a peremptory duty to classify in any particular way the
factors supplementing or modifying the significance of cost, and to
allocate to each a specific value. The report makes it clear that
Congress did not know what those factors were, and that the
Commission, guided by the courts, was to work out in its own way a
practical and fair result. Whatever duty was imposed had its basis
in a general admonition which left a wide and indefinite margin of
judgment as to the method of obedience.
Page 287 U. S. 201
In the light of these considerations, the aim of the statute in
bidding heed to be given to other elements of value than those of
cost alone is readily discerned. Its aim is to afford play for the
correction of the errors certain to result where the value of a
railroad is identified with the cost of its component parts without
reference to the values generated or extinguished by the union of
the parts into a single and organic whole. Effects that are the
resultant of two or more forces working in combination may be
capable of appraisal when it would be difficult, if not impossible,
to estimate the consequences of any one of the forces operating
singly. For an illustration of this truth, we have only to bear in
mind the obscure and varied factors, psychical as well as physical,
that enter into the creation of the "going value" of a business.
Not infrequently, the value of these intangibles will be an
aggregate made up of elements too deeply interpenetrated for any
specific figure to be set opposite to one of them dissevered from
the others. What is true of "going value" is true of roadbeds and
stations, of trackage rights and rights in terminals. As soon as
one passes beyond an appraisal of the cost, the increments or the
deductions involve estimates of relation, the parts being worthless
or nearly so unless adapted to the whole. Not a mile of track would
be worth the cost of reproducing it, nor a trackage right the
rental, if there were not stations at either end. Not a station
would be worth the cost of building it anew if there were not
roadbeds or tracks or trackage rights beyond. The final value set
down in the report of the Commission shows that, over and above the
cost of reproduction less depreciation, something has been added,
in appraising the property of the carrier, to express the value of
the whole, as distinguished from the total of the parts. Not even
the depreciated reproduction cost, let alone something in addition,
would
Page 287 U. S. 202
have been reported as the final value if the road had been
viewed as a congeries of fragments. To argue that the Commission
ignored these intangibles altogether because it failed to value
them specifically is to miss the significance of the whole process
of appraisal. Every trackage contract and every terminal use,
insofar as it contributes to the unity of the system, is reflected
in the final value ascribed to the physical things that are listed
in the inventory. The Harlem trackage contract is there reflected,
for the reproduction cost would cease to be a measure of the value
if the trains stopped short at Woodlawn. The rights in the New York
and Boston terminals are there, for again the reproduction cost
would be of no avail as a criterion if there were no terminal
facilities for passengers at Boston or New York. The question is
not whether trackage rights and rights in terminals are interests
that the Commission is at liberty to treat as nonexistent. The
question is whether they are interests of such a kind that they
must be specifically valued, instead of being viewed as factors
that enter by infusion into the lifeblood of the organism. If there
is anything in the statute requiring values of that order to be
separately stated, the carrier has not pointed to it. In the
absence of such a duty, nothing in the report of valuation
justifies a holding that any property interest was excluded
altogether. "We have given careful consideration," said the
Commission,
"to all facts of record and pertaining to the value of the
common carrier property of the carrier as an organized, developed,
well maintained, seasoned property in operation as a going
concern."
Many diverse elements, reacting one upon another, have been
fused in an act of judgment drawing its sustenance from all.
A word may yet be due with reference to those provisions of
subdivision
b of the statute which are set forth
Page 287 U. S. 203
under the heading "second." "Such investigation and report," it
is there said,
"shall state in detail and separately from improvements the
original cost of all lands, rights of way, and terminals owned or
used for the purpose of a common carrier, and ascertained as of the
time of dedication to public use, and the present value of the
same."
The rights of way there in view are those that involve an
investment of the moneys of the carrier, and result in the
possession of the land itself, the roadbed on which the tracks are
laid.
Georgia v. Cincinnati Southern Ry. Co., 248 U. S.
26,
248 U. S. 28.
They do not include the privilege of hauling cars for a rental over
the roadbed of another. What is true of rights of way is true also
of terminals. If the New Haven has no interest in the improvements
constituting the roadbed and the terminal stations sufficient to
require a specific valuation of its interests under parts one and
two of subdivision "first," it has none sufficient to require such
valuation under subdivision "second."
We do not go beyond the necessities of the case before us in
shaping our decision. Whether an inventory such as this one,
omitting a specific valuation of important rights and interests,
gives full or adequate effect to the intention of the lawmakers we
are not required to determine. In later or collateral
controversies, that question may be pertinent. For the purpose of
this case, it is enough to hold, as we do, that the duty of
specific valuation, if it exists, has been imposed upon the
Commission too vaguely and obscuredly to be enforced by a mandamus.
United States ex rel. Redfield v. Windom, 137 U.
S. 636;
Wilbur v. United States, 281 U.
S. 206. One cannot rise from a study of the statute in
the setting of its history and of the administrative practice under
it and hold at the end an assured belief that the Commission has
been commanded by the Congress to do the act omitted.
Page 287 U. S. 204
Where a duty is not plainly prescribed, but is to be gathered by
doubtful inference from statutes of uncertain meaning, "it is
regarded as involving the character of judgment or discretion"
(
Wilbur v. United States, supra), and mandamus is thereby
excluded. The case at hand differs in essentials from
Kansas
City Southern Ry. Co. v. Interstate Commerce Commission,
252 U. S. 178,
where a specific, unequivocal command, removed after the decision
by an amendment of the statute, [
Footnote 7] was laid upon the Commission to value a
particular thing, and the Commission ignored the command to the
extent of refusing to hear any evidence whatever. The ruling in
that suit has been explained in later cases, and confined to its
peculiar facts.
Interstate Commerce Commission v. Waste
Merchants' Assn., 260 U. S. 32,
260 U. S. 35;
United States v. Los Angeles & Salt Lake R. Co.,
273 U. S. 299,
273 U. S.
311.
Public policy forbids that the work of the Commission in the
fulfillment of the stupendous task of valuation shall be hampered
by writs of mandamus except where the departure from the statute is
clear beyond debate. The report is not a stage in a judicial
proceeding affecting this carrier or others. "It is the exercise
solely of the function of investigation."
United States v. Los
Angeles & Salt Lake R. Co., supra, p.
273 U. S. 310.
The final valuations made in it will indeed be
prima facie
evidence against the carrier in proceedings under the Commerce Act.
49 U.S.C., § 19a(1). Even so, the opportunity to contest them if at
any time they are introduced in evidence is "fully preserved to the
carrier, and any error therein may be corrected at the trial."
United States v. Los Angeles & Salt Lake R. Co.,
supra, p.
273 U. S. 313.
The valuation of the railroads of the country has been ordered by
the Congress in
Page 287 U. S. 205
the belief that this new "Domesday Book" will promote an
important public purpose. Nearly twenty years have passed since
that belief found expression in the enactment of the statute, and
the work is still unfinished. Report of the I.C.C. for 1931, p. 68.
In the meantime, the enactment of § 15a of the Interstate Commerce
Act, as added by Transportation Act of 1920 § 422, has made the
need for valuation more imperative than ever. 49 U.S.C., § 15a. In
any work so vast and intricate, what is to be looked for is not
absolute accuracy, but an accuracy that will mark an advance upon
previous uncertainty. If every doubt as to the extent and form of
valuation is to be dispelled by mandamus, the achievement of the
ends of Congress, already long deferred, will be put off till the
Greek Kalends.
The judgment of the Court of Appeals of the District of Columbia
is reversed, and the judgment of the Supreme Court dismissing the
petition affirmed.
Reversed.
MR. JUSTICE VAN DEVANTER, MR. JUSTICE McREYNOLDS, and MR.
JUSTICE SUTHERLAND are unable to concur in this decision. But, as
the decision is put distinctly on the ground that the specific duty
sought to be enforced by mandamus is not so definitely and plainly
described by the statute as to justify the application of that
remedy, and the question whether the inventory in controversy,
omitting a specific valuation of important rights and interests,
gives full or adequate effect to the intent of the statute, is not
determined but distinctly reserved for future contestations, they
deem it sufficient to say at this time that they regard the reasons
assigned by the Court of Appeals for its judgment as sound, and
requiring an affirmance of its judgment.
THE CHIEF JUSTICE and MR. JUSTICE BUTLER took no part in the
consideration and decision of this case.
[
Footnote 1]
The events leading up to the adoption of the act and the public
policy it was designed to further will be found clearly stated in
Sharfman, The Interstate Commerce Commission, vol. 1, pp. 117 to
137.
[
Footnote 2]
The practice is explained by Mr. Esch, formerly Valuation
Analyst of the Commission, in an article "Valuation of Leased
Railroad Property." 33 Yale L.J. 272, 276, 277.
[
Footnote 3]
"The term 'net railway operating income' means railway operating
income, including in the computation thereof debits and credits
arising from equipment rents and joint facility rents."
There is a like direction in the act incorporating the Boston
terminal.
[
Footnote 4]
Esch, Leased Railroad Property,
supra at 274.
[
Footnote 5]
"Not only is the matter of proportion of use at any particular
moment largely speculative, but it varies from time to time." Esch,
supra at 278, 279.
[
Footnote 6]
Upon a hearing before the Senate Committee, Senator La Follette,
the Chairman, inquired of a witness, Prof. Commons, as to the
proper method of valuation where property was leased. The answer
was in substance that such a case might be taken care of in either
one of two ways, by valuing the property as if it were owned by the
lessee or by making allowance for the rent as an operating expense,
and that it would be the function of the Commission to determine
the preferable method in any given situation. The members of the
Committee apparently acquiesced. Senator La Follette adverted to
the possibility of a double valuation if one railroad had the
privilege of running its trains over the tracks of another, and
added that, of course, only one valuation would be proper. Physical
Valuation of Property of Common Carriers, Senate Committee on
Interstate Commerce, 62d Congress, 3d Session, Senate Library, Vol.
15, No. 6, pp. 128 and 129.
[
Footnote 7]
See Act of June 7, 1922, c. 210, 42 Stat. 624.