287 U.S.

178
53 S.Ct. 106
77 L.Ed. 248

INTERSTATE COMMERCE COMMISSION

v.
NEW YORK, N.H. & H.R. CO. et al.
No. 15.
Argued Oct. 17, 18, 1932.
Decided Nov. 21, 1932.

Messrs. Thomas M. Ross and Charles W. Needham, both of Washington,

D.C. (Robert E. Freer and Mary B. Linkins, both of Washington, D.C., of
counsel), for petitioner.
Messrs. John L. Hall and Charles O. Pengra, both of Boston, Mass., for
respondents.
[Argument of Counsel from pages 179-183 intentionally omitted]
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 section 19a of the Interstate Commerce Act. 37 Stat.
L. 701, c. 92, as amended, 49 U.S.C., 19a (49 USCA 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 (52 S.Ct. 496).

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, Mass.,
the carrier's tracks connect with those of the Boston Terminal Company, the
owner of the South Station in Boston; and 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 Harlaem 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 (Laws N.Y. 1848, c. 143) passed an act to amend
the charter of the New York and Harlem Railroad Company. In section 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 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 State 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.
4

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 per cent. 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 per cent. interest on the cost of construction
and of the annual expenses for 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 per cent. 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 per cent. of the Terminal stock, the
remaining 20 per cent. being controlled by the Central.
6

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 by mandamus, to include those interests with a specific
valuation in the statutory inventory.

By section 19a of the Interstate Commerce Act (49 U.S. Code, 19a, Act
March 1, 1913, c. 92, 37 Stat. 401, as amended (49 USCA 19a)), 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.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.'

10

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.'

11

The provisions are distributed into five classes.

12

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.'

13

For convenience of reference this part of the directions that are grouped under
the heading 'first' will be described as number one.

14

Under the same heading there is, however, another part which will be identified

14

Under the same heading there is, however, another part which will be identified
as number two.

15

'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.'

16

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.

17

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.

18

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.'

19

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 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 (page 124 of 75 I.C.C.), '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.

20

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. U.S. ex rel. Kansas City Southern R. Co. v. Interstate Commerce
Commission, 55 App.D.C. 389, 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, 763, 24 L.Ed. 588; Logan v. Davis, 233
U.S. 613, 627, 34 S.Ct. 685, 58 L.Ed. 1121; Brewster v. Gage, 280 U.S. 327,
336, 50 S.Ct. 115, 74 L.Ed. 457; Fawcus Machine Co. v. United States, 282
U.S. 375, 378, 51 S.Ct. 144, 75 L.Ed. 397. In conformity with that practice the
Commission overruled the protest of the 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.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, 165, 35 S.Ct.
811, 59 L.Ed. 1244; McCardle v. Indianapolis Water Co., 272 U.S. 400, 414,
47 S.Ct. 144, 71 L.Ed. 316. 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.

21

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 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
section 19a, subd. 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.
22

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, 110, 31 S.Ct. 186,
187, 55 L.Ed. 112, 32 L.R.A.(N.S.) 1062, Ann. Cas. 1912A, 487. 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 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 Railway Co. v. Chicago, Rock Island &

Pacific Railway Co., 163 U.S. 564, 582, 583, 16 S.Ct. 1173, 41 L.Ed. 265;
Union Pacific Railway Co. v. Mason City Railroad Co., 222 U.S. 237, 247,
248, 32 S.Ct. 86, 56 L.Ed. 180), 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. 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?
23

In our summary of the statute, the provisions under the heading 'first' of
subdivision b, 19a, 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, 18 S.Ct. 418, 42 L.Ed. 819; St. Louis & O'Fallon Railway Co. v.
United States, 279 U.S. 461, 49 S.Ct. 384, 73 L.Ed. 798. 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 pages 31, 33.

Such a method of appraisal ignores the millions of dollars payable year by year
in perpetuity to keep 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), 49 USCA 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.
24

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 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.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. 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.
25

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. Code, 15a(1), 49 USCA 15a(1)3 as well
as of administrative practice. A carrier 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 unincumbered fee.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.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.6 Nor is there anything in the objection that by
force of section 15a of the Transportation Act 1920, a form of inventory
permissible under section 19a of the valuation act of 1913 is permissible no
longer. The act of 1920 authorizes the Commission to 'utilize the results of its
investigation under section 19a' of the Interstate Commerce Act for certain
additional purposes 'in so far as deemed by it available.' 49 U.S. Code,
15a(4), 49 USCA 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.
26

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 Railroad
Company, 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. 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, good will 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 rate-making 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.
27

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 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, in so far 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 non-existent. 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 commoncarrier 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.
28

A word may yet be due with reference to those provisions of subdivision b of

the statute which are set forth 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. State of Georgia v. Trustees of Cincinnati Southern Railway Co., 248
U.S. 26, 28, 39 S.Ct. 14, 63 L.Ed. 104. 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.'

29

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 obscurely to be enforced
by a mandamus. United States ex rel. Redfield v. Windom, 137 U.S. 636, 11
S.Ct. 197, 34 L.Ed. 811; Wilbur v. United States, 281 U.S. 206, 50 S.Ct. 320,
324, 74 L.Ed. 809. 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. 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 Railway Co. v. Interstate Commerce
Commission, 252 U.S. 178, 40 S.Ct. 187, 64 L.Ed. 517, where a specific,
unequivocal command, removed after the decision by an amendment of the
statute,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. U.S. ex rel.
Members of Waste Merchants' Association, 260 U.S. 32, 35, 43 S.Ct. 6, 67
L.Ed. 112; United States v. Los Angeles S.L. Railroad Co., 273 U.S. 299, 311,
47 S.Ct. 413, 71 L.Ed. 651.

30

Public policy forbids that the work of the Commission in the fulfilment 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 Railroad
Co., supra, page 310 of 273 U.S., 47 S.Ct. 413, 414. The final valuations made
in it will indeed be prima facie evidence against the carrier in proceedings
under the Commerce Act. 49 U.S. Code, 19a, subd. b(1), 49 USCA 19a,
subd. b(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 Railroad Co., supra,
page 313 of 273 U.S., 47 S.Ct. 413, 415. The valuation of the railroads of the
country has been ordered by the Congress in 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 section 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. Code, 15a, 49 USCA 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.
31

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.

32

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.

33

The CHIEF JUSTICE and Mr. Justice BUTLER took no part in the
consideration and decision of this case.

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.

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.

'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.

Esch, Leased Railroad Property, supra, at page 274.

'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 pages 278, 279.

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.

See Act of June 7, 1922, c. 210, 42 Stat. 624 (49 USCA 19a).