tions made these expenses $37,100.72. On the same division in May, 1910, the company's figures for passenger expenses were $51,885.72; the State's, $40,643.36. There were also similar reductions of considerable amounts on the Kenova division. It is not necessary to review in detail the methods thus used on the part of the State to apportion the various common items of expense, that is, after all items capable of direct assignment had been charged to the business to which they related. It is sufficient to say that instead of employing a general factor for the distribution of the outlays common to both kinds of traffic, freight and passenger, the State's witness divided each particular common item according to its character so as to make what was deemed to be a fair арportionment of that item. In this way, a variety of methods were employed which the witness described at length. After ascertaining the amount of the total expense considered to be attributable to the passenger traffic within the State, it was divided between the intrastate and interstate business; and for the most partaside from the expenses of passenger stations—the division was made on the basis of passenger miles and without charging extra cost to the intrastate traffic.

By combining the results of the selected periods, it was shown that in the intrastate passenger business, according to the classification and apportionment adopted, the operating expenses and taxes consumed 97.4203 per cent. of the total income.

This, in brief, was the result of the elaborate analysis presented by the State. There is no reason to suppose that either the periods chosen or the methods used were unfavorable to the rate. Included in the passenger business were the items of mail, express, excess baggage, etc.; the State did not present calculations as to the net return upon these items separately considered. When the State's expert who testified that he had undertaken to

Opinion of the Court.

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separate the cost of the express business, was asked on cross-examination whether with these items omitted the actual cost of carrying intrastate passengers was not in excess of two cents a mile, he said that it would be difficult to answer without a separate analysis of the mail item, but added that 'in rough computation' that cost was very close to two cents.

It is apparent, from every point of view that this record permits, that the statutory rate at most affords a very narrow margin over the cost of the traffic. It is manifestly not a case where substantial compensation is permitted and where we are asked to enter the domain of the legislative discretion; nor is it one in which it is necessary to determine the value of the property employed in the intrastate business. It is clear that by the reduction in rates the company is forced to carry passengers, if not at or below cost, with merely a nominal reward considering the volume of the traffic affected. We find no basis whatever upon which the rate can be supported and it must be concluded in the light of the principles governing the regulation of rates that the State exceeded its power in imposing it.

The judgment is reversed and the case is remanded for further proceedings not inconsistent with this opinion. It is so ordered.

MR. JUSTICE PITNEY dissents.

MICHIGAN CENTRAL RAILROAD COMPANY v.

MICHIGAN RAILROAD COMMISSION.

ERROR TO THE SUPREME COURT OF THE STATE OF MICHIGAN. No. 91. Submitted December 1, 1914.-Decided March 8, 1915.

A State, in virtue of its authority to regulate railroads as public highways, may, in a proper case, require two railroad companies to make a connection between their tracks so as to facilitate interchange of traffic, without violating rights of the company secured by the Federal Constitution. Wisconsin R. R. Co. v. Jacobson, 179 U. S. 287. A State, acting within its jurisdiction and not in hostility to any Federal regulation of interstate commerce, may compel a carrier to accept loaded cars from another line and transport them over its own. Chi., Mil. & St. P. Ry. v. Iowa, 233 U. S. 344.

A State may on reasonable conditions require a carrier to permit its empty or loaded cars to be hauled from its line upon a connecting line for purposes of loading or delivery of intrastate freight and to permit cars of other carriers loaded with such freight consigned to points on the connecting line to be hauled from its line upon the connecting line for purposes of delivery.

The common law is subject to change by legislation, and so held that a State may require a carrier, within reasonable bounds of regulation in the public interest, to permit its equipment to be hauled off its line by other carriers, although it was not bound to permit the same at common law.

It is a matter of common knowledge that interchange of freight cars between carriers is the usual practice; and a state statute requiring such interchange as to intrastate commerce is not so unreasonable as to amount to a taking of property without due process of law. An order of a state railroad commission requiring carriers to interchange freight cars for intrastate freight is to be read in the light of the opinion delivered by the Commission and as so read, the order involved in this case is not unreasonable nor does it take the property of the carriers without due process of law. An order of a state railroad commission requiring carriers to exchange freight and passengers in accordance with the provisions of the act establishing the Commission which has been construed by the state court as relating only to intrastate commerce, because the jurisdiction of the Commission is limited thereto, held not to disregard the needs of interstate commerce or to be a burden thereon, and also held

Argument for Plaintiff in Error.

236 U.S.

this court presumes, until the contrary appears, that the state court will not so construe or enforce the order as to interfere with or obstruct interstate commerce.

An order of the Michigan State Railroad Commission requiring two connecting railroads to make physical connection for transfer of intrastate business including loaded freight cars and empty cars being returned or forwarded for being loaded, held within the power of the State and not to a taking of the property of the carriers without due process of law or an interference with and regulation of interstate commerce. Central Stock Yards v. Louis. & Nash. R. R., 192 U. S. 568, and Louis. & Nash. R. R. v. Stock Yards, 212 U. S. 132, distinguished.

168 Michigan, 230, affirmed.

THE facts, which involve the validity of an order of the State Railway Commission of Michigan requiring a railway with respect to intrastate traffic to interchange cars, freight and passengers with another railway, are stated in the opinion.

Mr. Frank E. Robson and Mr. Henry Russell for plaintiff in error:

Act 300 of the Public Acts of 1909 of Michigan recognizes and preserves the distinctions which obtain in Michigan between street railways and railroads. See Act 312.

Railroad is used as meaning corporations organized under the general railroad law, and street railways as meaning those organized under the street railway act or other similar laws.

Railroads broadly and distinctly differ from street railways, and it has always been the policy of the legislature of Michigan to maintain this classification.

A street railway is constructed and operated on the public highways under the consent of the municipalities (§ 13, Street Railway Act, § 6446, C. L., 1897, App'x A, p. 44), and is not an additional servitude and may be constructed without compensation to abutting owners. Detroit &c. Ry. v. Mills, 85 Michigan, 634, 652-655; Nichols v. Railway, 87 Michigan, 361, 368–369, 370-1; People v. Railway, 92 Michigan, 522, 524; Dean v. Railway, 93

236 U. S.

Argument for Plaintiff in Error.

Michigan, 330; Detroit &c. Railway v. R. R. Commissioner, 127 Michigan, 219, 230; People v. Eaton, 100 Michigan, 208-211; Austin v. Detroit &c. Ry., 134 Michigan, 149; Mannel v. Detroit &c. Ry., 139 Michigan, 106; Ecorse v. Jackson &c. Ry., 153 Michigan, 393.

A railroad before constructing its railway upon a public street or highway must obtain the consent of the municipality and pay damages and compensation to abutting owners (subd. 5, § 9, General R. R. Law, § 6234, C. L., 1897). A railroad is an additional servitude. Cases supra and G. R. & I. R. R. v. Heisel, 38 Michigan, 62; S. C., 47 Michigan, 393; Cooper v. Alden, Har. Ch. 72; Hoffman v. Flint &c. Ry., 114 Michigan, 316; Nichols v. Railway, 87 Michigan, 361, 372; Keyser v. Lake Shore R. R., 142 Michigan, 143.

Under §§ 19, 25 and 28, Art. 8, State Constitution, 1909, the control of the public highways is expressly reserved to and placed in the cities, villages and townships. Even under the constitution of 1850 the right of control over the highways by municipalities was absolute. Detroit v. Railway, 95 Michigan, 460; Monroe v. Detroit &c. Ry., 143 Michigan, 315; Attorney General v. Toledo Ry., 151 Michigan, 473.

The decisions of the Michigan Supreme Court have long recognized the policy of the legislature, and declared the well-defined distinction between railroads and street railways. Grand Rapids R. R. v. Heisel, 38 Michigan, 62; Ecorse v. Jackson Ry., 153 Michigan, 393; Mason v. Lansing R. R., 157 Michigan, 1, 18.

This distinction has also been recognized in the matter of taxation of railroads and street railways, Detroit v. Mfrs. R. R., 149 Michigan, 530; and as well in the application of the criminal statutes relating to railroads, People v. Beebehyser, 157 Michigan, 239; and see Monroe v. Detroit &c. Ry., 143 Michigan, 315.

This act of the legislature must be considered a part of