"Tap Line Case" Summary of Prescott & Northwestern Railroad  
  Abstracted from "Tap Line Case", published in Decisions of the Interstate Commerce Commission, 23 I.C.C. 277, 23 I.C.C. 549, and in Decisions of the United States Supreme Court, 234 U.S. 1.  

PRESCOTT & NORTHWESTERN RAILROAD. The Prescott & Northwestern Railroad Company is an example of a well-equipped tap line which does a substantial outside business, only 75 per cent of its traffic being that of the Ozan Lumber Company, with which it is affiliated. The tap line has no branches and extends from Prescott, Ark., where it connects with the St. Louis, Iron Mountain & Southern in a westerly direction for about 40 miles to a point in the woods where it meets the unincorporated logging road of the lumber company. At Tokio (see map, post, p. 573), a small settlement with one or two stores and less than 100 people, it crosses another incorporated tap line that is a party to the record, and which is known as the Memphis, Dallas & Gulf. There are several other small settlements along the Prescott & Northwest-ern, the largest of which has a population of 100 people, with five or six stores, a sawmill, gin, and canning factory. There are also three or four small independent sawmills in the country tributary to its road, all of which bring their logs in by wagon; one or two of the mills also haul their manufactured lumber several miles over to the tap line for shipment. The principal outside industry on the Prescott & Northwestern is a peach orchard established three or four years ago, having 2,000 acres of trees, from which many carloads of peaches were shipped during the past year to St. Louis; this traffic is developing rapidly. Seventy carloads of cantaloupes moved out over the Prescott & Northwestern in 1911. It is the assertion that the construction of this line has resulted in building up several small communities, and that there is great promise of future agricultural development along its line.

The Prescott & Northwestern has 6 locomotives, 101 freight cars, and 1 combination passenger and baggage car. Most of the equipment has safety appliances. Its road is substantially and permanently built, with 54 and 63 pound rail laid on gravel ballast. It has one or two station buildings; and its trains are dispatched by telephone. There are four section gangs and two train crews. It em-ploys six station agents on commission, of whom all but one are storekeepers. In addition to carrying the mails and express 15,000 passengers were transported during the year 1910. There are two trains daily in each direction, one a mixed train and the other a passenger train, which from Tokio runs over the Memphis, Dallas & Gulf for 7 miles to Nashville, a town of 3,000 people. There is an arrangement by which the lines divide the revenues for this joint-passenger service. The record indicates that the tap line was organized in 1890, the mill being opened at the same time, and 8 or 9 miles of its line were built from Prescott out into the woods. It is said, however, that the lumber company then operating the mill had no direct interest in the road. Financial difficulties were encountered, however, and in 1892 the tap line was sold to Bemis & Whitaker, who were subsequently bought out by the Ozan Lumber Company. The tap line was extended to its present terminus, known as Helbig, about the year 1906.

The present capitalization of the Prescott & Northwestern is $30,000, having been reduced from $125,000. It has no bonds; but it is indebted to the Ozan Lumber Company for money borrowed to the extent of $570,000, of which $350,000 is secured by a mortgage. The stockholders of the two companies are identical and hold their shares in the same proportion. It is admitted that the tap line has been financed by the lumber company, and they have the same principal officers. The bookkeeper of the lumber company serves the tap line as auditor, without additional salary.

The timber holdings of the Ozan Lumber Company aggregate 40,000 acres, or upward of 250,000,000 feet, and were acquired between the years 1900 and 1907. The mill is in the village of Prescott, about 1,000 feet from the right of, way of the Iron Mountain; but the track on which lumber is loaded connects with the tap line at a point which for convenience is referred to as Dian. The logs. are brought from Helbig, the beginning of the unincorporated logging spurs, to the mill by the tap line under the contract rate of $1 per -1,000 feet, log scale, for the haul of 41 miles. The charge is intended also to cover rental for the rails and fastenings furnished by the tap line for the use of the lumber company in its logging spurs. No bills of lading or other shipping papers are issued, for the movements of the logs to the mill. The outbound lumber is switched by the tap line from the mill to the interchange track of the Iron Mountain, a distance of about 1,200 feet; and the bills of lading issued by the tap line's agent show Dian as the point of origin. So far as the billing is concerned, the traffic, therefore, does not move on a milling-in-transit basis. The rates, however, from Dian, the mill point, are the same as from Helbig, at the farther end of the tap line, and are the same as the Iron Mountain rates from the junction point, and the officials of the tap line admit that its division of from 31 to 6 cents per 100 pounds received from the Iron Mountain out of the joint rates is intended also to take care of the cost of hauling the logs into the mill. There is a division of only 1 cent oil the rate to Texas points.

In moving the lumber from the mill of the proprietary lumber company to the Iron Mountain we think that this line may be said to perform a service of transportation, or a switching service, for which it may be reasonably compensated out of the rate. It is clear, however, that the divisions allowed are altogether beyond reason, and that an allowance out of the rate of $1.50 a car is all that lawfully may be paid by the trunk line.

Text and images were digitized and proofread from the original source documents by Murry Hammond. Contact Murry for all corrections, additions, and contributions of new material.