FERNWOOD & GULF RAILROAD. The Fernwood & Gulf Railroad Company was incorporated in 1906 and has capital stock issued and outstanding to the amount of $10,000, together with bonds aggregating $125,000. It is identical in interest with the Fernwood Lumber Company, the stockholders being common and holding shares in the same proportion.

Some years ago the lumber company built a private logging road, laid with wooden rails, over which cars were drawn by horse or mule power. Later one or more small locomotives were acquired and the wooden rails were replaced by 25 and 30 pound steel. When the timber in that vicinity was cut out the track was moved to a different location in order to reach other timber and heavier rails were substituted. About 21 miles were laid and in operation when the tap line was incorporated; and an agreement was drawn up under which this track was thereafter operated for a period of three years by the tap line. At the end of that period the lumber company sold this track for the sum of $125,000 to the tap line, reserving, however, the privilege of operating logging trains thereon without charge. In 1909 about 9 miles of additional track were laid at a cost of $135,000.

The tap line, as described on the record, consists of about 33 miles of track connecting with the Illinois Central at Fernwood, Miss., running southeastward to Tylertown, on the New Orleans Great Northern, and thence northeastward to a point one mile beyond Kokomo. There are also about six miles of switch tracks in the, vicinity of the mill at Fernwood, which are owned and operated jointly by the Illinois Central, the tap line, and the lumber company. The lumber company has several miles of logging tracks connecting with the tap line and extending into the timber. The equipment of the tap line consists of a baggage car, 2 combination passenger cars, and 19 freight cars. It owns no locomotives, but leases one from the lumber company. There are several stations on the line and it has one train crew, a number of section men, and other employees.

The tap line was built through virgin timber owned largely by the proprietary company. Its traffic is chiefly lumber and other forest products, of which 60,374 tons moved during the year ending June 30, 1910, the total freight movement in that year being 79,041 tons. The traffic included 1,477 tons of naval stores, 579 tons of coal, 5,601 tons of agricultural products, and 10,950 tons of miscellaneous supplies and merchandise. It is asserted that only 63 per cent of the tonnage was supplied by the proprietary company. The revenues from freight traffic during the same year were $53,507.82; and the earnings from passenger, mail, and express aggregated $12,798.61.

The mill of the Fernwood Lumber Company is several hundred feet from the right of way of the Illinois Central at Fernwood. The logs are hauled to the mill by the lumber company, under the free trackage right heretofore referred to. The empty and loaded cars for lumber shipments are switched from the mill to the Illinois Central, sometimes by the lumber company, sometimes by the tap line, and at other times by the Illinois Central itself. In all cases, even when the Illinois Central itself switches the car, an allowance of 2 cents per 100 pounds is paid to the tap line by the Illinois Central out of the rates in effect from Fernwood. On the shipments made by small independent sawmills served by the tap line the rate:; charged are 2 cents per 100 pounds higher than the rate from the junction point, and the, tap line receives from the Illinois Central 4 cents per 100 pounds. A part of the output of the Fernwood mill is moved by the tap line to Tylertown, and there delivered to the New Orleans Great Northern, which makes an allowance of 2 cents per 100 pounds. That trunk line pays a division of 3 cents on lumber. shipped by other mills on the tap line.

In this case we hold that the Illinois Central may lawfully pay the tap line a switching charge of $2.50 a car when it handles the products of this mill to its rails; the New Orleans Great Northern may lawfully allow it a division out of the rate of 2 Bents per 100 pounds.