Application of Canadian National Railways, under Section 165A of the Railway Act and all other appropriate statutory provisions, for an order granting them leave to abandon the operation of part of the Exeter Subdivision, in the Province of Ontario, from Clinton Junction (mile 45.'57) to Wingham Junction (mile 68.50) a total distance of 22.93 miles.

39310.53

A. D. McDonfald, for Canadian National Railways;

F. Fingland, for the Township of Hullett;

J. H. Crawford, for the Town of Wingham and other Municipalities affected;

R. S. Hetherington, K.C., for the Village of Lucknow, W. H. Treleaven of Lucknow, and other flour millers;

W. J. May, representing the Post Office Department.

Heard at Goderich, Ont., on February 10th and 11th, 1941.

Judgment

Cross, Chief Commissioner:

On November 30, 1940, Canadian National Railways, hereinafter referred to as the Railways applied to the Board under Section 165A of the Railway Act and all other appropriate statutory provisions, for an order granting them teave to abandon the operation of the following line of railway, namely:—

Part of the Exeter Subdivision, in the Province of Ontario, from Clinton Junction (mile 45.57) to Wingham Junction (mile 68.50), a total distance of 22.93 miles.

The line of railway was opened for operation in 1876. It was built under the charter of the London, Huron and Bruce Railway Company. After several years' operation by the Grand Trunk Railway Company, it was amalgamated in 1893 with that company, and finally became part of the Canadian National Railways in 1923.

The train service on the line during the years 1937, 1938, 1939, and 1940 to the date of the application, consisted of a passenger train daily, except Sunday, in each direction, between London and Wingham, and a way-freight service three times per week, in each direction, between the same points.

Following the usual practice in abandonment cases, a detailed examination of the line was made by a District Engineer and an Inspector of the Operating Department of the Board, and their reports thereon presented to the Board.

The country through which the line in question passes is a good agricultural district devoted principally to mixed farming comi)rising, chiefly, dairying and the raising of cattle, hogs and sheep.

The line, generally, is in good condition for a branch line. It has light curvatures and grades. Drainage, fencing, ballast and culverts are well maintained for light branch line traffic. There are four bridges on the line. They consist of three combination deck plate girders and truss bridges erected over 55 years ago, and one I-Beam bridge erected in 1901. The bridges are only capable of carrying light type locomotives. The reconstruction of the three older bridges will be necessary in the course of a few years time.

Mr. Martin Wheelwright, Chief Engineer of the Central Region of the Railways, in his evidence, placed the time at which the three bridges would require to be renewed at between five and ten years, provided that only light equipment continued to be used on the line. If heavier locomotives and heavier cars are to be run over the line the bridges would have to be replaced immediately.

The bridges would probably meet the present traffic reciuirements for the next few years, but their renewal is a matter which the Railways must contemplate before very long. The estimated cost of replacing the steel structure of these bridges is $146,720. If the masonry portion of the structures should be found also to require renewal, this would mean a substantial additional cost.

The stations on the line are Clinton, at the south end, Londesborough, Blyth, Belgrave, and Wingham at the north end. The places directly affected are Londesborough, Blyth and Belgrave.

The line is being operated at a loss. A statement of operating earnings and expenditures for the calendar years 1937, 1938, and 1939, furnished by the Railways, is as follows:—

Revenues and expenses

	Calendar Year
	1937	1938	1939
Gross C.N.R. Revenues—
Passenger	2,310	2,323	2,675
Freight	21,558	11,220	13,231
Express	3,489	3,136	2,750
Miscellaneous	231	238	252
Mail	3,257	3,255	3,255
Total	30,845	20,172	22,163
Expenses—
(Out of Pocket Only) Branch Line
Maintenance of Way and Structures	12,538	10,007	11,532
Maintenance of Equipment	4,411	3,931	4,076
Transportation:
Train Service	4,458	5,051	4,974
Station Service	4,009	4,159	4,023
Balance of System:
50% Operating Ratio on off-line—Freight and Express	11,306	6,492	7,219
Total	36,722	29,640	31,824
System Loss	5,877	9,468	9,661

The foregoing statement has been the subject of examination by the Transportation Economist of the Board and from said examination, the evidence given, and the material filed, I am satisfied that the above statement of revenues and expenses correctly reflects the situation. The figures for 1940 operation were not available, but from the evidence it would appear that the result for 1940 will correspond with that of 1939.

The carload freight traffic in and out of the three points affected, for the years 1937, 1938, and 1939, is as follows:—

	Year	Number of Cars
		IN	OUT
Londesborough	1937	21	32
	1938	12	39
	1939	21	35
Blyth	1937	39	19
	1938	35	4
	1939	35	2
Belgrave	1937	86	121
	1938	25	116
	1939	30	112

Of the outward carload shipments for the three-year period, a little over 91 per cent consisted of cattle, hogs and sheep. As in the case of other branch line railways, highway motor transportation has been the major contributing factor to decrease in traffic on the line in question over a period of time, commencing about the year 1918.

The very substantial decline in passenger traffic on the branch line over a considerable number of years is attributable largely to the use of personally owned motor-cars and buses. One of the witnesses for the Railways estimated that the loss in passenger traffic was attributable about eighty per cent to privately owned motor-cars, and about twenty per cent to buses. While very few of the farmers in the district own motor-trucks, most of them own motor-cars.

The application was opposed by certain township and other municipalities, and farming, milling and other business interests. The district is in what is described as a snow belt, and the snowfall is heavy in most winters. This results in the blocking of many of the concession and side roads to traffic, except by means of horses and sleighs.

The evidence adduced on behalf of those engaged in the farming industry was directed to show the inconvenience and loss that would be occasioned, if the application were granted. The general opposition was mainly because of the greater distance that live stock would have to be taken, in order to reach a railway shipping point. Except during the winter time, a considerable number of the cattle for market, in the district, are picked up by drovers at the farms and conveyed in motor-trucks to a railway shipping point; but not infrequently cattle for market are driven on foot to the railway shipping point. This method of delivery is more necessary in the winter when, because of the snow, trucks are unable to operate on several of the roads. Other live stock intended for shipment to market by rail are, generally speaking, taken from the farm by truck or other form of road transport. The longer the distance to the point of delivery, the greater is the inconvenience and consequential loss. Some of the witnesses laid considerable stress on loss of weight to cattle by having to take them a greater distance to a railway station.

While stress was laid on the inconvenience and loss that would be occasioned in taking live stock a greater distance to reach a railway point, the evidence discloses that in one case a person raising live stock now delivers his stock for market to a drover at Belgrave, a distance of eight and one-half miles, regardless pf the fact that at Auburn on the Canadian Pacific Railway there is another railway shipping point, about four miles closer to his farm. This, he states, is because he prefers to deal wdth the drover, or dealer, at Belgrave. This is not an isolated case. The same witness states that there are quite a few other farmers in his district who also ship from Belgrave. While the closest place is a material consideration, it is not always the sole factor considered in the selection of a shipping point.

The evidence does not show the average increased distance from a railway station, or the number of farmers who would have a longer distance to travel if the line were abandoned. Of those who gave evidence at the hearing, the increased distance varied from two and one-half to four and one-half miles. In any event, the greater majority of the people would still be within a quite reasonable distance of a railway shipping point.

The city of London, Ontario, is the largest city in the district concerned. The branch line in question is part of the line of railway running from London to Wingham, through Clinton Junction and Wingham Junction.

Provincial Highway No. 4 runs from London to Wingham. This highway is paved, and closely parallels the line of railway in question throughout its entire length, at a distance not exceeding one mile at any place, and is open for traffic throughout the whole year. Most of the concession roads are hard surfaced, suitable for trucks, but only a comparatively small portion of these roads is kept clear of snow during the winter months.

The territory is served by the Gray Coach Lines which operate a bus service twice daily, in each direction, except Sunday, and one trip Sunday, between London and Wingham, over Highway No. 4. Regular truck service is operated into Blyth and Belgrave.

There are five towns, or stations, along the line proposed to be abandoned, namely: Clinton, Londesborough, Blyth, Belgrave, and Avingham. Clinton, on the south end of the line, is also on the Canadian National Railways' line from Toronto to Goderich, on which there is a good service. It is also on the line, London to Wingham. If the application for leave to abandon is granted, Clinton will remain a station on the line Toronto to Goderich, and will be the terminus of the line from London to Clinton. Clinton and the surrounding district should not be adversely affected by the abandonment.

Londesborough is a small village of about 175 people, located on No. 4 Highway, about a quarter of a mile west of the railway station. The facilities consist of a freight-shed, office, waiting-room, and 21-car siding, stock-pen and coal-shed. There are no industries. If the line through Londesborough is abandoned, this point will be without direct railway service. The railway facilities available to the people will be Clinton, a distance of 8 1/2 miles, Blyth, a distance of about 5 miles, and Auburn, a distance of about 8 miles. In respect to the farming area tributary to Londesborough, the area is not very great from which a longer haul to railway service will be required.

A party at Londesborough is a dealer in coal in a small way. He brings in on an average of five carloads per year for sale and distribution. This person claims that he will have to -discontinue his coal business, if the line is abandoned, as the business is not sufficient in volume to make it worth while to truck the coal from Clinton or Blyth.

Blyth is a village with a population of a little over 600. The industries at Blyth are two small flax-mills, turnip waxing plant, planing-mill, woollen mill, flour mill, and milk pasteurization plant. Clinton, at the south end, and Wingham, at the north end, are about 25 miles apart by rail, and about the same distance by No. 4 Highway. Blyth is between the two places, 12 miles from Clinton and about 13 miles from Wingham. Blyth is also on the Canadian Pacific Railway main line from Toronto to Goderich. As Blyth is also served by the Canadian Pacific Railway with a passenger and way-freight service daily, except Sunday, no great inconvenience should be occasioned to the people of the village or surrounding district.

Belgrave is a village with a population of about 200. If the line is abandoned, Belgrave will be without direct railway service. The facilities at this point consist of a freight-shed, office, waiting-room, and sidings with accommodation for 22 cars. There is also a stock-pen, coal-shed, chopping-mill, and fertilizer mixing plant.

Belgrave is 7 miles from Blyth, which will have Canadian Pacific Railway service, and about 8 miles from Wingham, which will continue to be served by both the Canadian National Railway and the Canadian Pacific Railway. Some of the territory now served at Belgrave could be almost as equally well served by Brussels, on the Canadian National Railway, to the east of Belgrave, a distance of about 8 miles.

In respect to Belgrave, according to the evidence, the party who would probably be the most seriously affected by abandonment of the line is Mr. C. R. Coultes, a resident of Belgrave and a drover, or dealer in live stock. He has built up quite a good business in the community and last year shipped from Belgrave about 120 carloads. He owns a truck and gathers up live stock from the people in the district, and assembles them at Belgrave for shipment by rail. The live stock which Mr. Coultes ships comes mostly from the Belgrave area, but he also gathers live stock from other places including Wingham. In the two weeks prior to the hearing, he trucked over half of his stock through Wingham to Belgrave.

While Mr. Coultes' shipments are mostly from Belgrave, he has shipped the occasional carload from Wingham, Blyth and Brussels. If the application is granted, Mr. Coultes will have to truck his live stock to either Wingham, Blyth, or Brussels, for shipment to market, which will involve additional trucking service and some extra expense in doing business. He is presently located at Belgrave, but might find it more convenient to locate at another point. In such case this would involve some inconvenience and probably expense. Apart from this, I do not think, however, that his business would be very seriously affected.

It was also urged that some of the farm lands would be depreciated in value, if the application be granted, by reason of the greater distance that these farms will be from a railway station. This is probably true to some degree, but I do not think that many would be a.dversely affected to a very material degree.

The Post Office Department of Canada operates a postal car service on the line of railway, Clinton to Wingham. The question of future mail service for the district, in the event of abandonment," was, therefore, the subject of considerable discussion. Mr. W. J. May, District Director of Postal Service for the London District, appeared at the hearing on behalf of the Post Office Department. From his statement it would seem necessary to operate some kind of motor vehicle service, possibly, from Clinton to Londesborough, and from Wingham to Belgrave. Such postal service would probably not be quite as satisfactory as the present postal car service, but I am satisfied that the Post Office Department can be relied upon, as in other cases, to furnish the district concerned with a reasonably adequate mail service.

Mr. W. E. Treleaven, a miller at Lucknow, a town on the Kincardine subdivision of the Railways, west of Wingham, and certain others engaged in the flour milling business at points not on the railway line under consideration, were represented at the hearing. They are chiefly concerned with the effect that the abandonment of the line mi8;ht have on the future freight rates which they would have to pay on wheat and flour. Mr. Treleaven appears to be most concerned, and in my view this question can be sufficiently dealt with by particular reference to his situation.

At present, Mr. Treleaven is bringing in wheat from Goderich over the railway at a carload rate of 6 cents per 100 pounds, which is the mileage rate for a distance of 50 miles, and it is 49 miles from Goderich to Lucknow via Clinton and Wingham Junctions. Under the proposed abandonment, the rail distance from Goderich to Lucknow will be increased to 116 miles, and the mileage rate for that distance is 12 cents. After milling of the grain, there is flour which is sold locally within a radius of approximately 100 miles from Lucknow, also, recently, a somewhat substantial movement to Montréal and Halifax for export.

With regard to local business, according to the evidence, the grain was practically all hauled by truck from Goderich to Lucknow when the rate by rail was 8 cents. Mr. Treleaven has his own trucks. The Railways established a 5 cent rate to meet truck competition, since which time the grain has moved by rail, although the rail rate was subsequently advanced from 5 cents to 6 cents. Mr. Treleaven states that, unless the 6 cent rate is continued, he will revert to trucking, which will be considerably cheaper than paying the 12 cent rail rate. He states there is a good highway from Goderich to Lucknow, which is open allyear, and the distance is 21 miles. The establishment of competitive rates to meet truck competition is a matter within the discretion of the Railways. No definite statement was made by the Railways as to whether they would continue the truck competitive rate. They had established it to meet truck competition and, if not continued, they will obviously lose the traffic.

It would appear, therefore, that Mr. Treleaven's position with respect to local business will be that he can bring in the grain at practically the same cost as at present, the movement, however, being by truck instead of by rail. It is stated that the flour distributed locally from Lucknow all moves by truck, so that that would be unaffected by the proposed abandonment.

So far as concerns the export movement of flour, the tariff provides that grain ex-lake would be charged the local mileage rate from bay port to milling point and, upon reshipment of the product, it is charged the balance of the through rate on flour for export from bay port to point of export plus a charge of 1 cent for stop-over as well as charge for out-of-line haul if any. This is a practice established a great many years ago and has the effect of placing all millers upon a rate equality, provided they are on the direct line between bay port and point of export. For example, millers at London, Woodstock, Toronto and Peterborough pay different rates inbound upon wheat, but, upon reshipment of the product for export, they are charged the balance of the through rate from bay port, thus producing rate equality with respect to this export traffic.

Of course, where a mill is not situated on the direct line of transit, there is a charge for the extra out-of-line-haul, which is based on a mileage scale of 1/2 cent per ton per mile. It seems quite obvious that those mills established at points involving an out-of-line haul in the case of export traffic were established there having regard to the local business, otherwise they would have been established at a point in the direct line of transit.

The mill at Lucknow has only done an export business of any consequence during the past five years, although established 75 years ago. Whether the grain rate to Lucknow is 6 cents or 12 cents is immaterial with respect to export traffic, as the through export rate is the same, namely, 16 1/2 cents per 100 pounds from Goderich to Halifax. On flour exported through Halifax, if the inward rate is 6 cents, the balance of rate is 10 1/2 cents; if it is 12 cents, the balance of rate is 4 1/2 cents.

The only change under the proposed abandonment would be a difference in the out-of-line haul. At present, the out-of-line haul is 57 miles, for which the charge is 1 1/2 cents per 100 pounds, and, under the proposed abandonment, the out-of-line haul would be 124 miles, for which the charge is 3 cents. It will be observed that, under abandonment, there would be an additional charge of 1 1/2 cents per 100 pounds, which is equal to 2.94 cents per barrel, although a figure of 4 1/5 cents per barrel was given by Mr. Treleaven, which, I think, was based upon calculation per bushel instead of per 100 pounds.

These out-of-line haul charges represent geographical disadvantages of location of the mills incurring them, and it has always been held by the Board that the railways are not required by law, and cannot in justice be required, to equalize natural disadvantages such as location. There are many milling points with out-of-line haul charges as great or greater than the 3 cents here referred to.

It is noted from the evidence that the Lucknow mill has built up quite an extensive export business only within the last five years. There has been no relative change in the rate situation as between Lucknow and the other milling points which would account for this.

There remains a further question for consideration. Bonuses were given by certain municipalities to the London, Huron and Bruce Railway Company to aid and assist it in the construction of this line of railway. The municipalities granting bonuses and the amounts thereof are as follows:—

Township of Hullett	15,000
	10,000	25,000
Township of East Wawanosh	18,000
	7,000	25,000
Township of Morris, a total of		30,000
Township of Turnberry		5,000
Making a total of		85,000

At the hearing a copy of each of the two following agreements were put in evidence:—

Agreement dated the 5th day of October, 1871, (Exhibit No. 2), and an agreement dated the 20th day of December, 1872, (Exhibit No. 3), each made between The London, Huron and Bruce Railway Company, of the First Part, and The Corporation of the Township of Hullett, of the Second Part. The two agreements are substantially similar in form, provide for the payment of the bonuses, and the construction of the railway, all on the terms therein set out. Each of the said two agreements contain the following covenant:—

That they the said parties of the First Part shall within a reasonable time after the final passing of the said intended by-law construct and complete their line of Railway from a point at or near London aforesaid as far as Londesborough aforesaid and shall within a like reasonable time erect a station for passengers and goods on their said line of Railway at Londesborough aforesaid or within one mile of the outer limits thereof on the east side and shall at all times thereafter maintain the said station so to be erected for the purpose as a passenger and goods station on the said line of Railway to all intent and purposes whatsoever.

Each agreement also provides that if the Parties of the First Part (the Railway Company) fail to perform the above quoted conditions or either of them, then the Parties of the First Part shall upon demand of the Parties of the Second Part (the Township of Hullett) repay to the Parties of the Second Part the whole of the sum mentioned with interest by way of liquidated and ascertained damages.

There was also put in evidence at the hearing Exhibit No. 4, an original agreement dated the 25th day of May, 1875, made between The London, Huron and Bruce Railway Company, therein called the Railway Company of the First Part; The Great Western Railway Company, therein called The Great Western of the Second Part; and The Corporation of the Township of East Wawanosh, therein called East Wawanosh of the Third Part. By this agreement the Railway Company and the Great Western, among other things, covenanted with East Wawanosh, in consideration of the bonus, to provide, maintain and keep a station on the line of railway at or within half a mile of Blyth another station at the nearest point to Belgrave on said line and the junction station of the said Railway with the Wellington, Grey and Bruce Railway at Wingham. The agreement, however, does not provide as in the case of the Township of Hullett, for repayment of the bonus moneys in the event of default.

There was also put in evidence Exhibit No. 5, a copy of an agreement dated the 26th day of December, 1872, and made between The Corporation of the Township of Morris and The London, Huron and Bruce Railway Company whereby the Railway Company, in consideration of a bonus, covenanted to locate its railway within the Township of Morris from Blyth to Wingham, and to erect and maintain two stations in said Township of Morris, namely, at Blyth and Belgrave. There is no provision for repayment of the bonus moneys in case of default. No agreement was filed in respect to the additional $20,000 Bonus which is said to have been contributed by the Township of Morris.

There was further put in evidence Exhibit No. 6, a copy of an agreement dated the 18th day of December, 1872, and made between The London, Huron and Bruce Railway Company and The Corporation of the Township of Turnberry, whereby the Railway Company, in consideration of a bonus, covenanted, among other things, to construct its railway within the limits of the said Township of Turnberry, and to erect and maintain a station in or near the Village of Wingham, in the said township. There is no provision for repayment of the bonus in the event of default. In any case, Wingham station is not affected by this application.

The copies of the said agreements and the original agreement were put in by counsel for the municipalities with the consent of counsel for the Railways and can be taken as proven for the purpose of this application.

It was submitted by counsel opposing the application that the payment of the bonuses by the municipalities and the agreements entered into are further matters to which consideration should be given by the Board; that the municipalities having assisted in building the railway should not now be deprived of its benefit. That substantial assistance was given towards the construction of the line there is no doubt. The line of railway was built and opened for operation in 1876 and has been in operation since that time. The communities have had the benefit of the railway service during that period. The line was built to carry the traffic of the country through which it passed and, no doubt, it was contemplated by the parties that it would continue to do so. Since that time the situation has very materially changed by the advent of motor vehicles, and the construction of better roads. The result has been that a considerable portion of the traffic which formerly passed over the railway is now handled by means of highway transportation. This condition is by no means limited to this particular line. A like situation is found in respect to many other branch lines of railway.

The evidence does not show that the said agreements, or any of them, have had the sanction of Dominion Legislation. The agreements as such are, therefore, not binding upon the Board. In fact it was not so contended. As to the position taken by the Board in respect to other somewhat similar agreements, reference may be had to New York Central Ry. Co. et al vs. County of Stormont et al, 50 C.R.C. 235, at 243 and 244, and the cases there referred to. The Board is, therefore, free to dispose of the matter according to the usual principles applicable in such cases. While it may not seem necessary, I would, however, reserve to all parties concerned whatever rights or remedies, if any, that may be open to them elsewhere by reason of the said agreements and each of them.

There is no doubt that some inconvenience and loss will be imposed upon the people of the district as well as farming and certain other business interests that have continued to use the freight, passenger and other services of this line of railway, and the reluctance of the communities tributary to the line to lose it after its operation for 75 years is readily understood.

Section 165A of the Railway Act under which the application is made, provides that:—

165A. The Company may abandon the operation of any line of railway with the approval of the Board, and no company shall abandon the operation of any line of railway without such approval.

The Railway Act does not lay down any principle upon which the Board should act in granting or withholding approval in such applications for abandonment of lines of railway. The Board has, however, in Canadian National Railways vs. Tweed, 44 C.R.C. 53, at 58, laid down the undermentioned principle which has been generally followed:—

The mere fact that a branch line of railway has ceased to show a profit from operation does not, in every case, justify its abandonment. The issue is clearly, however, whether the loss and inconvenience to the public consequent upon the abandonment outweigh the burden that continued operation of the railway line involved would impose upon the railway company.

In this case the evidence shows that no considerable inconvenience or loss will be imposed upon the public, if the line of railway is abandoned. The only points that would be without direct railway service are Londesborough and Belgrave, and the distance from these two communities to other points on a railway is not great. The districts are also well served with highway communication and motor transport services.

The operating loss to the Railways on the line in question has been considerable, and the year 1940 does not indicate improvement. While the renewal of the bridges is not an immediate problem, this is a considerable expense which would require to be faced before very long. It was urged on behalf of the communities that the abandonment of the line should, in any event, be deferred for a time, and the public given another opportunity to see if something could be done to increase the traffic and make the line of railway profitable to operate. While this proposal was made in good faith, there is not sufficient traffic, present or prospective, to warrant the continuance of the operation of the line of railway, taking into account the operating deficits shown by the evidence.

In view of what has been stated, I am of opinion that the application of the Railways for permission to abandon the operation of the line of railway between Clinton Junction and Wingham Junction should be granted. Order to issue accordingly.

March 3, 1941.

J. A. Cross.

I concur,

Hugh Wardrope.

J. A. Stoneman.

Railways: C.N.Rys.

Stations: Blyth, Clinton Jct., Londesborough, Wingham Wye