Wikipedia:WikiProject Trains/ICC valuations/Peoria and Eastern Railway

Interstate Commerce Commission, Valuation Reports, Volume 28

Location and General Description of Property
The railroad of The Peoria and Eastern Railway Company, herein called the Peoria and Eastern, is a standard-gage, steam railroad, located in the eastern part of Illinois and the western part of Indiana. Its owned mileage extends westerly from Indianapolis, Ind., to Pekin, Ill., with one branch at Indianapolis, Ind., and another extending from Urbana to Champaign, Ill. The Peoria and Eastern owns 305.56 miles of all tracks, all leased to and operated by the Big Four. In addition, the Peoria and Eastern owns jointly with other carriers 1.226 miles of yard tracks and sidings, one-half each, classified as minor facilities, which are used jointly by the Big Four and other carriers.

Introductory
The accounting records of the Peoria and Eastern and the Big Four and the reports filed with us indicate that the Big Four operated the property of the Peoria and Eastern, together with the 137 miles of road previously acquired by the Big Four from the Ohio, Indiana and Western Railway Company, from July 1, 1890, to December 31, 1913. The property acquired from the Ohio, Indiana and Western was apparently operated by the Big Four as agent for the Peoria and Eastern. Amounts expended and collected by the Big Four, including the payment of interest on the funded debt of the Peoria and Eastern in the operation of its property during the period mentioned, were charged or credited to the Big Four in an open account on the books of the Peoria and Eastern and the Big Four made corresponding charges and credits on its books in an open account with the Peoria and Eastern. The Big Four did not include in its income account the results from operation of this property for the period mentioned.

After January 1, 1914, the results that accrued from the operation of the property and the amount of interest that was paid on the funded debt of the Peoria and Eastern and the Big Four as if the property of the Peoria and Eastern and the 137 miles of road were leased to the Big Four. The income was included in the operating income of the Big Four and the interest paid on the funded debt of the Peoria and Eastern was reported to us by the Big Four as rent for leased road and by the Peoria and Eastern as income from lease of road. At the same time the Big Four charged on its books in an open account with the Peoria and Eastern the amount of net deficits that accrued during the period from the operation of the above property. The Peoria and Eastern made corresponding entries in its books, crediting the Big Four in an open account with these net deficits and charging its profit and loss account with a like amount.

The results from the operation of the property from April 1, 1890, to June 30, 1890, were recorded in the books of the Big Four as a charge to its profit and loss account and were not recorded in the books of the Peoria and Eastern.

Corporate History
The Peoria and Eastern was incorporated under the general laws of the State of Illinois. Articles of incorporation were filed with the secretary of state on February 17, 1890, and were superseded by corrected articles filed on February 21, 1890. These articles state that incorporation was for the purpose of constructing a railroad from Pekin, Ill., to Indianapolis, Ind. The principal office is at Danville, Ind. The detailed facts as to the development of the fixed physical property will be found in Appendix 2.

The Peoria and Eastern had only one immediate predecessor, The Ohio, Indiana and Western Railway Company, which was incorporated on November 11, 15, and 16, 1887, in Illinois, Indiana, and Ohio, respectively, and was deeded on February 21, 1890, to a purchasing committee who conveyed the portion east of Indianapolis, Ind., on February 22, 1890, to the Big Four and the remainder on the same date, with all rights, franchises, etc., to the Peoria and Eastern. The following statement shows facts concerning the incorporation and demise of companies, which were predecessors of The Ohio, Indiana and Western Railway Company.

Development of Fixed Physical Property
The Peoria and Eastern's entire 201.548 miles of road was acquired by it at organization from Charles H. Coster and Samuel Spencer, who had purchased it at foreclosure and conveyed it to the Peoria and Eastern on February 22, 1890, as follows: Total, 201.548 miles.
 * By deed conveyance of Feb. 22, 1890:
 * From Pekin to Illinois-Indiana State line, 122.782 miles.
 * By lease in perpetuity of Feb. 22, 1890, and deed of Mar. 15, 1890:
 * From Indiana-Illinois State line to Indianapolis, Ind., 78.766 miles.

The manner in which the Peoria and Eastern acquired the 2.496 miles of double track, owned by it, can not be ascertained from the records. The Ohio, Indiana and Western acquired all of its property from the Springfield and Western Railway Company and from the Indiana and Western Railway Company through consolidation of these two roads but only the property of the latter entered into the property now owned by the Peoria and Eastern. Information concerning property acquired by the Peoria and Eastern from the Ohio, Indiana and Western, including the location, dates of completion of construction, and mileage of road, are shown in the following tabulation: Total, 202 miles approx.
 * Construction completed by—
 * The Indianapolis, Crawfordsville and Danville Railroad Company, Danville, Ill., to Indianapolis, Ind., 1869., 85 miles approx.
 * The Danville, Urbana, Bloomington and Pekin Railroad Company, Pekin to Danville, Ill., 1869., 117 miles approx.

The transactions which resulted in the acquirement of the above-described property by the Peoria and Eastern may be briefly described as follows:

In an agreement dated October 30, 1889, between the Big Four and the reorganization committee of the Ohio, Indiana and Western, composed of Charles H. Coster, Samuel Spencer, George T. Bliss, and Anthony J. Thomas, it was agreed that the property of the Ohio, Indiana and Western should be sold at foreclosure and divided into two portions, one extending from Pekin, Ill., to Indianapolis, Ind., and the other from Indianapolis, Ind., to Springfield, Ohio. The committee agreed to organize a company to take over the western portion of the line, and the Big Four agreed to purchase the eastern portion, giving therefor a purchase money lien in the amount of $5,000,000. In addition to the property covered by this lien the Big Four was also to receive, for purchasing the eastern portion, one-half of the capital stock to be issued by the company acquiring the Ohio, Indiana and Western portion of the property.

The property of the Ohio, Indiana and Western was placed in the hands of a receiver on January 9, 1890, and sold at foreclosure and conveyed by deed of February 21, 1890, to Charles H. Coster and Samuel Spencer, trustees. These trustees divided the property into three portions which were disposed of in the following manner:

On February 22, 1890, the line from Peking[sic] to the Illinois-Indiana State line, about 123 miles in length, with all rights, franchises, etc., was conveyed to the Peoria and Eastern by a quitclaim deed.

On the same date and by the same instrument, the line from the Indiana-Illinois State line to Indianapolis, Ind., about 79 miles in length, was leased in perpetuity to the Peoria and Eastern from April 1, 1890. The trustees also conveyed to the Peoria and Eastern their reversionary interest in the lease and the property by a quitclaim deed, dated March 15, 1890, but specified that the lease should not be merged into a sale of the property while certain mortgage obligations under which the leasehold interest had been assigned as security, should exist.

On February 22, 1890, the line from Indianapolis, Ind., to Springfield, Ohio, about 137 miles, was also conveyed by the trustees to the Big Four, under the terms of a 50-year, $5,000,000 purchase money lien, dated April 1, 1890, and this lien with all rights and interests accruing therefrom, was assigned to the Peoria and Eastern by the trustees on February 22, 1890, as is more fully explained later on in this report.

Leased Railway Property
The entire property of the Peoria and Eastern, comprising about 202 miles of road extending from Pekin, Ill., to Indianapolis, Ind., together with certain rights to use the property of others, as previously explained in the report upon the Big Four, was solely operated by the Big Four from April 1, 1890, to date of valuation, through an agreement dated February 22, 1890. This agreement is to extend for a period of 50 years from April 1, 1890, and for such further time as the Big Four may elect to extend it.

Under the terms of the agreement, the Big Four is to operate the property of the Peoria and Eastern and apply the net earnings of each year arising therefrom, together with the net income from the $5,000,000 purchase-money 50-year lien, previously mentioned, to the payment of the interest on the first consolidated mortgage, The Indiana, Bloomington and Western Railway Company first preferred 7 per cent and the Ohio, Indiana and Western first preferred 5 per cent bonds of the Peoria and Eastern. The net earnings of each year are to be ascertained by deducting from the earnings and income the expenses of operation and maintenance, including taxes, assessments, insurance, rental, and other charges, and the cost of repairs, renewals, and reasonable betterments to the property necessary for its economical and efficient operation. After reimbursing itself out of what shall remain of such net earnings and income of the year, not applied to the payment of interest, for any advances previously made, with interest thereon at 6 per cent per annum, the Big Four is to apply the balance of said net earnings and income to the payment of interest upon the noncumulative 4 per cent 50-year income-mortgage bonds of the Peoria and Eastern, in accordance with the terms of the mortgage under which the income bonds were issued, and pay over to the Peoria and Eastern any amount thereof finally remaining. The Peoria and Eastern and the Big Four accounted for the results from the operations of the property of the Peoria and Eastern by the Big Four for the period from April 1, 1890, to December 31, 1913, as if the Big Four was agent for the Peoria and Eastern during that period and from January 1, 1914, to date of valuation, as if the Big Four leased the Peoria and Eastern's property during that period. The Peoria and Eastern recorded a rental as having been received for the use of its property, for the year ended on date of valuation, amounting to $404,260, which equaled the accrued interest on its funded debt for that year.

The Big Four operated the line of road owned by it extending from Indianapolis, Ind., to Springfield, Ohio, covered by the $5,000,000 purchase-money 50-year lien owned by the Peoria and Eastern, at date of valuation, as a part of the property of the Peoria and Eastern from April 1, 1890, to date of valuation, and the results from the operations of those properties are not separable on account of insufficient details.

Under the terms of the agreement whereby the $5,000,000 purchase-money 50-year lien was issued by the Big Four to Coster and Spencer, trustees, for the line of road extending from Indianapolis, Ind., to Springfield, Ohio, the net income not to exceed $200,000 per annum resulting from the operation of that property was to be turned over to the Peoria and Eastern, in lieu of interest on the purchase-money 50-year lien owned by the Peoria and Eastern. The Peoria and Eastern did not record separately in its accounts any amounts as having been received by it representing the net earnings from the operations of the Indianapolis-Springfield line.