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HARVARD LAW LIBRARY 



Received MAY 2 9 1920 



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U^ 



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Cited P.U.R. 1920 A 



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PUBUC UTILITIES 
REPORTS 



ANNOTATED 



Containing" Decisions 
of the Public Service 
Commissions and of 
State and federal Cburta 



1020A 



Henry C. Spurr, Editor 



PUBLIC UTILITIES REPORTS INC, 

ROCHESTER, NEW YORK 

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Copyright 1920 

by 

Public Utilities Rbpobts Incobporath> 



MAY 2 9 1920 



E. R. Andrews Pkintinq Company, Rochester, N. Y. 



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PREFACE 

The Public Utilities Reports, Annotated, heretofore published 
by the LawjerB Co-operative Publishing Company of Rochester, 
N. Y., will be published hereafter fey Public Utilities Reports, 
Inc., 20 Exchange Street, Rochester, N. T. 

Through the courtesy of the former publishers, Mr. H. C. 
Spurr, Editor of the publication from the beginning, and his 
entire editorial staff have been transferred to the new corpora- 
tion. 

The E. R, Andrews Printing Company of Rochester, N". Y., 
manufacturers of the Reports from the beginning, will also con- 
tinue in that capacity. 

There will therefore be no change in the editorial policy or in 
the standard of production.'^, ^ V/i/; 

The new plan under wjiich the Reports will be issued has been 
approved by the Committee on Publication of Decisions and 
Orders of State Commissions of the National Association of 
Railway and Utilities Commissioners, * 



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PUBLIC SERVICE COMMISSIONS 



ALABAMA. 
Public Service CommiMion. 

Sam p. Kennedy, President, Annis- 

ton. 
B. H. Cooper, Montgomery. 
8. P. Gaillard, Mobile. 



Atticus Muixin, Secretary, Mont- 
gomery. 

ARIZONA. 
Corporation Commissioii. 

Alcos A. Betts, Chairman, Phoenix. 
F. A. Jones, Phoenix. 
D. F. Johnson, Phoenix, 



A. E. Stelzeb, Secretary, Phoenix. 

ARKANSAS. 
Corporatioii Commitsioii. 

Herbert R. Wilson, Chairman, lit- 
tle Roclc. 
Thomas E. Wood, Little Rock. 
Walter G. Brasher, Little Rock. 



Guy a. Freeuno, Secretary, Little 
Rock. 

CALIFORNIA. 
Railroad Commissioii. 

Edwin 0. Edqerton, President, Flood 

Bldg., San Francisco. 
H. D. LovELAND, Flood Bldg., San 

Francisco. 
Harley W. Brundige, Flood Bldg., 

San Francisco, 
Irving Martin, Flood Bldg., San 

Francisco. 
Frank R. Devlin, Flood Bldg., San 

Francisco. 



COLORADO. 
Public Utilities Commission. 

Grant B. Halderman, Chairman, 
State Capitol, Denver. 

A. P. Anderson, State Capitol, Den- 
ver. 

Frank P. Lannon, State Capitol, 
Denver. 



George A. Flannioan, Secretary, 
Denver. 

CONNECTICUT. 
Public Utilities Commission. 

Richard T. Hiooins, Chairman, Wia^ 

sted. 
Chas. C. Ei.well, New Haven. 
Joseph W. Alsop, Avon. 



Henry F. Billings, Secretary, Hari> 
ford. 

DISTRICT OF COLUMBIA. 
Public Utilhies Commission. 

Brigadier General Charles W. 

KuTZ, Chairman, District Bldg., 

Washington. 
Louis Brownlow, Florence Court, 

Washington. 
Vacancy. 



Walter C. Allen, Executive Secre- 
tary, District Bldg., Washington. 

FLORIDA. 
Railroad Commission. 

R. Hudson Burr, Chairman, Talltf* 

hassee. 
Newton A. Blitch, Tallahassee. 
RoTAL C. Dunn, Tallahassee. 



W. R. Williams, Secretary, San Lewis G. Thompson, Secretary, T»l- 
Francisco. i lahassee. 

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viii 



PUBLIC SERVICE COMMISSIONS. 



GEORGIA. 

Railrbad Commission. 

Chables M. Candleb, Chairman, 

Atlanta. 
Paul B. Tbammell, Dalton. 
James A. Pebry, Lawrenceville. 
John T. Boifeuillet, Macon. 
J. D. Pbice, Athens. 



Albebt Collier, Secretary, Atlanta. 

HAWAII. 

Public Utilities Commission. 

WiLLLAM T. Cabden, Chairman, 

Honolulu. 
Ai.ex. J. GiGNOUX, Honolulu. 
Inobam M. Stainback, Honolulu. 



H. P. O'SuLLiVAN. Secretary, Hono- 
lulu. 

IDAHO. 
Public Utilities Commission. 
A. L. Fbeehafeb, President, Boise. 
Geobge E. Ebu, Boise. 
E. M. Sweelet, Boise. 



C. J. Callahan, Secretary, Boise. 

ILLINOIS. 
Public Utilities Commission. 

James H. Wilkerson, Chairman, 

Springfield.' 
Frank H. Funk, Springfield. 
Walter A. Shaw, Springfield. 
Thomas E. Dempcy, Springfield. 
P. J. LucEY, Springfield. 



R. Allan Stephens, Secretary, 
Springfield. 

INDIANA. 
Public Service Commission. 

E. I. Lewis, Chairman, State House, 
Indianapolis. 

J. W. McCabdle, State House, In- 
dianapolis. 

Glenn VanAuken, State House, In- 
dianapolis. 



Feed B. Johnson, State House, In- 
dianapolis. 

Paul P. Haynes, State House, In- 
dianapolis. 



Cabl H. Mote, Secretary, 12<J State 
House, Indianapolis. 

IOWA. 

Board of Railroad Commissioners. 

DwioHT N. Lewis, Chairman, Dca 

Moines. 
John A. Guiheb, Winterset. 
Charles Websteb, Waucoma. 



Geobge L. McCauohan, Secretary, 
Des Moines. 



KANSAS. 

Court of Industrial Relations. 

W. L. HuGGiNS, Presiding Judge, Em- 
poria. 
Clyde M. Reed, Parsons. 
Geobge H. Wabk, Caney. 



Cabl W. Moobe, Clerk, Kinsley. 

.ICENTUCKY. 

Railroad Commission. 

J. S. CooPEB, Chairman, Somerset. 
P. N. Burns, Paducah. 
£. C. Kash, Jackson. 



Richard Tobin, Secretary, Frank- 
fort, 

LOUISIANA. 

Railroad Commission. 

Shelby Taylob, Chairman, Crowley. 
John T. Michel, New Orleans. 
Hl'ey p. Long, Shreveport. 



Henry Jastremski, Secretary, Baton 
Rouge. 



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PUBLIC SERVICE COMMISSIONS. 



MAMfi. 

FiiMic Utilities Coiiiiiiisdoii« 

Benjamin F. Cleaves, Chairman, 

AugiiAta. 
Hebbebt W. Trafton, Augusta. 
Albert Oeeenlaw, Au^sta. 



Will H. Brvnsox, Secretary, Capi- 
tol Bldg., Lansing. 

. MINNESOTA. 

Railroad and WarehotM# 
Commission. 

Ira B. Mnxs, Chairman, State Capi- 
tol, St. Paul. 

^.^ „ ,,. , O. P. B. Jacobson, State Capitol, St 

Munsey Bldg., Baltimore. I p j "^ 

James C. Lego, Munsey Bldg., Balti- 
more. 

J. Frank Harper, Munsey Bldg., 
Baltimore. 



George F. Giddings, Clerk, Augusta 

MARYLAND. 

Public Senrica Coumission. 

John Milton Reifsnider, Chairman, 



SA:.irEL Oi>ell, Capitol Bldg., Lan- 
sing. 

Earl R. Stewart, Capitol Bldg., 
Lansing. 



Brnj. T. Fendall, Secretary, Mun- 
sey Bldg., Baltimore. 

MASSACHUSETTS. 

Commission of the Dopartmont of 
Public Utilities. 

Henry C. Attwill, Chairman, 15 

Ashburton Place, Boston. 
Everett E. Stone, 15 Ashburton 

Place, Boston. 
Alonzo R. Weed, 16 Ashburton Place, 

Boston. 
David A. Eliis, 15 Ashburton Place, 

Boston. 
Henry G. Wells, 15 Ashburton 

Place, Boston. 



Fred-W. Putnam, gtate Capitol, St 
Paul. 



A. C. Clausen, Secretary, St. Paul 

MISSISSIPPL 
Railroad Commission. 

George R. Edwards, President, Mo- 
Cool. 
W. B. Wilson, Corinth. 
C. M. Morgan, Hattiesburg. 



Andrew A. Highlands, Secretary, 15 
Ashburton Place, Boston. 

MICHIGAN. 

Public Utilities Commission. 

WnjJAM M. Smith, Chairman, Capi- 
tol Bldg., Lansing. 

William W. Potter, Capitol Bldg., 
Lansing. 

Sherman T. Handt, Capitol Bldg., 
Lansing. 



James Galgeran, Secretary, Jackson. 

MISSOURL 

Public Service Commission. 

William G. Busby, Chairman, Jef- 
ferson City. 
Edwin J. Bean, Jefferson City. 
David E. Blair, Jefferson City. 
XoAH W. Simpson, Jefferson City. 
Edward Flad, Jefferson City. 



X. E. WiLUAMS, Secretary, Jefferson 
City. 

MONTANA. 

Board of Railroad Commissionfi 
and Public Senrica Commission. 

Daniel Boyle, Chairman, Helena. 
J. £. McCoRMicK, Helena. 
Lee Dennis, Helena. 



W. J. Haynes, Secretary, Helena. 



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NEBRASKA. 

State Railway CommUsioii. 

H. G. Taylob, Chairman^ State Capi- 
tol, Lincoln. 

Thomas L. Haix, State Capitol, Lin- 
coln. 

T. A. Browne, State Capitol, Lincoln. 



PUBLIC SERVICE COMMISSIONS, 

NEW YORK. 



John E. Cvrtiss, Secretary, State 
Capitoli Lincoln. 

NEVADA. 

Public Senrice CommiMion. 

J. F. Shaughnessy, Chairman, Car- 
son City. 
W. H. Simmons^ Reno. 
J. G. ScBUGHAM, Carson City. 



H. D. Sammis, Secretary, Carson 
City. 

NEW HAMPSHIRE. 
Public Senrice Commistion. 

William T. Gunnison, Chairman, 

Rochester. 
Thomas W. D. Wobthen, Concord. 
John W. Storbs, Concord. 



Walteb H. Timm, Clerk, Concord. 

NEW JERSEY. 

Board of Public Utility Commis* 

sioners. 

John W. Slocum, President, Long 

Branch. 
Alfred S. March, New Brunswick. 
George F. Wbight, Pater son. 
Habby L. Knight, Medford. 
Andrew GiiUL, Jr., Ridgefield. 



Alfred N. Babbeb, Secretary, Tren- 
ton. 

NEW MEXICO. 
State Corporation CommiMioB. 

Hugh H. Williams, Chairman, Santa 

Fe. 
J. M. Luna, Santa Fe. 
Bonifacio Montoya, Santa F«. 



Public Senrice CcMumissioiif Isl 
District. 

Lewis Nixon, Commissioner, 40 La- 
fayette St., New York City. 

Edwabd J. Glennon, Deputy Com- 
missioner, 49 Lafayette St., New 
York City. 

Alfred M. Barrett, Deputy Commis- 
sioner, 49 Lafayette St., New York 
City. 

^loKGAN T. Donnelly, Deputy Com- 
missioner, 49 Lafayette St., New 
York City. 



James B. Walker, Secretary, 49 
I/afayette St., New York City. 

Public Senrice CommiMion, 2d 
District. 

Charles B. Hill, Chairman, Albany. 
Fbank Ibvine, Albany. 
John A. Babhite, Albany. • 
Thomas F. Fennell, Albany. 
Joseph A. Kellogg, Albany. 



A. L. MoBBisoN^ Clerk, Santa Fe. 



Francis X. Disney, Secretary, Al- 
bany. 

NORTH CAROLINA, 

Corporation Commistion. 

William T. Lee, Chairman, Raleigh. 
Geobge p. Pell, Raleigh. 
A. J. ^Iaxwell, Raleigh. 



R. O. Self, Clerk, Raleigh. 

NORTH DAKOTA, 

Board of Railroad Commissioners. 

S. J. Aandahl, President, LitchviUe. 
C. F. DuFcris, Bismarck. 
Fbank Milhollan, Bismarck. 



J. H. Galdebhbad, Secretary, Bis- 
marck. 

Fbed Bbsiueb, Director Diviflion at 
Utilities, Bismarck. 



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PUBLIC SERVICE COMMISSIONS. 



OHIO. 

Public Utilitiet Commisdoii. 

Chables C. Mabshaix, Chairman, 

Columbus. 
BEECHini W. Waltebmire, Columbus. 
Btbon M. ClemDemino, Columbus. 



G. C. Maxwell, Secretary, Columbus. 

OKLAHOMA. 

Corporation CommissioB. 

Art L. Walker, Chairman, Okla- 
homa City. 
Campbell Rcssell, Oklahoma City. 
R. E. Echols, Oklahoma City. 



J. E. SOOTT, Secretary, Oklahoma 
City. 

OREGON. 
Public Servico CommiMioB. 

Fred G. Buchtel, Chairman, Salem. 
Hylex H. Corey, Salem. 
Fred A. Williams, Salem. 



Ed Wright. Secretary, Salem. 

PENNSYLVANIA. 

Public Senrice ComnuMioB. 

Wm. D. B. Aixey, Chairman, Harris- 
burg. 

Samuel M. Clement, Jr., Philadel- 
phia. 

S. Ray Shelby, Unionto^vn. 

JoHX W. Reed, Clearfield. 

John- S. Rilling, Harrisburg. 

Jambs S. Bbnit, Philadelphia. 

Milton J. Brecht, Lancaster. 



John G; Hopwood, Acting Secretary, 
Harrisburg. 

PHILIPPINE ISLANDS. 

• Public Utility ComaiissioB. 

Judge Mariano Cui, Commissioner, 
Manila. 



Attorney Roman A. Cruz, Secretary, 
Manila. 



PORTO RICO. 
Public Senrico CoauBissioB. 

Josd E. Benedicto, Chairman, San 

Juan. 
Vacancy. \ 

J. W. Bonneb, San Juan. 
Manuel Camu^as, San Juan. 
GuiLLEBMO EsTEN'ES, San Juan. 
Paul G. Miller, San Juan. 
A. Ruiz Soler, San Juan. 
Josfi G. Torres, San Juan. 
L. Santiago Cahmona, San Juan. 



Pablo Berga, Secretary, San Juan. 

RHODE ISLAND. 

Public Utilities CommitrioB» 

William C. Bliss, Chairman, 10 Col- 
lege St., Providence. 
Samuel £. Hudson, Woonsocket. 
Robert F. Rodman, Lafayette. 



John W. Rowe, Secretary, Provi- 
dence. 

SOUTH CAROLINA. 

RailroacI CommissioB. 

Frank W. Shealy, Chairman, Co 

lumbia. 
James Cansler, Columbia. 
H. H. Arnold, Columbia. 



J. P. Darby, Secretary, Columbia. 

SOUTH DAKOTA. 

Board of Railroad ComBiissioBon. 

J. J. Murphy, Chairman, Pierre. 
J. W. Raish. Vice Chairman, Pierre. 
D. £. Brisbane, Pierre. 



H. A. Ustrud, Secretary, Pierre. 

TENNESSEE. 

Raifi^Mid aBd Public Utilities 
ComBiistion. 

B. A. Enloe, Chair man, Nashville. 



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xii 



PUBLIC SERVICE COMMISSIONS. 



H. H. Hannah, Nashville. 
GEORas N. Welch, Nashville. 
Miss Willie Fields, Secretary, 
Nashville. 

TEXAS. 

Railroail Commiftsion. 

Allison Mayfielo, Chairman, Aus- 
tin. 
Eaki.e B. Mayfield, Austin. 
Clarence E. Gilmore, Austin. 



E. R. McLean, Secretary, Austin. 

UTAH. 

Public Utilities CommisMon. 

Judge Joshua Greenwood, Presi- 

deat, Salt Lake City. 
Henry H. Blood, Salt Lake City. 
• Warren Stoutnoub, Salt Lake City. 



T. £. Banning, Secretary, Salt Lake 
City. 

VERMONT. 

Public Senrice Commission. 

Walter A. Dutton, Chairman, Hard- 
wick. 
William R. Warner, Vergennes. 
Eli H. Porter, Wilmington. 



Neil D. Clawson» Clerk, Brattle- 
boro. 

VIRGINIA. 

State Corporation Commission. 

William F. Rhea, Chairman, Rich- 
mond. 
Alexander Forward, Richmond. 
Berkley D. Adams, Richmond. 



Richard T. Wilson, Clerk, Rich- 
mond. 

WASHINGTON. 

Public Senrice Commission. 

E. V. Kuykendaix, Chairman, Olym- 

pia. 
Hance H. Clkland, Olympia. 
Frank R. Spinning, Olympia. 



J. H. Brown, Secretary, Olympia. 

WEST VIRGINIA. 

Public Service Commission. 

George R. C. Wiles, Chairman, 

Charleston. 
Ernest D. Lewis, Charleston. 
Edgar G. Rideb, Charleston. 



R. B. Bebnheim, Secretary, Charles- 
ton. 

WISCONSIN. 

Railroad Commission. 

Carl D. Jackson, Chairman, Madi* 

son. 
Henry R. Trum bower, Madison. 
John S. Allen, Madison. 



C. D. Se Cheverell, Secrcftary, Madi- 
son. 

WYOMINa 

Public Senrice Commission. 

Claude L. Draper, Chairman, 

Cheyenne. 
Maltiioe Groshon, Cheyenne. 
H. M. Huntington, Cheyenne. 



£. N. GBOWLfiY, Secretary, Clieyenne. 



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ABBREVIATIONS OF COMMISSION 
REPORTS 

Ann. Proc. Nat. Asm. R. Annual Proceedings of the National Associa- 

Comrs tion ol Railway Commissioners. 

Ann. Hep. Ala. R. C Annual Report of the Alabama Railroad Com- 
mission. 

•• " Ariz. C. C Annual Report ol the Arizona Corporattow 

Commission. 

** ** Ariz. R. C Arizona Railway Commission Annual Reports 

J 909-10. 

** ** Ark. R. C Arkansas Railroad Commission Annual Re- 
ports. 

** ** Cal. Bd. R. Co. ..California Board of Railroad Commissionera 

Annual Reports. 

•* " Can. R. C Board of Railway Commissioners of Canada 

Annual Reports. 

'• " Colo. P. U. C. ...Annual Report of the Colorado Public Util- 
ities Commission. 

•* " Col. S. R. C Colorado State Railroad Commission Annual 

Reports. 1907-14. 

" " Conn. P. U. C. . . Annual Report of the Connecticut Public Util' 

itics Commission. 

" " Conn. R. C Annual Report of the Connecticut Railroad 

Commissioners. 4853-1911. 

* " Dist. Col. P. U. C. Annual Report of the District of Columbia 

Public Utilities Commission.' 
" " Fla. R. C Annual Report of the Railroad Commission of 

for the State of Florida. 
•• " Ga. R. C Annual Report of the Railroad Commission of 

Georgia. 
« *• Houston, Tex., P. 

S. C Houston, Texas, Public Service Commissioner, 

Annual Reports. 
** ** la. R. Annual Report of the Iowa Board of Railroad 

Commissioners. 
« •* Ida. P. U. C Annual Report of the Idaho Public Utilities 

Commission. 

• •• Hi. P. U. C Annual Report of the Public Utilities Commis- 

sion of Illinois. 
' " 111. R. ft W. G. ..Annual Report of the Illinois Railroad and 

Warehouse Commission. 1871-1913. 
** ** Ind. P. S.C Annual Report of the Indiana Public Service 

Commission. 
zUi 



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xiv ABBREVIATIONS. 

Ann. Rep. Ind. R. C Annual Report of the Railroad Commission of 

Indiana. 1906-1912. 

** " Kan. R. C. ...... Annual Report of the Railroad Commissionera 

of Kansas. 

« " Ky. R. C Annual Report of the Kentucky Railroad Com- 

mission. 

** «» La. R. Annual Report of the Railroad Commission of 

Louisiana. 

" *• Los Angeles Bd. 

P. U I.08 Angeles, Cal., Board of Public Utilities 

Annual Reports. 1909-1913. 

** « Manitoba P.U.O. Manitoba Public Utilities Commission, Canada, 

Annual Reports. 

<* * Mass. G. & E. L. 

C Annual Report of the Massachusetts Board of 

Gas and Electric Light Commissioners. 

*• . •* Mass. High Com. Annual Report of the Massachusetts Highway 

Commission. (Tel. Cos.) 

•• " Mass. P. S. C. ...Annual Report of the Massachusetts Public 

Service Commission. 

•• " Mass. R. C Annual Report of the Massachusetts Board of 

Railroad Commissioners. 

" " Md. P. S. C Annual Report of the Maryland Public Service 

Commission. 

«» " Me. P. U. C Annual Report of the Public Utilities Commis- 
sion of Maine. 

" " Me. R. C Annual Report of the Board of Railroad Com- 
missioners of Maine. 

" ** Mich. R. C Annual Report of the Michigan Railroad Com- 
mission. 

•« ** Minn. R. & W. C. Annual Report of the Minnesota Railroad and 

Warehouse Commission. 

*• ** Mo. R. & W. C. ..Annual Report of the Missouri Railroad and 

Warehouse Commission. 

*• ** Mo. R. C Annual Report of the Missouri Board of Rail- 
road Commissioners. 1875-1889. 

•« *• Mont. R. & P. S. 

C Annual Report of the Railroad and Public 

Service Commission of Montana. 

" " Mont. R. C Annual Report of the Railroad Commission of 

Montana. 

** ** N. C. C. C Annual Report of the North Carolina Corpora- 
tion Commission. 

«• " N. C. R. C .Annual Reports of the North Carolina Board 

ol Railroad Commissioners. 1891-1898. 

M " N. D. C. of R. ...Annual Report of the North Dakota Commis- 
sioners of Railroads. 1890-1912. 

** ** N. D. R. C Annual Report of the Beard of Railroad Com- 
missioners of North Dakota. 



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ABBREVIATIONS. xr 

Ann. Rep. Neb. Bd. Trans. . . Annual Report of the Nebraska Board of 

Transportation. 1887-1900. 

•• " Neb. R. C. Annual Report of tbe Nebraska Board of RaU* 

road Commissioners. Only 1st Annual Re- 
port. 1885. 

•• *• Neb. S. R. C Annual Report of the Nebraska SUte Railway 

Commission. 

* * Ncv. P. 8. Annual Report of the Public Service Commis- 
sion of Nevada. 

.« ** Nev. R. C. Annual Report of the Railroad Commission of 

Nevada. 

«* " N. H. P. S. C. ...Annual Report of the New Hampshire Public 

Service Commission. 

** " N. H. R. C. Annual Report of the New Hampshire Board 

of Railroad Commissioners. 

** ** N. J. P. U. C. . . Annual Reports of New Jersey Board of Pub- 
lic Utility Commissioners. 

" •* N. J. R. C New Jersey Board of Railroad Commissioners 

Annual Reports. 1907-1910. 

« " N. M. ^. C. C. . . . Annual Report oi the State Corporation Com- 

mission of New Mexico. 

« « N. Y. P. S. C. (1st 

Dist. ) Annual Report of New York Public Service 

Commission, First District. 

" ** N. Y. P. S. C. (2d 

Dist.) Annual Report of New York Public Service 

Commission, Second District. 

•* ** N. Y. R. C New York Railroad Commission Reports, — 

1906. 

•< " Nova Scotia P. 

U. C Nova Scotia Board of Commissioners of Pablio 

Utilities, Canada, Annual Reports. 

** *' Ohio C. of R. k T. Annual Report of tlie Ohio Commissioner of 

Railroads and Telegraphs. 1867-1905. 

•* " Ohio P. S. C Annual Report of the Public Service Commis- 
sion of Ohio. 1912. 

** •• Ohio P. U. C Annual Rq>ort of the Public Utilities Com- 
mission of Ohio. 

•« ** Ohio R. C Annual Report of the Railroad Commission of 

Ohio. 1000-1911. 

** " Okla. C. C. ..*... Annual Report of the Corporation Conunission 

of Oklahoma. 

« ** Ontario Ry. & 

Mun. Bd Ontario Railway and Municipal Board, Ontario, 

Canada, Annual Reports. 

•* " Or. R. C. ..*.... Annual Report of the Oregon Railroad Com- 
mission. 

** •* Pa. P. S.»C Annual Report of the Pennsylvania Public 

Service Commission. 

^ * Pa. S. R. G. •••••Annual Report of the Pennsylvania State 

Railroad Commission. 



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XTi ABBREVIATIONS. 

Ann. Hep. Quebec P. U* C. Quebec Public Utilities CominisBion, Canada, 

Annual Reports. 

•• " R. I. P. U. C. ...Annual Report of the Public Utilities Commis- 
sion of Rhode Island. 

** " R. I. R. C Rhode Island Railroad Commission Annual 

Reports. 3889-] 911. 

•* f* S. D. R. C Annual Report of the South Dakota Railroad 

Commissioners. 

*• ** Tex. R. C Annual Report of the Railroad Commission of 

Texas. 

** " Va. S. C. C Annual Report of the State Corporation Com- 
mission of Virginia. 

* ** Vt. R. C Annual Report of the Railroad Commis^oneri 

of Vermont. 

« « Wash. P. S. C. ..Annual Report of the Public Service Commis- 
sion of Washington. 

*' ** Wash. R. C Annual Report of the Railroad Commission of 

Washington. 

« " Wilmington, Del., 

P. U. C ^Wilmington, Del., Board of Public Utility Com- 
missioners Annual Reports. 

* " W. V. P. S. C. ..Annual Report of the Public Service Commis- 

sion of West Virginia. 

A. T. ft T. Co. Com. L American Telephone and Telegraph Companj 

Commission Leaflet. 

* *' C. T. C American Telephone and Telegraph Company 

Commission Telephone Cases. 

Bien. Rep. Cal. Bd. R. C California Board of Railroad Commissioners 

Biennial Reports. 
*• " Kan. P. U, C. ...Biennial Report of the Kansas Public Utilities 

Commission. 

** " Miss. R. C Biennial Report of the Mississippi Railroad 

Commission. 

*• ** Vt. P. S. C Biennial Report of the Public Service Commis- < 

8 ion of Vermont. 

Cal. R. C. R. California Railroad Commission Reports. 

Can. Ry. Cases Canada Railway Cases (in 16 vols, to date). 

Colo. P. U. C Decisions of the Public Utilities Commission of 

Colorado. 

Fed. Tr. Rep Federal Trade Reporter. 

Hawaii P. U. C. y, Hawaii Public Utilities Commission. 

111. P. U. C. R Illinois Public Utilities Commission Reports. 

111. R. & W. C. D Decisions of the Railroad and Warehouse Com- 
mission of Illinois. 

Inters. Com. Rep Interstate Commerce Commission Reports. 

K. C. Mo. P. U. Kansas City, Mo., Public Utilities Commission 

"" Reports. Ist Semi-Annual, 1900. 1st An- 

nual, 1911. • 

Mo. P. S. C. R. .•••••. Missouri Public Service Commission Reports. 



Digitized by VjOOQIC 



ABBREVIATIONS. xvii 

N. B. Bd. P. U. C New Brunswick Board of Public Utilities Com. 

missionersy Canada. 

N. H. P. S. C. R, N. H. Pub. Ser. Commission Reports. 

N. J. P. U. C. R. Reports of the Board of Public Utilities Com- 

missioners of New Jersey. 

N. Y. Off. Dept. R New York Official Department Reports. 

Pa, P. S. C Pennsylvania Public Service Commission Re- 
ports. 

P. I. P. U. C Philippine Islands Public Utilities Comniis* 

sion. 

P. S. C. R. (1st Dist. N. Y.) . .Public Service Commission Reports, First Dis- 
trict New York. 

P. S. C. R. (2d Dist. N. Y.) ..Public Service Commission Reports, Second 

District New York. 

P. 8. Reg. Public Service Regulation. 

Rate Res Rate Research, published by the National Elec- 
tric Light Association. 

R. L Bd. R. C. Rhode Island Board of Railroad Commissioners 

Reports. 

St. <l. Mo. P. U. St. Joseph, Mo., Public Utilities Commissioa 

(No regular reports.) 1909-1913. 

St. L. Mo. P. S. St. Louis, Mo., Public Service Commission. 

Tenn. R. C Tennessee Railroad Commission ( no decisions 

published). Annual Reports. 1897-1912. 

UtiUties Mag Utilities Magazine. 

Wis. B. C. R. •..•• Wisconsin Railroad Conunission Reports. 



Digitized by VjOOQIC 



Digitized by VjOOQIC 



GENERAL TABLE OF CASES 
REPORTED. 

6ee also List of Appeals, Rehearings, and Modifications, post, p. xlix. 



Adamson, Re % (Idaho) 

Algoma, Re (Wis.) 

Allegany v. Keystone Gras Co ( N. Y. 

Aima V. CShicago, R. I. & P. R (La.) 

Alton (Jas A E. Co., Re • (HI.) 

American R. Exp. Co., Re (R. L) 

American Thread Co., Re (Conn. ) 

Andover v. Empire Cras & Fuel CJo (X. Y. 

Apple River Milling Co., Re (Wis.) 

ArlEona E. R. Co., Re (Ariz.) 

Atchison, T. & S. F. R. Co., Re (Mo.) 

Athens Electric Light Plant, Re (111.) 

Atlanta Gaslight Co., Atlanta y (6a. 

Atlanta v. Atlanta Gaslight Co. (Ga. 

Atlanta v. Georgia R. & Power Co (Ga. 

Aurelio y. Manila Gbs Corp. (2 cases) (P. I.) 

Avoca V. Chicago M. A St. P. R. Co , (Wis.) 

Bangor & R. Co., Re (Me.) 

Bangor R. k Electric Co., Re (Me.) 

Barkley, Re (Colo.) 

Bath & B. Light k P. Co., Re (Me.) 

Bath V. Bath Electric & Gas Light Co. . . (N. Y. 2d Dist.) 
Bath Electric & Gas Light Co., Bath v. . . (N. Y. 2d Dist.) 

Beloit Traction Co., Re (Wis.) 

Belt Line R. Corp., Re (N. Y. 1st Dist.) 

Berkshire Street R. Co., Lee v 

Berks v. Philadelphia & R. R. Ck) (Pa.) 

Berlin Heights Addition v. Berlin Water Co 

Berlin Water Co., Berlin Heights Addition y. 

Bevier Teleph. Co., Re 

Bismarck Gas Co., Re 

Black Diamond Water Co., Re 

Bloomington Electric Light & P. Co., Re (Wis.) 

Blue River Power Co., Re (Neb.) 

Bluffton, Re (Ind.) 

Board of County Road Com'rs, Re (Mich.) 

Board of County Road Com'rs, Re (Mich. ) 

Board of Supervisors, Re (Ariz. ) 

Bohall, Re (Nev.) 

xix 



(abstract 
(abstract 
2d Dist. 
(abstract 
(abstract 
(abstract 
(abstract 
2d Dist. 
(abstract 
(abstract 
(abstract 
(abstract 
Sup. CJt. 
Sup. Ct. 
Sup. Ct. 
(abstract 
(abstract 

(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
. . ( Mass. 
(abstract 
.. (X. H. 
. (N. H. 
... (Mo. 
. (N. D. 
... (CaL 
(abstract 
(abstract 
(abstract 
(abstract 
( abstract 
(abstract 
(abstract 



963 
994 
307 
989 
991 
984 
963 
702 
995 
974 
974 
991 
728 

ns 

734 
999 
982 

973 
905 
962 
966 
998 
998 
979. 
996 
206 
983 
865 
865 
90 
877 
160 
994 
967 
987 
977 
978 
974 
967 



Digitized by VjOOQIC 



CASES REPORTED. 



Boise Valley Traction Co., Re 

Boonton Electric Co., Re (N. J.) 

Boston & M. R., Brown v (Mass. Sup. 

Boulais, Re (Utah) 

Bountiful JCity. Re . . .> *.».-. r> . (yt^> . 

Boyle V. WillceB-Barre Co. - . 

Boynton Gas & E. Co., Re , ; (Okla.) 

Brockton Gas Light Co., Re ( Mass. ) 

Bronner, Re (Mich. ) 

Bronx Gas & E. Co. v. Public Service Commission . . (N. Y. 
Bronx Gas & E. Co. v. Public Service Commission . . (N. Y. 
Brooklyn Borough Gas Co., Public Service ComAiission 

V : : (N. Y. 

Brooklyn City R. Co., Re (X. Y. 1st Dist.) 

Broughall v. Utah Gas & Coke Co (Utah ) 

Brown, Re ( Conn. ) 

Brown v. Boston & M. R (Mass. Sup. 

Bullock, State ex rel. Railroad Commissioners v (Fla. 

Bureau County Independent Teleph. Co., Re (HI*) 



. (Idaho) 
(abstract) 
. Jud. Ct.) 
(abstract) 
(^»4ract) 

( abstract ) 
(abstract) 
(abstract) 
Sup. Ct.) 
Sup. Ct.) 

. Sup. Ct.) 
(abstract) 
(abstract) 
(abstract) 
Jud. Ct.) 
Sup. Ct.) 
(abstract) 



625 
993 

221 
969 
996 
98 
998 
998 
981 
512 
517 

434 
996* 
988 
979 
221 
406 
971 



Caldwell Traction Co., Re (Idaho) 

California-Oregon Power Co., Re (Or. ) 

Calvin, Re (Cal.) 

Canflleri Re (Ariz.) 

Canton Gas & E. Co., Re (111.) 

Carlson, Re (Nev.) 

Carrier Mills Utilities Co. v. Central Illinoi.s Pub. 

Service Co (111.) 

Carson Water Co., Re 

Carthage Commercial Club v. Cleveland, C. C. & St. L. 

R. Co (Tnd.) 

Carthage Natural Gas Co., Re ( Ind.) 

Central Citizens' Teleph. Asso., Re (Mich.) 

Central Illinois Light Co., Re (111.) 

Central Illinois Pub. Service Co., Re (2 cases) (III.) 

Central Illinois Pub. Service Co., Re (4 cases) .... (III.) 

Central Illinois Pub. Service Co., Re (III.) 

Central Illinois Pub. Service Co., Re (6 cases) . . .'. (111.) 
Central Illinois Pub. Service Co., Carrier Mills 

Utilities Co. v (111.) 

Central Illinois Utilities Co., Re ( III.) 

Central Illinois Utilities Co., Re (111.) 

Central States Gas Co., Re (Ind.) 

Central Union Teleph. Co., Re (III.) 



(abstract) 995 

(abstract) 1000 

(abstract) 970 

(abstract) 962 

(abstract) 997 

(abstract) 968 

(abstract) 991 

.. (Nev.) 664 



Chicago & A. R. Co. v. Chicago k N. W. R. Co. 

Chicago & E. I. R. Co., Re 

Chicago & E. I. R. Co., Highway Commissioner v. 

Chicago & N. W. R. Co., Re 

Chicago & N. W. R. Co., Chicago & A. R. Co. v. . . 



(III.) 
(III.) 
(HI.) 
(111.) 
(111.) 



(abstract) 982 

(abstract) 1000 

(abstract) 973 

(abstract) 991 . 

(abstract) 904 

(abstract) 96.5 

(a'batract) 995 

(abstract) 999 



Chicago & N, W. R. Co., Hubing v (Wis.) 



( abstract ) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 



991 
987 
991 
997 
971 
976 
989 
976 
987 
976 
982 



Digitized by VjOOQIC 



CASES REPORTED. 



xxi 



(aJbstract) 
(abstract) 



Chicago & N. W. R. Co., Oak Creek v (Wis.) (abstract) 

Chicago It N. W. R. Co., Rhinelander v (Wis.) (abstract) 

Chicago It Q-R. Co^ Re (? cases) (IIU) (abstract) 

Chicago, B. Is Q. R, Co., Re (IlL) 

Chicago, B. & Q. R. Co., Re (2 cases) (111.) 

Chicago, B. A Q. R. Co., Denver & S. L. R. Co. v. . . (Colo. Sup. Ct.) 

Chicago, G. W. R. Co., Re . , (Mich.) (abstract) 

Chicago Junction R. Co., Re. '. (III.) (abstract) 

Chicago, K. & S. R.» Re (Mich.) (abstract) 

Chicago, M. A. St. P. R Co., Re <3. D.) 

Chicago, M. 4 St P. R. Co., Re (2 ciises) (111.) (abstract). 

Chicago, M. & St. P. R. Co., Re (111.) (abstract) 

<:hicago, M. Jb St P. R., Re (Idaho) (abstract) 

Chicago, M. & St P. R. Co., Avocft v (Wis.) (abstract) 

^icagOi M. & St P. R. Co. v. Milwaukee (Wis. Sup. Ot.) 

Chicago, M. Is St. P. R, Ck)., National Elevator Co. v. (Minn. Sup. Ct.) 

Chicago, R. I. A P. R Co., Re (Minn.) (abstract) 

Chicago, R. L P. R., Alma v (La.) (abstract) 

Chicago, Stv P.* M. & O. R. Co., Wisconsin Highway 

Commission v. (Wis.) 

Chicago Teleph. Ca, Re\ (Ill;) 

Chautauqua v. Chautauqua Traction Co, (K Y. 2d Dist) 
Chautauqua Traction Co., Chautauqua v. (N. Y. 2d Dist) 

Cisco Electric Co., Re (lU.) 

Citizens Qas Co., Re {% cases) (Ind.) 

Citizens Teleph. Co., Re ..,...,. (Ind.) 

Citizens' Tekph. Co., Re (Me.) 

Citizens Teleph. Ezoh. Co. v. Metamora Teleph. Co (Ohio) 

City Water Co., Re (111.) (abstract) 

Clarksburg Light & Heat Co.. v. Public Service Com- 
mission (W. Va, Sup. Ct) 

aear Lake Teleph. Co., Re (S. D.) 

Cleveland 4 C. F. R. Co., Plain Dealer Pub. Co. v 

Cleveland It B. Traction Co., Plain Dealer Pub. Co. v. ... 

Cleveland, C. C. & St. L. R. Co., Re (2 cases) (Jnd.) 

Cleveland, C. C. & St. L. R. Co., Carthage Conunercial 

Clubv V (Ind.) 

Cleveland, Painesville & A. R. Co., Re. See Plain 

Dealer Pub. Co. v. Cleveland & E. Traction Co 

Clinton Light & Water Co., Re (Mo.) (abstract) 

OoeLi^t &P. Co., Re ...., (111.) (abstract) 

Coleman, Re (Mich.) , (abstract) 

Coleman^Ponsd Light k P. Co., Re *( Wis.) 

Collier Transp. Co., Re ; <Utah) (abstract) 

Colonial Power & Light Co., Re .• ( Vt.) (abstract) 

Colonial Power & Light Co., Re ( Vt. ) 

Commercial Power Co., Re (N. J.) (abstract) 

Connecticut Co., Re ; (Conn.) (abstract) 

Conservation of Fuel» Re <N. Y. 1st Dist) (abstract) 

Conservatian of Fuel, Re (N. Y, Isfc Dist) (abstract) 



(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 
(abstract) 



(abstract) 
... (Ohio) 
... {Ohio) 

(abstract) 



082 
082 
075 
075 
976 
654 
082 
980 
077 
330 
076 
077 
080 
082 
821 
109 
089 
089 

070 
971 
096 
096 
99i 
997 
972 
973 
813 
983 

639 
983 
818 
818 
980 



(abstract) 962 



818 
993 
963 
981 
105 
970 
986 
215 
085 
984 
984 
985 



Digitized by VjOOQIC 



CASES REPORTED. 



Consolidated Light & P. Co., Re (111. 

Consumers Electric Co., Re (Me. 

Consumers Light A P. Co., Re (Okla. 

Cordy v. Mellen Watfer & Light Co (Wis. 

Cnss V. Richland Pub. Service Co 

Crandall Transfer ft Warehouse (Do., Re (111. 

Crandall Transfer & Warehouse Ck)., Re (111. 

Crismon v. Utah Gas & Coke Co ^ • . . . (Utah 

Cullom Electric Co., Re (111. 

Cumberland County Power & Light O., Re .... (Me. 

Cumberland Teleph. & Tel^. Co., Re (Miss. 

Cumberland Teleph. & Teleg. Co., Re (2 casee) .. (111. 
Cushing Gas Co., Re (Okla. 



.Dakota Light, Heat & P. Co., Re 

Daniels Teleph. Co., Re (Idaho 

Deer Creek Power & Light Co., Re (111. 

DeKalb-Sycamore Electric Co., Re (III. 

Delaware L. & W. R. Co., Re (N. J. 

Delaware, L. & W. R. Co., Motor Club v (Pa. 

Denmark Light & P. Co., Re (Wis. 

Denver & N. Transp. Co., Re (Ck)lo. 

Denver & S. L. R. Co. v. Chicago, B. ft Q. R. Ok (Coi 

Denver y. Mountain States Teleph. ft Teleg. Co (Co' 

Detroit ft T. S. Line R., Re (Mich. 

Detroit United R., Re (Mich. 

Detroit United R., Re (Mich. 

Deveraux v. Utah (Jas ft Coke Co. (Utah 

Distefano, Re (Utah 

Dornsife v. Philadelphia ft E. R. (^ (Pa. 

Doyle Taxi Co., Re (Ariz. 

Drager Electric Co., Re (111. 

Drake v. Dunkirk ft F. Teleph. Co (N. 

Draper, LeVett v (N. Y. aty Ct. 

DuBois, Re (N. Y. 2d Dist. 

Duluth, S. S. ft A. R., Re (Mich. 

Dnluth, S. S. ft A. R. Co., Groeabeck v (U. S. 

Dunkirk ft F. Teleph. Co., Drake v (N. Y. 

Dutton, A C. Lumber Co., Re (N. Y. 



(abstract 
(abstract 
(abstract; 
(abstract 
... (Ohio 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 



. (N. D. 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
, Sup. Ot. 

Sup. Ct. 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 
. 2d Dist 
. Trial T. 
(abstract 
(abstract 

Sup. Ct. 

2dDUt. 

2d Dist. 



East Boston Gas Co., Re ^ . (Moss.) (abstract 

Eastern Connecticut Power Co^, Re (Conn.) (abstract 

Eftstern Massachusetts Electric Co., Re (2 cases) (Mass.) (abstract 
Eastern Massachusetts Street R. Co., Re. See 

Mc(jk>wan, Re .•. 

Eastern Montana Light ft P. Co., Re (Mont.) (abstract 

Eastern Pennsylvania R. Co., Lansford v ', (Pa.) (abstract 

Edinboro v. Northwestern Electric Service Oo. .... (Pa.) (abstract 

Edison Electric IlluminatiBg Ck>., Re (Mass.) (abstract 

Bighty-FourOi Street, Ra (N. Y. App. THv. 



907 

904 
905 
236 
964 
971 
988 
964 
993 
984 
986 
998 

884 
963 
965 
909 
983 
983 
994 
962 
654 
238 
981 
974 
981 
988 
970 
961 
990 
964 
872 
868 
988 
978 
177 
872 
749 

998 
963 
967 

540 
993 
996 
094 
985 
758 



Digitized by VjOOQIC 



OASES BSPORT£D. 



xxiii 



Electrio Corporations, Re (Ariz.) (abstract 

Electric Light Co., Ee (Ind.) (abstract 

Elkhart Gas 4 Fuel Co., Re (JnO.) (abstract 

Elkhart Lake Light 4 P. Co., Re (Wis. 

Elko Lamoille Power Co., Re (Nev.) (abstract 

ElUott-Van Bnint, Re (111.) (abstract 

Elliott V. New York C. R. Co. (Pa.) (abstract 

EmiDgton Tel^. Co., Re (111.) (abstract 

Empire Gas 4 Fuel Co., Andover v (N. Y. 2d Dist. 

Ephraim Electric Light Co., Re (Wis.) ( abstract 

Eureka Tsleph. Co., Re (lud.) (abstract 



Fagan v. Pittsburgh Transp. Co 

Fairland light 4 Water Works, Re (OkUt.) 

Fargo y. Union Light, Heat 4 P. Co 

Farmers Liberty Light 4 P. Co., Re (Neb.) 

Farmers Mut Teleph. Co., Re (Neb.) 

F^ette Home Teleph. Ca v. St. James Rural Teleph. 

Co (HI.) 

FUing Order, Re (N. Y. 1st Dwt.) 

Fitchburg & L. Street R. Co., Re (Mass.) 

Fort Atkinson Gas Ck>., Re (Wis.) 

Forty-Second Street, M. 4 St. N. Avemie R. Co., Re 

(N. Y. 1st Dist.) 

iVKS y. Pine Grove Electric Light, Heat 4 P. Co (Pa.) 

Fvankfort, Be (2 oases) , (Ind.) 

Franklin, Be , <Cola) 

Fraser ▼. Stanford Water Ca 

Fuel Committee, Be {Ind.) 

Fuhrmann v. International B. Co (N« Y. 



... (Pa. 
(abstract 
. (N. D. 
(abstract 
(abstract 

(abstract 
(abstract 
(abstract 
(abstract 

( abstract 
(abstract 
(abstract 
(abstract 
... (Cal. 
(abstract 
2d Dist. 



Gary 4 H. Txaction Co., Be (Ind. 

Gary 4 H. Traction Co., Be (Ind.) (abstract 

Gary 4 S. Traction Co., Be , (Ind.) (abstract 

Gary Street B. Co., Be (Ind. 

Oas Corporations, Be ( Ari^) (abstract 

Gaten, St. Croix Farmers Mut. Telepb. CO. t ( Wis. 

Gay, Be • (Vt) (abstract 

Georgia B. 4 Power Co., Atlanta v (Ga. Sup. Ct. 

Qolconda Light 4 Water (>>., Be (111.) (abstract 

Golconda Teleph. 4 P. Co., Be (Nev.) (abstract 

Golconda Teleph. 4 P. Co. v. Utah, N. 4 I. Teleph. Co. 

(Nev.) (abstract 

Goodyear Stage Line, Be (Ariz.) (abstract 

Groehen, Be (Ind.) (abstract 

Goshen v. Wallkill Transit Co. (N. Y. 2d Dist. 

Gofuld Electric Co., Be «... (Me.) (abstract 

Grand Bapids 4 I. B. 0>., Be (Mich.) (abstract 

Chrand Trunk Western Lines B. Co., Ba (8 eases) (Mich.) (abstract 
Gi«ngers Business Aeso., Be (Cal. ) (abstract 



961 
993 
997 
345 
993 
964 
983 
964 
702 
994 
972 

609 
994 
764 
967 
974 

987 
989 
995 
999 

996 
994 
987 
962 
860 
989 
133 

200 
905 
996 
191 
961 
103 
969 
784 
991 
967 

984 
985 
992 
809 
993 
981 
980 
962 



Digitized by VjOOQIC 



XXIV 



CASES REPORTED. 



Granite City Ga8 Light & Fnel Co., Re (111.) (abstract) 91^7 

Great Northern R., Mora v. ......... . . .....; . (Minn. ) (abstract) 982 

Greencastle Gas & E. Co., Re (Ind.) (abstract) 997 

Greensburg Natural Gas, Oil & Water Co., R© .... (Ind.) (abstract) 1000 

Greenup Teleph. Co., Re ;.;..; ( 111.) (abstract) i^o 

Greenup Teleph. Co., Re (Ind.) (abstract) 9T2 

Griffin Electric Plant, Re (Ind.) (abstract) 993 

Groe8l)eck v. Duluth, S. S. & A. R. Co. ; ; (U. S. Sup. a.) 177 

Hall, Re (Cal.) (abstract) 970 

Hancock^ Light & P. Co., Re (Wis.) (abstract) 995 

Hansen, Re (Utah) (abstract) 969 

Harker, Re (Cal.) (abstract) 971 

Haverstraw v. Rockland Light & P. Co. See Nyack v. 

Rockland Light & P. Co 754 

Haydis, Re (Cal.) 923 

Hayward Electric Light & P. Co., Re ^ (Wis.) (abstract) 994 

Henderson, Re (Utah ) (abstract) 969 

Herrin v. Missouri P. R. Co (III.) (abstract) 976 

Highland Gas Co., Perkasie v. See Sellersville v. 

Highland Gas Co 321 

Higliland Gas Co., Sellers\*ille v (Pa.) 321 

Highland Gas 0>., Thompson v. See Sellersville y. 

Highland Gas Co ! .' 321 

Highway Commissioner v. Chicago k E. I. R. Co. .. (111.) (abstract) 976 

Hines, Hought v (N. D.) 898 

Hines, Public UtilHies Commission v (111.) (abstract) 979 

Hines. St. Clair v (111.) (abstract) 976 

Hogue V. United States R. Administration .... (Mich.) (abstract) 987 

Hollander Exp. A Van Co., Re (Til.) (abstract) 966 

Holyoke Street R. Co., Re (Mass.) (abstract) 995 

Homer Electric Light & P. Co., Re (111.) (abstract) 991 

Hominy Ice, Light & P. Co., Re (Okla. ) (abstract) 994 

Hope Electric Light & Ice Plant, Re ( Ind. ) (abstract) 992 

Hought V. Hines (N. D.) 898 

Hubing V. Chicago A N. W. R. Co (Wis.) (abstract) 982 

Huntington Light A Fuel O., Re (Ind.) (abstract) 997 

Huntington Light A Fuel Co., Re (Ind.) (abstract) 1000 

Illinois C. Electric R., Re (HI.) (abstract) 985 

Illinois C. R. Co., Mulligan v (111.) (abstract) 975 

Illinois Northern Utilities Co., Re (HI.) (abstract) 966 

Illinois Northern Utilities Co., Re (111.) (abstract) 999 

Imperials Re (Cal.) (abstract) 962 

Indiana Fuel A Light Co., Re (Ind.) 414 

Indiana Ga« Transp. CJo., Re ....•.-.•..• (Ind.) (abstract) 1000 

Indiana General Service Co., Re (Ind.) 489 

Indiana General Service Co., Re- (Ind. ) 948 

Indiana R. A Light Co., Re (-2 cases) (Ind.) (abstract) 992 

Indiana R. A Light Co., Re (Iitd.) (abstract) 995 

Indian Valley Teleph. Co. v. Keithley A D. Teleph. Co (Idaho) 165 



Digitized by VjOOQIC 



(abstract) 


975 


. 2d Dist.) 


133 


(abstract) 


964 


(abstract) 


9T2 


(abstract) 


986 


(abstract) 


1000 


(abstract) 


990 



CASES REPOSED. xxv 

Industrial Sugar Co., Re (Colo.) 

International R. Co., Fuhrmann v (N. Y. 

Interstate Independent Telepli. & Teleg. Co., Re (111.) 

Interstate Independent Teleph. & Teleg. Co., Re (111.) 

Interstate Light & P. Co., Re (111.) 

Interstate Pub. Service Co., Re (2 cases) (Ind.) 

Investigation of Rules, Orders and Regulations, Re . . (Or.) 
Iroquois Natural Gas Co., Public Service Commission 

T. (N. Y. S\ip. Ct. Sp. T.) . 671 

Jackson, Re (Mich.) (abstract) 981 

Jackson's Exp. & Van Co., Re (111.) (abstract) 964 

James Canal Co., Re (Cal.) (abstract) 970 

Jcnnison Electric Co., Re (Mont.) (abstract) 993 

Jonesboro Teleph. Co., Re (Me.) (abstract) 984 

Jones-Kittle Stage Co., Re (Ariz.) (abstract) 970 

Joplin, Re . . . .^ (Mo.) (abstract) 978 

Kalama Business Men's Club v. North Coast Power Co. 

(Wash.) (abstract) 994 

Kalamazoo, Re (Mich.) (abstract) 981 

Kansas City, C. k S. R. Co., Polk County v (Mo.) (abstract) 97^ 

Kansas City Home Teleph. Co., Re (Kan.) (abstract) 973 

Kansas City, Kansas City R. Co. v (Mo.) 926 

Kansas City R. Co. v. Kansas City (Mo.) 926 

Kay County Gas Co., Re (Okla.) (abstract) 998 

Keithley & D. Teleph. Co., Indiana Valley Teleph. Co (Idaho) 165 

Keller, Re ... : (Mich.) (abstract) 973 

Keystone Gas Co., Allegany v (X. Y. 2d Dist.) 307 

Keystone Gfifts Co., Glean v. See Allegany v. Keystone 

Gas Co 807 

Keystone Grange No. 1682 v. Pennsylvania R. Co. .. (Pa.) (alistract) 983 

Kittams v. Los Angeles R. Corp ( Cal.) 916 

Knox R. Co., Re *. (Me.) (abstract) 973 

Knox R. Co., Re (Mo.) (abstract) 977 

Krier v. Nassau k 8. Lighting Co (X. Y. 2d Dist.) 761 

La Crosse k O. Street R. Co., Re (Wis.) (abstract) 997 

Lafayette Teleph. Co., Re (Mo.) 160 

Lafayette Teleph. Co., Re (Ind.) 422 

La Fontaine Water Co., Re (Ind.) (abstract) 992 

LaHarpe v. Western Illinois Utilities Co (III.) (abstract) 984 

Lansford v. Eastern Pennsylvania R. Co (Pa.) (abstract) 996 

Lansing Fuel & Gas Co., Re (Mich.) (abstract) 998 

La Porte Gas & EL Co., Re (Ind.) (abstract) 997 

Lawrence, Re (N.J.) (abstract) 982 

Leavenworth Electric L. Co., Re (Ind.) (abstract) 993 

I.ee V. Berkshire Street R. Co (Mass.) 206 

Lehigh & N. E. R. Co., Northampton v (Pa.) (abstract) 98S 

Lena Electric Light & P. Co., Re (111.) (abstract) 986 



Digitized by VjOOQIC 



XXTi 



CASES KKPORTED. 



Levett V. Draper (N. Y. City Ct. Trial T.) 868 

Liberty Transp. & Exp. Co., Re , (Colo.) (abatract) WiZ 

Ligonier, Re (Ind.) (abstract) 983 

Ziineoln Teleph. Co., Re (3 cases) (Ul.) (abstract) 964 

Lincoln Teleph. Co.. Re (3 cases) (IlL) (abstract) 971 

(Lincoln Traction Co., Re (NeU) 328 

Lincoln Water & Light Co., Re (111.) (abstract) 991 

Locke, Re (Mich.) (absti^act) 981 

Logansport Utilities Co., Re (Ind.) (abstract) 972 

Long Island Gas Corp., Sag Harbor v. ... (N. Y. 2d Dist.) (abstract) 998 

Long Island R. Co., Re (N. Y. 1st Dist.) (abstract) 961 

Long Island R. Co., Re (N. Y. Ist Dist.) (abstract) 978 

Los Angeles & S. P. Daily Express, Re (Cal.) (abstract) 990 

Los Angeles R. Corp., Kittams v ( Cal.) * 916 

Los Banos, Re (Cal.) 163 

Louisville & N. R. Co., McLeansboro v (IH.) (abstract) 976 

Lytle, Re (Mich.) (abstract) 977 



McCain, Re (Mich.) 

McGowan, Re 

Machias Electric Light Co., Re (Me.) 

McLeansboro v. Louisville A. N. R. (^ (111.) 

Macon Teleph. 0>., Re (Mich.) 

Mahoning & S. R. & Light Co., New Castle t 

Maine C. R. Co., Re (Me.) 

Malta Light & P. Co., Re (Mont.) 

Manila Gkts Corp., Aurelio ▼. (2 cases) (P. I.) 

Mankato Citizens Teleph. O., Re (Minn.) 

Manteca t. Southern P. Co (Cal.) 

Marion & E. R. Co., Re (111.) 

Masteller v. Xorth Branch Transit Co (Pa.) 

Mellen Water & Light Co.', Cordy v (Wis.) 

Mctamora TelepB. Co., Citizens Teleph. Exch, Co. v 

Mexico Power Co., Re ( Mo. ) 

Mexico Power Co., Re ( Mo. ) 

Mexico Power Co., Re (Mo. ) 

Michigan C. R., Re (2 cases) (Mich.) 

Michigan C. R. Co., Re (Mich.) 

Milan, Re (Mich.) 

Mill Creek Coal & Coke Co. v. Public Service Com- 
mission ( W. Va. 

Millinocket Light Co., Re (Me.) 



Millstadt Teleph. Co., Re 

Millstadt Teleph. Co., Re , 

Milo Electric Light & P. Co., Re 

Milwaukee, Chicago, M. & St. P. R. Co. v , 

Milwaukee Electric R. & Light Co., Re 

Milwaukee Electric R. & Light Co., West AUis v, 
Milwaukee Light, Heat & Traction. Co., Racine v. 



. (lU.) 
. (lU.) 
(Me.) 
.. (Wis. 

(Wis.) 
(Wis.) 



Minier Electric Light & P. Co., Re .•... (IlL) 



(abstract) 981 

. (Mass.) 540 

(abstract) 973 

(abstract) 976 

(abstract) 967 

.... (Pa.) 337 

(abstract) 980 

(abstract) 993 

(abstract) 999 

(abstract) 973 

(abstract) 975 

(abstract) 965 

(abstract) 996 

(abstract) 995 

., (Ohio) 813 

(abstract) 993 

(abstract) 998 

(abstract) 1000 

(abstract) 980 

(abstract) 98^ 

(abstract) 981 

. Sup. Ct.) 704 

(abstract) 993 

(abstract) 965 

(abstract) 972 

(abstract) 993 

Sup. Ct.) 821 

.. (Wis.) 361 

(abstract) 961 

(abstract) 997 

(abstract) 966 



Digitized by VjOOQIC 



CASES REPORTED. 



xxvii 



Missouri P. R. Ck>., Herrin y. (111.) (abstract) 976 

Monmouth Pub. Service Co., Re (111.) (abstract) 909 

Monmouth Pub. Service Co., Public Utilities Commis- 
sion V. (111.) (abstract) 987 

Monmouth v. Rock Island S. R. Co ( ill. ) (ab(«tract) 976 

Monroe v. Railroad Commission (Wis. ."Sup. Ct.) 721 

Moore v. United States R. Administration (Mo.l 685 

Mora V. Great Northern R. (Minn.) (abstract) 982 

Motor Club V. Delaware, L. A W. R. Co (Pa.) (abstract) 983 

Mountain Auto Co., Re (Ariz.) (abstract) 962 

Mountain States Teleph. & Teleg. Co., Denver v (Colo. Sup. Ct.) 238 

MounUin States Teleph. & Teleg. Ck>., Whitworth v (Idaho) 536 

Mount Konocti Light A P. Co (Cal.) (abstract) 970 

Mt. Pulaski Electric Light, Heat & P. Co., Re (111.) (abstract) 991 

Mulligan y. Illinois C. R. Co (111.) (abstract) 975 

Mulling, Re (Mich.) (abstract) 978 

Munch, Re (N. Y. 2d Dist.) (abstract) 968 

Muncy Water Supply Co., Waldron V (Pa.) 315 

Municipal Officers of Old Orchard, Re '. • . . (Me.) (abstract) 977 

Muskegon, Re (Mich.) (abstract) 980 

Muskegon Traction ft Lighting Co., Re . • • • (Mich.) (abstract) 998 



Nassau ft 8. Lighting Co., Krier y. (N. T. 2d Dist.) 

National Elevator Co. v. CSiicago, M. ft St. P. R. Co. . . (Minn. Sup. Ct.) 

Nevares Auto Stage Line, Re (Ariz.) (abstract) 

New Castle v. Mahoning ft 8. R. ft Li£^t Co (Pa.) 

Newton ft W. Gas Light Co., Re (Mass.) (abstract) 

New York ft H. R. Co., Re (N. Y. 1st Dist.) (abstract) 

New York ft H. R. Co., Re (N. Y. Ist Dist) (abstract) 

New York C. R. Co., Re (Mich.) (abstract) 

New York 0. R. Co., Elliott v (Pa.) (abstract) 

New York State R., Wilkinson v. (N. Y. 2d Dist) 

New York, W. ft B. R. Ck>., Re (N. Y. 1st Dist) (abstract) 

Niagara Falls y. Public Service Commission . . (N. Y. Sup. Ct. Sp. T.) 

Northampton v. Lehigh ft N. E. R. Co (Pa.) (abstract) 

North Bend, Re (Neb.) (abstract) 

North Branch Transit Co., Masteller v (Pa.) (abstract) 

North OMwt Power Co., Kalama Business Men's Club 

V (Wash.) (abstract) 

Northern California Power Co., Re (Cal.) 

Northern Indiana (^as ft E. Co., Re (Ind.) (abstract) 

Northern Power Co., Re (Wis.) (itbstract) 

Northern Union Gas Ck>., Re (N. Y. Ist Dist) (abstract) 

North Shore Fireproof Storage Co., Re (111.) (abstract) 

Northwest Business Men's Asso. v. Philadelphia Rapid 

Transit Co. (Pa.) (abstract) 

Northwestern Electric Service Co., Edinboro y. •. (Pa.) (abstract) 
Northwestern Teleph. Exch. Co., Re (2 cases) .. (Minn.) (abstract) 

Norwich, Re ••••• (Conn.) (abstract) 

Kyacky. Rockland Light ft P. 0>. (NT. 2d Dist) 



761 
109 
962 
387 
998 
978 
982 
981 
983 
965 
996 
175 
983 
967 
996 

994 
838 
997 
994 
986 
966 

984 
994 
973 
979 
764 



Digitized by VjOOQIC 



zxviii CASES REPORTED. 

Oak Creek v. Chicago A N. W. R. Co (Wis.) (abstract) 982 

Oakdale Gas Co., Re .., (Cal.) (abstract) 997 

Oakland-San Jose Transp. Co., Re (Cal.) 920 

Oakland-Valle jo Transit Co., Re (Cal.) (abstract) 970 

Ocean Grove Camp Meeting Asso., Re (N. J.) 681 

Oklahoma Gas & £. Co., Re (Okla.) (abstract) 988 

Oklahoma Union R. Co., Tulsa Street R. Ck). t. (Okla. Sup. Ct.) 691 

Oklahoma Union R. Co., Wilson v (Okla.) (abstract) 974 

Glean v. Keystone Gas Co. See Allegany v. Keystone 

Gas Co (N. Y. 2d Dist.) 307 

Clean v. Producers Gas Co (N. Y. 2d Dist.) (abstract) 309 

Oregon A C. R. Co., Re (Or.) (abstract) 978 

Oregon State Highway Commission, Re (Or.) (abstract) 978 

Oswego V. United States R. Administration (N. Y. 2d Dist.) 878 

Owego Gas Light Co., Re (N. Y. 2d Dist.) (abstract) 998 

Owenford P. Valley Teleph. Co., Re (Idaho) (abstract) 963 

Oxford Electric Co., Re (Me.) 852 

Pacific Gas A E. Co., Re. ' See Northern California 

Power Co., Re 838 

Pacific Light & P. Corp. v. Pasadena (Cal.) 149 

Paine, Re (Colo.) (abstract) 963 

Palmyra Light, Heat & P. (>)., Re (IlL) (abstract) 991 

Parks, Re (Mo.) (abstract) 978 

Parsons, lie (Me.) (abstract) 977 

Pasadena, Pacific Light & P. Corp. ▼. (CaL) 149 

Paxton Gas Co., Re (111.) (abstract) 997 

Pehrson, Re (Utah) (abstract) 969 

Pennsylvania R. Co., Keystone Grange No. 1682 v. . . (Pa.) (abstract) 983 

Pennsylvania R. Co. v. Public Service Commission ... (U. S. Sup. Ot.) 909 

Peoples Gas, Light &, Coke Co., Re (111.) (abstract) 997 

Peoples Mut. Teleph. Co., Re (Ind.) (abstract) 972 

People's Power Co., Re (111.) (abstract) 901 

Pere Marquette & G. T. W. Lines R., Re (Mich.) (abstract) 980 

Pere Marquette R., Re ; (Mich.) (abstract) 981 

Perkasie v. Highland Gas Go. See Sellersville v. High- 
land Gas Co ; 321 

Philadelphia A E. R. Co., Domsife t (Pa.) (abstract) 961 

Philadelphia A R, R. Co., Berks v (Pa.) (abstract) 983 

Philadelphia Rapid Transit Co., Northwest Business 

Men's Asso. v (Pa.) (abstract) 984 

Philadelphia Suburban Gas & E. Co., West Chester 

Board of Trade v (Pa.) 101 

Philadelphia Suburban Gas & E. Co., Zeigler v. .... (Pa.) (abstract) 990 

PhoenixGlendale & P. Stage Line, Re (Ariz.) (abstract) 990 

Phoenix R. Co., Re (Ariz.) (abstract) 995 

Piermont v. Rockland Light ft P. Co. See Nyack v. 

Rockland Light ft P. Co 764 

Pinal, Re (Ariz.) (abstract) 978 

Pine OrQve Electric Light, Heat ft P. Co., Fox v (Pa.) (abstract) 994 



Digitized by VjOOQIC 



OASBS RBPOBTED. 



Pkmeer Stage Co., Be 



(Nev.) (abstrMt) 967 

Pittsburgh & a R. Ga.» State Highway Dep't y. (2 

cases) (Pa.) (abstract; 

Pittsburgh ft W. Va. Gas Co. y. Richardson . . . ( W. Va. Sup. Ct. App. 

Pittsburgh, C. C. ft St L. B.' Co., Be (Ul.) (abstrac 

Pittsburgh Transp. Ca, Fagaa y , (Pa. 

Plain Dealer Pub. Co. y. Cleyeland ft C. F. B. Co. See 

Plain Dealer Pub. Co. y. deyeland ft E. Traction Ck> (Ohio 

Plain Dealer Pubw Co. y. Cleyeland ft E. Traction Co (Ohio 

Plummer, £. ft Sons, Be (Me.) (abstract 

Polk County y. Kansas City, C. ft S. B. Co. (Mo.) (abstract 

Portland Terminal (^ Be (Me.) (abstract 

PosUl T^egraph Cable Co. y. Western Union Teleg. Co. (N. Y. 2d Diet 

Powers Storage Ck>., Be (111.) (abstract 

Prairie Electric Ca, Be (111.) (abstract 

Producers Qas Co., Olean y. (N. Y. 2d Dist) (abstract 

Producers Warehouse, Be (CaL 

Public Senrice Commission, Bronx Qm ft £. Co. y. . . (N. Y. Sup. Ct. 
Public Service Omimission, Bronx Qm ft B. Ck>. y. . . (N. Y. Sup. Ct. 
Public Serfice Commission y. Brooklyn Borough Gas 

Co. (N. Y. Sup. Ct. 

Public Service Commission, Clarksburg Lig^t ft Heat 

<3o. y (W. Va. Sup. Ct. 

PaUic Service Commission v. Iroquois Natural Gas Co. 

(N. Y. Sup. a. 8p. T. 
Pnblie Service Commission, Mill Creek Coal ft Coke 

Co. y. (W. Va. Sup. Ct 

Pnblie Service Commiision, Niagara Falls v. . . (N. Y. Sup. Ct Sp. T. 
Poblie Service Commission, Pennsylvaiia B. Co. v. . . (U. S. Sup. Ct 
PvUie Service Commission v. Southwestern Bell Teleph. Co. . . (Mo. 

Public Service Co., Be (Hi) (abstract 

PaUic Service C(as Co., Be ; (N. J. 

Public Service C(as Oa, Be (N.J.) (abstract; 

PubUc Service R. Co., Be (N. J. 

Public UtiUties Commission v. Hines (111.) (abstract 

Public Utilities Commission y. Monmouth Pub. Service 

CJo. (IlL) (abstract 

Public Utilities Commission y. Bhode Island (To (B. I. Sup. Ct 

Public Utilities Commission v. Bhode Island Co. (B. I. Sup. Ct 

Public Utilities Commission y. Springfield Gas ft E. Ck> (III. 

Pullman B. Ca, Be (in.) (abstract 

Punzsutawney, Be (Pa.) (abstract 



Queens Borough Gas ft B. Co., Be (N. 

Quinn, Be 



Baeine v. Milwaukee lif^t. Heat ft Traction Co. 

BAilroad Commission, Monroe v. ••••«• 

Rammer, Be ••••• 

Raadom Lake Bleetrie Ca, Be » 



Y. 1st Dist) (abstract 
.... (Utah) (abstract 



. (Wis.) (abstract 

... (Wis. Sup. Ct 

(N. H.) (abstract 

. (Wis.) (abstract 



983 

184 

) 989 

609 

818 
818 
977 
978 
977 
688 
964 
991 
309 
919 
612 
617 

434 

639 

671 

704 
176 
909 
664 
999 
233 
998 
294 
979 

987 
624 
630 
326 
975 
988 

986 
969 

997 
721 
968 
994 



Digitized by VjOOQIC 



XXX 



CASES RKPORTED. 



Rasmussen, Re * (Uttth) (abfttrftct) 969 

Regulations or Operation and Equipment of Street 

Railway Cars, Re (D. C.) (abstract) 985 

Report of Board of Conciliation, Re '.•.;••••«..* 4 (Wisi) (abstract) 997 

Rhinelander y. Chicago AN. W. R. Co. *.. (Wis.) (ubstimct) 982 

Rhode Island Co., Re • (R. I.) (abstract) 996 

Rhode Island Co., Public Utilities Commissioa y* . . . . (R. L Sup. Ct.) 624 

Rhode Island Co.,' Public Utilities Commissioa v (R. I. Supv Ct.) 630 

Richardson, Pittsburgh & VV. Va. Gas Co. v. . . . ( W. Va. Sup. Ot. App.) 184 

Richland Pub. Service Co., ^oss v (Ohio) 236 

Roielring Fork Electric Li^ht A. P. Co., Smuggler Leas- 
ing Co. t. (Colo.) (abstract) ^88 

Rochester, Re • (Ind.) (abstract) 992 

Rookford A I. R. Co., Schneider v (Wis.) (abstract) 961 

Rockford City Traction Go.> Re (111.) (abstract) 995 

Rock Island S. R, CJo., Monmouth v. - (111.) (abstract) 978 

Rockland Light & P. Go.> Haverstraw v. (N. Y. 2d Dist.) 754 

Rockland Light & P. Co., Nyack v (N. Y. 2d Dist.) 764 

Rockland Light & P. (Do.. Piermont v ( N. Y. 2d Dist. ) 754 

Rockland Light & P. Co., Spring Valley y (N. Y. 2d Dist) 764 

Rockport, Re (Me.) ♦ 72 

Rolapp y. Utah Gas & Coke Co (Utah) (abstract) 988 

Rosholt Electric Co., Re (Wis.) (abstract) 994 

Rousseau, Re (N. H.) 863 

Royal Light & P. Co., Re (111.) (abstract) 991 

Sag Harbor y. Long Island Gas Corp. ... . (N. Y. 2<i Dist^) (abstract) 998 

St. Clair y. Hines ; (HI.) (abstract) ^76 

St. Ooix Farmers Mut. Teleph. Co. r. Gatten (Wis.) 103 

Saint Francisville y. Yazoo A; M. V. R (La.) (abstract) 989 

St. James Rural Teleph. Co., Fayette Home Teleph. 

Co. V ; *..;...ii (111.) (abstract) 987 

St. Joseph Gas Co., Re (Mo.) (abstract) 998 

St. Joseph R. Light, H. A; P. Co., Re (Mo.) 642 

St. Joseph R. tight, H. & P. Co., School District of 

St. Joseph V (Mo.) 669 

St. Louis & S. F. R. Co. v. State (Okla. Sup. Ct.) 605 

St. Louis, S. & P. R. Co., West V (111.) (abstract) 975 

Salmon's Investment & Security Co., Re ( 111.) (abstract) 966 

Salmon's Investment & Security Co., Re (111.) (abstract) 972 

Salt Lake Terminal Co., Re '. .' (ttah) (abstract) 090 

Sand Lake Board of Trade v. Wyantskill Hydro-Elec- 
tric Co •••;;;;•. (N. Y. 2d Dist.) (abstract) 994 

San Francisco-Oakland Terminal R.,,Re (Cal.) 115 

Sanguinetti, Re (Ariz.) (abstract) 970 

Santa Fe JL Co., Re (Ari?.) (abstract). 976 

Scandia-Marine Mut. Teleph.. Co., Re ««,,,,....,.* (Minn.) (abstract) 986 

Scharl, Re (Mich.) (abstract) 977 

Schneider v. Rockford A I. R. Co. (Wis.) (absUact) 961 



Digitized by VjOOQIC 



CASES itE2K)RTEI>. 



yT^r4 



(abstract 
< abstract 
(abstract 
(abstract 
(abstract 
(abstract 
(abstract 

... (Mo. 



School DIstriei of St Joseph v. St Joseph R. Light, 

H. * P. Co. k (Mo. 

Sdiuylksn R. Co., Re (Pa.) (abstract 

SeUersTille y. Highland Qas Co. (Pa. 

Reward, Rte (Neb.) (abstract 

Seymour Electric Oo., Re (Wis.) (abstract 

Silrerton Lumber Co., Re . . • .^ .• (Or.) (abstract 

Sllvertoti Lumber Co., Re (Or.) (abstract 

Smedley, Re (Utah) (abstract 

Smith, C. F. Storage k Warehouse Co., Re (111.) (abstiUct; 

Smuggler Leasing Co. v. Rearing Fork Electric Light 

A P. Co (Colo.) 

Southern California Edison Co (Cal.) 

Southern Comities Gils Co., Re (Cal.) 

Southern Cknmties Gas Co., Re (Cal.) 

Southern L^Uana Power Co., Re ( Ind. ) 

Southern P. Co., Re k .* (Or.) 

Southern P. O., Manteca ▼. ....../. (CaL) 

Scfuthwestem Bell Teleph. Co., Public Service Com- 
mission ▼. ; k w 

Southwest Missouri R. Co;,- Re (Mo.) (abstract 

Springfield Qas & £. Co., Re . w . « < 4 (111. 

Springfield Gas k E. Ck>., Public Utilities Commission V (111. 

Spring Valley ▼. Rockland Light A, P. Co. See Nyack 

y. Rockland Light & P. Co. 

Spring Valley UtUitiesCo.^ Re i (Hl.f (abstract 

Standard Gas Co., Re (N.J.) (abstract 

Standard Oil Co., Re ..v. (Or.) (abstract 

Stanford Water Co., Fraser y. (Cal. 

State H^way Dept v. Pittsburgh ^ 8. R. Co. (2 

cases) n (Pa.) (abstract 

State ex rel. Railroad Commissioners y. Bulk)ck (Fla. Sup. Ct. 

State, St Louis & S. F. R. Co. v (Okla. Sup. Ct. 

Stephenson County Teleph. Co., Re (111. 

Stockton Electric Co., Re (111.) (abstract 

Stockton Electric Co., Re (111.) (abstract 

Stoughton Light & Fuel Co., Re (Wis.) (abstract 

Sulliyan Home Teleph. Co., Re (111.) (abstract 

Superyisors of Mohave County, Ro (Ariz.) (abstract 

Swett, Re. See Oakland-San Jose Transp. Co., Re 



Tahna Teleph. Co., Re (Ind.) (abstract 

Ttomaroa Electrk; Supply O., Re v * . i * ; (111.) (abstract 

Terminal Taxicab Co., Re <.... (D. C.> (abstract 

Thompson v. Highland Gas Co. See Sellersville v. 

Highland Gas Co; •....; ; 

Tipton Electric & Water Plant, Re (Ind.) (abstract; 

Tipton Electric Ik Water Plant, Re- (8 cases) (Ind. ) (abstract 

Tiskilwa Electric Li^ht Co., Re-.. .</.. v (IlL) (abstract 

Titter, Re i.<.* i** (Colo^) (abstract 



550 
979 
321 
984 
988 
978 
982 
969 
956 



962 
962 
1000 
992 
979 
975 

564 
996 
446 
826 

754 
965 
998 
979 
850 

983 
406 
605 
188 
966 
986 
999 
986 
974 
920 

983 
966 
990 

321 
988 
992 
991 
969 



Digitized by VjOOQIC 



zxjdi 



CASES REPORTED. 



Tonopah ft G. R. Co., Re (Ner.) (abstrMt 

Tonopah A T. R. Co., Re (Nev.) (abgtraet 

ToDopah-Divide & G. Elec. R. Co., Re (Nev.) (abitraet 

Trentoa & M. County Traction Corp., Re (K. J.) (abstra^^t 

Tri-State Teleph. ft Teleg. Co., Re (Minn.) (abstract 

Tuckerton Ga» Co., Re (N.J.) (abetraet 

Tulsa Street R. Co. y. Oklahoma Union R. Ca (Okla. Sup. Ct 

Turman Township Mut. Teleph. Co.^ Re (Ind. 

Tumbeaugh,Re (Utah) (abstract 

Twin State Gas ft E. Co., Re ••. (N. H. 

Tyler V. Woodbury Electric Co (Conn.) (abstraot 

Uintah R. Co., Re (Utah) (abstract; 

Uintah R. Co., Re (Utah) (abstract; 

Ukon Water Co., Re ....; (Utah) (abstract; 

Union Auto Transp. Co., Re (Ariz^) (abstraet; 

Uniondale Rural Teleph.. Co., Re (Ind,) (abstract 

Union Light, Heat ft P. Co., Fargo ▼ (N. D. 

Union Street R.' Ck>., Re (Mass.) (abstract 

Union Traction Co., Re (Ind.) (abstract; 

United Fanners Tel^h. ft Teleg. Co., Re (Nev.) (abstraet 

United Pub. Service Co., Re ..,,.. , (Ind.) (abstract; 

United R. ft Electric Co., Re (Md. 

United R. ft Electric Co., Re (Md.) (abstract 

United States R. Administration, Re (111.) (abstract 

United States R. i^dministration, Hogue ▼. (Mich.) (abstract 

United States R. Administration, Moore v ; (Mo. 

United States R. Administration, Oswego t. (N. Y. 2d Dist. 

Urmaoga Teleph. Co., 'Re (III.) (abstract 

Urmaoga Teleph. Co., Re (I^.) (abstract 

Utah Ckis ft Gcke Co., Broughall v. (Utah) (abstract; 

Utah Gkks ft (^ke Co., Crimson t (Utah) (abstract 

Utah Gas ft Coke Co., Deveraux y« (Utah) (abstract 

Utah Gas ft Coke 0>., Rolapp V. (Utah) (abstract 

Utah Gas ft Coke O., Wells V (Utah) (abstract 

Utah, N. ft I. Teleph. Co., Re (Nev.) (abstract 

Utah, N. ft I. Teleph. (Do., Golconda Teleph. ft P. Ck>. 

V * (Nev.) (abstract 

Utah Valley Gas ft Coke Co., Re (Utah) (abstract 

Valley Home Teleph. CJo., Re (Mich. 

Van Auken v. Wisconsin R. Light ft P. Co (Miss.) (abstract 

Van Dorn, Re (Colo.) (abstract 

Voile, Re (Utah) (abstract 

Wabash Valley Utilities Co., Re ..•• (Ind.) (abstract; 

Wabash Valley UtUitiea Co., Re (Ind.) (abstract; 

Waldronv. Muncy Water Supply Cow (Pa. 

Wallace Ck>-operative Teleph. Cq., Re (Ind.) (abstract 

WaUkiU Transit Ck>., Goshen V. .., (N, T. 2d DUt. 



068 
968 
068 
006 
978 
008 
501 
4X2 
060 
746 
063 

000 
000 
060 
070 
072 
764 
006 
087 
067 
008 
1 
005 
989 
987 
585 
678 
063 
971 
988 
988 
988 
988 
988 



984 
999 

859 
985 
963 
060 

993 
992 
315 
984 
300. 



Digitized by VjOOQIC 



CASES REPORTED. 



zzxiii 



Warble Storage & Furniture Co., Re (111.) (abstract) 966 

Washita Electric Power Ca, Re (Okla.) (abstract) 994 

Watson, C. A« & Sons, Re (111.) (abstract) 964 

Wells V. Utah Gas A Ck>ke Co (Utah) (abstract) 988 

West Allis V. Milwaukee Electric R. ^ L. Co. (Wis.) (abstract) 961 

West Chester Board of Trade v. Philadelphia Suburban 

GasAKCo. (Pa.) 101 

Westchester Motor Transfer Co., Re (N. Y. 2d IHst.) 336 

Western Colorado Power Co., Re (Colo. ) (abstract) 963 

Western Illinois Utilities Co., La Harpe v. (111.) (abstract) 984 

Western New York k P. Trac^tion Co., Re (X. Y. 2d Dist.) 961 

Western Oklahoma Gas & Fuel Ck>., Re (Okla. ) (abstract) 998 

Western Union Teleg. (Do., Re (Mo.) 661 

Western Union Teleg. Co., Postal Telegraph-Cable Co. 

V. (N. Y. 2d Dist.) 683 

Western Vermont Power 4 Light Co., Re ( Vt.) (abstract) 220 

Western Warehousing Co., Re (111.) (abstract) 965 

Weston, Re (Idaho) (abstract) 963 

West y. St. Louis, S. ft P. R. Co. (lU.) (abstract) 976 

West Warwick, Re. See Public Utilities Commission 

T. Rhode Island Co « 624 

West Warwick, Re. See Public Utilities (Commission 

V. Rhode Island Co. / « 630 



Wheatfield Teleph. Exch., Re (Ind.) (abstract 

Whitney, Re (Me.) (abstract 

Whitworth y. Mountain States Teleph. & Teleg. Co (Idaho 

Wikum V. Wisconsin Teleph. Co (Wis. 

Wilkes-Barre Ck)., Boyle v (Pa. 

Wilkinson y. New York State R. (N. Y. 2d Dist. 

Wilson y. Okhihoma Union R. Co. (Okla.) (abstract 

Wisconsin Gas & E. Co., Re (Wis.) (abstract 

Wisconsin Highway Commission v. Chicago, St. P. 

M. & 0. R. Co. (Wis.) (abstract 

Wisconsin Jitneymen's Asso., Re (Wis. 

Wisconsin -Minnesota Light A. P. Co., Re (Wis.) (abstract 

Wisconsin Power, Light & Heat Co., Re (Wis.) (abstract 

Wisconsin R. Light ft P. Co., Van Auken v (Wis.) (abstract 

Wisconsin Teleph. Co., Wikum v. (Wis. 

Wisconsin Valley Electric Co., Re (Wis.) (abstract 

Woodbury Electric Co., Tyler y. (Conn. ) (abstract 

Woonsocket Street R. Co., Re . ^ (R- I*) (abstract 

Worcester ConsoL Street R. C^., Re « . . (Mass.) (abstract 

Wyanet Electric Light Co., Re (111.) (abstract 

Wynantskill Hydro-Electric Co., Sand Lake Board of 

Trade y. '. (N. Y. 2d Dist.) (abstract 

Wyoming ft Nebraska Teleph. Co., Re (Neb. 

Yarmouth Lighting Co., Re • (Maine 

Yawkey-Wissell Lumber Co., Re (Wis.) (abstract 

Yazoo ft M. V. R., Saint Francisville y. (La.) (abstract 



972 
977 
536 
356 
98 
695 
974 
999 

979 
915 
969 
1000 
985 
356 
994 
963 
979 
995 
991 

904 
95 

506 
979 
989 



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xxxiv CASES R£PORTBD. 

Youngs, Be (Mioh.) (Abfitraet) 977 

Yuma Light, Gas ft Water Co., Re • (Ari&) (abstract) 990 

Zoitmyer, Re • ••••••• (Pi^) (abstract) 969 

Ziegler t. Philadelphia Suburban Oaa 4 EL Go. ..... (Fa.) (abstract) 999 



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TABLE OF CASES BY JURISDICTIONS. 



COURT CASES. 

ITnlted States Supreme Court. 

Groesbeck v. Duluth, 8. S. & A. R. Co v 177 

Pennsylvania B. Co. y. Public Sendee Commission < 909 

Colorado Supreme Court. 

Denyer ft S. L. R. Co. y. Chicago, B. ft Q. R. Ca ..t*. 664 

Benyer y. Mountain States Teleph. ft Teleg. Co. •••••• 238 

Florida Supreme Court. 
State ez rel. Railroad Commiasionera y. Bullo^ 406 

Georgia Smprome Court. 

Atlanta y. Atlanta Gaslight Co. 728 

Atlanta y. Georgia R. ft Power Co. 734 

Bfaasachusetts Supreme Judicial Court. 
Brown y. Boston ft M. R. 221 

Minnesota Supreme Court. 
National Elevator Co. v. Chicago, M. ft St. P. R. Co 109 

New York Appellate Diyision. 

Eighty-Fourth Street, Re 758 

Public Service Commission y. Brooklyn Borough Gas Co 434 

New Tork City Court, Trial Term. 
Leyett T. Draper 868 

New York Supreme Court, Special Term. 

Bronx Gas ft E. Co. y. Public Service Commission 512 

Bronx Gas ft B< Co. v^ Public Service Commission 517 

Niagara Falls v* Publie Servioe Commission 175 

PuUio Service CommissieB ¥» Iroquois Natural Gas Co. 671 



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xxxvi CASES REPORTED (BY JURISDICTIONS). 

Oklahoma Supreme Court. 

St. Louis ft S. P. R. Co. V. State 605 

Tulsa Street R. Co. y. Oklahoma Union R. Co 591 

Rhode Island Supreme Court. 

Public Utilities Commission ▼. Rhode Island Co 624 

Public Utilities Commission ▼. Rhode Island Co. 630 

West Virginia Supreme Court. 

Clarksburg Light & Heat Co. t. Public Service Commission 689 ^ 

Mill Creek Coal k Coke Co. v. Public Service Commission 704 

West Virginia Supreme Court of Appeals. 

Pittsburgh ft W. Va. Gas Co. v. Richardson 184 

Wisconsin Supreme Court. 

Chicago, M. ft St. P. R. Co. t. Milwaukee 821 

Monroe t. Railroad Commission • 721 

COMMISSION CASES. 

Arizona. 

Arizona E. R. Co., Re (abstract) .< 974 

Board of Supervisors, Re (abstract) 974 

Cansler, Re (abstract) 962 

Doyle Taxi Co., Re (abstract) 990 

Electric Corporations, Re (abstract) 961 

Gas Corporations, Re (abstract) 961 

Goodyear Stage Line, Re (abstract) 985 

Jones-Kittle Stage Co., Re (abstract) 970 

Mountain Auto Co., Re (abstract) 962 

Nevares Auto Stage Line, Re ( abstract) 962 

Phoenix-Glendale ft P. Stage line. Re (abstract) 990 

Phoenix R. Co., Re (abstract) 995 

Pinal, Re (abstract) , • 975 

Sanguinetti, Re (abstract) 970 

Santa Fe R. Co., Re (abstract) 975 

Supervisors of 'Mohave County, Re (abstract) 974 

Union Auto Transp. Co., Re (abstract) 970 

Tuma Light, Qm ft Water Co., Re (abstract) 990 

California. 

Black Diamond Water Co., Re , .•. 160 

Calvin, Re (abstract) 970 

Eraser v. Stanford Water Co. * 850 

Grapgers Business Asso., Re (abstract) 962 



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CASES REPORTED (BY JURISDICTIONS). xxxvii 

Hall, Be (•betract) , .970 

Barker, Re (abstract) :. . 071 

Haydis, Re , 023 

Imperial Re (abstract) 062 

James Canal Co., Re (abstract) , 070 

Kittams ▼. Los Angeles R. Corp 910 

Los Angeles & S. P. Daily Express, Re (abstract) 990 

Los Banos, Re 163 

Manteca v. Southern P. Co. (abstract) 975 

Mount Konocti Light & P. Qo. (abstract) ...«.• 070 

Northern California Power Co., Re 838 

Oakdale Gas Co., Re (abstract) 997 

Oakland-San Jose Transp. Co., Re 920 

Oakland-Vallejo Transit Co., Re (abstract) 970 

Pacific Light ft P. Corp. v. Pasadena 149 

Producers Warehouse, Re 919 

San Francisco-Oakland Terminal R., Re ^..•. 115 

Southern California Edison Co., Re (abstract) /. 962 

Southern Counties Gas Co., Re (abstract) 962 

Southern Counties Gas Co.^ Re (abstra^ct) • .••••••• 1000 

Ck>lorado« 

Barkley, Re (abstract) S|62 

Denver ft N. Transp. (>>., Re (abstract) 962 

Franklin, Re (abstract) 962 

Industrial Sugar Co., Re (abstract) 976 

Liberty Transp. ft Exp. Co., Re (abstract) 962 

Paine, Re (abstract) 963 

Smuggler Leasing Co. t. Roaring Fork Electric Light ft f. Go. 

(abstract) 988 

Titter, Re (abstract) •••;••.•. « 969 

Van Dom, Re (abstract) 963 

Western Colorado Power Co., Re (abstract) 963 

Ooimectlciit* 

American Thread Co., Re (abstract) 963 

Brown, Re (abstract) 979 

Connecticut Co., Re (abstract) 984 

Eastern Connecticut Power Co., Re (abstract) 963 

Norwich, Re (abstract) 979 

T^ler Y. Woodbury Electric Co. (abstract) 963 

. . District of Columbia. 

Regulations for OperatioQ.aud. Equipment of Street B£ailway Cars, Re 

(ab^ract) 985 

Terminal Taxicab Co., {le (abstract) • •....••..• t90 



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zxrviii CASES REPORTED (BY JURISDICTIOiHS). 

Idaho.. 

AdAmson, Be (abstraot) 963 

Boi8e Valley Traction Co., Re 525 

Caldwell Traction Co., Re (abetract) 995 

Chicago, M. ft St. P. R., Re (aUtract) 989 

Daniels Teleph. Co., Re (abstract) 963 

Indian Valley Teleph. Co. v. Keithley k D. Teleph. Co 165 

Owenford P. Valley Teleph. Co., Re (abetract) .' 963 

Weston, Re (abstract) -963 

Whitworth v. Mountain SUtes Teleph. k Teleg. Co 536 

nUnols. 

Alton Gas k E. Co., Re (abstract) '• 991 

Athens Electric light Plant, Re (abstract) 991 

Bureau County Independent Teleph. O., Re ( abstract) ► 971 

Canton <3as k E. Co., Re (abstract) ...... 997 

Carrier Mills Utilities Co. v. C^tral Illinois Pub. Service C3o. 

(abstract) 991 

Central Illinois Light CJ6., Re (abstract) 991 

Central Blinois Pub. Setvlee Co., Re (abstract) (2 cases) 964 

Central Illinois Pub. Service Co., Re (abstract) (4 cases) 964 

Central Illinois Pub. Service Co., Re (abstract) 995 

Central Illinois Pub. Service Co., Re (abstract) (6 cases) 999 

Central Illinois Utilities Co., Re (abetract) 987 

Central Illinois Utilities Co., Re (abetract) *. 991 

Central Union Teleph. Co., Re (abetract) 971 

Chicago k A. R. Co. v: Chicago k N. W. R. Co. (abstract) 97G 

Chicago k E. I. R^ Co., Re (abstract) 989 

Chicago k N. W. R. O., Re (abstract) 987 

CHiicago & Q. R. Co., Re (abstract) (2 cases) ..*. 975 

Chicago, B, k Q. R. Co., Re (abstract) 975 

Chicago, B. & Q. R. Co., Re (abstract) (2 cases) 976 

Chicago Junction R. Co., Re (abstract) 989 

Chicago, M. k St. P. R. Co., Re (abstract) (2 cases) 976 

Chicago, M. k St. P. R. Co., Re (abstract) 977 

Chicago Teleph. Co., Re (abstract) 971 

Cisco Electric O., Re (abstract) 991 

City Water Co., Re (abstract) 983 

Coe Light k P. Co., Re (abstract) 963 

(Consolidated Light k P. Co., Re (abstract) " 997 

Crandall Transfer k Warehouse Co., Re (abstract) 964 

Crandall Transfer k Warehouse Co., Re (abstract) 971 

Cullom Electric Co., Re (abstract) r.- 964 

Cumberland Teleph. k Teleg. Co., Re (abstract) (2 cases) 986 

Deer Creek Power & Light (>>.» Re (abstract) • 965 

DeKalb-Sycamore Electric Co., Re (abstract) „^ 999 

Drager Electric Co., Re (aJbstract) «■ 964 

EUiott-Van Brunt, Re (abstract) 964 

Bmingtoii Teleph. Co., Re (abstract) • .•^•••••. 964 



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OASE& BXBO&TED (BY JUBISDIGTK)N8). zzzix 

Fayette Home Telepb. jl3o. y. St. JAmes Rural Teleplk Ck>. (abBtraot) 4. 987 

€N>iconda Light &.Water Co.^Re (abstraot) ..••• 991 

Granite City Gas Light k Fuel Co., Re fabstraet) 997 

Greenup Teleph. Co., Re (abstraet) »».«. 965 

Herrin v. Missouri P. R. Co. (abstract) ..•,;....♦.. 976 

Bighway Commissioner y. Chicago: A> E. L R. Co. (abstract) 976 

Hollander Exp. & Van Ck)., Re (abstract) w.... 966 

Homer Electric Light & P. Co., Re (abstract) 991 

Illinois C. Electric R., Re (abstract) 965 

Illinois Northern Utilities Co., Re (abstract) 966 

Illinois Northern Utilities Co., Re (abstract) . . ; ; . . . 999 

Interstate ludependent Teleph. & Teleg. Ck)., Re (abstract) '964 

Interstate Independent Teleph. & Teleg. Co., Re (abstract) ........ 972 

Interstate Light & P. Co., Re (abstraofc) ..w...... 986 

Jackson's Exp. & Van Co., Re (abstract) 964 

LaHarpe y. Western Hlinois Utilities Co^ ( abstract) 984 

Lena Electric Lig^ht k P. Co., Re (abstract) ^... 986 

Lincoln Teleph. Ck>., Re (abstract) (3 cases) .: 964 

Lincoln Teleph. O., Re (abstract) (3 cases) ; '. 971 

Lincoln Water & Light Co., Re (abstract) 991 

McLeansboro v. Louisville & N. R. Co. (abstract) 976 

Marion & E. R. Co., Re (abstract) 965 

Millstadt Teleph. Co., Re (abstract) :. 966 

MillsUdt Teleph. Co., tie (abstract) •.. 972 

Minier Electric Light & P. Co., Re (abstract) • 966 

Monmouth'Pub. Service Co., Re (abstract) 999 

Monmouth v. Rock Island S. R. Co. (abstract) 976 

Mt. Pulaski: Electric Light, Heieit k P. (Do., Re (abstract) 991 

Mulligan v. Illinois C- R. Co. (abstract) , 975 

North Shore Fireproof Storage Co., Re (abstract) 966 

Palmyra Light, Heat A P. (>)., Re (abstract) . . . , ., 991 

Paxton Gas Co., Re (abstract) , . , 997 

Peoples Gas, Light & Coke Co., Re (abstract) 997 

People's Power Co., Re (abstract) 991 

Pittsburgh, C. C. & St. L. R. Co., Re (abstract) r...... .989 

Powers Storage Co., Re (abstract) .', ^ 964 

Prairie Electric CJo., Re (abstract) .....,..♦ , 991 

Public Service Co., Re (abstract) ., 999 

Public Utilities Commission v. Hines (abstract) , . , 979 

Public Utilities Commission v. Monmouth Pub. Ser>*ice Co. (abstract) 987 

Public Utilities Commission v. Springfield Gas & E. Co »......., 326 

Pullman R. CJo., Re (abstract) .....,,, ', *w,.» 976 

Rockford City Traction Co., Re (abstract) .^....•. ^^ 

Royal Lijght k P. Co., Ref (abstract) , ^» 991 

St. Clair v. Hines (abstract) * ........... ... 976 

Salmon's Investment k Security Co., Be (abstract) .«....»... ^..•. - 9661 

Salmon^s Investment k Security Co., Re (abstract) , ^.m ••'..•.... . 972 

Smith, C. t. Storage k Warehouse Ox, Ke (abstract) « «.. « • . j 966 

Springfield Gas & E. Co., Re ....*.. .,^ * *..*» -44(1 

Spring Valley Utilities CJo., Re (i^fltract),.:^. ,*•*........ ....•;..}* -90^ 



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xl CASES REPORTED (BY JURISDICTIONS). 

Stephenson County Teleph. Co., Re ; • 188 

Stockton Electrio Co., Re (abstract) 966 

Stockton Electrio Co., Re (abetraet) 986 

Sullivaa Home Teleph. Co., Re (abstract) 986 

Tamaroa Electrio Supply Ca, Re (abstract) 966 

Tiricilwa Electrio Light Ca, Re (abstract) 991 

United States R. Administration, Re (abstract) 989 

Urmaoga Teleph. Co., Re (abstract) 963 

Urmaoga Teleph. Co., Re (abstract) 971 

Warble Storage & Furniture Co., Re (abstract) 966 

Watson, C. A. & Sons, Re (abstract) 964 

Western Warehousing Co., Re (abstract) 965 

West V. St houiB, S. Jt P. R. Ck>. (abstract) 975 

Wyanet Electric Light Co., Re (abstract) 991 

Indiana. 

Blufften, Re (abstract) 987 

Carthage Commercial Club v. Cleveland, C. C. & St. L. R. Co. (abstract) 982 

Carthage Natural Gas Co., Re (abstract) , 1000 

Central States Gas Co., Re (abstract) ; .997 

Citizens CkM Co., Re (abstract) (leases) 997 

Citizens Teleph. Co., Re (abstract) 972 

Cleveland, C. C. & St. L. R. Co., Re (abstract) (2 cases) 980 

Electric Light Co., Re (abstract) , 993 

Elkhart Gas & Fuel Co., Re (abstract) 997 

Eureka Teleph. Co., Re (abstract) 972 

tVankfort, Re (abstract) (2 cases) 987 

Fuel Ck>mmittee, Re (abstract) r 989 

Gary & H. Traction Co., Re 200 

Gary A H. Traction Co., Re (abstract) 995 

Gary A S. Traction Co., Re (abstract) .» 995 

Gary Street R. Co., Re 191 

Goshen, Re (abstract) 992 

Greencastle Gas & E. Co., Re (abstract) .^ 997 

Greensburg Natural Gas, Oil & Water Co., Re (abstract) 1000 

Griffin Electric Plant, Re (abstract) 993 

Hope Electric Light & Ice Plant, Re (abstract) 992 

Ituntington Light & Fuel Co., Re (abstract) 997 

Huntington Light & Fuel (Do., Re (abstract) 1000 

Indiana Fuel & Light Co., Re , 414 

Indiana Gas Transp. Co., Re (abstract) 1000 

Indiana- General Service Co., Re 489 

Indiana General Service Co., Re f 948 

Iiidiana R. A Light Co., Re (abstract) (2 cases) ; . . . 992 

Indiana R. & Light Co., Re (abstract) .,., 995 

Interstate Pub. Service Co., Re (abstract) (2 cases) 1000 

Lafayette Teleph. Co., Re ;. 422 

La Fontaine Water Co., Re (abstract) , 992 

LaPorto Cks Jt K Co., Re (abstract) 997 

Lettvenworth Electric L. Ca, Re (abstract) i 998 



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OASES BRPOBTBD (BY JUBISDICTIOKS). xU 

Ugonier, Be (abetract) 983 

Logansport Utilities Co., Re (abstract) , 972 

Northern Indiana Gat k E. Co., Re (abstract) 907 

Peoples Mttt. Telepfa. Co., Re (abstract) 972 

Rochester, Re (abstract) 992 

Southern Indiana Power Co., Re (abstract) 992 

Talma Teleph. Co., Re (abstract) % 983 

Tipton Electric k Water Plant, Re (abstract) 988 

Tipton Electric & Water Plant, Re (abstract) (3 cases) 992 

Turman Township Mat. Teleph. Co., Re ' 412 

Uni<mdale Rural Teleph. Co., Re (abstract) 972 

Union Traction Co., Re (abstract) 987 

United Pub. Senrice Co., Re (abstract) 998 

Wabash Valley Utilities Co., Re (abstract) 993 

Wabash Valley Utility Co., Re (abstract) 992 

Wallace Co-operative Teleph. Co., Re (abstract) 984 

Wheatfleld Teleph. Exch., Re (abstract) •• 979 



Kansas City Home Teleph. Co., Re (abstract) • 978 

liOiilslana* 

Alma ▼. Chicago, R. I. & P. R. (abstract) 989 

Saint FraneisTille y. Tasoo ft M. V. R. (abstract) 989 

Maine, 

Bangor & R. Ck>., Re (abstract) • 973 

Bangor R. & Electric Co^, Re (abstract) 995 

Bath &B. Light ft P. Co., Re (abstract) 96« 

Citizens' Teleph. Co., Re (abstract) 973 

Consumers Electric * Co., Re (abstract) • 966 

Cumberland County Power ft Light Co., Re (abstract) 993 

Gould Electric Co., Re (abstract) 993 

Jonesboro Teleph. Co., Re (abstract) 984 

Knox R. Co., Re (abstract) 973 

Knox R. Co., Re (abstract). 977 

Machias Electric Light Co., Re (abstract) 973 

Maine 0. R. Co., Re (abstract) , 980 

MUlinocket Light Co., Re (abstract) 998 

Milo Electric Light ft P. Co., Re (abstract) 993 

Municipal Officers of Old Orchard, Re (abstract) 977 

Oxford Electric Co., Re ....,,.*,... : ». 852 

Parsons, Re (abstract) , 977 

Plummer, E. ft Sons, Re (abstract) ^77 

Portland Terminal Co., Re (abstract) V4...« 977 

Bockport, Re '^ 

Whitney, Re (abstract) ®77 

Yarmouth Lighting Co., Re .......f ^W6 



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xHi CASES REPORTED (BY JURISDICTIONS). 

Maryland. 

United R. & Electric Co.; Re k.... «•« 1 

United R. 9i Electric Co., Re (abstract) ,,< •«.«^ MS 

Massacliusetts. 

Brockton Oas Light Co., Re (abstract) 998 

East Boston Gas Co., Re (abstract) 998 

Eastern Massachusetts Electric Co., Re (abstract) (2 cases) 967 

Edison Electric Illmninating Co., Re (abstract) 985 

Fitchburg &, L. Street It Co., Re (abstract) 995 

Holy<^e Street R. Co., Re (abstract) 995 

Lee y. Berkshire Street R. Co 206 

McGowan, Re 540 

Newton & W. Gas Light Co., Re (abstract) 998 

Union Street R. Co., Re (abstract) 996 

Worcester ConsoL Street R. Co., Re (abstract) 995 

Ml<;hlgan. 

Board of County Road Com'ra, Re (abstract) 977 

Board of County Com'rs, Re (abstract) 978 

Bronner, Re (abstract) 981 

Central Citizens' Teleph. Asso., Re (abstract) 973 

Chicago, G. W. R. Co., Re (abstract) * «••• 982 

Chicago, K. & S. R., Re (abstract) 977 

Coleman, Re (abstract) 981 

Detroit k T. S. Line R., Re (abstract) 981 

Detroit United R., Re (abstract) 974 

Detroit United R., Re (abstract) 981 

Duluth, S. S. Jt A. R., Re (abstract) 978 

Grand Rapids & I. R., Re (abstract) 981 

Grand Trunk Western Lines R. Co., Re (abstract) (3 cases) 980 

Hogue V. United States R. Administration (abstract) 987 

Jackson, Re (abstract) 981 

Kalamazoo, Re (abstract) 981 

Keller, Re (abstract) 9r3 

Lansing Fuel & Gas Co., Re (abstract) 998 

Locke, Re (abstract) 981 

I^le, Re (abstract) , 977 

McCain, Re (abstract) 981 

Maoon Teleph. Co., Re (abstract) 967 

Michigan (X R., Re (abstract) (2 cases) 980 

Michigan C» R. Co., Re (abstract) 984 

Milan, Re (abstract) 981 

Mullins, Re (abstract) 978 

Muskegon, Re (abstract) 980 

Muskegon Traction t Light Co., Re (abstract) v 998 

New York CX R. Co., Re (abstract) ...;...* 981 

Pere Marquette &G. T. W. Lines R., Re (abstract) 980 



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CASES BBPOBTSD (BY JURISDICTIONS). zlui 

Pere* Marquette R., Be (abstract) ..••..•^•... 981 

Scharl, Re (abstract) 977 

Valley Home Teleph. Co., Re ' 869 

Youngs, Re (abstract) 977 

Minnesota. 

Qdcago, R. I. & P. R. Co., (abstract) 1 989 

Hankato Citizens Teleph. Co., Re (abstract) 973 

Mora V, Great Northern R. (abstract) 982 

Northwestern Teleph. Exch. Co., Re (abstract) (2 cases) 973 

Seandia-Marine Mut. Teleph. Co., Re (abstract) 985 

Tri-State Teleph. & Teleg. Co., Re (abstract) 973 

Mississippi. 

Cumberland Teleph. & Teleg. Co., Re (abstract) b.../ 984 

Missouri. V 

Atchison, T. & S. P. R. Co., Re (abstract) 974 

Bevier Teleph. Co., Re 90 

Clinton Light & Water Co., Re (abstract) 993 

Joplin, Re (abstract) '...... 978 

Kansas City R. Co. t. Kansas City ; : . i: 926 

Lafayette Teleph. Co., Re 169 

Mexico Power Co., Re (abstract^ 993 

Mexico Power Co., Re (abstract) 998 

Mexico Power Co., Re (abstract) ^ 1000 

Moore v. United States R. Administration '.. 585 

Parks, Re (abstract)* 1 978 

Polk County t. Kansas City, C. & S. R. Co. (abstract) ... 978 

Public Service Commission v. Southwestern Bell Teleph. Co 564 

St Joseph Gas Co., Re (abstract) 998 

St Joseph R. Light, H. k P. Co., Re 54^ 

School District of St Joseph v. St. Joseph R. Light, H. & P. (^. 559 

Southwest Missouri R. Co., Re (abstract) 996 

Western Union Teleg. Co., Re , 661 

Montana, 

Ettatern Montana Light & P. Co., Re (abstract) .-• ..-.v.. 993 

Jennison Electric Co., Re (abstract) , 993 

Malta Light & P. Co., Re (abstract) 993 

Nebraska* ^ 

Blue River Power Co., Re (abstract) .-5^ 967 

Farmers Liberty Light & P. Co., Re (abstract) •:• 967 

Farmers Mut Teleph. Ck^., Re (abstract) 974 

lincoln Traction 0>., Re 328 

North Bend Re (abstract) •••••as.««.**«*jl2; ^^'^ 



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xliv CASES REPORTED (BY JURISDICTIOJTS). 

Seward, Re (abstract) ' 984 

Wyoming k Nebraslca TelepTi. Co., Re 96 

Nevada. 

Bohall, Re (abstract) 967 

Carlson, Re (abstract ) 968 

Carson Water Co., Re 664 

Elko Lamoille Power Co., Re (abstract) 993 

Ck)lconda Teleph. & P. Co., Re (abstract) 967 

Golconda Teleph. A P. Co. v. Utah, N. & I. Teleph. Co. (abstract) 98^ 

Pioneer Stage Co., Re (abstract) 967 

Tonopah & G. R. Co., Re (abstract) 968 

Tonopah & T. R. Co., Re (abstract) 968 

Tonooah-Divide & G. Elec. R. Co., Re (abstract) 968 

Unittd Farmers Teleph. & Teleg. Co., Re (abstract) 967 

Utah, N. & L teleph. Ck)., Re (abstract) 968 

New Hampshire. 

Berlin Heights Addition v. Berlin Water Co 866 

Rammer,. Re (abstract) 968 

Rousseau, Re 863 

Twin State Gas A £. Co., Re 746 

New Jersey. 

Boonton Electric Co., Re (abstract) 993 

Commercial Power Co., Re (abstract ) 986 

Delaware L. & W. R. Co., Re (abstract) 983 

Lawrence, Re (abstract) 982 

Ocean Grove Camp Meeting Asso., Re 681 

Public Service Gas Co., Re 233 

Public Service Gas Co., Re (abstract) 998 

Public Service R. Co., Re 294 

Standard Gas Co., Re (abstract) 998 

Trenton & M. County Traction Corp., Re (abstract) 996 

Tuckerton Gas Co., Re (abstract) 998 

New York. 

All^any r. Keystone Qab Co ; 307 

Andover v. Empli-e Gas A Fuel Co 702 

Bath V. Bath Electric A Gas Light Co. (abstract) 998 

Belt Line R. Corp., Re (abstract) 996 

Brooklyn City R. Co., Rte (abstract) 996 

Chautauqua v. Chautauqua Traction Co. (abstract) 996 

Conservation of Fuel, Re (abstract) 984 

Conservation of Fuel, Re (abstract) 985 

Drake v. Dunkirk & F. Teleph. Co 872 

Dii^Bois, Re (abstract ) ., . 968 

Button, A. C, Lumber Co., Re 749 



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OASES REK>RTED (BY JURISDICTIONS). xlv 

Filing Order, He (abstract) .....••. 989 

Forty-Second Street, M. k St. N. Avenue R. Co.« Re (abstract) .. . v.* 99^ 

Fuhrmann v. International R. Co 133 

Ck>shen v. Wallkill Transit Co - v.,.. 309 

Krier v. Nassau & S. Lighting Co. , ..........*«.. 7Q1 

Long Island R. Co., Re (abstract) ,..»,.. 961 

Long Island R. Co., Re (abstract) 978 

Munch, Re (abstract) 968 

Xew York & H. R. Co., Re (abstract) , 978 

New York & H. R. Co., Re (abstract) 982 

New York, W. & B. R. Co., Re (abstract) 996 

Northern Union Gas Co., Re (abstract) 986 

Xyack v. Rockland Light A P. Co 764 

Glean v. Producers Gas Co. (abstract) 309 

Oswego V. United States R. Administration 678 

Owego Gas Light Co., Re (abstract) 998 

Postal Tel^raph-Cable Co. v. Western Union Teleg. Co 683 

Queens Borough Gas & E. Co., Re (abstract) . . i 986 

Sag Harbor v. Long Island Gas Corp. (abstract) 998 

Sand Lake Board of Trade v. Wyantskill Hydro-Electric Co. 

(abstract) 994 

Westchester Motor Transfer Co., Re 336 

Western New York & P. Traction Co., Re 961 

Wilkinson v. New York State R 695 

I 

Nortli Dakota. 

Bismarck Gas Co., Re 877 

Dakota Light, Heat k P. Co., Re 884 

Fargo V. Union Light, Heat A P. Co 764 

Bought V. Hines 898 

Union Light, Qeat A P. Co., Fargo v 764 

Ohio. 

Citizens Teleph. Exch. Co. y. ^etamora Teleph. Co v 813 

Cobs v. Richland Pub. Service Co 236 

Plain Dealer Pub. Co. v. Cleveland & F. Traction Co 818 

OklAboma. 

Boynton Gas k E. Co., Re (ab^Uact) 998 

Consumers Light k P. Co., Re (abstract) .' 994 

Gushing Gas Co., Re (abstract) 998 

Fairland Light k Water Works, Re (abstract) ; . 994 

Hominy Ice, Light k P. Co., Re (abstract) 994 

Kay County Gas Co., Re (abstract) 998 

Oklahoma Gas k £. Co., Re (abstract) . ; 988 

Washito Electric Power Co., Re (abstract) 994 

Western Oklahoma Gas k Fuel Co., Re (abstract) ' 998 

Wilson V. Oklahoma Union R. Co. (abstract) 974 



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jM CASB8 EBPORTSD (BY JURISDICTI0N3). 

Orecon. 

CalifoniiA-Oregon Power Go., B6 (abstract) 1000 

Investigation of Roles, Orders and Regulations, Re (abstract) 990 

Oregon A: C. R. Co., Re' (abstract)' ' 978 

Or^on State Higliway Commission, Re (abstract) 97t^ 

Silverton Lumber Co., Re (abstract) 978 

Silverton Lumber Co., Re (abstract) 982 

Soutbem P. Co., Re (abstract) 979 

Standard Oil Co., Re (abstract) : 979 

Pennsylvania. 

Berks y« Philadelphia & R, R, Co. (abstract) 983 

Boyle V. Wilkes-Barre Co ^ 98 

Domsife v.. Philadelphia & E. R. Ck>. (abstract) 961 

Bdinboro v. Northwestern Electric Service Ca (abstract) 994 

EUiott V. New York C R. Co. (abstract) 983 

Fagan y. Pittsburgh Transp. Co 609 

Fox V. Pine Grove Electric Light, Heat & P. Co. (abstract) 994 

Keystone Grange No. 1682 v. Pennsylvania R. Co, (abstract) .../.,.. 983 

Lansford v. Eastern Pennsylvania R. Co. (abstract) « 996 

BCasteller v. North Branch Transit Co. (abstract) 996 

Motor Club V. Delaware, L. A W. R. Co. (abstract) 983 

New Castle y. Mahoning ft S. R. & Light Co 337 

Northampton v. Lehigh & N. E. R. Co. (abstract) 983 

Northwest Business Men's Asso. v. Philadelphia Rapid Transit Co. 

(abstract) ; . 984 

Punxsutawney, Re (abstract) , 988 

Sfhuylkill R. Co., Re (abstract) 979 

Sellersville v. Highland Gas Co 321 

State Highway Dep't v. Pittsburgh ft S. R. C^. (abstract) (2 cases) . . 983 

Waldron v. Muncy Water Supply Co 315 

West Chester Board of Trade v. Philadelphia Suburban Gas ft E. Co. 101 

Zentmyer, Re (abstract) *. 969 

Ziegler v. Philadelphia Suburban Gas ft E. O). (abstract) 999 

Philippine. 

Aurelio y. Manila Gas Ck>rp. (abstract) (2 cases) 999 

Rhode Island. 

American R. Exp. Co., Re (abstract) « 984 

Rhode Island Co., Re (abstract) 996 

Woonsocket Street R. Co., Re (abstract) 979 

South Dakota. 

Chicago, M. ft St. P. R. Co., Re 339 

Clear Lake l^eleph. Co., Re (abstract) ^ 983 



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CASES REPORTED (BY JURISDICTIONS). xlvll 

Utah. 

Boulaifl, Re (abstract) .^ 969 

Bonntifol City, Re (abstract) * 996 

Broughall v. Utah Gas A Coke Co. (abstract) 988 

Collier Transp. Co., Re (abstract) , ,... 970 

Crismon y. Utah Gas & Coke Co. (abstract) 988 

Deveraux v. Utah Gas & Coke Co. (abstract) 988 

Distefano, Re (abstract) 970 

Hansen, Re (abstract) » 969 

Henderson, Re (abstract) .* 969 

Pehrson, Re (abstract) 969 

Quian, Re (abstract) • 969 

Rasmussen, Re (abstract) 969 

Rolapp y. Utah Gas A Coke Ck>. (abstract) 988 

Salt Lake Terminal Co., Re (abstract) 990 

Smedley, Re (abstract) 961) 

Tumba^^, Re (abstract) 969 

Uintah R. Co., Re (abstract) 990 

Uintah R. Co., Re (abstract) 990 

Ukon Water Co., Re (abstract) ,, .,.. 969 

Utah Valley Gas k Coke Co., Re (abstract) ,,.. 999 

Veile, ke (abstract) 969 

Wells y. Utah€ks& Coke Co. (abstract) ,...,.... 988 

Vermont. 

Colonial Power & Light Co., Re (abstract) •...• 986 

Colonial Power & light Ck>., Re 216 

Gay, Re (abstract) 969 

Western Vermont Power & Light Co., Re (abstract) 220 

Washington. 

Kalama Business Men's Club y. North Coast Power Co. (abstract) .... 994 

Wisconsin. 

Algoma, Re (abstract) 994 

Apple Riyer Milling Co., Re (abstract) 995 

Avoca y. Chicago M. A St. P. R. Co. (abstract) 982 

Beloit Traction Co., Re (abstract) 979 

Bloomington Electric Light & P. Co., Re (abstract) 994 

Coleman-Pound Light k P. Co., Re 105 

Cordy y. Mellen Water & Light Co. (abstract) 995 

Denmark Light k P. Co., Re (abstract) 994 

Elkhart Lake Light & P. Co., Re 346 

Ephraim Electric Light Co., Re (abstract) 994 

Fort Atkinson Gas Co., Re (abstract) 999 

Hancock Light & P. Co., Re (abstract) 995 

Hayward Electric Light A P. Co., Re (abstract) 994 

Hubing y. Chicago A N. W. R Co. (abstract) 982 



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xlviii CASES. REPORTED (BY jpRISD|CTIONS). 

La Cro88e & 0. Street R. Co., Re (^bs^act) 997 

Milwaukee Electric R. & Light Co., Re 361 

Northern Power Co., Re (abstract) 994' 

Oak Creek v. Chicago A N. W. R. Oa. (abstract) . 982 

Racine v. Milwaukee Light, Heat & Traction Co. (abstract) 997 

Random Lake Electric^Co., Re ( abstract) 994 

Report of Board of Conciliation, Re (abstract) 997 

Rhinelander v. Chicago & N. W. R. Co. (abrtract) 982 

Rosholt Electric Co., Re (abstract) 994 

St. Croix Farmers Mut. Teleph. Co. v. Gatten ; 103 

Schneider v. Rockford & I. R. Co. (abstract) 961 

Seymour Electric Co., Re ( abstract) 988 

Stoughton Light A Fuel Co., Re (abstract) 999 

Van Auken v. Wisconsin R. Light A P. Co. (abstract) 986 

West Allis V. Milwaukee Electric R. & L. Co. (abstract) ' 961 

Wikum V. Wisconsin Teleph. Co 356 

Wisconsin Gas & E. Co., Re ( abstract) 999 

Wisconsin Highway Commission v. Chicago St. P. M. & O. R. Co; 

(abstract) 979 

Wisconsin Jitneymen's Asso., Re' 915 

Wisconsin'Minnesota Light & P. Co., Re (abstract) . .• 969 

Wisconsin Power; Light & Heat 06., Re (abstract) , 1000 

Wisconsin Valley Electric Co., Re (abstract) 994 

Yawkey-Wissell Lumber Co., Re (abstract) 979 



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LIST OF APPEALS, REHEARINGS, 
AND MODIFICATIONS. 

ArlBona. 

Walker v. Tucson Farms Co., P.U.R.1919E, p. 350. 
Petition for r^earing ^nied (July 24, 1919). 

District of Ck>lnmbla. 

Washington R. & Electric Co., Re, P.U.R.1919F, p. 751. 

Street railway compitny authorized to use metal toftens ill lieti of 
paper tickets (October 27, 1919). 

Idaho. 

Boise Railway Co', Re, P.U.R.1919B, p. 958. 

Order modifying required street railway service (December 3, 1919). 

IlUnola. 

Pekin t. Pekin Water Works Co., P.UJ1.1917C, p. 838. 

Supplemental order reaffirming finding as to rate base, ordering utility 
to show cause why depreciation fund had not been maintained as 
ordered bv the Ommission, and establishing increased rates (Jan- 
uary 28, 1920). 
Public Service Co., Re, P.U.R.1916B, p. 363. 

Authority to lease equipment tised for lighting public streets (Decem- 
ber 2, 1919). 
Queen City Qas Co., Re, P.U.R.1918A, p. 621. 

Increase in gas rates authorized (January 28, 1920), 

Indiana. 

Knightstown Natural Gas Co., Re, P.U.R.1919F, p. 667. 

Number of wells required to be added reduced to two and length of 
notice of' discontinuance of service extended from 60 to 120 days 
(October 4, 1919, November 16, 1919). 
Lafayette Teleph. Co., Re,* P.U.R.1920A, p. 422. 

Line charge of 60 cents applicable to first four quarter miles of line 
instead of first one quarter miles (December 19, 1919). 

Maine. 

Rockport, Re, P.U.R.1920A, p. 72. 

Compliance with certain portions of order postponed pending decision 
of supreme court (November 13, 1919 )• 

xlix 



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1 APPEALS, R£U£ARINQS, ETC. 

Nebraska. 

Farmera k Merchants Teleph. Ck>., Re, P.U.R.1919F, p. 691. 

Utility authorized to retain real estate on condition of lelling stoek 
at par to the amount of $4,000, one-hall to be used tQ reyreonnrent 
lial>ilitieB and the other half to be retained as a liquid reserrs 
(January 2^, 1920). 

New Jersey. 

PuUic Service R. Co., Re, P.U.R.1920A, p. 294. 

Zone system abolished and 7 -cent fare with one cent for transfers re-es- 
tablished (December 2, 1919). 

New York First District. 

Brooklyn Boroqgjh Gas Co., P.U.R.1919B, p. 49. 

Supplemental orders extending time when 95H»nt rate becomes effee- 

tiye to March 1, 1920 (December 19, 1919, January 23, 1920). 
Extension to June 30, 1920 (February 24, 1920). 

Wisconsin. 

Milwaukee Electric R. & Light Co., Re, P.U.R.1920A, p. 861. 

Beroutiog of street railway lines ordered (December ^ 1919)« 



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PUBLIC UTILITIES 
REPORTS 

ANNOTATED 



MARTIiAND PUBLIC SERVICK COMMISSION. 

BE UNITED EAILWAYS & ELECTRIC COMPANY. 
[Case No. 1682; Order No. 5120.] 

Beturn — Beammahlenese — Estimates of future expenses and 
revenues. 

1. More satisfactory estimates can be made as to tlie probable 
futnre results of an increased fare from figures covering a period of 
Bine, ten, or eleven months, than from figures for shorter periods, 
particularly where a new rate of fare has been in force for only a 
comparatively short time. 

Beturn — Be€isanahleness ~ Ammint utility is entitled to earn. 

2. A public utility is entitled to Receive from the public a sum 
not only sufficient to pay operating expenses, taxes, and a fair return 
upon the fair value of the property used in the public service, but, in 
addition thereto, a sum sufficient to maintain such property in repair 
and replace such portions of the same as may be worn out in the public 
service. 

Return ~ Dividends — Use of depreciation funds. 

3. It is grossly unfair to thejpresent and immediately future patrons 
to provide in rates large sums of money necessary either to pay for 
deferred maintenance accruing during the period of the war, or to set 
up depreciation reserves which could have been easily set up had 
dividends upon the common stock not been paid during the period of 
the war. 

Return — Beasonahleness ~ War emergency. 

4. In view of the probable continuance 'of abnormally high prices 
of labor and materials, rates should be no longer fixed on the basis 
ol a war emergency. 

Return — Basis — Corporate requirements. 

6. During a period of social unrest and abnormally high prices 
resulting from the war, rates should be based upon the corporate re- 
P.UJ1.1920A, 1 



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2 MARYLAND PUBLIC SERVICE COMMISSION. 

qulrements of the utility, rather than upon fair value or upon a war 
emergency. 
Bates ~ Poxoer of Commisaian — AddUions to city — Charter pro- 
vtsiona, 

6. By the provisions of the Public Service Commission Law of 
Maryland, the whole question of rates to be charged for railway service 
in the city of Baltimore was committed by the legislature to the de- 
termination in the first instance by the Commission, subject to review 
by the courts as provided by the law; and this is true as to any ter- 
ritory added to the city limits. 

Rates — Street railways — Extension of city zone limits, 

7. In granting an increase in street railway rates, the Maryland 
Commission refused to extend the city rates to the portion of the 
second zone lying outside of the city remaining after a portion thereof 
had been annexed to the city, where such extension would result in a 
loss in revenue approximating the increase in revenue to be obtained 
by the increase in rates. 

On Rehea!ring. 
Commissions ~ Opinions — Interpretation, 

8. Amounts stated in the Commission's opinion to be mere esti- 
mates of expenditures cannot reasonably be taken as limitations upon 
the right of the company to expend such sums for the operation and 
maintenance of its property as may be found by actual experience to 
be reasonably necessary. 

Hetum — Reasonableness — Temporary determination ~ Basis — JBe- 
construction. 

9. An earning capacity of one and one-half times the fixed charges 
of a street railway company is reasonable and necessary and in the 
interest of the public, pending the establishment of fares based upon a 
valuation of the colmpany's property, or the adoption of a cost and 
service basis; but the entire burden of earning this surplus should not 
be placed upon the public during a reconstruction period following 
war. 

Return — Balance to surplus, 

10. In estimating the amount of balance to surplus a public utility 
company was entitled to earn, the Maryland Commission conditioned 
its conclusion, first, upon the exercise of reasonable efficiency in the 
operation of the property, second, upon the exercise of reasonable 
economies, and, third, upon the expenditures of no more than reasona- 
ble amounts for the maintenance of the property and of its accident 
and depreciation reserves. 

Return — Btisis — F€Ur present value ~ Abnormal prices. 

11. Rates based upon value must be based upon ''fair present value" 
which cannot be determined by the abnormally high prices following 
war. 

Return — Bond discount ~ Amortization, 

12. A utility which sells securities at a discount, with the consent 
of the state regulatory body, is entitled to charge the public, in addi- 
tion to what would otherwise be the cost of the service, the amount 
necessary to amortize such discount during the life of the securitiei, 

P.U.R.1920A. 



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RE UNITED RAILWAYS & E, CX). J 

Metum — Operating expenses — Interest. .t, .. . v:vVv/> 

13. Good faith requires that the purohasen ol public ittittfcy secuii- 

ties bearing an abnormally high interest rate, with the consent of the 

state, be protected in their investment by the fixing of rates whicK^ 

will enable the utility to pay such interest. 



Metttm — Gross income — Revenue passengers en street railway. 

Table showing increases in revenue passengers on United Rail- 
ways & Electric Company of Baltimore, p. 10. 
Metum — Estimates of future expenses and revenues* 

Methods of estimating future street railway revenue passeii^idr^ 
and car miles operated, p. 17. 
Heturn * Gross revenue — Bstiniates of passenger revenu^'. 

Methods of estimating street railway passenger revenues wh6ii 
different rates of fare are charged, p. 20. (i 

l^epreoUMon * Method of treatment. 

Statement that the United States Supreme Court has never ;^ 
tempted any full discussion of the manner in which depreciation should 
be treated, p. 23. 
depreciation — Relation of depreciation and maintenance. * ; 

Discussion of relation of maintenance and depreciation and liability 
of public for both, p. 23. 
Bepreciation — Need of depreciation reserve. ..•.;; 

Discussion of need of depreciation reserve and benefit to be derived 
therefrom, p. 24. 
Service — Duty — Repairs and replacem,ents. 

Discussion of duly of utility with reference to repairs and re- 
placements, p. 24. 
Depreciation * Funds — Duty of utility. 

Discussion of duty of utility as to use of depreciation fund to 
restore property, and not to pay dividends, p. 24. 
Depreciation — Poiaer of Commission * Compelling maintenance of 
depreciation reserve. 

Discussion of power of Maryland Commission relative to main- 
tenance of depreciation fund, and to fixing of rates to provide fqc 
depreciation and maintenance, p. 25. 
Depreciation — Basis of com>putations — Gross expenses. 

Statement showing impropriety of computing annual depreciatldn 
oa basis of gross expenditures, p. 28. 
Depreciation — Methods of estimating — Increased cos$ of labor c^ 
materials. 

Statement that depreciation allowance should be increased upoik* 
an increase in cost of labor and materials, p. 29. 
Metum — Basis. . < ^ 

Statement that estimates of future earnings and expenses baseic^ 
iq>on past results necessarily assume that thera will be po improve 
ment in operating efficiency, p. 30. . ' , . * 

P.UJL1920A. - : i f 



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4. MARYLAND PUBLIC SERVICE COMMISSION. 

Bates •^»Power of ContmissUm * JHacreUon. 

Statement that the Commission most at each stage of rate maJHng 
use Ita own judgment in each partionlar case, p. 30. 
Betium * Vet income * Amount, 

Statement that a utility should earn one and one-half times the 
fixed charges in order to maintain its credit, p. 43. 

Uetwrn — Qroae income — Number of street raUway passengers MSing 
tickets. 

Discussion of number of street railway passengers buying tickets 
at specified reduced rates, p. 47. 
JIMMm — Oross income — Passengers using street railway tickets. 

Table showing number of street railway passengers ia Washington 
making use of tickets at reduced rates, p. 49. 
WMes — Street railways * **Cost of service** plan. 

Discussion of "cost of service" plans of r^ulating rates of street 
railway, p. 63. 
Wietum — Operating expenses * Taxes and paving cTiarges, 
* Statement that paving charges required to be paid by a street 

railway, taxes on gross income, and other forms of taxation, must be 
paid by patrons, p. 55. 

On Rehearing. 

Public utilities — Relations with public — Policy — Reconstruction 
period. 

Discussion of necessity of inauguration of a eonstructive policy 
with reference to public utilities, p. 67. 
Return * Adequacy — ^ Interest of public in operation and maintC" 
nance of utility property. 

Discussion of interest of public in the continued and proper dpera- 
' tion and maintenance of public utility property, p. 60, 

[September 30, 1919.] 

Petition of the United Kailways & Electric Company of 
Baltimore for permission to increase street railway rates ; denied 
as to increase in special ticket rates, but 6-cent adult charge raised 
to 7 cents with requirement that four tickets be sold for 26 cents. 

Appearances: Joseph C. France, and William H. Maltbie 
representing the United Railways & Electric Company of Balti- 
more; Joseph S. Goldsmith People's Counsel, and Osborne I. 
Tellott, Special Counsel, both representing the general public; 
James J. McNamara, Counsel for the Federation of Labor; S. S. 
Field, Oity Solicitor (by printed brief only), representing the 
Board of Estimates of Baltimore City. 
P.U.R4920A. 



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RE UNITED RAILWAYS & E. CO. 6 

Statement of Proceedings. 

By the Commission: On July 19, 1918, the United Rail- 
ways & Electric Company of Baltimore filed its application for 
an iijcreased rate of fare from 5 to 6 cents and a uniform, increase 
of 1 cent in the case of children between the ages of four and 
twelve years and the users of commutation books. In its peti- 
tion the company alleged in substance that by reason of war 
conditions it was no longer possible to render adequate service to 
the public at the existing rates of fare. It also expressly dis- 
claimed any intention to establish by the proceeding any per- 
manent rate of fare, stating that it asked for relief purely as a 
war emergency measure and during the period of war conditions, 
solely for the purpose of preserving its pre-war efficiency, and to 
prevent, as far as possible, injury to its credit and to its organiza- 
tion and the deterioration of its plant, which would otherwise 
result. It further stated that "it is not intended that any part 
of the increased revenue hereby sought should increase the mar- 
gin of profit which the company had heretofore earned." 

Subsequently, without waiting for the Commission to act upon 
this application, the company, acting imder § 15 of the Public- 
Service Commission Law, filed its schedule "P. S. O. Md. No. 
6," effective October 1, 1918, in which it provided for a flat in- 
crease of 1 cent in each of its existing adult, children, and com- 
mutation fares. 

On September 18, 1918, the Commission, of its own motion^ 
filed a complaint alleging that the proposed increases in fares as 
set forth in the above-revised schedule were "excessive, unjust, 
unfair, and unreasonable.'* 

The company's application of July 19, 1918 (case No. 15.68 
and the Commission's complaint (case No. 1583) were subse- 
quently consolidated and came to hearing November 18, 1918. 
The hearing adjourned on that date until December 2d, on which 
date the hearings were resumed and continued until December 
19th. 

On January 7, 1919, the Commission filed its opinion in these 
two cases, the same being accompanied by its order No. 4608, Re 
United R. & Electric Co. P.U.R.1919C, 74, of that date pi^ 
scribing a 6-cent fare for the conveyance of each passenger over 
twelve years of age and 4 cents for each child between, the ages 
P.UJR.1920A. 



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6 MARYLAND PUBLIC SJERVICE COMMISSION. 

of four and twelve years, with substantially equivalent increases 
in the, case of other special and commutation rates;. 

By the express terms of order No. 4608, the rates therein pre- 
scribed were to become effective from and after January 7, 1919, 
and continue ^^until December 31, 1919, and for no longer, unless 
such period be extended for a further period as hereinafter pro- 
vided, or this order be earlier modified or abrogated by further 
order of this Conmiission.'' The order further provided in this 
connection, as follows : 

"2. That from and after the hour of midnight on the Slst day 
of .December, 1919, said company's right and privilege to charge 
and collect the increased fares herein authorized to be charged 
and, collected, shall cease and determine, and said company shall 
thereafter be permitted to charge no fares in excess of those 
charged by it on September 30, 1918, unless this Commission 
shfill in the meantime, by its order in writing, for such cause as 
may then seem to it, and be in law, good and sufficient, authorize 
said company to charge fares in excess of those which were in 
effect September 30, 1918 ; 

"3. That so soon after the date of this order as may be reason- 
ably practicable and convenient, and in no event later than Jan- 
uary 31, 1919, said company shall furnish to this Commission 
accurate and complete statements under oath, and in convenient 
form, setting forth the number of revenue and transfer passen- 
gers carried, and the number of car miles operated, the cash re- 
ceipts from operation and other sources, and the operating and 
other expenditures of the company, all set forth in the manner 
prescribed by the rules of this Commission for accounting by 
streejt rjE^ilway companies, for the calendar months of October, 
November, and December, 1918, respectively; and thereafter, so 
sojC|i^ ias may be reasonably practicable and convenient after the 
end of each calendar month during the year 1919, and in no 
event later than the last day of the next succeeding calendar 
month, said company shall furnish this Commission a complete 
statement, as aforesaid, covering the operations of the company 
during the next preceding month ; 

^% That the right of the respondent company to charge and 

collect the fares in this order prescribed shall be held subject at 

all times during the period covered by such order, or any exten- 
P.u!ki926A, 



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EE UNITED RAILWAYS & E. CO. 7 

flion thereof which may hereafter be granted as aforesaid, to the 
right and power of this Commission to reopen this case in the 
light of the facts disclosed by the monthly reports^ aforesaid, or 
of other facts otherwise coming to the attention of this Conmiis- 
sion, and modify the rates of fare by this order authorized to be 
charged and collected by the respondent company/' 

Meanwhile the rates of fare prescribed in the company's re- 
vised schedule "P. S. C. Md. No. 8" had become effective October 
1, 1918, as provided in such schedule. 

On May 23, 1919, seven months and. twenty-three days after 
the rates' so prescribed became effective, and a little over seven 
months before the date set for their termination unless further 
extended by the Commission as provided in said order No. 4608, 
the company filed its petition, alleging that while its passenger 
trafiic had continued with no diminution since the cessation of 
bostilities in the early part of November, 1918, and its gross 
revenues had increased, nevertheless, by reason of its increased 
service at war wages and costs, and vinoreased cost in operating 
f-ocpenses and maintenance, the company since the 1st of October, 
1918, when the additional fare became effective, to April 1, 1919, 
had accumulated a deficit of $167,088.90 as to its interest charges 
and a deficit of $619,894.90 as to its pre-war surplus and inter- 
est, and asked that the Commission's order No. 4608 of January 
7, 1919, be modified to increase the base rate from 6 cents to 6J 
cents adult fare (four tickets for 25 cents or multiple thereof, 
when paid for in tickets), or 7 cents for a single cash fare, with 
proportionate increases in all other rates except children's fares, 
which the company suggested should remain unchanged. 

This application came to be heard August 7, 1919, the hear» 
ings and arguments consuming eighteen days and being concluded 
September 6, 1919. 

Jfeanwhile the company had voluntarily entered into an agree- 
ment with its employees, under which agreement wages and sala- 
ries were materially increased, the company's estimate of the 
aggregate of these increases being $805,624 per year. Inasmuch 
as the estimates both of the company and of counsel representing 
the public had been prepared before this wage increase was made, 
and it was not practicable to redraft them at that late date, there 
was no official mention of such increase until near the conclusion 

P.UJL1920A. 



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8 MARYLAND PUBLIC SERVICE COMMISSION. 

of the hearings, when it was suggested that proper allowanoes b^ 
made therefor in the exhibits as originally prepared. The com- 
pany jalso filed additional exhibits based on the inclusion of such 
wage increase, and contended that an increase of fare5 from 
6 to 7 cents, with four tickets for 25 cents, would not suffice to 
enable it to render adequate service and meet its corporate re- 
quirements, including such wage increase, and that for these pur- 
poses a fare of 10 cents would be reqjiired, with two tickets for 
15 cents. It was estimated by the company's witness, Mr. John 
E. Zimmermann, of the firm of Day & Zimmermann of Phila- 
delphia, that with the base rate at 10 cents, from 90 to 99 per 
cent of the company's patrons would use tickets at the reduced 
rate of 7^ cents each. Subsequently it was suggested that a base 
rate of 8 cents, with tickets at the rate of 7^ cents, would produce 
substantially the same result and would be satisfactory to the 
company. 

On behalf of the public it was contended that, with the intro- 
duction of proper and possible economies, a base rate of 7 cents 
with four tickets for 25 cents, or 6 J cents each, would yield the 
company a sufficient net operating income to enable it to render 
adequate service and at the same time meet all its corporate re- 
quirements. Representatives of the Federation of Labor con- 
tended that there should be no further increases over the existing 
base rate of 6 cents; and there were petitions filed in the case 
asking the Commission to reduce the base rate to the former rate 
of 5 cents. 

At the date of the conclusion of the argument the compan/s 
operating figures for the month of August, 1919, were not avail- 
able, but have since been furnished the Commission. Inasmuch 
as they were furnished in compliance with order No. 4608, above 
referred to, the figures for August will be used in this opinion 
along with the other figures and data which were given in evi- 
dence at the hearings. It is important to note in connection with 
these August figures that the wage increase above referred to 
became effective August 17, 1919, and that the effect of such 
wage increase is therefore reflected in part in the figures for that 
month. 

P.UJL1920A. 



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KE UNITED RAILWAYS A E. CO. 

Effect of Former Increase. 

In its opinion in the Six Cent Fare Case this Commission 
estimated that the 1-cent increase provided for in its order No. 
4608 would yield the company approximately $2,240,000 addi- 
tional gross revenue. 

It was shown in that case that the company's average net earn- 
ings from 1912 to 1917, inclusive, after the payment of operating 
and maintenance expenses, depreciation allowances, taxes, and 
fixed charges, had been $848,802, this sum having been available 
for dividends and surplus during that period. 

It was also shown that in view solely of the higher wage scales 
prevailing at the date of our order, and without any regard what- 
ever to the higher prices of materials and supplies, the operations 
of the company under the existing 5-cent fare would result in a 
deficit of $2,163,057 for the ensuing year as compared with the 
above pre-war period. 

The Commission concluded in that case that "if the respondent 
company is to be put in a position to render adequate service to 
the people of this community, it must have a substantial increase 
in its revenues, and that the amount of such increase required in 
the immediate future is approximately the amount which may 
reasonably, be anticipated to be yielded by the increase of 1- cent 
in practically all the company's fares.'* 

It will be noted that the Commission did not, in this opinion, 
<X)mmit itself absolutely to the proposition that the company 
should be permitted^ at all hazards, to increases in fares sufficient 
to yield its full and exact pre-war surplus. It is true, the com- 
putations were made upon that basis, but these computations took 
account only of increased labor costs, and ignored entirely in- 
creased costs qf materials^ the company itself having elected this 
method of presenting its case, and having asked only for an in- 
<»rease of 1 cent in its fares to meet this additional expense of 
labor. 

Notwithstanding the fact that for these reasons the 6-cent fare 
was not designed to yield the company its full pre-war surplus, it 
will nevertheless prove interesting and helpful to see how far this 
1-cent increase has fallen short of yielding such pre-war surplus 

P.UJ1.1920A. 



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10 



MARYLAND PUBLIC SERVICE COMMISSION. 



during the eleven months from October 1, 1918, to -August 31, 
1919, the latest date for which operating figures are available. 

The Conunission's estimate in the former case, that the in- 
crease in fare from 5 to 6 cents would yield the company in- 
creased gross revenues of $2,240,000 during the year, was upon 
the assumption that the company would transport during that 
year 224,000,000 revenue passengers, this figure having been the 
estimate of the Commission's special counsel, and the company's 
representatives having contended that such estimate was exces- 
sive. 

The following table shows actual results as compared with such 
estimate: 

TABLE L 
Revenue Passengers — (Actual and Estimated) • 



1918. 



November 
December 



Total bal. 1918 



1919. 

January f, 

February 

March « 

April 

May 

June 

July 

Auifust 

September 

October 



Total 10 mos. 1919 
Total 12 mos 



Estimated. 


Actual. 


19^50.000 


18,642,833 


18,750,000 


19,402,443 


38,000,000 


38,045,276 


17,600,000 


18.771,764 


16,500,000 


17,640,547 


18,000,000 


19,613,464 


18,000,000 


19,711,271 


19,000,000 


21,260,540 


19,500,000 


21,021,634 


19,700,000 


20,966,521 


19,600.000 


21,557,818 


19,000,000 




19,500,000 




186,200,000 




224,200,000 





It will be noted that the actual number of revenue passengers 
carried by the company siiice December 1, 1918, have far ex- 
ceeded the estimates adopted by the Commission in its opinion in 
the former case. This fact is unquestionably due to the more 
pronounced prosperity and business activity of the community 
following the cessation of hostilities, than was anticipated by the 
Commission at the date of its opinion, — a demonstrated fact 
which should not be lost sight of when we come later in this opin- 
ion to estimate upon the number of revenue passengers to be 
carried in the future. 

The excess revenue passengers over the Commiission's estimate 

P.U.R.1920A. 



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RE UNITED RAILWAYS A E. CO. 11 

resulted in a cori'esponding excess in the company's gross receipts 
aver the Commission's estimates. 

But, on thje other hand, the transportation of this greater num- 
ber of passengers required the company to operate its cars a 
greater number of car miles, this fact being directly reflected in 
the company's operating expenses during the period. 

The book3 of the company show that since October 1, 1918, the 
date when the existing rate became effective, the earnings of the 
company, after the payment of operating expenses, taxes, depre- 
ciation allowances, and fixed charges, have been materially less 
than they were during corresponding periods in the past The 
balance remaining after the payment of the above items, includ- 
ing fixed charges, has been referred to in the exhibits ai)d by the 
witnesses and counsel throughout the hearings as the ^^alance to 
surplus," and that phrase will be used with such meaning 
throughout this opinion. 

The following table shows this 'T)alance to surplus" by months 

since October 1, 1918, and until August 31, 1919, with figures 

showing revenue passengers and car miles during this period, and 

the corresponding figures for each month during the preceding 

year for comparison; 
P.UJ1.102OA. 



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MARYLAND PUBLIC SERVICE COMMISSION. 



P.UJLIMOJL 



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RE UNITED RAILWAYS & E. 00. 13 

The above table shows that, diiring the eleven months Ae •- 
cent fare has been in force, the company has earned a net balance 
to surplus of but $41,731, as against $488,485 earned during the 
corresponding eleven months beginning October 1, 1917, and as 
against the average of $848,802 during the entire years 1912 to 
1917 inclusive. 

During these eleven months the company transported 215,- 
138,245 revenue passengers, the additional revenue from whorti, 
through the 1-cent increase in fare, may roughly be estimated at 
$2,160,000, Without this additional revenue during these eleven 
months, the company would have sustained a deficit in operating 
and fixed charges of $2,108,269, on the basis of the above figures. 

Its fixed diarges during these eleven months were $2,916,411^ 
80 that it is clearly demonstrated that, without such increased 
fares granted by our order No. 4608, the company would have 
fallen $808,142 short of being able to pay the interest on its bonds 
and other interest-bearing obligations. 

These facts do at least two things : 

First, they demonstrate conclusively both the wisdom and 
reasonableness of the increase in fares granted by our order Noi 
4608 of January 7, 1919; and 

Second, they demonstrate just as conclusively, the utter unrea-^ 
sonableness, certainly at the present time, of the applications 
-which we have received for an order requiring the restitution of 
the former 5-cent base rate of fare. 

The Company's Present Necessities. 

The above figures do not, however, necessarily in themsehreSy 
justify the present application for an increase in the fares of the 
company beyond the 6-cent base rate established by our former 
order. 

In the case now before us, the Commission has had the benefit 
of much more elaborate and exhaustive studies of the operating 
results of the company in the past and other relevant data, than 
we had before us in the former case. 

The exhibits containing this data included detailed studies of 
the company's primary and subaccounts, respectively, by years 
from 1912 to 1918 inclusive; of the same by months from Jan- 
uary 1, 1916, to June 80, 1919, supplemented by further more* 
p.UJl,l9eoA. , 



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U MARYLAND PUBLIC SERVICE COMMISSION. 

V 

general statements of operating results for July and August, 
1919^ furnished as those figures became available; tables and 
charts showing the nature, extent, and effect of increases in the 
cost of labor and materials ; comparisons with the operating re- 
sults' of similar companies in other cities; elaborate estimates of 
probable future operating results, accompanied by voluminous 
suppoi^ing sheets and data; and much other information and 
data'i^ot within the above. general classifications. 
.. In addition to the above data, which was furnished principally 
by .-the company, the Commission has had the benefit of independ* 
ea3iti€i»twAt08 and supporting data prepared by people's counsel, 
Joseph S. Goldsmith, and of an elaborate typewritten analysis of 
tb^icpiwpany's books, and estimate of probable future operating 
results, pr^ared by Osborne I. Yellott, who was for five and a 
balf:y^r^ theMassistant general counsel of this Commission, sub- 
fi:ftq[.\jently, participated in the Six Cent Fare Case, and was again 
employed by the state as special counsel to assist in the presenta- 
tion of this case. 

j.^.Thp company's only witness was John E. Zimmermann, of Day 
& Zimm^jrm^nn. Mr. Zimmermann was on the stand under direct 
examination for six days, and under cross-examination for ei^t 
Jays.,. ., 

. While T^ideir direct examination he filed a large number^ of 
^h^b.it?, (Jealing almost exclusively with the past earnings of the 
company and its prospective earnings under existing and pro- 
posed rates up to December 31, 1919, all these estimates ignoring 
the wage increase of $805,524, above referred to. Mr. Zimmer- 
m^n.'s general plan in these estimates was to take the actual 
^gure,s for the first six months of the calendar year 1919 and add 
t;o.,t^,em l^s estimates for the remaining six months of that year, 
thus showing the balance to surplus as it would be during that 
cfklendpr yefir if his estimates were correct, and also showing how 
far, ;1;his .|:]|alance to surplus would fall short of thp balance to sur^ 
plus, earned by the company during the year 1916. His estimates 
for the remaining six months in 1919 were based mainly upon 
sctua^ Cfl|r-ipile costs during the first six months of 1919, applied 
to hi? e^tii^ates of the car miles which it would be necessary to 
opera tc; ins order to caory the number of passengers which he esti- 
m^atjCd W(}^ld,b^,carrie(i 4^^i^ sue^ 

The original estimates of Mr. Zimmermann, Mr. Qoldtoiith^ 
PU.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 



15 



and Mr. Yellott were all predicated upon the assumption that 
the Q-ceait fare would continue in force to the end of the year, that 
the amount of maintenance work would be proportionately the 
s^ame as that done during the first six months of the year, that 
the proportion of car miles operated to revenue passengers car- 
ried would remain substantially the same, and that there would 
be no increase in wages. 

The estimates of Mr. Zimmermann, Mr. Ooldsmith, and Mr. 
Yellott, respectively, are shown in comparative form in the fol- 
lowing table: 

TABLE in. 
Comparative Estimates for 1919. 





Estimate for Year of 1919. 


• 


. Yellott. 


Zimmer- 
mann. 


Goldsmith. 


Revenue nassencfers •• 


240,000,000 
36,520,821 

5,897^ 


240,777,100 
35,721,406 

6.887^ 


244,620.000 


Oar milea • ....••• 




Average fare 


5.887^ 


Passenfirer revenue ..•••••• 


$14,140,819 
122,360 


$14,174,548 
125,000 


$14,400,786 


Other cDeratini? revenue ••••• 


122,056 




Total operating revenue • • 


$14,263,179 


$14,299,548 


$14,622,841 






Maintenance ways and structures . • 
Equipment • . • 


$685,569 
856,033 

58,450 


$689,429 

860,867 

68,229 


$682,366 
825,207 


Power plants, etc 


67,984 


Total 


$1,600,042 


$1,608,526 


$1,666,547 






Operating power ••....••..••••••• 


$986,392 

3,735,211 

948,420 

17,896 

1,212,248 


$985,392 

3,736,297 

976,699 

21,701 

644,324 

700,474 


$989,445 

3,738,354 

927,216 


Platform labor — pass, service 

Other transpor. expense 


Traffic 


25,152 


Accidents and damages 


644,278 


General ai>d miscellaneous 


706,584 


Total 


$6,899,162 


$7,068,737 


$6,931,059 






Taxes 


$1,410,839 


$1,420,142 


$1,610,323 






Total maint. oper. and taxes 


$2,910,043 

$4,353,136 
713,598 


$10,092,454 


$10,006,929 


Balance , 


$4,207,094 
717,609 


$4,515,912 


Depreciation 


614,248 






Balance 


$3,639,338 
40,000 


$3,489,486 
24,260 


$4,0p 1,664 


Nonoperating income 


20,562 






Total 


$3,679,538 
3,178,949 


$3,613,735 
3,178,950 


$4,022,226 


Fixed charges 


3,202,854 






Balance to surplus ' before income 
tax 


$500,689 


$334,785 
86,221 


$819,372 


1918 Federal income tax paid in 
1919 ; 






Balance 




$240,564 





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16 MARYLAND PUBLIC SERVICE COMMISSION. 

Subsequently Mr. Zimmermann introduced a number of addi* 
tional exhibits through which he undertook to demonstrate the 
company's necessity for greater allowances on account of main- 
tenance, depreciation, and accidents and damages, than he had 
made in his original estimates, which were based mainly, as we 
have stated, upon actual expenditures during the first six months 
of 1919. Still later in the hearings he presented other exhibits 
designed to show the effect of the wage increases above referred 
to, his final exhibit (company's exhibit B) indicating the neces- 
sity for a 10-cent straight fare, with two tickets for 15 cents, in 
order to yield a balance to surplus of $1,017,476 (a little less 
than the 1916 balance) after the allowance of the sums which he 
claimed would be necessary for the proper operation of the com- 
pany's system. • 

The cross-examination of Mr. Zinamermann developed the fact 
that the main differences between his estimates and those of 
counsel for the public were in respect to the following items: 

1. Passenger revenue ; 

2. Maintenance; 

8. Depreciation allowance; 

4. Accidents and damages; 

5. Federal income tax; 

6. Proper balance to surplus. 

Both People's Counsel Goldsmith and Special Counsel Tellott, 
at the time of making up their respective original estimates, had 
before them the complete figures only up to the end of May, 1919, 
although they subsequently received from the company a few days 
prior to the first day of the hearings the complete figures for the 
month of June. The operating figures for the month of July 
were not furnished them until the hearings were well under way. 
Under the company's methods of accounting it is possible to fur- 
nish the traffic figures a day or two after the close of each month, 
but jthe revenue and expense figures cannot be shown until the 
books for the month have been closed, which usually takes from 
two to three weeks. 

[1] It goes almost without saying that in a case of this kind, 
where a new rate of fare has been in force for only a compara- 
tively short time, more satisfying estimates can be made as to 

probable future results from the figures covering a period of 
P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 17 

nine, ten or eleven months, respectively, than from the figures for 
shorter periods. v 

The Commission now has before it the full figures for the 
period from January 1, 1912, to September 80, 1918, while the 
old fare of 6 cents was in force, and for the further period of 
October 1, 1918, to August 81^ 1919^ covering the period the new 
6-cent rate has been in force. 

In view of the fact that the estimates of counsel for the public 
were prepared before the figures after May 30, 1919, were avail- 
able, that Mr. Zimmermann's original estimates were prepared 
with only one more month's data at hand, and that many of the 
differences between the respective estimates are due to the fact 
•that th^ were made npon the basis of incomplete and different 
data, the Commission has concluded that it is incumbent upon 
it to go through the painfully laborious task of making its own 
estimate of what would have been the probable operating results 
for the entire calendar year of 1919 npon the assumption that 
the 6-cent fare had remained in effect throughout the entire year. 

In making this analysis the Commission adopted the methods 
about to be stated, nsing the order in which the items are set up 
in table IlL 

Revenue Passengers. 

The first step in estimating probable operating receipts and 
expenses is to determine the number of revenue passengers likely 
to be carried during the period under consideration. In this case 
♦he period under consideration is the calendar year 1919. 

Mr. Yellott's estimate of the nimiber of passengers likely to be 
carried during the year was 240,000,000. 

At the time of making this estimate he had before him the 
number of revenue passengers carried each year during the years 
1912 to 1918, inclusive, and the number carried eacli month dur- 
ing the years 1916 to 1918, inclusive. He also had before him 
the figures showing the actual number of passengers carried dur- 
ing the first six months of 1919. Analyzing the above figures, 
he found that the average ^number of passengers carried during 
the first six months of 1916, 1917, and 1918 was 48.4 per cent 
of the average for the entire year. Applying this percentage to 
the total for the first six months of 1919, he found that the num- 
P.UJ1.1920A. 2 



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18 MARYLAND PUBLIC SERVICE COMMISSION. 

l)er to be carried during the entire year upon this basis would bd 
243,634,535. He then applied the average percentage which 
each month bore to the entire year during the years 1916 to 1918, 
inclusive, and found that these figures ranged between 239,- 
000,000 to 249,000,000, the average being 243,330,500 for the 
entire year. He also found that the January and February 
figures were abnormal, and, in order to be conservative, took the 
average indicated by the remaining four months in the first half 
of 1919, which was approximately 240,000,000 for the entire 
year. 

Mr. Goldsmith took the number of revenue passengers actual* 
ly carried during the months of March, April, and May, 1919, 
and multiplied this by four, thus arriving at his estimate of. 
244,620,000. 

Mr. Zimmermann had available the monthly figures for the 
entire period, 1912 to 1918, inclusive, but excluded the year 1918 
for the reason that it was in some respects abnormal, especially 
with respect to the severe weather in January and Feb- 
ruary and the epidemic of influenza in Ocftober. He then ascer- 
tained the average percentage which the revenue passengers car- 
ried each month bore to the number carried during the whole 
year throughout the period 1912 to 1917, inclusive, and applied 
these percentages to the last six months of 1919, adding the re- 
sult so obtained to the actual number carried during the first 
six months. This method resulted in his estimate of 240,777,100 
for the year. Incidentally Mr. Zinmiermann's table of these 
percentages showed that from 1912 to 1917, inclusive, the com- 
pany had carried during the first eight months of each year an 
average of 65,991 per cent of the number carried for the entire 
twelve months. 

It will be noted that the methods adopted by Mr. Yellott and 
Mr. Zimmemiiann were strikingly similar, but inasmuch as the 
latter had available more data than the former, the Conmiission, 
in. making its estimate, has adopted the method and figures used 
by Mr. Zimmermann. In short, we have accepted Mr. Zinmier- 
mann^s calculations that 65.991 per cent of the passengers carried 
during the year, from 1912 to 1917, inclusive, were carried dur- 
ing the first eight months of the year, and have applied this per* 
centage to the known figures for the first eight months of 1919, 
P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 19 

the result being an estimate of 243,129,230 revenue passengers 
for iho entire year 1919. In our estinaate we have used the round 
figure 243,000,000. 

Car Miles. 

In estimating the number of car miles necessary to be run in 
order to carry the number of revenue passengers which he had 
estimated would be carried during the last six months^ Mr. Yell- 
ott first found that the number of revenue passengers carried per 
car mile had increased gradually from 5.84 in 1912 to 6.96 in 
1918, the average for the seven years being 6.25. He attributed 
this increase from year to year to growth in population, greater 
business activity, increase in riding habit, larger cars, and im- 
provement in distribution of cars. He then found that the aver- 
age for the first six months of 1919 had been 6.75 as against 6.98 
during the first Ax months of 1918, 6.29 during the first six 
months of 1917, and 6.33 during the first six months of 1916. 
Under these circumstances he took the figure for the first six 
months of 1919, to wit, 6.75, rather than the higher figure of 
1918. He then applied this figure to the number of revenue pas- 
sengers estimated by him to be carried during the remainder of 
the year, and finally reached his estimate of 35,520,821 car miles 
to be operated during the entire year. 

Mr. Zimmermann's estimate of the number of revenue passen- 
gers to be carried per car mile during the last six months of 1919 
was 6.74 as against Mr. Yellott's estimate of 6.75. 

Mr. Goldsmith made no independent estimate as to the num- 
ber of passengers per car mile or number of car miles to be oper- 
ated. 

The Commission found that the number of revenue passengers 
carried per car mile during the first eight months of 1919 was 
6.7837. They then found that the number of car miles operated 
during the first eight months of each year from 1912 to 1917, 
inclusive, averaged 66.954 per cent of the number operated dur- 
ing the entire year. This percentage was applied to the 23,- 
651,322 car miles operated during the first eight months of 1919, 
and it was found that the total for the year would be 35,324,733^ 
this figure being u/=;ed in its subsequent estimate of operating 
costs. The use of this figure in our estimates results in the as* 
P.U.R.1920A, 



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20 MARYLAND PUBLIC SERVICE COMMISSION. 

sumption that the company will be able to carry an average of 
6.879 revenue passengers per car mile during the entire calendar 
year 1919, as against the average of 6.7837 carried during the 
first eight months of the year. This will require a somewhat 
better distribution of service than the company has maintained 
in the past, but this is one of the eificiencies which this Commis- 
sion has in mind the company should adopt in the future. The 
exhibits show that the number of revenue passengers carried per 
car mile during the last four months of the year is normally 
greater than the average for the first eight months. 

Passenger Revenue. 

An estimate of the probable revenue to be derived from a given 
number of revenue passengers at a given rate of fare involves 
necessarily the ascertainment of the amount of revenue produced 
per revenue passenger by that rate of fare. Owing to the use of 
half fare, commutation books, and special tickets, this average 
revenue per revenue passenger is never as great as the nominal 
fare itself. 

Mr. Yellott found that the average rate erf fare received by the 
company while the 6-cent base fare was in force was 4.865 cents. 
He estimated that since the 6-cent fare had been in effect, the 
average fare collected had been 5.897 cents, but at the time of 
making this estimate the figures for May and June were not 
available. Applying th^ above figures to his estimate of revenue 
passengers he found that the passenger revenue would be $14,- 
140,819. 

At the time of testifying, Mr. Zimmermann had the figures for 
the entire period October 1, 1918, to July 31, 1919, and found 
that during this period the average fare had been only 5.887 
cents. 

Applying the figure 5.887 cents to his total estimated revenue 
passengers, Mr. Zimmermann got the figure $14,174,648 as the 
probable passenger revenue during the year. 

Mr. Goldsmith in his estimate took the hctual passenger 
revenue for the months March, April, and May, 1919, multiplied 
this by four, and reached the figure $14,400,786 for ihe entire 
year. 

Under these circumstances the Commission has used the Zim- 

P.UJ1.1920A. 



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RE UNITED RAILWAYS & E. CO. 



21 



mennann figure of 5.887 cents, and, applying the same to its esti- 
mate of revenue passengers for the 7^, has reached the con- 
clusion that the passenger revenue during the year will be $14,- 
305,410. 

Other Operating Revenue. 

There being less than $3,000 difference between the estimates 
of Mr. Zimmermann and either of the representatives of the 
public in the case of this item, the Commission has accepted the 
Zimmermann estimate of $125,00(X 

Maintenance and Depreciation. 

Reference to table III. will show that there was relatively little 
difference between the several estimates on account of mainte- 
nance in the original exhibits filed by Mr. Yellott, Mr. Zimmer- 
mann, and Mr. Goldsmith, respectively, these exhibits having 
been as follows: 





Yellott 


Zimmer- 
mann. 


Goldsmith. 


Maintenance ways and structures . • . 
Fquipment •••••.••••.• 


$685,559 

856,033 

58,450 


$689,429 

860,867 

68,229 


$682,356 
825,207 


Power olants. etc. ..••....••••. 


57,984 








$1,600,042 


$1,608,525 $1,565,647 



In the case of the depreciation allowance, Mr. Yellott estimated 
«713,598 and Mr. Zimmermann $717,609. Mr. Goldsmith's 
estimate was not an estimate of depreciation at all, but was ac- 
cepted as the balance left over after the allowance of $819,372 
balance to surplus, representing dividend payments made by the 
company during the years 1913 to 1918, inclusive, although he 
pointed out that the resulting depreciation allowance of $514,248 
was substantially "equivalent to the average amount set aside on 
this account during those years. 

Both Mr. Yellott and Mr. Zimmermann arrived at their main- 
tenance figures by using the car-mile costs during the first six 
months of 1919, the difference between them being due to the 
fact that they used different car-mile totals. This meant that 
both of them assumed in these estimates that no more mainte- 
nance would be done per car mile during the latter half of 1919 
than had been done during the first half. 
P.U.R.1920A. 



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22 MARYLAND PUBLIC SERVICE COMMISSION. 

During the course of his testimony, Mr. Ziminermann con- 
tended most earnestly th^t his estimate of $1,608^525 as the co^ 
of maintenance during the year 1919 was much less than the 
Commission should allow in its final estimate on this account, 
and also that his estimate of $717,609 (5 per cent of estimated 
gross) in the case of depreciation was inadequate. 

Mr, Zimmermann filed a number of special exhibits covering 
these points. In one series of these special exhibits he assumed 
that the actual maintenance work done during the year 1916 
would furnish a fair criterion for the amount which should be 
done during the year 1919, and estimated that the cost of such 
amount of maintenance work at 1919 prices would be $1,919,49& 
as against his estimate of $1,608,525, based upon tie actual 
amount of maintenance done during the first half of the year 
1919. He contended in this connection that there should be a 
corresponding increase in the depreciation allowance from $717,- 
609 to $1,140,717, in other words, a total allowance of $3,050,215 
for maintenance and depreciation on the basis of 1916 quantities 
and 1919 prices, as against $2,326,134 on the basis of 1919 
quantities and 1919 prices, a difference of $726,079, which would 
amount to about ^ of a cent additional in the way of fare. 

In another series of exhibits, and in fact this was his final 
recommendation and conclusion, Mr. Zimmermann contended 
that the company should be given an allowance of 9 cents per car 
mile for maintenance and 3 cents per car mile for depreciation,, 
an estimated total of $4,286,568 against his other total of $2,- 
326,134, based on 1919 quantities and 1919 prices, — an increased 
allowance on this account of $1,960,434, or almost a full cent 
additional fare. 

[2] It is a universally accepted principle of rate making that 
the proprietors of a public utility are entitled to receive from the 
public through the rates a sum not only sufficient to pay operat- 
mg expenses, taxes, and fair return upon the fair value of the 
property used in the public service, but in addition thereto a sum 
sufficient to maintain such property in repair, and replace >such 
portions of the same as may be worn out in the public service, or 
have to be replaced from time to time for other reasons incident 
to their use in such service. 

There is probably no one subject in connection with rate mak- 
P.U.R.1920A, 



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BE UNITED RAILWAYS & £. CO. 23 

ing that has been more discussed than this general subject of 
maintenance and depreciation, and the difSculties of the subject 
to those who attempt to approach it along technical or theoretical 
lines are innimierable. The Supreme Court of the United States 
has never attempted any full discussion of the subject which 
could safely be taken as a guide to rate-making bodies. 

For these and other reasons^ this Commission has always en- 
deavored to approach the question in a practical, as distinguished 
from a theoretical, way, and, in all the cases which have come 
before it, has attempted to provide in the rate a sum in dollars 
which will be adequate to maintain the property in reasonably 
good operating condition, and to provide in addition a fund out 
of which current replacements can be made promptly as required 
from time to time, without any undue or abnormal enhancement 
in the cost of current maintaiance. 

The Commission sees little, if any, ground for any substantial 
distinction, so far as the public is concerned, between the cost of 
maintaining in good repair individual articles used in the public 
service, and replacing such articles when they are actually worn 
out and have to be retired from, service. In either event the pub- 
lic should in fairness pay the bill, and it is a matter of no real 
concern to the public whether the bill is made out for mainte- 
nance or for replacements. 

The public is, however, interested in replacements being 
promptly made, when and as required. It is also interested in 
the proper and equitable apportionment of the cost of the article 
replaced among those who have had the benefit of its service dur- 
ing its useful life. The public is also interested to a considerable 
extent, and the utilities and regulatory bodies to an even greater 
extent, in the continued maintenance of an existing charge for 
service, as distinguished from charges which are constantly fluctu- 
ating up or down. And it is to accomplish the first two of these 
ends, to wit, prompt replacement as required and equitable ap- 
portionment of the cost of the article replaced among those who 
have enjoyed its service, — and to prevent the second, to wit, fre- 
quently fluctuating rates for service, — that depreciation and 
kindred reserves are created. It therefore follows that it is just 
as much incumbent upon the general public to pay through the 

P.U.R.1920A. 



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24 MARYLAND PUBLIC SERVICE COMMISSION. 

rates sums sufficient for adequate depreciation reserves as it is to 
pay the cost of actual current maintenance. 

But, on the other hand, there is a correlative duty and obliga- 
tion on the part of those who have dedicated their property to the 
public service, tp keep such property always in such a condition 
of repair as to render adequate service to the public. One who 
has devoted his property to the public service cannot, certainly 
under the law of this state, withdraw the entire property or any 
considerable portion of the same from the public service without 
the express consent of the state. And what he cannot do in gross, 
he cannot lawfully do by piecemeaL 

In short, no public service corporation, or individual engaged 
in the public service, has the right, without the consent of the 
state, to dispose of the property dedicated to the public service 
and divert the proceeds thereof to the payment of dividends. 
And the same principle forbids the public service corporation 
neglecting properly to maintain its property out of the fund 
contributed by the public through the rates paid for the service,, 
and use those funds for the payment of dividends. So to do is in 
effect to consume in the payment of dividends property which 
has been dedicated to the public service and in which the public 
has acquired a material interest by virtue of such dedication. 

That the petitioning company has not kept up the maintenance 
of its property during the past several years to the extent to 
which it should properly have been kept up is a matter of common 
• knowledge, and was frankly admitted by the company's principal 
witness at the hearing. Some justification for this state of affairs 
was sought in the fact that, owing to war conditions during this 
period, it was not possible to keep up the maintenance of the 
property as well as it should have been kept up. This fact, 
coupled with the further fact that Ae operating officials of the 
company no doubt felt that the prices of labor and materials were 
abnormally high during this period, and that true economy de- 
manded that this maintenance be deferred, may be some justifica- 
tion for the company's conduct in deferring the same to the extent 
that it did. 

But these facts, while possibly justifying the deferring of 
maintenance itself, cannot be taken to justify the company's ac- 
tion in neglecting to provide for such deferred maintenance duj> 
P.U.R.1920A. 



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BE UNITED RAILWAYS & £. 00. 25 

ing the period it was so accruing. As was pointed out so fre- 
quently at the hearings by all the counsel representing the public 
in this case, the company continued throughout the entire war 
period to pay dividends upon its common stock at the accustomed 
rate of 4 per cent per aimum, and not only made absolutely no 
provision for taking care of the deferred maintenance accruing 
during this period, but almost •entirely exhausted the deprecia- 
tion reserves which it had so slowly set up in the past. 

[3] Under these circumstances this Commission feels that it 
would be grossly unfair to the public of to-day and of the immedi- 
ate future to provide in the rates about to be established the large 
sums necessary either to pay for the deferred maintenance ac- 
cruing during the period of the war, or to set up depreciation 
reserves which could hate been so easily set up had dividends 
upon the common stock not been paid during the period of the 
war. 

It is questionable under the law of this state, as declared by 
the court of appeals in the Havre de Grace & P. Bridge Co. Casa, 
132 Md. 16, P.U.R.1918D, 484, 103 Atl. 319, whether this Com- 
mission has the power under the Public Service Commission Law 
to require a public service corporation, against the judgment of 
its directors, to set up any specific depreciation reserves, or has 
the power and authority to control the disposition of that reserve. 
But r^ardless of the extent of its power in this connection, this 
Commission has considerable latitude in the first instance, at 
least, in establishing rates to be charged by public service cor- 
porations subject to its jurisdiction, and in respect to this malr 
ter can properly be guided to a considerable extent by the pro- 
visions which it finds such corporations have made both for the 
current maintenance of their properties and for the prompt re- 
placement of those portions of the same which may require to be 
replaced from time to time for any reason. More liberal allow- 
ances for maintenance and replacement will naturally be made 
by this Commission in cases where it finds proper and adequate 
provisions are made by the owners of the property for the main- 
tenance and replacement thereof, than in cases where it finds a 
tendency to consume their property in the payment of unwarrant- 
ed dividends., 

Mr. Zinimermann contended in effect that the actual amount of 

P.UJt.l920A. 



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26 



MARYLAND PUBLIC SERVICE COMMISSION. 



maintenance done by the company during the first half of the 
year 1919 was materially less than the actual amount done dur- 
ing the first half of the year 1916, although the aggregate cost 
of such maintenance in the first half of the year 1919 was great- 
er than its aggregate cost in the first half of 1916 by reason of 
the much higher cost of labor and material at the present time. 
As we have stated, in a number of his exhibits, he sets up these 
1916 quantities of maintenance and 1919 prices, and his other 
estimates based upon 9 cents per car mile for maintenance and 
3 cents per car mile for depreciation allowances were only final- 
ly adopted by him at the very conclusion of his testimony on 
cross-examination. 

The exhibits in the case show that during the years 1912 to 
1918, inclusive, expenditures were made as follows on account 
of total maintenance and the depreciation reserve: 



Year. 


Total 
Maintenance 


Depreciation 
AUowances 


Total. 


1912 


$847,076 
877,309 
811,724 
719,279 
834,116 
923,641 

1,300,879 


$428,574 
530,226 
469,395 
410,548 
496,702 
528.042' 
696,485 


$1,276,649 


1913 


1,407,635 


1914 


1,281,119 


1915 


1,129,827 


1916 


1,329,818 


1917 


1,451,683 


1918 


1,897,364 



It will be seen from these figures that the amount expended 
for maintenance during the year 1916 was considerably above 
the average sp^it during the preceding years; also that the 
appropriation to depreciation was larger in 1916 than it had 
been during any of the preceding four years, with the exception 
of 1913, and was considerably above the average for the four 
years. 

Under these circumstances we are constrained to adopt Mr. 
Zimmermann's view that the appropriations on account of main- 
tenance and depreciation in 1916 fairly represented the com- 
pany's conception of the amounts proper to be devoted to these 
purposes, especially in view of the fact that the year 1916 ended 
with a balance to surplus of approximately $300,000 more than 
the company had earned during any of the four preceding years, 
and that year was regarded as the most prosperous in its history. 
It is fair to assume under these circumstances that, if the man- 

P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 27 

aging officers of the company had conceived that more money 
was required for maintenance or depreciation during the year 
1916, it would have been expended. 

The actual amount of the company's property subject to 
•depreciation is not materially greater at the present time than 
it was in 1916. Therefore the only factor to be reckoned with 
is the increased cost of labor and materials at the present time 
over their cost during the year 1916* 

Mr. Zimmenliann filed a number of exhibits dealing with the 
increased cost of labor and material at the present time, some of 
these exhibits going as far back as 1893. In these exhibits it 
appeared that the 1919 costs of maintenance, labor, and mate- 
rial included, were approximately 101 per cent in excess of the 
1916 costs. 

Resorting to the exhibits showing the monthly expenditures 
on various accounts during the year 1916, we find that the aver- 
age maintenance expenditures per month for the first seven 
months of that year were $66,039. During the first seven months 
in 1919, we find the average maintenance expenditures per month 
were $133,558, an increase of a trifle over 102 per cent, this fact 
indicating that practically as much maintenance, in quantity, 
was done during the first seven months of 1919 as during the 
first seven months of 1916. 

Going further, we find that the amount spent for maintenance 
in August, 1916, was $75,509, whereas the amount spent for 
maintenance in August, 1919, was $196,826, an increase of 
160.6 per cent; this larger increase in the percentage being no 
doubt due in part to the wage increase of August 16, 1919. 

It is somewhat difficult to reconcile Mr. Zimmermann's con- 
tention that the proper allowance for maintenance at the pres- 
ent time would be 9 cents per car mile, with the fact that dur- 
ing the year 1916, when the company did all the maintenance 
work which it evidently thought necessary, such cost was at the 
rate of but 2.66 cents per car mile. 

It is evident from the above figures as to the actual expendi- 
tures for maintenance during the first seven months of the years 
1916 and 1919, respectively, if we accept Mr. Zimmermann's 
assumption that the cost of maintenance, labor, and material 
has advanced approximately 101 per cent, that the company 
p:ua1920A. 



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28 ICABYLAND PUBLIC SERVICE COMMISSION. 

has done sabBtantiallj as much maintenance work during the 
first seven months of 1919 as it did during the first seven months 
of 1916. 

The car-mile cost of maintenance during the first seven 
months of 1919 was 4.65 cents. Applying this figure to the 
14,797,891 car miles estimated by us to be operated during the 
last five months of the year, we get the sum $674,043 to be add- 
ed to $934,910, the actual cost of maintenance during the first 
seven months, this addition resulting in a total of $1,608,953 
as the estimate of the probable cost of maintenance during the 
entire calendar year 1919. 

Or, if we take the actual maintenance cost in 1916 and in- 
crease it by 101 per cent, we get the sum of $1,676,573 as the 
probable cost of maintenance during the entire year 1919. 

Under all the circumstances we have concluded to adopt this 
latter figure as our estimate. 

In the case of depreciation allowances to maintain the com- 
pany's depreciation reserve, the same being referred to in the 
exhibits as "depreciation,^' the company during the past few 
years has been accustomed to make these allowances in per cent 
of gross, the usual allowance being 6 per cent of gross. While 
this may be a convenient method of computing proper allow- 
ances for depreciation in cases where charges for service run 
along regularly the same from year to year, it must be very evi- 
dent that there is little or no logic in its use where such charges 
fluctuate from time to time. Certain it is that this company's 
depreciable property did not b^in to depreciate 20 per cent 
more rapidly over night between September 30, 1918, and Octo- 
ber 1, 1918, when the 5-cent fare was increased to 6 cents, and 
the company's gross revenues increased over night proportion- 
ately. 

As we have said in an earlier portion of our discussion of the 
subject of maintenance and depreciation, this Commission's aim 
is always to meet this subject in a practical way. Ordinarily 
depreciation allowances are expressed in percentages of the 
value of the depreciable property, or equated over the Commis- 
sion's valuation of the whole. But in this case, the valuation of 
the company's property has never been completed, and we are 
therefore without that guide. Common sense and a knowledge 

P.U.R.1920A. 



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RE UNITED RAILWAYS A B. CO. ^ 

d the purposes and objects of a depreciation reserve seem to 
dictate that, by reason of the enhanced costs at the present time, 
depreciation allowances^ when expressed in dollars, and even 
where there has been no material increase in quantities, should 
be materially larger than in the past. There would also seem 
to be some relation between the car miles operated and the 
amount set aside from year to year to provide for replacements. 

Under the circumstances we have determined, not for the 
purpose or with the object of establishing a precedent, but with 
the idea of reaching an amount which will be reasonable under 
the circumstances of this particular, case, to. base our estimate 
of depreciation allowances for the last four months of the year 
1919 upon the- car-mile ratio to such actual allowances during 
the first eight months of 1919. These allowances during the 
first eight months of 1919 amoimted to $475,734 or 2.01 cents 
per car mile. Upon this basis our estimate for the depreciation 
allowances for the last four months of the year is $234,636, 
which, added to the above $475,784, makes $710,370. 

The allowances in the past have been as follows: 

1912 $428,574 

1913 630,226 

1914 469,396 

1915 410,648 

1916 496.702 

1917 628,042 

1918 696,485 

Operating Power Plant, 

Mr. Zimmermann in his estimates accepted June, 1919, as 
fairly representing the car-mile cost of power plant operation 
at the present time. We have taken the actual cost for the first 
six months of 1919, and estimated the cost for the remaining 
six months by multiplying the June cost per car mile, 2.49 
cents, by the car miles estimated to be run during the last six 
months, our total being $975,516 as against Mr. Zimmermann's 
and Mr. Yellotf s estimates of $985,892 and Mr. Goldsmith's 
estimate of $989,445. 

Platform Labor. 

Mr. Zimmermann in this case took the car-miTe cost of plat- 
form labor for the first six months of 1919 and multiplied it by 
P.U.R.1920A. 



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30 MARYLAND PUBLIC SERVICE COMMISSION. 

his estimate of car miles to be run during the remainder of the 
year, adding the actual and estimated, and getting $3,736,297. 
Mr. Yellott took his car-mile cost for the ten months, Septem- 
ber, 1918, to June, 1919, inclusive, and in other respects fol- 
lowing the same course as Mr. Zinunermaon, estimated the cost 
for the year at $3,735,211. Mr. Goldsmith took the actual 
amount paid for platform labor during March, April, and May, 
1919, multiplied this sum by four, and got the figure 
$3,738,354. 

The Commission has taken the average car-mile cost for the 
first seven months of 1919, multiplied this by its estimated car 
miles for the last five months, the total of actual and estimated 
being $3,701,102. 

Other Conducting Transportaiion. 

The same methods were followed by the several parties in 
estimating the cost of this item as they followed respectively in 
estimating the cost of platform labor, with the result that the 
Commission's estimate is $959,391 as against Mr. Yellott's esti- 
mate of $948,420, Mr. Zimmermann's estimate of $976,599, 
and Mr. Goldsmith's estimate of $927,246. 

Trafic. 

Owing to the particular nature of the items embraced in this 
account, Mr. Yellott concluded that it was not properly suscep- 
tible of computation \>n a car-mile basis, the same embracing 
advertising, net cost of parks, etc., and estimated that the cost 
for the year would be $17,896. Mr. Zimmermann's estimate 
was based on the car-mile cost for the first six months and 
amounted to $21,701. Mr. Goldsmith's estimate was based on 
actual results for March, Aprii, and May, 1919, multiplied by^* 
four, and amounted to $25,152. 

The Commission had the benefit of the July and August fig- 
ures, and found that there was a net profit from the parks during 
these two months which resulted in a credit item overbalancing 
the debits for the year. It was nevertheless necessary to esti- 
mate the probable cost during the remainder of the year, and 
this was done by taking the actual cost for the first six months, 
reducing the same to a car-mile basis, multiplying this by the 
P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CX). 31 

estimated car miles for the last four months, adding actual and 
estimated, and deducting the July and August credit items, 
leaving a net expense for the year of $1,086. 

AcciderUs and Damages. 

In this case both Mr. Yellott and Mr. Goldsmith based their 
estimates upon the figures in the exhibits furnished them, which 
showed actual appropriations to the accident reserves, instead 
of actual expenditures during the first six months. This error 
was corrected by Mr. Zinmiermann in his exhibits and testi' 
mony, and he also contended that there should properly be an 
addition of $110,000 to the accident reserves for the current 
year. The Commission has accepted the Zimmermann estimate 
of $644,324. 

Oenerdl and Miscellaneous. 

In this case Mr. Yellott adopted the car-mile basis from Octo- 
ber 1, 1918, to June 80, 1919, Mr. Zimmermann the car-mile 
basis for the first six months of 1919, and Mr. Goldsmith the 
actual payments during March, April, and May, 1919, multi- 
plied by four. 

The Commission has adopted the car-mile costs for the first 
seven months of 1919 as the basis for the remaining five months, 
and has combined actual and estimated with the result that its 
estimate for the year is $705,077. 

• Taxes {except Federal Income Tax). 

In this case Mr. Yellott estimated each class of tax separately, 
Mr. Zimmermann applied the car-mile basis for the first six 
months of 1919, and Mr. Goldsmith used the actual payments 
for March, April, and May, 1919, multiplied by four. 

The Commission took the first six months of actual cost of all 
items except park tax and Fedepal income tax, multiplied such 
actual by two for the year, estimated the park tax on the basis 
of 6.91 per cent of its total actual and estimated passenger rev- 
enue for the year, getting a total of $1,394,370 exclusive of Fed- 
eral income tax. 

P.UJ1.1920A. 



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3a MARYLAND PUBLIC SERVICE COMMISSION. 

Nonoperating Income. 

Mr. Zimmennaim estimated this on the basis of cainmile re- 
ceipts for the first six months^ applying this basis to estimated 
car miles during the remaining six months and adding the totals 
of actual and estimated. The Commission followed the same 
course, except that it took the car-mile basis for the first eight 
months, and arrived at the result $22,476, which is almost the 
exact result which would have been obtained by considering the 
actual for the first eight months as two thirds of the year and 
computing the entire year upon that basis. 

Fixed Charges. 

In this case both Mr. Yellott and Mr. Zimmermann took the 
actual fixed charges for the first six months of 1919 and multi- 
plied this sum by two to get the fixed charges for the year. Mr. 
Goldsmith took the fixed charges for Maivh, April, and May, 
1919, multiplied this amount by four and got a somewhat high- 
er sum. The Commission adopted the method pursued by Mr. 
Yellott and Mr. Zimmermann, and its estimate of this item for 
the year is $3,178,950. 

1918 Federal Income Tax. 

The amoimt of this tax was $86,221. Mr. Zimmermann 
originally included it in his estimate, but subsequently deducted 
it to make his estimate comparable with the others, reserving 
the question for further consideration. The Commission 
approved this course, thinking it better to reserve the question 
until the 1919 estimated net income and consequent Federal 
income tax on that year's receipts have been determined. 

The results of the aforegoing computations of the Commis- 
sion are shown in the following table: 
P.UJL1920A. 



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RE UNITED RAILWAYS & E. CO. 



33 



TABLE IV. , 
Commission's Estimated Income Statement. 
For Calendar Year 1919. 





Amount. 


Per Cent 
of GroiiS. 


Per 
Car Mile. 


Gar miles ^ 


35,324,733 

243,000,000 

6.887^ 

$14,306,410 
126,000 






Revenue nassenflrers .............. 




Average fare i.............i..... 








P&ssensrer revenue 


99.1338 
.8662 


40.4969# 
.3638 


Other oneratiniF revenue 






Total 


$14,430,410 


100.0000 


40.8607 


Idaintenance way and structure . . . 
Maintenance equipment 








Maintenance nower nlant ......... 








Total maintenance 


$1,676,673 


11.6183 

6.7602 
26.6477 
6.6485 
.0076 
4.4651 
4.8861 


4.7462 






Operating power plants, etc 

Platform labor 


$975,616 

S,701,ia2 

959,391 

1,086 

644,324 

706,077 


2.7616 
10 4773 


Other transportation expense 

Traffic 


2.7159 
00.^1 


Accidents and damages • • • . 


1 8240 


General and miscellaneous 


1.9960 


Total operating 


$6,986,495 


48.4151 


19.7779 




Taxes (except Fed. inc. tax) 


$1,394,370 


9.6627 


3.9473 


T6tal oper., main, and taxes 


$10,057,438 

$4,372,972 
710,370 


69.6961 


28.4714 


Balance 


30.3039 
4.9227 


12.3793 

2.0109 


Depreciation 




Balance 


$3,662,602 
22,476 


25.3812 
.1567 


10.3684 
.0636 


Nonoperating income 




Total 


$3,686,077 
3,178,950 


25.5369 
22.0296 


10.4320 
8.9992 


Fixed charges 




Balance to surplus 


$606,127 


3.6074 


1.4328 



P.U.R.1920A. 



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34 



MAKYLAND PUBLIC SiiKVlCE COMMISSION, 



The Wage Increase of August 17, 1919. 

romnpny's exhibit No. 13 F-1 shows the effect of the princi* 
pal wage increases of August 17, 1919, as follows: 

TABLE V. 
Principal Wage Increases — August 17, 1919. 



Old Rate. 



New Rate. 



Platform employees — 

First 3 mos. 

Next 9 mos 

Thereafter 

Line superintendence 

Despatcher 

Car cleaners ( male) 

Street inspectors 

First-class mechanics 

Shop foreman 

Fireman 

Watch engineers 

Electrical operators 

Substation operators , 

Linemen , 

Asst. engineers 

Pavers 

Ramers 

Laborers 

Construction supervisors 

General office and mis. employees 



$ .41 hr. 
.43 hr. 
.46 hr. 

180.00 mo. 
6.50 day 
3.00 day 

170.00 mo. 
5.00 day 

200.00 mo. 
5.30 day 
&.30 day 
6.60 day 
5.60 day 
5.00 day 

200.00 mo. 
5.00 day 
3.75 day 
3.50 day 

150.00 mo. 



• .46 hr. 
.48 hr. 
.50 hr. 

200.00 mo. 
6.00 day 
3.30 day 

185.00 mo. 
6.00 day 

230.00 mo. 
5.80 day 
6.00 day 
6.16 day 
6.00 day 
5.50 day 

225.00 mo. 
5.50 day 
4.15 day 
4.00 day 

165.00 mo. 
Approx. 

10% Inc. 



Company's exhibit No. 13-F purports to show the estimated 
cost, of the above wage increase based on hours of labor for the 
preceding twelve months, as follows : 

TABLE VI. 
Estimated Cost of Wage Increase of August 17, 1919. 



Class of Employee. 



Total Days. 



Amount. 



Conductors and motormen 

Other transportation employees 

Car house employees 

Shop employees 

Power employees 

Roadway employees 

General office and miscellaneous employees 



834,694 
110,511 

68,447 
155,748 
102,727 
183,892 

«4,658 



$399J48 
46.977 
54,305 
121,518 
46,696 
98,357 
38,923 



Total 



1,640,677 



$805,524 



There was no effort upon the part of counsel for the public to 
attack or impeach the above estimates, and, as the Conmiission 
has no reason to believe the same are not accurate, it will adopt 
the amount of $805,524 as the cost of such increase. 

In doing so, however, we are not unmindful of the evidence 

P.U.R.1920A. 



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RE UNITED RAILWAYS & B. CO. 



^ 



in the case to the effect that 'certain of the above classes of labor 
were notoriously inefficient during a large portion of the period 
used as the basis of such estimate, and that there is good reason 
to hope that greater efficiency in the case of such classes of labor 
will be brought about in the near future. 

While we use the above figure, therefore, for the purpose of 
our final calculations, it is so used with this reservation. 

Balance to Surplus* 

Table IV. shows that the Commission's estimated balance to 
surplus on the basis of the wage scales in effect prior to August 
17, 1919, was $506,127. From this balance to surplus the cost 
of the wage increase for the remainder of the year should prop- 
erly be deducted in order to determine the true 1919 balance to 
surplus. 

We will assume for our present purposes that the effect of the 
continuance of this wage increase for the four and a half months 
from August 17th to December 31st would be to increase the 
expenses of the company four and one-half twelfths the total in- 
crease, $805,524, or $302,071. 

This amount deducted from our balance to surplus of $506,- 
127 per table V. would leave a true balance of $204,056 for the 
current year. 

The following table shows the balance to surplus, by years 
from 1912 to 1918, inclusive: 

TABLE vn. 
Balance to Surplus by Years. 



Year. 


Balance to 
Surplus. 


Cumulative 
Average. 


1912 


$678,042 
792.322 
819.368 
819,368 

1,108,124 
875.687 
332,65^ 




1913 


$736,182 
763 244 


1014 


1916 


777 276 


1916 


843.446 


1917 


848 802 


1918 


775,066 



Reference .to an early portion of this opinion, or to our opin- 
ion in the Six Cent Fare Case (Re United R. & Electric Co.),, 
P.U.R.1919C, Y4, will show that in that case we established the 
period 1912 to 1917, inclusive, as the pre-war period, and the 
pre-war surplus as $848,802. 
P.U.R-1920A. 5 



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3d MARYLAND PUBLIC SERVICE COMMISSION. 

Deducting the above $204,056 from such pre-war surplus of 
$848,802, we find that, by following this method of computa- 
tion, there would be at the end of the year a deficit of $644,746 
under the pre-war surplus. 

To have required all the revenue passengers since August 17, 

1919, up to December 31, 1919, to make up this deficit would 
have required an increase in the fare of approximately 7/10 of 
1 cent, or to require those using the cars after October 1st, and 
until December 31st, to make up the same, would require an in- 
crease in the fare of over 1 cent. 

It is not possible, of course, at this date, for the Commission 
to pass an order which would require patrons who have used the 
cars in the past to pay the company the balance of the fares 
which they should have paid in order to render the company ade- 
quate compensation for the service rendered, and whatever may 
be the justice of the company's contention that our order now 
should provide compensation for the losses sustained since the 
date of the filing of the petition for an increase in fares, the Com- 
mission feels that the ends of justice can best be subserved by pro- 
jecting the estimates for 1919 into the year 1920 and assuming 
that the estimates for the year January 1, 1919, to December 
31, 1919, would apply equally well to the year October 1, 1919, 
to September 30, 1920. 

There are no such evidences at the present time of prospective 
reductions in the cost of labor or materials as to justify this 
Commission in predicating the relief to be granted the company 
upon the assumption that there will be such reductions. We 
will therefore assume that our estimated balance to surplus of 
$506,127 is the balance to surplus which the company would 
have earned during the year October 1, 1919, to September 30, 

1920, had there not been the wage increase of August 17, 1919. 
Special Counsel Tellott, in his argument at the conclusion of 

the case, laid particular stress upon the fact that both his and 
Mr. Zimmermann's estimates were based upon actual figures 
for the first six months of 1919, the estimated figures for the last 
six months having been predicated largely upon unit costs dur- 
ing that period, and that consequently any projection of these 
estimates beyond December 31, 1919, would have to be upon 
the assumption that operating results would be no more efficient 
P.UJt.l920A. 



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RE UNITED RAILWAYS & £. CO. 37 

and conditions generally no better from the standpoint of the 
company than they had been during the first six months of 1919. 

The Commission thinks this point is well taken, and feels that 
it is but reasonable to assume that many of the unfavorable oper- 
ating conditions which existed during the latter part of 1918 and 
the first half of 1919 will not continue on in full force and eifect 
into any considerable period in the future. It is, however, im- 
possible for this Commission to estimate in terms of dollarij 
and cents the eifect of this anticipated improvement in operating 
conditions, just as it is impossible for the Commission to fore- 
tell with any d^ee of accuracy whether or not there may arise 
other conditions in the future which will affect the company 
adversely. About all we can do under the circumstances is to 
assume, and we think we are justified in so assuming, that- 
operating conditions in many of the respects referred to by both 
the people's counsel and special counsel in their arguments, and 
during their cross-examination of Mr. Zimmermann, will not be- 
as unfavorable to the company as they were during the latter 
part of 1918 and first hal^ of 1919. This assumption has had 
some weight with this Commission in reaching its conclusions 
in this case, but, as we have said, is not one which can be reduced 
even approximately to figures. 

We are therefore deducting our estimated balance to surplus 
of $506,127 from the $805,524 wage increase, and conclude 
that, with such wage increase in effed;, the company will earn 
during the year October 1, 1919, to September 80, 1920, $299,- 
397 less than the amoimt necessary to pay its interest charges In 
full unless greater revenues are given it through an immediate 
increase in fares. 

[4] In the former case, as we have hereinbefore stated, this 
Commission did not commit itself absolutely to the proposition 
that the company should be permitted at all hazards to charge 
fares which would enable it to earn its pre-war surplus, although 
we permitted an increase in fares designed to accomplish sub* 
stantially that result 

Our hesitancy to commit ourselves absolutely upon this point 

in our previous opinion and order was due largely to the fact 

that we hoped and rather expected that, with the resumption of 

peace, there would come about a general and fairly rapid reduc- 
P.U.R.1920A. 



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38 MARYLAND PUBLIC SERVICE COMMISSION. 

tibn in the prices of labor and commodities which would prove 
the continuance of the increased fare authorized in that case to 
be unnecessary. 

At the present time we see no evidences of any sudi general 
reduction in the prices of either labor or commodities, althou^ 
it is true that there are some few commodities which have recent- 
ly fallen in price. ThAe are, however, the exceptions rather 
than the rule. 

For these and other reasons the Commission feels that it would 
bo unwise, misleading, and inexpedient to continue the fixing of 
rates for our public utilities upon the basis of a war emergency. 
' At the same time we feel that conditions to-day are so far 
from normal that it would be unwise for the present for us to 
revert to the former method^of fixing rates solely upon the basis 
of valuation. 

= [5] Rates for service in the case of public utilities are ordi- 
narily fixed in the hope that they will continue in force without 
change for long periods of time. Realizing as we do that pres- 
ent costs are abnormal, that they are hot likely for many years, 
if at all, to return to their former or pre-war level, and that they 
will ultimately find their new post-war level, which will prob- 
ably be higher than the pre-war level but lower than the present 
day abnormal cost, the Commission is of the opinion that, in this 
interim of social unrest and business uncertainty, some better 
and iribre satisfactory basis of fixing ratea for the period of such 
unrest should be found than either war emergency or valuation. 

Heretofore, in this Commission's decisions ^nd orders in the 
two Tecent cases of the Consolidated Gas Electric Light & Power 
Company, to wit, the Electric Rate Case and the Gas Rate Case, 
and to a very considerable extent in our former order in the 
United Railways & Electric Company, Six Cent Fare Case, we 
have been largely governed in reaching our conclusion by the ex- 
isting corporate requirements of the several companies under 
the peculiar circumstances existing at the time of our order. 

In short, we have felt in all these cases that the best interests 
of 'the public of this city and state peremptorily demanded that 
these corporations be permitted to charge rates for their serv- 
ices which would yield them revenues sufficient both to enable 

thein to render the public adequate service for the present, and 
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B£ UNITED RAILWAYS & E. CO. S9 

to maintain their properties and affairs in a condition to con- 
tinue to render the public such adequate servic'e until such time 
in the future as conditions can fairly be considered to have be- 
come normal. When* that time comes, it will be time Bnough to 
adopt methods which will result in greater permanency of rates. 

It is true that this principle furnishes no standard by which 
1 elief can be given to other public utilities operating under some- 
what similar ocmditions, but whose corporate requirements are 
materially different from those of the corporation in the case of 
which such principle may have been applied. For illustration, 
the corporate requirements of a public utility having a large 
bonded indebtedness at a high rate of interest might well be ma- 
terially greater than the corporate requirements of another utility 
having a relatively small funded debt in comparison with the ac- 
tual value of its property, and paying a correspondingly low rate 
of interest 

And this Conmiission would not for a moment contend, nor 
does it admit, that a proper application of the above principle 
would necessarily require the allowance of a larger relative bal- 
ance to surplus in the case of the former company than in the 
case of the latter, regardless of all other circumstances. 

The fixing of rates of charge for the service of public utilities 
is essentially a business problem, and as was so tersely said by 
Mr. Justice Hughes of the Supreme Court of the United States 
in the Minnesota Rate Cases (Simpson v. Shepard) 230 U. S. 
362, 67 L. ed. 1611, 48 L.RA.(N.S.) 1161, 88 Sup. Ct. Eep. 
729, Ann. Cas. 1916A, 18, is not a matter of formulas This 
same proposition has repeatedly been stated by the Supreme 
Court in o£her ways. 

For instance, it has been held that r^nlatory bodies, in mak- 
ing their valuations of property used in the public service for the 
purpose of fixing rates, must use their best judgment in the 
endeavor to arrive at a valuation which will be just and fair as 
between the public and the owners of the property under all the 
facts and circumstances of the particular* case. 

Again it has been held that there is no standard rate of return 
upon investment which should be allowed by regulatory bodies 
under any and all conditions, but that the proper rate of return 
to be allowed in any given case is the rate which would be fair 

P.UJ1.1920A. 



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40 MARYLAND PUBLIC SERVICE COMMISSION. 

and just as between the public and the owners under the circum* 
stances of that particular case. 

Likewise it has been held that, in prescribing the charges ta 
be made by the utility for its services, those charges shall not fol- 
low any set standard, but shall be such as are just and fair as 
between the public and the owners of the properly under all 
the facts and circumstances of the particular case. 

Thus we see that at every stage of rate making the regulatory 
body is expected to use its best judgment and discretion in the 
premises, and render judgments which will be based, in large 
part at least, upon the facts and circumstances of the particular 
cases before them. 

In short, we must take each case as we find it, and endeavor 
to adopt that form and measure of relief which we think best 
adapted to the circumstances of that particular case. 

In the course of our opinion in the Six Cent Fare Case, Ee 
United E. & Electric Co, P.TJ.E.1919C, Y4, this Commission 
said as to the United Eailways & Electric Company of Balti- 
more: 

"In the course of a relatively few years the street railway 
has become one of the most important adjuncts to life in all 
thickly populated communities. With water, gas, and electric- 
ity, it has become one of the prime necessities of life. Without 
it, business would come almost to a standstill, and social life in 
cur cities and suburban communities would be most radically 
changed. So dependent have the people of our cities become 
upon the street railway, that an interruption of only an hour 
or so in the service is almost instantly felt throughout the length 
and breadth of the community, and continuous bad or inadequate 
service is a thing which no community will long tolerate if re- 
dress of any kind can be found. From the above reasons it fol- 
lows that the prime obligation which any state regulatory body^ 
such as a public service commission, owes to the public in con- 
nection with the property and affairs of a street railway cor- 
poration, is, first, to see that the property of such corporation is 
at all times so constructed, equipped, and maintained as to en- 
able those in charge of the same to render at all times adequate 
service to the public, and, second, to see that such character of 

service is at all times rendered. The former proposition re- 
P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 41 

quired that the company shall at all times be kept iu such a con- 
dition, financially, that it can command investments in its prop- 
erty by the investing public, in order that necessary extensions 
to meet the demands of a rapidly growing community may be 
made promptly when and as required, and that its roadbed, pow- 
er houses, and equipment may always be of a type and capacity 
to render adequate service economically and efficiently. There 
is no statutory law which can be resorted to in order to compel 
the investing public to invest its money in a public utility rather 
than in any other class of enterprise, and the only laws which 
can be appealed to. are the natural laws of trade and commerce 
which lead men to invest their money where it may reasonably 
be expected to yield them a fair return for its use, and forbid 
the investment of money where there is no reasonable hope or 
expectation of such a return. . . . Consequently it follows 
that a state regulatory body could do no greater harm to a com- 
munity so entirely dependent upon the service of a street railway 
company as the public of Baltimore is dependent upon the service 
of the respondent company, than to refuse to permit it to charge 
such rates for its service as will enable it at all times both to com- 
mand the investment of money necessary for the making of re- 
quired extensions and continued maintenance of its property in 
efficient condition, and alflo to render such character of service 
as the needs of the community reasonably require. So to refuse 
would not only be to render it physically impossible for the com- 
pany to render adequate service, but would also be to drive the 
company itself into a position of pecuniary decrepitude which 
would in the end result in bankruptcy and dissolution, after a 
long drawn out period of such inadequate service, during which 
the property and equipment would fall into a condition of dis- 
repair which could only be corrected after the lapse of many 
years and the expenditure of many millions of dollars." 

The exhibits in this case show that the petitioning company 
had outstanding June 30, 1919, net funded securities amounting 
to $64,762,000, and our estimates show that the company's fixed 
charges amount at the present time to $3,178,950, the great bulk 
of this amount being made up of interest charges on the above- 
funded securities. 

The exhibits also show that on June 1, 19122, there will be due 

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42 MARYLAND PUBLIC SERVICE COMMISSION. 

$3,000,000 of the City & Suburban Railway first mortgage 6 
per cent underlying bonds ; that on November 1, 1929, there wiU 
be due $1,500,000 of the Baltimore Traction Company ftrst 
mortgage 5 per cent bonds; that on October 1, 1931, there will 
be due $4,946,000 Maryland Electric Railways first mortgage 
5 per cent bonds, guaranteed by the petitioning company, $823,- 
000 of these bonds now being in the treasury of said company ; 
that on March 1, 1932, there will be due $600,000 of the Cen- 
tral Railway Extension & Improvement 5 per cent mortgage 
bonds, and on May 1, 1932, $700,000 of said Central Railway 
Company Consoliduted 5 per cent mortgage* bonds, both under- 
lying issues. 

Meanwhile, on February 1, 1922, there will be due $1,222,000 
of the petitioning company's five-year 5 per cent gold notes, on 
August 15, 1922, $1,528,000 of the company's five-year convert- 
ible 5 per cent gold notes, and on the same day $3,000,0b0 of the 
company's five-year convertible 6 per cent gold notes. 

In addition to the above the company has at the present time 
a number of outstanding bills payable, for the funding of jvhich 
arrangements must be made in the near future. 

From the above it will be seen that between the present time 
and August 15, 1922, the company must refinance over $8,- 
000,000 of existing interest-bearing 6bligations, in addition to 
which it must provide by some form of financing for additional 
large sums covering necessary additions, betterments, and exten- 
sions. 

In our opinion in the Six Cent Fare Case, Re United R. & 
Electric Co. P.U.R.1919C, 74, we commented upon the fact that 
during the period 1912 to 1917, inclusive, the average fixed 
charges of the petitioning company haH amounted to $2,810,807 
and its average balance to surplus $848,802, saying in this con- 
nection: "It will be noted that the above net earnings amounted 
to approximately one and one-third times the amount of the 
company's fixed charges, a ratio by no means excessive in view 
of the desirability of upholding the credit of the company, and 
in fact considerably less than that frequently demanded by rea- 
sonably conservative invest9rs.''' 

In the case now before us there was adduced a considerable 
amount of testimony relative to the unmarketabilitf under exist- 

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RE UNITED RAILWAYS & E. CO. 43 

ing conditions of street railway securities upon anything like 
fav.>rable tei-ms where such corporations had earnings available 
for interest, dividends, and surplus less than one and two-thirds 
times or double their fixed charges. Numerous instances were 
given of the high cost of money in the case of the sale of street 
railway securities in the recent past. 

This opinion has already been so far prolonged that we will 
not stop to discuss this subject further than to say that the high 
cost of financing in the case of public utilities is one which ordi- 
narily falls directly upon the consiimer and must be paid by him 
through the rates charged for the service, and to refer to the 
latest decision of the Supreme Court of the United States touch- 
ing upon this subject and recognizing the difficulties of financing 
under existing conditions in the case of public service corpora- 
tions. 

In the case of the Lincoln Gas & E. L. Co. v. Lii^cobi, 250 U. 
8. 266, 63 L. ed. 968, 89 Sup! Ot. Kep. 454, decided June 2, 
1919, Mr. Justice Pitney, delivering the opinion of the court, 
said : "It is a matter of conmion knowledge that, owing princi- 
pally to the World War, the costs of labor and supplies of every 
kind have greatly advanced since the ordinance was adopted, and 
largely since this cause was last heard in the court below. And 
it is equally well known that annual returns upon capital and 
enterprise the world over have materially increased, so that what 
would have been a proper rate of return for capital invested in 
gas plants and similar public utilities a few years ago furnishes 
no safe criterion for the present or for the future." 

Under the circumstances, this Commission has no hesitancy in 
saying that the best interests of the public with respect to the 
petitioning company require that it should earn a balance of not 
materially less than one and a half times its fixed charges after 
the payment of operating expenses, taxes, and the making of rea- 
sonable allowances for its accident and depreciation reserves. 

Our calculations show that the amount of additional earnings 
required to produce this sum is approximately $1,000,000. 

Eeference to table IV., our estimated income statement, will, 
diow that we estimate the company's total net receipts for ,thc 
year, before deducting fixed charges, to be $3,685,077. If thisv 
Amount be increased by $1,000,000 it will be found to be some^, 
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44 MARYLAND PUBLIC SERVICE COMMISSION. 

thing less than one and one-half times the compan/s interest 
charges. 

Testing the aboVe conclusion in another way, we find that on 
August 31, 1919, the company^s funded and floating debt 
amounted to $65,996,000. If, now, we were to accept as correct 
the contention so frequently made that tiie company^s outstand- 
ing stock to the amount of $20,484,200 represents no actual 
j^alue, and assume that tie outstanding funded and floating debt 
represents the full fair value of the company's property, we will 
find that the above return of $4,685,000 which^we have stated to 
be a reasonable return, amounts to a return of barely 7 per cent 
upon the fair value of the company's property as indicated by its 
outstanding funded and floating debt. 

This Commission, in all its history, which includes a lonsj pre- 
war period, during which the cost of money was very much lower 
than at present and operating risks not nearly so great as now, 
has never held that a return of 7 per cent was unreasonably high 
when rates were based upon valuation. 

In the two Telephone Company cases we held that .the com- 
pany should be permitted to earn a return not exceeding 8 per 
cent ; in- the case of the Baltimore County Water & Electric Com- 
pany we established rates estimated to yield between 7 and B 
per cent upon the fair value of the property as determined by 
this Commission. In the cases of the Consolidated Gas Electric 
Light & Power Company of Baltimore the charges authorized by 
us were estimated to yield the company a return of approximate- 
ly 8 per cent upon the assumed fair value of the property. In a 
number of other cases we have held that, in view of the nature of 
the risks surrounding the operation of the properties of public 
utilities, the rate of return should materially exceed the current 
legal rate of interest, 6 per cent. 

We are not to be understood by anything we have said with 
respect to the fair value of the property here in question, that 
such fair value is to be measured by the outstanding funded debt 
of the company. We have not so decided, and use that assump- 
tion only for purposes of illustration, and to show that these re- 
turns in money which we have concluded the company should 
have, would be no more than a reasonable return if measured 
upon the basis of such assumption. 
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EE UNITED RAILWAYS & E. CO. .45 

Our conclusion is, therefore, that the petitioning company is 
entitled to charge rates which will yield it a balance to surplus of 
approximately $1,000,000 after the payment of its operating ex- 
penses, taxes, fixed charges, and the making of reasonable allow- 
ances for the maintenance of its accident and depreciation re- 
serves. 

It remains now to be seen what rate of fare will be necessary 
to yield such balance to surplus of approximately $1,000,000, 

Rate of Fare Necessary. 

Having reached the aforegoing conclusion, it now becomes 
necessary for the Conmiission to establish for the company rates 
of fare which may reasonably be anticipated to yield the petition- 
ing company a net balance to surplus of approximately $1,- 
000,000, after the payment of operating expenses, taxes, fixed 
charges, and the setting aside of the amounts hereinbefore de- 
clared by us to be reasonable for the creation and maintenance, 
of proper depreciation and accident reserves. 

Reference to the company's revised schedule P. S. 0. Md. 'Nct^ 
8 will show that, in addition to the regular base rate of 6 cents 
for adults, there were prescribed in such schedule and are now 
in force under our order No. 4608 and supplementary orderji 
Nos. 4609, 4646, and 4944, a number of special fares, to wit, 
half fares, commutation tickets for first, second, and third zones, 
cash transfers on the Curtis Bay Line, and tickets in bulk for the 
use of the employees of the Bethlehem Steel Company an4 Cen- 
tral Foundry Company. 

The company has proposed flat increases of from J cent to 1^ 
cents in each of the above special rates with the exception of the 
half fares for children, as to which it has proposed no increase. 

The company has also furnished the Commission an estimate 
of the number of such special fares which will probably be paid 
during the year 1919, together with an estimate of the yield 
of the same in the event of such proposed increases. These fig- 
ures were based on increases in the base rate of from ^ of a cent 
to 1^ cents respectively. 

For our present purposes it will suffice to take the eompany's 
estimate based on the supposition of a 1-oent increase in both' 

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46 , MARYLAND PUBLIC SERVICE COMMISSION. 

base and special fares. This estimate is shown in the following 
table: 

TABLE VIIL 

Yield of Increases in Special Fares. 

Increase on One Cent Basis. 

7,918,283 half fares 4 cts. 

1,612,622 Curtis Bay cash transfers 4 cts. 1 eL $16,126.22 

1,437,780 Ist Co. Com. tickete 4i cts. 1 ct. 14,377.30 

407,740 2d Co. Com. tickets 6 cts. 1 ct. 4,077.40 

58,830 3d Co. Com. tickets . ^ 6 cts. 1 ct 545.30 

1,947,508 Bethlehem Steel 4i cts. 1 ct 19,475.08 

128,250 Central Foundry 5 cts. 1 ct 1,282.60 

13,406,663 $54388.80 

It will be seen from this table that the company estimates that 
out of a total of 240,777,100 revenue passengers during the year, 
there will be but 13,406,663 of the same using half fares and the 
above classes of special tickets, and that a flat increase of 1 cent 
in the case of eadi such special fares, with the exception of half 
fares, would yield the company an additional revenue of but 
$54,883.80. It follows that an increase of ^ cent in these special 
fares would yield the company but $27,441.90 additional rev- 
enue. 

In case of half fares for children the former rate of 3 cents 
was 60 per cent of the adult rate of 6 cents. Witi the increase 
in the adult rate from 5 to 6 cents, it seemed desirable at the 
time of our former order to increase the half fares to 4 cents, or 
66f per cent of the adult rate. Under the circumstances the 
Commission would not feel justified in making any further in- 
crease in this particular fare unless it should happen that, by 
reason of a considerable increase in the adult rate, the half -fare 
rate would be disproportionately low as compared with the rates 
in force for many years before the increase in the adult fare from 
6 to 6 cents. 

In our previous opinion and orders in the Six Cent Fare Case, 
Re TTiiited E. & Electric Co. P.U.R.1919C, 74, the charge for 
Curtis Bay cash transfers was increased from 3 to 4 cents in or- 
der to be moire nearly proportionate to the increase in the base 
rate from 6 to 6 cents. Under the circumstances the Commis- 
sion does not feel that there should now be a further increase in 
the charge for this cash transfer, since the effect of the increase 
in. tiie* base rate- which we -are about to authorize will be only 

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RE UNITED RAILWAYS & E. CO. 47 

to bring the 4-cent cash transfer on the Ourtis Bay Line, if per- 
mitted to remain at 4 cents, more nearly proportionate to the 
new base fare as compared with the original transfer charge of 
S cents and base fare of 5 cents. 

For the same reasons the Commission is not inclined to make 
any further increases at the present time in the case of the com- 
mutation tickets or special tickets for employees of the Beth- 
lehem Steel Company and Central Foundry, as such increases 
were in our former order somewhat disproportionate to the 
amount of the increase in the base fare, this having been neces- 
sary at the time in order that such increases might be in con- 
venient fractions of the cent. 

The company's estimate of 13,460,663 special fares was based 
upon its estimate of 240,777,100 reyenue passengers for the en- 
tire year. Consequently the Commission's estimate of 243,- 
000,000 passengers for the year, coupled with the fact that there 
wUl probably be a greater use of commutation books with the 
proposed readjustment of fares, . would seem to justify the 
assumption that there will be a somewhat larger number of 
patrons paying these special fares in future than in the past. 
Without attempting to make a Aiinute calculation based upon 
these factors, we have assumed that there wUl be approximately 
14,000,000 users of these special fares during the year which 
will be covered by our order. 

Deducting this figure from the » 243,000,000 revenue passen- 
gers estimated by us leaves a balance of 229,000,000 revenue 
passengers who will have to make up the increased revenues re- 
quired by the company. 

Any additional sums raised through increases in the fares will 
be sijbject to the park tax, which we find is 6.91 f)er cent of the 
company's total passenger revenues. 

Since we know that 1 cent additional fare charged 229,- 
000,000 passengers would yield $2,290,000, and that sum is far 
in excess of the amount which we conclude the company prop- 
erly requires under existing conditions, it is evident that what- 
ever increase in the base rate of fare is made must be an increase 
of a fractional part of a cent, and will consequently involve the 
use of tickets or fare checks. 

It is equally obvious that not all of the adult paesengers of 

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48 MARYLAND PUBLIC SERVICE COMMISSION. 

the company will make use of these checks, and* it therefore re- 
mains to determine what percentage of such passengers paying 
the full fare will probably use the same. 

Mr. Zimmermann based his estimates of the probable yield 
of a 7-cent fare with four tickets for 25 cents upon the assump- 
tion that not less than 80 per cent nor more than 90 per cent 
would avail themselves of the privilege of purchasing checks at 
the reduced rate. In the case of his estimates based on a 7-cent 
fare with three tickets for 20 cents, he assumed that not less than 
70 per cent nor more than 80 per cent of the passengers paying 
the full fare would use such tickets, the differences in these 
assumptions being due to the fact that in the case of four tickets 
for 25 cents there would be a saving of f of a cent on each indi- 
vidual ticket, whereas in the case of three tickets for 20 cents, 
there would be a saving of but ^ of a cent on each ticket. In 
the case of Mr. Zimmermann's estimates as to the effect of a 10- 
cent base rate with two tickets for 15 cents, he estimated that 
between 90 and 99 per cent of the passengers would avail them- 
selves of the reduced rate through the purchase of the two tickets 
for 15 cents, in view of the -saving of 2^ cents on each fare 
through such purchases of tickets. 

The Commission is inclined to think that Mr. Zimmerman's 
estimates of ticket purchasers in the case of four tickets for 25 
cents or three tickets for 20 cents are rather high, and is con- , 
firmed in this belief by its studies of the experience of the Wash- 
ington Railway & Electric Company and the Capital Traction 
Company, both of Washington, District of Columbia, where the 
use of the 5-cent cash fare or six tickets for 25 cents has con- 
tinued from 1S94 until about a year ago. In this case there was 
a saving of 5/6 of a cent with the purchase of each ticket. In 
addition, as we have seen, the ticket system has been* in vogue 
in Washington for nearly twenty-five years, during which time 
the public has grown accustomed to the use of the tickets and 
thoroughly familiar with the advantages of their purchase. 

The following table shows the comparatively recent experience 
of the Washington companies in this respect; these being the 
only figures available at the date of this opinion: 
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RE UNITED RAILWAYS & E. CO. 49 

TABLE IX. 

Per Cent of Passengers Using Tickets. 

Washington, D. C. 

5^ Cash or 6 Tickets for 25^. 

W. R. ft E. Ca Year. Capital Tracticm Co. 

1900 77.0 

1908 80.9 

83.62 • 1 . . . 1909 80.7 

84.10 1910 80.9 

84.44 1911 80.9 

84.71 1912 '. . . 80.8 

84.88 1913 80.7 

86.36 1914 81.2 

84.95 1915 81.1 . 

86.37 1916 , 80.9 

85.05 1917 80.6 

In view of the experience of the Washington companies as set 
forth in the above table, the Commission has concluded that it 
would be reasonable to assume that, for the present at least, the 
people of Baltimore may be expected to purchase tickets at re- 
duced rates between the limits of 50 per cent as a minimum and 
SO per cent as the maximum. 

The following table shows the estimated yield of additional 
fares at diflFerent rates upon the respective assumptions that 50 
per cent, 66f per cent, 75 per cent, or 80 per cent of patrons 
paying the full fare, will use fare checks or tidcets: 

TABLE X. 
Estimated Yield of Additional Fares at Different Rates. 

Efltimated additional revenue from in- 
creased fare base 243,000,000 passengers per annma 

Lees passengers paying other than full 

fare 14,000,000 

Number of passengers paying increased 

fare 229,000,000 

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50 MARYLAND PUBLIC SERVICE COMMISSION. 

Additional Yield. 





60%. 


661%. 


75%. 


80%. 


74 cash fare, 4 tickets 

for 26^. 
Full base fare increase 
Fractional fare increase 


$1,145,000 
573,500 


$763,333 
763,333 


$572,500 
858,750 


$458,000 
916,000 


Total addit'l revenue . . 
Less park tax 


$1,717,500 
118,679 


$1,526,666 
105,492 


$1,431,250 
98,899 


$1,374,000 
94,943 


Net additional revenue 


$1,598,821 


$1,421,174 


$1,332,351 


$1,279,067 


74 cash fare, 4 tickete 

. for 25^. 
Full base fare Increase 
Fractional fare increase 


$1,145,000 
286,250 


$763,333 
381,667 


$572,500 
429,375 


$458,000 
458,000 


Total addit'l revenue . . 
Less park tax 


$1,431,250| $1,145,000 
98,899, 79,120 


$1,001,875 
69,230 


$916,000 
63,295 


Net additional revenue 


$1,332,351 


$1,065,880 


$932,645 


$852,705 


74 cash fare, 3 tickets 

for 20^. 
Full base fare increase 
Fractional fare increase 


$1,145,000 
763,333 


$763,333 
1,017,777 


$572,500 
1,145,000 


$458,000 
1,221,333 


Total addit'l revenue . . 
Less park tax 


$1,908,333 
131,865 


$1,781,110 
123,074 


$1,717,500 
118,679 


$1,679,333 

116,042 


Net additional revenue 


$1,776.4681 $1,658,036 


$1,598,821 


$1,563,291 



Mr. .Zimmermann, in his testimony, gave virtually no explan- 
ation of or reason for his assumptions as to the minimum num- 
ber of passengers who would purchase tickets, and there was no 
other evidence adduced at the hearings upon this point. 

Under all the circumstances and after a careful study of this 
most important phase of the situation, the Commission has con- 
cluded that in the case of the sale of four tickets for 26 cents not 
less than 66f nor more than 75 per cent of the patrons of the 
company will use tickets, and that the proper estimate lies about 
midway between the two, or 70.833 per cent. 

Applying these conclusions to the above figures in the case of 
four tickets for 26 cents, we find that the net increase in rev- 
enues, after the payment of the park tax, would be $1,376,762. 

From this sum should be deducted the $805,524 wage increase 
less our estimated $506,127 balance to surplus under the 6-cent 
fare without such wage increase, or $299,397, leaving a net bal- 
ance to surplus of $1,077,365. 

From this sum should be deducted the 10 per cent Federal 
Income Tax which the company is required by law to pay upon 

P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 61 

its net income. Upon our estimate this would amount to $10Y,- 
736y leaving a final net balance to surplus of $060^620. 

A summary of the above calculations wiU'be found in the fol- 
lowing table: 

TABLE XI. 
Commission's Final Estimate of Effect of Increased Fare. 
Net increase from additional full fare after deduction of park 

tax @ 6.91% $1,376,762 

Deduct wage increase $805,524 

Less estimated balance to surplus subject to wage in- 
crease . • 506,127 

299,397 

Balance to surplus 74 fare, 4 tickets for 26^ $1,077,385 

Less Federal income tax 107,736 

Final net balance to surplus $969,629 

For the reasons hereinbefore stated, this Commission con- 
cludes that the above final net balance to surplus is reasonably 
required by the company at the present time in order to enable 
it to meet its corporate requirements. 

We therefore conclude that the company should be permitted 
by our order^ about to be passed, to increase its existing 6-cent 
adult or base charge to 7 cents, and required to sell four tickets 
or checks representing this charge for 26 cents. 

FtUure Modifications of Fares. 

The Commission's order passed pursuant to this opinion will 
provide that the fares established therein shall remain in for.ce 
and effect for one year from October 1, 1919, to September 30, 
1920, unless earlier modified or abrogated by the further order 
of the Commission. Such order is not to be taken either by the 
company or by th,e public as a guaranty that such fares will con- 
tinue in force during the whole of that period. 

In the course of our opinion we have pointed out that we are 
dealing at the present time with abnormal conditions, and this 
means that existing conditions may either remain fairly con- 
stant for some time into the future, or may at any time grow 
materially better or materially worse so far as the company is 
concerned. Our conclusions have been reached upon the assump- 
tion that they will remain practically constant during the com* 
ing twelve months. 

P.UJL1920A. 



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62 MARYLAND PUBLIC SERVICE COMMISSION. 

Our order will further provide that the company shall con- 
tinue to furnish the Commission as heretofore accurate and com* 
plete monthly statenhents setting forth the number of revenue 
and transfer passengers carried, the number of car miles operat- 
ed, the cash receipts from operation and other sources, and the 
operating and other expenditures of the company, set forth in 
the manner prescribed by the rules of this Commission for 
accounting by street railway companies. 

These reports will be scrutinized closely by the Commission 
and its staff as they are received from month to month, and if it 
appears at any time that our estimates of receipts and expendi- 
tures are so far wrong as to make it unjust, either to the com- 
pany or to the public, that the rates prescribed in our order be 
continued until the end of the year therein prescribed, steps will 
be taken at once to modify the same. 

It is to be understood by all concerned that our order passed 
pursuant to this opinion is so far tentative that it can be reopened 
at any time within such twelve months upon the evidence adduced 
in this and the previous case, and the monthly reports which 
will be furnished under oath by the company, as above stated. 

In other words, there will be no necessity, during the coming 
year at least, for any lengthy, formal hearing upon applications 
for either the increase or decrease of the fares established bv our 
order. 

The Commission now has before it the complete operating fig- 
ures of this company for a period of approximately seven years, 
and there is now no necessity for further details as to such 
operations in the past or for further estimates of probable future 
operating results, except in so far as the estimates contained in 
this opinion may require modification from time to time by rea- 
son of actual results. 

If it should happen that the experience of several months un- 
der the new rates should demonstrate tiiat the company is earn- 
ing a larger net revenue than is anticipated by this order, and 
that there is a reasonable probability that such excess earnings 
during the course of the year would be such as to justify some 
reduction in the base rate of fare, the Commission will, of its 
own motion, require the company to abaw cause why such de- 
crease should not be made. 

P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 53 

If, on the other hand, such reports, upon thorough investiga- 
tion by the accounting department of the Commission and by 
the members of the Commission itself, should demonstrate that 
the company is earning materially less than we now anticipate it 
will earn under such rates, the company will be permitted to 
make an application for their increase, with the imderstanding 
that the Commission will confine the hearings upon such appli- 
cation, as far as it can reasonably do so under the law, to the 
precise issue of the rate necessary to yield approximately the 
net balance to surplus which we have declared a reasonable one 
for the company to earn during the period of the next twelve 
months. 

The order will further provide in substance that at the end 
of such period of twelve months the base rate shall revert to the 
present fare of 6 cents unless it shall then be made to appear 
that some other rate than 6 cents is a proper rate thereafter to 
be charged by the company. 

Meanwhile the Commission expects to give much thought to 
the "cost of service" plan which has been adopted in the com- 
paratively recent past by a number of cities in the United States 
and elsewhere for the better and more satisfactory regulation of 
fares to be charged by street railway companies. 

The theory of these plans is in brief that the owners of street 
railway properties are entitled to receive from the public the 
actual cost of the service rendered, including in that cost the 
reasonable expenses of operation, maintenance, taxes, fixed 
charges, and a fair return upon the fair value of the investment, 
with the proviso that as the cost of service increases the fares 
go up, and as the cost of service decreases the fares come down, 
such plans providing for the ready ascertainment of the perti- 
nent facts without the necessity of prolonged hearings and in- 
vestigations. 

These cost-of-service plans are usually predicated upon the 
fair value of the property used in the service, that value either 
being fixed by the Commission or agreed upon by the public and 
the owners of the property. 

Such plans have been adopted in Cleveland and Montreal, in 
both of irtiich cities they have been reported to work with con- 
siderable satisfaction to the public as well as to the owners of the 
P.U.R.1M0A. 



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64 MARYLAND PUBLIC SERVICE COMMISSION. 

properly. Somewhat similar plans have been authorized b}' the 
Massachusetts legislature, and a modified form of the plan pro- 
vided by the statutes of that state has been in use for some time 
in the city of Boston, where its result has been anything but 
satisfactory to the public at large. Such plans have also been 
tried in one form or another in many other cities with varying^ 
degrees of success or failure, as the case may be. 

This Commission hopes within the course of the next few ' 
months to be able to formulate and present to the public a com- 
plete study of these plans, with the results achieved thereunder 
in the various cities where they have been tried, and our con- 
clusions in the premises. It may well be that tie Commission's 
conclusions will be that legislation should be enacted to make 
provision for the adoption of plans of this general character in 
this state, in which event our recommendations will be made 
to the coming session of the general assembly. 

The Paark Tax and Paving Charges. 

Under certain ordinances of comparatively long standing, 
ratified by the general assembly of Maryland in some instances, 
the United Railways & Electric Company of Baltimore is re- 
quired at the present time to pay a tax amounting to 9 per cent 
of its gross receipts on certain lines, this sum going into the 
fund for the maintenance of the public parks of the city. This 
tax equates at the present time 6.91 per cent of the total pas- 
senger revenues of the company. Upon this basis, and upon the 
assumption that the company's passenger revenues during the 
next twelve months will be $14,305,410, as estimated by the 
Commission, this tax will amount to the sum of $988,504. 

This sum is very much greater than the amounts paid in 
previous years, this fact being, due to the increased amount of 
patronage, in the recent annexation of parts of Baltimore and 
Anne Arundel counties to Baltimore city, and to the recent fare 
increase from 6 to 6 cents and the present increase from 6 to 6^ 
cents. 

In addition to this large percentage of its gross receipts paid 
directly into the park fund, the company also pays taxes to the 
city, counties, and state on its real estate, and is also required 
P.U.R.1920A. 



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BE UNITED RAILWAYS & E. 00. 65 

by law to pave between its tracks and for 2 feet on either side 
thereof, and keep such paving in repair. 

These forms of taxation were all adopted in the case of the 
railways company before the days of r^ulation, and at a time 
when it was assumed that what the public got through these 
forms of taxation came^ out of profits which the stockholders 
would otherwise have received. 

Under regulation, where the effort is to r^ulate the chafges 
made by a public utility for the service rendered in almost exact 
proportion to the actual cost of such service, all these taxes go 
into and form a part of such costs, with the result that it is no 
longer a question whether the public at large or the stockholders 
will pay these taxes, but the question is whether the general 
public or the portion of the public getting the service of the 
utility shall pay the same. 

In the case now before us, for instance, the sum of the park 
tax, general taxes, and the paving charges to which this company 
is subject, amount to something more than the -^ cent which has 
1 oen added to the fare. Without those charges the fare could 
have remained at .6 cents. 

It is the purpose of the Commission to make a complete study 
of this subject in the immediate future, and determine what, if 
any, recommendation it should make to the legislature. 

In many other cities where the public has been confronted 
with much the same difficulties with respect to their street rail- 
way service as confronts the public of Baltimore, one of the 
first steps taken by the public to relieve the situation and lessen 
the burden upon the users of the street railways has been to 
abolish all or some of these forms of taxation. 

The Commission is not prepared at the present time to make 
any recommendation in connection with any of these forms of 
taxes, and in fact has reached no definite conclusion itself as to 
what should be done in the premises. 

Zone Extensions to New City Limits. 

[61 In the Six Cent Fare Case, Re United R & Electric Co. 
P.U.R.1919C, 74, it was contended that the 1^ effect of that 
portion of § 2 of chapter 82 of the Acts of 1918, providing 
that aU Qxistin^r provisions of the Baltimore City Charter should 



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66 MARYLAND PUBLIC SERVICE COMMISSION. 

be applicable • to such portions of Baltimoi^e and Anne Arundel 
counties as were annexed to Baltimore city by that act, was to 
extend the provisions of § 796 of the city charter, prescribing 
certain fares within the old limits of the city to such annexed 
portions of Baltimore and Anne Arundel counties, and thereby 
make uniform the fares within the limits of Baltimore city as 
enlarged by such act. 

As was stated in our opinion in the former case, this question 
was submitted to the Conmiission's general counsel, who advised 
the Commission that by the Public Service Commission Law 
the whole matter of the rates of fare proper to be charged by the 
company had been committed by the legislature in the first in- 
stance to determinations by the Commission, subject to review 
by the courts as in said law provided. 

In the former case the Commission said the general question 
of fare zones should be made the subject of an independent 
study, and that this could not be done until the effect of the 
increased fares, on the basis of the existing zones, had been 
demonstrated by experience over a reasonable period. 

That experience has now been had, with the results set forth 
in an earlier portion of this opinion. Those results demon- 
strated conclusively that it would not have been possible to make 
such extensions to the city limits under the 6-cent rate of fare 
prescribed by our order in that case. 

During the hearings in the case now before us, numerous ap- 
plications were filed asking the Commission to require the com- 
pany to extend its first fare zone to the new city limits in various 
directions, and the Commission caused a study to be made of the 
effect of extending the first fare zone to the new city limits on 
each of the lines of the company. 

A study of the situation confronting the company through the 
extension of the first fare zone to the new city limits involves an 
understanding of the mileage of the present second fare zone, 
which remains outside the new city limits, and determination 
whether it would be expedient to create a new zone out of the 
remaining portion of the present second fare zone, or include 
such portion in the present third zone (which would then become 
the second zone). An alternative of this would be the entire 
eliminfltion of the present second zone, which would mean carry- 

P.U.R.1920A. 



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KE UNITED RAILWAYS & E. CO. 



67 



ing passengers a short distance beyond the new city limits for 
one fare. The company's officials were of the opinion that where 
the portion of the present second zone extending beyond the city 
limits is less than 2 miles in length, it dioiild be added to the 
next zone or else be considered within the first fare zone, since 
it was obvious that great objection would be made to paying 
the full fare in a zone where the maximum ride permitted was 
less than 2 miles. 

The following table shows the mileage remaining outside the 
new city limits: 

TABLE XIL 
Mileage Outside New City Limits. 



Line. 



Pimlico-Pikesville . . . 
\Ve»t Arlington-Gwynn Oak 
VVelbrook-Gwynn Oak .... 

Woodlawn 

Curtis Bay 

Towson 

Catonsville 

Lakeside 

I^iverview 

EUicott City 

Mt. Washington-Pikesville 

Back River 

Sp. Point-Dundalk 



Ist 


County Zone. 










2nd. 
County 


In New 


Outside 




City 


New Ci^ 


TotaL 


Zone. 


Limits. 


Limits. 






2.51 


1.67 


4.18 


3.61 


6.94 


.55 


6.49 




2.85 


.55 


3.40 




.89 


1.02 


1.91 




4.12 




4.12 




.83 


2.12 


2.95 - 




1.52 


2.11 


3.63 




1.59 


.56. 


2.15 




3.47 


.78 


4.25 




.43 


2.85 


3.28 


2.76 


2.42 


2.00 


4.42 




2.10 


2.61 


4.71 


2.87 


2.80 


1.60 


4.40 


3.48 



3rd. 

County 

Zone. 

5.91 



4.42 



The following lines show a remaining mileage of less than 2 
miles and the portion of the zone remaining in the county would 
therefore have to be considered either as having been combined 
with the city zone or added to the next county zone: 

West Arlington — Gwynn Oak 

Walbrook — Gwynn Oak 

Woodlawn 

Lakeside 

Eiverview 

Sparrows Point — Dundalk 

The entire Curtis Bay line is in the new city limits, and would 
have to be considered as eliminated under the proposed plan. 

Of the Pimlico-Pikesville line 1.67 miles of the second fare 
zone remains outside the new city limits. If this be added to 

P.U.R.1920A. 



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58 MARYLAND PUBLIC SERVICE CX)MMISSION. 

the present third fare zone, this zone would have a mileage of 
5.28 as compared with 5.91 miles on the pres^it fourth fare 
zone of this line. 

2.12 miles of the present second fare zone of the Towson line 
remain outside the new city limits; 2.11 miles of the present 
second fare zone of the Catonsville line remain outside the new 
city limits; 2.85 miles of the present second fare zone of the 
Ellicott City line remain outside the new city limits; an(J 2 
miles of the Mt. Washington-Pikesville line remain outside the 
new city limits. Separate zones would have to he created in 
each of these cases. 

The traffic department of the company stated that eventually 
all of the Back River lines would be in the first fare zone, and 
it was accordingly considered as being eliminated. 

The following table shows the number of passengers carried 
on each of the present second fare zones, together with the per- 
centages such passengers bore to the total passengers carried 
during the entire year 1018 and first six months of the year 
1919: 

P.U.R.1920A. 



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BE UNITED RAILWAYS & E. CO. 



69 



P.U^.1920A. 





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Digitized by VjOOQIC' 



00 MARYLAND PUBUC SERVICE COMMISSION. 

The above table shows that for the year 1018, 9.226 per cent 
of the total revenue passengers were carried in the second fare 
zones, and that during the first six months of 1919, 8.271 per 
cent were so carried. As the summer months have a distinct 
influence on the county lines, the former percentage, 9.226, has 
been used hereinafter in preference to either the six months'^ 
or eighteen months' figures shown in the above table. 

The following table shows the estimated loss in revenues from 
the extension of city zones in all cases upon the suppositions 
above set forth, the chief of such suppositions being that, where 
the extension of an existing city zone to the new city limits 
would leave less than 2 miles of the first county fare zone, the 
first county fare zone will either be taken into the city zone or 
into the next county fare zone : 

TABLE xrv. 
Estimated Lobs in Revenue^ from Extension of City Zones. 

Line. Per Cent of Loss. 

Pimlico-Pikesville 100% of .617% or .617% 

West Arlini^n-Gwynn Oak 100% of .068% or .068% 

Walbrook-Gwynn Oak ■ 300% of .056% or .056% 

Woodlawn 100% of .084% or .084% 

Curtis Bay , 100% of 1.434% or 1.434% 

Towson 10% of .679% or .058% 

Catonsville 10% of .494% or .049% 

lakeside 100% of .076% or .076% 

Riverview 100% of 1.004% or 1.004% 

Ellicott City 10% of .506% or .05t>% 

Moimt Washington 100% of .028% or .028% 

Back River 100% of 1.102% or 1.102% 

Dundalk 100% of 3.179% or 3.179% 



Total per cent of revenue passengers eliminated 7.805% 

(a) Estimated revenue passengers 243,000,000 

Estimated Passenger Revenue — 

(b) Under existing fares $14,305,410 

(c) From fare increase 1,376,762 

$15,682,172 

(d) Average fare, entire system, new rate 6.463^ 

(e) Average fare, entire system, old rate 6.887^ 

(f ) Average fare in second fare zone during first six months of 

191» 6.68^ 

(g) Assumed average fare in second fare zone, new rate 6.20i 

(h) 7.805% of 243,000,000 18,966,160 

(g) X (h) represents total loss from eliminating above second 

zones $1,176,901 

It will be noted that the above table assumes that but 10 per 
cent of the traffic originating in the second fare zones on the 
Towson, Catonsville, and Ellicott City lines will be lost through 
P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 61 

the extension of the city zone to the new city limits the short 
distance required in each of these cases. 

[7] The above table shows that the effect of extending the 
city zone to the new city limits would be that the company would 
sustain a loss in revenues of approximately $1,176,000 per- an- 
num, which is within $200,000 of the amount estimated by the 
Commission to be yielded by the new increase in fare. This 
would require the addition of approximately -J a cent to the new 
6^ cent base rate, and bring the base rate up to at kast 7 cents 
flat. 

Under these circumstances the Commission cannot see its way 
clear at the present time to require these extensions to be made, 
and fliinks it would be unwise to select any of the zones for such 
extensions until the new rate has been given a fair trial and it is 
seen what the yield thereof will be. 

It may well be that experience widi the new rates will demon- 
strate earnings in excess of those estimated by the Commission. 

In such event the Commission will have to consider the rela- 
tive merits of what will no doubt be a general demand on the 
part of all the public for a reduction in the ticket rate from 6^ 
cents to 6J cents each, and the demand of those residing in these 
second zones for extensions of the first zone. Or it may be that 
the rates will yield so much in excess of our estimates that the 
Commission will find its way clear to grant relief in all these 
cases. 

But, on the other hand, it may happen that our estimates of 
earnings will be in excess of actual earnings, and that such 
actual earnings, even without any of such extensions, will be 
inadequate to meet the requirements of the company and yield 
it the return to which we have declared it properly entitled. 

This Commission has no more right to assimie that its esti- 
mates will be excessive than it has to assume that they will be 
inadequate; and until they have been given an actual trial over 
a reasonable period of time, we must decline to direct the exten- 
sion of any of these zones. 

An order will be passed embodying the principal conclusions 
in the aforegoing opinion. 

A petition for rehearing having been filed the Commission 

P.VJL1920A. 



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62 MARYLAND PUBLIC SERVICE COMMISSION. 

on November 29, 1919, handed down the following additional 
opinion : 

The Commission's opinion in the above case was filed Septem- 
ber 30, 1919, and was accompanied by an Order No, 6120 in 
which it was ordered, as by law provided, that the petitioning 
company should advise the Commission in writing within ten 
days from the date of service upon it of a copy of such order 
whether or not it would accept and abide by the same. 

Before the expiration of said ten days the company requested 
and obtained an extension of such period for the purpose of giv- 
ing its representatives further opportunity to study and analyze 
the opinion of the Commission upon which such order was based. 

On October 20, the company filed a petition for a modification 
of such order and opinion. In such petition the company al- 
leged in substance that before, during, and since the hearing in 
this cause its officials had been engaged in a comprehensive 
study of plans for the improvement of the service and for the 
increase of carrying capacity of the service rendered; that its 
officials had hesitated to authorize large capital expenditures in 
view of prevailing high prices, but that in order to keep pace 
with and stimulate the growth of the city and in view of the 
seeming stabilization of prices, such officials were about to recom- 
mend to the company's directors the purchase of from thre,e 
hundred to three hundred and fifty new cars, the improvement 
or reconstruction of approximately 40 miles of track and the 
expenditure of substantial sums for improvement of the power 
situation, all aggregating a total capital sum of several million 
dollars. 

The company further stated in its said petition that it was 
willing to continue the rates of fare established by said Order 
No. 5120 for a sufficient length of time to determine their 
adequacy or inadequacy both for the proper operation and main- 
■ tenance of the property, and for the establishment and mainte- 
nance of the balance to surplus which this Commission had 
declared in said opinion the company was reasonably entitled 
to earn, but believed that no fair test of such order could be had 
until certain of the Commission's estimates of receipts and ex- i 
penditures, particularly as to maintenance and depreciation re- 
serves, had been corrected, and the Commission's expressicms rel- 

P.U.R.1920A. 



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RE UNITED RAILWAYS & E. CO. 63 

ative thereto made so clear that they could not reasonably be 
misinterpreted by the public* 

Other orders extending the time within which the company 
should signify its acceptance or rejection of Order No. 5120 were 
subsequently passed, and the petition finally came to a hearing 
on November 14, lOlO*- 

[8] At this hearing counsel for the company apparently 
abandoned the request that the Commission's estimates as set 
forth in its opinion be -corrected, but contended that it should 
be made more abundantly clear in the opinion that such estimates 
were in fact merely estimates, and that if the Commis- 
sion's estimates of expenditures were exceeded in actual opera- 
tion without a corresponding saving in other estimates, the com- 
pany would not necessarily be penalized thereby. Great stress 
was laid upon the necessity of upholding the company's credit in 
the eyes of the investing public in order that capital necessary 
to make the improvements referred to in the petition and for 
refinancing might the more readily be secured, and it was con- 
tended that with the opinion as originally written, such credit 
was more likely to be impaired than strengthened. 

It was also contended that Section four of the order should be 
amended in certain minor particulars. 

After a careful study of the opinion in the light of the above 
criticisms, the Commission is unable to see wherein it is neces- 
sary that it should be corrected or modified in order to make it 
more abundantly clear that our estimates of probable receipts and 
expenditures were in fact merely estimates, and were in no sense 
meant to be limitations upon the company's right to make such 
expenditures for the operation and maintenance of its property 
as might be found reasonably necessary. When the Commission 
states in paragraph after paragraph of an opinion that its 
figures are merely estimates, heads its tables with the statement 
that the figures therein are merely estimates, and then finally 
concludes that portion of its opinion with a clear statement that 
all of its said figures are merely estimates, and that if such esti- 
mates turn out to be materially wrong, steps will be taken at 
once to modify the order based upon the same, it is somewhat 
difficult to see how any reader of that opinion could possibly 

look upon such figures other than as estimates, or conceive them^ 
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04 MARYLAND PUBLIC SERVICE COMMISSION. 

in any way to have been intended as limitations upon the ri^t 
of the company to expend such sums for the operation and main- 
tenance of its property as might be found by actual experience 
to be reasonably necessary. 

In view, however, of the fact that in the haste with which our 
opinion in this case was prepared in order that the new rates 
should go into effect by October 1, 1919, the Commission failed 
to make entirely clear just what balance to surplus the company 
should be permitted to earn under varying conditions in the 
future, we have concluded that it is desirable for us to file a 
supplementary opinion in which our views upon this important 
point will be so clearly set forth that there will be no reasonable 
ground for any misunderstanding as to the same. 

In our original opinion in this case we stated in one place 
that the best interests of the public with respect to the company 
required that it should earn a balance of not materially less 
than one and a half times its fixed charges, or $1,500,000 per 
annum, after the payment of operating expenses, fixed charges, 
taxes and the making of reasonable allowance for its accident and 
depreciation reserves. Subsequently in that opinion we stated 
that the company was entitled to charge rates at the present time 
estimated to yield it a balance to surplus of approximately one 
million dollars after the payment of such expenses and charges 
and the making of such allowances. In that opinion we neglected 
to reconcile these two apparently conflicting statements, with the 
natural result that doubt has arisen as to exactly what may here- 
after be our policy with respect to the rates authorized by the 
order passed pursuant to such opinion. 

[9^ 10] Pending the establishment of fares based upon a 
valuation of the company's property or the adoption of a plan, 
under which fares will be more or less automatically established 
upon the basis of actual cost of the service rendered, it is the be- 
lief of this Commission that an earning capacity of one and a half 
times the fixed charges of the company is reasonable and neces- 
sary and in the interest of the public. But we do not believe 
that the entire burden of earning this surplus should be placed 
upon the public at the present time and under existing circum- 
stances. We feel that a portion of the responsibility for earning 
such balance to surplus should be placed upon the company, and 

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RE UNITED RAILWAYS & E. CO. 65 

that this responsibility can and should be met by the exercise 
of all reasonable economies and efficiences on its part. But the 
Commission is not to be imderstood as undertaking to establish in 
the future rates and fares estimated to yield such a balance to 
surplus of $1,500,000, or to increase existing rates in order that 
they may yield such amount. We merely mean that it is not our 
intent to refuse such earning capacity, provided the company, 
by diligent, sensible economies and good service can produce 
such a surplus. If, in time, the balance to surplus under any 
existing rate of fare, should come to exceed such $1,500,000, the 
Commission, of its own initiative, will proceed to consider the 
propriety of reducing the rates of fare then in force. 

Pending the institution and coming into full effectiveness of 
such economies and increased efficiency, it was at the date of the 
original opinion and is now the view of this Commission that 
the rates of fare authorized to be charged by the company should 
be such as may reasonably be anticipated to yield a balance to 
surplus of approximately one million dollars ($1,000,000) after 
the payment of the company's operating expenses, taxes, fixed 
charges, and the making of reasonable allowances for the main- 
tenance of the property and of its accident and depreciation 
reserves. 

In other words, if, after exercising what may seem to the 
Commission to be reasonable economy and efficiency in the op- 
eration of its property, it appears that the company is unable 
to earn under the established rates such a balance to surplus of 
approximately one million dollars, the Commission stands ready, 
upon request of the Eailways Company, to reconsider the esti- 
mates set forth in its original opinion, and also the rates of fare 
authorized to be charged by our Order No. 5120 passed pursu- 
ant thereto. 

But in fixing $1,000,000 as the minimum balance to surplus 
which the company should be permitted to earn under existing 
conditions, this Commission is not to be understood as under- 
taking to guarantee such balance to surplus at the expense of 
the public at any and all hazards. 

It will be noted that we have conditioned our conclusion as to 
such balance to surplus, first, upon the exercise of reasonable 
efficiency in the operation of the property; second, upon the exer- 

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66 MARYLAND PUBLIC SERVICE COMMISSION. 

cise of reasonable economies; and, third, upon the expenditures 
of no more than reasonable amounts for the majbitenance of the 
property and of its accident and depreciation reserves. 

In our ori<^inal opinion in this case we had occasion to con- 
sider what, in our judgment, would constitute reasonable expend- 
itures for the maintenance of the property and reasonable allow- 
ances for tlie company's accident and depreciation reserves. This 
was necessary in order for us to reach a definite basis on which 
to establish the rates fixed by such order. We nevertheless ap- 
preciate the impossibility of determining in advance the exact 
amount of money to be expended upon any one item, particularly 
in a period of economic readjustment, such as the present. 
Table IV of the original opinion and our other estimates therein, 
are no);, therefore, to be construed as placing a limit upon the 
amount which may be spent by the Railways Company on each 
item, but should be understood as constituting an expression of 
the Commission's opinion as to the sums which would probably 
be necessary. It may be that actual experience will demonstrate 
the need of larger appropriations or expenditures for some of 
the items therein contained, but in any application hereafter filed 
for an increase in the rates prescribed by such order, the com- 
pany must assume the burden of justifying any expenditures in 
excess of our estimates set forth in such opinion. Moreover it 
is the hope of the Commission that if there should be any in- 
crejjsed expenditures in excess of such estimates, such increases 
maj be offset by increased income or by reductions in other 
items brought about by strict economy and greater efficiency 
in operating methods. 

This Commission would not, under any circumstances, feel 

justified in going farther than the above in giving assurances as 

to what will be its future action with respect to any public utility 

subject to its jurisdiction. And especially would we not feel 

so justified in the case of this particular company, as its monthly 

reports since the date of our original opinion and order have 

shown expenditures for maintenance and depreciation so greatly 

in excess of our estimates above referred to, and largely in 

excess of any expenditures heretofore made in like periods on 

account of such items. These reports have been scrutinized 

thoroughly by us as they have been received, and will be fur- 
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RE UNITED RAILWAYS & E. CO. «7 

ther scrutinized and analyzed by us in the event of an applica- 
tion for authority to charge fares in excess of those prescribed 
by our Order No. 5120. For the present we express no opinion 
thereon. 

In view of this reluctance upon our part to commit ourselves 
in advance more definitely upon the specific point of a fare 
increase in the event of expenditures exceeding the estimates up- 
on which our order was based, the Commission feels that both the 
company and the public are entitled to a full and clear state- 
ment of the general policy which we expect to follow with respect 
^to this particular utility during the reconstruction period upon 
which the world at large is now fully entered. 

In our original opinion in this case we discussed at some length 
some of the problems of rate making before, during, and since 
the World War. 

[11] If rates are to be based upon value, they must be based 
npon "fair present value,'^ and conditions are still so far from 
normal that we would not feel justified at the present time in 
accepting present-day prices as conclusive of that fair value 
which should be used as the basis for the making of* rates to le- 
ipain effective for any considerable period in the future. 

On the other hand we would not feel justified in continuing 
longer to fix rates upon the "war emergency" basis, since the 
theory of that method of rate making was merely to preserve 
the status quo ante of the property and business during the period 
of the emergency created by the pendency of the war. 

With the end of the war the time has come when we can no 
longer be satisfied merely to preserve the status quo ante of utili- 
ties subject to our jurisdiction. Eather has the time come for 
the inauguration of a truly constructive policy in the case of 
business enterprises of all kinds, our public utilities included. 

If, before and during the war, there was any uncertainty as 
to the relations which should or would continue to exist be- 
tween the public and our public utilities, now that the war is 
over, it is the time, of all times, when this question should be 
definitely settled, in order that both the utilities and the public 
should know what will be the policy of the state with respect to 
such utilities in the future. Upon no other basis than that of a 
full mutual understanding of the relative rights and obligations 

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68 . MARYLAND PUBLIC SERVICE COMMISSION. 

p^ our public utilities and the public, can the former go ahead 
and do the best there is in them toward rendering adequate service 
at reasonable rates to the public they have undertaken to serve. 

With respect to the particular utility whose affairs are here 
under consideration, this Commission has had little or no diffi- 
culty in determining what should be its policy in the future. 

Practically ever since the creation of the Public Service Com- 
mission of Maryland in 1910, this Commission has had before 
it for consideration questions concerning the property, affairs, and 
operation of the United Railways & Electric Company of Balti* 
more. It is one of the largest public utilities which are fully 
iBubject to this Commission's jurisdiction. As we have pointed 
-out in other of our opinions, its continued operation is of the 
utmost importance to the entire. community which it has under- 
taken to serve. The company's property is one of great value, 
and one which should not be jeopardized or needlessly impaired 
in value by the adoption on the part of this Commission of a 
narrow or illiberal policy with respect to its financial affairs. 

Time and again we have had occasion to consider the question 
of the character of service actually rendered by the company . 
to the public, and as well the character of service which th^ 
property is susceptible of rendering with comparatively minor 
improvements and additions. More recently we have noted on 
the part of the management of the company what has seemed 
to us to be a sincere desire so to operate the property as to render 
the public more adequate service than has been rendered at 
times in the past. This attitude apparently has been based 
upon a growing recognition of the fact that the public has rights 
in our public utilities which must not be subordinated on the 
rights of the owners of the property. 

Our consideration of the company's affairs has extended as 
well to its financial situation and requirements, and this Com- 
mission, from time ^o time in the past, has passed orders author- 
izing the issuance of securities of large aggregate value for the 
betterment of the property and service. 

With this intimate knowledge of the company's affairs, ac- 
quired through a period of what is now nearly ten years, this 
Commission is firmly convinced that the present and future wel- 
fare of this community requires the preservation of the property 
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EE UNITED RAILWAYS & E. CO. «& 

of the company and its continued operation in the service of the 
public not only unimpaired, but in a position to meet all reason- 
able demands incident to the growth of the city and community. 

While the property of this company nominally belongs to 
its stockholders, subject to mortgages held by its bondholders, the 
public itself is interested even to a greater extent than either 
the stockholders or bondholders in the continued proper operation 
and maintenance of such property. 

In the case oi operation, the public is the first to suffer from 
inadequate service. Inasmuch as proper service can never long 
be rendered in any line of business enterprise without reasonable 
compensation, it is incumbent upon the public to pay for the 
kind of service it desires, and such public cannot justly complain 
if it does not receive a character of service better than that for 
which it has paid. 

But the requirements of the public will be by no means fully 
met merely by a satisfactory operation of the company's present 
property and equipment 

The city of Baltimore is one of the most important commercial 
and industrial centres in the country. This growth during the 
past twenty years has been regular and consistent, and has kept 
pace fairly well with our other large cities. During this period it 
has been necessary for the Eailways Company to add to its service 
equipment and property in order that it might keep up with the 
community which it has undertaken to serve. During the war 
the advantages of Baltimore as a commercial and industrial 
center, and as a place of residence as well, came to be appreciated 
to a greater extent than ever before, with the result that a new 
impetus was given to our city and it has now fully entered into 
an era of prosperity and growth the like of which it has never 
enjoyed at any time in the past. But the city cannot continue 
to grow to advantage unless its street railway system continues 
to grow as well and keep abreast in all respects with the com- 
munity which it serves. 

It appears by the petition of the company that it now has 
under consideration plans for the expenditure in the near future 
of three or four millions of dollars in the purchase of some 
three hundred to three hundred and fifty new cars, the im- 

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70 MARYLAND PUBLIC SERVICE COMMISSION. 

provement or reconstruction of approximately 40 miles of track, 
and the general improvement of service. 

This money is to be expended for the benefit of the public. 
The surpli^ which the company accumulated in pre-war times, 
together with the depreciation reserves which had been accumu- 
lated under more favorable conditions, has been exhausted. 
Therefore the company has no funds at the present time with 
which to make these improvements. Hence this large sum 
must be borrowed, and in order to borrow th^ same the com- 
pany must ivave credit with the investing public. 

It is a well-known fact that there is s^t the present time an 
almost unprecedented demand for money to meet the require- 
ments of the business world of to-day. The high prices being 
paid for commodities of all kinds, with the resulting promise 
of unusually large profits, are stimulating enterprise in almost 
every line of business endeavor. Foreign governments as well 
as our own government are offering higher rates of interest for 
the use of money than they have paid for generations past The 
securities of large and hitherto most prosperous public utilities 
throughout the country are being bought in the open market at 
abnormally low prices in order that purchasers thereof may 
assure themselves of an interest yield materially in excess of the 
return with which they were satisfied prior to the war. The 
• daily papers are full of oilers of all kinds of securities issued by 
business enterprises of the highest standing, and which are so 
much in need of money for further developments that they are 
willing to pay unusually high prices for the use of the same. 

Companies with assets in some instances of a value several 
times in excess of their outstanding obligations and with assured 
earnings three, four, five and six times their interest charges, 
are offering 6 and 7 and in some instances as high as 8 per cent 
for the use of funds which to further develop their business. 

With such a demand for the use of money, investors are de- 
manding substantial security for their loans, and are insisting 
that there be both a substantial equity in the property over the 
amount of funded securities and assured earnings largely in 
excess of the aggregate interest charges thereon. If less than 
this is offered, the investors will either decline to make the 
loan upon any terms whatsoever, or will insist upon an abnormal- 

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RE UNITED RAILWAYS & E. CO. 71 

ly high rate of interest in order to compensate them for the 
additional risk taken in making the investment This last means 
either that the interest rate itself must be abnormally high or 
that the securities be sold at a discount which will yield the 
desired rate. 

[12, 13] In the case of a public utility, where securities are 
sold at a discount with the consent of the state regulatory body, 
the utility is entitled to charge the public in addition to what 
would otherwise be the cost of the service, the amount neces- 
sary to amortize such discount during the life of the security. 
Where, on the other hand, the interest rate is made abnormally 
high with the consent of the state regulatory body, good faith re- 
quires that the purchasers of such securities be protected in their 
investment by the fixing of rates which will enable the utility to 
pay such abnormally high rate of interest. 

Thus, in either event, the public is the one to suffer most where 
the financial credit or any of its utilities is so far impaired that 
it is obliged to pay abnormally high prices for the loan of funds 
to be used in improving its property or service for the benefit 
of the public 

It follows that the prospective investors shall be given rea- 
sonable assurances of earnings materially in excess of the com- 
pany's interest charges. ^ 

The present interest charges of the Kailways Company amount 
to approximately three million dollars. It is this Commission's 
judgment that a balance to surplus varying from approximately 
one million five hundred thousand dollars as the maximiim, 
both conditioned as hereinbefore set forth, and the latter subject 
to increase with increases in the company's funded debt, would 
not only provide fair and reasonable compensation to the com-* 
pany for the service which it expects hereafter to render the 
public, but would in addition give lie company such credit with 
the investing public as will enable it to secure upon reasonably 
favorable terms the capital necessary for all its corporate require- 
ments. 

For the reasons herein stated the application of the company 
for a modification of the estimates contained in our original 
opinion will be refused, but inasmuch as it appears that the 

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72 MARYLAND PUBLIC SERVICE COMMISSION. 

changes which the company's, representatives suggested should 
properly be made in paragraph 4 of our Order No. 5120, a new 
order will be passed embodying suoh changes. 



MATSE PUBLIC UTILITIES COMMISSION. 

EE TOWN OF ROCKPORT. 

[R. R. 496.] 

Service — Powers of Commission — Street railways — Safety of 
"bridges. 

1. A bridge erected by a town, over which the location granted by 
the town oflScials carries the tracks of a street railway, is a "bridge 
erected by any municipality" within the meaning of § 77 of chapter 6& 
of the Revised Laws of Maine, prescribing the duties of the Public 
Utilities Ommission with reference to the safety of bridges over which 
street railway tracks are laid. 

Service — Power of m,unicipaUties — Street railways — Repair of 
"bridges, 

2. The charter of a street railway company authorizing the officers 
of a municipality through which 'the road passes, to determine what 
streets and ways the railroad should occupy, and the distance from 
the sidewalk which the tracks might be laid, to determine the rate of 
speed and other precautions with reference to the safety of operation, 
to regulate the removal of snow and ice from the streets, to require 
the street railway company to keep and maintain in repair such 
portions of the streets and ways as were occupied by the tracks of the 
railway, and to require the railway to make other repairs in the streets^ 
roads and ways, which in the opinion of the municipal officers **may 
be rendered necessary by the occupation of the same by the railroad," 
does not authorize the town officials to require the railroad to keep 
in repair a bridge over which the track passes. 

Service — Power of mMnidpalities — Reasonable requirements — 
Legislative intent, * 

3. The intent of the legislature in granting to a street railway 
a charter, and giving to the municipal officers of a town through 
which the railway passes, certain authority, was that the authority 
should be exercised in a proper and reasonable manner. 

Constitutional law — Police pouter — Safety of passengers, 

4. The safety of a passenger in a street car of a street railway 
company which the state has authorized and required to do business 
is within the letter and spirit of the police power. 

Constitutional law — Police power — - Power of legislature to abro* 
gate, 

5. The legislature of a state cannot by any contract derest itself 
of its police power. 

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KE ROCKPORT. 73 

Constitutional law — Impairment of contract — Street railways — 
Maintenance of bridge, 

6. An assent by a street railway company to the grant of a location 
by the' officials of a town, which grant contained a provision requiring 
the railroad company to maintain a bridge in repair so long as the 
tracks crossed the bridge, even if constituting a contract between the 
parties, is not binding as against subsequent action by the legislature 
or Commission. 

Bridges — Rebuilding — Apportionment of costs — Street railways, 

7. The Maine Commission apportioned the expense of rebuilding 
a bridge equally between the town and a street railway company that 
crossed the bridge, where it appeared that the street railway company 
might find it cheaper to change its location and build a bridge at 
another point, rather than to pay the entire expense of the bridge in 
question, thus leaving the town with the entire expense of rebuilding it« 

[October 1, 1919.] 

Information as to the safety of a certain bridge in the town 
of Eockport over which the cars of the Knox County Electric 
Company pass; bridge ordered rebuilt and cost apportioned 
"equally between the town and the street railway company. 

Appearances: Hon. W. T. Cobb, for Knox County Electric 
Company ; H. L. Withee, Esq., for Town of Eockport 

By the Commission : Having been informed that there was 
doubt as to the safety of a certain highway bridge in the town of 
Kockport, known as "the Iron Bridge in Eockport," and passing 
over Goose river, and upon which the electric railroad tracks of 
the Knox County Electric Company are located, the Commis- 
sion, dfeting under the provisions of § 77 of chapter 50 of the 
Revised Statutes required the officers of the Knox County Elec- 
tric Company and of the town of Eockport to attend a hearing 
to be held at the municipal court room in the city of Eockland, 
on August 22, 1919, at 1:30 o'clock. Notice of such hearing 
was given by causing to be served upon an officer of each of the 
above-named parties an attested copy of the notice and order, 
and the electric company and the town of Eockport were repre- 
sented as above indicated. 

At the conclusion of the taking of testimony, upon August 
22d, counsel for the town expressed a desire for further time, 
and the hearing was adjourned to September 3, 1919, at the offi- 
ces of the Commission at Augusta, when further and full oppor- 
tunity for hearing was given. At the adjourned hearing the 
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74 MAINE PUBLIC UTILITIES COMMISSION. 

electric company and the town were represented as at the orig- 
inal hearing. 

The bridge in question is an iron bridge, a part of a highway 
in the town of Eockport, erected by the town about 1884. In 
1889, by chapter 409 of the Private and Special Laws of that 
year, the legislature granted a charter to the Camden and Eock- 
port Street Eailway, and l^ chapter 193 of the Private and Spe- 
cial Laws for the year 1891 the legislature granted a charter to 
the Eockland, Thomaston, & Camden Street Eailway. This 
charter authorized the latter company to buy or lease the Cam- 
den & Eockport Street Eailway, subject to all tte duties, restric- 
tions, and liability of said Camden & Eockport Street Eailway. 
The purchase under this legislative authority was made, and 
very recently the name of the Eockland, Thomaston, & Camden 
Street Eailway has been changed to the Knox County Electric 
Company. 

[1] In 1892 the Camden & Eockport Street Eailway peti-* 
tioned the municipal officers of the town of Eockport under its 
charter for a determination of the route over which it might be 
permitted to lay its tracks and operate its road. The location 
granted took the tracks of the street railway company across this 
Iron Bridge over Goose river, and such tracks have since been 
so located and used by the street railway. This bridge is there- 
fore to-day a ^T}ridge erected by any municipality, over which 
any street railway passes," as referred to in § 77 of chapter 56 
of the Eevised Statutes. 

The Commission therefore proceeded upon the theory that it 
had a right and it was its duty to conduct an investigation to 
determine whether such bridge so used required any "repairs^ 
lenewals, or strengthening of parts, or, if necessary, the . . . 
rebuilding such bridge, required to make the same safe for the 
uses to which it is put" In other words, we assumed that here 
was a highway bridge erected by a municipality, over which a 
street railroad passed, and concerning the safety of which we 
had received information which seemed to make it necessary for 
us to conduct an investigation to the end that we might deter- 
mine whether the bridge as used was safe for the passengers who 
might be riding in the cars of this public utility over a bridge 
used by such public utility. We caused our engineering force to 

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RE ROCKPORT. 76 

make a careful survey, investigation, and study of the bridge 
and its then present condition. These engineers had the benefit 
of a previous study and investigation by the engineer of this 
Commission, who examined the bridge in 1916, and of a more 
recent investigation and study conducted by the very eminent 
engineering firm of Fay, Spofford & Thomdike, made during the 
spring of the present year. 

The report submitted to us in 1916 as a result of an exami- 
nation by our engineering department indicated that the bridge, 
while not then safe for unrestricted use, was, nevertheless, in 
Fuch a condition that traffic of all kinds should be carried on un- 
der reasonable restrictions and provisions for safety. It is our 
understanding that the street railway company and the town care- 
fully followed out the recommendations contained in this earlier 
report The electric company, in the interest of the safety of its 
traveling public, early this year felt that a very full investiga- 
tion and study of the bridge should be made, and employed the 
services of Fay, Spofford & Thomdike, and a copy of their report 
was presented to us prior to the independent investigation which 
this Commission made. This report indicated that the bridge as 
used was unsafe and constituted as used a menace to travelers 
upon lie street railway and upon the highway. The report of 
(#ur engineers confirmed the opinion expressed by Fay, Spoffo^'d 
& Thomdike as to the condition of the bridge. It therefore, in 
our judgment, became necessary to call the parties together and 
determine what repairs, renewals, strengthening of parts or r€^ 
building was necessary in order to make the stmcture s^fe for 
the uses to which it was being put and would be put. 

It appears that some years ago the street railway company ex- 
pended a considerable sum in strengthening that part of the 
"bridge occupied by its tracks. The report of Fay, Spofford & 
Thomdike and of our engineers indicate that this part of the 
bridge is now safe for street railway uses, and if all the highway 
travel could be diverted to this part of the bridge the stmtture 
would also be safe for highway travel. But long-continued use, 
and the natural wear and decay incident to such use, and the pas- 
sage of time, has rendered that part of the bridge designed for 
highway use in such condition that it is no longer safe for the 
kind of highway traffic which customarily passes over it, and be- 
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76 MAINE PUBLIC UTILITIES COMMISSION. 

cause of this condition of nonsafety that part of the bridge used 
by the street railway is also rendered dangerous for use, because 
of the fact, well understood, that if during use that part employed 
in highway traffic should fail and should fail at a time when it 
was being used by the electric street railway, such failure would 
result in disaster as well to the occupants of the electric cars as to 
those persons who at the moment chanced to be using the highway 
part. It follows that t&e whole structure as used is unsafe, and 
unless traffic can be entirely diverted to the street railway side 
the bridge must be either thoroughly repaired or entirely rebuilt. 
No one suggests that it would be practicable to close up that part 
of this bridge which is how used for highway traffic and divert 
all of the traffic to the street railway side. Such a practice would 
create congestion and invite accidents. 

The entire evidence relating to the condition of the bridge is 
before us. This consists of the 1916 report of our own engineer, 
the report of Fay, Spofford & Thorndike, dated May Slst, this 
year, and the report of our own engineer, filed with us August 
21st, this year, together with oral testimony introduced at the 
two hearings. No attempt on the part of the town was made to 
dispute or modify the engineering reports, and we do not under- 
stand that the town seriously contends that the bridge is now safe 
for the uses to which it must be put. It follows that if we have 
the necessary legal authority we should order something done to 
this structure to make it safe for such uses. The town challenges 
our jurisdiction and authority to require anything to be done, 
any part of the expense of which is to be borne by the town of 
Eockport We do not understand that our authority to require 
the bridge to be put in a safe condition is at all questiojied, but 
the objection of the town of Eockport is directed to our authority 
to proceed under the provisions of § 77, chapter 56 of the Eevised 
Statutes, to the extent of apportioning the expense of any repairs, 
etc., between the railroad company and the town, asserting that 
by Mason of what is called a contract between the street railway 
and the town the street railway has obligated itself to make all 
repairs upon this bridge so long as it uses the same for street rail- 
way purposes. 

The foundation for this claim is based upon a record of the 

town of Eockport which relates to the action of the municipal 
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RE ROCKPORT. 77 

officers upon the petition of the Camden and Rockport Street 
Railroad Company to fix and determine the streets and ways 
upon which said railroad should enjoy and exercise its charter 
rights. The record of the action of the municipal oJ0Bcers is dated 
February 11, 1892, and after describing the route as to streets 
and ways over which tracks of the street railway might pass, con- 
tains this paragraph : 

"The condition on which said location is granted is, first, the 
iron bridge shall be put in repair, strengthened and kept in repair 
(the foot walk and abutments excepted) so long as said track 
crosses said bridge, at the expense of said street railroad com- 
pany, and the Berlin Iron Bridge Company is to be employed to 
strengthen said bridge." 

The record also shows the following: 

"The Camden & Eockport Street Railroad Company assents to 
the foregoing location. Rockport, February 11, 1892. 

"H. L. Shepherd, Pres.'^ 

The town, through its learned counsel, claims to the Commis- 
sion that this grant of authority to use the bridge upon the con- 
ditions above set forth constituted a valid contract between the- 
town and the street railway, and that this contract is still in f orcCy 
because of the fact that the tracks of the railway still pass over 
the bridge ; that such contract is binding between the town andl 
the street railway; that this Commission has no authority what- 
ever to issue any order which will impose upon the town any fi- 
nancial burden in the repair or rebuilding of this bridge; and 
tliat if the bridge is to be repaired or rebuilt it must be done en- 
tirely at the expense of the street railway. 

This raises a very clean-cut and very important legal proposi- 
tion. 

It is first, perhaps, advisable to see what was the status of the 
law with reference to street railways at the time of this action 
of the municipal officers. We of course first have the charter of 
the street railway, and such law as existed with reference to the 
powers and duties of towns in general, and (if any such existed} 
any special authority granted to the town of Rockport either 
through the charter of the street railway or in any other way. At 
the time of this action by the town of Rockport there was no gen- 
eral street railway law. The first legislation in this state with 
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78 MAINE PUBLIC UTILITIES COMMISSION. 

reference to street railways is found in chapter 268 of the Public 
Laws of Maine for the year 1893. Section 6 of this act was 
amended by chapter 249, § 2 of the Public Laws of Maine for 
the year 1897, so that it stood and now stands in its present form 
as § 7 of chapter 58 of the Revised Statutes of 1916. This sec- 
tion relates to the approval of the location of a street railroad, 
and in its particular application to the case we are considering 
applies to the permission to be granted a street railroad to cross 
a public bridge already erected. This section provides: "But 
the authority to determine whether such crossing shall be per- 
mitted shall rest with the municipal officers of the cities or towns 
liable for the repair of said bridges respectively, who may impose 
such conditions and terms upon railroads desiring to cross the 
same as to them may seem expedient.'* 

Section 8 of the same chapter, originally chapter 132, § 1, 
Public Laws of 1907, relates to the application to the municipal 
officers for apprpval of proposed. route and location, and contains 
this provision: "Any contract entered into between any such 
street railroad corporation and such municipal officers as to the 
t^rms, conditions, and obligations under which such location is 
approved so 'far as consistent with the powers and duties of the 
Public Utilities Commission under the general laws of the State, 
shall be valid and binding.'* 

That which is now § 77 of chapter 56 of the Revised Statutes 
was originally chapter 72, § 3, Public Laws of 1895. 

We thus find that when the town of Eockport acted upon the 
application, of the street railway there was no general street rail- 
way law, §§7 and 8 of chapter 58 of the Eevised Statutes relat- 
ing to the approval of the location and proposed route of street 
railways had not yet been enacted, and § 77 of chapter 56 of the 
Revised Statutes (the section under which we are proceeding) 
had not then been enacted as law. 

[2] We must then, for the moment, at .least, take the charter 
of the electric railway and such law as then existed and determi^ie 
whether upon February 11, 1892, the town of Eockport had au- 
thority to impose the conditions as to the use of the bridge above 
iset forth ; whether such action by the town, and whatever action 
the railway took, constituted a valid and binding contract under 
the law as it then existed ; and finally determine whether even if 
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RE ROCKPORT. 79 

an affirmative answer must be returned to the first two proposi- 
tions such contract was of a character the performance of which 
must be fully carried out no matter what changes in the organic 
law the legislature might from time to time make. 

The charter provides that the street railway shall have author- 
ity to construct, maintain, and use a street railroad "upon and 
over such streets and ways as shall from time to time be fixed 
and determined by the municipal officers of said town of Camden, 
and assented to in writing by said* corporation . . . provided, 
however, that all tracks of said railroad shall be laid at such dis- 
tances from the sidewalks of said town as the municipal officers 
thereof shall, in their order fixing the routes of said railroad, de- 
termine to be for public safety and convenience. The written 
assent of said corporation to any vote of the municipal officers of 
said town prescribing from time to time the routes of said rail- 
road, shall be filed with the clerk of said town and shall be taken 
and deemed to be the location thereof." 

Section 2 of the charter provides that the municipal officers 
cf the town shall have power to make regulations as to the rate 
of speed, the removal of ice and snow from the streets, and the 
mode of the use of the tracks of said railroad within the town in 
accordance with safety and convenience of the public. 

Section 3 of the charter is as follows : 

"Section 3. Said corporation shall keep and maintain in re- 
pair all such portions of the streets and ways as shall be occupied 
by the tracks of its railroad, and shall jaake all other repairs of 
said streets, roads and ways, which in the opinion of the munici- 
pal officers of said town may be rendered necessary by the occu- 
pation of the same by said railroad, and if not repaired upon 
reasonable notice, such repairs shall be made by said town, at the 
expense of said corporation." • 

We do not find in the charter any other provisions which in 
any way apply to the matter we are considerings 

Did any of these provisions give to the town authority to im- 
pose the condition above set forth ? Did the assent of the street 
railway to the "foregoing location" above referred to bind irrev- 
ocably the company to the aforesaid condition ? Was the result 
of this grant of location upon condition and the above assent of 

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80 MAINE PUBLIC UTILITIES COM^SSION. 

the company such as to require the street railway to repair or, 
if necessary, rebuild this bridge entirely at its own expense ? 

"If the town of Eockport did not acquire from the above- 
quoted charter provisions authority to impose and enforce this 
condition as above outlined, "W^as there in the law as it then ex- 
isted with reference to towns in general or the town of Eockport 
in particular, any such authority? Our attention has not been 
called to any particular provision with reference to the town of 
Eockport nor are we aware of any such. 

Viewing the charter provisions in a light most favorable to the 
town of Eockport, we do not find anything which authorized the 
town to arbitrarily and without the consent of the street railway 
impose upon the latter the condition contained in the copy of the 
record above set forth. The authority of the municipal officers 
gave them power to determine what streets and ways the railroad 
should occupy and the distance from the sidewalk which the 
tracks might be laid. It gave them also authority to determine 
the rate of speed and other precautions with reference to safety 
of operation, and also gave them authority concerning the remov- 
al of snow and ice from the streets. Section 3 gave the munici- 
pal officers authority to require the street railway to keep and 
maintain in repair such portions of the streets and ways as were 
occupied by the tracks of the railway, and further authority to 
require the railway to make other repairs in the streets, roads, 
and ways which in the opinion of the municipal officers *^ay be 
rendered necessary by the occupation of the same by said rail- 
road/' This, of course, means that the municipal officers must 
at all times act in accordance with a reasonable discretion and 
could not, against the consent of the street railway, impose an 
unreasonable condition or restriction. 

[3] We a» therefore compelled to ask ourselves whether the 
railroad consented or assented to the above condition to the ex- 
tent of making itself a party to a contract (assuming that author- 
ity to make one existed in both the town and the street railway). 
The only assent to which our attention is called is the one re- 
corded, and is in this language: "The Camden & Eockport 
Street Eailroad Company assents to the foregoing location/* 
This assent appears of record directly after the record of the ac- 
tion of the municipal officers, which record contains the condition 

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KE ROCKPORT. 81 

with reference to the repair of the Iron Bridge. Is that condition 
properly a part of the "foregoing location'' to which the street 
railway assented in writing ? Did the legislature when it granted 
the charter of the street railway company intend that the town 
of Eockport could impose and the street railway assent to any 
condition, no matter how burdensome it might be, no matter how 
unreasonable it might be, and no matter how out of keeping with 
usual practice it might be ? . ' 

The question of legislative intent is finally for the courts and 
as an administrative arm of the legislature we dislike to enter 
the field properly reserved for the courts. In this instance, how- 
ever, it seems necessary for us to determine, for ourselves at least, 
what was the legislative intent in this matter. We cannot s<top 
with this particular charter, and we cannot enter and examine 
the minds of those legislators who granted the charter. We can, 
however, examine subsequent acts of the legislature relating to 
the same subject-matter, and in that way perhaps determine what 
was the legislative intent. Looking at § 7 of chapter 58 of the 
Eevised Statutes (originally chap. 132, § 2, Laws of 1907) we 
find that the legislature seems to have placed in the municipal 
officers of cities or towns authority to impose such conditions and 
terms upon railroads desiring to cross a public bridge as to such 
municipal officers might seem expedient. But in the same ye^r 
(Laws 1907, chap. 132, § 1) the same legislature provided that 
any contract entered into between a street railroad and the mu- 
nicipal officers of a town as to the terms, conditions, and obliga- 
tions under which the location of the street railway is approved, 
should be consistent with the powers and duties of the public 
regulatory body having to do with such matters under the general 
laws of the state. 

It therefore seems to us that the intent of the legislature in 
granting to the street railway a charter and giving to the munici- 
pal officers of the town of Eockport certain authority was that 
the authority should be exercised in a proper and reasonable man- 
ner, and that no authority was granted to the municipal officers 
to impose, against the consent of the street railway, unreasonable 
and hence unlawful conditions. 

But the town goes a step farther and says that even if this be 
true there was no law which prevented the street railway from 
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82 MAINE PUBLIC UTILITIES COMMISSION. 

accepting any conditions and entering into a contract to perforai 
the same for all time, and they say that the above-recorded assent 
to the location constituted a consent upon the part of the railroad 
to the location with the conditions attached and resulted in a con- 
tract which then was, ever since has been, and now is binding 
upon the parties to the same. 

Resolving in favor of the tovm any doubts which may exist 
(and there are many such) as to the authority of a town under 
the law as it then existed, to enter into this kind of a "contract," 
we are led to ask ourselves whether such a contract is of so invio- 
lable a character as to preclude the state, acting under its police 
powers and through its legislature, from enacting laws which will 
render the further performance ,of such a contract from a given 
time unlawful. Hence if we assume that the above record of the 
town of Rockport discloses a valid contract, binding between the 
parties thereto, we must even then, go further and look at the law 
as it exists to-day and determine whether the further perform- 
ance of that contract is contrary to the law as it exists; and 
whether the law as it exists to-day if enforced and resulted in the 
annulment or modification of this contract would violate any le- 
gal or constitutional right of the town of Rockport. 

[4, 5] The police power of the state has been variously defined. 

From among the many definitions we select the following : 

"The power which inheres in the state and in each political 
division thereof to protect by such restraints and regulations as 
are reasonable and proper the lives, health, comfort, and prop- 
erty of its citizens." 

"As understood in American constitutional law, means simply 
the power to impose such restrictions upon private rights as are 
practical and necessary for the general welfare of all." 

"Nothing more nor less than the power of government inher- 
ent in every sovereignty, that is to say, the power to govern men 
and things." 

"The power vested in the legislature by the Constitution to 
make, ordain and establish all manner of wholesome and reason- 
able laws, statutes and ordinances, either with penalties or with- 
out, not repugnant to the Constitution as they shall judge to be 
for the good and welfare of the commonwealth and for the sub- 
jects of the same." 
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HE ROCKPORT. 83 

Whatever definition may be adopted* there can seem to be no 
Teasonable doubt as to the proposition that the safety of a pas- 
senger in the street car of a public street railway corporation 
which the state has authorized and required to do business is 
within the letter and spirit of the police power. This police 
power, whether reviewed in its broad or its restricted sense, is 
regarded as inalienable. We know of no court but what has lield 
that the legislature cannot by any contract devest itself of its 
police power. See 8 Cyc. 865-966. 

Some courts go to the extent of holding that the state may 
reassume authority or power delegated to a municipality, 28 
Cyc. 694, note 81. 

It is also held that the legislature may repeal a municipal or- 
dinance by passing a law absolutely inconsistent with its letter 
and spirit. 28 Cyc. 290; Southport v. Ogden, 23 Conn. 128; 
Marietta v. Fearing, 4 Ohio, 427. 

As to the authority of the state to regulate and control public 
utility corporations, it is held that "the state has plenary power 
to regulate all quasi-public corporations after as well as before 
their organization, in the exercise of theii' public functions.^' 28 
Cyc. 851. 

In Raymond Lumber Co. v. Raymond Light & Water Co. 92 
Wash. 330, L.R.A.1917C, 574, P.U.R.1916F, 437, 159 Pac. 
133, the court say: "The rule is that contracts upon subjects 
which are within the police power, even though valid when made, 
must be taken to have been entered into in view of the continuing 
power of the state to control rates to be charged by public service 
corporations. ... So far as we are informed there is no re- 
ported decision of any court which would sustain the doctrine 
that the right of the state to exercise its sovereign power, such as 
the^ police power, can be limited by private contract.'* 

In Philadelphia, B. & W. R. Co. v. Schubert, 224 U. S. 
603, 56 L. ed. 911, 32 Sup. Ct Rep. 911, 1 N. C. C. A. 892, 
the court say: "To subordinate the exercise of the Federal au- 
thority to the continuing operation of previous contracts, would 
be to place, to this extent, the regulation of interstate commerce 
in the hands of private individuals and to withdraw from the 

control of Congress so much of the field as they might choose*by 
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84 MAINE PUBLIC UTILITIES COMMISSION. 

prophetic discemment to' bring within the range of their agree- 
ments. The Constitution recognizes no such limitation.** 

In Louisville & N. E. Co. v. Mottley, 219 U. S. 467, 65 L. 
cd. 297, 34 L.RA.(KS.) 671, 31 Sup. Ct. Eep. 265, the court 
say: "If the legislature had no power to alter its police laws 
when contracts would be affected then the most important and 
valuable reforms might be precluded by the simple device of en- 
tering into contracts for the purpose." 

In the case of Cowley v. Northern P. K. Co. 68 Wash. 558^ 
41 L.RA. (KS.) 559, 123 Pac. 998, the court say : "The plain- 
tiff conveyed the property to the defendant upon the faith of de- 
fendant's promise to perform conditions which were then wholly 
lawful but which, after a substantial part performance, became 
unlawful without any contributing cause upon the part of 
either. '* And later in the same case the court say : "Contracts 
even as between individuals, when entered into, are necessarily 
subject to the control of the police power of the state, whenever 
such contract relates to matters which are or may be subject to 
' the exercise of such powers.'* 

In Manigault v. Springs, 199 U. S. 473, 50 L. ed. 274, 2ft 
Sup. Ct Eep. 127, the court say : "It is the settled law of this 
6ourt that the interdiction of statutes impairing the obligation of 
contracts does not prevent the state from exercising such powers 
as are vested in it for the promotion of the common weal, or are 
necessary for the general good of the public, though contracts 
previously entered into between individuals may thereby be af- 
fected. This power, which, in its various ramifications, is known 
as the police power, • • . is paramount to any rights, under 
contracts between individuals." 

In Hewett v. Canton, 182 Mass. 220, 65 N. E. 42, the court, 
speaking of the right of the exercise of the police power, say : 
The rule applies with all the more force to changes of the teiins 
of municipal ordinances granting rights to public utility com- 
panies, so far as concerns the rights of the municipalities them- 
selves, because of the fact that in fixing the terms the municipal 
authorities do not act for the local interests of the municipality, 
'Tjut as public officers exercising a quasi-judicial authority.'^ 

In Chicago & A. E. Co. v. Tranbarger, 238 U. S. 67, 76, 69 
L. ed. 1204, 1210, 35 Sup. Ct. Eep. 678, it is held that the sub- 

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/KE ROCKPORT. 85 

ordination of existing contracts to the exercise of the poKce power 
does not contravene the rule against the impairment of contracts, 
but "that this power can neither be abdicated nor bargained 
away, and is inalienable even by express grant, and that all con- 
tract and property rights are held subject to its fair exercise." 

In Northern P. K. Co. v. Minnesota, 208 U. S. 583, 52 L. 
ed. 630, 28 Sup. Ct. Kep. 341, the court says : "But the exercise 
of the police power cannot be limited by contract for reasons of 
public policy, nor can it be destroyed by compromise, and it is 
inmiaterial upon what consideration 1;he contracts rest, as it is 
beyond the authority of the state or the municipality to abrogate 
this power so necessary to the public safety." 

And our own state court in Boston & M. K. Co. v. York Coim- 
ty, 79 Me. 386, say: "This power of the legislature to impose 
imcompensated duties and even burdens, upon individuals and 
corporations for the general safety is fundamental. It is the 
^police power.' . . . This duty and- consequent power, over- 
ride all statute or contract exemptions. The state cannot free 
any person or corporation from subjection to this power. All 
personal as well as property rights must be held subject to the 
police power of the state. . • . Its exercise must become 
wuder, more varied, and frequent, with the progress of society. 
• . . When the party or property affected, though private in 
its character; yet has a public relation, the opa'ation of the police 
power is still more extensive and frequent. , . • 

Has the state devested itself of the exercise of the police power 
in this case ? 

Upon this point, the court in Milwaukee Electric E. & Light 
Co. V. Railroad Comrs. 238 U. S. 174, 59 L. ed. 1254, P.U.E. 
1915D, 591, 35 Sup. Ct. Rep. 820, says: "It has been uniform- 
ly held in this court that the renunciation of a sovereign right 
of this character must be evidenced by terms so clear and un- 
equivocal as to permit of no doubt as to their proper construction. 

In Winfield v. Public Service Commission, — Ind. — , P.TJ.R. 
1918B, 747, 118 K E. 531, the court said: "Therefore the 
municipality, so far as affects the public welfare, acts, in grant- 
ing franchises to public service corporations, as the agent of the 
state, and cannot bind the state beyond the authority delegated 
by the state to the municipality in that respect, . . . The 

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66 MAINE PUBLIC UTILITIES COMMISSION. 

state may deprive itself of the power to exercise this power by 
granting directly to the public service companies in charters, or 
by franchises, freedom from the exercise thereof; but inasmuch 
as such grant of freedom is in derogation of common right, it is 
never presumed to have been made by the state, and the state will 
not be held to have abandoned the right to exercise its police 
power, unless the state's intention so to do is expressed 'in terms^ 
so clear and unequivocal as to exclude doubt ; and if doubt exists,^ 
it must be resolved in favor of the state." 

Very many other decisions of the same effect might be -found 
and cited, but we regard this phase of the matter as being too- 
well settled to require any such further citations. 

[6] And we come back to our original proposition, whether 
the location which the town of Eockport caused to be recorded 
in its books and which contained the condition set forth earlier 
in this decision, and which location was assented to by the street 
railway company, constitutes, first, a contract, and second, one 
which would be binding upon the legislature in the exercise of its 
police powers. 

Upon the first proposition it might be urged that both the town 
and the street railway in doing the things which they did do, as 
disclosed by the aforementioned record, were no more than com- 
plying with a law of the state, and that such compliance, if car- 
ried out in a lawful manner, could not constitute a contract in 
the ordinary acceptation of the term ; and that if the provisions 
of the law were not carried out in accordance with those provi- 
sions, then the acts actually performed were without warrant or 
authority of law, and could not be made the basis of a contract. 

But for the purposes of this case it may be assumed that a con- 
tract, so-called, was actually consummated, and the question then 
is raised whether the legislature was bound by the same and this 
Commission is now bound by the so-called contract; or by the law 
as the l^slature from time to time has since enacted the same. 
We are convinced that the town and the street railway are both 
bound by the provisions of § 77 of chapter 58 of the Revised 
Statutes, and that the so-called contract is no bar to any proper 
action which this Commission may take thereunder. The legis- 
lature, in view of the changed and changing conditions with ref- 
erence to the street railway industry, found it necessary to make 
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RE ROCKPORT. 87 

provision for the safety and convenience of those travelers who 
were to be served by such street railways. Any law of the state 
in conflict with such later provision must give way. Any con- 
tract, however solemnly and in good faith entered into, must yield 
to the law, and its further performance must be either absolutely 
prevented, or carried out in accordance with the law as it existed 
at any given time when rights under the contract were set up and 
urged. 

As the Commission finds the law to-day, it is its duty to not 
only make determination with reference to the safety of thia 
bridge and make provision for its repair or rebuilding if found 
to be unsafe, but we are also obliged to determine how the ex- 
pense shall be paid. 

[7] Section 77 of chapter 58 provides that the expenses of 
any repairs, renewals, strengthening or rebuilding may be borne 
by, either one or the other of tlie interested parties solely, or they 
may be apportioned, indicating that the legislature fully appreci- 
ated conditions which might be present and which would equi- 
tably require a fair division of the expense. In the pending case. 
Should the street railway pay the entire bill or should there be 
an apportionment of the expense between the railway and the 
town? 

As already pointed out, that portion occupied by the street 
railway is safe for street railway uses. If the bridge is to be 
rebuilt because of the weakened condition of the highway por- 
tion, the railway Vill be put to an expense which would not have 
to be incurred if the highway portion had been put and kept in 
the same repair as the street railway portion. 

Who uses the highway portion of this bridge? Is it the people 
of Eockport and that immediate vicinity ? Formerly this would 
undoubtedly be the case. To-day, and, so far as we can see, for 
all time, this highway bridge as other highway bridges in the 
state will be used not only by local people but by people coming 
in automobiles from every state in the Union. The use of our 
highway bridges has thus become more than ever a state use, and 
it was in recognition of this fact that the legislature of 1915 
enacted a law under which towns mij^ht obtain state and county 
aid in the construction of highway bridges?- In the present case, 
as we understand it, the town of Rockport, lT it is to pay any 

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88 MAINE PUBLIC UTILITIES COMMISSION. 

portion of the expense of rebuilding this bridge, may apply to 
the county and to the state for the aid provided for, and if such 
aid be granted the town of Rockport will pay 50 per cent of what 
would otherwise be its share of the cost to-day of rebuilding this 
bridge. 

But whether the aid so provided for may be obtained or not, 
it is not, in our judgment, equitable and fair to require this 
street railway to pay the entire expense. The only way that the 
street railway can obtain money to pay for the whole or a part 
of the expense of rebuilding this bridge is through its patrons. 
These patrons are more likely to be local people than are the 
ones who use the highway part of the bridga In this respect 
and to this extent it would not be fair to place the entire cost of 
this rebuilding upon these patrons of the electric railway. Fur- 
thermore, if an attempt should be made to require the electric 
railway to stand the entire expense that corporation might well 
conclude that it was far cheaper to seek to change its location to 
a point where, by constructing a bridge for itself, it could still 
carry on its public duties and at a much less expense than would 
be necessary to produce a bridge for the joint use of the highway 
traveling public and those upon the electric railway. In this 
event the town would still be obliged to provide a safe highway 
bridge and would have to stand the entire expense. 

So, looking at the matter with the rights and duties of both 
parties in mind, it seems neither more nor less than equitable and 
fair to provide for an equal division of the exp^ise of rebuilding. 

We have thus far spoken only of rebuilding. We do so for the 
reason that engineers advise us that repairs which would be 
necessary to place this bridge in a condition which would render 
it safe for use would in cost so nearly approximate the expense 
of a new bridge that it is unwise to for a moment think of re- 
pairs. We accept the judgment of these engineers and conclude 
that a rebuilding is necessary. 

At thp hearing suggestion was made that the abutments might 
be placed somewhat nearer together than those carrying the ex- 
isting bridge, and the actual space to be bridged shortened up by 
filling in on either side of the river and erecting a much shorter 
bridge. We call attention to this matter in order that when plans 
are made this suggestion may be acted upon if found feasible. 

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RE ROCKPORT. 89 

If the town of Rockport concludes to ask for county and state 
aid in rebuilding this bridge it is not unlikely that the state will 
desire that the engineers of the State Highway Commission make 
the plans, and it is probable that the street railway will have no 
serious objection. We cannot, however, determine what the to\vn 
of Rockport may conclude to do. We shall, therefore, have to 
provide that the street railway prepare and present to the town 
of Rockport and to this Commission plans for such a bridge as 
will be safe for the joint use at this place for highway and street 
railway traffic. If, instead of the railroad preparing and pre- 
senting the plan, it can be agreed upon bnetween the town and' the 
street railway that some other method of producing the plans is 
more satisfactory, then the Commission will consider such plans 
as are presented and give its approval or disapproval as to such 
plans when the same are presented. 

So long as the bridge is to be used in its present condition there 
must be such a use as is in keeping with its present condition. 
We have no absolute control over highway traffic. This traffic is 
at times very heavy. Lime rock in considerable loads is hauled, 
there are one or more local trucks, such as the Standard Oil truck, 
which carry heavy loads, and there is other heavy vehicular 
traffic. We understand that the selectmen of the town of Rock- 
port are perfectly willing to take up with the lime rock people 
and the trucking concerns the matter of use of this highway 
bridge until such time as it is reconstructed. We recommend to 
the town officials that they arrange, if possible, with those parties 
who are hauling lime rock and those who are locally engaged in 
the use of trucks, to observe, before entering upon this bridge, 
whether there is any street railway traffic, and if any such is 
found to be at the moment using the bridge the lime rock teams 
and trucks should stay off until the bridge is no longer occupied 
by the street cars. 

So far as the street railway is concerned, the officials should at 
once instruct their motormen with reference to the use of the 
bridge when there is any considerable vehicular traffic thereon. 
Such instructions should be to refrain from going onto the bridge 
at any time when there are one or more lime rock teams or one 
or more heavy trucks. These instructions should be positive to 
eaxjh motorman. We also feel that the railroad must restrict the 
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90 MAINE PUBLIC UTILITIES COMMISSION. 

loads which it can carry upon this bridge to a maximum load of 
20,000 pounds in addition to the car upon which the load may bo 
hauled, such load to be hauled across the bridge by an empty 
freight motor car of the company. No greater load than thia 
should be permitted. The speed of cars on the bridge should not 
exceed 5 miles per hour. 



MISSOURI PUBiiio service: commission. 

EE BEVIER TELEPHONE COMPANY. 

[Case No. 1880.] 

Discrimination — Rates — Telephones — Tteduoed rates to profess 



sional nien* 



i 



1. It is a discrimination to give to professional- men a rate for 
buflineas telephones lower than that given to other business sub- 
scribers. 

Bates — Telephones — SuHtching farm lines — Folua and cost of 
service. 

2. Owners of farmers' telephone lines receiving switching service 
should be required to pay what such service is reasonably worth, 
although such amount may be in excess of what the rendering of the 
service costs the telephone company. 

Rates — Factors — Value of service. 

3. The mere fact that patrons have been given a service for years 
at an extremely low charge should not prevent a Commission from 
fixing a charge based on what the service is reasonably worth, although 
the increase will amount to 100 per cent. 

[July 9, 1919.] 

Trotobtsd increase in telephone rates; granted. 

By the Commission: On November 7, 1918, the Bevier Tele- 
phone Company filed with the Commission its P. S. C. Mo. No. 
2, canceling P. S. C. Mo. No. 1, for exchange and rural line 
service connected with its exchange at Bevier, Missouri, effective 
January 1, 1919, making the following changes in the rates; 
P.U.R.1920A. 



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RE BEVIER TELEPH. 00. 



91 



Exchange. 


-No. 


Present 
Rate. 


Proposed 
Rate. 


BiisinesSt direct line ••• 


27 
2 

10 

11 

165 

109 

87 


$2.00 
1.00 
1.50 
1.00 
1.00 
1.00 

.25 


$2 25 
1.50 


Business, 2-party line 


Business, direct line (Prof.) 

Business, mine line 


1.25 


Residence, direct line 


1.25 


Residence, party line 


1.00 


Rural. 
Claas A, switching 


.50 






Total 


401 





• An increase of $942 in the annual revenue will be obtained if 
the increase as asked be allowed. 

A number of protests from the subscribers were received by 
the Commission against the proposed increase. The Commis- 
sion accordingly on the 16th day of December, 1918, issued 
its order suspending the effective date of the schedule for a 
I)eriod of one hundred and twenty days, to and including April 
30, 1919, unless otherwise ordered by the Commission, and on 
the 18th day of April, 1919, by supplemental order No. 1, 
further suspended the effective date for a period of six months, 
to and including October 31, 1919, unless otherwise ordered by 
the Commission. 

On May 7, 1919, a public hearing was held in Bevier by 
Special Examiner C. B. Bee, at which the company was repre- 
sented by Attorneys George N. Davis and Waldo Edwards, and 
the protestants by Attorney W. L. Simpson. All the evidence 
was then heard, and the case is therefore before the Commission 
upon that evidence. 

The Facts. 

[1] The population of Bevier is about 1,900. The com- 
pany furnishes service to 314 exchange subscribers, and switches 
87 rural subscribers, but owns no rural lines. The company, 
however, owns and maintains a party line furnishing service to 
the coal mines, on which it serves eleven subscribers. This 
service is designated as "business mine line." Some few of the 
exchange subscribers are being furnished metallic line service, 
but the greater number receive grounded line service. One of 
the proposed changes in the rates is the doing away with the 

P.U.R.1920A. 



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92 MISSOURI PUBLIC SERVICE COMMISSION. 

"direct line professional rate'* of $18 per annum. This for 
the reason that it is a discrimination to allow a particular class of 
business to enjoy a rate different from that charged others for 
the same class of service. The other changes are 25 cents per 
month for direct line business service, 50 cents per month for 
two-party line business service, 25 cents per month for business 
line service, 25 cents per month for direct line residence servii^e. 
and 25 cents per month for class A, or switching service. 

The principal objection came from the subscribers of tho 
last-named service. They based their contention on the fact 
that they kept up their lines and equipment, the company re- 
ceiving Ihe revenue derived from chaises made to parties who 
had occasion to talk over their lines, and that the company w«i4 
only furnishing them with a line within the city limits and 
operators' service. 

The testimony was to the effect that the gross revenue for 
the year 1918 was $4,805.94, and the operating expense $4,- 
203.52, with no allowance for depreciation or return on the 
investment, leaving a balance of $602.42 for this purpose. 
The company when filing its application placed a value of $21,- 
614.50 upon its entire plant, and the president in his testimony 
gave $21,623.90 as the value on December 31, 1918 ; but there is 
nothing in the testimony or in the statements filed that in any 
manner shows the source of this information. 

Taking the value of the plant as given would show a value 
of $68.86 per station for each of the 314 subscribers stations in 
the plant, which amount is above that usually found for a plant 
the size of the Bevier exchange. 

The Commission has not made a valuation of the Bevfer 
exchange. The company's statement and testimony of its officials 
throws very little light upon the subject. We will therefore 
take such information as can be secured from its sworn annual 
report as filed in this office for the year 1918, and which shows 
as follows : 

Capital stock $15,000.00 

Accounts payable , 1,423.56 

Surplus ^ 6,142.84 

Total 122,666.40 

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RE BEVIER TELEPH. CO. 93 

EMminating the surplus of $6,142.84 will allow $16,423.56, 
which amount we will not assume even tentatively as a fair value 
of the property, but merely to show our figure that we will 
assume for rate-making purpose only, According to the testi- 
mony there remained the amount of $602.42 on December 31, 
1918, for depreciation and return on the investment, and the 
increase as asked, $942, will make a total of $1,544.42 at the 
proposed rate for the year, and which amount will allow 9.3 
per cent for depreciation and return on the assumed value of 
$16,423.56. 

Conclv^ions. 

From our experience in valuing comparable exchanges we 
are satisfied that a valuation of the Bevier exchange would 
show a value in excess of the figures we have used for the purpose 
of making calculations. Aside from the question of property 
value the exchange rates compare favorably with rates in towns 
comparable with Bevier,- and the rural switching is in line with 
the rates for such service recently authorized by the Commmis- 
sion. 

It appears from the evidence that the company has made no 
agreement with the Federal authorities for compensation to it 
for the taking over of its property as provided by the various 
acts of Congress and the proclamation of the President, nor has 
the company made any application for such compensation. 

[2] As we construe the position of counsel for the protestants, 
owing to the fact that these farmer lines are owned and main- 
tained by the farmer subscribers, that whatever amount the 
applicant company is able to collect for its switching service 
is practically all profit This line of argument impresses the 
Commission as being extremely fallacious. We think a more 
apt principle of economics to apply would be to say a patron 
receiving substantial advantages and benefits from a public serv- 
ice utility for himself and his household should be required to 
pay what the service is reasonably worth. In this instance we 
find these farmer users enjoying a privilege, for $3 per year, 
of using telephone communication with several hundred sta- 
tions. 

It is entirely too narrow a construction to place upon the 
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94 MISSOURI PUBLIC SERVICE COMMISSION. 

attending expense of this service to say that it should be held to a 
proportional part of the wages of the operators who handle the 
connecting switchboard. 

Counsel for the protestants appear to overlook the fact that 
property values other than their own are being utilized when 
this exchange service is accorded to them. In these modem 
times, with prices of labor and material mounting a higher level, 
for a telephone company to have to furnish the character of 
service given these patrons at $3 per year can only mean that 
other classes of patrons must make up the deficit between that 
price and its correct value. Moreover, such a yearly charge is 
entirely out of line, viewed upon a comparable basis with the 
decisions of this Commission of like service governing other parts 
of Missouri, that the Commission feels fully justified in per- 
mitting the yearly charge to be increased to $6. 

[3] We have given cognizance to the position of protestants 
that this increase means an advance of 100 per cent. But the 
mere fact that protestants have been given this service for years 
past at an extremely low charge would in no manner warrant the 
Commission in penalizing the company for the future after the 
issue is properly brought to the attention of the Commission. 

The new schedule of rates as filed appears to the Commis- 
sion as being just and reasonable, and an order will be entered 
permitting them to become effective. 

As heretofore recited in this report, the Commission is not 
, fixing a permanent value upon this utility for rate-making pur- 
poses. However, a permanent rate base must eventually be 
found for this property. The Conmiission cannot accept the 
value of the property as given. The applicant will be required 
to file with the Commission a full and complete inventory and 
appraisal of its physical property, in accordance with instructions 
thereto pertaining from the telephone department of this Com- 
mission on or before one year from the effective date of the at- 
tached order hereto. This information will be given applicant 
by the aforementioned department upon application. 

The suspension orders heretofore made by the Commission, 
withholding the effective date of the applicant's new schedule, 
will be vacated, and in lieu thereof new orders entered permitting 
applicant to charge rates set forth in said new schedule for a 

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RE BEVIER TELEPH. 00. 95 

period of thirteen months, with our usual recitals of reservation 
of jurisdiction of the cause during said period of time. Let the 
orders issue. 



NEBRASKA STATE RAILWAY COMMISSION. 

EE WYOMING & NEBRASKA TELEPHONE COMPANY. 

[Application No. 3736.] 

Betum — Operating expenses — Extensions — iJharges to capital, 

1. The entire amount of general office expenses should not be 
charged to operating expenses, where the time of the^ general officers 
whose salaries form the greater part of such .expense was largely 
devoted to the work of enlarging and extending the plant. 

Metum » Operating expenses » Vncollectdble IHlls. 

2. It is improper to charge against the operating expenses of one 
year the uncollectable accounts accumulated from the beginning of 
the company. 

suites — F€ustors — Quality of service, 

3. In establishing a new schedule of increased telephone rates for 
a utility operating in several communities, an exception was made to 
the general rate increase in favor of subscribers connected with a 
certain line, where the evidence showed that the line was in very 
poor service condition. 

Security issues — Kind of securities — Short-term note. 

4. Financing a large portion of the investment by means of short- 
term papers is objectionable because of the higher interest rate that 
must be paid on such securities, and also because of the danger of 
financial embarrassment in the event the company is called upon to 
pay the securities when due. 

[August 2, 1019.] 

Application for authority to increase telephone exchange 
rates ; schedule of increased rates for various communities served 
by applicant authorized. 

Appearances : Phillip E. Horan, attorney for applicant. 

Wilson, Commissioner: On December 81, 1918, the Com- 
mission granted an increase in applicant's rates of approximately 
20 per cent on subscribers' charges and exactly 25 per cent on toll. 
Applicant now alleges that the costs of operation, maintenance, 
and taxes have continued to increase since that time and are yet 

increasing; that based upon its experience under the increased 
P.UJ1.1920A. 



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06 NEBRASKA STATE RAILWAY COMMISSION, 

rates in the first four months of 1919, under the increased rates, 
the deficit for the current year, including the 8 per cent return 
allowed by the Commission, will amount to $3,754.95, in addi- 
tion to the deficit of $7,857.68 suffered in 1918 ; and that if it 
is not permitted to increase its rates iis property will be con- 
fiscated in the amount of the deficit. Applicant prays a fur- 
ther increase of its subscribers' charges of 25 cents per month 
on individual residence telephones and 50 cents per month on 
business telephones, excepting at the Gordon exchange 25 cents 
on party residence, 50 cents on individual residence, and $1.25 
on business telephones, is asked, subject to the conversion of 
the exchange from magneto to common battery, which work is 
now in progress. A new rate of 25 cents per month for desk sets 
is also requested. 

Applicant presented the following estimate of earnings and 
expenses for the year 1919, based on the results of the first 
four months of the year: 

Earnings: 

Subscriber's stations $51,240.30 

Switching service 8,784.66 

Toll 36,860.32 

Miscellaneous 2,200.00 

Total $99,075.28 

Expenses : 

Maintenance and depreciation (99i of plant value) $28,576.17 

Traffic 17,748.60 

Commercial 10,357.59 

General , 10,252.13 

Total $66,934.49 

Net operating revenue $32,140.79 

Charges against Net Revenue: 

Taxes $4,600.00 

Office rents 1,566.00 

Rents on phantom coils , 120.00 

Interest 8% on $160,244.28, for one year 12,819!54 

Interest 8% on $13,000 for eight months 692.00 

Interest 8% on $15,000 for five months 500.00 

Uncollectable accounts 1,880.00 

Dividends 8% on $172,740 of stock 13,819.20 

Total $36,896.74 

^^^<^^^ $3,764.96 

Further increases in operators^ wages since the four months' 
period will increase this deficit by $1,020, and the prospects are 
that further increases of wages must be made. 

P.U.R.1920A. 



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RE WYOMING & N. TELEPH. CO. 97 

[1] Much testimony was oflFered in support of the estimate, 
but it was deduced by the Commission on cross-examination of 
applicant's witnesses that 85 per cent of the general office ex- 
penses, including salaries, supplies, and attorneys' fees is being 
charged against operating revenues as a current expense, where- 
as it is evident that the major portion of these expenses has been 
incurred on account of additions to the plant 

Applicant dates its existence from November 1, 1916, when it 
purchased and consolidated seven telephone exchanges of an esti- 
mated value of $183,000. It has practically doubled its plant 
since that time, and the work has required the close attention of 
the president and vice president and general manager, whose 
combined salaries of $11,500 per annum represents the greater 
part of the overhead expenses. The results of charging so large 
a proportion of these expenses to current revenues would not 
be serious but for the fact the company is likely to expand for 
several years in the future and the total amounts to a considerable 
sum. We are of the opinion^ therefore, that not less than 40 
per cent of the ov^head expenses as now accounted for be 
charged to new construction, and that the accounts reflecting 
these charges be corrected from the beginning. When this is 
done the company's surplus will show a balance in place of a 
deficit as now. 

[2] It was also shown that the item of uncollectable accounts, 
$1,880, represents an accumulation of such accounts from the be- 
ginning of the company, and that the annual allowance for that 
purpose need not be in excess of $600. If the balance now in 
the account represents a total loss it will of course diminish the 
surplus in that amount. 

With these additions and exceptions applicant's estimate of 
1919 results is conservative and points clearly to the necessity 
for additional revenue. The revenues estimated to accrue from 
the increases in rates proposed amounts to $8,645.40 per annum, 
— all of which will apparently be needed to overcome the deficit. 

[8] Complaint was made to the Commission that rural tele- 
l^one line No. 24 oonnected with the Chadron exchange was in 
very poor condition, and an exception will be made to the gen- 
eral rate increase in favor of subscribers connected with this 

line until the line is placed in good operating condition* 
P.U.R.1920A, 7 



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98 NEBRASKA STATE RAILWAY COMMISSION. 

[4] The attention of the company is again called to its method 
of financing so large a portion of the investment by means of 
short-time paper. This is objectionable for two reasons; name- 
ly, the higher interest rate that must be paid on such securi- 
ties, and the danger of financial embarrassment in the event the 
company is called upon to pay the securities when due. It would 
appear that a long-time bond issue could be floated at 7 per cent 
per annum, and applicant is urged to effect such an issue as . 
soon as possible. 

The same restrictions as to the payment of interest and divi- 
dends made in the Commission's order on December 81, 1918, 
will apply to all of the revenues of the company as heretofore. 

Consideration was given during the hearing to the relation 
of the switching rates to the regular subscribes* rates, and in 
view of the great increase in the costs of operation, it was sug- 
gested that the switching rate of 60 cents per month was probably 
too low. Applicant was not prepared to offer testimony as to 
the exact cost of switching service, but offered to do so within a 
reasonable time. As switching rates are for the most part paid 
annually in advance and the rates for the current year have been 
collected, it would be unwise to increase them at this time. The 
Commission will retain jurisdiction of the case for the purpose 
of receiving this cost study, and the applicant is requested 
to furnish it on or before December 1, 1919, in order that higher 
rates found reasonable may take effect on January 1 following. 



PENNSYIiVANIA PUBIilO SERVICE COMMISSIOir. 

EDWAED J. BOYLE 

v. 

WILKES-BAERE COMPANY. 

[Ck>mplaint Docket No. 2966.] 

Security issues — Validity — Statement in advertisement, 

1. In advertising an issue of securities, it is improper to state 
that the securities have been approved by the Pennsylvania Commis- 
sion, where the statute merely requires the utility to file the statutory 
notice with the Commission, and no such approval had or oould be 
secured or was required under the statute. 

P.U.R.1920A. 



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BOYLE V. WILKES-BARRE 00. 99 

BecuHty issues ^Certificate of notificaUon — Advertisements — 
Variance, 

2. There is not such a yariance hetween the etatement in an ad- 
vertisement as to securities, that the proceeds would be used to increase 
the capacity of the plant, and the statement in the certificate of notifi- 
cation, that the issue was to provide funds to pay accounts and bills 
and for improvements, betterments, additions and extensions, and the 
acquisition of property, and for working capital and other capital ex- 
penditureSi as to invalidate the issue. 

[October 14, 1919.] 

OoMPXATNT as to falsc and misleading statements contained 
in advertisements relative to the issuance of securities; dis- 
missed. 

By the Commission: The respondent company by advertise- 
ments in several daily papers to invite public attention to aiid 
subscriptions for an issue of $300,000 of its 7 per cent stock set 
forth" r "The Public Service Commission of the state of Penn- 
sylvania has approved the issue of this stock. This and the 
fact that the company is located in our home city makes the stodky, 
it is believed, attractive for any person who desires a sounict 
investment at a good rate of interest and in the same time the 
building up of Wilkes-Barre.*' 

[1] The company also, by printed circulars sent through the 
mails, advertised that "the Public Service Commission has au- 
thorized the issue and sale of this stock at a price not less than 
its par value, $50 per diare." These matters were complained 
of to the Commission," and in answer thereto, the respondent 
admitted these allegations of the complaint, but set forth that it 
Lad inadvertently used, without consulting counsel, the same 
language that had been used in advertisments in New York and 
appropriate under the Public Service Company Law of that 
state ; that upon respondent's attention being called to it, it had, 
by equally extensive advertisements, copies of which were sub- 
mitted to the Commission, promptly corrected the error. In 
that respect it has done (as counsel for complainant stated at 
the argument) all that could be properly expected to correct the 
error. The Public Service Company Law of Pennsylvania re- 
quires public service companies purposing to issue stocksj or 
bonds, on or before their issuance, to notify, by what has been 
designated a certificate of notification^ the Commission of their 

P.U.R.1920A. 



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100 PENNSYLVANIA PUBLIC SERVICE COMMISSION. 

character, the amount proposed to be issued, .the purpose, etc., 
but it does not require Commission approval in order to their 
validity. The error in this case was in advertising that they 
had been so approved when as a matter of fact no such approval 
had or could be secured or was required under the law. The 
act referred to is satisfied when public service companies file the 
statutory notice with the Commission. There being no necessity 
for securing Commission approval, it of course was not proper 
to state that approval, which carried with it the inference of 
Commission investigation, had been had, and the respondentia 
conduct calls for condemnation. The complaint to this extent is 
sustained, but, under the« circumstances, without order. 

[2] At the time of the hearing, an amendment to the com- 
plaint was filed, in which it was stated that the advertisements 
referred to set forth that "the proceeds of the sale of stock now 
offered will be used to increase the capacity of the gas, electric, 
and steam heat plant,^' whereas the certificate of notification filed 
with the Commission on February 11, 1918, was to provide "for 
the purpose of providing funds to pay accounts and bills pay- 
able representing capital items and for improvements, better- 
ments, additions, and extensions, and the acquisition of the 
property, and for working capital and other capital expendi- 
tures,'* and by this amendment it was further complained that a 
certificate of notification was filed February 11, 1918, and the 
entire issue was advertised for sale in August, 1919. 

We are not prepared to say that thefre is a variance between 
the language contained in the certificate of notification and 
that used in the advertisements, nor that, even if there were, 
it would be of such a nature as would come within the adminis- 
trative province of this Commission. This we believe to be a 
compliance with the law, insofar as the validity of the issue is 
involved, and the matters presented by the amended complaint 

are therefore dismissed* 
P.U.R.1920A. 



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WEST CHE6TBB BD. OF TRADE y. PHILADELPHIA S. G. & K CO. 101 



PSNNSTIiVANIA PUBIjIO SBRVICB COMMISSION. 

WEST CHESTEB BOARD OP TRADE 

t;. 

PHILADELPHIA SUBURBAN GAS & ELECTRIC COMPANY. 

[Complaint Docket Nob. 1717, 2253.] 

Discrimination » Rates » Large consumers. 

1. It is the uniform practice to furnish electric current to large 
Industrial consumers at a reduced rate on account of less cost of pro- 
duction and distribution, the price decreasing in proportion as* the 
amount increases, with a reasonable ready-to-serve or minimum charge 
applied. 

Behim — RetiSimahleness — War emergency* 

2, While a utility should not be permitted to pass along to Its 
patrons all the burdens imposed by the war conditions, it must main- 
tain its plant in an efiScient manner, and, to a reasonable extent, may 
ask that it be reimbursed for its increasing operating costs. 

[October 14, 1919.] 

CoMPijiiNT against schedules carrying increased electric rates ; 
complaint dismissed. 

By the Commission: The western division of the Phila- 
delphia Suburban Gas & Electric Company, the respondent, is 
composed of three districts, viz., Pottstown district, Phoenixville 
district, and West Chester district. Respondent has a steam 
power plant at Pottstown, also at Phoenixville and at West Ches- 
ter, together with a water power plant at Cromby, on the Schuyl- 
kill river. It has also recently constructed a large steam power 
plant at Cromby. It furnishes steam for heat at West Chester, 
using exhaust steam for that purpose. The three districts axe 
connected with transmission lines, and during the winter season 
when steam is used for heating in West Chester the surplus cur- 
rent generated is sent to the other districts, and during the sum- 
mer season current generated in the other districts is sent to West 
Chester. 

On April 6, 1915, respondent filed a uniform schedule of rates 
in each of the three districts for light and power, and on July 2, 
1917, effective August 1, 1917, it filed a further schedule cover- 
ing the three district/^ in which an increase was made in its rates, 

P.U.IL1920A. 



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102 PENNSYLVANIA PUBLIC SERVICE COMMISSION. 

claiming that it was necessary to make such increase on account 
of increased cost of operation. 

To this schedule, the West Chester Board of Trade on Sep- 
tember 27, 1917, filed its complaint alleging that said rates were 
excessive, unreasonable, and discriminatory, and asked that in the 
determination of its complaint so much of respondent's plant as 
was located in the West Chester district should be segregated, 
contending that on account of the furnishing of heat through ex- 
haust steam the respondent was manufacturing its current for 
both light and power much cheaper in the West Chester district 
than in its other two districts. 

An investigation made by the Commission shows that such 
s^regation could not be made. 

With this complaint pending, respondent on July 2, 1918, filed 
another schedule of rates covering its three districts, effective 
August 1, 1918, making further increases in its rates, contending 
that it was necessary so to do in order to meet the rapidly advanc- 
ing cost of operation. To this complaint the West Chester Board 
of Trade again, on July 24, 1918, filed another complaint; all 
the material allegations in the two complaints were denied by 
respondent, and the two complaints were combined and will be 
disposed of together. 

[1, 2] A large amount of testimony was taken, briefs filed, 
and oral argument had. Upon a careful consideration of all the 
evidence in this case the Commission has reached the conclusion 
that the rates of respondent complained of are not excessive or 
unreasonable, and that the complaints as made must be dismissed. 
The three districts, as stated, Are operated as one division, and 
while it is true that large industrial plants in the Pottstown and 
Phoenixville divisions are furnished current at a lower rate than 
ife furnished in the West Chester division, in which the amount 
of current used for industrial purposes is very limited, the facts 
disclosed by the evidence do not justify the Commission in hold- 
ing that there is any unjust discrimination by reason of respond- 
ent's making a difference in the cost of current to large industrial 
consumers. It is the uniform practice, so far as the Commission 
is able to determine, that large industrial consumers are fur- 
nished current at a reduced rate on account of less cost of produc- 
tion and distribution, the price decreasing in proportion as the 
P.U.R.1920A. 



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WEST CHESTER BD. OF TRADE v. PHILADELPHIA S. G. & E. CO. 103 

amount increases, with a reasonable stand-ready-to-serve or mini- 
mum charge applied* The fact of the great increase in cost of 
operation of a utility like respondent's is common knowledge, and 
the extent thereof, as shown by the evidence, justifies the promul- 
gation of the rates complained of. While a utility should not be 
permitted to pass along to its patrons all the burdens imposed 
by the war condition, it must, however, maintain its plant in an 
efficient maimer, and to a reasonable extent may ask that it be 
reimbursed for its increased operating cost, and the extent to 
which it has so done in this case does not convince the Commis- 
sion that the rates it is now collecting are excessive or unreason- 
able. The complaints will, therefore, be dismissed. 



WISCONSIN RAHiROAD COMMISSION. 

ST. CEOIX FARMERS MUTUAL TELEPHONE COMPANY. 

v. 
C. E. GATTEN et al. 

[U-1664.] 

Monopoly and compeHUon «« Occupied territory — Character o/ 
existing service. 

Extensions connecting certain telephone subscribers in occupied 
territory with the lines of another company will not be disapproved, 
although no certificate of convenience was procured from the Ck>mmis- 
•ion, where it was clearly apparent that the ezisbing company could 
aot have continued service to the parties in question for any length 
of timet. 

[September 30, 1019.] 

CoMPiAiKT alleging the construction of a local telephone line 
in occupied territory without serving notice in writing on the 
<!omplaining company; dismissed. 

By the Commission: Informal complaint was filed by the 
St Croix Farmers Mutual Telephone Company to the effect that 
C R. Gatten and other parties recently built and placed in opera- 
tion a local telephone line in the towns of Blaine and Swiss, Bur- 
nett county, without serving notice in writing on the complaining 
company, as required by chapter 610 of the Laws of 1918. Fol- 

P.U.R.1920A. 



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104 WISCONSIN RAILROAD CX)MMISSION. 

lowing the usual practice in such cases^ the Cammission conducted 
an investigation in order to determine whether or not the exten- 
sion would have been authorized if the proper procedure had been 
followed. 

Hearing was held at Danbury and the situation thoroughly 
investigated. It appears that four parties desiring service from 
the Blaine & Markville Telephone Company, operating from the 
village of MarkviUe, built stub lines at their own expense to con- 
nect with a circuit of that company. Some of tte four were for- 
merly subscribers of the St. Croix Farmers Mutual Telephone 
Company, with exchange facilities at Weblake. Apparently that 
part of the St. Croix Company's line was built at the expense of 
the subscribers who were also stockholders, the company doing 
business on a mutual plan. Originally there were some eighty- 
six shareholders, but at present only about fifteen are receiving 
service, and in order to maintain such service it is necessary to 
keep up about seventy miles of line, some of which is now so bad- 
ly out of repair as to be unserviceable. It at once becomes ap- 
parent that if the cost of service is to be charged to those whc 
receive it^ the company is in a hopeless condition. It also ap- 
I)ears that there is no available means of raising funds with 
which to rehabilitate the service, even if it could be given on any 
terms that would not be prohibitive. 

There being no remote possibility that the St. Croix Company 
could have continued service to the four parties for any length of 
time in any event, it follows that, had the proceedings tak^i thcj 
usual and legal course, the Commission would have been unable 
to find that public convenience and necessity did not require the 
extension to be made, and the same would therefore have been 
allowed. While we cannot approve the construction of exten- 
sions, either by telephone organizations or by individuals, in dis- 
regard of the statute, the facts show that the needs of the parties 
can only be served by allowing the new line to remain in service. 

It is therefore ordered that this proceeding be and the same 
hereby is dismissed. 

Dated at Madison, Wisconsin, this 80ih day of September, 
1919. 

Eailroad Commission of Wisconsin, Carl D. Jackson and 
Henry E. Trumbower Commissioners. 

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BE OOLPMAN-POUND LIGHT & P. CO. 106 

mnSOONSIN RAHiROAD OOfilMISSION. 

BE COLEMAN.POUND LIGHT & POWEB COMPANY. 

[U-1563.] 

DiaoHminatian — Bates ^ Large consumer. 

An electric utility is justified in offering a low rate to seonre a 
large customer, which could not be obtained otherwise, provided such 
rate is sufficiently high to pay the output costs of the service, and a 
part of the fixed costs, as this will reduce the amount of fixed costs 
to be paid by the other consumers. 

[September 29, 1019.] 

Investioatioit on the motion of the Commission as to the rates 
and practices of the Coleman-Pound Light & Power Company; 
rates for large consumer fixed. 

By the Commission: Pursuant to complaint filed by certain 
stockholders of the Coleman-Pound Light & Power Company, 
April 22y 1919, the Commission on its own motion has investi- 
gated the rates and practices of the utility. 

Hearing was held June 18, 1919, at Green Bay. The appear- 
ances entered were : Eittell, Jaseph & Bedfield, by J. A. Kittell^ 
on behalf of the Coleman-Pound Li^t & Power Company ; Mar- 
tin, Martin, & Martin, by John Martin, and Miller & Miller, by 
Edward Miller, on bdialf of the complainants. 

The l^gal rates of the utilily as filed with the Commission are 
as follows: 

Oommercial LtghHng: 
Minimum charge per month, $1 

First 20 kw. hr. per month, 12 cents per kw. hr. 

Next 80 kw. hr. per month, 11 cents per kw. hr. 

Next 60 kw. hr. per month, • 10 cents per kw. hr. 

Next 100 kw. hr. per month, 8 cents per kw. hr. 

Over 200 kw. hr. per month, 6 cents per kw. hr. 

Oommeroial Power: 

Minimum charge per month — $1 per h. p. for the first 2 h. p. and 60< for 
each additional h. p. ^ 

First 60 kw. hr. per month, 6 cents per kw. hr. 

Next 60 kw. hr. per month, 6.5 cents per kw. hr. 

Next 400 kw. hr. per month, 6 cents per kw. hr. 

Next 600 kw. hr. per month, 4.6 cents per kw. hr. 

Next 600 kw. hr. per month, 4 cents per kw. hr. 

Next 600 kw. hr. per month, 3.76 cents per kw, hr. 

Next 600 kw. hr. per month, 3.6 cents per kw. hr. 

Discount oi 6% on bills paid by the 10th of the month. 
Power Rate for consumers having installations of 20 -h. p. or more:— 

Minimum charge, 60<^ per month per h. p. of connected load. 

Ener^ charge, 2# pet kw. hr. 
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106 WISCONSIN RAILROAD COMMISSION. 

Street Lighting: 

200 watt a. c. multiple tungsten lamps $24 per lamp year 

300 watt a. c. multiple tungsten lamps 36 per lamp year 

600 watt a. c. multiple tungsten lamps 60 per lamp year 

Burning period: £very night — dusk to 1 A. H. 

The specific rate around which this investigation has centered 
is that for consumers having installations of 20 h.p. or more. 
At the present time this rate applies only to one consumer oper- 
ating a gristmill at Pound. 

Examination of the Commission's rate files shows that on Au- 
gust 20, 191 §, an inquiry was received from attorneys for the 
utility, asking whether a special rate for power supplied Mr. 
Koenig at Pound which had been applied for some time past had 
been approved by the Conmiission. As this rate was not on file^ 
the Commission asked that a copy be forwarded. September 28^ 
1918, a further request was made by the attorneys for a copy of 
the agreement containing the special rate referred to. On De- 
cember 5, 1918, a request was made of the company for a copy 
of any contract for special service which had been entered into 
with Mr. Koenig. On December 9, 1918, the utility wrote that 
no contract existed but that a rate of 2 cents per kilowatt hour 
had been applied to enei^ used in Mr. Koenig's mill since the 
utility began operation. Under date of December 11, 1918, the 
CommiBsion wrote the utility that it should file the 2-cent rate as 
applicable to all customers of similar type taking service under 
similar circumstances, in order that no discrimination might re- 
sult from the application of such a rate. In compliance with 
the above the utility filed, June 13, 1919, the power rate appli- 
cable to installations of 20 h.p. or over previously noted. 

The question arises: Have the other consumers of die Cole- 
man-Pound Light & Power Company been placed at any dis- 
advantage by reason of this power rate which was unlawfully ap- 
plied for practically four and one-half years ? Inasmuch as no- 
complain* has been made by the general consumers regarding 
the commercial lighting and power rates, it is apparent that the 
rates were not considered excessive. An examination of the in- 
come accounts of the utility as filed with the Commission for the 
five years ended June 30, 1919, shows that with the special 
power rate in effect the utility has averaged 7.35 per cent return 
on its book value. Excluding the year 1915, or the first operat- 

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RE COLEMAN-POUND LIGHT A P. CO. 107 

ing period during which it appears to the Commission items were 
charged to operation which should have been charged to constnie- 
tion, it is noted that the utility earned on an average 10 per cent 
of its book value each year. 

It is contended by certain officials of the utility that increasing 
the rate to the mill will result in the loss of this consumer. Dur- 
ing the year ended June 30, 1919, the utility purchased 98,600 
kilowatt hours at a net cost of $1,341.33. The mill used 45,270 
kw. hr. Excluding this amount, the consumption of all other 
consumers will not exceed the annual minimum of $1,200 prt>- 
vided for in the contract between the utility and the Wisconsin 
Public Service Company. For this reason it is held that the los? 
of the gristmill business will result in burdening the other con- 
sumers with that portion of this energy cost now carried by the 
mill. 

The Commission has authorized in a number of cases, "addi- 
tional business basis'' rates as a means of securing business which 
would otherwise be lost to the utility. . An electric utility when 
once constructed and put in operation has a comparatively large 
proportion of its expenses which are more or less fixed. That 
is, these expenses are independent of the output or its variations 
and depend largely upon the capacity of the plant or the invest- 
ment represented therein. If, then, with an existing investment 
or outlay, additional large consumers can be served who will bear 
their full share of the output costs and at the same time bear A 
part, at least, of the fixed costs, it will be readily seen that the 
remaining fixed expenses which must be borne by the other con- 
sumers will be lessened. The "additional business basis" rate 
which combines the output and a part of the fixed costs cannot 
be considered unreasonably discriminatory because tbe other con- 
sumers are not only no worse off than if such business were not 
secured, but the increased output will help to decrease unit costsy 
benefiting all consumers. 

Investigation shows that the utility has been helped, due to 
the fact that it had a single customer whose consumption was 
large enough to bring the cost of energy purchased by the utility 
tip to a slightly above the annual minimum which the utility must 
pay, while the general commercial and power business is being 
developed. It is profitable to retain customers of this character 

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108 WISCONSIN RAILROAD COMMISSION. 

on an "additional business basis" rate until the utility is able to 
reach the minimum consumption under the contract even though 
such consumers discontinue service. Until the business is de- 
veloped the loss of the mill load, using the expenses for the year 
ended June 30, 1919, as adjusted by the Commission, would in- 
crease the cost of electric current purchased on the basis of energy 
sold, from 1.58 cents to 3.02 cents per kilowatt hour. Total ex- 
penses, including taxes, depreciation, and interest, would be in- 
creased per kilowatt hour sold from 5.11 cents to 10.52 cents. 
On an "additional business basis" the mill should bear the cost 
of current purchased, commercial expense, general expense, and a 
part at least of taxes and depreciation, or a total of ^.605 cents. 

The fact that the utility has earned a fair return upon its 
reported value during the past four years with a low rate to the 
mill would indicate that, with the rate applicable thereto in- 
creased, the rates to other consumers might be equitably lowered. 
If operating conditions were normal at this time, some adjust- 
ment would appear advisf^ble in the rates for commercial service. 
In our opinion, however, in view of the imoertainty r^arding 
further increases in the cost of electrical energy to the producing 
company, we do not believe we are justified in reducing the rates 
in the commercial schedule. 

It is therefore ordered that the Coleman-Pound Li^t & Power 
Company discontinue the power rate applicable to consumers 
having installations of 20 h.p. or over and substitute therefor the 
following schedule: Minimum charge, 50 ots. per month per 
h.p. of connected load. Energy charge, 2^ cts. per kw. hr. 

Dated at Madison, Wisconsin, this 29th day of September, 
1919. 

Railroad Commission of Wisconsin, John S. Allen and Henry 
R. Trumbower Commissioners. 
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NATIONAL ELEVATOR CX). v. CHICAGO, M. & 8, P. R. CO. 109 



MINNESOTA SUPKEMB OOTJRT. 

NATIONAL ELEVATOE COMPANY 

V. 

CHICAGO, MILWAXJEJEB & ST. PAUL BAILWAY COMPANY. 

[No. 21^40.] 
(— Minn. — , 173 N. W. 418.) 

Bates — Faed schedulea — First instance tarilf. 

1. A schedule of rates published and filed by a railroad company, 
providing for the absorption by the company of the switching charges 
of connecting carriers at th« destination of shipments, where, under itff 
schedules of rates theretofore published and filed, the shipper was 
required to pay such charges, is a change in an existing tarifl", and not 
a "first instance tariff," within the meaning of chapter 176, Gen. Laws 
1906 (Gen. Stat. 1918, §§ 4290-4297). 

Bates — Fower of Commission — Reduction in rates, 

2. A change in the tariffs of a railroad company, Voluntarily made, 
reducing rates to all shippers on all commodities, at all stations in 
this state, becomes effective without obtaining the consent of the Rail- 
road and Warehouse Commission in the manner provided by chapter 
176, Gct. Laws 1905 (Gen. Stat. 1913, §§ 4290-4297). 

Bates — Fower of Commission — Restoration of old rate. 

8. After such a change has been made, the original rate eannot 
be restored without the consent of the Commission after a hearing 
upon notice, a finding that the reinstatement of such rate will be a 
fair and reasonable change in rates, and an order or other action on 
the part of the Commission sanctioning the change. 

[June 27, 1919.] 

Headnotes by the Coubt. 

Appeai, by the defendant from a judgment for the plaintiff 
in an action brought to recover switching charges paid by the 
plaintiff; judgment affirmed. 

Appearances: F. W. Eoot, of Minneapolis, and Nelson J. Wil- 
cox and J. N. Davis, both of Chicago, Illinois, for appellant ; Lan- 
caster, Simpson & Purdy, Harold G. Simpson, and Frank J. 
Morley, all of Minneapolis, for respondent 

Lees, C. This action was brought to recover switdiing charges 
paid by plaintiff on three carloads of wheat which it shipped 
over defendant's line of railroad from Wheaton in this state to 

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no MINNESOTA SUPREME OOURT. 

Minneapolis. A recovery was allowed after a trial by the court 
without a jury and this appeal was taken from the judgment. 

The court found that plaintiff had an elevator at Wheaton, 
from which it shipped grain to Minneapolis and other terminal 
markets. Defendant is the only railroad company having a line 
at Wheaton. Prior to April 14, 1905, it had published and filed 
with the Railroad and Warehouse Commission of this state a 
tariff applicable to shipments of grain from Wheaton to Min- 
neapolis, which contained no provision relative to the switching 
charges of its connecting carriers at Minneapolis. 

On September 19, 1906, it published and filed with the com- 
mission a tariff which provided in effect that switching charges 
on carload shipments from competitive points were included is 
the rates on such shipments, or "absorbed.^* 

On November 15, 1906, it published and filed another tariff 
providing for the absorption of such charges on carload shipments 
from all points in the state, whether competitive or noncompeti- 
tive, if its minimum net earnings were $15 per car. 

Thereafter and prior to January 21, 1907, and effective on 
and after that date, it published and filed a tariff naming the 
rates on intrastate shipments of grain, and providing that freight 
transported thereunder should be subject to the printed regula- 
tions relative to switching charges and the absorption thereof. 

On January 28, 1907, it published and filled a tariff contain- 
ing the following provision : *^ates named herein and in tariff 
as amended on grain to Minneapolis, Minnesota, do not inchide 
connecting line switching charges when shipments are for deliv- 
ery on connecting lines.*' 

On November 5, 1907, it published and filed a supplement to 
its tariffs, reading as follows : "Unless otherwise provided, rates 
named in tariff do not include connecting line switching charges 
when for cleaning houses, elevators or mills located on connect- 
ing lines at Minneapolis, Minnesota.'' 

On April 14, 1905, chapter 176, Gen. Laws 1905 (Gen. Stat 
1913, §§ 4290, 4292, 4294), became effective. The portions 
thereof which concern this case read as follows: 

"Section 1. All common carriers subject to the laws of this 

state shall have the right, in the first instance to prescribe and 

{Hiblishy as required by laW; all classifications and tari&i rates 
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NATIONAL ELEVATOR CO. v. CHICAGO, M. & S. P. R. CO. Ill 

and charges, together with rules governing the same. . . . 
This act shall include all terminal and switching charges. There 
shall be but one classification, which shall be uniform on all the 
railroads in this state, and shall govern in all state commerce." 

"Sec. 3. The schedule of rates and charges for the transporta* 
tion of freight and cars, together with the classification of such 
freights, minimum weights and rules now in effect, and all rates, 
charges and classifications published by any common carrier after 
the passage of this act shall be deemed just and reasonable and 
shall not be changed except upon the order of or by the written 
consent of the Kailroad and Warehouse Commission." 

"Sec 6. Any common carrier desiring to change or discon- 
tinue any published rate, charge ... or rule governing the 
same to which it is a party, shall make application to the Com- 
mission in writing, stating the changes . . . desired, giving 
the reasons for such change. Upon receiving such application, 
the Commission shall fiz a time and place for hearing, and give 
such notice to interested parties as it shall deem proper and rea- 
sonable, and after hearing all the evidence offered, if the Commis- 
sion find that it is reasonable, fair and just to both shippers and 
carriers that the change should be allowed as asked for, it shall 
grant the application ; otherwise, it shall deny the same." 

After the passage of this act, it was the practice of the Com- 
mission, when a new tariff was filed, to cause it to be checked 
over by clerks in its office. If no change in existing rates or rules 
was contained therein, it would send the carrier a written ac- 
knowledgment of the receipt of the tariff. If changes were dis- 
covered, the receipt was withheld and the carrier notified that 
they were not approved and required to make application in writ- 
ing for leave to make them. At times clerks checking up a tariff 
would fail to discover changes in it and would file and receipt 
for it without calling the attention of the Commission to the 
change. 

Each of the tariffs to which reference has been made were 
stamped "Filed," with the date of filing, and receipt thereof was 
acknowledged. The Commission never approved of any of the 
changes set forth in these tariffs and no application in writing 
was ever made for leave to make them. There was no hearing 
upon and no Order authorizing the proposed changes* 

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112 MINNESOTA SUPREME COURT. 

The shipmoits involved here were made during the year 1912, 
and defendant's net earnings thereon exceeded $20 per car. Each 
car was delivered by defendant to a connecting carrier at Min- 
neapolis. Such carrier switched one car to a flourmill and one to 
a grain elevator, where each was unloaded. The third car was 
switched to an elevator and the wheat disposed of in some man- 
ner not disclosed by the evidence. These three shipments were 
selected as typical of the manner in which grain shipped to Min- 
neapolis is usually handled. In each case the switching charges 
of the connecting carrier were added by defendant to its charges 
for the line haul from Wheaton to Minneapolis and collected from 
plaintiff. 

The sole question is whether defendant was bound to absorb 
these charges. 

[1] 1. Before the Act of 1905* became effective, the statute 
provided that there should be but one terminal charge for switch- 
ing a car within the limits of any municipality and that if the 
car must pass over the tracks of more than one railroad therein, 
the company first switching it should receive the entire charge 
for that service and make an equitable division thereof with the 
other company. It required carriers to print schedules of rates 
for public inspection, setting forth separately the terminal 
charges and any regulations that would change their aggregate 
rates and charges. They were required to file copies of the sched- 
ules with the Commission and to notify it of all proposed changes 
therein. Minn. Eev. Laws §§ 2012-2014, and 2016. In com- 
pliance with the statute, defendant had filed its schedules of rates. 
They contained no provision for the absorption of switching 
charges. By the first tariff filed after the Act of 1905 took effect, 
it reduced its rates by discontinuing switching charges on ship- 
ments from competitive points; and, by the second, by discon- 
tinuing such charges on shipments from noncompetitive points, 
if its net earnings on a car were $15. 

Defendant argues that these were changes in its rates under 
its schedule filed with the Commission prior to 1905. Plaintiff 
asserts that they were "first instance'^ rates, within the meaning 
of § 1 of the Act of 1905, and might be put into effect without 
the consent of the Commission. We are of the opinion that plain- 
tiff's position Ld untenable and that the new tariffs did bring about 

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NATIONAL ELEVATOR CO. v. CHICAGO, M. & & P. R. €0. 118 

a change in rates. But the ohange was voluntarily made and re- 
duced the rates to all shippers cm all commodities at all railroad 
stations in the state. That such a change may be made without 
the consent of the Oommission was tak^i for granted when Steen- 
erson v. Great Northern E. Co. 60 Minn. 461, 62 N. W. 826, 
was decided. We quote from the opinion in that case. Re- 
ferring to the statute under consideration there> it was said : 

"We are of the opinion that the *no higher, no lower,' feature 
of the subdivision [of the statute] is capable of but one construe- 
tioiL It was not the intention of the legislature to prohibit car^ 
riers from making reductions in tariffs at will, providing such 
reductions were uniform — ^what are frequently called ^horizontal 
reductions.' This provision was designed, evidently, to thwart 
every attempt to evade the law or an order made imder it by the 
raising of rates • • . changing of classifications at some sta- 
tions ... or to the detriment of some persons. • • . 
The result of such raising or lowering would be to unjustly dis- 
criminate as between persons and places, and this the statute will 
not tolerate." 

By the act under consideration in the Steenerson Case, it was 
made unlawful for a carrier to maintain a higher or a lower rate 
than that fixed by the Commission, unless a court had decreed 
otherwise, while by the Act of 1906 changes in rates were pro- 
hibited unless the consent of the Ccnnmission was obtained. We 
attach no importance to the difference in the phraseology of the 
two acts. To prohibit the raising or lowering of a rate is equiva- 
lent to prohibiting a change of rates. Defendant coRtends that 
the portion of the opinion we have quoted was purely obiter and 
that, as a statement of the law, it is fundamentally unsound. We 
do not so regard it. 

[2] legislation affecting rates charged by common carriers 
has two principal ends in view — the first, to prevent the carrier 
from charging excessive rates; the second, to prevent discrimina- 
tory rates as between different shippers, different localities, and 
different commodities. That these were the ends sought to be 
accomplished by the Act of 1905 becomes apparent when it is 
read as a whole and the conditions which then existed quite gen- 
erally are taken into accoimt. On no possible hypothesis can it be 
said that a general horizontal reduction of rates on all commodi- 

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114 MINNESOTA SUPREME COURT. 

ties may be detrimental to the pablio and ought not to be made 
without the consent of the Commission as the representative o£ 
the public. Such a reduction was accomplished by the pubiioa- 
tion and filing of the two tariffs relating to the absorption of 
switching charges. We hold that they became effective without 
the consent or approvfil of the Commission. 

[3] 2. After defendant's rates had been reduced, they could 
not be advanced by restoring the old rates vdthout complying with 
the provisions of § 5 of the Act of 1905. The same steps were 
taken by defendant on filing each of its several tariffs. We have 
already pointed them out. The court found that they were not 
such a compliance with the statute as is required. It appears 
that there was no hearing before the Commission; that no notice 
was given to the interested parties ; that there was no finding by 
the Commission that the proposed reinstatement of the original 
rule as to switching charges was fair and reasonable; and that 
there was no order by or action on the part of the Commission 
which sanctioned the change. Berwind White Coal Min. Co. v. 
Chicago & E. K. Co. 235 U. S. 371, 59 L. ed. 275, 35 Sup. Ct 
Rep. 131, is cited by defendant to the point now under considera- 
tion. In that case it was held that the filing with the Interstate 
Commerce Commission of a book of rules relating to demurrage 
was a sufficient compliance with the Federal act to regulate com- 
merce (Act Feb. 4, 1887, chap. 104, 24 Stat, at L. 379, Comp. 
Stat. § 8563, 4 Fed. Stat. Anno. 2d ed. p. 337), which required 
tariffs of interstate carriers to be filed and published. An exami- 
nation of the act of Congress discloses an entire absence of the 
specific provisions for a hearing after notice and for affirmative 
action by the Commission upon an application for a change of 
rates, which are contained in § 5. We think the mere filing of its 
tariffs with the Commission was not a compliance with the re- 
quirements of the act and that the finding of the learned trial 
court to that effect is correct Bell Lumber Co. v. Great Nortii- 
ern K. Co. 135 Minn. 271, 160 N. W. 688. 

It is to be noted that the changes in the tariffs of January 38 
and November 5, 1907, affect only shipments of grain to Min- 
neapolis. The effect of these changes was to make the rates on 
grain shipped there higher than they were at other places in the 
state. It is also to be noted that on all commodities ahif^^ed to 

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MATIONAL ELEVATOR CO. v. CHICAGO, M. & S. P. R. CO. lU 

Minneapolis, except grain, the switching charges were to continue 
to be absorbed. Upon their face, the changes appear to be dis- 
criminatory. There may have been valid reasons for making 
them, but we think they should have received the approval of 
the Commission in the manner directed by the statute before they 
became effective. 
Judgment affirmed. 



OAIilFORNIA RAIIiROAD COMMISSION. 

RE SAN FRANCISCO-OAKLAin) TEBMINAL BAILWAYS. 
[Decision No. 6549, Application No. 2986.] 

Return — Operating expenses — Incretises in labor costs, 

1. The California Commission has definitely adopted the policy to 
recognize as operating expenses, all increases in labor costs. 

Bates — Factors — Competition, 

2. To fix fares on an interurban railway on a theoretical rate base, 
without regard to the competitive conditions under which the service 
is rendered, is impracticable, and, therefore, unsound. 

Return — Beasonahleness as a whole — Street and interurban rail' 
way system, 

3. A company operating both a street railway and an interurban 
railway, which are united into one system, has no ground for complaint 
if its combined transportation operations are on a fair, earning basis, 
although the interurban fares may not be at a point where they pro* 
duce, what might be called, a fair return on the value of the property 
devoted to that service. 

Return » Effect of unsound financing, ^ 

4. Rate increases will not effect a complete or permanent remedy 
for a utility resting on an unsound financial structure. 

JMum — Operating expenses — BepreciaHon, 

5. A depreciation allowance which was made in a rate proceeding, 
was made a direct operating expense and thus became a direct charge 
on the patrons of the business. 

Depreciation — Care of reserves, 

6. The California Commission declared it to be its purpose to re- 
quire the depreciation allowance to be actually set aside and used for 
that purpose only under the careful supervision of the Commission. 

Bei^reeiation — Amount of fund, 

7. A depreeiation fund should be sufficient to allow for the replace* 
meat of such depreciable items of property at the end of a reasonabk 
expected life as should be taken care of through the fund* 

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116 CALIFORNIA RAIliROAD COMMISSION. 

Depreciation — Funds — Safety of. 

8. The safety of a depredation fund should not be sacrifioed to » 
possible high rate of interest, but it is preferable to require merely 
that all earnings by the fund should be added to the reserve, whaterer 
these earnings may be, rather than to require an accounting on a strict- 
ly sinking fund basis at a definite rate of interest, irrespective of 
whether or not the fund actually was able to earn the fixed rate. 

Uetum — Amount — Interurban railufays, 

9. A rate of return of 5 per cent on the depreciated reproduction^ 
cost of interurban railway property is not unreasonably low in the 
case of a utility which has not been successful in the past and is operat- 
ing under competitive conditions, and a street railway operated fat 
connection therewith is earning a satisfactory income. 



Depreciatitm, 

Discussion of effect of failure to provide for depreciation, p. 129. 
Depreciation — Costs — Part of maintenance of property. 

Statement that cost of depreciation is part of the cost of maintain- 
ing the property which is part of the cost of the service, p. 1£9. 

[August 11, 1919.] 

Appuoatioi? for increase in interurban railway fares; one 
way fares increased from 11 cents to 15 cents, and a monthly 
commutation book increased from $3.30 to $4. 

First Supplemental Order. 

Appearances: 0. W. Durbrow, for Southern Pacific Com- 
pany ; Bishop & Behler, by H. M. Wade and L. R. Bishop, for 
the city of Oakland and Oakland Chamber of Commerce; Paul 
C. Morf and H. L. Hagan, for the city of Oakland; Frank D. 
Stringham and B. D. Marx Greene^ for the city of Berkeley 
and Berkeley Chamber of Commerce; A. F. St. Sure, for city 
of AJfimeda; H. F. Strother, for master mates and pilots in 
the employ of the Southern Pacific and San Francisco-Oakland 
Terminal Railways; Vincent Carroll, for marine engineers; C. 
W. White, for city of Hayward ; T. V. O'Brien, for the citizens 
of Hayward ; Sapiro, Neylan & Ehrlich, for East Oakland Pro- 
tective League and Merchants Exchange of Oakland; Leon 
Clark, for city of Albany; Morrison, Dunne & Brobeck and 
Creed, Jones & Dall, for San Francisco-Oakland Terminal Rail- 
ways. 

By the Commission: On June 8, 1918, the Commission 
made a preliminary order in this application (16 CaL R. C. R 
832) and authorized the San Francisoo-Oakland Terminal 

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&£ SAN FRANCISCX)-OAKLAND TERMINAL RAILWAYS. IIT 

Bailways to increase by 10 per cent its one-way and ccanmuta- 
tion surburban passenger fares. This order had the effect of 
raising the one way fare from 10 to 11 cents and the commuta- 
tion fare from $3 to $3.30 between San Francisco and points 
located in Alameda county, those being the rates established 
June 10, 1918, between the same points on the Southern Pacific 
Company by Director General McAdoo in his Order No. 28. 
The application had been consolidated with Applications Nos. 
3086, 3087, and 3219, and a number of hearings were held on 
the four applications, beginning September 6, 1917, and end- 
ing May 29, 1918. Applications Nos. 3086 and 8087 were filed 
in behalf of the Southern Pacific Company to increase their 
fares between these same points and were dismissed by this 
Commission June 8, 1918, by reason of the Southern Pacific 
Company having passed under Federal controL Application 
No. 3219, of the San Francisco-Oakland Terminal Railways, 
sought authority to increase its street car fares on the Traction 
Division serving points in Alameda and Contra Costa counties. 
This last application was disposed of by our Decision No. 5687, 
August 18, 1918 (15 CaL E. C. R 1070), by which applicant 
was given permission to increase the fares iii the street car zones 
from 5 to 6 cents. 

We, therefore, have remaining for consideration, in connec- 
tion with the transbay rates, only those of the Key Division of 
the San Francisco-Oakland Terminal Bailways embraced in 
Application No. 2985. The application as filed July 7, 1917, 
asked for higher passenger fares based on the large increases in 
operating costs consisting mainly of wages, paving, taxes, cost 
of materials and supplies, power and fuel. 

In Decision No. 5473, supra, we said : 

"On May 27, 1918, the Director General of Railroads, Hon. 
Wm. G. McAdoo, filed with this Commission his Order No. 28, 
initiating new freight and passenger rates on all federally con- 
trolled railways, the passenger rates to become effective on 
June 10, 1918, and the frei^t rates on June 25, 1918. 

The passenger rate schedule as initiated by the Director Gen- 
eral also affects so-called suburban and commutation rates, and 
in 80 far as such rates are concerned reads as follows: 

"Section 9. Commutation fares shall be advanced ten (10) 

P.UJL1920A. 



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118 CALIFORNIA RAILROAD COMMISSION. 

per cent. CommTitation fares shall be construed to indude all 

forms of transportation designed for suburban travel, and for 

the use of those who have daily or frequent occasion to travel 

between their homes and places of employment or educational 

institutions/' (Page 833.) 

«««««« 

**The numerous issues involved were presented by the appli- 
cants and protestants in these proceedings in a very thorough 
and complete manner. The Commission has now before it all 
of the data necessary in order to come to definite conclusions, 
but it has not yet been possible to come to a final decision as to 
the amoimt of increase which should be finally allowed. Pend- 
ing such decision it is our opinion that the Key System should 
be authorized to put into effect the same rates that will be estab* 
lished for the Southern Pacific as it seems to us proper that sim- 
ilar rates should become effective for both lines at the same 
time.*' (Page 834.) 

The San Francisco-Oakland Terminal Railways is divided 
into two. divisions — the Key Division, covering that part of the 
organization handling passengers by boat and rail between San 
iVancisco and Alameda County points, and the Traction Divi- 
sion, handling the street car and interurban traffic between 
points located in Contra Costa and Alameda counties. While 
this proceeding has only to do with Key Division rates, it will 
be necessary to deal, to a great extent, with the properly as a 
whole in order to reach a conclusion. 

Financial condition of the company. 

The financial condition of applicant as it appears in the last 
annual report filed with the Commission is shown on the follow- 
ing condensed balance sheet as of December 31, 1918: 

Aseets. 
InvestmeniB* 

Road and equipment '. $46,052,230.05 

Sinking fund 213,342.35 

Deposits in lieu of mortgaged property sold 11 JOO.OO 

Miscellaneous physical property 1,594,177.9^ 

Investments in affiliated companies : 

Stocks 1,979,344.2S 

Other investments: 

Bonds 13,601.00 

MieeellaMeous 3,464,0100.01^ 

Total investments : •53,328,896.6a 

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KB SAN FRANCISCO-OAKLAND TERMINAL RAILWAYS. 119 

Current Assets. 

OMh $66,040.41 

Special deposits 110,864.52 

lioans and notes receivable 500.00 

Miscellaneous accounts receivable 125,696.42 

Material and supplies 388,122.66 

Interest, dividends and rents receivable 528.93 

Total current assets $691,791.84 

Deferred Assets, 
Insurance and other funds $6,426.91 

Total deferred assets $6,426.91 

Vnadjusted Debits. 

Rents and insurance premiums paid in advance $16,322.75 

Other unadjusted debits 55,992.55 

Total unadjusted debits $72,315.30 

Grand total $54,098,929.7a 

Liabilities. 

Stock. 
Capital stock $28,175,000.0a 

Total stock $28,175,000.00 

Long Term Debt. 
Funded debt unmatured $18,825,000.00 

Total long-term debt $18,825,000.0a 

Current Liabilities. 

Loans and notes payable $3,848,901.51 

Audited accounts and wages payable 531,250.44 

Miscellaneous accounts payable 12,351 .86 

Matured interest, dividends and rents unpaid 952.310.00 

Matured funded debt unpaid 1,183,000.00 

Accrued interest, dividends and rents payable 318,012.8^ 

Total current liabilities $6,845,826.67 

Deferred Liabilities, 
Deferred liabilities $34,182.63 

Total deferred liabilities $34,182.63 

Unadjusted Credits. 

Tax liability $16,381.32 

Insurance and casualty reserves 5.000.00 

Operating reserves 25,875.03 

Accrued depreciation — road and equipment 866.725.02 

Reserve for amortization of franchises 22,094.40 

Other unadjusted credits 33,970.48 

$970,047.25 
Profit and loss debit $751,126.86 

Total corporate surplus $751,126.85 

■ I 

Grand total $54,098,929.70 

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120 CAUFORNIA RAILROAD COMMISSION. 

The investment in road and equipment of the entire prop- 
erty, including materials and supplies, it will be noted, appears 
on the balance sheet at $46,440,402.61. This figure is not 
reliable as an investment figure and should be compared with 
the valuation figures available for this purpose. 

It is our opinion that neither the investment nor the val- 
uation in this proceeding can be considered the chief factor in 
the determination of rates. It should be noted, however, that 
the Conmiission's engineering department's estimates of repro- 
duction cost less depreciation of this property, which figures in 
our opinion reflect as nearly as may be the "fair value" of the 
property devoted to the public service, are: $8,000,000 
(approximately) for the Key Division property, $11,000,000 
(approximately) for the Traction Division property, and a 
total of $19,000,000 (approximately) for the combined prop- 
erty. The valuation figures as reflecting the cost, less depreci- 
ation, are the values under which the company claims a fair 
return. 

The following table, compiled from applicant's income and 
expense statements in evidence herein, portrays the results of 
the company's operation for the Key and Traction divisions for 
the various periods shown: 

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BE SAN FRANCISCO-OAKLAND TERMINAL RAILWAY& 121 



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122 CALIFORNIA RAILROAD COMMISSION. 

Items representing operating income, as the table shows, are 
the amounts obtained after deducting operating expenses (itt- 
cluding depreciation and taxes) from the gross operating rev- 
enue, to which is added nonoperating income, and from this 
gross income payment of interest on funded and unfunded deb* 
and return on the property investment is obtained. The defici* 
for fiscal year 1917 for the Key Division is accounted for by 
reason of a charge to operating expense of $240,882.34, cover* 
ing abandonment of the old pier trestle, which amount should 
properly have been spread over a period of years. By elini' 
inating this charge, instead of a deficit of $44,821, a profit of 
$196,061 would appear. It vdll be noted that the increase in 
gross operating revenue 1918 over 1915 is $806,493.85, where- 
as the increase in expenses amounts to $1,111,109*77, indicat- 
ing that the growth in revenue has failed to keep pace with the 
increase in operating expenses. The operating costs com- 
menced to ascend in 1917 beginning with the decision of the 
board of arbitration in the dispute between the company and 
its steamer crews involving the engineers, masters, mates, and 
pilots, which resulted in changed working hours and the 
employment of additional men, entailing an increase in the pay 
roll of approximately $30,000 per annum. It is an established 
fact that since then the cost of labor and materials has steadily 
been on the increase. 

The following table was prepared from the applicant^ 
accounts and from reports made by the Commission's auditing 
department. It shows results for the Key Division only for the 
period beginning August 1, 1918, and ending June 30, 191&, 
compared with similar period for the preceding year. 

P.UJL1020A. 



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124 CALIFORNIA RAILROAD COMMISSION. 

From the foregoing table it will be seen that while operating 
revenue increased $177,997, the operating expenses, exclusive 
of depreciation, increased $255,576, an excess in the increase 
in expenses over increase in revenue of $77,579. When the 
claimed increase in depreciation of $49,288 is included, it is 
shown that the net operating profit for the eleven months* 
period 1918-1919, as compared with 1917-1918, ^as a 
decrease. 

In this discussion the item of depreciation enters as charged 
by the company without any correction on the part of the Com- 
mission. The matter of depreciation is a very important one 
and will be further considered in this decision. 

The fare of 11 cents and the commutation fare of $3.30 
authorized in our decision 15 Cal. R. 0. R. 832, constituting a 
10 per -cent increase on the Key Division, became effective June 
12, 1918, and the fare of 6 cents on the Traction Division, mak- 
ing an increase of 20 per cent, as authorized by our decision 15 
Cal. R 0. R. 1070, became effective August 31, 1918. In 
order to ascertain the effect of these increases on the revenue 
of both divisions of the San Francisco-Oakland Terminal Rail- 
ways, the Commission's auditing department made a compara- 
tive statement beginning with August 1, 1918, to and includ- 
ing June 80, 1919. Without producing the figures in detail it 
is sufficient to say that while in the period under consideration 
the increases in rates produced additional revenue to the 
amount of $685,116.88, the increases in expenses and taxes 
including depreciation as charged by the company amounting 
to $762,808.42, showing that during the ten months' period 
August 1, 1918, to and including May 31, 1919, the entire 
property earned net $77,691.69 less than it produced during 
the same period of 1917-1918. 

For the twelve months, <5omparing the fiscal year ending 
June 30, 1919, with the year ending June 30, 1918, we find 
that the Traction Company carried (pay passengers only) 
68,234,105 as against 66,407,534, or an increase of 1,826,571, 
indicating no diminution in travel by reason of the change in 
fare from 5 to 6 cents. The same condition developed on the 
Key Division, 15,338,617 passengers having been carried as 
against 14,663,552^ or an increase of 675,065, a toti^ inereaae 

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K> BAN FRANCISCO-OAKLAND TERMINAL RAILWAYS. 125 

for the two divisions during the twelve months' period of 
8,501,636 passengers. 

Were it not for the fact that there has been a remarkable 
increase in traffic during the last two years on both the Traction 
and the Key Divisions of this system, the financial results would 
be much worse. There appears to be so healthy and rapid a 
growth in population in the territory served by this company 
that it is sound to estimate that this growth will further con- 
tinue. This condition is taken into consideration in reaching 
our conclusions. 

Even with this condition obtaining^ it is apparent that the 
increased gross revenue from the increased traffic has failed to 
keep up with the increasing operating expenses. The results 
for the ten months' period September 1, 1918, to June 30, 1919, 
for the Key and Traction Divisions during which time the in- 
creased fares were in full force and effect^ will be apparent 
from the following table: 

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126 



CALIFORNIA RAILROAD COMMISSION. 





Key. 


Traction. 


IbtaL 


Gross operating revenue 

Operating expenses (excluding 
depreciation) • • • . . 


$1,194,165.34 
1,048,540.83 


$3,460,300.20 
2,311,164.50 


$4,054,466^4 
8,369,705.33 


Net operating rev^ue 

Add net commissary revenue . . . 


$145,624.31 
67,056.12 


$1,149,135.70 


$1,294,760.21 
67,056.12 






Total net revenue ....•••.. 


$202,680.63 
57,173.09 


$1,149,135.70 


$1,351,816.33 


Less taxes •••••• 


163A08.23 230:281.82 








Oneratincr income • . • 


$135,507.54 
1,375.49 


$986,027.47 
14,856.93 


$1,121,535.01 


Add nonoperating income 


16,231.42 


Oroaa income 


$136,883.03 
175,415.69 


$1,000,883.40 
236,677.99 


$1,137,766.43 


Total deoreciation •••• 


411,993.58 






Net income after deducting oper- 
ating^ expenses, including de* 
Dreoiation and taxes 


$38,532.56 
6,828.17 


$764,306.41 
28,856.29 


$726,772.86 


Correction: auditor's entry in 
connection with renewals for 
last four months of 1918 im- 
properly charged to operating 
expenses, now credited to nrof- 
it and loss and chargea to 
deoreciation 


29,894^ 






Corrected net income 

Deduct additional operating ex- 
penses: 
increased wages motormen and 
conductors retroactive No- 
Tember 1, 1918, to April 22, 
1919 (National War Labor 
Board award ) 


$32,704.39 

11,189.21 
10,560.00 


$788,161.70 
74,466.87 


$756,457^1 
•6,664.58 


Increased wages, ferryboat 
crews, retroactive January 
1, 1919 (account action of 
federally controlled lines) . . 


10,560.00 






Actual net income after deduct- 
ing all operating expenses (in- 
cluding depreciation and 
taxes) corrected 


$54,453.60 


$713,696.33 


$659,242.73 



Under a decision of the National War Labor Board, effective 
April 22, 1919, wage scales of motormen and conductors were 
increased and other wage increases have been given to various 
classes of the company's employees since May, 1919, 

[1] The Commission has definitely adopted the policy to 
recognize as operating expense all increases in labor costs and 
this policy will be adhered to in this proceeding. It will not be 
necessary in this decision to go into the details of the increases 
in operating expenses and the reasons for such increases. The 
subject is a familiar and pressing one and has been dealt with 

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HE SAN FRANCISCO-OAKLAND TERMINAL RAILWAYS. 127 

ediaustively in a number of previous decisions made by this 
Commission. 

A careful analysis of applicant's financial condition leads to 
the conclusion that the margin between revenues and operating 
expenses is steadily growing less. This is true for the prop- 
erty as a whole, taking the Traction and the Key Divisions 
together. It is also true to a lessor extent for the Traction Sys- 
tem alone, although it is apparent that the street car operations 
of applicant taken by themselves are still, even with the in- 
creased operating costs, returning a profit even though this profit 
on a fair rate basis is less than 2 per cent. The Traction Divi- 
sion earnings now are, as they have been in the past, carrying 
the Key Division's losses. Considering the Key Division alone 
(and it must be remembered that it is the rates on the Key 
Division that we are dealing with in this decision), the point 
has almost been reached where the revenues are insufficient for 
operating expenses and taxes alone with no margin whatever 
for a return on any rate base. 

For the property as a whole, the net income after operating 
expenses, depredation and tax^, is less than 5 per cent on the 
rate base. 

Rate hose. 

[2] The interurban service given by applicant is of a strict- 
ly competitive character. It will not prove practicable to have 
one set of rates for the Key Route and another set for the com- 
peting Southern Pacific lines. To fix fares on a theoretical rate 
base without regard to this competitive condition is impractica- 
ble and is, therefore, in our opinion unsound. 

[3] It is further our conclusion that the interurban service 
of this company and the street car service must be considered 
together. An applicant would have no cause for complaint if 
its combined transportation operations were on a fair earning 
basis. It has already been pointed out that the Traction opera- 
tions are carrying the Key Division's losses. It seems to us 
impracticable^ aside from the questions of value of the service, 
to increase the interurban fares to a point where they would 
produce what might be called a fair return on the value of the 

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128 CALIFORNIA RAILROAD C0MMII5SI0N. 

Key Diyision property alone. We are aware that this is Hie 
claim made by the company but it is our conclusion that this 
claim cannot be considered without, at the same time, giving 
consideration to the other controlling factors referred to. 

A fair decision both to the public and to the company should 
provide for increases in fares sufficient to place this company in 
a position where it can render adequate and efficient service 
to the communities on its lines. 

[4] It has been repeatedly pointed out by this Commission 
that the only permanent remedy for the financial difficulties of 
this company is a thorough-going reorganization of its finances. 
As long as the Key System rests on the present unsound finan- 
cial structure, it is bound to continue in financial difficulties in 
the future as it has in the past The rate increases will not 
effect a complete or permanent remedy of this situation. If it 
were practicable to do so, we would make reorganization one of 
the conditions of this order. The value and the cost of the serv- 
ice rendered by the company, in our opinion, justify an increase 
of interurban fares. Even with the fares as they are now pro- 
posed, the suburban rates wiU still be among the lowest in the 
entire country. This is true if we take into consideratioii both 
the quality of the ferry and electric service rendered and also 
the length of haul, which for the combined ferry and rail serv- 
ice on the shortest line amounts to 6.7 miles, and on the long- 
est line to 12.6 miles, with an average haul for all passengers 
carried of nearly 10 miles. 

Depreciaiion and DeprecicUion Reserve. 

In the figures of operating expenses shown heretofore, there 
are included for the several years varying amounts credited to 
depreciation reserves, increasing for the year ending December 
31, 1918, to the sum of $492,291. The applicant in 1918 made 
a radical change in its practices of depreciation accounting. 
Prior to 1918 the company charged altogether insufficient 
amounts against depreciation, and, in a number of statements, 
filed with the Commission the depreciation, actually charged 
on the company's books, was revised in order to reflect more 
accurately what in the company's oinnion was tiie actual result 
of its operations year by year. In the year 1916, for instance, 

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BE SAN FBANCISCOOAKLAND TERMINAL BAILWAYS. 129 

ike aotaal depreciation deduction from gross income according 
to the annual report of the company was $89,281.64, while in 
the subsequent statements that figure was increased to $473,197 
($204,731 for the Key property and $268,486 for the Traction 
property). In 1917, the actual charge appearing in the com- 
pany's annual report was $178,070.83, while the figure was 
increased in the statement to $488,607 ($211,216 for the Key 
property and $277,392 for the Traction property). The fig- 
ures for 1918 were $211,900 for the Key property and $280,- 
391 for the Traction property. 

The matter of adequate depreciation reserves is without 
doubt one of the most important considerations in this proceed- 
ing. In a number of investigations in various street railway 
properties throughout the state which are now under way, it 
has become increasingly clear that one of the principal reasons 
for the present difScult financial situation of these properties 
is the fact that in the past no provision at all, or only inade- 
quate provision, has been made for the inevitable wasting away 
of property from natural or other causes, that is summed up in 
the term "depreciation.'' 

It is self-evident that when track and equipment wears away 
and must be replaced and there is no money available for such 
replacement, operating expenses must increase, the value of the 
property must dwindle, the capital account will be inflated, 
and, what is perhaps most important, service must deteriorate. 
Without exception, almost all street railway properties, not only 
in California but throughout the United States, are to-day con- 
fronting this deplorable condition. 

Whatever the ultimate solution of the present day street rail- 
way difficulties may be; whether we have to come to outright 
public ownership or to some form of partnership between the 
present owners and the public on a cost of service basis; or 
whether private ownership and operation continues ; there is no 
escape from this proposition : If the service is to continue, the 
cost of tie service must be forthcoming. And this cost of serv- 
ice is made up of the three chief items of expense, namely, cost 
of operation, taxes, and cost of money. Included in the cost of 
operation is the cost of maintaining the property and maintain- 

P.U.R.1920A. 9 



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13d CALIFORNIA RAILROAD COMMISSION. 

ing the service. Included in the cost of maintaining the pn^ 

erty is the cost of depreciation. 

[5-6] We propose in this proceeding to fix inch rates as 
will enable the company to meet for the future all of the costs 
of operation, including the cost of depreciation, as will provide 
for taxes, and as will, in addition, give such a return on the 
property devoted to the service of the public as seems possible 
under the circumstances. The depreciation allowance, there- 
fore, which will be made in this rate fixing proceeding, is a 
direct operating expense, exactly as the cost of power, for in- 
stance, and becomes a direct charge on the patrons of this busi- 
ness and consequently on the public. We propose, therefore, 
that in the future the amount allowed to insure against depre- 
ciation shall be actually set aside and used for that purpose only 
under the careful and strict supervision of this Commission. 
One great difficulty in the past has been that the amounts osten- 
sibly set aside for depreciation were book figures merely and 
that the actual money was used for altogether different pur- 
poses. It must be clear that depreciation funds used for new 
construction or for additions and bettennents are not available 
when the need for the replacement of the original property 
items arises. And the additions and betterments paid with 
such funds cannot possibly be a substitute for what it is neces- 
sary to replace. As long as the credit of a utility is good and 
as long as there exists sufficient margin between property values 
and outstanding bonds, the real condition is not apparent and 
the financial aspect of the question is not a very serious one. 
Additional bonds can be issued and sold and the property can 
be kept intact. Operating expenses in normal times can be 
increased to take care of unusual replacement and requirements 
without great damage to net revenue. But such practices can 
not be considered as sound under normal conditions even, and 
with prosperous concerns. In the present situation confronting 
the street and interurban railway properties, a continuation oi 
this course must prove disastrous. 

[7] A depreciation fund should be sufficient to allow for the 
replacement of such depreciable items of property at the end of 
a reasonable expected life as should be taken care of through the 
fund. What this sum should be, it is impossible to determine 

P.tJ.R.1920A. 



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EE SAN FRANCISOO-OAKLAND TERMINAL RAILWAYS. Ul 

witk absolute accuracy at this time because of necessity estimates 
of what will happen in the future enter into the problem, A 
close approximation, however, can be had. From time to time 
the status of the depreciation reserve should be compared with 
the actual depreciation of the property and the annual allowance 
for the fund should be either increased or decreased as actual 
conditions may demand. 

The allowance should be neither too large nor too small. If it 
is too small, the property and the service will suffer. The depre- 
ciation reserve is intended to take care of the future and is not 
intended to provide a reimbursement for neglected renewals and 
maintenance in the past. Such renewals, of course, must be 
made, but the allowance which will be set up with inauguration 
of the proposed rates is intended to keep the depreciable prop- 
erty intact for the future only and the deficiencies of the past 
will have to be provided for out of surplus. We have reached the 
conclusion that the amounts set aside on the company's books 
(though it will be noted not actually set aside) in 1918 are too 
large. After segregating between depreciable and nondepreciable 
property and between ordinary operating expenses and such 
replacements as should come from a depreciation reserve, we are 
of the opinion that there should be set aside annually to take care 
of the now existing depreciable property, the sum of $240,000. 
Of this amount there should be assigned to the Key property the 
sum of $100,000 per year and to the Traction property $140,000. 
This total sum should go into a sinking fund in monthly instal- 
ments of $20,000 and should be set aside in actual cash and in- 
vested, imder the direction of this Commission. 

[8] The safety of the fund should not be sacrificed to a pos- 
sible high rate of interest. We believe it is preferable to require 
merely that all earnings by the fund shall be added to the 
reserve (whatever these earnings may be) rather than to require 
an accounting on a strictly sinking fund basis at a definite rate 
of interest, irrespective of whether or not the fund actually was 
able to earn the fixed rate. This method seems to us more equi- 
table to the company because under the fixed interest rate the 
unearned portion of the fund would have to be made up from 

the company's surplus. 
P.U.R.1«20A. 



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1S2 CALIFORNIA RAILROAD COMMISSION. 

Disburs^nents from the fund are to be made only on detailed 
showing and on the periodical approyal of this Commission. 

Proposed Fares and Estimated Results. 

We have made a careful study of the operations of the Key 
Division and of the operations of the property as a whole, have 
considered all of the facts and circumstances and records in the 
case, and it is our conclusion that the applicant should be 
authorized to increase its fares as follows: 

(a) One-way fares on entire system between all points whew 
the present fare is 11 cents to be increased to 15 cents. 

(b) Monthly commutation books between all points where 
the present fare is $3.30 to be increased to $4. 

[9] It is our estimate that with these fares, the applicant's 
revenues will be increased by approximately $400,000 per 
annum. The greater percentage of this amount will be a net 
increase, because whatever additional operation expense in- 
oreases may come, will occur regardless of the rate of fare. It 
is true that under these rates the company, with present and 
estimated operating expenses, will probably not earn more than 
5 per cent on the depreciated reproduction cost of its operative 
Key Division property. But this rate of return is not an unrea- 
sonably low one, in our opinion, when the past history of the 
company, the competitive conditions and the returns from the 
Traction Division are taken into the calculation. The increase 
in earnings, we confidently believe, will be sufficient to take 
care of all increased operating expenses, will enable the com- 
pany to set aside an actual depreciation reserve as indicated 
above and will make it possible in addition to secure the neces- 
sary funds to rehabilitate its track and structures, where rehabil- 
itation is necessary, and to provide for the necessary additions 
and betterments. We believe that with this increase, the appli- 
cant will be enabled to render an entirely efficient and adeqAiate 
service to the public. 

It is our opinion, as repeatedly expressed, that a flnaneU 
reorganization of the company is necessary and that no pci- 
manent satisfactory operating and financial resuH tan be 
obtained until such a reorganization has been made. 
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FUHKMANN t. IKTBRNAHONAL RAILWAY 00. 133 



NEW YORK PUBLIC SmiVICS COMMISSION. SECOND DISTRIOT. 

LOUIS P. FUHEMANIT 

V. 

INTEBNATIONAL EAILWAY COMPANY. 
[Case No. 6825.] 

Bates — Poicer of Comtnisaion — Power of legislature ob delegated. 

1. The New York CommiBsion, aa agent of the legislature, has 
power to change a rate fixed by contract between a utility and a city, 
which provided that nothing in the contract should be considered aa 
preventing the legislature from regulating the rate in question. 

Return — Gross income — Greatly increased fare to produce large 
increase in immediate receipts. 

2. Gk)od busineaa judgment indicates the unwisdom of putting into 
effect greatly increased street railway fares that immediate receipts 
may be largely increased to take care of deferred maintenance, after 
which, consideration can be given to lowering the rates, particularly 
where the expenditures' will necessarily be spread over many months, 
and the company's credit, with a moderate increase, which, over a con- 
siderable period, will enhance the net receipts, will be restored propor- 
tionately. 

Intercorporate relations — Jurisdiction of Commission — Parent and 
subsidiary company, 

3. The New York Commission has jurisdiction over the relations 
«f a street railway company and another corporation holding all of the 
stock thereof. 

Vdduation — Going value — Limitation of allowance for, 

4. Going value, as recognized by the laws of New York state, is 
limited to expenses incurred in the earlier years of the life of a utility 
ia building up its business, and not recovered from the publio in the 
way of 'earnings. 

Tmluation — Going value — Effect of contract, 

6. A contract between a utility and a city, which, by its terms, 
settles all disputes arising out of fares and the giving of transfers by 
an agreement to transport passengers for a fixed fare, and which con- 
tained a provision that nothing therein contained should be construed 
to prevent the legislature from changing the rate, precludes any con- 
sideration of going value antecedent to the date of the contract, and 
also from that time forward until the legislature assumes the regula- 
tioB of the fare, or until the company asks relief from the contract. 



Beturn — Decreased patronage from increased fare. 

Discussion of amount of falling off in street railway traffic iqKm 
iMoreasiag fares, p. 138. 
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184 NEW YORK PUBLIC SERVICE COMMISSION. 

Security issues — Financing the equity. 

Discussion of evil effects of ''financing the equity" or pledging ttook 
to secure bonds, p. 138. 

Intercorporate relations — Exploiting subsidiary company. 

Discussion of evil effects of exploitation of subsidiary company, 
p. 139. 

Bates — Mutual interest of stockholders and public. 

Discussion as to mutual interests of stockholders and public in hay- 
ing reasonably adequate rates, p. 140. 

Intercorporate relations — Exploitation of subsidiaiif company — Be* 
turn of funds. 

Statement that funds taken by holding company from subsidiary 
company which was practically in an insolvent condition should be 
returned, p. 140. 

Public utilities — Control by beneficial oumers of equity rather than 
in holding company. 

Statement that control of utility should be in the hands of the 
benefici&l owners of the equity rather than in the hands of a holding 
company, p. 140. 

[October 21, 1919.] . 

Complaint by Louis P. Fuhrmann, individually and as may- 
or of the city of Buffalo, relative to the street railway fares in 
said city, and answer by street railway company asking for 
increase in fares; fares fixed at 7 cents cash, and four tickets 
for 25 cents. 

Appearances: Williari S. Rann, Corporation Counsel, and 
George E. Pierce and Andrew P. Ronan, Assistant Corporation 
Counsel, for the city of Buffalo; H. A. Zimmermann, Buffalo, 
for the town of Tonawanda; Penney, Killeen & Nye (by 
Thomas Penney and Henry W. Killeen), Buffalo, and Morton 
G. Bogue, New York city, for the International Railway Com- 
pany. 

Hill, Chairman: In December, 1916, the local authorities 
of the city of Buffalo filed with this Commission a complaint 
alleging that the 5-cent fare collected by the International Bail- 
way Company for passenger transportation over its lines within 
the city of Buffalo was excessive, unjust, and unreasonable, and 
praying that the same be reduced. Thereupon, the railway com- 
pany began an action in the supreme court to restrain action 
upon the complaint upon the ground that, by virtue of the pro- 
visions of the so-called Milbum Agreement, which fixed the 6- 
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FUHRMANN t. INTERNATIONAL RAILWAY CO. 136 

cent rate, the Commission was without power to lower the rate. 
The complaint was not pressed further at that time and the 
court proceedings instituted by the company were held in abey- 
ance; the war came on and the operating expenses of the com- 
pany were very greatly increased, and in 1918 it discontinued 
its court proceedings, and on September 16 of that year, filed 
an answer to the city^s complaint, which was still pending be- 
fore the Commission, in which it alleged that the 5-cent fare 
was unreasonably and unjustly low, and asked that the Com- 
mission determine a just and reasonable rate of fare- There- 
upon, the question of the power of the Commission to regulate 
the rate was presented to the supreme court, reaching the court 
of appeals on review, and a final determination was made by 
the latter court upholding the power of the Conmiission, by vir- 
tue of the reserved power of the legislature to regulate the fare 
which was embodied in one of the provisions of the Milbum 
Agreement. Hearings were then held by the Commission upon 
the merits, evidence taken, briefs filed, and it is now the duty 
of the Commission to determine a just and reasonable rate. 

The Milbum Agreement. 

[1] Since January 1, 1892, the railway within the city of 
Buffalo has been operated in conformity to the provisions of a 
contract between the city of Buffalo and certain predecessor 
companies of the International Railway Company, which is 
commonly known as the Milbum Agreement The binding 
quality of this contract is not questioned by either the city or 
the company. It was entered into upon substantial considera- 
tions moving between the parties. It was approved by the leg- 
islature and has been accepted by the present company. A 5- 
cent fare was fixed to be charged within the city of Buffalo sub- 
ject only to the proviso that nothing in the contract should be 
considered to prevent the legislature from regulating the fare 
in question. Pursuant to this last-mentioned provision the Com- 
mission is now, as the agent of the legislature, undertaking such 
T^ulation, the court of appeals having determined that it has 
power to do so as above stated. International Railway Co. v. 
Public Service Commission, 226 N. Y. 474, P.U.R.1919P, 
556, 124 N. E. 123. 

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x3« NEW YORK PUBLIC SERVICE COMMISSION. 

ValiuUioru 

As a basis of sucli determination it is requisite that a valua- 
tion of the company's property within the city of Buffalo devot- 
ed to the public service be first fixed upon. This we have done 
and have arrived at the figure of $18,820,606.38 as the value of 
such property, both tangible and intangible, and an item of 
$882,000 for working capital. This sum is based on the esti- 
mated and assumed actual cost of the property in place as the 
expenditure was made from time to time, including an allow- 
ance of about $1,200,000 for intangibles or overheads. Table A, 
following, shows the calculation by which this result waa 
reached. 

As shown in the table, we have rejected from the valuation 
the item of $12,000,000 and upwards carried in the company** 
accounts under the heading of "Other Intangible Property to be 
Amortized," with a statement of our reasons for so doing. 

The figure adopted represents undepreciated costs. While 
undoubtedly depreciation exists, no direct evidence was given 
to indicate its amount, and the questions, whether actual invest- 
ment or reproduction value, and whether with or without depr^ 
ciation, were not discussed by the parties, and, in view of the 
fact that the valuation adopted is in a sense tentative, we will 
not at this time attempt to determine them. The rate, whick 
will be permitted, is for a limited period only and remains with- 
in the power of the Commission to further alter and adjust* 
For the purposes of the present determination we will therefore 
adhere to the figure stated. 

The ease has been presented not with a view on the part of 
the city or the company to obtaining at this time a final and 
binding determination as to the value of the property devoted 
to the public service. It was apparently assumed by both sides 
that a figure could be arrived at without great controversy which 
would afford a sufficient basis for the immediate purposes of 
this case, and which would be op«i to further inquiry in any 
future eonsideration of rates. Accordingly, there was little, 
if any, discussion or contention by the parties as to the princi- 
ples to be applied. The Commission will treat the case accord- 
ingly and the valuation which it will adopt as a basis for return 
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FDHRMANN ▼. INTERNATIONAL RAILWAY CO, 137 

and the concepts^ upon which the same is based^ will be consid- 
ered to be binding cmly for the purposes of the present 
determination, and not necessarily in any future consideration 
oi the rate. At the same time, the Commission has attempted 
to reach a valuation, which, in its. opinion, will at least approx- 
imate a correct figure. 

Current Financial Needs. 

[2] The company shows the immediate need of a consider- 
able amount to be expended for defeired maintenance which has 
Jiccumulated in recent months, and urges that temporarily at 
least a greatly increased fare be put in effect to the end that the 
immediate receipts be largely increased, which would permit of 
the funds being used directly to meet such expenditures, after 
which consideration could be given to lowering the rate. We 
suppose that under the broad powers of the Commission this 
«ould legally be done, but we feel strongly that every consid- 
eration of good business judgment indicates the unwisdom of 
such method. Nor do we consider that such a course is at all 
necessary to compass the end in view. The expenditures will 
necessarily be spread over many months, and with a moderate 
increase, which, over a considerable period, will enhance the net 
receipts, the company's credit will be restored proportionately. 
In the mercantile world income in sight can be used in the way 
of credit with practically as good effect as cash in hand, while, 
on the other hand, violent fluctuations in the rates of fare so 
surely tend to disrupt traffic that such a course would be very 
likely to entirely defeat the object to be attained. Fortunately, 
in this respect, the Commission is clothed with broad discretion 
and this suggestion meets with its disapproval. 

BeventLe Required for 8 Per Cent Return. 

Using as a basis upon which to compute the return to which 
the company is entitled the figure of $18,820,606.38, and 
assuming as rate of return 8 per cent, we reach the sum of 
$1,505,648.61, and crediting to this requirement the return 
which we estimate will be realized upon the present rate of 
fare, viz., $863,059.05, we find a required balance to be secured 
from increased fares of $1,142^589*46. 

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138 N£W YORK PUBLIC SERVICE COMMISSION. 

The Commission estimates that with a 7-cent cash fare and 
a ticket rate of 6J cents (four tickets for 25 cents) an average 
fare of about 6^ cents will be realized. We assume there wijl 
be a falling off of 9 per cent in traffic This is necessarily spec- 
ulative and we have no sure measure by which to determine 
what the falling off will be. Upon this calculation we realize 
a gain of approximately $1,200,000, thus making up somewhat 
more than the total assumed required return. Table C shows 
the calculations supporting this result. 

Table D gives a comparison of the reported main track, mile- 
age, bonded debt, and stock issues per mile, of the larger trao- 
tion systems in the Second Public Service Commission District 
In such a comparison allowance must be made for the possibil- 
ity of varying conditions. 

Oeneral Condition. 

The International Railway Company has a bonded debt as of 
December 31, 1918, of $28,370,582, in addition to which it has 
outstanding capital stock of $16,707,500. We find the com- 
pany in an insolvent condition, unable to meet its current liabil- 
ities out of earnings or surplus. This condition may be ascribed 
to a top-heavy financial structure, the recent great increase in 
operating expenses, with no corresponding increase in rev- 
enues, resulting in a large accumulation of deferred liability 
and loss of credit. 

All of the capital stock of the International Railway Com- 
pany having come into the ownership of a New Jersey corpo- 
ration, known as the International Traction Company, that 
company performed the operation known as "financing the 
equity," that is to say, it pledged the stock with other collateral 
in trust, and issued against it bonds bearing 4 per cent interest 
j-^ayable semiannually. The traction company has defaulted in 
the interest on these bonds. This transaction has been very 
widely criticised, and is believed by many to have been the 
cause of most of the financial difiiculties which have attended 
the railway company. It may not be amiss for the Comimis- 
sion to point out that this method of control of the International 
Railway Company includes some highly objectionable features. 
In the first place^ the bonding of the entire equity of any prop- 

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FUHRMANN v. INTERNATIONAL RAILWAY CO. 139 

erty, public utility or otherwise, is clearly an element of groat 
weakness. A company, which cannot forego a dividend without 
precipitating a default in the payment of interest on an out- 
standing bond issue, is embarrassed the moment its income is 
diminished to any considerable degree by the ordinary fluctu- 
ations of business. It is like a merchant doing business with 
no surplus or reserve over and above his debts. Another objeo- 
tion, equally vital, is, that should the property thus pledged 
for any reason become or prove to be less valuable than has been 
estimated, serious embarrassment ensues and the company be- 
eomes bankiupt. 

Another objectionable feature of such financial arrangements 
38 reflected in the evidence, where it is shown that during the 
year 1918 the traction company purchased a coal mine for 
$150,000 and resold it to the railway company for double this 
amount within a few months after the purchase. No evidence 
was given to show any increase in value between the time of the 
purchase and the time of the sale. We have been unable to 
find, however, that this has been* a common practice between 
the companies. It appears that all of the materials used in 
operation of the railway company are purchased in the open 
market and not through the traction company or any subsidiary 
interests, nor is there any evidence that in any other instance 
the railway company has been thus exploited. 

But it further appears that since March 1, 1918, when the 
last dividend on the railway stock was paid by that company to 
the traction company, the former has advanced to the latter in 
cash upwards of $160,000 on open account which remains un- 
paid. This transaction occurred while the railway company 
was in the courts seeking increased revenues alleged to be need- 
ed to forestall its own insolvency. 

It is too obvious to be questioned that the profit of $150,000 
paid the traction company on the turnover of the coal mine, 
and the cash advance made as above stated, were improper 
exploitations of the railway company's treasury for the benefit 
of the embarrassed traction company, and the question is thus 
forcibly presented to the Commission whether or not any in- 
creased revenues, which may be provided by an increase in fare, 
will not be similarly withdrawn, and thus diverted from the 

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140 NEW YORK PUBLIC SERVICE COMMISSIOK. 

expenditures for maintenance, proper operation, and payment 
of interest on the outstanding bonded debt of the railway comr 
pany. 

[3] It is urged by the learned counsel for the railway com- 
pany that the relations between these corporations are not the 
subject of the jurisdiction of the Commission and that it has 
no right to inquire into or consider thenL But the Public Serv- 
ice Commissions Law gives the Commission general supervision 
not only of the railway company (§46) but also of a corpora- 
tion or person "owning or holding a majority of the stock of a 
common carrier in respect of the relations between such eommon 
carrier . . . and such owners or holders in so far as such 
relations arise from or by reason of such ownership or holding 
of stock thereof or the receipt or holding of any money or prop- 
erty thereof or from or by reason of any contract between them'/ 
(§6). This language would seem to need no interpretation and 
fully answers the contention of the counsel in this regard. 

The Commission is of the opinion that the proposed relief 
should be extended only in ^uch manner as to remain within 
control. While the beneficial owners of the proper^ are en- 
titled to a reasonable rate of fare, the interest of the public in 
the preservation of the railroad so that satisfactory service shall 
be given at reasonable rates, is equally involved. Unless the 
property is maintained and conserved, neglect in these respects 
will later on be reflected in a breakdown of service. It will be 
idle to extend relief to the railway company if its added re- 
ceipts, instead of going to restore its credit and maintain its 
property, are to be diverted to the traction company in the form 
of improper advances. 

It is apparent that the increased revenues will not be proper- 
ly available for the purpose of restoring the credit of the trae- 
tion company. It appears that the withdrawal of funds, above 
referred to, took place when the railway company was approach- 
ing default on its own interest and for all practical purposes 
in an insolvent condition. These funds should be promptly re- 
stored. 

It has been intimated to the Commission that plans are 0n 
foot to remedy the objectionable conditions above pointed out 
by a reorganization of the corporate structure^ which will eUnu« 

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FUHRMANN y. INTERNATIONAL RAILWAY CO. 141 

nate the traction company and place the railway company on a 
sound financial basis with the beneficial owners of the equity is 
direct control. This is highly desirable and the Commission 
strongly recommends it 

The order, permitting an increase in rates, will be made ef- 
feetire for a period not to exceed six months, beginning not 
earlier than November 1, 1919. At the end of that time the 
conditions may be very materially changed. On a proper show- 
ing, if necessary, the period can then on application be extend- 
ed, or such other order be made as the oircumstanoeermay seem 
to require. 

The order will also contain such conditions as will tend to 
ecmserve the revenues of the company for its proper corporate 
purposes. The terms of the order will be settled by the Chair- 



TABLE A. 
VahiatiaB of the Physical Property and Related Intangibles of the Buffalo 

City Lines as of Dec«nber 31, 1918. 
An Lines: 

Total fixed capital as of June 30, 1915 $38,374366.33 

Lees other intangible capital to be amortized 12,651,600.00 

' •125,723,366.33 
* This item also includes intangible value to cover engineer- 
ing and superintendence, miscellaneous construction ex- 
penditures, and interest during construction, amounting 
to approximately $1,900,000. 
Buffalo City Lines: 

Reported to represent 63 per cent of the total valuation t 
Therefore, 63 per cent of $25,723,366.33 as of June 30, 

1915, equals $16,206,720.79 

Plus additions to fixed capital from July 1, 1915 to Decem- 
ber 31, 1918 2,244,234.00 

and "New Line* « 17,000.0^ 

Total fixed capital applicable to Buffalo eity lines as 

of December 81, 1918 $18,466;954.79 

B«ss Reserve for depreciation: 63 per cent of reported re- 
serve of $838,648.28 for aU lines 628,348.41 

l^hiation of tangible and related intangible property of the 
International Railway Company in t£9 city of Buffalo as 
of December 31, 1918 $17,938,606.38 

Flos allowance for working capital 882,000.00 

Amount upon which to compute return $18,820,6Q6.38 

It will be observed that we have adopted in Bubstance die 
costs appearing upon the company's books, the entries having 
"been made as the result of the Commission's examination made 

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14t MEW YORK PUBLIC SERVICE COMMISSION, 

in 1915 and 1916. The end then sought was to obtain as dose 
an approximation as possible to actual cost, and an allowance 
of about $1,900,000 for the intangible items of engineering and 
superintendence, miscellaneous construction expenditures and 
interest during construction was made by the Commission. This 
we have included. We have excluded the large item of "other 
intangible capital to be amortized^' $12,651,500, which was 
apparently allowed to stand in order to balance the accoimt. 
This was directed to be amortized not from earnings but from 
income. The records show that at that time the Commission 
was urged, but refused, to allow any part of this item to be car- 
ried as "going value." 

[4, 5] Going value, as recognized by the laws of this state, 
seems to be limited to expenses incurred in the earlier years of 
the life of a utility in building up its business, and not recovered 
from the public in the way of earnings. Aside from any bear- 
ing upon that question which the Milburn Agreement may have, 
we do not see how any substantial amount can be claimed under 
this head. It would seem clear, however, that that agreement, 
which by its terms settled all disputes arising out of rates of 
fare and the giving of transfers, by the agreement to transport 
passengers for a fixed fare, precludes any consideration of 
going value antecedent to its date, and it seems equally clear that 
from tiiat time forward until the legislature assumes the regula- 
tion of the fare the same principle must govern. 

It is not the case of a maximum rate being fixed as one of the 
conditions of a consent to construction and operations granted 
by the local authorities, and it does not necessarily follow that 
the principle which we are applying here would be applicable to 
that class of cases. The distinction is pointed out in the recent 
decision by the Virginia supreme court of appeals in the case 
of Virginia Western Power Co. v. Commonwealth ex rel. Clif- 
ton Forge, P.TJ.E.1919E, 766, 99 S. E. 723; and the Cleve- 
land Case, 194 U. S. 517, and the Columbus Case, 249 TJ. S. 
399, 63 L. ed. 669, rest upon the broad powers of contract given 
to Ohio municipalities by the legislature of that state. 

The binding power of the Milburn Agreement does not rest 
upon any constitutional or legislative grant of power to impose 
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rUHRMANN V. INTERNATIONAL RAILWAY CO. 143 

conditions in the consent of local authorities, but upon the fact 
that it is a contract between the city and the railroads based 
upon valuable considerations and ratified by the legislature. It 
fixed not a maximum or a minimum, but the exact rate of fare, 
subject only to the proviso that nothing in the contract con- 
tained "shall be construed to prevent the legislature regulating 
the fare." 

If we follow the plain intent and meaning of this contract, it 
seems quite obvious that the company cannot, now that the pow- 
er so reserved by the legislature is being exercised by the Com- 
mission, ask that any going value be taken into account for the 
purpose of making up possible past deficiencies of return, and 
conversely, that the municipality cannot now be heard to re- 
quire that any excessive return which may have been secured 
by the company during the period of operation under the rate 
fixed by the contract be now taken into account in fixing future 
rates. It would se^tn apparent that any such treatment of past 
operation would have the effect of defeating the object of the 
contract so far as it fixed the rate and rendered the contract 
rate, heretofore charged^ not an actual but a nominal one. 

The company, while not conceding the correctness of this 
view, contends that if it is adopted the regulation by the Com- 
mission should be assumed to have its inception as of the date 
of the company's application for relief. That contention seems 
just The investigation by the Commission, as well as its deter- 
mination, may well be considered a part of the exercise of the 
reserved regulatory power, and will be treated accordingly. 
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144 NEW YORK PUBLIC SERVICE COMMISSION. 

TABLE B. 

Computations Used in Arriving at Estimated Gross Income of the Buffalo 

City Lines. 

Buffalo City Line — Per Company's Books, 

Operating revenues January 1 to June 30, 1919 . . $3,363^72.25 
Revenue deductions for the same period — 

Maintenance of way and structures $230,510.76 

Maintenance of equipment 324,871.09 

Traffic expenses 14,765.00 

Conducting transportation 1,530,240.39 

Accidents and damages 1481,784.88 

General law expenses 19,503.31 

Other general expenses 171,059.81 

Taxes 231,061.87 

Rentals 217.50 

Depreciation (as per books) 5,222.30 

Total revenue deductions $3,009,236.01 

Gross income for the first six months of 

the year 1919 $354,336.34 

Gross income for entire year, $354,335.34 X 
2=» $708,670.68 

Buffalo City Line — As adjusted hy the Commission^ 

Operating revenues January 1, to December 31, 

1919 $6,727,144.50 

Revenue deductions January 1, to December Zl, 
1919: 

Maintenance of way and structures $461,021.52 

Maintenance of equipment 649,742.18 

Traffic expenses 29,630.00 

Conducting transportation 3,060,480.78 

Accidents and damages 1 679,625.99 

General law expenses 39,006.62 

Other general expenses 342,119.62 

Taxes 462,123.74 

Rentals 435.00 

Depreciatiun '640,000.00 

$6,864,086.49 

Estimated gross income for the year 1919 
at the five cent rate after allowing for 
operating expenses, taxes, and deprecia- 
tion $363,069.06 

1 Aecidents and Damages, 

This item is entered for the six months at $481,784.88, or at the rate of 

$963,669.76 for the year. The corresponding item for several preceding years 

was M follows: 

1914 $315,377 

1915 293,103 

1917 473,235 

1918 679,626 

The large and rapid increases in this item are not very clearly ezphtine^ 

«videntlv there is an accumulation in the later years of liabilities deferrect. 

If we allow as a proper allocation to the year 1919 the same amount charged 

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FUHRMANN v. INTERNATIONAL RAILWAY CX). 145 

in 1918 we will probably be charging the current year with its full pro- 
portion. The item will be adjusted accordingly. 

^ • The depreciable property of the International Railway in 

the city of Buffalo amounts to approximately $16,000,000.00 

which at the rate of 4 per cent (.04% ) refleots the amount .04 

applicable to depreciation during the year 1010 640,000.00 

Estimate of Operating Results Under the Increased Rates Period of one Year. 

Buffalo city lines — 
Hew rates: 

Cash fare — 7 cents per pass^ger 

Tickets sales— four tickets for 25 cents 

Estimated to yield 6^ cents per passenger 
Number of passengers estimated 

to be carried at 6 cents per 

passenger 132,624,145 

Estimated loss of passengers due 

to fare increaBe---9 per cent of 

above 11,927,173 

Bstimated number of passengers 

at new rate 120,596,072 

Estimated revenue per passenger 

at new rate .065 $7,838,803.18 

Compared with the passenger receipts from 
132,524,145 passengers estimated to be car- 
ried at 5 cents • 6,626,207.26 

Estimated increase in passenger revenue $1,212,595.03 
which, added to the estimated gross income 
for the year 1919, after allowing for oper- 
ating expenses, taxes, and depreciation, as 
shown in Table "B'' 368,059.06 

npresents the estimated gross income for 

one year at the new rate $1,676,634.98 

Betarn based upon valuation: — 

Total fixed capital and related intangibles, 
such as engineering and superintendence, 
miscellaneous construction expenses and 
interest during construction as of December 

SI, 1918 $18,466,964.79 

&MS reported reserve for depreciation appli- 
cable to Buffalo city lines 528,348.41 

Valuation of the tangible and related in- 
tangible property of the International 
Railway Company in the city of Buffalo 
as of December 31, 1918 $17,938,606.38 

Pku allowance for working capital 882,000.00 

Amount upon which to compute return— 

as shown in Table ''A" $18,820,606.38 

Eetum at 3 per cent on above valuation . • $1,606,648.61 

resulting in an excess of gross income of 
over the amount believed to be a fair re* 
turn upon the valuation of the company's 

property $70,006.47 

TJJJR.1920A. 10 



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146 NEW YORK PUBLIC SERVICE COMMISSION. 

TABLE D. 
Cost Per Mile of Track of Electric Railways Named. 





Main 

Track 

Mileage. 


Fixed 
Capital. 


Mortgage 
Bonds. 


Stookfc 


New York State Railways 

(as of Dec. 30, 1917) 

Authority, Needy, 1918 

Per mile 


416.67 
103.3 
134.4 
45.46 
46.83 


$60,231,709 
120,584 

11,730,133 
113,554 

7,353,084 
64,710 

8,805,869 
83,737 

8,810,220 
83,138 


$24,693,000 
59.277 

6,500,000 
62,923 

2,676,000 
19,911 

1,000,000 
22,002 

2,467,000 
54,260 


$23,814,900 
67,100 


United Traction Co. (as 
of Dec. 31, 1918) 
Authority P.S.C. Report 
Per mile 


12,600,000 
121.007 


Schenectady Railway (as 
of Dec. 31, 1918) 
Authority P.S.C. Report 
Per mile 


4,100,000 
30,606 


Yonkers Railroad Co. (as 
of Dec. 31, 1918) 
Authority P.S.C. Report 
Per mile 


1,000,000 
22,002 


Bingham ton Railroad Co. 

(as of Dec. 31, 1918) 

Authority P.S.C. Report 

Per mile 


078,996 
21,361 






International Railway Co. 

— all lines (as of Dec. 

31, 1918) 
Authority P.S.C. Report 
Per mile 


404.28 


44,486,405 
110,061 


28,370,582 
70,175 


16,707,500 
41,327 




International Railway Co. 

— Bujfalo lines 

Per mile 


208. 


28,032,105.16 
134,770.00 


(63 per cent 

of total) 
17,873,466.66 
85,930.00 


(63 per cent 

of total) 
10,525,725. 
60,604.00 


Dec. 31, 1918 





Irvine, Fennell, and Kellogg, Commissioners, concur, the 
latter filing memorandum; Barhite, Commissioner, concurs in 
result, filing memorandum. 

Kellogg, Commissioner: I concur in the opinion of the 
Chairman. I approve of this increase in fare, however, only 
as a temporary expedient, and approve of the proposed order 
only because it is extremely limited as to time. 

An important factor in the computation is the assumed de- 
crease of travel resultant from the increase in fare. This, I 
think, is largely problematical, and the increase of rate pro- 
posed is justified only upon the assumption that it will occur. 
Some decrease is usually experienced in such cases, but in most 
instances the former volume of travel is sooner or later re- 
stored, and I believe in a growing city like Buffalo whateyet 

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FUHRMANN v. INTERNATIONAL RAILWAY CO. 147 

loss of travel may follow the increase in fare will soon be over- 
come. 

If it were not for this probable decrease in travel, a flat fare 
of 6 cents would, under the computation set forth in the Chair- 
man's opinion, be adequate. 

Unless other elements enter to change the situation, in the 
meantime, it seems to me that a 6 cent fare would be adequate 
and sufficient in fairness both to the carrier and the public, when 
whatever shrinkage in travel following the proposed rate in- 
crease is overcome. 

BarhitCy Commissioner: I heartily concur in the result 
reached by the Chairman in this case. The figures presented as 
a matter of arithmetic might justify a higher rate of fare than 
the one which he recommends. But experience has taught that 
an increase in a street railway fare usually is followed by a 
decrease in patronage. While there are no accurate statistics of 
general application the experiments which have been made would 
indicate that an increase of each cent in a rate of fare is fol- 
lowed by at least seven per cent decrease in the number of pas- 
sengers carried. By limiting the effect of the order which the 
Commission may make to six months, a sufficiently long time 
will have passed to enable the Commission at the end of that 
time to take any further action which the operation of the road> 
under the rate named, may justify. 

There is, however, one conclusion reached in the prevailing 
opinion to which I cannot give my assent. That conclusion 
briefly stated is to the effect that in fixing a rate this Commis- 
sion cannot provide for any deficiency which may have accrued 
while the road was operating under the Milburn Agreement; 
that the regulatory power of the Commission must have its in- 
ception as of the date of the company's application for relief, 
and that provision can only be made for the future from that 
date and not for the past. If that contention is true the power 
of the state to provide for the well being and the prosperity of 
street railway companies is very meager. It should be remem- 
bered that statutes, intended to regulate the rates of our public 
utility corporations, are really intended for the benefit of the 
public and must be liberally construed in the interest of the 

P.U.R.1929A. 



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148 iSeW YORK PUBLIC SERVICE COMMISSION. 

public. Beekman v. Third Avenue R R Co. 153 N. Y, 144, 
160 ; People ex rel. Jackson v. Potter, 47 N, Y. 375, 382. 

No argument is needed to show that street railways in our 
modem life are an absolute necessity; no argument is needed 
to show that they cannot exist without sufficient income to pay 
the expense of operation, and their only ultimate source of in- 
come is the fares they receive from their passengers. They may 
temporarily borrow money, but that money must be repaid. If 
relief is not granted at some time, a stoppage of seryice must 
result and the public suffers. If this Commissicm can grant no 
relief which may provide for past debts however honestly in* 
curred, then to provide a relief which only takes care of flie 
future simply puts off the day of final dissolution. The officials 
of a company may know that the income received does not pay 
the expenses of operation, and yet may believe that increased 
business in the future will care for the increasing shortage of 
money; if subsequent conditions do not justify their hopes, 
there is no way to rectify an honest belief. 

I do not believe that the statute under which the Commis- 
sion acts should bear so narrow an interpretation as to exclude a 
consideration of the conditions to which attention has been 
called. Provision is made for the determination of a "just and 
reasonable rate.'* Is a rate just and reasonable which only pro- 
vides for the future and leaves no way for the company to pay 
its past debts, although these debts may have been honestly in- 
curred for the benefit of the public in furnishing service. 

The recent decision of the court of appeals did not bring into 
existence the right of this Commission to fix a just and reason- 
able rate; that decision simply interpreted and placed beyond 
question the right which existed under the law and the condi- 
tions which governed the actions of the parties. 

To hold that because the city and the railroad had entered 
into an agreement prevents the state from fixing a just and rea- 
sonable rate, is to ignore the police power of the state, which is 
pre-eminent and cannot be controlled by agreements or siatates. 

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PACIFIC LIGHT ft P. CO. v. PASADENA. 149 



OAIilFORNIA RAILROAD COMMISSION. 

PACIFIC LIGHT & POWEE COBPORATIOlf 

V. 

CITY OP PASADENA, et aL 

[Decision No. 6635, Case No. 926.] 

Certificate of amvenienoe and necessity — Municipal plonla •* Mece9» 
aity for, 

1. A city operating an electric utility beyond its own incorporate 
limits, is not required to obtain a certificate of public conyenience and 
necessity from the California Conmiission, where it is shown that 
such service was being rendered prior to the effective date of the Publie 
Utilities Act. 

Municipalities — Operating public utilitiea — Private corporationa, 

2. Municipal corporations, insofar as they engage in public enter- 
prises as distinguished from the exercise of governmental functions, 
must be regarded as falling within the phrase "a private corporation/' 
as that phrase is used in § 23 of art. 12 of the Constitution of Cali- 
fornia, defining public utilities. 

Commissions — Pouters — Regulation of utilitiea — Con8tituti€nuU 
authority, 

3. The California Constitution gives to the legislature unlimited 
power to vest in the Railroad Commission any jurisdiction whatsoever 
respecting any or all public utilities and not merely the public utilities 
specifically defined in the Constitution itself. 

Commissions -* Potvera — Delegation by legislature, 

4. The legislature of California has delegated to the Railroad Com- 
mission, jurisdiction over every corporation supplying electric energy 
for compensation generally to the public, including municipalities 
rendering service outside of their corporate limits, 

[August 30, 1919.] 

Complaint by Pacific Light & Power Corporation that the 
city of Pasadena was rendering electric service outside of ita 
incorporate limits without a certificate of convenience from the 
California Commission ; certificate held unnecessary but city of 
Pasadena ordered to file with Commission a complete rate sched- 
ule. 

Appearances: Gibson^ Dunn ft Crutcber, James A. Gibson, 
for complainant; J. H. Howard, for defendants; H. H. Trow- 
bridge and John R. Dixon, amici curise, one bdialf of complain- 
ant 

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liO CALIFORNIA RAILROAD COMMISSION. 

E^gerton, Commissioner: This case is presented upon tut 
agi-eed statement of facts, the question at issue being solely one 
of law. Briefly, the facts are that from about September, 1900, 
complainant, Pacific Light & Power Corporation, itself and 
through its predecessor San Qabriel Electric Company, haa 
been supplying electric energy for light and power purposes to 
the inhabitants of the city of South Pasadena. In so doing com- 
plainant is admittedly a public utility subject to the provisions 
of the Public Utilities Act and the jurisdiction of the Railroad 
Commission. 

Defendant, city of Pasadena, a municipal corporation, for 
many years has owned and operated an electric utility system 
used to supply electric energy for light and power purposes to 
the inhabitants of that municipality. On December 10, 1909^ 
the city of Pasadena commenced the service of electric energy 
for light and power purposes to the Raymond Hotel situated 
within the municipal limits of the city of South Pasadena, and 
has greatly increased the number of its consumers within that 
city, until at the time this proceeding was instituted the city of 
Pasadena was serving over 100 consumers within the municipal 
limits of the city of South Pasadena. The agreed statement 
of facts recites: "That since the 10th day of October, 1911, the 
city of Pasadena has been furnishing electricity for heating, 
lighting, and power to the inhabitants of the city of South Pasa- 
dena under and by virtue of the provisions' of § 19, of Article 
XI, of the Constitution of the state of California as then amend- 
ed; that on April 7, 1914, and pursuant to an act of the legisla- 
ture of the state of California, entitled ^An act granting to mu- 
nicipal corporations of the state of California the right to 
construct, operate, and maintain water and gas pipes, mains or 
conduits, electric light and electric power lines, and telephone 
and telegraph lines along or upon any road, street, alley, avenue 
or highway or across any railway, canal, ditch, or flume,' ap- 
proved April 10, 1911 (Stat. 1911, p. 852), the governing body 
of the city of South Pasadena, to wit, the board of trustees there- 
of, by order made and passed by more than a two-thirds vote of 
said body, granted to the city of Pasadena the right to use and 
occupy the streets, alleys, avenues, and highways of the city of 
South Pasadena for the construction, operation, and mainte- 
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PACUriC LIGHT & P. CO. ▼• PASADENA. 161 

Bance of overhead and undergroimd electric light and electric 
power lines." 

The basis of the complaint of Pacific Light & Power Corpora- 
tion is that the city of Pasadena^ in so far as it supplies electric 
energy for compensation to consumers outside the territorial 
limits of the municipality, is a public utility subject to the pro- 
visions of the Public Utilities Act and the jurisdiction of the 
Railroad Commission. The complaint prays for an order re- 
quiring the city of Pasadena to obtain from the Railroad Com- 
mission, under § 50 of the Public Utilities Act, a certificate of 
public convenience and necessity before serving electric energy 
within the limits of the city of South Pasadena, complainant 
already being engaged in the public utility business of supplying 
electric energy within that area. The complaint also prays that 
the city of Pasadena be required to file with the Railroad Com- 
mission its rates for electric energy supplied within the limits 
of the city of South Pasadena. 

[1] As to the necessity of obtaining a certificate of public 
convenience and necessity, the agreed statement of facts shows 
that the city of Pasadena commenced the service complained of 
prior to March 23, 1912, when the Public Utilities Act became 
effective, and under the provisions of § 50 of that act a cer- 
tificate of public convenience and necessity is not necessary to a 
continuance of the service already initiated when the act became 
effective. 

The question still remains, however, as to the necessity of the 
city of Pasadena filing with the Railroad Commission its rates 
for electric energy supplied to consumers within the city of 
South Pasadena. The answer to this question depends upon the 
extent, if any, to which the city of Pasadena is subject to the 
provisions of the Public Utilities Act and the jurisdiction of the 
Railroad C<»nmission when engaged in a public utility service 
outside the municipal limits. No question is presented in this 
proceeding as to the amenability of the city to the provisions of 
the Public Utilities Act and the jurisdiction of the Railroad 
Commission in so far as public utility service is rendered within 
the municipal limits; and counsel have suggested distinctions 
in fact and in law which might result in the adoption of a dif- 
ferent conclusion as to the jurisdiction of the Railroad Conunis- 

P.U.R.1D20A. 



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162 CALIFORNIA RAILROAD COMMISSION. 

sion over intramimicipal service from that applicable to extra- 
municipal service. Accordingly, I shall in this opinion confine 
myself solely to the issue presented, namely, the jurisdiction 
of the Railroad Conmiission over the rates charged by the city 
of Pasadena for a public utility service supplied by the mu- 
nicipality to consumers outside the municipal limits. 

The argument against the Commission's jurisdiction is based 
almost entirely upon the use of the words "private corporation" 
in § 23, Article XII of the State Constitution. That section 
provides in part: 

"Every private corporation, and every individual or associa- 
tion of individuals, owning, operating, managing, or controlling 
any commercial railroad, interurban railroad, street railroad, 
canal, pipe-line, plant, or equipment, or any part of such rail- 
road, canal, pipe-line, plant or equipment within this state, for 
the transportation or conveyance of passengers, or express mat- 
ter, or freight of any kind, including crude oil, or for the trans- 
mission of telephone or telegraph messages, or for the produc- 
tion, generation, transmission, delivery, or furnishing of heat, 
light, water, or power or for the furnishing of storage or wharf- 
age facilities, either directly or indirectly, to or for the public, 
and every common carrier, is hereby declared to be a public 
utility subject to such control and regulation by the Railroad 
Commission as may be provided by the legislature, and every 
class of private corporations, individuals, or associations of in- 
dividuals hereafter declared by the legislature to be public utili- 
ties shall likewise be subject to such control and regulation. 
The Railroad Commission shall have and exercise such power 
and jurisdiction to supervise and regulate public utilities, in the 
state of California, and to fix the rates to be charged for com- 
modities furnished, or services rendered by public utilities as 
shall be conferred upon it by the legislature, and the right of the 
legislature to confer powers upon the Railroad Commission re- 
specting public utilities is hereby declared to be plenary and to 
be unlimited by any provision of this Constitution." 

[2] It is contended that the use of the words "private cor- 
poration" in this section of the Constitution absolutely precludes 
the legislature from vesting in the Railroad Conmiission any 
jurisdiction whatever with reference to the public utility opei a- 

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PACIFIC LIGHT & P. CO. v. PASADENA. 163 

tiona of any municipality or public corporation. Reliance is 
placed in part upon § 19, Article XI of the Constitution, which 
gives to municipalities the right to establish and operate certain 
defined public utilities and, under the conditions therein speci- 
fied, to operate these utilities beyond the municipal limits. It 
is contended that this section gives to municipalities the right to 
operate public utilities without any supervision or regulation by 
the state. 

I am unable to agree that these provisions of the Constitution 
prohibit the legislature from vesting the Bailroad Commission 
with any jurisdiction whatever over public utilities ovmed and 
operated by municipalities. At the outset § 23 of Article XII 
of the Constitution defines certain businesses conducted by ^*a 
private corporation, and every individual or association of in- 
dividuals" to be public utilities subject to such regulation by 
the Railroad Commission as may be imposed by the legislature. 
Under decisions of our supreme court to which I shall later 
refer, it appears to be perfectly proper to hold that municipal 
corporations, in so far as they engage in public utility enter- 
prises as distinguished from the exercise of governmental func- 
tions, must be regarded as falling within the phrase ^^a private 
corporation, and every individual or association of individuals," 
as that phrase is used in § 23 of Article XII of the Constitu- 
tion. Aside from this point, however, it should be noted that 
after specifically defining these businesses to be public utilities, 
§ 23 of Article XII ccmtinues: 

"The Railroad Commission shall have and exercise such pow- 
er and jurisdiction to supervise and regulate public utilities, in 
the state of California, and to fix the rates to be (diarged for 
commodities furnished, or services rendered by public utilities 
as shall be conferred upon it by the legislature, and the right of 
the legislature to confer powers upon the Railroad Commission 
reepecting public utilities is hereby declared to be plenary and 
to be unlimited by any provision of this Constitution." 

Also § 22 of Article XII, after specifically bringing vrfthin 
the jurisdiction of the Railroad Commission, **railroad and oth- 
er transportation companies," continues: 

*^o provision of this Constitution shall be construed as a 
limitation upon the authority of the l^slature to confer upon 

P.U.R.1920A. 



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164 CALIFORNIA RAILROAD COMMISSION. 

the Eailroad Oommission additional powers of the same kimd 
or different from those conferred herein which are not inconsist- 
ent with the powers conferred upon the Railroad Commission 
in this Constitution, and the authority of the legislature to con- 
fer such additional powers is expressly declared to be plenary 
and unlimited by any provision of this Constitution." 

[3] Under these plenary provisions of the Constitution the 
legislature is given unlimited power to vest the Railroad Com- 
mission with jurisdiction respecting public utilities. The pro- 
visions are not limited in their applicability to the particular 
utilities specifically defined in the Constitution itself, but give 
to the legislature unlimited power irrespective of all other pro- 
visions of the Constitution to vest in the Railroad Commission 
liny jurisdiction whatever respecting any or all public utilities. 
In other words, under these plenary constitutional provisions 
the legislature can if it so desires vest in the Railroad Commit 
sion jurisdiction over any or all classes of public utilities wheth- 
er privately or publicly owned and operated. 

[4] Accordingly we must look to the Public Utilities Act 
(Stat. 1915, p. 115) to see what the legislature has done. The 
-classes of public utilities subject to the provisions of that act 
and the jurisdiction of the Railroad Commission are defined in 
various subdivisions of § 2. 

Section 2 (66) provides in part: 

"The term 'public utility' when used in this act includes every 
common carrier, pipe-line corporation, gas corporation, electri- 
cal corporation, telephone corporation, telegraph corporation, 
water corporation, wharfinger and warehouseman where the 
service is performed for or the commodity delivered to the pub- 
lic or any portion thereof.** 

This subsection declares every "electrical corporation'* where 
the service is performed for, or the commodity delivered to, the 
public or any portion thereof, to be a public utility. 

Section 2 (r) provides: 

"The term 'electrical corporation* when used in this act itt- 
cludes every eorporation or person, their lessees, trustees, re- 
ceivers, or trustees appointed by any court whatsoever, owning, 
<M)ntroning, operating, or managing any electric plant for eom- 
pensation within this state, except where electricity is generated 

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PACIFIC LIGHT & P. C50. v. PASADENA. 156 

upon or distributed by the producer through private property 
alone solely for his own use or the use of his tenants and not for 
sale to others/' 

Section 2 (c) and (d) provide: 

(c) "The term ^corporation' when used in this act includes a 
corporation, a company, an association, and a joint stock associa- 
tion." 

(d) "The term ^person' when used in this act includes an 
individual, a firm and a copartnership." 

In each of these definitions the legislature has subjected to 
the jurisdiction of the Eailroad Commission every corporation 
supplying electric energy for compensation generally to the pub- 
lic. There is nothing in these definitions which purports to 
limit their effect only to privately owiiod and operated corpora- 
tions. The term "corporation" is used without any qualifying 
limitation, and is equally applicable to a corporation publicly 
owned as to one privately owned. The contention of complain- 
ant, therefore, that the term "private corporation" used in § 23 
of Article XII of the Constitution defeats the jurisdiction of the 
Eailroad Commission in the present proceeding, is untenable 
inasmuch as the legislature, which, under the Constitution, hai 
unlimited power to define public utilities subject to the juris- 
diction of the Eailroad Commission, has not qualified the term 
"corporation" to exclude those which may be municipally owned. 
The legislative definition does not apply to private corporations 
only, but to every corporation. 

Furthermore, there is a well-established rule that when a 
mimicipal corporation engages in the public utility business it 
ceases to act in its governmental capacity and is to be regarded, 
as to its rights and obligations, on exactly the same plane as any 
person or private corporation engaged in the same business. Our 
own supreme court .definitely announced this principle in South 
Pasadena v. Pasadena Land & Water Company, 152 Cal. 579. 
In that case the supreme court had before it for decision the 
character of the obligations of the city of Pasadena in supplying 
water to the inhabitants of South Pasadena, which decision is, 
of course, peculiarly pertinent in the present proceeding. The 
court decided that in performing this public utility service liie 
city of Pasadena was acting — ^not in a governmental capacity, 
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116 CALIFORNIA RAILROAD OOMMISSION. 

but in a proprietary capacity, and was subject to the ri^ts and 
obligations which would be imposed upon any privately owned 
public utility performing the same service including the obliga- 
tion of having its rates fixed by the city of South Pasadena in 
accordance with the provisions of § 19, Article XI of the Con- 
stitution, which at that time vested the control of public utility 
rates in the municipalities of the state. I call attention to ihe 
fact that the power of municipalities to regulate rates of public 
utilities operating within their limits as provided by section 19 
of Article XI of the Constitution was transferred to the Kail- 
road Commission by an amendment adopted November 3, 1914, 
to section 23 of Article XII of the Constitution* It is impor- 
tant to bear this fact in mind in considering the decision of the 
Supreme Court in the Pasadena case. The conclusion of the 
court in the Pasadena case under the constitutional provisions 
then existing is stated on page 592 as follows: 

'TTnder the Constitution South Pasadena has power to fix 
the rates to be charged for water supplied to its inhabitants and 
to control the manner of laying and repairing pipes in its streets 
for that purpose. Necessarily it has this power as against an- 
other city engaged in supplying such water, as well as when an 
individual or water corporation does so. It is suggested that 
the two cities each represent the sovereign power and would have 
equal authority in all municipal affairs, that a conflict would 
ensue, and that such consequences cannot be considered as in- 
tended, unless the intention is espressly and unmistakably de- 
clared. In this connection the rule is invoked that there cannot 
be two municipalities exercising the same powers at the same 
time within the same territory. But the two cities would not be 
of equal authority with respect to the use of water in South 
Pasadena, in such a case. South Pasadena would have the pow- 
er above stated, under the constitution, and Pasadena, so far as 
that service is concerned, would be subject to those powers, to 
the same extent as the Pasadena Land and Water Company is 
now subject thereto. In the carrying on of the waiter swvice to 
the people of South Pasadena the city of Pasadena will not be 
acting in its political, public, or governmental capacity as an 
agent of the sovereign power equal in all respects to tiie city 

within which it operates. In administering a public utility, 
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PACIFIC LIGHT & P. CO. v. PASADExvA, 167 

such as a water system, even within its own limits, a city does 
not act in its governmental capacity, but in a proprietary and 
only quasirpnhlic capacity. [Davoust v. Alameda, 149 Cal. YO 
(84 Pac 760) ; Illinois, etc. Bank v. Arkansas City, 76 Fed. 
271 (22 0. 0. A. 171) ; Esberg Cigar Co. v. Portland, 34 Or. 
282 (75 Am. St Eep. 651, 55 Pac. 961).] Having taken over 
the whole system subject to the burden of supplying a part of 
the water to inhabitants of South Pasadena, the city of Pasa- 
dena will have no greater rights or powers, respecting that part 
of the service, than its grantor previously had. It will be under 
the same obligation as its grantor to continue the service and 
supply the water to all persons who may become entitled to it in 
the future, so long as it retains possession and control of the 
properly so charged. [Fellows v. Los Angeles, 151 Cal. 52 
(90 Pac. 141).] The powers of the two cities in regai'd to this 
water service will be separate and distinct, one will be subordi- 
nate to the other, and, hence, there will not be two cities exercis- 
ing the same powers in the same territory at the same time; 
South Pasadena, within its own limits, will be the sole represen- 
tative of sovereignty in the fixing of rates, and in the supervision 
of the streets ; and Pasadena will be subject thereto, as a private 
person. If, by fixing too low rates. South Pasadena should at- 
tempt to Qpmpel the service to be made at a loss, Pasadena would 
have the same remedies, and no greater, in the courts, that a 
qtuisirpvhliii corporation or natural person would have in the 
same circumstances. The fact that the outside service is within 
another city does not appear to be a significant factor in the 
question of the power. If it were in a rural community, the 
rates charged would be subject to judicial control to make them 
reasonable. Being in another city, the serving city has a right 
to demand reasonable rates and may enforce them if not grant- 
ed The limitations would not affect the power in one case more 
than in the other." 

The distinction between governmental and private functions 
of a municipality was again considered by the Supreme Court 
in Chafor v. City of Long Beach, 174 CaL 478, in which the 
court stated on page 486 : 

"That the distinction between governmental and private func- 
tions has been adopted as the principle govwning the adjudica- 
P.UJt.l920A. 



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168 CALIFOKNIA RAILROAD CX)MMISSION. 

tions in this state, our decisions leave no doubt. Thus in ihe 
early case of Touchard v. Touchard, 6 Cal. 306, 807, it is said: 
*A corporation, both by the civil and common law, is a person, an 
artificial person, and although a municipal corporation has dele^ 
gated to it certain powers of government, it is only in reference 
to those delegated powers that it will be regarded as a govern- 
ment. In reference to all other of its transactions, such as affect 
its ownership of property in buying, selling, or grantiQg, and in 
reference to all matters of contract, it must be looked upon and 
treated as a private person/ In Bloom v. San Francisco, 64 
Cal. 603, S Pac. 129, in the conduct of the municipal hospital 
the city and county maintained a nuisance. Action was brought 
to recover damages occasioned by this nuisance, and it was held 
that Hhe city and county of San Francisco had such proprietor- 
ship of the city and couQty hospital as rendered it liable for dam- 
ages in the case presented.' In South Pasadena v. Pasadena 
Land, Etc. Co. 152 Cal. 679, 93 Pac 490, it is declared that in 
the carrying on of a water service for the benefit of South Pasa- 
dena the city of Pasadena will not be acting in its political, pub- 
lic, or governmental capacity. And in Davoust v. City of Ala- 
meda, 149 Cal. 69 (9 Ann. Cas. 847, 5 L.K.A.(N.S.) 536, 84 
Pac. 760), this court reviewing our cases, and drawing the in- 
dicated distinction between governmental and proprietary func- 
tions, held that the negligent operation of an electric light plant 
by the city, which light plant was operated for the twofold pur- 
pose of lighting the city and furnishing electric light and power 
to its inhabitants, made the city liable, upon the ground that it 
was not exercising any governmental power or function.^' 

In Nourse v. Los Angeles, 26 Cal. Appeals 384, the principle 
was announced on page 385 as follows: 

"Under its charter the city has assumed the duty of operating 
a water system for the purpose of supplying water to its inhabit- 
ants. In the performance of this duty it acts, not in its sover- 
eign capacity, but in the capacity of a private corporation en- 
gaged in like business. [Appeal of Brumm (Pa.) 12 Atl. 855; 
Linno v. Bredes, 43 Wash. 540 (117 Am. St. Rep. 1068, 6 
L.R.A.(N'.S.) 707, 86 Pac. 858) ; 1 Wyman on Public Service 
Corporations, p. 187.] Like a private corporation, it is the 

duty of this city to furnish without discrimination to all its 
P.U.R.1920A, 



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CALIFORNIA RAILROAD <X)MMISSION, 160 

inhabitants who apply therefor a supply of water upon suoh 
applicants complying with such reasonable rules and regulations 
as it may lawfully establish for the conduct of the business." 

In my opinion, these decisions clearly hold that when a mu- 
nicipality engages in a public utility business, certainly in so fat 
as extraterritorial service is concerned, the municipality is to be 
regarded as acting in the capacity of a private corporation or" 
individual and is subject to the same obligations and enjoys the 
same rights, in so far as its public utility operations are con- 
cerned, as a private corporation or individual engaged in such a 
business. 

I believe the conclusion irresistible, therefore, that the city of 
Pasadena in supplying a public utility service to the inhabitants 
of the city of South Pasadena must be regarded as coming with- 
in the phrase "private corporation, and individual or association 
of individuals" as that phrase is used in § 23 of Article XII of 
the Constitution specifically defining certain public utilities to 
be subject to regulation by the Railroad Commission. It is my 
conclusion also that this service clearly comes within the defini- 
tion contained in the Public Utilities Act itself. 

As before stated, I am limiting my decision to municipal pub- 
Kc utility service rendered beyond the limits of the municipality. 
There may be considerations which would require a different 
conclusion as to service rendered to the inhabitants of the mu- 
nicipality owning the utility. That question, however, is not 
presented in this case. 

I submit the following form of order: 

ORDER. 

This case having come on regularly for hearing upon com- 
plaint and answer duly filed and argument being had upon the 
motion of defendants that the proceeding be dismissed for lack 
of jurisdiction,- 

It is hereby ordered that the motion of defendants to dismiss 
the complaint herein for lack of jurisdiction be, and the same is 
hereby, denied. 

It is further ordered that the city of Pasadena, a municipal 
corporation, be, and it is hereby, ordered and directed within 
twenty days from the date of this order to file with the Railroad 
Commission a complete schedule of all its rates, charges, rales 
PJ7JL192QA. 



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160 CALIFORNIA RAILROAD COMMISSION. 

and regulationB for the service of electric energy to consumers 
within the limits of the city of South Pasadena. 

The foregoing opinion and order are hereby approved and 
ordered filed as the opinion and order of the Bailroad C!ommiBh 
sion of the state of California* 



OAIilFORNIA RAIIiROAD COMMISSION. 

EE BLACK DIAMOND WATER COMPANY et aL 

[Decision No. 6655, Application No. 4806.] 

Security issues — Purpose — To discharge losses. 

The difference between an 8 per cent return on the property of a 
utility and the amount actually earned by it under a rate fixed by the 
Commission, should not be taken as the basis for the issuance of 
securities, but the proper remedy is an application to the Commission 
to increase rates. 

[September 6, 1919.] 

Petition for an order authorizing the transfer of properties, 
the execution of a mortgage, and the issuance of bonds and 
stock; transfer authorized and issuance of $26,200 of common 
stock and $63,000 face value of bonds, autiiorized. 

Appearances: B. D. Marx Greene, for applicants. 

Devlin, Commissioner: The Railroad Commission is asked 
to make an order authorizing — 

1. Black Diamond Water Company to sell and Pittsburg 
Water Company to purchase all of the properties of Black Dia- 
mond Water Company. 

2. Pittsburg Water Company to execute a mortgage. 

3. Pittsburg Water Company to issue $34,000 of stock and 
$63,000 of bonds to pay for the properties of Black Diamond 
Water Company. 

4. Pittsburg Water Company to issue $5,000 of bonds or 
stock for and as working capital. 

For a description of the properties of Black Diamond Water 
Company, the extent and method of its operations, reference is 
here made to Decision No. 3257, dated April 17, 1916 (VoL 9^ 

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RE BLACK DIAMOND WATER CO. 161 

Opinions and Orders of the Railroad Commission of California, 
page 710), and Decision No. 6470, dated June 30, 1919. 

In Decision No. 6470, the Commission established a rate 
schedule designed to yield the following annual charges: 

Int«-e8t $6,500.00 

Depreciation annuity 2,835.00 

Maintenance and operating expenses 16,222.00 

Total $25,567.00 

The Commission's attention is called to the appraisal of the 
properties by H. A. Noble, one of the Commission's engineers, 
and by A. Kempkey, engineer for the company, such appraisals 
having been made in connection with Application No. 4471, 
and referred to in Decision No. 6470. H. A. Noble estimated 
the probable cost new of the properties as of June 1, 1919, at 
$89,223 and allowed a 4 per cent sinking fund annuity of $2,- 
373. A. Kempkey estimated the probable original cost of the 
properties at $98,328, and the depreciated cost at $70,717. 
Trom the $70,717, B. D. Marx Greene, attorney for Black Dia- 
mond Water Company and vice president and general manager 
of Pittsburg Water Company, in this proceeding deducts $1,945, 
representing cost of pipe lines which went out of service, leav- 
ing a balance of $68,772. Since the appraisal of the properties 
referred to, Black Diamond Water Company has purchased a 
barge at a cost of $13,752 to haul water and made other im- 
provements costing about $1,000 which brings the probable de- 
preciated cost of the properties up to $83,524. 

Pittsburg Water Company asks permission to issue bonds 
equal in amoimt to 75 per cent of the $83,524 and common 
stock equal in amount to the remaining 25 per cent or $63,000 
of bonds and approximately $21,200 of stock. 

To the $83,524, B. D. Marx Greene adds $13,890 which he 
alleges represents the difference between an 8 per cent return on 
the reasonable cost of Black Diamond Water Company's proper- 
ties and the actual net earnings of the company during the past 
three years. This difference, $13,890, he characterizes as a de- 
velopment cost, adds it to the reported depreciated cost of the 
properties and proposes to issue $13,890 of stock against it. 
His argument is based upon the theory that the Commission has 
recognized 8 per cent as a proper return on public utility in- 

P.UJ1.1920A, 11 



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162 CALIFORNIA RAILROAD COMMISSION. 

veBtments. There is nothing in Hie Commission's decisions 
which warrants such a conclusion. It is true that at times the 
Commission has fixed rates designed to yield an 8 per cent re- 
turn, but it should be remembered that in all rate, as well as 
all other proceedings, the orders of the Commission are based 
upon the facts then before it. In Decision No. 3257, dated 
April 17, 1916, in which decision the Commission fixed the 
rates of Black Diamond Water Company, there is no reference 
made to the establishment of rates yielding an 8 per cent return 
and even if such statement did appear in the decision, it would 
not follow that the alleged loss should be capitalized. The prop- 
er remedy in case of a loss would appear to be to ask for a revi- 
sion of rates before or shortly after the effective date of the 
Commission's decision and not wait for three years and then 
apply for permission to capitalize the difference between the 
actual net return and an assumed return. The request to issue 
th& $13,890 against alleged losses should, in my opinion, be de- 
nied. 

Pittsburg Water Company also asks permission to issue $5,- 
000 of stock or bonds for the purpose of obtaining working capi- 
tal. Thi9 properties of the Black Diamond Water Company are 
to be transferred to the Pittsburg Water Company free and 
clear of all indebtedness. The BlacTc Diamond Water Company 
will, however, retain the cash in its treasury and its current 
assets. In order to put the new company in a condition where 
it may go ahead with its public utility functions, it is apparent 
that it should be provided with a certain cash working fund. 
It occurs to me that this fund should be obtained through the 
isdud of stock rather than bonds. It appears that the F. E. 
Booth Company, who owns all of the stock of Black Diamond 
Water Company, has agreed to advance to Pittsburg Water 
Company, $5,000 for working capital, provided that company 
issue to it $5,000 of its stock or bonds. If prices decline and 
the necessity for a working capital as large as $5,000 disappears, 
part of the moneys herein allowed for working capital should be 
invested in permanent improvements and construction. 

Pittsburg Water Company also asks permission to execute to 

Union Trust Company of San Francisco a mortgage securing 

the payment of $100,000 of 6 per cent bonds, due July 1, 1949. 
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R£ BLACK DIAMOND WATER 00. 108 

The proposed mortgage will constitute a first lien upon the 
properties to be acquired by Pittsburg Water Company. Of 
the bonds, $63,000 may be issued forthwith and the remaining 
$37,000 from time to time in an amount or amounts not exceed- 
ing 75 per cent of their reasonable cost to the company of any 
new or additional properties purchased or acquired or of any 
peraaanent extensions, additions^ improvementSi or betterments* 



CAUFORNIA RAHiROAD COMMISSION. 

EB CITY OP LOS BANOS. 

tDecidon No. 6657, Application No. 8003.] 

T^uaUon — Municipal aequUiUon « Severance damageM. 

No allowanee will be made for eeyerance damagee In a Tahiatfoii 
lor muBidpal acquisition purposes on the theory that the eliminatioii 
•f the plant in question will result in greater cost of operation of other 
plants owned by the same company, where the latter plants are separate 
and distinct from the utility proposed to be condemned* 

[September 6, 1919.] 

Application by the city of Lob BanoB for an order fixii^ 
tiie just compensation to be paid West San Joaquin Valley Wa- 
ter Company for certain properties; OHnpensation fixed at $369- 
000. 

Appearances: Stephen P. Qalvin, for applicant; Edward F. 
Treadwell, for West San Joaquin Valley Water Company. 

Loveland, Commissioner: This is a proceeding brought Igr 
the city of Los Bancs under the provisions of § 47 of the Public 
Utilities Act, for an order of this Commission fixing the just 
compensation to be paid West San Joaquin Valley Water Com- 
pany for its properties used in serving the inhabitants of the 
city of Los Bancs with water for domestic, manufacturing, and 
municipal purposes. 

West San Joaquin Valley Water Company is a public utility 
corporation, engaged in the business of selling water in Los 
Bancs, Dos Palos, and South Dos Palos, each locality being 
•erred by a separate water system. The city of Los Banos^ 

P.UJLlMfA. 



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164 RE LOS BANGS. 

hereinafter referred to as "applicant/' asks this Commission to 
fix the compensation to be paid for the water system serving the 
city of Los Bancs. 

Public hearings were held in this proceeding, at which testi- 
mony and appraisals were submitted concerning the value of 
the property of West San Joaquin Valley Water Company, here- 
inafter referred to as "the water company." 

Appraisements were submitted of lands and physical struc- 
tures by representatives of the water company and by the hy- 
draulic engineers of this Commission. 

The following tabulation sets forth the results of these ap- 
praisements : 

Company'ft Commission's 



Beproduction cost 

Reproduction cost less depreciation 
Present value 



appraisal. 



$46,083.03 



appraisal. 



$45,647.00 
34,561.00 



At the hearing it was stipulated and agreed by the parties 
liereto that the value of the three lots upon which are located 
the pumping plant, tanks, etc., is $5,000. Certain other correc- 
tions of inventory were submitted and agreed to, which modify 
to some ext^it the amounts reported by the Commission's engi- 
neers as the depreciated cost of the system. Correcting for these 
<5hanges the Commission's engineers now report a depreciated 
reproduction cost of $35,322. The sum reported by the water 
^company which purports to be the present value of the system 
is based largely upon actual cost records. Witnesses for the 
i^ater company admitted that, in a great many instances, the 
sums reported as the value of various items had not been de- 
creased by reason of depreciation. It is, therefore, obvious that 
the sum reported as present value is in excess of .the actual de- 
preciated cost of the system. 

It was contended by representatives of the water company 
that some allowance over and above the value of the physical 
property should be included in the sum determined as the just 
4K)mpensation, for the value of franchise, severance damages, and 
l^^oing concern value. Severance damages were claimed on the 
ground that the elimination of the Los Bancs water system 
I*.U.R.1920A. 



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CALIFORNIA BiULROAD COMMISSION. 165 

from the company's property would result in a greater cost of 
operation for the plants at Dos Palos and South Dos Palos, 
These systems are separate and distinct entities^ and some dis- 
tance intervenes between the area served by each. Miller & 
Lux, owners of the water company, have extensive interests in 
all three towns, and all water utility matters are handled from 
their offices by their regular employees. It is, therefore, evi* 
dent that no increase in expenses would be incurred by the sepa- 
ration of the Los Bancs system from the other properties. 

The water company does not own and never has obtained a 
franchise from the city of Los Banos, but is operated under a 
so-called "constitutional franchise. '^ The water system at Los 
Banos was originally constructed to serve Miller & Lux pur- 
poses, among which was the sale of town lots and other real es- 
tata The water system was later extended and as the city grew 
the company became a public utility. Because of the condi- 
tions surrounding its inception and operation, this system has, 
until recently, been operating at a loss. 

After carefully considering all of the ejements of value going 
to make up the just compensation to be paid for the water com- 
pany's plant, including value of physical properties, history of 
the plant, franchise and going value, and other elements pre- 
sented, it appears that the value of the water system of the West 
San Joaquin Valley Water Company, which the city of Tx>s 
BanoB asks to have fixed, is in amount equal to the sum of $36,- 
000. 



IDAHO PUBIilO XJTHilTIBS OOMMI8SION. 

INDIAN VALLEY TELEPHONE COMPANY 

v. 

KBITHLEY & DELASHMUT TELEPHONE COMPANY. 

[Case F-278, Order No. 606.] 

Minwpoly and competition — Occupied territory — Operation at time 
of enactment of statute. 

Under the Idaho statute, a telephone company may, without pro- 
curing a certificate of convenience and necessity from the Commission, 
extend its lines within a county within which it was legally operating 
at the time of the enactment of the Public UtiHtiea Commission Statute^ 
P.U.R.1920A. 



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1«6 IDAHO PUBLIC UTILITif 8 COMMISSION. 

Botwithstanding such extension would be in territory oontigiioiis t» the 
lines of another company. 

[October 16, 1919.] 

CoMPUoirr as to the invasion of occupied territory by the 
respondent company; dismissed. 

Appearances: R. E. Wilson, Cambridge, Idaho, attorney for 
complainant; (Jeorge Donart, Weiser, Idaho, and A. M. Henke, 
Midvale, Idaho, attorneys for defendant. 

By the Commission: On the 9th day of June^ 1919, the 
Indian Valley Telephone Company, a corporation, filed its com- 
plain herein alleging that the defendant, Keithley & Delashmut 
Telephone Company, was invading or about to invade the terri- 
tory served by complainant in Washington county, state of 
Idaho, without having first secured from the Public Utilities 
Commission of the state of Idaho a certificate of convenience and 
necessity authorizing it so to do, and praying that said defend- 
ant be restrained from so doing. 

On June 21, 1919, defendant, Keithley & Delashmut Tete- 
phone Company filed its answer, admitting an invasion of the 
territory contiguous to complainant's telephone lines, alleging 
that the necessity therefor was the demand for service from de- 
fendants telephone system as the result of the poor and inade- 
quate service from the telephone system of complainant, and 
praying that a certificate of convenience and necessity be issued 
to it authorizing the extension of its lines to afford the serviee 
demanded. 

The matter came regularly on for hearing before Commis- 
sioners Freehafer and Sweeley at Cambridge, Idaho, an the 
11th day of July, 1919. 

History of the Case. 

The testimony shows that Indian Valley Telephone Company, 
complainant, herein, is a public utility and that for about ten 
years last past it has been continuously engaged in furnishing 
telephone service in Washington county, Idaho, with an ex- 
change at Cambridge in said county; that the Keithley & De- 
lashmut Telephone Company, defendants herein, ia a public util- 
ity and that, for about ten years last past, it has been oontinuoii(»- 

P.U.R.1920A. 



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INDIAN VALLEY TELEPH. CO. ▼. KEITHLEY & D. TELEPH. CO. 167 

ly engaged in furnishing telephone service in Washington connty, 
Idaho, with an exchange at Midvale in said county. 

The testimony further shows that the territory sought to be 
invaded by an extension of defendant, and complained of by 
complainant in its complaint herein, is wholly within said Wash- 
ington county, Idaho. 
.Section 2474 of the Compiled Laws reads as follows: 

"No street railroad corporation, gas corporation, electrical 
corporation, telephone corporation or water corporation, shall 
henceforth begin the construction of a street railroad, or of a 
line, plant, or system or of any extension of such street railroad, 
or line, plant, or system, without having first obtained from the 
commission a certificate that the present or future public con- 
venience and necessity require or will require such construction : 
Provided, That this section shall not be construed to require 
any such corporation to secure such certificate for an extension 
within any city or county, or city or toT^ within which it shall 
have theretofore lawfully commenced operation, or for an ex- 
tension into territory whether within or without a city or coun- 
ty, or city or town, contiguous to its street railroad, or line, 
plant or system, and not theretofore served by a public utility 
of like character, or for an extension within or to territory al- 
ready served by it necessary in the ordinary course of its busi- 
ness: And, provided further. That if any public utility in con- 
atructing or extending its lines, plant or system, shall interfere 
or be about to interfere with the operation of the line, plant or 
system of any other public utility already constructed, the cwn- 
mission on complaint of the public utility claiming to be inju- 
riously affected may, after hearing, make such order and pre- 
scribe such terms and conditions for the locating of Hie line, 
plant or system affected as to it may seem just and reasonable: 
Provided, That power companies may, without such certificate, 
increase the capacity of their existing generating plants or de- 
velop new generating plants and market the products thereof/' 
Hist. '18, c. 61, § 48a, p. 277, substantially reen. '16, c. 62, 
§ 2, Subd. 48a, p. 155, reen. C. L. 106 : 106. 

Jhe Section above quoted contains the body of the law and 
three provisos or exceptions thereto. 

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168 IDAHO PUBLIC UTILITIES COMMISSION. 

The provision of the body of the law as set forth in said Sec- 
tion 2474 applicable to the instant case is: 

"No . . . telephone corporation . . . shall hence- 
forth begin the construction of a . • . line, plant or sys- 
tem or of any extension of such . . . line, plant or system,. 
>yithout having first obtained from the Commission a certificate 
that the present or future public convenience and necessity re- 
quire or will require such construction." 

The first proviso or exception as far as applicable to the in- 
stant case would read : 

"This section shall not be construed to require any such cor- 
poration to secure such certificate for an extension within any 
city or county or city or town, within whidi it shall have there- 
tofore lawfully cconmenced operation. . . .*' 

The second proviso or exception has been held to apply solely 
to physical and not financial interference with operation and is 
clearly not applicable to the instant case. 

The third proviso or exception is only applicable to power 
companies. 

Now since each of these telephone companies has been in 
operation for a period of about ten years within Washington 
county, Idaho, and since the law creating the Public Utilities 
Commission was passed by the legislature of the year 1913, the 
Commission finds : That each thereof had lawfully commenced 
operation within said Washington county, Idaho, and that either 
may extend its line, plant or system, within said county, outside 
of cities or towns, or within any city or town, wherein now law- 
fully operating without being required to procure a certificate 
from the Public Utilities Commission. 

'The Commission further finds: That since the threatened 
extension of the defendant complained of by plaintiff is wholly 
within said Washington county, said defendant has a legal right 
to extend its lines, and this Commission is without jurisdiction 
to restrain i^id defendant from so doing. 

The Commission further finds : That the Keithley & Delash- 
mut Telephone Company, defendant herein, being now lawfully 
in operation within Washington county, does not require a cer- 
tificate of convenience and necessity to extend its lines, plants 
or system to any part of said Washington county, outside of 
cities or towns or to any nart of any city or town now served. 

P.U.IL1020A. 



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BE LAFAfETTE TELEPH. CO. W0 

HISSOURC PUBLIO SERVICB OOBiMISSION. 

BE LAFASrETTE TELEPHONE COMPANY. 
[Case No. 1887.] 

Botes — Bower of Commission — Franchise — Exercise of poioer. 

1. The power, which the Missouri Commission has, of changing 
franchise rates will he exercised <mly for good cause shown. 

Befum — Operating expenses — Excessive salaries, 

2. A telephone company operating 1135 exchanges and switching 
15 rural line stations, was allowed $2,400 for salary of a manager and 
$600 for services of a nonresident president, rather than $4,800 claimed 
by the company for such salary and sflrrices. 

Betum — Operating expenses — TraveUng eoopenees — Ntnvresident 
general officers. 

3. Subscribers of a telephone company should not be charged with 
the traveling expenses of nonresident general officers from their homes 
to the place of business. 

Betum — Operating expenses — Dotiations to charities. 

4. Subscriptions to the Red Cross and donations to other charities 
are not proper charges to operation. 

Betum — Amount — Telephones, 

5. A telephone company will not be permitted to increase Its rates, 
which, for depreciation and return, yield 11.05 per cent on the value 
of the property as fixed by the utility's experts. 

[October 28, 1919.] 
Petition for increase of telephone rates ; denied. 

By the Commission: This case is at issue upon the order 
of the Commission, entered on the 19th day of December, 1918, 
suspending the Lafayette Telephone Company's P. S. C. Mo. 
No. 2, canceling P. S. C. *Mo. No. 1, same being a schedule of 
increased rates for telephone service at said company's exchange 
in the city of Lexington, Missouri. The effective date of said 
schedule was thereby postponed for a period of one hundred 
and twenty days, to and including April 30, 1919, unless other- 
wise ordered by the Commission. Being unable to complete its 
investigation, the Commission entered a second order of sus- 
pension on the 18th day of April, 1919, postponing the effec- 
tiveness of said schedule for a period of six months from May 
1, 1919, to and including October 31, 1919, unless otherwise 
ordered by the Commission. 

A hearing was held by Special Examiner W. W. Johnson at 

P.U.R.1920A. 



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170 MISSOURI PUBLIC SERVICE COMMISSION. 

the city of Lexington on August 22, 1919, at which the oomr 
pany was represented by its counsel, William AuU, Sr., and the 
city of Lexington by the city attorney, D. W. Sherman. All of 
the evidence was then heard and the case is therefore before the 
Commission on the evidence submitted. 

The Issues. 

The city attorney of Lexington filed Ordinance No. 67, a 
franchise granted to the Lafayette Telephone Company on the 
23rd day of October, 1905, which franchise authorized the La- 
fayette Telephone Company, its successors and assigns, to con- 
duct and operate the telephone system in the city of Lexington 
for a period of twenty years. One of the provisions in the fran- 
chise is to the effect that the telephone company is to pay the 
city 3 per cent of the gross annual revenue derived from the 
rental of telephones in the city of Lexington, with a minimum of 
$200 per annum. It also provides that the telephone company 
shall furnish the city of Lexington 6 telephones without charge, 
to be located as the city may direct. The telephone company 
has complied with these provisions. The franchise further pro- 
vides that the telephone company shall not charge for telephone 
service in the city to exceed $3 per month for business telephone 
and $1 per month for residence telephone. 

[1] There is no question as to the power of the Commission 
to fix reasonable rates for the service furnished the public by 
the various public utilities of the state regardless of stipulations 
in franchises relative thereto, since the supreme court of Mis- 
souri handed down its opinion in tl^ case of the State ex rel. 
Sedalia v. Public Service Commission, 204 S. W. 497, and the 
City of Fulton v. Public Service Commission, 204 S. W. 386, 
and in other cases. The Commission, however, will, in no case, 
disturb the provisions of any franchise except for good cause 
shown. 

The company on its proposed rate sheet provides for an in- 
stallation and move charge. The Commission is at the present 
time engaged in a state-wide investigation, going thoroughly 
into the matter of installation and move charges, and will not 
at this time rule upon the justice of these charges in this par- 
ticular case. 

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B£ Lafayette teleph, go. 171 

The Facts. 

The Lafayette Telephone Company is a Missouri corporation 
and was organized in 1898 with a capital stock of $12,500. All 
of the stock, 125 shares with a par value of $100 each, was sold 
at par, and the money invested in the property. For several 
years the owners acted as officers of the company and drew no 
salaries for their services. No dividends were paid for many 
years, but during the past four or five years a dividend of about 
7 per cent has been paid on the $12,500 stock. Money was bor- 
rowed from the banks when it was necessary to make extensions 
or betterments, which was repaid out of the earnings. , At the 
time of the erection of the building and the installation of the 
new switchboard, $10,000 was borrowed from a local bank. 
All of the various loans have been paid with the exception of 
about $5,000. At present all of the stock is owned by the presi- 
dent, Mr. Locke, with the exception of 15 shares which are 
owned by two other parties. 

The company operates the exchange at Lexington, Missouri^ 
a city having a population of about 6000, and has in operation 
in the city a full metallic, common battery system, with a West- 
em Electric No. 1 switchboard equipped with lightning protec- 
tion and main frame of the most modem l^pe, and is housed 
in a 2-story modem brick building owned by the company, 
which was built about five years ago, at which time the central 
office equipment was installed. It also owns and operates a 
number of grounded circuit farm lines furnishing a local bat- 
tery service to the farmers in the vicinity, and metallic toD lines 
to Dover, Wellington, Odessa, and two metallic lines to Higgins- 
ville. 

No free toll service is given the subscribers. 

At the time of the filing of this application the telephone com- 
pany owned and operated 1185 telephone stations and switched 
15 rural line stations. The present and proposed monthly 
rates are as follows: 

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172 



MISSOURI PUBUC SERVICE COMMISSION. 



No. 



Class of Service. 



Exchange, 

104 Business, Direct Line 

1 Business, 2-Party Line 

48 Business, Extension 

50 Business, Desk Set 

28 Business, Extension- Bell 

536 Residence, Direct Line 

134 Residence, 2~Party Line 

Residence, 4-Party 

25 Residence, Extension 

34 Residence, Desk Set 

25 Residence, Direct Line outside city limits . . 

^1 Residence, 2~Party Line outside city limits 

Rural. 

16 Class A 

3 Class B Business < 

104 Class B Residence 



Present 


Proposed 


Rates Per 


Rates Per 


Month. 


Month. 


$3.00 


$3.50 


3.00 


ZM 


.50 


1.00 


.50 


.50 


.25 


.25 


1.00 


1.76 


1.00 


1.60 




1.26 


.60 


1.00 


.50 


.50 


1.60 


2.00 


1.50 


1.76 


.60 


.60 


8.00 


8.00 


1.50 


1.60 



The four party line residence rate shown on the proposed 
schedule is not shown on the schedule now in force. 

[2, 3] The Telephone Company filed an exhibit showing the 
revenue for a twelve month period from August 1, 1918 to July 
31, 1919, to be $28,69X).86 as the total annual revenue, which 
includes an item of a connection charge in the amount of $752.- 
30, and move charge of $135, which were put in force by order 
of the Postmaster General. It also files a statement showing 
the expense incurred during the same period in the amount of 
§27,185.18, including an item of depreciation of $7,806.96 and 
an item of $2,400 for manager's salary and another item of 
$2,400 for the president's salary. There is also shown $109 
for donations to the Red Cross and other charities, and an item 
of traveling expense for the officials in the sum of $411*95. 

The testimony showed that the manager did not live in Lex- 
ington, and only made periodical visits there; that he was one 
of the principal owners of the property, and that the president 
was also one of the large stockholders and in fact at the time 
of the hearing owned 110 of the 125 shares of stock outstanding; 
that his residence was in Mexico, Missouri, and that he con- 
ducted the affairs by correspondence and made occasional visits 
to the exchange. On account of these officials residing outside 
of the city, traveling expense in the amount of $411.95 was 
charged up as an expense against the company, making an ag- 
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RE LAFAYETTE TELEPH. CO. 17^ 

gregate of $5^211.95^ the amount paid for salaries and expenses 
of the two. 

There is no question but that a competent, experienced man 
could be secured as manager of the exchange in a city the size 
of Lexington at a salary of not to exceed $200 per month, who 
would live there and devote his entire time to the management 
of the plant, and $50 a month would be a fair salary to pay the 
president, living outside the city, for such services as he would 
render in financing and laying out in a general way the opera- 
tion of the property. 

[4] With reference to the $109 for Ked Cross and other 
donations, the Commission has always held in other cases that 
while they are in favor of such donations being made,. same 
should be made by the stockholders or oflScers of the company 
personally, and not charged to the public or telephone subscrib- 
ers. The same will therefore be disallowed. 

We will also at this time deduct the amount of $7,806.96,. 
depreciation item, and take up the same later. 

From the total amount of the expenses for the year should be 
taken the following items : 

Salary of President $2,400.00* 

Salary of Manager 2,400.00 

Depreciation 7,80C.9ft 

Traveling expenses 411.95 

Donations, Red Croea, etc 109.00 

$13,127.91 

Deducting from this amount the $3,000 to be paid in salaries 
to the manager and president leaves $10,127.91 to be taken from 
the total expense of $27,185.18 as submitted by the company, 
leaving $17,067.27 as the actual amount covering the expense 
incurred in the operation of the telephone plant for twelve 
months, which amount taken from the annual revenue of $28,- 
f)90.86 will allow $11,633.59 for depreciation reserve and re- 
turn. 

The Commission has made no valuation of the Lexington ex- 
change, but at the hearing there was submitted an inventory and 
appraisal made by H. P. Topping, a valuation engineer of Kan- 
sas City, Missouri. He fixes the "cost new*' value at $99,402; 
and the "cost new less depreciation" at $86,899, to which he haa 
added 10 per cent for the cost of establishing business, or $8,690l 
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174 MISSOURI PUBLIC SERVICE COMMISSION. 

Also "working capitaP* equal tx> one months* annual operating 
expense, $1,704, placing the total value at $97,293 as "reproduc- 
tion cost new less depreciation," stating that he had used unit 
prices in force during a period from August, 1914, to August, 
1915, or prewar prices. 

The testimony also showed that the property was assessed for 
taxes in 1918 at a valuation of $70,000. 

• There was no complaint as to the service. The testimony of 
Mr. Price, manager of the Lambert Lumber Company was to 
the effect that he had a great deal of use of the telephone system 
in reaching the farmers, freight house, etc., and that he found 
the service to be satisfactory in all respects. 

Mr. William Palmer, Jr., a member of the city council and 
fire chief, testified that he had been a member of the city's fire 
department for the past eight years, and chief for four years; 
that the city ordinance specified that all fire calls were to be 
pven to the operator of the telephone company who in turn 
reported to the fire department the location of the fire and also 
called him at his residence; that the service was universally 
good, and that he had no complaint to make on the same nor had 
be heard any from the subscribers. 

Conclusions. 

[5] Taking the value of the plant as fixed by H. P. Topping, 
of $97,293, and the $11,633.59 remaining, we have 11.95 per 
aent, or practically 12 per cent for the reserve for depreciation 
and return. The rates as filed will not be allowed, and the com- 
pany will cancel and withdraw its proposed schedule from tlis 
files of the Commission. 

Let the order issue. 

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NIAGARA FALLS v. PUBLIC SERVICE COM. 175 



meCW YORK SUPKEMB COURT, SPBOIAIi TERM, ALBANY 

COUNTY. 

CITY OF NIAGAEA FALLS 

V. 

PUBLIC SEEVICE COMMISSION, SECOND DISTRICT, et al. 
(177 N. Y. Supp. 861.) 

Constitutional law — Impairment of contract — Franchise rate prO' 
vision. 

The Public Service Commissioii may authorize an increase of the 
fares of a street railway company in a proper case, notwithstanding 
a franchise limitation, where the municipal consent does not impose 
the fare provision as a condition, the charter of the city does not limit 
the street railway fares, there is no special contract fixing the rate of 
fare recognized by the legislature, and no consent granted for con- 
struction and operation within the city which i» required by the state 
Constitution. 

[September 22, 1010.] 

Application for writ of prohibition ; denied. 

Appearances: Robert J. Moore, Corp. Counsel, of Niagara 
Falls, for relator ; Ledyard P. Hale, of Albany, for Public Serv- 
ice Commission; Cohn, Chormann & Franchot, of Niagara 
Falls (Edward E. Franchot, of Niagara Falls, of counsel), for 
International Railway Company. 

Rudd, J. : The city of Niagara Falls seeks a writ of prohi- 
bition directed to the Public Service Commission of the state, 
Second District, and International Railway Company, direct- 
ing each of them to refrain from further proceedings under an 
application pending for permission to increase the company's 
rate of fare within the city of Niagara Falls. The Public Serv- 
ice Commission fixed a hearing upon the company's application. 

The answer of the city of Niagara Falls raised the question 
as to the Commission's jurisdiction, moving a dismissal of the 
proceedings upon the ground that the rate of fare now charged 
by the railway company is fixed and limited to a rate not in 
excess of 5 cents by the company's franchise and the municipal 
consent given, and that because of such limitation the Public 
Service Commission has not jurisdiction to entertain the appli- 
cation. The motion to dismiss was overruled by the Commit- 

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176 NEW YORK SUPREME COURT. - 

sion and Chairman Hill sought to continue the hearing, which 
stands adjourned pending the determination of this motion. 

From the evidence taken before the Public Service Commis- 
sion, it appears that the International Railway Company is not 
receiving income suflScient to meet the actual expenses of opera- 
don. Aside from that situation, and disregarding it, the relator 
contends that no power exists to correct or remedy what under 
other circumstances would seem to be a wrong, for the reason 
that the franchise granted in 1905 to the respondent provided 
as to rate of fare as follows : 

"XV, Said company shall not charge more than one fare of 5 
cents for each passenger for any continuous ride or passage over 
its railroad and extensions within the present limits of said city 
of Niagara Falls. Children under 6 years of age shall be carried 
free when accompanied by adult passengers within said city. 
AH police officers and firemen belonging to the paid police and 
fire department of said city shall be transported free upon the 
passenger cars of said company within the limits of said city 
when said policemen and firemen shall be in uniform and on 
duty. For the purposes of this subdivision the railroad of the 
Electric City Railway Company within said city of Niagara 
Falls shall be deemed an extension of the railroad of Inter- 
national Railway Company, and the right to transfer to and 
from the railroad of the Electric City Railway Company with- 
in the city shall be recognized by said International Railway 
Company.'* 

The relator relies entirely upon the authority of the Quinby 
Case, 223 N. Y. 244, 119 N. E. 433, claiming that the franchise 
granted was through the authority conferred upon the munic- 
ipality by the Constitution of the state (article 3, § 18), and 
not by the legislature, and that therefore the Quinby Case con- 
trols. The contention does not convince this court. 

The municipal consent granted to the International Railway 
Company did not impose the fare provision as a condition. 
The charter of Niagara Falls does not limit street railroad fares. 
There is no special contract fixing the rate of fare recognized 
by the legislature, and no consent was granted for construction 
and operation within the city of Niagara Falls which was re- 
(juired by the state Constitution, 

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NIAGARA FALLS v. PUBLIC SERVICE COM. 177 

It is quite apparent that the Public Service Commission has 
the delegated legislative power to regulate fares and to grant 
such a rate as will enable the carrier to live and to furnish trans- 
portation to the people of a community, except and unless the 
circumstances and conditions are extraordinary. The Quinby 
Case has been illumined by the court of appeals in People ex 
rel. South Glens Falls v. Public Service Commission, 225 N. T. 
216, 121 N. E. 777, P.U.K.1919C, 374; and later in Matter of 
International Railway Co. 226 N, Y. 474, 124 N. E. 123, 
P.U.R.1919F, 355. 

We gather that the doctrine of the Quinby Case is not to be 
extended to cover local consents or franchises which are based 
upon legislative enactment. See Koehn v. Public Service Com- 
mission, 107 Misc. Eep. 151, 176 N. Y. Supp. 147, P.U.R. 
1919D, 953. 

"The Glens Falls Case is a dear authority for the proposition 
that, except for the constitutional provision referred to, the leg- 
islature has delegated to the Commission all the power which it 
had over rates, except such as it had expressly reserved to it- 
self." Chairman Hill, in Re Schenectady Railway Co. 20 
State Department Rep. 9. 

The motion for a writ of prohibition is denied, with costs. 



ITNITEID STATES SUPREME COURT, 

ALEX. J. GEOESBECK et al. 

V. 

DULUTH, SOUTH SHORE & ATLANTIC RAILWAY COM- 
PANY. 

Appeal and review — Moot case — Repeal of statute, 

1. A suit to enjoin the enforcement of an alleged confiscatory rate 
statute does not become moot, upon the repeal of the statute, where 
the ownership of a considerable fund from excess fares, required to be 
accumulated pending the detenuiuation of the action, rests upon the 
outcome of the suit. 

Betum — Reasonableness as a tphole — Confiscation. 

2. Unprofitable lines of a railroad within a state should not be 
ezchided, in determining whether a statutory rate confiscates its prop- 
erty, in the absence of illegality and mismanagement in the acquisition 

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178 UNITED STATES SUPREME CX)URT. 

and operation of such lines; and it is immaterial whether a particulv 
line was built to establish a through route between important oitlai 
rather than to serve local needs, or that an extension of service was 
furnished by acquiring traffic rights rather than by building an in4»> 
pendent line. 
Betum — Reasonahlenesa as a whole — Special oar eervioee* 

3. Unprofitable sleeping car, parlor car, and dining car servlit, 
although voluntary, must be considered as part of the company's bu^ 
ness for the purpose of determining whether a rate statute is ccn- 
fiscatory. 

Appeal and review — Apportionment formula — Question of fact — 
Accounting. 

4. The decision of the lower court that a formula for apportion- 
ing railroad expenses, common to both freight and passenger servioe, 
is proper, will not be disturbed, on appeal, unless clearly erroneous, 
the correct formula being a questicm of fact, in the present undeveloped 
state of railroad apportionment accounting. 

[November 10, 1019.] 

Appeal from the District Court of the United States for the 
Eastern District of Michigan. From a decree enjoining th« 
enforcement of a state maximum passenger rate statute; 
affirmed. 

Appearances: Leland W. Carr and Roger L Wykes for 
appellants; John E. Tracy for appellee. 

Mr. Justice Brandeis delivered the opinion of the court: 
[1] The Constitution of Michigan (art 12, § 7) authorizes 
the legislation to pass laws establishing "reasonable maximum 
charges for the transportation of passengers and freight^' In 
1907 it fixed 2 cents a mile as the maximum intrastate passen- 
ger fare on railroads operating in the Lower Peninsula, and 3 
cents for those in the Upper. By act approved May 2, 1911 
(Pub. Laws No. 276), the 2-cent rate was made applicable to 
all the railroads of the state whose gross earnings on passenger 
trains equal or exceed $1,200 per mile of line operated. Be- 
fore the statute took effect, the Duluth, South Shore, & Atlantic 
Railway Company, an interstate carrier operating in the Upper 
Peninsula, brought this suit in the district court of the United 
States for the eastern district of Michigan to enjoin the enforte- 
ment of the act. The bill alleged that the reduced rate woiiiU 
deprive plaintiff of its property without due process of law, 1a 
violation of the 14th Amendment. The attorney general and 

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GROESBKCK v. DULUTH, S. S. & A. R. CO. 17» 

Ae railroad commissioners of the state, being charged by the law 
with its enforcement, were made defendants. They denied that 
the rate was confiscatory; and on this issue the district court 
found for the railway. A final decree granting the relief sought 
was filed February 14, 1918; and an appeal to this court was 
promptly applied for by the defendants and allowed. Mean- 
while, on January 1, 1918, the Federal government had taken 
over the operation of this and other railroads, and is still operat- 
ing the same. The 2-cent rate was never put into effect on this 
railroad, as a restraining order issued upon the filing of the bill 
was continued until entry of the final decree. In 1919 the stat- 
ute attacked here was repealed (Mich. Pub. Laws N"o. 382). 
But the case has not become moot for the following reason : On 
continuing the restraining order the railway was required to 
issue to all intrastate passengers receipts by which it agreed to 
refund, if the act should be held valid, the amount paid in excess 
of a 2-cent fare. Later the railway was required to deposit, 
subject to the order of the court, such amounts thereafter col- 
lected. The fund now on deposit exceeds $800,000, and the 
refund coupons are still outstanding. In order to determine the 
i-ights of coupon holders and to dispose of this fund, it is neces- 
sary to decide whether the Act of 1911 was, as respects this rail- 
road, confiscatory. 

The issues of fact were tried below with great thoroughness. 
The case was referred to a special master to hear the proofs 
and to report the evidence, together with his findings, to the 
court. The report fills 503 pages of the printed record. The 
transcript of the testimony introduced before him covered more 
than 12,000 typewritten pages; and there were, besides, many 
(:xhibits. The evidence before the master related largely to the 
results of the operation of the railroad for the four years end- 
ing June 30, 1913. When the case came on for hearing before 
the district judge in 1917, supplemental evidence was taken in 
open court covering the operations of the four additional years 
ending June 30, 1917. The evidence disclosed the usual diver- 
sity of opinion as to the value of the property and as to the 
proper method of dividing between the passenger and freight 
services the common expenses and the charges for property used 
in common. Upon the whole evidence the court found that tht 
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180 UNITED STATES SUPREME COURT. 

2-cent fare would have resulted in a return on intrastate pas^ 
senger business of less than 2 per cent during the six years end- 
ing June 30, 1917. 

Between the commencement of this suit and the entry of the 
final decree many of the questions in controversy below have 
been settled by the decisions of this court in other cases.* The 
state officials do not deny that there was legal evidence to justify 
the findings of fact made by the lower court; nor do they re- 
quest that this court should undertake a general review of the 
evidence. But they insist that the finding of the district judge 
of the low return is erroneous, and that the error is due partly 
to his having included in his calculations property and opera- 
tions which should have been excluded, and partly to his hav- 
ing adopted improper formulas for the division of common 
charges and expenses as between the freight and the passenger 
services; and that if these specific en-ors are corrected it will 
appear that the 2-cent fare would have been highly remuner- 
ative. These alleged errors must be considered separately. 

[2] First: It is contended that the Western Division 
should be excluded from the calculation. The Duluth, South 

1 Interstate Ck)mmerce CommiBsion v. Union P. R. Co. 222 U. SS. 541, 56 
L. ed. SOS, 32 Sup. Ct. Rep. 108; Minnesota Rate Cases (Simpson v. Shep- 
ard) 230 U. S. 352, 57 L. ed. 1611, 48 L.R.A.(N.S.) 1151, 33 Sup. Ct. Rep. 
729, Ann. Cas. 1916A, 18; Missouri Rate Cases (Knott v. Chicago, B. & 
Q. R. Co.) 230 U. S. 474, 57 L. ed. 1571, 33 Sup. Ct. Rep. 975; Chesapeake 
& 0. R. Co. V. Conley, 230 U. S. 613, 57 L. ed. 1597, 33 Sup. Ct. Rep. 985 ; 
Oregon R. & Nav. Co. v. Campbell, 230 U. S. 525, 57 L. ed. 1604, 33 Sup. 
Ct. Rep. 1026; Southern P. Co. v. Campbell, 230 U. S. 537, 57 L. ed. 1610, 
33 Sup. Ct. Rep. 1027; Allen v. St. Louis, I. M. & S. R. Cd. 230 U. S. 653, 57 
L. ed. 1625, 33 Sup. Ct. Rep. 1030; Missouri P. R. Co. v. Tucker, 230 U. S. 
340, 67 L. ed. 1607, 33 Sup. Ct. Rep. 961; Wood v. Vandalia R. Co. 231 
U. S. 1, 58 L. ed. 97, 34 Sup. Ct. Rep. 7; Louisville & N. R. Co. ▼. Garrett, 
231 U. S. 298, 58 L. ed. 229, 34 Sup. Ct. Rep. 48; Re Engelhard A Sons Co. 
231 U. S. 646, 58 L. ed. 416, 34 Sup. Ct. Rep. 258; San Joaquin & K. R. 
Canal & Irrig. Co. v. Stanislaus County, 233 U. S. 454, 58 L. ed. 1041, 34 
Sup. Ct. Rep. 652; Northern P. R. Co. v. North Dakota, 236 U. 8. 685, 59 
L. ed. 735, L.R.A.1917F, 1148, P.U.R.1915C, 277, 36 Sup. Ct. Rep. 429, Ann. 
Cas. 1916A, 1; Norfolk & W. R. Co. ▼. Conley, 236 U. 8. 605, 59 L. ed. 
746, P.U.R.1915C, 293, 36 Sup. Ct. Rep. 437; Missouri v. Chicago, B. & 
Q. R. Co. 241 U. S. 533, 60 L. ed. 1148, 36 Sup. Ct. Rep. 715; Rowland v. 
St. Louis & S. F. R. Co. 244 U. S. 106, 61 L. ed. 1022, P.U.R.1917C, 685, 37 
Sup. Ct. Rep. 577; Darnell v. Edwards, 244 U. S. 564, 61 L. ed. 1317, P.U.R. 
1914F, 64, 37 Sup. Ct. Rep. 701; Denver v. Dehver Union Wat«r Co. 246 
U. S. 178, 62 L. ed. 649, P.U.R.1918C, 640, 38 Sup. Ct. Rep. 278. 
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GROESBECK v. DULUTH, S. S. A A. R. CO. 181 

Shore, & Atlantic Railway extends from Sault Ste. Marie to 
Duluth, and has, including branches, 584 miles of line, 475 of 
which are in Michigan. The' Eastern Division serves mainly the 
iron region; the Central, the copper country; the Western, ex- 
tending through sparsely settled country from Nestoria, Mich- 
igan, 101 miles to the Wisconsin state line, and thence to Duluth, 
serves mainly interstate business. This division is said to have 
been built not in a desire to serve local needs, but for the pur- 
pose of establishing a through line from Duluth to Sault Ste. 
Marie. The statement, if true, furnishes no reason for exclud- 
ing it from the calculation. The cost per mile of transporting 
passengers varies greatly on diflFerent parts of the same railroad 
system according to circumstances, being dependent, among 
other things, upon the cost of the roadbed and terminals, the 
grade, the number and character of the trains, the density of 
traffic and the length of the haul. The justification for a uni- 
form fare per mile is furnished by the doctrine of averages ; and 
the legislature of Michigan made clear its purpose to apply the 
doctrine of averages in order to give to travelers the benefit of 
the 2-cent fare on those portions of a railroad on which travel 
was light and the cost of carrying each passenger necessarily far 
in excess of 2 cents a mile. For this act declares: "That in 
computing the passenger earnings and mileage, all branch roads 
owned, leased, controlled or occupied or that may hereafter be 
owned, leased, controlled or occupied by such company . . . 
shall be included in the computation ; [i. e., determining wheth- 
er the year's gross passenger earnings equal $1,200 per mile] 
and the rate of fare shall be the same on all lines owned, leased, 
controlled or occupied by such company.^ In other words, the 
legislature has declared that for the purpose of determining the 
right of an intrastate passenger to travel on any part of the com- 
pany's lines at the rate of 2 cents a mile, all of the lines within 
the state must be treated as one; that those on which travel is 
light must be averaged with those on which it is dense; and 
obviously, also, that those parts of the system which are unprofit- 
able must be taken with those which are profitable. Every part 
of the railroad system over which the passenger is entitled by 
the act to ride for a 2-cent fare must be included in the compu- 
tation undertaken to determine whether the prescribed rate is 
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182 UNITED STATES SUPREME COURT. 

•onfiacatory. Thi3 is true, at least, in the abseuce of illegality 
or mismanagement in the acquisition or operation of the division 
in question; and of such there is not even a suggestion in the 
record. There is nothing in San Di^o Land & T. Co. v. Na- 
tional City, 174 U. S. 739, 758, 43 L. ed. 1154, 1161, 19 Sup. 
Ot Rep. 804, or in San Di^o Land & T. Co. v. Jasper, 189 TJ. S. 
489, 446, 47 L. ed. 892, 896, 23 Sup. Ct. Eep. 571, upon which 
the state officials rely, which is inconsistent with this conclu- 
sion. 

Second: It is likewise contended that the soKsalled South 
Line between Marquette and Ishpeming should be excluded from 
the calculation. This line, which for miles substantially paral- 
lels the main line, was originally built as an independent road^ 
and was purchased by plaintiff's predecessor in 1884, probably 
to avoid ruinous competition. It is used mainly for heavy 
freight, and the intrastate passenger travel over it is light. It is 
asserted that the construction of this road was not required to 
supply the transportation needs, and that it would still be possi- 
ble to carry all existing traffic between Marquette and Ishpem- 
ing over the main line. What has been said above in regard to 
the Western Division applies equally to the South Line. 

Third : It is contended also that a loss was incurred in operat- 
ing through passenger trains from Houghton over the Mineral 
Eange Railroad to Calumet, and that such loss should be exclud- 
ed from this calculation. This extension of plaintiff's service 
was clearly reasonable in view of the importance of Calumet, 
which lies only 14 miles from its own lines. It was admitted by 
the state officials that passengers on the route were, under the 
act, entitled to travel at the 2-cent rate. The fact that the serv- 
ice was furnished by acquiring traffic rights instead of by build- 
ing an independent line clearly affords no reason for excluding 
the results of the operation from the calculation. 

[3] Fourth: The further contention is made that the sleeping 
car, parlor car, and dining car services should be treated as sep- 
arate operations ; that they should be charged with their propor- 
tion of specific and general expenses, but credited only with the 
amounts received from charges for the specific service ; and that 
no part of the apparent loss on these services should be taken in* 

to consideration in determining whether the 2-cent fare is con- 
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GROESBECK v. DULUTH, S. S. & A. K. CO. W^ 

fificatory. In support of this contention it is urged that these 
services were voluntary; that the law (Mich. Pub. Acts of 1875^ 
No. 38) permits railroads to make special charges for these serv- 
ices ^^in addition to the regular passenger fares allowed by law/^ 
and that travelers in day coaches must not be allowed to suffer 
because a railroad fails to make these services compensatory. 
On American railroads of importance these services have been 
well-nigh universal for more than a generation; and the charges 
for them are substantially uniform throughout the country. It 
would be practically impossible, as it would be obviously unwise, 
for a railroad like the plaintiffs either to discontinue the serv- 
ices or to increase the charges to cover the cost of the particular 
service on its line. It is inconceivable that the l^slature of 
Michigan should have intended, in enacting the 2-cent fare law, 
to deny to its citizens these customary facilities; and for the pur- 
pose of determining whether the act is confiscatory, the passenger 
service, including these facilities, must be treated as a whole. 
The fact alleged, that these facilities are used mainly by inter- 
state travelers, is immaterial. 

[4] Fifth: The remaining objection relates to the formula 
adopted by the lower court for dividing charges and expenses 
common to freight and passenger services, and not capable of 
direct allocation. What method should be pursued in making 
such division is a very difficult problem to which railroad 
accountants, the Interstate Commerce Commission, and state 
railroad commissions have for years given serious attention.* 

'The Interstate Commerce Gommission upon its organization July 1, 
1887, required the railroads to report operating expenses separately as be- 
tween the freight and passenger services. The difficulties were so great 
and the results so widely discredited that the requirement was withdrawn 
as of June 30, 1894. The requirement was restored as of July 1, 1916. Re 
Separating of Operating Expenses, 30 Inters. Com. Rep. 676. In the in- 
terval railroad accounting had in this respect made gradual advances. J. 
M. Talbott. Transportation by Rail (1904) ; Buell v. Chicago, M. & St. P. 
R. Co. 1 Wis. R. C. 324 (1907) ; Minnesota Rate Cases (Simpson ▼. Shep- 
ard) 230 U. 8. 362, 468-461, 57 L. ed. 1511, 1565, 1566, 48 L.R.A.(N.S.) 
1151, 33 Sup. Ct. Rep. 729, Ann. Cas. 1916A, 18 (1913) ; 14 American Rail- 
way Engineering Asso. Proceedings, pp. 587, 1128-1136 (1913); Western 
Passenger Fares, 37 Inters. Com. Rep. 1, 12-30 (1915) ; see M. 0. Lorenz, 
Railroad Rate Making, 30 Quarterly Journal of Economics, pp. 221-232 
(1916) ; W. J. Cunningham, Separation of Railroad Operating Expenses 
between Freight and Passenger Services, 31 Quarterly Journal of Econom- 
i<», pp. 200-249 (1917). 
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184 UxNlTED STATES SUPRExME COURT. 

Despite much patient study and the exhibition of great ingenuity 
no wholly satisfactory method has yet been devised. The vari- 
ables due to local conditions are numerous; and experience 
teaches us that it is much easier to reject formulas presented as 
being misleading than to find one apparently adequate. The sci- 
ence of railroad accounting is in this respect in process of devel- 
opment; and it may be long before a formula is devised which 
can be accepted as satisfactory. For the present, at least, the 
question what formula the trial court should adopt presents a 
question, not of law, but of fact; and we are clearly unable to 
say that the lower court erred in adopting the method there pur- 
aued.* 

The decree of the District Court is affirmed. 



WEST VIROINIA SUPREME COURT OF APPEAIjS. 

PITTSBUEGH & WEST VIEGINIA GAS COMPANY 

V. 

ELMUS P. RICHAEDSON. 
(100 8. E. 220.) 

^09 — Natural — Lease — Constrtiction, 

1. An owner of real estate, who has leased the same for the pro- 
duction of oil or gas therefrom, with a stipulation in such lease that 

• The average rate of return for the years 1914-1917, according to the 
formula adopted by the trial judge, was 1.20 per cent. By the use of a 
formula more favorable to the defendant he found it to be 2.52 per cent. 
The modified revenue train mile ratio used by the plaintiff showed a loss 
of over $100,000 a year; while the gross ton mile ratio proposed by the 
defendant indicated an average return of at most 6.82 per cent. Of these 
methods employed by the parties it may be noted that the Interstate Com- 
merce Commission has said: 

'The representatives of the state commissions advocated the use of 'gross- 
ton-mile' as a basis, while the representatives of the railways favored 'engine- 
^n-miles.' The discussion seemed to be somewhat influenced by the possi- 
ble effect of these respective bases on statistical evidence which might be 
introduced in passenger rate cases. It may fairly be said that the facts 
and arguments presented do not warrant the final approval by the Commis- 
sion of either the gross-ton-mile or the locomotive-ton-mile at this time." 
Rules Governing the Separation of Operating Expenses between Freight 
Service and Passenger Service on Large Steam Railways, Effective July 1^ 
1915) p. 3. These rules are now in process of revision* 
P.U.R.1920A. 



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PrnSBURGH & W. V. GAS <X). V. RICHARDSON. 185 

he shall be allowed to use at his residence gas from any well drilled 
upon the premises for domestic purposes, free of charge, is entitled, 
in case a producing well is drilled upon such premises, to such quantity 
of gas produced therefrom as is reasonably necessary for his domestic 
uses, for the purposes to which such natural gas is ordinai;jly devoted* 
Qaa — Natural — Reservation in lease — Free domestic use, 

2. A regulation by a lessee in an oil and gas lease for the estab- 
lishment and maintenance of meters upon lines furnishing free ga£ t-o 
the lessor, under the terms of the lease providing that such lessor is 
entitled to the use of gas free of charge for domestic piu^oses, is a 
reasonable and proper regulation, and a court of equity will enjoin 
such lessor from interfering with or obstructing such lessee in the 
installation, maintenance, or reading of such meters. 

Qaa — NcLtural — Free domestic use — Inunction. 

3. A regulation by the Public Service Commission of West Virginia, 
requiring all producers of natural gas who furnish any of their product 
to persons free of charge to measure such part thereof by a meter, and 
to report the amoimt thereof to the Commission at certain intervals, 
is a reasonable and proper regulation, and any interference or obstruc- 
tion upon the part of such free user of gas to the carrying out of such 
regulation will be enjoined by a court of equity. 

Headnotes by the Coubt. 

[September 9, 1919.] 

Case Cebttpibd from Circuit Court, Marion County, upon 
demurrer of a temporary injunction in a suit by the Pittsburgh 
& West Virginia Gas Company against Ehnus P. Richardson; 
reversed, temporary injunction reinstated and cause remanded. 

Appearances: Law & McCue, of Clarksburg, and H. H. Rose, 
of Fairmont, for plaintiff. 

Ritz, J. Plaintiff is the owner of a lease for oil and gas pur- 
poses on a certain tract of land owned by the defendant, by the 
terms of which lease the defendant is entitled to have free gas 
for domestic purposes for one house from any gas well drilled 
or utilized on said premises. A gas well was drilled upon the 
premises, and in accordance with the terms of said lease defend- 
ant was allowed to make connection with plaintiff's gas line in 
order to secure a supply of gas for his domestic purposes, and 
the same has been continuously furnished to him under the terms 
of said lease for many years. In July, 1915, the Public Serv- 
ice Commission of West Virginia adopted a rule providing that 
all gas furnished without charge within the state should be me- 
tered, and that reports should be made to it monthly of the quan- 

P.U.R.1920A. 



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186 WEST VIRGINIA SUPREME COURT OF APPEALS. 

titles of gas so furnished. The plaintiffs bill alleges that in ordeF 
to comply with this provision, as well as in order to be in a posi- 
tion to protect itself against the waste of gas by the defendant, it 
desired to- install a meter upon the pipe supplying gas to the 
defendant's residence. To this the defendant objected, and, the 
plaintiff having installed said meter, the defendant removed the 
same. This suit was then brought and an injunction asked to 
restrain the defendant from interfering with the plaintiff in the 
installation of a meter upon his supply line, and the maintenanoe 
and reading of the same at proper intervals. A temporary inr 
junction was granted, but subsequently, when the defendant 
appeared and demurred to the bill, the demurrer was sustained, 
and the temporary injunction dissolved. The question arising 
upon the sufficiency of said bill is now certified to this court 

[1, 2] The plaintiff insists that it is entitled to establish a 
meter upon the defendant's supply line, entirely at its own ex- 
pense, as one of the practicable ways of securing information for 
the proper regulation of its business, and also in order that it 
may comply with the regulation made by the Public Service 
Commission of West Virginia. It is a little difficult to under- 
stand why the defendant objects to having the quantity of gas 
used by him ascertained in this manner. It involves no expense 
to him, nor does it appear how it can in any manner incon* 
venience him in the exercise of his ri^t. The quantity of gas 
to which the defendant is entitled under this free gas clause in 
his lease is not imlimited, but is only such amount as is custo- 
mary and reasonable for his domestic uses. Hall v. Philadel- 
phia Co. Y2 W. Va. 5Y3, Y8 S. E. Y55 ; Harbert v. Hope Nat- 
ural Gas Co. Y6 W. Va. 20Y, 84 S. E. YYO, L.RA.1916E, 5Y0. 
It cannot be said that the plaintiff has any arbitrary right to 
determine such amount. Neither has the defendant the right to 
say that he may use the gas produced to any extent which hit 
wants, real or capricious, may demand. He is entitled unde» 
his contract only to so much gas free of charge as is ordinarily 
used, and as is reasonably necessary for such domestic purpoMB 
as natural gas is usually devoted to. This being true^ it is entire- 
ly proper for the plaintiff to adopt such regulatory measures as 
may be practicable and appropriate for the purpose of determm- 
ing that its product is not being wasted. Whatever productian 

P.U.R.1920A. 



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PITTSBURGH k W. V. GAS CO. ▼. RICHARDSON. 18f 

«f gaa remains after the free use thereof by the defendant is th« 
property of the plaintiff. If the defendant uses more gas than 
bis reasonable wants require, if gas is wasted by him, either be- 
cause of defective appliances, or because of excessive use there- 
of, to the extent that such quantity exceeds his reasonable ordi- 
narj' requirements, he is taking the property of the plaintiff. It 
is represented by the plaintiff that this free gas is in many in- 
stances frmished through pipe lines constructed by the users 
thereof. These lines become out of order ; they leak, and much 
gas is wasted in this way. These leaks can only be determinated 
by a system of continuous inspection, unless meters are allowed 
to be installed, in which case such meters will give information 
as to any excessive use and waste, and lead to the repair of any 
defects or leaks in the supply line, or the correction of any waste- 
ful use of the substance. We are very clearly of the opinion that 
inasmuch as it appears from the allegations of the bill that the 
attachment of this meter to the supply line of the defendant is 
a practicable and appropriate way of detecting any loss of gas 
by leaks, or wasteful consumption of the same, and further that 
it will not in any way hinder or obstruct the defendant in the 
full and free exercise of his rights, the plaintiff had and has a 
right to enforce such regulation, and that the attempt of the 
defendant to interfere with it in the installation, maintenance 
and reading of such meter is an invasion of its right in this re- 
gard, which a court of equity will prevent 

[3] Aside from the right of the plaintiff to protect its prop- 
erty by this regulatory measure, it would seem that the authority 
of the Public Service Commission to make the regulation which 
it has made is entirely justified. It is shown by the bill that the 
amount of gas delivered to free gas consumers, so far as it has 
been able to be accurately measured, is something like 30 timet 
as much as is delivered to other consimaers for similar service. 
One of the duties devolved upon the Public Service Commission 
is to regulate the distribution of natural gas, and undoubtedly 
the purpose of the regulation it has adopted is to prevent the 
waste or improper use thereof to the end that as large an amount 
as possible may be devoted to the beneficial uses of the inhab- 
itants of the state. The regulations adopted by the Public Serv- 
iee Commission are appropriate, to say the least, for the effecta- 
P.U.R.1920A. 



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168 WBBT VIRGINIA SUPREME COURT OF APPEALS. 

ation of this purpose, and it may be said that not only does the 
plaintiff have the right to install these meters with the view of 
giving effect to the Public Service Commission's regulation, but 
it is its duty to do so, and it is entirely competent for a court of 
equity to restrain anyone who interferes with the discharge of 
such duty. 

We are, therefore, of opinion to reverse the decree of the cir- 
cuit court sustaining the demurrer and dissolving the injunction,, 
everrule the demurrer, reinstate the temporary injunction, and 
remand the cause for further proceedings. 



ILLINOIS PUBLIC UTILITIES OOBfMISSION. 

BE STEPHENSON COUNTY TELEPHONE COMPANY. 

[No. 9035.] 

MHsorhnination — Bates — Telephone switching — ViUage residents. 

It is discriminatory for a telephone company to furnish exchange 
service at switching rates to residents in a village notwithstanding a 
contract between the exchange company and the rural company pro- 
vides that stockholders having telephones on farm lines owned by the 
latter company, shall have the right, upon removing to the village* 
to bring their telephones to their new places of residence and receive 
service there at the switching rates. 

[October 20, 1919.] 

Petition -for authority to increase rates for telephone switch- 
ing service; granted. 

Lucey, Commissioner: The petitioner herein, the Stephen- 
son County Telephone Company, filed a schedule of rates covers 
ing the local and switching rate now in effect in Orangeville, 
county of Stephenson, and vicinity. The proposed switching 
rate is covered hy a contract between the Stephenson County 
Telephone Company and the Orangeville Independent Tele- 
phone Company. The present rate for switching service is $2 
per year and the proposed rate $4 per year. Since the inter- 
pretation of a certain clause in the contract between the two 
companies is in dispute, the matter was brought before the Com- 
mission and came on for hearing on May 14, 1919. George X. 

P.U.R.1920A. 



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RE STEPHENSON COUNTY TELEPH. CO. 189 

Cannon represented the Stephenson County Telephone Company 
and A. J. Clarity, Attorney, appeared for the Orangeville In- 
dependent Telephone Company. No objectors to the proposed 
increase in switching rate appeared. Petitioner submitted proof 
of publication of intention to increase the switching rate, to- 
gether with contract of May 16, 1918, between the Stephenson 
County Telephone Company and the Orangeyille Independent 
Telephone Company. 

It appears from the record that the Stephenson County Tele- 
phone Company is furnishing local exchange service to eighty- 
eight subscribers in Orangeville, and vicinity. The Orangeville 
Independent Telephone Company is a mutual tdephone com- 
pany operating in the rural district around Orangeville, the 
subscribers of which each owns and maintains his telephone and 
line. The lines are connected to the switchboard of the Stephen- 
son County Telephone Company at Orangeville and subscribers 
connected therewith are provided with switching service by the 
Stephenson County Telephone Company. On May 16, 1918, a 
contract was entered into between the Stephenson County Tele- 
phone Company and the Orangeville Independent Telephone 
Company which provides that the rate for switching service 
shall be $4 per year. Section 10 of the contract provides as fol- 
lows: 

*T[t is mutually agreed by both parties hereto that the Stephen- 
son County Telephone Company, the first party, is conducting 
a telephone business in and about Orangeville, and the Orange- 
ville Independent Telephone Company, the second party, a 
farm telephone business, but all stockholders having telephones 
on farm lines owned by said second party shall have the right 
upon removing from their f aims to Orangeville to bring their 
telephones to their new place of residence at Orangeville and 
attach the most suitable farm line designated by second party, 
and said first party agrees that this contract thereinafter shall 
apply to them, subject to a ruling of the Public Utilities Com- 
mission of the state of Illinois. The second party further agrees 
that no telephones other than the above will be connected to 
their lines within the town of Orangeville.'' 

The Stephenson County Telephone Company sets forth that 
the interpretation of § 10 of the contract does not mean thai 

P.U.R.1920A. 



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190 ILLINOIS PUBLIC UTILITIES COMMISSIOK. 

shareholders of the Orangeville Independent Telephone (Xm> 
pany who formerly resided in the country and later moved to 
the village, bringing their telephones with them and connecting 
with the iiiral lines at points within the village are entitled to 
enjoy the rural switching rate. It also appears from the record 
that all of the subscribers living in the village of Orangeville 
and receiving service at the rural switching service rate did not 
formerly live in the country. 

The record shows that at the present time there are 24 share- 
holders of the Orangeville Independent Telephone Company 
who are now living in Orangeville and receiving switching serv- 
ice at the present switching rate now in effect. Of these 24 
shareholders, 8 have sold their farms, 3 were formerly tenants 
on farms, 6 now own farms in the country, and 7 have never 
owned a farm or lived in the country. 

A person who moves to the village and who enjoys the privi- 
leges of the village should, as a matter of course, be subject to 
the limitations and regulations that apply to all other persons 
similarly situated, and if a rural switdhiing service telephone 
subscriber volimtarily removes to a city or village and desires 
telephone service,^ he should pay the rate that applies to city or 
village subscribers for the class of service furnished. To do 
otherwise would appear to be creating an unlawful discrimina- 
tory condition. Rural switching service is distinct from the 
various classes of local exchange service and is designed for 
persons living in the country who own and maintain their lines 
and telephone. It is proper that the telephone company should 
establish such rules as would tend to maintain the classification 
and rates provided for city or village subscribers, and a rule 
restricting switching service to rural subscribers only is a prop- 
er regulation. 

It appears that the regular schedule of rates for the class of 
service furnished should apply to all subscribers in the village 
of Orangeville, and that for the Stephenson County Telephone 
Company to furnish service to certain or any subscribers lo- 
cated in the village of Orangeville at any other than the estab 
lished rate for the classification of city service received, is dia- 
oriminatory and unlawful. A practice of allowing a rur^* 
switching service rate to subscribers within the village iTOula 

P.U.R.1920A. 



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RE STEPHENSON COUNTY TELEPH. CO. 191 

result in a tendency on the part of other subscribers to install 
their telephones and build their lines and, subsequently, in a 
divided ownership of the exchange lines and equipment, serioua- 
ly impairing the service. 

After carefully considering the evidence, the Commission is 
of the opinion, and finds: 

1. All subscribers located within the village or exchange 
limits of the Stephenson County Telephone Company at Or- 
angeville should pay the regular scheduled rate for the class of 
service furnished r^ardless of the ownership of shares in the 
rural telephone company whose lines are connected with the 
switchboard of the Stephenson County Telephone Company. 

2. That the proposed rate for switching service is just and 
reasonable and should be authorized. 



INDIANA PUBIilO SBRVIGE OOBCMISSION. 

BE GAET STKEET KAILWAT COMPANY. 
[No. 4690.] 

XUtum — Street raitwave — Amount. 

1. A return of from 2.76 per cent to 3.1 per cent for a street rail* 
way company, dependent upon the valuation of the property used, ia 
grossly inadequate, and rates yielding a theoretical return of 6.74 
per cent to 7.57 per cent are not unreasonable in view of the continued 
upward trend of eost and the possibility of loss of traffic from tha 
increase in rates. 

€knnmi8ei<m — Potcers — Begulation of street traffic. 

2. The Indiana Commission has no power to regulate street traffic 
In cities. 



Rates — Street railtoays — Competition of jitneys. 

Discussion of danger of increasing street railway rates where there 
is jitney competition, p. 106. 
JHserimination — Street railways — Charge for transfers. 

Discussion of discrimination in charging for street railway trans- 
fers, p. 106. 
Monopoly and competition — Street railtoays — Jitneys, 

Discussion of evils to street railway company from jitney som- 
petition, p. 196. 
Monopoly and competition — Street railways — Jitneys. 

Statement that cities must choose between jitney serrie* and low 
street railway lares, p. 197. 



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192 INDIANA PUBLIC SERVICE COMMISSION. 

Monopoly and competition — Street railwaya — Jitneys, 

Discussion of unfairness of reqtdring street railway to pave portiona 
of street used by competing jitneys, p. 197. 

[October 26, 1919.] 

Petition for increase in street railway and interurban rail- 
way fares; increase granted. 

Appearances: Charles W. Miller, for petitioner; Robert M. 
Davis, city attorney, for city of Gary; William W. McMahon, 
city attorney, for city of Hammond. 

By the Commission: On July 30, 1919, The Gary Street 
Railway Company filed with the Commission a petition for au- 
thority to increase fares. The essential allegations of the peti- 
tion are: 

That no dividends have been paid on either preferred or com- 
mon stock; that petitioner will, in the near future, be required 
to relay certain of its tracks and repave certain streets in the 
city of Gary at a cost of $350,000 ; that the city is calling for 
further extensions to petitioner's street railway system made 
necessary by the extraordinary rapid growth of the city; that 
during the war period petitioner borrowed from the United 
States Housing Corporation $170,000 which was expended in 
the purchase of badly needed equipment; that said loan must 
be repaid in five annual installments ; that the increases in train- 
men's wages made between March 1, 1918 and July 1, 1919 
averaged 48 per cent, that by reason of the increases in wages 
already granted and other increases which must necessarily be 
granted; the operating expenses will be increased $20,000 per 
annum, that by reason of the general advances in prices of ma- 
terial and supplies operating costs have been greatly increased. 

The petition further recites: "That your petitioner has no 
available net revenue to pay such increase of wages nor to pay 
any return upon its preferred or common shares of capital stock, 
nor to provide for the payment of interest charges upon new 
capital, which must be invested in said renewals of its tracks 
and pavements, and extensions to its system of railways by rea- 
son of the fact that, during the last nine months, your petitioner 
has had no appreciable net income or profit whatsoever, the 
actual net income or profit having been for such period only 
$881. 

P.U.R.1920A. 



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RE GARY 8TREBT R. CO. 193 

That the only means of enabling your petitioner to pay such 
increased wages and return upon its shares of capital stock, and 
to provide interest charges .upon such needed additional capital, 
is to permit your petitioner to increase its rates of fare and 
transportation charges as herein applied for. 

That without such increased rates of fare your petitioner 
will be unabled to pay the interest upon its present indebtedness, 
to repay maturing, loans from the United States government, 
and will necessarily be thrown again into bankruptcy from 
which it has just emerged, thereby causing permanent and se- 
vere loss to the public and its employees as well as great loss 
to the investors in its present issue of securities. 

Petitioner called attention to its existing fare of 10 cents for 
the transportation of a passenger between Hammond and Gary, 
a distance of 10 miles, or 1 cent per mile. 

Petitioner prays authority to put into effect a 6-cent fare in 
the cities of Gary, Hammond, and East Chicago and a 20-cent 
fare between Hammond and Gary, and between East Chicago 
and Gary; said 20-cent fare to be collected in three zones, so as 
to collect a 6-cent fare in each terminal zone, and an 8-cent fare 
in the middle zone. 

Copies of the petition were served on the municipalities of 
Gary, Hanmiond, East Chicago, and Indiana Harbor, and their 
chambers of conunerce or commercial clubs, and also on news- 
papers published in said cities. After due notice to such parties 
and the public generally, hearing was had at Gary^ Indiana, 
October 8, 1919. 

Financial Showing. 

A carefully prepared exhibit submitted in evidence by peti- 
tioner stated an estimate of revenue and expenses for the year 
1919 based on actual figures for the eight months ending Au- 
gust 31, 1919. The estimated revenue is computed on the ex- 
isting fares. The totals were as follows: 

Revenue from all sources • $519,304.90 

Expeilses $411,692.40 

Plus increase in payroll account wage increases . . 9.200.00 

DepreciaUon 30,000.00 

Taxes 19,000.00 469,892.40 

Net operating revenue e. • • . • • • •••••••••••••••••••.. $49,412.50 

P.U.R.1920A, 18 



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194 INDIANA PUBLIC SERVICE COMMISSION. 

The testimony tends to support these estimates* 

The Commission finds it unnecessary in acting on this peti- 
tion to make a formal valuation of petitioner's property. It 
has before it however: (1) the tentative estimate of the value 
of said property as of November, 1917, used in reaching a deci- 
sion in Cause No. 3451; (2) the list of additions, extensions, 
and betterments since made, and (3) testimony as to the condi- 
tion of the property. On such bases, the Commission feels safe 
in basing its calculations on a property value ranging from 
$1,600,000 to $1,800,000. 

[1] Taking such tentative estimate as a basis, the net oper- 
ating revenue of $49,412 would be but 3.1 per cent on a value 
of $1,600,000 or 2.75 per cent on a value of $1,800,000. Such 
a return is so inadequate as, not only to justify a readjustment 
of petitioner's rate schedules, but to constitute a positive menace 
to the rapidly growing community served. Such a financial 
showing must deprive the utility of credit necessary to obtain 
the necessary money to maintain proper service conditions and 
meet demands for extensions for a rapidly growing and expand- 
ing population. 

Petitioner estimates that the increase in rates prayed would 
result in an increase in revenue of $72,000 per annum. If 
(here should be no increase in operating expenses beyond the 
estimate for 1919, the net operating revenue would be increased 
to $121,000. This would yfeld a return of 7.57 per cent on a 
value of $1,600,000 or 6.73 per cent on a value of $1,800,000, 
neither of which could be considered unreasonable considering 
the. especial conditions existing in the section served, and es- 
pecially taking into consideration the continued upward trend 
of operating costs. It must also be borne in mind that expe- 
rience has demonstrated that an increase in utility rates usually 
means a shrinkage in volume of traffic. It is therefore essential 
to allow for that factor in estimating future revenues. It may 
be that the proposed increases, if allowed, will cause a reduction 
in patronage that will materially reduce the eatimated ^oss 
revenue. 

The testimony is that what petitioner most desires is fares 
yielding a margin of profit sufficient to enable it to sell bonds 
to secure funds to make the desired extensions, provide adequate 

P.U.R.1920A, 



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RE GABY STREET B. CO. IW 

equipment, repay the United States Housing Corporation, re- 
place worn out tracks, and relay worn out pavCTients. 

Attitude of Municipalities. 

The city of. Gary offered no objection to the proposed in- 
crease of fare from 5 cents to 6 cents, provided it included the 
whole of the railway system located within city limits. This 
was also the attitude of the Gary conmiercial club. At the close 
of the hearing both the city and its civic organization annmincedl 
that if the evidence sustained the averments of the petition,, 
they would concede the 6-cent fare, but would oppose transfer 
charges and insist that the 6-cent fare extend to the city limits. 

The city of Hammond protested against the advance from & 
cents to 6 cents within the city of Hanmiond, maintaining that 
the part of the system located within the city of Hammond, and 
the line between Gary dnd Hanmiond, returned adequate reve- 
nue for the service rendered, and that the people of Hammond 
should not be charged higher fares to make up for the failure 
of the rest of the system to pay an adequate return.* 

Since the hearing, the Commission has received a communis 
cation from Roe and Peterson, attorneys, protesting against the 
proposed advance in East Chicago far^ from 5 cents to 6 cents, 
on the ground that the hauls in East Chicago are short as com- 
pared with the hauls in Gary, and that anything in excess of a 
6-cent fare within the city of East Chicago, would be excessive 
and unreasonable for the service rendered. The communication 
contained the following statement: 

"In other words, we do not feel that our residents, ^ho ride 
to and from their work in this city, varying from half a mile to 
a mile and a half distance, should pay the expense of hauling 
people who do not reside in our city, but who are compelled to 
xide in order to work in our city, a distance of 10 miles. In 
other words we believe that the long haul should take care of 
itself." 

The Commission also has before it an appeal from W. L. 
Cook, a mail carrier, who presents the serious financial and 
social effect of an increase of fares on the low-salaried class, an 
nppeal ably presented and given consideration. 

Petitioner prays authority to establish a 6-cent fare- in Gar^ 

P.U.Ra020A. 



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IH INDIANA PUBLIC SERVICE COMMISSION. 

on that part of its system lying east of Englewood avenue on its 
Eleventh avenue line and east of Clark road on its Fifth avenue 
line, and to put into effect a charge of 3 cents for transfers. 
The 5-cent fare now in effect includes transfers. 

The "Jitney" Problem. 

. The testimony leaves no doubt that increased cost of opera- 
tioiJ makes impossible the continuance of the 5-cent fare, at 
lea^it for the present, and that the welfare of the communities 
served makes necessary the improvement of the financial condi- 
tion of petitioner. However, the Commission must not do a 
vain thing. Conditions exist which complicate the problem. 
A very large part of the traffic of petitioner is carried on the 
Broadway line, which operates on the main street of the city. 
The company there is confronted with the most formidable 
^'jitney'^ jcpmpetitioner in the state. Would the institution of 
a i6-cent fare and a 8-cent transfer charge result in the diversion 
of traffic to the jitneys to such an extent as to result in a decrease 
rather than increase in revenues, and so result in further dis- 
ability of .the company? 

E^dence reveals that while officers of petitioner are by no 
meana certain of results, tjiey are of the opinion that the 6-cent 
fare will net an increase, but not the theoretical increase that 
might be anticipated but for the jitneys. It would seem to the 
CQmmiasion, however, that the 3-cent transfer charge, making 
the through fare 9 cents between points where a transfer would 
have to be taken, would have a repressive effect on traffic, and 
would at the same time create a 50 per cent discrimination be- 
tween citizens of Gary traveling like distances, since in some 
instances jthey would travel between two points which, by peti- 
tioner's operation of cars, would involve a transfer, and in other 
between points that would not involve a transfer. 

The Conmiission is of the opinion that under all the condi- 
tions existing, a straight 6-cent fare should at least be given a 
trial and reports required during a period of from sixty to nine- 
ty day^ in order to ascertain what revenues it will produce, and 
that in this period of experiment the city of Gary should bo 
given opportunity to exercise a measure of self determination as 
to t}ie: future., The Commission, without prejudging the test of 

P.U.R.1920A. 



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RE GARY STREET R. CO. 197 

a 6-eent fare without transfer, is nevertheless fearful that it 
win be found to be insufficient provided the jitneys are per- 
mitted to continue to operate and skim the cream of short haul 
traffic. The Commission, however, is hopeful that the 6-cent 
fare will prove successful, if there can be eliminated the $100,^ 
poo gross loss of revenue per annum which now goes to the 
jitoeys. 

In ruling on the charge of 3 cents for transfers, the Commis- 
sion is influenced by petitioner's estimates that the 8-cent trans- 
fer charge, if authorized, would increase its revenues approxi- 
mately $15,123 a year, but that the eliminations of "jitneV' 
competition would result in a gain of $100,000 gross revenues 
or $60,000 net revenues. It is therefore within the power of 
the city to more than compensate petitioner for the loss of the 
$15,123 incurred by its failure to secure the approval of the 
Conmiission for the transfer charge, and to determine whether 
the 6-cent fare will be sufficient. 

Gary is located in what may be termed the Chicago district, 
a section in which there prevails to-day one of the highest levels 
of street car operating cost to be found in tKe country. More- 
over the street railways in this district are face to face with a 
highly competitive labor market 

The time has come, the present era of high coal and labor 
costs, and the reduction of street car traffic due to private auto- 
mobiles, when cities, at least in the Chicago district, must sel^t 
between (1) jitneys, which can and will serve only a few people* 
and limited areas, and which operate largely in peak load hours 
and in favorable weather, and (2) low fares and good service on 
the cars of street railway utilities which are held responsible 
for constant operation over large areas, much of which opera- 
tion is unprofitable. 

The competitive conditions, which always are unfair, are 
especially unreasonable in Gary. The terms under which peti- 
tioner occupies the streets of Gary provide that it shall pave 
between its tracks, and a certain distance on each side of its 
tracks. The result is, that petitioner paves and maintain^ the 
22 feet in the center of the principal street of Gary. This part 
of the main street of the city often, if not generally, happtos 
to be the best part of the Entire pavement, and is used by the 

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198 INDIANA PUBLIC SERVICE COMMISSION. 

jitneys, in common with all other traffic of the city. The results 
are: (1) that the street railway company paves and maintains 
a large part of the street used freely by " jitneys'' which deprive 
it of revenue: (2) that the people who ride in the street cars 
pay higher fares than otherwise would be the case, to provide 
and maintain street pavement for other transportation agencies 
whose operation tends to increase the fares of street car pa- 
trons. 

{2] The Commission has no jurisdiction that will enable it 
to regulate street traffic in municipalities. In exercising its rate- 
making duties in this instance, it must provide $100,000 in 
higher fares to be paid by the masses of people who do not own 
automobiles and who must use the street cars, to cover revenues 
lost to the "jitneys." The Commission, therefore, feels justi- 
fied in directing the attention of the city of Gary to the question 
of whether Gary shall have low street car fares for all, or jit- 
neys for a few. 

The Commission also will suggest to the city of Gary for its 
consideration the possibility of an eventual return to a 5-cent 
fare by removing from the patrons of the street cars, the burden 
of providing funds for pavements which are used by the entire 
community, including private pleasure cars and trucks, 

Intcrurban Fares. 

Petitioner prays authority to establish an 8-cent fare on the 
Hammond-Gary line between Englewood avenue and Kennedy 
avenue, and the same on the Gary-East Chicago line between 
Clark road and the Calumet river; a 6-cent fare in Hammond 
west of Kennedy avenue; and a 6-cent fare in East Chicago. 
The result of the establishment of the proposed fares would be 
that a passenger traveling between Hammond and Gary, or be- 
tween East Chicago and Gary, would pass through three fare 
zones paying respectively 6 cents, 8 cents and 6 cents, an aggre- 
gate of twenty cents. 

The evidence reveals that the di^ance that a passenger may 
travel from the west end of the line in Hammond to the Broad- 
way loop in Gary, is 11.27 miles. The evidence makes obvious 
that under new operating costs, 10 cents is not an adequate fare 

for this distance. It disproves the contention of counsel for the 
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RE GARY STREET R. CO. 199 

city of Hammond that this part of the system makes a financial 
showing that should exempt it from rate readjustment. 

The service is really interurban and not local street railway 
transportation. There is a territory of at least 3 miles between 
the populated portions of Hammond and Gary, which is open 
and practically unsettled. The same situation exists between 
Gary and East Chicago. For the same transportation distance 
an interurban railway would charge 28 cents. Petitioner asks 
authority for a 20-cent fare. 

It appears, however, that while the aggregate of 20 cents for 
the entire trip between Hammond and Gary, or between East 
Chicago and* Gary, cannot be held unreasonably high, the pro- 
posed zoning may be criticized. To illustrate : Under the pro- 
j)osed zoning it would cost a passenger 14 cents to ride from the 
comer of Grant street to the Elgin, Joliet & Eastern Railroad, 
less than a mile in the second zone. Having given the matter 
careful consideration, the Conmiission is of the opinion, that 
the Gary 6-cent fare zone on the Gary-Hammond line, should 
l>e extenc^ed to New avenue, and that the line between that 
point and Kennedy avenue should be divided into two 4-cent 
yoncs as follows: (1) New avenue to Grand avenue; (2) 
Grand avenue to Kennedy avenue. The Commission would 
favor four instead of two zones in this area, but is of the opiu; 
ion that such a division, while more ideal, would not be prac- 
tical in operation. The Commission is further of the opinion 
that the Gary 6-cent fare zone on the Gary-East Chicago line 
should be extended to Dearborn street, and that the line from 
that point to the Calumet river should be divided into two 4- 
oent zones as follows: (1) Dearborn street to the Elgin, »Toliet 
& Eastern Railroad crossing; (2) Elgin, Joliet & Eastern Rail- 
road crossing to the Calumet river. 

The Commission, being fully advised, finds that petitioner's 
fares are inadequate to yield revenues to meet operating ex- 
penses and maintain credit vital to the welfare of the commim- 
ity ; that 6-cent fares, which shall include present transfer privi- 
leges, should be authorized at least for an experimental period 
for all portions of its system in the city of Gary lying east of 
New avenue on its Ninth-Eleventh avenue line and east of Dear- 
bom street on its Fifth avenue line, on that portion of its system 

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200 . INDIANA PUBUC SERVICE COMMISSION. 

in the city of Hammond lying west of Kennedy- avenue, and ott 
that portion of its system lying north of the Calumet river, in- 
cluding the extension to Summer street, and that interurban 
fares should be readjusted to bases more comparable with other 
interurban fares by the creation of an 8-cent zone between New 
avenue in Gary and Kennedy avenue in Hammond, and between 
Dearborn street in Gary and the Calumet river; and that each 
8-cent zone should be divided into two 4rcent zones as herein- 
after provided. 

The division of a railway into fare zones presents difficult 
problems which can be solved only by periods of experiment 
and analyses of monthly reports during the experimental peri- 
ods. The order will therefore require monthly reports of reve- 
nues so framed as to afford detailed information so analyzed bb 
to enable the Commission to determine the effect of the zoning 
required by this order* 



INDIANA PUBIilG SBRVIOE COMBaSQION. 

BE GABY & HOBART TBACTION COMPANY. 

[No. 4802.] 

Service — > Abandonment — Street railtoaye — System as a whole, 

A town should not be allowed to enforce unreasonable condition* 
as to service in a street railway franchise which would adversely affect 
the service of the system as a whole. 



Service — r Power of Commission — > Abandonment of street raHwa^t 
service. 

Discussion of power of Indiana Commission to authorize abandon- 
ment of street railway service, p. — • 

Johnson, Commissioner, dissents. 

[October 26, 1919.] 

Petition for authority to dismantle part of street raflway 
track in town of Hobart ; granted in part 

Appearances: A. T. Ewin^, president, O. Wildermutii, attor- 
ney, for petitioner ; R. R. Peddicord, city attorney, Jamea Car- 
penter, president, board of trustees, for town of Hobart 

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RE GARY & H. TRACTION CO. ZOi 

By the Commission: On September 5, 1919, the Gary & 
Hobart Traction Company filed with the Commission a petition 
for authority to dismantle 1690 feet of single track in the town 
of Hobart, running from the intersection of Third and Center 
streets to its present terminus in Hobart. The petition avers 
that petitioner operates a line of interurban railroad 5.42 miles 
long, from a point in the city of Gary to a point near the intern 
section of Third street and the Pennsylvania Railroad in Ho- 
bart; that the part of such line in Hobart which it desires to 
abandon is of little value to the public as shown by a check of 
patrons using same; that the operation of such part of its line 
is dangerous owing to the narrowness of the street and also be- 
cause of a steep declivity, at the bottom of which is a railroad 
crossing; that the town of Hobart proposes to pave Third street^ 
on which such line runs, at an expense to petitioner of betweai 
^8,000 and $9,000, which petitioner is financially unable to 
pay ; that its line originally extended only to the intersection of 
Main and Third streets; aiid that the portion of its line, which 
it desires to abandon, was constructed under a permit from 
the town of Hobart, butj petitioner never obligated itself to oper- 
ate same. 

The town of Hobart filed an answer opposing the prayer of 
petitioner and averring that petitioner is required by its fran- 
chise to operate its line to its present terminus; that the aban- 
donment of such part of petitioner's, line will cause great in- 
convenience to the public and depreciation of property values; 
that it will neiessitate a 'TT" at Center street, which is not de- 
sired by the citizens of the town; that petitioner should not be 
allowed to abandon part of its line, but the earning ability of 
its line should be considered as a whole; that petitioner desires 
to abandon such part of its line only on account of the proposed 
paving of Third street; and that petitioner has applied to the 
board of town trustees for permission to abandon such part of 
its line, and such permission has been refused. 

After due notice, the matter was heard in the Town Hall at 
Hobart, September 25, 1919. 

After said hearing the presiding Commissioner suggested 
that, whether it should finally be determined that this Commis- 
sion has or has not jurisdiction, grounds for amicable comprch 
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202 INDIANA PUBLIC SERVICE COMMISSION. 

mise probably could be found by conference between the town 
of Hobart and petitioner. On October 16, 1919, petitioner 
filed an amended petition. In the amendment there is added to 
the prayer for authority to remove the section of petitioner' .« 
track lying between the intersection of Center and Third streets 
and the east end of said track, the clause, "for such part there- 
of as the Commission may find proper.^' 

The evidence shows that petitioner has a franchise from the 
town of Hobart, which was granted April 30, 1913, by Resolu- 
tion No. 128 of the board of town trustees. Section 1 of this 
franchise describes the streets over which the line shall nin, 
including the part of the line which petitioner now desires to 
abandon. Section 14 provided for forfeiture of the right to 
operate over any part of such route over which the line was not 
in operation within three months. On July 22, 1913, the board 
of town trustees extended the time for beginning operation 180 
days. It seems that the part of the line, which petitioner now 
desires to abandon, was not built within that time, for on No- 
vember 10, 1914, in Resolution No. 129, the board of town trus- 
tees, granted the predecessor of petitioner, "the right, permis- 
sion, and authority to extent, build, lay, maintain, and operate 
its system from the westerly side of Main street upon such 
streets as are specified in the original franchise.'* 

The exact status of franchise or franchises, or franchise and 
extensions, is somewhat confused. Petitioner, however, did not 
avail itself of opportunity afforded by the legislature to sur- 
render same and to take in lieu thereof an indeterminate per- 
mit. The question of the jurisdiction of the Commission was 
raised, and time was granted for the filing of briefs and for 
conference between representatives of petitioner and the town. 
Petitioner has filed a brief on the question of jurisdiction, but 
the town of Hobart has not filed its brief. 

The Public Service Conmiission Act is not as clear as it 
rhould be as to the jurisdiction of the Commission in such a 
situation as here presented. The Commission might properly 
find itself without jurisdiction were the effects of its order to 
be limited to the local community. On the other hand it may 
have jurisdiction if the evidence reveals that unreasonable or 
unnecessary demands in the town of Hobart would result in 

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KE GARY & H. TRACTION CO. 203 

iiBsatisfactory conditions, either as to rates or service, for in- 
terurban patrons living outside of said town. 

Behind much subterfuge, the Commission finds that the ap- 
peal herein arises over the decision of the town of Hobart to 
pave Third street, its main east and west highway, and the fact 
that said paving will cost pertiitioner, whose tracks occupy said 
street, an amount estimated at the hearing between $8,000 and 
$12,000. The local situation is aggravated by the fact that the 
president of petitioner assumed a conspicuous part in the agita- 
tion for paving, and that after the work had been decided upon 
and begun, he and his gompany have taken an attitude whose 
effect would practically be to relieve petitioner of the major 
part of its share of the paving expenses. 

Evidence, and inspection, does not justify emphasis laid by 
petitioner in its testimony, that its desire to abandon service 
arises largely from a desire to eliminate dangerous conditions 
involved in operating that part of its line lying east of Center 
street. The so-called "declivity'^ east and west of the Elgin, 
Joliet & Eastern Railroad spur switch crossing, on which em- . 
phasis is laid, is a grade not unusually encountered in electric 
railway construction, and other dangerous conditions are such 
that they could easily be made safe by application of the usual 
rules and regulations for the safe operation of street railways. 

The testimony reveals that petitioner is more than merely 
a local street railway ; that it is an interurban railway operating 
between Gary and Hobart; that interests of others than citizens 
of Hobart may be, and are, involved; that its propei-ty value 
does not exceed its book value of $62,954, and more likely in a 
rate case, would be found to be approximately $50,000 ; that it* 
field of operation and its revenues are limited ; that its financial 
history is particularly unfavorable; and that only recently it 
has emerged from a receivership. In the light of the upward 
trend of coal, labor, and other operating costs, its future is any- 
thing but promising. 

The evidence further reveals that the petitioner's line orig- 
inally was planned as an interurban to run from Gary through 
Hobart to other points; that it was completed to, and practi- 
cally through, said town of Hobart; that after reaching the cen- 
ter of the town of Hobart, on Third street, it was extende<i 

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204 INDIANA PUBLIC SERVICE COMMISSION. 

some 1^690 feet to the Pennsylyania Eailroad tra«ki m said 
town before construction was stopped; that the population of 
the town living east of the crossing of a spur traek belonging 
to the Elgin, Joliet & Eastern Eailroad, is scattered, though 
ccwisiderable ; that many people residing in that part of the town 
M^ork in Gary and formerly depended on petitioner's interurban 
i-ailroad for transportation; that, by reason of (1) unsatisfac- 
tory service and (2) commutation or accommodation service 
provided by the Pennsylvania Eailroad, this patronage has de- 
clined to a marked extent ; that, taking into consideration prop- 
er maintenance, allowance for depreciation, taxes, interest, etc., 
petitioner's financial showing is not such as to afford it credit 
under favorable terms; that a heavy capital expenditure of a 
nonrevenue yielding character, would still further weaken it, 
and, eventually, would be prejudicial in rates and service to 
all served by its interurban line. 

As urged by the town of Hobart in its answer, the line should 
be considered as a whole. The town of Hobart should not be 

^ allowed to enforce unreasonable conditions which would 
adversely affect service as a whole. 

Having heard the evidence and being fully advised in the 
premises, the Commission is of the opinion that the demands 
of the town of Hobart require unreasonable capital expenditures 
of petitioner, which must eventually affect adversely its rates 
and service ; that if the service and rails of petitioner were dis- 
continued beyond a point between New street and the Elgin', 

' Joliet & Eastern spur track in the town of Hobart, citizens 
residing beyond (east of) said point would be afforded reason- 
able service; that they would not be required to walk a great- 
er distance to reach the cars of petitioner than persons resid- 
ing in other parts of the town of Hobart now have to go; that 
the prayer of petitioner to abandon this line east of Center 
street should be denied for the reason that it would necessitate 
certain car turning facilities in the business center of the city, 
and other unfavorable conditions that would tend to congest 
traflSc in highways already crowded; that petitioner should be 
required to operate its cars to a point between New street and 
the Elgin, Joliet & Eastern crossing; that the reeonatruction. 

paving, and maintenance of track of petitioner easi ef the said 
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RE GARY &, H. TRACTION CO. tO# 

Elgin, Juliet & Eastern spur track would result in laying an 
unreasonable burden on others who depend on petitioner for 
transportation facilities. 

It is, therefore, ordered by the Public Service Oommission 
of Indiana, that petitioner be, and it is denied authority to 
abandon its track lying east of Center street in the town of 
Hobart, but that petitioner be, and it is, authorized to abandon 
its track and service beyond a point between New street and 
the Elgin, Joliet & Eastern spur track crossing of Third street 
in the said town. 

Johnson, Commissioner, dissents: 

I dissent from the majority opinion of the Commission. To 
my mind, there is serious doubt as to the Commission's jurisdic- 
tion in this case. 

The Commission has never authorized a street railway operat- 
ing within the limits of a municipal corporation, under a fran- 
chise which was still in effect and not surrendered, to discou* 
tinue operations and dismantle all or part of its system within 
such mimicipality. By dicta the Commission has, at times,, 
indicated willingness to give such authority, but it has never 
so ruled where the question was squarely presented. 

Whatever might be the judicial determination of this ques- 
tion, the fact remains that the jurisdiction of the Commission 
in such a case is clouded in doubt. Such doubt should be re-^ 
solved -in favor of the validity of the contractual obligation, 
viz., the unsurrendered franchise. The Commission has been 
slow, of its own motion and initiative, to assume doubtful juris- 
diction. An example of this policy is the case of the petition 
of the Indianapolis Traction & Terminal Company for increase 
in fares. 

Such caution is wise and should be continued. Any other 
course will inevitably lead to further assumption of jurisdic- 
tion by the Commission in doubtful cases, and a gradual but 
ultimately coipplete disregard of any and all contract obliga* 
lions between municipalities and utilities. This in my opinion, 
would be highly undesirableu 
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too MASSACHUSETTS PUBLIC SERVICE COMMISSION. 

MASSACHUSETTS PUBIilC SERVICE COMMISSION. 

TOWN OF LEB et aL 

V. 

BEEKSHIBE STREET RAILWAY COMPANY. 

[P. S. C. 2417.] 

^wdotnenta — > Consent — Effect — Validity of statute, 

1. A decree of a Federal court merely embodying an agreement 
between the United States Department of Justice and a railroad com- 
pany, which declares that the company and some of its subsidiaries are 
parties to an illegal combination in restraint of trade, and which pro« 
Tides that the company shall sell the shares of a subsidiary company, 
with the proviso that such sale shall not proceed until authorized by 
the state, or until the cpurt, after a hearing at which the state shall 
be invited to appear shall so direct, is not binding on the state, nor an 
adjudication as to the validity of the statute authorizing the railroad 
company to acquire the stock of the subsidiary company. 

Procedure — > Enforcement of penal hond, 

2. A petition asking the Commission to order the restoration of 
service on an interurban railway line, is not to be regarded as an action 
on a penal bond given by the company to insure the construction and 
opening for use of the road, where the statute requiring the giving of 
the bond contemplated the enforcement thereof by an action in equity 
brought by the attorney general upon the authorization of the general 
court. 

Service — Abandonment — Contract to construct and open for use. 

^ 3. The provisions of a statute requiring a railroad company, be- 

fore a fixed date, to ^'construct and open for use" a certain line of 
railroad, is not violated by the company in abandoning operation* on 
the line, after it had attempted to operate it as long as itg financial 
<K>ndition would permit. 



Service — Abandonment — Street railways. 

Discussion of liardship worked on communities by abandonment of 
street railway service, p. — . 

[October 30, 1919.] 

Petition of committee representing the towns of Lee, 
Becket, Otis, Blandford, Russell, Huntington &.Westfield, and 
the city of Springfield, relative to the opening and operation of 
the Lee-Huntington line of the Berkshire Street Eailway; dis* 
missed. 

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LEE V. BERKSHIRE STREET R. CO. 207 

By the Commission: This is a petition requesting the Com- 
mission to order the Berkshire Street Railway Company to re- 
open for public travel its line of railway, constructed under the 
provisions of chapter 601 of the Acts of 1910, between the 
towns of Lee and Huntington. The portion of this line from 
its connection with the company's main line in East Lee to 
Phelps* Farm Crossing in the town of Otis, a^ distance of 12.54 
miles, was opened for use in December, 1915, and a certificate 
for the operation of an additional section of the line about 3,800 
feet in length, from Phelps Farm Crossing to Algeree Four Cor- 
ners in the town of Otis, was issued by the Commission on 
August 21, 1916. At that time the remainder of the line to its 
tei-minus in the town of Huntington, a distance of 10.6 miles, 
had been partially constructed, but the company showed no 
apparent disposition to complete this portion of the line so as 
to make it available for public travel. The towns affected 
thereupon petitioned the Commission to require the company 
to complete the line and open it for use. 

After public hearing the Commission, in an order issued 
December 30, 1916, directed the company to complete the con- 
struction of the line in a manner satisfactory to the Commis- 
sion, and to open the entire line for use on or before July 1, 
1917. (4 Mass. P. S. C, 160.) In compliance withithis order, 
the company completed the work of construction as soon as 
practicable, . a certificate of operation, stating that the line 
appeared to be in a safe condition for operation and that all 
laws preliminary to operation had been complied with, was 
issued by the Commission on August 17, 1917, and on the same 
date the entire line was opened for both freight and passenger 
transportation. 

During the following winter, the company, of its own motion, 
but without complaint from the towns affected, suspended the 
operation of the line, but, as the result 'of conferences of repre- 
sentatives of the towns with the Commission and the company, 
operation was resumed on April 24, 1918. Last winter, owing 
to the influenza epidemic and disturbed labor conditions, the 
company, with the acquiescence of the towns, again suspended 
the operation of the line. Early this spring, representatives of 
the towns conferred with the oompaoj with a view to securing 
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208 MAJS8AUHUSETTS PUBLIC SERVICE COMMISBIOK- 

the restoration of service. The company, however, declined to 
reopen the line unless the deficit of operation which it estimated 
on the basis of its experience of last year, at $8,000, was con- 
tributed by the towns under the provisions of chapter 288 of 
the General Acts of 1918, or was otherwise guaranteed or made 
good to the company. This proposition was declined by the 
towns, and the present petition was brought to require the com- 
pany to reopen the line for public travel. 

The petitioners allege that the continued operation of this 
line is vital to the development of the entire region through 
which it is operated, that the company, by its acceptance of 
chapter 601 of the Acts of 1910, is under a contractual obliga- 
tion to continue the operation of this line, and that the Commis- 
sion^ should require the company to fulfill this obligation. The 
company, on the other hand, contends that its financial condi- 
tion does not warrant it in assuming the additional loss due to 
the operation of this line, that the contract between the com- 
pany and the Commission embodied in the Act of 1910 has been 
held by the Federal courts to be in restraint of trade and com- 
merce, and as such illegal and void from its inception, and that, 
in any event, that statute raises no obligation to resume the 
operation of the line under existing conditions. 

The Commission in the report accompanying its order of 
December 30, 1916, already referred to, stated that "it does 
not appear that the financial condition of the company is such 
as to justify the Conmaission, under ordinary conditions, in re- 
quiring the company to assume an additional financial burden 
through the operation of an unprofitable line." At the hearing 
on the present petition counsel for the petitioners agreed that 
the above finding was correct as matter of law. If that be so, 
the financial results of operation of the company's lines since 
1916 merely strengthen the conclusion then reached. For the 
year ended June 30, 1916, the company had a net operating 
revenue of approximately $225,000, but its total income was 
insufficient by about $87,000 to pay operating expenses, taxes, 
interest and other fixed charges. For the year ended December 
31, 1918, the company failed by over $181,000 to earn even its 
operating expenses, and failed by over $561,000 to earn its 
operating expenses and fixed charges. During the fiift icfwt 
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L££ Y. BERKSHIRE STREET R. CO. 209 

months of the present year the company, under its new schedule 
of fares, has been making a somewhat better finanqial showing, 
but the company's figures indicate that its income is still insuffi- 
cient to meet operating expense without making any allowance 
for taxes or interest on its debt. The petitioners agree that a 
company in Ruch financial condition could not be required, 
under the general law, to operate an unprofitable line such as 
the one now imder consideration. The entire case of the peti- 
tioners, therefore, admittedly rests upon the provisions of the 
epecial Act of 1910. 

[1] Before examining the provisions of that statute in their 
bearing upon the present case, it is necessary irst to consider 
the contention of the company that this statute is illegal and 
void, and that it is so declared in the decree entered October 17, 
1914, in the district court of the United States for the Southern 
District of New York, providing for the separation of the New 
EEaven Railroad from the Boston & Maine Railroad and various 
steamship and trolley properties, including the Berkshire Street 
Railway, which have formed a part of the New Haven system. 
This decree recites that the New Haven Company and certain 
of its subsidiaries ^^are parties to combinations in restraint of 
trade and commerce among the several states and with foreign 
nations and have attempted to monopolize and now are monop- 
olizing a part of such trade and conmierce, consisting of trans- 
portation by railroad, trolley lines, and steamboat lines within 
New England, contrary to the Act of Congress of July 2, 1890," 
and provides, among other things, for the sale, prior to July 1, 
1919, of the shares of the Berkshire Company held by the New 
HavCTi Company, "provided, however, such sale shall not be 
proceeded with until action shall have been taken by the com- 
monwealth of Massachusetts authorizing a sale of the shares of 
the Berkshire Street Railway Company or until this court on 
the application of any party and after a hearing at which the 
commonwealth of Massachusetts shall be invited to appear, 
shall by further order so direct." 

It is clear from the language of the decree itself that it does 

not purport to nullify the provisions of the statute of 1910 but 

contemplates either a repeal of that act by the general court of 

tiie commonwealth or a future adjudication with respect to its 
P.U.R.1020A. 14 



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210 MASSACHUSETTS PUBUC SERVICE COMMISSION. 

legality, after full hearing on a proceeding to which the com- 
monwealth is a party. In any event, however, the decree, 
which was entered by consent and merely embodies an agree- 
ment between the United States Department of Justice and the 
New Haven Company, cannot bind the commonwealth, which 
was not a party thereto, or be regarded as an adjudication, even 
by a lower Federal court, as to the legality of this statute. Un- 
less and until the statute is found to be illegal by a court of 
competent jurisdiction its .provisions must be accepted as bind- 
ing upon the Commission and the parties to this proceeding. 

Under that statute the New Haven Railroad Company was 
permitted, contrary to the general law and policy of the com- 
monwealth, to acquire and hold the capital stock of the Berk- 
shire Street Railway Company, and both companies, upon and 
by virtue of their acceptance of the act, assumed certa.in obli- 
gations named therein. These included the coristruction of cer- 
tain designated extensions of the Berkshire Street Railway 
including the line from Lee to Huntington now under considera- 
tion, and the opening of such new lines for use prior to Jan- 
uary 1, 1913, unless an extension of time, for cause shown, 
should be panted by the Commission. The New Haven Com- 
pany was also required to finance the cost of construction and to 
secure the completion of these lines within the time and under 
the authority provided for in the act, and to furnish a bond to 
the commonwealth conditioned upon the fulfilment of this obli- 
gation. 

[2] The present case raises no question in regard to the for- 
feiture of the penal sum named in the bond, as the company, 
upon breach of the conditions named, is required only to pay 
the difference between $2,000,000 and: the amount actually 
expended in the construction of the various extensions provided 
for in the act, and as the company has already expended for this 
purpose an amount substantially greater than the sum named. 
The act, however, provides in § 6, that "instead of enforcing 
the penalty of said bond, the general court may direct the attor- 
ney general to bring a bill in equity against the Berkshire 
Street Railway Company and said railroad corporation, in 
which . the commonwealth shall be entitled to, and by their 
acceptance of this act each of said companies shall be deemed 

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'lee v. BERKSHIRE STREET Rt ()0. 211 

to have assented to, the issue of a permanent injunction or de- 
cree, in appropriate form, for the specific performance of their 
several contracts resulting from their acceptance of this act, 
directing said street railway company to construct and open for 
use, and said railroad corporation to provide, in the manner pre- 
scribed in section one, the means for meeting the expense of con- 
structing and opening for use each and all of the lines of rail- 
way specified in, or approved under the provisions of, section 
three of this^ act, which shall not have been constructed and 
opened for use at the expiration of the time provided for in said 
section three." 

As the statute contemplates the enforcement of the conditions 
of the bond through a bill in equity brought by the attorney 
general upon the authorization of the general court, the present 
petition asking the Commission to order the restoration of serv- 
ice on this line is not to be regarded as a proceeding upon the 
bond, but is based upon the obligations of the company with 
respect to the operation of this line as defined in § 3 of the act. 
But while the conditions named in the bond are, strictly speak- 
ing, not in issue at this time, they may properly be conBidered 
as evidence of the obligations assumed by the company under 
the act. 

[3] Under the provisions of § 3, the Berkshire Street Rail- 
way Company is required, prior to tjie date named in the act or 
such later date as may be approved by the Conunission, to "con- 
struct and open for use" the various lines designated "in a man- 
ner satisfactory to the. Board of Railroad Commissioners and 
upon such locations as shall be designated in the petitions of 
said street railway company and lapproved by said board." It 
is admitted by the petitioners that tl\is line has been construct- 
ed in compliance with the provisions of the act and that it was 
duly opened for use on August 16, 1917. They claim, however, 
that the statute in requiring the line to be opened for use is rea- 
sonably to be construed as requiring continued operation, and 
that the discontinuance of the line, after a comparatively brief 
period of operation, is in violation of the intent and purpose of 
the act. 

It is doubtless true that if the company had opened the line 
for use, and had immediately thereafter arbitrarily discon- 
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212 MASSACHUSETTS PUBUC SERVICE COMMISSION. 

tinued operation without just cause or excuse^ its action might 
be regarded as a breach of faith, if not a breach of the contract 
obligations which it assumed by acceptance of the act. These, 
however, are not the facts in the present case, as the company 
has apparently attempted to operate the line as long as its finan- 
cial condition would peiinit. As already pointed out, the com- 
pany is not earning sufficient money to pay the bare expense of 
operation, and its total revenue last year was insufficient by 
more than half a million dollars to meet its operating expense, 
taxes, and fixed charges, without making any provision for div- 
idends upon its stock. Moreover, the New Haven Railroad 
during the period of Federal control has not been permitted to 
assist the Berkshire Company in meeting any of its deficits of 
operation. Obviously, under these conditions, the operation of 
the entire system is seriously jeopardized, and, unless the finan- 
cial condition of the company can be improved by the installa- 
tion of one-man cars or other changes in methods of operation, 
the company must inevitably be f(trced to abandon thie poorer 
paying lines in the hope of saving the remainder of the system. 
As th^ Lee-Huntington line is by far the poorest paying line 
on the entire system, the company's discontinuance of service 
on this line cannot be regarded as being without right or lawful 
excuse unless it is within the prohibition of the statute. 

The issue in the present case is whether the company, after 
it has duly constructed this line and opened it for use, is pro- 
hibited by the statute from discontinuing it after the company 
has apparently made a reasonable attempt to operate it and 
when it is confronted with the financial conditions which we 
have described. It is to be observed that the Act of 1910 leaves 
the Berkshire Street Railway Company subject to the provisions 
of the general street railway law in all matters which are not 
covered by the provisions of the special act. Under the general 
law, locations are granted to street railway companies in the 
public streets, in many cases grants of land or contributions of 
money have been made by individuals or municipalities to se- 
cure the construction of the road and large investments have 
been made and communities built up in reliance upon the con- 
tinuance of the service, but whatever hardship the abandon- 
ment of service may involve, the law recognizes that im tiie 

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LE£ y. BERKSHIRE STREET R. (X). 21S 

absence of express statutory requirement, street railway com- 
panies may voluntarily discontinue, in whole or part, the uses 
of their tracks when their business proves unprofitable. 

The requirement of the sjlecial act with respect to this and 
the other lines named is that the company shall "construct and 
open for use." If the word "operate" had been used instead of 
the words "open for use," it might have been open to argue that 
that word implied a continuing obligation, but it is dipcult to 
see how such a construction can be given to the words actually 
used, which would ordinarily be r^arded as referring to a sin- 
gle act. It must be assumed that the language of the statute 
was used advisedly and that the words "open for use" are to be 
taken in their usual and accepted meaning, especially as the 
construction sought to be given them by the petitioners would 
be in conflict with the provisions of the general law and would 
impose a special and unusual obligation upon this company. 
J'his conclusion is strengthened by the provisions of § 6 of the 
special act with respect to the enforcement of the company's 
obligations upon its bond. It is clear from the language of this 
section, which we have quoted above, that the bond does not im- 
pose a continuing obligation of indefinite duration, biit that 
when these lines are constructed and opened for use in compli- 
ance with the statute, all obligations under the bond are inmie- 
diately discharged. 

It is doubtful if the question of the continued operation of 
these lines was one to which the legislature gave any special 
consideration while this legislation was in process of enactment 
If the matter was considered at all, the legislature doubtless 
assumed that the company, after expending several million dol- 
lars for the construction of these lines, would not lightly sacri- 
fice its entire investment by- abandoning them, so long as serv- 
ice could possibly be furnished. The company's financial stake 
in the enterprise amounted to a practical guarantee of operation 
which, in the light of conditions prevailing in 1910, might rea- 
sonably have been regarded as sufficient. The legislature un- 
doubtedly did not anticipate, and in any event made no stat- 
utory provision for conditions now prevailing in the street rail- 
way field which have forced many companies to discontinue 
service on some or all of their lines. Under these conditions 

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214 MASSACHUSETTS PUBLIG SERVICE COMMISSION. 

the Commission cannot, in the absence of statutory authority 
therefor, require the company to resume the operation of this 
line. This finding is in no way in conflict with the Commis- 
sion's order of December 30, 1916>, already referred to, as the 
issue in that case related solely to the completion of the line and 
its opening for use, and was clearly' within the express provi* 
sions of the statute. 

The Commission recognizes that the abandonment of street 
railway service in practically every case involves substantial 
hardship to the communities which have heretofore enjoyed 
this service, and, even where the company is within its legal 
rights in proposing to discontinue service, the Commission has 
endeavored from time to time by conference vrith the parties ta 
work out some arrangement which would permit of the reten- 
tion of service. Such a situation can be reasonably met only 
when a spirit of co-operation is shown on both sides. Where a 
line is operated at a loss, and this loss is not made good by the^ 
receipts from other portions of the company's system, a public 
demand for continued operation is equivalent to a request for 
a voluntary contribution or subsidy from the company, of an 
amount equivalent to the deficit in operation, towards the gen- 
eral public welfare of the communities served. Such a request 
we believe cannot fairly be made of an impoverished company, 
unless the communities which are the sole beneficiaries of the- 
service are prepared to share in its responsibilities and burdens. 
This principle is recognized in chapter 288 of the General Acts 
of 1918, which authorizes cities and towns to contribute to the 
cost of operating and fixed charges of street railway companies, 
to an amount not exceeding $1 per $1,000 of assessed valuation.. 
Several towns have already voluntarily contributed the max- 
imum amount authorized by the statute, in order to preserve- 
their street railway facilities. 

The company in this case has volunteered to continue the 
operation of the line if its patrons or the municipalities serted' 
should make up the deficit of operation. Under this plan the 
company would supply, without charge or remuneration, the 
entire capital and plant representing an investment of over two- 
million dollars and an annual interest charge of approximately^ 
$125,000, while the towns served would pay their respective 
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LEE V. BERKSHIRE STREET R. CX). 215 

proportions of a total annual eharge of approximately $8,000. 
As under the 1918 statute, contributions can apparently be 
made only by the towns within which the street railway lines 
are located, the towns of Russell and Westfield, and the city of 
Springfield, which are parties to the present petition, and 
would undoubtedly share in the benefits resulting from the 
resumption of operation, could not legally contribute as munic- 
ipalities any portion of the amoimt which might be required in 
order to secure the restoration of service. If the other five 
towns made the maximum contribution permitted by the stat- 
ute, the aggregate amount raised would be only slightly in ex- 
cess of $6,000. If, however, these towns should deem the reten- 
tion of this service of sufficient importance to justify making 
this contribution, we believe that the company should reason- 
ably resume the operation of the line, with the understanding 
that operation may be suspended during the winter months. In 
any event, we would suggest the desirability of further confer- 
ence between the parties, with a view to ascertaining whether 
any feasible arrangement can be made which will preserve to 
these towns the service which is so vital to their prosperity and 
future development. 

As, however, the Commission is without legal authority to 
grant the petitioners the relief prayed for. 

It is ordered that the petition be dismissed. 



TBRMONT PUBLIC SERVICE COMMISSION. 

EE COLONIAL POWER & LIGHT COMPANY et aL 

[No. 662,] 

ValuatUni — Reproduction cost — War time prices — Depreciation, 

1. An appraisal in proceedings for the consolidation of properties, 
based on the cost of reproduction, is defective, where the unit prices 
are the abnormal war time prices, where no allowance is made for 
depreciation, and where a reasonable return on the amount of the 
appraisal would impose an undue burden upon the rate payers. 

Valuation — Consolidation — Water rights. 

2. Upon consolidation proceedings, the Vermont Commission re- 
fused to allow, as the value of certain water rights, an amount more 
than three times the price paid therefor. 

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£16 VERMONT PUBUC SERVICE COMMISSION. 

Valuation — Consolidation — Undeveloped water potoer, 

3. The Vermont Commission refused, upon consolidation, to permit 
the issuance of long-term securities to pay for undeveloped water 
power, where the testimony did not disclose any present plans to de- 
velop these powers, or any plans for such development in the near 
future. 

Security issues — Amount — Consolidation, 

4. The Vermont Commission refused upon consolidation to permit 
the issuance of new securities approximately double the amount of the 
properties proposed to be acquired. 

Consolidation, merger, and sale — Incumbrance on purchased prop* 
erty. 

6. Upon proceedings for the consolidation of electric properties, 
the Vermont Commission refused to authorize the purchase of certain 
power properties of a railway company, where the properties so pur- 
chased would come into the hands of the new corporation charged 
with the payment of the entire bonded indebtedness of the railway 
company. 

[September 8, 1019.] 

Petition for the purchase and consolidation of certain pow- 
er properties; dismissed. 

Appearances: E. C. Anderson, Esq., Homer L. Skeels, Esq., 
E. W. Lawrence, Esq., for petitioner; Hon. Frank C. Archi- 
bald, attorney general, state of Vermont, for the state of Ver- 
mont; E. E. Moore, Esq., state's attorney, Windsor county; 
P. M. Phelps, Esq., state's attorney, Rutland county, for the 
state of Vermont ; Leonard Wing, Esq., for the city of Rutland, 

After setting forth the contents of the petition showing that 
the purpose of the proceedings was the acquirement by the Ver- 
mont Hydro-Electric Corporation of the properties of the Colo- 
nial Power & Light Company, the Western Power & Light Com- 
pany and the Clarendon Power Company, also the property of 
the Pittsford Power Company, a Massachusetts corporation, of 
the Cl^remont Power Company, a New Hampshire corporation, 
and certain power property of the Rutland Railway Light & 
Power Company, consisting of a reservoir and various distribu- 
tion lines ; also showing the outstanding securities of the various 
companies, the amounts proposed to be paid therefor, and the 
developments of power proposed to be made, the Commission 
continued : 

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RE COLONIAL POWER & L. CO. 217 

By the Commission: The prayer of said petition is that an 
order be issued authorizing the said selling corporations to sell 
all their assets to the said Vermont Hydro-Electric Corporation 
and to receive in payment therefor the securities hereinabove 
described, and the prayer of said petition as to *said Hydro- 
Electric Corporation is that the Commission issue to It a cer- 
tificate of public good making an order authorizing it to issue 
the securities referred to in said petition, and deliver the same 
to said selling corporations in payment of said properties to be 
conveyed to it as set forth in said petition, and for further re- 
lief. 

A hearing was had upon said petition at Eutland on the 5th 
day of August, 1919, with the appearances above set forth. 

From the evidence adduced at said hearing, we find that the 
allegations in said petition as to the existence of said several 
corporations are true; and that the contract to sell all the assets 
of the said Pittsford Power Company, the Colonial Power & 
Light Company, the Western Vermont Power & Light Com- 
pany, the Clarendon Power Company, and the Claremont Pow- 
er Company, and the properties of the Butland Railway Light 
& Power Company, described in said petition, to the Vermont 
Hydro-Electric Corporation as set forth in said petition, has 
been entered into between the said corporations subject to the 
approval of this Commission. 

Testimony was introduced by the petitioner tending to show 
the value of the properties proposed to be sold by the said six 
corporations ; that testimony tended to show such valuations to 
be as follows: 

Pittsford Power Company ', . . $697,750.50 

Colonial Power & Light Company 837,657.72 

Western Vermont Power & Light Company 533.865.59 

Clarendon Power Company 103,400.00 . 

Claremont Power Company ^65,280.57 

Rutland Railway light & Power Company 6C3.6S8.00 

The total estimated valuation of said properties according to 
said testimony including $100,000 of cash was $3,231,642.38. 
With this property as securities, the said Vermont Hydro-Ele'c- 
tric Corporation purposes to issue securities amounting to $3,- 
375,000 or $143,357.62, more than the value of the properties 
behind said issue of securities according to said testimony. 

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218 VERMONT PUBLIC SERVICE COMMISSION. 

[1] The evidence relating to the value of the properties of 
the selling corporations consisted of the testimony of valuation 
experts produced by the petitioners. In most cases the method 
of valuation was the estimated cost of reproduction new, with 
no allowance made for depreciation as to some of the proper- 
ties. The testimony showed that the structures and machinery 
were more or less affected by age and use, while in some cases 
the testimony showed that most of the structures and machinery 
were new or nearly new. In no case was the actual cost of the 
properties determined and in no case was any effort made to de- 
termine the actual cost except with respect to recent construc- 
tion. 

We consider that this method of appraisal of the properties 
to which it is proposed to be applied is defective for three rea- 
sons: First, the unit prices used for material are the prices 
prevailing at a time when all material is abnormally high and 
the price of labor is equally inflated, and the securities to be 
issued being most of them long-term obligations, it is not fair to 
charge the holders of those securities with payment based upon 
these inflated prices; second, it is*not a fair price upon which 
to estimate the value of these properties to apply reproduction 
cost new without allowing a proper per cent for discount for 
deterioration since construction; and third, in case of the issue 
of the amount of securities proposed, the holders of those securi- 
ties should be entitled hereafter to a reasonable rate upon its 
investment. That would involve the making of rates large 
enough to secure that reasonable return thereby, causing con- 
sumers of the corporation's products to pay rates proportionate- 
ly high, and upon a sum which would be greater than the actual 
value of the properties upon which the securities were based. 

[2] Included in the estimated value of the properties which 
the Vermont Hydro-Electric Corporation proposes to purchase 
of the Rutland Railway Light & Power Company is an item of 
$87,000 for water rights between the "Chittenden dam" and the 
^Tittsford reservoir." This sum is made up of an item of $27,- 
000 which represents the purchase price of said water rights 
plus investigating expense, and an item of $60,000 for esti- 
mated value of those water rights above the purchase price. 

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RE COLONIAL POWER & L. CO. 210 

With all due respect to the judgment of the expert who esti- 
mated the value of those water rights, we cannot approve the 
issue of securities to the amount of more than three times the 
price paid for the water rights in question. 

[8] The property of the Clarendon Power Company consists 
of an undeveloped water power on the Mill river in the town of 
Clarendon with other water rights on Cold river in the town of 
Mendon. The testimony did not disclose any present plan to 
develop those water powers or any plan for such development 
in the near future. This property being unproductive, but sub- 
ject to the payment of taxes and interest charges, if purchased 
as planned casting this burden of expense upon the productive 
operations of the property purchased to be acquired by the new 
corporation, would make it necessary to charge rates for the 
products of the corporation large enough to include these ex- 
penses. This condition might continue to exist indefinitely. 
This Commission has heretofore expressed its disapproval of 
allowing the issue of long-term securities upon unproductive or 
**dead" property unless it was for the purpose of immediate 
development of that property and we do not deem it wise to de- 
part in this case from that petition. 

[4] The properties of the Claremont Power Company, one 
■of the proposed selling companies, are estimated to be worth, 
according to expert testimony, the sum of $365,280.57. It ap- 
j)ear8 that there are now outstanding against this corporation 
securities consisting of common and preferred stock and bonds 
amounting to $1,321,662.27, and the petitioner, the Vermont 
Hydro-Electric Corporation, asks for permission to issue against 
this property new securities to the amount of $691,000. It is 
true that those securities would be an incumbrance also upon 
the other properties of the new corporation, and such a com- 
bination as is proposed might prove very beneficial to the own- 
ers of the present securities of the Claremont company, but in- 
somuch as it benefited that corporation it must be detrimental 
to the patrons of the more prosperous companies proposing to 
^mter into the deal. 

[5] Another feature of the proposed plan which we cannot 
iipprove is that which relates to the purchase of said properties 

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220 VERMONT PUBLIC SERVICE COMMISSION. 

of the Rutland Railway Light & Power Company, The proper- 
ties 80 purchased would come into the hands of the new cor- 
poration charged with the payment of the entire bonded indebt- 
edness of the Rutland Railway Light & Power Company, and 
in the future these particular properties, in the changes of con- 
ditions that may take place, may be sacrificed for the payment 
of that indebtedness thus depriving the holders of the new se- 
curities of a half-million dollars worth of the new company's 
assets.' 

We are not unmindful of the fact that the operations of the 
several power plants involved in this proposied combination 
jointly might be beneficial ; neither do we overlook the fact that 
there is a demand in nearly every business center in Vermont 
for additional power, nor the difficulty in obtaining the neces- 
sary funds for power development; and a combination freed 
from objectionable features, might meet VTith our approval. 

On account of the objections to the proposed plan herein- 
above set forth we cannot approve of said plan, and tl^e petition 
in this case is dinnissed. 

Dated this 8th day of September, 1919. 

Public Service Commission of Vermont ; W. A. Lhitton, Wil- 
liam R. Warner, Eli H. Porter, Conimissioners. 

Note. — ^In re Western Vermont Power & Light Co. and Clarendon 
Power Co. No. 673, and re Colonial Power & Light Co. No, 674, Oct. 
16, 1919, the Vermont Commission granted the petition of the 
Colonial Power & Light Company to purchase, free of incumbrance, 
all of the property and assets of the Western Vermont Power & 
Light Company, the Clarendon Power Company, the Claremont 
Power Company, and the property of the Rutland Railway Light & 
Power Company, and to issue $650,000 7 per cent preferred stock 
at not less than par, $289,500 common stock at not less than par, 
and $684,000 6 per cent 10-year first mortgage bonds at not less than 
90, in payment therefor; the Commission also authorized the Colonial 
Power & Light Company to issue $2,050,000 of 6 per cent first 
mortgage bonds to be sold at not less than 90, proceeds to be used 
to retire outstanding mortgage bonds and to develop property; au- 
thority was also granted to issue $110,000 6 per cent gold bonds at 
not less than 90, proceeds to be used exclusively for the purchase 
of supplies. 
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BROWN V. BOSTON & M. RAILROAD. 221 



MASSACHUSETTS SUPREME JUDICIAL COURT. 

EDWAED P. BEOWN et al. 

V. 

BOSTON & MAINE BAILEOAD et aL 

[124 N. E. 322.] 

Appeal and review — ConatructUm of statutes — Beorganization of 
Boston A Maine Railroad, 

1. A provision of a MaBsachusetts statute (Stat. 1913, chap. 784, 
§ 27) authorizing proceedings in general for the correction of errors 
of law in any ruling or decision of the Public Service Commission, 

. applies to the special statute providing for the reorganization of the 
Boston & Maine Railroad so as to render the order of the Commission 
authorizing consolidation reviewable hj the supreme court. 
ConstUutional law — Due process — Refunding of valid indebtedness, 

2. Minority stockholders cannot be deprived of their property with- 
out due process of law by a Commission order authorizing the refunding 
of valid indebtedness. 

Appeal and review — Point raised in record — Waiver, 

3. The court, upon a review of a Commission order authorizing 
the refimding of indebtedness of public service corporations, will not 
refuse to consider questions raised on the record as to the validity 
of such debt on the theory that they have been waived by a state- 
ment in the brief of the petitioners that they do not desire to argue 
the questions ''further than to plainly restate them." 

Intercorporate relations *- Purchase of stock — Construction of stat- 
ute, 

4. The right of the Boston & Maine Railroad to purchase stock 
of other railroads provided for in chap. 194, of the statutes of 1898, 
is not limited to the particular means prescribed in § 2 of that act. 

Constitutional law — Due process — Ultra vires — • Ratification, 

5. A statute ratifying and confirming a debt of a corporation 
incurred on sufficient consideration, but ultra vires, is not the taking 
of property of the^ stockholders without due process of law. 

Constitutional law — • Exercise of judicial function by legislature, 

6. It is not the exercise of a judicial function by the legislature to 
ratify and confirm and authorize a corporation to treat as legal its 
ultra vires debt. 

Constitutional law — Trial by jury — Special statutes. 

7. There is nothing in the special statutes authorizing a reorgani- 
zation of the Boston & Maine Railroad and a consolidation by it with 
its numerous subsidiary and leased railroads conferring upon the Pub- 
lic Service Commission the power to decide a controversy concerning 
property, without trial by jury so as to render such statute uncon* 
Btitutional. 

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222 MASSACHUSETTS SUPREME JUDICIAL COURT. 

ConstituUonal law — Due process — Subscription for new stock. 

' 8. There is no vested right in stockholders to subscribe for an 
issue of new stock, and therefore, such issue may be upon such terms 
as is voted by the majority stockholders within the scope of l^islative 
sanction. 

Constitutional law — Delegation of legislative power. 

9. The special acts providing for the reorganization of the Boston 
& Maine Railroad, and the consolidation by it with its numerous 
subsidiary and leased railroads, and conferring administrative powers 
and certain quasi judicial functions on the Public Service Commis- 
sion, do not unconstitutionally delegate legislative power to such 
Commission. • 

Constitutional law — • Equal laws — Special statute. 

10. The special statutes authorizing the consolidation of the Boston 
& Maine Railroad do not violate the constitutional provision requiring 
equal laws, since these statutes provide for a situation peculiar to that 
railroad and its leased lines. 

Consolidation, merger, and sale — Assumption of indebtedness. 

11. It is lawful for the legislature to provide, in enacting a general 
plan for the consolidation of several railroads, that an existing cor- 
poration, to which the others become joined, shall assume and pay or 
provide for the payment or refunding, as its own, debts of other sub- 
sidiary companies, as part consideration for the purchase of their 
property and franchises which, otherwise, it would be imlawful for 
such corporation to pay or refund; 

Security issues — Consolidation — Retirement of bonds. 

12. An order of the Public Service Commission, approving the issue 
of first preferred stock for the piurpose of retiring an equal amoimt 
at par of bonds, under a plan for the consolidation of certain railroads, 
is valid where the approval is conditioned upon a vote of two-thirds 
in interest of the common stock. 

Appeal and review — Conclusivene^is of finding of ComnUssion — Bur* 
den of proof. 

13. The burden is upon a petitioner seeking to annul an order of 
the Massachusetts Public Service Commission to show that a finding 
upon which it is based is invalid. 

Railroads — Voting — Holding corporation. 

14. The delegation, by the directors of a holding company, of two 
of their members to vote the stock of the holding company in the 
railroad company is proper, in Massachusetts, since voting by proxy 
is authorized by statute in such a case. 

Railroads — Conflict of laws — Voting by proxy. 

15. Voting by proxy, at a meeting in Massachusetts of the stock- 
holders of a Massachusetts railroad, is binding upon the corporation 
even if the law of a sister state, within which the railroad is also 
incorporated, does not permit voting by proxy; and the meeting need 
not be repeated in the latter state. 

[September 13, 1919.] 
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BROWN T. BOSTON & M. RAIIJROAD. 22» 

Appeat* from Supreme Judicial Court, Suffolk County, from 
the dismissal, by a single justice, of a petition by Edward P. 
Brown, and another, against the Public Service Commission, 
the Boston & Maine Railroad, and others, to review, annul, 
modify, and amend an order of the Commission; dismissed by 
full court. 

Appearances: C. W. Crocker, of Boston, for appellants. 

Greorge L. Mayberry and L. R. Chamberlin, both of Boston, 
for appellee corporations. 

Burton E. Eames and William C. Rice, both of Boston (Ty- 
ler, Tucker, Eames & Wright, of Boston, of counsel), for com- 
mittee under deposit agreement dated June 26, 1918, holders 
of $451,000 principal amount of 6 per cent short term notes of 
B<)ston & Maine Railroad, as amici curise. 

Rugg, C. J. This is a petition by two owners of stock, one 
of 55 shares and the other of 52 shares, in the Boston & Maine 
Railroad, under Stat. 1913, chap. 784, § 27, to review, annul, 
modify or amend an order of the Public Service Commission. 
That order was made pursuant to particular authority assumed 
to have been conferred by Sp. Stat. 1915, chap. 380, as extended 
by Sp. Stat. 1917, chap. 323, hereafter termed the special act 
Eight railroads are joined witfi the members of the Public Serv 
ice Commission as defendants. The special act provided for a 
reorganization of the Boston & Maine Railroad and a consol 
idation by it with its numerous subsidiary and leased railroads 
In assumed pursuance of the special act, the presidents and a 
majority of the directors of each of the defendant railroads, act 
ing for the respective railroads, but subject to the consent of 
the stockholders of the several railroad corporations and to the 
approval of public authorities of the different states having 
jurisdiction, entered into an agreement for consolidation of the 
several railroads into a single corporation. Votes of the stock- 
holders of the several corporations were passed purporting to 
approve the agreement of consolidation by large majorities. 
The several corporations then petitioned the Public Service 
Commission to issue orders and certificates necessary to enable 
them to carry into effect the agreement for consolidation. 
Hearings were had and thereafter the Public Service Commis- 

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2m MASSACHUSETTS SUPREME JUDICIAL COURT. 

sion made a report of its findings of fact and issued orders and 
certificates approving the agreement for consolidation and en- 
abling it to be consummated substantially in accordanise with 
the prayers of the petition. 

[1] 1. The respondents question the jurisdiction of this court 
to consider the petition on the ground that the provisions of 
Stat. 1913, chap. 784, § 27, authorizing proceedings in general 
for the correction of errors of law in any ruling or decision of 
the Public Service Commission, are not applicable under the 
special act. The revision by this court of the orders and rul- 
ings of the Public Service Commission, provided for by § 27, 
relates only to such as are unlawful and then "to the extent 
only of such unlawfulness.'' A careful study of the special act 
reveals no provision which either expressly or by fair implica- 
tion exempts the Public Service Commission in the perform- 
ance of the duties thereby imposed upon it from the supervisory 
control of the court established by § 27. It is not consonant 
with the main design of the general law or of the special act 
that unlawful acts, committed by the Public Service Commis- 
sion in respect of this consolidation, should go unredressed by 
the speedy and direct method ordinarily applicable to its rulings 
and orders. 

[2, 3] 2. It is provided by § 7 of the special act that — 

"The Boston & Maine Railroad may issue stocks, common 
or preferred, or bonds, or both stock and bonds, subject to the 
provisions of section 15 of chapter 784 of the acts of the year 
1913, and of any acts in addition thereto or in amendment 
thereof, for the purpose of paying or funding its unfunded debt 
outstanding on the 31st day of March in the year 1915, and 
any debt of any of its subsidiary companies outstanding on 
such date which it may lawfully assume under the provisions 
of this act in connection with the purchase of the properties 
and franchises of or consolidation with such subsidiary com- 
panies, which debts, for the purpose of such finding, shall be 
deemed to be debts properly incurred for lawful purposes under 
the statutes of this commonwealth.'' 

In § 4, after authorization of the issue of new stock of the 
reorganized corporation, there is a somewhat similar provision. 
to the effect that — 

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BROWN V. BOSTON & M. RAILROAD. 226 

'The proceeds of such stock so issued may be applied to the 
payment of the unfunded debt of the corporation outstanding 
on the 31st day of March in the year 1915, including any in- 
debtedness of any subsidiary company outstanding on said date 
which said corporation may lawfully assume under the provi- 
sions of this act, which debts for the purpose of such payment 
shall be deemed to be debts properly incurred for lawful pur- 
poses under the statutes of this commonwealth." 

It appears from the record that these provisions of the spe- 
cial act refer to and include an indebtedness of the Boston & 
Maine Kailroad amounting to $13,306,000, and to indebted- 
ness of subsidiary companies aggregating several millions of 
dollars. 

The petitioners now according to their brief, after reciting 
several reasons leading thetn to adopt that course, state that 
they "do not desire to urge their contentions with respect to 
this alleged debt" upon this court in these proceedings — that is, 
"whether or not the $13,306,000 of alleged debt of the respond- 
ent Boston & Maine Eailroad was at the date of the order of the 
Commission the lawful valid debt of that corporation" — "fur- 
ther than to plainly restate them in this brief." The reasons 
for their present position are of no consequence. It is only 
important to understand and deal with their present conten- 
tions. If this statement quoted from their brief be treated as 
a waiver of all contention that the debt of $13,306,000 is void 
and a concession that for the purposes of this case it is to be 
treated as valid and binding upon the Boston & Maine Railroad, 
then the main ground upon which to rest an argument as to the 
the unconstitutionality of the statute has slipped away so far as 
concerns this debt. 

If it be conceded that the debt of $13,306,000 of the Boston 
i Maine Railroad which is to be refunded is valid, nothing re- 
mains to the petitioners worthy to be dignified as a constitu- 
tional question concerning deprivation of property without due 
process of law or denial of equal protection of the laws. It 
needs no discussion to prove the power of Uie legislature to 
authorize a public service corporation in such financial straits 
as the Boston & Maine Railroad has been acting through a 

majority vote of its stockholders, to refund its valid indebted- 
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226 MASSACHUSETTS SUPREME JUDICIAL COURT. 

ness in the manner authorized by the special act against the 
protest of minority stockholders so far as relates to deprivation 
of their property without due process of law or denial to them 
of the equal protection of the laws. 

It is not clear, however, that the petitioners intend to make 
such a sweeping admission. A mere declination to discuss the 
validity of the indebtedness, without admission of its validity 
for the purposes of this case, cannot compel the court to rest its 
decision upon constitutional grounds based upon assumption of 
the invalidity of the debt, when the record discloses enough to 
determine its validity for the purposes of this proceeding. A 
statement of desire not to argue propositions "further than to 
plainly restate them," may be regarded as not a satisfactory 
waiver and not intended as such. A complete and plain state- 
ment of a contention often is a cogent argument in its support. 

If there were ground for the contention that the order of the 
Public Service Commission authorized the inclusion of so large 
a sum as $13,306,000. unlawfully in the capitalization of a pub- 
lic service corporation, we should hesitate long before passing 
it over in a proceeding like the present even upon waiver of the 
point by a party. It would be a gross perversion of the idea of 
public supervision of capitalization of corporations to permit 
such an overcapitalization, or capitalization of illegal claims 
in the nature of debts upon which rates must be permitted to 
enable a fair return as upon capital honestly invested. 

The position of the petitioners upon this point seems equiv- 
ocal. The point itself is of importance. Since it has been 
raised upon the record and has not been clearly waived, it will 
be considered under these circumstances. It hardly needs to be 
said that the rights of persons in interest not parties thereto 
cannot be precluded. 

4. The finding of the Public Service Commission was that 
there were outstanding notes of the Boston & Maine Railroad 
to the amount of $13,306,000, and that this fact was not disput- 
ed. The record confirms the truth of this finding. The Com- 
mission permitted the counsel for the petitioners to introduce 
any competent evidence of any facts which tended to show that 
any of the notes were not enforceable obligations of the Boston 

& Mainf^ Railroad. The Conmiission found^ however^ thai in 
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BROWN ▼. BOSTON & M. RAILROAD. 027 

•very instance the issue of the notes was authorized by TOte of 
the directors, that the notes were all sold for cash, that the pro- 
•eeds all went into the treasury of the company and that no val- 
id defense to any of the notes was disclosed. Assuming that a 
•onsiderable portion of these proceeds afterwards was used to 
purchase stock of the Worcester, Nashua & Rochester Railroad 
and the Maine Central Railroad Company, the Commission 
farther found that there was nothing in such use which affected 
the liability of the Boston & Maine Railroad on the notes. 

[4] The alleged right of the Boston & Maine Railroad to 
purchase the stock of other railroads rests upon Stat. 1898^ 
«hap. 194, § 1, which authorized it^ subject to approval of the 
Board of Railroad Commissioners, to "purchase and hold the 
ihares of the capital stock or any part thereof of any railroad 
corporation whose road is leased to or operated by it, or of 
which it owns a majority of the capital stock." It appears upon 
the record to have been conceded that the railroad corporations 
whose stock was purchased came within this description, anS 
that § 2 of that act authorized the issuance and sale of stock o£ 
the Boston & Maine Railroad for the purpose of providing 
means for the purchase of such shares. At all events, no ques- 
tion was raised touching these points. Section 2 contains na 
language to the effect that the exclusive method of providing 
•Such means is therein set forth. The fair construction of that 
act as a whole is that § 2 is not a limitation but confers a par- 
ticular means in addition to those which might otherwise be 
open to the Boston & Maine Railroad as a corporation acting 
under § 1. If it had been the purpose of the legislature to con- 
fine the Boston & Maine Railroad to the single method specially 
provided by § 2, restricted language to that end would natural- 
ly have been used. This construction is confirmed by practical 
considerations which need not be detailed at length and by ref- 
erence to Stat 1891, chap. 308, which, under restrictions 
authorized the acquisition by the Boston & Maine Railroad qf. 
the franchises and property of its lessee and subsidiary com- 
panies, and recognized as valid its ownership of the capital 
stock of some of them. See, for example, Stat 1888, chap. 
260; Stat 1890, chap. 186. 

Unless restricted by some provision of law, a railroad corpo- 

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228 MASSACHUSETTS SUPREME JUDICIAL COURT. 

ration has authority to incur debts for lawful purposes. To 
that end it may borrow money and give its notes therefor. 
Commonwealth v. Smith, 10 Allen, 450, 455, 87 Am. Dec. 
672; Chicago, Rock Island & Pacific R. R. Co. v. Howard, T 
Wall. 392, 412, 413, 19 L. ed. 117. See R. L. chap. 109, § 24; 
Stat. 1906, chap. 463, pt. 2, § 48; Stat. 1912, chap. 725, pt. 2, 
§5. 

The result is that the debts of the Boston & Maine Railroad, 
amounting to $13,306,000, sold far as concerns the special act 
and the authority of the Public Service Commission there- 
under, were valid. From this the conclusion is irresistible and 
indubitable that no question as to the constitutionality of the 
special act is reached or can arise founded upon any contention 
that the unfunded debt of $13,306,000 of the Boston & Maine 
Railroad is illegal. This decision rests upon this ground. 

5. The same result would be reached upon another and inde- 
pendent ground. Even if it were assumed (contrary to what 
the record shows), that the $13,306,000 was a debt incurred 
by the Boston & Maine Railroad for the purchase of stock in its 
leased or subsidiary lines without express or implied authority 
of law, the same conclusion would follow. It is plain on this 
record that this indebtedness was incurred for the purchase of 
such stocks. Upon the hypothesis that borrowing of money for 
that purpose was not within the purview of Stat. 1898, chap. 
194, it is manifest that a debt tiius incurred would be merely 
ultra vires. There is nothing inherently evil or malefic or con- 
trary to public policy in such purchase. It is forbidden by 
Stat. 1906, chap. 468, pt. 2, § 67, 'Sinless autiiorized by the 
General Court or by the provisions'' of general law. The in- 
currence of a debt in order to procure funds to make such pur- 
chase might originally have been authorized by the legislature. 
There is no constitutional objection to subsequent legislation 
confirming, ratifying and rendering legal and enforceable such 
debts although ultra vires at the time they were incurred. Such 
subsequent validation no more interferes with the vested consti- 
tutional rights of the stockholders than does a statute confirm- 
ing the sale of a corporate franchise, or the giving of a 
mortgage originally not authorized by law, Shaw v. Norfolk 
County Railroad Co. 5 Gray, 162, 180; Graham v. Boston, 

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BROWN V. BOSTON & M. RAILROAD. 229 

Hartford & Erie Eailroad, 118 IT. S. 161, 168-172, 6 Sup. Ct. 
1009, 30 L. ed. 196. 

[5] There is no substance in the contention that a subse- 
quent statute ratifying and confirming a debt of a corporation 
incuned on suflScient consideration, but ultra vires, is the tak- 
ing of property rights of the stockholders without due process 
of law. Statutes validating contracts void or nonenforceable in 
their inception have been upheld in numerous instances on the 
ground that they effectuate the intent of the parties and prevent 
one from escaping payment for property which he has received. 
Hanscom v. Maiden & Melrose Gaslight Co. 220 Mass. 1, and 
cases collected at page 8, 107 N. E. 426, Ann. Cas. 1917A, 146 ; 
Utter V. Franklin, 172 U. S. 416, 19 Sup. Ct. 183, 43 L. ed. 
498; Gross v. United States Mortgage Co. 108 U. S. 477, 2 
Sup. Ct. 940, 27 L. ed. 795 ; White Water Valley Canal Co. t. 
Vallette, 21 How. 414, 425, 426, 16 L. ed. 154; Anderson v. 
Santa Anna, 116 U. S. 356, 363, 364, 6 Sup. Ct. 413, 29 L. ed. 
633; Ritchie v. Franklin County, 22 Wall. 67, 22 L. ed. 825; 
Grenada County Supervisors v. Brogden, 112 U. S. 261, 270, 
272, 6 Sup. Ct. 125, 28 L. ed. 704; Randall v. Krieger, 28 
Wall. 137, 149, 23 L. ed. 124; Watson v. Mercer, 8 Pet 88, 
8 L. ed. 876. 

[6] 6. This principle and these decisions effectually dispose 
also of the contention that it is the exercise of a judicial func- 
tion by the legislature to ratify and confirm and authorize the 
corporation to treat as legal its ultra vires debts. Wildes v. 
Vonvoorhis, 15 Gray, 139. See In re Mayor and Aldermen of 
Northampton, 158 Mass. 299, 33 N. E. 668. 

[7] 7. There is nothing in the suggestion that § 7 of the spe- 
cial act confers upon the Public Service Commission power to 
decide a controversy concerning property without trial by jury, 

[8] 8. There is no vested right in stockholders to subscribe 
for an issue of new stock. Attorney General v. Boston & Maine 
Railroad, 109 Mass. 99. The issue of new stock may be upon 
such terms as is voted by the stockholders within the scope of 
l^slative sanction. Hale v. Cheshire Railroad, 161 Masa. 
443, 37 K E. 307. 

[9] 9. There is no delegation of legislative power to the 
P\iblic Service Commission in §§ 2 or 6. These sections con- 

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280 ' MASSACHUSETTS SUPREME JUDICIAL COURT. 

fer only administrative powers upon that Commission and cer- 
tain quasi judicial functions. They are of a kind which ha^e 
been exercised in this commonwealth by this and other Commis- 
sions of a kindred character for many years. They have been 
recognized too long as not violative of any constitutional pro- 
vision now to be open to question. No authorities are cited by 
the petitioners in support of this contention and we believe 
none can be found. That these sections violate no provision of 
the Constitution is within the principle of many decisions. 
Mayor and Aldermen of Worcester v. Norwich & Worcester Eail- 
road, 109 Mass. 103. See Selectmen of Norwood v. New York 
& New England R. R. 161 Mass. 259, 37 N. E. 199 ; Providence 
& Worcester Railroad v. Norwich & Worcester Railroad, 138 
Mass. 277; Weld v. Gas & Electric Light Commission, 197 
Mass. 666, 84 N. E. 101 ; Commonwealth v. Hyde, 230 Mass. 
6, 118 N. E. 643; Boston, Petitioner, 221 Mass. 468, 109 N, E. 
389; Childs v. Krey, 199 Mass. 362, 85 N. E. 442; Inhab- 
itants of Weston v. Railroad Commissioners, 205 Mass. 94, 91 
N. E. 303 ; Holcombe v. Creamer, 231 Mass. 99, 111, 120 N. 
E. 354. 

[10] 10. There is no foundation for an argument that the 
special act violates the constitutional provision requiring equal 
laws. This case presents a situation peculiar to the Boston ft 
Maine Railroad and its leased lines. Special legislation was 
wholly appropriate under these circumstances. No other rail- 
road corporation is similarly situated. For many years all 
legislation respecting railroads was by special act. Because cer- 
tain general laws have been passed is no reason why in appro- 
priate instances special acts may not still be enacted. 

[11] 11. Manifestly it is lawful for the Legislature to pro- 
,vide in enacting a general plan for the consolidation of several 
railroads that an existing corporation, in this case the Boston 
& Maine Railroad, to which the others become joined, shall 
assume and pay or provide for the payment or refunding as its 
own of debts of other subsidiary companies as part considera- 
tion for the purchase of their property and franchises which 
otherwise under existing law it would be unlawful for the Bos- 
ton & Maine Railroad to pay or to refund. There has been no 
serious question on this record concerning the validity of the 

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BBOWN T. BOSTON ft M. RAHaROAD. 261 

debts of the several subsidiary railroad corporations, as against 
the original debtors, which under the special act maj be and 
under the order of the Public Service Commission are to be 
refunded by the Boston & Maine Sailroad as reorganized. 

[12] 12. The order of the Public Service Commission 
approved the issuey upon vote of two-thirds in interest of the 
common stock of the Boston & Maine Bailroad at any time be- 
fore January 1, 1924, of 120,000 shares of first preferred stock 
at a par of $12,000,000 for the purpose of paying an equal 
amount at par of bonds issued under the plan. This order was 
valid under the circumstances. The option to issue this stock 
rests with the majority vote of the common stockholders. It 
is not a right to demand stock vested in the bondholders. Sec- 
tion 7 of the special act expressly authorizes the issue of such 
sto<^, to pay its unfunded debt, without limit as to time. The 
present order and plan authorizes issuance of the stock to pay 
bonds by which in the first instance the floating indebtedness 
is to be paid. There is nothing in Bulkeley v. New York, New 
Haven & Hartford Kailroad, 216 Mass. 432, 103 N. E. 1088, 
at all at variance with this conclusion. In that case the general 
law was considered, while the case at bar rests upon a special 
act passed for the avowed purpose of establishing different 
rules to meet an extraordinary situation. In that case the 
option to demand stock rested with bondholders, whose interest 
inevitably would be to exercise their option only in the event 
that they could get stock of a railroad corporation by paying 
less than its real value and thus unduly increase capitalization. 
In the case at bar the option rests wiih those whose interest will 
lead them to get full value for the stock and not to increase the 
capitalization beyond that for which the corporation received 
full return. The time within which the right may be exercised 
is not under these circumstances unreasonably long. The facts 
in that case were radically different from those in the case 
at bar. 

[13] 13. There is nothing on this record to show that the 
meetings of the stockholders of the several corporations, at 
which the votes were passed approving the terms of the consol- 
idaticHi agreement, were not legally called and held. The find* 
ing of the Public Service Commission is explicit. The burden 

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232 MASSACHUSETTS SUPREMB JUDICIAL COURT. 

is upon the petitioners to show that this finding is invalid. 
We find nothing on the record to support a reversal of this 
finding as illegal. 

[14] 14. There is no invalidity disclosed on this record 
respecting the voting of the stock in the Boston & Maine Kail- 
road held by the Boston Railroad Holding Company. The 
latter company hold a majority of the stock of the former corpo- 
ration. No l^al meeting of its stockholders could be held with- 
out this stock. Stat. 1906^ chap. 463, pt. 2, § 33. The decree 
of the Federal court appointing trustees of the stock of the Bos- 
ton Bailroad Holding Company, among other matters, directed 
them to "exercise all the powers which owners of shares of the 
Holding Company are entitled to exercise exc^t the right to 
sell or otherwise dispose of them/' to act in the election of direo- 
tors in any corporation which it controls so as to assure efficient 
management in the interest of that corporation, and to aid in 
facilitating a reorganization of the Boston & Maine Bailroad. 
These powers involved a voting of the stock in order to effectu- 
ate the manifest design of the decree. The delegation by the 
directors of the holding company of two of their directors t6^ 
vote its stock in the Boston & Maine Bailroad was proper. Vot* 
ing by proxy was authorized. Stat. 1906, chap. 463, pt. 2, 
§37. 

[15] 15. The Boston & Maine Bailroad, being a Massachu- 
setts corporation, voting by proxy at a meeting of its stockhold- 
ers held here in accordance with Massachusetts law was bind- 
ing upon the corporation. Even if it be assunxied that the law 
of New Hampshire, within which state the Boston & Maine Rail- 
road also was incorporated, was different in respect of permit- 
ting voting by proxy at the meeting of the stockholders, a fact 
not clearly apparent upon this. record, the stockholders' meet- 
ing held in Massachusetts and conducted according to its law 
was lawful. The meeting need not be repeated in New Hamp- 
shire even if it be assumed that the law of that state was differ- 
ent in this particular and did not allow voting by proxy. Gra- 
ham V. Bostcm, Hartford & Erie Railroad, 118 U. S. 161, 168, 
169, 6 Sup. Ct. 1009, 80 L. ed. 196 ; Attorney General v. New 
Yoik, New Haven & Hartford Railroad, 198 Mass. 413^ 420^ 
422, 84 N. E. 737. 

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BROWN y. BOSTON & M. RAILROAD. 233 

16. For the same reasons the meetings of the other corpora- 
tions chartered under Massachusetts laws and under the laws 
of other states were valid and binding because held here and 
in accordance with our laws. 

All the questions argued by the petitioners have been consid- 
ered. No further discussion is required. There is no merit in 
any of the petitioners* contentions* 

Petition dismissed with costs. 



NEW JERSEY BOARD OF PUBIjIC UTHjITT COMMISSIONERS. 

BE PUBLIC SEBVICE GAS COMPANY. 

Boies * Ous * Factors — Cost of purchased ootMnodity* 

The New J^sej Commission will not guarantee that, in fixing the 
rates of a gas company, it will allow such additional charges as will 
cover the additional cost of gas purchased from a coke company which 
is not a public utility subject to the jurisdiction of the Commission. 



Return — Operating expenses * Cost of materials purchased — Duty 
of utility. 

Discussion of duty of utility to obtain best prices for materials 
purchased, p, — * 

[October 2S, 1919.] 

Report of Commission in the matter of proposed increase in 
price to be paid for gas by the Public Service Gas Company to 
the Seaboard By-Products Coke Company. 

By the Commission: In the course of a proceeding before 
the Board, in which there is involved the question of the reason- 
ableness of the rates charged for gas by the Public Service Gas 
Company, it has developed that a large proportion of the gas 
supplied by this company in northern New Jersey is not man- 
nfactured by it but is made by a company known as the ^'Sea- 
board By-Products Coke Company/' It appears that in the 
early part of 1917, the Public Service Gas Company began pur- 
chasing gas from the Seaboard By-Products Coke Company, 
and that gas is now supplied und^ a contract in which the price 
to be paid is stipulated. 

The Seaboard By-Products Coke Company manufactures 

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234 NEW JERSEY BD. OF PUBLIC UTIUTY COMMISSIONERS 

coke and other products. It claims that changed conditions 
since the contract was made with the Public Service Gas Com- 
pany have so affected its operating expenses that it cannot con- 
tinue in business^ and must shut down its plant unless it can 
receive from the gas company a price higher than that stipulat- 
ed in the contract for the gas sold. 

The president of the Public Service Gas Company states that 
he has investigated the financial condition of the Seaboard By- 
products Coke Company, and that he is convinced their repre- 
sentation of their financial condition is correct Officers of the 
Seaboard By-Products Coke Company have appeared as wit- 
nesses before the Board and testified to the financial affairs of 
the company. 

It does not appear that there is any comimon ownership of 
the companies or that they are in any way allied with each 
other except as parties to the contract under consideration. 
The Public Service Gas Company appears to be willing to pay 
to the Seaboard By-Products Coke Company a price for gas 
higher than that called for in its contract. Before agreeing 
with the Seaboard By-Products Coke Company to do this, the 
gas company desires the approval of this Board, or some guar- 
antee on the part of the. Board that, in considering the rate 
which the company shall charge, it will allow such addition as 
will amount to the increased cost of gas because of the higher 
price to be paid to the Seaboard By-Products Coke Company ;^ 
this to be in addition to any increase which may be found neces- 
sary as a result of increased costs of gas manufactured by the 
company. 

The Board is unwilling to give such a guarantee. It is the 
duty of the Board, in deciding whether rates charged by a pub- 
lic utility are just and reasonable, to give consideration to costs 
of operation and to decide whether such costs are reasonable. 
A public utility should exercise at all times its best judgment 
in an effort to obtain the best prices consistent with proper qual- 
ity for everything it buys for the conduct of its business. It is 
not the function of regulation for the state to dictate to tibe 
utility what prices it shall pay, or to guarantee to it that if it 
pays a certain price it will regard such price as reasonable and 
proper. 

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RE PUBLIC SERVICE GAS CO. 236 

The Board has no jurisdiction over the Seaboard By-Prod- 
acts Coke Company. This company is not a public utility. 
The Board could not issue any order requiring it to accept any 
price which the Public Service Gas Company is willing to pay, 
or to continue to manufacture gas for distribution by the Pub- 
lic Service Gas Company. It is claimed by the gas company 
that it can pay to the Seaboard By-Products Coke Company a 
price for gas sufficient to enable the latter named company to 
keep its plant in operation^ and that the cost to the gas com- 
pany, if this is done, will still be materially less than the cost of 
manufacturing gas in plants of the company built exclusively 
for gas mantlf acture. 

The Board, in deciding the question now before it of the 
reasonableness of the rate of the Public Service Gas Company, 
will give consideration to the cost to the company of the man- 
ufacture of the gas supplied by it. If the company, relying up- 
on its contract with the Seaboard By-Products Coke Company, 
has failed to maintain in a condition fit for efficient and eco- 
nomical operation any part of its plants and if the result of this 
is to make the cost of manufacturing gas either in the company's 
plant or by the Seaboard By-Products Coke Company, at an 
increased price in its plant, greater than can be r^arded as 
reasonable, the penalty for this must be paid by the company. 
The public cannot be expected to be penalized for failure of 
the company, if such exists, to so conduct its affairs as to have, 
at all times, ready for distribution to its patrons gas produced 
at as low a cost as is reasonably practicable. Whether this cost 
can best be arrived at through the manufacture by the company 
of the gas in its own plant or by the Seaboard By-Products Coke 
Company, under such arrangements as the gas company can 
make with said company, is a question calling for the exercise 
of the company's discretion. It is not the function of the 
Board to dictate which method shall be pursued. 

The question has been raised whether the facilities of the 
Public Service Gas Company are sufficient in themselves to sup- 
ply gas to all the company's patrons in New Jersey, and wheth- 
er, if the Seaboard By-Produces Coke Company stops operat- 
ing, a considerable number of the company's patrons will not 
be deprived of service. It is the duty of the gas company to 

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230 NEW JERSEY BD. OF PUBLIC UTILITY COMMISSIONERS. 

supply its patrons with gas, and the Board will not accept, as 
an excuse for failure to do this, any inability of the Seaboard 
By-Products Coke Company to continue to supply gas to the 
Public Service Gas Company. The Public Service Gas Com- 
pany must keep its patrons supplied with gas without regard to 
the condition, financial or otherwise, of the Seaboard By-Prod- 
ucts Coke Company. Its responsibility and duty to the public 
are so clear, it is expected they will be respected, and that unin- 
terrupted service to the public will be continued without regard 
to any arrangement the Public Service Gas Company may or 
may not make with the Seaboard By-Products Coke Company. 
Should it appear otherwise, the Board will zeroise, to the full- 
est extent, the authority vested in it to compel the company to 
supply the service to which the public is entitled. 

Dated October 28, 1919. 

Board of Public Utility Commissioners: John W. Slocum, 
President; Alfred S. March, George F. Wright, Andrew Caul, 
Jr., Harry L. Knight, Commissioners. 



OHIO PUBUC tmiilTIBS COBfMISSIOK. 

JOHN H. COSS 
v. 

BICHLAND PUBLIC SERVICE COMPANY. 

[No. 1703.] 

Diacritnination — Power of Commission — Enforoem^ent of rate coiu 
tmct. 

The Ohio OommisBion has no pow^ to enforce a contract providing 
for rates not contained in its filed schedules. 

[October 28, 1919.] 

Complaint asking for the enforcement of a contract fixing 
a rate for electric current for the operation of a fan; dismissed 
for lack of jurisdiction. 

By ihe Commission: The complainant filed his complaint 
alleging in substance that he is a resident of the city of Mans- 
field, Ohio; that on or about the day of ^ 1908, 

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COSS V. RICHLAND PUB. SERV. CO. 237 

he entered into an oral contract with the Mansfield Street Kail- 
way & Power Company of that city, whereby the duly author- 
ized officer or agent of the said company agreed to install an 
electric fan in the office of the said complainant and furnish 
electric current for the operation of said fan for and in con- 
sideration of the monthly charge of $1.50 during the time said 
fan was in operation; and that pursuant to said verbal agree- 
ment the said Mansfield Street Railway & Power Company did 
install said fan and furnish electric current to operate same at 
said rate agreed upon for and during all the time said fan was 
operated from the said year 1908 to 1919; that the defendant 
company, successor to the property and franchises of the Mans- 
field Street Eailway & Power Company, did, during the month 
of May, 1919, refuse to furnish electric current to the complain- 
ant according to the terms of his oral contract entered into with 
the drfendant^s predecessor as heretofore set forth, namely, 
$1.50 per month on a flat rate; and praying for an order of this 
Conmoiission directing the defendant to furnish current for the 
operation of said electric fan in his said office at the said flat 
rate provided for in his alleged contract, the basis of his action 
in this cause. 

To the complaint of the complainant, the defendant, the Rich- 
land Public Service Company, filed its motion asking the Com- 
mission to dismiss the complaint setting forth four grounds in 
support of same, viz. : 

1. That same is made without any right or authority. 

2. That the Public Utilities Commission is without author- 
ity in law to grant the relief asked for. 

3. That the facts stated in the complaint did not show any 
binding arrangement, understanding or contract enforcible 
against the Richland Public Service Company, nor that the 
complainant was entitled to the service as demanded by him. 

4. The Richland Public Service Company, in accordance 
with law, filed a schedule of rates for electric service with the 
Public Utilities Commission of Ohio, which rates were approved 
by the Public Utilities Commission of Ohio, and became effec- 
tive December 1, 1918, and which rates are now in full force 
and effect, and to provide the service demanded by the com- 
plainant would be in violation of the schedule so filed and ap- 

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288 OfflO PUBLIC UTIUTIES COMMISSION. 

proved, and would constitute a discrimination in favor of the 
complainant and therefore prohibited by law. 

The state in exercising its police powers by the passage of the 
laws governing this Commission and particularly by § 614r-15 
of the General Code, made it the mandatory duty of all utili- 
• ties to file schedules showing all rates, joint rates, rentals, tolls, 
classifications and charges for service of each and every kind by 
it rendered or furnished, and private contracts, especioJly ver- 
bal contracts relating to the exercise of said power by the state, 
cannot supersede said power if properly exercised. 

The defendant properly filed its schedule with this Oommis- 
fiion as provided by law, and this Commission is without the 
power to compel it to furnish complainant electric current as 
prayed for by him, as that would be ordering the defendant to 
oommit a discrimination, which the law itself forbids. 

Judgment will enter accordingly and complaint be dismissed. 



CK>IiORADO SUPREME COURT. 

CITY AND COUNTY OF DENVEB 

V. 

MOUNTAIN STATES TELEPHONE & TELEGBAPH COM- 

PANY et aL 

[No. 9443.] 
( —Colo. — , 184 Pac. 604.)^ 

JEUite8 * JuriadicHan * Commission * Hom^ rule dUes, 

The Colorado Public Utilities Act of 1013, giving tlie OommlBsioii 
jurifldiction over public utility rates, is not applicable to tlie rates 
of a telephone company for local service within the city and county of 
Denver, jurisdiction over such rates, by virtue of art. 20 of the Colo- 
rado Constitution, as amended in 1912, being vested in the local 
authorities. 

(Oabbioues, Ch. J., and Soott and Bailet, J J., dissent.); 

[July 7, 1919. On Rehearing October 6, 1919.] 

En Banc. Writ of review to the Public Utilities CommisBion 
by the city and county of Denver, objecting to the jurisdiction 
of the Commission in proceedings to fix the rates of the Monn- 

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DEKVER V. MOUNTAIN STATES TELEPH. & TELEG. GO. 289 

tftin States Telephone & Tel^aph Company; Commission or- 
im fixing rates reversed. 

Appearances: James A. Marshy Thomas H. Gibson, and 
2Torton Montgomery, all of Denver, for city and county of Den- 
ver ; Leroy J. Williams, of Central City, and Grant E. Haider- 
man and A. P. Anderson, both of Denver, for Public Utilities 
■Commission; Milton Smith, Charles R. Brock, and W. H. Fer- 
guson, all of Denver (Elmer Brock and Floyd F. Walpole, both 
of Denver, of counsel), for Mountain States Telephone & Tele- 
graph Company; John A. Bush, E. W. Hurlbut, and Albert L. 
Vogl, all of Denver, Charles M. Rose, of Pueblo, M. H. Ayles- 
worth, of Salt Lake City, Utah, Gerald Hughes and Clayton C. 
Dorsey, both of Denver, Push L. Holland, of Colorado Springs, 
and Lee & Shaw, of Ft Collins, amici curise. 

White, J, The sole question involved herein is whether the 
Public Utilities Commission has jurisdiction to r^ulate the 
rates to be charged by the Mountain States Telephone & Tele- 
graph Company in its local service within the city and county 
of Denver. The case does not involve the constitutionality of 
the Public Utilities Act (Laws 1913, p. 464), but only whether 
the act is applicable within the aforesaid municipality. The 
city and county of Denver came into existence by virtue of arti- 
cle 20 of the Colorado Constitution, and that article, as amended 
at the general election of 1912, measures its powers. (See Laws 
1913, p. 669.) 

Prior to the aforesaid amendment, we held that the stinted 
grant of power in § 1 of article 20 was not the only power in- 
vested in the municipality, as the purpose of the article was to 
enlarge the powers beyond those usually granted by the legisla- 
ture, and to bestow upon the people of the municipality "every 
power possessed by the legislature in the making of a diarter 
for Denver." Denver v. Hallett, 34 Colo. 393, 399, 83 Pac. 
1066, 1608. And subsequently, in Londoner v. Denver, 52 
Oolo. 16, 22, 23, 119 Paa 156, 158, 159, referring to the Den- 
ver-Hallett case, we further declared: 

''By that decision we determined that the powers enumerated 
in § 1 of article 20 of the Constitution do not constitute a limi- 
tation of the powers conferred on the municipality; and, more- 

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240 COLORADO SUPREME COURT. 

over, the article conferred upon such people (of the city and 
county of Denver) ^every power possessed by the legislature in 
the making of a charter for Denver/ " 

In fact those decisions and other declarations of this court of 
like character made it clear that the power invested in the city 
and county of Denver by article 20, prior to its amendment, 
could be determined by ascertaining whether the legislature, in 
the absence of article 20, could have conferred upon the munici- 
pality the power in question. People v. Cassiday, 50 Colo. 503, 
117 Pac. 357; Speer v. People, 52 Colo. 325, 122 Pac. 768; 
People V. Prevost, 55 Colo. 199, 134 Pac. 129 ; People ex reL v. 
Perkins, 56 Colo. 17, 137 Pac. 55, Ann. Cas. 1914D, 1154. 

Under the rule of constitutional interpretation those deduc- 
tions were inevitable. "Narrow and technical reasoning is mis- 
placed when it is brought to bear upon an instrument framed by 
the people themselves, for themselves, and designed as a chart 
upon which every man, learned and unlearned, may be able to 
trace the leading principles of government. A constitution is to 
be construed as a frame of government or fundamental law," 
and not as a mere statute. Cooley on Const Limitations (7th 
Ed.) p. 93. 

This judicial rule, which we applied in the interpretation of 
article 20, was in no sense abrogated by the amendment thereto, 
but rather enlarged and confirmed thereby. The amendment 
confirms in the people of the municipality the power set out in 
§§ 1, 4, and 6 of the article, and invests them with "all other 
powers necessary, requisite, or proper for the government and 
administration of its local and municipal matters,'* including the 
power "to amend, add to or replace the charter of said city or 
town, which shall be its organic law and extend to all its local 
and municipal matters.*' It then declares that — 

"Such charter and the ordinances made pursuant thereto in 
such matters shall supersede within the territorial limits and 
other jurisdiction of said city or town any law of the state in 
conflict therewith.'' 

It then provides: 

"The statutes of the state of Colorado, so far as applicable, 
ghall continue to apply to such cities and towns, except in so 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. C50. 241 

far as superseded by the charters of such cities and towns or bj 
ordinance passed pursuant to such diarters/' 

And further declares that — 

"All provisions of the charters of the city and county of Den- 
ver, . . . which provisions are not in conflict with this 
article, and all elections and electoral votes heretofore had un- 
der and pursuant thereto, are hereby ratified, affirmed, and vali- 
dated as of their date." 

At and prior to the time of the adoption of this amendment, 
the charter of the city and county of Denver contained the fol- 
lowing: 

"Sec. 280. All power to regulate the charges for service by 
public utility corporations is hereby reserved to the people, to. be 
exercised by them in the manner herein provided for initiating 
an ordinance." 

Prior to the adoption of article 20, all ordinary legislative 
power of the people was vested in the general assembly. The 
general assembly, however, was only a creature of the Constitu- 
tion, and therefore an agent of all the people. By that article 
the sdvereign created anothw agaicy, to wit, the city and county 
of Denver, and vested in it some of the power previously re- 
siding in the first agency. It invested the second agency with 
the exclusive power "in the making, altering, revising or amend- 
ing'* charters for the city and county of Denver, and by the con- 
stitutional amendment in 1912 invested it with "all other power 
necessary, requisite or proper for the government and adminis- 
tration of its local and municipal matters." These two agencies 
are creatures of the same sovereign people, and the source of 
their authority is the same. Neither agency has either supreme 
or inherent power, for that power resides only in all the people, 
upon whose will all government is founded. Bill of Eights, §§1, 
2, art 2. Each agency may exercise the power which the sov- 
ereign has invested in it, but only to the extent and in the man- 
ner and form prescribed. We must not be confused by the use 
of the word "state" when the mere machinery of government is 
meant 

The sovereign in Colorado — ^the people thereof — ^has surren- 
dered nothing, bartered nothing away, or in any sense abdicated. 
The powers with which municipal corporations are endowed, 
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242 CX)LORADO SUPRBME COURT. 

whether created directly by the sovereign through ooi^titatioiud 
grant or by the general assembly through legislative enaotment^ 
are divided into two main classes, so that municipal corporations 
act in two distinct capacities. One is governmental, legislative, 
or public; the other is proprietary, commercial, and, in this 
sense, quasi private. Pond (m Public Utilities, § 2. This is 
equally true, however, of the General Assembly. The granting 
of the right by the city to a public service corporation to use 
the streets of the municipality, or the granting by the general 
assembly to such a corporation the right to use the highways of 
the state, is the exertion of the proprietary power of the sov- 
ereign. The r^ulation, however, of the business of such public 
service corporation, whether performed by the legislature or the 
municipality, is an exertion of the governmental power of the 
sovereign. Indeed, the governmental regulation of a business, 
whatever its character, is always the exertion of the police pow- 
er, and therefore lawmaking. In the exercise of this power no 
agent can exhaust it and no vested right may be acquired there- 
in. Such governmental power is inherent in the sovereign and 
may be exerted, withdrawn, and re-exerted according to the 
judgment, whim, or caprice of the sovereign. The ever-existing, 
inherent, and inalienable power resides in the sovereign, to wit, 
the whole people of Colorado, to regulate the business of every 
public utility operating within the limitations of the state and 
to make and to remake, as changed conditions may require, a 
maximum schedule of rates to be charged for the service r^i- 
dered by such utility. It does not follow, however, that this 
function can only be discharged through an agency created by 
the legislature. It may be performed through other agencies 
which the sovereign has also created, and invested with power in 
the premises. The police power "is not above the Constitution, 
but is bounded by its provisions." People v. Gillson, 109 N. T. 
389, 400, 17 N. E. 343, 346 (4 Am. St. Rep. 465). It may 
be exercised by any agency which the Constitution creates for 
that purpose. 

Moreover, the regulation of rates to be charged by public utili- 
ties has long been recognized as a proper municipal function. 
McQuillin on Munic. Corp. § 34; Dillon on Munie. Corp. (Stli 
Ed.) § 1325 ; Wyman on Public Service Corp. § 1410. 

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BBNVER V. MOUNTAIN STATES TELEPH. & TELEG. 00. 248 

In the case of Home Teleph. Co. v. Los Angeles, 155 Fed. 
554, affirmed, 211 TJ. S. 265, 271, 29 Sup. Ct. 50, 51, 53 L. ed. 
176, it is said: 

"The power to fix, subject to constitutional limits, the charges 
of such a business as the furnishing to the public of telephone 
service, is among the powers of government, is legislative in its 
<?haracter, continuing in its nature, and capable of being vested 
in a municipal corporation." 

These authorities demonstrate conclusively that, prior to the 
adoption of article 20, the general assembly of the state of Colo- 
rado could have invested the city and county of Denver with the 
governmental power to regulate the rates to be charged by pub- 
lic utilities for local service within its territorial limits. It, 
therefore, has such power under the repeated decisions of this 
court hereinbefore cited. 

But apart from this, article 20 invests the city and county of 
Denver with exclusive power to make, alter, revise, or amend 
its charter, and the amendment invests it "with all other power 
necessary, requisite or proper, for the government and adminis- 
tration of its local and municipal matters.'' Could language be 
stronger? Clearly this is an express grant of full and complete 
power of local self-government. It necessarily includes the 
power, whether of eminent domain, taxation, or police, necessary 
to modern, progressive, and efficient local self-government. In- 
deed, the growth of cities has been the productive force broaden- 
ing and extending the police power. It is indispensable to self- 
government in all our municipalities. In fact, it is the very 
soul and spirit thereof. It is inconceivable that the health, edu- 
cation, and welfare of a great city could be properly safeguard- 
ed, extended, and protected without telephones, street railroads, 
and other like public utilities. Cities have produced new social, 
industrial, commercial, safety, and healtli conditions, and the 
problems of government resulting from them. Clearly, then, 
the regiilation of the instrumentalities essential to deal with 
sudi problems is peculiar to such communities, and, therefore, a 
local or municipal matter. Indeed, those residing outside the 
city limits are only incidentally, if at all, interested in, or con- 
cerned with, the rate a public service corporation receives for 
its service within such municipality. If the rate therein be 
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244 COLORADO SUPREME COURT. 

fixed by the city, it must be a reasonable rate. This is equally 
true if the rate be imposed by a central body. We are unable 
to perceive the force of the point, that respondents seek to make^ 
that a distinction exists between utilities which operate only 
within a charter city and those which operate within and with- 
out. The only distinction apparent is that the former only per- 
forms one duty — it serves a lotal community; the latter serves 
the same community and renders an additional service. In ei- 
ther event, the service rendered among the inhabitants of the city 
is a local matter. This is clearly pointed out by the Federal 
courts in Home Telepk & Teleg. Co. v. City of Los Angeles^ 
supra, in the following language: 

"Nor is there anything contrary to these views in . . • 
the Constitution, for the simple reason that the regulation of 
the charges of a public service corporation within the limits of 
a city is a 'municipal affair.' The streets of a city are public 
highways, in which the people of the whole state are interested,, 
yet the opening and widening of streets are 'municipal aflFairs.'^ 
. . . The regulation of telephone rates in a city would seem 
to be more clearly a matter of local concern than the control of 
streets." 

Mauff V. People, 52 Colo. 562, 123 Pac 101, does not con- 
flict with the doctrine just quoted from the California case. On 
the contrary, it is in perfect harmony therewith. In the Mauff 
case we held that elections are public in character, of govern- 
mental and state-wide importance rather than of local interest, 
and, therefore, must be under the control and regulation of the 
Constitution and general laws, and that the city and county of 
Denver, under article 20, prior to the amendment in 1912, had 
no authority to legislate upon, or otherwise control, its munici- 
pal elections. Such holding was inevitable because of the pro- 
visions of § 11, art. 7, of the Constitution, which required the 
general assembly to pass laws to secure the purity of elections^ 
and as this constitutional duty was imposed upon the general 
assembly, and not upon mimicipalities, and the right to vote 
came from the sovereign and can only be fully protected and en- 
forced by the same authority, elections were not* purely local or 
municipal matters. 

The contention of respondents that the police power to r^u* 

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DENVER Y. MOUNTAIN STATES TELEPH. & TELEG. CX). 245 

late the rates to be charged by public utilities may not be invest- 
ed in a municipality, unless the intention so to do is contained in 
express language, is untenable. There is a marked distinction 
between the investment or delegation of sudi power, and the 
delegation or investment of the authority to surrender by con- 
tract such power of government. In the latter specific authority 
for that purpose is required. The authorities cited in support 
of the contention clearly disclose the distinction, which is fun- 
ilamental. The police power is lodged in the people of the state. 
It is one of the highest attributes of sovereignty. The exercise 
of this power is essential to the good order and general welfare 
of organized society. It is continuing in its nature, and, if it 
can be bargained away at all, it can only be by words of posi- 
tive grant, or something which is in law equivalent. The invest- 
ment or del^ation to a subordinate agency to exercise the police 
power differs materially from the investment or delegation of 
authority to suspend or bargain that power away. The case of 
Denver & S. P. E. Co. v. Englewood, 62 Oolo. 229, P.U.B. 
1916E, 184, 161 Pac. 151, involved an attempted exercise of the 
latter power. In the one instance the power remains to be ex- 
orcised either by the agency in whcwn it is invested or recalled 
and exercised by the sovereign. In the other instance the power 
is gone, and may not be reclaimed during the life of the con- 
tract. The police power to control public utilities need not be 
granted or invested in a subordinate agency in express words. 
It is sufficient if it necessarily arises from, or is fairly implied 
in, or is incidental to, the powers expressly granted, or is essen- 
tial to the declared objects and purposes for which the agency 
was created. Denver v. Hallett, supra. 

However, were the law otherwise, the Constitution has ex- 
pressly authorized the people of the municipality to regulate the 
charges for service by public utilities operating therein. Prior 
to the adoption in 1912 of the amendment to article 20 of the 
Constitution, the city and county of Denver had attempted, at 
least, to exercise the power of regulating public utilities. Sec- 
tion 280, supra, of its charter, had been enacted, and such char- 
ter, wili that section therein, was on file in the office of the 
secretary of state. The constitutional amendment expressly ap- 
proved, "ratified, affirmed, and validated'^ such charter and each 

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§46 OOLORADO SUPREME COURT. 

and every provision thereof "not in conflict with" article 20. It 
farther declared that such charter and the ordinances made pur- 
suant thereto in local and municipal matters shall supersede^ 
within the territorial limits of the municipality, any law of the- 
state in conflict therewith. This provision of the charter was in 
substantial effect written into the Constitution. It was adopted 
by reference, for there is nothing in the charter provision in 
question which is in any wise in conflict with the article. We 
cannot assume that the constitutional ratification, affirmance,^ 
and validation of the various charter provisions had reference- 
only to the municipal election at which they were adopted. The 
language of the Constitution is otherwise. It not only ratifies 
such elections, but expressly designates the charter provisions 
themselves and ratifies and validates them. Each word embodied 
in the Constitution must be given its meaning, and courts should 
not construe away that which the sovereign has embodied in its 
fundamental law. With the wisdom of the measure we have no- 
eoncern. That question belongs solely to the people in their sov- 
ereign capacity. 

The constitutional article in question is different £rom the 
so-called *Tiome rule" provisions in the Constitutions of other 
states. Therefore authorities from other states aid but little in 
ascertaining the intent and purpose of the article in question. 
It has no counterpart in the Constitutions of other states. In 
other states the power to make a charter for ^^ome rule" cities is 
subject to the Constitution and laws of the state. With us the 
only constitutional provision that may affect the charter is arti- 
cle 20, and legislative acts in conflict with the charter provisions 
enacted in pursuance of article 20 have no force and effect with- 
in the municipality. 

We are clearly of the opinion that the Public Utilities Com- 
mission had no jurisdiction in the premises, and its order, there- 
fore, is reversed and held for naught 

Judgment reversed. 

Burke, Denison, and Teller, JJ., specially concurring. 
Garrigues, C. J., and Scott and Bailey, JJ., dissenting. 

Teller, J. concurring. For the respondent it is argued tiiat 
the rate-making power can be conferred only by expreet grants 

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DENVER Y. MOUNTAIN STATES TELEPH. A TSLEO. CO. 247 

aad that said article contains no such grant; that, moreover, 
BOfih powers as are therein granted relate only to local and mu- 
nicipal matters; and that the regulation of rates is not a local 
matter. 

It is not to be denied that cases may be found in which it is 
held that the grant must be express; but those cases involve the 
question of the power of a municipality to contract away some 
portion of the police power. 

Cases from three states are cited in which constitutional granta 
are under consideration; but^ inasmuch as the constitutional 
provisions, there under consideration, are quite different from 
article 20, those cases are not in point 

It is also true that there are in some cases dicta to the effect 
that the regulation of telephone rates is not a local matter, but 
nowhere have we been given a valid reason for that opinion. 

If the constitutional provision under consideration vests this 
power in the petitioner, it is not material whether or not the act 
of 1913 (Laws 1913, p. 464), which created the Commission 
and prescribed its duties, is in conflict with said article; but, if 
the statute recognizes that the jurisdiction of the Commission 
is limited by said article, it makes the conclusion we have 
reached the more satisfactory. 

Section 15 of the law, after requiring the filing of schedules 
with the Commission, provides that — 

''The rates, tolls, rentals, and charges shown on such schedules 
when filed by a public utility as to which the Commission ac- 
quires the power by this act to fix any rates, tolls, rentals, or 
charges, shall not within any portion of the territory as to which 
the Commission acquires as to such public utility such power, 
exceed the rates, toUs, rentals, or charges in effect on the tenth 
day of October, nineteen hundred and twelve.'* 

This clearly indicates that there VTas ''territory*' within the 
state in which the Commission vrould have no jurisdiction. And 
the only territory to which this language can conceivably apply 
is that of the home rule cities. 

It has been suggested that the limitation was to prevent in- 
terference with interstate commerce, but the control of that it 
not confined to any particular portion of the state. 

Tte exception refers to "territory,** and not to jurisdictian 

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248 COLORADO SUPREME COURT. 

or power. That it was not necessary to exclude interstate com- 
merce from this provision is conclusively shown by the fact that 
§ 68 of the act provides that no part of the act, "except when 
specifically so stated," shall apply to foreign or interstate com- 
merce. In other words, exclusion of interstate commerce is the 
rule, and inclusion only by special mention. 

That the legislature may delegate to a city the power to regu- 
late telephone rates is distinctly held in Home Telephone Co. v. 
Los Angeles, 211 U. S. 265, 29 Sup. Ct. 50, 63 L. ed. 176. 

That being so, it is not to be doubted that such power may be 
conferred by the act of the people through the fundamental law. 

I am of the opinion that article 20, as originally adopted, gave 
to the petitioner the right now in question, as a local mattw. 

In support of the contrary position, it is said that local tele- 
phone communication is carried on oyer the same lines as are 
used in state-wide business ; that the separation of the property 
for taxation is exceedingly difficult; and that the local rates 
affect the ability of the company to carry on its business out- 
Bide of the city. Conceding all of this, it does not make a case 
against the right of local regulation. 

In Simpson v. Shepard, 230 U. S. 352, 33 Sup. Ct. 729, 57 
L. ed. 1511, 48 L.RA.(N.S.) 1151, Ann. Cas. 1916A, 18, the 
oourt had under consideration the right of the Minnesota Rail- 
road Commission to prescribe rates on business wholly within 
the state, but carried on over lines engaged in interstate com- 
merce. It was there contended, among other things, that the 
local or intrastate rates were a burden on interstate commerce; 
that the parts of the carriers' business were so intermingled that 
they could not be separately regarded, etc. The court, howeveir, 
upheld the right of the state to regulate rates on intrastate busi- 
ness. 

If the regulation of rates on intrastate commerce, carried on 
over interstate railroads, is a local, as distinguished from a na- 
tional, matter, it is difficult to see why telephone rates in Denver 
are not a local matter, though the same lines are used for hoih 
local and general purposes. 

If it were necessary, therefore, the right claimed for the city 
might find a basis in article 20, as it was before amendment. 

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DENVER y. MOUNTAIN STATES TBLBPH. & TELEG. CO. 24» 

Bat, as I shall hereafter show, it is not necessary thus to base 
it. 

Although this court had, in Denver v. Hallett, 34 Colo. 393, 
83 Pac. 1066, held that the grant of powers under said article 
was not limited to those therein enumerated, but was intended 
**to bestow upon the people of Denver every power possessed by 
the l^slature in the making of a charter for Denver," it seems 
to have been thought necessary by the people to make the fact 
certain, and so they included in the amendment the following 
provision : 

"It is the intention of this article to grant and confirm to the 
people of all municipalities coming within its provisions the 
full right of self-government in both local and municipal mat- 
ters and the enumeration herein of certain powers shall not be 
construed to deny to such cities and towns, and to the people 
thereof, any right or power essential or proper to the full exer- 
cise of such right.*' 

It not being denied that the legislature, before article 20 was 
adopted, could have granted to the city the power now in ques- 
tion, it follows from the quotation from the last case cited that 
article 20 granted that power. 

In that case the right of the city to build an auditorium was 
held to exist because the court found, on a review of the authori- 
ties, that the legislature might have authorized it — a direct ap- 
plication of the argument above made. 

This cause may be determined by reference to article 20, as 
amended in 1912 ; and by giving to the language therein used its 
plain meaning. No construction is required or permissible, for 
*'it is not allowable to interpret what has no need of interpreta- 
tion." 

In Mauff V. People, 62 Colo. 562, 123 Pac. 101, it was held 
that the people of Denver in the conduct of a municipal election 
were subject to the general laws concerning elections ; and it is 
common knorwledge that the decision in that case was the mov- 
ing cause of the framing and initiating of the amendment of 
1912. That amendment, in temos, gave to the city the very 
power, which this court had denied to it, on the ground that it 
was not loeal-T-an assertion by the people of the right to confer 

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260 COLORADO SUPREME COURT. 

upon a municipality a right which in common parlance is not 
local. 

In People v. Prevost, 55 Colo. 199, 134 Pac. 129, it ip said 
that, if the powers in the home rule amendment were not local 
before the amendment they are so now. 

It is to be observed, too, that in the provision above quoted it 
is the announced intention to grant the "right of self-govern- 
ment in both local and municipal matters,'^ showing that there 
might be local rights granted which were not municipal. 

After enumerating certain powers granted, and following 
that with the provision above quoted, that the enumeration of 
powers should not be held to include all powers granted, a fur^ 
ther provision was added, apparently, to prevent a denial of the 
right to exercise such powers as the home rule cities were by 
their charters exercising. The provision reads as follows: 

"All provisions of the charters of the city and county of Den- 
ver and the cities of Pueblo, Colorado Springs and Grand Junc- 
tion, as heretofore certified to and filed with the secretary of 
state, and of the charter of any other city heretofore approved 
by a majority of those voting thereon and certified to and filed 
with the secretary of state, which provisions are not in con- 
flict with this article, and all elections and electoral votes here- 
tofore had under and pursuant thereto, are hereby ratified, 
affirmed and validated as of their date.^' 

The charter of the city and county of Denver was on file in 
the office of the secretary of state when the amendment was 
adopted, and it included the following provision: 

"All power to regulate the charges for service by public util- 
ity corporations is hereby reserved to the people, to he exer- 
cised by them in the manner herein provided for initiating an 
ordinance." 

The claim of the city is that, the right to regulate rates be- 
ing thus asserted in its charter, the right is effectually afiirmed 
by the above quoted provision of the amendment of 1912. 

This claim is met in the briefs for respondent by the asser* 
tion that anything in the charter not expressly authorized by- 
article 20, before it was amended, would be in conflict with said 
article, and hence not ratified. 

If that be true — that is, if nothing could be made valid by 

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DENVER y. MOUNTAIN STATES TELEPH. & TELEG. 00. 251 

the amendment which was not expressly authorized by the orig- 
inal article — why say anything about validation and ratifica- 
t]<Hi? The things that were expressly authorized required no 
ratification, and the use of that word was without reason. Rati- 
fication implies that some act has been done without authority 
in the agent, which the principal is willing to adopt as his own. 
Likewise 'Validate" involves the idea of making valid that 
which is for some reason not valid. Such provisions of the 
charters as were expressly authorized by article 20 were valid, 
and could not be "validated." 

That there was no intent to limit the validation to acts 
authorized, either expressly or by implication, by the original 
article, is further shown by the fact that the sentence following 
that above discussed provides for the ratification of all elections 
theretofore had pursuant to said charter provisions. By the 
provision above quoted, anything in the filed charters, not in 
conflict with this article is ratified. The reference can only be 
to the article of which the amendment of 1912 forms a part 
How can the words "this article," in the amendment itself, re- 
fer to the original article 20? The only article in force when 
a question of conflict might arise under this provision was arti- 
cle 20, as amended. No one has pointed out anything in arti- 
cle 20 with which this charter provision is in conflict 

The simple, narrow question is: What powers have been 
granted by article 20, as it now is ? Until some conflict between 
the charter provision above mentioned and article 20 — the only 
article 20 there is at this time — ^be pointed out, there is no pos- 
sible escape from the conclusion that the people intended to and 
did ratify and validate said provision, and that in consequence 
thereof the city has the right to regulate telephone rates. 

Denison, J. specially concurring: I concur in the conclu- 
sion of the majority of the court, as annotmced in the former 
opinion handed down in this case, for the following reasons: 

Under the twentieth amendment, Denver could assume, by 
charter, any power which, before the amendment, the legisla- 
ture could grant Denver v. Hallett, 34 Colo. 896, 897 et seq., 
83 Pac. 1066. 

The legislature could grant the power to regulate telephone 

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262 COLORADO SUPREME COURT. 

rates. Home Teleph. Co. v. Los Angeles, 211 U. S. 271, 279,. 
29 Sup. Ot. 50, 53 L. ed. 176. 

Therefore Denver could assume, by charter, the power to reg- 
ulate telephone rates. 

By her charter of 1904, § 280, she did assume that power r 

"All power to regulate the charges for service by public util- 
ity corporations is hereby reserved to the people, to be exer- 
cised by them in the manner herein provided for initiating an 
ordinance.'^ 

Therefore she has it 

Furthermore, in 1912, by the home rule amendment, the peo- 
ple expressly ratified Denver's charter, including the section 
above quoted. 

It has been held by this court that the legislature can grant, 
and therefore the city can assume, any power in matters of local 
concern, and that the legislature can grant, and therefore the 
city can assume, no power, except in matters of local concern. 
It follows from these holdings that what is of local concern and 
what the legislature can grant are one and the same. 

It seems to the writer that regulation of rates within the city 
is manifestly of local concern. However, the reason for the re- 
striction of the city's powers to matters of local concern is that 
otherwise a state within a state would be created, and thus the 
Constitution of the United States would be violated. Some of 
the arguments against the decision are upon the ground that 
the regulatiijn of rates within the city is not of local concern 
and the right to regulate them could not be granted by the legis- 
lature. The whole force of this argument lies in the conclusion 
that the Constitution of the United States would be violated. 
Were it not for that Constitution, the people of this state, by 
constitutional amendment, might grant to the city or any part 
of the state full sovereignty or independence or anything short 
of it. The question, therefore, is one under the Constitution of 
the United States, and it is our duty to follow the decisions of 
the Supreme Court of the United States upon it j but that court 
has determined in the Home Telephone case that the power to 
regulate rates can be granted to the city, and that necessarily 
determines that such power is of local concern and that such 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. 00. 268 

grant does not violate the Constitution of the United States. 
It is then our duty to hold likewise. 

It has heen argued that the home rule amendment ratified 
only what was ^^ot in confliot with this article," and that the 
said provision of the charter was so in conflict because the arti- 
cle made no specific provision that that particular power might 
be assumed ; that is to say, the charter is in conflict with some- 
thing the articles does not contain. With what part does it 
<X)nflict ? I cannot assent to such reasoning. 

It is a part of the history of the state that the people* were 
disappointed, not to say more, at the restrictions put upon the 
jwwers of cities by this court's interpretations of article 20, and 
that the home rule amendment was the expression of that feel- 
ing. Upon points where this court has given the* article a 
restricted interpretation, the home rule amendment reverses 
that interpretation. That they did not include regulation of 
rates must be because this court had not yet restricted the mean- 
ing of the article on that point But they expressed, in general 
terms as broad as language permits, all powers which could be 
constitutionally granted under the previous decisions of this 
court 

I cannot agree with the proposition that the power to reg- 
ulate rates is not expressly granted by such language. An ex- 
jH-ess grant of all power is an express grant of every power, 
and the ratification of Charter, § 280, is an express grant; a 
discussion, therefore, of the question whether the power to reg- 
ulate rates can be inferred or impliedly granted has no applica- 
tion to the question in hand. 

I am authorized to state that Mr. Justice Allen concurs in 
this opinion. 

Burke, J., concurring specially: I concur in the conclu- 
sion reached in the majority opinion. It is conceded in respond- 
ent's briefs that article 20 of our Constitution, including 
umended § 6, has conferred upon the city and county of Denver 
all powers which the legislature could have conferred, i. e., pow- 
er to legislate upon all subjects local and municipal ; and, if the 
power to fix telephone rates by compulsion be one of local and 
municipal concern, it has been granted to the municipality. 

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254 COLORADO SUPREME COURT. 

The sole contention is that this is not a local or municipal mat^ 
ter. 

The latest definite declaration of the law on this subject by 
the highest authority in the country, and which still stands 
unreversed and unmodified, is Home Teleph. & Teleg. Co. v. 
City of Los Angeles, decided by the Supreme Court of the 
United States November 30, 1908, 211 TJ. S. 266, 271, 29 Sup. 
Ct. 60, 61 (63 L. ed. 176). Among other things it is there 
said : 

"The power to fix, subject to constitutional limits, the charges 
of such a business as the furnishing to the public of telephone 
service, is among the powers of government, is legislative in its 
character, continuing in its nature, and capable of being vested 
in a municipal corporation." 

If it is "capable of being vested in a mtmicipal corporation," 
it is only so because it deals with a matter of purely local and 
municipal concern. 

Quoting further (211 U. S. 273, 29 Sup. Ct. 52, 53 L. ed. 
176): 

"It has been settled by this court that the state may authorize 
one of its municipal corporations to establish, by an inviolable 
contract, the rates to be charged by a public service corporation 
(or natural person) for a definite term, not grossly unreason- 
able in point of time, and that the effect of such a contract is 
to suspend, during the life of the contract, the governmental 
power of fixing and regulating the rates." 

This authority holds that this power to contract for a def- 
inite rate for a specified time is a greater power than the power 
to fix rates by compulsion. The reason is apparent. A rate 
fixed by ordinance or statute is not fixed for a definite time 
because it may be changed or altered at any time by repeal or 
amendment of the legislation. The same is true even of a con- 
stitutional provision. But a rate fixed by c<mtract is definite 
and certain as to time and may extend far beyond any such 
temporary limits. The right to confer the greater power neces- 
sarily implies the right to confer the lesser. 

As to the further declaration therein that — ^'But for the very 
reason that such a contract [fixing rates for a definite term] 
has the effect of extinguishing pro tanto an undoubted power of 

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DENVER V. MOUNTAIN STAl'ES TELEPH. & TELEG. CX). tM 

government, both its existence and the authority to make it must 
elearly and unmistakably appear, and all doubts must be resolved 
in favor of the continuance of the power" it seems to me wholly 
inapplicable. Because here the authority, being derived from 
the Constitution, is unquestioned, and the existence, if the sub- 
ject be one of local or municipal concern, is admitted. 

Quoting again (211 TJ. S. 279, 29 Sup. Ct. 54, 63 L. ed. 
176) : 

"It is too late, however, after the many decisions of this 
court, which have either decided or recognized that the govern- 
ing body of a city may be authorized to exercise the rate-mak- 
ing function, to ask for a reconsideration of that proposition.'' 

The court is here speaking of an authorization by legislative 
enactment If the governing body of a city may so be author- 
ized by the l^islature, it is only because the subject is one of 
local and municipal concern. And if the municipality may be 
so authorized by the legislature, it may, a fortiori, be so author- 
ized by constitutional enactment. 

The opinion in the Los Angeles case was by Mr. Justice 
Moody, without dissent. It supersedes all previous state and 
Federal decisions in conflict with it, and, in view of its positive 
statement that it is now too late to ask for a reconsideration of 
the proposition, it cannot be presumed that the highest court of 
the land will hereafter otherwise decide. It is absolutely bind- 
ing upon this court. 

I think it cannot be denied that the question, upon reason, is 
a elose one, nor that the great weight of authority, exclusive of 
file Home Telephone case, is to the contrary. I, myself, during 
the eonsideration of the matter, have been of a different opin- 
ion, but am led to this conclusion by what I believe to be the 
•verwhelming force of that decision. 

In the instant case the opinion was by a closely divided court, 
four justices concurring and three dissenting. It was handed 
iown but a few minutes before a change occurred in the per- 
sonnel of the court; two of the concurring justices retiring, and 
their places being taken by two newly elected. The opinion 
was written by one of the retiring justices. A majority of the 
members of the court who had heard argument and considered 
the case were against the conclusion. The motion for a rehear- 

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M6 COLORADO SUPREME COURT. 

ing could not be passed upon bj the justices who had dedldad 
the cause. The question at issue was one of vast importance to 
the whole people of the state. Under such conditions^ I think a 
motion for rehearing should be granted and the question 
determined upon a careful review of the whole case upon its 
merits, and that such was the proper procedure irrespective of 
the final determination of the court. 

Furthermore, if the power to fix rates by compulsion exists 
in the city of Denver, it is by reason of the provisions of article 
20 of the Constitution, including amended § 6 ratifying the 
city's charter. If it depends upon the amendment, such power 
is granted only to those cities which had their diarters on file 
with the secretary of state January 22, 1913, when the amend- 
ment became effective. It would, therefore, take another con- 
stitutional amendment to confer this power upon other home 
rule cities. It is contended that the inevitable result must be 
that home rule cities will fix the lowest rates which the courts 
will permit to stand as not confiscatory ; that to balance this re- 
sult the Commission will fix, in all other cities and in the state 
at large, the highest rates which the courts will sanction as rea- 
sonable; that the citizens of the state at large will thus be 
obliged to bear so much of the burden of the support of such 
utilities as the favored cities will in this manner be able to trans- 
fer to them; because the courts cannot correct the evil, being 
powerless to fix rates, and having only jurisdiction to determine 
what rates are unreasonable and what are confiscatory; hence 
that § 8 of article 15 of the Constitution, providing that — 
"The police power of the state shall never be abridged or so 
construed as to permit corporations to conduct their business in 
such manner as to infringe the equal rights of individuals or 
the general well-being of the state'' will be violated. 

This question was not discussed in the original opinion and 
seems not to have been presented in the main case. It was a 
new question raised on the motion for a rehearing, which of 
itself justified the granting of that motion. On this subject I 
am of the opinion that, until it otherwise appears, the courts 
must assume that the cities concerned, as well as the Oonmiifl- 
sion, will do their duty, fixing rates that are fair and reason- 
able. If the people have granted this power to these home rule 

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BEMVBR V. MOUNTAIN STATES TELEPH. & TELEG. 00. 257 

oitieB, BO presiimption that it will be impraperly exercised can 
be indulged to defeat any exercise thereof. It may be that the 
plan will not work out to the satisfaction of the people of the 
state. If so, it is within their province to amend or repeal it 
whenever they see fit. "On their own heads, in their own hands, 
the sin and the saving lies." 

Scott, J., dissenting: The Public Utilities Commission of 
the state of Colorado, upon hearing, entered an order fixing 
rates for service to be charged by the Mountain States Tel- 
ephone Company, within the state, including the city and county 
of Denver. The city objected to the jurisdiction of the Com- 
mifision in the premises, as relates to the city and county of Den- 
ver, claiming exclusive jurisdiction to fix such rates as applied 
to the city under article 20 of the Constitution and the amend- 
ment thereto. The city did not appeal to the supreme court 
from the findings and decision of the Commission, as under the 
statute it was expressly authorized to do, but elected to permit 
such decision to become final, so that the merits of the case are 
not before us, and the controversy is now one of jurisdiction as 
between the city and the state. 

'Acting under § 46 of the Public Utilities Act, and upon stip- 
ulation of parties, the Commission certified to this court the rec- 
ord, for a decision upon the question of jurisdiction alone. 

The powers of the Public Utilities Commission, under lihe 
Act of 1913, creating the Commission and defining its powers 
and duties, were considered and determined by this court in 
Denver & S. P. E. Co. v. Englewood, 62 Colo. 229, P.U.E. 
1916E, 134, 161 Paa 151, reserving, however, a decision on 
the application of the rule in the case of a municipality organ- 
ized and operating under article 20 of the Constitution, and this 
is the question now before us for decision. Therefore the rule 
amiounced in that case must be held to apply here, unless it 
shall be found that the Public Utilities Act of 1913 is inhib- 
ited by article 20 and the amendment thereto. The act de- 
clares : 

"Sec. 14. The power and authority is hereby vested in the 
Public Utilities Commission of the state of Colorado, and it is 
hereby made its duty to adopt all necessary rates, charges, and 

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258 COLORADO SUPREME COURT. 

regulations to govern and regulate all rates, charges and tariffs 
of every public utility of this state as herein defined, the power 
to correct abuses, ind prevent unjust discriminations and extor- 
tions in the rates, charges and tariffs of such public utilities of 
this state and to generally supervise and regulate every public 
utility in this state and to do all things, whether herein specif- 
ically designated, or in addition thereto, which are necessary or 
convenient in the exercise of such power, and to enforce the 
same by the penalties provided in this act, through proper courts 
having jurisdiction.'* 

1. In the Englewood case, speaking of the powers thus con- 
ferred, we said : 

"This act is very broad and seems to confer the absolute pow- 
er to regulate, both as to rates and otherwise, all public util- 
ities within the state," 

And again: 

"From the sections quoted, and from other provisions of the 
act, it fully appears that the legislature intended to delegate 
to the Public Utilities Commission the administration, super- 
vision, and regulation of all service rendered to the public 
throughout the state, including municipalities/* 

The first comprehensive general public utility law enacted 
in this country was the New York Act of 1907 (Laws 1907, c 
429), and which furnishes the model for the many subsequent 
Acta by the legislatures of other states, including our own. 

The New York act created two districts with two Commis- 
sions and with identical powers. One of these districts consist- 
ed alone of the territory now embraced in the city of Greater 
New York, and therefore now embracing a single municipality. 

The intention of the legislature by that act to include munic- 
ipalities with the operation of the law is too plain to permit 
question* 

It has been uniformly so held as to every other similar act, 
where the question has been raised. It is obvious that the chief 
purpose of our act, as of all laws of that character by other 
states, was to generally regulate and fix rates for public utilities, 
such as water, gas, electric, telephone, and street car corporations, 
operating within municipalities; for the then existing rail- 
road Commission act quite fully provided for such regulation 

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DENVKR V. MOUNTAIN STATES TELEPH. & TELEG. CO. 259 

of railroads. The kind of utilities so intended to be regulated 
were to be found only in municipalities. To say that the 
legislature intended to exclude municipalities from the operation 
of the law is to convict that body of either ignorance or willful 
intent to violate the fundamental law. 

Article 20 is as nauch a part of the Constitution of the state 
as if it had been a part of the original instrument^ and is of 
like force and sanctity. 

Then to sustain the contention of the city, it is plain that we 
must hold the Public Utilities Statute of 1913 to be in derogation 
of the Constitution, to the extent, at least, as the act may apply 
to cities of two thousand population or more, and for such rea- 
son to be void. 

2. It has been uniformly held since the case of Ogden v. 
Saunders, 12 Wheat. 214, 6 L. ed. 606, that the presumption 
is that every statute is a constitutional enactment, and that this 
presumption is not overcome until the contrary appears beyond 
a reasonable doubt. 

This doctrine has been repeatedly affirmed by this court. 
Consumers* League v. C. & S. K. Co. 53 Colo. 54, 125 Pac. 
577, Ann. Gas. 1914A, 1158, where our cases involving the sub- 
ject up to that time are collated and cited. 

The rule then by which we must be governed in this partic- 
ular is that, when an act of the legislature is attacked as in 
violation of the Constitution of the United States or of thi3 
state, we are required to uphold the legislation, unless its uncon- 
stitutionality appears beyond all reasonable doubt. 

We are asked in this case to declare an act void, not such as 
affects merely the private or public rights or wrongs of persons, 
or the rights of property in a general way, but, on the contrary, 
a legislative act in which the state asserts the exercise of its 
inherent and sovereign power, as against the claim to such pow- 
er upon the part of a municipality within its own borders. 

8. There is another canon of construction which may not be 
overlooked in this case, and that is the deference and weight 
which the court must give to a practical contemporaneous leg- 
islative construction of a constitutional provision. 

The amendment to article 20 of the Constitution, known as 
the ^^ome rule" amendment, and upon which the ci^ relies, 

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260 COLORADO SUPREME COURT. 

.'was adopted at the November, 1912, election, being the same 
general election at which all the members of the legislature, ex- 
cept a moiety of the senate, were elected, and which legislature en- 
acted the Public Utility Act of 1913, now under consideration. 
It may be noted that not one votQ in either house of the 
assembly was cast against the bill upon ijts passage therein, so 
that the representatives of .every city in the assembly, operating 
under, or which may operate under, article 20, voted for the 
statute. The legislative act then is clearly a contemporaneous 
•construction, by the legislative branch of the state government, 
pf the constitutional amendment now under consideration. 

It is universally held that contemporaneous 6r practical con- 
struction of an ambiguous provision of a Constitution by the 
legislative or executive departments of the government is 

• always important, and is frequently of controlling influen^se 
in determining its meaning. 12 C. J. 712. 

* And the rule seems likewise to be general that, if the mean* 
ing of the Constitution is doubtful, legislative construction will 
be given serious consideration by the courts, both as a matter 
-of policy, and also because it may be presumed to represent 
the true intent of the instrument. A contemporaneous legis- 
lative exposition of a constitutional provision is entitled to 
great deference, as it may well be supposed to result from the 
same views of policy and modes of reasoning which prevailed 
among the framers of the instrument expounded. 12 C. J. 
714. 

This rule of construction of a constitutional provision has 
been accepted many times by this court In People ex rel. 
Livesay v. Wright, 6 Colo. 92, where there was quoted with 
approval the following: 

"*As in regard to statutes, so in regard to Constitutions, 
contemporaneous and legislative expositions are frequently 
resorted to, to remove and explain ambiguities. • . . Great 
deference is due to a legislative exposition of a constitutional 
provision, and especially when it is made almost contempo- 
raneously with such provision, and might be supposed to result 
from the same views of policy and modes of reasoning which 
prevailed among the framers of the instrument expounded.^ 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 261 

Sedgwick Stat & Const. Law, 412; People v. Green, 2 Wend 
[N. Y.] 266, 274." 

And in Frost v, Pfeiffer, 26 Colo. 338, 68 Pac 147, the 
court said: 

"Contemporaneous legislative construction of the funda- 
mental law, while not controlling upon the courts, yet, in case 
of doubt or ambiguity, is entitled to great weight, as expressive 
of the views entertained by those of the meaning of that law 
whose mandates they are bound to observe. Cooper Mfg. Co 
V. Ferguson, 113 U. S. 727, 6 Sup. Ct. 739, 28 L. ed. 1137;, 
People V. LeFevre, 21 Colo. 218, 40 Pac. 882." 

In Denver v. Adams County, 33 Colo. 1, 77 Paa 868, it was 
said: 

**While it is not conclusive with the courts, nevertheless a 
contemporaneous legislative construction of a statute or con* 
stitutional provision is persuasive." 

In Cooper Mfg. Co. v. Ferguson, 113 IT. S. 727, 6 Sup. Ct 
739, 28 L. ed. 1137, it was held that as the clause in the Con-* 
stitution and the act of the legislature relate to the same subject, 
like statutes in pari materia, they are to be construed together ; 
and that * an act passed by the first legislature that assem- 
bled after the adoption of the Constitution must be considered 
as a contemporary interpretation, entitled to much weight. 

The court must take notice of the fact that the adoption of 
the "home rule" amendment to article 20 was of state-wide 
interest and the subject of much discussion while pending. 

We cannot assume that the members of the legislature electr 
ed at the same election were not therefore familiar with the 
intent and purpose of this amendment to the organic law, nor 
that they had the intent to knowingly or wilfully act in viola- 
tion thereof. Therefore, in considering the question of the 
validity of the Public Utilities Act, we must bear in mind the 
two foregoing important and universally accepted canons of 
construction. 

4. It is well to consider the nature and character of the pow- 
er which the city claims in this case. 

It is universally held that the power to fix maximum rates is 
a power resting exclusively in sovereignty. "Sovereignty'* has 
been judicially defined as the supreme power which governs tbe . 

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262 COLORADO SUPREME COURT. 

body politic, or society which constitutes the state; a term used 
to express the extreme political authority of an independent 
state or nation; the aggregate of all civil and political power; 
the supreme, absolute, uncontrollable power by which a state 
is governed; that public authority which directs or orders what 
is to be done by each member associated^ in relation to the ^id 
of the association. 36 Enc. 516. 

Preliminary to the adoption of the Federal Constitution, there 
was grave apprehension as to possible or probable conflict be- 
tween the several co-ordinate branches of the government. The 
suggestion of Thomas Jefferson, in his 'ITotes on the State of 
Virginia," seems to have since been followed in every serious 
or crucial conflict between the powers of government. His 
statement, in which he likewise gave a further definition of 
sovereignty as then contemplated, is as follows : 

"As the people are the only legitimate fountain of power, 
and it is from them that the constitutional charter, under which 
the several branches of government hold their power, is derived, 
it seems strictly consonant to the republican theory to resort to 
the same original authority not only when it may be necessary 
to enlarge, diminish, or new-model the powers of the govern- 
ment, but also whenever any one of the departments may com- 
mit encroachments on the chartered authorities of the others. 
The several departments being perfectly co-ordinate by the 
terms of their common commission, neither of them, it is 
evident, can pretend to an exclusive or superior right of setting 
the boundaries between their respective powers^ and how are 
the encroachments of the strong to be prevented, or the wrongs 
of the weaker to be redressed, without an appeal to the people 
themselves, who as the grantors of the Commission, can alone 
declare its true meaning, and enforce its observance." 

This sound governmental truth has been made manifest by 
its frequent application in both state and nation. The several 
branches of the government are but the creatures of the sov- 
ereign power, and always subject to the exercise of the sov- 
ereign will. This is illustrated by the recent constitutional 
enactment in this state of the power of the initiative and refer- 
endum where theretofore exclusive powers of the assembly were 
taken away and reserved to the people themselves^ to initiate 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. (X). 263 

statutes and constitutional amendments^ and also to veto stat- 
xites enacted by the assembly. 

The argument by the city assumes that sovereign power is 
divisible^ separable, and alienable, like bushels of grain, rather 
than as the life-saving air of government, indivisible, insep 
arable perpetuating the equilibrium in government and serv- 
ing as a system of checks and balances as between, not only 
the co-ordinate branches of government, but all the agencies of 
government, as well. 

5. It is to be observed that, in all governments of constitu- 
tional limitations, sovereign power manifests itself in three 
ways: By exercising the right of taxation, the right of eminent 
domain, and through its police power. 

The exercise of sovereign right is of necessity the exercise of 
a right which the state alone, or some of its governmental 
agencies, possess, and before such right may be exercised by 
any such agency there must have been a delegation of such 
power in terms clear and unmistakable. This is not only the 
rule of this court, but it is universal with all courts. In the 
Englewood case we quoted with approval the following: 

"In Freeport Water Co. v. Freeport, supra [180 U. S. 587, 
21 Sup. Ct. 493, 45 L. ed. 679], it is said: This power of 
regulation is a power of government, continuing in its nature ; 
and, if it can be bargained away at all, it can only be by words 
of positive grant, or something which is in law equivalent. If 
there is reasonable doubt, it must be resolved in favor of the 
existence of the power.' In the words of Chief Justice Mar- 
shall in Providence Bank v. Billings, 4 Pet. 614, 661, 7 L. ed. 
939, 955, Its abandonment ought not to be presumed in a 
case in which the deliberate purpose of the state to abandon it 
does not appear.' " 

Upon this point it was said in Interstate Commerce Com. v. 
Kailway Co. 167 IT. S. 479, 17 Sup. Ct 896, 42 L. ed. 243: 
"The question debated is whether it vested in the Commis- 
sion the power and the duty to fix rates, and the fact that this 
is a debatable question, and has been most strenuously and 
earnestly debated, is very persuasive that it did not. The 
grant of such a power is never to be implied. The power itself 
is so vast and comprehensive, so largely affecting the rights of 
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264 COLORADO SUPREME COURT, 

carrier and shipper, as well as indirectly all oommereial trans- 
actions, the language by which the power is given had been 
so often used and was so familiar to the legislative mind and 
is capable of such definite and exact statement, that no just rule 
of construction would tolerate a grant of such power by m^re 
implication.*' 

Further citation of authority is not required. There are 
none to the contrary. 

The power to regulate publi(^ utilities is based upon that 
branch of sovereignty designated as the police power of the 
state. The term "police power*' has never as yet been accu- 
rately or satisfactorily defined. The difficulty is that it is froDi 
its very nature incapable of definition, because none can fore- 
see the ever-changing conditions which may call for its exer- . 
cise. But it is by all agreed that it is an attribute of sovereign- 
ty, inherent in the several states of the Union, subject only to 
the limitations of the Federal Constitution, and that the very 
existence of government depends on it. It is as a well, kteK- 
haustible, from which may be drawn from time to time the 
power necessary to protect or promote' the public welfara 

It is a fixed principle of government that the state eannot 
barter away the right to the use of the police power, for the 
reason that the governmental power of self-protection eannot 
be contracted away. 

This furnishes the reason for the rule aimounced in Denver 
Co. V. Englewood, supra, that the power of regulation of pub- 
lic utilities is a power of government, continuing in its nature ;^ 
and, if it can be bargained away at all, it can only be by wordft 
of positive grant, or something which is in law equivalent, and 
that, if there is reasonable doubt, it must be resolved in favor 
of the existence of the power in the state. 

While the state may delegate the exercise of this power to 
an agency, municipal or otherwise, yet there can be no aliena- 
tidn. That is to say, here the same authority that granted the 
power under article 20, acting through the same instrumental- 
ity, may recall this power in its entirety. We turn to article 
20 and search in vain for words expressly granting the power 
to the city to regulate or fix rates to be charged by aaoLj public 

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DSNYER V. MOUNTAIN STATES TEI^PH. & TELEG. CO. 265 

utility. Indeed, there is no language therein even suggestive 
of any such grant of power, nor is the subject referred to. 

6. The city in its contention apparently relies upon the fol- 
lowing provisions of section 6, article 20, as amended, as con- 
ferring the power claimed: 

"(1) The people of each city or town in this state, having a 
population of two thousand inhabitants as determined by the 
last preceding census taken under the authority of the United 
States, the state of Colorado or said city or town, are hereby 
vested with, and they shall always have, power to make, amend, 
add to or replace the charter of said city or town, which shall be 
its organic law and extend to all its local and municipal mat- 
ters. 

'^(2) Such charter and the ordinances made pursuant there- 
to im such matters shall supersede within the territorial limits 
and other jurisdiction of said city or town any law of the state 
in conflict therewith. 

"(3) It is the intention of this article to grant and confirm 
to the people of all municipalities coming within its provisions 
the full right of self-government in both local and municipal 
matters and the enumeration herein of certain powers shall not 
be construed to deny to such cities and towns, and to the peo- 
ple thereoj^ any right or power essential or proper to the full 
exercise of such right. 

"(4) The statutes of the state of Colorado, so far as appli- 
cable, shall continue to apply to such cities and towns, except 
in so far as superseded by the charters of such cities and towns 
or by ordinance passed pursuant to such charters. 

"(5) All provisions of the charter of the city and county of 
Ti^nver and the cities of Pueblo, Colorado Springs, and Grand 
function, as heretofore certified to and filed with the Secretary 
of State, and of the charter of any other city heretofore 
approved by a majority of those voting thereon and certified to 
and filed with the Secretary of State, which provisions are not 
in conflict with this article, and all elections and electoral votes 
heretofore had under and pursuant thereto, are hereby ratified, 
afSrmed, and validated as of their date." 

It will appear that in this amendment there is no suggestion 
of a grant of power to fix rates to be charged by a public utility. 

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266 CX)LORADO SUPREME COURT. 

What would be said of the powers o£ the Public Utility Com- 
mission, if its grants of power under the statute creating and 
controlling were so obscure or rather so invisible ? 

There are two universally accepted rules of construction by 
which the court must be governed in determining whether or 
not these provisions of the Constitution, or any one of them, 
may be held to confer upon the city the rate-regulating power 
over public utilities within the city. The first of these is that 
the provision or provisions of the Constitution must appear to 
as clearly express the power claimed to have been conferred on 
the city, and in language as free from ambiguity, as those pro- 
visions of the statute allied to be in conflict with the organic 
law. 

The second rule is that laid down by the Supreme Court of 
the United States in the case of Milwaukee R. Co. v. Wiscon- 
sin Eaiboad Commission, 288 U. S. 174, 36 Sup. Ct. 820, 59 
L. ed. 1254: 

"The fixing of rates which may be charged by public service 
corporations, of the character here involved, is a legislative 
function of the state, and while the right to make contracts 
which shall prevent the state during a given period from exer- 
cising this important power has been recognized and approved 
by judicial decisions, it has been uniformly held in this court 
that the renunciation of a sovereign right of this character must 
be evidenced by terms so dear and unequivocal as to permit 
of no doubt as to their proper construction. This proposition 
has been so frequently declared by decisions of this court as ta 
render imnecessary any reference to the many cases in which 
the doctrine has been affirmed. The principle involved was 
well stated by Mr. Justice Moody in Home Telephone Co. v. 
Los Angeles, 211 U. S. 265, 273 [29 Sup. Ct. 50, 52 (53 L. ed. 
176)]: 

" The surrender, by contract, of a power of government^ 
though in certain well-defined cases it may be made by legisla- 
tive authority, is a very grave act, and the surrender itself, as 
well as the authority to make it, must be closely scrutinized. 
2^0 other body than the supreme l^islature (in this case, the 
legislature of the state) has the authority to make such a sur- 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 267 

render, unless the authority is dearly delegated to it by the 
supreme legislature. The general powers of a municipality, or 
of any other, political subdivision of the state are not sufficient. 
Specific authority for that purpose is required/ " 

This language was spoken of grants by the legislature as 
representative of the sovereign power of the state. If it shall 
apply in such case, then with what greater force should it be 
regarded when applied to constitutional grants of power? 

It is plain that the specified class of cities were thus granted 
power to make or amend a charter, applicable and specifically 
limited to its 'local and municipal matters,'' and the declared 
purpose was to grant to the mimicipalities, as such, the full 
right of self-government, 'limited to local and municipal mat- 
ters." The same power was granted to all otber cities having 
a population of 2,000 or more. The people of the state could 
have had in mind municipal powers only, except as otherwise 
conferred by express grant. 

Nowhere in the provisions quoted can there be found any 
express delegation of power to fix maximum rates to be charged 
by public service corporations, and by no intelligent interpreta- 
tion can this language be construed to intend an implied power 
to so do. 

Of all things to be sacredly avoided by the court is the possi- 
bility of error in a construction that may be the equal to rewrit- 
ing the organic law to that extent, and thereby to unconsciously 
usurp the Constitution-making power of the people. 

It may be noted further that in lie home rule amendment, 
in addition to the general powers, upon which the city relies in 
this case, there is provided eight express grants of power. They 
relate, in brief, to: (a) The creation of municipal officers, 
terms, duties, etc.; (b) the creation of police courts, powers, 
duties, etc.; (c) the creation of municipal courts, etc.; (d) 
matters pertaining to municipal elections, etc; (e) providing 
for municipal obligations, etc.; (f) providing for the consol- 
idation and management of park and water districts; (g) pro- 
viding for assessments of city property for municipal purposes, 
collection of such taxes, etc. ; and (h) providing for the impo- 
sition and collection of fines for the violation of provisions of 
the city charter and ordinances. 

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263 COLORADO SUPREME COURT. 

Article 20 was enacted several years before this amendment 
and some o£ these powers had been questioned. 

All of these express grants relate in a general* way to local 
and municipal matters only, and it was clearly the purpose of 
the amendment to relieve such powers from doubt, and of the 
necessity for judicial interpretation. If such was the purpose, 
it is pertinent to ask why such care to specifically express and 
recite powers, in their nature local and municipal, and omit 
entirely any express reference to a power, universally held to 
be general and sovereign in character, if such power was intend- 
ed to be conferred. This fact alone is sufficient to create the 
doubt which must necessarily, under the rule of construction, 
<M)ntrol the court's action in this case. 

Is it possible that any elector could have read these provi- 
sions of the purposed amendment, which are quoted here, and 
have concluded that it was the intent and purpose of it to con- 
fer upon these cities the exclusive power to fix compulsory rates 
to be charged by public service corporations, a municipal grant 
then certainly uncommon, if not unprecedented in any state 
in the Union? 

7. It is urged that prior to the adoption of the home rule 
amendment there was inserted in the charter the following: 

"All power to regulate the charges for service by public util- 
ity corporations is hereby reserved to the people, to be exer- 
oiised by them in the manner herein provided for the initiation 
of an ordinance.'' 

It is then argued that by the ratification provision, as to the 
four cities named therein, this charter provision became an ex- 
press constitutional grant of power to the city to regulate such 
<;harges. But there is an express limitation upon the provi- 
sions of the charter so ratified, and they were strictly confined 
to "provisions not in conflict with this article." But -if article 
20 and the amendment thereto contained no express power to 
regulate charges for service by public utility corporations, then 
the provision of the <?harter relied on was in conflict with arti- 
cle 20, and for such reason void under the very terms of the 
iimendment. 

The ratification provision in the amendment expressly ex« 

tended to such provisions of the charter only as were not in con- 
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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CX). 2C9 

flict with the original article 20, and hence in plain terms did 
not ratify such attempted reservation of power. That the city 
was without power to prescribe compulsory rates to be charged 
by public utilities, under article 20 before the amendment, and 
that therefore the declaration to that effect found in the char- 
ter, before the amendment, was in conflict with such article^ 
and for such reason is void, is the crux of this controversy, and 
we believe our conclusion finds confident and irresistible sup*- 
port in the authorities to follow: If it was void, it could not 
be, and by the terms of the amendment itself was not, ratified. 

Municipalities have no express or implied powers, excepting 
only such as may be conferred by sovereignty. It would be n 
strange anomaly to say that a municipality can reserve to itself 
a power resting exclusively in sovereignty. Certainly it can- 
not be said that a municipality has inherent power. If so^ 
then it is sovereign, and constitutes a government within a goy- 
emment, an imperium in imperio. The ratification of the pro- 
visions of the charter and valid ordinances, not in confiict witb 
the article, did not make them a part of the Constitution. It. 
is true, this ratification being constitutional in character, such 
provisions as are valid are immune from legislative act, but 
they were still only valid provisions of a municipal charter^, 
always subject to amendment or repeal by the people of the city.. 

If we suppose that the charter had contained a provision? 
declaring all power to r^ulate the liquor traflSc *'is hereby 
reserved to the people to be exercised by them in the manner 
herein provided, for the initiation of an ordinance," and, so far 
as the people who voted upon the amendment knew, there may 
have been such a provision, what would be said of the validity, 
of the then state wide anti-saloon law ? It would have been the 
exercise of the same general and sovereign police power as ilk 
the case of the regulation of public utilities. 

Could it have been said that such a provision was ratified by 
the amendment to article 20 ? And there is to be found in arti- 
cle 20 and the amendment no more explicit grant of power toi 
regulate public utilities than to regulate the liquor traffic 

The illustration demonstrates the wisdom, necessity, and pur*- 
pose of the limitation contained in the amendment, ''not ia 
conflict with this article.*' The people could know the provi- 

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270 COLORADO SUPREME COURT. 

eions of the amendment. They could have no knowledge of 
the charter provisions, nor the ordinances under it 

The constitutional amendment can be said to have done no 
more than to validate such charter provisions as were clearly 
within the lawful powers of the mimicipality. It was plainly 
not intended to confer a new or different power, not theretofore 
expressly conferred, or necessarily implied by article 20; for, 
as said in the Sours case, 31 Colo. 369, 74 Pac. 167, 102 Am. 
St. Rep. 34: 

"Even by constitutional amendment, the people cannot set 
apart any portion of the state in such manner that that portion 
of the state shall be freed from the Constitution, or delegate the 
making of constitutional amendments concerning it to a char- 
ter convention, or give to such charter convention the power to 
prescribe the jurisdiction and duties of public officers with 
respect to state government as distinguished from municipal, 
or city, government." 

8. The power to regulate and control all public utilities of 
the state by means of a Oonmiission for that purpose is not 
entirely new or untried. So far as we are able to discover, all 
such statutes include, within such exercise of authority, the 
regulation of public utilities within the cities of the state, 
whether the municipal powers rest upon constitutional or stat- 
utory grant. 

These laws may now be said to be general, and to consti- 
tute a definite policy for the regulation and control of all pub* 
lie utilities. They include, among the acts of regulation, the 
issuance of stocks and bonds, the question of necessity for con- 
struction or extension, and many other matters and things not 
contemplated by the earlier regulation statutes which were con- 
fined to railroads alone. Indeed, it may be said that the r^- 
ulation of those public utilities operating chiefly in large cen- 
ters of population is the paramount purpose. The enactment 
of similar statutes has followed in most of the 'states of the 
Union, and the state's general power to regulate all the public 
utilities, without distinction as to municipalities, has been 
asserted and exercised under all such statutes. 

So far as we are advised, this power has never been ques- 
tioned in most of the states by the cities, whether operating 
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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 271 

under constitutionally conferred charter power or otherwise. 
But the question has heen raised in some of the states of the 
Union, and, in so far as we are advised, in all cases, determined 
adversely to the contention of the city in this case. 

We will now proceed to cite and briefly consider some of 
these cases. The recently recided case of Cleveland Teleph. 
Co. V. Cleveland, by the supreme court of Ohio, 98 Ohio St. 
358, P.U.R19190, 136, 121 N. E. 701, as in this case, in- 
volved only the question of jurisdiction to fix maximum rates 
for the telephone company within the city of Cleveland, as be- 
tween the city and the Public Utilities Commission of the state. 

The city enacted an ordinance fixing the maximum rates and 
brought the action to enjoin the Commission from enforcing 
other and different rates fixed by that body. The city claimed 
under a constitutional provision granting home rule as here, 
and it was held that the public utilities statute creating the 
Commission and conferring authority upon it to r^ulate pub- 
lic utilities, and to fix the rates that such utilities may charge 
for commodity furnished or service rendered, gave exclusive 
powers to the Commission. 

It was contended in that case, as in this, that the authority 
conferred by the Constitution upon municipalities to exercise 
all powers of local self-government, necessarily included, as an 
incident thereto, police power in the broader sense of that term, 
and authorized the fixing of rates that may be charged by pub- 
lic utilities within the city. 

It appears that, under the home rule amendmeut to the Con- 
stitution of Ohio, municipalities were given quite as broad and 
general powers for self-government as are to be found in the 
Constitution of this state. It was said in that case: 

"The exercise of local police power is of vital importance to 
large centers of population. If police powers may be divided 
along the lines suggested, it is of far more importance to mu- 
nicipalities that they should have authority to exercise local 
police power untramiueled by the general laws of the state, 
than that they should have absolute right to exercise the police 
powers included in the broader definition suggested by coun- 
sel. Yet section 8, art. 18, of the Constitution, does limit and 

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27^ COLORADO SUPREME COURT. 

restrict municipalities to the exercise of local police power in 
conformity with the general laws of the state. 

". . . If [municipalities] were independ^it soTereignties, 
there might be some force in the contention that they possess 
inherent police powers incident to sovereignty, especially if 
the Constitution imposed no limitations upon the exercise of 
that power, but even the most ardent supporters of independ- 
ent sovereignty in the constitutional convention were obliged 
to abandon that idea. 2 Constitutional Debates^ p. 1456, col- 
umn 2. That question, however, is fully settled in the case of 
Billings V. Cleveland Ry. Co. 92 Ohio St 478, 485, 111 M". E. 
155, 157, in this language: 

** There is no imperium in imperio, except in the sen^e that 
by the approval of the state the city exercises part of the sov- 
ereign power under the limitations imposed.' 

"While in this state, in order to meet the needs of urban 
districts, local police powers have uniformly been del^ated to 
local authorities to be exercised in confoAnity with general 
laws, nevertheless, police power is an attribute of sovereignty, 
and the exercise of that power largely in the discretion of the 
sovereign state. . • . 

"It is hardly within the range of possibility, much less prob- 
ability, that the people of this state intended to vest in the 
many municipalities of Ohio discretion to exercise tmlimited 
and unrestricted police power." 

In the case of Traverse City v. Railroad Commission, 202 
Mich. 575, P.U.R.1918F, 752, 168 N. W. 481, the precise 
question of jurisdiction as between the state Commission and 
the constitutionally chartered city likewise involved the regula- 
tion of rates to be charged by a telephone company. 

The authorities were quite generally reviewed, and the court 
said: 

"Neither the Railroad Conmiission nor the municipality 
had any rate-making power, except that which the legislature 
might delegate to them to exercise as state agencies. There is 
no doubt that it is competent for the legislature to delegate its 
control over and power to regulate charges of common carriers 
operating within the state to a board or Conmiission created 
for that purpose and within the range of l^timat« municipal 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. 00. 273 

purposes to municipalities, but when such power is delegated t# 
a municipal corporation by its charter it must be done in ex- 
press terms. Jacksonville v. Bell Tel. Co. 57 Fla. 374, 49 
South. 509 ; St. Louis v. Bell TeL Co. 96 Mo. 623, 10 S. W. 
197, 2 L.R.A. 278, 9 Am. St. Rep. 370. No power is given 
Traverse City by its charter in express terms to fix rates to be 
charged by telephone companies operating within its borders, 
nor is such authority inferable from the conferred power to r^- 
ulate and control the use of its streets by telegraph, telephone, 
and other companies referred to." 

The case of Portland v. Public Service Commission, 89 Or. 
326, P.U.R.1919A, 127, 173 Pac. 1178, has peculiar likeness 
to the case at bar, and is determined upon the question of ju- 
risdiction alone. 

The constitutional power in that case granted to municipal- 
ities in the matter of their charters and ordinances was lim- 
ited to "local, special and municipal" legislation, while in the 
Colorado Constitution this power is limited to "matters local 
and municipal," omitting the word "special." So that in effect 
the power granted in this respect is the same; that is to say, 
the power extends, in the absence of an express grant, to mat^ 
ters municipal only. 

In that case the court said: 

"That the regulation of rates is a prerogative of the state aa 
to carriers operating wholly within its borders is taught in 
Simpson v. Shepard, 230 U. S. 352, 33 Sup. Ct. 729, 57 L. ed. 
1511, 48 L.R.A.(N.S.) 1151, Ann. Cas. 1916A, 18. . . . 

"The case of the plaintiff is not aided by the subsequent 
amendments to the charter, whereby the effort was to invest the 
municipality with substantially all the authority over public 
utilities operating within the city that was conferred upon the 
Commission. 

"There are two reasons for this. One is that, although the 
city by these changes in its organic law asserted the right to 
regulate rates, it has not exercised the right. Another is that 
the scope of the initiative and referendum power vested in the 
legal voters of municipalities is confined to ^ocal, special and 
municipal le^lation.' Article 4, § la. State Constitution. 
This section explains and limits the language of section 2 of 

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274 COLORADO SUPREME CX)URT. 

article 11 of the same inBtrumenti authorizing the legal voters 
of cities and towns *to enact and amend their municipal char- 
ter, subject to the Constitution and criminal laws of the state 
of Oregon,' with the result that the city is debarred from assum- 
ing on its own initiative a power which is peculiarly a prerog- 
ative of the state itself. Kegiilation of rates is such a power. 
It affects the general public, and not merely the inhabitants of 
any single city, and never could have been exercised by the 
plaintiff, unless delegated to it by the state. The constitutional 
provisions for ^ocal, special and municipal legislation' by the 
initiative were never intended as permission to cities and towns 
to arrogate to themselves powers otherwise primarily resident 
in the state. All authority whatever possessed by cities and 
towns emanated from the state. They cannot further invade 
its original sovereign prerogative, unless the attempt is refer- 
able to ^ocal, special and municipal legislation.' The state, 
operating through its legislative assembly, or directly by its 
people, exercising the initiative, is still paramount in the mat- 
ter of making laws. It can del^ate authority to its subordi- 
nate governmental agencies, and it can revoke it.'' 

State ex rel. v. Telephone Co. 189 Mo. 83, 85 S. W. 41, in- 
volved the precise question now under consideration. In that 
case the city was operating under specific constitutional author- 
ity to frame its own charter as follows : 

"Any city having a population of more than one hundred 
thousand inhabitants may form a charter for its own govern- 
ment, consistent with and subject to the Constitution and laws 
of this state." 

The charter framed under this constitutional provision and 
certain additional statutory provisions contained a provision in 
substance as follows: 

"The city shall have power by ordinance: ^ . . To reg- 
ulate the prices to be charged by telephone, telegraph, gas, and 
electric light companies, and to compel them and all persons 
and corporations using, controlling or managing electric wires 
for any purpose whatever to put and keep their wires under 
ground and to regulate the manner of doing the sama' " 

The court held that this ordinance, in so far as it related to 
the compulsory maximum rate-making power^ was void as 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 276 

against the asserted power of the state in that respect. It was 
there said: 

"A charter framed under that clanse of the Constitution 
within the limits therein contemplated has the force and effect 
equal to one granted by an act of the legislature. 

"But it is not every power that may be essayed to be con- 
ferred on the city by such a charter that is of the same force 
and effect as if it were conferred by an act of the general assem- 
bly, because the Constitution does not confer on the city the 
right, in framing its charter, to assume all the powers that the 
state may exercise within the city limits, but only powers inci- 
dent to its municipality, yet the legislature may, if it should 
see fit, confer on the city powers not necessary or incident to 
the city government. There are governmental powers the just 
exercise of which is essential to the happiness and well-being 
of the people of a particular city, yet which are not of a char- 
acter essentially appertaining to the city government. Such 
powers the state may reserve to be exercised by itself, or it may 
delegate them to the city, but until so delegated they are re- 
served. The words in the Constitution, %ay frame a charter 
for its own government,' mean may fr^me a charter for the 
government of itself as a city, including all that is necessary 
or incident to the government of the municipality, but not all 
the power that the state has for the protection of the rights and 
regulation of the duties of the inhabitants in the city, as be- 
tween themselves. Nor does the Constitution confer unlimited 
power on the city to regulate by its charter all matters that are 
strictly local, for there are many matters local to the city, re- 
quiring governmental regulation, which are foreign to the scope 
of municipal government." 

Mr. Justice Marshall, in a specially concurring opinion in 
that case, declared: 

"I am thoroughly persuaded that it never was within the 
contemplation of the framers of our system of government, or 
of our Constitution, that any city, whether organized under the 
general laws of this state, or under thfe provisions of the Con- 
stitution which allow cities to frame their own charter, to con- 
fer upon cities anything more than a police power, and a strict- 
ly nranicipal power. And that the power to enact all laws of 
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276 COLORADO SUPREME COURT. 

civil conduct, and to prescribe all civil remedies among citizens, 
in short, to enact laws as distinguished from municipal regula- 
tions, is expressly reserved to the l^islature of this state, and 
cannot be delegated by it/' 

Perhaps the most exhaustive and convincing opinion of any 
of those dealing with the subject now under consideration, is 
that of City of Woodbum v. Public Service Commission, 82 
Or. 114, 161 Pac. 391, L.RA.1917C, 98, Ann. Cas. 1917E, 
996. The city of Woodbum was operating under a home rule 
provision of the Constitution of the state of Oregon, which con- 
ferred the power upon municipalities: 

" ^To grant franchises in, through and upon the streets of 
the city for public uses and public benefits;' and % regulate 
and control or prohibit the placing of poles for electric lights or 
other purposes, and the suspension of electric and other wires 
along on cross-streets of said city, and to require any or all al- 
ready placed or suspended, either in limited districts or through- 
out the entire city, to be removed, or to be placed in such man- 
ner as it may designate beneath the surface of the streets or 
sidewalks.' " 

The city granted a ^anchise to the telephone company, one 
section of which fixed the maximum rates to be charged for 
telephone service. Upon application and hearing, the Public 
Service Commission fixed a schedule of rates higher than that 
fixed by the franchise. The Public Service Act was passed 
after the franchise was granted and thus arose the question of 
jurisdiction as between the city and the state. 

The Constitution of Oregon also denied the right of the legis- 
lature to amend or repeal any city charter in the following lan- 
guage:. 

"Corporations may be formed under general laws, but shall 
not be created by the legislative assembly by special laws. The 
legislative assembly shall not enact, amend, or repeal any char- 
ter or act of incorporation for any municipality, city, or town. 
The legal voters of every city and town are hereby granted 
power' to enact and amend their municipal charter, subject to 
the Constitution and criminal laws of the state of Oregon." 

It was said: 

*While the Constitution grants to a city the right to enact 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 277 

and amend its charter and simultaneously prohibits the legisla- 
tive assembly from enacting, amending, or repealing any char- 
ter for any city, nevertheless, neither the grant nor the prohibi- 
tion includes any subjects except those 'that are purely local 
and municipal in character' (Kalich v. Knapp, 73 Or. 558, 142 
Pac. 594, 145 Pac, 22, Ann. Gas. 1916E, 1061), or, as is stated 
in Branch v. Albee, 71 Or. 188, 205, 142 Pac 598, the author- 
ity of the cities is not extended 'over subjects that are not prop- 
erly municipal and germane to the purposes for which munici- 
pal corporations are formed.' We use the word 'municipaP as 
signifying T<rhat belongs to a city. 

'1b Coleman v. La Grande, 78 Or. 521, 525, 144 Paa 468, 
470, this court ruled that — 

" *By granting and reserving to the people of municipalities 
the power to enact and amend their charters and adopt local or 
special laws, the state has not surrendered her sovereignty to 
the municipalities. Within their boundaries cities are clothed 
with power to regulate matters purely locaL However, a city 
is not constituted as a sovereignty as regards all matters of legis- 
lation, but is still to a certain extent a mere agency of the state 
of which it is a part. Beyond such mimicipal boundaries and 
in matters of general concern not pertaining solely to local 
municipal affairs, cities are amenable to the general laws of the 
«tate, which do not infringe upon the right of cities to local self- 
government. This is so whether such laws are enacted by the 
legislature or by the people of the state at large.^ 

"The right to regulate rates is a matter of general concern, 
^xid does not pertain solely to local municipal affairs. Portland 
it. Light & Power Co. v. City of Portland (D. C.) 210 Fed. 
«67.'^ 

It was further said: 

"The state guards its right to r^ulate rates so vigilantly that 
Specific authority is necessary to compel a surrender of this 
e:lement of sovereignty, and in the language of the Supreme 
Court of the United States: 

" 'The general powers of a municipality or of any other poli- 
tical subdivision of the state are not sufficient' Home Tele- 
phone Co. V. Los Angeles, 211 U. S. 266, 58 L. ed. 176, 29 

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278 COLORADO SUPREME COURT. 

Sup. Ct. 60; Milwaukee Elec. Ry. v. Wisconsin R. R. Com. 
238 U. S. 174, 69 L. ed. 1254, 35 Sup. Ct. 820. 

"The power to regulate rates does not appertain to the gov- 
ernment of a city ; it is not municipal in character, nor is it even 
an incident to a grant of authority to enact or amend a charter 
for a city or town. State ex rel. Webster v. Superior Court, 
67 Wash. 37, 120 Pac. 861, Ann. Cas. 1913D, 78, L.R.A.1915C, 
287.^' 

It will be noted that the Constitution in that state uses the 
term "local and municipal,^' the precise limitation placed upon 
the powers and municipalities found in our own Constitution. 

No case has been cited in the briefs, and we have no knowl- 
edge of any decision by a court of last resort, state or Federal, 
expressing a contrary view to that of the cases here reviewed 
and cited. 

To the same effect and of the same import as the foregoing 
cases may be cited: Milwaukee Elec. Co. v. Railroad Com. 
238 U. S. 174, 35 Sup. Ct. 820, 59 L. ed. 1254; Freeport Water 
Co. V. Freeport, 180 U. S. 587, 21 Sup. Ct. Rep. 493, 45 L. 
ed. 679; Salt Lake City v. Utah Light & Traction Co. (Utah) 
P.U.R.1918F, 377, 173 Pac. 656; Idaho Power & Light Co. 
V. Bloomquist, 26 Idaho, 222, 141 Pac. 1083, Ann. Cas. 1916E, 
282; Light & Power Co. v. Portland (D. C.) 210 Fed. 672; 
Benwood v. Public Service Commission, 75 W. Va. 127, 83 
S. E. 296, L.R.A.1915C, 261; Webster v. Superior Court, 67 
Wash. 37, 120 Pac 861, L.R.A.1915C, 287, Ann. Cas. 1913D, 
78; Wolverton v. Telephone Co. 58 Colo. 58, 142 Pac 165, 
Ann. Cas. 1916C, 776; City of St. Louis v. Public Service 
Commission (Mo.) 207 S. W. 799; Public Service Commis- 
sion V. City of Helena, 52 Mont. 527, 159 Pac. 24; Yuma Gas, 
Light & Water Co. v. Yuma (Ariz.) 178 Pac. 26. 

9. Counsel strenuously contend that the cases here cited are 
not authority in this case by reason of alleged distinction be- 
tween the language of our Constitution and the wording of con- 
stitutional limitation of charter powers in those states. It is 
said that in some of these states the words are, "not in conflict 
with the Constitution and laws of this state." In others, "not 
in conflict with the Constitution and criminal laws of this state.'^ 

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DENVBK V. MOUNTAIN STATES TELEPH. ft TELBG. 00. 27» 

Willie in the Colorado Constitution the limitation is as to ^^ocal 
and municipal matters." 

This is a distinction without a difference. These limitations 
all have the same meaning in effect, and that is to limit the 
powers under the charter to matters municipal in character as 
distinguished from general or sovereign powers. 

In none of the decisions we have reviewed, nor in any of the 
cases cited therein, is there any intimation that rate an4 service 
regulations of public utilities are matters of local or municipal 
concern. But, on the contrary, it is stated in all of them that 
this power is governmental, and is vested in the state in its sov- 
ereign capacity, which completely negatives the idea that it is 
merely local. 

These authorities are in harmony with the true spirit of the 
*1iome rule'^ provision of the Colorado Constitution, The dear 
intention of the amendment undoubtedly was to confer upon 
the cities, coming within the class created by the amendment, 
the power and authority to exercise complete control over their 
local and mimicipal matters. This has been the universal con- 
clusion reached in substance and in fact by the Colorado deci- 
sions. 

10. Counsel for the city seem to regard the word 'locaP* as 
having some peculiar significance, and in some manner enlarg- 
ing upon the word "municipal." Why or how is not clear from 
the argument. If the word "local" can have any different 
meaning from the word "municipal" in this respect, it is to re- 
strict rather than to enlarge, for it can mean no more than that 
the power is local to the municipality as distinguished from 
general, as applied to the state. 

But, in a number of cases before this court construing article 
20 and the amendment thereto, this contention has been ex- 
pressly and uniformly repudiated. 

Therefore to say that the charter powers of the city under 
the Constitution extends beyond its municipal affairs, except 
where otherwise expressly provided, is to overrule a line of 
oases of this court with express declarations to the contrary, 
and we are not required to rely upon the decisions from other 
courts for authority. 

In the case of People v. Sours, 31 Colo. 369, 74 Pao. 167^ 

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280 CX)LORADO SUPREME COUKT* 

102 Am. St. Rep. 84:, the contention was that article 2© was 
invalid for the reason that it was a grant of powers other than 
municipal in their nature ; that is to say, it was a grant of pow- 
ers general and sovereign in character and therefore in con- 
flict with the Federal Constitution, This is the precise conten- 
tion of the city in the case at bar. The answer of the court to 
that contention, speaking through Mr. Justice Steele, was: 

"If this amendment must be given that construction, it can- 
not be sustained. Even by constitutional amendment, the peo- 
ple cannot set apart any portion of the state in such manner 
that that portion of the state shall be freed from the Constitu- 
tion, or delegate the making of constitutional amendments con- 
cerning it to a charter convention, or give to such charter con- 
vention the power to prescribe the jurisdiction and duties of 
public officers with respect to state government as distinguished 
from municipal, or city, govenmient. . . . Under the Con- 
stitution of the United States, the state government must be 
preserved throughout the entire state ; and it can be so preserved 
only by having within every political subdivision of the state, 
such officers as may be necessary to perform the duties assumed 
by the state government, under the general laws as they now ex- 
ist or as they may hereafter exist. 

"This distinction between the governmental duties of public 
officers and their municipal duties is fundamental, and there- 
fore is not avoided or affected by the consolidation." 

Finally, construing the purpose of the amendment, in its au- 
tiiorization to the city to adopt a charter and enact ordinances, 
as being limited to matters of local and municipal concern only, 
the court said: 

"The amendment is to be considered as a whole, in view of 
its expressed purpose of securing to the people of Denver abso- 
lute freedom from legislative interference in matters of local 
concern; and, so considered and interpreted, we find nothing 
in it subversive of the state government, or repugnant to. the 
Constitution of the United States." 

This doctrine has in no sense been modified or abridged, but 
has been repeatedly affirmed. 

The precise claim to sovereign and general police power up- 
on the part of the city was made in the case of Keef e v. People, 

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B^^NVEK y. MOUNTAIN STATES TEI^PH. & TELEO. GO. 281 

37 Colo. 317, 87 Pac. 791, 8 L.R.A.(N'.S.) 181, as here. It 
was there contended that the state statute providing for an eight- 
hour law was not applicable to the city and county of Denver, 
because such power of regulation had been conferred upon the 
city by article 20. Speaking through Mr. Chief Justice Gab- 
bert, it was held: 

"But the municipality of Denver, though created by a con- 
stitutional amendment by a direct vote of the people, and hav- 
ing the power to frame its own charter, is just as much an agency 
of the state for the purpose of government as if it was organized 
under a general law passed by the general assembly. The mode 
of its creation does not change the nature of its relation to the 
state. Like cities and towns organized under the general stat- 
utes, it is still a part of the state government It is as much 
amenable to state control in all matters of a public, as distin- 
guished from matters of a local, character, as are other munici- 
palities. The state still has the supreme poww to enact general 
laws declaring what shall be its public policy, and it can make 
them applicable to the city of Denver, as well as to all other 
cities of the state. This act, in effect, declares that it is the 
public policy of the state not to permit any officer or agent of 
the state, or its municipalities, or any contractor thereof, to 
employ any working man in the prosecution of public work for 
more than eight hours a day, and for a violation of the statute 
a penalty is provided* What the public policy of the state is 
rests with its legislative department. The work of building a 
flanitary sewer by a city, in a sense, is local, in that it affects, 
primarily, its own citizens; but it is directly connected with 
the public health, and is a matter of concern and great import- 
ance to the people of the entire state*'' 

In the case of Speer v. People, 52 Oolo. 825, 122 Pac. 768, 
speaking through Mr. Justice Musser, the court said: 

^^Section 5 of article 120 of the Constitution expressly pro- 
vides that *the citizens of the city and county of Denver shall 
have the exclusive power to amend their charter or to adopt a 
new charter, or to adopt any measure as herein provided.' The 
citizens of this municipality, so far as concerns their local mu- 
nicipal matters, have all the powers of a legislature with re- 
spect to their charter. Denver v. Hallett, 34 Colo. 393 [83 

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282 CX)U)RADO SUPREME COURT. 

Pac. 1066] ; Londoner v. City and County of Denver [52 Colo. 
15] 119 Pac. 156." 

In the case of Hilts v. Markey, 52 Colo. 382, 122 Pac. 394, 
the city, under a like claim to the exercise of general and state 
police power as here, attempted to avoid a levy of tax under the 
state law, by reason of its powers under article 20. Speaking 
through Mr. Justice Bailey, the court quoted and approved the 
following from the Cassiday case: 

" 'As matters now stand, there is nothing whatever in article 
20 which gives to the people of the city and county of Denver 
power to legislate upon anything whatever, concerning matters 
solely of state and county governmental import, except merely 
the designation of certain agents to perform therein the acts 
and duties incident thereto.' 

"These excerpts from our own decisions serve to conclusively 
show that the people of the city and county of Denver have no 
power whatever to legislate in the slightest degree upon any 
matter solely affecting state and county affairs. Such has been 
the construction given article 20, and none other was possible 
if the article was to stand.'' 

And further, after quoting from the Sours case, the court 
said: 

"It was this original construction of the purpose and intent 
of article 20, to the effect that the people of the city and county 
of Denver had power to legislate upon and regulate matters of 
local concern only, that made it possible for the court to uphold 
and validate it, and this construction has ever since been rigid- 
ly and vigilantly upheld and maintained." 

It was said by the court in People v. Prevost, 55 Colo. 199, 
134 Pac. 129, speaking through Mr. Chief Justice Musser, and 
considering article 20 and the home rule amendment: 

"It has been determined again and again that the subject- 
matter of article 20 was home rule, or the right of self-govern- 
ment by Denver and other municipalities in the state relating 
to local and municipal matters. Section 6 of the arricle, as it 
stood before the home rule amendment, gave to cities of the 
first and second class in this state the power to adopt charters 
and to govern themselves in relation to their local and munici- 
pal matters.'' 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 283 

In the case of Mauff v. People, 52 Oolo. 562, 123 Pac. 101, 
speaking through Mr. Justice Bailey, it was said : 

"The distinction between the subject-matter of this suit and 
the matters involved in Denver v. Hallett, 34 Colo. 393, 83 
Pac. 1066, and Londoner v. City, 52 Colo. 15, 119 Pac 156, 
is that in the latter cases purely local matters were under con- 
aideration, while here the matter involved is one of public and 
general interest That the people of the city and county of 
Denver cannot legislate through their charter upon the latter 
subject is settled by all of our decisions." 

And again: 

'ni^There the Constitution and general laws of the state have 
not been, either by direct provision or necessary implication, 
set aside, ihey are as much in force in the city and county of 
Denver as they are in other portions of the state. The purpose 
of article 20 was to give to the people of the city and county of 
Denver exclusive control in matters of local concern only. 
. . . If by article 20 it had been undertaken to free the 
people of the city and county of Denver from the state Con- 
stitution, from statute law, and from the authority of the gen- 
eral assembly, respecting matters other than those purely of 
local concern, that article could not have been upheld." 

And further: 

"The contention is that the exclusive power having been giv- 
en to the citizens of the city and county of Denver, by article 
20, to amend their charter, or to adopt a new charter, or to adopt 
any measure as therein provided, the power is with the people 
to provide for the conduct and control of elections as they may 
see fit By every decision of this court, from the Sours case, 
supra, down to and including the case of Hilts et al. v. Markey 
et aL, decided February 21, 1912, which is the last expression 
upon this subject, it has been held that this power extends to 
liothing except matters of local concern." 

It is contended that the Hallett case, 34 Colo. 399, 83 Pac. 
1068, tends to support the contention of the city here, in the 
holding that it was the intention of article 20 to confer upon the 
"people of Denver every power possessed by the legislature in 
the making of a charter for Denver." This falls far short of a 
decision that the people of the state, when they adopted the 

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284 COLORADO SUPREME COURT. 

• 

amendment; invested Denver, or intended to invest it, with po- 
lice powers which essentially belong to the people of the whole 
state. 

The learned judge in that case could have had only in mind 
the question of the grant of municipal powers only by the legis- 
lature. 

The sole contention was that the building of an auditorium 
was not a municipal function within the meaning of article 20. 
It was not suggested that the 1/uilding of an auditorium for the 
city of Denver was a state function, or that the whole people of 
the state could have any possible interest in it. It was simply 
concluded that the city might construct an auditorium for the 
convenience, comfort, and pleasure of the people of the city, as 
it is well recognized it may do in case of public parks and boule- 
vards; in other words, that it was a municipal purpose. 

This court has heretofore recognized that there might be pro- 
visions in the Denver charter in conflict with the constitutional 
amendment when it said: 

"It may be that the people of the city and county of Denver 
have, in some particulars, by their charter provisions, exceeded 
the grant of power given them, and, if so, those matters are for 
correction in proper proceedings to that end." People v. Cas- 
siday, 50 Colo. 503, 117 Pac. 857. 

11. It is important in this connection to consider the effect 
and importance of the provision contained in the amendment 
to article 20, providing for the application of general laws with- 
^in the cities operating thereunder. The provision is as fol- 
lows: 

"The statutes of the state of Colorado, so far as applicable, 
shall continue to apply to such cities and towns, except in so 
far as superseded by the charters of such cities and towns or by 
ordinance passed pursuant to such charters." 

This language can have but one meaning, fixed and definite — 
that all statutes of a general nature shall have application with- 
in municipalities. It is the precise converse of the language 
of the grant to municipalities — of powers limited to local and 
municipal matters. 

There is perfect harmony between the language of the grant 
and the language of the reservation of power. The sum of the 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 285 

two equals the total of the state's inhCTent power, in this re- 
spect. 

If we are accurate in our observation, no other constitutional 
grant of municipal charter powers contains a similar, or any 
express, reservation; hence in this instance the language of the 
reservation must be considered in an interpretation of the grant. 
It would seem to be consonant with the spirit and purpose of 
article 20, which purpose we have so often declared was to give 
to such cities all powers of local and municipal concern only, 
to assume that all laws general in their character were intended 
to be included within the reservation above quoted. 

If, however, it be contended that some general laws were to 
be included and others not, then how may we differentiate be- 
tween a statute plainly of a general character, and regulating 
public utilities, and one of the same character, otherwise in- 
volving the public peace, the public health, the public safety, 
or the public welfare generally? 

In considering the many laws of this nature, can it be said 
that, because some of the people of the state are domiciled in 
cities, they are in any case freed from the common duties and 
obligations of citizens to the state, or that they are to be denied 
the equal protection of the laws ? 

By what rule is the court to determine which of these laws, 
of the character we are considering, are to be included in, or 
excluded from, this provision of the article, making state stat- 
utes universally applicable ? WiU we not in all such controver- 
sies be compelled by necessity to rely upon the rule that, if 
the exercise of a general police power of the state has been con- 
ferred upon municipalities, it must so appear by specific and 
unmistakable declaration of the intent to do so, to be found in 
the grant itself? 

12. There is another all-compelling reason why the contention 
of the city cannot be sustained. It is insisted that, by the mere 
use of the term ^^ocal and municipal," it was intended the in- 
herent police power of the state claimed, now rests within the 
municipality, and therefore the court should so construe it. 

It is provided by section 8 of the Constitution, article 15, 

that— • 

''The right of eminent domain shall never be abridged, nor 
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286 COLORADO SUPREME COURT. 

SO construed as to prevent the general assembly from taking llie 
property and franchises of. incorporated companies and sub- 
jecting them to public use, the same as the property of individ- 
uals; and the police powers of the state shall never be abridged 
or so construed as to permit corporations to conduct their busi- 
ness in such manner as to infringe the equal rights of indivi(^- 
uals or the general well-being of the state.'^ 

It cannot be said that this provision was repealed or in any 
wise affected by article 20 including the amendment to § 6 
thereof. It is a bulwark too sacred to our liberties to permit 
of such a contention. 

"The police power of the state shall never be abridged.'^ 
This seems in itself imperative and controlling, but the framers 
of the instrument were vigilant and they added "or so con- 
strued." H^nce, both the legislature and the courts were ex- 
pressly prohibited from invading this reserved power, either by 
legislative act or by judicial construction. 

The contention that each city operating under the amend- 
ment may regulate public utilities operating within its borders 
must apply to all alike. It follows that, if it applies to tele- 
phones, it likewise applies to railroads. In case of these utili- 
ties one company may operate in all municipalities and through- 
out the state. 

It also follows that the one utility may be regulated by as 
many powers as there are cities of the specified class within the 
state, and by the Commission as to all territory outside the 
cities. Each city may fix a different rate ; the Commission may 
fix a different rate from either city, for the same utility and 
for like service. 

Can it be denied that such a scheme would not infringe the 
equal rights of citizens of the state, or the well-being of the 
state? It would not only permit the corporations to do this, 
but would compel them to do so, regardless of the necessary dis- 
crimination between citizens of the state as to rates to be 
charged and regulations to be observed. It would require the 
deficiency of income from one city to be supplied by overcharge 
in other cities, or by the body of the state, outside the cities; 
for the Constitution, as construed by the courts, guarantees the 
reasonable expense of operation, and a reasonable return on the 

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DENVER V. MOUNTAIN STATES TELEPH. & TELBG. 00. 287 

JDvestment in public utilities in the matter of fixing the rates 
to be charged. The logical result of such a plan is confusion, 
chaos, and injustice. 

Construing a like provision of the Constitution, it was said 
by the supreme court of the state of Missouri : 

By the language of § 8, art. 15, **the legislature would be 
powerless to enact a valid law by the terms of which the right of 
the state in the exercise of its sovereign police power in the 
fixing of reasonable rates for public services could be limited 
or abridged.'^ State ex rel. City of Sedalia v. Public Service 
Commission, 275 Mo. 201, P.U.R.1919C, 507, 204 S. W. 497. 

But while the legislature is thus powerless, it is not power- 
less to enact a valid general and uniform law asserting the po- 
lice power of the state, in the particulars just mentioned, since 
there is no prohibition against this in the Constitution. Mauff 
V. People, supra. 

To adopt the contention of the city in this case would be to 
decide that the people of the state at large, by inference mere- 
ly, there being no express grant, have abdicated every inherent 
police power of the state and surrendered it to home rule cities. 
It would not only be the announcement of a principle univer- 
sally repudiated by all courts, but one, the tendency of which 
would be to destroy our whole scheme of constitutional govern- 
ment. 

My view of the matter is that the people of the state have 
given to home rule cities the right of local self^overnment, 
with all the incidental powers, including full control and super- 
vision of their local and municipal matters, but that, the regu- 
lation of public utilities not being a local or municipal matter, 
that power has been reserved by the state, and has been con- 
ferred exclusively upon the Public Utilities Commission. 

In sum and in substance, the question here is : There is no 
language in article 20, nor in the amendment thereto, that ex- 
presses the intent upon the part of the state to grant the com- 
pulsory rate-making power of the state to the cities involved. 
We are asked to write such a grant of power into the Constitu- 
tion by construction; that is to say, we must interpret the term, 
'^ocal and municipal powers," to include and intend, "sovereign 
and general powers," as well. This I cannot do. 

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288 OOLOEADO SUPREME COURT. 

13. I recapitulate the points of law applicable to tlud eflse^ 
each one abundantly supported by an undivided judicial ojMai- 
ion in this country, as follows: (1) The Public Utilities Act 
does, and was intended to, confer exclusive jurisdiction upon 
the Utilities Commission for the regulation of all public utili- 
ties in this state including those operating in all cities. (2) 
In order to sustain the contention of the city, we must hold tiie 
act void, in so far as it applies to all cities operating under arti- 
cle 20 of the Constitution. (3) In order to do this, we must 
find the act to be in conflict with that provision of that article 
of the Constitution beyond a reasonable doubt. (4) The uni- 
versal rule of law is that practical contemporaneous construc- 
tion by the legislative branch of the government is to be given 
great weight in our consideration of the question involved. 

(5) It i^ a rule of law affirmed by all courts that the power of 
compulsory rate regulation is a sovereign and general police 
power, inherent in sovereignty, as distinguished from munici- 
pal powers resting solely on the express grant of sovereignty, 

(6) It is a rule of law, afflbrmed by universal judicial opinion 
covering the whole period of government, that this sovereign 
power cannot be conferred except by language clear and un- 
mistakable, and that such a grant of power, either to a munici- 
pality or otherwise, may never be inferred. (7) Repeated de- 
cisions of this court have declared in unmistakable language 
that the powers conferred by article 20 were limited to those 
of municipal concern only. (8) That therefore, by the ex- 
press terms of article 20, and by the force of such decisions, 
any power assiuned under the charter of the city, sovereign or 
general in its nature, as distinguished from a power local or 
municipal in character, is void as being in conflict with the 
grant, and for such reason was not and could not be ratified. 
(9) That the contention of the city is repugnant to a cardinal 
principle in constitutional government, in that its effect is to 
deny a republican form of government. 

We know of no respectable judicial authority, state or Fed- 
eral, considering the precise question, which expresses a con- 
trary view to any one of the foregoing principles of the law. 

14. The issue here involves a great public question. It is 
solely between the people of the state on Ae one hand, and the 

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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. (X). 289 

people of the city on the other. No particular public utility 
is involved. No question of merit affecting the rights or in- 
terests of any one public utility is to be or can be determined 
in this proceeding. The city has elected to renounce its right 
of review, by the supreme court, of the merits of the cause, 
decided by the Commission in the case of the utility, wherein 
and out of which this certified question arose, by declining to 
appeal from the decision against it 

No great public question should be permitted by the court to 
remain obscure in the public mind. 

It is a law enacted by the constitutional lawmaking power 
of the state we are considering. It is the public alone, both of 
the city and state, whose vital interests are directly affected, and 
this public has a right to understand the policy and principle 
of the law iu question, in order that they may the better under- 
stand the construction which the court must place upon it. 

Public utility regulation was the conception of the public 
mind. Its purpose was to curb, and, if possible, prevent in- 
justice in the matter of public service, rendered by private 
interests, always loath to recognize the moral and legal rights 
of the community in such matters. All public regulation is 
therefore compulsory in character. 

No court has yet ever held that such compulsory power rested 
in any subdivision of the state, except under specific grant by 
the state. But all courts have held, on the contrary, that such 
power is inherent in sovereignty. 

The history of rate regulation is replete with failures to ac- 
complish the purpose. The earlier attempts to regulate were 
by state statutes, and applied principally to railroads. These 
jitatutes fixed maximum rates to be charged. These were of 
necessity but the arbitrary declarations of the lawmaking pow- 
er. They were without hearing or determination as to merit or 
the rights of the private or public interests involved. 

Therefore such rate regulation was universally held by the 
courts to be subject to consideration and determination by them 
as to whether or not they were unreasonable or confiscatory in 
the particular instance. The Federal courts thus assumed ju- 
risdiction in such cases generally, and at least temporarily en- 
joined enforcement, in order to determine whether or not the 

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290 COLORADO SUPREME COURT. 

Tate so arbitrarily fixed was inhibited by that provision of the 
it'ederal Constitution which provides that no person shall be 
deprived of his life, liberty, or property, without due process of 
law. 

This practice became substantially universal, and the advo- 
cates of public regulation despaired of the accomplishment of 
their purpose. Finally, there was evolved the plan, incorpo- 
rated into the Texas railroad law, the Interstate Conunerce 
Conunission Law, and into all railroad and public utility laws. 
This was by the creation of a Commission, with delegated legis- 
lative 'powers to establish rates to be charged, and other r^ula- 
tions to be observed by public utilities, upon full hearing of the 
facts in each case, and under the law controlling, with right of 
review by either party to the courts of last resort, either state 
or Federal 

This seems to have overcome in a large degree the thereto- 
fore insurmountable objection to arbitrary regulation, by legis- 
lative acts. 

That the sovereign state should create a duly empowered tri- 
bunal to hear and determine the merits of each controversy, and 
that such hearing and determination might be reviewed by the 
court of last resort in the state, was believed to satisfy the con- 
stitutional guaranty of due process of law. This now is the 
state of the Colorado law, and, whether effective or not, it seems 
to represent at this time the best thought of economists, public- 
spirited men, and legislative authority of the country on that 
subject. That this plan of public utility r^ulation has largely 
succeeded in the accomplishment of its purpose must be con- 
ceded. But that it has failed in many instances is equally ap- 
parent. 

In the administration of this character of law, as in case of 
any other law, the Greek maxim, that no law is better or more 
efficient than those chosen to administer it, finds ample exempli- 
fication. It largely depends on the personnel of Conamissions, 
and of courts who administer and construe it, as to the degree 
of right and justice which is to obtain. 

But if the contention of the city could be sustained under the 
law, and if the city by ordinance enacted by the city council, 
or by direct vote of the people, was to fix an arbitrary rate to 

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DENVER V. MOUNTAIN STATES TELEPH, & TELEG. CO, 291 

Le charged for service by any public utility, then dearly it 
would be subject to be enjoined in the Federal courts, and the 
question of its reasonableness, or whether or not it is confisca- 
tory, determined and finally, determined, by such courts. 

It will thus appear that to sustain the contention of the city, 
even though the law so permitted, would be, as a matter of pulh 
lie policy, a step backward in the progress of rate regulation for 
30 years. 

This is illustrated by the case of Denver Union Water Co. v. 
City and County of Denver, TJ. S. Supreme Court, 246 U. S. 
178, 38 Sup. Ct Eep. 278, 62 L. ed. 649, where, as late as 1916, 
the city adopted an ordinance fixing the rates to be charged by 
the water company, and which rates were held to be unreason- 
able and confiscatory, and were accordingly perpetually en- 
joined. Can the city expect any other procedure in any other 
attempted regulation by the enactment of an ordinance? And 
this was a case in which the franchise of the company had ex- 
pired. 

Can it be said that the people of the state, including the 
cities, without some S(»rt of expression, either in the Constitu- 
tion or statutes, to that effect, intended or desired to return t^ 
that hopeless and helpless state in this regard ? If so, it is with- 
in their power to write such an intent in plain language inix> 
their organic law. It is not within the province of a court to so 
write it for them. 

Garrigues, C. J., and Bailey, J., concur in the dissenting 
opinion. 

On Application for Rehearing. 

Bailey, J. While fully concurring in the dissenting opin- 
ion of Mr. Justice Scott, there are additional reasons why I 
cannot agree to the opinions of the majority, and why a rehear- 
ing should be allowed. 

It has been urged by the respondents, especially by the tele- 
phone company, that § 280 of the Charter of the City and Coun- 
ty of Denver is invalid because in conflict with the due process 
and equal protection clause of the Fourteenth Amendment to 
the Constitution of the United States, and that to oonstrue arti- 

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*292 COLORADO SUPREME OOURT. 

ele 20 of the State Confltitution as amended so as to vest in the 
city and county of Denver the jurisdiction to regulate the busi- 
ness and rates of the respondent telephone company, thus de- 
priving the Utilities Commission of that jurisdiction, is to bring 
t^e article in question into conflict with the due process clause 
of the Fourteenth Amendment above mentioned. 

Thes^ contentions seem, for the following reasons, to be well 
taken: 

. 1. Section 280 of the Charter of the City and County of 
Denver reads as follows: 

"AU' power to regukte the charges for services by public 
•utility corporations, is hereby reserved to the people, to be exer- 
cised by them in the manner herein provided for initiating an 
ordinance/* Municipal Code 1917, City and County of Den- 
very p. 146* 

* The manner of initiating an ordinance is prescribed by seo- 
^ori 273 of said charter, which reads : 

"Any proposed ordinance may be submitted to the council 
i>y petition therefor of qualified electors equal in number to at 
least 5 per cent of the last preceding vote for mayor, and such 
proposed ordinance shall be passed without alteration by the 
council, and if vetoed by the mayor shall be passed over his 
veto, within Airty days after such petition is filed, or the 
council shall refer such proposed ordinance to the qualified 
electors at the next municipal election held not less than sixty 
days after such petition is filed. If such petition contain a 
request for a special election and is signed by qualified electors 
^qual in number to at least 15 per cent of the last preceding 
vote for mayor, the ordinance thereby proposed shall be passed 
by the council without amendment or change, and if vetoed by 
the mayor, shall be passed over his veto, within thirty days 
after such petition is filed, or the council shall refer such pro- 
posed ordinance to the qualified electors at a special election 
which shall be called within thirty days, and held not less than 
sixty, nor more than ninety days after such petition is filed, 
nnless a general or special election is held within said period 
of time, in which case such proposed ordinance shall be sub- 
mitted to a vote at such election. The council shall cause such 
p«>po8ed ordinance to be published in some daily newspaper of 
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DENVER V. MOUNTAIN STATES TELEPH. & TELEG. CO. 293 

general circulation once each week until such election is held. 
No ordinance adopted by vote of the people shall be repealed or 
amended by the counciL Any provision of the charter in con- 
flict herewith is hereby repealed." Municipal Code 1917, City 
and County of Denver, p. 142. 

It is demonstrated that the method of rate regulation thus 
prescribed precludes the possibility of any hearing as the basis 
of regulation. No presumption may be indulged in favor of 
the initiated ordinance relied upon by petitioner, nor in favor 
of any other initiated ordinance enacted in pursuance of the 
section of the charter, because the court judicially knowi that 
there could have been no hearing of, or consideration given to, 
the facts upon which rate regulation, to be valid, must always 
be based. Moreover, the charter provides a method by which 
telephone users may apply for a change in rates, but affords np 
method by which the telephone company may make such appli- 
cation. These sections of the charter manifestly deny the tele- 
phone company due process of law and the equal protection of 
the law, in violation of the Fourteenth Amendment. The ma- 
jority opinions, in denying the jurisdiction of the Utilities 
Commission to regulate the rates of the respondent company, 
necessarily and inevitably enforce against the telephone com- 
pany these invalid charter amendments. 

2. Article 20 as amended is so construed by the majority 
opinions as to parcel out the telephone company, a state-wide 
utility, and its property, among as many independent cities as 
there are in the state of Colorado having a population of 2,000 
inhabitants, with the power in each city to regulate the busi- 
ness and rates of the company within its own borders, but neces- 
sarily without relation to the effect of such regulation upon the 
general service in other parts of the state, and of course with- 
out relation to the effect of such regulation upon the entire busi- 
ness or property of the company within the state. 

There is no support in our state Constitution for such con- 
fetruction, and such construction brings the Article into direct 
conflict with the dim-process clause of the Constitution of tha 
United States, and the enforcement of that construction, neces- 
sitated by the majority opinions, clearly denies to the telephone 

company due process of law. 
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294 COLORADO SUPREME COURT. 

The several opinions of the majority, so far as they relate to 
the particular matters herein discussed, although they do not 
present the same line of reasoning, have precisely the same 
effect, because they permit the city to arbitrarily fix rates for 
the telephone company, without the possibility of a hearing, 
and so plainly deny to it due process of law. 

From each of these opinions, therefore, I must dissent, as 
well for the reasons so clearly and fully discussed by Mr. Jus- 
tice Scott, as for the additional ones hereby suggested, and like- 
wise from the ruling of the majority in denying a rehearing in 
the case. 

I am authorized to state that Mr. Chief Justice Qarrigues 
and Mr. Justice Scott concur in this dissait. 



NBW JBRSKT BOARD OF PUBULC imiilTIBS OOlOaSSIONBIlS. 

EE PUBLIC SEBVICE EAILWAT COMPANY. 

Bmte» — Street railways — Cost of service. 

1. A Commission would not be justified in ordering a street rail- 
way company to return to a 6-cent fare, which, under present con- 
ditions, would result in the company's bankruptcy, unless there was a 
clear showing that obligations it had assumed for payment of fixed 
eharges were in excess of ^liat would be justified by the value of the 
property used. 

Return — Reasonableness — Bight to fair return. 

2. There is no merit in the contention that patrons are entitled 
to lower street railway fares, without regard to the effect upon the 
financial condition of the company. 

Return — Chross revenues — Street raiUoays -» Earnings under 5-oeiU 
fare, 

8. A Commission cannot order a street railway company to re- 
turn to a 5-cent fare, where it is known that costs have greatly in- 
creased, and that street railway companies all over the country had 
been permitted to increase their fares, and the highest court of the 
state has decided that the company cannot be compelled to adhere to 
a 5-cent fare. 



Rates — Street railways — New system — Test during potUieal cam- 
paign. 

Statement that fair test of new system of street railway rates 
cannot be had where it had been made an issue during the existing 
political campaign, p. 297. 
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RB FUBUO SEBYICE R. CO. 295 

Bates — Street raUttfays — Zone eysteni, 

DiflcuBsion of equities of zone system of street railway fares, p. 297. 
Bates — Street railways — Pretoar fares. 

Statement that street railway with the present cost of labox and 
materials, cannot nmain sohrent on preiwar ^ea, p. 298. 
Bates -« Street railways -« Zone or flat rate systetn. 

Discnssicm of respective merits of zone and flat street railway 
fares, p. 800. 
Bates — Street railways — Test of sone eysten^. 

Discussion of serious effect of discontinuing zone system of fares 
before giving it a fair test, p. 301. 
Bates ^ Street railways ^ Effect of lHkyeott» 

Discussion of effect of boycott of street railway rates, p. 802* 

(Gaui., Commissioner, dissents.) 
[October 28, 1919.] 

Appucatiow for permission to change from zone system of 
street railway rates to flat 7-c6nt fare; denied, but zone system 
modified. 

By the Commission: X)n July 30, 1919, this Board, by 
its report, permitted, subject to certain modifications, a trial 
of a zone plan with a schedule of tariffs or rates providing for 
the payment of 8 cents for a ride within the first zone in which 
the passenger boards a car and 2 cents for a ride in each addi- 
tional zone or part thereof traversed on the same car, in pro- 
ceedings which were then pending before it The purpose of 
the Board in permitting the plan to be filed was to test its feasi- 
bility and to test the operation thereunder, so that the results 
thereof could be used in evidence in the pending proceeding. 
The plan was put in effect on Septem^r 14, 1919, and has since 
been in operation. 

Shortly thereafter the city of Camden called to the attention 
of the Board the effect of the operation of the system in Cam- 
den and its suburbs. Much confusion attended the beginning 
of the operation of the system under the plan in Camden and 
vicinity, which affected many patrons of the road. With a de- 
sire to discourage the system and force a fiat fare of 5 cents, a 
general boycott of the lines of the railway company in Camden 
and vicinity was instituted and continues to exist. The au- 
thorities of the city of Camden requested the abrogation or 
modification of the system. 

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296 NEW JERSEY BD. OF PUBLIC UTILITY CfOMMISSIONERS. 

Upon this request a hearing was held in the city of Camden 
on September 29, 1919. Numerous witnesses were called by 
the municipal authorities of Camden, who gave testimony as 
to the objections of the residents and patrons of the line to the 
zone system, and to the effect to this hearing, and before the 
Board had arrived at a determination as to whether the zone 
system should be modified because of the objections urged on 
behalf of the people of Camden and vicinity, the preadent of 
the railway company, on October 8th, apprised the Board that 
the company was running behind $12,000 per day, of which 
sum, $4,500 was due to the conditions existing in Camden and 
vicinity, and requested permission to abandon the zone plan and 
return to the flat fare of 7 cents with a charge of 1 cent for a 
transfer. Upon this application, notice was given to all of the 
municipalities of the application, and a hearing thereon was 
held on October 16, 1919. Many representatives of the munici- 
palities appeared and expressed their views both as to the con- 
tinuation of the zone system and a return to the pre-existing 
flat fare of 7 cents and 1 cent for a transfer. To many of the 
municipalities neither the zone system nor the pre-existing flat 
fare was desirable, and it was urged that the Board should fix 
a flat fare of 6 cents as a just and reasonable rate. 

It became apparent at the hearing that much confusion ex- 
isted as to the present status of the proceeding in which the 
zone plan was permitted to be filed, and upon the suggestion 
of one of the representatives of municipalities that a confer- 
ence be held at which the representatives of the municipalities 
might meet with the officials of the railway company for a full 
discussion of the problem with a view to reaching some agree- 
ment which would be acceptable to the company as well as to 
the municipalities, an adjournment of the further hearing was 
ordered until October 2l8t The conference of the railway of- 
ficials with the representatives of the municipalities was held 
on October 20th, at the offices of the railway company in the 
city of Newark. 

It was stated to the Board at the hearing on October 21st,, 
that no agreement had been reached at this oonferenoe. Fur- 
ther, statements of the desires of the municipalities were then 
made to the Board by their respective xepreeemtatives, and the 

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RE PUBUO SERVICE R, CO. 297 

president of thb railway campany oflPered to the Board for its 
consideration a schedule of rates to be charged under the zone 
plan in modification of the fyrmer rates, and in substitution 
thereof, if the Board should determine to continue the zone 
plan with a modified schedule of rates as well as a return to 
the pre-existing flat fare of 7 cents with 1 cent for a transfer. 

[N'one disputed the fact that a fair trial of the zone system 
had not been had. Subsequent to the application of the rail- 
way company for the abrogation of the zone system, and at the 
hearing held on October 16th, the railway company reported 
that in the interim an improvement in the operation of the zone 
system had been manifest, both financially and from a traffic 
standpoint. The causes which militated against a fair trial of 
the system were numerous. The plan was instituted during a 
political primary campaign. None of the ticket issuing devices 
were installed and make-shift cash raster devices for the regis- 
tration of fares had been partially installed, thus occasioning 
much confusion both at points of heavy loading and discharging, 
resulting in pronounced delays. Some traffic delays and con- 
fusion had been anticipated as incidental to the initiation of a 
new and radical change. It was expected, however, tlfiit a fair 
trial of the plan would indicate to what extent the confusion 
and delays accompanying the installation of tiie system might 
reasonably be avoided, and what changes should be made in 
the location of zone points. The reasonable co-operation of the 
public and the company was looked for. 

Some opposition from the long haul riders to the plan, be- 
cause of the increased fares required to be charged to them 
under the plan over and above the pre-existing flat fare, was 
regarded as inevitable. The objections of the long haul riders, 
the confusion and delays occasioned by the inauguration of the 
plan with temporary equipment, and the utterances of candi- 
dates for political offices as well as the platform declaration of 
political parties, produced a condition from which it might \)e 
assumed, in the absence of other evidence, that general public 
opposition and nusimderstanding of the principle of regulating 
charges, in accordance with the distances traveled, would make 
impracticable an adjustment of fares in accordance therewith. 

From the expressions of opinion by the representatives of the 

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208 NEW JERSEY BD. OF PUBUO UTILITY COMMISSIONERS. 

municipalities, the Board is, however, convinced, that there is 4 
much more general appreciation of the equity of charging in 
accordance with a zone system than superficial observation 
would indicate. It is not meant by this that the charges and 
the details of the operation of the system, now in effect, met 
with approval. It is the concensus of opinion that the charges 
resulting under the prevailing schedule for the long-distance 
riders are too high ; that, except in cases where there is no other 
method of transportation available, these charges would not be 
paid. 

With few exceptions the company's proposal to abrogate the 
zone plan and return to a flat fare of 7 c^its with 1 cent for 
a transfer was unfavorably received. It was urged by some 
that the zone plan should be abrogated, and the company be 
required to restore the flat fare of 6 cents in effect before the 
approval by the Board of a higher charge. Many of those, 
who urged this, contended, and with evident sincerity, that if 
this were done, riding would increase to such an extent that 
the company's revenues would be equal to those which would 
accrue under a 7 cent fare. 

The ihonthly reports to the Board, which give the receipts 
for each month during which the 7 cent fare was in effect, and 
the receipts for the corresponding month of the preceding year 
under the 5 cent fare, do not sustain this contention. 

While receipts under the 7 cent fare did not increase in full 
proportion to the amount of increase in the fare, this resulting 
from some decrease in travel, they did exceed materially the 
receipts under the 6 cent f ara 

That the company cannot remain solvent and afford the serv- 
ice which the public should receive under the rate of fare which 
was adequate before the war must be recognized, as the in- 
creases in costs of labor and material since are well known. Its 
income with the increased fares which have been allowed has 
been barely sufficient to pay operating expenses, rentals, and 
fixed charges. It is apparent that these rentals and charges 
cannot be paid under a 6 cent fare except by serious impair- 
ment of service. 

[1] The Board would not be justified in ordering the com- 
pany to return to a fare which prevailed under operating con- 

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BE PUBLIC SERVICE R. CO. 299 

ditions vastly different from those now existing^ and wluch 
would result in the company's bankruptcy, except, upon a clear 
showing, that the obligations, it had assumed for the payment 
of rentals and other fixed charges, were in excess of what would 
be justified by the value of the properties used. Until the pro- 
ceeding which is now pending before the Board to determine 
the fair value of the properties of the railway company is com- 
pleted, this cannot be ascertained. In the interim, however, or 
until it clearly appears that the rentals and fixed charges being 
paid under the existing leases, are in excess of a fair return on 
the fair value of the property, any rate, fixed by the Board 
which clearly would result in revenue insufficient to pay rentals 
and fixed charges, would be against the decisions of the courts 
by which we must be bound. 

[2] That the public is justly and reasonably entitled to 
lower fares, without regard to the effect of this upon the com- 
])any under which the properties are now united and operated, 
is a contention without merit. 

Before any permanent zone plan is adopted by the Board or 
any final or permanent sdiedule of rates is permitted to be 
diarged the value of the properties of the company will be de- 
termined. The Board has required the company to submit to 
it a complete inventory and appraisal of its property. This in- 
ventory and appraisal has been checked by experts and account- 
ants employed by the Board, and subjected to the criticism of 
experts employed by associated municipalities who are ably 
lepresented by counsel. The Board is now holding hearings, at 
which testimony of experts representing the public is being 
presented. The properties are of such magnitude and extent 
that the Board cannot, in fairness to the public, hurry the pro- 
ceeding to the exclusion of the testimony of experts, who are. 
in the public employ and are submitting to the Board the re- 
sults of their study and investigation. 

At as early a date as is practicable, with due regard for 
the legitimate interests of all concerned, the proceeding will be 
concluded, and the return, which the company is fairly entitled 
to receive upon the value of its property, will be fixed, 

[3] Until this can be done, faced as the Board is with the 
fact of greatly increased costs of operation, knowing that all 

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300 NEW JERSEY BD. OP PUBLIC UTILITY COMMISSIONERS. 

oyer the country street railway companies, fairly comparable 
with that under consideration, have been permitted to charge 
more than the 5 cent rate generally prevailing before the war, 
and with the question of compelling this company to adhere to 
a 5 cent fare having been positively decided in the negative by 
our highest court, it cannot fix that rate as a just and reason- 
able rate. There remains, therefore, for consideration the ques- 
tion whether the zone plan shall be abrogated and the company's 
request for permission to return to a flat fare of 7 cents, plus 
1 cent for a transfer shall be allowed. 

It was intimated by the president of the railway company, 
that his purpose in requesting the return to the pre-existing 
fiat fare of 7 cents was in no sense final, but was likely to give 
the company immediate partial relief from the financial loss it 
was suffering under the zone plan. From the statements made, 
it is reasonable to expect that, with the restoration of the flat 
7 cent fare, the company will subsequently apply for a further 
increase in the amount thereof, should the operations under 
the said fare be insufficient. 

The Board, in its earliest report in these proceedings, an- 
nounced its conviction that the flat rate charge for electric street 
railways is 'uneconomical and inequitable, and from the experi- 
ence obtained since, it is more firmly convinced that some plan 
or method of charging, which will more equitably relate the 
eost of service to the length of haul, must be devised. This is 
not only the experience with the electric railways of this state, 
but is as well the experience of the railway systems generally. 
Inasmuch as any new system would be novel and uncertain of 
accurate determination, both as to operation and financial re- 
sults, it is particularly desirable that, with a view to the final 
determination, more extensive experience with the proposed 
system should be had so as to determine the actual results there- 
under. These actual results can only be obtained by a fair trial 
in which thwe exists complete co-operation between the public, 
the company, and its employees. It is, therefore, desirable that 
some plan to work out the principle be continued rather than 
abrogated. It would be almost fatal to the principle, which 
the Board is seeking to work out, to abandon the plan at this 
time, before it has had a fair trial. Governing agencies, else- 

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KE PUBLIC SERVICB R. CX). 801 

where in the XTnited States, making similar studies of the 
street railway problem, are watching with interest the trials o£ 
new systems. To conclude that the plan proposed here had 
failed would seriously retard the possible soliition of the prob- 
lem, and would not be justified because of the conceded fact 
that the plan has not had a fair triaL It seems to the Board,, 
therefore, that it is particularly desirable under all of the fact» 
and circumstances to continue ,the plan, with modification^ 
which will seek to meet the objections of the riders, and en- 
courage resumption of travel for the longer distances, tliiis af- 
fording to the company revenues of which, under the existing 
charges, it is deprived* These objections, insofar as they re- 
late to the location of zone points, can be dealt with as the in* 
dividual merits of each particular complaint is investigated. 
The principal objection seems to be directed to the schedule of 
rates under the plan, rather than to the plan itself, and tlm 
Board believes that objections to the fares, which accrue under 
the prevailing plan to the long haul riders, have much merit,. 
])articularly where the aggregate fare exceeds the conmiutationt 
rates charged on competing steam railroads. This can only- 
result in the abandonment of the use of the lines where other 
facilities for transportation exist A readjustment of the fare& 
under the plan is possible. 

Calculations have been made with a view to determine {her 
operating results under the flat fare of 7 cents with 1 cent for 
a transfer, to which rate the company requested permission jto 
return. The financial results of the operations under this fare 
are available to the Board in the monthly reports filed by the 
company, pursuant to the orders of the Board, during the exiat- 
ence of said fare. Calculations made by the experts of tha 
Board indicate that under a schedule of rates as follows : 

"Five cents for the first two zones under the plan and one- 
cent for each zone thereafter with a charge of one cent ior a. 
transfer.'' 

Eevenues will accrue, equal to those which would be obtained 
if a fare of 7 cents with 1 cent for a transfer should be charged] 
under the conditions which now exist 

This schedule will largely meet the wishes of many of tfae» 
municipalities in that it will permit a fair ride within the' 

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302 NEW JERSEY BD. OP PUBLIC UTILITY COBiMISSIONERS. 

limits of most municipalities for 6 cents. It will also reduce 
the charges to the long haul riders sufficiently to induce th^n 
to patronize the lines, and, in most cases, will bring the aggre- 
gate rate below the commutation rates charged by competing 
steam railroad lines. Such a schedule will ha!ve the effect of 
making the use of the lines attractive to the short haul as well 
as the long haul riders. It was the hope in the make-up of the 
prevailing schedule of rates to attract short haul riders with 
the inducement of the low fare of 3 cents. The delay occa- 
sioned in making change militated against its successful opera* 
tion, and the reports to the Board, would indicate that many of 
the short haul riders would preferably pay a 6 cent fare for 
any ride rather than suffer the delay and confusion resulting 
in making change to permit the payment of 3 cents. While re- 
sults cannot be determined in the absence of actual trial, it is 
reasonable to assimie that the change from 8 cents to 5 cents 
will not be objectionable to any considerable number of the 
company's patrons and that, in view of the large number of 
short haul riders, the revenues from this zone will increase 
materially. 

In making this report the application of the city of Camden 
for the abrogation of the zone system is incidentally disposed 
of. It is not the intention of the Board to deal in this report 
with all the details which affect traffic conditions in Camden. 
These will be ^ven further consideration by the Board with a 
view to correcting such inequalities as may appear to continue, 
with a view to bringing about a traffic situation fair to the com- 
pany and satisfactory to the people of Camden and vicinity. 
The situation in Camden is peculiar in that a systematic boy- 
cott of the company's lines has be^i instituted and is main- 
tained. While there is dissatisfaction in other parts of the 
state with the zone system as it is now in effect, there has been 
no general boycott of the company's lines because of the sys- 
tem. It is the Board's opinion that this boycott is largely due 
to a mistaken idea of the Board's authority to order a 5 cent 
fare because of the existence of ordinances enacted a number of 
years ago, which were accepted by the companies, now part of 
the Public Service Railway system, and which provides for 5 
cent fares in a number of municipalities. It is. the opinion of 
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BB PUBLIC SI^VIGE R. CO. 803 

ttie Board that the people of Camden and vicinity will, upon 
r6fiecti<Hiy appreciate the fact that the Board of Public Utility 
Commissioners cannot^ in the proper performance of its duty, 
direct the company to charge a certain rate because the riding 
public emphatically declare they wiU not use the company's 
lines unless this rate is fixed; or that they will continue to 
submit themselves to material inconvenience, and pay much 
more for other methods of transportation rather than pay the 
street railway fare approved by the Board. 

The Board in fixing rates must give due consideration to the 
rules laid down by the courts for its guidance, and to the re- 
turn which the company is lawfully entitled to receive. It is 
the hope of the Board that the people of Camden and vicinity 
will consider this question in aU of its aspects^ and will assist 
the Board in the attempt it is making, under the peculiarly try- 
ing conditions which have resulted irom the war, to solve this 
difficult probl^n with fairness to all concerned. 

The Board therefore refuses the application of the company 
to abrogate the zone plan, and to permit the company to return 
to a flat fare of 7 cents with a charge of 1 cent for a transfer. 

The Board recommends the continuation of the zone system 
with a modification of the schedule of fares thereunder pro- 
viding for a charge of 6 cents for the first two zones and 1 cent 
a zone thereafter with a penny for each transfer. 

The permission of the company to collect the charges and 
tariflFs, above indicated, shall be imposed and exacted by the 
company, and be collected only in the event that prior to the 
28th day of October, 1919, the Public Service Railway Com- 
pany shall file with this Board its acceptance, in writing, of the 
fame conditions as were set forth in the report of this Board in 
the matter of the application of the Public Service Railway 
Company for a further increase in rates of fare, dated July 30, 
1919 (P.TJ.E.1919E, 710). 

The Board will retain jurisdiction of the proceeding in which 
these rates are permitted to be filed, as herein provided, for the 
purpose of modifying or abrogating same as, and if, the condi- 
tions change, and as, and if, the results of operation warrant. 

Dated October 23, 1919. 

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S04 ^'EW JERSEY BD. OF PUBUC UTILITY OOMMISSIONMMS. 

Board of Public Utility Coinmissioners, John W. Slocum^ 
President; Alfred S. Mardi, (Jeorge F. Wright^ and Harrj L^ 
Ivnight) Commissioners. 

Gaul, Commissioner, dissenting: Concurrently with this 
report, the majority of the members of the Board have handed 
down their report in this matter, with which report I dissent^ 
for the following reasons: 

It is my opinion that the two schedules providing for a zone 
system of rates offered by the company are impractical. My 
colleagues have agreed to submit a zone plan, 5 cents for the 
first two miles and a penny a mile thereafter with a penny for a 
transfer. Although I was a believer in the justice of the zone 
system of fares, the present trial has convinced me that, un- 
less some radical change can be made in the method of fare 
collection, the delay caused by collecting fares under any zone 
system will drive more passengers away than tiie most equitable 
zone system will attract. 

It is my belief the public wants service, and is willing to pay 
for it Frequency and rapidity of service are the essentials of 
good trolley transportation. The number of riders will increase 
in proportion to the speeding up of service. Therefore, as I 
believe that any zone system of fares will slow up traffic, I 
favor, until a valuation of the property is reached by this Com- 
mission, a return to the flat fare system of 7 cents and a penny 
for a transfer, which the supreme court of this state, in review- 
ing this Board's decision, has decided is a just and reasonable 
fare. 

On Eehearing. 

On October 28, 1919, the Public Service Railway Company re- 
fused to accept the schedule of rates under the zone plan recom- 
mended by this Board in its report of October 23, 1919, and re- 
newed its application for the abandonment of the zone system 
and permission to return to the flat fare of 7 cents with one cent 
for a transfer. The concluding paragraph of the company^s 
present application is as follows: "The company is of the 
opinion, for the foregoing reasons, that the whole zone system 
project is a practical failure, at least as applied to this property, 
P.UJ1.1920A. 



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RE PUBLIC SERVICE R. 00. 806 

and should be immediately abandoned and that the company 
should at this time return to a flat fare of 7 cents with a penny 
for a transfer. The company, therefore, is unable to accept the 
recommendation of the Board and renews its application to re- 
turn to the flat fare o^T cents with a penny for a transfer, which 
rate has already been approved by the court of errors and appeals 
of the state of New Jersey. The company expressly states, how- 
ever, that this rate imder the present operating conditions, will 
only keep the company going, will not yield it any return upon 
its capital stock investment, and is not the rate to which the com- 
pany is entitled'* 

The Board dismisses the application for the folbwing rea- 
sons: (1) The application was passed on comprehensively by the 
Board in the original application and no new facts have been pre- 
sented which would justify the Board in changing its conclusions. 
The application is irregular in that it is not made pursuant to any 
section of the statute. The Board has endeavored to solve a seri- 
ous problem in a practical manner by permitting rates to become 
effective to meet changing conditions and thus enabling the com- 
pany to operate. The rejection of its last effort and the assertion 
by the company of its legal rights precludes the Board from con- 
sideration of any application excepting such as is presented to 
it in conformity and compliance with the provisions of the stat- 
ute. 

It is apparent that the application is not designed to meet the 
present situation nor the present demands of the company nor is 
it in accordance with the claims of the company as to the amount 
of revenue to which it is entitled. 

(2) The application is not made in good faith because there 
could only result further applications for increases in the flat fare. 
There is no certainty that the flat rate, sought to be restored, 
would yield as much as it formerly yielded. On the contrary, 
it is highly probable under existing conditions that it would 
yield diminished revenues to the company to an extent that would 
require further increased flat fare or sessation of service. 

(3) From the facts now before the Board in that part of the 
case in which the value of the properties of the Public Service 
Railway Company is under investigation, it is apparent that with 
the continued existence of high costs of operation, some other 
method of charging other than a flat fare will have to be con- 

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306 NEW JERSEY BD. OF ]?UBLIC UTILITY CX)MMI88I0NBBfl. 

sidered. The Board reiterates its conclusiona contained in 
former reports that it is highly desirable that the zone plan be 
permitted to have a fair trial; that a fair trial would be more 
likely to be had under the schedule of rates recommended by this 
Board than under any other rates proposed and that said schedule 
of rates would yield to the company as much revenue as the 7 
cent rate with one cent for a transfer would yield wider existing 
conditions. In proposing schedules of rates to be tried under 
the zone plan at the hearing on October 21, 1919, the president 
of the railway company stated the position of the company to be 
as follows : "It is the position of the company that it will try out 
any reasonable method that the Board might suggest, that it 
thinks, in deference to the Board, is reasonable. I do not think 
we can be expected to try a method that we think would be suici- 
dal. I think it is too serious a matter. We have lost too much. 
But these rates that I have suggested are the ones that in our 
judgment wUl come anywhere near producing the money. If the 
Board should produce some other rate which in their judgment 
and in ours too had a reasonable show to produce the money, we 
would be very glad to try it, but the day of experimentation with 
the railway is pretty nearly at an end." 

The Board assumed that the president meant what he said 
and thereupon recommended a schedule of rates which it believed 
and still believes would approximately produce as much revenue 
as the alternative flat rate would produce, and would probably do 
much toward restoring normal traffic. 

Dated, October 30, 1919. 

Board of Public Utility Commissioners; John W. Slocum, 
President, Alfred S. March, George F. Wright, and Harry L. 
Knight, Commissioners. 

Gaul, Commissioner dissenting: For the reasons heretofore ex- 
pressed, I am of the opinion that the zone fare should be abro- 
gated and the 7 cent fare with one cent for a transfer should be 
put into effect 

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PUKCHASERS OF GAS IN ALLEGANY y. KEYSTONE GAS CO. 307 
MEW YORK PIJBIjIO SERVICE COMMISSION, SECOND DISTRICT. 

PUBCHASEBS OF GAS IN INCORPOEATBD VILLAGE OF 

ALLEGANY 

i;. 

KEYSTONE GAS COMPANY. 

[Case No. 6303.] 

MAYOE OF OLEAN 

V. 

KEYSTONE GAS COMPANY. 
[Case No. 6307.1 

Behtm — Amount — Natural gas, 

1. Rates of a natural gas company which produced a return of 
about 2.5 per cent on the investment, are not unreasonable. 

Service — Power of Comtnisaion — Foreign natural gas company, 

2. The New York Commission cannot compel a foreign natural gas 
company to transport gas into New York, although, upon an inyesti- 
gation, it might determine whether the present price charged by the 
producing company to the local distributing company was reasonable, 
and, if found unreasonable, fix a lower rate. 

[November 6, 1919.] 

Complaint as to increase in natural gas rates; dismissed. 

Appearances: John K, Ward, Attorney, city of Olean, for 
complainant; Allen J. Hastings, Olean, New York, for respond- 
ent. 

Irvine, Commissioner: The Keystone Gas Company sup- 
plies natural gas in a part of the city of Olean, the village of 
Allegany, and to a few customers in the town of Allegany. 
Early in 1918 the price of gas was increased from 35 cents per 
thousand feet to 42 cents per thousand feet with a discount of 
2 cents for prompt payment. Complaints were filed against 
this increase by the city of Olean and the village of Allegany, 
but the complaints were not pressed and on November 26, 1918, 
the cases were closed without prejudice. Subsequ«itiy, a sup^ 
plemental complaint was served charging that the rate had been 
again increased to 47 cents a thousand feet (with a discount of 

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308 NEW YORK PUBLIC SERVICE COMMISSION. 

2 cents for prompt payment). The cases were then reopened 
and hearings were held. 

[1] The Keystone Gas Company is a Pennsylvania corpo- 
ration which has supplied the communities concerned for many 
years, but for at least thirty years it has had no producing 
capacity and has of late years purchased all its gas from the 
Iroquois Natural Gas Company. The Iroquois company sup- 
plies certain communities in the state of New York including 
the city of Buffalo. It produces a part of its gas in this state, 
but the greater part of its supply comes from the state of Penn- 
sylvania, in part produced by itself and in part produced by 
other corporations and sold to the Iroquois company. There is 
a community of interest between the Iroquois company and the 
other producing companies. There is no conmiunity of inter- 
est whatsoever between the Iroquois company and the Key- 
stone company. All the gas supplied to Olean and AUejgany 
comes from Pennsylvania. The entire increase in the price to 
consumers in the Keystone territory is attributable to the in- 
crease in price demanded and received by the Iroquois com- 
pany from the Keystone company. The Keystone company 
proved an investment of at least $208,000 which, after investi- 
gation by the city of Olean, remains unquestioned on the rec- 
ord. The assessed valuation is considerably more. The in- 
come of the Keystone company for the year 1918 amounted to 
about 2.5 per cent return on this investment As the order, it 
is proposed to make, is of a temporary character, it is unneces- 
sary to go into details of the income account. It is sufficient 
to say that, on the whole, the items of operating expense seem 
reasonable, and while one or two, on a close investigation, 
might be reduced, the entire elimination of these would not in- 
crease the income to anything amounting to a fair return on 
the investment The Iroquois company has served notice on 
the Keystone company that it will not furnish gas after Jan- 
uary 1, 1920. The Commission knows that during the winter 
months its capacity to furnish gas in Buffalo and other com- 
munities is strained already, but ta deprive Olean and Alle- 
gany of the supply would work a great hardship upon those com- 
munities. It is not too strong to say that such an occurrence 
would be a disaster. With the diminishing supply of natural 

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PURCHASERS OF GAS IN ALLEGANY v. KEYSTONE GAS 00. 309 

gas, it is perfectly evident that all communities accustomed to 
its use will, in the not remote future, be compelled to substitute 
other fueL At 46 cents per thousand feet these communities 
are enjoying much cheaper fuel and light than is, under pres- 
ent conditions, obtainable from other sources. 

[2] There is no interstate regulation of the transpprtation 
of natural gas. This Conunission mi^t probably institute a 
proceeding to determine whether the present price charged by 
the Iroquois company to the Keystone company is reasonable 
and, if found unreasonable, it might fix a lower price but it 
could not compel the Iroquois company to transport gas from 
Pennsylvania to New York at the price so fixed. The Keystone 
company is not earning, and cannot earn, an unreasonably high 
return at the present rate at which it must purchase its gas, 
and no other source of supply seems at present available. The 
complainants must, therefore, be dismissed, but the whole mat- 
ter may be reopened on complaint of the Keystone company, 
the city of Olean, the village of Allegany, or consumers in any 
community served at any time after December 1, 1919, or at 
such later time when the relations between the Keystone com- 
pany and the Iroquois company for the period following the 
close of the present year may be determined. 

All concur. 

Note. — A similar order was entered in Foster Studholme, as 
Mayor of the city of Olean v. Producers Gas Company, Case No. 
6748, Nov. 6, 1919. 



NEW TORK PUBLIC 8ERVIGB COMMISSION, SECOND DISTRICT. 

VILLAGE OF GOSHEN 

V. 

WALLKILL TEANSIT COMPANY. 
[Case No. 6905.] 

BaieM — Filed achedtUee * Power of utiUty * Effect, 

1. A public service corporation has the positive right to file 
sefaedtiles giving notice of a proposed change in rates without any 
action on the part of the Commission^ unless the rates affected have 

P.U.R.1920A. 



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810 NEW YORK PUBLIC SERVICE COMMISSION. 

therefcofore been fixed and are effeetiye under an order of the CommiA- 
sion, and such filing is no evidence that the Commission has approved 
the rates named in the schedule. 
CimstUutiondl law — ImpaimtetU of contract — Poioer of ComnUsHon 
to change rates, 

2. The New York Commission has jurisdiction to increase or de- 
crease rates fixed in a franchise granted by a municipality to a public 
service corporation, which reserves the right to the legislature to 
r^ulate or reduce such rates. 

[November 6, 1919.] 

Complaint as to proposed increase in passenger fare; 
ordered that Commission has jurisdiction to decide the case 
upon the merits. 

Appearances: Philip A. Eorty, Esq., corporation counsel 
for the village of Goshen, New York. 

BarhitCy Commissioner: The Wallkill Transit Company, 
operating a street surface railroad which extends within the 
city of Middletown, the village of Goshen, and between the two 
municipalities, has filed with this Commission a proposed new 
schedule of increased rates which names a 15-cent fare between 
any point in the village to any point in the city in either direc- 
tion. The village of Goshen now brings this proceeding 
against the traction company, and alleges that it objects to the 
jurisdiction of this Commission to grant the increase of fare 
or to approve the schedule in the particular named in the peti- 
tion, upon the ground that in a franchise granted to the pred- 
ecessor in interest of the traction company by the village in 
1894, it was provided that a single fare of only 10 cents should 
be charged for transportation between any point in the village 
of Goshen and any point in the city of Middletown in either 
direction; that the said franchise is a valid and enforceable 
contract, and that the defendant company cannot legally in- 
crease its fare, and that this Commission has no jurisdiction 
to authorize and approve the increase, and the village asks that 
the Commission refuse jurisdiction of the application, and 
that said proceeding be dismissed. 

The company, in its answer, denies that the franchise, to 
which reference is made, deprives the Public Service Commis- 
sion of authority to regulate the rate of fare between the vil- 
lage of Goshen and the city of Middletown, and then makes 

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GOSHEN y. WALLKILL JRANSIT CO. au 

all^ations with regard to its financial condition which, it is 
claimed, justify the increased rate. 

[1] If the allegations of the petition that the Conunission 
is without authority to authorize and approve an increase of 
fare or to consider this application, coupled with the demand 
that the Commission refuse jurisdiction of the application, and 
that said proceeding be dismissed, refer to the proceedings of 
the company in filing a schedule and putting into effect in- 
creased fares, the implication contained in the petition is 
founded on error. 

The theory seems to be quite prevalent that, when a public 
service corporation files a new schedule of rates, it must be 
done with the consent and approval of this Conmaission and 
that such filing is evidence that the Commission has approved 
the rates it contains. Such belief is not founded upon the stat- 
utes. Schedules affecting rates are filed as a positive right 
under the law and they go into effect within a certain prescribed 
time without any action on the part of the Commission, unless 
the rates affected have theretofore been fixed and are effective?' 
under an order of the Commission. 

The only control that the Commission has over the schedules, 
except in the case of common carriers, to suspend their effect 
for a limited period, is that after they are filed, and a reason- 
able notice has been given to the company filing the schedules, 
and a hearing has been had, the Commission may make such 
changes in the schedules as may be warranted by the evidence. 

At the hearing it was stipulated by the parties that the only 
question then to be presented to the Commission was as to the 
jurisdiction of the Commission to make a determination as to 
the validity of the new rate, in view of the franchise agreement 
between the village of Goshen and the company. 

[2] The village of Goshen claims that under the authority 
of Quinby v. Public Service Commission, 223 N. Y. 244, 
P.U.R.1918D, 30, 119 N. E. 438, 8 A. L. R 685, commonly 
called the "Quinby case,'^ this Commission has no authority to 
grant increased fares to the defendant company. 

It may be said that if the Quinby case controls the dispo- 
sition of this matter, the Commission has not only no authority 
to grant increased fares, btit also has no authority to decrease 

P.U.R.1920A. 



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312 NEW YORK PUBIJC SERVICE COMMISSION. 

any fares now in effect. The case in question was decided not 
upon a lack of power in the legislature to disregard a franchise 
agreement, which question was left open, but upon the failure 
of the legislature to grant to the Public Service Commission 
authority to fix fares in the face of a positive agreement as to 
such fares made between the municipality and the company. 
The case decided arose over a question of increasing fares, but 
the reasoning of the court is equally applicable to a demand to 
decrease fares. In the opinion of the court, 223 N. Y. 244, at 
pages 263-264, in speaking of franchise agreements, the court 
says: "As it has often been held in connections other than 
that of legislative power over them that such agreements are 
valid, it may well be inferred that the legislature excluded 
them from consideration by failure to mention them and that it 
has made no attempt to turn them over to the Public Service 
-Commission for revision." 

In the Quinby case the court had before it for consideration 
a contract made between the city of Rochester and the street 
railway company, which concerned fares in the public streets 
of that municipality alone. Here the facts are different: The 
Wallkill Transit Company is an interurban road. In the vil- 
lage of Goshen it passes partly over the public streets and part- 
ly over private right of way; it then passes through two town- 
ships on the highway and over private right of way until it 
reaches the city of Middletowiu There are about four miles of 
tra<!k in that city, the greater portion of which is in the public 
streets and a small portion on private right of way. The fran- 
chise granted by the village of Goshen does not attempt to limit 
the fare within the village but .provides that but a single fare 
of 10 cents shall be charged for transportation from any point 
in the village of Goshen to or from any point in the city of 
Middletown- 

In the Quinby case, the basis of the decision was a legal 
binding contract made under authority derived from § 18 of 
Art. III. of the state Constitution. In the case at bar,, the 
contract was not made under and pursuant to the iMX)visions of 
the Constitution. The Constitution provides that no law shall 
authorize the construction of a street railroad which does not 
provide for the consent of the local authorities having control of 

P.U.R.1920A. 



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GOSHEN y, WALLKILL TRANSIT CO. 813 

that portion of the street upon which it is proposed to construct 
or operate the road. The larger part of the road of the Wallkill 
Transit Company is not and cannot be under the control of the 
local authorities of the town of Goshen. 

The distinction between an urban road passing entirely over 
public streets, like the one under consideration in the Quinby 
case, and an interurban road running both in public streets 
and on private right of way like the one with which we are 
concerned in this case, is well pointed out by Mr. Justice Hin- 
man in Eoehn v. Public Service Commission, 107 Misc. 151, 
P.U.E.1919D, 953, 176 N. Y. Supp. 147. In fact it appears 
from later decisions of the court of appeals in which the Quin- 
by case is discussed, that it is intended to limit the decision in 
that case strictly to the facts then before the court. See Peo- 
ple ex reL Village of South Glens Falls v. Public Service Com- 
mission, 225 N. T. 216, P.U.R.1919C, 874, 121 N*. E. 777; 
International E. Co. v. Public Service Commission, 226 N. Y. 
474, P.U.R.1919F, 355, 124 N. E. 123. 

The decision of the case under consideration is controlled 
rather by the International Eailway case, supra, than by the 
Quinby case. In the International Eailway case this Commis- 
sion was called iipon to regulate the rate of fare charged by 
the company named within the city of Buffalo which had been 
fixed at 5 cents, in a franchise granted by the city to one of the 
predecessors in interest of the International Company under 
what is known as the "Milbum Agreement." This agreement 
contains a clause in the following words: "Nothing in this 
contract contained shall be construed to prevent the legislature 
from r^ulating the fares of said companies, or either of them,*' 
and the court in construing this agreement said: ^This is a 
case where the local authorities, in imposing a condition, have 
consented that the legislature may change it, and have thus 
renounced the right of forfeiture or revocation that might 
otherwise be theirs^" and again, "In the light of this provision, 
amendment by legislation. must be held to have been as much 
within the contemplation of the parties as amendment by 
agreement . . . There is nothing to fihow that we have no 
right to assume that the reservation of the power of the state 
was for the benefit of oHe of the parties to the exclusion of the 

P.U.R.1920A. 



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314 NEW YORK PUBLIC SERVICE COMMISSION. 

other. The power to regulate rates is the power to increase 
them if inadequate, just as truly as it is the power to reduce 
them if excessive. ... Is there anything in the attempted 
distinction between regulation directly by the legislature and 
regulation indirectly through a Commission? The Public 
Service Commission is the delegate of the legislature; and reg- 
ulation by the one is regulation by the other." 

In the franchise granted by the village of Goshen to the com- 
pany we find this provision: "This consent is given upon the 
following terms and expressed conditions, to wit: — First, 
This consent is given upon the expressed condition that the prO' 
visions of Art. IV. of the Tlailroad Law' known and designat- 
ed as Chapter 565 of the Laws of 1890, as amended and entitled 
^An Act in Relation to Railroads,' consisting of Chapter 39 of 
the General Laws, shall be complied with, etc." If we examine 
§ 101 of the statute in question, we find, after a provision 
which names five cents as the maximum rate, these words: 
^The legislature expressly reserves the right to regulate and 
reduce the rate of fare on any railroad constructed and operat- 
ed, wholly or in part, under such chapter or under the provi- 
sions of this article." 

Using the thought of the court of appeals in the Interna- 
tional Railway case, supra, "to regulate" gives the power to 
increase as well as decrease, and regulation by this Commission 
is regulation by the legislatura The parties made the statute 
s. part of their agreement They fixed the fare pro tempore 
but they plainly agreed to allow the legislature to change the 
rate when that body elected so to do. 

Counsel for the village of Goshen in his argument before 
the sitting Commissioner made the point that the legislature 
has no power to interfere with the contract made between the 
village of Goshen and the railroad company. In view of the 
character of the contract between the village and the company, 
which incorporates a statute which expressly provides that the 
legislature may regulate the rate of fare, it is unnecessary to 
discuss at length that contention. The answer, in short, is, 
that by assuming jurisdiction in this case, the Commission 
does not contravene the terms of the franchise but upholds and 
<K)mplies with its terms. To again quote from the International 

P.U.R.1920A. 



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GOSHEN V. WALLIOLL TRANSIT CO. 316 

<5a8o: ''Municipality and railroad have joined in the declara- 
tion that the rate fixed by their agreement shall be, not final, 
but provisional. It is to be subject, in case of need, to re-ex- 
amination and readjustment by the agents of the state. The 
need, that was foreseen as possible, has arisen. In upholding 
the jurisdiction of the Commission to deal with it, we do not 
over-ride the conditions of the franchise. We heed and enforce 
them. There are times when the police power modifies a con- 
tract in spite of the intention of those who have contracted. 
Here its action is in aid of their intention. The covenant which 
limits rates is a condition of the consent, but only in equal 
measure with the covenant preserving and defining the power 
of amendment 

So far as the power of the Commission is concerned, the result 
is the same as if no condition had been imposed at all." 

The Commission must hold that it has jurisdiction to decide 
this case upon the merits. 

Commissioners Hill, Irvine, and Fennell concur in result; 
Commissioner Kellogg concurs in result upon the authority of, 
and for the reasons stated, in the opinion of Mr. Justice Hin- 
man in matter of Koehn v. Public Service Commission, 107 
Misc. 161, P.U.E.1919D, 953, 176 N. Y. Supp. 147. 



PCNNSYIiVANIA PUBLIC S£RVICB COMMISSION. 

CHABLES M. WALDRON 

i;. 

MIINCY WATEB SUPPLY COMPANY. 

[Complaint Docket No. 2169.] 

ViUuation — Going value — NeceaaUy of consideration, 

1. The Pennsylvania Public Service Company Law requires going 
concern value to be considered in arriving at the fair value of the 
property of a utility. 

VahMMHon — Working capital — Necessity of aUowanoe for, 

2. Working capital it, in most if not in all instances, necessary 
to the proper functioning of any utility, and an allowance for that 
purpose should be made. 

Security issues ~ Antount — Bonds. 

3. A public utility whose outstanding bonda oover» or more than 
P.U.R.lft20^ 



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316 PENNSYLVANIA PUBLIC SERVICE COMMISSION. 

cover, the total value of the property of the plant, cannot, hope to 
attract additional capital to peet, from time to time, its corporate 
requirements, and such a situation n^bessarily discredits bonds with 
the investing public. 
Bates — Water — I^otr rates to large oeneumers — Vnfaimeas. 

4. Rates for water to large consumers as low as 3 miles per 1000 
gallons and in no instance higher than 2.6 cents per 1000 gallons, are 
manifestly unjust per se to the company and to the other consumers* 

[November 6, 1919.] 

Complaint against increase in water rates; sustained and 
company ordered to file a new schedule. 

Ainey, Chairman: The experts of the complainant and 
respondent, sitting with the engineering representatives of the 
Public Service Commission and constituting a valuation boards 
have agreed upon the reproduction new cost of respondent's 
property devoted to public service, and upon the factors of 
depreciation to be deducted therefrom. In so doing they have 
taken into consideration, and made due allowance, for all the 
elements entering into a proper conclusion as to this measure 
of fair value. They did not consider or include going concern 
value or working capital. 

It was impossible for them to ascertain the historical or 
original cost of respondent's plant because of the absence of 
books which would give this information. They have, how- 
ever, with definiteness and clarity, presented the facts ascer- 
tained by them, and their conclusions therefrom so that we may 
unhesitatingly accept their joint judgment and use it, after 
giving due consideration to the going concern value of respond- 
ent's property and making an allowance for working capital, 
as a measure by which to determine the fair value of this prop- 
erty for rate-making purposes. 

The complaint as filed was against increases in water rates 
proposed by a schedule filed with the Conmiission. It also 
alleged inadequacy of service. The latter feature of the com- 
plaint was abandoned during the hearings, and, therefore, the 
question open for the Commission's determination is confined 
to an inquiry into the reasonableness of the rates which respond- 
ent may impose upon its patrons. 

The valuation board found that the reproduction cost new^ 

P.U.IL1920A. . 



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WALDRON V. MUKCY WATER SUPPLY CO. 817 

exclusive of working capital, was $85,860, and that, after de- 
ducting accrued depreciation, that item would be reduced to 
$64,520. They also determined that the annual allowance for 
depreciation should be $1,300. 

[1, 2] The Public Service Company Law requires going 
concern value should be considered in arriving at the fair value 
of the property. Working capital is in most, if not in all, in- 
ftances necessary to the proper functioning of any utility, and 
an allowance for that purpose should be made. With all the 
evidence before us, and having in mind statutory elements 
which we may take into consideration, we are of the opinion 
that the fair value of respondent's property used and useful, 
considered as a going concern, and devoted to public purposes, 
is $70,000, and upon this, as a rate base, that the respondent 
is entitled to a fair return out of imposed rates of $4,900 
Accepting the judgment of all the experts that $1,300 per an* 
num is the proper allowance for depreciation, in order that tho 
property may be maintained in a good condition for public 
service, we have left open for determination tl;ie one factor, the 
cost of operation. Preliminary to it, a brief review of the com- 
pany's history and the character of its property is pertinent. 
The respondent's plant is a combined gravity and pumping 
water system. It serves a population in the borough of Muncy 
which in 1910 was approximately nineteen hundred. In 1918 
there were three hundred and fifty-six domestic flat rate con- 
sumers, ten conmiercial consumers of which seven were me- 
tered, and forty-five fire hydrants, forty-one of which were paid 
for by the borough. The plant was built in 1889, improved in 
1899, and a filter constructed in 1913. The source of supply 
is Glade run. The intake is approximately two and one-half 
miles from Muncy from which point water is carried by giav- 
ity to a distributing reservoir overlooking the town and having 
1,500,000 gallons capacity. There were periods when the 
Glade run supply was inadequate, and it became necessary to 
supplement the same by water from the Susquehanna river 
which passes through a slow sand filter and is pumped directly 
into the distribution system. There are approximately 9 miles 

of supply and distributing lines. 
P.UJR.1926A. 



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318 PENNSYLVANIA PUBUC SERVICE COMMISSION. 

The present company is unfortunate in its financial history 
and in its management The works were originally ccmstmct- 
ed by James P. Hardie. It then became the property of the 
Muncy Water Company, and later it was purchased by the 
Muncy Water Supply Company, the present owner^ The in- 
termediary between the Muncy Water Company and the 
respondent was the secretary of the latter company, and he 
was authorized by respondent to purchase the works and to re- 
ceive therefor, about 1898, $74,000 in stock, out of the total 
$76,000 authorized, and $50,000 out of the $75,000 first mort- 
gage five per cent bonds. In 1899 the respondent entered into 
a contract with the Continental Water Works Company where- 
by the latter was to receive $20,000 of the first mortgage bonds, 
in consideration of certain improvements which it agreed to 
undertake in connection with the dam, intake, and reservoir, 
and the laying of certain mains. Three thousand five hundred 
dollars in bonds were given for engineering and other expenses. 
The amount of bonds issued was $73,600, and is still outstand- 
ing, and upon which no interest has been paid in recent years, 
and no dividends have been declared on the capital stock. 

[3] It is an irresistible conclusion from the evidence that 
the bonds issued covered, and perhaps more than covered, the 
total property value of the plant, and that the stock was not 
supported by any adequate consideration. Such a situation 
brings its own condemnation. A company under such circum- 
stances cannot hope to attract additional capital to meet, from 
time to time, its corporate requirements, and it necessarily 
discredits this kind of securities with the investing public. 

Counsel for respondent, in brief filed, asks for the allowance 
of a gross revenue of $12,500.33. This is based in part upon 
the continuance of the operating expenses for the year 1918 of 
$6,683.93. In that year there were approximately $1,000 of 
extraordinary expense in the repair of the distribution lines 
not likely soon to occur again, or of such a nature as should not 
be made an annual charge against the ratepayers. The operat- 
ing costs for the year 1915 were $4,729.96; 1916, $2,872.98; 
1917, $3,725.95. Making due allowance for the increase in 
costs of coal and supplies, and for increases in salaries for emi- 
ployees and superintendence, which under present day condi- 

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WALDRON V. MUNOY WATER SUPPLY CO. 



819 



titas ought to be made, we are of the opinion that $5,800 for 
the annual costs of operation is not tmreasonable. Bringing 
together the several items, the siunmation of which determine 
the amount of allowable gross revenue, we have operating costs 
$6,800, annual depreciation $1,300, fair return $4,900; total 
$12,000, which we conclude is a just and reasonable amount 
for the respondent to receive and its consumers to pay. This 
ram must be apportioned reasonably and equitably among the 
respondent's patrons, and classified in its filed tariff. The real 
diflSculty in the case arises at this point and is largely due to 
the company's practices. 

The company has so far departed from its filed tariff in col- 
lection of rates, particularly metered rates, that it is difficult for 
us to determine from its experience just what is the proper allo- 
cation to be made among its several consumers in order that 
it may receive the required revenue. 

[4] It is rather startling to note the inequalities which have 
resulted from its arbitrary and unwarranted violation of the 
terms of its tariff schedule in making collections. All of its 
metered consumers, six in number, are comparatively large 
users of water; it has one consumer properly of this class con- 
cerning which the company reported "meter out of order," 
and for whom it fixed, outside of its tariff provisions, a flat 
rate of $00. Three others are charged flat rates of $800, $200 
and $75 respectively, without any schedule basis for such classi- 
fications. Three of the meters in use register in terms of 
(!ubic feet and the remaining three in gallons. Reducing to a 
per gallon basis on the consumption data which the respondent 
offered in evidence, we have the following results: 



Consumer. 


Consumption 
per year. 


Average 

rate per 
Mgal. 


Amount 
under 
tariff. 


Actually 
colleeted. 


Average 
rate paid 
per M gal. 


No. 1 

No. 2 

No. 3 

No. 4 ..... 

No. 6 

No. 6 


4,400,000 gal. 
11,640,000 gal. 

6,239,000 gal. 
13.022,000 gaL 
46,500,000 gal. 
26,500,000 gal. 


.12 
.10 
.12 
.10 
.07 
.08 


$527.00 
1,164.00 
627.00 
1,302.00 
3.260.00 
2,120.00 


$76.88 
90.90 
82.50 
836.86 
137.42 
446.04 


$.0175 
.0086 
.0157 
.026 
.003 
.017 




$9,000.00 


$1,179.59 





It will be observed that under the old rates, applied to the 

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S20 PENNSYLVANIA PUBUC SERVICE COMMISSION. 

consumption as metered and reported, the company should have 
collected $9,000 from these six patrons, whereas it actually col- 
lected about $1,180, making a net loss to the company of 
$7,820, Under this showing the company was famishing 
water at rates as low as 3 mills per thousand gallons, and in 
no instance, as noted, higher than 2.6 cents. Manifestly these 
collected amounts for the water consumed are per se unjust to 
the company and the other consumers. The analysis of the old 
rate schedule shows that it was calculated to yield to the com- 
pany, if its collections had been properly made (including the 
$7,820 above referred to), approximately $16,000, yet the com- 
pany collected but $8,200. The new tariff against which com- 
plaint was filed would, on the same basis of metered consump- 
tion, yield upwards of $18,350. Both amounts are ip excess of 
what the company, by evidence and argument, asks to be 
allowed, and larger than the Commission by this report finds to 
be just and reasonable 

The new schedule imposes no substantial change or increase 
upon these metered consumers, but it increases in gross the 
rates for domestic consumption from about $4,727.50 to 
$6,858.50. The evidence discloses that these domestic con- 
sumers have very generally paid the rates imposed upon them 
by the old tariff, and it would appear that the respondent under 
the new tariff, by levying upon them an increase, approximately 
45 per cent, expects to make up in part the deficiency caused 
by its failure to collect its filed rates from its other classes of 
consumers. In fact one of the ofiiccrs of the respondent water 
company rather naively suggested that he would continue to 
collect from the metered patrons substantially the same amounts 
he has heretofore accepted. It may be that the metered rates 
as filed, either under the old or new tariff, are too high, but 
the method by which this inequality should and must be cor- 
rected is to change the filed rates under the procedure provided 
by the Public Service Company Law, and not according to the 
past practices of the company. There are other and somewhat 
similar violations of the company's tariff obligations, but it 
would be of no particular use to further prolong this discussion 
by specifying thenu The correction will result from following 

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WALDRON V. MUNCY WATER SUPPLY 00. 321 

the aacompanying order. Keither the new nor the precedinir 
tariff schedule can stand. 

The complaint should be sustained, and the respondent re- 
quired, within two weeks of the service of the accompanying 
order, to file with the Commission a just and reasonable rate 
schedule, equitably apportioning its charges among its patrons, 
and calculated to produce a gross revenue of $12,000. When 
60 filed and approved by the Commission, it should be strictly 
adhered to by the respondent. The rate experts and account- 
ants of the Commission will, if called upon, render assistance 
in formulating such a schedule, and in placing the accounts of 
the respondent company on a better and more business like basis 
In accordance with the requirements of the uniform system of 
accounting heretofore adopted. 



PBNKSTIiVANIA PUBIjIO sbryicb coMiassioir. 

BOEOUGH OP SELLEESVILLE 

V. 

HIGHLAND GAS COMPANY. 

[Complaint Docket No. 2319.] 

GILBERT L. THOMPSON 

V. 

HIGHLAND GAS COMPANY. 

[Complaint Docket No. 2327.] 

BOBOTJGH OF PERKASIE 

v. 

HIGHLAND GAS COMPANY. 

[Complaint Docket No. 282S.] 

C&nBHtuUQfial law — Impairment of contract — Power of Commission 
to change contract rates. 

1. An ordinance fixing ratet does not preclude the PennsjlYABia 
CommiflBion from inquiring into the reasonableness of suoh rates. 

Ratms — Kind — Beadiness^to-serve. 

2. A "readiness-to-Berye" charge is based upon the fact that H 
P.VJU920A. 21 



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322 PENNSYLVANIA PUBUC SERVICE COMMISSION. 

cost the utility money to keep the plant in condition to render im- 
mediate service to each of its patrons, whether he draws upon it or 
not. 



Rates — Kind — ReadinesS'tO'Serve — Consumption. 

Discussion of relation of readiness-to-serre charge and consump- 
tion charge, p. 322. 
Rates — Kind — Readiness-tO'Serve charge. 

Discussion of amount of service charge as affecting amount of con- 
sumption charge, p. 323. 

[October 7, 1919.) 
Complaint against gas rates; dismissed* 

By the Commission: These three complaints against a tar- 
iff schedule of respondent company were filed prior to its effec- 
tive date September 1, 1918. Of the three complainants, only 
Gilbert H. Thompson, a resident of Perkasie, is a consumer of 
respondent's gas. Respondent denied the material allegations 
of the complaints, which were heard jointly, and will be dis- 
posed of together. Complainants offered no evidence to contro- 
vert the testimony of respondent's witnesses, and the hearings 
were closed on their uncontradicted statements as given in chief 
and under cross-examination of complainants' counsel. 

The respondent is chartered for the purpose of the manufac- 
ture and supply of gas for light, heat, and fuel to the public in 
certain boroughs and townships in Bucks county. By its tariff 
respondent has established a ready-to-serve charge of 75 cents 
per month, and an initial meter rate of $1.35 per thousand 
cubic feet, with lesser commodity rates for consumptions in ex- 
cess of 5000 cubic feet per month. 

The complaints of the two boroughs allege that the new 
schedule is inequitable and discriminatory against the small 
consumer; also that, although the proposed rate of $1.35 per 
thousand cubic feet for the first 5000 feet is less than the rate 
of $1.50 per thousand cubic feet authorized by existing ordi- 
nances, the ready-to-serve charge of 75 cents per month in- 
creased the total to an amount in excess of the ordinance rates, 
and thus violated them; and that the ready-to-serve charge 
places an unjust and unfair burden upon the consumers of gas. 
The complaint of Gr. L. Thompson contains the same allega- 
tions, and the further one that under the proposed tariff, he 

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SELLERSVILLE v. HIGHLAND,GAS CX). 323 

ivill be compelled to pay the additional sum of $9 per annum, 
ready-to-serve charge, which amount he considers exorbitant 
and unfair. 

The issue presented involves the determination of three ques- 
tion: (1) the legality of the rates fixed by the several ordi- 
nances; (2) the legality of the ready-to-serve charge of 76 cents 
per montJb; (3) the reasonableness of the ready-to-serve charge* 
The metered rates for consumption of gas in excess of 600D 
cubic feet- were not attacked, but in reaching a conclusion the 
whole rate structure including the readiness-to-serve charge 
must be considered. 

[1] The supreme court in Leiper v. Baltimore & P. R. Oo. 
262 Pa. 328, P.UiR.1919C, 397, 105 AtL 651, has determined 
the law which must guide us in disposing of the first question. 
That decision is authority for our conclusion, that an ordinance 
fixing rates does not preclude the Commission from inquiring 
into the reasonableness of the same. 

[2] It is a popular error to say, that a "readiness-to-serve'^ 
charge requires consumers to pay for that which they do not re- 
ceive. This is a wholly fallacious conception. Such charges 
are based upon the fact that the plant must be kept in a condi- 
tion to render immediate service to each of its patrons whether 
he draws upon it or not. It costs the company money to be 
ready at all times to render such service. For a supply of gas 
must be kept in the mains and pipes to the consumers business 
ready for his immediate and instant use when he desires it, and 
notwithstanding he nafay not light it at alL In some respects 
it is comparable to the telephone which a patron has installed 
in house or office, ready tq transmit messages whether it 'is act- 
ually used by the patrons or not, and also to the charge for a 
taxicab or automobile which a patron may hold awaiting his 
use while on visits to store, house, or office. If such charges are 
not imposed upon the rate payers in the form of a ready-to-serve 
charge, they must of necessity appear in some other form, for 
the gross amount, which any company is permitted to obtain 
from its patrons, is made up of two elements of service actually 
rendered them, "readiness-to-serve" and "consumption." If 
the readiness-to-serve charge is lowered, the consumption charge 
must be raised, and if the readinessrto-serve is eliminated as a 

P.UJL1920A. 



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324 PENNSYLVANIA PUBLIC SERVICE COMMISSION. 

separate item, then it will be necessary to include this cost in 
some other form. 

Eeadiness-to-eerve includes those items of expense of keep- 
ing the gas or water in the pipes ready to be used, and the con- 
sumption diarge begins where this readiness-to-serve expense 
' ends, and the two together make up the proper charge to the 
consumer, whether presented in one figure or separated into two 
elements. 

The real question, which confronts the public and the Com- 
mission, is not with respect to the legality of such charges^ but 
whether there be reasonableness in amount under the testimony. 
I'hia leaves for determination the third question: Is respond- 
ent's ready-to-serve charge of 75 cents per month unjust, un- 
fair, and unreasonable? 

Respondent began to do business in 1911. By 1918, it was 
eerving approximately 1155 patrons. Most of its consumers 
are very small users of gas, only 12 using in excess of 10,000 
cubic feet per month. The connections are metered, and prac- 
tically all meters are of the same size. Respondent's business 
consists chiefly of furnishing fuel for domestic purposes, and 
practically all the consumption occurs during the spring, sum- 
mer, and autumn months. 

The sales for 1917 totaled 13,617,800 cubic feet, or an aver- 
age of less than 1000 cubic feet per month per patron. In this 
year an average of 22 per cent of the services, measured in 
'terms of consumer months, did not use any gas at all; 64 per 
<3ent used 1000 or less cubic feet per month, while 98 per cent 
'(which of course, includes the 54 per cent above referred to) 
used less than the initial block of 5000 cubic feet per month. 
It is thus evident that respondent has an unusually large num- 
ber of small consumers, and that the rate previously in effect, 
which contained neither minimum nor ready-to-serve charges, 
did not and could not distribute the burden equitably. 

Respondent's books, examined by a certified accountant as of 
April 30, 1918, show that respondent has actually expended 
$*il2^182.20 for its physical property. Of this sum $16,000 
represents real estate and gas plant, the balance covering addi- 
tions, betterments, and extensions. 

The company has never paid any salaries to its officerij; nor 
P.C.K.1W0A. 



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SELLERSVILLE ▼. HIGHLAND GAS CO. 325 

paid dividends ; it did not have sufficient funds to meet interest 
payments on its bonds at numerous interest paying periods, and 
was dependent upon friendly stockholders and directors to ad- 
vance the amounts for which the company's notes were issued. 
The amount of interest thus advanced approximates $22,000. 

The gross income of respondent for the year ended Decem- 
ber 31, 1917, was $19,309.65 ; its total operating expenses $14,* 
148.79, leaving the sum of $5,160.85 available as a reserve for 
depreciation in order to keep the property in a good condition 
to render public service, and for fair return. For the year 
ended December 31, 1918, the gross revenue was $25,271.28, 
of which amount the sum of $2,456.25 was produced by the 
ready-to-serve charge in effect during the last four months. 
The total operating expenses for this year were $18,887.36, 
leaving the sum of $6,383,92 available for depreciation and fair 
return. 

Respondent estimates that by applying the new rates to its 
1918 volume of business, its gross revenues for 1919 will 
approximate $28,000 ; its operating expenses, $18,900 thus leav- 
ing for depreciation and fair return the sum of $9,100. This 
estimate is based on a retention of the number of meters in serv- 
ice on the effective date of the new tariff. 

The testimony discloses, however, that by February, 1919, 
after five months operation of the proposed rates, respondent 
lost approximately 400 customers, with a consequent estimated 
annual shrinkage from the ready-to-serve charge alone of 
$3,600, and without any regard to the loss of revenue from 
consumption. Assuming, however, that some of this loss may 
be recouped, it is safe to estimate the annual minimum loss 
from the ready-to-serve charge at $3,000. This would reduce 
the estimated amount available for depreciation and fair return 
on the 1918 volume of business, from $9,100 to $6,100. 

It was urged by counsel for complainants, that^the price of 
$1.35 per M. for the initial block of 5,000, or less, cubic feet 
of consumption per month, plus the monthly stand-ready charge 
of 75 cents, was high. If respondent were to reduce its readi- 
ness-to-serve charge it would require a corresponding increase 
in the consumption rates to make up the deficiency, but this 
would not result in any material advantage to the ratepayers., 

P.U.R.1020A. 



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326 PENNSYLVANIA PUBLIC SERVICE COMMISSION. 

It is the desire of the Commission equitably to distribute the 
total rate burden among all the patrons of the company, and 
the gross amount of $9,100, which it is anticipated, the pres- 
ent rates would yield, is not more than the law requires us to 
allow the respondent. As heretofore pointed out, the situation 
which confronts the company and its patrons, and likewise this 
Commission, is that there is such a large percentage of small 
consumers who do not use the gas excepting for cooking, and 
then only for a limited portion of the year. In the light of all 
these conditions, we cannot say that the respondent's ready-to- 
serve charge of 75 cents per month, when added to the meter 
rates, will yield too great a revenue or be unjust or unreason- 
able. 

Under the circumstances it does not appear necessary to de- 
termine the fair value of respondent's property used and useful 
in public service. 

The complaints will be dismissed and an order will issue 
accordingly. 



ILIilNOIS PUBIilO UTILITIES COMMISSION 

PUBLIC UTILITIES COMMISSION* 

V. 

SPRINGFIELD GAS & ELECTRIC COMPANY. 

[No. 9022.] 

Discrimination — Rates — Rebate because of defective meter* 

The Illinois Public Utilities Act does not authorize a utility to 
make any reduction in the amount of a consumer's bill as shown by 
the meter, although it is alleged that the meter is defective, a proper 
procedure being for the consumer to pay the bill and seek reparation 
of the overcharge in a proceeding before the Commission. 

[November 11, 1919.] 

Citation to show cause for alleged discrimination by settling 
certain bills for heating service at less than the schedule of rates 
on file with the Commission ; respondent ordered to take proper 
measure to collect the full amount of its bills. 

P.U.R.1920A. 



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PUBLIC UTILITIES COM. v. SPRINGFIELD GAS & E. CO. 327 

By the Commission: On March 25, 1919, the Commission 
issued a citation directing the Springfield Gas & Electric Com- 
pany to appear before it and show cause why certain heating 
bills had been settled for an amount less than required by the 
company's schedules of heating rates on file with the Commission. 
A hearing in the matter was held in Springfield, April 4, 1919, 
at which the company and the city of Springfield were repre- 
sented by counsel, and testimony and exhibits bearing upon the 
questions at issue were offered in evidence. 

Evidence shows that John D. Constant, 409 South Fifth Street, 
Springfield, Illinois, one of the consumers of said company, was 
duly billed in the amount of $65.81 for steam heating service 
furnished during the months of January and February, 1919. 
He refused to pay the bills, claiming they were excessive, and 
that something was wrong with the meter and that he did not 
receive the service, he was charged for. The company, after an in- 
vestigation which included testing the meter, claimed the bills 
were correct and sent a final notice to the consumer stating that 
unless he paid the bills the service to him would be discontinued. 
The consumer then made an offer to the company to compromise 
the bills and stated that if the amount offered by him was refused 
he would not make any payment unless compelled to do so by l^al 
action. The company, acting apparently in good faith and to 
avoid the trouble and expense of a lawsuit, on March 15, 1919 
accepted $50, in payment of the bill. 

About this time the company was going through a period of 
change in its heating system, because of a previous order of the 
Commission requiring all consumers to be placed on a meter 
basis, which made necessary certain modifications in the billing 
and bookkeeping systems. The heating plants of all the consum- 
ers were inspected, and the company advised them what changes 
were necessary in order to heat the premises economically. In 
this case the consumer was told his bills were high because the 
building had insufficient radiation and the pipes were uncovered 
to such an extent that an undue amount of steam was condensed. 
The provisions of the Illinois Public Utilities Act, relating to 
excessive rates or overcharges made by a public utility, are set 
forth in §§ 37, 39 and 72. Section 37 provides that no public 
utility shall receive any compensation for its service other than 

l'.U.R.1920A, 



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328 ILLINOIS PUBLIC UTILITIES COMMISSION. 

that specified in its schedule of rates on file with the Commission^, 
and shall not refund or remit directly or indirectly any charges 
made according to such schedule. Section 39 provides that a 
public utility shall not permit anyone to obtain by any device or 
means whatsoever any service for less than the rates or charges 
shown in the schedule of rates on file with the Commission, and 
prohibits anyone from obtaining or seeking to obtain any service 
at less than the lawful rates. Section 72 provides for a hearing 
on complaints made to the Commission concerning any excessive 
rate or overcharge by a public utility lancl empowers the Commis- 
sion to require proper reparation with interest at the legal rate 
from the date of payment of the charge. This section also pro- 
vides that if the public utility does not comply with the order of 
the Commission that the complainant may file a petition in court^ 
and the order of the Commission shall be prima facie evidence of 
the facts therein stated. 

The Commission, being fully advised in the premises, finds 
that the Illinois Public Utilities Act provides proper remedies for 
cases such as herein involved, and that the consumer should have 
paid the bills as rendered and then filed a complaint with this 
Commission asking for proper reparation, as provided for in 
said § 72. The (Jlommission further finds that the facts in this 
case did not justify the Springfield Gas & Electric Company in 
making a settlement for an amount less than stated in the bills. 

It is therefore ordered that, within ten days from the date of 
service of this order, the Springfield Gas & Electric Company 
shall take such appropriate action in the premises as may be 
necessary to comply with the views of the Commission herein- 
before expressed. 



NEBRASKA STATE RAILWAY COMMTSSION. 

EE LINCOLN TRACTION COMPANY. 

[AppUcation No. 4103.] 

Bates — Street railtoaya *- School children -« Scope of order, 

1. The term "school children" ae used in an order of the Nebraska 
Commission, requiring a street railway company to carry children at 
reduced rates, embraces children attending public achools and those at- 
P.U.R.1920A. 



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RE LINCOLN TRACTION CO. 329 

tending any sehool attendance at which excuses attendance at the pub- 
lic school, including pupils of the Teachers College Hig^ School who 
are pursuing only the high school course, and not including persons 
taking high school work anil at the same time pursuing studies in the 
university. 
Bates — Street railtpaya — School children tickets — School year, 

2. The term "school year" aa used in an order of the Nebraska 
Commission, requiring a street railway company to carry children at 
reduced rates during the school year, is sufficiently broad to include 
sessions of any schools at any time during the year, if the instruction 
given is of the same grade as given in the public schools. 

Bates — Street railti>ays — School children tickets — School day, 

3, The term "school day," as used in an order of the Nebraska Com- 
mission, requiring a street railway company to carry children at re- 
duced rates on school days, includes all that part of the day during 
which instruction is given, and sufficient time before the opening and 
aftjBT the dosing of the day's session to enable pupils to go to the school 
and return to their homes. 

[October 27, 1919.] 

Application of Lincoln Traction Company to Have fixed and 
determined the meaning of certain phrases used in a previous or- 
der of the Nebraska Commission, directing the company to carry 
school children at reduced rates; terms defined. 

By the Commission: This proceeding is based on a com- 
plaint of the principal of the Teachers College High School, a 
training school for children taking high school- work, which is 
conducted in connection with the Teachers College of the Uni- 
versity of Nebraska. The school enables practical experience in 
teaching to be given to the students in that college, and at the 
same time offers a high school course to those preparing for the 
university. The work is, in general, similar to that of other high 
schools, the same credits being given. 

By order made in Formal Complaint No. 8, September 28, 
1907, 1 Am. Rep. Keb. S. R C. 81, the Lincoln Traction Com- 
pany is required to sell tickets to school children at reduced rates. 
The language of the order referred to is as follows : 

*lt is further ordered that the defendants, the Lincoln Trac- 
tion Company and the Citizens Street Railway company be, and 
the same are hereby notified and required, on or before November 
1, 1907, to put on sale at places convenient to the public, lO tick- 
ets for 25 cents, good for school children, properly certified, dur- 

P.UJ1.1920A. 



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330 NEBRASKA STATE RAILWAY COMMISSION. 

ing the school year, on school days, between the hours of 7:30 a» 
M. and 5 :30 p. u. over all lines where the cash fare is 5 cehts/^ 

Complainant alleges that the Lincoln Traction Company is not 
complying with the order in that it refuses certain of the pupils 
of the Teachers Co^' :ge High School tickets at the fares pre- 
scribed by the Commission. The company appeared and filed an 
application asking the Commission to fix and determine the mean- 
ing of the terms "school children," and "school day,'' expressing 
at the same time its willingness to obey the order, but alleging 
that the order was not sufficiently clear. 

There seems to have been no controversy as to the meaning of 
the term "school children" during the early years the order was 
in force, and it received a practical construction during that time 
by which all of the pupils in the grade schools and in the high 
school of the city of Lincoln, as well as pupils of parochial and 
private schools, pursuing studies similar to those in the public 
schools, were carried at the reduced fares. In 1913 a difference 
arose in regard to the carriage of pupils of the Temple High 
School, which was adjusted apparently to the satisfaction of all 
l)arties, and pupils of that school continued to be carried at the 
reduced fares. There was also complaint in 1916, which seems to 
have been dismissed without formal hearing. Subsequently there 
was an order, changing the number of tickets from 10 to 8 to be 
sold for 25 cents and an order changing the hours during which 
such tickets might be used, making such time run from 7 a. m. to 
5 :30 p. M. In conformity with the recent order of the Federal 
court, the number of tickets to be sold for 25 cents was reduced 
to 7. 

[1] Unless there is something indicating that a special mean- 
ing is to be assigned to a word, it is, of course, to be taken in its 
ordinary significance. The word "school" has a great variety of 
meanings. It may refer to any institution of learning but unless 
otherwise qualified, it usually means a school of lower grade. 
Webster's International Dictionary of 1911 defines the term, 
when used generally, as follows : 

"A place for instruction in any branch or branches of knowl- 
edge ; an establishment for imparting education ; also, the institu- 
tion or collective body of teachers and learners in such a place. 
When without qualification, school is now familiarly used of an 
P.U.K.1920A. 



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RE LINCOLN TRACTION CO. 331 

institution for teaching children ; as, he went through school and 
college. Schools (in this sense), conducting the twelve years of 
study between the ages of about six to eighteen, are in the United 
States commonly qualified as : primary school, covering tlie first 
four years; grammar school, covering the second four; high 
school, covering the third four. Primary and ^grammar schools 
are often distinguished as elementary schools, irom secondary 
schools, which include high schools and private schools imme- 
diately preparatory to college.'' 

Black Law Dictionary (2nd Ed.) defines it thus: 

"An institution of learning of a lower grade, l)elow a college 
or university. A place of primary instruction. The term gener- 
ally refers to the common or public schools, maintained at the 
expense of the public.'' 

"School children" are, therefore, those children who attend 
schools below the grade of college, normal school or university. 
The word "children" is also doubtless used in its popular sense, 
in contradistinction to the term "adult." 

See also Pike y. State Land Commissioners (Idaho) 113 Pac. 
447; Lichentag v. Tax Collector (La.) 15 So. 176; State ex rel. 
Dick V. Kalaher (Wis.) 129 N. W. 1060; Commonwealth v. Con- 
necticut Valley Street E. Co. 196 Mass. 309, 82 N. E. 19; BeU 
V. State, 18 Tex. App. 53, 51 Am. Eep. 293; State v. Lanassa 
(La.) 51 So. 688. 

This meaning is evidently attached to the several sections of 
the school law relating to the subject. For instance, Statutes 
1913, § 6945, relating to secret fraternities, provides: "It shall 
be unlawful for pupils of any public high schools or other elemen- 
tary schools of this state to participate in or be members of any 
secret fraternity or secret organization whatsoever that is in any 
degree, a school organization." 

The use of the term "pupil" indicates the meaning of the stat- 
ute, as those attending a college, normal school or university are 
generally called "students." The views herein expilessed aire not 
at all in conflict with Omaha Medical College v. Rush, 22 Neb. 
449, in which it is held that a medical college conducted without 
profit is a school within the meaning of, the statute exempting 
property from taxation. The term "school" in that case was 

given its broader significance in accordance with the plain intent 
P.U.R.1920A. 



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332 NEBRASKA STATE RAILWAY COMMISSION. 

of the legislature in exempting educational institutions from tax- 
ation. 

The supreme court of Washington, in the case of State v. 
Seattle Electric Co. 128 Pac. 220, 43 L.R.A.(KS.) 172, deter- 
mined a controversy in many respects similar to the present one. 
The city of Seattle brought an action to compel a street railway 
company to issue one-half fare tickets to pupils attending the 
state university. In sustaining the decision of the lower court 
refusing to compel the company to issue such tickets to students, 
the court uses the following language : 

"It is one of the first rules of statutory construction, applying 
to contracts as well, that words are to be taken in their common 
or ordinary meaning. With this rule to guide us, we have no 
hesitation in holding, there being nothing in the contract indicat- 
ing an intention to include all who are voluntarily seeking a high- 
er or technical education, that the words 'school children,' as em- 
ployed in the franchise, include only those who are commonly 
referred to as school children, not students of universities or 
colleges or schools where a particular branch of learning is pur- 
sued. 

**We find assurance for our holding by reference to existing 
laws. Our Educational Code speaks of those attending the State 
University, the State Colle*-^. and normal schools as 'students' 
(Sees. 4317, 4333, 4366 Rem. & Bal. Code) ; but in chapter 8, 
Sec. 4406, where our common schools are defined, the legislature 
adopts the word 'children.' In Sec. 414, under the title 'Com- 
pulsory Education,' the law refers to 'child' or 'children,' show- 
ing that there is a common acceptation of the words 'school 
children;' and, this being so, we must conclude that the parties 
had it in mind when the contract was entered into. The few 
cases which have been called to our attention are in line with this 
reasoning. In Northrop v. Richmond, 105 Va. 335, 53 S. E. 
962, the court was called upon to construe the meaning of the 
word 'pupils' in a franchise providing for the carrying of pupils 
at a reduced fare by a street car company. The ordinance as 
originally proposed provided that the company should place tick- 
ets on sale for the accommodation of 'children going to and from 
school.' The city council insisted upon the substitution of the 
word 'pupiL' The court held the word 'pupil' to have a broader 

P.U.R.1920A. 



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RE LINCOLN TRACTION CO. 333 

meaning, and that it must have been intended to include others 
than mere school children. The court said that, if the ordinance 
had been adopted in the terms proposed, it would have been plain 
and unambiguous, and would have excluded the class of persons 
who were insisting upon the benefits of the ordinance ; they being 
students at the business college. The court continues: *The 
phrase "children going to and from schoo?* would, without doubt^* 
have referred to young people in attendance upon institutions of 
a subordinate character, and in common acceptation would have 
embraced only places of primary instruction and establishments 
for the instruction of children.' In Clinton v. Worcester Conso^ 
Street R. Co. 199 Mass. 279, 85 K E. 507, where a similar con- 
tract was being considered by the court, the court differentiatec^ 
between the meaning of the word ^school*, as applied to in- 
stitutions of higher learning, and when applied to schools of less- 
er degree, saying: TBut ordinarily, and without something to in- 
dicate that a wider meaning was intended to be given to this 
word, it will not be taken to include such higher institutions of 
learning, as colleges or universities, or institutions for the teach- 
ing of trades, professions, or business.^ *' 

It was argued that the term ^^school children", applied only to 
the pupils of the public schools. We think that the provisions 
of the order include not only those in attendance at the public 
schools, but also those who are attending other schools in lieu of. 
public schools of the same grade. Section 6924, Revised Statutes 
1913, as amended, provides as follows: 

*1n school districts, other than city and metropolitan qity school 
districts, every person, having legal or actual charge or control of 
any child or children or youth not less than seven nor more than 
sixteen years of age, shall, during each school year between the 
second Monday of Jiily and the last Monday of June following, 
cause said child or children or youth to attend the public, private, 
denominational, or parochial day schools for a period of not less 
than twelve weeks, and if the public day school of the school dis- 
trict in which the person or persons, having charge or control of 
such child or children or youth, may reside shall be in session 
during the school year between the second Monday of July and 
the last Monday of June following more than twelve weeks, then 

the person having legal control of such child or children or youth 
P.XJJl,1920A. i • 



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334 NEBRASKA STATE RAILWAY COMMISSION. 

shall cause each of them to attend such public, private, denom- 
inational, or parochial day school not less than two-thirds of the 
entire time the public schools shall be in session during the school 
year as aforesaid; and in no case shall such attendance be for a 
less period than twelve weeks." 

Oklahoma R. Co. v. St. Joseph Parochial School (Okla.) 127 
Pac. 1087, involved the sale of tickets to school children at re- 
duced rates. In discussing the subject, the court says: 

"In the ordinance or grant under consideration, the half-fare 
tickets were to be furnished for the use of school children. The 
council of Oklahoma City in adopting this ordinance, which was 
afterwards ratified by the legislature of the territory, were acting 
ils agents of the people of the municipality. In attempting to 
grant away certain privileges or rights, they exacted certain obli- 
gations from the grantee, and that was that school children should 
be furnished tickets for their use in quantities of not less than 20 
rides at the rate of 2| cents each, under any reasonable regula- 
tions which the company may impose to prevent the abuse of such 
privilege or. the use of such tickets by others than children under 
16 years of age in actual attendance on the public schools of said 
city. The object in view was to facilitate the education of the 
children of the city. Is it to be assumed that the mayor and 
council of said city would enter into a contract with the grantee 
which could not be impaired in certain respects to extend o\ er a 
long period of years — it may be in perpetuity — ^by which children 
of a certain age should be transported to the public schools main- 
tained by public taxation at half price when other children, going 
td schools that were maintained by private agencies by private 
benevolence for the benefit of the public, should pay full fare? 
Such discrimination in making the contract is not to be pre- 
sumed. A fair interpretation of this contract leads to the conclu- 
sion that it covers children under the age of 15 years attending 
schools in Oklahoma City, whether maintained by the public by 
taxation or by private agencies for the public by private benevo- 
lence/^ 

. We, therefore, conclude that under the order the Lincoln Trac- 
tion. Company is required to sell tickets at reduced fares to those 
atteiiding any school, attendance at which excuses attendance at 
tlWi public school, that the order covers private and parochial 

P.U.R.1920A. 



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RE LINCOLN TRACTION CO. 335 

schools, as well as the public schools, and that as attendance at 
the Teachers College High School is equivalent to attendance at 
any other high school, its pupils should be carried at the reduced 
fares. This will be restricted to those pursuing only *he high 
school course in the Teachers College High School and will not 
include persons taking high school work and at the same time 
pursuing studies in the university. The governing authorities of 
any private or parochial school whose pupils are entitled to the 
reduced fares should file with the Lincoln Traction Company a 
certificate of the city superintendent of schools showing that the 
pupils of such school are excused from attending the public 
schqols. 

[2] The term "school year," used in the order, naturally 
means that part of the^'ear during which school is in session. At 
the time of the adoption of the order, the portion of the year dur- 
ing which school was in session was shorter than it now is. We 
consider the term sufficiently broad to include sessions at any 
time during the year if the instruction given is of the same grade 
a?^ given in the public'schools. In § 6730, Revised Statutes 1913, 
it is provided that the school year shall begin with the second 
Monday of July. The meaning of the term is too obvious to re- 
quire discussion. 

[3J The term "school day" includes all that part of the day 
during which instruction is given and sufficient time before the 
opening and after the closing of the day^s session to enable pupils 
to go to school and return to their homes. Some discussion was 
had at the hearing as to the method of certification. It would be 
difficult to devise a system that would entirely prevent unauthor- 
ized persons from taking advantage of the reduced rates. We 
think the system now in use is probably as good as any that could 
be devised and that nothing would be gained by modifying it. 

Xo formal order is necessary herein. The company will be 

guided by views expressed in this opinion in carrying out the 

terms of the order heretofore made. 
P.U.RJ920A. 



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336 NEW YORK PUBLIC SERVICE COMMISSION. 



NEW YORK PUBLIC SERVICE COMMISSION, SECOND BISTBIOT* 

BE WESTCHESTER MOTOR TRANSFER COMPANY, 
INCORPORATED. 

[Case No. 6724.] 

Autoniohllea — Certificates of convenience — Transfer. 

The New York Commission, Second District, refused to sanction 
the transfer of a certificate of convenience for the operation of an auto 
bus line, where it appears that the proposed assignee was not the real 
party in interest, and the latter did not have the consent of the local 
authorities in the city in which it was proposed to operate. 

[October 9, 1919.] 

Petition for permission to assign certificate of convenience 
for operation of auto bus line ; denied. 

Appearances: Joseph L. Glover, Realty Building, White 
Plains, N. T., for the applicant ; Strange & Taylor (by Mr. Tay- 
lor), and John J. Hughes, White Plains, N. T., for John H. Cal- 
houn; Eugene F. McKinley, White Plains, N. Y., for the West- 
chester Street Railroad Company; and Meyer N. Finkelstein, 
White Plains, in person. 

Fennel!, Commissioner : This is a joint petition of the West- 
chester Motor Transfer Company, Inc., and Louis Kass to permit 
the assignment from the former to the latter of a certificate of 
convenience and necessity for the operation of an auto bus route 
gi-anted April 1, 1919. The certificate covers a route in the city 
of White Plains. The route also extends to the villages of Port 
Chester, Eye, and Eye Beach. 

The petition states that the company desires to dispose of its 
said motor bus route except that the company shall enjoy the 
right to operate "through" busses from Hastings to and through 
White Plains to Port Chester, Eye, and Eye Beach. 

The hearing on the original application of the company for a 

certificate of convenience and necessity was held February 17, 

1919. Subsequent to the date of the hearing, but prior to the 

granting of the certificate of public convenience and necessity, the 

company and Kass entered into an agreement, dated March 1, 

1919, to assign such certificate, if granted, to Louis Kass. 

On or very shortly prior to February 8, 1919, Louis Kass re- 
P.U.R.1920A. 



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RE WESTCHESTER MOTOR TRANSFER CO. INC. ^7 

Signed the vice presidency of the company and also sold and trana- 
ferred his stock therein. On the hearing, February 17, 1919, he 
testified that he was vice president of the company. Subsequent- 
ly he bought an auto bus and has been operating on the route in 
question as owner although claiming to be operating under the 
certificate as agent of tie company. It also appears that he is not 
at present sole owner of the auto bus which he is operating but 
that one Glass is part owner and partner with him in such opera- 
tion. The consent from the city of White Plains runs to Eaas 
alone. 

If Messrs. Kass and Glass desire a certificate they should make 
a new application, in the names of the real parties in interest, to 
the city of White Plains, and then petition the Commission for a 
certificate of convemence and necessity. This whole transaction 
s^ms to be one of trading in certificates rather than of building 
up a sound transportation business. 

The Commission should refuse its consent to the assignment 
of this certificate to Louis Eass. 

An order has been made accordingly. 

All concur. 



PBNNSTIiVANIA PUBLIC SJBRVICE COMMISSION. 

CITY OF NEW CASTLE 

V. 

MAHONING & SHENANGO BAILWAT & LIGHT COMPANY. 

[Complaint No. 2880.] 

Boies — Power of CommisMon — Bight of utility to file new acJtedule 
after determination of Cotnmiaaion, 

A public utility, whose rates have been declared to be just and 
reasonable by the Pennsylvania Commission, cannot thereafter, within 
a period of three years, file a schedule of increased rates without the 
•onsent of the Commission. 

[July 29, 1919.1 

Complaint against proposed increase in rates ; snstained and 
new schedule of rates ordered stricken from the files of the Com- 
mission. 

P.U.R.1926A. 22 



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336 NEW CASTLE v. MAHONING & SHENANGO R. & L. CO. 

By the Commission: The Mahoning and Shen^ingo Railway 
& Light Company has filed with the Commission and posted and 
published a new tariff or schedule of rates to be charged on its 
lines in the city of New Castle, and to become effective on August 
5th, 1919, which provides for an increase in fare from 6 to 7 cents 
duA for other changes in the charges for said company. A com- 
plaint has been filed against this proposed change in the tariffs of 
the company by the city of New Castle, and from. an examination 
of the record it appears that on April 22, 1919, this Commission, 
after hearing and investigation, made an order in which it de- 
termined the rates to be charged by this company for the service 
in question. By this order the respondent company was "per- 
mitted to collect its rates filed with the Commission and effective 
January 16th, 1918, until May Ist, 1920, at which time it is or- 
dered to restore its old tariff and schedule of rates in force and 
effective prior to January 15th, 1918, unless it be shown that 
the company then requires the revenue which the new rates pro- 
duce." The rates referred to in this order are those which the 
company proposes to change by the tariff above mentioned. 

We are of the opinion and find and determine that the report 
and order of the Commission of April 22, 1919, city of New 
Castle V. Mahoning & S. E. & L. Co. P.U.E.1919D, 783, was a 
■ deteimination of the just and reasonable rates which the respond- 
ent company was entitled to collect, and it is, therefore, unlawful 
for the company to change these rates within three years of the 
date of such determination, without an application to this Com- 
mission as provided by the Public Service Company Law. An 
order will therefore be issued directing that the tariff of increased 
rates to become effective August 5, 1919, be stricken from the 
files of the Commission and the respondent company be ordered 
to continue its service under the tariffs now in effect. 

P.U.R.1920A, 



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RE CHICAGO, MILWAUKEE & ST. PAUL K. CO. 339 



SOUTH DAKOTA BOARD OF RAILROAD COMMISSIONERS. 

BE CHICAGO, MILWAUKEE & ST. PAUL EAILWAY COM- 

PANY. 

[F-649.] 

Service — Railroads — Common law statutory duty. 

The duty which rests upon a railroad to furnish such service and 
facilities as will sufficiently and adequately meet the reasonable public 
demands and necessities, exists not only at common law, but in South 
Dakota is expressly imposed by statute. 

[Angnst 11, 1919.] 

Complaint as to the inadequacy of passenger train service on 
the Iowa & South Dakota Division of the Chicago, Milwaukee & 
St. Paul Railway Company between Bapid City and Chamber- 
lain ; daily passenger service ordered. 

By the Board: In this case numerous informal complaints 
were presented to the Board of Railroad Commissioners setting 
forth the fact that the passenger train service and facilities af- 
forded by the Chicago, Milwaukee & St. Paul Railway Company 
on the Iowa & Dakota Division thereof between Rapid City and 
Chamberlain in this state were insufficient and inadequate to 
properly care for and accommodate the demands of the public 
for transportation service over that line. 

After careful consideration of said complaints the Board of 
Railroad Commissioners made an order, on the 27th day of June, 
1919, to enter upon an investigation of the matters complained 
of, upon the Board's own motion aid without formal pleading, 
and caused a notice of hearing to be issued and served upon the 
defendants, the Chicago, Milwaukee & St. Paul Railway Com- 
pany, and the Director General of Railroads, and also upon the 
various complainants and others interested in the matter to be so 
investigated ; such notice stating that a hearing for the purposes 
of such investigation would be held before the Board at the court- 
room in the court house at Rapid City, Pennington County, 
South Dakota, on Monday, the 7th day of July, 1919, at the 
hour of ten o'clock in the forenoon of that day. At the time 
stated in said notice the place of hearing was, upon request, and 
for the purpose of convenience, changed to the dub rooma of 

P.U.R.1920A. 



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340 SOUTH DAKOTA BOARD OF RAILROAD COMRS. 

the Rapid City Commercial Club where the same was held before 
Commissioners Murphy, Brisbine, and Kaish. 

Mr. George Williams, city attorney of Eapid City, appeared 
on behalf of the commercial dub and city of Eapid City; Mr. A» 
C. Granger, on behalf of the commercial club and town of Ka- 
d6ka ; Mr. Lewis Young, on behalf of the town of Scenic ; Mr. W» 
F. Boland, on behalf of the town of Oacoma ; Mr. J. C. Rounds^ 
on behalf of the town of Interior; Mr. W. F. Cody, division 
passenger and freight agent, and Mr. H. H. Ober, division su- 
perintendent, respectively, of the Chicago, Milwaukee & St. Paul 
Railway Company, appeared on behalf of the Railway Company 
and the Director General of the United States Railroad Adminis- 
tration, and Mr. Oliver E. Sweet appeared as counsel for t}ie 
Board of Railroad Commissioners. 

The testimony of numerous witnesses was then and there taken 
and upon due consideration of all of the evidence, including the 
exhibits introduced at said hearing, and all of the information bo- 
fore the board, and the said Board of Railroad Commissioners 
being fully advised in the premises, now makes and orders filed 
the following: 

Findings of Fact 

That the defendant, the Chicago, Milwaukee & St. Paul Rail- 
way Company, oXvns and operates within this state, in connection 
with its other lines of railway and as a part of its system, a line 
of said railway extending from Chamberlain, in Brule county, in 
a westerly direction through the counties of Lyman, Jones, Jack- 
son, and Pennington, in the state of South Dakota, to Rapid City, 
a distance of approximately 219 miles, passing through and 
serving, together with the territory adjacent and tributary there- 
to, the following cities and towns: Chamberlain, Oacoma, Reli- 
ance, Kennebec, Presho, Vivian, Draper, Murdo, Okaton, Stam- 
ford, Belvidere, Kadoka, Weta, Interior, Conata, Imlay, Scenic, 
Creston, Farmingdale, Daputa, Murphy, and Rapid City; that 
five of said cities and towns, namely. Chamberlain, Oacoma, 
Murdo, Kadoka, and Rapid City, are the county seats respective- 
ly of Brule, Lyman, Jones, Jackson, and Pennington counties in 
the state of South Dakota, and that these points, tc^ther with 
many of the other stations above mentioned, are located in pro©- 

P.UJt.l920A. 



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RE CHICAGO, MILWAUKEE & ST. PAUL R, CO. 341 

peroiis and thriving agricultural and cattle raising communities 
and are important shipping points on said line of railway ; that 
said railway company also operates a liiie of its railway between 
Chamberlain and Mitchell, at which latter point connection is 
had with the main north and south line of said railway through 
the state of South Dakota, and where connections are made for all 
points on said railroad system, north, south, and east. 

The evidence further shows that Rapid City, in Pennington 
county, is a thriving city of approximately 7,000 population and 
with bank deposits of approximately $4,000,000; that this city 
has no less than twelve firms which are engaged in wholesaling 
and manufacturing, and that nearly all of said firms have occa- 
sion to ship the products manufactured or distributed by them to 
nearly all of the towns and cities on the line of said Chicago, Mil- 
waukee & St. Paul Railway Company between Chamberlain and 
Rapid City; and that large quantities of cream, fruits and other 
perishable commodities, and other produce, are shipped by bag- 
gage and express between many of these stations and Rapid City. 

It is the duty of the defendants, as coinmon carriers of passen- 
gers and freight, to furnish adequate, suitable, and reasonable 
facilities, including rolling stock and equipment, for the suitable 
and proper operation of a railroad as a carrier of passengers, as 
well as a carrier of freight; and as carriers of passengers it is 
the duty of the defendants to furnish such service and lacilities 
therefor as will sufficiently and adequately meet the reasonable 
public demands and necessities. Such duty exists not only at 
common law, but in this state is expressly imposed by statute. 

It is shown by the testimony of several witnesses that it is not 
uncommon for persons residing at the towns and cities on said 
line of railroad between Rapid City and Chamberlain, who are 
desirous of traveling either east or west, to drive a distance of 
several miles to reach a station on another railroad, because of the 
better passenger train service afforded by such other line of rail- 
road. The said line of the Chicago, Milwaukee & St. Paul Rail- 
way is the only railroad which serves any of the said towns and 
cities between Rapid City and Chamberlain. 

The evidence shows that at the time of the hearing, and for 
about two years prior thereto, the only train service between 
Chamberlain and Murdo westbound was a daily way freight 
scheduled to leave Chamberlain at 8:40 a. m. and to arrive at 

P.U.H.1920A. 



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342 SOUTH DAKOTA BOARD OF RAILROAD COMRS. 

Murdo at 3:45 p. m., and a passenger train scheduled to leave 
Chamberlain at 8:30 p. m. and to arive at Murdo at 12:10 a. 
M. ; and t)iat the only service afforded between Murdo and Rapid 
City westbound was that furnished by what is known as a mixed 
train, being an ordinary freight train to which is attached a com- 
bination mail, baggage, and express car and a combination* coach 
for the carrying of passengers. This coach is partitioned off so 
as to allow a compartment to be used as a smoking room and the 
balance as a day coach. This train, according to the time table 
introduced in evidence, is scheduled to leave Murdo daily at & 
A. M. and to arrive at the various stations upon this line as fol- 
lows: Okaton 6:35, Stamford 7:10, Belvidere 7:50, Kadoka 
8:45, Weta 9:25, Interior 10:05, Conata 11:05, Imlay 11:40,. 
Scenic 12:40 p. m., Creston 1:20, I'armingdale 2: Caputa 
2:25^ Murphy 3: Rapid City 3:30; the time between Murdo- 
and Rapid City being nine hours, thirty minutes and the dis- 
tance 144 miles. Thus the schedule time of his train, allowing 
for stops, is about 15 miles per hour. This being the only train 
operated over this line, it necessarily stops at all stations to load 
and unload freight and to do all switching usually done by a way 
of freight, thus consuming much time. 

From the time table introduced in evidence it appears that 
passengers from points east of Murdo to points west, arrive at 
Murdo on the passenger train about midnight and are com- 
pelled to wait until 6 o'clock the following morning before con- 
tinuing their journey. The evidence shows that the traflSc on 
this passenger train is usually heavy and that the hotel accom- 
modations and facilities at Murdo are limited, the result being 
that nearly every night many passengers arriving at Murdo on 
this passenger train are unable to secure lodging and are com- 
pelled to sit in the coaches or in the station house from midnight 
until 6 o'clock a. m. 

Eastbound from Rapid City to Murdo the only service is that 
afforded by a mixed train similar to the westbound train be- 
tween the same points, which train handles all of the business, 
passenger, freight, mail, and express. This train is scheduled 
to leave Rapid City daily at 5 :30 a. m. and to arrive at the sev- 
eral stations on this line as follows: Murphy 5:45, Caputa 
6:15, Farmingdale 6:40, Creston 7:1.5, Scenic 8:10, Imlay 
8:35, Conata 9:05, Interior 10:05, Weta 10:40, Kadoka 11:10^ 

P.U.R.1920A. 



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RE CHICAGO, MILWAUKEE & ST. PAUL IL 00. 343 

Belvidere 12:15 p. m., Stamford 1: Okaton 1:40, Mutdo 
2:15. This train connects with the daily eastbonnd passenger 
train between Mnrdo and Chamberlain, which train is scheduled 
to leave Mnrdo at 3 :45 p. m. 

It was contended by the defendant that the passenger train 
service on this line is now being conducted at a loss, and testi- 
mony was received tending to show that the earnings of trains 
Nos. 4 and 5 between Chamberlain and Murdo, and trains Nos. 
504 and 505 between Murdo and Rapid City, were less than the 
cost of operation of these trains; but the cost of operation per 
train mile was merely an estimate, and the oral statement re- 
garding earnings covered only the earnings for the transporta- 
tion of passengers and did not include the earnings of trains Nos. 
504 and 505 in the freight service, nor the earnings of any of the 
above-mentioned trains from excess baggage, mail, express, or 
other passenger train revenues. There is no evidence in the 
record from which the board can determine whether or not the 
present service results in a profit or a loss to the company, or 
whether the addition to the present service of a daily through 
passenger train each way between Chamberlain and Eapid City 
would result in loss or profit. 

The defendants, at the time of the hearing, signified their will- 
ingness to put on a through triweekly passenger train between 
Mitchell and Bapid City, taking off the mixed train between 
Murdo and Rapid City on the days on which the passenger train 
would be operated, thus giving service as follows: westbound 
the proposed passenger train to leave Mitchell 1 : a. m. on Tues- 
day, Thursday, and Saturday, arrive at Chamberlain 4 :15 a. m.,. 
depart Chamberlain 5:45 a. m., depart Murdo, mountain time, 
8 :45 A. M., arrive Rapid City 3 :45 p. m. ; eastbound to leave 
Rapid City 7:30 a. m. on Monday, Wednesday, and Friday, 
Murdo 3:45 p. m. on practically the same schedule as previous- 
ly in effect east of Murdo, arriving at Mitchell at 10 p. m. ; the 
eastbound train to connect with the train for Sioux City and 
points south and east at Mitchell, and also for points west with I. 
& D. No. 4 out of Mitchell and for points north on the Aberdeen 
division, leaving Mitchell about 12 :30 a. m. ; the westbound train 
to have a sleeper operated between Sioux City and Murdo, leav- 
ing Sioux City at 6 :15 p. m. on Monday, Wednesday, and Friday 

P.U.R.1920A. 



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344 SOUTH DAKOTA BOARD OF RAILROAD COMRS. 

and No. 4 out of Murdo iat 3 :45 p. m., to haul the sleeper on its 
return trip to Sioux City; on the alternate days, to keep in serv- 
ice the present mixed train service west of Murdo and the pres* 
-ent passenger servicie between Mitchell and Murdo. 

The Board is informed by a time table filed in its office, sub- 
sequent to the date of the hearing, that such proposed service 
has since been installed and made effective as of July 14, 1919. 
From this time table it appears that the triweekly arrangement 
^ves the towns east of Murdo two westbound passenger trains 
a day on three days a week, and one westbound passenger train 
on Sunday, but no passenger train whatever westbound on the 
other three week days. 

Conclvsions. 

From the foregoing statement of facts the Board hereby con- 
<5ludes and decides: 



That the passenger service and facilities furnished by the 
Director General of Railroads and the Chicago, Milwaukee & St. 
Paul Eailway Company, on its line within the state of South 
Dakota between Chamberlain and Rapid City, are insufficient 
and inadequate to meet the reasonable needs of the traveling 
public and of the several cities and tovms, together with the ter- 
ritory adjacent and tributary thereto, which is served by said 
line of railroad, and that there is a reasonable public demand and 
necessity for the establishment of a daily through passenger serv- 
ice over said line between Chamberlain and Rapid City. 

n. 

That an order should be made and entered in this proceeding 
Tequiring the Director General of Railroads and the Chica^co, 
Milwaukee & St. Paul Railway Company to operate one passen- 
^r train each way daily between the stations of Chamberlain 
-and Rapid City, said train to leave Chamberlain, westbound, 
-daily at 5 :45 a. m. and to arrive at the intermediate stations on 
approximately the following schedule: Oacoma 6 : a. m., Relianct> 
6:35, Kennebec 7:08, Presho 7:43, Vivian 8:16, Draper 8:50^ 
Murdo 9 :15, Okaton 9 :i2, mountain time, Stamford 9 :42, Bel- 

P.U.R.1920A. 



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RE CHICAGO, MILWAUKEE & ST. PAUL IL CO. 346 

videre 10 :H, Kadoka 10 :46, Weta 11 :17, Interior 11 :55, Gonata 
12 :52 p. M., Imlay 1 :21, Scenic 1 :47, Creston 2 :19, Farming- 
dale 2:47, Caputa 3:03, Murphy 3:24, Rapid City 3:45; said 
train to leave Bapid City, eastbound, daily at 7 :30 a. m., and to 
arrive at the intermediate stations on approximately the follow- 
ing schedtile: Mnrphy 7:45 a. m., Caputa 8:06, Farmingdale 
8:22, Creston 8:50, Scenic 9:22, Imlay 9:48, Conata 10:16, In- 
terior 10:46, Weta 11:24, Kadoka 11:55, Belvidere 1 p, m., 
Stamford 1:29, Okaton 1:59, Murdo 2:30, Draper 4:10 central 
time, Vivian 4 :30, Presho 5 :12, Kennebec 5 :40, Eeliance 6 :14^ 
Oacoma 6:45, Chamberlain 7. 

nx 

That such passenger train be put in operation not kter than 
the first day of September, 1919. 

Note, — The time table established by the order was modified itt 
some particulars by subsequent order of August 11, 191d. 



WISCONSIN RAILROAD COMMISSION. 

BE ELKHAET LAKE LIGHT & POWEB CQMPAKT. 

IU-1660.] 

Taluation — Auxiliary plant, 

1. Some allowance should be made for an investmeiit in a hydrv^ 
electric deyelopment, in determining the reasonableness of the rates- 
of an electric utility, althongh the electrics company purchases its energy 
from another company, where it appears that the hydroelectric plant 
has' some real value In Toltage regulation. 

Valuation — Discarded equipment — AmortiMation. 

2. Bidcarded equipment should be deducted from book yalue of a 
plant; and, upon disposition, any loss that the company may have 
suffered as between the ori^al cost and the junk sale price, plus the- 
depreciation set up for it, assuming that a reasonable provision has 
been made for such depreciation, should be amortized over a period of 
years and the equivalent amounts charged to operating expenses. 

lUites — Electricity •» Form of schedule, 

8. In determining a schedule of electric rates, the Wisconsin Oom- 
mission endeavored to design one which would not only produce the 
required revenues, but result in an economic use of the energy liy eon- 

P,UJ1.1920A. 



Digitized by VjOOQIC 



346 WISCONSIN RAILROAD COMMISSION. 

Burners; and, rather than include provisions which would necessitate 
estimates of transformer losses on rural and power consumers, the 
Commission, in the case of rural consumers, provided for a diiferential 
in the rate, and, in the case of power consumers, recommended the 
installation of disconnecting switches for the large users which would 
permit cutting the transformers off when not in use. 

[August 30, 1919.] 

Application for authority to increase rates for electric serv- 
ice; granted. 

By the Commission: The application of the above-named 
<3orporation was filed with the Commission on March 29, 1919. 
It is set forth therein that the applicant is a public utility doing 
business under the laws of the state of Wisconsin with its princi- 
pal place of business at Elkhart Lake, and that it is engaged in 
furnishing electrical energy to customers in and about that 
village and in adjacent communities at the following rates : 

Commercial Lighting Rates: 
Minimum charge, $1 per month. 

Energy charge, 10 cents per kw. hr. if paid on or hefore the 15th of the 
current month, 10 per cent penalty if paid later. 
Rural Lighting Ratea: 

The regular commercial lighting rate plus 3 cents per kw. hr. for trans- 
former losses. 
Summer Cottage Lighting: 

Minimum charge of $10 for 100 kw. hr. consumed between March 15th and 
November 16th; aU energy consumed in excess of this amount 10 centa 
per kw. hr. 
Beating Rate: 

Heating and cooking appliances using current in excess of 2.000 watts 
per hour, 10 cents for the first 10 kw. hr. of TwayiTiniTn demand; all 
excess at 3 cents per kw. hr. 
Power Ratea: 

10 cents per kw. hr. for the first 10 kw. hrs. per month per kw. of maximum 

demand. 
4 centa per kw. hr. for all of the first 1,000 kw. hrs. not covered by the 

primary rate. 
3 cents per kw. hr. for the next 4,000 kw. hrs. 

2.8 cents per kw. hrs. for all current in excess of 6,000 kw. hrs. per month. 
Off -peak Power Rates are provided for by contracts. 

It is alleged by the applicant that these rates are inadequate 
to provide a fair return on the capital invested after meeting 
operating expenses. Furthermore, it sets forth that the Com- 
mission in a decision issued March 6, 1919, authorizes the East- 
•em Wisconsin Electric Company, from which it purchases pow- 
er, to place in effect certain increases in the rate under which it 
wholesales energy to the petitioner as soon as it shall have com- 
plied with the requirements of voltage regulation as set forth 

P.U.R.1920A. 



Digitized by VjOOQIC 



RE ELKHART LAKE LIGHT & POWER CO. 



$47 



therein. It prays, therefore, that the Commission establish one 
schedule of rates to meet the present operating conditions, and 
another schedule which will meet conditions when the increase in 
the cost of power becomes effective. 

Permission is sought by the petitioner to put the following 
rates into effect imder the present costs of power: 

Oommercial Lighting: 

12* cents per kw. hr. if paid on or before the 15th of the current month 

Minimum biU, $1 

Penalty for. late payment, 10 per cent of bill. 

Rural Rate — same as above plus 3 cents per kw. hr. for transformer losses. 

Summer Pottage Rate: 

Minimum charge, $10 for 76 kw. hrs. 

12^ cents per kw. hr. for all over 76 kw. ktu* 

Power Rates: 

Two horse power motors or less — 

10 cents per kw. hr. for the first 10 kw. hrs. per h. p. of connected load 
6 cents per kw. hr. for the balance of 1,000 kw. hrs., and 
8 cents per kw. hr. for all in excess of 100 kw. hra. 
Minimum charge, $1 per h. p. 
Motors over 2 horsepower — 

Demand Charge of $1.50 per kw. hr. upon the maximum 15 minutes 
demand of each month, plus the transformer loss at 3 cents per kw. hr. 
Energy Charge for the first 10,000 kw. hr. purchased per month, 3 cents 
per kw. hr. 

For the next 20,000 kw. hrs. 2.6 cents 

For all over 30,000 kw. hrs. per month, 2.2 cents per kw. hr. 
Five per cent discount if bill is paid before the 8th of the current 
month; net» if paid before the first of the following month; and 
5 per cent penalty if not paid before issue of the following month's 
bill. 

<^ooking — $1.50 minimum which entitles the consumer to 30 kw. hrs. 
All in excess of this amoimt, 3 cents per kw. hr. 

A hearing in the matter was held at Elkhart Lake, April 29^ 
1919, at which time the following appearances were entered: 

E. R. Bowler, on behalf of the Crystal Lake Crushed Stone 
Co. ; Nash & Nash, on behalf of the Elkhart Lake Sand & Gravel 
Co. ; Q. W. Brickbauer, President, and W. H. Burk, Secretary, 
on behalf of the Elkhart Lake Light & Power Co. ; Nash & Nash 
also appeared on behalf of the village of Elkhart Lake as the at- 
torney for the village, M, 0. Mead, was nnable to be preset/;. 

The applicant furnishes service in the villages of Elkhart Lake, 
Olenbeulah, St. Cloud, and Greenbush, and in the towns of 
Khine, Russell, Plymouth, and Greenbush, serving a population 
of from 2,000 to 3,000. 

The total consumers number 600 and are classified as follows : 

P.UJ1.1920A. 



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34S* 



WISCONSIN RAILROAD COMMISSION. 





TABLE I. 
Consumer Data, 










Commercial Lighting. 1 


Power. 


Munic- 




Resi- 
dences. 


Businefls. 


TotaL 


ipal 
lighting. 


Number of Consumen . • . 
Demand kw 


416 

8 


69 

• 


485 
106 

71698 


15 

tsoo 

226242 


15a 


Annual Consumption kw. 
hrs w... 


1600O 



1 Number of lampi. 
t Estimated* 



Property. 



An approximate valuation made by the Commission's engineers 
in June, 1917, for the purposes of a stock and bond issue shows 
the following items of property. 

TABLE IL 
Final Summary of ValwUion Elkhart Lake Light d Power Co. 



Land 

Transmission and Distribution 

Buildings and Miscellaneous Structures 

Plant Equipment i 

General Equipment 



Total , 

Add 12% (See note below) 

Total 

Materials and Supplies . . . 



Total 

Nonoperating Property 



Total 



Reproduc- 
tion cost. 



$600.00 
31,062.00 
7,930.00 
6,235.00 
1,112.00 



$45,929.00 
6,611.00 



$61,440.00 
4,383.00 



$55,823.00 
8,496.00 



$64,318.00 



Reproduc- 
tion Cost 
Less De- 
preciation. 



$600.00 

26,079.00 

5,106.00 

4,701.00 

950.00 



$37,436.00 
4,492.00 



$41,928.00 
4,38^.00 



$46,311.00 
2,002.00 



$48,318.00 



Note. — ^Addition of 12% to cover engineering, superintendence, interest 
during construction, contingencies, etc. 

The applicant's central station equipment originally consisted 
of a gas producer and gas engines driving the electric generators. 
These, however, were abandoned in 1913, when a high voltage 
transmission line was built to connect with the Sheboygan Rail- 
way & Electric Company's central station at Sheboygan. All of 
its power was th^n purchased from this source up to February, 
1918, when the applicant commenced the generation of a part of 

P.U.R,1920A. 



Digitized by VjOOQIC 



RE ELKHART LAKE LIGHT & POWER CO. 949 

its energy by a hydroelectric plant on the Mullet rivw about 
three miles south of Elkhart Lake. The applicant maintains 
that this plant was built principally for the purpose of regulat- 
ing the voltage of its system with which it had had considerable 
trouble in the past. The merits of this plan were discussed con- 
siderably in connection with the application of the Eastern Wis- 
consin Electric Company for authority to increase rates on pow- 
er sold to the Elkhart Lake Light & Power Company, decided 
March 6, 1919, and we need not go further into the matter here. 
Suffice it to say that this^ expenditure has caused considerable 
question among applicant's consumers as to the wisdom of the 
undertaking, and as a result the petitioner has agreed to disre- 
gard this investment, and the expense incident to its operation 
and maintenance, and to base all estimates of costs upon the a^ 
sumption that all power is purchased from the Eastern Wisconsin 
Electric Company, at its authorized rates. 

[1, 2] The valuation included in Table n includes approxi- 
mately $16,000 which was invested in the hydroelectric develop- 
ment Deducting this and making allowances for additions other 
than those to the hydroelectric plant, we arrive at a book value ot 
about $62,197 as of June 30, 1918. Inasmuch as the hydroelec- 
tric plant has some real value in voltage regulation, we believe 
that some allowances should be made for this feature. Such an 
allowance, however, need not be greater than the necessary costs 
of induction r^ulators to produce the same results. We vrould 
also point out that in the Commission's valuation there is an item 
of $8,495 in nonoperating property, which refers to the dis- 
carded central station equipment. We believe that this prop- 
erty has now been disposed of at but a small fraction of its orig- 
inal cost and should therefore have been deducted from the book 
value. Any loss that the company may have suffered as between 
its original cost and the junk sale price plus the depreciation set 
up for it, assuming that a reasonable provision had been made for 
its depreciation, should be amortized over a period of years and 
the equivalent amounts charged to operating expenses. After a 
consideration of these various matters, we conclude that the ap- 
plicant should earn fixed charges on approximately $65,000. Al- 
though this value results in an average investment of $130 per 

consumer, which is higher than the average for utilities of this 
Pjy.R.1920A. 



Digitized by VjOOQIC 



350 



WISCONSIN RAILROAD COMMISSION. 



size, we feel that the higher investment can be partially justified 
by the fact that the applicant's distribution systems are widely 
scattered in relatively small communities. 

The applicant's balance sheet for June 30, 1918, which ap- 
pears in Table III shows a capital stock issue of $23,500 against 
the electric plant and a funded debt of $21,000. Both of these 
items are against the old plant and do not cover any of the in- 
vestment in the new hydroelectric development. We would also 
point out that of the $43,615.32 in notes and bills payable and in 
accounts payable, $27,522.05 is chargeable to current construc- 
tion on the new plant, and would leave current liabilities of $15,- 
993.27 against the old plant. This amount plus the stock issued 
and the funded debt is equal to approximately $60,500, or to 93 
per cent of the $65,000 we have estimated the applicant should 
earn upon. 

TABLE ni. 
Balance Sheet ae of June SO, 1918. 



Assets. 


1 liiabilities. 




Property and Plant .... 
Treasury Securities .... 
Ca«h 


$80,730.48 

4,000.00 

48.49 


Oanital Stock 


$23,500.00 


Funded Debt 


21,000.00 


Depreciation Reserve .. 
Notes and Bills Payable 

Accounts Payable 

Accrued Interest ...... 

Surplus 


3,093.92 


Accounts Receivable 

Materials and Supplies . 
Misc. Current Assets .. 


8,250.39 
3,602.10 
3,719.65 


32,992.40 

10,622.92 

2,500.00 

1,641.87 




Total Liabilities ... 




Total assets 


$95,351.11 


$95,351.11 



Income Accounts, 

In Table IV we have set forth the applicant's revenues and 
operating expenses for the years from 1914 to 1918, inclusive. 
The operating expenses for 1918 are hot complete, however, as 
they do not include the cost of hydraulic power generation, which 
must have been a considerable item during the period from Feb- 
ruary to June 30, 1918. However, for the purposes of the case 
at hand it has been agreed between the parties coiicerned to 
neglect all investments and expenses of operation of the hydroelec- 
tric development, and to base the rates upon the costs of 1917. 

It appears that applicant's accounting procedure has not been 
entirely consistent, otherwise there would not be so wide a differ- 
ence in the operating ratios for the years 1914 and 1915. Again, 

r.U.R.1920A. 



Digitized by VjOOQIC 



RE ELKHART LAKE LIGHT & POWER CO. 



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Digitized by VjOOQIC 



362 WISCX)NSIN RAILROAD COMMISSION. 

the ratio for 1918 is considerably less than for 1917 when costs 
on an average were relatively higher. However, if we compute 
the cost of energy actually consumed on the same basis ^f cost as 
for 1917 we arrive at a cost for energy purchased of $9,258.77. 
It is quite likely that the cost of developing the power at the ap- 
plicant's hydroelectric station, when all costs, both fixed and 
operating, are considered, is more than the cost of the equivalent 
energy if it were purchased. If we substitute then $9,258.77 for 
$6,734.64 (electric power purchased) for 1918, we arrive at gross 
income of $688.01, instead of $3,212.14, and a percentage of 
gross income to book value of approximately 1 per cent instead of 
4.63 per cent. 

In considering a distribution of the applicant's expense to 
capacity and output charges we have used those items of expense 
of the calendar year 1917, excepting the cost of current purchased 
which has been computed upon the consumption of 1918 by ap- 
plying thereto the same average cost per kw. hr. as that for the 
year 1917. The items appear as follows: 

Current purchased $9,258.77 

Transjniasion expense — 

Operation $40.92 

Maintenance 13.26 54.18 

Distribution expense- 
Operation 608.54 

Maintenance 234.28 842.82 

Commerdal expense 172.50 

General expense-r- 

Salary — Superintendence 1,200.00 

Salary — Secretary-Treasurer 800.00 

Office 186.90 2,186.90 

Undistributed expense — 

Automobiles ; 302.54 

Other expense 488.00 788.54 

Total above expense $13,303.71 

For taxes, it appears that for the year 1917 the applicant paid 
$444.49. For the other fixed charges we have estimated interest 
at 8 per cent on $65,000 and depreciation computed from normal 
life tables upon a 3 per cent sinking fund basis at 3.38 per cent 
on the reproduction cost. The total of the operating and main- 
tenance expenses and the fixed charges is $21,145.20, or 113.6 
per cent of the revenues for 1918. 

P.U.R.1920A.* 



Digitized by VjOOQIC 



RE ELKHART LAKE LIGHT & POWER GO. 355 

[3] In determining a schedule, we have endeiK^ored to design 
<Mie which wiil not only produce the required revenues, but will 
also result in an economic use of the energy by consumers. Rather 
than include provisions which will necessitate estimates of trans- 
former losses on rural and power consumers, we have in the case 
of rural customers provided for a differential in the rate, and in 
the case of power customers we recommend the installation of dis- 
connecting switches for the large users which will permit of cut- 
ting the transformers off when not in use as is now practiced by 
some of the applicant's larger consumers. For commercial light- 
ing requirements we determine the following schedule : 

City Lines Rural Lines. 

For the first 10 kw. hr. consumed per month 

14 cents gross, 13 cents net 17 cents gross, 16 cents net 
For the next 10 kw. hr. consumed per month , 

13.5 cents gross, 12.5 cents net 16.5 cents gross, 15.5 cents net 
For the next 10 kw. hr. consumed per month 

12.5 cents gross, 11.5 cents net 15.5 cents gross, 14.5 cents net 
AW over 30 kw. hr. consumed per month 

11.5 oents grossr, 10.5 cents net 14J^ cents gross, 13.5 cents net 
Jdinimum hill — $1 per month. 

For power consumption including energy for cooking and heat- 
ing, the following rates will apply: 

Demand Oharge: 

f 1.25 per month per kw. for the maximum danand determined in the case 
of installations of 50 h. p. or over by monthly readings. Such readings 
may, at the option of the company, be determined by counting revolutions 
of the wattmeter disk, or by quarter hour readings of the wattmeter, 
or by a graphic recording wattmeter, or a demand meter, and average 
demand over the maximum 15 minute period in each month iAiall be 
used. 
On installations of less tha|i 50 horsepower the demand shall be estimated 
for different sized motors as follows: 
Installations imder 10 h. p., where but one motor is installed, 00 per 

cent of the connected horsepower. 
Installations under 10 h. p., where more than one motor is installed, 

80 per cent of the connected horsepower. 
Installations of 10 h. p. or over and less than 20 h. p., irrespective of 

the number of motors, 70 per cent of the connected horsepower. 
Installations of 20 h. p. or over and less than 50 h. p., 60 per cent of 
the connected horsepower. 

Energy Charge: 

First 100 kw. hr. consumed per month . . 1\ oents gross, 6^ cents net 
Next 400 kw. hr. consumed per month . . OJ cents gross, 5i cents net 

Next 1000 kw. hr. consumed per month . . 5i cents gross, 4^^ cents net 
Next 1500 kw. hr. consiuned per month .. 4i cents gross, 3^ cents net 
All over 3000 kw. hr. consumed per month . . 3^ cents gross, 2\ cents net 
All bills are payable during the ten days following the dates thereof at 
the net rates. After this period the gross rate shall be ooUected. 

It appears from our distribution of expenses that the street 

P.U.R.1920A, 23 



Digitized by VjOOQIC 



354 WISCONSIN RAILROAD COMMISSION. 

lighting system should stand not less than a sum of $1,400.00 an- 
nually. This matter, however, has not been raised in the present 
proceedings and will not therefore be considered further. 

The applicant has requested that an additional schedule of 
rates be designed at this time, which will compensate for any in- 
creases in costs that may arise under the application of our order 
of March 6, 1919, which authorized the Eastern Wisconsin Elec- 
tric Company to increase the sale price of its wholesale power to 
the applicant after certain conditions shall have been met as we 
have already explained. 

We do not believe that it would be well to attempt to establish 
any such schedule at the present time for the reason that the ap- 
plication of the above-determined rates to the applicant's system 
will, we believe, have a tendency to change the character of its 
load and create an entirely different demand for purchased power. 
Moreover, the petitioner's large power users have not been operat- 
ing under normal conditions for some time past, due to the 
restrictions placed upon them during the war, and as a result the 
data which we have upon their demands for and consumptions of 
energy are meager. These facts, together with the effects of nor- 
mal operation of the applicant's hydroelectric plant, cannot help 
but create new conditions affecting the purchase of power from 
the Eastern Wisconsin Electric Company. It does not seem 
reasonable then to pass upon a schedule to provide for an increase 
in costs of purchased power and base it upon past performances 
which probably will not prevail in the future. 

It also appears that to date there has been no move on the part 
of the Eastern Wisconsin Electric Company to meet the condi- 
tions imposed by our previous order and thereby acquire the in- 
crease in rates for power sold to the applicant. 

In view of these facts, action providing for a further increase 
in rates to compensate for added costs of purchased power should 
be iieferred until more accurate data are made available by the 
results arising from the application of this order under normal 
operating conditions. 

It is therefore ordered that the applicant, the Elkhart Lake 
Light & Power Company, be and the same hereby is authorized to 
discontinue its present schedule of rates for commercial lifting 

P.U.R.1920A. 



Digitized by VjOOQIC 



RE ELKHART LAKE LIGHT & POWER CO. 355 

and power and to substitute therefor the following rates and 
charges : 

'Commercial Lighting: 

City Lines. Rural Lines. 

For the first 10 kw. hr. con- 
sumed per month 14^ gnross, 13# net; 174 gross, 10# net 

For the next 10 kw. hr. con- 
sumed per month 13.6# gioss, 12.5# net; 16.5# gross, 35.6^ net 

For the next 10 kw. hr. con- 
sumed per month 12.5# gross, 11.6^ net; 16.6* gross, 14.5* n^ 

For all over 30 kw. hr. con- 
sumed per month 11.5* gross^ 10.5* net; 14.5* gross, 13.5* net 

Minimum bill, $1.00 per month. 

Power — including cooking and heating. 

Demand Charge. 

$1.26 per kw. for the maximum demand determined by taking the aver- 
age demand over the maximum fifteen minute period of each month aa, 
provided for in the body of this decision, excepting motor installations 
wliose demand is otherwise provided for as follows: 
Less than 10 h. p. — one motor, 90 per cent of connected load. 
Less than 10 h. p. — more than one motor, 80 per cent of connected load. 
10 h. p. or more but less than 20 h. p., 70 per cent of connected load. 
20 h. p. or more but less than 50 h. p., ^0 per cent of connected load. 

Energy Charge. 

First 100 kw. hr. consumed per month 7^* gross, Ci* net 

^ext 400 kw. hr. consumed per month 6i* gross, SJ* net 

Next 1,000 kw. hr. consumed per month 5A* gross, 4.}* net. 

Next 1,500 kw. hr. consumed per month 4^* gross, 3^* nel. 

All over 3^000 kw. hr. consumed per month 3^* gross, 2^* net 

Optional Power Hate — for installations of less than 50 h. p. to be applica- 
ble only when the customer elects to take this rate for all service 
used by the installation to which it is applicable within one year of 
the date of such election. 
10* per kw. hr. for the first 10 kw. hrs. per month per h. p. of connected 

load. 
6* per kw. hr. for the balance of 1,000 kw. hrs. per month. 
3* for all in excess of 1,000 kw. hrs. per month. 

Minimiun charge— -$1 per month per h. p. of total connected load. 

All bills are payable during the ten days following the dating thereol 
at the net rates. After this period the gross rate shaO apply. 

Dated at Madison, Wisconsin, this 30th day of August, 191d. 
Raiboad Commission of Wisconsin, Henry IL Trumbower, 
and John S. Allen, Commissioners. 

F.U,R.1920A. 



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«» WISCONSIN RAILROAD OOMMISSION. 



WISOONSnf RAIIiBOAD OOBIMISSION. 

ANDBBW WIKUM et aL 
, V. 

WISCONSIN TELEPHONE COMPANY. 

Mates ^ Telephones — Lang line subscribers — Benefit to sihert line 
Mubsoribers, 

1. Under ordinary telephone rate schedules,, short line fiubscribers 
•re made to bear a part of the cost on the lines of the long line siib- 
acribers, since the former receive benefits by the connection with the 

. . latter. 
efervice — Extensions — Effect of increasing cost of labor and ma- 
terials. 

2. The increasing cost of material and labor should not have much 
.(' effect upon the length of line which a telephone company should be re- 
quired to build to reach a prospective subscriber, where the community 

' fs s6 developed that subscribers can afford to pay for ordinary staad- 
jMrds of service. 

ilervioe -« Extensions — Cost — By whont to be borne. 

3. Tlie normal rural development of a telephone plant should be 
made at the expense of the company, and rates fixed accordingly, rather 
than have each rural extension made upon the basis of the subscribers 
bearing the cost above a certain fixed figure. 

J^iee .— Telephones — Excess radius rates. 

4. If a telephone company seta up a rate schedule providing for a 
' higher* rental for subscribers beyond a fixed radius than for subscrib- 
ers Vithin that radius, it should be deenoied to have provided for any 
additional costs by means of such higher rentaL 

^ BetiJim -^ Reasonableness as a whole — Telephone extensions, 

' .. 6. A. telephone company may be required to operate one of its lines 
for less than a fair return on that portion, provided always that the 

^ return on the property as a whole is not thereby diminished so as to 
render the business as a whole unprofitable. 

[October 11, 1919.] 

Complaint as to alleged refusal by the Wisconsin Telephone 
Company to extend service to Andrew Wikmn and others; re- 
spondents ordered to extend line to applicant. 

By the Commission: Informal complaint was filed by An- 
drew Wikum and a number of other parties, alleging, in sub- 
stance, that they reside in §§ 15, 16, 21, 22, and 27 of the town 
of Dunkirk, Dane county, and have applied to the Wisconsin 

P.U.R.1920A. 



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WIKUM V. WISCONSIN TELEPHONE CO. 357 

Telephone Company for service from the company's exchange at 
Stoughton, and have been nnable to obtain such service. 

The Commission conducted an investigation on its own motion, 
and a formal hearing was held on September 16, 1918, the com? 
plainants appearing in their own behalf and J. F. Erjizek, att(>r-, . 
ney, appearing for the company. . ... 

At the time of the hearing, the business of the company yr&B 
being operated under Federal control, and the respondent was, 
under instructions to make no extensions of its lines except fojr. 
war purposes. For that reason the matter has been hejd in abey-, 
ance until the present time. , 

[1] It appears from the record that the parties all reside with- 
in 6 miles of Stoughton, where all their business is transacted., 
The proposed extension will require the building of about 2.6 
miles of new line and the stringing of an additional circiiit opa 
existing poles from Stoughton to the end of the present liner-rra. 
distance of approximately 6.4 xniles. There is no dispute on the. 
question of public convenience and necessity, the only question., 
presented being with respect to the proper division of the cost of 
the extension. Eespondent estimates the total cost at present, 
day prices, and including substation equipment, at approximately 
$990. The Commission's check on this estimate indicates tl^at^ 
this figure is not too high to serve as a basis for computation, 
The company has in effect at its Stoughton exchange a schedi^le, 
calling for an excess radius charge for service beyond the 5 mile, 
limit, measured on an air line from the exchange. Under this, 
schedule seven of the subscribers, being more than 5 miles .oi;it>^ 
would pay a rate of $18 per year, while the other two would take 
the regular rate of $15. Gross revenue to be anticipated from the. 
extension amounts to $156 per annum, there being no present 
probability of securing additional subscribers. It will thus be, 
seen that if respondent is to build the whole line at its own ex-r. 
}>ense, the investment will be somewhat over $100 per subscriber 
and the gross revenue $17.33 per subscriber. While these figures 
indicate a rather high investment per subscriber and a corr^. 
spondingly low return upon the investment, we should not loaie) 
sight of the fact that part of the annual costs incident to the ex- 
tension may rightfully be borne by the subscribers of the Stough- 
ton exchange with whom the prospective subscribers would have, 

P.X3.R.1920A. 



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358 WISCONSIN RAILROAD COMMISSION. 

telephone communication. We doubt if the return to the respond- 
ent of any of its rural lines built into the outlying zcmes is great 
enough to pay entirely the fixed charges, maintenance, and opera- 
tion thereof, and this is probably as it should be. Under the 
ordinary rate schedule those classes of subscribers with short 
lines bear part of the annual costs on lines reaching long line sub- 
scribers. This does not mean that the short line subscriber shares 
in a cost which is not his due. The fact that the short line sub- 
scriber benefits by the connection of the long line subscriber — 
transacts business with him over the telephone which is mutually 
beneficial — makes such a division of the costs proper. The re- 
spondent attempts to place practically the entire annual costs of 
the proposed extension upon the prospective subscribers. 

[2, 3] One of the principal elements entering into the respond- 
ent's argument against the extension is the present high cost of 
materials and the resultant excessive cost of the extension. We 
will assume that the extension which would now cost about $100 
per telephone was proposed in 1914 when the cost might have 
been $50 per telephone, and we will further assume that at $50 
per telephone the extension would have been put in without ques- 
tion, the rates at that time being the same as at present What 
disposition should be made of the extra $50 per telephone which 
the extension will now cost? Should it be assessed against the 
prospective subscribers, or should it be paid by the respondent, 
and the fixed charges thereon be absorbed by the earnings of the 
exchange as a whole ? Perhaps this may better be answered by 
another question. 

If me connections which were made for a subscriber many 
years ago at a cost of $50 now have to be replaced at a cost of 
$100, should that subscriber pay the added cost of the replace- 
ment ? We do not understand that such a policy is proposed by 
any public utility, and it seems to us that the same principle 
should apply, with limitations in extreme cases perhaps, in the 
case of new service. Where the community is so developed that 
subscribers can afford to pay for ordinary standards of service, 
the increasing costs of material and labor should not have much 
effect upon the length of line which the company should build to 
reach a prospective subscriber. The extent of the territory 

naturally to be served by a telephone company is not affected hj 
P.U.R.1920A. 



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WIKUM V. WISCONSIN TELEPHONE CO. 369 

variations in the cost of building a telephone plant, and rather 
than have each rural extension made upon the basis of the sub- 
scribers bearing the cost above a certain fixed figure, the normal 
rural development should be made at the expense of the company 
and the rate fixed accordingly. 

[4] There is another element which should be considered in 
this case. That is, that the company has provided in its rate 
schedule an excess radius charge for rural extensions beyond a 6 
mile radius. It is not a matter for consideration here that this 
excess radius charge may or may not be sufficient to meet the cost 
on the basis of the present prices of telephone equipment. The 
point is that the rate schedule in its present form is designed to 
cover the cost of furnishing rural service within any area which 
is likely to be served from the Stoughton exchange as long as 
there will be a normal development of business on any prospec- 
tive rural line. If the rate is inadequate the proper remedy is 
not to charge against the prospective subscribers a part of the 
capital cost but to provide a proper rate. 

In this case there seems to be no question but that the develop- 
ment on this line will be substantially normaL There are nine 
subscribers to be served, the greatest distance of any of them from 
the exchange being only a little over 5 miles. Nine subscribers 
on a line of this length would constitute practically a normal 
loading. That being the case, it would seem to follow that, inas- 
much as the telephone company has set up a rate schedule provid- 
ing for a higher rental for subscribers beyond the 5 mile radius 
than for subscribers within that radius, it should be deemed to 
have provided for the additional cost by means of such higher 
rental The question of the adequacy of the rate is not an issue 
in this case. One of the purposes of having an excess radius 
charge as a part of a rural rate schedule, as we understand it, is 
to meet just such situations as that involved in this case, and if 
the company builds the extension at its own expense, it will only 
be performing a duty which it has assumed by adopting and filing 
the schedule of rural rates which it has on file, including the ex- 
cess radius charge. 

The company contends that it should not be required to expend 
any greater sum than that on which a revenue of $166 per year 
will pay a gross return of 33 per cent to cover operating expenses, 

P.U.K.1920A. 



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360 WISCONSIN RAILROAD COMMISSION. 

fixed charges, and return on the investment On that basis the 
company would expend only about $470 on the line, leaving^ 
about $550 to be paid by the nine applicants. 

[5] This contention seems to ignore entirely the effect of the 
excess radius charge, and proceeds on the further erroneous as- 
sumption that the company is entitled, as a matter of right, to 
earn the usual rate of return on the extension considered by it- 
self. It is, of course, well settled that a utility may be required 
to operate a small portion of its facilities for less than a fair re* 
turn on that portion, provided always that the return on the prop- 
erty as a whole is not thereby diminished so as to render the busi- 
ness as a whole unprofitable. New York ex reL N. Y. & Q. Gas 
Co. V. McCall, 245 U. S. 345, P.U.R.1918A, 792, 62 L. ed. 387, 
38 Sup. Ct. Rep. 122, and cases cited. In the absence of any 
proofs as to any detrimental effect of the expenditure on the re- 
turn as a whole, it must be assumed that the income of the ex- 
change at Stoughton will still be adequate, and that the excess 
radius charge will provide for the increased cost of ordinary ex- 
tensions beyond the 5 mile limit. 

The Commission therefore finds: 

(1) That public convenience and necessity require that the 
service of the respondent be extended to the petitioners herein. 

(2) That while the extension herein proposed may not of itself 
constitute a paying investment, the location of the proposed sub- 
scribers is clearly within the rural zone which the Stoughton 
exchange should serve and the cost of the extension should there- 
fore be borne by the company. 

It is therefore ordered that the respondent, the Wisconsin Tele- 
phone Company, within sixty days from the date of this order ex- 
tend its lines from its Stoughton exchange and furnish telephone 
service to the parties herein. Provided, however, that the respond- 
ent may, at its option, require a deposit by any or all of such 
applicants of not to exceed three years' rental as a further consid- 
eration of receiving service, the amount of the deposit to be appli- 
cable upon the annual rental. 

Dated at Madison, Wisconsin, this 11th day of October, 1919. 

Railroad Commission of Wisconsin, Carl D. Jackson, Henry 
R. Trumbower, and John S. Allen, Commissioners, 

P.UJ1.1920A. 



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R£ MJLl.WAUik££ £L£ClKiC RAILWAY & L. CX). 861 



WISCONSIN RAIIiROAD COMMISSION. 

BE MILWAUKEE ELECTEIC EAILWAT & LIGHT COM- 

PANY et aL 

• [Kr.1909.] 

BE MrLWAUKEB ELECTRIC EAILWAY ft LIGHT COM- 

PANY. 

[B-2603.] 

BE EEPOBT OF BOARD OP CONCILIATION AS TO WAGES 
OP MILWAUKEE ELECTRIC RAILWAY & LIGHT COM- 
PANY. 

BE INVESTIGATION AS TO TRANSFER PRIVILEGES IN 
CITY OF MILWAUKEE. 

Metum — Oro98 revenues — Street raUwaya — Eetimatee. 

1. In • proceeding to fix rates for a street raUway company, the 
Wisconfiin Commisaion estimated the operating revenues for the year 
as four times the revenues for the months of May, June, and July, 
since the earnings in those months in 1016 and 1917 were approximately 
one-fourth of the earnings for the calendar years of 1016 and 1917. 

Itetum — Operating eocpenses — Method of estimating for future coet 
of maintenance. , 

2. Average expenditures for actual maintenance over a period of 
years rather than information gained by an audit examination covering 
a brief period, furnishes the most reliable index as to what are normal 
expenditures for way and structure maintenance. 

lEtetum — Operating eocpenses — Way and etrtioture maintenance — 
Method of estimating, 

8. In working out an allowance for way and structure maintenance 
of a street railway, the Wisconsin Conunission used two bases: First, 
using average expenses per year per books, reduced to the level of pre- 
war prices, and applying to this cost the estimated increase in present 
day costs over prewar costs; second, applying to the adjusted figures 
for such maintenance for the calendar year of 1916, the estimated in- 
crease in the cost of labor and materials for 1919 over 1916.. 

Depreciation — Street railways — Amount. 

4. The Wisoonsin Commission allowed a rate of 2.82 per eent for 
tiie depreciation of a street railway. 

Rates — Street railways — Suhurhan passengers — Burden of rush* 
hour or tripper service. 

5. A suburban street railway rider, who enjoys the advantages of 
a greater load factor because of the suburban cars carrying city passen- 
gers during offpcak hours, and who also enjoy the same transfer 

P.U.R.1920A. 



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3(52 WISCONSIN RAILROAD COMMISSION. 

privileges as city passengers, must bear some portion at the cost of the 
more expensive tripper service during rush hours, although such ser\'ice 
IS mainly consigned to the urbai^ districts. 
Service — Street railways — Extensions — Brospeotive return. 

6. If the needs of a growing community are to be served adequately 
by a street railway, it is inevitable that extensions will be made be- 
fore the population, in suburban areas, has reached a density such that 
these extensions will become inmiediately profitable from the point of 
view of revenues earned within the suburban sones. 

Depreciation — Suburban street railuyays — Amount. 

7. The Wisconsin Commission fixed the allowance for depreciation 
for the suburban lines of a street railway at 2.82 per cent. 

Betum ^ Seasonablensss — Factors — Past earnings, 

8. To require a street railway to forego a reasonable return for 
a period sufficiently long to absorb excessive past earnings, received 
under lawful rates provided for in franchises, would not only be ques- 
tionable as violating the United States Constitution, but would also 
be establishing a principle against public policy and against the inter- 
est of the patrons. 

Depreciation — Use of reserves, 

9. No good public policy is served by a segregation of depreciation 
reserves in a bank at moderate rate of interest to be used only to re- 
place property retired from service, but it is in ^e public interest as 
well as in the interest of the utility that these funds shall be used from 
time to time for corporate piu^oses, especially for extensions and addi- 
tions to property. 

Depreciation — Reserve funds — Interest, 

10. Interest on depreciation reserves, whether invested in securities 
or in extensions or betterments should be credited to the reserve. 

Service — Adequacy — Duty to render, 

11. Adequate service is as much a corollary to fair rates of return 
as is the right to demand a fair rate of return for adequate service 
rendered. 



Itetum — Operating expenses — Way and structures maintenance. 

Table showing way and structures maintenance of Milwaukee 
Street Railway on basis of prewar costs, p. 369. 

Betum — Operating expenses — Increased cost^of labor and ma" 
terials. 

Statement showing results of study as to increases in cost ol main- 
tenance of way and structures, labor, and materials, p. 370. 
Betum — Operating expenses — Equipment eoopense. 

Table showing equipment expense of Milwaukee City Rallvay on 
basis of prewar costs, p. 876. 
Betum — Operating expenses — Increased east of tabor and mmk- 
terials. 

Statement showing increase in cost of equipment labor and ma- 
terials, p. 376. 
P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 363 

Betum — Operating expenses — Effect of change in maintenance 
expense. 

Discussion of policy of not disturbing rate structure because of 
fluctuations in maintenance costs, p. 378. 
Return — Operating expenses ^ Federal income tax. 

Statement that Federal income tax is a factor to be considered in 
fixing rates, p. 381. 
Return — Reasonableness as a whole — Street raUway system. 

Statement that in considering the fares of a street railway com- 
pany in suburban districts, some weight must be given to the whole sy*' 
tern as a unit, p. 382. 
Rates — Street railivays — System of fare. 

Discussion of elements to be considered in establishing an equitable 
system for street railway fares in a large city with suburban districts, 
p. 390. 
Service — Street railways — Two'coin fares — Time of loading. 

Discussion of elTect on time of loading of fares necessitatiBg use 
of more than one coin, p. 391. 
Rates — Street railways — Advantages of lower ticket rate. 

" Discussion of right of regular street railway riders to have an ' 
advantage of lower ticket rates, p. 891. 
Rates — Street railtvays — Vse of fare toUen, 

Discussion of use of tokens to pay street railway fares, p. 393. 
depreciation — Basis for computing. 

Statement that ordinarily depreciation should be computed on cost 
op property and not on operating revenues, p. 398. 
Return — Operating expenses — Federal income tax. 

Discussion of method of treating Federal income tax as an operat- 
ing expense, p. 401. 
Rates — Street railways — Cost hasis of fare. 

Discussion concerning the advisability of establishing an automatie 
eo8t basis of fares, p. 406. 

[October 30, 1919.] 

Application for increase in fares of the Milwaukee Electric 
Railway & Light Company ; increase granted to enable utility to 
earn a fair return and particularly to pay wage increase sug* • 
gested by report of Board of Conciliation. 

By the Commission: The case covered by Railroad Commis- 
sion File No. R-1909 was disposed of by the decision of April 
4, 1919, Milwaukee Electric R. & L. Co. v. Milwaukee, P.TJ.R. 
1919D, 504, except that jurisdiction was retained as to service 
matters and accounting practices. 

Case No. Rr-2503 originates upon the application of the Mil- 

P.U.R.1920A.. 



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364 WISCONSIN RAILROAD COMMISSION. 

waukee Electric Railway & Light Company, filed with this Com- 
mission on July 26, 1919, for a revision of rates of fares, zone 
limits and service standards, upon its electric railway system 
operated within the Milwaukee single fare area and adjacent 
suburban zones. The application sets forth at length the conten- 
tion of the applicant that the fares provided for by the previous 
orders which are referred to in this petition have not given the 
railway utility a reasonable return upon its property devoted to 
the railway business within the single fare and suburban areas. 

Subsequent to the filing of this application, the question of 
wages to be paid in the Transportation Department of the utility 
was brought before the Board of Conciliation of Wisconsin in 
accordance with the provisions of Chap. 530 of the Laws of 1919. 
The final report of the Board of Conciliation was filed with this 
Commission on the I7th day of September, 1919, and was subse- 
. quently approved by the Commission, though the order provided 
for by Chap. 530 of the Laws of 1919 has not been entered. Sec- 
tion 2 of the act referred to provides, among other things, as fol- 
lows : 

"In the event such dispute shall arise between any public serv- 
ice corporation and its employees of any class, division or grade, 
and said Board of Conciliation shall investigate and report there- 
on as herein provided and determine the wages, hours of labor 
or working conditions to w hich such employees are reasonably en- 
titled, such determination shall be immediately submitted to the 
Railroad Commission of Wisconsin, which Railroad Commission 
shall without delay further investigate the said matter and make 
and file its determination therein, confirming or modifying the 
report of said Board within 45 days after receiving the same. U 
the earnings of such public s.ervice business in which such em- 
ployees are engaged are found to be sufficient to meet the cost of 
making the determination of said Commission effective without 
depriving said corporation of a fair return upon the capital em- 
ployed in such business as determined by the Railroad Com- 
mission, said Railroad Commission shall order such public service 
corporation to make effective the wages, hours of labor, and 
working conditions so determined by it to be fair, equitable, and 
just, otherwise the Commission shall provide for such a revision 
of the rates, tariffs, and charges of such public service business 

P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 865 

as win enable it to meet such cost and yield a fair rate of retnin 
upon the capital employed therein, as determined by the Rail- 
road Commission, which order of the Railroad Commission shaU 
be subject to review in the manner now provided by law/* «te. 

Hearings in the above-referred-to matters were held at the Cijy 
of Milwaukee on August 18 and September 26, 1919. The ap- 
pearances were: James D. Shaw, on behalf of the Milwaukee 
Electric Railway & Light Company; Clifton Williams, City Ai^ 
tomey for the city of Milwaukee ; Albert H. Houghton, City At- 
torney for the city of Wauwatosa; George H, Gabel, Attorney on 
behalf of Shorewood ; J. E. Tiemey, City Attorney for West Allis 
and representing the village of West Milwaukee ; J. P. Beuschei;, 
on behalf of the Federal Rubber Company et al. ; R. S. Witte ; 
City Attorney of North Milwaukee; W. O. Mielhan, for G, J. 
Davelaar, on behalf of the town of Wauwatosa ; H. J Piper, on 
.behalf of the tovm of Lake ; Henry Cadby Case, on behalf of Allis 
Chalmers Company ; G. C. Dutcher, City Attorney, on behalf of 
the city of Cudahy; W. J. Riley, City Attorney, on behalf of 
South Milwaukee ; Ross W. Harris, Engineer, on behalf' of th^ 
Suburban Municipalities; F. W. Doolittle, statistician. On behalf 
of the Milwaukee Electric Railway & Light Company; S. L» 
Odegard, statistician, on behalf of the city of Milwaukee^ J. B. 
Hogarth, accountant, on behalf of the city of Milwaukee. ' 

On the question of transfer privil^es in the city of Milwaukee, 
a hearing was held on August 27, 1919. Mr. Blake of Milwaukee 
appeared for the Milwaukee Electric Railway & Light Company 
and Clifton Williams on behalf of the city of Milwaukee. 

The increased cost growing out of the wage adjustment mad^ 
by the State Board of Conciliation is not confined to the Tranla- 
portation Department but other collateral wage adjustments af- 
fecting the railway utility grow out of this adjustment. The es- 
timated total increases in wages affecting the railway titility in 
single fare and suburban areas was estimated at the time of the 
hearing by the company at $710,000 and for all railway utilities 
of the company, including the intcrurban and the city of llacilie^ 
at $829,000. The case also involves questions of increased taxes 
and other items of operating costs which are referred to in the? 
opihion. This opinion deals solely with the single fare an^ sub-' 

P.UJt.l920A. * ' 



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S^ WISCONSIN RAILROAD COMMISSION. 

ui*ban area, a separate hearing being held in relation to the street 
car situation in the city of Eacine. 

' Many of the questions here invoved have been fully discussed 
in previous opinions of this Commission, particularly those of 
^une 1, 1918, Milwaukee Electric R & L. Co. v. Milwaukee, 
P.U.R.1918E, 1, and April 4, 1919, Milwaukee Electric I. & L. 
Co. v. Milwaukee, P.TJ.R.1919D, 504. ,The question of valua- 
tion of the railway utility in the single fare and suburban area 
has been discussed at great length in those opinions in connection 
with the capital employed in such utility. We see no reason to 
change the decisions there arrived at on that question. 

Estimate of Revenues and Expenses for the Coming Tear at 
Present Rates of Fare. 

This forecast of the results from operations for the coming 
year has been made on the basis of the present rates of fare and 
is designed to indicate merely the amount by which the present 
fares fail to yield an adequate return upon the fair value of Mil- 
waukee city and suburban railway property. Having determined 
the amount of this deficiency we shall then, in the following sec- 
tion, indicate the specific fare increases considered necessary in 
order to provide the additional revenue requirements. 

In making an estimate of the results from operations for the 
^Kmiing year, it has been decided to use as a base the three months 
'ending July 81, 1919, giving due consideration, to seasonal varia- 
tions and to increases in the cost of labor and material. 

At the direction of the Commission an audit was made of the 
accounts of the Milwaukee City Railway for the three months 
ending July 31, 1919. In connection with this audit no verifica- 
tion was made of way and structures and equipment expenses, as 
these expenses have been reserved for special consideration by 
the Commission. Following the completion of the audit a hear- 
ing was held at which the parties in interest were given an oppor- 
tunity to examine the auditor upon the results of his investiga- 
tion. No serious criticisms of the audit findings were made, and 
in our judgment the income account, as adjusted by the auditor, 
correctly states the results from operations for the Milwaukee 
Oity Railway utility for the three months ending July 31, 1919^ 

P,U.R.1020A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 



367 



subject to adjustments of way and structures, and equipment ex- 
penses which, were not audited. 

In the following summary will be found a statement of the in- 
come aooount of the Milwaukee City Railway for the three months 
ending July 31, 1919, as audited. 

MILWAUKEE CITY RAILWAY. 
Inoome Account Three Months Ending July 31, 1919. 



Particulars. 



Operating revenues 

Operating Expenses — 

Way and structures 

Equipment * 

Traffic 

Power 

Conducting Tlransportation 

General 

Undistributed 



Fixed Chariest 
Depreciation 
Taxes 



Total operating expenses 
Net oper&ting income . . . 



Per Books. 


As Adjusted. 


$1,585,246.66 


$1,585,246.60 


$155,572.19 
152,890.09 


$155,572.19 

152,890.09 

1,941.05 


ii9.28.'5.72 
685,043.27 

51,510.78 
87,008.30 


1 207,559.00 

586,043.27 

43,536.87 

68,627.29 


$1,151,319.35 

79,355.17 
79,262.33 


$1,215,169.76 

100,191.68 
54,190.84 


$1,309,936.85 


$1,369,552.28 


$275,309.81 


$215,694.38 



* Includes allowance for fixed charges and return on power plant prop- 
erty and for proportion of general and undistributed expenses. 

It is obvious, however, that in times when the cost of labor and 
materials is constantly rising the results from operations for any 
period cannot be used as a basis in forecasting revenues and ex- 
penses for the future unless due consideration be given to changes 
in the cost of materials, wage increases, seasonal variations, and 
other influences which may require adjustments of the base 
figures. In the following pages appears a detailed statement of 
the bases used" and the methods followed in estimating revenues 
and expenses for the coming year. 

Milwavkee City Railway. 

Operating Revenues, $6M0,986M- 

[1] Operating revenues for the three months ending July 31, 
1919, were $1,585,246.66, which on an annual basis would aggre- 
gate $6,340,986.64. Operating revenues for the three months 
ending July 81, 1916, were 24.43 per cent of the total operating 
revenues for the calendar year 1916, and operating revenues 

P.U.R.1920A. 



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368 WISCONSIN RAILROAD COMMISSION. 

for tb^ three months ending July 31, 1917, were 24.48 per cent 
of the operating revenues for the calendar j^ear 1917. By stating 
the operating revenues for the three months ending July 81, 
1919, upon an annual basis, we have assumed that these revenues 
will aggregate 25 per cent of the total revenues for the calendar 
year 1919. If the experience of the years 1916 and 1917 is re- 
peated in 1919, the revenues for the three months ending July 31, 
1919 will be slightly less than 25 per cent of the total reveneus for 
the calendar year 1919. We believe, therefore, that the estimate 
of $6,340,986.64 for operating revenues on present basis of fares 
for the coming year is conservative. 

Way and Structures Expenses, $41S,996.i7. 

In making an estimate of normal way and structures expenses 
for the coming year, it was decided to consider, first of all, what 
these expenses should be upon the basis of price levels in effect at 
the end of the audit period, and secondly, to consider the effect of 
wage increases in the way and structrues departmelit, effective 
after August 1, 1919, or which are expected to be granted in the 
near future. 

[2, 3] In the determination of proper allowances for way and 
structures and equipment maintenance for rate purposes, the in- 
formation furnished by an audit examination is, in many cases, of 
only secondary value, for the reason that in a case, such as the one 
under present consideration, the questions involved relate not 
only to the character of the expenditures which may properly be 
considered maintenance, but also to the amount of maintenance 
which may properly be considered normal for any one year. It is 
believed that average expenditures for actual maintenance work 
for a long period of years should furnish the most' reliable index 
as to what normal expenditures should be, having due regard, of 
course, to changes in cost of labor and materials over the period. 
It is known, however, that the accounts of the company, which 
recprd the expenditures for way and structures maintenance for 
prior year, do contain charges which should properly have been 
made to property and plant or to the depreciation reserves. Any 
allowance, therefore, for way and structures maintenance ex- 
penses based upon the average of these expenditures in prior 
years, per books, will necessarily be high in Aat it will be based 

P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 



169 



xipon Tecords of expenses whioh contain charges that should prop- 
erly have been capitalized. For this reason it has been deter- 
mined to work out the allowance for way and structures mainte- 
nance upon two bases. The first base uses average expenditures 
for way and structures maintenance per year per books, reduced 
to the level of prewar costs, and to this cost is applied the esti- 
mated increase in present day costs over prewar costs. The 
second base applies to the adjusted figures for way and structures 
maintenance for the calendar year 1916, the estimated increase in 
the cost of labor and materials for 1919 over 1916. 

In connecticfn with the computation of the average per books 
expenditures for way and structures maintenance, upon the basis 
of prewar costs, the following summary has been prepared. In 
this summary, the results for the years ending June 30, 1909 to 

1917, inclusive, are as per the company's annual reports to the 
Commission. The expenditures for way and structures mainte- 
nance, as reported by the company for the year ending June 30, 

1918, have been reduced to a prewar cost basis. The figures used 
for the last six months of 1918 are as per books, reduced to pre- 
war cost, and the estimates for the calendar years 1919 and 1920 
represent the per books results for the seven months ending July 
81, 1919, reduced to the level of prewar prices. 

MILWAUKEE CITY RAILWAY. 

Way and Structures Maintenance July 1, 1908 — December 31, 1920. 

On Basis of Prewar Costs, 



Year Ending June 30. 



Per 
Revenue 
Car Mile. 



Per Dollar 

of Operating 

Revenue. 



Per Mile of 
Single Main 
Track. 



1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

1917 

1918 

Last 6 months 

1918 

Calendar year 

1939 

1920 



$.0102 
• .0117 
.0112 
.0105 
.0099 
.0088 
.0068 
.0117 
.0116 
.0112 

.0077 

.0164 
.0164 



$.0377 
.0432 
.0403 
.0371 
.0344 
.0306 
.0249 
.0413 
.0394 
.0368 

.0229 

.0440 
.0440 



$995.20 

1,154.40 

1,122.10 

1,070.40 

840.10 

727.40 

549.20 

984.50 

1,050.50 

1,027.42 

719.44 

1,625.71 
1,525.71 



Average 



.0116 



.0381 



$1,060.17 



P.U.R.1920A. 



24 



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870 WISCONSIN RAILROAD CX)MMISSION. 

Althou^ no extended investigation was made to determine this 
fact, it appeared from such information, as was available, that 
the price levels prevailing at December, 1916 represented approx- 
imately the average price level for the period from July 1, 1908 to 
June 30, 1917. For the year ending June 30, 1918, the costs per 
books for way and structures maintenance have been reduced by 
28.62 per cent representing the composite increase in the cost of 
way and structures labor and materials over 1916 in order to state 
the costs on the basis of 1916 prices. The per books costs for 
the last six months of 1918 were reduced by 47.97 per cent. This 
percentage represents the rate of increase in the unit cost of labor 
and materials for December, 1918 over December, 1916. As the 
results for the last six months of 1918 cover the one-half of the 
calendar year, these figures have been divided by 2 to place them 
on a comparable basis with the figures for full years. 

In order to bring down to date previous studies of changes in 
the costs of labor and materials, a study was made of the cost of 
materials for the month of July, 1919 as compared with the month 
of December, 1918, and of wages for the last half of July, 1919 as 
compared with December, 1918. This study showed that at July, 
1919 there had been an average increase in the unit cost of way 
and structures labor of 64.39 per cent over December, 1916, and 
that there had been an average increase in unit cost of way and 
structures materials of 48.77 per cent over December, 1916. 
Using the same relative proportions of total way and structures 
cost for labor and materials which obtained in 1916, we find that 
at July, 1919 there had been a composite increase in way and 
structures labor and material imit prices of $56.25 per cent over 
1916. Applying this percentage to the per books expenses for 
the seven months ending July 31, 1919, we arrive at a figure of 
$160,555.69 representing approximately the cost of way and 
structures maintenance for the seven months ending July 31, 
1919, if stated upon a basis of 1916 costs. This figure 
represents a cost of 1.64 cents per car mile, of 4.40 cents per 
dollar of operating revenue, and, stated on an annual basis, 
of $1,525.71 per mile of single main track. For the pur- 
poses of this computation it has been assumed that way and 
structures maintenance work occurs to some extent in cycles, that 
the company at the present time is experiencing a period whea 

P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 371 

way and structures maintenance expenditures are above normal. 
In order to give full recognition to this period of abnormal ex^ 
penditures for way and structures maintenance, we have assumed 
that the same relative amount of maintenance work will be done 
for the calendar years 1919 and 1920 as was done for the seven 
months ending July 31, 1919, and consequently we have included 
an estimate for these years m our figures. 

We now have figures covering twelve and one-half years stated 
approximately upon the basis of average costs prevailing during 
this period, and we find that the average cost of way and struc- 
tures maintenance per revenue car mile for this period was 1.15 
per cent. This cost is exclusive, of course, of the cost of cleaning 
and sanding tracks and of removing snow, ice, sand, and dirt 
from tracks. 

A similar study was made of the coett of cleaning and sanding 
tracks and of the cost of removing snow, ice, sand, and dirt from 
tracks. This study indicated that the average cost, on the basis 
of 1916 prices, of way and structures operation was $199.68 per 
mile of single main track. Our estimate of way and structures 
expenses for the coming year, before giving recognition to wage 
increases not effective prior to August 1, may be summarized as 
follows : 

Operation, 
180.4 miles of single main track at $199.68 per mile=$36,022.27, cost 
on basis of 1016 prices. Cost of way and structures operation on basis of 
1019 price8= $36,022.27, increased by 66.26 per cent, or $56,284.80. 

Maintenance, 
Car miles seven months ending July 31« 1919=9,767,978 or 
16.745,105 stated on an annual basis; 16,745,105 car miles at 
1.15 cents per car mile=$102,568.71; $192,56JS.71 increased by 
56.25 per cent represents our estimate of way and structures 
maintenance at prices prevailing July 31, 1919 and aggregates $300,888.61 



Total way and structures allowance on basis of costs prevail- 
ing July 31, 1919 $357,173.41 

In making this estimate of way and structures cost for the 
coming year upon the basis of average results for a twelve and 
one-half year period, we recognize that we are using per books 
figures ind that these figures contain charges which should more 
properly have been allocated to capital expenditures. In conneo- 
tion with the rate determination for the Milwaukee city and sub- 
urban railways, embodied in our decision of April ^ 1919| Mil* 

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372 WISCONSIN RAILROAD COMMISSION. 

waukee Electric E. & L. Co. v. Milwaukee, P.TJ.R1919D, 504, 
we worked out an estimated allowance for way and structures ex- 
penses which attempted to recognize the fact that the costs per 
books for way and structures expenses over a period of years do 
contain charges which should more properly have been allocated 
to capital expenditures. The Commission's estimate at that time, 
therefore, applied to way and structures expenses for the calen- 
dar year 1916 as adjusted by the Commission's auditor, the com- 
posite increase in the cost of labor and materials for 1918 over 
1916, and arrived in that manner at an allowance for way and 
structures expenses for ihe future. Upon the basis of per books 
figures it was shown that the maintenance of way and structures 
expenditures for the calendar year 1916 were slightly above nor- 
mal, and it was assumed that the company had followed the same 
accounting policy during the entire period from 1909 to 1918. 
If such were the case, the selection of the year 1916 as a base and 
the use of adjusted way and structures expenses for 1916 in de- 
termining the proper allowance for way and structures expense 
would be entirely justified. It is noted, however, that the expend- 
itures for removing snow, and ice, and cleaning and sanding 
tracks were approximately $26,000 for the year 1916, as com- 
pared with an average of $32,000 for the ten year period ending 
June 30, 1918. In the use, therefore, of actual 1916 expenditures 
for way and structures operation, and applying thereto the aver- 
age increase in the cost of labor and material, 1918 over 1916, it 
would appear that in the April 4th decision the allowance for 
way and structures operatioji was hardly adequate. This short- 
age, however, is relatively small. K we apply the method fol- 
lowed in the April 4th decision to a determination of way and 
structures maintenance expenses for the future upon the basis 
of July, 1919 price levels, we should increase the adjusted figure 
for way and structures maintenance for the calendar year 1916 of 
$140,969.78 by 56.25 per cent, making a total allowance for way 
and structures maintenance of $220,265.28. To this allowance 
of $220,265.28 should be added the allowance for way and struc- 
tures operation, as previously determined, of $56,284.80, making 
a total allowance on this basis of $276,550.08, which is approx- 
imately $80,000 less than the allowance computed on the basis 
of a twelve and one-half year average of way and structures main- 

P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 878 

toiance costs per books. It would appear that either plan is open 
to some criticism ; that the plan of using per books figures ignores 
the fact that the per books charges for maintenance of way *and 
structures over this period, do contain item which should have 
been chained to capital expenditures. On the other hand, the 
method of basing the allowance for way and fiibuctures mainte- 
nance upon adjusted 1916 costs, increased to present day price 
level, assumes that the same accounting policy was followed 
throughout the entire period from 1909 to 1918, and that the por- 
tion of charges to way and structures maintenance made in 1916, 
which should have been charged to capital expenditures, would be 
found, upon investigation, to apply in a fairly constant ratio to 
the other years considered in the period. If the way and struc- 
tures maintenance accounts of the year 1916 contained unusually 
heavy charges for foreshortened life or major replacements, as 
compared with the other years which we have under considera- 
tion, then it probably would not be true that the actual main- 
tenance expenses for the year 1916 represented a fair index as to 
normal maintenance expenses per year over a considerable period 
of years. 

As has been stated, the difference between these two methods of 
computing the allowance for way and structures maintenance is 
approximately $80,000. In times such as these when there are 
constant fluctuations in the cost of labor and materials, and when 
there appears to be a tendency for costs to increase, it appears to 
us that allowance should be reasonably liberal, and, therefore, we 
have accepted the basis of average per books costs for way and 
structures maintenance in the determination of the proper allow- 
ance for the coming year. 

At a hearing held in Milwaukee, September 26, 1919, there 
were submitted, on behalf of the company, certain exhibits indi- 
cating wage increases which had been granted since April 4, 
1919, and also an estimate of additional labor costs which it is 
expected will be incurred in the near future. These figures have 
been examined by us and certain minor adjustments have been 
made. Although we have made no detailed verification of these 
estimated wage increases, and although it is not possible to state 
with absolute accuracy the amount of certain wage increases 
which are anticipated, nevertheless, we believe that the estimated 

P.U.R.1920A. 



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374 WISCONSIN RAILROAD COMMISSION. 

wage increases submitted by the company in these exhibits, sub- 
ject to the minor adjustments already mentioned^ are substantial- 
ly Correct. In the case of way and structures expenses, all in- 
creases, effective prior to August 1, have been recognized in the 
plan followed in the determination of the allowance for way and 
structures expenSes for the coming year, on the basis of price 
level prevailing at July 31, 1919. 

Increases effective after August 1, 1919, already granted aggregate $5S,677.5(( 
H'age increases anticipated for this department total • 26,487^7 

Making total increasea of $86,116.48 

It is obvious, however, that if a considerable portion of the 
charges to the way and structures maintenance accounts of the 
company during the coming year will cover items properly 
chargeable to capital expenditures, or which represent mainte- 
nance properly applicable to prior years, then a considerable por- 
tion of these wage increases would be considered as representing 
a charge against capital expenditures and deferred maintenance^ 
rather than a charge against maintenance expenses which should 
be considered as part of the normal maintenance expenses of tlie 
year, for purposes of rate determination. It is evident that the 
way and structures expenses for the three months ending July 
31, 1919, which are heavy maintenance months for roadway and 
track maintenance, furnish, if stated on an annual basis, no indi- 
cation as to what the company^s charges will be for way and struc- 
tures expenses during the coming year. In order, therefore, to 
estimate approximately the charge which will be made to way and 
structures accounts by the company during the coming year, if 
present policies are adhered to, we have made a computation of 
the ratio of way and structures expenses for the seven months 
ending July 31 to a twelve month period for the years 1916, 
1917, and 1918. We find that this ratio was 50.75 per cent for 
1916 ; 60.60 per cent for 1917, and 54.23 per cent for 1918, mak- 
ing the average per cent 52.34 per cent. We have assumed, there- 
fore, that the way and structures expense per books for the 
seven months ending July 31, 1919, of $273,773.84, represents 
52.34 per cent of the per books way and structures charge for a 
twelve-month period. On this basis, way and structures expenses 
per books ior a twelve-month period will be $523,068.10. This 

P.U.R-1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 375 

estimate, however, does not recognize the full effect of certain 
wage increases which were granted in this department July 1, 
and July 16, and taking these increases into account, we should 
add an amount of $11,981.53, making our estimate of the com- 
pany's charges for way and structures expenses for the coming 
year, on the hasis of July, 1919 price levels, $535,049.63. The 
Commission's allowance for way and structures expenses on the 
basis of July, 1919 price levels was $357,173.41, making an esti- 
mated amount of $177,876.22, which will be charged by the 
company to way and structures expenses during the coming year, 
which should be considered to consist of expenditures properly 
chargeable to deferred maintenance or to capital expenditures. 
On this basis we find that the Commission's allowance for way 
and structures expenses for the coming year amounts to only 
66.76 per cent of what we estimate will be. the company's charges 
to way and structures expenses for this period, and, therefore, of 
total wage increases, effective after August 1, of $85,115.43; 
only 66.76 per cent of this amount should be added to our allow- 
ance for way and structures expenses for the coming year. Our 
final allowance, therefore, of $413,996.47 for way and structures 
expenses for the coming year was determined as follows : 

Tlie Commission's allowance for way and structures expenses 
for the coming year, based on price leTcls prevailing in July, 
1919 $357,173.41 

Additional allowance for wage increases, effective after August 
1, or anticipated 56,823.00 

Total way and structures expenses allowance $413,996.47 

Equipment Expenses, $6^0,867.78. 

In the following summary will be found a statement of equip- 
ment expenses for the period from July 1, 1908 to December 13, 
1920, stated on the basis of average costs prevailing during the 

prewar period. 
P.UJt.l920A, 



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376 WISCONSIN RAILROAD COMMISSION. 

MILWAUKEE CITY RAILWAY. 

Equipment Expense — July 1, 1908 — December 31, 1920. 

On the Basis of Prewar Costs, 



Year Ending June 30. 


Per 
Revenue 
Car Mile. 


Per Dollar 

of Operating 

Revenue. 


1909 


$.0135 
.0ir,9 
.0131 
.0153 
.0214 
.0176 
.0153 
.0128 

. .0137 
.0179 

.0114 

.0211 
.0211 


$.0499 


1910 


.0587 


1911 


.0470 


1912 


.0539 


1913 


.0744 


1914 


.0613 


1915 


.0657 


1916 


0453 


1917 


.0464 


1918 


.0588 


Last six months 

1918 


.0340 


Calendar year 

1919 


i)665 


1920 


0565 






Average 


.0168 


.0559 



The same method, which was followed in regard to way and 
fltructures expenses, was followed in regard to equipment ex- 
penses for the year ending Jnne 30, 1918, for the last six months 
of 1918, and for the calendar years 1919 and 1920, in order to 
reduce the results for these periods to a basis of 1916 costs. For 
the year ending June 30, 1918, the costs per books were reduced 
by 29.39 per cent, representing the average increase in the unit 
<50st of equipment labor and material for that period over 1916. 
For the six months ending December 81, 1918, the per books costs 
were reduced by 58.70 per cent, representing the composite in- 
crease in the unit cost of equipment labor and materials for 
December, 1918 over December, 1916. In order to place the re- 
sults for this period upon a comparable basis with full years, we 
have divided the results by 2. The increase in the cost of equip- 
ment labor for July, 1919 over December, 1916 was found to be 
105.26 per cent, and the increase in equipment materials for 
July, 1919 over December, 1916, was found to be 60.76 per cent, 
and the composite average increase of labor and materials for 
July, 1919 over December, 1916, for equipment expenses was 
found to be 79.87 per cent. The equipment expenses for the 
seven months ending July 31, 1919 per boots, have been re- 
duced by the amount of these increasee in order to place them 

P.U.R.1920A, 



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RE MILWAUKEE ELECTRIC RAILWAY ft L. CO. 377 

upon the basis of 1916 costs. We have assumed that the amount 
of maintenance work done for the calendar years 1919 and 1920 
will be equals relatively, to the maintenance work done for the 
seven months ending Jtdy 31, 1919. We recognize that equip- 
ment maintenance work follows certain cycles from year to year. 
In the results from July 1, 1908 to June 80, 1918, it would ap- 
pear in general that there are included two low cycles and one 
high cycle, and it is believed that by including the years 1919 
and 1920 at the cost found for the seven months, ending July 81, 
1919, full recognition is given to the high cyde period of equip- 
ment maintenance which the company appear to be experiencing 
at this time, and we believe that, with the inclusion of these years, 
we have a reliable basis upon which to compute the average cost 
of equipment maintenance, on the basis of prewar prices for 
labor and material. The car miles for the seven months ending 
July, 81, 1919, stated on an annual basis aggregate 16,745,106, 
and if to these car miles we apply the cost per car mile of 1.68 
cents deduced from the forgoing summary of average equipment 
costs over a twelve and one-half year period, we arrive at a cost 
of equipment maintenance for a normal prewar period year of 
$281,817.76. To this amount should be added 79.87 per cent, 
representing the percentage of increase in the unit cost of labor 
and material for equipment expenses for July, 1919 over 1916. 
Computed upon this basis, the allowance for equipment expenses 
for the coming year would be $506,006.25. 

The foregoing estimate of equipment expenses, however, does 
not recognize the wage increases which, it is anticipated, will be 
granted in the near future in the rolling stock department. The 
increase anticipated in this department aggregates $52,916.63. 
A computation was made of the ratio of equipment expenses for 
the seven-month period ending July 81, to a calendar year 
period for the years 1916, 1917, and 1918. It was found that 
for the year 1916 the expenditures to July 81, aggregated 56.83 
per cent of the total for the year; for the year 1917, they aggre- 
gated 49.26 per cent of the total ; for the year 1918 they aggre- 
gated 60.78 per cent of the total ; for the three years combined, 
they aggregated 61.62 per cent of the total. Maintenance expenses 
per books for the seven months ending July 81, 1919, aggregate 
$371,790.72, and we have assumed that tiiis represents 51.62 per 

P.U.R.1920A. 



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378 WISCONSIN RAILROAD COMMISSION. 

cent of the maintenance expenses for the coming year before giv- 
ing recognition to anticipated wage increases. On this basis these 
expenses will be $721,643.47. An increase, however, was granted 
in the rolling stock department July 16, 1919, which would be 
crease the estimated amount of these equipment expenses by $46,- 
401.40, making a total of $768,044.87. The Conmiission's allow- 
ance for equipment expenses on the* basis of July, 1919 price 
levels, was $506,006.25. The company's charge for maintenance 
on this same basis would be $768,044.87. We conclude, there- 
fore, that of this $768,044.87 there is an amount of $262,038.62 
which should probably be considered as expenditures for mainte- 
nance work which has been deferred from prior years, and which, 
therefore, should not be recognized in making an estimate of the 
normal equipment expenses for the coming year. We find, there- 
fore, that of total estimated expenses of $768,044.87, only 66.88 
per cent may properly be considered as representing normal 
equipment expenses. As previously stated, the total wage in- 
creasei^ anticipated in the rolling stock department amount to 
$52,916.63, and to this amount we have applied the percentage of 
65.88, arriving at a figure of $34,861.48, representing our esti- 
mate of the anticipated equipment wage increases which are 
properly chargeable to normal equipment expense. Our estimate 
of equipment expenses for the coming year may be summarized, 
tlieref ore, as follows : 

Cdmmission's allowance for equir»7nent expenses for the coining 

year on the basis of July, 1919 price levels $506,006.25 

Wage increases anticipated 34,S61.48 

Total allowance for equipment expenses « $540,867.73 

It should be clearly understood that it is not anticipated that 
the Commission's allowance for way and structures and equip- 
ment expenses for the coming year will equal the expenditures 
charged by the company during this peyiod to these accotmts. 
The Commission feels that rates should not be disturbed by vio- 
lent fluctuations of maintenance expenses which, as has been said, 
follow cycles of high and low expense periods. It feels that its 
allowance for rate-making purposes should cover only a normal 
amount of nmintenance at the scale of prices then prevailing. 
The adoption of this policy, it may be said, involves the necessify 
in periods when the maintenance expenses are abnormally low of 

P.U.R.1920A. 



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HE MILWAUKEE ELECTRIC RAILWAY A L. CO. 379 

making some allowance to cover the deficiency below normal 
maintenance requirements for those years. 

The policy of the company in the past, moreover, has been to 
include in way and structures maintenance expenses charges that 
should properly have been made either to property and plant or 
to the depreciation reserves, and if this policy be continued in the 
future, it is quite possible that it may be a considerable factor in 
causing per books charges for way and structures maintenance to 
exceed the Commission's allowance. ' 

In the foregoing estimate of way and structures and equipment 
expenses for the coming year, no consideration has been given 
to the fact that, at the present time, an unprecedented demand for 
labor and a very high recession rate have combined to make the 
actual increase in the cost of labor exceed the average increase in 
wage rates. The effect of this factor does not admit of scientific 
computation, but it exists nevertheless and it will be recognized in 
the final determination of the additional earning requirements of 
the company. 

Traffic Expenses $7,76Jf,20. 

This allowance represents the adjusted amount for the three 
months ending July 31, 1919, as per the report of our auditor, 
stated upon an annual basis. 

Power, $830,236. 

The cost of power chargeable to the Milwaukee City Railway 
for the three months ending July 31, 1919, including a full al- 
lowance for depreciation and 7| per cent return on the invest- 
ment in power property devoted to city railway purposes, was 
bound by our auditor to be $207,559. Stated on an annual basis, 
this cost amounts to $830,236, and from such information as is 
available, it appears that this figure represents a normal cost for 
power during the coming year. 

Conducting Transportation, $2,827 JiBl. 19. 

The company^s expenditures for conducting transportation for 
the three months ending July 81, 1919, were $585,048.27. Stated 
on an anniial basis, these expenses amount to $2,840,173.08. In 
estimating the oopt of conducting transportation for the coming 
ye^r there should be added to this amount $487,078.11, repre- 

P.U.R.1920A. 



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880 WISCONSIN RAILROAD COMMISSION. 

senting Ae cost of wage increases in the transportation depart- 
ment, which, it is estimated, will be granted in tljp near future. 
The cost of conducting transportation, therefore, for the coming 
year has been estimated at $2,827,261.19. 

Oeneral Expenses, $184.,611.S7. 

General expenses, as determined by the audit report for the 
three months ending July 31, 1919, aggregated $43,536.87. 
Stated on an annual basis, these expenses amount to $174,147.48, 
and to this figure should be added an amount of $10,363.89, 
representing wage increases granted July 16, 1919, and, there- 
fore, effective during only one-half month out of the three months^ 
period covered by the audit. The Commission's estimate, there- 
fore, of general expenses for the coming year is $184,511.37. 

Undistributed Expeme$, $280^78.70. 

Undistributed expenses for the three months ending July 81, 
1919, as stated in our audit report, aggr^ated $68,627.29. 
Stated on an annual bf^sis, they amount to $274,509.16, and to 
this amount should be added $5,769.54 for wage increases not 
covered by the audit figure. This makes the total estimate of 
undistributed expenses for the coming year $280,278.70, 

Depreciation, $^00,766.72. 

[4] The value of railway property, exclusive of power prop- 
erty, was fixed, as at December 31, 1918, as $15,491,305. To 
that amount we have added the additions since aggregating $154,- 
229, making the total value of railway property devoted to the 
single fare area at July 31, 1919, $15,645,534. At the rat«j of 
2.82 per cent per annum, the charge to operating expenses for de-. 
preciation for the three months, ending July 31, 1919, would be 
$110,301.01. Deducting therefrom the portion of the provision 
for depreciation on special account equipment, credited by the 
company to railway depreciation reserve during this period of 
$10,109.33, we have an amount of $100,191.68, representing the 
proper charge to operating expenses for depreciation on railway 
property in the single fare area for the three months, ending July 
31, 1919. Stated on an annual basis, this amounts to $400,766.- 

72. 
P.UJRa020A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 381 

Taxes, $616,768.86. 

The proper tax provision for the three months, ending July 31, 
1919, as computed by our auditor, was $54,190.84. Stated 
upon an annual basis, this would amount to $216,763.36, and this 
figure has been used as an estimate of taxes for the coming year. 

With increased rates of fare in effect, the net income of the Mil- 
waukee City Railway during the coming year should be relative- 
ly somewhat greater than was its net income for the three months, 
ending July 31, 1919. Any increase in net income will result in 
an increase in Federal income taxes, and although the matter of 
railway net income in this connection is so involved with the in- 
come from the electric and heating utilities that it is not possible 
accurately to determine just what the increase will be in^the tax 
requirement due to this cause, it is a factor which must receive 
consideration. 

Nonoperating Revenues, $22,178.6^. 

Nonoperating revenues for the calender year 1916 were $19,- 
066.90; for the calendar year 1917, $26,801.84; and for the cal- 
endar year 1918, $48,313.45. Inasmuch as the nonoperating in- 
come of the Milwaukee City Railway cannot be expected to be as 
great as it was during the years 1917 and 1918, when it was con- 
siderably augmented by munition war contracts, it has been as- 
sumed that the nonoperating revenues for the three months end- 
ing July 31, 1919, stated on an annual basis and amounting on 
that basis to $22,178.64, represent a conservative estimate of the 
company's revenues from these sources during the coming year. 

Summarizing our estimates of the results from operation for 
the Milwaukee City Railway for the coming year, we find esti- 
mated operating revenues of $6,340,986.64; estimated operating 
expenses of $5,702,435.74; estimated net operating income $638,- 
550.90; estimated gross income $660,729.54. These figures are 
before providing for increased taxes or for increases in labor costs 
due to high recession rates. 

The value of the Milwaukee City Railway property exclusive 
of power plant property at July 81, 1919, was $16,645,634, and 
if to this figure we add an allowance for materials and efupplies of 
say $500,000, we arrive at an amount of $16,145,534. If a 7 J 
per cent return is to be earned upon this property, the gross in- 
P.U.R.1920A. 



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382 WISCONSIN RAILROAD COMMISSION. 

come of the Milwaukee City Railway roust be $1,210,915.05, as 
compared with the gross income as per the Commission's estimate 
of $660,729.54 (before making any allowance on account of in- 
creased taxes and high recession rate), showing additional 
revenue requirements for the single fare area before giving any 
consideration to deficits from operation in the suburban area, of 
$650,185.61. 

Milwaukee Suburban Railway. 

[5] In considering the question of rates of fare in the subur- 
ban areas, it would seem that weight must be given not only to 
the theoretical cost of rendering service in that area, but also to 
the connection of that area with the city railway transportation 
system of Milwaukee and the surrounding municipalities consid- 
ered as a unit. Considering first of all the question of the the- 
oretical cost of service, evidence on behalf of the suburban mu- 
nicipalities was presented at the last hearing on this case before 
the Commission designed to show that inasmuch as the rush 
hour or "tripper service," as it is called, is confined mainly to the 
single fare area, and that inasmuch as this service is relatively 
much more expensive than the regular offpeak service, no portion 
of the cost of this tripper service should be charged against the 
suburban area, which is the effect of the company's apportion- 
ment of expenses upon a car hour basis. We would not under- 
take to say that the method followed by the company of appor- 
tioning these expenses upon a car hour basis is entirely correct, 
nor can we find ourselves in agreement with the theories of ap- 
portionment advanced on behalf of the suburban municipalities 
which, if adopted, would show that the company earned a reason- 
able rate of return in the suburban area during the first six 
months of 1919. Although it may doubtless be true that the ex- 
pensive tripper service operates mainly in the single fare area, 
nevertheless it is also true that if the suburban cars running into 
the city of Milwaukee were to carry only suburban passengers, 
the revenue of these cars during the offpeak hours of the day 
would be very much less than it is at present, and it seems doubt- 
ful if, on this basis, it would be possible for the company to ren- 
der service to the suburban municipalities at a rate of fare con- 
sisting of the single fare area component plus the preeent £one 

P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 386 

fare9. It should be bom© in mind also that a suburban rider 
entering the city of Milwaukee on a suburban car has the same 
transfer privileges that a city rider has. In other words, if a sub- 
urban rider is to enjoy the advantages secured through the attain- 
ment of a better load factor on suburban cars during the offpeak 
hours of the day, and if he is to enjoy the same transfer privi- 
leges that a city rider enjoys, he must also expect to bear some por- 
tion at least of the cost of the expensive tripper service. 

[6] As has been stated, we do not believe that the suburban 
area at present rates of fare is self-supporting. It would be en- 
tirely possible to zone the system in such a way that certain zones 
could never be expected to pay, just as it is undoubtedly true that 
certain city lines yield /t much smaller return than do certain 
other lines operating within the single fare area. These facts 
lead inevitably to the conclusion that a rate of fare within a cer- 
tain zone or on a certain line is not necessarily too low merely be- 
cause it is insufReierit to make that area or that line, considered 
entirely apart from the rest of the system, yield a fair rate of re- 
turn. We feel, therefore, that the question of proper rates of fare 
for this area is one that cannot be decided on the narrow grounds 
of theoretical cost of service. The suburban area served by any 
city railway system represents the less thickly settled portion of 
the area served by the entire system. If the needs of a growing 
community are adequately to be served, it is inevitable that ex- 
tensions will be made before the population in suburban areas has 
reached a density such that these extensions will become im- 
mediately profitable from the point of view of revenues earned 
within the suburban zone. On the other hand, if a policy be 
adopted of making these extensions only when and as they can be- 
come immediately profitable, the business and social interests of 
the community must inevitably suffer. 

We believe that the present relations existing between the city 
of Milwaukee and the suburban municipalities in respect to their 
street railway transportation requirements are such that some 
portion of the shortage in return now resulting from the opera- 
tions of the Milwaukee Suburban Railway may properly be borne 
by the Milwaukee City Railway. In this connection the fact must 
be recognized that any increase in fares in the single fare area au- 
tomatically results in an increase in fare to a very large percent- 

P.U.R.1920A. 



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384 WISCONSIN RAILROAD COMMISSION. 

age of the suburban riders, inasmuch as a very large percentage 
of riders originating in the suburban area are terminated within 
the single fare area. 

In connection with any estimate of results from operations in 
the suburban area during the coming year it should be said that 
the company does not keep on its books separate accounts covering 
the expenses of the suburban railway area. The figures presented 
by the company in showing the results from operation of the sub- 
urban area from month to month are therefore to an extent only 
an estimate. Certain suburban railway expenses are carried on 
the books, together with interurban railway expenses, and other 
suburban expenses are carried, together with the interurban and 
Racine railway expenses. 

Operating Revenues, $S02J9S9.29. 

The revenues as stated by the company for the suburban rail- 
way for the twelve months ending July 31, 1919, have been ac- 
cepted as representing approximately the suburban railway rev- 
enues for the coming year. 

Way and Structures Expenses, $72,m.65. 

The character of the way and structures maintenance work in 
the suburban area is radically different from the character of this 
work in the single fare area, and for that reason it is not possible 
to use unit costs of way and structures maintenance in the single 
fare area as applicable to costs that may be anticipated for the 
suburban area. Lacking any independent basis for the determi- 
nation of suburban way and structures expenses for the coming 
year, we have, for purposes of this case, accepted the company's 
figure, raised to an annual basis, for these expenses for the seven 
months ending July 31, 1919, of $67,147.85, and have added 
thereto wage increases now in effect or anticipated, which are not 
fully covered in the company's figure for these expenses, for the 
seven months' period, raised to an annual basis. Taking the com- 
pany's figure as raised to an annual basis and increasing it by the 
amount of these wage increases, we find that $72,144 should 
represent approximately the cost of way and structures expenses 
for the suburban railway during the coming year. This estimate 
is exclusive of any allowance for increases in the cost of materials 

between January 1 and July 31, 1919. The data are not avail- 
P.U.R.1920A. - . 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. 385 

able for such an allowaiice> but we judge that it would not exceed 
two or three thousand dollars in any case and is therefore unim* 
portant 

Equipment Expenses, $SS,6S1.10. 

Car miles for the suburban area for the seven months ending 
July 81, 1919, were 614,585, which if raised to an annual basis, 
amount to 1,053,574. If to this figure were applied the average 
cost per car mile, on the basis of prewar prices, namely 1.68 cents, 
we find a cost for equipment expenses for the suburban railway 
area for a year on the basis of prewar prices of $17,700.04. As 
previously stated, there has been an increase between 1916 and 
July, 1919 of approximately 79.87 per cent in the average cost of 
labor and materijJs entering into equipment expenses, and, there- 
fore, this amount of $17,700.04 should be increased by 79.87 per 
cent, giving us an allowance, of $31,887.06, representing our 
estimate of a fair allowance for equipment maintenance on the 
basis of prices prevailing at July 81, 1919. Wage increases in 
the rolling stock department applicable to the suburban area are 
estimated as amounting to $2,728.20. Of this amount 65.88 
per cent only should be considered as representing the wage in- 
crease properly applicable to normal equipment expenses of the 
suburban area during the coming year. This wage increase, 
therefore, applicable to normal equipment expenses, is reduced 
to $1,794.04, making our allowance for equipment expenses for 
the coming year $83,631.10. 

Power, $48,0^2.97. 

In the determination of the power cost for the three monllis 

ending July 31, 1919 the same plan has been followed that was 

used by the auditor in his determination of power costs for the 

Milwaukee City Railway for that period. The revenue car miles 

for the three months^ ending July 81, 1919, in the suburban area 

were 276,186, making a cost per car mile for the suburban rail* 

way area for the tiiree month period 4.66 cents. The revenue car 

miles for the seven months, ending July 81, 1919, stated on an 

annual basis aggregates 1,053,674. At 4.56 cents per car mile, 

this amonts to an estimated power cost for the coming year of 

$48,042.97. 

P.r,R.lOTOA. * 25 



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38« WISCONSIN RAILROAD COMMISSION. 

Traffic (md Transportation Expenses, $146,126.65. 

Aa has been previously stated, we have not all the information 
available to permit us to determine whether or not the company's 
plan of apportioning transportation expenses upon a car hour 
basis is entirely correct From the information that we have, 
however, we are inclined to believe that this method for purposes 
of this case, at least, will give us approximately the desired 
information. The Commission's allowance for traffic and trans- 
portation expenses for the Milwaukee City Eailway for the com- 
ing year amounts to $1.5222 per car hour. Applying , this allow- 
ance to the suburban car hours for the seven months ending July 
31, 1919, raised to an annual basis, we have $145,126.55 %s the 
joint allowance for traffic and transportation expanses of the Mil- 
waukee Suburban Railway for the coming year. 

General amd Undistributed Expenses, $30,073,89. 

Upon summarizing our estimate of expenses for the Milwaukee 
City Railway for the coming year, we find that the ratio of the 
general and undistributed expenses to the other operating ex- 
penses, exclusive of fixed charges, is 10.06 per cent. Applying 
this same ratio in the case of the Milwaukee Suburban Railway, 
w« find that our allowance for general and undistributed ex- 
penses for the comii^ year should be $30,078.89. 

Taxes, $16,^98.32. 

Taxes have been computed for the Milwaukee Suburban Rail- 
way upon the basis of the ratio of the value of the suburban prop- 
erty to total property as at July 31, 1919. Upon this basis we 
find that there would be chargeable to the Milwaukee Suburban 
Railway for the coming year for state, city, and capital stock 
taxes $16,498.32. In regard to the adequacy of this tax provi- 
sion, the same qualifications hold that were stated in the case of 
the Milwaukee City Railway tax provision, namely, that this es- 
timate includes no allowance for probable increase in state and 
Federal taxes applicable to this utility. In this case of the subur- 
ban utility, however, the amount involved is probably small and 
does not require further consideration. 

Depreciation, $37MS.68. 

[7] In the Commission's decision of April 4, 1919, ike figure 

P.U.R.1920A. 



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RE MU.WAUKRE ELECTRIC RAILWAY & L. CO. 3S7 

u8<kI for the value of the property in the suburban railway area as 
at 1/ceember 31, 1918, was $1,320,698. The additions to the 
sabiirban railway property since that time are negligible, and for 
that reason we have calculated the provision for depreciati<» 
upon the value of the property as at December 31, 1918, as pre* 
viously stated. Applying the annual rate of 2.82 per cent to 
property value of $1,320,698, gives an allowance for depreciation 
for the coming year of $37,243.68. 

Summarizing our estima;tes of the results from operations in 
the suburban area during the coming year, we find operating 
revenues $302,939.29, operating expenses $382,761.16, resulting 
in a net operating deficit of $79,821.87. A value of $1,320^- 
698.00 has been used as the value of the property in the suburban 
railway area as at July 31, 1919. If to this amount we add the 
allowance for materials and supplies of $42,500, which was used 
in the decision of April 4, 1919, Milwaukee Electric R. & E. Co. 
V. Milwaukee, P.U.R.1919D, 604, we have $1,363,198 as the 
value of the suburban railway property upon which a return 
should be earned. Seven and one-half per cent applied to this 
value would mean an earning requirement over and above operat- 
ing expenses, including taxes and depreciation, of $102,239.85 
per annum. If to the net operating deficit of $79,821.87 we add 
this return requirement of $102,239.85, we find that the addi- 
tional revenue requirements for the suburban area for the com- 
ing year are estimated at $182,061.72. In the following sum- 
mary will be found a statement of the estimated results from 
operation of the Milwaukee City Railway and of the Milwaukee 
Suburban Railway for the coming year, before giving effect to in- 
creased taxes and unusual recessional rates, 

r.UJl,1020A. 



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388 



WISCONSIN RAILROAD COMMISSION. 




P.U R.1920A. 



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BE MILWAUKEE ELECTRIC RAILWAY & L. CO. 



389 



. In the following tabulation will be found a comparison of the 
estimated income available for return from the Milwaukee C5ity 
Railway and from the Milwaukee Suburban Railway for the com- 
ing year as compared with a fair return upon the value of the 
property employed in street railway service. 



Particulars. 


Milwaukee 

City 
Railway. 


Milwaukee 
Suburban 
Railway. 


Combined. 


Return on the basis of 7i% of 
the value of the property 

Income available for return after 
providing for taxes and depre- 
oiati<m as estimated to amount 
to 


$1^10,916.05 


$102,239.85 
1 70,821.87 


$1^13,164.90 


660,729.54 
$550,185.51 


580,907.67 






Deficiency in return 


$182,061.72 


$732,247.23 



1 Deficit. 

la view of the omission from our previous estimates of any al- 
lowance for important increases in cost of operation due to high 
recession rates of labor and increased tax requirements, we con- 
clude that the additional earning requirements of the Milwaukee 
city and suburban railways for the coming year will be approx- 
imately $860,000 to $900,000. 

[8] It has been strenuously urged upon this Commission that 
the company has in the past had excessive earnings, and that in 
view of the claimed excessive earnings the Commission should 
now refuse any relief to the street railway utility until it had 
absorbed over a period of time the claimed excess earnings of pre- 
vious years. As to whether there have been excess earnings in the 
past on the part of the railway utility, there has been a dispute* 
ever since the original fare case was brought before this Commis- 
sion. The first case relating to the street car fares in the city 
of Milwaukee decided by this Commission was decided August 
28, 1912. Until this order of August 23, 1912 went into eflPect, 
the street car system, both suburban and city area, .was operated 
imder rates of fare provided for in franchises. While elabor- 
ate investigations have been made by special accountants and by 
the Commission's accounts of the early history of the company, 
no two of the experts agree as to the basis of calculating earnings 
during this period. The evident judgment of the Commission, 
when it decided the case of August 28, 1912, was that the eara- 

P.UJtl920A, 



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390 WISCONSIN RAILROAD COMMISSION. 

ings on the average for years 1897 up to 1912 exceeded 7^ per 
cent return. It is strenuously claimed by the company that the 
method used in arriving at these results did not take a proper 
valuation for different years and used certain other bases not fair 
to the company. For the reasons hereinafter stated, we do not 
think it incumbent upon this Commission to make an elaborate 
reinvestigation of this question. For the period during which 
the company has operated since the order of August 23, 1912, it 
is clear that the company has not earned, taking the period as a 
whole, excess earnings over a reasonable return. Assuming, how- 
ever, that previous to Commission regulation there were excess 
earnings over a reasonable return, whatever earnings there were, 
were under lawful rates and were the property of the company 
which it was entitled to use in any lawful manner. To be sure, 
this question of early earnings has its bearing on questions of 
going value and perhaps other questions, but to now order that 
the company should forego a reasonable return for a period such 
as this Commission might in recasting accounts previous to 1912 
determine to be necessary to absorb past calculated excess earn- 
ings, would, in our opinion, not only be questionable as a violation 
of the Constitution of the United States, but would be establish- 
ing a principle against public policy and against the interests of 
the riding public of the city of Milwaukee. It could only result 
in crippling the company financially, making it impossible to 
carry out the very provisions of this order, looking toward ad- 
equate equipment for giving adequate service, but would interfere 
with other improvements which might be found necessary for 
serving of the public in the future. 

System of Fares. 

The most difficult question which has been presented, in con- 
nection with this case, concerns the method to be used in raising 
the increased-revenue necessary for the company at this time. As 
already shown, the basis of fares cannot be placed strictly Upon 
the income account by zones. This would be unfair to the outer 
zones and to some extent, at least, gives the single fare area an 
advantage of density of traffic and somewhat lower costs than 
would obtain in the single fare area were it not for the contribut- 
mg traffic from the zone areaa The difficulty in arriving at a 

P.U.R.1020A. 



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*M: MILWAUKEE ELECTRIC RAILWAY A L. CO. 591 

strictly cost basis .as to zones is very great. We do not feel that 
there has yet been presented to us a traffic study upon which we 
could ba3e an ultimate conclusion as to the actual costs, taking 
into account the contributed density of traffic in the inner area 
arising from the outer zones* The question, however, is not one 
entirely of costs. Economic and social considerations are to be 
grven due consideration. Established business and riding habits 
are not to be overlooked, and residential congestion within the 
single fare area ought not, in our opinion, be furthered by a sys- 
tem of fares discouraging the outward growth of the city through 
the suburbs. On the other hand, the additional cost for the long 
haul ought not to be entirely overlooked and some system of zones 
in the outer area, such as is not provided, can, if properly treated, 
give recognition on the one hand to the increased cost of the hauls 
into these areas, and at the same time take into account the de- 
creased cost within the single fare area through traffic originating 
in the outer zones, and also give consideration to economic and 
social conditions. There are many objections to the introduction 
of another zono within the single fare area. This area is not a 
large area, the inner zone lines being within 3J or 4 miles of 
the Public Service Building. The introduction of a restricted 
zone, bounded by North avenue <m the north, 27th street and 
22nd avenue on the west, and National avenue on the south in 
the midst of the heaviest traffic would not only introduce the seri- 
ous problem of the handling of fare collections but would greatly 
influence the tr^d of traffic throughout all the areas under con- 
sideration. 

The introductiion of a 6-cent flat cadi fare in the single fare 
area would probably produce the necessary increased revenue. It 
would undoubtedly have the eS^% for some time at least, of 
discouraging riding to some extent, especially short riding, and 
any cash fare nece$sitating the use o£ more than one coin is likely 
io adversely effect the time of loading. It is impossible, however, 
to avoid a cash fare involving the use of more then one coinu On 
the other hand, the cash fare of 6 cents flat with no tickets does 
not recognize tiie. principle that the frequent riders are entitled 
to special consideration and should have some advantage over 
those who only occasionally use the street car system and con- 
tribu^ but little to the fised charges. The point was not so im- 

P.UJ1.1920A. 



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392 WISCONSIN RAILROAD COMMISSION. 

portant at lower fares, but was given recognition in ticket rates in 
Milwaukee for many years. It was the unanimous opinion of all 
those representing all of the municipalities involved in this case,, 
present at the hearing, that a higher cash fare with lower tickets 
was greatly to be preferred to a flat cash fare of 6 cents. To those 
who seldom use the street car system and contribute but little 
toward the fixed charges, no injustice is done by requiring the 
payment of a higher cash fare. The use of tickets at reduced 
rates is a recognition of the fact that the frequent users are conr 
tributing more toward the maintenance of the property and the 
system. 

We have, therefwe, decided that the cash fare of 7 cents shall 
be introduced in the single fare area of the city and cash fare of 
3 cents per zone in the suburban zone districts. In the single 
fare area, it is thought best to introduce a system of tickets which 
will give the lowept rate of fare to those wh6 are the most fre- 
quent riders and will purchase tickets, therefore, in the largest 
amounts, while some ticket rate for convenience should be put in 
for those who may desire to buy smaller number of tidcets at a 
time. 

The difficulty in fixing these ticket rates is that it is impossible 
to forecast the amount of riding which will be done on the cash 
basis, the amount on the reduced tickets where the smaller num- 
ber of tickets is purchased, and the amount of riding which will 
take place on those tickets which are sold at the minimum price. 
Furthermore, it is possible that the increased fares may somewhat 
reduce the riding for a short time, at least. 

The riding under the old basis of cash and ticket fares throws 
some light on this subject, but we do not believe that the percent- 
age which then prevailed will necessarily be the percentages 
which will apply on riding under this order. The Commission 
has endeavored to put in ticket rates on a basis which Will result 
in the estimated necessary tevenue. This system of ticket fares 
will allow the frequent rider to ride at little increase over the 
5 cent rate. Because the Commission cannot accurately estimate 
the percentage or amount of riding on the cash fares and differ- 
ent ticket fares, it is deemed advisable not to make this order final 
at this time as to ticket fares, but the Commission will make a 
study of the reveaaues accruing under this order and will, within 

P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY 4 L. CO. 398 

s reasonaUd time^ enter the order finall j fixing the ticket rates ap- 
plicable in the single fare area. 

These rates oi fare may for the time modify to some extent the 
short riding. Only experience can tell what will be the ultimate 
effect of the (»rder. Biding has increased a great deal since Jan- 
nary ly 1919, and has resulted in far more favorable conditions to 
the company than existed during October and November of 1918. 
Increased traffic, we believe, is to be looked for, and we also be- 
lieve that the use of additional cars, as {provided for in this order, 
will bring about increased riding and increased revenue to the 
company. Careful following of the outline of accounting proce- 
dure fixed by the Commission in this order should make it possi- 
ble to readily adjust the ticket fares,, especially the ticket fares at 
the minimum rate from time to time so as to meet fluctuations in 
the cost of service. This could perhaps be best brought about by 
some arrangement for automatic changes in ticket rates from time 
to time, but the Commission does not fe^l it is in a position to 
make an order along that line at the present time. The matter 
will be found discussed in Addendum A to this opinion* It is the 
hope of the Commission that the riding habit in the city of Mil- 
waukee will not be interfered with, and that there will be a pos- 
sibility of further reduction in the ticket fares. Only experience 
can tell, however, wh^er this will be possible. 

While metal tokens are more convenient for handling by the 
ccHnpany, and when purchased in amall numbers do not cause ina- 
terial public inconvenieirae, we are of the opinion that they are 
an inconvenience when purchased in large numbers^ and that 
while tokens may possibly prove satisfactory for the first fares es- 
tablished, tickets will be more convenient for those riding at the 
minimum rate of fare. 

There are some special situi^tions which have given rise to a 
great deal of complaint in the past and as to which complaints 
win be more proi»)unced with the increased fare than in the past 
The principal one of these is the situation from the Cudahy depot 
into the single fare area. Large manufacturing concerns are sit- 
uated in this neighborhood and a very heavy traffic is carried 
from tiieae manufaeturing plants at the Oudahy depot in to the 
P»U.R.1020A. 



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304 WISCX)NSIN RAILROAD COMMISSION. 

single fare area, but a large part of this traffic does not penetrate 
into the single fare area beyond what is known as the Bay View 
district south of Mitchell street In every case which has been be- 
fore the Commission in connection with fares and otherwise, this 
situation has been pres^ited to the Commission, and it has been 
insisted that the workingmen here have be^i discriminated 
against, especially when the fares are compared to those applic- 
able into West Allis and some other territories. The Commission 
is against overlapping zones, as a matter of principle, but the sit- 
uation is unique in regard to Cudahy and the Bay View district 
where the length of haul is not greater than the average haul in 
the single fare area, perhaps less. The Commission does not 
deem it advisable, however, to establish this overlapping zone for 
all traffic but is of the opinion that the complaint in regard to this 
situation can be remedied by establishing a special rate to and 
from the Cudahy depot from and into that territory south of 
Mitchell street known iis the Bay View district which shall be 
applicable on special cars or trains running during rush hours* 
Any questions of difficulty in collection of fares can be obviated 
by nmning cars which are to carry this traffic south of Mitchell 
street and not going further into the single fare area. On these 
particular cars and trains and during these particular hours, the 
same rate of fare wilt be applied as applies in the single fare area, 
to wit 7 cents cash ; 6 tickets for 35 cents, and 18 tickets for $1. 
For those riding on tickets the rate of fore from the single fare 
area to South Milwaukee and vice versa will be increased but 
slightly. There is, however, considerable riding between tiese 
points, some of the patrons riding frequently. We do not think 
it would be out of line with public policy to estftUish a commuta- 
tion ticket rate to meet the situation of these patrons from South 
Milwaukee to the single fare area. The ccmipany will be ex- 
pecited to submit a proposition to the CommisJ^on along this line 
for its approval, and jurisdiction of this case in that perticnlftr 
will be retained. 

Treatment of Reserves. 

[ft, 10] There is something to be said in. favor, of a require- 
ment that depreciation reserves shall be represented by depredft- 

P.UJ1.1920A. 



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HE MILWAUKEE ELECTRIC RAILWAY & L. CO. 395 

tion reserve, funds, but as stated in our opinion of June 1, 1918^ 
Milwaukee Electric R & E. Co. v. Milwaukee, P.U.R.1918E, 1, 
where this question is discussed at length, we do not believe any 
good public policy would be served by a segregation of such funda 
in a hank at moderate rate of interest to be used only to replace 
property retired from service, but that it is in the public interest, 
as well as in the interest of the utility, that these funds should 
be allowed to be used from time to time for corporate purposes 
and especially for extensions and additions to property, the funds 
in effect being restored as capital issues are made for improve- 
ments and extensions. Whether the funds are segregated and 
invested in liquid securities or are used for extensions and im- 
provements, the funds are drawing interest. Our opinion wa» 
that a fair rate of interest, under the conditions and eircum- 
stances of this case, was not less than 3^ per cent. As such f unds^ 
however used, draw interest, and as depreciation is figured on a 
corresponding sinking fund basis, it follows that the interest 
should be credited to reserves. 

It is possible that a further development of Milwaukee traffic 
can be secured in the nonrush period, and that economies can be 
brought about through short routing. Both of these problems 
should be given further study by the company with the idea in 
view of improving service conditions in the city and increasing 
traffic. 

Additional Car Equipment. 

[11] In its decision of June 1, 1918, the Commission re- 
tained jurisdiction in the matter of service. The primary duty 
of a public utility is to render adequate service to the public- 
Adequate service is as much a corollary to fair rates of return as 
is the right to demand a fair rate of return for adequate service 
rendered. We have repeatedly called attention to the necessity 
for more equipment in Ae city railway system. We were not jus- 
tified during the period of war in ordering the company to enter 
into any activities which might interfere with war activities. 
This situation is now changed, and new equipment to meet the 
present situation in the city of Milwaukee should be secured at 
the earliest possible time. The investigation of the engineer in 
dbarge of our Milwaukee office showed a oonsiderable shortage of 

P.U.R.1920A. 



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31KI WISCONSIN RAILROAD CX)MMISSIQN« 

cars on practically aU lines in the city. He reports that ioir sev- 
eral years the service specifications issued by him in accordance 
with the June 13, 1916 order had been modified so as to require 
not more than the available number of cars. 

An investigation made in February and Mardi, 1919 showed 
that for the company to comply fully with service specifications 
drawn in accordance with service standards, it would be neces- 
sary to provide 83 additional cars. At a subsequent hearing the 
company introduced evidence intended to show that adequate 
service could be supplied without the addition of any more equip* 
ment Careful study of the company's data and further investi* 
gation of traffic convince us that our engineer's estimate was sub- 
stantially correct. It is further shown that this investigation was 
made after the season's peak was passed. The requirements for 
the peak period would further increase the estimate made by the 
engineer. 

The company's statistics of passengers carried show that there 
has been a more or less uniform increase in riding since 1916. 
There is every reason to believe that this increase may continue 
in the future. After consideration of all these matters, it ap^ 
pears that by November, 1920 the company will need and should 
provide at least 100 additional cars with a total seating capacity 
of 6,000. 

Dcmble Transfers. 

The Commission has repeatedly called the attention of the com- 
pany to the need of extending the use of the double transfer. (8 
Wis. R C. 535 ; 10 Wis. R. C. 352 ; 12 Wis. E. C. 213.) In its 
June 1, 1918 order, Milwaukee Electric E. & L. Co. v. Milwau- 
kee, P.TJ.R.1918E, 1, reference was again made to this matter 
with the statement that the ccmipany was expected forthwith to 
submit a proposal for the consideration of the Commission. 

At a later hearing on this matter the company stated that it 
was preparing a plan which would not only extend lie use of the 
double transfer wherever it was needed, but would also remove 
many of the possibilities of abuse in the present system, but up 
to the present time no such proposal has been received by the 
Commission. 

The majority of complaints received by the Commission are 

P.U.R.1920A. 



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RE MILWAUKEE ELECTRIC RAILWAY & L. CO. , M7 

from patrons who can reach their destination only by the pay- 
ment of a double fare or by the nse of long routes through oonr 
gested sections of the city. 

Certain parts of the city are now fairly well provided witib 
transfer privileges. Other parts of the city are greatly incon- 
venienced by failure to give transfers. This can be corrected 
only by the extension of the nse of double transfers, and we find 
that the extension of the use of double transfers is necessary for 
this purpose. With a system of track layout such as exists in 
Milwaukee, no doubt certain limitations should be placed upon 
the use of transfers in order that abuse may be prevented. The 
company should submit a statement showing the restrictions 
which it thinks are necessary to prevent abuse, and the Commis- 
sion will retain jurisdiction in this matter to pass upon all ques- 
tions growing out of the transfers and any necessary restrictions 
and for the purpose of requiring changes from time to time, as 
it may be necessary, to bring about a general transfer system 
throughout the city of Milwaukee. The company will be re- 
quired to have such system in force and effect not later than 
November 24, 1919. 

Order. 

It is hereby ordered that changes in accounting procedure shall 
be adopted and followed by the Milwaukee Electric Railway & 
Light Company fuUy complying with the following provisions: 

Subject ,to such specific modifications as inay be stated in the 
following section of this decision, it is hereby ordered that, effec- 
tive January 1, 1920, the company shall conform its accounting 
practices to those set forth in the several previous audits sub- 
mitted to the Commission by its audit staff. Although special in- 
structions are given for certain accounts in the following para- 
graphs, this fact shall not be construed as relieving the company 
in any way of its obligation to acquaint itself with the audit ad- 
justments made by the Commission's auditor in previous audits 
and to apply the principles of these adjustments in recording its 
financial transactions upon its books in future. The Commission 
has in its files complete data as to the manner in which the ac- 
counts affecting the recording of the results from operation of 
the Milwaukee City Railway should be kept, and, if there be any 

r.UJl.l920A. 



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J9I3 WISCONSIN RAILROAD COMMISSION. 

question at any time in regard to any specific acconnty this infer* 
mation is available to the company. 

For the calendar year 1920 an allowance shall be made for the 
Milwaukee City Railway to cover way and structures and equip- 
ment maintenance and depreciation on Milwaukee City Railway 
property, exclusive of power property. This allowance shall. be 
20 per cent of the monthly operating revenues and the charge of 
Milwaukee City Railway operating expenses for depreciation 
shall represent the excess of this allowance over and above the to- 
tal amount of way and structures and equipment maintenance ex- 
penditures for the month, plus the proper allowance for deprecia- 
tion on power plant property devoted to Milwaukee Cily Rail- 
way service, as hereinafter provided. In preparing the estimated 
allowance for way and structures and equipment maintenance 
and for depreciation for the Milwaukee City Railway for the 
coming year, great care has been taken to work out these allow- 
ances as accurately as possible upon the basis of average expenses 
for a considerable period of years, and no consideration has been 
given to the ratio of maintenance and depreciation allowances to 
operating revenue. It is believed, however, that at the price 
levels which will probably-prevail during the calendar year 1920/ 
an allowance of 20 per cent of Milwaukee City Railway operat- 
ing revenues to cover the necessary costs of way and structures 
and equipment maintenance and depreciation will be reason- 
able and fair. Nothing in this order, however, should be con- 
fttrued to commit the Commission in any way to a permanent 
policy of basing the combined allowance for maintenance and 
depreciation upon a percentage of operating revenues, or to the 
percentage here used. As a general matter of accounting policy, 
we believe that the depreciation reserve provision should be based 
upon the cost of property against which the reserve is established, 
but in a case where the maintenance expenditures are clearly 
abnormal and subject to extreme fluctuations, we believe that 
for the time, at least, it will be reasonable to provide a combined 
allowance for the maintenance and depreciation which shall be re- 
lated to the operating revenues of the company. 

Depreciation shall be computed monthly at the rate of 2.82 

per cent per annum on power plant property devoted to Mil- 
P.U.R.1920A. 



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K£ MILWAUKEE ELECTRIC RAILWAY & L. CO. 399 

vaukee .City Railway service and shall be charged to depreciation 
and credited to the Milwaukee City Railway depreciation reserve. 
The value of power plant properly devoted to Milwaukee City 
Railway service shall, for this purpose, represent the value <d the 
prc^perty as at the end of the month and shall be determined, fol- 
lowing the procedure outlined, by adjustment No. 10 in the audit 
made for the Commissicm covering the 3 months ending July 31, 
1919. . 

Comm^icing January 1, 1920, the company shall make month- ' 
ly charges to interest and credits to its depreciation reserves, 
amounting T*«pectively to 3^ per cent per annum, interest on the 
balances in the several depreciation reserves as at the beginning of 
the month. This interest charge shall be treated as a deduction 
from gross iiK^ome. In the future, a reserve for depreciation shall 
be carried upon the books of the company to cover property in the, 
single fare area, and a separate reserve for depreciation shall be 
carried to cover suburban, interurban, and Racine property. 
The monthly provisions charged to operating expenses and the 
monthly provisions charged to interest shall be properly separated 
between these reserves, and losses on property retired from serv- 
ice shall be charged to the proper reserve. This procedure will 
place the handling of the railway depreciation accounts in exactly 
the same situation that existed prior to the consolidation of the 
Milwaukee Light Heat & Traction Company, with the Milwaukee 
Electric Railway & Light Company except for the fact that, in- 
asmuch as the two properties are now consolidated, no entry will 
be required crediting suburban, interurban, and Racine deprecia- 
tion reserve with depreciation on leased tracks and, in ease of 
property retired from service within the single fare area owned 
by Milwaukee Light Heat & Traction Company prior to date of 
consolidation, any losses in connection therewith should not be 
charged to the Milwaukee City Railway depreciation reserve. 

Banning January 1, 1920, there shall be computed monthly 
and charged to interest paid an amount representing 8| per cent 
per annum interest upon the respective balances, as at the be- 
ginning of the month, of all the active reserves carried by the 
company. This interest charge shall be credited to the several re- 
serves in their due proportion, A distinction is made here be- 
tween reserves to which no credits are made which represents 
charges to operating expenses and those reserves which are built 
P.UJt.l920A. 



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400 WISCONSIN RAILROAD COMMISSION. 

up, partially at least, through charges to operating expenses. The 
order is intended to apply only to those reserves which, in the 
course of the year, are partially built up through charges to oper- 
ating expenses and, in the case of inactive reserves, to which 
neither charges nor credits are made in the course of the year, 
this order is inoperative. 

Beginning January 1, 1920, no further diarges or credits shall 
be made to the reserve for legal expenses or to the promotion of 
business railway reserve. All expenditures in the future such as 
were formerly charged to these reserves shall be charged directly 
to operating expenses, except that the company shall continue its 
present practice of charging a due proportion of legal expenses 
to capital expenditures. 

Effective January 1, 1920, the cost of stock handling now 
carried by the company under three accounts — "Operation of 
Stores Departmental," "Maintenance of Stores Departmental 
Equipment," "Maintenance of Stores Departmental Buildings, 
Fixtures, and Grounds" — shall be charged to the Materials and 
Supplies Disbursement Eeserve, and the percentage added to 
materials issued to cover the cost of stock handling and storage 
shall be no larger than is necessary to cover the costs of operation 
and maintenance of the Stores Department, plus losses due to 
breakage and spoilage, after deducting therefrom the interest 
credits to this reserve. 

As provided for the other reserves, interest at the rate of 3J 
per cent per annum shall, in the future, be computed monthly 
upon the balance in the injuries and damages reserve account as 
at the banning of each month. With this exception the pro- 
cedure adopted by the Commission's auditor in the audit for the 
three months ending July 31, 1919, shall, commencing January 
1, 1920, be followed by the company in working out the proper 
amount and distribution of its injuries and damages reserve re- 
quirements. 

Until such time as it shall be possible for the company to make 
a scientific computation of relief and pension requirements, based 
upon an actuarial study of pensions accrued yearly, the company 
shall compute its relief and pension requirements upon the basis 
outlined in the Commission's audit for the three months ending 
July 81, 1919. The change in the computation of the reserve re- 

P.U.R.lrf20A^ 



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RE MILWAUKEE ELBCPRIC RAILWAY & L. 00. 401 

quirements for this account to be effective January 1, 1920. In 
this oonneetion it should be noted^ howev^er, that 3| per cent per 
annum interest should be computed upon the balances in l^is re< 
serve account as at the banning of each month and should be 
eharged to interest paid. This interest credit should be in addi- 
tion to the provision contemplated by the audit repOTt 

All interest credited to reserves and diarged to interest paid, 
under deductions from income, shall be s^regated from all inter- 
est paid on funded and floating indebtedness and shall be entered 
in a lump sum on the income account under the caption of '^Inter- 
est on Eeserve Capital.'^ 

Except as specifically provided in other sections of this deci- 
sion the company shall make no change in its methods of deter- 
mining and apportioning power costs. 

The provisions for taxes for the year 1920 shall be computed 
and distributed as follows : 

State, city and capital stock taxes for the year shall be care- 
fully estimated, and the amount of these taxes so determined 
shall be apportioned on a monthly basis between the several 
operating utilities and the power division. This apportionment 
shall be made upon the basis of the fair value of the property as 
at January 1, 1920, and in determining fair value for this pur- 
pose, there shall be added to the property figures as at July 81, 
1919, used in apportioning the tax provision for the Commission's 
audit, the additions to property and plant from August 1, 1919 to 
December 81, 1919. This basis is r^arded as temporary, and 
at such time as the company shall have completed its property 
ledger in accordance with the Commission's order of April 4, 
1919, the property figures used in the division of state, city and 
capital stock taxes should be taken from the prop^iy ledger, al- 
though, of course, the principle in connection with the apportion- 
ment of state, city, and capital stock taxes will not be changed 
thereby. 

Federal incx>me taxes for the calendar year 1920 should be es- 
timated as accurately as possible, and one-twelfth of the amount 
of this estimate should be credited monthly to the taxes accrued 
account. The monthly provision for Federal income taxes should 
be apportioned, upon the basis of the distribution of the net in- 
come of the preceding calendar year, between, the several ofierat- 

P.U,R.1920A. 26 



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402 VVIStONSLN RAILfiOAD C0MMI8SI0X. 

ing ntilitiei. In the determination of the distribixtion of net in« 
come for the calendar year for this purpose, all deductions from 
net income should be apportioned between utilities upon the basis 
of property yalues. The credits to taxes accrued representing 
charges to special accounts for taxes should be prorated orer the 
utilities upon the basis of the distribution of the total state, city, 
capital stock, and Federal income taxes as aforesaid, and the 
charges to operating expenses to the several utilities for tax^ 
should be exclusive of the taxes charged to special accounts. 
Taxes applicable to power, determined as hereinbefore provided, 
shall be reapportioned between the railway and electric utilities 
on the basis of adjustment No. 10 of the Commission's audit for 
the three months ending July 31, 191^. 

Since the consolidation of Milwaukee Light Heat & Traction 
Company with the Milwaukee Electric Eailway & Li^t Com- 
' pany, the monthly financial and operating reports have covered 
the operations only of the three utilities, railway, electric and 
heating. In order that the Commission may be able to readily 
secure the necessary information from the company's reports, it 
is hereby ordered that these financial and operating reports shall 
be prepared, following the same divisions which were in existence 
prior to February 1, 1919. In this connection two separate rail- 
way reports shall be prepared, — one report covering the opera- 
tions of the Milwaukee City Railway and the other report 
covering the operations of the suburban, interurban, and Bacine 
railways. There shall also be prepared monthly two reports for 
the electric utility — one report recording the results from opera- 
tion of the *^ilwaukee System" electric utility, and the other 
report containing the results from operations of the other electric 
properties, exclusive of "Milwaukee System.^'- These reports 
shall be prepared monthly as heretofore and, in order to preserve 
the continuity of the records, the company shall prepare corre- 
sponding reports covering the results from operations . for the 
period from February 1, 1919 to the present time. 

Commencing with the reports for the month of November, 
1919, the company shall furnish this Commission monthly copies 
of its financial and operating reports, and there shall be attached 
to the Milwaukee City Railway report and to the auburban, in- 
terurban, and Racine report, typewritten Aeets containing oon- 

P.U.R.1020A. 



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RE MILWAUKEE ELECTRIC RAILWAY 4.L. CO. 403 

densed statements of the income aocoxints in xrhicli the power 
costs shall be computed^ following the method outlined in ad- 
justment 'So. 10 of the Commission's audit for the three months 
ending July 31, 19 19, and in which the amount of power prop- 
erty apportioned to the sereral utilitiea for the month shall be 
included. 

It is further ordered that within lihe single fare area, upon the 
payment of a fare, the company shall issue a transfer upon the re- 
quest of the passenger, and it shall issue a second transfer on this 
transfer, if requested, subject to limitations whidi will be ap- 
proved from time to time by ihe Eailroad Commission. (The 
above is in addition to any oar to car emergency transfer which 
may have been issued.) This section of t^^e order herein shall 
become effective not later than November 24, 1919, 

It is further ordered that the company take immediate steps 
for the procurement of not less than 100 additional cars with a 
total seating capacity of 5,000, said additional equipment to be 
placed in service from time to lime and as fast as procured or 
built, all of said cars to be available for service by the 1st of 
Xovember, 1920. Jurisdiction over the matter of additional 
equipment will be retained by the Commission and the company 
will on or before December 1, 1919 submit to the Commission for 
its approval general plans for the additional cars to be built or 
procured. 

It is further ordered that the report of the Board of Concilia- 
tion of the state of Wisconsin created under Chapter 530 of the 
Laws of 1919 and filed with this Commission and heretofore a