Bill in equity by Columbia National Bank | The state may not impose additional conto restrain A. W. Powell, Auditor General, ditions or restrictions upon the right of such from enforcing the Escheat Act against a institutions to do business, nor may it in any national bank. From a decree dismissing way regulate or interfere with their conduct the bill, plaintiff appeals. Reversed and bill or management concerning matters subject to reinstated, and defendant enjoined from en- the control of Congress. As a result of their forcing the act. status we have held that state statutes referring in general terms to banks will not be construed to include national banks, in absense of express provision to that effect. Commonwealth ex rel. v. Ketner, 92 Pa. 372, 37 Am. Rep. 692; Allen v. Carter, 119 Pa. 192, 13 Atl. 70. Had the Legislature intended to include banks doing business under federal laws such intention would, undoubtedly, have

See, also, 260 Pa. 181, 103 Atl. 596. Argued before BROWN, C. J., and MOSCHZISKER, FRAZER, WALLING, and KEPHART, JJ.

John M. Freeman and H. F. Stambaugh, both of Pittsburgh, for appellant.

Wm. M. Hargest, Deputy Atty. Gen., and Frank M. Eastman, of Harrisburgh, and Francis Shunk Brown, Atty. Gen., for appel-provisions of the act to all banks doing busi

lee.

FRAZER, J. The Columbia National Bank of Pittsburgh began proceedings in equity to restrain the auditor general from enforcing the provisions of the Escheat Act of June 7, 1915 (P. L. 878), requiring banks and other corporations and persons to make annual reports to the auditor general showing property in their hands subject to escheat under the provisions of the statute. While the constitutionality of the act is attacked on various grounds, covered by our opinion in the case of Trust Cos. v. Powell, 108 Atl. 441, filed herewith, the only question now requiring consideration is whether the law applies to deposits in national banks doing business

within this state.

been shown in general terms by applying the

ness within this commonwealth, in which
case the language would probably have been
sufficiently comprehensive to include those
operating under federal charters; we are not,
however, called on to decide that question
The fact that the Legis-
and do not do so.
lature used the limited phraseology rather
than that of a general character indicates an
intention to confine the act to institutions
governed by the laws of this state, and thus
exclude national banks.

The decree of the court below sustaining a demurrer to the bill is reversed and the bill is reinstated; and it is now ordered, adjudged, and decreed that appellee is enjoined from enforcing the provisions of the act against banks incorporated under the laws of the United States. Costs to be paid by the

commonwealth.

The title of the act, so far as it relates to bank deposits, provides generally for "the escheat of deposits of money," etc. Section 1 requires a report of deposits to be made by "every person, bank, safe deposit company, In re GUILFORD WATER CO.'S SERVICE

trust company and corporation organized or doing business under the laws of this commonwealth." That a national bank is not organized under the laws of this commonwealth, but, on the contrary, is organized, chartered, and does business under and by virtue of federal laws, is, of course, conceded. The auditor general contends, however, that an intention on the part of the Legislature that the act should apply to national banks is apparent from the wording of section 1, above quoted, which includes corporations "organized or doing business under the laws of the commonwealth." It will be observed that although appellant is "doing business" within the commonwealth it does not necessarily follow that it is transacting business "under the laws" of the commonwealth. True, in carrying on its business within the state a national bank conforms to state laws in so far as they are not in conflict with federal statutes, yet such bank obtains no franchise or authority from the state, but owes its existence and its right to do business solely to acts of Congress.

RATES.

(118 Me. 367)

There is a power which has never been surrendered by the states in virtue of which they may, within certain limits, control everything within their respective territories, and upon the proper exercise of which, under some circumstances, may depend the public health, the public morals, or the public safety. 3. CONSTITUTIONAL LAW 113, 135 - CON

TRACTS TOUCHING GOVERNMENTAL FUNCTIONS NOT WITHIN PROTECTION OF CONSTITUTION. Const. U. S. art. 1, § 10, and Const. Me. art. 1, § 11, relating to the inviolability of con

(108 A.)

CONTRACTS WITH PUBLIC UTILITY BINDING.

tracts, do not go to contracts touching govern- [11. WATERS AND WATER COURSES 203(11)mental functions or prevent the state from regulating rates charged by public utilities, as no obligation of a contract can extend to the defeat of legitimate governmental power.

6. WATERS AND WATER COURSES 203(7) POWER TO REGULATE SERVICE RATES OF WATER COMPANIES.

The mere fact that a contract between a municipality and a water company is subject to regulation as to rates by the state does not ity any right to disregard the contract and give either the municipality or the public utilchange the rates.

12. WATERS AND WATER COURSES 203(5)— RATES OF WATER COMPANY TO BE EQUITABLE.

Rates of water company should neither be so low as to deprive the utility of means of appropriately discharging its duty, nor so high as to unduly burden the public; the basic principles of law of public utilities requiring that the rates should provide the utility an equitable reward on its investment devoted to a public use.

13. STATUTES 263-TERMS SHOWING RETROSPECTIVE OPERATION TO BE CLEAR AND STRONG.

A statute shall not have retrospective operation unless its terms are so strong, clear, and

While not competent for the state entirely imperative that no other meaning can be anto abandon the governmental function of regu-nexed to them, or unless the intention of the lating public water service rates, it may tem- Legislature cannot be otherwise satisfied. porarily suspend exercise of that power, and may authorize municipality to establish by an inviolable contract water rates to be charged, for a definite term not unreasonable in point of time, by a public utility.

7. WATERS AND WATER COURSES 203(7) POWER TO REGULATE RATES BY CONTRACT.

The authority of a municipality to make a contract with a public utility fixing definite rates to be charged for a definite time which cannot be interfered with by the state must be expressly and specifically bestowed upon the municipality by the state, it being beyond the recognized general powers of a municipal corporation to make such a contract.

14. PUBLIC SERVICE COMMISSIONS 7-MAY

FIX RATES OF PUBLIC UTILITIES REGARDLESS
OF PRIOR CONTRACTS.

Subject to review on questions of law the Public Utilities Commission has authority, inclusive of both quasi legislative and quasi judicial power, to fix rates and charges for all public utility services, in view of Rev. St. c. 55, §§ 4, 16, 36, 46; notwithstanding the proviso of section 34 relating to contracts in existence January 1, 1913.

15. WATERS AND WATER COURSES 203(11)— PETITION TO PUBLIC UTILITY COMMISSION TO INCREASE RATES.

Rev. St. c. 55, § 34, providing that the furnishing by any public utility of any service at CONTRACTS REGU-the rates and upon terms and conditions pro

LATING RATES CHARGED BY PUBLIC UTILI

TIES.

Doubts must be resolved in favor of the continuance of the governmental prerogative of regulating rates and charges of public utilities, as exoneration from such control is neither to be presumed nor implied.

203(7)

9. WATERS AND WATER COURSES
CONTRACT FIXING RATES RENDERED INVIOLA-
BLE BY RATIFICATION.

The state may render inviolable a contract entered into between a municipality and a public service corporation fixing rates by ratifying the contract in express and unmistaken terms.

10. WATERS AND WATER COURSES 203(6)NO DELEGATION BY STATE OF POWER TO REG

ULATE WATER RATES.

The state did not directly or indirectly surrender to the Guilford Water Company the power of regulating rates and charges in Priv. & Sp. Laws 1909, c. 226, and Priv. & Sp. Laws 1911, cc. 201, 249, in view of Rev. St. c. 4, § 63.

vided for in any contract in existence January 1, 1913, shall not be construed as constituting a discrimination or undue or unreasonable preference, has no application on petition to the Public Utilities Commission to have water rates uniformly increased.

16. WATERS AND WATER COURSES 203(3) COMPLAINT TO PUBLIC UTILITIES COMMISSION THAT RATES WERE DISCRIMINATORY.

Where a water company, furnishing water for a town, sold water to another water company under a contract executed prior to January 1, 1913, for a less amount than the statute granting the charter of the water company permitted, the town and its consumers is not prevented by Rev. St. c. 55, § 34, from complaining before the Public Utilities Commission that the amount paid by the second water company, which was furnishing water to another town, was too small and discriminatory.

Exceptions from Supreme Judicial Court, Piscataquis County.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

Petition of the Guilford Water Company | ing and furnishing a supply of water, and the to the Public Utilities Commission to approve and allow a revision of rates. The town of Guilford and individual citizens thereof remonstrated. There was an order of the Utilities Commission granting an increase of rates, and the town brings exceptions. One exception sustained, and one overruled.

Argued before CORNISH, C. J., and SPEAR, HANSON, PHILBROOK, DUNN, MORRILL, WILSON, and DEASY, JJ.

J. S. Williams, of Guilford, for Guilford Water Co.

Hudson & Hudson, of Guilford, for Town

of Guilford.

other distributing and selling it. For the
supply the Guilford Company invariably has
charged the Sangerville Company $300 a year.
In 1911, the Guilford Water district was
chartered by the Legislature to acquire by
purchase the property owned by the Guilford
Water Company, and used by the latter in
Priv. & Sp.
supplying water to Guilford.
Laws 1911, c. 201. The charter imposed that
the district assume and carry out all then ex-
isting authorized contracts of the Guilford
Company, and extended permission to furnish
water to the Sangerville Company at a rental
proportional within defined limits, to the num-
ber of faucets and hydrants in the respective
towns. The district never was organized.
At the same session, the Legislature invested
the Guilford Company with right to supply
water to the Sangerville Company "according
to the terms and conditions set out in the
charter of the Guilford water district." Priv.
& Sp. Laws 1911, c. 249.

DUNN, J. The corporation of the Guilford Water Company owes its existence to a charter specially granted in the year of 1909. Priv. & Sp. Laws, c. 226. Its powers were broadened by an act of 1911. Priv. & Sp. Laws, c. 249. So far as relevant to the issues of this case, the original grant of authority After supplying water, in conformity to its limited the company to conveying to and contract with Guilford, for a period extending supplying the inhabitants of the town of Guil-over somewhat more than one-third of the ford "with water for all domestic, sanitary, stated term, the Guilford Company petitioned municipal, and commercial purposes." The town was empowered "to contract with said corporation for a supply of water for fire or other purposes for a term of years, and at the expiration of such contract to renew or change the same."

On August 10, 1910, the water company and the town entered into a written agreement, whereby the company obligated itself, for the period of 20 years then next ensuing, to construct, maintain, and operate a system of waterworks, for the purposes, in brief:

(a) Of constantly providing, at hydrants in certain of the public streets in Guilford, enough water for the protection of property against loss or damage by fire.

(b) of furnishing to the inhabitants of Guilford dwelling in the village "a sufficient supply of pure water for domestic purposes on the following terms and rates: Six dollars per year for the first faucet for each family. * * *”

the Public Utilities Commission to approve and allow a revision of rates, uniformly increasing the annual charge for the “first faucet" from $6 to $8. The town of Guilford, and individual citizens of that town, remonstrated that such increase palpably would be in violation of a valid contract. They contended that the commission could neither order nor permit it. Moreover, they argued that the amount of the rental or charge against the Sangerville Company should be made greater. Following hearing, and upon extensive investigation, the Utilities Commission granted an increase of faucet rate, less in amount than applied for. With regard to the charge for the Sangerville supply, the Commission held that, though inadequacy of compensation was manifest, yet it was powerless to regulate what sum the one company rightly should pay to the other. The case is here on exceptions by the town of Guilford. Renewing its attack, the town emphatically asserts: (1) That in view of the contract the commission cannot, either directly or by acquiescence, sanction any change in the rates therein set out; (2) that the commission had plenary power to determine what quantity of money should be paid by the Sangerville Company to the Guilford Company for water to be supplied the former by the latter.

When that agreement was made, the works of the Guilford Company already were in process of construction. About two months later, by promotion of the contractor installing the Guilford system, a corporation was formed under the provisions of the general incorporation statute, to supply water to the nearby village of Sangerville, in the town of that name. For convenience, this corporation, or- [1-4] That the state, as an attribute of ganized as the Sangerville Water Supply Com- sovereignty, is endowed with authority to pany, will be referred to as the Sangerville | regulate the rates of charges of public utilCompany. Its main extends to the standpipe ities, is past dispute. Munn v. Illinois. 94 of the Guilford Company. From the beginning U. S. 113, 24 L. Ed. 77; Home Teleph. & Teleg. (though for a time going beyond the extent of Co. v. Los Angeles, 211 U. S. 265, 29 Sup. Ct. rightful corporate power), the two companies 50, 53 L. Ed. 176; Minnesota Rate Cases, 230 have functioned successively in providing U. S. 352, 33 Sup. Ct. 729, 57 L. Ed. 1511, 48 public service in Sangerville-the one collect- L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18. It

(108 A.)

acts, in such connection, either immediately for the common good and welfare, can modithrough legislative act or mediately through fy the contract when and as the benefit of a subordinate body, in the exercise of the that interest properly may require. While police powers; those powers which "are noth- not competent for the state entirely to abaning more or less than the powers of govern- don the highly important governmental funcment inherent in every sovereignty, *** the tion of regulating public service rates, neverpower to govern men and things." License theless it temporarily may suspend exercise Cases, 5 How. 583, 12 L. Ed. "256; Veazie v. of the power. It has been settled that a state Mayo, 45 Me. 560; B. & M. R.. R. Co. v. Coun- may authorize one of its municipalities to esty Com'rs, 79 Me. 386, 10 Atl. 113; Skowhegan tablish, by an inviolable contract, the rates to v. Heselton, 117 Me. 17, 102 Atl. 772. That be charged, for a definite term, not unreasonthere is a power, which has never been sur- able in point of time, by a public utility. rendered by the states, in virtue of which Home Teleph. & Teleg. Co. v. Los Angeles, they may, within certain limits, control every- supra; Detroit v. Detroit Citizens' Street Ry. thing within their respective territories, and Co., 184 U. S. 368, 382, 22 Sup. Ct. 410, 46 upon the proper exercise, of which, under L. Ed. 592; Vicksburg v. Vicksburg Watersome circumstances, may depend the public works Co., 206 U. S. 496, 508, 27 Sup. Ct. 762, health, the public morals, or the public safety, 51 L. Ed. 1155; Minneapolis v. Minneapolis is conceded in all the cases. New Orleans Street Ry. Co., 215 U. S. 417, 30 Sup. Ct. 118, Gaslight Co. v. Louisiana Light & Heat Pro- 54 L. Ed. 259. But the authority to make ducing & Mfg. Co., 115 U, S. 650, 6 Sup. Ct. 252, such contract must be expressly and specifi29 L. Ed. 516. Regulation in such cases is not cally bestowed. It is beyond the recognized an unwarranted interference with the right of general powers of a municipal corporation to contract which the constitutional guaranty of make that kind of a contract. Doubts must liberty includes. Private contracts, concern- be resolved in favor of the continuance of ing property rights, are inviolable. Const. the governmental prerogative of regulating U. S. art. 1, § 10; Const. of Maine, art. 1, § 11. rates and charges. Railroad Commission The constitutional inhibitions do not go to Cases, 116 U. S. 307, 325, 6 Sup. Ct. 334, 388, contracts touching governmental functions. 1191, 29 L. Ed. 636; Freeport Water Co. v. Stone v. Mississippi, 101 U. S. 814, 25 L. Ed. Freeport, 180 U. S. 587, 21 Sup. Ct. 493, 45 1079. No obligation of a contract can extend L. Ed. 679; Rogers Park Water Co. v. Ferto the defeat of legitimate governmental pow- gus, 180 U. S. 624, 21 Sup. Ct. 490, 45 L. Ed. er. Legal Tender Cases, 12 Wall. 457, 20 L. 702; Knoxville Water Co. v. Knoxville, 189 Ed. 287; Stone v. Mississippi, supra; Butch- U. S. 434, 23 Sup. Ct. 531, 47 L. Ed. 887; ers' Union Co. v. Cresent City Co., 111 U. S. Union Dry Goods Co. v. Georgia Public Serv746, 4 Sup. Ct. 652, 28 L. Ed. 585; Chicago, ice Corp., supra; City of Englewood v. DenBurlington and Quincy R. Co. v. Nebraska, ver & South Platte Ry. Co., 248 U. S. 294, 170 U. S. 57, 18 Sup. Ct. 513, 42 L. Ed. 948. 39 Sup. Ct. 100, 63 L. Ed. 253. Exoneration Contract rights, which affect the public safety from state control is neither to be presumed and welfare, must yield to that which is es- nor implied. The grant, or, what is equivasential to the general good. Union Dry Goods lent thereto, the ratification, must be in exCo. v. Georgia Public Service Corp., 248 U. S. press and not to be mistaken terms. 372, 39 Sup. Ct. 117, 63 L. Ed. 309. In Atlan- only when the right is very clearly conferred tic Coast Line R. R. Co. v. Goldsboro, 232 U. that the state will be held to have relinS. 548, 34 Sup. Ct. 364, 58 L. Ed. 721, it is said: quished the power to regulate rates. Chica"Neither the 'contract' clause nor the 'due go, M. & St. P. Ry. Co. v. Minnesota, 134 U. process' clause has the effect of overriding the S. 418, 456, 10 Sup. Ct. 462, 33 L. Ed. 970; power of the state to establish all regulations Stanislaus County v. San Joaquin Co., 192 that are reasonably necessary to secure the U. S. 201, 24 Sup. Ct. 241, 48 L. Ed. 406; health, safety, good order, comfort, or general Home Teleph. & Teleg. Co. v. Los Angeles, welfare of the community; that this power can neither be abdicated nor bargained away, supra; Milwaukee Electric, etc., Co. v. Railand is inalienable even by express grant; and road Com., 238 U. S. 174, 35 Sup. Ct. 820, 59 that all contract and property rights are held L. Ed. 1254. In Georgia Railroad Co. v. subject to its fair exercise." Smith, 128 U. S. 174, 9 Sup. Ct. 47, 32 L. Ed. 377, the Legislature chartered a railroad and authorized it to charge rates of fare "not exceeding" certain specified sums. The contention of the company that thereby it was exempted from legislative interference with its rates within the designated limits for all time was rejected. The court said:

The Legislature, in the exercise of the police power, is unrestricted by the provisions of contracts between individuals or corporations, or between individuals and municipal corporations. Manigault v. Springs, 199 U. S. 473, 26 Sup. Ct. 127, 50 L. Ed. 274. [5-9] The rule is general that every contract touching matters within the police power must be held to have been entered into with the distinct understanding that the continuing supremacy of the state, if exerted 108 A.-29

It is

"To effect this result, the exemption must appear by such clear and unmistakable language that it cannot be reasonably construed consistently with the reservation of the power (i. e., the power to regulate rates) by the state."