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the appraisers, under the terms of this act, company will be wholly and forever deprived must consider and allow for, as a material of all said franchises, rights, privileges, earnand necessary element of value, by separate ing power, incomes, and revenues; and that item or otherwise, all and several, the fran it is the duty of said appraisers to make, in chises, rights, and privileges, whether now their sound judgment, just and full compenused or capable of being used, of the Maine sation to said water company for all the Water Company, so far as they relate in same. any manner to the territory included within (14) That the true measure of value, unthe Kennebec water district and the towns der the terms of this act, and under the reof Benton and Winslow, including specifical- quirements of the constitutions of this state ly all the rights of said company to supply and of the United States, is just and full comwater to municipalities and to all the in- pensation to said water company for each and habitants within the entire territory above every thing of value of which it is to be named, all rights incidental thereto or con deprived by this taking; that, in addition to nected therewith, and the right to receive the special property covered by request 4, the and appropriate the net incomes and reve plant, property, franchises, rights, and privinues from its business enterprise or under leges now held by said water company withtaking, considered as a whole.

in the territory embraced by this act con(11) That the value of a franchise depends tain distinct elements of value-First, as an on its productiveness or net earning power, asset; and, second, as a source of income, present and prospective, developed or capable having, or not, present and prospective net of development, within the entire territory earning power; that by the taking under this embraced by the taking; that whenever net act said water company will be deprived, earning power, or net incomes and revenues, wholly and forever, both of said asset and of is to be determined under this act, it is to be said source of income; that just compensaso determined under reasonable water rates, tion to said company for what is thus comafter due allowance for operating expense pulsorily taken from it requires that the sum and maintenance or depreciation; that the to be awarded as a substitute therefor shall value of all franchises, rights, and privileges be the full equivalent of everything taken, to be taken is their full value, not to the both in value as an asset, and in net earning taker, but to the seller; that “just compen. power, and such a sum as, in the sound judgsation," under this act, means full compen ment of the appraisers, will be the full money sation for everything or element of value equivalent of all the plant, property, frantaken; and that nothing less than such full chises, rights, and privileges aforesaid, and compensation can be legally awarded, either at the same time, if prudently invested at under the terms of this act, or under the re fair current rates of interest, will yield to quirements of the constitution of this state said company the same net incomes and rev. and of the United States.

enues, and for the same term, that it will be (12) That the fact that the franchises, deprived of by this taking; the net earning rights, and privileges of said Maine Water power, incomes, and revenues aforesaid to be Company are to be taken under this act in determined under reasonable water rates, aftno respect destroys or impairs their value to er due allowance, on the one hand, for opersaid water company, and cannot diminish or ating expense and maintenance or depreciaaffect the amount to be awarded as just com tion, and, on the other hand, with due regard pensation therefor.

to the probable future increase or decrease (13) That in estimating said franchises, thereof under all conditions affecting the and the present and future net earning power same. included therein, the appraisers should duly (15) That the constitution of the United, weigh the nature and extent of these fran States, independent of the terms of this act, chises, rights, and privileges, whether the requires that just compensation should be same are perpetual or otherwise; also, so far made to said water company for all its plant, as proved, the rights of the Maine Water property, franchises, rights, privileges, good Company under all existing contracts, and will, incomes, and revenues to be taken unthe value thereof; the extent of existing der this act, at their full value, not to the business, and of the net incomes or revenues taker, but to the seller; and, to secure just now derived or derivable therefrom; the ex and full compensation for all the same, the isting demand for new and additional sery defendants are entitled, under the constituices, and for the development and increase tion of the United States, to have the court of said business, incomes, and revenues; the give, and the appraisers follow, as legal rules past and probable future growth or decay of and material elements of value, in language the territory now served, or capable of being or in substance, the several foregoing reserved, under said franchises, in population, quests; and this request applies to each of in wealth, and in needs and uses for water to said foregoing requests, separately and withbe supplied by some water system, and the out reference to any other. past and probable future increase or decrease (16) All legal evidence pertinent under eiin said net incomes and revenues, as affected ther of the foregoing requests, or tending to by these or other surrounding conditions; al show the fair market value of the property, so the fact that by said taking said water rights, privileges, and franchises taken, so

far as admissible upon general rules of law, pany and used in supplying water in said shall be received by said appraisers at the district and towns, and any other real estate hearing before them.

in said district.” This act was held constiParagraphs 13 and 14 of the plaintiff's bill, tutional and valid in Kennebec Water Disupon which requests 12 and 13 of the plain trict v. Waterville, 96 Me. 234, 52 Atl. 774. tiff seemed in part to be based, were as fol The act further provides that, in the process lows:

of the condemnation proceedings, the court "(13) Your complainant alleges that, in shall appoint three appraisers for the purpose spite of the duty imposed upon said Water of fixing the valuation of the property men. ville Water Company by its charter to supply tioned in section 6; that the "appraisers pure water, it has constantly, from the com shall, upon hearing, fix the valuation of said mencement of its operations to the time of plant, property and franchises at what they the conveyance and surrender of its property are fairly and equitably worth, so that said and powers to the Maine Water Company, and Maine Water Company shall receive just said Maine Water Company from that time compensation for all the same”; and that until now, furnished water so polluted, foul, "upon payment or tender by said district unclean, impure, and unwholesome as to be of the amount fixed, and the performance utterly unfit for drinking purposes or general of all otber terms and conditions imposed by domestic use, and a constant menace to the the court, said entire plant, property, franhealth and lives of the people using the same, chises, rights, and privileges shall become whereby said Waterville Water Company vested in said water district.” and said Maine Water Company have utterly It is further provided that, “before a comforfeited their rights and franchises to op mission is issued to the appraisers, either erate as water companies within said Ken party may ask for instructions to the appraisnebec water district, and the towns of Ben ers, and all questions of law arising upon ton and Winslow, and have rendered them said requests or upon any other matters in selves liable to such processes as are appro issue may be reported to the law court for priate to work legal forfeiture of said rights determination before the appraisers proceed and franchises.

to fix the valuation of the property.” And "(11) Your complainant further alleges it is at this last stage that the proceedings that, in spite of the duty of said water com have now arrived. The bill in equity for the panies to render service at reasonable rates, judicial appraisal and condemnation of the said companies established and have always property having been sustained (Kennebec maintained, and are now maintaining, a Water District V. Waterville, supra), both schedule of rates or charges for services ut. parties have asked for instructions to the terly disproportionate to the cost of the plant appraisers, and the questions of law arising and the expense of maintaining the same, and upon the requests for instructions have been so unreasonable, excessive, and extortionate reported to this court for its determination. that said companies have for this reason ut To say the least, the method thus authorterly forfeited their rights and franchises ized and adopted is an anomalous one. The to operate as water companies within said questions before the court, which are compreKennebec water district and the towns of hensive in scope and minute in detail, in efBenton and Winslow, and have rendered fect relate to the admissibility of evidence; themselves liable to such processes as are and yet they must be decided before the appropriate to work legal forfeiture of said court knows or can know what specific evirights and franchises."

dence will be offered or relied upon, or to Argued before WISWELL, C. J., and what conditions the evidence will be applicaSTROUT, SAVAGE, POWERS, PEABODY, ble. In such case, it is evident that the anand SPEAR, JJ.

swers must be general in character. The

conditions surrounding properties like the one H. D. Eaton, G. K. Boutelle, and E. R.

here proposed to be taken are so variant that Thayer, for plaintiff, 0. D. Baker, J. W.

it is difficult, and in some particulars imposSymonds, D. W. Snow, C. S. Cook, C. L. Hutchinson, and H. M. Heath, for defend

sible, to lay down rules of value which will

properly apply to all cases without modificaants.

tion. It was intimated in Ames v. Un. Pac.

Ry. Co. (C. C.) 64 Fed., at page 178, that no SAVAGE, J. By chapter 200 of the Pri hard and fast rule could be made applicable vate and Special Laws of 1899, the Kenne to all properties under all conditions. bec water district was incorporated; and by And it may be said further that owing to section 6 it was empowered to acquire, by the this fact, and to the fact that in scarcely exercise of the right of eminent domain, “the any two cases are the statutes authorizing entire plant, property and franchises, rights condemnation proceedings alike, so far as and privileges now held by the Maine Water they provide for an estimate of the different Company within said district and said towns elements of value, the expressions of other of Benton and Winslow, including all lands, courts, and results arrived at by them, are waters, water rights, dams, reservoirs, pipes, frequently of less authority than they othermachinery, fixtures, hydrants, tools, and all wise would be. apparatus and appliances owned by said com. It should be noticed that this is a bill in

equity, to be heard and determined, except er the Maine Water Company has any franas otherwise provided, according to the prac chise in this territory which it is not now tice in equity. The hearings, except upon exercising. It has some franchises which questions of law reserved upon report or ex undoubtedly will be more fully exercised than ceptions, are to be before a single justice. at present, in the course of the development A single justice is to make all necessary or of its system, if it is allowed to continue in ders and decrees. And the act contemplates possession of it. It would be, however, raththat the justice who directs the issuing of a er the extension of the use or exercise of a commission to the appraisers may instruct | franchise, than the exercise of an unused them in regard to the manner of the per franchise. formance of their duties. The requests for Secondly, as to reasonable rates: We such instructions can be considered by this think it is clear that the pecuniary value of court only when they raise questions of law. the property of the Maine Water Company, So we construe the act in question. In this both plant and franchises, depends, to a conview, plaintiff's requests 1, 14, and 15 are siderable extent, upon the financial returns not open for consideration by this court. it can be made to yield to the stockholders; They relate to details of procedure, and raise that is, upon its net income. The franchise no questions of law. They relate to ques or right to do business, if unproductive, is tions concerning which the sitting justice of little value; and it stands to reason that may, in his discretion, give or withhold in the plant, as a structure, irrespective of franstructions, according as he may think they chise, if the business were profitable, would are, or are not, practicable, and useful to be worth more, and would sell for more, than the parties, the appraisers, and the court. if the business were unprofitable. The basis The same remarks apply to plaintiff's re of income, of course, is the tolls charged and quest 16, in part. Of course, the appraisers received. If the Maine Water Company must make a report of their doings, and the were doing a private business, knowing its statute requires that in their report they present net income, and the facts tending shall state the date as of which the valua to show a probable increase in the future or tion is fixed. But beyond this, it is for the otherwise, it would be comparatively easy to sitting justice below to pass upon this request, approximate the present value of its plant and not for this court.

and franchises. But it is not doing a private Before entering upon a consideration of business. It is not a private corporation. the requests seriatim, we think it will be The value of its property cannot be appraised expedient to discuss certain general proposi as if it were a private corporation, doing a tions which concern and must qualify or lim private business. Cotting v. Kansas City it the answers to be given to many or all of Stock Yards Co. (C. C.) 82 Fed. 850. It is the requests.

a quasi public, or public service, corporation. First, as to the subjects of valuation: In In pursuit of legitimate gain, it has devoted substance, it is claimed by the defendants its property to public use. In that way (request 2), and conceded by the plaintiff, the public have acquired an interest in the that the latter, if it takes anything, must use of the property. The company owes a take every item of property held by the duty to the public as well as to its stockMaine Water Company in the Kennebec holders. It must serve the public faithfully water district (the city of Waterville and the and impartially, and must charge no more Fairfield village corporation), and in Benton than reasonable rates for service. Brunsand Winslow, at the date of the appraisal, wick Gaslight Co. v. United Gas, Fuel & whether specifically named in the act or Light Co., 85 Me. 532, 27 Atl. 525, 35 Am. not. We think it must be so held. And for St. Rep. 385. The legislature may limit the every such item of value the Maine Water tolls of such a corporation so that they shall Company is entitled to "just compensation.” be reasonable. Munn V. Illinois, 94 U. S. This includes the real estate or other proper 113, 24 L. Ed. 77; Smyth v. Ames, 169 U. S. ty, if any, not connected with the water 466, 18 Sup. Ct. 418, 42 L. Ed. 819. Unreasystem. It includes the plant, or physical sonable charges may be reached by the resystem, real and personal. It includes all straining hand of the court. Thus far the the franchises, rights, and privileges held by parties agree. And it may be said that the the Maine Water Company in the territory fair and equitable value of the system of the described, except the franchise to be a cor Maine Water Company, as a whole, may, in poration. It is unnecessary to particularize a large sense, be measured by its net income further. The plaintiff criticises the use of at reasonable rates, taking into account futhe phrase "capable of being exercised," in ture probabilities. But the plaintiff (request speaking of franchises in request 2. But we 4) asks us to say that “what would be reathink it is unobjectionable. Whatever fran sonable rates can be determined only after chise the Maine Water Company holds in and by means of a valuation of the comthis territory is to be taken from it, and must panies' property," and that “the actual rates be paid for. Its existence is the criterion, which may have been charged by the comnot whether it is being exercised or not. panies, and their actual earnings, have no Joy V. Grindstone Neck Water Co., 85 Me. bearing on the value either of the companies' 109, 26 Atl. 1052. It may be doubted wheth- plant or property, or of their franchises, and

are immaterial.” On the other hand, the de control, though such control must be exercisfendants state their proposition in these ed with due regard to the constitutional guarwords (request 11): "That the value of a anties for the protection of its property. It franchise depends on its productiveness or cannot, therefore, be admitted that a railroad net earning power, present and prospective, corporation maintaining a highway under the developed or capable of development, within authority of the state may fix its rates with a the entire territory embraced by the taking; view solely to its own interests, and ignore that whenever net earning power, or net in the rights of the public. But the rights of comes and revenues, is to be determined un the public would be ignored if rates for the der this act, it is to be so determined under transportation of persons or property on a reasonable water rates, after due allowance railroad are exacted without reference to the for operating expense and maintenance or fair value of the property used for the public, depreciation.”

or the fair value of the services rendered, but Waiving other questions for the time be in order simply that the corporation may ing, it will be seen that "reasonable water meet operating expenses, pay the interest on rates" lie at the foundation of this proposi its obligations, and declare a dividend to tion. But so far we are not in any way aid stockholders." Again, at page 547, 169 U. S., ed in determining how they should be ascer page 434, 18 Sup. Ct., 42 L. Ed. 819: “What tained. The differing forms in which the the company is entitled to ask is a fair return parties have presented their requests upon upon the value of that which it employs for this subject have given rise, in argument, to the public convenience. On the other hand, the question whether the reasonableness of what the public is entitled to demand is that the rates depends upon the value of the prop no more be exacted for the use of a public erty, or whether the value of the property highway than the services rendered by it are depends upon the income derived at reason reasonably worth.” Of course, the same able rates. But the requests do not present principles apply to the water rates as to railthe question in this form. The plaintiff asks road rates. San Diego Land & Town Co. v. that reasonable rates be made to depend up National City, 174 U. S. 739, 19 Sup. Ct. 804, on the value of the property, and we think 43 L. Ed. 1154. In the case last cited it was this is correct, as far as it goes, as we shall claimed by the appellant, as bearing upon have occasion to show hereafter. The de just or reasonable rates for water service, fendants say that the value of the franchise that the court should take into consideration (that is, of the right to do the business) de the cost; the cost per annum of operating pends upon the net income at reasonable the plant, including interest paid on money rates. And this is also correct, as far as it borrowed, and reasonably necessary to be goes. Mononga hela Navigation Co. v. U. S., used in constructing the same; the annual de148 U. S. 312, 13 Sup. Ct. 622, 37 L. Ed. 463. preciation of the plant from natural causes reOne refers to the value of the property in sulting from its use; and a fair net profit. gross; the other, to the value of the fran The court said, at page 757, 174 U. S., page cbise. But the value of the property is not 811, 19 Sup. Ct., 43 L. Ed. 1154: "Undoubtthe only element to be considered in deter edly, all these matters ought to be taken into mining what are reasonable rates. As de consideration, and such weight be given clared in Smyth v. Ames, 169 U. S. 466, 18 them, when rates are being fixed, as, under Sup. Ct. 418, 42 L. Ed. 819, the basis of all all the circumstances, will be just to the comcalculation as to the reasonableness of rates pany and to the public. The basis of calcuto be charged by a public service corporation lation suggested by the appellant is, however, is the fair value of the property used by it defective, in not requiring the real value of for the convenience of the public. Yet while the property, and the fair value in themselves the company is entitled, so far as this case of the services rendered, to be taken into consbows, to a fair return upon the value of the sideration. What the company is entitled to property used for the public at the time it is demand, in order that it may have just combeing csed, the public (that is, the customers) pensation, is a fair return upon the reasonmay demand that the rates shall be no higher able value of the property at the time it is than the services are worth to them, not in being used for the public." the aggregate, but as individuals. The value In Covington & Lexington Turnpike Road of the services in themselves is to be consid Co. v. Sanford, 164 U. S. 578, 17 Sup. Ct. 198, ered, and not exceeded. These views seem to 41 L. Ed. 560, it was held that the nature and be consonant with reason. They are also es value of the service rendered by a turnpike tablished by the highest Judicial authority in company bear upon the reasonableness of our country.

rates charged. And in the same case it was In Smyth v. Ames, 169 U. S. 466, at page held that other considerations were involved, 554, 169 U. S., page 433, 18 Sup. Ct., 42 L. Ed. such as “the reasonable cost of maintaining 819, the court said: "Such a corporation was the road in good condition for public use, and created for public purposes. It performs a the amount that may have been really and function of the state. Its authority to exer necessarily invested in the enterprise." cise the right of eminent domain and to In Cotting v. Kansas City Stockyards Comcharge tolls was given primarily for the ben pany, 183 U. S. 79, 22 Sup. Ct. 30, 46 L. Ed. efit of the public. It is under governmental | 92, decided since these proceedings were be

gun, Mr. Justice Brewer declared (page 91, the reasonableness of rates. We think some183 U. S., page 35, 22 Sup. Ct., 46 L. Ed. 92), thing may be allowed in this respect for the that the present value of the property is the risks of the original enterprise, if there were basis by which the test of reasonableness is any. It is common sense that they who into be determined, although the actual cost is vest their money in hazardous enterprises to be considered, and that the value of the may reasonably be entitled, for a time, at services rendered to each individual is also least, to larger returns than would be the to be considered.

case if the success of the undertaking were In the same case, at.page 96, 183 U. S., page assured from the beginning. The plaintiff, 37, 22 Sup. Ct., 46 L. Ed. 92, the case of Can in request 11, concedes that such risks may ada Southern Railway Co. v. International be considered in valuing the franchise. But Bridge Co., 8 App. Cas. 723, was cited with inasmuch as the value of the franchise deapproval to the point that the question is not pends chiefly upon the net income which what profit it may be reasonable for a com may be produced by its exercise at reasonpany to make, but what it is reasonable to able rates, as has already been stated, it folcharge to the person who is charged. And lows, we think, that the reasonableness of Mr. Justice Brewer adds: “The question is, the rate may be affected by the degree of always, not what does he make, as the aggre risk to which the original enterprise was natgate of his profits? but, what is the value of urally subjected. This does not mean unthe services which he renders to the one seek foreseen or emergent risks, but such as may ing and receiving such services? Of course, have been justly contemplated by those who it may sometimes be, as suggested in the made the original investment. We use the opinion of Lord Chancellor Selborne, that word "chiefly,” because we apprehend that the amount of the aggregate profits may be a franchise, even of an unprofitable business, a factor in considering the question of the might have a temporary value for some purreasonableness of the charges; but it is only poses. But that condition does not seem to one factor, and it is not that which finally exist in this case. The element of risk, howdetermines the question of reasonableness." ever, is not controlling. It is only one ele

We deem the principles established by the ment. It is to be fairly considered in consupreme court of the United States as af. nection with the other elements named. To fecting the reasonableness of rates of public say just how must allowance should be service corporations to be authoritative. The made, and for how long a period, requires rates of such corporations are within the pro the exercise of a careful, conservative, and tection of the fourteenth amendment to the discriminating judgment. If allowance be federal constitution. Reagan v. Farmers' sought on account of this element of original Loan & Trust Co., 154 U. S. 362, 14 Sup. Ct. risk, we think it will be permissible at the 1047, 38 L. Ed. 1014; Covington & Lexing same time to inquire to what extent the comton Turnpike Road Co. v. Sanford, supra; pany has already received income at rates in Smyth v. Ames, supra; San Diego Land Co. excess of what would otherwise be reasonv. National City, supra. And the declara able, and thus has already received compentions of the highest federal court thereon are sation for this risk. This latter inquiry of controlling force.

should be limited to this specific purpose, The elemental principles thus far noted and is not open, as we shall hold, under may be summarized as, on the one hand, the plaintiff's request 13. right of the company to derive a fair income, Thirdly, as to the character and duration based upon the fair value of the property at of the franchises: It must be evident that the time it is being used for the public, tak the value of the plant and the franchises ing into account the cost of maintenance or themselves, whether taken separately or as depreciation, and current operating expenses; a whole, is affected by the character and duand, on the other hand, the right of the pub-ration of the franchises. Bristol v. Bristol lic to have no more exacted than the sery & W. Waterworks, 19 R. I. 413, 34 Atl. 359, ices in themselves are worth.

32 L. R. A. 740; Re Brooklyn, 143 N. Y. In some of the cases to which we have 596, 38 N. E. 983, 26 L. R. A. 270. An exreferred, it is suggested that there may be clusive franchise to do a profitable business instances where these two principles will is worth more than one which is not exclash,-where public service rendered at rates clusive. A perpetual franchise to do a profitnot higher than the service in itself is worth able business is, or may be, worth more than may produce less than a fair income, or no one which is subject to repeal. net income at all. But we assume that it is The plaintiff (request 9) asks an instrucunnecessary to discuss this question here, tion that the franchises now held by the for neither upon the face of the bill and an Maine Water Company are in no way exswer, nor in the requests for instructions, clusive. The defendants suggest that whethnor in the arguments of counsel, is there any er the franchises are exclusive, or not, is a suggestion that what will be reasonable rates question for the appraisers to answer after for the public in this case will not also be the charters have been put in evidence, and reasonable rates for the company.

not for the court, in the first instance, at There is another matter which we think least. We do not think so. Certain acts inmay fairly be considered in connection with corporating the Waterville Water Company

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