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the appraisers, under the terms of this act, must consider and allow for, as a material and necessary element of value, by separate item or otherwise, all and several, the franchises, rights, and privileges, whether now used or capable of being used, of the Maine Water Company, so far as they relate in any manner to the territory included within the Kennebec water district and the towns of Benton and Winslow, including specifically all the rights of said company to supply water to municipalities and to all the inhabitants within the entire territory above named, all rights incidental thereto or connected therewith, and the right to receive and appropriate the net incomes and revenues from its business enterprise or undertaking, considered as a whole.

(11) That the value of a franchise depends on its productiveness or net earning power, present and prospective, developed or capable of development, within the entire territory embraced by the taking; that whenever net earning power, or net incomes and revenues, is to be determined under this act, it is to be so determined under reasonable water rates, after due allowance for operating expense and maintenance or depreciation; that the value of all franchises, rights, and privileges to be taken is their full value, not to the taker, but to the seller; that "just compensation," under this act, means full compensation for everything or element of value taken; and that nothing less than such full compensation can be legally awarded, either under the terms of this act, or under the requirements of the constitution of this state and of the United States.

(12) That the fact that the franchises, rights, and privileges of said Maine Water Company are to be taken under this act in no respect destroys or impairs their value to said water company, and cannot diminish or affect the amount to be awarded as just compensation therefor.

(13) That in estimating said franchises, and the present and future net earning power included therein, the appraisers should duly weigh the nature and extent of these franchises, rights, and privileges, whether the same are perpetual or otherwise; also, so far as proved, the rights of the Maine Water Company under all existing contracts, and the value thereof; the extent of existing business, and of the net incomes or revenues now derived or derivable therefrom; the existing demand for new and additional services, and for the development and increase of said business, incomes, and revenues; the past and probable future growth or decay of the territory now served, or capable of being served, under said franchises, in population, in wealth, and in needs and uses for water to be supplied by some water system, and the past and probable future increase or decrease in said net incomes and revenues, as affected by these or other surrounding conditions; also the fact that by said taking said water

company will be wholly and forever deprived of all said franchises, rights, privileges, earning power, incomes, and revenues; and that it is the duty of said appraisers to make, in their sound judgment, just and full compensation to said water company for all the

same.

(14) That the true measure of value, under the terms of this act, and under the requirements of the constitutions of this state and of the United States, is just and full compensation to said water company for each and every thing of value of which it is to be deprived by this taking; that, in addition to the special property covered by request 4, the plant, property, franchises, rights, and privileges now held by said water company within the territory embraced by this act contain distinct elements of value-First, as an asset; and, second, as a source of income, having, or not, present and prospective net earning power; that by the taking under this act said water company will be deprived, wholly and forever, both of said asset and of said source of income; that just compensation to said company for what is thus compulsorily taken from it requires that the sum to be awarded as a substitute therefor shall be the full equivalent of everything taken, both in value as an asset, and in net earning power, and such a sum as, in the sound judgment of the appraisers, will be the full money equivalent of all the plant, property, franchises, rights, and privileges aforesaid, and at the same time, if prudently invested at fair current rates of interest, will yield to said company the same net incomes and revenues, and for the same term, that it will be deprived of by this taking; the net earning power, incomes, and revenues aforesaid to be determined under reasonable water rates, after due allowance, on the one hand, for operating expense and maintenance or depreciation, and, on the other hand, with due regard to the probable future increase or decrease thereof under all conditions affecting the same.

(15) That the constitution of the United, States, independent of the terms of this act, requires that just compensation should be made to said water company for all its plant, property, franchises, rights, privileges, good will, incomes, and revenues to be taken under this act, at their full value, not to the taker, but to the seller; and, to secure just and full compensation for all the same, the defendants are entitled, under the constitution of the United States, to have the court give, and the appraisers follow, as legal rules and material elements of value, in language or in substance, the several foregoing requests; and this request applies to each of said foregoing requests, separately and without reference to any other.

(16) All legal evidence pertinent under either of the foregoing requests, or tending to show the fair market value of the property, rights, privileges, and franchises taken, so

far as admissible upon general rules of law, shall be received by said appraisers at the hearing before them.

Paragraphs 13 and 14 of the plaintiff's bill, upon which requests 12 and 13 of the plaintiff seemed in part to be based, were as follows:

"(13) Your complainant alleges that, in spite of the duty imposed upon said Waterville Water Company by its charter to supply❘ pure water, it has constantly, from the commencement of its operations to the time of the conveyance and surrender of its property and powers to the Maine Water Company, and said Maine Water Company from that time until now, furnished water so polluted, foul, unclean, impure, and unwholesome as to be utterly unfit for drinking purposes or general domestic use, and a constant menace to the health and lives of the people using the same, whereby said Waterville Water Company and said Maine Water Company have utterly forfeited their rights and franchises to operate as water companies within said Kennebec water district, and the towns of Benton and Winslow, and have rendered themselves liable to such processes as are appropriate to work legal forfeiture of said rights and franchises.

"(14) Your complainant further alleges that, in spite of the duty of said water companies to render service at reasonable rates, said companies established and have always maintained, and are now maintaining, a schedule of rates or charges for services utterly disproportionate to the cost of the plant and the expense of maintaining the same, and so unreasonable, excessive, and extortionate that said companies have for this reason utterly forfeited their rights and franchises to operate as water companies within said Kennebec water district and the towns of Benton and Winslow, and have rendered themselves liable to such processes as are appropriate to work legal forfeiture of said rights and franchises."

Argued before WISWELL, C. J., and STROUT, SAVAGE, POWERS, PEABODY, and SPEAR, JJ.

H. D. Eaton, G. K. Boutelle, and E. R. Thayer, for plaintiff. O. D. Baker, J. W. Symonds, D. W. Snow, C. S. Cook, C. L. Hutchinson, and H. M. Heath, for defend

ants.

SAVAGE, J. By chapter 200 of the Private and Special Laws of 1899, the Kennebec water district was incorporated; and by section 6 it was empowered to acquire, by the exercise of the right of eminent domain, "the entire plant, property and franchises, rights and privileges now held by the Maine Water Company within said district and said towns of Benton and Winslow, including all lands, waters, water rights, dams, reservoirs, pipes, machinery, fixtures, hydrants, tools, and all apparatus and appliances owned by said com.

pany and used in supplying water in said district and towns, and any other real estate in said district." This act was held constitutional and valid in Kennebec Water District v. Waterville, 96 Me. 234, 52 Atl. 774. The act further provides that, in the process of the condemnation proceedings, the court shall appoint three appraisers for the purpose of fixing the valuation of the property mentioned in section 6; that the "appraisers shall, upon hearing, fix the valuation of said plant, property and franchises at what they are fairly and equitably worth, so that said Maine Water Company shall receive just compensation for all the same"; and that "upon payment or tender by said district of the amount fixed, and the performance of all other terms and conditions imposed by the court, said entire plant, property, franchises, rights, and privileges shall become vested in said water district."

It is further provided that, "before a commission is issued to the appraisers, either party may ask for instructions to the appraisers, and all questions of law arising upon said requests or upon any other matters in issue may be reported to the law court for determination before the appraisers proceed to fix the valuation of the property." And it is at this last stage that the proceedings have now arrived. The bill in equity for the judicial appraisal and condemnation of the property having been sustained (Kennebec Water District v. Waterville, supra), both parties have asked for instructions to the appraisers, and the questions of law arising upon the requests for instructions have been reported to this court for its determination.

To say the least, the method thus authorized and adopted is an anomalous one. The questions before the court, which are comprehensive in scope and minute in detail, in effect relate to the admissibility of evidence; and yet they must be decided before the court knows or can know what specific evidence will be offered or relied upon, or to what conditions the evidence will be applicable. In such case, it is evident that the answers must be general in character. The conditions surrounding properties like the one here proposed to be taken are so variant that it is difficult, and in some particulars impossible, to lay down rules of value which will properly apply to all cases without modification. It was intimated in Ames v. Un. Pac. Ry. Co. (C. C.) 64 Fed., at page 178, that no hard and fast rule could be made applicable to all properties under all conditions.

And it may be said further that owing to this fact, and to the fact that in scarcely any two cases are the statutes authorizing condemnation proceedings alike, so far as they provide for an estimate of the different elements of value, the expressions of other courts, and results arrived at by them, are frequently of less authority than they otherwise would be.

It should be noticed that this is a bill in

equity, to be heard and determined, except as otherwise provided, according to the practice in equity. The hearings, except upon questions of law reserved upon report or exceptions, are to be before a single justice. A single justice is to make all necessary orders and decrees. And the act contemplates that the justice who directs the issuing of a commission to the appraisers may instruct them in regard to the manner of the performance of their duties. The requests for such instructions can be considered by this court only when they raise questions of law. So we construe the act in question. In this view, plaintiff's requests 1, 14, and 15 are not open for consideration by this court. They relate to details of procedure, and raise no questions of law. They relate to questions concerning which the sitting justice may, in his discretion, give or withhold instructions, according as he may think they are, or are not, practicable, and useful to the parties, the appraisers, and the court. The same remarks apply to plaintiff's request 16, in part. Of course, the appraisers must make a report of their doings, and the statute requires that in their report they shall state the date as of which the valuation is fixed. But beyond this, it is for the sitting justice below to pass upon this request, and not for this court.

Before entering upon a consideration of the requests seriatim, we think it will be expedient to discuss certain general propositions which concern and must qualify or limit the answers to be given to many or all of the requests.

First, as to the subjects of valuation: In substance, it is claimed by the defendants (request 2), and conceded by the plaintiff, that the latter, if it takes anything, must take every item of property held by the Maine Water Company in the Kennebec water district (the city of Waterville and the Fairfield village corporation), and in Benton and Winslow, at the date of the appraisal, whether specifically named in the act or not. We think it must be so held. And for every such item of value the Maine Water Company is entitled to "just compensation." This includes the real estate or other property, if any, not connected with the water system. It includes the plant, or physical system, real and personal. It includes all the franchises, rights, and privileges held by the Maine Water Company in the territory described, except the franchise to be a corporation. It is unnecessary to particularize further. The plaintiff criticises the use of the phrase "capable of being exercised," in speaking of franchises in request 2. But we think it is unobjectionable. Whatever franchise the Maine Water Company holds in this territory is to be taken from it, and must be paid for. Its existence is the criterion, not whether it is being exercised or not. Joy v. Grindstone Neck Water Co., 85 Me. 109, 26 Atl. 1052. It may be doubted wheth

er the Maine Water Company has any franchise in this territory which it is not now exercising. It has some franchises which undoubtedly will be more fully exercised than at present, in the course of the development of its system, if it is allowed to continue in possession of it. It would be, however, rather the extension of the use or exercise of a franchise, than the exercise of an unused franchise.

Secondly, as to reasonable rates: We think it is clear that the pecuniary value of the property of the Maine Water Company, both plant and franchises, depends, to a considerable extent, upon the financial returns it can be made to yield to the stockholders; that is, upon its net income. The franchise or right to do business, if unproductive, is of little value; and it stands to reason that the plant, as a structure, irrespective of franchise, if the business were profitable, would be worth more, and would sell for more, than if the business were unprofitable. The basis of income, of course, is the tolls charged and received. If the Maine Water Company were doing a private business, knowing its present net income, and the facts tending to show a probable increase in the future or otherwise, it would be comparatively easy to approximate the present value of its plant and franchises. But it is not doing a private business. It is not a private corporation. The value of its property cannot be appraised as if it were a private corporation, doing a private business. Cotting v. Kansas City Stock Yards Co. (C. C.) 82 Fed. 850. It is a quasi public, or public service, corporation. In pursuit of legitimate gain, it has devoted its property to a public use. In that way the public have acquired an interest in the use of the property. The company owes a duty to the public as well as to its stockholders. It must serve the public faithfully and impartially, and must charge no more than reasonable rates for service. Brunswick Gaslight Co. v. United Gas, Fuel & Light Co., 85 Me. 532, 27 Atl. 525, 35 Am. St. Rep. 385. The legislature may limit the tolls of such a corporation so that they shall be reasonable. Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77; Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct. 418, 42 L. Ed. 819. Unreasonable charges may be reached by the restraining hand of the court. Thus far the parties agree. And it may be said that the fair and equitable value of the system of the Maine Water Company, as a whole, may, in a large sense, be measured by its net income at reasonable rates, taking into account future probabilities. But the plaintiff (request 4) asks us to say that "what would be reasonable rates can be determined only after and by means of a valuation of the companies' property," and that "the actual rates which may have been charged by the companies, and their actual earnings, have no bearing on the value either of the companies' plant or property, or of their franchises, and

are immaterial." On the other hand, the defendants state their proposition in these words (request 11): "That the value of a franchise depends on its productiveness or net earning power, present and prospective, developed or capable of development, within the entire territory embraced by the taking; that whenever net earning power, or net incomes and revenues, is to be determined under this act, it is to be so determined under reasonable water rates, after due allowance for operating expense and maintenance or depreciation."

Waiving other questions for the time being, it will be seen that "reasonable water rates" lie at the foundation of this proposition. But so far we are not in any way aided in determining how they should be ascertained. The differing forms in which the parties have presented their requests upon this subject have given rise, in argument, to the question whether the reasonableness of the rates depends upon the value of the property, or whether the value of the property depends upon the income derived at reasonable rates. But the requests do not present the question in this form. The plaintiff asks that reasonable rates be made to depend upon the value of the property, and we think this is correct, as far as it goes, as we shall have occasion to show hereafter. The defendants say that the value of the franchise (that is, of the right to do the business) depends upon the net income at reasonable rates. And this is also correct, as far as it goes. Monongahela Navigation Co. v. U. S., 148 U. S. 312, 13 Sup. Ct. 622, 37 L. Ed. 463. One refers to the value of the property in gross; the other, to the value of the franchise. But the value of the property is not the only element to be considered in determining what are reasonable rates. As declared in Smyth v. Ames, 169 U. S. 466, 18❘ Sup. Ct. 418, 42 L. Ed. 819, the basis of all calculation as to the reasonableness of rates to be charged by a public service corporation is the fair value of the property used by it for the convenience of the public. Yet while the company is entitled, so far as this case shows, to a fair return upon the value of the property used for the public at the time it is being used, the public (that is, the customers) may demand that the rates shall be no higher than the services are worth to them, not in the aggregate, but as individuals. The value of the services in themselves is to be considered, and not exceeded. These views seem to be consonant with reason. They are also established by the highest judicial authority in our country.

In Smyth v. Ames, 169 U. S. 466, at page 554, 169 U. S., page 433, 18 Sup. Ct., 42 L. Ed. 819, the court said: "Such a corporation was created for public purposes. It performs a function of the state. Its authority to exercise the right of eminent domain and to charge tolls was given primarily for the benefit of the public. It is under governmental

control, though such control must be exercised with due regard to the constitutional guaranties for the protection of its property. It cannot, therefore, be admitted that a railroad corporation maintaining a highway under the authority of the state may fix its rates with a view solely to its own interests, and ignore the rights of the public. But the rights of the public would be ignored if rates for the transportation of persons or property on a railroad are exacted without reference to the fair value of the property used for the public, or the fair value of the services rendered, but in order simply that the corporation may meet operating expenses, pay the interest on its obligations, and declare a dividend to stockholders." Again, at page 547, 169 U. S., page 434, 18 Sup. Ct., 42 L. Ed. 819: "What the company is entitled to ask is a fair return upon the value of that which it employs for the public convenience. On the other hand, what the public is entitled to demand is that no more be exacted for the use of a public highway than the services rendered by it are reasonably worth." Of course, the same principles apply to the water rates as to railroad rates. San Diego Land & Town Co. v. National City, 174 U. S. 739, 19 Sup. Ct. 804, 43 L. Ed. 1154. In the case last cited it was claimed by the appellant, as bearing upon just or reasonable rates for water service, that the court should take into consideration the cost; the cost per annum of operating the plant, including interest paid on money borrowed, and reasonably necessary to be used in constructing the same; the annual depreciation of the plant from natural causes resulting from its use; and a fair net profit. The court said, at page 757, 174 U. S., page 811, 19 Sup. Ct., 43 L. Ed. 1154: "Undoubtedly, all these matters ought to be taken into consideration, and such weight be given them, when rates are being fixed, as, under all the circumstances, will be just to the company and to the public. The basis of calculation suggested by the appellant is, however, defective, in not requiring the real value of the property, and the fair value in themselves of the services rendered, to be taken into consideration. What the company is entitled to demand, in order that it may have just compensation, is a fair return upon the reasonable value of the property at the time it is being used for the public."

In Covington & Lexington Turnpike Road Co. v. Sanford, 164 U. S. 578, 17 Sup. Ct. 198, 41 L. Ed. 560, it was held that the nature and value of the service rendered by a turnpike company bear upon the reasonableness of rates charged. And in the same case it was held that other considerations were involved, such as "the reasonable cost of maintaining the road in good condition for public use, and the amount that may have been really and necessarily invested in the enterprise."

In Cotting v. Kansas City Stockyards Company, 183 U. S. 79, 22 Sup. Ct. 30, 46 L. Ed. 92, decided since these proceedings were be

gun, Mr. Justice Brewer declared (page 91, 183 U. S., page 35, 22 Sup. Ct., 46 L. Ed. 92), that the present value of the property is the basis by which the test of reasonableness is to be determined, although the actual cost is to be considered, and that the value of the services rendered to each individual is also to be considered.

In the same case, at page 96, 183 U. S., page 37, 22 Sup. Ct., 46 L. Ed. 92, the case of Canada Southern Railway Co. v. International Bridge Co., 8 App. Cas. 723, was cited with approval to the point that the question is not what profit it may be reasonable for a company to make, but what it is reasonable to charge to the person who is charged. And Mr. Justice Brewer adds: "The question is, always, not what does he make, as the aggregate of his profits? but, what is the value of the services which he renders to the one seeking and receiving such services? Of course, it may sometimes be, as suggested in the opinion of Lord Chancellor Selborne, that the amount of the aggregate profits may be a factor in considering the question of the reasonableness of the charges; but it is only one factor, and it is not that which finally determines the question of reasonableness."

We deem the principles established by the supreme court of the United States as affecting the reasonableness of rates of public service corporations to be authoritative. The rates of such corporations are within the protection of the fourteenth amendment to the federal constitution. Reagan V. Farmers' Loan & Trust Co., 154 U. S. 362, 14 Sup. Ct. 1047, 38 L. Ed. 1014; Covington & Lexington Turnpike Road Co. v. Sanford, supra; Smyth v. Ames, supra; San Diego Land Co. v. National City, supra. And the declarations of the highest federal court thereon are of controlling force.

The elemental principles thus far noted may be summarized as, on the one hand, the right of the company to derive a fair income, based upon the fair value of the property at the time it is being used for the public, taking into account the cost of maintenance or depreciation, and current operating expenses; and, on the other hand, the right of the public to have no more exacted than the services in themselves are worth.

In some of the cases to which we have referred, it is suggested that there may be instances where these two principles will clash,-where public service rendered at rates not higher than the service in itself is worth may produce less than a fair income, or no net income at all. But we assume that it is unnecessary to discuss this question here, for neither upon the face of the bill and answer, nor in the requests for instructions, nor in the arguments of counsel, is there any suggestion that what will be reasonable rates for the public in this case will not also be reasonable rates for the company.

There is another matter which we think may fairly be considered in connection with

the reasonableness of rates. We think something may be allowed in this respect for the risks of the original enterprise, if there were any. It is common sense that they who invest their money in hazardous enterprises may reasonably be entitled, for a time, at least, to larger returns than would be the case if the success of the undertaking were assured from the beginning. The plaintiff, in request 11, concedes that such risks may be considered in valuing the franchise. But inasmuch as the value of the franchise depends chiefly upon the net income which may be produced by its exercise at reasonable rates, as has already been stated, it follows, we think, that the reasonableness of the rate may be affected by the degree of risk to which the original enterprise was naturally subjected. This does not mean unforeseen or emergent risks, but such as may have been justly contemplated by those who made the original investment. We use the word "chiefly," because we apprehend that a franchise, even of an unprofitable business, might have a temporary value for some purposes. But that condition does not seem to exist in this case. The element of risk, however, is not controlling. It is only one element. It is to be fairly considered in connection with the other elements named. To say just how must allowance should be made, and for how long a period, requires the exercise of a careful, conservative, and discriminating judgment. If allowance be sought on account of this element of original risk, we think it will be permissible at the same time to inquire to what extent the company has already received income at rates in excess of what would otherwise be reasonable, and thus has already received compensation for this risk. This latter inquiry should be limited to this specific purpose, and is not open, as we shall hold, under plaintiff's request 13.

Thirdly, as to the character and duration of the franchises: It must be evident that the value of the plant and the franchises themselves, whether taken separately or as a whole, is affected by the character and duration of the franchises. Bristol v. Bristol & W. Waterworks, 19 R. I. 413, 34 Atl. 359, 32 L. R. A. 740; Re Brooklyn, 143 N. Y. 596, 38 N. E. 983, 26 L. R. A. 270. An exclusive franchise to do a profitable business is worth more than one which is not exclusive. A perpetual franchise to do a profitable business is, or may be, worth more than one which is subject to repeal.

The plaintiff (request 9) asks an instruction that the franchises now held by the Maine Water Company are in no way exclusive. The defendants suggest that whether the franchises are exclusive, or not, is a question for the appraisers to answer after the charters have been put in evidence, and not for the court, in the first instance, at least. We do not think so. Certain acts incorporating the Waterville Water Company

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