and good faith to permit stockholders to invite directors to enter into an engagement, and, after the directors had put themselves in a position in which the contract could be enforced against them, to permit the stockholders to deprive them of the benefits of it. In my investigation no case has been found which will justify such a result. In the proper application of a legal rule, it cannot be necessary, in order to do justice to one party, to do manifest injustice to the other. Such inequity would condemn the application of the rule, not the rule itself.

On the ground which has been discussed, upon the facts presented, the complainant's case is without support in law. He made no inquiry, did not attend the meeting, and now attempts to deprive the two-thirds of the stockholders who did attend the May meeting of the benefit of a contract which they then approved, and which, as has been held in the Berger Case, the corporation had power to make. As was declared in that case (citing Ellerman v. Chicago Junction Co., 49 N. J. Eq. 217, 23 Atl. 287), individual stockholders cannot question, in judicial proceedings, corporate acts of directors, if the same are within the powers of the corporation, and in furtherance of its purposes, are not unlawful or against good morals, are done in good faith and in the exercise of an honest judgment. Much less can a shareholder challenge like action taken by a majority of his co-stockholders.

The remaining grounds upon which the complainant rests his claim to relief relate to the act of 1902. This act, as this court adjudged in the Berger Case, is a restraining act, and required a due observance of its provisions by the steel company as a condition precedent to the right to enter into the conversion scheme. The first alleged infirmity relied upon by the complainant is that dividends were not made in conformity with the requirement of the act of 1902, which is a supplement to the general corporation act. The language of the act with respect to this condition is: "Every corporation organized under this act * * that shall have issued preferred stock entitling the holders thereof to receive dividends at a rate exceeding five per centum per annum, and that shall have continuously declared and paid dividends at such rate, on such preferred stock, for the period of at least one year next preceding the meeting." The amended certificate of incorporation of the company provided that "the holders of the preferred stock shall be entitled to receive, when and as declared, yearly dividends at the rate of seven per cent. per annum, payable quarterly on dates to be fixed by the by-laws." It is admitted that a dividend of 14 per cent. was declared by the company for the three months beginning on the 1st of April, 1901, and ending on the 1st of July, 1901; that a like dividend was declared for the three months beginning July 1, 1901, and ending October

1, 1901; that a like dividend was declared for the three months beginning October 1, 1901, and ending January 1, 1902, and that a like dividend was declared for the three months beginning January 1, 1902, and ending April 1, 1902,-all of which dividends were paid by the company to the stockholders within the time fixed by the by-laws and before the meeting of May 19, 1902. This provision in the act of 1902 was drafted in contemplation of the eighteenth section of the corporation act of 1896, giving power to create preferred stock, and prescribing that "the holders thereof shall be entitled to receive and the corporation shall be bound to pay thereon, a fixed yearly dividend to be expressed in the certificate not exceeding eight per centum payable quarterly, half yearly or yearly, before any dividends shall be set apart or paid on the common stock, and such dividends may be made cumulative." The dividends on the preferred stock were, by the amended certificate of incorporation of the steel company and the bylaws, made payable quarterly, were cumulative, and to be paid before any dividend was paid on the common stock. A dividend on the preferred stock might have been passed, and it was, therefore, intended by the act of 1902 to require, in compliance with section 18, that, before its provisions could be taken advantage of, the company must have paid a dividend at the rate of 7 per cent. for the full year next preceding the meeting to retire the preferred stock; and it was a compliance with that section whether the dividend was paid quarterly, half-yearly, or at the end of the year. The dividend required by the eighteenth section is a yearly dividend of 7 per cent., and it was paid in four quarterly payments.

The vice chancellor held, in construing this legislation, that, if the dividend had been paid annually, there must have been two dividends of 7 per cent. each, covering two previous years, to make the payment continuous; that, if the dividends were paid half-yearly, there must have been three payments of 32 per cent. each, covering 18 months, in order to make the payment continuous; that, if paid quarterly, as in this case, there must have been five payments of 14 per cent. each, covering 15 months, to satisfy the statute; and so, if the dividends had been paid monthly, there must have been 13 dividends covering a period of 13 months. The mere statement of this view is destructive of it. Thus interpreted, the law would provide no fixed, determinate, uniform time during which dividends must be paid, but would leave it optional with the corporation to get the benefit of the law by making dividends so payable that a period either of 2 years or only 13 months need be covered. As to a corporation making dividends payable annually, one rule would prevail, while to a corporation paying quarterly a different rule would apply. The very essence of a

law is that it is uniform and universal within the territory to which it relates. It must apply in the same way to every one. It cannot be varied at the will of the corporation. The construction adopted in the court below is clearly erroneous, and gives a meaning to the word "continuous" which is wholly unwarranted. It, of course, must not be given its strictest meaning, which would require a never-ceasing payment of dividends, like the continuous flow of water. Applied to dividends, it means, "during one year," which is equivalent to the words of the act "for the period of at least one year." The act does not prescribe that 7 per cent. dividends shall have been continuously declared and paid for the period of at least one year next preceding the meeting, but that dividends at the rate of 7 per cent. shall be paid. The force of the word "continuously" evidently is that dividends at the rate of 7 per cent. must be paid for a continuous period of one year, so that, where dividends are paid quarterly, a quarterly dividend cannot be passed without losing the benefit of the act. The payment of dividends is to be for the period of one year. The dividends are to be paid out of surplus over and above the amount of the capital stock and outstanding indebtedness, and are to be made for the "period." When a dividend is made, it is made as a dividend for the period of three months then previously elapsed. A dividend for a future period has not been known in the business history of corporations. When a dividend is paid, it is paid for the period then elapsed. In this case a dividend at the rate of 7 per cent. was paid for the first quarter, and a like dividend for the second, third, and fourth quarters of the year next preceding the meeting of the stockholders. If that was not a payment continuously at the rate of 7 per cent. for one year next preceding the meeting, for what year was it a continuous payment? The meaning of the draftsman of this provision may be further elucidated by dropping out of it the words "for the period of at least one year next preceding the meeting." The act will then read: "A corporation that shall have continuously declared and paid dividends at the rate of seven per cent. on such preferred stock." This language is ambiguous. It might be construed to mean a corporation that had paid three consecutive dividends at the rate of 7 per cent. that would be a continuous payment. It might also be held to mean a corporation that had continuously declared and paid dividends during the entire period of its corporate existence. To exclude this uncertainty, the words were added, "for the period of at least one year next preceding the meeting." The dividend was required to extend over the entire preceding year, and the failure to pay the dividend for any one of the quarters would break the continuity, and require the company thereafter to make four consecutive

quarterly dividends of 14 per cent. each to make the act of 1902 available.

The cases as to publications in newspapers, cited and relied on by the vice chancellor as his only authority, are not in point. Our laws require publication of notice of sale “at least four weeks successively, once a week, next preceding the time of sale." It has been uniformly and properly held to require a publication for four full weeks once a week, and that the publication must begin four weeks next before the day of sale, and that four full weeks must elapse between the first publication and the day of sale. The statute requires that there shall be four weeks' notice of sale, and, if sale can be made after four weekly publications, it might be made after the expiration of only 22 days. A publication has no relation to a previously elapsed period. It is a publication only on the very day it is made, while a dividend relates to and is for a time previously run. All that the act of 1902 requires with respect to payment of dividends is that the provision of section 18 of the general corporation law shall be complied with.

The other objections urged as to the want of conformity by the defendant corporation with the requirements of the act of 1902 have been duly considered, and are deemed to be without merit. There is no ground presented by the case or agitated in the briefs of counsel which will justify the interposition of a court of equity to arrest the proposed action of the defendants.

The decree below should be reversed, and the injunction dissolved, with costs in this court and in the court below.

An act incorporating the plaintiff district authorized it 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 the towns of Benton and Winslow." The act further provides that appraisers appointed by the court, "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," but that, "before a commission is issued to the appraisers, either party may ask for instructions to the appraisers." Both parties having asked for instructions, and the questions of law arising thereon having been reported to the law court, the court is of opinion that the appraisers should be instructed in accordance with the following principles:

1. The plaintiff, if it takes anything, must take all the property held by the Maine Water Company in the Kennebec water district and in Benton and Winslow, whether specifically named in the act or not. This includes the

real estate or other property, if any, not con- | nected with the water system; it includes the plant or physical system; and it includes all franchises, rights, and privileges held by the water company, exercised or capable of being exercised.

2. The Maine Water Company is a quasi public, or public service, corporation, and is entitled to charge reasonable rates for its services, and no more.

3. 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.

4. At the same time, the public have the right to demand that the rates shall be no higher than the services are worth to them, not in the aggregate, but as individuals.

5. Summarized, these elemental principles are 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 the right of the public to have no more exacted than the services in themselves are worth.

6. The reasonableness of the rate may also be affected, for a time, by the degree of hazard to which the original enterprise was naturally subjected; that is, such hazard only as may have been justly contemplated by those who made the original investment, but not unforeseen or emergent risks. And such allowance may be made as is demanded by an ample and fair public policy. If allowance be sought on account of this element, it would 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 hazard.

7. The franchises granted to the Waterville Water Company by chapter 141, Priv. & Sp. Laws 1881, as amended by chapter 59, Priv. & Sp. Laws 1887, and chapter 14, Priv. & Sp. Laws 1891, and to the Maine Water Company by chapter 352, Priv. & Sp. Laws 1893, are not exclusive. Neither are they perpetual and irrevocable. They are subject to legislative repeal. In fixing the value of the franchises, both of these considerations are entitled to their just weight. If the business of the company is now practically exclusive, in that it has no competitor, that fact, also, may and should be considered by the appraisers when they fix the value of the property of the company as a going concern.

8. In determining the present value of the company's plant, the actual construction cost thereof, with proper allowances for depreciation, is legal and competent evidence, but it is not conclusive or controlling.

9. The request that "under no circumstances can the value of the plant be held to exceed the cost of producing at the present time a plant of equal capacity and modern design" should not be given. Among other things, it leaves out of account the fact that it is the plant of a going concern, and seeks to substitute one of the elements of value for the measure of value itself.

10. The actual rates which may have been charged heretofore, and the actual earnings, are both admissible and material in determining the value of the plant. The value of the evidence, however, will depend upon whether the appraisers shall find that the rates charged have been reasonable.

11. The quality of water furnished and of the service rendered, and the fitness of the plant and of the source of water supply to meet reasonable requirements in the present and future, are material upon the question of present value.

12. The appraisers should regard the franchises of the company as entitling it to continue business as a going concern, but subject to all proper legal duties governing public service companies.

13. Faithfulness or unfaithfulness shown by the water company in the past in the performance of public duty to furnish pure water at reasonable rates is not a proper matter for consideration. It is the franchise as it now exists which is to be taken and paid for.

14. The liability of the company to legal forfeiture of its franchises on account of past unfaithfulness and misbehavior is not to be considered.

15. If the water company and its predecessors have actually received more than reasonable rates hitherto, the excess cannot be deducted from the amount to which the company would otherwise be entitled.

16. No compensation can be allowed to the Maine Water Company for incidental damages to its other property having no physical connection with or contiguity to that taken, and having no relations with it except those which grow out of common ownership, nor for the impairment of the economy and efficiency of administration which are obtained by the combination of many water systems under one management.

17. The real estate or other outside property not directly connected with the water system should be appraised at its fair market value, not at forced sale, but at what it is fairly worth to the seller, under considerations permitting a prudent and beneficial sale thereof. 18. The appraisers may properly consider what the existing system can be reproduced for. But the cost of reproduction will not be conclusive. It will be evidence having some tendency to prove present value. The inquiry along the line of reproduction should be limited to the replacing of the present system by one substantially like it.

19. In estimating even the structure value of the plant, allowance should be made for the fact, if proved, that the company's water system is a going concern, with a profitable business established, and with a present income assured and now being earned.

20. So far as the water system is practically exclusive, the element of good will should not be considered.

21. In fixing structure value, while considering the fact that the system is a going concern, the appraisers should also consider, among other things, the present efficiency of the system, the length of time necessary to construct the same de novo, and the time and cost needed after construction to develop such new system to the level of the present one in respect to business and income, and the added net income and profits, if any, which by its acquirement would accrue to a purchaser during the time required for such new construction, and for such development of business and income. But these are to be considered "among other things." They are not controlling. Their weight and value must depend upon the varying circumstances of each particular case.

22. In addition to structure values, the appraisers should allow just compensation for all the franchises, rights, and privileges to be taken.

23. The value of the franchise depends upon its net earning power, present and prospective, developed and capable of development, at reasonable rates; and the value to be assessed is the value to the seller, and not to the buyer. 24. In considering prospective development of the use of a franchise, consideration must also be had of the fact that further investment may be necessary to develop the use, and of the further fact that at any stage of development the owner of the franchise will be entitled to

charge only reasonable rates under the conditions then existing.

25. Subject to all the foregoing limitations, the owner is entitled to any appreciation due to natural causes.

26. The fact that the franchises are to be taken in no respect impairs their value for the purposes of appraisal.

27. As to the property to be taken, both plant and franchises are to be appraised, having in view their value as property in itself, and their value as a source of income. There are these elements of value, but only one value of one entire property is to be appraised in the end. These elements necessarily shade into each other.

28. The capitalization of income, even at reasonable rates, cannot be adopted as a sufficient or satisfactory test of present value. But while not a test, present and probable future earnings at reasonable rates are properly to be considered in determining the present value of the system.

29. The appraisers should be instructed to receive and consider all evidence offered, so far as admissible under the general rules of law, which is pertinent under the rules stated in the requests of the parties, so far as they have been approved, and as limited or explained, in the opinion of the court.

(Official.)

Report from supreme judicial court, Kennebec county.

Action by the Kennebec water district against the city of Waterville and others. Case reported. Instructions to appraisers given.

On report.

Instructions to appraisers given

by the court to determine the valuation of property of the Maine Water Company, and acquired by the plaintiff by the exercise of the right of eminent domain.

In this court below, the parties, in accordance with the provisions of the act of the legislature authorizing the water district to take over the property, filed written requests for instructions which they desired, and contended ought to be given by the court to the appraisers, to guide them in determining the valuation of the property to be taken over. The case was then reported; the bill, answer, replication, and docket entries making part of the case, with a stipulation that all legislation of Maine relating to the Maine Water Company and the Waterville Water Company is to be referred to by either party in argument.

The Kennebec water district requested the court to instruct the appraisers as follows:

(1) The appraisers are directed to state separately in their report what part of the amount fixed by them as the valuation of the plant, property, and franchises of the Waterville Water Company and the Maine Water Company is fixed as the value of the plant and property, and what part is fixed as the value of the franchises, and further to state what property and what franchises they have considered in fixing these values.

(2) Upon the question of the value of the companies' plant and property, the actual cost of said plant and property, together with proper allowances for depreciation, is legal and competent evidence; and for the purpose

of fixing this actual cost the companies are directed to produce before the appraisers all book accounts and documents containing entries which bear on the subject.

(3) Under no circumstances can the value of the plant of the companies be held to exceed the cost of producing at the present time a plant of equal capacity and modern design.

(4) The Waterville Water Company and the Maine Water Company are public service corporations, and, as such, have the right to charge reasonable rates only. What would be reasonable rates can be determined only after and by means of a valuation of the companies' property. Accordingly, 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.

(5) The selling value of the capital stock in the companies has no bearing on the valuation of the companies' plant, property, or franchises, and is immaterial.

(6) The quality of the water furnished by the companies, and of the service rendered by them, and the fitness of their plant to meet the reasonable requirements of consumers in the present and the future, are material questions in fixing the valuation of the companies' plant and property.

(7) The franchises of the Waterville Water Company are fixed by chapter 141, Priv. & Sp. Laws 1881, as amended by chapter 59, Priv. & Sp. Laws 1887, and chapter 14, Priv. & Sp. Laws 1891.

(8) The franchises of the Maine Water Company material to these proceedings are those of the Waterville Water Company, and those granted by Priv. & Sp. Laws 1893, c. 352, and no others.

(9) The appraisers shall regard the franchises of the companies as entitling them to continue business as a going concern, but subject to all proper legal rules governing public service companies; it being further understood that said franchises are in no way exclusive. The franchises shall not be otherwise appraised or valued.

(10) Upon the question of the value of the companies' franchises, the question of the fitness of the source of supply granted by these franchises with reference to the reasonable requirements of the consumers in the present and the future is material and competent.

(11) In fixing the value of the companies' franchises, the appraisers may give such regard as is demanded by ample and fair public policy to the past investment, risks, and services of the companies, and to the reasonably just expectations which those who made the investment had in mind when so investing and also to the faithfulness or unfaithfulness shown by the companies in the performance of their public duty and obligation to fur nish pure water at reasonable rates.

(12) Competent evidence may be received by the appraisers, tending to prove or refute the allegations contained in paragraph 13 of plaintiff's bill; and, in case said allegations are found to be true in whole or in part, said facts are to be considered as bearing on the value of the companies' franchises.

(13) Competent evidence may be received by the appraisers, tending to prove or refute the allegations contained in paragraph 14 of plaintiff's bill; and, in case it is found that said companies have actually received more than reasonable rates for the services rendered since operations begun, then the amount of such excess shall be deducted from the amount to which the companies would otherwise be entitled.

(14) The appraisers may view the premises, so far as they see fit.

(15) They shall procure a stenographer to be in attendance, who shall take notes of all testimony, and furnish transcripts thereof.

(16) They shall make a report showing their doings and findings under each branch of the instructions above given, and also the date as of which the valuation was fixed.

The defendants requested the court to instruct the appraisers as follows:

(1) If the court shall be of the opinion that either party at this stage of the case is entitled to instructions under the eighth section of the act above mentioned, the defendants respectfully ask the court for the following instructions to said appraisers; the defendants understanding that preliminary requests for instructions are authorized by said eighth section, and that they will be asked for on the part of the plaintiff, and not deeming it right that requests should be presented and considered by the court on the one part, and not on the other.

(2) That by the terms of chapter 200 of the Private and Special Laws of 1899, every item of property within the limits of the Kennebec water district, and of the towns of Benton and Winslow, included in the water system of the Maine Water Company at the date selected for appraisal, or then used or usable in connection therewith, whether specifically enumerated in said act or not, together with all real estate within said district then held by said Maine Water Company, is to be taken from said water company, and every such item, and every valuable contract, right, privilege, or franchise exercised or capable of being exercised within the territory above named, must be considered and allowed for by the appraisers, separately or otherwise.

(3) That any increase of pecuniary obligation or burden or duty, or any damage to or impairment of the value of its remaining property or franchises, in any way resulting to said Maine Water Company by reason of the exercise of the right of eminent domain contemplated by said act of 1899, should be

considered by said appraisers, and just compensation therefor should be included in their award.

(4) That the real estate or other outside property not directly connected with the water system, so far as included in the taking contemplated by this act, should be appraised at its fair market value, not at forced sale, but at what it is fairly worth to the seller, under conditions permitting a prudent and beneficial sale thereof.

(5) That as to the remaining property constituting the water system to be taken, and the franchises, rights, and privileges connected therewith, neither the total construction cost of the entire water system, measured at the date selected for valuation, nor such construction cost less wear and tear and depreciation, nor such construction cost, thus reduced, and afterwards increased by any adjudged percentage or bonus of profit thereon, can constitute the legal criterion of the total values to be awarded under the terms of this act.

(6) That neither can the reproduction cost thereof, at the date thus selected, either new or in its then condition, constitute the legal criterion of said total values.

(7) That the cost, at the date thus selected, of replacing said entire water system by a new one, differently constructed, but equal or even superior in efficiency to the one now existing, is not the legal criterion of said total values.

(8) That in order to determine even the structure value of said water system, and to award just compensation to said Maine Water Company therefor, under the terms of this act, a proper sum must be allowed by the appraisers, in their sound judgment, separately or otherwise, in addition to its value as otherwise established, for the fact, if proved, that such water system is not merely an aggregate of materials fitted for use, without actual business, service, connections, takers, or income, but a going concern, with a profitable business and good will already established, and with a present income assured and now being earned.

(9) That in determining the amount thus to be added to measure adequately even the structure value of said water system, the appraisers should consider, among other things, the present efficiency of said system, the length of time necessary to construct the same de novo, the time and cost needed, after construction, to develop such new system to the level of the present one in respect to business and income, and the added net incomes and profits, if any, which, by its acquirement as such going concern, would accrue to a purchaser during the time required for such new construction, and for such development of business and income.

(10) That in addition to the items to be valued under request 4, and all the structure values of said water system to be determined in accordance with requests 8 and 9,