United States Supreme Court Cases & Opinions

U.S. Supreme Court

Board of Commissioners v. New York Tel. Co., 271 U.S. 23 (1926)

Board of Public Utility Commissioners v.

New York Telephone Company

No. 567

Argued January 18, 19, 1926

Decided April 12, 1926

271 U.S. 23

Syllabus

1. The just compensation safeguarded to a public utility by the Fourteenth Amendment is a reasonable return on the value of the property used at the time that it is being used, for the public service. And rates not sufficient to yield that return are confiscatory. P. 271 U. S. 31.

2. Constitutional protection against confiscation does not depend on the source of the money used to purchase property; it is enough that the property is used to render the service. Id.

3. The relation between a public utility and its customers is not that of partners, or agent and principal, or trustee and beneficiary. The amount of money remaining after paying taxes and operating expenses, including the expense of depreciation, is the company's compensation for the use of its property. Id.

4. The law does not require the company to give up for the benefit of future subscribers any part of its accumulations from past operations. P. 271 U. S. 32.

5. Assets of a public utility represented by a credit balance in the reserve for depreciation cannot be used to make up the deficiency in current rates which are not sufficient to yield a just return after paying taxes and operating expenses, including a proper allowance for current depreciation. Id.

Affirmed.

Appeal from a decree of the district court granting a temporary injunction, in a suit by the Telephone Company to restrain the Board of Public Utility Commissioners of New Jersey from enforcing confiscatory rates.

Page 271 U. S. 26