A corporation, although organized under a general statute, may
nevertheless thereby enter into and obtain a contract from the
state which may be of such a nature that it can only be altered in
case the power to alter was, prior thereto, provided for in the
constitution or legislation of the state.
The provision in the California Water Act of 1862 that county
boards of supervisors should regulate water rates but could not
reduce them below a certain point does not amount to a contract
with water companies, which would be impaired within the meaning of
the federal Constitution by a subsequent act either reducing the
rates below such point or authorizing boards of supervisors to do
so.
Statutes of California providing that the use of all water
appropriated for sale, rental, or distribution should be a public
use and subject to public regulation and control are valid.
To regulate or establish rates for which water will be supplied
is, in its nature, the execution of one of the powers of the state,
and the right of the state to do so should not be regarded as
parted with any sooner than the right of taxation should be, so
regarded, and the language of the alleged contract should in both
cases be equally plain.
Although there is a limitation to the power of amendment when
reserved in the constitution or statute of a state, it is not
confiscation nor a taking of property without due process of law,
nor a denial of the equal protection of the laws, to fix water
rates so as to give an income of six percent upon the then value of
the property actually used, even though the company had prior
thereto been allowed to fix rates securing one and a half percent
per month, and, if not hampered by an unalterable contract, a law
reducing the compensation as above is not unconstitutional.
The county above named has appealed directly to this Court from
a decree of the Circuit Court of the United States for the Northern
District of California setting aside an ordinance adopted by the
Board of Supervisors of Stanislaus County on June 24, 1896,
designating the water rates which were to be charged by the company
(appellee) to its water consumers for
Page 192 U. S. 202
the ensuing year. The appeal here is on the ground that the case
involved the construction or application of the Constitution of the
United States, under section 5 of the act of 1891. 26 Stat.
826.
The company was incorporated in 1871 under an act of the
California Legislature approved in 1853, Stat. of 1853, p. 87, as
amended in 1862, Stat. of 1862, p. 540. After its incorporation and
the obtaining of the necessary land, the company built a canal or
reservoir at a cost, as alleged, of about a million dollars, and it
is averred that the property was and is of that value. Subsequently
to the completion of its works, the company furnished water for
irrigating purposes to its customers at rates fixed by it, which
were not interfered with by the board of supervisors up to the time
of the adoption of the above-mentioned ordinance of June 24, 1896.
Soon afterwards, the company commenced this suit for the purpose of
obtaining a decree setting the ordinance aside and declaring it to
be null and void and decreeing that the company was entitled to
have the rates for supplying its water to its customers and the
users thereof generally so fixed that they would in the aggregate
furnish a reasonable and just compensation for the services
rendered, and a fair, just, and equitable return therefor.
The act of 1862 provided in section 3 as follows:
"Every company organized as aforesaid shall have power, and the
same is hereby granted, . . . to establish, collect, and receive
rates, water rents, or tolls, which shall be subject to regulation
by the board of supervisors of the county or counties in which the
work is situated, but which shall not be reduced by the supervisors
so low as to yield to the stockholders less than one and one-half
percent per month upon the capital actually invested."
On March 12, 1885, the legislature passed an act, Cal.Stat.
1885, page 95, providing for the fixing, by the board of
supervisors of a county, of the rates to be collected by water
companies. Section 5 of that act authorized the various boards of
supervisors in the state to regulate and control the water
Page 192 U. S. 203
rates that might be charged in their respective counties by any
person, company, association, or corporation, and provided:
"Said boards of supervisors, in fixing such rates, shall, as
near as may be, so adjust them that the net annual receipts and
profits thereof to the said persons, companies, associations, and
corporations so furnishing such water to such inhabitants shall be
not less than six not more than eighteen percent upon the said
value of the canals, ditches, flumes, chutes, and all other
property actually used and useful to the appropriation and
furnishing of such water of each of such persons, companies,
associations, and corporations; but, in estimating such net
receipts and profits, the cost of any extensions, enlargements, or
other permanent improvements of such water rights or waterworks
shall not be included as part of the said expenses of management,
repairs, and operating of such works, but, when accomplished, may
and shall be included in the present cost and cash value of such
work. In fixing said rates within the limits aforesaid at which
water shall be so furnished as to each of such persons, companies,
associations, and corporations, each of said boards of supervisors
may likewise take into estimation any and all other facts,
circumstances, and conditions pertinent thereto, to the end and
purpose that said rates shall be equal, reasonable, and just both
to such persons, companies, associations, and corporations and to
said inhabitants."
The complainant alleges in its bill that, prior to March 12,
1885 at the time of the passage of the act of that date, the
company and its incorporators had actually invested under the
authority of the act of 1862 a capital amounting to $971,113.13 in
money, all of which was actually, reasonably, and necessarily
expended by the complainant in the purchase and construction of its
canals and other property actually used in and useful to the
appropriation and furnishing of the water, and that the property
was, on the last named date, and still is, of the reasonable worth
of $971,113.13. The complainant averred that, if the act of 1885
was construed as repealing,
Page 192 U. S. 204
altering, or amending the provisions of the act of 1862 as to
rates to be charged by the company, then that the act of 1885 was
in violation of, and repugnant to, the provisions of Article I,
section 10 of the Constitution of the United States, and, as thus
construed, the act of 1885 impaired the obligation of the contract
between the State of California and the complainant entered into
under the authority of section 3 of the act of 1862.
It was also averred that the rates, as fixed by the board under
the act of 1885, would result in taking the property of the
complainant without due process of law, and in depriving it of the
equal protection of the laws.
An answer was put in taking issue with the complainant on the
averments in its bill, and a trial was had in the circuit court.
That court held, 113 F. 930, that there was a contract under the
act of 1862, as contended for by the complainant; that the act of
1885 could not be so construed as to permit the board of
supervisors, in fixing water rates by its authority, to entirely
disregard the capital actually invested in the property of the
corporation under the act of 1862, and that, if otherwise
construed, the act of 1885 would run counter to the constitutional
provision that no law impairing the obligation of a contract should
be passed, and the statute would be subjected to the further
objection that, as so construed, the state would deprive
complainant of its property without due process of law, and would
also deny to it the equal protection of the laws, as provided for
in the federal Constitution, and that such provision could not be
held subordinate to the constitutional power conferred upon the
state legislature to alter, amend, or repeal the general laws
concerning corporations. It was also said by the court that it was
the duty of the board of supervisors to ascertain the amount of the
capital actually invested in the corporation -- that is to say, the
amount of capital actually paid in and invested in constructing the
canals and acquiring the other property used and made useful in
supplying water to the customers of the corporation in Stanislaus
County, and this fact should have been considered by the
Page 192 U. S. 205
board in fixing the water rates which the complainant was
entitled to charge under the statute; that, when the board of
supervisors fixed the rates, no consideration was given by it to
the evidence showing the amount of the capital actually put into
the corporation, or the actual, reasonable, and proper cost of the
works; that the evidence establishes the fact that the board failed
to perform its duty in this respect, and that by reason thereof it
deprived the complainant of its property without due process of law
and denied to it the equal protection of the laws.
The court found that the evidence showed that the rate fixed by
the board of supervisors reduced the income of the company
considerably below six percent upon the capital actually invested
in the property of the corporation, and if a corresponding
reduction were made in Fresno and Merced Counties, its income
would, under the most favorable conditions, be reduced to less than
five percent per annum on the value of the property as estimated by
the board of supervisors.
The court also held that the company had waived the right to fix
rates as high as permitted under the act of 1862 by failing to make
them as high as therein permitted prior to the passage of the act
of 1885, and the act of 1885,
"providing that the net annual receipts as adjusted by the board
of supervisors should not be less than six nor more than eighteen
percent per annum, is therefore properly applicable to the
regulation of complainant's rates."
MR. JUSTICE PECKHAM, after making the foregoing statement,
delivered the opinion of the Court.
First. The question which first arises in this case is
whether
Page 192 U. S. 206
there was a contract with the company under the act of 1862 by
reason of which the state could not thereafter authorize the board
of supervisors to reduce the rates so low as to yield less than one
and one-half percent per month upon the capital actually
invested.
The acts of 1853 and 1862 are general laws, the former providing
for the formation of corporations of the character named therein
and the latter amending that act and especially providing for the
incorporation of canal companies and the construction of canals. No
special charter was given the company directly from the legislature
otherwise than is contained in the powers granted by the two acts
above named. A company, although organized under a general statute,
may nevertheless thereby enter into and obtain a contract from the
state which may be of such a nature that it can only be altered in
case power to alter was, prior thereto, provided for in the
constitution or legislation of the state.
In
Salt Co. v. East
Saginaw, 13 Wall. 373, it was said by Mr. Justice
Bradley, in delivering the opinion of the Court, page
80 U. S. 378,
that:
"Corporations formed under general laws in place of special
charters, like the Ohio banks under the general banking law of that
state, are entitled to the benefit of specific provisions and
exemptions contained in those laws, which are regarded in the same
light as if inserted in special charters. 'The act is as special to
each bank,' says Justice McLean, delivering the opinion of this
Court, 'as if no other institutions were incorporated under it.' In
such cases, the scope of the act takes in the whole period for
which the corporation is formed. The language means that, during
the existence of any corporation formed under the act, the
stipulation or exemption specified in it is to operate."
The language used in conferring power to fix rates in the act of
1862 is to be taken as if it were contained in a special charter
granted by the legislature to this company. The question then
arises whether language such as is contained in the third
Page 192 U. S. 207
section of that act, and which is set forth in the foregoing
statement of facts, amounts to a contract, to be protected by the
Constitution of the United States? We think it does not.
It seems to us that language of this nature cannot properly be
construed as a promise or pledge that the limitation as to rates
may not be altered at any time when, in the judgment of the
legislature, it may be proper so to do. Water rates which might
have been perfectly reasonable at the time of the passage of the
act of 1862, although amounting to one and one-half percent per
month upon the capital actually invested, might, in the course of
years, become exceedingly burdensome to those who used the water,
and amount to a very unreasonable compensation to the company for
the water it sold. Irrigation by means of corporations formed to
supply water was in its infancy in 1862 in California, and the
risks necessarily taken in the organization of such companies, and
the prosecution of their work, were then not only very large, but
also extremely uncertain in character. Consequently, a rate of
compensation was proper at that time which, in the course of years
and the accumulated experience as to the necessary cost of such
works, and of their successful operation, including the
consideration of the risk attendant upon their operation, would
make a water rate, as provided by the act of 1862, a very
unreasonable overcharge. These facts must have been present in the
minds of those who enacted the legislation of 1862, and it would be
most unreasonable to suppose that it was intended by any such
legislation to forever thereafter tie the hands of the state in
regard to all companies organized under the act of 1862, and before
the passage of the act of 1885.
The authority given by the act of 1862 enabled the board of
supervisors to conditionally regulate the rates. There is no
promise made in the act that the legislature would not itself
subsequently alter that authority. The state simply authorized its
agents, the boards of supervisors, to regulate rates, but not to
reduce them below a certain point. We do not think that from this
language a contract can or ought to be
Page 192 U. S. 208
implied that the state might not thereafter authorize the boards
to reduce them, or that it might not itself do so directly. Even as
between individuals, such an implication would not be a reasonable
one from the language used, and as the contract, if it existed,
would take away from the legislature its otherwise undoubted right
of regulation upon a subject of great public importance, there is
still less reason for implying a contract which would prevent the
state from using its power to that end for the future. The language
of this portion of the act applies to the boards, and limits their
right of reduction, leaving unhampered the right of the state to
interfere directly or by authorizing the boards to reduce the rates
below the point stated in the act. In order to make such a
contract, the language must be plain and susceptible of no other
reasonable construction.
Freeport Company v. Freeport
City, 180 U. S. 587
180 U. S. 599,
citing
Railroad Commission Cases, 116 U.
S. 307.
116 U. S.
325.
In our belief, the language of the act of 1862 does not and was
not intended to form a contract, but simply amounted to the
statement of the then pleasure of the legislature, to so remain
until subsequently altered by it. The cases heretofore decided in
this Court are authority for this view. Some of them are now
referred to.
In
Christ Church v.
Philadelphia, 24 How. 300, the following language
was used in the statute:
"The real property, including ground rents, now belonging and
payable to Christ Church Hospital, in the City of Philadelphia, so
long as the same shall continue to belong to the said hospital,
shall be and remain free from taxes."
A subsequent law provided that all property belonging to an
association or incorporated company which was then by law exempt
from taxation should thereafter be subject to taxation in the same
manner as other property. The later law was held not be in
violation of the Constitution of the United States. It was held
that language such as this was nothing but in the nature of a
privilege, which existed only during the pleasure of, and might be
revoked by, the sovereign power whenever it chose so to do.
Page 192 U. S. 209
Salt Co. v. East
Saginaw, 13 Wall. 373, was a case where the court
held that the language used was that conferring a bounty, and that
it did not amount to a contract in such a sense that it could not
be repealed, although it did grant an exemption from taxation of
the property used for the purpose of obtaining salt. In regard to
the language exempting the property from taxation, the Court
said:
"The law in question says to all: you shall have a bounty of ten
cents per bushel for all salt manufactured, and the property used
shall be free from taxes. But it does not say how long this shall
continue; nor do the parties who enter upon the business promise
how long they will continue the manufacture. It is an arrangement
determinable at the will of either of the parties, as much so as
the hiring of a laboring man by the day."
In
Tucker v.
Ferguson, 22 Wall. 527, it was also held that an
act of the legislature exempting property of a railroad company
from taxation was not a contract to exempt it unless there were a
consideration for the act; that, without it, the promise was of a
gratuity, spontaneously made which might be kept, changed, or
recalled at pleasure, and that the rule applies to the agreements
of states made without consideration as well as to those of
persons.
In
Welch v. Cook, 97 U. S. 541, the
act of the Legislative Assembly of the District of Columbia of June
26, 1873, exempted from general taxes for ten years thereafter such
real and personal property as might be actually employed within the
District for manufacturing purposes. It was held that the language
did not create an irrepealable contract with the owners of such
property, but simply conferred a bounty, liable at any time to be
withdrawn.
In
Grand Lodge &c. v. New Orleans, 166 U.
S. 143, the language exempted the property from taxation
"so long as it is occupied as a Grand Lodge of the F. and A.
Masons," and it was held that it did not constitute a contract
between the state and the plaintiff, but was a mere continuing
gratuity,
Page 192 U. S. 210
which the legislature was at liberty to terminate and withdraw
at any time.
In
Wisconsin & Michigan Railway Company v. Powers,
decided at this term,
191 U. S. 379, the
language of the act was
"[t]hat the rate of taxation fixed by this act or any other law
of this state shall not apply to any railway or railroad company
hereafter building and operating a line of railroad within this
state north of parallel forty-four of latitude until the same has
been operated for the full period of ten years, unless the gross
earnings shall equal four thousand dollars per mile."
After the railroad company had been organized, and while that
act was in force, and on June 4, 1897, the state passed a law
levying a specific tax upon the property and business of every
railroad corporation operated within the state. The road in
question would have been entitled to the exemption stated in the
prior law if it were in force. The railroad contended that it had a
contract by virtue of the language above set forth. This Court held
that no contract arose from the language used, and that
consequently the subsequent act providing for taxation did not
violate the federal Constitution in regard to contracts.
Sufficient cases have been cited to show that language quite as
strong as that used in the act of 1862 does not amount to a
contract. It is true that the cases cited involved questions of
alleged contracts for exemption from taxation, in regard to which
it has been said that no presumption exists in favor of a contract
by a state to exempt lands from taxation, and that every reasonable
doubt should be resolved against it. Statutes of California,
providing that the use of all water appropriated for sale, rental,
or distribution should be a public use, and subject to public
regulation and control, are valid,
San Diego &c. Company v.
National City, 174 U. S. 739, and
companies formed for the purpose of furnishing water for irrigation
purposes have been held in that state to be public municipal
corporations, and the use of the water for the purpose mentioned a
public use.
See cases cited in
Fallbrook Irrigation
District v. Bradley, 164 U. S. 112,
164 U. S. 159.
To regulate or establish rates for which
Page 192 U. S. 211
water will be supplied is in its nature the execution of one of
the powers of the state, and the right of the state so to do should
not be regarded as parted with any sooner than the right of
taxation should be so regarded, and the language of the alleged
contract should in both cases be equally plain.
Owensboro v.
Owensboro Waterworks Company, 191 U.
S. 358.
In our judgment, the language of the act of 1862 did not amount
to a contract that the rates for the use of water should never be
lowered below the amount provided for in that act.
Second. But, assuming there was a contract, we think
the rates could be changed under that provision of the Constitution
of the state adopted in 1849, article 4, section 31, which
provided:
"Corporations may be formed under general laws, but shall not be
created by special act except for municipal purposes. All general
laws and special acts passed pursuant to this section may be
altered from time to time or repealed."
This Court has had frequent occasion to discuss the meaning and
extent of the power thus reserved, as it exists in about all the
states, either by constitutional or statutory provisions.
Tomlinson v.
Jessup, 15 Wall. 454, held that the object of
reserving a power to amend or repeal (p.
82 U. S. 458)
was:
"To prevent a grant of corporate rights and privileges in a form
which will preclude legislative interference with their exercise if
the public interest should at any time require such interference.
It is a provision intended to preserve to the state control over
its contract with the corporators which, without that provision,
would be irrepealable and protected from any measures affecting its
obligation."
It was also said (p.
82 U. S.
459):
"The reservation affects the entire relation between the state
and the corporation, and places under legislative control all
rights, privileges, and immunities, derived by its charter directly
from the state."
In
Shields v. Ohio, 95 U. S. 319, it
was stated that, by virtue of the power to alter, revoke, or repeal
an act, as provided in
Page 192 U. S. 212
the Constitution of Ohio, section 2, article 1, the legislature
did not impair the obligation of a contract in prescribing rates
for passenger transportation by a new as controlled by the law of
New York, original companies, prior to the adoption of the
Constitution, was organized under a charter which imposed no
limitation as to rates.
In
Close v. Glenwood Cemetery, 107 U.
S. 466, it was again held that a power reserved in the
legislature to alter, amend, or repeal a charter authorizes it to
make any alteration or amendment of the charter granted subject to
it, which will not defeat or substantially impair the object of the
grant, or any rights vested under it, and which the legislature may
deem necessary to secure either that object or any public
right.
The same principle was decided in
Sinking Fund Cases,
99 U. S. 700,
99 U. S. 720;
New York &c. Railroad v. Bristol, 151 U.
S. 556, and
United States v. Union Pacific
Railway, 160 U. S. 1,
160 U. S. 33.
Covington v. Kentucky, 173 U.
S. 231, decided that language describing certain
property, and providing that it should be and remain forever exempt
from state, county, and city tax, did not prevent the legislature
from withdrawing such exemption and subjecting the property to
taxation, in view of the statute that all charters and grants of
the corporations should be subject to amendment or repeal at will
of the legislature. MR. JUSTICE HARLAN, in delivering the opinion
of the Court, said (p.
173 U. S.
238):
"We are of opinion that the exemption from taxation embodied in
that act did not tie the hands of the Commonwealth of Kentucky so
that it could not, by legislation, withdraw such exemption and
subject the property in question to taxation. The act of 1886 was
passed subject to the provision in a general statute of Kentucky,
above referred to that all statutes 'shall be subject to amendment
or repeal at the will of the legislature, unless a contrary intent
be therein plainly expressed.' If that act in any sense constituted
a contract between the city and the commonwealth, the reservation
in an
Page 192 U. S. 213
existing general statute of the right to amend or repeal it was
itself a part of that contract."
To the same effect is
Knoxville Water Co. v. Knoxville,
189 U. S. 434.
These cases also hold that there is a limitation, even to the
power of amendment, when reserved in the constitution or a statute
of a state. Some of the cases, although holding that the power to
amend or repeal was properly exercised in them, also state that the
power is not without limit; that the alterations must be reasonably
made, in good faith, and consistent with the scope and object of
the act of incorporation, and that sheer oppression and wrong could
not be inflicted under the guise of amendment or alteration; that,
beyond the sphere of the reserved powers, the vested rights of
property in corporations in such cases are surrounded by the same
sanction and are as inviolable as in other cases. In reiterating
this view of the power, we think that a mere reduction of rates,
while still leaving reasonable, fair, or just compensation for the
use of the property, is not prohibited, and we are quite clear
that, even assuming there was a contract, the legislature
nevertheless had the power to so alter and amend the act of 1862 as
to provide for the fixing of rates as set forth in the act of
1885.
It is not confiscation, nor a taking of property without due
process of law, nor a denial of the equal protection of the laws,
to fix water rates so as to give an income of six percent upon the
then value of the property actually used for the purpose of
supplying water as provided by law, even though the company had,
prior thereto, been allowed to fix rates that would secure to it
one and one-half percent a month income upon the capital actually
invested in the undertaking. If not hampered by an unalterable
contract, providing that a certain compensation should always be
received, we think that a law which reduces the compensation
theretofore allowed to six percent upon the present value of the
property used for the public is not unconstitutional. There is
nothing in the nature of confiscation about it.
Page 192 U. S. 214
The original cost may have been too great; mistakes of
construction, even though honest, may have been made which
necessarily enhanced the cost; more property may have been acquired
than necessary or needful for the purpose intended. Other
circumstances might exist which would show the original rates much
too large for fair or reasonable compensation at the present time.
Notwithstanding such facts, are the shareholders in the company to
be forever entitled to eighteen percent upon this cost, and does a
reduction in amount, as provided for in the act of 1885, take away
property, in violation of the provisions of the federal
Constitution? We think not.
In this case, much of the total amount expended in the course of
the construction of the works was not proved by those who made such
expenditures, and the items and total amount of the cost of
construction were only proved by the books. What such books did not
prove was the reasonableness of that cost, its propriety or
necessity. There were statements that appeared in the minutes of
the meetings of the shareholders, which were put in evidence, that
showed at least a dispute as to the proper cost of the works, and
at one of these meetings a shareholder said there had been a waste
in the management of the affairs of the company amounting to
$350,000, which was caused by the chief engineer, who had been in
charge of the canal, and that his mistakes had cost the company a
good deal of money. There would seem to have been more of a dispute
as to who was responsible for this loss than over the fact of loss.
At another meeting held in December, 1881, the president had said
in his remarks to the meeting that, in his opinion, with careful
management, the canal would pay a fair revenue on what it ought to
have cost. Although these minutes did not conclusively prove the
fact of the excessive cost of the work, yet, where the books of the
company were substantially the only evidence of the amount expended
and there was no other satisfactory evidence of the reasonableness
of the expenditures, it would not be surprising if the board should
have
Page 192 U. S. 215
regarded the statements in the minutes relating to excessive
cost as a justification, if not a requirement, for the reduction of
the cost of construction, upon which rates might be fixed, by at
least the amount mentioned -- $350,000.
Other considerations, in the shape of facts, circumstances, and
conditions pertinent to the alleged cost of the work, and appearing
in the course of the inquiry, may have been considered by the
supervisors, and the conclusion arrived at, after a consideration
of all the material facts, that the rates fixed would result in
justice to both the company and the consumers, as called for by the
act.
Judging by this record, we are unable to say the board of
supervisors failed to provide just and fair compensation for the
use of the property by the public.
In
San Diego Land Company v. National City,
174 U. S. 739, it
was held (following
Smyth v. Ames, 169 U.
S. 466,
169 U. S.
543-544), that what the company was entitled to demand
in order that it might have just compensation was a fair return
upon the reasonable value of the property at the time it was being
used for the public. The appellants in that case contended that, in
fixing what were just rates, the court should take into
consideration the cost of the plant and of its annual operation,
the depreciation of the plant, and a fair profit to the company
above its charges for its services. It was observed by the court
that 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, would be just to the
company and to the public. The same principle is reaffirmed in
San Diego Land &c. v. Jasper, 189 U.
S. 439,
189 U. S.
442.
After taking such facts into consideration, the company might
still be directed to receive rates that would be nothing more than
a fair and just compensation or return upon the reasonable value of
the property at the time it was being used for the supplying of the
water to the public.
To take the amount actually invested into "estimation" does not
mean necessarily that such amount is to control the
Page 192 U. S. 216
decision of the question of rates. Other language would have
been employed to express that thought. The cost may be estimated,
says the act, but that leaves open a reference to the other facts
adverted to in the latter part of section 5, and it is upon a
consideration of the whole case that the board is to determine what
shall be reasonable, just, and equal to all parties. The record
would seem to show that the board did take these various matters
into consideration in coming to the conclusion it did in regard to
the value of the property, although giving much less weight to such
alleged cost than the company thought was proper. The board added
over $25,000 to the amount proved as the present cost of the
construction of the canals, based on the prices of material,
supplies, and labor, of the date when the estimate was made, that
estimate being $312,000, while the board fixed the valuation at
$337,000.
Much of the capital was invested between twenty and thirty years
ago, and to be able still to realize six percent upon the money
originally invested is more than most people are able to accomplish
in any ordinary investment, and more than is necessary in order to
give just compensation for property at the time it is used for the
public purpose originally intended.
It is, of course, impossible to say what rates may be adopted in
the other counties through which this canal runs, and that is one
of the embarrassments under which the parties suffer from the
language of the statute of 1885. Heretofore the company has fixed
its own rates therein. Exactly how the question may be hereafter
determined as to the percentage of income, where there are three
different boards of supervisors who may fix rates for their
respective counties, each differing from the other, is not made
clear by the statute. The complainant admits that the rates
provided for by the supervisors under the act of 1885, if applied
to all three counties, would allow complainant an income of
substantially six percent on $337,000, being $25,000 more than the
present cost of the work would be, as shown by uncontradicted and
satisfactory evidence. Those rates exist in the other counties at
present.
Page 192 U. S. 217
Hereafter, in case the other counties should fix rates in such
manner that, taken as a whole, the rates in the three counties
would not insure an income of at least six percent, as provided for
in the act of 1885, the company would, of course, not be bound to
accept such rates, and a decree in this case would not bind it in
regard to the propriety of rates for the future, as fixed by the
ordinance of 1896 for the County of Stanislaus.
The judgment of the Circuit Court must be reversed, and the bill
dismissed without prejudice.
So ordered.
