injured or destroyed in the construction or operation of the plant, and a certain charge to cover its depreciation and which, in the course of time, as accumulated, will be sufficient to replace the machinery or such portions of it as may have become worn out.1086 Charges including all of these items do not involve the making of a profit from the carrying on of the business. An interesting suggestion in this connection has been made by a recent author.1037 "Of course, if a plant is self-sustaining, and the municipality thereby gets its street and own light free of charge (as is usually the case), then an inequality necessarily arises among its inhabitants; for those who use the gas necessarily pay a rate so high that it enables the municipality to supply its streets and its public buildings with light free of cost to itself, while those of its inhabitants who do not use the gas contribute nothing towards the lighting of such streets and public buildings. The inequality may not be very great, and yet it will exist. The author does not recall any instance where this fact of inequality has been urged as a reason why statutes authorizing a municipality to furnish gas, light or water to private consumers are unconstitutional, or such an enterprise unauthorized." § 893. Rules and regulations. Public corporations legally operating plants of the character under consideration have unquestionably the right to make reasonable rules and regulations having in view the economical operation of the business, the protection and preservation of the plant. in all its parts and the collection of charges for the use of the commodity supplied. Many suggestions have been already made in previous sections.1038 These rules and regulations may involve the compulsory use of meters, 1039 the collection of rates established, or the use of water in the absence of meters.1640 1036 Hamilton v. Hamilton Gaslight Co., 11 Ohio Dec. 513; Smith v. City of Seattle, 25 Wash. 300, 65 Pac. 612. See authorities cited in §§ 468 and 475, ante. 1037 Thornton, Oil & Gas, § 515. 1038 See §§ 468, et seq. 1039 Sweeny v. Bienville Water Supply Co., 121 Ala. 454, 25 So. 575; Sheward v. Citizens' Water Co., 90 Cal. 635, 27 Pac. 439; Hill v. Thompson, 48 N. Y. Super. Ct. (16 J. & S.) 481; State v. Gosnell, 116 Wis. 606, 93 N. W. 542, 61 L. R. A. 33. But see Smith v. Birmingham Water Works Co., 104 Ala. 315, 16 So. 123; Spring Valley Water Works v. City of San Francisco, 82 § 894. Other restrictions upon power to require and operate plants for the supply of water and light. In a preceding chapter 1041 a discussion of the power of a public corporation to incur indebtedness is to be found and the universal rule prevails that it is limited in this respect by both statutory and constitutional provisions. The existence of these restrictions may prevent a municipal or quasi public corporation from supplying water or light or both because of the condition that the constitutional limitation has already been reached and any further expenditure will create an indebtedness in excess of statutory or constitutional limitations and which will, therefore, be void. This subject as well as the question of whether water or lighting contracts extending over a term of years is to be regarded as an indebtedness has already been considered.1042 § 895. Sale or lease of property. It might be said that the power to sell or lease a plant supplying water or light is co-extensive with the right to acquire and operate it; that is, it is dependent upon the express grant of authority to such an end. The terms and mode of carrying out the transaction as prescribed by statute is to be strictly followed.1043 §896. Use of highways by private persons. Highways may be also occupied or used by private persons, natural or artificial, in supplying the commodities under discus Cal. 286, 22 Pac. 910, 1046, 6 L. R. works Co., 114 Wis. 487, 90 N. W. 442; Shaw v. San Diego Water Co. (Cal.) 50 Pac. 693. 1040 See §§ 468 et seq., ante. Farnham, Waters, §§ 163 et seq. 1041 See chapter V, subd. III. 1042 See §§ 152 and 159, ante. 1043 City of St. Louis v. Western Union Tel. Co., 149 U. S. 465; Councilmen of Frankfort v. Capital Gas & Elec. Light Co., 16 Ky. L. R. 780, 29 S. W. 855; American Rapid Tel. Co. v. Hess, 125 N. Y. 641, 26 N. E. 919, 13 L. R. A. 454; Thompson v. Nemeyer, 59 Ohio St. 486, 52 N. E. sion to either municipal corporations, private consumers, or both.1044 The nature of this right is not always clearly understood by the courts though this is without apparent reason. The permission to occupy the highways has been variously termed a franchise, lease, privilege, easement and contract.1045 The weight of authority and as based upon the better reasoning holds that where permission is granted for the use of public highways or grounds. to one legally capable of exercising it, a right is obtained in the nature of an easement or contract and of which the grantee cannot to be deprived illegally.1046 There is created a contract obliga 1024; Pittsburgh Carbon Co. V. Philadelphia Co., 130 Pa. 438, 18 Atl. 732; Baily v. City of Philadelphia, 184 Pa. 594, 39 Atl. 494, 39 L. R. A. 837. 1044 Inhabitants of Falmouth v. Falmouth Water Co., 180 Mass. 325, 62 N. E. 255. A water company may commence the construction of its plant before the issuance of its capital stock or bonds. See, generally, cases cited under this and succeeding sections. 1045 Jackson County Horse R. Co. v. Interstate Rapid Transit R. Co., 24 Fed. 306; Chicago City R. Co. v. People, 73 Ill. 541; Crowder v. Town of Sullivan, 128 Ind. 486, 28 N. E. 94, 13 L. R. A. 647. An ordinance granting an electric light company the right to use its streets without making it exclusive is a mere license. United Railways & Elec. Co. of Baltimore v. Hayes, 92 Md. 490, 48 Atl. 364; Electric Const. Co. v. Heffernan, 58 Hun, 605, 12 N. Y. Supp. 336. Central Crosstown R. Co. v. Metropolitan St. R. Co., 16 App. Div. 229, 44 N. Y. Supp. 752. Consent is a mere license-not a franchise. Brush Elec. Light Co. v. Jones Bros. Elec. Co., 5 Ohio Circ. R. 340. A franchise can only be acquired by express grant. Galveston City R. Co. v. Gulf City St. R. Co., 63 Tex. 529. The right to occupy streets by a street railway company is a mere license-not a contract. City of Seattle v. Columbia & P. S. R. Co., 6 Wash. 379, 33 Pac. 1048. A railroad franchise to occupy a street cannot, however, be destroyed by an arbitrary change in the grade of the streets. Thornton, Oil & Gas, § 469. 1046 Levis v. City of Newton, 75 Fed. 884; Southern R. Co. v. Atlanta Rapid-Transit Co., 111 Ga. 679, 36 S. E. 873, 51 L. R. A. 125; City of Kankakee v. Kankakee Water Co., 38 Ill. App. 620; Metropolitan City R. Co. v. Chicago West Division Co., 87 Ill. 317. The right of a company operating a horse railway by contract with the city not to have a similar railway on certain streets is properly within the Eminent Domain Act, is subject to condemnation thereunder and is no part of the franchise. City of Vincennes v. Citizens' Gas Light Co., 132 Ind. 114, 31 N. E. 573, 16 L. R. A. 485; City of New Orleans v. Great Southern Telep. & Tel. Co., 40 La. Ann. 41; Rutland Elec. Light Co. V. Marble City Elec. Light Co., 65 Vt. 377, 26 Atl. tion which is protected by the federal constitution 1047 and which is subject to all principles of law in respect to a change or alteration, amendment or revocation, that apply to ordinary contracts,1048 There are some authorities which consider the right 635, 20 L. R. A. 821. See, also, authorities cited generally in this section. Since writing the text included in § 896 and just as volume three is going to press, the Supreme Court of the United States in the Chicago Traction Cases, so called, has held that a license or contract in respect to the occupation of streets by a street railroad company is not to be confused or confounded with the grant of a corporate franchise by the state and that a license to occupy streets does not necessarily follow the granting of a franchise to carry on the business of transportation by means of street railways-thus sustaining the views as stated. The court say: "What then was conferred in the franchise granted by the state? It was the right to be a corporation for the period named and to acquire from the city the right to use the streets upon contract terms and conditions to be agreed upon." 1047 New Orleans Gas Co. V. Louisiana Light Co., 115 U. S. 650; New Orleans Waterworks Co. v. Rivers, 115 U. S. 674; Louisville Gas Co. v. Citizens' Gas Co., 115 U. S. 685; City of Walla Walla v. Walla Walla Water Co., 172 U. S. 1; Citizens' St. R. Co. v. City R. Co., 64 Fed. 647; Illinois Trust & Sav. Bank v. Arkansas City (C. C. A.) 76 Fed. 271, 34 L. R. A. 518; City of Knoxville v. Africa (C. C. A.) 77 Fed. 501; Cleveland City R. Co. v. City of Cleveland, 94 Fed. 385; South West Missouri Light Co. v. City of Joplin, 101 Fed. 23; Id. 113 Fed. 817; Little Falls Elec. & Water Co. v. City of Little Falls, 102 Fed. 663; People v. Chicago West Div. R. Co., 18 Ill. App. 125; City of Belleville v. Citizens' Horse R. Co., 152 Ill. 171, 26 L. R. A. 681; City R. Co. v. Citizens' St. R. Co. (Ind.) 52 N. E. 157; East Louisiana R. Co. v. City of New Orleans, 46 La. Ann. 526, 15 So. 157; Proprietors of Bridges v. Hoboken Land & Imp. Co., 13 N. J. Eq. 81; Theberath v. City of Newark, 57 N. J. Law, 309, 30 Atl. 528; Western Union Tel. Co. v. City of Syracuse, 24 Misc. 338, 53 N. Y. Supp. 690; Lima Gas Co. v. City of Lima, 2 Ohio Cir. Dec. 396. See §§ 917, 919, 926 and 928, post. 1048 City of St. Louis v. Western Union Tel. Co., 148 U. S. 92; Los Angeles Water Co. v. City of Los Angeles, 88 Fed. 720, affirmed 177 U. S. 558; People v. Suburban R. Co., 178 Ill. 594, 53 N. E. 349, 49 L. R. A. 650; Gas Light & Coke Co. v. City of New Albany, 156 Ind. 406, 59 N. E. 176. Where it is provided by the license that the city council shall determine the quantity of gas to be used by the city, the city is under no obligation to continue its use. Lewick v. Glazier, 116 Mich. 493, 74 N. W. 717. It is not necessary to the validity of a waterworks company privilege that the water be furnished to the entire village. Michigan Tel. Co. v. City of Benton Harbor, 121 Mich. 512, 80 N. W. 386, 47 L. R. A. 104; Hudson Tei. as a franchise, but it does not seem to the author that the term is correctly and legally used in this connection.1049 Public utility corporations are organized under authority of law and they are given solely through this act the power to carry out the purpose for which they are organized. The right to conduct a business or occupation or to exercise a privilege which does not belong to the citizens of a country generally of common right is regarded as a franchise and this is secured through the act of incorporation, not by the permission to exercise these privileges in a particular locality. An early case in the Supreme Court of the United States,1050 defined franchises as "special privileges conferred by government upon individuals and which do not belong to the citizens of the country generally of common right." The right of pursuing a business, calling or trade, the conduct of which is not a common natural one because it cannot be prosecuted without the aid of a legal grant or franchise, strictly speaking, from the state, is distinct as a legal proposition from the granting of a license to exercise powers granted in a particular place. The fact that a municipality may refrain from granting permission to use its streets to a public utility corporation organized under the general Co. v. Jersey City, 49 N. J. Law, 303; Roebling v. Trenton Pass. R. Co., 58 N. J. Law, 666, 33 L. R. A. 129; Potter v. Collis, 19 App. Div. 392, 46 N. Y. Supp. 471; Nicoll v. Sands, 131 N. Y. 19, 29 N. E. 818; Rutland Elec. Light Co. v. Marble City Elec. Light Co., 65 Vt. 377, 20 L. R. A. 821; City of Burlington v. Burlington Traction Co., 70 Vt. 491, 41 Atl. 514. But see Spring Valley Water-works Co. v. Schottler, 110 U. S. 347. 1049 Grand Rapids E. L. & P. Co. v. Grand Rapids E. E. L. & F. G. Co., 33 Fed. 669. "It is also well settled that the right to use the streets and other public thoroughfares of a ciy for the purpose of placing therein or thereon pipes, mains, wires, and poles for the distribution of gas, water, or electric lights for public and private use, is not an ordinary business in which any one may engage, but is a franchise belonging to the government, the privilege of exercising which can only be granted by the state or by the municipal government of the city, acting under legislative authority." Harrell v. Ellsworth, 17 Ala. 576. The grant of a license to a toll bridge is a privilege in its nature strongly resembling a franchise granted by the state and in the general establishment must be governed by the same principles. People v. Deehan, 153 N. Y. 528, 47 N. E. 787, reversing 11 App. Div. 175, 42 N. Y. Supp. 1071; State v. Portage City Water Co., 107 Wis. 441, 83 N. W. 697. 1050 Bank of Augusta v. Earle, 13 Pet. (U. S.) 519. |