broken by either party.1174 The principles which sustain this rule have been well and frequently stated by the Supreme Court of the United States in a series of cases involving the establishment and change of rates of transportation as charged by common carriers.1175 In the San Diego case (174 U. S. 739) the Su for the gas which they might furnish for public or private use. This discretionary power of regulation might have been vested elsewhere; but wherever vested it must be exercised in good faith, for the purpose for which it was given. If, in the colorable exercise of this power, a majority of the members of the council, for a fraudulent purpose, combine to pass an ordinance fixing the price of gas at a rate at which they well know it cannot be manufactured and sold without loss, such an ordinance, so fraudulently passed, would impose no obligations on the gas company intended to be affected thereby. And in a proceeding like the present, the good faith of the members of the city council who passed the ordinance may be inquired into." 1174 City of Los Angeles v. Los Angeles City Water Co., 177 U. S. 558, affirming 88 Fed. 720; Los Angeles City Water Co. v. City of Los Angeles, 103 Fed. 711; Leadville Water Co. v. City of Leadville, 22 Colo. 297, 45 Pac. 362; Westfield G. & M. Co. v. Mendenhall, 142 Ind. 538; City of Indianapolis v. Consumers' Gas Trust Co., 140 Ind. 107, 27 L. R. A. 514; City of Noblesville v. Noblesville Gas & Improvement Co., 157 Ind. 162, 60 N. E. 1032; Agua Pura Co. v. City of Las Vegas, 10 N. M. 6, 60 Pac. 208; Logan Natural Gas & Fuel Co. v. City of Chillicothe, 65 Ohio St. 186, 62 N. E. 122; Sewickly Borough School Dist. v. Ohio Val. Gas Co., 154 Pa. 539, 25 Atl. 868; City of Ashland v. Wheeler, 88 Wis. 607, 60 N. W. 818. But see Freeport Water Co. v. City of Freeport, 180 U. S. 587, affirming 186 Ill. 179, 57 N. E. 862; Danville Water Co. v. City of Danville, 180 U. S. 619, affirming 186 Ill. 326, 57 N. E. 1129. 1175 Stone v. Farmers' Loan & Trust Co., 116 U. S. 307; Chicago M. & St. Paul R. Co. v. Minnesota, 134 U. S. 418, reversing State v. Chicago, M. & St. Paul R. Co., 38 Minn. 281, 37 N. W. 782; Minneapolis Eastern R. Co. v. Minnesota, 134 U. S. 467, reversing 40 Minn. 156, 41 N. W. 465; Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362; Reagan v. Mercantile Trust Co., 154 U. S. 413; St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649. Smyth v. Ames, 169 U. S. 466. The court in this case said: "The basis of all calculations as to the reasonableness of rates to be charged by a corporation maintaining a highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public. And in order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the orginal cost of construction, the probable earning capacity of the prop preme Court of the United States in its opinion by Mr. Justice Harlan said in passing upon the question of reasonableness of rates: "That it was competent for the State of California to declare that the use of all water appropriated for sale, rental or distribution should be a public use and subject to public regulation and control and that it could confer upon the proper municipal corporation power to fix the rates of compensation to be collected for the use of water supplied to any city, county or town or to the inhabitants thereof, is not disputed, and is not, as we think, to be doubted. It is equally clear that this power could not be exercised arbitrarily and without reference to what was just and reasonable as between the public and those who appropriated water and supplied it for general use; for the state cannot by any of its agencies, legislative, executive or judicial, withhold from the owners of private property just compensation for its use. That would be a deprivation of property without due process of law. Chicago, B. & Q. R. Co. v. Chicago, 166 U. S. 226; Smyth v. Ames, 169 U. S. 466. But it should also be remembered that the judiciary ought not to interfere with the collection of rates established under legislative sanction unless they are so plainly and palpably unreasonable as to make their enforcement equivalent to the taking of property for public use without such compensation as under all the circumstances is just both to the owner and to the public; that is, judicial interference should never occur unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of property under the guise of regulations as to compel the court to say that the rates prescribed will necessarily have the effect to deny just compensation for private property taken for the public use. The contention of the appellant in the present case is that in ascertaining what are just rates the court should take into consideration the cost of its plant; 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 profit to the company over and above such charges for its services in supplying the water to consumers, either by way of interest on the money it has expended for the public use, or upon some other fair and equitable basis. 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 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. The property may have cost more than it ought to have cost, and its outstanding bonds for money borrowed and which went into the plant may be in excess of the real value of the property. So that it cannot be said that the amount of such bonds should in every case control the question of rates, although it may be an element in the inquiry as to what is, all the circumstances considered, just both to the company and to the public." 917. Contract obligation. Where a maximum charge is established in the grant of the license or privilege, the courts have repeatedly held that the right to collect this becomes then a contract obligation,1170 and one which is protected by the federal constitution against ordinances, regulations or other action which seeks to effect a reduction in the rates thus lawfully permitted to be charged.1177 § 918. Assignment of privilege or license. The legal right of the grantee of a privilege of the character considered to assign or transfer by sale or through consolidation erty under particular rates prescribed by statute, and the sum required to meet operating expenses, are all matters for consideration, and are to be given such weight as may be just and right in each case. We do not say that there may not be other matters to be regarded in estimating the value of the property. 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 en titled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth." City of Detroit v. Detroit Citizens' St. R. Co., 184 U. S. 368. 1176 Cleveland City R. Co. v City of Cleveland, 94 Fed. 385; In re Pryor, 55 Kan. 724, 41 Pac. 958, 29 L. R. A. 398; Pingree v. Michigan Cent. R. Co., 118 Mich. 314, 76 N. W. 635, 53 L. R. A. 274. 1177 City of Detroit v. Detroit Citizens' St. R. Co., 184 U. S. 368; Bail v. Rutland R. Co., 93 Fed. 513. the rights which it may possess under its original lawful authority is largely dependent upon the language of the license or contract.1178 Ordinarily the privileges granted are assignable to other persons or corporations with the same obligations for a period equal at least to the length of time which they may still be lawfully exercised.1179 Privileges may be granted for a term beyond. 1178 City of Los Angeles v. Los Angeles City Water Co., 177 U. S. 558; Louisville Trust Co. v. City of Cincinnati, 73 Fed. 716; American Waterworks Co. v. Farmers' Loan & Trust Co., 73 Fed. 956; People v. Stanford, 77 Cal. 360, 18 Pac. 85, 19 Pac. 693, 2 L. R. A. 92; Visalia Gas & Electric Light Co. v. Sims, 104 Cal. 326, 37 Pac. 1042; San Luis Water Co. v. Estrada, 117 Cal. 168; Huntting v. Hartford St. R. Co., 73 Conn. 179, 46 Atl. 824; Consolidated Traction Co. v. Elizabeth City, 58 N. J. Law, 619, 32 L. R. A. 170; People v. O'Brien, 111 N. Y. 1, 18 N. E. 692, 2 L. R. A. 255. A street railway may, however, by statute, be prohibited from leasing its rights and franchises to any other company owning and operating a parallel road. 1179 City of Detroit v. Detroit City R. Co., 60 Fed. 161; Africa v. City of Knoxville, 70 Fed. 729; American Water-works Co. v. Farmers' Loan & Trust Co. (C. C. A.) 73 Fed. 956; Los Angeles City Water Co. v. City of Los Angeles, 88 Fed. 720; City of Austin v. Bartholomew (C. C. A.) 107 Fed. 349; San Luis Water Co. v. Estrada, 117 Cal. 168, 48 Pac. 1075; Peoples' Gas Light & Coke Co. v. Hale, 94 Ill. App. 406; Western Paving & Supply Co. v. Citizens' St. R. Co., 128 Ind. 525, 26 N. E. 188, 28 N. E. 88, 10 L. R. A. 770. The purchaser of a street railway receiving from the city council the privileges and franchises belonging to the former company is also obliged to assume the burdens accompanying it. Green v. City & Surburban R. Co., 78 Md. 294, 28 Atl. 626; City of Lawrence v. Inhabitants of Methuen, 166 Mass. 206, 44 N. E. 247; Horsky v. Helena Consolidated Water Co., 13 Mont. 229, 33 Pac. 689; State v. Laclede Gas-Light Co., 102 Mo. 472, 14 S. W. 974, 15 S. W. 383; Borough of Wilbur v. Trenton Pass. R. Co., 57 N. J. Law, 212, 31 Atl. 238; Consolidated Traction Co. v. Elizabeth City, 58 N. J. Law, 619, 34 Atl. 146, 32 L. R. A. 170; Brinkerhoff v. Newark & H. Traction Co., 66 N. J. Law, 478, 49 Atl. 812; Cincinnati Inclined Plane R. Co. v. City of Cincinnati, 52 Ohio St. 609, 44 N. E. 327; Borough of Sandy Lake v. Sandy Lake & S. Gas Co., 16 Pa. Super. Ct. 234; Borough of Easton v. Lehigh Water Co., 97 P. 554; City of Philadelphia v. Thirteenth & Fifteenth Sts. Pass. R. Co., 169 Pa. 269, 33 Atl. 126; Columbia Water Power Co. v. City of Columbia, 5 Rich. (S. C.) 225. Ft. Worth St. R. Co. v. Allen (Tex.) 39 S. W. 125. A street railroad accepting its license on the condition that it will keep the streets in repair cannot relieve itself from this liability by leasing its line to another company. Jenkins v. Columbia Land & Imp. Co., 13 Wash. 502, 43 Pac. 328; Com the corporate life of the licensee or grantee under this principle for in this case they may be assigned to interests lawfully succeeding them 1180 § 919. Revocation or impairment of the grant Where a public corporation has the lawful power to grant a privilege or license to one to occupy public highways and thereafter carry on the business thus authorized, such a grant becomes a contract and one which cannot be revoked or impaired without the consent of the interested party to whom the license is granted.1181 The federal constitution protects as inviolable these mercial Elec. Light & Power Co. v. City of Tacoma, 17 Wash. 661, 50 Pac. 592; Wright V. Milwaukee Elec. R. & Light Co., 95 Wis. 29, 69 N. W. 791, 36 L. R. A. 47; but see Detroit v. Mutual Gas Light Co., 43 Mich. 594, 5 N. W. 1039, where a condition prohibiting a combination with competing companies was sustained. See, also, Stafford v. Chippewa Val. Elec. R. Co., 110 Wis. 331, 85 N. W. 1036, where a new franchise was held not subject to old conditions and regulations. Richmond Water-works Co. v. Vestry of Richmond, 45 Law J. Ch. 441; Id. 3 Ch. Div. 82. See, also, City Water Co. v. State (Tex. Civ. App.) 33 S. W. 259. V. Detroit 1180 City of Detroit Citizens' St. R. Co., 184 U. S. 368; Edison Elec. Light Co. V. New Haven Elec. Co., 35 Fed. 233; Detroit Citizens' St. R. Co. v. City of Detroit, 64 Fed. 628, 26 L. R. A. 667; State v. Laclede Gas Light Co., 102 Mo. 472, 14 S. W. 974, 15 S. w. 383; State v. Payne, 129 Mo. 468, 31 S. W. 797, 33 L. R. A. 576; People V. O'Brien, 111 N. Y. 1, 18 N. E. 692, 2 L. R. A. 255. A franchise acquired is property which survives the dissolution of corporaAbb. Corp. Vol. III — 11. tions by legislative act. Watson v. Fairmont & S. R. Co., 49 W. Va. 528, 39 S. E. 193. A franchise to operate a street railway may be granted to an individual who may then make a valid assignment of the same with the consent of the council to a private corporation. 1181 The Binghamton Bridge, 70 U. S. (3 Wall.) 51; City R. Co. v. Citizens' St. R. Co., 166 U. S. 557; Citizens' St. R. Co. v. City R. Co., 64 Fed. 647; City of Laredo v. International Bridge & Tramway Co., 66 Fed. 246; Africa v. City of Knoxville, 70 Fed. 729; City of Knoxville v. Africa (C. C. A.) 77 Fed. 501; Southwest Missouri Light Co. v. City of Joplin, 101 Fed. 23, 113 Fed. 817; Anoka Water-works, Electric Light & Power Co. v. City Anoka, 109 Fed. 580; Harrell v. Ellsworth, 17 Ala. 576; Capital City Light & Fuel Co. V. City of Tallahassee, 42 Fla. 462, 28 S. 810; City of Los Angeles v. Los City Water Co., 61 Cal. 65; MeLeod v. Burroughs, 9 Ga. 213; Bellevue Water Co. v. City of Bellevue, 3 Hasbrouk (Idaho) 739, 35 Pac. 693; People v. Chicago West Div. R. Co., 18 Ill. App. 125; Peoples' Gas Light & Coke Co. v. Hale, 94 Ill. App. 406; |