It was also proper for the commission to pay regard to the fact that the plaintiff had an established business, built up after experiments and changes during a long period. Gloucester Water Supply Co. v. Gloucester, 179 Mass. 365, 60 N. E. 977. . . . The commission reports that it considered, in connection with these facts, that the plaintiff's business had been thus "built up at the risk of private capital." It indisputably had been so built up, and whatever had been sunk in experiments in order to secure, and with the result of securing, a good working plant, was properly considered as entering to some extent into the value of that plant. "Nihil simul inventum et perfectum est." The defendant itself invited the commission, in making its valuation, to take into account "the value, if any, of the physical plant in excess of the value or cost to purchase and install the several parts of a similar plant in similar condition, due to the fact that it is a connected working whole, shown by experiment to be capable of operating at a definite cost." The proof furnished by experience was thus plainly and properly stated to be of material importance. . . .

The Superior Court also properly declined to admit in support of the remonstrance the stenographer's report of all the evidence introduced before the commission on the question of values. This was offered to show that the commission, in valuing the property at $590,000, must have taken into account considerations which were legally inadmissible. The claim of the city in making the offer was that there was no testimony before the commission warranting a valuation of over $420,000, in addition to a gross allowance, which, on the hearing the city had admitted might fairly be made of not over $60,000, by reason of the fact that the plant was that of a going concern. The sum at which this allowance, if made, should be fixed was evidently a matter as to which a difference of judgment between reasonable men might fairly exist. The same state of facts which might lead one to deem $60,000 too much might to others seem to call for a much larger addition. The commission viewed the plant, and may thus have derived impressions that were decisive. The evidence thus put before it could not be put before the Superior Court. This is enough to justify the

ruling, without reference to other grounds urged in its support.

§ 532. Purchase of Galena, Kan., water plant, 1906.

The case of Galena Water Company v. City of Galena, 74 Kan. 624, 87 Pac. 735, decided November 10, 1906; Supreme Court of Kansas, involves the price to be paid by the City of Galena for the property of the Galena Water Company. The city had granted a franchise to the company reserving an option to purchase at the end of fifteen years and at the end of each subsequent five year period. The franchise provided that the city should purchase the waterworks "at their fair and equitable value, which shall be placed at the actual value of the works, lands, buildings, machinery and equipments including the franchise hereby granted." The city exercised its option at the end of the fifteen year period and the referee fixed the value of the property in its entirety at $75,400. In such value he included an allowance for going concern and franchise of $15,214.73. The District Court excluded the allowance for going concern and franchise and fixed the purchase price at $60,185.27. The Supreme Court reversed the action of the District Court in excluding this item. Judge Graves says (at page 736):

We think the District Court erred in excluding from its estimate of the "fair and equitable" value of the waterworks system, the sum of $15,214.73, that being the amount found by the referee to be the value of the plant as a going concern, including the franchise. A system of waterworks in a city, without the right to operate there, or without being connected with water takers, and not in a running condition, would be comparatively worthless. The water company was the owner of these important elements of value, and it seems reasonable that they should not be taken without compensation.

In this case the allowance for franchise and going concern

amounted to approximately 25% of the present value of the physical structure. As to going concern the court quotes at length the opinion of Justice Brewer in National Waterworks Company v. Kansas City (see above § 521).

§ 533. Maine water plant condemnation cases, 1902, 1904Value of structure in use.

In the case of Kennebec Water District v. City of Waterville, 97 Me. 185, 54 Atl. 6, decided December 27, 1902, the Supreme Judicial Court of Maine lays down rules to govern appraisers in making a valuation of the property of the Maine Water Company for purposes of purchase by the Kennebec Water District. In doing this the court, while complying with the provisions of a state statute, appreciates the possible difficulties if not dangers in attempting to formulate rules which are to be applied to facts not yet ascertained. This is the first of two similar cases, the second one being that of the Brunswick Water District, decided in 1904. Judge Savage says (at page 19):

Defendants' request eight is, in effect, that, in estimating even the structure value of the plant, allowance should be made, in addition to the value as otherwise established, for the fact, if proved, that the water system is a going concern, with a profitable business and good will already established, and with a present income assured and now being earned. We think this instruction, with a modification to be noted, should be given. Newburyport Water Co. v. Newburyport, supra; National Waterworks Co, v. Kansas City, supra; Gloucester Water Supply Co. v. Gloucester, supra; Bristol v. Waterworks, 23 R. I. 274, 49 Atl. 974. But the term "good will" may be misleading. Lord Eldon said that good will is nothing more than the probability that the old customers will resort to the old place. Crutwell v. Lye, 17 Ves. Jr.. 335. See Flagg Mfg. Co. v. Holway, 178 Mass. 83, 59 N. E. 667. Under any possible definition, it involves an element of personal choice. This phrase is inappropriate where there can be no choice. So far as the

defendants' system is "practically exclusive," the element of good will should not be considered. Bristol v. Waterworks,

supra.

The defendants, in request nine, ask that in determining the amount to be added to structure value, in consideration of the fact that the system is a going concern, the appraisers should consider, among other things, the present efficiency of the 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. think this instruction should be given. These are all proper matters for consideration "among other things." They are not controlling. Their weight and value depend upon the varying circumstances of each particular case. Of course a plant, as such, already equipped for business, is worth more, if the business be a profitable one, than the mere cost of construction. Later in this decision in quoting from an English decision involving the purchase of a tramway under statutory provisions, the court apparently agrees with the position there taken that the valuation of a tramway as a going concern involves merely the consideration of the present replacement value of the structure. The court says (at page 21):

Take, for instance, the case of Edinburgh Street Tramway Co. v. Lord Provost, App. Cas. 1894, p. 456, cited by defendants. It does not support the doctrine. In that case the arbitrator declined to value the tramway lines by capitalizing the rental, and upon appeal his assessment was affirmed, and the appeal dismissed. It was held that the statute under which the proceedings were had limited the appraisal to construction value, which the arbitrator had considered in the light of the fact that the tramways were then successfully constructed

and in complete working condition; in other words, that the company was a going concern.

It is well known that in England under the purchase clause of the Tramways Act the municipality pays merely the reproduction cost of the physical structure less the existing depreciation. The structures are treated as parts of a going concern. Otherwise they would have only a scrap value, i. e., the price that could be obtained if the entire plant was to be dismantled and its constituent materials sold for what they would bring as scrap. The valuation of a structure as a part of a going concern does not mean therefore that anything is to be added for going concern in excess of the value indicated by cost-of-reproduction-less-depreciation. In basing present value on cost to reproduce the existence of a going concern is recognized and allowed for. The above ruling of Judge Savage seems contradictory on this point, but in his subsequent ruling in a similar case he states his position more clearly and seems to say that in valuing the various structures as parts of a going concern all the consideration has been awarded the going concern factor to which it is entitled. This of course is not in any sense a recognition of the claims of the advocates of an allowance for going concern or going value. Judge Savage says: "

Now, what is the property which the district has taken by the power of eminent domain? In the first place, it is a structure, pure and simple, consisting of pipes, pumps, engines, reservoirs, machinery, and so forth, with land rights and water rights. As a structure it has value, independent of any use or right to use, where it is-a value probably much less than it

7 G. S. Robertson, The Law of Tramways and Light Railways, pp. 182– 183, London, Stevens and Sons, Ltd., 1903.

8 Brunswick and T. Water District v. Maine Water Company, 99 Me. 371, 59 Atl. 537, 539, decided December 14, 1904, Supreme Judicial Court of