the action was to restrain the enforcement of an ordinance of the defendant city forbidding manufacturers from demanding more than seventy-five cents per thousand cubic feet for gas served to its customers, which was a marked reduction from the prevailing price of gas. In refusing to find such power in the city to regulate the rate of gas supply the court said: "No one has pretended that the regulation of the price of gas is essential to the specific object for which the city of Chicago was created. . . . It is plain to me that the sixty-sixth section, while granting power to regulate the police of the city or village, cannot be enlarged to include power to regulate the price of gas. . . . The mere laying of gas pipe, and the installation of gas plants, together with their repair, are the subject matter of a power widely separable in circumstance from the power to deal with the rates at which gas shall be manufactured and sold. The first belongs naturally to the city whose streets are to be occupied, for it is related intimately with the supervision of streets; the latter, with equal reason, is foreign naturally to the city. . . . Until there is legislation, more unmistakable than the language used in this section, to indicate a purpose to grant the city power to fix rates, I shall not hold that such was the legislative intent. Unquestionably the power resides somewhere in the State, but until consciously delegated to some other body, it remains in the State's general repository of power, the General Assembly of the State."

And finally the case of State ex rel. City of St. Louis vs. Laclede Gas Light Co.1 was a mandamus action to compel the respondent company to comply with an ordinance of the relator city and supply gas to consumers at not to exceed ninety-five cents per thousand cubic feet, being a reduction from one dollar and twenty-five cents per

1 102 Mo., 472.

thousand. In denying such power in the city by virtue of the police power vested therein, the court expressed its opinion in the following clear language: "It is not open to doubt or dispute that this power to make and vend gas carries with it as an inevitable incident the right to fix the price of the gas thus made and sold. . . . So that, by the terms of the charter of the respondent company its right to fix the price of its product was as much a part of its charter as if it had been in terms set forth in section 5 of the original act of incorporation. But, if a price had thus been set forth, no one familiar with constitutional principles but would at once deny that the right to contract for the sale of gas at such price could anywise be impaired. . . But certainly there is a limit in this regard over which legislatures and municipalities cannot pass; they cannot, in the exercise of assumed police powers, violate charter contracts and overthrow vested rights. On this subject Judge Cooley aptly says: The limit to the exercise of the police power in these cases must be this: The regulations must have reference to the comfort, safety or welfare of society; they must not be in conflict with any of the provisions of the charter; and they must not, under pretense of regulation, take from the corporation any of the essential rights and privileges which the charter confers. In short, they must be police regulations in fact, and not amendment of the charter in curtailment of the corporate franchise.' "1

Where authority is expressly conferred upon the municipality to fix the rates at which public utilities may be supplied to its inhabitants by private capital, the courts agree that such municipality may fix these rates but they must be

1 Cooley, Constitutional Limitations, 5th ed., 712. See also Tacoma Gas and Electric Co. vs. Tacoma, 14 Wash., 288; Omaha Water Co. vs. City of Omaha, 147 Fed., I.

reasonable; for the state cannot by itself or any of its agencies deny to the owners of private property a fair return for its use at a just valuation. To permit this would amount to a deprivation of property without due process of law. The principle is stated to be the general rule of law by the Supreme Court of the United States in the leading case of San Diego Land, etc. Co. vs. National City,' and in many other cases. In the course of this opinion the court defines what constitutes "reasonable rates" as follows: "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."

Where the rates fixed by the municipality acting under proper authority are not reasonable, redress may be had by the party injured at the hands of the courts for they stand ready on good cause shown to enjoin the enforcement of an ordinance reducing such rates below what is fair and reasonable. The fixing of rates, however, is a legislative act requiring the exercise of discretion and will not be interfered with by the courts unless, as is said in the case just referred to," 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." As this same court has said in another case: The extent of judicial interference is protection against unreasonable rates." 2

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1 174 U. S., 739.

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2 143 U. S., 339. To the same effect and for the further definition of the term, reasonable rates," see San Diego Water Co. vs. San Diego, 118 Cal., 556; Brymer vs. Butler Water Co., 179 Pa., 231; Des Moines vs. Des Moines Waterworks Co., 95 Ia., 348; Capital City Gaslight Co. vs. Des Moines, 72 Fed., 829; New Memphis Gas & Light Co. vs. Memphis, 72 Fed., 952; State ex rel. vs. Cincinnati, etc., Co., 18 Ohio St., 262.

The case of Milhau vs. Sharp1 decided as early as 1854 that a statute, providing that certain municipal corporations should have the power from time to time to regulate the rates of fare to be charged by street railway companies could not be defeated in its operation by a resolution of any such municipality forever waiving such power by a perpetual grant to a certain company to erect and operate a street-railway system in Broadway, New York City. In perpetually enjoining such action by the company for the reason that such resolution was void the court said: "An ordinance regulating a street is a legislative act, entirely beyond the control of the judicial power of the State. But the resolution in question is not such an act. Though it relates to a street, and very materially affects the mode in which that street is to be used, yet, in its essential features, it is a contract. Privileges exclusive in their nature, and designed to be perpetual in their duration, are conferred. Instead of regulating the use of the street, the use itself, to the extent specified in the resolution, is granted to the associates of the Broadway railroad. . . . The licenses contemplated by the resolution must therefore be regarded as perpetual and irrevocable. If it takes effect at all, the right of way, now vested in the corporation, so far as it is necessary for the purposes of the defendants, will become vested in them. The exercise of the legislative powers of the corporation, in respect to that street, must be in subordination to the vested rights of the defendants. We have already seen that a corporation cannot, without the consent of the legislature, thus divest itself of its own powers. The resolution itself is, therefore, unauthorized and void."

1 17 Barb. (N. Y.), 435.

CHAPTER X

CONCLUSIONS

IN what has been said the endeavor has been made to indicate what has been the attitude of our courts toward the question of the municipal ownership and operation of public utilities by showing what have been their decisions on the points of law which affect both the power of municipal corporations to extend their sphere of activity and the facility with which they might exercise the powers pertaining to this general subject which are regarded as inhering in them.

By way of stating the conclusions which have been reached it may be said 1st. Municipal ownership and operation is regarded by the courts as quite consistent with our constitutional system. There is no constitutional objection to the grant by the legislature of the widest powers relative to the municipal ownership and operation of public utilities. Only one case casts any doubt upon the power of the legislature to permit a municipality to enter into the field of business. This is Opinion of the Justices 1 which regards as improper the attempt of the legislature to permit a city to establish yards for the sale of coal and wood. The courts further have given the widest possible meaning to the term "municipal purpose" in our constitutions where by the terms of those instruments cities were forbidden to exercise the power of taxation or to spend public funds for other than such purposes.

1 155 Mass., 598.

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