PUBLIC UTILITIES COMMISSION

No. 2157-In the Matter of the Application of The Trumbull and Mahoning Water Company for Permission to Issue $506,000 of Its Capital Stock and $250,000 of Its Bonds.

(Dated February 14, 1922.)

The Supreme Court of Ohio, having by its mandate in Cause No. 17118, reversed the order made and entered herein upon the thirteenth day of May, 1921, and remanded all papers herein to this Commission for further order in accordance with the opinion of said court in said Cause No. 17118:

And the first syllabus of said opinion providing:

"When moneys have been advanced as loans to a public utility for the purpose of discharging, and which were used to discharge, indebtedness incurred in the acquisition, development and construction of the utility's plant and facilities, the public utilities commission, under Section 614-53, General Code, has authority to order the issue of stocks and bonds for the discharge or refunding of the obligations so incurred, whether incurred during or prior to the five year period fixed in that section."

It is, therefore,

Ordered, That said The Trumbull and Mahoning Water Company be, and hereby it is authorized to issue its stock and bonds in such an amount as is necessary to discharge or refund its indebtedness incurred in the acquisition, development and construction of its plant and facilities.

And the record herein made and submitted not disclosing the amount of applicant's indebtedness incurred in the acquisition, development and construction of its plant and facilities, so that the Commission may determine the amount of stock and bonds so to be issued, it is further

Ordered, That this proceeding be, and the same hereby is reopened for the purpose of permitting the applicant to make such further showing herein as may be necessary and proper in the premises.

Advanced Utility Rate Proceeding No. 36-In the Matter of the Proposed Increased Rates of The Upper Sandusky Waterworks Company for Water Service, Filed to Become Effective November 1, 1920.

(Dated February 13, 1922.)

The Commission having heretofore by its order, made and entered in Formal Proceeding No. 2191, dated December 16, 1921, after ascertaining and determining the value of respondent's property used and useful for the convenience of the public in the furnishing of water service, and making due allowance for the cost of furnishing said service and the necessity of making reservation from income for depreciation and contingencies, fixed and determined as the just and reasonable rates to be charged by respondent tor the furnishing of water service in the Village of Upper Sandusky, Ohio, for a period of two years from and after the effective date of the ordinance complained of and appealed from in said Formal Proceeding No. 2191, the schedule of rates and charges herein under investigation, the proposed effective date of which was the first day of November, 1920, and it appearing that the dif ference in operating expenses and revenues for said intervening period will not be so great as to render the net revenues from respondent's service within such period an excessive return upon respondent's said property, it is

Ordered, That the order heretofore made and entered herein, suspending the going into effect of the rates and charges contained in said proposed schedule of said The Upper Sandusky Water Works Company be, and hereby it is rescinded, and that said inves tigation be, and hereby it is discontinued.

ATTORNEY GENERAL

Notwithstanding the Provisions of Sec. 154-37, G. C., Purchase of Machinery Tools, Equipment, Supplies and Material for Use by the Department of Highways and Public Works on Force Account Under Authority of Sections 1191, 1224 and 1231, G. C., Are to Be Made by the Department of Highways and Public Works in Conformity with the Requirements of Said Sections and of Section 6 of the General Appropriation Act and Not by the Department of Finance. The Sale and Exchange of Worn-Out Machinery, Tools and Equipment as Mentioned in Section 1231, G. C., is Also to Be by the Department of Highways and Public Works, Subject to the Requirements of Said Section and of Section 6, of the Appropriation Act.

No. 2841-(Opinion Dated February 6, 1922.)

Hon. W. Albert Davis, Director of Finance, Columbus, Ohio:

Dear Sir-The receipt is acknowledged of your communication of recent date requesting the opinion of this department upon the following:

"In view of the provisions of section 154-37 and of section 6 of the general appropriation bill found in 109 O. L. 415, what is the correct procedure in the matter of purchase of machinery, tools, equipment, supplies and material for use in the construction of highways under sections 1191 and 1231 G. C.; in the maintenance of highways under section 1224 G. C., and in the sale and exchange of machinery, tools and equipment under 1231 G. C.?"

Sections 1191, 1231 and 1224, G. C., are quite lengthy, and it is sufficient, for the purposes of your inquiry, to state the substance of them.

Section 1191, G. C., deals primarily with the application by the county commissioners or township trustees for aid by the state. in the construction of highways. If county commissioners or township trustees do not avail themselves of the privilege to make application for state aid, then an alternative is provided for by the section in the following language:

"If the county commissioners or township trustees do not make application for the apportionment to such county on or

before the first day of May then the state highway commissioner shall enter upon and construct, improve, maintain or repair any of the inter-county highways or parts thereof in said county, either by contract, force account or in such manner as the state highway commissioner may deem for the best interests of the public, paying the full cost and expense thereof, except that portion to be assessed against abutting property, from the apportionment of the appropriation due said county and unused or unapplied for by the said county or any board of trustees thereof, as hereinafter provided."

Referring next to Section 1231, G. C., as amended in 109 O. L., 299, we find that it has particular reference to work on main market roads. The opening lines of the section are to the effect that the Director of Highways and Public Works

"subject to the provisions of law governing the state highway department, shall have power to purchase such equipment and materials, and employ such labor as may be deemed necessary to execute any work upon said main market roads."

Further along in the section are these provisions:

"The state highway commissioner is hereby authorized to sell, either at private sale, or at public sale, after such notice as he may deem proper, any machinery, tools or equipment that through wear have become unfit for use. The proceeds of such sale shall be paid into the state treasury to the credit of the state highway improvement fund. The state highway commissioner is also authorized to exchange such machinery, tools and equipment for new equipment and pay the balance of the cost of such new equipment from any funds available for that purpose.'

The closing sentence of the section reads

"The funds appropriated or available for main market roads shall be used for carrying out the provisions of the section."

It may be stated that said Section 1231, G. C., has primary reference to the expenditure of the so-called main market road fund accruing from the setting aside to main market road improvement of twenty-five per cent of the state highway improvement levy. (See Section 1221, G. C.)

Section 1224, G. C., has primary reference to the expenditure of the state's share of automobile license tax funds accruing under the provisions of Section 6292, G. C.,Said Section 1224 is to the effect that the state highway commissioner shall maintain and repair these sections of inter-county highway and main market roads

which have been originally constructed by the aid of state money or taken over by the state after being constructed. Among its provisions are the following:

"The state highway commissioner may enter into a contract with any individual, firm or corporation which gives sufficient herd for the faithful performance of said contract, or with the county commissioners of any county or the township trustees of any township in which such highway is situated for the repair and maintenance of such highways, or any part thereof, according to the plans and specifications provided by the state commissioner, or for the furnishing of the material or labor for such repair and maintenance, or the state highway commissioner may furnish the material or labor or both and supervise the repair and maintenance."

(Somewhat similar provisions on the subject of maintenance and repair are to be found in the last paragraph of Section 1221, G. C.)

It is thus seen that under the quoted provisions of said Sections 1191, 1224 and 1231, the state highway commissioner in lieu of proceeding by contract, may proceed by force account as that term is used in the strict sense, or in other words, as force account has been described in an opinion of this department of date December 13, 1917, appearing in Opinions of Attorney General, 1917, Vol. III, p. 2332, of which opinion the fourth headnote reads:

"4. The term 'force account' implies that the department officer or board having work to do, instead of entering into a contract for the performance of the work, assumes a direct oversight of the same, employing men with teams, purchasing material and paying for the same without reference to any contract whatever.”

The quoted provisions of Section 1191 confer on the Director of Highways and Public Works a somewhat broader power than is implied in the strict sense of the term "force account," since said section authorizes proceedings either by contract, force account, or in such manner as the state highway commissioner may deem for the best interests of the public; but for present purposes, it will be assumed that your inquiry relates only to the relations of the Department of Finance with the Department of Highways and Public Works in the matter of procedure under force account in the strict sense, as above defined.

The quoted provisions of Sections 1191, 1224 and 1231 have all been in effect for a number of years. The principal point raised by your inquiry is the effect upon these quoted provisions of the