for determination by state authority and private individuals or corporations cannot, as between themselves, enter into a contract to oust the state of its power and authority to regulate rates and prevent unjust discrimination. This has been settled so many times by the decisions of our court that a citation of authorities is unnecessary.

(7) After all of the property of the Williamston Telephone Company had been appraised, persons living in the vicinity of Williamston had an opportunity to purchase it. Before investing their money in the telephone business, they undoubtedly made investigation as to the cost and expense of maintaining and operating the business; as to labor prices and material costs in the telephone business; and after this investigation their ardor for engaging in the operation of a telephone utility seems to have cooled.

Based upon the value of the Williamston Telephone Company's plant as shown by the appraisal, its income and operating expenses as claimed by its president and general manager, the present price of telephone materials and present operating costs, the rates fixed by the previous order of this Commission would seem to be justified. Should economic conditions and prices change so that operating costs may be reduced or should an audit show that these claimed expenses are not real, it would be the duty of the Commission either upon application or upon its own motion to modify the telephone rates charged by the Williamston Telephone Company in accordance with the facts.

(8) (a) The telephone lines and facilities belonging to the rural farm line telephone companies in the vicinity of Williamston disconnected from the exchange of the Williamston Telephone Company at Williamston in August, 1920, should be connected therewith within ten days from the date of the order filed in connection with this opinion and in the manner prescribed therein.

(b) The rural telephone lines and companies in question should, in accordance with the terms of such order, immediately put their telephone lines and facilities in a condition so as to render reasonably adequate telephone service to the persons desiring the same and should keep them in repair.

(c) The application on the part of the Williamston Telephone

Company for a certificate of public convenience and necessity authorizing it to construct telephone lines and facilities in the several townships adjacent to the village of Williamston should be temporarily denied, subject, however, to the further order of the Commission, as hereinafter provided.

(d) The certificate of public convenience and necessity, if one is necessary, authorizing the applicant to repair and reconstruct the old Michigan state toll line running from Williamston to Dansville should be authorized.

[7] (e) The farm residents desiring telephone service who filed an application for physical connection to be established between the lines of the farm line telephone companies and the exchange of the Williamston Telephone Company at Williamston, will then be in a position to be given service, and they should be given service through the facilities above established and connected; and having the right to such service, if the rural farm line telephone lines and companies above mentioned do not within ten days comply with the order of physical connection accompanying this opinion, then and in such case a certificate of public convenience and necessity should issue to the Williamtson Telephone Company authorizing it to construct its telephone lines and facilities as applied for, so as to render telephone service to the applicants therefor who are entitled thereto.

(f) The territory around Williamston, served by the several telephone companies, should be divided and that to be served from the Williamston Exchange segregated from that occupied and served by other telephone exchanges, so far as rural telephone switching service is involved; and the persons within the limits of such territory segregated and alloted to be switched by the Williamston Telephone Exchange should receive their primary switching from and through the Williamston Telephone Exchange; and so far as persons within that territory are concerned, in case the physical connection of the farm line telephone company's lines are not established within ten days as hereinbefore provided, then, and in such case, the said Williamston Telephone Company should be authorized, empowered, and directed to refuse telephone service to such persons when routed by circuitous routing through exchanges into the Williamston Exchange except upon the basis of the standard telephone toll rates

applicable to the Michigan State Telephone Company, the Independent Telephone and Traffic Association, and other established toll lines in Michigan.

(g) The application for a modification of the switching rate for rural farm line telephone service will for the present be denied, but should it hereafter be made to appear that telephone service in Williamston and rural farm line switching service can be rendered at a less rate than that heretofore fixed by the order of the Commission, it will be reduced in accordance with the facts.

[8] (h) The inventory made of the telephone property of the Williamston Telephone Company should be valued on the basis, as near as may be, of original cost, and also of present cost of reproduction less depreciation; and an audit of its books made to show the actual income and operating expenses paid in the past and when this is done the rates should be readjusted both in Williamston and on rural line services in accordance with the facts disclosed.

Michigan Public Utilities Commission, William W. Potter, Chairman, Sherman T. Handy, Samuel Odell, Earl R. Stewart, William M. Smith, Commissioners.

Apparent discrimination in water rates charged in several cities where rates have been fixed by the Commission as against other cities receiving water under a contract not regulated by the Commission, calls for immediate action by the Commission to remove discrimination. [February 15, 1921.]

CERTIORARI against the Board of Public Utility Commissioners to review an order fixing water rates; reconsideration of the

case ordered. For Commission opinion see P.U.R.1920C, 160.

Appearances: John J. Fallon, of Hoboken, for city of Hoboken; William M. Wherry, Jr., of New York city (Collins & Corbin, of Jersey City, on the brief), for Hackensack Water Company; Wendell J. Wright, of Hackensack, for Hackensack and Teaneck; L. Edward Herrmann, of Jersey City, for Board of Public Utility Commissioners.

Swayze, J. Inasmuch as the parties in this case desire a speedy decision, in order that the appeal may be taken to the March term of the court of errors and appeals, I will only indicate a single consideration, which in my judgment, requires a reversal of the action of the utility board.

The water company supplies the city of Hoboken and several municipalities outside of Hoboken. The supply to Hoboken is under a contract made many years ago, and since renewed, and expiring next year. The Public Utility Commissioners at different times have ascertained the value of the property devoted to the supply of Hoboken and the value of the property devoted to the supply of the other municipalities, and they have from time to time increased the rate allowed to be charged in the other municipalities, but have not increased the rate allowed to be charged in Hoboken.

Upon the theory that the contract between Hoboken and the water company could not be varied, the necessary result has been that the larger proportion of the cost of the service has fallen upon the other municipalities and a smaller proportion upon Hoboken. The water company, in the summer and fall of 1920, sought to have the rate increased in all the municipalities, and an increase was allowed in the others, although not as large as the company claimed; but the board refused to consider the case of Hoboken. The water company appeals from the failure of the Board to allow its claim as to the other municipalities, and also appeals from the refusal to consider the case of Hoboken. The situation now is: That the company is receiving a return of 2.37 per cent on the value of the property used for the supply of Hoboken and 7 per cent on the property used for the supply of the other municipalities. Manifestly this is discrimination between Hoboken and the other municipalities, in favor of Hoboken.

As I understand the decision in the case of Attorney General v. Gaul and others, 112 Atl. 341, a discrimination of that kind calls for immediate action on the part of the Public Utility Commissioners on pain of having their failure to act treated as neglect of duty for which they may forfeit their office. It is true that it might be open to them to show that the rates which resulted in such a difference are not unjust, unreasonable, unduly preferential, arbitrary, or unjustly discriminatory, and it may be that upon inquiry into the facts the court would hold that the existence of the contract between Hoboken and the water company made legal the discrimination. But on the face of it a contract by which Hoboken pays so small a proportion of the cost of the capital invested in the business is unjustly discriminatory, and the existence of a contract is not an insuperable objection, where the contract is with a municipality. Collingswood Sewerage Co. v. Collingswood, 91 N. J. L. 20, P.U.R.1918C, 261, 102 Atl. 901, affirmed 92 N. J. L. 509, P.U.R.1919B, 585, 105 Atl. 209; Atlantic Coast Electric R. v. Public Utility Board, 92 N. J. L. 168, P.U.R.1919C, 489, -A.L.R., 104 Atl. 218, affirmed.

Manifestly, in order that justice may be done, the whole case. must be reconsidered, since the proper rate can only be determined upon considering the property as a whole. I will hear counsel on the form in which the judgment shall be entered.

NEW YORK PUBLIC SERVICE COMMISSION, SECOND DISTRICT.

HARRY N. HOFFMAN, as Mayor of City of Elmira,

1. The operations of a street railway and electric light company must be considered separately for rate fixing purposes, although the services are combined in one company.

2. The New York Commission, Second District, holds that a public utility is entitled to a return upon the present value of its property.