The Kennewick courier. [volume] (Kennewick, Wash.) 1905-1914, 1909-01-29
AN EPOCIl-mAKiN6 DECISION


in the case Of the Metropolitan Gas
company, of New York, there We're
two main points of universal inter
est. OF universal interest, because
the decision makes the law for all
the public-service corporations, us
ing state or municipal franchises in
the United States. To particularize
the decision establishes two prin
ciples.
First, that the grantee of a fran
chise may not capitalize it as
property belonging to himself,
which he may estimate as worth SO
much, or so much, and then pro-
ceed to charge rates that will give
him such return upon such valua-
ton as he may think he has a right
to expect or demand.
Second, that a rate made by leg
islative authority in such cases can
not be resisted by a public service
corporation, on the assumption
that it will prove confscatory or re-
munerative. and therefore uncOn-
stitutional; but it must be shown
by proof of experience that it is 50,
before the court will set aside the
rate and allow a higher one.
The effect Of it is that a franchise
So called, is not a property granted
by the state to the person using it,
but license to do business during
t h e term Of t h e franchise;
and use Of the license is subject to
control or regulation by lawful au-
thority
In every private business good |
will is a matter that may be taken
into consideration, if the circum-
stances call for it. But in the case
Of these franchises, particularly |
those that are exclusive and there
fore are in the nature Of monopoly, |
good will' is not an element nor
a factor; for in such cases, SAYS the |
supreme court, as there is no pos
sibility of competition, there shall |
be no allowance for good will "
This another way Of cutting eff the
capitalization of the franchise for
use as a basis of earnings and profit.
This decision, in its two aspects,
casts clear light upon a wide
range Of similar questions.
First, the ruling out of good !
will" or franchise valuation"
from the calculation Of a reasonable !
rate is of immense importance
Second, the position that practical
experience of a legislative rate is
necessary to prove that it does not
yield a fair return, takes the rate
regulation out Of the control OF the
holder of the franchise, and refers
it to examination, under the rules
Of reason and justice. 1t is, there
fore, an epoch making decision, in
one of the most difficult parts Of our
Jurisprudence and legislation. The
holder of the franchise is not en-
titled to decide, alone, what is
fair and just return. The in
curry concerns the whole public,
the courts will intervene, on appli-
cation, to decide it; and the public
ity will be secured to which all are
entitled. But capitalization and
and franchises and insistence on
earnings to make returns upon cap
1ldllZdllOii are III dll tIIl, anu 80 is |
the assumption that obedience to a
rate may be disobeyed, arbitrarily,
on the claim that it is too low to
yield a return, till the proof thereof
shall be made to appear The proof
will stand now on what is a lair
profit, with valuation of the fran
chise thrown out of the account.
Full publicity in these matters thus /
will be assured; and reason, equity
and justice must be the arbiters over
it all .-Oregonian.
Divorced. Elter Cne Months RIiSs