Court Opinion

ID: 9307274
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:18:05.375146+00
Date Added: 2024-06-11T17:13:58.130141
License: Public Domain

Justice Miller,
concurring:
“(3) Neither the legislature, nor a commission acting under authority of the legislature, can establish arbitrarily, and without regard to justice and right, a tariff of rates for such transportation which is so unreasonable as to practically destroy the value of the property of persons engaged in the carrying business, on the one hand, nor so exorbitant and extravagant as to be in utter disregard of the right of the public for the use of such transportation, on the other.”
In Stone v. Trust Co., 116 U. S. 307, 347, 6 Sup. Ct. 334, 388, 1191, Chief Justice Waite, delivering the opinion, says:
“From what has thus been said, it is not to be inferred that this power of limitation or regulation is itself without limit. This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under pretense of regulating fares and profits, the state cannot require a railroad corporation to cany persons or property without reward. Neither can it do that which in law amounts to a taking of private property for public use without just compensation, or without due process of law.”
*839In Railway Co. v. Gill, 156 U. S. 657, 15 Sup. Ct. 484, Justice Sid-ras, delivering tlie opinion, says:
“Tills court: has declared in several cases that there is a remedy in the courts for relief against the legislature establishing a tariff of rates which is so unreasonable as to practically destroy the value of the property of companies engaged in the carrying business, and that especially may the courts of the United States treat such a question as a judicial one, and hold such acts of legislation to be in conflict with the constitution of the United States, as depriving the companies of their property without due process of law, and as depriving them, of the equal protection of the laws.”
In Ames v. Railway Co., 64 Fed. 176, Justice Brewer says:
“The idea of reasonableness is justice, and that which is unjust cannot be reasonable; and, when tlie strong arm of the legislature is laid upon property invested in railroad transportation, it must be so laid as to do justice to such investors. There can be no justice in that which works to such investors a practical destruction of their property thus invested. It must be borne in mind that property put into railroad transportation is put there permanently. It cannot be withdrawn at the pleasure of the investors. Kailroads are not like stages or steamboats, which, if furnishing no proiit at one place, and under one prescribed rate of transportation, can bo taken elsewhere, and put to use at other places and under other circumstances. The railroad must stay, and, as a permanent investment, its value to its owner may not be destroyed. The protection of the property implies the protection of its value.”
In Reagan v. Trust Co., 154 U. S. 397, 14 Sup. Ct. 1047, Justice Brewer, delivering opinion, says:
“The courts are not authorized to revise or change the body of rates imposed by a legislature or commission. They do nol determine whether one rate is preferable to another, or what, under all circumstances, would be fair and reasonable as between the carriers and the shippers. They do not engage in any mere administrative work. But still there can be no doubt of their power and duty to inquire whether a body of rates prescribed by a legislature or a commission is unjust, and unreasonable, and such as to make a practical destruction to right of property, and, if found so to be, to restrain its operation.”
And on page 399, 154 U. S., page 1047, 14 Sup. Ct., the same justice, in delivering the unanimous opinion of tlie court, says:
"The equal protection of the laws, which, by tho fourteenth amendment, no state can deny to the individual, forbids legislation, in whatever form it may be enacted, by which the property of one individual Is, without compensation, wrested from him for the benefit of another, or of the public. This, as has been often observed, is a government of law, and not a government of men; and it must never be forgotten that, under such a government, with its constitutional limitations and guaranties, the forms of law and the machinery of government,, with all their reach and power, must, in their actual workings, stop on the hither side of the unnecessary and uncompensated taking or destruction of any private property legally acquired and legally held.”
In Railway Co. v. Dey, 35 Fed. 879, Judge Brewer declared:
“The rule to be laid down is this: That where the proposed rates will give some compensation, however small, to the owner of the * * * property, tlie courts have no power to interfere. Appeal must then be made to the legislature (in the pending ease to the city council] and the people. But, whore the rates prescribed will not pay some compensation to the owners, then it is the duty of the court to interfere, and protect the companies from such rates. Compensation implies three things: Payment of cost of service, interest on bonds, and then some dividend.”
He closes this branch of his discussion in these words, as applicable to the payment of interest on bonds:
*840“While, by reducing the rates, the value of the stockholder’s property may be reduced, in that less dividends are possible, — and that power of the legislature over property is conceded, — yet if the rates are so reduced that no dividends are possible, and especially if they are such that the interest on the mortgage debt is not earned, then the enforcement of the rates means either confiscation, or compelling, in the language of the supreme court, the corporation to carry persons or property without reward.”
But still the question remains whether the matters presented show the ordinance in question impairs the obligation of the contract, deprives plaintiff of property without due process of law, or denies to plaintiff the equal protection of the laws, so that at this point in the case a preliminary injunction should issue. In the question just stated are included so many factors, the application of the general principles embraced therein so strongly differ, as the peculiar circumstances and conditions of the cases differ; there is absent any special, unfailing test or standard of measurement; in short, each case presented is so largely, and almost wholly, of its own peculiar kind, and the constitution, congress, and the courts have all failed to minutely and specifically define these constitutional provisions, that a court may well approach the matter with great reluctance. The ordinance in controversy is prima facie reasonable, in the rates imposed. On plaintiff is the burden of proving the contrary. Un-less, when the case is finally submitted on the merits, the plaintiff shall have satisfied the court, by a fair preponderance of the proof, that the rates by the ordinance so fixed, or some of them, are not reasonable, and are so unreasonable as to justify the court in staying its operation, the decree must be for defendant, and the court must refuse to interfere with the enforcement of the ordinance. We are not, at this point in the case, to determine what decree shall pass on the merits. The action now to be taken may be in harmony with, or contrary to, the final action; that is, should a preliminary injunction now issue, yet the final decree — the decision on the merits of the case, after evidence has been fully introduced on both sides— may dissolve this injunction, and find for defendant, that the ordinance is valid and enforceable. While, if the application now pending for a writ of injunction be denied, yet the final decision on the merits may decree the ordinance invalid, as to rates therein fixed, and its enforcement to be stayed. The extraordinary process of the court — which, if issued, is to stay, until decree herein, the enforcement of the ordinance — may not lightly issue.. The court is bound to assume, until the contrary be proven, that the council of the defendant city have acted with due regard to the rights of the plaintiff, and have established reasonable rates. The proof introduced on the application now to be decided has not been full or satisfactory in many points, or the case might now be submitted for final decision. It is not the practice, nor is it expected, that the proof submitted on the application for a preliminary writ shall fulfill all the requirements of the proof to sustain the decree and the permanent writ. If, on the showing now made, the case presented is such that, were the same convincing judgment present at the final hearing, the writ would be decreed, and the preliminary writ is found necessary for plaintiff’s protection meanwhile, such writ may *841issue. This is a statement of largest generality. But, as in all such statements, there are many qualifying exceptions and particulars. If the writ shall not issue, will plaintiff suffer irreparable injury? Taking the attitude of the two parties to the suit under the showing now made, how are the two before the court, as to equities, looking at their respective situations if the writ shall, and if it shall not, now be ordered? I think I am safe in saying that the court must be pressed by the proof into finding the preliminary writ necessary to prevent grave and practically irreparable injury to the plaintiff, or the preliminary writ will not issue against the opposition of defendant, however strong the showing. But the parties will be remitted to the decree for settlement and adjudication therein of all matters involved in the suit. In this case the plaintiff has some 2,500 consumers. Of these, at time of hearing the evidence on pending application, only 17 had refused to pay to the plaintiff the old rates. Since then, according to the affidavit filed by plaintiff, though filed -without leave, and out of time, the number has risen to 229 refusals, with 144 offering to pay the ordinance rates. Defendant has been given no opportunity to meet the statement of this last affidavit, but the tendency therein shown to refuse to pay old rates, we may safely assume, will probably result in increasing refusals to pay in excess of the new ordinance rates until this cause is decided. How shall the reasonableness or unreasonableness of the ordinance rates be determined? By what test or standard is this fact to be decided? Counsel radically differ in the views presented on this point in the forcible and elaborate printed briefs presented, aggregating over 300 pages. Mr. Justice Brewer, in Ames v. Railway Co., supra, when speaking of rates for transportation of freight on that railway, says:
“What is the test by which the reasonableness of the rates is determined? This is not yet fully settled. Indeed, it is doubtful whether any single rule can be laid down applicable to all cases. If it be said that the rates must be such as to secure to the owners a reasonable per cent, on the money invested, ifc will be remembered that many things have happened to malte the investment far in excess of the actual value of the property, — injudicious contracts, poor engineering, unusually high cost of material, rascality on the part of those engaged in the construction or management of the property. These and many other things, as is well known, are factors which have largely entered into the investments with which many railroad properties stand charged. Now, if the public was seeking to take title to the railroad by condemnation, the present value of the property, and not the cost, is that which must be' paid. In like manner, it may be argued that, when the legislature assumes the right to induce, the rates so reduced cannot be adjudged unreasonable, if, under them, there is earned by the railroad a fair interest on the actual value of the property. It is not always easy to determine the value of railroad property, and, if there is no other testimony in respect thereto than the amount of stock and bonds outstanding, or the construction account, it may be fairly assumed that one or the other of these represents it, and computation as to the compensatory quality of rates may be based upon such amounts. In the cases before us, however, there is abundant testimony that the cost of reproducing these roads is less than the amount of the stock and bond accounts, or the cost of construction, and that the present value of the property is not accurately represented by either the stock and bonds, or the original construction account, nevertheless, the amount of money that has gone into the property — the actual investment, as expressed, theoretically, at least, by the amount of the stock and bonds — is not to be ignored, even though such sum is far in excess of the *842present value. It was said in the case of Reagan v. Trust Co., 164 U. S. 412, 14 Sup. Ct. 1069: ‘It Is unnecessary to decide, and we do not wish to be understood as laying down as an absolute rule, that in every case a failure to produce some profit to those who have Invested their money in the building of a road is conclusive that the tariff is unjust and unreasonable. And yet justice demands that every one should receive some compensation for the use of his money or property, if it be possible, without prejudice to the. rights of others.’ ”
In tbe case at bar, tbe proof shows tbe capital stock of plaintiff to be $300,000, and outstanding bonds $200,000. Tbe amount of cash invested in tbe entire plant, — I now refer, as I have heretofore referred, to tbe gas plant alone, eliminating entirely tbe electric plant, — in tbe entire gas plant, as shown by tbe construction account of tbe company, appears a cash investment of $466,532.93, and patent rights purchased of $172,096.94, aggregating $600,000. None of tbe experts place tbe cost of reproducing tbe plant at a sum equal to tbe stock and bonds. The bonds outstanding were issued almost entirely in payment of certain patent rights which were sold to tbe gas company. Tbe proof shows that a part of those patents — tbe exact part is not shown — has expired, so that their present value to tbe gas company is greatly below tbe amount of outstanding bonds. Whether, at tbe time of tbe purchase of these patent rights, — that is, the right to'use tbe improvements secured by tbe patents, — tbe value of the patents to tbe gas company was properly measured by tbe bonds given for such purchase, is not fully apparent, but tbe testimony strongly tends to show that at least it was then so regarded by tbe parties to tbe transaction. Yet tbe circumstances surrounding such transaction have this peculiarity: A Pennsylvania corporation, known as tbe United Gras Improvement Company, is tbe owner or manager of a large number of gas plants at different points in tbe United States, tbe plaintiff being one of that number. Tbe patents were sold by tbe United Gas Improvement Company to tbe plaintiff. While this fact does not cf itself impart tó tbe transaction any fraud or bad faith, it nevertheless suggests and demands a more searching inquiry into tbe details, and a more careful weighing of tbe facts involved. As to tbe consideration of such bonds, — I mean, tbe consideration which is proper to be here considered, and included in tbe value of this gas plant at present, or on which interest is to be allowed, — tbe proof does not satisfy me. Such of tbe bonds as were issued in purchase of patents now expired cannot here be considered, in the attempt to ascertain tbe basis on which tbe reasonableness of rates is to be determined, for those patents have now no market value. And if more was originally paid for such expired patents than at tbe time of their purchase was justified by their importance to plaintiff, and by tbe length of life they then possessed, an element thereby enters into tbe loss column of plaintiff’s profit and loss account, and is not now to be considered as an active element in fixing reasonable rates. Besides, tbe proof is that these bonds were issued in purchase of "all tbe patents that tbe United Gas Improvement Company owns’1; not alone tbe “patents in use in tbe city of Des Moines,” bu,t also “whether used in this city or elsewhere.” Testimony of Lillie (interrogatories 24, 25, 29). So that, confessedly, a *843part of the bonds was issued for patents not used at all by plaintiff. Manifestly, these should not be included in arriving at the basis we are now seeking. Nor should there be included any amounts expended or investments made by plaintiff in its attempt or experiment, however laudable these attempts may have been, to supply fuel gas to the citizens of Des Moines, and which were expended or invested in directions not now required, or not properly serviceable for the company’s present uses. These must be laid aside, among any other unprofitable investments in the history of the company. These may evidence the creditable desire of the company to keep its works fully abreast with progressive idea of gas making, lint they are now of no market value. In other words, the court may not now regard the rates as properly to be increased above what would otherwise be reasonable for the purpose of allowing plaintiff to recoup losses heretofore incurred in any unfortunate or unprofitable investments it has made, or to charge and receive interest on losses thus incurred. In this connection I "wish to say that the proof presented on the hearing fully absolves the plaintiff from any rascality on (he part of those engaged in the construction or management of plaintiff’s property. Having quoted from Justice Brewer, wherein he has used those words, it is but just to plaintiff to state that the proof, without contradiction, shows no presence of dishonest methods or management in plaintiff’s business methods or affairs, but, on the contrary, an honest and most creditable business management. In the opinion delivered by Justice Brewer in the case last quoted from (Ames v. Railway Co.), the learned justice, after having considered at some length different elements claimed to be legitimate factors in the basis from which the reasonableness of rates was to be determined, says (page 178):
“Considerations such as these compel mo to say that I think there is no hard and Cast test: which can he laid down to-determine in all cases whether the rates proscribed by the legislature ¡city council] are just and reasonable. Obviously, however, the effect of the reduction upon earnings is the first and principal matter to be considered.”
Perhaps the factors which affect: the question of earnings — that is, the reasonable cost of manufacture, etc., as applied to income — • are not more difficult in this case than generally may be anticipated in like cases. But, between the extremes of the expert testimony introduced on either hand, we have here irreconcilable differences. The cost of manufacture involves many matters wherein this' difference of judgment will arise, however honest the expert, and his attempt at unprejudiced opinion, for the basis of the opinions on either hand are from radically differing standpoints of view. Under the proof presented, the plant is in excellent condition and efficiency, and the cost of its reproduction appears to be the substantial equivalent of its value. The estimated cost of reproducing the present gas plant of plaintiff varies, under the proof as presented by the company, from about $450,000 to $500,000. Some proof has been introduced by defendant which places the cost: of erecting a plant, laying the mains, and placing the plant in same operative condition in which plaintiff now is, at about $330,000. The evidence, without *844contradiction, shows that the plant, under present management, is in excellent condition. Some criticism appears as to whether plaintiff has thrown a proper share of the expense upon the electric light company, which offices with plaintiff, has its works on plaintiff’s real estate, and, to a considerable extent, is of-ficered and managed by the same persons as plaintiff. But I see little cause of complaint in this respect. Apparently, the accounts of the two concerns are kept separate, and each charged with its own expense. Except as to a charge — not shown to be made, but which should be made — for use of plaintiff’s real estate by the electric light company’s works, no improper or unfair element appears, as between these two plants. .Defendant insists that a part of the present gas plant is not only unnecessary for present use in supplying gas in Des Moines, but also for probable use in the near future, and that that part of the plant devoted to manufacture of coal gas should not be included in any computation for determining the money value, or in any basis used for determining-on what plaintiff may rightfully ask income or profits. The fact that plaintiff has at Des Moines,'in operation, two distinct or separate parts of its gas plant, — one for manufacturing coal gas, the other for water gas, — has served to increase greatly the difficulties attending a decision of this matter. If I remember rightly, all the witnesses agree that, the coal-gas plant having been erected and being on the plaintiff’s ground, they would not recommend its destruction. There exists a marked difference of opinion among the experts as to whether, if erecting a new plant, -they would advise such coal-gas plant to be included as a part of it. The trend of proof is to the effect that the later-built plants are almost exclusively for the manufacture of water .gas. But on this point I am not satisfied that it would be improper to include the coal-gas plant, and therefore, for present hearing, retain it as a part of the property to be considered in our calculations as to rates.. But its retention complicates the decision herein, for there is thus retained an element whose exclusion would take with it many obstinate and perplexing questions. Returning to the attempt to ascertain the cost of present reproduction of plaintiff’s gas plant, or rather of a gas plant which shall be equally efficient and capable in supplying gas to the defendant and its citizens, and examining the proof for that purpose as introduced by plaintiff and defendant, I conclude that suitable and proper real estate could be obtained, and such plant erected, mains laid, etc., with same efficiency to meet demands of the city as that now possessed by plaintiff, for $400,000. The experts sworn on plaintiff’s behalf have varied in their figures from about $450,000 to about $500,000. From these estimates must be taken that part of the present plant which was used for fuel gas, and is now not available for present use; also, the overestimate by them made on the real estate; and also making allowance for storage capacity on the holder last erected beyond what seems, under present circumstances, profitably necessary. On the whole proof, I reach the conclusion above announced. The profit and loss statement intro*845duced by plaintiff for the years 1891 to 1894 shows that plaintiff received for gas supplied as follows: 1891, $1.50 per 1000 feet; 1892, $1.55 per 1,000 feet; 1893, $1.59 per 1,000 feet; 1894, $1.56 per 1,000 feet. By reference to this statement for 1894, it will be noticed that plaintiff has charged, as against the gas used by itself, almost 69-£ cents per 1,000 feet. I am not authorized, under the proof as to its cost, to assume that this rate was so taken by plaintiff because it regarded that as the actual cost per 1,000 of the gas used by it. But I am not advised why the charge for this gas is thus made. Making allowance for the proportionate discount as shown in such statement, it will be seen that the remainder of gas, —that supplied to city and citizens, — as shown in this 1894 statement, brought to the plaintiff the net rate per 1,000 of $1.57J. By thus charging gas used by plaintiff at the same rate as that supplied to city and citizens, the average rate obtained for gas supplied would be increased by something over 1 per cent, additional.
We now turn to the cost of making and distributing gas. Here we have the proof by plaintiff, based on its statement of actual expenditures, showing the cost as follows: 1891, $1.056; 1892, $1.15; 1893, $1.23; 1894, 93 cents. Plaintiff insists that the cost (93 cents), as thus shown in the last year named, cannot be taken as a correct basis lor the future, because, as it is claimed, of that year’s unusually low cost of materials which enter into the manufacture of gas. Plaintiff insists that the correct average, as to cost of gas hereafter, would be the average of these four years, or $1.09 per 1,000 \feet. It may be conceded that there appears no full and satisfactory explanation for the dropping from $1.23 in 1893 to 93 cents in 1894. Perhaps one of the reasons may be found in the affidavits of Manager Pratt and Foreman Pugh, and in the tables presented as to the results accomplished under Foreman Pugh’s supervision. Certain it is that better results have been accomplished than theretofore seemed possible. The proof fails to show such reductions in material as thereby to account for this decrease in cost to plaintiff for that year. I may here say that all the expert witnesses — even those who testified at the instance of defendant — - testify to the manifest ability and efficiency, and the apparent economy, of Mr. Pratt’s management. I am not inclined to include in this hearing for the writ, as one of the proper elements relating to cost of gas, the rental of land paid by plaintiff for that paid of the real estate on which plaintiff holds a purchase option, but which was not actually and properly occupied by plaintiff in the operation of its gas plant. This rental has been included by plaintiff as one of the expenses, in arriving at the cost of gas as it has given it. While it may be, as claimed, good business policy on part of plaintiff to hold this land under the present option, looking to its purchase hereafter in the growth of the plant, I question whether plaintiff may at this time rightfully insist that this rental shall be placed among its proper expenses, in estimating which proof is not clear but that a small portion of this land was actually and necessarily occupied by plaintiff in operating its gas plant. But I am not able to determine from the proof what part and value, if any, *846was thus occupied. This rental, as given in plaintiff's proof, was in 1891 and 1892 $2,502.95; in 1893, $2,428.76; and in 1894, $2,184.91. If these items are disallowed in gross, such disallowance would reduce the actual cost, as given by plaintiff, nearly 5 cents per 1,000 feet in 1891 and 1892, and nearly 4 cents in 1894; thus bringing the cost, in plaintiff’s proof, to $1 (about) in 1891, and to 89 cents (about) in 1894.
Turning to the testimony of the experts who testified on behalf of plaintiff as to what, in their judgment, is, or should be, the actual cost in I>es Moines of manufacturing and distributing gas, we have the following results: Butterworth, 88 to 94 cents per 1,000 feet; Cowdery, 90 to 98 cents per 1,000 feet; Harper, 90 to 95 cents per 1,000 feet; White, 90 to 95 cents per 1,000 feet; Faber, 90 to 95 cents per 1,000 feet; Wallbridge, 90 to 95 cents per 1,000 feet; Chollar, 92 to 96 cents per 1,000 feet. I will not attempt recapitulation of the evidence of other witnesses, who placed the cost yet lower (some of that evidence bears marked indication of mere speculation on the subject), but will, for present purposes, take 90 cents as the cost per 1,000, in the belief that, under the proof thus far presented, this will be sustained as a fair estimate, and as not below the cost. The proof introduced by plaintiff shows that about 70 per cent, of the gas sold by it was at illuminating gas rates, and about 30 per cent, at fuel gas rates. Applying this percentage to the net rates of the 1895 ordinance, we have each 1,000 feet of gas bringing $1.21 per 1,000 feet. At a cost of 90 cents per 1,000, there will remain 3i cents per 1,000 of profit, or, at the output for 1894, a profit of $17,546. If we now take the cost of reproduction of plaintiff’s gas plant, as hereinbefore found, the per cent, of profits on output for 1894, at the 1895 ordinance rates is .0438, or 4-.1- per cent, on cost of reproducing such plant. Under the present state of the proof, I am not satisfied that any allowance should be made on the present hearing for interest on outstanding bonds. The evidence hereafter presented may convince me that this interest, or some part thereof, should be included, in determining what are reasonable rates herein.
It is insisted by defendant that the reduction in price of gas will work a corresponding and large increase in amount consumed, resulting in increase of net profits as well. That some increase in consumption will follow reduction in price, plaintiff admits, but insists that there is no basis for believing such increase will be large, or that the net profits will increase at all. What will be the amount or per cent, of increase in consumption, and whether any increase in profits will result from reduction of rates, is, and must at present be, an uncertain matter. In Railway Co. v. Wellman, 143 U. S. 343, 12 Sup. Ct. 400, Mr. Justice Brewer inquires:
“Must it be declared, as matter of law, that a reduction of rates necessarily diminishes income? May it not be possible — indeed, does not all exijerience suggest the probability — that a reduction of rates will increase the amount of business, and therefore the earnings? At any rate, must the court assume that it has no such effect, and, ignoring all other considerations, hold, as a matter of law, that a reduction of rates necessarily diminishes the earnings?”
*847The same learned justice, in the opinion rendered by him on this circuit, as circuit judge, in Railway Co. v. Dey, 35 Fed. 881, when speaking of the application in that case of the possible increase of business as following reduction of rates, uses this language:
“Again, it is said tliat it cannot. I>e determined in advance what the effect of reduction in rates will be. Oftentimes it increases business, and who can say that it will not in the present case so increase-the volume of business as to make it remunerative, — even more so than at present? But speculations as to the future are not guides for action. Courts determine rights upon existing facts. Of course, there is always a possibility of the future; but the only fair judicial test is to apply the races to the business that has been done in the past, and see whether, upon that basis, such rates will be remunerative, or will compel the transaction of business at a loss.”
After all, there can be but one certain method of ascertaining the effect of reduction of rates, and that is the test of experience.
In plaintiff’s opening argument, on page 43, appears a table wherein counsel have attempted to apply to a possible increase in business the rates of the 1895 ordinance, as affecting the receipts by the company therefor. Therein is shown a probable reduction in cost per 1,000 feet, as incident to such increased business. Let us take that part of the table, and, instead of placing the cost per 1,000 feet at plaintiff’s figures (which are 95 cents), for present consumption, start our table at 90 cents, as above found, and thereafter reducing cost, as consumption increases, the same number of cents per 1,000 as reduced in such table, and we have the following as a result:

This is the result most nearly approaching accuracy at which I have been able to arrive, under the proof presented. Í realize that, of necessity, any result, attempted as accurate, must largely rest on probabilities, many of wbicb may easily change, and many, if not: all, of which, are shifting factors. But, taking the entire proof, I can do no better at this lime. It may be here stated that the proof shows that., during the 20 years in which plaintiff has operated its gas plant, there has been paid in dividends, and in interest on bonds, less than $50,000. Apparently, what profits beyond that amount have been realized from the business have been applied to the building up of plaintiff’s plants. Were this the final hearing of this case, and time had proven my computation accurate, and that the increase in consumption had not proportionately and profitably grown in response to decrease in rates, but that substantially the consumption was as now, I should be strongly inclined, with my present view of the law and the facts, to grant a permanent in*848junction, if plaintiff be found entitled to include interest on bonds. There has been invested of cash (so the proof shows), in this gas plant, $466,522.93. In this amount is included nothing relating to the electric light plant, nor any part of the bonds which were given for the right to use gas patents. If these bonds are included, the investment in the gas plant amounts to $641,974.73 according to the proof. And considered from any standpoint of business enterprise, with the risks attending the business, the depreciation naturally occurring to the plant, the repairs which must constantly be in progress, the possibility (always imminent in a business enterprise such as this) of some invention or new process being found which would manufacture some satisfactory illuminant so cheaply as to make further operation of the plant financially-impracticable, and the many other matters which must occur to a business mind when considering this gas plant as a financial investment, — all these strongly impress my mind that the per cent, of profit shown by the above table (assuming that interest on the $200,000 bonds should be paid) is not what plaintiff is entitled to under equal protection of the laws with other like business enterprises generally, and that compulsory rates, which only permit charges affording no larger returns, and when the business is carried on with all practicable prudence and economy, are not reasonable rates, and are not compensatory, within the meaning of the term “compensation,” as that term is used and construed in the decisions which are binding authority on this court. It will be observed, also, that the figures above tabulated do not provide any opportunity for realizing from the business a sinking fund, or other means with which to provide for payment of the principal of the bonds when these shall mature. The language of Justice Brewer, above quoted, is pertinent in this connection: “The idea of reasonableness is justice, and that which is unjust cannot be reasonable.” Had plaintiff, in any manner, apparently sought to conceal any items pertaining to its business, which to defendant seemed material in this hearing, there might be some reason for doubting the correctness of the computations above made. But so far as seemed material to plaintiff, and so far as defendant asked, the entire business and accounts of plaintiff were opened up for investigation and consideration from its commencement of business, in 1876, to the date of the hearing. But we have not yet reached the final hearing in the case. What is now uncertain may, by the time of final hearing, become certain and convincing. Possibly, the result thus obtained may be contrary to present appearances. Opportunity, meanwhile, will probably be offered to definitely determine the working out of the ordinance in practice, in its business'application. The test of experience — the most supreme test — may have been applied. As to the propriety of this test, Mr. Justice Woods, in the case of Tilley v. Railroad Co., 5 Fed. 662, when speaking of a hearing before him in an application for injunction against the enforcement of rates fixed by a railroad commission, says:
“Tile officers of tfie railroad company declare that the rates' fixed by the commission will so reduce its income that it will not suffice to pay the running *849expenses of the road and the interest on the bonded debt, leaving nothing for dividends to its stockholders. The railroad commissioners assert that their schedule was framed to produce eight per cent, income on the value of the road, after paying cost of maintenance and running expenses. Which view is the correct one, it is impossible to decide from the evidence submitted. There is, however, a conclusive way — and it seems to me it is the only one — by which this controversy can be settled, and that is by experiment. A reduction of railroad charges is not always followed by a reduction of either gross or net income. It can soon be settled which is right — the railroad company’s officers, or the railroad commission — in their view of the effect of the commission’s tariff of rates, by allowing the tariff to go into operation.”
This language is quoted by Judge Brewer (Railroad Co. v. Dey, 38 Fed. 664) on a hearing before Mm upon an application for a preliminary injunction in this state against a tariff of rates prescribed by the railroad commissioners of Iowa. Judge Brewer, after making the quotation, adds:
“While quoting this language as applicable hereto, I do not indorse it as of universal application, but only under the circumstances of the present case. Where the effect of the rates is doubtful, with a probability that they will prove compensatory, and the amount of business to be thereby affected is comparatively small, 1 think the courts may well wait for the test of experience. Influenced by these considerations, I am led to refuse the preliminary injunction, and to set aside the restraining order heretofore entered. It may well be that by the time this case comes to a final hearing llie test of experience will have solved some of these matters, and it may be clear — as now seems probable —that the rates imposed by this last schedule are compensatory, within the rule laid down in the prior opinion, in which case an injunction ought not to issue, or clear that they are not compensatory, in which case, beyond any doubt, in my mind, a Anal and permanent injunction ought to. be granted.”
Is there, from the proof herein, such danger to plaintiff — such showing of irreparable injury to plaintiff — as to require that the preliminary writ shall issue? Taking the situation of plaintiff and defendant, where are the pressing, the controlling, equities? Plaintiff, at furthest, will receive within 40 cents per 1,000 feet of the prices heretofore received. According to the proof as now presented, plaintiff will pending this suit receive some profit. It is not compelled, as were plaintiffs in the Reagan and Ames Cases, to perform its business at ruinous or destructive rates, and without any compensation. The final hearing herein need not long he delayed, with a decision had on the merits, upon all the evidence that may be presented.
I have not attempted to notice herein all the points argued or pressed by counsel. Were I to attempt such presentation, this opinion, already too lengthy, would he greatly prolonged. I have given to the consideration of this application much time and study, through different methods of computation as to the items involved. About 30 days were occupied with the matter at the oral hearing-in last August. The printed briefs of counsel were received after I had entered upon the fall sessions of this court, in September. These sessions continue, without interruption, until in December. I have devoted the past three weeks to the investigation of the proof and law presented, to the exclusion of other pressing official business. The nature of this case not only justified, but required, this exclusive and unremitting attention. The proof consists of *850many hundreds of typewritten pages, with numerous tabular exhibits. The presentation by counsel of the facts and principles of law involved has been unusually thorough and complete, and consistent with the important financial and public interests involved, and as would have been confidently expected from the eminent legal standing and recognized ability of counsel representing the parties. If the court has erred in the conclusions reached, certainly such result cannot be charged to failure of counsel in presenting the case. I do not find in the proof presented and conclusions reached herein such showing as, when opposed to the prima facie proof of reasonableness of rates which accompanies and must be given to the ordinance, requires or justifies the issuing of a preliminary injunction. Accordingly the application for a preliminary injunction is denied, to which plaintiff excepts.