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The Green Bag

pertinency and importance of these principles were demonstrated in an opinion of Mr. Justice Lacombe* jus tifying a temporary injunction against the enforcement of the eighty-cent gas rate by the New York commission. Mr. Justice Lacombe said: "Under the authorities, in fixing the rate to be charged for 'public service' by private corporations, two elements of calculation are of fundamental im portance: what is the true present value of the property embarked in the enterprise? and what, in view of the risks of the business, is a fair annual percentage of return thereon? .... In estimating the value of the property of complainant embarked in the business, the commission reached the conclusion that the franchises under which it has laid mains and is delivering gas, and which are a part of its property, should be considered as of no value whatever, although the state, through the action of its taxing officers, has declared that they were worth several millions of dollars. It is suggested that some of these franchises have expired or lapsed in some way. The complainant has taken over the franchises of many dif ferent corporations, granted at different times. The reason assigned by the commission for not including the value of the franchises is that 'they were granted by the people without compen sation.' That is so. These fran chises were granted many years ago when there seems to have been no in telligent appreciation of the fact that they might become enormously val uable, when reckless improvidence was the rule, and all sorts of franchises were given away without any provision for securing to the state its fair share of un earned increment thereon. Nevertheless, •Consolidated Gas Co. v. Mayer, 146 Fed. 150, at p. 156.

when the state offers a franchise to whoever will take it without requiring any money return thereon, and for the sole consideration that the taker shall promptly, continuously, and fully de velop it by the expenditure of its own money, and such offer is accepted, and the terms of the agreement carried out by the taker, there results a contract, which, with due consideration of all proper conditions and limitations in herent in the nature of the particular contract, is as much within the pro tection of the Constitution as are all other contracts. If the state, twentyfive or thirty years thereafter, should say to the taker: 'We were very im provident in not providing that you should pay us something each year for this franchise; therefore hereafter you shall pay us eight per cent annually on $10,000,000 or $20,000,000, or we will evict you from the franchise,' it might find itself embarrassed by the provis ions of the Constitution in thus under taking to avoid the results of its own improvidence. A franchise, whatever its value may be, which has not ex pired nor lapsed, nor been in some way forfeited, is property in the hands of its holder. There is force in the argument that when the state says: 'We will value this property at several millions of dollars when we tax you on it, but at nothing at all when we fix the rate you may charge for your product in order to receive an eight per cent return on your property,' it is seeking to accomplish by indirect methods what it might not be able to accomplish directly." The argument upon the regulation of public service corporations must be based, apparently, upon a definition of the "property" of such corporations. The use of public property and the ex ercise of a common or public calling has no necessary relation to corporate ex