1

munity may with reason prefer to pay rates which yield a return to the money of other people higher than the event shows they could serve themselves for, rather than make the venture themselves and risk their own money to lose in an uncertain enterprise. It was said by us in the Waterville case 1 that the investor is entitled to something for the risk he takes, and it is not unreasonable for the customer to be charged with something on that account. That is one of the things which make up the worth of the water to the customer. The same element enters always into the relations between producer and consumer. But such a consideration as this last one must always be treated with caution. The company is only entitled to fair returns, in any event, and "fair" to the customer as to itself. In the aspect now being considered, the worth of a water service to its customers does not mean what it would cost some one individual or some few individuals to supply themselves, for one may be blessed with a spring, and another may have a good well. It means the worth to the individuals in a community taken as a whole. It is the worth to the customers as individuals, but as individuals making up a community of watertakers."

§ 1214. Cost of obtaining a substitute for the service. In at least one case the suggestion was made that the cost to the consumer of obtaining the service for himself was the true criterion. In Grand Haven v. Grand Haven Waterworks,2 the court was obliged to determine the proper amount to be allowed by the city for water furnished by the defendant company. The court held that in the absence of definite evidence of the value of the

1 Kennebec Water Dist. v. Water

119 Mich. 652, 78 N. W. 890

ville, 97 Me. 185, 54 Atl. 6, 60 L. (1899). R. A. 856 (1902).

services, the company should be allowed what the city had been saved by the water furnished, which was found to be eight per cent upon the amount necessary to build a plant which would furnish the water. The course of the court in this case is certainly open to criticism. The rule adopted gives to the company all the profit on the transaction, leaving the consumer no better off than if he had supplied the water for himself. Yet there was presumably a considerable profit in the transaction; at least, such would ordinarily be the case. A fair share of this profit ought to be extended to the consumer. In the ordinary case, such a rule would be prohibitive. A farmer, a thousand miles from market, could not afford to pay as freight on his grain what it would cost him to build a railroad or to cart his crops to market; nor could a person who desires to cross a river pay a bridge company by way of toll what it would cost him to get across on his own account. Such a basis of compensation is certainly unreasonable to the customer.1

§ 1215. External standards of value.

While not the legal measure of proper charge, the current rates for other transportation within the same territory by the company in question or by other companies performing similar services, is evidence which will furnish a test for the value of the particular services in question. This was one of the strongest arguments brought forward in the "Naval Stores Case," 2 to show that the Savannah rates were themselves unreasonable. This comparison cannot be made as the cases hold without considering dissimilar conditions; and conditions may be so dis

1 Canada Southern Ry. Co. v. International Bridge Co., L. R. 8 App. Cas. 723 (1883).

2 Interstate Commerce Commission v. Louisville & N. Ry. Co., 118

Fed. 613 (1902). Compare Southern Pacific Co. v. Interstate Commerce Commission, 177 Fed. 963 (1910).

similar that no comparison would be proper. Thus in a recent Illinois case,' involving the reasonableness of switching rates, the court, in holding that it was error to deny the company the right to prove the usual and customary charges during the time in question for like services in other cities and places in the State, said that while charges which are usual and customary are not necessarily fair and reasonable, and a charge which is fair and reasonable in one place is not necessarily fair and reasonable in another, yet proof of what is usual and customary under substantially like conditions in many places in the State tends more or less to prove what is fair and reasonable in any particular place in the State.

§ 1216. Rates reasonable per se.

In arriving at the real value of anything its current price is good evidence. To a certain extent there are external standards as to what constitutes a fair rate in that community for a given service, so that it might often be possible to say of a particular rate demanded by a particular public service company that it was reasonable or unreasonable in itself. Where there are such standards the rate which the company has established to meet its. own policies or necessities must yield something.3 But

1 Chicago, P. & St. L. R. R. Co. v. People, 136 Ill. App. 2 (1909). But proof as to charges in different communities is not admissible. Hooper v. Chicago, M. & St. P. Ry. Co., 91 Iowa, 639, 60 N. W. 487 (1894).

2 Thus it has often been remarked in the water cases that the particular rate charged is obviously reasonable in itself. City of Madison v. Madison Gas & El. Co., 129 Wis. 249, 108 N. W. 65, 116 Am. St.

does it follow that if the rates of a certain company are no higher than these standard rates that it may justify any profits however large which may result from its business? It would seem that this is a situation where one or the other of the fundamental limitations upon a public service company must be applied, since the public is entitled to protection in either case. Thus no public service company, whatever its necessities, can charge the public more than reasonable rates; while if it is making exorbitant dividends it is not open to it to urge that its rates are not above the ordinary.

§ 1217. The Kansas City stock yards case.

A certain opposition to the views put forward in this treatise is shown in the dicta in the opinion of Justice Brewer when he delivered the judgment of the court in Cotting v. Kansas City Stock Yards Company.1 This was a bill in equity to enjoin the enforcement of a statutory rate for the use of the defendant's stock yards. The court said of one engaged in such a public service: "He has a right to charge for each separate service that which is reasonable compensation therefor, and the legislature may not deny him such reasonable compensation, and may not interfere simply because out of the multitude of his transactions the amount of his profits is large. Such was the rule of the common law, even in respect to those engaged in a quasi-public service, independent of legislative action. In any action to recover for an excessive charge, prior to all legislative action, who ever knew of an inquiry as to the amount of the total profits of the party making the charge? Was not the inquiry always limited to the particular charge, and whether that charge was an unreasonable exaction for the service rendered?" What there is in this case may be judged only after a 1 183 U. S. 79, 46 L. ed. 92, 22 Sup. Ct. 30 (1901).

consideration of the case which follows upon which it is founded.

§ 1218. The Niagara bridge case.

The same rule appears to have been the basis of decision of the judicial committee of the Privy Council in the case of Canada Southern Railway v. International Bridge Company. This was a suit in which the railroad claimed that the bridge company was charging it too high a toll for the transportation of passengers across the bridge, the toll charged being ten cents for each passenger. Lord Selborne said: "It certainly appears to their Lordships that the principle must be, when reasonableness comes in question, not what profit it may be reasonable for a company to make, but what it is reasonable to charge to the person who is charged. That is the only thing he is concerned with. They do not say that the case may not be imagined of the results to a company being so enormously disproportionate to the money laid out upon the undertaking as to make that of itself possibly some evidence that the charge is unreasonable, with reference to the person against whom it is charged. But that is merely imaginary. Here we have got a perfectly reasonable scale of charges in everything which is to be regarded as material to the person against whom the charge is made. One of their Lordships asked counsel at the bar to point out which of these charges were reasonable. It was not found possible to do so. In point of fact, every one of them seems to be, when examined with reference to the service rendered and the benefit to the person receiving that service, perfectly unexceptionable, according to any standard of reasonableness which can be suggested."

§ 1219. These cases apparently distinguishable. In these cases the court apparently concedes the neces18 App. Cas. 723 (1883).