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1. Willcox v. Consolidated Gas Co., Nos. 396, 397, 398., SUPREME COURT OF THE UNITED STATES, Argued November 4, 5, 6, 1908. , January 4, 1909, n1 Decided; Opinion filed January 12, 1909 1 On January 4, 1909, MR JUSTICE PECKHAM made the following announcement: First. At the time of the consolidation, the value of the franchises of the constituent companies was fixed by them at $ 7,781,000 and that amount formed part of the capital of the complainant for which it issued stock The consolidation was effected pursuant to the state statute and the State has never questioned the validity or fairness of the valuation Since the consolidation the stock so issued has been dealt in up to the present time as valid stock of the consolidated company, capitalized pursuant to the statute at not more than the fair aggregate value of the property, franchises and rights of its constituent companies The State should not now be heard to question the value of the franchises at the time of the consolidation The method of arriving at the value of these kinds of franchises, and how they should generally be tested in the fixing of rates, are questions not now before the court and are left undecided The case before the court is decided upon its own peculiar facts Second The estimated increase in the value of these franchises as made by the trial court at the time of the commencement of this suit is only an estimate and is not based upon evidence sufficient to warrant the finding of any increase whatever over the amount agreed upon at the consolidation Third The evidence leaves it in doubt whether the value of the property used by the company in its business is as great as found by the trial court after reducing the value of the franchises to the sum agreed upon at consolidation Fourth But taking the value as found by the court, after reducing the value of the franchises the result gives a return of almost 5 1/2 per cent A reduction in the value of the real estate, plants, etc., of a small amount only would bring the return to, if not more than 6 per cent A possible increased consumption of gas would probably increase the earning of the company without a corresponding increase of cost Under all the circumstances the complainant has failed to make out its case with that degree of clearness necessary to warrant the interference of a court of equity before an actual and bona fide test has been made under the practical operation of supplying gas at the rates mentioned in the statutes Fifth There is no rule as to any particular rate which any corporation subject to legislative control in the matter has a right to obtain without legislative interference It depends upon circumstances and locality In this particular case with reference to the risk attending the business and the locality where it is carried on, the complainant is entitled to a return, if it is possible, of 6 per cent upon the fair value of its property actually used in business of supplying gas Sixth There is no discrimination between the individual consumer and the city, by fixing the price of gas for the city at five cents per thousand cubic feet less than is permitted in the case of individual consumers, so far at least as the complainant is concerned If the amount obtained from the total gas sold to the city and the individual is enough to secure the requisite return upon the property, it is all the complainant can require and the question of discrimination between city and individual is one in which the complainant can have no interest Seventh The rate proposed must be with reference to the value of the property at the time when the rate takes effect The company is entitled to the benefit of any increase in value at that time This at least is the general rule, and if there be any exception to the rule, this case does not come within it Eighth Any increased expense arising from the increased candle power of the light demanded by the statutes, was included substantially in the expenses of the year (1905) with reference to which the inquiry was made Ninth The provision in the acts requiring a certain pressure in unconstitutional The proof unquestionably shows great possible if not probable danger of explosion in the mains or other pipes, if the pressure demanded were applied to them as they now are To eliminate such danger would require strengthening all the mains and other pipes, which would involve an expenditure of many millions of dollars upon which no return could be obtained at the rates prescribed by the acts The provision can be separated, however, from the rest of the statute and the balance thereof made valid The pressure must be sufficient to produce a light of the candle power mentioned in the acts Tenth If the court below is right in its construction of the penalties, as to their amount, etc., such penalties are void, but are separable from the rest of the acts and the balance can be effectually carried out Eleventh This is not a case for the valuation of good will The complainant has in fact a substantial monopoly of the gas business in the city of New York and those who wish to use gas must take it from complainant In this case, as there is no possibility of competition there should be no allowance for good will Twelfth As it may possibly be that a practical experience of the effect of the acts by actual operation under them might prevent the complainant from obtaining a fair and just return upon its property used in its business of supplying gas, the complainant, in that event, ought to have the opportunity of again presenting its case to the court Therefore the decree is reversed with directions to dismiss the bill without prejudice

OVERVIEW: Two state acts that regulated a consolidated gas company were valid because the unconstitutional provisions were separable from the valid rate regulating provision.

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