KILWAUKEE ELECTRIC RAILWAY" LIGHT CO. V. CITY OF MILWAUKBL

077

MILWAUKEE EJ;..ECTRIC RAILWAY & LIGHT CO. T. CI'.l'Y 0 .. MILWAUKEE. CENTRAL TRUST 00. OF NEW YORK
T.

SAMJD.

(Circuit Court, E. D. Wisconsin. L

STREET RAILROADS-MuNICIPAL REGULATIONS.

May 81, 1898.)

An ordinance requiring a street railroad charging 5 cent fares to seD 6 tickets for 25 cents, or 25 tickets for $1, Is unreasonable, when the road is only making yearly net earnings of 3.3 per cent. to 4;5 per cent. on It. bona fide Investment, and paying 5 per cent. Interest on Its bonds, In a city where the current rate of Interest on first mortgage real-estate security Is 6 per cent. Such an ordinance is void, under the fourteenth amendment, as depriving the company of Its property without due process of law· The power of a municipality to regulate street-railroad fares Is subject to the limitations (1) that there Is reasonable need on the part of the public, considering the. nature and extent of the service, of lower rates and better terms than those existing; (2) that tb'e rates and terms fixed by the ordinance are not clearly unreasonable, In view of all the conditions.

.. SAME-REASONABLENESS OF ORDINANCES.

Final hearing in two actions,-one wherein the street-railway company is complainant, and the other brought by the trustee for the bondholders,-each seeking a decree declaring null and void, in respect of the complainant, a purported ordinance of the defendant city entitled "An ordinance to regulate the rate of fare upon the street railways in the city of Milwaukee, and providing for the sale of packages of tickets thereon," approved June 11, 1896, and to perpetually enjoin its enforcement. Miller, Noyes, Miller & Wahl, Winkler, Flanders, Smith, Bottum & Vilas, and W. J. Curtis, for complainant. Howard Van Wyck, for defendant. SEAMAN, District Judge. The main controversy in each of these actions is whether the ordinance of June 11, 1896, unreasonably fixes rates of. fare which would deprive the complainant of its property without due process of law, and thus violates the fourteenth amend, ment to the constitution of the United States. A further question is raised by the bill filed on behalf of the bondholders, and is pressed by argument in support of both bills, whether the municipality had power to regulate rates beyond the provisions contained in the several franchises which are vested in the complainant street-car company, limiting only to a five-cent fare. Both contentions are of serious import, involving, on the one hand, consideration of the rights of the community in respect of a great public utility, and interference with acts of municipal control, which are presumptively inviolable; and, on the other hand, affecting the preservation of private rights of property, where investment has been made in a great undertaking of public nature, on the faith of existing and probable conditions, and where, by reason of its nature, there can be no withholding of operation by the company, even if unremunerative. Ameii v. Railway Co., 64 Fed. 165. 177; Wright v. Railway 00., 95 Wis. 29, 36, 69 N. W. 791. Further investigation has confirmed theim·
87F.-37

578

.' 87. FEDERAL JliEPORTER.

·

at the hearing, that the ,question so clearly by' the pleadings'and' testimony,' and was so dIstinctly of federal cognizance, that it· should be first considered. Certain rules to interpret and apply the limitations of the constitution in this cIa.ss of cases are well settled by decisions of the supreme court. If thi(state of lacts shown by the evidence clearly establishes a case. of impairment within these rules, it wiHbe llnnecessary' to pass upqn the complicated qu;estiQn of general power, as one of first instance,calUng for the interpretation of various statutes and ordinances. The" ordinance under consiMdltion provides tMf tickets shall be sold, good. for One fare, including one transfer, "in packages of six for twenty-five cents, and twenty-five for the sum of one dollar," thus making a reduction of the regtular five-cent rate to all who so purwithout that the chase. tickets.. 'Assuming, general power to fix and regulate the terms and rates to be charged subsists in the municipaIity;:"""'namely, that by delegation it became vested with and still retains the full extent of legislative power un...:po.s.s.essed.bY the. state,:-th. .·. . can pe.. n.0 iIlquiry here as . to the wls!:lOill, or good polley of exerclsmg the power so delegated, that a. matter of municipaJdiscretion, over which the courts have no righfof supervision or review. Nor is it open to inquiry in there is a public demand or 'need for the enactthis case ment, or Whether it is just' in aU 1ts 'provisions, except for purpose of ascertaining its infrh:lgement of rights which are guarantied to the complainant by the. Upon this record it must be taken as true that enforcement of the ordinance wonld 'operate to reduce materially the net .revenues of the street-car company. There is efforton the part hf the defendant to show that the probable increase of passengers through the method of commutation tickets would make up for the reduction in rate, but noreIiabfe bat:lis is furnished, and the argument is too speculative for aceeptance; while on thepllrtof the complainant the testimony is founded upon .practical and varied experience; and clearly shows it to be improbable that anyincrel1JSe in travel would yield receipts, over and ,above the additional expense necessariI;Y; .· entailed, to offset the decrease in: gross receipts appearing pl'imafacie from the reductioniu fares. The claims are that a loss of income would reo suit of "somewhere betweenlO and 15 per cent.9fthe gross earn· ings/, and estimates are :byseveral witnesses' ofa net loss ranging from $87,000 to $140,000 per annum. ·It is sufficient, for the present consideration, that the ordinance must be regarded as a measure. which reduces the rates of fare materially; and consequently would impair materially the net l'.evenue produced by the property, and no analysis of the testirnonyupon that point is necessary, nor is any attempt reqUired to state, e:ven approximately, the amo1}.nt of loss., The law which must govern, #-hen the facts are determined, is concisely and pertinently stated'in the opinion by Mr. Justice Harlan, for the supreme court, in Smyth v. Ames, 18 Sup. at. 418, 42g, as foI1Qws: .

MILWAUKEE ELECTRIC RAILWAY & LIGHT CO. V. CITY OF MILWAUKEE.

579

"In view of the adjudicathms, these principles must be regarded as settled: (1) A railroad corporation is a person, within the meaning of the fourteenth amendment, declaring that no state shall deprive any person of property without due process of law, nor deny to any person within its jurisdiction the qual protection of the laws. (2) A state enaCtment, or regulations made under the authority of a state enactment, establishing rates for the transportation of persons or property by railroad, that will not admit of the carrier arning such compensation as, under all the circumstances, is just to it and to the public, would deprive such carrier of its property without due process of law, and deny to it the equal protection of the laws, and would therefore be repugnant to the fourteenth amendment of the constitution of the United States. (3) While rates for the transportation of persons and property within the limits of a state are primarily for its determination, the question whether they are so unreasonably low as to deprive the carrier of its property without such compensation as the constitution secures, and therefore without due process of law, cannot be so conclusively determined by the legislature of the state, or by regulations adopted under its authority, that the matter may not become the subject of judicial inquiry."

And this opinion reviews the line of decisions upon the subject, and clearly approves the application of the same doctrine to legislative regulation of charges over toll roads, in Road Co. v. Sandford, 164 U. S. 578, 594, 17 Sup. Ct. 198. Therefore it must be regarded as established beyond question that the power to regulate the rates of fare, which is here assumed to rest in the municipality, is SUbject to these limitations: (1) That there is reasonable need on the part of the pUblic, considering the nature and extent of the service, of lower rates and better terms than those existing; (2) that the rates and terms fixed by the ordinance are not clearly unreasonable, in view of all the conditions. Neither of these considerations is independent of the other, and, although the public interest is of the first importance; the test is not what is desirable upon the part of either, but what is reasonable in respect of the rights of both. As stated in Smyth v. Ames, supra: "What tbe company is entitled to ask is a fair return upon the value of that which it employs for the public convenience. On the other hand, what the public is entitled to demand is that no more be exacted from it for the use of the public highways than the service rendered by it is reasonably worth." So, in Road Co. v. Sandford, supra, it is clearly held, in the same view of mutual consideration, that it is neither the right of the corporation to subject the public "to unreasonable rates in order simply that stockholders may earn dividends," nor of the public to have the use of the conveniences thus furnished except "upon payment of such tolls as, in view of the nature and value of the service rendered by the company, are reasonable," but that "each case must depend upon its special facts"; and the reasonableness of rates must be measured by all the conditions, including, of course, the reasonable cost of operation and of maintenance "in good condition for public use, and the amount which may have been really and necessarily invested in the enterprise." The difficulties presented in this case do not, therefore, rest in any doubt as to the general principles which must be observed, nor in ascertaining the actual facts disclosed by the testimony as a whole, so far as material to this controversy; Although the testimony on the part of complainant makes a volume of 1,445 printed pages, and
,

'

580

87. FEDERAL REPORTER.

that of the defendant 163 pages, the only substantial contentionll of fact relate to items of expenditure and claims of credit by way of depreciation, presented OIl behalf of the complainant as entering into the showing of net revenue, and to the present or reproduction value of the plant. And it may be remarked, in passing, that this testimony is so well classified and indexed, with such fair summaries in the briefs, that the task of examination has been materially lightened. But the sole embarrassment in the inquiry arises from the wide divergence which appears between the actual and undisputed amount of the cash investment in the undertaking, and the estimates, on either hand, of the amounts for which the entire plant could now be reproduced, in the view that the line of authorities referred to does not attempt to define or specify an exact measure or state of valuation, and leaves it, within the principles stated, that "each case must depend upon its special facts." Therefore the twofold inquiries of reasonableness above indicated are of mixed law and fact, and start with the presumption, in favor of the. ordinance, (1) that the prevailing rates exacted too much from the public, and (2) that those prescribed are reasonable. 1. Are the terms and rates fixed by the company excessive demands upon the public, in view of the service rendered? The Milwaukee Street-Railway Company, of which the complainant is the successor in interest, was ()rganized in December, 1890, for the. purpose o( establishing an electric. street-railway system, which .should cover the entire field for the city of Milwaukee. There were then in operation five distinct lines; owned separately, operated' mainly by horse or mule power, each charging separate fares,a:p.d having no system of trallsfers. It is conceded' that the servie:e .was slow and antiquated, was not well arranged for the wants,oltlle city,and was generally inadequate and unsatisfactory. As the old lines occupied the principal thoroughfarelil, and the public interest prevented the aIof double lines in such streets, the improV;y:r;nenteould n,ot be made efilective unless those lines were in some manner brought into the proposed They were gradually ac· at prices which may appear excessive when .llleasured by results,and during the ensui;:p.g period of about years the WOr]{ of installing the new systeJP ,:,:us carried on, involving an entire an,d rearrangemellt of the old lines and, extensions, and new and improved equipments thrQughout, at all of oV,er $3,OOO,OOO,aside from the cost of the old lines. Asa result, at the time the ordinance was adopted, the mileage of tJ;'acks had increas!3d from the previous aggregate of 110 miles to 142.89 miles, reaching every section of the city, with shorter and bett,er ro,utes, and furnishfeature ing 38 transfer points, with a universal transfer of special value to the public, as a single fare of five cents gives a length of ride. more than double the old arrangement. The ,service was improved in speed /lnd reguhtrity 50 per cent. or more, w,ith Qetter cars and !lnd, -it appears beyond (bat it was generally more satisfa,({to:ry and economical In other words, the service was from the sta,J;lQpoint of the materially enhanced in its value to the public, without any increase

MILWAUKEE ELECTRIC RAILWAY &: LIGHT CO. V. CITY OF MILWAUKEE.

581

in either normal or maximum charges, affording rides for five cents which had previously cost two and even three fares; and against all these advantages there appears only a single benefit extended by three out of the five constituent companies which is not given under the new arrangement, namely, in the sale of commutation tickets,-an omission for which there seems to be plausible excuse and offset in the universal system of transfers, aside from the other advantages. Surely, therefore, no imposition upon the public appears through any comparison between the old and the new service and rates. Nor does it find any countenance in comparison with either service or rates which prevail in other cities, for it is shown in this record, and is undisputed, that the five-cent rate is almost universal; that commutations are exceptional in cities of like class, and arise out of exceptional conditions, which are not fairly applicable here; and that instances of lower rates are so clearly exceptional that they cannot have force for any affirmative showing of reasonableness in the instant case. Nevertheless, with the burden of proof on the defendant, these considerations are not controlling, unless it further appears that the earnings of the company are insufficient, in view of the amount which may justly be regarded as the investment in the undertaking, to warrant the making of rates and terms which are more advantageous to the public. The interests of the public in its highways are and, if the service can reasonably be afforded more cheaply in Milwaukee than in other cities of like class, the community is entitled to the just benefit of any possible conditions which may tend to that result. The issue in that regard must be met under the second branch of inquiry. but I am clearly satisfied that this first question must be answered in favor of the complainant, if the evidence sustains its claim that lower rates would be confiscatory, and not compensatory. 2. Are the earnings of the property insufficient, in view of all the conditions, to justify this reduction in the rates of fare? Solution of this" inquiry depends upon the showing (1) of earning capacity at existing rates, and (2) of the "amount really and necessarily invested in the enterprise," and upon the conclusion (3) whether the ratio of return· upon the investment is excessive. In the statements which are to both parties have adopted a ratio, so far as necessary, to separate the electric lighting plant owned by the complainant, so that the statements which follow relate exclusively to the street-railway plant. except where otherwise mentioned. First. The question of earning capacity is confined by the testimony to the results of three years' operation, being after the system was fairly installed, and inclusive of the year in which the ordinance was adopted, namely, 1894, 1895, and 1896. It is suggested on behalf of the defendant that those years were exceptional, for one cause and another, and are not a fair criterion for future earnings under more favorable circumstances; but the suggestion is without force in this case, because the ordinance operates upon these very conditions, and must, of course, be predicated upon them,-upon existing facts, and not upon mere future possibilities,........and,· so determined, the instant case cannot affect rights under new conditions.

582

87 FEDERAL Rll1PORTER.

The proofs on the part of the complainant furnish, in detail, from the books of account,the gross earnings, the various items of expense and of charges for which deduction is claimed, excluding any pay· ments of, ar allowance for, interest on the bonded indebtedness, and state the net earnings as follows: In 1894, $64,868.77; in 1895, $269,202.30; in 1896, $100,628.81. In this showing it appears that deduction of $247,324.88 is made in 1894 for "depreciation," being the amount apportioned in that year to meet the alleged annual loss by physical depreciation of the plant, to keep the capital intact. No such is made in 1895 and 18rHi, because not shown in the books, although it is insisted that like credit is due in each year, for the purposes of this case. . The defendant concedes the correctness of the showing as to the gross earnings, but disputes certain large items for which deductions are made in the above statement, corrects some items, and denies that any allowance should be made for depreciation. Aside from the fact that reports and statements of financial condition made from time to time by the company omit many of the deductions here asserted, these contentions on the part of the defendant rest solely upon the books of account kept by the company, and the testimony of Mr. De Grasse, stating his conclusions as an expert accountant fram exam· ination of such books, with'the following result as :to net earnings: In 1894, $387,074.70; in 1895, $479;621.11.; in 1896;$66,520.99. But this tatal for 1896 erroneously includes an allowance of $160,550 paid for interest on bonds, which should be excluded on the basisassumed, and would make the net earnings for that year, on his com· putation, $227,070.99. In this statement the allowance for depreciaitem was in tion in 1894 is excluded by Mr. De fact charged off upon change in the syetem of bookkeeping. He also eXcludes large amounts of undoubted expenditures upon the hypothesis that they belong to "construction aCl'lOunt," as covering permanent iIllprovements, and not to "expense of maintenance," as stated; rejects certain payments as accruing on account of previous years, and certain sums apportioned and charged off'to meet damage claims; and makes corrections as to taxes, for whieh the book entries were made in advance upon estimates, by way of apportioning the expenses of the year, pending litigation and other causes. However valuable this testimony is for analysis of· the bookkeeping methods and for correction of certain charges, it is clearly insufficient, without other support, to contradict the undisputed testimony, both positive and expert, on the part of complainant, which verifies substantially its contention upon the disputed subjects of deduction, namely, that the expenditures so charged were largely, if not wholly, of such nature as to justify de,duction for and that depreciation is a wellrecognized fact in all such plants, for which allowance must be made to save the capital from impairment, without regard to any question oUts entry upon the books. Making allowances for· maintenance alone, in accordance with the analysis presented by the expert witnesses Goodspeed, Oaffin, McAdoo, and Beggs, taking in each. instance the estimate most favorable to the defendant, I am satisfied fthatthedefendant's claim oi net earnings

MILWAUKEE ELECTRIC RAILWAY & LIGHT CO. V.

OF MILWAUKEE.

583

must be materially reduced, and"that the largest amounts which can be assumed upon its theory, excluding anyallowanee for depreciation (except that for 1894 the "maintenance" allowance is increased, to bring it-the general allowance-up to the minimum estimate by the experts), would approximate the following sums:
In 1894 ··················.····································· $230,000 In lSf};") ·············.····.······················.···········.··· 340,000 In 1896 ························································· 115,000 $685,000

-Making the average earnings per year, say, $228,333. In reference to the element of depreciation, the witness Beggs gives the following. explanation:
"I think experience has demonstrated that the utmost life that can be expected from the best roadbed that can be laid to-day would be, at the outside, ten to twelve years, when it would have to be almost entirely reuewed. The Milwaukee Company is in that condition to-day, because of the different periods that their track went down, and due to the fact that It was not all put down atone time, and it must now of necessity commence to lay about 12 miles of track annually, being about .one-twelfth of Its total mileage; and will be required, whether they wish to or not, to lay that amount annually hereafter, and will thereby be keeping their tracks fairly up to the standard. The same applies, I might say, to the equipment. In my estimate I have calculated that the Milwaukee Company must do this year, whIch, as a matter of fact, It Is doing, what it did last year,-In other words, put on not less than 20 of the most modern, best-constructed equlpments, thereby keeping Its standard up to the minimum It has now, of 240 equipments; because I think It Is fall' to assume that the average life of the double equIpment, taken as a whole, wIll not exceed 12 years, the life of the motor being somewhat less than that. and that of the car we hope may exceed It possibly several years,-I mean the car bodies; but that, In the maIn, we hope that we will get an average life of twelve years out of them. So. taking 20 equipments annually, you would keep to your standard of' 240 equipments, which is absolutely necessary to maintain-to operate-the Milwaukee Street Railway. I mean cars complete, with motors and complete electrIcal equipment."

For the causes thns stated, within general rules which are well known, it is manifest that this element must be taken into account before it can be determined that earnings derived from a plant are excessive; and in the same line there is much force in the argument of counsel that consideration should also be given to the factor of depreciation by amortization of franchises, as all the franchises in question terminate in the year 1924. The latter item, if allowed, would be a matter of simple computation; but a just measure of physical depreciation seems, to some extent, although only partially, involved in provisions for maintenance, and, while the testimony is very full and instructive upon this subject, it does not clear the case from serious difficulties in the way of stating a definite ratio or sum for such allowance. I am, however, clearly of opinion that neither of these elements is essential to the determination of the issues upon any aspect presented by the testimony, and that depreciation may be left to serve as an important factor of safety, in either view. Second. As to valuation: For purposes of the company, the value of the property, including both railway and lighting plants, appears to have been placed at $14,250,000, represented by the issue of bonds

584

81 FEDERAL REPORTER.

electric lighting department, ,and on no view can'it be taken as the basis for the present consideration. The statements of the actual cost of the constituent street.railway properties, including the cash investment for improyemGnts, are necessarily complicated, from the fact that payments were partly.made in stocks and bonds, and the aggregate amount varies according to the ratio of valuation placed upOn-the bonds alone,-in two statements in which the stock is excluded, and in one statement which values both stock and bonds,the minimum being $9,024,1'07.85, and the maximum $11,313,829.81. The former amount was modified (page 465, Complainant's Proof), making the statement of cost $8,885,644.17; and as this excludes any valuation of stock, and places the value of the bonds at the discount agreed upon the parties, which also seems fair, it may justly be taken as the true amount invested. But adoption of this purchase amount does not meet the issue, as it is the value of the investment, and not the amount paid, which must control. On the other hand, both parties introduce testimony pl;;tdng valuations upon tpe various items of the plant as it exists in fact, upon. the . basis ()f its reproduction value. This amount, as stated by the witnesses for complainant, aggregates $5,153,287.76; while, on the. face of defendant's proofs, the value of the tracks and equipment is placed at $2,358,799; the real estate and buildings being . the highest valuation of the real estate ·being $236,949, and of the buildings $208,449, making the aggregate $2,804,197. It appears; however, 'that these estimates on behalf of the defendant omit 27 miles qf track,maI1y parcels of real estate, and other items, so that copnsel for defendant concedes that this aggregate should be increltsed to $3,679,631. The wide difference in these amounts is mainly due to divergence in the estimates upon tracks and equipment. So the amounts on real estate and buildings, after allowance for the omissions, would appear higher on the valuations submitted by the defendant than those of the other side. For the valuation of tracks and equipment, the. defendant relies upon the estimate made by Mr. Partenhehner, a witness of apparent ability and experience asa street-ra;ilway contractor, engaged in business at Ohicago; but his examination of the plant was cursory, being made within three days, and could not give the detailed· information upon which a just estimate for this inquiry must be based, and it is conceded that he left out of consideratiO;ll many important items (aside from the error in mileage) which should enter in and would greatly increase the amount as estimated On his basis. Both upon its face and by reference to other source of information, this estimate is far below any fair valuation, for the purpose in view, either at the sum stated by the witness, or with the additions conceded on behalf of the defendant; the former amount being in fact $320,000. short of the actual cash expenditures by the company for construction and equipment. Opposed to this, the estimate for complainant is made by Mr. Clark, an expert of distinction in this line, "who gave weeks to the examination, with the aid of a corps of assistants, and presents. the results in detailed state-

for $7,250,000; preferred stock, $3,500,000; and common stock, $3,. 500,000; butthisaggregate/wasclearly excessive, after excluding the

MILWAUKEE EI.ECTlUC RAILWAY &: I.IGHT CO. V. CITY OF MILWAUKEE.

585

ments,so that his testimony and estimates'impress me as well founded; and they are supplemented and supported by the testimony of Mr. Coffin, Mr. Payne, and other witnesses, and by comparative showing of mileage valuations in Massachusetts, which appear in the noteworthy system of reports published by that state. I am satisfied that the property of complainant represents a value, based solely upon the cost of reproduction, exceeding $5,000,000. And I am further satisfied that this amount is not the true measure of the value of the investment in the enterprise. It leaves out of consideration any allowance for necessary and reasonable investment in purchase of the old lines and equipments, which were indispensable to the contemplated improvement, but of which a large part was of such nature that it does not count in the final inventorv. No allowance enters in for the large investment arising out of the then comparatively new state of the art of electric railways for a large system, having reference to electrical equipment, weight of rails, character of cars, and the like, of which striking instance appears in the fact that the electric motor which then cost about $2,500 can now be obtained for $800; so that work of this class was in the experimental stage in many respects, and the expenditures by the pioneer ill the undertaking may not fairly be gauged by the present cost of reproduction. Of the $5,00Q,000 and over paid for the acquisition of the old lines, it would be difficult, if not impossible, from the te$timony., to arrive at any fair approximation of the share or amount of tangible property which enters into the valuation in this inventory. It does appear that the roadways required reconstruction with new rails and paving, and that the amonnt stated was actually paid by the investors, making their investment nearly $9,000,000. How much of this may be defined or apportioned as the amount which was both "really and necessarily invested in the enterprise" (vide Road Co. v. Sandford, snpra) I have not attempted to ascertain, except to this extent: that I am clearly of opinion that at least $2,000,000 of those preliminary expenditures are entitled to equitable consideration, as so invested, beyond the reproduction value, if the valuation of the investment is not otherwise found sufficient for all the purposes of this case, but no opinion is expressed in reference to the remaining
$1,885,644.

Third. The final inquiry, whether the net earnings shown are in excess of or equal to a just return upon the investment, presents no serious difficulty, under the premises above stated. Assuming $5,000,000 as the basis of investment, the ratio of earnings would be as follows: (1) At the extreme computations of defendant, the yearly average would be $364,000, which would yield .072 per cent.; (2) at the complainant's figures, after adding the corrections for taxes, the return would be .03:3 per cent.; (3) at the amounts which are above stated as my deductions from the testimony, the yearly average, being $228,333, would make .045 per cent. Assuming $7,000,000 as the basis, the ratio of earnings would be, upon each of said versions, as follows: . For the first, .052 per cent.; for the second, .023 per cent.; for the third, .032 per cent. The interest rate fixed in the bonds issued by the company is 5 per

585

87 FEDERAL REPORTER: · '

cent., 1:lhe rate>whjch pre\"aHs: iil' ;1:his market;' as shown· by the un· contl'()\"erted, testimony, is 6 percent for real-estate mortgages and like 'securiti'es. If the $5,000,000 ;basis be adopted, surely a better rate must be afforded for the risks of investment than can be obtained on securities of this class, lin' whiCh there is no risk. Upon the basis of $7,000,000, which is' more logical and just, the 5 per cent. named in the bOIids iscleadynot excessive, and should be accepted by:a court of equity as the minimum of allowance; and, even upon the defendant's partial showing, the return would be less than one-quarter per cent. above that, with the large margin for depreciation left out of account. lam of:opinion that the testimony is not only convincing in support of the material allegations of the bill, but is uncontradicted and conclusive that the ,improved service :received by the public, with the universal system of transfers, is well worth the five·cent rate charged therefor; that the company has not received earnings in excess of an equitable allowance to the investors for the means necessarily invested in furnishing such service; that enforcement of theordinance would deprive complainant of property rights, by preventing reasonable compensation for its service; and that, therefore, the ordinance clearly violates the constitlltion of the United States, and is invalid. Decree must' enter accordingly, and for an injunction as prayed in thf' bill. "
McGORRAY v. O'CONNOR et aI.

(Circuit Oourtof Appeals, Ninth Circuit. May 8, 1898.) No. 407. 1. A motion was made'to strike out answers for want of certificates of counsel that the answer was wellfonnded In law. The court denied the motion, "with, leave to:Sllld defendants to further verify their answers. aIld add, certificatlls, Ii so advised.", Held, that this, order was merely permisslYe, and not ,a decision, constituting thlllaw of the case, that cer' " , , tificates to the' answer were necessary. There Is no equity rule requiring a certificate of counsel that an answer to the merits Is well founded in law.
S. SAME-MOTION TO STRIll:E.

A motion to strike Q.ut parts of tne answer must be denied when not sufficiently specific to Identify the portions to stricken. ,
,'. . TO ANSWER. " , TOS'l'RIKE., ' '.'

4-EQUITY PRACTICE-SElTTJNG DOWN FOR HEARING.',,'

Where over 90 days elapse after the filing of the Without the taking' of any' testimony by plaintiff or any motion to extend the time for taking testim(jny;and thereafter plaiIltiff gives notice of motions to strike out certaill portions of t4e answer, which motions are denied, t11ere is no error In then setting the case down for hearing on the blll and answers.

5.

MORTGAGE FORECLOSURE- RIGHT OF REDEMPTIQN- HEIRS AND SURVIVING

PARTNER. ' In California, where the ,law gives to a surviving partner absolute power assets of the partnership (Code Civ. of the control Rllddisposition of Proc. § 1585), the heirs of a deceased partner have no such Interest In the partnership property al? entities them, or their judgment creditors to redeem such property from a' sale untler a mortgage. 79 Fed. 861, affirmed.