United Rys. & Elec. Co. v. West, 280 U.S. 234 (1930)

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Author: U.S. Supreme Court

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United Rys. & Elec. Co. v. West, 280 U.S. 234 (1930)

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United Railways and Electric Company of Baltimore v. West


Nos. 55 and 64


Argued October 29, 1929
Decided January 6, 1930
280 U.S. 234

APPEALS ROM THE COURT OF APPEALS OF MARYLAND

Syllabus

1. Where a valuation of the property of a public utility has been made by a state commission and has been accepted by it and by the utility and by the state courts in a litigation over the question whether rates fixed by the commission allow a constitutionally adequate return upon that valuation, objections to it come too late when made by the commission, for the first time, in this Court upon the utility’s appeal from a judgment sustaining the rate. P. 248.

2. The property of a public utility, although devoted to the public service and impressed with a public interest, is still private property, and neither the corpus of that property nor the use thereof constitutionally can be taken for a compulsory price which falls below the measure of just compensation. One is confiscation no less than the other. P. 249.

3. What is a fair return within this principle cannot be settled by invoking decisions of this Court made years ago based upon conditions radically different from those which prevail today. The problem is one to be tested primarily by present day conditions. Id.

4. It is common knowledge that annual returns upon capital and enterprise, like wages of employees, cost of maintenance, and related expenses have materially increased the country over, so that a rate of return upon capital invested in street railway lines and other public utilities which might have been proper a few years ago no longer furnishes a safe criterion either for the present or the future. Id.

5. Nor can a rule fixing a rate of fair return be laid down which will apply uniformly to all sorts of utilities. What may be a fair return for one may be inadequate for another, depending upon circumstances, locality, and risk. Id.

6. What will constitute a fair return in a given case is not capable of exact mathematical demonstration. It is a matter more or less of approximation about which conclusions may differ. The court, in the discharge of its constitutional duty on the issue of confiscation, must determine the amount to the best of its ability in the exercise of a fair, enlightened, and independent judgment as to both law and facts. P. 251.

7. Just compensation for a utility, requiring for efficient public service skillful and prudent management as well as use of the plant, and whose rates are subject to public regulation, is more than current interest on mere investment. Sound business management requires that, after paying all expenses of operation, setting aside the necessary sums for depreciation, payment of interest, and reasonable dividends, there should still remain something to be passed to the surplus account, and a rate of return which does not admit of that’s being done is not sufficient to assure confidence in the financial soundness of the utility to maintain its credit and enable it to raise money necessary for the proper discharge of its public duties. P. 251.

8. In the present case, a return of less than 7.44%, the rate sought by the utility, would be confiscatory. P. 252.

9. Regulation of a state commission requiring a street railway company to abolish a second fare zone applied to a suburban extension of its lines without which the extension would be unprofitable, is not subject to constitutional objection if the extension be an integral part of the railway system and if fares be so readjusted a to yield a fair return upon the property as a whole. P. 252.

10. In reaching its judgment sustaining rates fixed by a state commission, the state court ruled with the public utility and against the commission on the amount to be allowed the utility for annual depreciation, but against the utility on the adequacy of the rates. The utility appealed on the ground that the return yielded by the rate was inadequate, and the commission took a cross-appeal and applied for certiorari on the ground that the allowance for depreciation was erroneous. Held, that the ruling on the depreciation allowance could properly be reviewed in connection with the utility’s appeal, and that the petition for certiorari and the question of this Court’s jurisdiction over the cross-appeal need not be considered. P. 253.

11. In determining adequate rate for a public utility, the allowances for annual depreciation must be based not upon cost, but upon present value. P. 253.

157 Md. 70 reversed.

Appeal from a judgment of the Court of Appeals of Maryland sustaining street railway fares fixed by the State Public Service Commission, in a suit by the railway company to enjoin their enforcement. The case is decided on the appeal of the Company. The cross-appeal of the commissioners is dismissed and their petition for certiorari denied. For another decision of the court below at an earlier stage of the case, see 155 Md. 572.

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Chicago: U.S. Supreme Court, "Syllabus," United Rys. & Elec. Co. v. West, 280 U.S. 234 (1930) in 280 U.S. 234 280 U.S. 235–280 U.S. 247. Original Sources, accessed August 9, 2022, http://www.originalsources.com/Document.aspx?DocID=3W7ELTJLULABQ73.

MLA: U.S. Supreme Court. "Syllabus." United Rys. & Elec. Co. v. West, 280 U.S. 234 (1930), in 280 U.S. 234, pp. 280 U.S. 235–280 U.S. 247. Original Sources. 9 Aug. 2022. http://www.originalsources.com/Document.aspx?DocID=3W7ELTJLULABQ73.

Harvard: U.S. Supreme Court, 'Syllabus' in United Rys. & Elec. Co. v. West, 280 U.S. 234 (1930). cited in 1930, 280 U.S. 234, pp.280 U.S. 235–280 U.S. 247. Original Sources, retrieved 9 August 2022, from http://www.originalsources.com/Document.aspx?DocID=3W7ELTJLULABQ73.