135 A. 579 (Md. 1926), 54, Miles v. West

Docket Nº:54.
Citation:135 A. 579, 151 Md. 337
Opinion Judge:DIGGES, J.
Party Name:MILES v. WEST ET AL.
Attorney:Thomas J. Tingley and Clarence W. Miles, both of Baltimore (Jackson R. Collins, of Baltimore, on the brief), for appellant. Thomas H. Robinson, Joseph C. France, and Edwin G. Baetjer, all of Baltimore (John Hubner Rice, of Baltimore, on the brief), for appellees.
Judge Panel:Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT, DIGGES, PARKE, and WALSH, JJ.
Case Date:July 08, 1926
Court:Court of Appeals of Maryland
 
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Page 579

135 A. 579 (Md. 1926)

151 Md. 337

MILES

v.

WEST ET AL.

No. 54.

Court of Appeals of Maryland

July 8, 1926

Motion for Modification of Opinion Overruled Jan. 28, 1927.

Appeal from Circuit Court of Baltimore City; Eli Frank, Judge.

Objection by Clarence W. Miles to an item of an order of Harold E. West and others, constituting the Public Service Commission of Maryland, determining the fair value for rate-making purposes of the property of the United Railways & Electric Company of Baltimore. An appeal was taken to the circuit court, which confirmed the order of the Commission, and plaintiff appeals. Remanded, without affirmance or reversal, for further proceedings in accordance with the opinion.

Adkins and Parke, JJ., dissenting.

Page 580

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT, DIGGES, PARKE, and WALSH, JJ.

Thomas J. Tingley and Clarence W. Miles, both of Baltimore (Jackson R. Collins, of Baltimore, on the brief), for appellant.

Thomas H. Robinson, Joseph C. France, and Edwin G. Baetjer, all of Baltimore (John Hubner Rice, of Baltimore, on the brief), for appellees.

DIGGES, J.

By order passed on the 30th day of December, 1912, the Public Service Commission of Maryland, under the authority contained in section 30 of the Public Service Commission Act, now codified as section 385 of article 23 of the Code of Public General Laws 1924, instituted proceedings to determine the value of the properties of the United Railways & Electric Company of Baltimore, a corporation. For this purpose the Public Service Commission began hearings in May, 1925, which hearings and the proceedings incident thereto, including argument of counsel for the respective parties, culminated in an opinion and order of the commission dated March 9, 1926. By this order the commission determined that the fair value for ratemaking purposes of the property of the Railways Company, as of December 31, 1923, was $77,000,000. Included in this valuation was the item of easements, at the sum of $7,000,000. Objection was made by the appellant to the allowance of this item, and from the order of the Public Service Commission an appeal was taken to the circuit court of Baltimore City; the basis of this appeal being the contention by the appellant that these easements in the streets and highways of Baltimore City were not property which should be included in a valuation of the Railways Company's property in forming a rate-making base, and that the inclusion of the value of the easements in the rate base was unreasonable and unlawful. Upon a hearing of the case in the circuit court of Baltimore City the chancellor passed a decree confirming the order of the Public Service Commission passed on the 9th day of March, 1926, and held that said order was neither unlawful nor unreasonable. The case is now here to be considered on appeal from that decree.

The authority, power, duties, and functions of the Public Service Commission are set forth in article 23 of the Code of 1924; sections 346 to 418, inclusive, having been originally enacted by chapter 180 of the Acts of 1910. It can be generally stated that the purpose of the Legislature in enacting the Public Service Commission statute was to provide for the creation of a commission with the power and duty of supervision and control over the corporations and individuals engaged in the operation of public utilities within the state. The commission has the power and authority to require safe and adequate service to the public and to fix such rates as, on the one hand, will be reasonable to the user of the utility and commensurate with the service rendered, and, on the other hand, will produce a fair and reasonable return upon the property or capital invested in the public service enterprise. Section 30 of the original act, now section 385 of article 23 of the Code, provides:

"The commission shall, whenever it may deem it desirable to do so, investigate and ascertain the fair value of property of any corporation subject to the provisions of this subtitle and used by it for the convenience of the public."

It is evident that the most important purpose in ascertaining the fair value of a public service corporation's property is to enable the commission to determine the rate to be allowed, in order that the public may receive adequate and safe service at a reasonable price, and at the same time that the rate be not fixed so low as to constitute a confiscation of its property under the provisions of the Fourteenth Amendment to the federal Constitution, but will produce a reasonable and proper return upon the capital invested.

The present case presents the single question of whether the Public Service Commission, in ascertaining the fair value of the property of the Railways Company for ratemaking purposes, should include as property of the Railways Company easements in the streets and highways of Baltimore City at their fair and just value. The appellant contends that the value of these easements is so dependent upon the earnings of the corporation, and the earnings being dependent upon the rate fixed by the commission, that, therefore, it is illegal and unreasonable to include the value of these easements in the sum upon which the...

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