
    The City of Columbus, by etc., v. The Public Utilities Commission et al.
    
      Public utilities commission — Jurisdiction — Telephone companies — Merger of corporations — Authority to increase rates — Existing municipal franchise — •Power of municipality to establish rates.
    
    (No. 16562
    Decided July 5, 1921.)
    Error to the Public Utilities Commission.
    
      Mr. Henry L. Scarlett and Mr. Charles A. Leach, city solicitors, for plaintiff in error.
    
      Messrs. Daugherty, Todd & Rarey; Messrs. Tolles, Hogsett, Ginn & Morley and Messrs. E. H. & W. B. Turner, for defendants in error.
   It is ordered and adjudged that the order of the public utilities commission be, and the same is hereby, reversed. Four members of the court concur in this judgment. But inasmuch as the judges who concur are not agreed upon the grounds of reversal, no authoritative opinion setting forth the reasons of the judgment is filed in the case. The views of the individual judges may, however, be stated in separate opinions.

Order reversed.

Marshall, C. J., Johnson, Hough and Wanamaker, JJ., concur.

Marshall, C. J.,

concurring. This cause comes from the Public Utilities Commission, and the city of Columbus seeks reversal of an order made by the commission relative to rates to be charged by The Ohio State Telephone Company in the city of Columbus, Ohio. The order of the commission approves rates in excess of certain rates stipulated in a franchise granted by the city of Columbus to' The Columbus Citizens Telephone Company, in 1899, and the commission claims the right to fix a rate in excess of the provisions of said ordinance, by virtue of a reservation made by the commission in certain merger proceedings in the year 1914, wherein a number of telephone companies having plants in cities throughout the state of Ohio merged. their plants and their companies into one corporation then formed under Ohio laws under the name of The Ohio State Telephone Company.

The question presented by this' record is whether the municipality, in 1899, had the power to make a contract with the telephone company agreeing upon a rate for product and service for a period of twenty-five years.

On May 8, 1899, the city of Columbus passed an ordinance granting a franchise to The Columbus Citizens Telephone Company, which company was. not theretofore doing business in'the city of Columbus, authorizing and empowering the board of public works to enter into a contract with the company, and pursuant to the provisions of the ordinance the board of public works did, on the Sth day of June, 1899, enter into such contract. And on the 12th day of June, 1899, another ordinance was passed affirming the contract, in which ordinance the provisions of the contract were fully set out. The contract provided that the telephone company, its successors and assigns, be granted the right and .privilege, for the period of twenty-five years from the taking effect of the contract and ordinance, to enter upon and use the streets and public ways of the city for the purpose of digging trenches and laying conduits therein, erecting poles, and placing wires and cables in said conduits and on said poles, and all other necessary things to enable the company to construct, maintain and operate a telephone exchange, toll lines, and fire-alarm system. One of the provisions of the contract was that the city required the telephone company to lay not exceeding five miles of trench in the business portion of the city, and, if thereafter deemed necessary, to require other trenches and underground work, stipulating that in such event the company would be entitled to certain increases in the minimum-rate provisions, as extensions were required by the city. It was further stipulated that for full copper metallic circuit connections the telephone company should be entitled to charge for residences a sum not exceeding $30 per year, and for business houses and offices a sum not exceeding $42 per year, within the corporate limits of the city, and that the rates charged patrons of the company under like circumstances should be uniform. The provision for increases of rates specifically provided that if the city should at any time after five years require the telephone company to place additional wires under ground the charges for rentals might be equitably increased, not exceeding $1 per month per telephone in excess of the original charges. The 13th subdivision of the contract contained the following provision: “The said The Columbus Citizens Telephone Company hereby agrees to faithfully and completely, carry out and fulfill each and all of the obligations, conditions and requirements in said contract contained on its part to be kept, observed and performed.” The same provision appears in the second ordinance passed under date of June 5, 1899. Thereupon the company did construct its telephone exchange and system and did construct a conduit system in connection therewith. No complaint is made as to á full compliance by the telephone company of all the provisions of the franchise, except as to the increase in the rates, as hereinbefore stated, in excess of the established rates under the original contract.

On July 5, 1914, The Columbus Citizens Telephone Company and thirteen other companies, applied to the public utilities commission for an order approving a merger agreement, and, after hearing, the commission approved the merger and approved the rates theretofore established by each and all of the telephone companies respectively, including the franchise-rates established by the contract entered into in 1899 between the city of Columbus and The Columbus Citizens Telephone Company. The order of the commission upon this point was as follows: “Ordered, that the authority herein granted, and the consent and approval of the Commission herein given be, and the same aré hereby conditioned upon the provision that nothing in this order shall be held or construed to prevent, preclude or estop the' Commission * * * -of fixing and determining, at any time in the future, rates, charges, tolls and rentals that may be charged by said consolidated company, at any or all of its exchanges, or by any constituent company, upon complaint of any party or person or upon the Commission’s own initiative,” etc.

The city of Columbus was not a party to the proceedings in which that order was made. Thereafter, the merger company, The Ohio State Telephone Company, continued to comply with the rate provisions of the franchise of 1899, until February 1, 1917, at which time a new sbhedule of rates was filed by it with the Public Utilities Commission, without any application having been previously made for a modification of the commission’s former order wherein the existing rates were required to be maintained. The new schedule demanded $54 per year for business telephones, with a cash discount of $3. Thereupon the city of Columbus brought suit in the court of common pleas of Franklin county to enjoin the collection of the excess rates. A demurrer to that petition was sustained and the case appealed to the court of appeals, where the decision of the court of common pleas was reversed, the court of appeals holding that the provisions of the franchise, were binding. That case has never been disposed of for the reason that an issue! of fact was made as to whether or not the-city of Columbus had ever required the telephone company to extend its underground system bey'ond the original five-mile limitation, and the case has lain dormant in that court, apparently pending a decision of the proceedings before the Public Utilities Commission. The case in the state court of appeals is reported in City of Columbus v. Ohio State Telephone Co., 13 Ohio App., 232.

On February 12, 1918, the telephone company filed an application with the Public Utilities Commission seeking a modification of its merger rate-order of July, 1914, and pursuant to such application the commission, on June 3, 1918, made an order requiring an inventory and valuation of all the property used and useful of the telephone company. Pending final disposition of that matter the commission on November 26, 1919, made an emergency order, over the objection of the city of Columbus, fixing the rates of the company in the amounts requested, without hearing any evidence as to the cost of product and service. It is from this order that error proceedings are prosecuted in this court.

The application of the telephone company for confirmation of the new schedule of rates filed by it cofttains the following allegations:

“That by reason of the great increase in operating cost due to increased cost of materials, supplies and labor, and also due to the extended and enlarged service furnished by your petitioner to its subscribers and the public by reason of the greatly increased number of service lines and telephones installed and operated within the City of Columbus aforesaid, and the extension of telephone service necessarily incident to such increase, the rates, charges, tolls and rentals fixed by your Honorable Commission by its said order of July 23, 1914, are now and have been since a date prior to February 1, 1917, unreasonably low and grossly inadequate; that said rates are insufficient to and have not produced sufficient income properly to maintain and operate the said telephone system in the City of Columbus; and that unless your petitioner shall be permitted to charge and collect said increased rates set forth in the schedule filed January 1, 1917, it will not only be unable adequately to discharge its obligation as a telephone company, both to its subscribers and the public, but it will continue to operate at an actual loss of large sums of money, and without any or adequate return on capital invested, and will be compelled to dissipate its capital in operating expense; and that the rates so fixed by order of your Honorable Commission of July 23, 1914, are now and have been since a date prior to February 1st, 1917, not only not compensatory, but in fact confiscatory.”

The issue raised in the various applications and proceedings was the jurisdiction of the commission to abrogate the rates in the franchise-contract. The grounds alleged, in brief, are as follows:

(1) That the statutes do not give the Public Utilities Commission authority to make such order ; (2) If such authority was given by the merger section of the code, such authority was exhausted by the order of 1914, when rates in conformity with the franchise-contract were endorsed by the merger order; (3) If any such authority was attempted to be given by statute, that such statute is in violation of Sections 4 and 5, Article XVIII of the Ohio Constitution, and Section 10, Article 1 of the Constitution of the United States.

The'difficulty in this case is to determine the line of cleavage between the rights, powers and duties of many conflicting interests; to fix the limitations of municipalities on the one hand and telephone companies on the other; to determine where the powers of municipalities and the Public Utilities Commission, respectively, begin and leave off; to ascertain how far the commission may exercise its regulatory powers without coming in conflict with the constitutional inhibition against impairment of the obligation of contracts. It is also imperatively necessary to ascertain how far the legislature has proceeded under the power conferred upon it by Section 2, Article XIII of the Constitution, in authorizing the commission to regulate or terminate valid contracts theretofore entered into between municipalities aijd utilities. As a preliminary to the solution of these problems we should first inquire into the purpose underlying the creation of the commission, the evils existing or threatened, and the remedy sought.

It is stated in the Constitution that the commission shall be given such supervisory and regulatory powers over the business of corporations as may be prescribed by law. By virtue of the police power, the legislature undoubtedly had such power without constitutional warrant. A valid exercise of the power necessarily presupposes some abuses or irregularities on the part of corporations, contrary to the public welfare, calling for remedy. The statutes which have been enacted show that they are designed to supervise and regulate two very important matters in which the public are deeply interested, to-wit, rates and service. The commissiori, however, is not the only agency through which abuses and irregularities may be corrected; extensive powers have been conferred upon the municipalities of the state, both by the constitution and by statute.

In this inquiry we are concerned only with the matter of rates. Surely it requires no argument to show that the purpose of regulating rates was to prevent exorbitant rates which would amount to extortion and profiteering on the part of public utilities, on the one hand, and to prevent inadequate rates, which would amount to confiscation on the part of the municipalities, on the other hand. It is no hardship upon the public to be required to pay a fair, remunerative rate,-and it is no injustice to the utility to be required to conform to a rate which will provide a fair return upon the capital invested. . V

The commission, clothed with power to supervise and regulate rates, stands as a barrier against an exorbitant rate on the one hand and an inadequate rate on the other, and promotes and fosters a policy of “live and let live.” It is designed to relieve the public against the tyranny of utilities, and to relieve utilities against the tyranny of municipalities.There can be no tyranny, however, when utilities and municipalities, dealing on even terms, enter into mutual covenants, and the question under consideration is whether under such circumstances the commission can logically or constitutionally exercise the power of regulation.

Many utilities in Ohio are entirely free from municipal supervision and regulation in the matter of rates, and as to such utilities the commission by virtue of Sections 535, 540, 541, 614-20, 614-23, and perhaps other sections of the General Code, has poweV to determine and fix reasonable rates for product and service, and the orders of the commission are final unless found to be unreasonable and unlawful.

Again by virtue of Sections 3644, 3982 and 3983, General Code, municipalities have been given specific authority without the concurrence or consent of the utility to fix rates within their corporate limits for product and service of gas companies, water companies, electric light companies, gas light or cohe companies, and steam heat and hot water companies, and as to such utilities both the utilities and the people of the municipalities, by virtue of Section 614-44, have the right to complain of such rates to the commission, and the commission shall thereupon “fix the just and reasonable rate,” etc.

Again by virtue of Sections 9113, 9133, 9144, 3769, 3770, 3645, 3635, 3640 and 3642, General Code, municipalities have been given specific authority to fix rates for product and service of street and interurban companies, movable or rolling roads, wagons, carts, drays, public docks and ferries, without any provision having been made for complaint to the Public Utilities Commission or other state agency. In fact it is expressly provided by Section 614-47 that the commission act shall not apply.

It will be seen, therefore, that in the first class of cases above referred to, where municipal regulation is specifically authorized, .a review is provided, and that in the second class, although regulatory power is equally specific, no review is provided. No reason is perceived why such distinction is made, and yet it is clear that the distinction exists. It shows, however, that the action of the legislature, the source of all supervisory and regulatory power, has not been logical, which is not surprising in view of the labyrinth of complications in which the subject is involved.

In all the foregoing cases of regulation by the commission and those where review is provided for municipal regulation, it will be found that the power has been given to fix the rate by compulsion and without obtaining or asking the consent either of the consuming public or the utility corporation, and a review is therefore vitally essential to prevent injustice and extortion.

The same reasoning does not however apply to Section 9197, General Code, pertaining to the requirement that telephone companies shall obtain municipal consent as a condition precedent to laying wires in underground conduits. There is nothing arbitrary or compulsory about this statute. The consent is a matter of mutual and voluntary contract, involving all the necessary elements of valid contracts, to-wit, parties, consideration and subject-matter. Such contracts are to be enforced in the same manner and construed according to the same principles as other commercial contracts, and are protected by the same constitutional guaranties against impairment of obligations. The contracts being mutually binding and enforceable, and the parties being subject to no disabilities, their solemn obligations are not logically, or constitutionally subject to review or termination at the hands of the state or any agency of the state.

If it is said that Section 9197 does not specifically confer upon municipalities the clear and unmistakable power to fix a -rate, it cannot be denied that it has at least sanctioned the making of a contract. If the municipality has not been clothed with power to fix a rate in a compulsory manner it has been empowered to negotiate and execute a mutual and voluntary contract.

Where, as in the instant case, a contract has been entered into, without any fraud or imposition having been practiced, the parties being competent to make it and its terms being agreeable to both parties, where it has been faithfully observed for a period of eighteen years without question and has once been approved by the commission in an ex parte proceeding brought by the telephone company, and where no compulsion has been exercised at the time of its execution, but on the contrary full voluntary consent has been given and an agreement entered into to faithfully carry out all its terms, including rates, what reason is perceived for acceding to the request of the telephone company for a revision of rates?

The only reason urged by the telephone company is that the present rate is inadequate and unremu-nerative and does not afford a fair return upon the investment. Even if this is true it affords no ground for relief. The courts do not relieve parties from the losses of an improvident contract, which has been fairly .negotiated. The fact .that there has been an increase in cost of furnishing product or service is the good fortune of the city and a misfortune of the telephone company. This was not to be expected, because as a rule new and improved methods and inventions tend to gradually decrease costs, and if that had happened in this case the telephone company would have been the beneficiary. It is the function of courts to interpret and enforce contracts as made by the parties, not to modify them to meet changed conditions. Rising and falling markets frequently bring financial ruin to business men, but the courts turn a deaf ear. Does anyone doubt that the same rule applies to the contract between the city of Columbus and The Ohio State Telephone Company, if otherwise valid?

It would seem that these propositions are so well settled that citation of authority should be unnecessary. The question has, however, been squarely met in the case of Columbus Railway, Power & Light Co. v. City of Columbus, 249 U. S., 399. In that case the railway company sought to enjoin a continued enforcement of street railway franchise-ordinances fixing rates. The ordinances were passed in 1901, for the term of twenty-five years, and were duly accepted by the railway company.. Under their provisions the railway company was required to issue and sell eight tickets for twenty-five cents and give universal transfers. The provisions as to fares charged were faithfully carried out until 1918, when the franchise was surrendered and the injunction suit brought. It was alleged in the bill that due to many causes therein stated the gross earnings for the year ending June 30, 1919, would fall short of paying expenses, depreciation and taxes by approximately $250,000, and that there would be no earnings from which to pay interest charges or to yield any return to the company on the value of its property; that the rates of fare prescribed by the terms and conditions of the ordinances were insufficient to enable it to maintain its railway in good order and repair and to perform its duty as a public utility. After clearly stating that the passage of the ordinances and their acceptance by the railway company constituted a binding contract, the court made the following statement, which appears on page 409 of the opinion:

“By these contracts, obligatory alike upon the City and the Company, the City granted the right to use the streets and the Company bound itself to furnish the contemplated service at the rates of fare fixed in the ordinances. We cannot agree with the contention of the appellant that these were permissive franchises, granted and accepted with the right upon the part of the Company to abandon the uses and purposes for which the franchises were granted because the rates fixed became unremunérative as alleged in the amended bill. The authority under which the City acted came from the State, and was granted by proper statutes passed for that purpose. The contracts were made between the City and the Company, and became mutually binding for the period named in the ordinances. This case does not involve the remedies which may be invoked against a street railway company which is or may become insolvent because of conditions arising since it entered into a given contract. The Company seeks now by its own action to terminate the contracts, still binding upon it by their terms as to rates of fare to be, charged, and seeks to have the aid of a court of equity by enjoining the City from any further requirement of service under them.
“There is no showing that the contracts have become impossible of performance. Nor is there any allegation establishing the fact that taking the whole term together the contracts will be necessarily unprofitable.”

Again, on page 412 of the opinion, we find this statement:

“Unforeseen difficulties will not excuse performance. Where the parties have made no provision for a dispensation, the terms of the contract must prevail. United States v. Gleason, 175 U. S. 588, 602, and authorities cited; Carnegie Steel Co. v. United States, 240 U. S. 156, 164, 165. The latest utterance of this court upon the subject is found in Day v. United States, 245 U. S. 159, in which it was said: ‘One who makes a contract can never be absolutely certain that he will be able to perform it when the time comes, and the very essence of it is that he.takes the risk within the limits of his undertaking.’ ”

These authorities could be greatly multiplied, but it is not necessary to discuss others. The case above quoted is much stronger than the case at bar, because in that case the company was willing to surrender its franchises, while in the instant case the franchise and all its advantages are retained. .

We have so far proceeded upon the theory that the ordinance of 1899 was a valid contract, and it is well, at this point, to examine the soundness of this theory.

It has become established by numerous decisions of this court that an ordinance adopted by the municipality and accepted by the company constitutes a contract and that the rights of the parties thereunder are to be determined by its terms. (State, ex rel. West, Attorney General, v. Cincinnati Gas Light & Coke Co., 18 Ohio St., 263; Circleville Light & Power Co. v. Buckeye Gas Co., 69 Ohio St., 259; City of Columbus v. Columbus Gas Co., 76 Ohio St., 309; East Ohio Gas Co. v. City of Akron, 81 Ohio St., 33; Interurban Ry. & Terminal Co. v. City of Cincinnati, 93 Ohio St., 108; City of Cincinnati v. Public Utilities Commission, 98 Ohio St., 320, and Interurban Ry. & Terminal Co. v. Public Utilities Commission, 98 Ohio St., 287.) It has also been established by the supreme court of the United States in the case of City of Cleveland v. Cleveland City Ry. Co., 194 U. S., 517.

All of the foregoing cases assume that the municipality had the power to make the contract, and since this is denied in the instant case that question must receive attention.

The city of Columbus has of course inherent and common-law power to make contracts generally, but it does not follow that by virtue of the .consent provisions of Section 9197, General Code, it has power to stipulate a rate as a condition to the consent, and this must be our next inquiry, and we will first -discuss the matter upon principle, without regard to precedent.

The right to contract generally, and the discretion to give or withhold consent, are not identical propositions, but they have much in- common, The consent to the use of the streets being discretionary and optional with the city, it may give such consent without imposing conditions of any kind, or it may adopt the opposite extreme and refuse consent altogether. Between these two extremes there is a middle course in which the consent may be given subject to the utmost detail of conditions.

Where the utility has no franchise to use the streets and alleys and can only acquire the right to such use by consent, the granting of the consent is not a mere formality which the utility may demand as of right, but on the contrary the city lawmakers have certain business functions to perform, among which is the duty to use judgment and discretion in imposing reasonable and proper conditions to the grant. These conditions may assume a great variety of forms. The lawmakers might require the payment of a lump sum of money; they might forego any money consideration and impose very exacting conditions as to care, repair, maintenance and restoration of streets, and indemnity against loss, damage and liability; they might take the view that the utility is so beneficial and so necessary to. the welfare and development of the city that it would be wiser to make no charge and impose no burdensome conditions, thereby making it possible for the utility to operate cheaply, on condition that a favorable rate be made to the citizens for product and service. Any of these conditions or stipulations would constitute a valid consideration for the use of the streets, and any of them would be such a consideration as would accrue to all citizens even though not all of the citizens should contract for and use the service.

It has been urged that a stipulation for a favorable rate would not be a proper consideration for a consent to a telephone company because a large percentage of citizens do not directly employ the service. The same is true of every utility, yet it does not follow that because they are not directly benefited they may not be benefited indirectly. Telephones have become a public necessity, or at least a very great convenience which benefits every member of society, as well those who have their own phones as those who use their neighbors’. Business places conduct business better and more economically. A high telephone rate tends to increase the general living cost and a lower rate tends to reduce it.

The very name “utility” indicates general public use and necessity and it is only on that theory that the police power is invoked and state supervision and regulation exercised. The claim that a stipulation for a maximum rate for service cannot be made a part of the consideration for the consent is not justified. The consent is purely discretionary with the city, and no one would contend that mandamus would lie to compel the consent, or that any power other than the legislative body of the city could dictate the terms and conditions.

Every public utility owes three duties and obligations : first, not to abfise the streets so as to create a nuisance; second, to provide adequate service and facilities; third, to charge a reasonable rate.

If any of these elements is lacking, there is an omission of duty, pro tanto, and it follows that the city and its citizens are-not receiving their due. If an unreasonable rate is charged, there is a detriment to the consumer just as clearly as though the service or facilities were inadequate. The damage differs only in kind, not in degree. If these premises are true, then the conclusion is irresistible that the city authorities would be remiss in their duty and unfaithful to their trust if they did not carefully safeguard all these three elements, including rates.

We have therefore reached the conclusion that the rate stipulation is upon reason and principle a valid condition to the consent contract. Let us, however, discuss briefly some of the authorities upon this question.

In the state of Michigan the statute is quite similar to Section 9197, General Code, and the adjudication's in that state should therefore be valuable. In the case of Mahan v. Michigan Telephone Co., 132 Mich., 242, on the subject of contracts entered into under favor .of consent provisions, the syllabus contains the following statement: “Although a telephone company has a right to maintain a telephone exchange in a city under reasonable rules and regulations made by the city, yet it may, by accepting an ordinance,,enter into contractual relations with the city, and be bound to perform the terms and conditions of the ordinance.”

It will be seen that in Michigan the telephone companies may use and occupy the streets as a matter of right, the statute merely containing a proviso that consent of the city authorities must first be obtained. In the Ohio statute the consent is a condition precedent to the right to construct underground conduits.

This proposition was again before the Michigan courts in a gas case, entitled Boerth v. Detroit City Gas Co., 152 Mich., 654. In that case the question arose under the city charter of the city of Detroit, which gave the common council the right to control, prescribe and regulate the manner in which the highways and streets within the city should be used and enjoyed. The statute under which the gas company was organized provided that the company should have power to lay pipes or conductors “with the consent of the municipal authorities * * * under such reasonable regulations” as the city may prescribe. Under this state of the law, the court, made the following declaration (18 L. R. A., N. S., 1197): “A municipal corporation has authority to fix by contract the rates which shall be paid by its inhabitants for gas furnished by a public-supply corporation under statutory authority to consent to the laying of the gas main in its streets under such reasonable regulations as it may prescribe.”

In the case of Chas. Simons Sons Co. v. Maryland Telephone & Telegraph Co., 99 Md., 141, the court of appeals of Maryland dealt with a very similar proposition. The statute is as follows: “The Mayor and City Council of Baltimore shall have power to regulate the use of the streets, lanes and alleys in said city by railway or other tracks, gas or other pipes, telegraph, telephone, electric light or other wires and poles,, in, under, over or upon the same, and may require all such wires to be placed under ground, after such reasonable notice as they may prescribe.” The syllabus in that case (63 L. R. A., 727) is:

“The duty to furnish service at specified rates may be imposed by a municipal corporation having statutory authority to regulate the use of its streets by a telephone company.
“A telephone company which accepts the conditions as to rates to be charged by it imposed by a municipal corporation as a condition to its use of the streets for its conduits, cannot complain that the rates are not reasonable.”

In the state of Kentucky the constitution provides that a city may sell franchises at public sale to the highest and best bidder for a term not exceeding twenty years. Pursuant to that constitutional authority it was decided in the case of Moberly v. Richmond Telephone Co., 126 Ky., 369, as follows:

“A city may annex any lawful condition to the exercise of a franchise granted to a public service corporation, which condition becomes a part of the contract under which it is thenceforth used.
“Where a city granted a franchise for the operation of a telephone line, it was competent to provide as a condition that the rates for service to citizens should not exceed a schedule fixed in-the ordinance, or any future ordinance properly adopted.”

In the state of Texas the statute gives telephone and telegraph companies the right to use streets and alleys of municipalities, and such right is absolute except for the limitation that the city authorities may by ordinance specify where posts, piers or abutments shall be located, the kind of posts that shall be used, and the height at which the wires shall be run. Pursuant to this very meager authority given to municipalities it was held in the case of Athens Telephone Co. v. City of Athens, 182 S. W. Rep., 42, that if in a franchise there'is a stipulation providing a maximum charge for telephone rentals, such charge cannot thereafter be raised above such maximum, and that a telephone company voluntarily accepting the rate imposed by a franchise cannot thereafter contest its reasonableness or refuse to furnish service at such rate.

In the case of City of Emporia v. Emporia Telephone Co., 88 Kans., 443, it was. held not only that the provision as to rates would be binding but also that the principle of estoppel applies.

The syllabus of that case is in part as follows:

“The principle of estoppel applicable to a public service corporation claiming that its contract with a city was ultra vires the municipal corporation is considered and applied.
“The rates for telephone charges prescribed in an ordinance adopted and accepted in the year 1900, and agreed to by an assignee ■ of the privileges granted by such ordinance in the year 1905 as a condition of the municipal consent to the transfer, (such consent being necessary under the terms of the ordinance), will govern until action is taken by the state or by its authority.”

In the state of Indiana the statute provides that the common council shall have exclusive power over the streets, highways, alleys and bridges within cities; and the power to establish a rate had not been expressly delegated. Nevertheless, in the case of Muncie Natural Gas Co. v. City of Muncie, 160 Ind., 97, the supreme court held not only .that the municipality can stipulate a maximum rate in a franchise allowing a gas company to lay pipes in the streets, but also held that the gas company, while continuing to use the streets under such franchise-contract, is estopped from claiming that the city has not power to stipulate such rate.

In the state of Pennsylvania the constitution provides that no street passenger railway shall be constructed within the limits of any city, borough or township without the consent of its local authorities. Based upon this constitutional provision, the supreme court of Pennsylvania, in the case of Allegheny v. Millville, Etna & Sharpsburg Street Ry. Co., 159 Pa., 411, held that a municipality, as a condition of its consent, may require that the railway company charge a certain designated fare.

In the state of New York the statutes are similar to Ohio statutes, and it was held in the case of Rochester Telephone Co. v. Ross, 195 N. Y., 429, that an agreement as to rates made as a condition to granting consent was a valid stipulation in the contract.

In addition to the adjudications in courts outside of Ohio there are certain declarations by the supreme court of Ohio which strongly support the view that contracts between municipalities and utilities may contain valid stipulations agreeing upon rates and charges.

In the case of City of Lima v. Public Utilities Commission, 100 Ohio St., 416, the opinion written by Judge Matthias contains, on page 421, the following: “The right to contract for the product or service of a public utility necessarily includes the right and authority to agree on rates and charges. There can be no virtue in the right conferred upon municipalities to contract for the product or service of a public utility company if it is powerless to agree on the rate or price to be paid therefor, or, if, after such agreement is made, and during the period covered by the contract, its terms may be materially altered by the Public Utilities Commission. Aside from the proposition that the right to make such contract is now,conferred by constitutional provision, it is to be borne in mind that the powers of the Public Utilities Commission are conferred by statute and it possesses no authority other than that thus vested in it. The City of Cincinnati v. The Public Utilities Commission, 96 Ohio St., 270; The City of Washington v. The Public Utilities Commission, 99 Ohio St., 70.”

More recently, at the present term of this court, in the case of Link et al. v. Public Utilities Commission, 102 Ohio St., 336, the opinion written by Judge Matthias contains the following, statement, at page 339: “In this instance the city of Cleveland-passed an ordinance fixing the price for steam for heating purposes covering a period of five years. The Cleveland Electric Illuminating Company, in writing, duly accepted the provisions of such ordinance, without condition or reservation. By such unconditional acceptance the utility company agreed to continue to furnish its product and service for the ensuing period of five years at the stipulated rate. A contract between the city and the utility company for its product and service at the stipulated price, and for the period named, was thus made, and is binding upon both parties. City of Cleveland v. Cleveland City Ry. Co., 194 U. S., 517, and Columbus Railway, Power & Light Co. v. City of Columbus et al., 249 U. S., 399.”

If the conclusion is reached in this case that the franchise-contract of 1899 is valid, the doctrine of ultra vires would have no application and it would follow as a'natural sequence that it would not be necessary to invoke the doctrine of estoppel.

On the other hand, let us assume for the purposes of the argument that the contract is invalid, and ultra vires the city of Columbus, and from that standpoint discuss the question as to whether or not under such circumstances The Ohio State Tele-r phone Company is estopped from asserting ultra vires.

This contract was made in 1899, and by virtue of its terms the telephone company acquired valuable rights and has exercised privileges which are presumably of great value to it, for a period of approximately eighteen years, before invoking the power and authority of the Public Utilities Commission. Furthermore the telephone company is still occupying and using the streets and alleys of the city and desires to continue to do so. The relations, powers and duties of the parties are therefore to be measured and determined not upon the theory that the contract is executory, but upon the theory that it is an executed contract, or at least partly executed. It would be impossible for the telephone coftipany to give up and restore to the city the advantages it has enjoyed during the period of approximately twenty years, and it is not even tendering restoration and surrender at this time of the use, occupation and other advantages which, it is enjoying at the present time. Surely the principle of entirety of contract must apply to this case, and it is elementary that one party to a contract, whether entire or divisible, may not invoke the aid of a court for relief from certain conditions and obligations of a contract and at the same time claim the benefits and advantages of other features of the contract: It is well settled that as a general rule the doctrine of estoppel does not preclude the state, and this rule is urged by counsel for the telephone company. It is our view of the matter, however, that although the state through its agency, the Public Utilities Commission, has made the order in this case, the fact remains that the order was made at the request and for the benefit of the telephone company in a controversy in which the city of Columbus and not the state of Ohio is the adversary party. The rule that the doctrine of estoppel cannot be invoked to prevent the state from setting up a claim of ultra vires is equally applicable to municipalities, and if there is any force and effect to be given to the rule it ought therefore to be in favor of the city of Columbus in its contentions in this controversy.

A distinction is properly drawn in the application of the principle of estoppel against setting up the claim of ultra vires between cases in which contracts are contrary to public policy or expressly or impliedly prohibited by statute and cases where there is a mere defect of power on the part of the municipality to enter into the contract, where in fact the other party has entered' upon the execution of the contract and continues to enjoy its benefits and advantages. In the first class of cases it is settled beyond controversy that the contract is absolutely void and that it cannot be made valid by any subsequent act, but there is a long line of very respectable authorities which hold that in the latter class o„f cases the doctrine of estoppel applies.

In addition to the cases of City of Emporia v. Emporia Telephone Co., 88 Kans., 443, and Muncie Natural Gas Co. v. City of Muncie, 160 Ind., 97, heretofore cited, there are a number of other Indiana authorities, and the same doctrine has been declared in the following cases outside of Ohio: City of Manitowoc v. Manitowoc & Northern Traction Co., 145 Wis., 13, 19; Jersey City v. North Jersey St. Ry. Co., 72 N. J. L., 383, 391; State, ex rel. Borough Rutherford, v. Hudson River Traction Co., 73 N. J. L., 227, 235; Chicago General Ry. Co. v. City of Chicago, 176 Ill., 253, 259; People, ex rel. Jackson, v. Suburban Rd. Co., 178 Ill., 594, 607, and City of St. Louis v. Davidson, 102 Mo., 149.

This question has received some attention at the hands of this court in several cases in which the situation is sufficiently similar to make the declarations therein found of some value. In the case of Farmer v. Columbiana County Telephone Co., 72 Ohio St., 526, it was held that estoppel could not be invoked, but it was particularly stated in that case as the reason for so holding that the agreement which had been made between the municipality and the telephone company was one in which the telephone company had received no consideration whatever for its promise. Under the law the telephone company had the right to use the streets and alleys of municipal corporations for overhead construction without the necessity of obtaining the consent of such municipality, and therefore the attempt of the city to impose conditions as to rates was wholly without force or effect. The court therefore held that there was no contract. In the opinion at page 532, the court made the following declaration: “It follows from what has preceded that the municipality possessed nothing in the way of a valuable right to bestow upon the Company. Hence the promises of the Company to do what it was not, and could not by the city be required'to do, was a naked promise, without consideration. • It therefore fails as a contract, and it is difficult to see how Farmer & Getz could take advantage of a nude pact to raise an estoppel, a pact to which they were in no wise parties, or privies in the eye of the law, and against a party with whom they had no contract or other legal relations whatever themselves.”

The above-quoted declaration and other declarations found in.the opinion clearly show that the court was basing its conclusion entirely upon the fact that there was no contract, and it fairly follows conversely that if there had been a mutual contract based upon a proper consideration a different conclusion would have been reached.

The later decisions of this court, however, throw further light upon this proposition. In the case of Interurban Ry. & Terminal Co. v. City of Cincinnati, 93 Ohio St., 108, we find in the syllabus the following significant language: “The acceptance of the grant by the company constituted a binding contract between the parties. As, long as the company retains the franchise and operates its road thereunder its terms must control.”

The language of the above-quoted syllabus is adopted and carried into the first paragraph of the syllabus in the case of Interurban Ry. & Terminal Co. v. Public Utilities Commission, 98 Ohio St., 287. While the word “estoppel” does not appear either in the syllabus or in the opinion in either of these cases, that part of the language which we have emphasized and italicized clearly states the principle of estoppel. The doctrine of ultra vires has its foundation in public policy and its chief value consists in being a brake upon improper corporate action, to be enforced while the contract is still executory. But in the instant case the parties have proceeded too far under the contract, and have received and are still holding too many benefits and advantages under the contract, without making any effort toward reimbursement or restoration or surrender of those benefits and advantages, to be permitted to invoke the benefits of the doctrine at this time.

If the state has conferred upon the municipality the power to make a valid contract, including the stipulation of a rate, and if pursuant to such power so given a contract has been made in which a rate has been stipulated, and no review thereof under favor of Section 614-44 is authorized, then the state has lost the power to revoke or revise such rate, because the obligation of the contract and the rate therein established are inviolable under the guaranty of both State and Federal Constitutions, Section 28, Article II of the State Constitution, and Section 10, Article I of the Federal Constitution.

If on the other hand it be conceded for the sake of argument that a rate-contract 'made under legislative authority may afterwards be regulated by an. agency created and empowered by legislative enactment, it becomes important to ascertain whether the agency (the Public Utilities Commission) has acted under specific authority of statute.

It is claimed that the state has acted through the agency of the Public Utilities Commission. It then becomes necessary to inquire into the powers of the commission.

It has been decided several times that the commission is a creature of the statute and.that it has no authority except such as is invested in it by statute. (Interurban Ry. & Terminal Co. v. Public Utilities Commission, supra, and City of Cincinnati v. Public Utilities Commission, 96 Ohio St., 270.) We must therefore look to the statutes to ascertain whether express power has been given to abrogate the rate-contract between the city of Columbus and The Ohio State Telephone Company.

The powers conferred by statute upon the Public Utilities Commission are in the most general terms, and the only specific provisions contained therein, giving the right to terminate existing contracts, are found in Section 614-19, General Code, which apply only to contracts for an indeterminate period, or those which by their terms may be terminated by notice.

That section cannot, therefore, apply, because the franchise of 1899 runs twenty-five years and is not terminable by notice.

It is claimed by counsel for the telephone company that authority for regulation of this contract is found in Section 614-47, General Code. This section reads as follows:

“This act shall not apply to any rate, fare or regulation now or hereafter prescribed by any municipal corporation granting a right, permission, authority or franchise, to use its streets, alleys, avenues or public places, for street railway or street railroad purposes, or to any prices so fixed under sections 3644, 3982 and 3983 of the General Code, except as provided in sections 46, 47 and 48 [G. C. §§ 614-44, 614-45 and 614-46] of this act.”

It is argued that since the foregoing section provides that the act shall not apply to certain rates prescribed by municipal corporations, therefore, by virtue of the maxim expressio unius est exclusio alterius, it does not apply to all rates prescribed by municipal corporations other than those therein mentioned.

Section 614-47 cannot aid unless by its express terms the power is clearly conferred to revise and regulate' a compulsory municipal rate. To, invoke the aid of the maxim is to admit that the authority is not express, but is only implied, if it exists at all..

It is further claimed, however, because severál companies were merged in 1914, and because the consolidation required the approval of the commission by virtue of Section 614-61, General Code, and because the further provisions of Section 614-61 authorize the commission to regulate and determine the rate to be charged by such. consolidated company, and because in this instance the commission did in fact determine the rate thereafter to be charged, that authority for changing the rate is found in Section 614-61, General Code.

There are several good and sufficient answers to this proposition. In the first place the city of Columbus was not a party to the consolidation proceedings, and while the commission might make binding and enforceable orders upon the telephone companies as a condition to granting authority to consolidate, it could have no power to make any order against the city of Columbus which would- not be acceptable or agreeable to it. In the second place, if the commission had special power in the matter of imposing rates upon telephone companies, as a condition to approval of the proposed merger, it seems that the power was exercised and the commission in fact did determine that the contract rates theretofore established should be the rates thereafter to be charged.

We do not hold that the órder of the commission fixing the rate at the time the consolidation was approved exhausted its power over rates. Our holding is that it did not have the power to revise and regulate a contract.

If the rates fixed by contract in 1899 had proved to be exorbitant in 1914, the commission might have so ascertained and might have required a reduction as a condition to granting approval of the merger, because the telephone companies were submitting themselves to the jurisdiction; but it does not follow that the city of Columbus would be bound to submit to an increase, because it was not a suppliant.

We are therefore forced to conclude that the provisions of Section 614-61 do not aid the telephone company.

The language of the court of appeals of New York in the case of In re Quinby v. Public Service Commission, 223 N. Y., 244, 263, is applicable:

“In the absence of clear and definite language conferring without ambiguity jurisdiction upon the public service commission to increase rates of fare agreed upon by the street railroad and the local authorities we should not unnecessarily hold that the legislature has intended to delegate any of its powers in the matter, whatever its powers may be. The Public Service Commissions Law (§ 26, §49, subd. 1) and the Railroad Law (§181) deal with maximum rates of fare established by statute but make no reference in terms to rates established by agreement with local authorities.
“In regulating rates three courses were open to the legislature:
“1. To prescribe rates itself. 2. To delegate the power to the Commission. 3. To leave the matter to agreement between • the street railroad company and the local authorities. It has constitutionally conferred on the public service commission certain functions (Matter of Trustees of Village of Saratoga Springs v. Saratoga Gas, E. L. & P. Co., 191 N. Y. 123), which plainly include the power to regulate rates fixed by statute, and while it may be said that it has undertaken to delegate to the public service commission ‘the same power’ that it has to regulate rates of fare (Railroad Law, § 181) it is impossible to find a word in the statutes which discloses the legislative intent to deal with the matter of rates fixed by agreement with local authorities.”

The law of the state of New York and the facts of that case to which the law was applicable are so parallel to the law of the state of Ohio and the facts of the instant case to which the same is applicable that the foregoing pronouncement of the court of appeals of New York, if sound, must be decisive of the instant case. Counsel for the telephone company have evidently seen the matter in this light and have endeavored to show that the court of appeals of the state of New York in the case of People, ex rel. Village of South Glens Falls, v. Public Service Commission, 225 N. Y., 216, has either overruled that case or so far distinguished it as to render it of little value. We have therefore carefully examined the later New York case and find that Justice Crane in rendering the principal majority opinion has stated very definitely that the case is not inconsistent or contrary to the principles declared in the Quinby case and has so clearly distinguished the two' cases as to show that the latter was not intended in any sense to overrule the declarations of the former. Justice McLaughlin in a concurring opinion reached the same conclusion and at great length points out the distinctions and the lack of conflict.

It is further claimed by the telephone company that the order of the commission in this case is valid because it was made as an emergency order under authority of Section 614-32, General Code. The only emergency shown to exist, however, is a pending proceeding to revise and regulate rates, and a claim that due to increased costs the former rate was inadequate.

The section provides that this emergency power shall exist when deemed by the commission “necessary to prevent injury to the business or interests of the public or any public utility,” and that its action shall be temporary. The commission is to judge the' emergency, but its judgment will be reversed on review if “unreasonable and unlawful.” Surely, even if the business of the utility is temporarily conducted at a loss, no emergency is presented, any more than if, due to a business depression, the cost of furnishing service would be greatly reduced making the rate a very profitable one for the time being. We have no hesitation in holding that such situations are not emergencies.

The greatest objection to Section 614-32 is that like Section 614-23 it is general in its terms and not specifically made applicable to rates made by voluntary contract.

It is not even suggested that any other provisions of the public utilities laws have any bearing upon the matter.

Our conclusion therefore is that no express power has been conferred by statute upon the commission in clear and definite language to increase the rates fixed by contract, and that whatever the powers of the'state may be they have not been delegated to the Public Utilities Commission.

This view is supported by this court in the case of Interurban Ry. & Terminal Co. v. Public Utilities Commission, 98 Ohio St., 287, from which we quote, page 299: “Moreover, we are not able to find that the legislature has attempted to confer upon the public utilities commission the authority to change rates fixed by contract between the company and local authorities.”

Again, from page 302, we quote: “The general, assembly not having provided that the commission may interfere with valid and binding contracts, we may well conclude that it excluded them from consideration.”

While that case involved a franchise-contract with an interurban railway company, and while the provisions of the statute conferring power upon the municipality to make contracts with interurban railroad companies and to fix terms and conditions of the grant are much-more comprehensive than the provisions of Section 9197, General Code, nevertheless we have reached the conclusion that this is a valid and binding contract and the declarations of this court in that case therefore have equal force in the instant case.

Reference has been made by counsel on both sides to several decisions of the supreme court' of the United States. We think a careful examination of those cases will disclose that the aupreme court of the United States has not a.t any time made any declarations which would destroy voluntary contracts fairly entered into.

In the case of City of Cleveland v. Cleveland City Ry. Co., 194 U. S., 517, the principle of the inviolability of such contracts is clearly recognized.

The case of Puget Sound Traction, Light & Power Co. v. Reynolds, 244 U. S., 574, has been cited and Commented upon by counsel for the telephone company. But an examination of that case and of the constitution and statutes of the state of Washington shows that the provisions of the constitution and statutes of that state have an important bearing upon the decision. The constitution permits certain cities to frame charters for their own government, but further provides that such charters must be “consistent with and subject to the constitution and laws of this state.” The charters are therefore made specially subject to legislative authority, and based upon this provision there was no difficulty in holding that the public utilities act would supersede any ordinance or charter provision of any city which would come in conflict with state laws. The dissimilarity of the Ohio Constitution makes that case without value as an authority.

In the case of Walla Walla City v. Walla Walla Water Co., 172 U. S., 1, it was held that the grant by the municipality to fhe water company of the right to lay pipes and mains in the streets upon certain stipulated conditions was a contract which was protected by the federal constitution against impairment of its obligations. It was held that all contracts entered into between municipalities and others are valid and immune against any law or state constitution impairing their obligations, unless such contracts are “prejudicial to the peace, good order, health or morals of its inhabitants.”

In that case the court further states that the rulings of the court that a city council cannot bind itself nor its successors to contracts are confined to cases of that class.

It cannot possibly be claimed that the contract between the city of Columbus and the telephone company contains anything prejudicial to the peace, good order, health or morals of the community, and the conclusion is therefore reached that the declarations of the supreme court of the United States do not justify the supervision, regulation or termination of the contract.

From all the foregoing discussion of principles and authorities we conclude that although by the provisions of Section 9197, General Code, definite and specific power was not given to prescribe -by compulsion a telephone rate, nevertheless the consent provision of that section necessarily implies the power to contract for a rate and that the legislature has not in definite and specific terms conferred upon the Public Utilities Commission the power to supervise, regulate or terminate such contract.

The franchise-contract .was made in 1899 and’ must be construed and enforced according to the standard of laws in force at that time. Laws existing in 1899 are read into and become a part of the contract. But this is not true of laws enacted thereafter. The public utilities act was not enacted until May 31, 1911. Even if the provisions of the act were broad enough and specific enough to clearly empower the commission to revise and regulate the rates in the contract of 1899, upon what principle would such provisions be valid? For aught that appears the contract was fairly entered into. The telephone company has received its “quid,” the city of Columbus must receive its “quo.” Why should the telephone company be permitted to exercise its franchise to the end of the term and yet be relieved from the obligation of the most important consideration which moved the city to grant the franchise, and except for which the city might have withheld its consent altogether? Upon this point we quote from the opinion in Interurban Ry. & Terminal Co. v. Public Utilities Commission, supra, at page 302. Referring to the consents of abutting property owners as a condition to municipal grant of railway franchise it is said: “The presumption is that such consents are given in consideration of the terms of the grant to be complied with by the company, including the rate of fare agreed on. It would not only be a vain and empty arrangement, but a deceptive one, if these provisions could be disregarded and the company nevertheless retain and exercise all of the valuable rights and privileges granted to it in consideration thereof.”

Reference has been made by counsel on both sides to the constitutional amendments of 1912, known as the home-rule amendments. In the view we have taken of this matter the home-rule provisions need not be invoked. Neither do we think they have any bearing upon the matter. If, on the other hand, it is contended that the public utilities act of May 31, 1911, can affect a contract entered into in 1899, then it would seem that a constitutional provision adopted in 1912 ought to have at least as much effect as the statute of 1911. It will of course not be disputed that if the franchise-contract had been entered into after January 1, 1913, there would be no cause for controversy. In our view of the case, the only effect the home-rule amendments can have upon a contract theretofore entered into is to indicate the policy of the state.

Much of the difference of opinion between counsel arises from the fact that counsel for the telephone companies treat this contract as an effort to fix, or impose, or prescribe by compulsory process a rate to the telephone companies, while we think the correct view is that maintained by counsel for the city, that the contract was voluntary.

While we have examined every .authority cited in the exhaustive and voluminous briefs of counsel, we cannot discuss all of them within the reasonable compass of this opinion. We believe the principles herein declared are controlling and that nearly all of the cases cited can be either distinguished or reconciled.

We therefore hold that the city had the power to give or withhold its consent to the use of its streets for underground conduits; that as one of the conditions to such consent it might stipulate a maximum rate for a period of twenty-five years; that such a stipulation was agreed to by the telephone company and observed by it without objection for approximately eighteen years; that the contract in which consent was given subject to the condition that the maximum rate therein named would be observed was valid; and that its obligations may not be impaired.

Johnson, J.,

concurring. Inasmuch as the members of the court who join iti the judgment differ as to the grounds upon which they concur, I briefly set forth my views.

The only parties to the franchise-contract in controversy are the city and the telephone company; and the first question we encounter is, Was it a valid and binding contract between those parties?

Sections 9197 and 9198, General Code, which are the sections under which the franchise-ordinance was passed, contain provisions under which telephone companies may construct and maintain underground wires and pipes or conduits in the streets and public ways of any city or village “when the consent of such city or village has been obtained therefor.” Section 9198 provides that such consent shall be given t>y the council in cities or villages.

All the essential steps necessary for the execution of a valid franchise-contract between the parties were taken in this case.

The numerous authorities cited in the briefs of counsel establish the proposition that where the municipality has the right to withhold or to grant its consent at will, it has ample power to include among the terms of the grant provisions for adequate service at reasonable and fixed rates. And the acceptance by the company of the terms and conditions of the grant constitutes a contract between the two parties.

As an illustration of many cases holding this view, it is said in City of Manitowoc v. Manitowoc & Northern Traction Co., 145 Wis., 13, at page 26: “Inasmuch as the city might on any terms refuse its consent to the use of its streets by interurban cars, we see no reason why it might not exact any conditions it saw fit, provided they were not unlawful in themselves, and as to the parties to the contract there was nothing unlawful about the condition we are considering. The decided cases fully sustain this view. We therefore hold that the parties were competent to make the contract entered into.” To the same effect are 3 Dillon on Municipal Corporations (5 ed.), 1952, and Pond on Public Utilities, § 431.

In the case of Farmer et al. v. Columbiana County Telephone Co., 72 Ohio St., 526, the question presented here was not before the court. It did not involve a construction of the section which required the consent of the municipality for the construction of the conduit.

However, it is very urgently and properly pointed out by counsel that in the case now before us the public utilities commission of the state, as' the representative of the state, is a party, and is here insisting that the existence of the franchise-contract does not stay the arm of the state in the exercise of its legislative rate-making power in the premises. Under the circumstances of this case has the state the paramount authority to regulate rates under the police power, in disregard of the franchise-contract ? This is the decisive question here. Cases in which the litigation was solely between the municipality and the company do not assist in its solution.

In Interurban Railway & Terminal Co. v. Public Utilities Commission, 98 Ohio St., 287, some phases of the question were presented and the authorities concerning them were fully examined and the rules stated. It would be wholly unprofitable to repeat what was said there. It is sufficient to say that the leading case, Home Telephone & Telegraph Co. v. City of Los Angeles, 211 U. S., 265, is one of the many cases there examined, and the following language quoted from it at page 273: “It has been settled by this court that the State may authorize one of its municipal corporations to establish by an inviolable contract the rates to be charged by a public service corporation (or natural person) for a definite term, not grossly unreasonable in point of time, and that the effect of such a contract is to suspend, during the life of the contract, the governmental power of fixing and regulating the rates. [Citing cases.] But for the very reason that such a contract has the effect of extinguishing pro tanto an undoubted power of government, both its existence and the authority to make it must clearly and unmistakably appear, and all doubts must be resolved in favor of the continuance of the power.”

The above comprehensive statement of the relation of the state to the municipality, and to contracts made by the latter under the authority of the state, has been declared in very many cases in the federal and state courts. As said by Mr. Justice Day in Milwaukee Electric Railway & Light Co. v. Railroad Commission of Wisconsin, 238 U. S., 174, at page 180: “This proposition has been so frequently declared by decisions of this court as to render unnecessary any reference to the many cases in which the doctrine has been affirmed.” No estoppel can apply to the state. Where it has retained the power, it acts whenever the public weal demands.

In Interurban Co. v. Public Utilities Commission, supra, the franchise-contract there involved was examined and was found to have been entered into pursuant to a clear and unmistakable grant of power in that behalf.

For many years the statutes of Ohio have contained provisions granting explicit authority to municipalities to make contracts for the furnishing of gas to cities and villages, to construct street railroads, and as to other matters, and to fix rates and fares in those contracts.

Now as to the franchise involved in this case, Section 9197, General Code, provides that the telephone company shall have the right to construct and maintain underground wires and conduits, etc., for containing, protecting and operating such wires in the streets and public ways of the city “when the consent of such city * * * has been obtained therefor.”

Assuming that the language just quoted cannot be said to make the clear and unmistakable grant of power, which is necessary under the decisions of the supreme court of the United States and of many states, as well as of this court, to suspend during the existence of the contract the governmental power of fixing and regulating rates, still it must be kept in mind that there is no such requirement so far as the binding validity of the contract between the parties themselves is concerned. That requirement only relates to the power of the state to interfere in the exercise of the police power for the public welfare.

As said in City of Traverse City v. Citizens’ Telephone Co., 195 Mich., 373, at page 384: “Accepting it as permissive- only, it remains valid between the parties until such time as the reserved State control is asserted and interposed against it. The statute conferring controlling powers upon the railroad commission does not of itself abrogate the contract.”

In Milwaukee Electric Railway & Light Co. v. Railroad Commission of Wisconsin, supra, at page 183, the following is quoted from Manitowoc v. Manitowoc & N. Trac. Co., 145 Wis., 13, 28, and approved by the supreme court of the United States: “No specific authority having been conferred on the city to enter into the contract in question, the right of the state to interfere whenever the public weal demanded was not abrogated. The contract remained valid between the parties to it until such time as the state saw fit to exercise its paramount authority.” This proposition has been declared in many cases.

It is very important in the consideration of cases such as this to keep in mind the distinction between the power of the state and its municipalities to regulate rates by compulsion, and the right of a city to exercise its contractual power in the making of a franchise-contract with a public service company. The power to regulate rates is the exercise of the police power by the legislative authority. The company property having been devoted to a public use must yield to public regulation in the interest of the public welfare. That power must be reasonably exercised, and in no degree confiscatory. A contract is a different matter. It. is not compulsory, it is voluntary. It implies parties capable of contracting, and a meeting of their minds upon the thing they contract about and as to the considerations for the contract.

Subsequent to the making of this contract, and while it was in full legal effect and being carried out by the parties, and before the taking of any step whatever with reference thereto by the public utili-ties commission, Sections 4 and 5 of Article XVIII of the Constitution were adopted in September, 1912. By that amendment the municipalities of the state were given plenary power to deal with the subject involved in this controversy. Since that amendment they have full and exclusive authority in the making of contracts for the product or service of public utilities free from any supervisory or other control by the state. Those provisions are self-executing. . -

This court has considered and enforced those constitutional provisions in a number of cases which are familiar. Dravo-Doyle Co. v. Village of Orrville, 93 Ohio St., 236; Link v. Public Utilities Commission, 102 Ohio St., 336; Ohio River Power Co. v. City of Steubenville, 99 Ohio St., 421, and City of Lima v. Public Utilities Commission, 100 Ohio St., 416.

In the latter case it was held that when the municipality and a utility contract for its service and fix in the contract the rate for such service, the public utilities commission is not empowered to authorize the utility, to exact the payment of a charge in excess of that agreed upon.

As already stated this franchise-contract was made prior to the' adoption of the constitutional amendment referred to, and if the contract had not been binding on the parties when made, or if the city had exceeded its authority in any way in the making of the contract, or if the contract had any infirmity in itself, the subsequent adoption of the constitutional amendment would not give vitality to that void or infirm contract. So far as the validity of the contract itself is concerned, it must be determined by the law in existence at the time it was made. This contract was in every respect valid and binding between the parties when made. There was no infirmity in it. So far as the contract is concerned it has remained valid between the parties until the present. The company has asserted its right to enjoy all the privileges conferred by it. While this contract perfectly valid between the parties was in existence' and was being performed by the parties, the state surrendered its supervisory right over the contractual power of the city. The people by constitutional amendment explicitly conferred that power — a part of the sovereignty — on the city. The state no longer sustains the relation to the city which permits it to set aside and disregard the contract in the exercise of its police power. That is now the fixed public policy of the state declared in its constitution. Some cases are cited in which constitutional amendments, made after a contract is entered into, are referred to. But I have seen none which conferred on the city absolute explicit power to deal with the subject as the Ohio amendment does.

In addition to what has been said it must also be noted that the public utilities commission is an administrative board. Its powers are specially conferred by statute and it has been repeatedly held that it has no authority other than thus conferred. City of Cincinnati v. Public Utilities Commission, 96 Ohio St., 270; Sylvania Home Telephone Co. v. Public Utilities Commission, 97 Ohio St., 202, 207; City of Lima v. Public Utilities Commission, 100 Ohio St., 416, 422; City of Washington v. Public Utilities Commission, 99 Ohio St., 70, and Village of Oak Harbor v. Public Utilities Commission, 99 Ohio St., 275, 282.

In Interurban Railway v. Public Utilities Commission, supra, it was pointed out that no specific authority had been conferred upon the public utilities commission in Ohio to interfere'with contracts between municipalities and public utilities, and that in the absence of such a grant there was no such authority. That is, in Ohio, so far as the public utilities commission’s power is concerned, the state, where there is a contract, leaves the parties where it finds them. My views as to that feature of the case were set out at length, together with the authorities concerning it, in the Interurban case, supra, and there is no need for me to repeat that discussion here.

Hough, J., concurs in the foregoing concurring opinion.

Wanamaker, J.,

concurring. Four of the members of this court agree on this judgment. We disagree, however, as.to the routes of reason by which the judgment isi arrived at. The importance of the question to the .public, no less than the amount involved to the telephone companies, justifies ' at least a brief statement setting forth the grounds for my concurrence.

The full statement made by the Chief Justice in his opinion renders unnecessary more than a brief reference to such facts as become pertinent in my view of the case.

A franchise contract with the telephone company was entered into by the municipality in 1899 for the period of 25 years. In 1914, under a provision of the public utilities statutes, application was made for a merger of certain companies, which merger was allowed, pursuant to the statute, but no order was made changing or attempting to change the franchise rates theretofore existing. The public utilities commission, however, pretended to expressly reserve, such authority under the provisions of the statute.

Thereafter, an application was made to the public utilities commission to increase the telephone rates beyond the franchise ordinance rates, in accordance with a certain schedule filed by the telephone company with the commission, to which objectiohs were duly made, on the ground, among others, that the commission was without constitutional authority to act by reason of the said 25-year franchise ordinance contract being in full force and effect.

The public utilities commission finally made an order substantially changing the former telephone rates under the ordinances of the municipality, by increasing them. Error is prosecuted by the municipality to reverse that decision. '

The leading question therefore is whether or not such alterations, or change in franchise contract rates, made by the public utilities commission under color and authority of one of the sections of the public utilities statutes, is an exercise of constitutional power under the national constitutional provision, Section 10, Article I, which reads:

“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque or Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

It will be observed that this section denies the exercise of certain powers upon the part of the state, or any of the agencies of the state, and that that denial of power is expressly made in the national constitution. The particular power here denied to the state, involved in this case, is that no state shall pass any “Law impairing the Obligation of Contracts.”

This is a plain provision of the people’s constitution. The language of the law, the organic constitutional law, is direct. There is nothing doubtful about it. We know what a contract is. We know what the obligation of a contract is. Possibly the word “impair” is somewhat unusual. Webster’s International Dictionary defines it thus, “To make worse; to diminish in quantity, value, excellence, or strength; to deteriorate,” and gives the following synonyms: “Diminish, decrease, deteriorate, reduce, weaken, enfeeble.”

Certainly to wholly destroy an obligation is' to diminish that obligation, or “impair” that obligation. If to destroy part of it is to diminish it or “impair” it, surely to destroy all of it woüld be of like legal or constitutional effect.

In the business world nothing should be more sacred than the inviolability of contracts; their integrity and the integrity of all parties thereto. Confidence is necessarily the cornerstone of all commerce, and it will not do to hold compacts between individuals or individuals and the public, or even between nations, as “mere scraps of paper.” The kaiser provoked á world war because the contracts and obligations resulting from a solemnly entered treaty imposed no obligation upon him. On the other hand, Belgium was to be invaded, without any cause or provocation upon its part, merely because treaty rights and obligations and contracts were to be henceforth treated as “mere scraps of paper.”

With like effect contracts involving millions and billions of dollars in the business world have been cancelled, impaired, destroyed, because somebody’s profits were affected thereby. The obligation of a contract is as evanescent as temperament, and seems to be determined not by considerations of conscience, but by considerations of profit. Our patriotism in protecting our constitution must not be spelled “paytriotism.”

But it is claimed that this franchise ordinance contract entered into in 1899 was not a valid obligation between the telephone company and the municipality.

After fifteen years of operation under the contract by both sides, each carrying its respective burdens and taking its respective benefits under the same, it would be an exceedingly doubtful policy to permit either party to complain of the invalidity, while still holding the benefits under the contract. Some things are so obviously unjust-, illegal, and unconscionable, that no argument is necessary to prove them.

Under the old common law, for centuries, when a community became a public corporation, agreeable to law, one of the first powers with which it became endowed was the power of contract. Indeed it would not be a corporate entity to any purpose without that power.

I am fully aware that Farmer v. Columbiana County Telephone Co., 72 Ohio St., 526, holds the contrary. A reading of the opinion in that case discloses neither reason nor authority to support the proposition, especially in view of the common-law power of every corporation. Though that decision still stands unreversed it cannot overturn by mere dictum the old established common-law doctrine, which has become settled as the law of the land. That decision has not yet become stare decisis in Ohio, though written by one of the most eminent judges of our supreme court. The common-law principle of power of contract vested in every municipality with regard to its municipal and proprietary functions is inherent, and is the very life of the corporation, except as it may be limited by state or national constitution.

Judge Thurman, in his very able opinion in the old case of Cass v. Dillon, 2 Ohio St., 607, holds exactly contrary to the Farmer case, supra, and at page 622 supports the same by authoritative and historic statement of facts and principles, in the following words:

“Again: The constitution did not create the municipalities of the state, nor does it attempt to enumerate their powers. It recognizes them as things already in being, with powers that will continue to exist, so far as they are consistent with the organic law, until modified or repealed. Thus there is no express provision that a county may make a road or contract a debt, yet no one will doubt for a moment that it may do both. Indeed, its power to contract debt is recognized, -beyond even the authority conferred by law. It is clearly assumed in section 5 of article 8, that it may create debts to repel invasion, suppress insurrection, or defend the state in war, although no such power has ever been conferred by statute, so far as I can discover. If it can thus incur debts, it may, of course, levy taxes to pay them; notwithstanding its-only express grant of the taxing power is, by section 7 of article 10, for ‘police purposes,’ The same thing may be said of townships, cities, towns, and villages

But, it may be said that what we have under, consideration here is not a “law,” because not an act of the general assembly, the legislative brahch, whose action is necessary to pass a law as ordinarily viewed; that it is, after all, only an “order” of the public utilities commission.

I think it will be readily conceded that the legislature can not pass an act directly nullifying these franchise ordinance contracts. May the legislature, nevertheless, create a' commission and authorize such commission to nullify such ordinance contracts, even upon hearing and notice to all parties, so long as either party to the contract objects? It is elementary, that what the legislature may not do directly as principal, it may not do indirectly through its agents. To hold otherwise, would be to make our constitutional provisions the playthings and shuttlecocks of the politicians and profiteers, and would reduce them to such a state of confúsion and chaos that the public could not know what the law was until the supreme court had passed on each and every controversy.

The legislature cannot create an agency, board or commission to do an act which the constitution says that the principal may not do. However, the denial is not an express one to the legislature; it is, upon the other hand, an express denial to the state, and it is the state that is acting through the public utilities commission as one of its governmental agencies. Therefore the power granted to the public utilities commission, however solemnly vested, or pretended to be vested by the general assembly of Ohio, is null and void, because prohibited by our Federal Constitution.

I am quite aware that there are decisions to the contrary, decisions that take the people’s plain provisions of their own organic law and give them a twist and technical squint till they become substantially meaningless. Be it remembered, however, that the constitution was not made by judges, nor for the judges. It was made by the people, for the people, through their representatives. Presumably it expresses in general, germane terms the sense of the whole people, and is not to be perverted so as to express the sense or financial interest of any mere group.

John Marshall, who rarely cited a case as an authority to sustain a principle, but rather declared and demonstrated the sense and soundness of the principle, and its application to the case at bar, laid down this fundamental doctrine of constitutional interpretation in Gibbons v. Ogden, 9 Wheat. (22 U. S.), 1, at page 188:

“As men whose intentions require no concealment, generally employ the words which most directly and aptly express the ideas they intend to convey, the enlightened patriots who framed our constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what thev have said.”

As a corollary to this proposition regarding the use of broad general terms, so characteristic of constitutions, Judge Ranney, in his dissenting opinion in Cass v. Dillon, supra, at page 634, uses this language, clear, and commendable in all constitutional construction: “This case, throughout, furnishes another and forcible illustration of the absolute necessity * * * of comprehending, clearly, the spirit and object of the provision, and of holding that cases within its equity are included within it, and governed by it.”

He then continues':

“If this be true of statutory enactments, how eminently so of constitutional provisions, necessarily expressed with brevity, and designed to declare great principles in the fewest possible words. To the judicial tribunals belongs the duty of applying-these principles to individual cases; * * * the polar star to guide the judicial mind, should be the object intended to be accomplished by the provision ; and it should be so construed as to preserve this in full vigor, unimpaired by evasion, although in doing so the letter may not be strictly adhered to.”

Too much legal ingenuity is today employed in advising clients how to do a perfectly unlawful thing in a prima facie lawful way, and in advising courts to do a perfectly unconstitutional thing in a prima facie constitutional way. Whether or not such sophistry shall succeed depends upon whether the' courts shall regard the substance of things, or merely the surface of things.

It is self-evident that the thing aimed at by the federal constitutional provision, in declaring against the impairment of the obligation of contracts, is to prevent repudiation in whole or in part of any such obligation; and any act, order or law, by the state or any of its agencies, that effects such impairment, is clearly and conclusively prohibited, and therefore unconstitutional.

Not very long ago the great corporate interests of the country were the loudest and longest in defending the sacredness of this provision of the constitution; but as profits began to diminish they temporarily reversed their position in this behalf, and are now pleading that this former sacred provision is meaningless as against the police power.

The absurd position that the police power under our- constitution is above and beyond other provisions of the constitution is too ridiculous to admit of any argument. It is self-evident that police power represents more than 90 per cent, of all governmental power. Eliminating the power of taxation and the power of eminent domain, little remains of government but the police power, in one form or another, and to hold that constitutional limitations are not restraints upon police power, the same as upon any other governmental power, is to open wide the doors of government toward the supremacy of the autocrat, toward irresponsible government, and un-American government, and to make a mere scrap of paper of our constitutions.

Police power is a much-abused term. It is not found in the Declaration of Independence, the Federal Constitution, or our State Constitutions. It is a judicial invention, and because of its great dimensions, limited only by the constitutions, courts have refused to define it. with exactness or precision. It is probably best represented as Uncle Sam, the policeman, exercising the great governmental power of policing the people so as to preserve their powers and privileges, their rights and liberties, as recognized, limited and guaranteed by our constitution.

The police power is all represented within the popular provision obtaining expressly in nearly all the state constitutions, and by implication in our national constitution, that “All political power is inherent in the people.” Of course this includes police power as well as every other power, and when the people delegate that power, or deny that power to any governmental agency, such delegation or denial must by its very nature be either exclusive or paramount, which in practical effect are substantially synonymous.

Now Section 10, Article I of the Constitution of the United States, is of necessity, a limitation upon ithe police power of the state, as well as upon every other governmental power of the state. If the fathers had meant it otherwise, it is to be presumed they would have clearly so said. It is therefore immaterial what purpose the law which seeks to impair that obligation may be designed to serve. It is immaterial that it may have some pretended benevolent purpose, or that it is designed- to be a so-called emergency. If it impairs the obligation, that is enough to make it unconstitutional.'

But it is urged that this public utility service is a matter so affected by public interests that the public are not bound by this constitutional limitation. But the people are bound by constitutional limitations no less than the individual, and the bonds and bounds of the constitution cannot be set aside by any less authority than the power that made them.

My second reason for concurring in this judgment is that the public utilities act of 1911', passed one year before the new constitutional amendments of 1912, is subordinated necessarily to the later constitutional amendments, especially Sections 3, 4 and 5, Article XVIII of the Ohio Constitution.

The sovereign people of the state by direct grant in the Constitution of 1912 gave the sovereign people of tlie city not only “all powers of local self-government,” as provided in Section 3, Article XVIII, but also the more particular specific “power to contract” for the “product or service” of public utility corporations.

This is the first appearance of this provision 'in Ohio constitutions, and it appears nowhere else, either expressly or impliedly, than in the article dealing with municipal corporations.

I hold that this express grant from the sovereign people of the state to the .sovereign people of the municipalities is clearly and conclusively an exclusive grant, which neither the legislature nor any other branch of the government may ignore, alter or modify.

One of the latest cases dealing with this 18th Amendment is that of City of Elyria v. Vande-mark, 100 Ohio St., 365. In that case the general assembly of Ohio had undertaken to classify certain cities, particularly the city of Elyria, and then to provide for a certain form of government for such legislatively classified cities. This court held that the act of the legislature in the matter of classification of cities, under the 18th Amendment, was unconstitutional. The following judges concurred in that opinion: Nichols, C. J., Jones, Matthias, Johnson, Wanamaker and Robinson, JJ. Judge Matthias, at page 371, of the opinion, uses this course of reasoning:

“The constitution adopted in 1912 did not leave to the legislature the matter of classification of municipalities. The constitutional convention retained the provision that 'General laws shall be passed to provide for the government of cities and villages,’ substantially as in the former constitution, but in furtherance of its manifest and clearly expressed purpose to take from the legislature the power theretofore exercised by it relative to the government of the municipalities of the state and to confer such powers of local self-government directly upon the municipalities themselves the constitution provides in Section 1, Article XVIII, that 'Municipal corporations are hereby classified into cities and villages. All such corporations having a population of five thousand or over shall be cities; all others shall be villages. The method of transition from one class to the other shall be regulated, by law’.”

It is to be exercised within constitutional limitations by such agency.

In this case the sovereign people saw fit not to exercise the power themselves, under Sections 3, 4 and 5. That would be impracticable. But they delegated that power to the sovereign people of the municipality, through the muriicipal government agencies, to be determined by the people themselves; and, when this express grant of power was made to the municipality, by the doctrine announced in the Elyria case, supra, “It thereby withheld that subject absolutely and entirely from legislative control and permitted it to be no longer a matter of statutory jurisdiction.”

In short, what had been, delegated to the municipality had been denied to the state.

This express grant of the people of the state to the people of the municipality is therefore clearly and conclusively an exclusive grant, not only of “all powers of local self-government,” in the general sense, but specifically of the power to contract for the product or service of any public utility furnishing a product or service to the municipality or its inhabitants; and neither the legislature or any branch of the government other than the grantee of the constitution may alter, modify, or in any wise exercise such power.

If it be otherwise, what the principal, the people, do, may at any time be undone by the agents of the people, the legislature, the courts, or a board or commission of the state.

Our judicial duty to support and sustain these several provisions of the state and national constitutions is specifically required by our oaths. These oaths, however, do not require us to support any decision of any court or any legislative act of the general assembly of the state of Ohio, especially where the same is repugnant to our organic law, our constitution.

We have applied this principle to safeguard the jurisdiction of our court. (Cincinnati Polyclinic v. Balch, 92 Ohio St., 415; Wagner v. Armstrong, 93 Ohio St., 443.) We have applied this principle to safeguard the right of candidates for public office, and the right of the people to elect them to the same. (Fulton v. Smith, 99 Ohio St., 230.) We have applied this principle with reference to the constitutional classification of cities. (City of Elyria v. Vandemark, supra.) We have also applied it in numerous other cases involving essentially the same principle. Why should we not apply this same principle in safeguarding the rights of the people, three million and more of them, in our municipalities, who use the service of the public utility companies, pay for said service, police said service, and are solely and directly affected by such service by virtue of the fact that they are a municipal corporation?

I have not thought it worth while to deal with the various statutory provisions involved in this case, further than heretofore mentioned. A statute cannot exceed the constitutional delegation of power, nor a constitutional denial of power. It is therefore to the constitution we must look for the people’s rights as well as for those of the telephone company.

Much has been said in behalf of the telephone companies about “bartering away” the police power; that the state may not do such a thing. This, after all, is only a play upon words, because it is self-evident that the state and all of its political agencies must be held to faithfully and fully observe all its contractual obligations, and things have come to a pretty pass when the police power may be successfully invoked to enable a party to escape or avoid any portion of a just obligation under a contract validly entered into, as this contract was, and as all parties believed it to be and operated under it for more than fifteen years.

These two constitutional provisions, one national, the other state, are so obvious and obligatory upon this court, that it is difficult to understand how there could be any division of opinion about their plain and potential application.

This drawing of distinctions on the surface by courts, where there are no differences in substance, is the proximate cause of much of the confusion and uncertainty of the law, much of the confusion and uncertainty as to constitutions and courts. We will never get back to the safeguard of constitutional government until we' permit to the full the natural and ordinary meaning of the people’s language in the operation of the people’s law. What the constitutions prohibit, courts must not permit by any legal legerdemain.

Jones, J.,

dissenting. The judgment in this case is supported by a bare majority, who are unable to agree on a syllabus. An inspection of the opinions supporting it discloses a divergence among the three judges announcing their individual opinions. And it is not clear why the Ohio Constitutional Amendment of 1912 has been referred to, for it may be conceded that the validity of the contract in question, as stated by Johnson, J., is to “be determined by the law in existence at the time it was made.”

In the present case the judgment of the majority is based upon the fact that in 1899 a municipality had, by virtue of a consent .statute, the power to fix a maximum rate for a period of years by an agreement between itself and the public utility, and thereby nullify the state’s power thereafter to fix the telephone rates through its commission. Were the state not a party attempting to invoke the jurisdiction of its commission in the exercise of its sovereign power, the application of the authorities cited in the majority opinions would be germane. But the decision is predicated upon the following erroneous assumptions:

First. It overlooks the fact that the state is here seeking to exercise its own powers, and the question, involved is not what obligations may have existed between the contracting parties, inter sese, arising out of their rate contract.

Second. It mistakenly assumes that the conduit consent statute gives the city and the utility the right to fix rates which the state- Is powerless to change.

In 1899 a franchise and maximum-rate contract between these parties was entered into. It is nowhere claimed that there was any express power of rate regulation of telephone companies resting in the municipality at the time the contract was made. The only authority given the municipality at that time was contained in Section 9197, General Code. That section is as follows:

“Any company * * * in any city or village in this state, may construct and maintain * * * conduits and other fixtures for containing, protecting and operating such wires in the streets and public ways of such city or village in the state, when the consent of such city or village has been obtained therefor.”

The majority opinion holds that by virtue of this consent statute, empowering the city to grant or withhold its consent to the telephone company, the municipality had as incident thereto the right also to contract with reference to the.rates which should govern during the time of the franchise.

It has been uniformly held that the regulation of rates is a police power, that the police power is one of the sovereign powers of the state, and that this power cannot be renounced unless the renunciation is expressed in clear and unequivocal language.

State, ex rel. City of Toledo, v. Cooper, County Auditor, 97 Ohio St., 86; Milwaukee Electric Ry. & Light Co. v. Rd. Comm. of Wisconsin, 238 U. S., 174; Union Dry Goods Co. v. Georgia Public Service Corp., 248 U. S., 372; Home Telephone & Telegraph Co. v. City of Los Angeles, 211 U. S., 265, 273; Portland Ry., Light & Power Co. v. City of Portland, 210 Fed. Rep., 667, 671; Stone v. Farmers Loan & Trust Co., 116 U. S., 307; Chicago Railways Co. v. City of Chicago, 292 Ill., 190, 195, and City of Richmond v. Chesapeake & Potomac Telephone Co., 127 Va., 612.

In 1899 there were other public utilities with which municipalities were granted the express power of contract, with reference to rates, but no such statute appears governing rate contracts made with telephone companies. It has been uniformly .held in this state that municipalities have only the powers expressly granted by the legislature or those impliedly necessary to carry such express powers into effect. Townsend, v. City of Circleville, 78 Ohio St., 122; Ravenna v. Pennsylvania Co., 45 Ohio St., 118, and Ohio Electric Ry. Co. v. Village of Ottawa, 85 Ohio St., 229, 237.

It has been decided by the supreme court of this state in two cases, one reported with and the other without opinion, that under our statutes affecting telephone rates municipalities do not have the right to fix rates for telephone charges. In Farmer v. Columbiana County Telephone Co., 72 Ohio St., 526, decided in 1905, it was held that telephone companies obtain their power to construct their lines in municipalities from the state; that municipalities have only the power to agree with telephone companies as to the mode of use and for such compensation only as may be necessary to restore the streets to their former state of usefulness. “They have not power to exact or receive compensation by way of free telephone service for themselves or for citizens, or to fix rates for telephone charges.” This case has not been overruled.

Just one year earlier this court, in the case of City of Findlay v. Findlay Home Telephone Co., reported without opinion in 70 Ohio St., 507, affirmed the circuit court decision of Macklin against the same company (Macklin v. Home Telephone Co., 1 C. C., N. S., 373, 14 C. D., 446), which had upheld the same principle.

This is not a case where a contract has been entered into between the parties by virtue of express authority given to fix rates, as with other utilities. This is a case where no authority has been expressly granted other than that consent may be given by the municipality to the utility for the occupation of its streets by a conduit. Where statutes of this character have been under consideration by the courts it has uniformly been held, that, where the state or its commission is involved, grants to a municipality by a state legislature enabling it to grant franchises either by its consent or by the imposition of terms or conditions do not empower the municipality to fix rates beyorid the. control of the state thereafter to change. And in connection with this feature of the case the majority opinions clearly ignore the later cases upon this subject, where this question arose under exercise of the reserve powers of the state acting through its commission. The principle herein contended for is announced both by state and federal courts as will be seen by an inspection of the following cases: Home Telephone & Telegraph Co. v. City of Los Angeles,, 211 U. S., 265; City of Pawhuska v. Pawhuska Oil & Gas Co., 250 U. S., 394; Producers Transp. Co. v. R. R. Comm. of California, 251 U. S., 228; Puget Sound Traction, Light & Power Co. v. Reynolds, 244 U. S., 574; Columbus Ry., Power & Light Co. v. City of Columbus, 249 U. S., 399; Union Dry Goods Co. v. Georgia Public Service Corp., 248 U. S., 372; Milwaukee Elec. Ry. & Light Co. v. Rd. Comm. of Wisconsin, 153 Wis., 592; People, ex rel. Village of South Glenn Falls, v. Public Service Comm., 225 N. Y., 216; Chicago Rys. Co. v. City of Chicago, 292 Ill., 190; Central Union Telephone Co. v. Indianapolis Telephone Co., 126 N. E. Rep., 628, 630; City of Washington, Ind., v. Pub. Service Comm., 129 N. E. Rep., 401; Hoyne, State’s Atty., v. Chicago & Oak Park Elevated Ry. Co., 294 Ill., 413; City of Richmond v. Chesapeake & Potomac Telephone Co., 127 Va., 612.

The following cases hold that consent statutes of this character do not give municipalities authority to fix rates which are beyond the power of the state to modify.

In the case of People, ex rel. Village of South Glenn Falls, v. Public Service Comm., supra, a similar statute was involved. There the New York statute, provided that gas companies were empowered “ 'to - lay conductors for' conducting gas through streets * * * zvith the consent of the municipal authorities thereof, and under such reasonable regulations as they may prescribe.’ ”

In September, 1900, the village of Glenn Falls granted the gas company the right to use the streets of the village for the term of 50 years, and provided that as a consideration therefor the company should charge no greater rate than $1.25 per 1000 cubic feet for illuminating or fuel gas. In August, 1917, the company increased its rate to $1.50 per 1000 cubic feet. Thereupon in the following January the village of Glenn Falls made complaint to the public service commission, asking that the gas company be restrained from raising its rates above $1.25 per 1000 cubic feet, alleging that the franchise of 1900 constituted a valid knd binding contract for the full term of 50 years. The question determined by the N. Y. Court of Appeals was whether the public service commission had the power, under the circumstances mentioned, to regulate the price of gas. It was held that rate regulation being a matter of police power, the public service commission had authority to regulate charges made by the gas company, distinguishing the case of Matter of Quinby v. Public Service Comm., 223 N. Y., 244, and reversing the appellate division which had held that the public service com-, mission had no power over the matter and had granted the demand of the village that the company should be prohibited from charging more than the rate fixed in 1900.

In the case of Milwaukee Electric Ry. & Light Co. v. Railroad Comm. of Wis., 238 U. S., 174, the supreme court of the United States had under consideration the Wisconsin statute, which provided that .a municipal corporation might grant to any corporation the right to construct, maintain and operate street railways and their use “upon such terms as the proper authorities shall determine,” etc. Justice Day at page 183, quoted the following from the opinion of the chief Justice in a former Wisconsin case: “‘No specific authority having been conferred on the city to enter into the contract in question, the right of the State to interfere whenever the public weal'demanded zvas not abrogated. The contract remained valid between the parties to it until such time as the State sazv fit to exercise its paramount authority, and no longer. To this extent, and to this extent only, is the contract before us a valid subsisting obligation. It would be unreasonable to hold that by enacting Sec. 1862, Stats. (1898), or Sec. 1863, Stats. (Supp. 1906: Laws of 1901, ch. 425), the State intended to surrender its governmental power of fixing rates. The power was only suspended until such time as the State saw fit to act.’ ”

A similar question arose in the case of City of Winchester v. Winchester Water Works Co., 251 U. S., 192. There a Kentucky statute provided that the board of council of a municipality may grant a right of way over public streets to any railroad or street railroad company “on such conditions as to them may seem proper,” etc. Justice Day in that case says of that statute: “This language is certainly very far from that express authority to regulate rates, which is essential in order to enable municipalities so to do.”

We can see no difference between a statute imposing “terms and conditions” and a statute imposing “consent.” If anything the former implies greater municipal authority. However, both relate to manner of occupancy, and cannot, by any sophistry, relate to, the fixing of rates. Whether one term or the other is used, how is it possible to say that the state in either case has renounced its own power of rate fixing “in clear and unequivocal-language?” Counsel cannot find a statute anywhere wherein a municipality has been granted power over telephone rates. The statutes of Ohio do grant explicit power of rate fixing as to other various utilities. And the very lack of such granted power as to telephone companies is a strong argument that nope was intended.

In the case of Chicago Rys. Co. v. City of Chicago, 126 N. E. Rep., 585 (292 Ill., 190), it was held that the “Provision of Mueller Law providing that city authorities may consent to location or construction of street railroad upon street for period not exceeding 20 years, upon such terms not inconsistent with the hct as the city authorities deemed in public’s best interest, does hot confer upon the city authorities the right to contract with railway company for rates of fare for 20-year period free from legislative control.”

Cartwright, J., in that connection says, at page 200: “It is perfectly clear to us that the statutory provision that consent may be granted by corporate authorities to locate or construct a street railroad upon or along any street for any period not longer than twenty years, upon such terms and conditions, not inconsistent with the act, as the corporate authorities shall deem for the best interests of the public, does not clearly and unmistakably confer upon the corporate authorities the right to contract with the street railway company for rates of fare for a period of twenty years free from legislative control.”

As apropos to this feature of the case, distinguishing some of the cases cited in the majority opinion, the judge continues, at page 201 :■ “It may\ be true that the constitutional and statutory provisions imply authority of a municipality “to make an agreement with the public utility as to rates binding on the parties to the contract so that neither one can repudiate the contract with the other and it can only be abrogated by them by mutual consent, but that is a very different proposition from authority to deprive the State of its right to regulate fares, and lower them if found to be excessive and more than reasonable compensation for the service performed, or to raise them if so low as riot to be fair, just and reasonable to the public utility.”

Section 4, Article XI, of the Illinois Constitution, provides: “No law shall be passed by the General Assembly granting the right to construct and operate a street railroad within any city, town or incorporated village, without requiring the consent of the local authorities having the control of the street or highway proposed to be occupied by such street railroad.” On October 23, 1920, in Hoyne, State’s Atty., v. Chicago & Oak Park Elevated. Ry. Co., 128 N. E. Rep., 587 (294 Ill., 413), the supreme court of Illinois held that such provision of the constitution “neither abridges nor denies the state’s right to regulate or fix the rates for street railway companies.”

In the Indiana case City of Washington, Ind., v. Public Service Comm., 129 N. E. Rep., 401, in speaking of the question.of consideration, Ewbank, J., said that the case was controlled, so far as a question of rate making is concerned, “by the many cases which have held that a mere grant of power to consent that a public utility company shall use the city streets does not include power to make a contract that such company shall be exempt from further regulation of its charges, or any of them.” And the learned judge continues: “The rule that a contract by a city, or by a private corporation or individual, fixing the rate at which a public utility company shall perform a service to such contracting party, for a period of years, cannot deprive the legislative authority of power to prescribe and enforce the payment of a higher rate of charge for such service within the period covered by the contract, where the state has in no way surrendered that right, has been declared so often in this and other jurisdictions that we shall content ourselves with citing a few of the decisions.” Some twenty decisions are accordingly appended to his opinion.

In the case of the City of Richmond v. Chesapeake & Potomac Telephone Co., 127 Va., 612, 616, the “city having the right under its charter and by, the general law (Code 1887, sec. 1287) to prohibit any telephone company from occupying the streets of the city with its lines without the consent of the council, by ordinance of October 15, 1901, granted a franchise” and fixed a rate for 30 years, and it was held by the supreme court of Virginia that this consent did not deprive the state of the power to change the rate fixed in the ordinance, and that the commission had the power to raise the rates above those fixed by the franchise.

Citation of further authorities upon tliis question would only tend to display the .overwhelming weight of opinion in its support.

Counsel for the city cite the states of Michigan, Maryland, Kentucky, Texas, Kansas, Indiana, Pennsylvania and New York, wherein the court of last resort of those respective, states, under statutes giving municipalities authority to consent, decided that as incident thereto a municipality had the right to fix rates: Mahan v. Michigan Telephone Co., 132 Mich., 242; Boerth v. Detroit City Gas Co., 152 Mich., 54; Charles Simons Sons Co. v. Maryland Telephone & Telegraph Co., 99 Md., 141; Moberly v. Richmond Telephone Co., 126 Ky., 369; City of Emporia v. Emporia Telephone Co., 88 Kans., 443; Muncie Natural Gas Co. v. City of Muncie, 160 Ind., 97; Allegheny (City) v. Millville, Etna & Sharpsburg Street Ry. Co., 159 Pa. St., 411, and Rochester Telephone Co. v.Ross, 195 N. Y., 429.

These early cases from the states named can be readily distinguished by later decisions of the courts of those states. In the first place, the controversies involved in those.decisions arose largely before the commissions of the various states were created, through which the state exercised its police power to regulate the rates of public utilities. The earlier cases cited involve controversies between the parties themselves, to which the state itself was not a party. The distinguishing’principle is stated by Mr. Justice Day in Milwaukee Elec. Ry. & Light Co. v. Rd. Comm. of Wisconsin, 238 U. S., 174, in the following quoted language: “The contract remained valid between the parties to it until such time as the State saw fit to exercise its paramount authority, and no longer. * * * That power was only suspended until such timé as the State saw fit to act.” There is respectable authority which holds, as does Farmer v. Columbiana County Telephone Co., supra, that the utility, is not even then bound. There the state had not exercised its authority.

Let us now take the later decisions from the same states, upon the same question, where the litigation arose between municipalities and the state commission.

In Michigan, it was held in 1918, City of Traverse City v. Michigan Rd. Comm., 168 N. W. Rep., 481 (202 Mich., 575): “Where a city without a specific grant of legislative power to fix rates of common carriers enters into a franchise contract fixing the rates to be charged by a telephone company, such contract is subject to the reserved right of the state to change the rates.”

In Maryland, Yeatman v. Public Service Commission, 126 Md., 513, decided in 1915, it was held that “Contracts when entered into, even between individuals, are subject to the police, powers of the State, whenever such contracts relate to matters which are or may be subject to the exercise of such powers.”

In a case from Kentucky, City of Winchester v. Winchester Water Works Co., 251 U. S., 192, decided in 1920, it was held that a city cannot regulate the rates chargeable by a water company unless the authority to do so has been fully granted by the legislature. The Kentucky statute had provided that the board of council might grant the right of way over public streets “on such conditions as to them may seem proper.”

In City of Emporia v. Emporia Telephone Co., 88 Kans., 443, while authority for rate fixing was conceded by the court of that state under a consent statute, the judge delivering the opinion said that such consent “will govern until action is taken by the state or by its authority.”

In Pennsylvania, in City of Scranton v. Public Service Comm., 268 Pa. St., 192, decided in 1920, the supreme court of that state held that the city of Scranton, under a statute providing for the consent of its local authorities, was conclusively presumed to have known that the sovereign police power had power to modify the terms of the consenting ordinance, and in distinguishing the case of Allegheny (City) v. Millville, Etna & Sharpsburg Street Ry. Co., 159 Pa. St., 411, the court said: “The question in the case was solely between the City of Allegheny and the railway company; the Commonwealth was not a party to it; the question now under consideration was not involved.”

In Indiana, City of Washington, Ind., v. Pub. Service Comm., 129 N. E. Rep., 401, decided in 1921, Ewbank, Judge, after stating that the Indiana statute contained nothing suggesting the púrpose on the part of the legislature to expressly authorize the city to fix water rates,' Stated that the case was “controlled so far as the question of rate-making is concerned, by the many cases which have held that a mere grant of pozver to consent that a public utility company shall use the city streets does not include power to make a contract that such company shall be exempt from further regulation of its charges, or any of them.”

In the state of New York, in the case of People, ex rel. Village of South Glenn Falls, v. Public Service Comm., supra, decided in 1919, under a statute which provided that gas companies had the power “to lay conductors for conducting gas through streets * * * in each such city, village and town, with the consent of the municipal authorities' thereof,” the supreme court of that state held that the public service commission had authority to regulate the charges made by the gas company notwithstanding the municipal contract fixing rates.

In the case now under consideration an attempt is made to invoke the doctrine of estoppel against the state. It is difficult to conceive how the state could be estopped from the exercise of its police powers. If the municipality had no express authority to make the contract as to rates in 1899, the doctrine of estoppel naturally falls, for otherwise a municipality might tie the hands of the state by entering into a contract with a private corporation which the latter was powerless to make. However, the question of estoppel may be dismissed from the case under authority of Farmer v. Columbiana County Telephone Co., supra, wherein it is held that a rate contract made between the municipality and the utility at the solicitation of the latter did not create an estoppel under the Ohio telephone statute, even as against a telephone company which had solicited the rate and had acted under it.

“ ‘One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract about them.’ ” Union Dry Goods Co. v. Georgia Public Service Corp., 248 U. S., 372.

But it is said that there is no legislative power given to the public utilities commission of this state to review the question of rates. It will be observed that the facts disclose that there was á consolidation of telephone companies made by the public utilities commission on an application filed July 5, 1914. This was in compliance with statutory authority. Acting under the statute, the commission merged the various telephone companies, and then fixed the rate, as it was required to do under the consolidation act.

Section 614-61, General Code, provides that when such consolidation is made the same shall not become valid or effective until after the commission shall not only have determined the valuation upon which the rates are determined, but shall also “have fixed and determined such rates, tolls, charges and rentals so to be charged.” This was complete authority for the commission to fix the rates upon consolidation, and exercising its jurisdiction under that section the commission did fix the rates to be charged, and retained jurisdiction for further consideration of rates to be charged in the future. Whether the rate fixed at that time is to be considered an emergency rate, or not, it is unquestionable that the jurisdiction of the commission attached upon the rate feature of the case and the subject of rates to be charged was reserved under its order.

The whole scope of the public service commission act discloses that the entire jurisdiction over rates rests in the public utilities commission, with the exception (Sec. 614-47) that the act shall not apply to a rate prescribed by a municipal corporation granting a franchise for .street railroad or street railway purposes, or to prices fixed under other sections of the General Code, the exception not applying to telephone companies.

It is claimed that this is not a question in which the state is a party or in which it has any concern, but that the real dispute arises between the municipal corporation and the public utility. It would be difficult to find any case wherein the-jurisdiction of the public utilities commission is involved where the real controversy does not arise between the utility and the municipality. In all such cases, however, under the provisions of our Code, the state is a party to the dispute. It has enacted laws by which these disputes must be submitted to the commission. It has provided in effect that the commission’s orders are subject to review by the supreme court. Certainly the state is a party to the action, not only in the spirit by which it has passed laws reserving to itself the right of rate regulation between the parties, but also because it has provided a method by which the orders of its commission shall be reviewed. .If it should be declared by this court that this is merely a matter of controversy between the contractual parties, then it is difficult to see how, in any case, these rate questions could be reviewed by this court. It follows, therefore, that the following principles are sound:

First. There was no statutory authority granting municipalities the right to fix rates for telephone companies.

Second. The conduit statute provided that conduits should be laid in the streets of the city, with the city’s consent, but did not grant the municipality the right to fix and regulate rates for the future, so as to prevent the state thereafter from exercismg its power over that regulation.

Third. The state, therefore, having acted under its public utility law, through its public utilities commission, the parties to the alleged contract must submit themselves to the law requiring the public utilities commission to fix rates which should be charged. This being so, it necessarily follows that the' judgment should be affirmed.  