Commissioners' Opinion. the clerk of the district court plaintiff Appeal from District Court, Yellowstone Action by the Billings Utility Company against the Public Service Commission of Montana and another. From a judgment for BRANTLY, C. J., and REYNOLDS, COOP- defendants, and an order denying a new ER, and GALEN, JJ., concur. On Motion for Rehearing. PER CURIAM. The motion for rehearing is overruled. This court is not to be understood as having foreclosed inquiry as to whether the security mentioned became val ueless within the meaning of sections 6656 and 6657, Revised Codes. The question was not presented fully to the trial court. trial, plaintiff appeals. Affirmed. Nichols & Wilson, of Billings, for appellant. E. G. Toomey, of Helena, for respondents. cor JACKSON, C. On December 13, 1918, the poration, engaged in the public service of Billings Utility Company, a Montana furnishing hot water heat in the city of BillCommission its petition for an increased ings, Mont., filed with the Public Service If an amended affidavit is filed, the right of the defendants to move again to dissolve and to contest the allegations of the amend-rate. A hearing was had on January 17, ed affidavit is preserved. Rehearing denied. 1919, at which evidence in support of the company's petition was introduced, and the protestant. Montana Realty Company, was also heard. Subsequently Report and Order No. 259, Public Service Commission of Montana, was filed, denying the increase. 12 Mont. R. R. and P. S. C. 120. Thereafter this action was instituted in the district court to vacate and set aside the above-mentioned order on the ground that it was erroneous and unreasonable. Issue was joined by the answer of the Commission. The cause was tried to the court sitting without a jury, on May 9, 1919. At the trial, in addition to the transcript of the evidence offered at the hearing of January 17, 1919, new evidence was received. Pursuant to subdivision (b), § 26, c. 52, Session Laws of 1913, a copy of the new evidence was submitted to the Commission by the court, and, after having reviewed the same, the Commission declined to rescind, modify, or amend its order. Thereafter, the court 2. Constitutional law 70 (3)-Rate making heard the defense of the Commission, and on purely legislative act. Rate making is purely a legislative act, and as such the power of the courts is circumscribed and restrained in interference with determinations reached within the scope of legislative authority. 3. Public Service Commissions 7-Legislature may regulate public utilities through administrative medium. August 19, 1919, found fully in its favor. From the judgment and an order denying a new trial, plaintiff appeals. At the outset we cannot refrain from comment on the splendid brief filed herein on the part of the respondent, prepared by counsel for the Public Service Commission. Assistance of such material character is greatly appreciated. It aids the court in colThe Legislature has the undoubted author-lecting the authorities applicable, and in arity to regulate public utilities, and by means riving at an understanding and determinaof a duly constituted commission it operates tion in such an important case, with little through its administrative medium. 4. Public Service Commissions 15 Rates fixed for heat by Public Service Commission held not shown to be unreasonable or unlaw ful. Rates fixed for hot water heat by Public Service Commission after a valuation of the properties of the utility company under Laws 1913, c. 52, held not shown to be unreasonable, unlawful or erroneous. waste of valuable time in research. In their brief, counsel for plaintiff urge several errors, but on the oral argument they abandoned all save two questions, viz., the plan of fixing valuation of public utilities and the element of value contained in a "going concern." They expressly stated that no value could be given to the franchise, and that they had no right to ask for For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes (203 P.) a separate surplus fund; that it must be fair, for four years, making a depreciation created from dividends. of $12,400. On the earnings turned into physical property and the new capital, it takes an average term of two years at 5 per cent. on $70,835.23 as principal, making additional depreciation of $7,083.52. A total The Commission, before the hearing on the petition of December 13, 1918, had already granted increased rates to the company as follows: August 31, 1917, 5 cents per square foot of radiation, approximately 14 cents depreciation of $19,483.52, deducted from over the rate of 1915. This was an emergency order, which was continued by a supplemental order November 23, 1917; July 18, 1918, a second supplemental order, granting an additional increase of 2 cents per square foot; November 20, 1918, a further additional increase of 6 cents per square foot was granted. Thus it will be seen that during the period of price soaring on materials and labor, the Commission, appreciating the conditions, acted accordingly. the base $152,835.23, gives the value of the plant for rate making in 1919, in the sum of $133,351.71. It was shown at the trial that the results of nine months' operation under the rates attacked netted the company approximately 8 per cent. on the valuation of $180,000, and a little less than 11 per cent. on the valuation of $133,000. The following sections from chapter 52, Session Laws of 1913, quite clearly and unequivocally set forth the force and charac "Section 25. All rates, fares, charges, classifications and joint rates fixed by the Commission shall be enforced, and shall be prima facie lawful, from the date of the order until changed or modified by the Commission, or in pursuance of section 26 of this act," etc. The rate base finally fixed by the Commis-ter of rates and charges fixed by the Comsion is the real point of attack herein. It mission, the ground upon which recourse was established after having considered may be had to the courts, and the procedure four estimates made by competent experts. therein: No one of the tabulations submitted was in whole adopted, the Commission using its own discretion as to the values and depreciation. A diversity as to amount and method of ascertainment appears from a perusal of the different estimates, but it is unnecessary to weigh down this opinion with a mass of in"Section 26. Any party in interest being districate calculations. The Commission's val- satisfied with an order of the Commission fixing any rate or rates, fares, charges, classifications, ue of $133,351.71 rests on the 1914 base of joint rate or rates, or any order fixing any $82,000 the sum which Meyers, superintend-regulations, practices or services, may within ent of the plant, and more familiar with it than any other person, then thought the plant was worth, and to that amount was added every dollar which the company officials testify has been devoted to the plant since 1914. The additional sums were from two sources; $51,085.23 from rate earnings, and $19,750.00 new capital. This value of $82,000 was made under oath by Meyers, as receiver, before the present defendant came into possession, and it is highly unreasonable to assume that his estimate was less than the actual value, as he was endeavoring to realize every cent possible for the creditors. The same figure was reported by Meyers in his first annual report to the Pub lic Service Commission as the value of the plant on June 30, 1914, for rate-making purposes. For the "fair prices" on the "reproduction cost" theory, all of the engineers reverted to the years 1914 and 1915. What, then, as the defendant fairly urges, could be a better foundation for the Commission to select than the Meyers appraisal of 1914? Every increase of value added to the plant since 1914 is embraced in the additional sums mentioned. Depreciation, however, takes its toll. The Commission selected $62,000 as a depreciation base, excluding from the value of $82,000 the company's own valuation of realty at $20,000, and applied the rate of 5 per cent., agreed by all to be approximately ninety (90) days commence an action in the district court of the proper county against the Commission and other interested parties as defendants to vacate and set aside any such order on the ground that the rate or rates, fares, charges, classifications, joint rate or rates, fixed in such order is unlawful or unreasonable, or that any such regulation, practice or service, fixed in such order is unlawful or unreasonable," etc. "(a) No injunction shall issue suspending or staying any order of the Commission except upon application to the court or judge thereof, notice to the Commission having been first given and hearing having been had thereon; provided, that all rates fixed by the Commission shall be deemed reasonable and just, and shall remain in full force and effect until final determination by the courts having jurisdiction. "(b) If, upon the trial of such action, evidence shall be introduced by the plaintiff which is found by the court to be different from that offered upon the hearing before the Commission, or additional thereto, the court, before proceeding to render judgment, unless the parties to such action stipulate in writing to the contrary, shall transmit a copy of such evidence to the Commission, and shall stay further proceedings in said action for fifteen (15) days from the date of such transmission. Upon receipt of such evidence the Commission shall consider the same and may modify, amend, or rescind its order relating to such rate or rates, fares, charges, classifications, joint rate or rates, regulation, practice or service complained of in said action, and shall report its action thereon to said court within ten days from the receipt of such evidence. "(e) In all actions under this act the burden of proof shall be upon the party attacking or resisting the order of the Commission to show that the order is unlawful or unreasonable, as the case may be." [1] The rates fixed, as by the statute directed, are prima facie lawful, can be attacked in court on the sole ground that they are unlawful or unreasonable, shall be deemed reasonable and just until final determination by the courts and the burden of proof rests on the party antagonizing the order. [2] It is well-settled law that rate making is purely a legislative act, and as such the power of the courts is circumscribed and restrained in interference with determinations reached within the scope of legislative authority. [3] The Legislature itself has the undoubted authority to regulate public util. ities, and by means of a duly constituted Commission it operates through its administrative medium., "The establishment of a rate is the making of a rule for the future, and therefore is an act legislative, not judicial, in kind." Prentis v. Atl. Coast Line Co., 211 U. S. 210, 29 Sup. Ct. 67, 53 L. Ed. 150; Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77; Peik v. Chicago & N. W. Ry., 94 U. S. 164, 24 L. Ed. 97; Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362, 14 Sup. Ct. 1047, 38 L. Ed. 1014; St. Louis & S. F. Ry. v. Gill, 156 U. S. 649, 15 Sup. Ct. 484, 39 L. Ed. 567; Cincinnati, etc., Ry. v. I. C. C., 162 U. S. 184, 16 Sup. Ct. 700, 40 L. Ed. 935; Texas & Pac. Ry. v. I. C. C., 162 U. S. 197, 16 Sup. Ct. 666, 40 L. Ed. 940; I. C. C. V. Cincinnati, etc., Ry. Co., 167 U. S. 479, 17 Sup. Ct. 896, 42 L. Ed. 243; Railroad Commission Cases, 116 U. S. 307, 6 Sup. Ct. 334, 388, 1191, 29 L. Ed. 636; Smyth v. Ames, 169 U. S. 466, 515, 18 Sup. Ct. 418, 42 L. Ed. 819; McChord v. L. & N. Co., 183 U. S. 483, 22 Sup. Ct. 165, 46 L. Ed. 289. rates contrary to evidence, or without evidence to support it; or (6) if the authority therein involved has been exercised in such an unreasonable manner as to cause it to be within the elementary rule that substance, and not the shadow, determine the validity of the exercise of the power. [Citing cases.] "In determining these mixed questions of law and fact, the court confines itself to the ultimate question as to whether the Commission acted within its power. It will not consider the expediency or wisdom of the order, or whether, on like testimony, it would have made a similar ruling. ""The findings of the Commission are made by law prima facie true, and this court has ascribed to them the strength due to the judg-. ments of a tribunal appointed by law and informed by experience.' Ill. Cent. v. I. C. C., 206 U. S. 441. Its conclusion, of course, is subject to review, but when supported by evidence is accepted as final; not that its decision, involving as it does so many and such vast public interests, can be supported by a mere scintilla of proof; but the courts will not examine the facts further than to determine whether there was substantial evidence to sustain the order." Interstate Commerce Commission v. Union Pac. R. R., 222 U. S. 541, 32 Sup. Ct. 108, 56 L. Ed. 308. See, also, State Pub. Utilities Com. v. Springfield Gas & Elec. Co., 291 Ill. 209, 125 N. E. 891; Muskogee Gas & Electric Co. v. State (Okl.) 186 Pac. 730; M., St. P. & S. S. M. R. Co. v. R. Com., 136 Wis. 163, 116 N. w. 905, 17 L. R. A. (N. S.) 821. The various inven Commission or trial court with respect to There was nothing tangible before the tories and appraisals do not contain the "going concern" value. item, and there is no effort on the part of should be. For aught this court may know, the utility company to suggest what it cluded in the liberal estimate placed on the allowance for "going concern" may be incompany's real estate. The court has not the power to substitute showing it to be greatly less in value than its judgment for that of the Commission, the figure of the company, but the Commission allowed the company's valuation to stand. nor can it set the Commission's conclusions aside when they have been made lawfully and reasonably, within the proper sphere of authority. "There has been no attempt to make an exhaustive statement of the principle involved, but in cases thus far decided, it has been settled that the orders of the Commission are final unless: (1) Beyond the power which it could constitutionally exercise; or (2) beyond its statutory power; or (3) based upon a mistake of law. But questions of fact may be involved in the determination of questions of law, so that an order, regular on its face, may be set aside if it appears that (4) the rate is so low as to be confiscatory and in violation of the constitutional prohibition against taking property without due process of law; or (5) if the Commission acted so arbitrarily and unjustly as to fix There was evidence [4] However, with respect to both matters complained of, the burden of proof is upon the plaintiff company. The burden of showing that the rate established by the Commission was unlawful, unauthorized, unreasonable, or erroneous was plainly not sustained. There was ample evidence to support the action of the Commission, and the court was in duty bound to fully affirm its conclusion. For the reasons herein contained, we recommend that the judgment and order be af firmed. PER CURIAM. For the reasons given in the foregoing opinion, the judgment and order are affirmed. (118 Wash. 266) (203 P.) SMITH et al. v. TOWN OF TUKWILA. (No. 16593.) (Supreme Court of Washington. Jan. 11, 1922.) 1. Municipal corporations 374(4)—Evidence held to prove abandonment of contract by street contractors. In street contractors' action against town for work performed, evidence held to prove abandonment of the contract by the contractors. 2. Municipal corporations 358(1) Street contractors could not recover for work done without certificate of street committee, unless it was unfairly withheld. Where contract entitled contractors to certain per cent. of the contract price for the work completed during the preceding month "as shown by certificate of street committee," contractors could not recover amount due without producing such certificate, unless certificate had been unfairly withheld. 3. Municipal corporations 358 (2)-Committee members' report to town council as to amount due street contractors not sufficient under contract required certificate of street committee. Where contract entitled street contractors to a certain per cent. of contract price for work done during month "as shown by certificate of street committee," a statement by one of the members of the committee to the town council as to the amount due contractors held not sufficient for recovery of amount; a certificate signed by the street committee being necessary. 4. Municipal corporations 346-Contractors' bond, not complying with statutory require ments, held good as a common-law bond. Where street contractors' bond did not comply with requirements of Rem. Code 1915, §§ 1159, 1159-1, 1160, 1161, 1161-1, but was accepted by the town in good faith, the town could recover thereon as a common-law bond, on the contractors' default; there being no statute precluding the town from taking a bond other than that provided for in the statutes. Department 2. a bond, with Lee Monohon, whom we will hereafter call the bondsman, as surety. This action is to recover from the town damages for the alleged breach of contract. It was provided in the contract that on the 16th of every month the appellant would pay to the respondents, on certificate of the street committee, 80 per cent. of the contract price of the work completed during the preceding month. The breach alleged is that appellant failed to pay the installment due on Septem. ber 16, 1920, which amounted to $800, "as shown by the certificate of street committee," together with certain other sums on account of extra work. It is alleged that on September 16 demand was made on the appellant, which refused to pay the sums demanded; that demand was then made on the 18th of September and again refused, and at that time the respondents declared the contract forfeited. The Citizens' Bank of Renton, being the assignee of certain laborers' claims, recovered a judgment against the appellant and the bondsman, which had been paid by the appellant under a stipulation that such payment shall be without prejudice to the parties to this appeal. In the appellant's answer it denies the breach of the contract, and that the amount had been certified, and alleges that prior to September 16 respondents had quit and abandoned the work, and refused to proceed further with it, and as a cross-complaint asked for judgment against the respondents and their bondsmen, based on the abandonment of the work prior to September 16; the appellant claiming to have been put to the expense of completing the work left unfinished in a sum in excess of the contract price. This cross-complaint was answered by a general denial. As between the appellant and the bondsman, it is alleged that at the time of signing the bond it was the intention that two bondsmen should be secured, and that the bondsman was told by the respondents that they were not to file the bond until the other Appeal from Superior Court, King County; surety had signed, and it is therefore claimed John S. Jurey, Judge. Action by A. Smith and E. J. Fielding, copartners, against the Town of Tukwila, in which defendant filed cross-complaint against plaintiffs and another. From judgment rendered defendant appeals. Reversed, with di that the bond was void. [1] There are but two questions presented by this appeal: First, which raises a question of fact, is whether the respondents had quit and abandoned the work prior to September 16, when a payment would be due them. This question first makes necessary an examination of the testimony in the case, and Jones & Colvin and Riddell & Brackett, to our minds it overwhelmingly preponderall of Seattle, for appellant. rections. ates against the findings of the trial court Houser & Davis, of Renton, for respond- that there had not been such abandonment. ents. MACKINTOSH, J. Smith and Fielding, whom we will hereafter call the respondents, were the contractors for certain street grading in the town of Tukwila. They furnished A number of citizens, whose credibility is For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes is unnecessary to detail all of the testimony | vide that when a municipal corporation shall which forces this conclusion upon us. It is fail to take such bond, it shall be liable to only denied by the very uncertain testimony the full extent of the contract liability. They of one of the respondents, which denial is also provide that bonds shall be equal in attempted to be corroborated by the equally amount to the full contract price. uncertain evidence of two or three employees. Altogether, it is far from satisfactory, and cannot have the effect of overcoming the reasonable and positive testimony to the contrary. The respondents, having repudiated their contract, had created an anticipatory breach of it, which furnished an excuse for the other party not performing its part. Victor Safe & Lock Co. v. O'Neil, 48 Wash. 176, 93 Pac. 214; Calhoun, Denny & Ewing v. Pederson, 85 Wash, 633, 149 Pac. 25. [2, 3] Furthermore, upon this first point, the record establishes that respondents have failed to produce or request a certificate from the street committee, which was made by the contract a prerequisite to recovery of the installment due on the 16th of every month, and without such certificate the respondents could not recover such installments, unless the certificates had been unfairly withheld. Craig v. Geddis, 4 Wash. 390, 30 Pac. 396; De Mattos v. Jordan, 15 Wash. 378, 46 Pac. 402; Colby v. Interlaken Land Co., 88 Wash. 196, 152 Pac. 994; School District No. 75 v. Qualls, 95 Wash. 250, 163 Pac. 761. Although the respondents alleged that such a certificate was in existence, this allegation was denied by the appellant, and no proof was produced to show the certificate had ever been issued or demanded. The necessity of producing such certificate is sought to be avoided by the respondents on the ground that one Kline, who was a member of the town council, and also the city engineer and a member of the street committee, had, on September 11, reported to the town council the amount that was then due to the respondents. But such statement did not purport to be a certificate of the amount due on the 16th. According to the terms of the contract, a certificate was to be made, and surely this statement cannot amount to a certificate signed "by the street committee,” and there is no evidence that there was any conduct on the part of the appellant which amounted to wrongful, fraudulent, arbitrary, or unlawful refusal to allow the certificate to be made on the date called for by the contract. The truth is that before that date the contract had been abandoned by the respond ents. [4] Passing now to the second question, which involves the liability of the bondsman, it is to be noticed that the bond was furnished with but one surety. Sections 1159, 1159-1, 1160, 1161 and 1161-1, Rem. Code, are in regard to bonds to be required on public work, and provide that the town shall require bonds with two or more sureties, or with a surety company as surety, that the contract shall be faithfully performed, and that all laborers, etc., shall be paid, and pro The bond here does not meet any of the requirements of the statute. It had but one surety, and was not for the full amount of the contract price. The bond is therefore not a statutory bond, and the question is whether it is good as a common-law bond. We take it that the statutes cited do not compel the municipality to exact the bond there provided for, but that it may elect to proceed with the work under other guaranties of its performance, taking the risk incident to failure to secure the statutory bond. There is no question that the appellant accepted the bond in good faith at the time it entered into the contract, and, so long as the law does not provide that the municipality shall not take a bond other than that provided for in the statute, or that such bond, if taken, shall be without effect, we are constrained to hold that the bondsman will be liable as upon the common-law bond. Sears v. Williams, 9 Wash. 428, 37 Pac. 665, 38 Pac. 135, 39 Pac. 280; Pacific Bridge Co. v. U. S. F. & G. Co., 33 Wash. 47, 73 Pac. 772. The bond was taken by the appellant without any communication with the bondsman, although it may be true that when the bond was delivered by the bondsman to the respondents that it was delivered with the understanding that another surety's signature was to be placed thereon before it was submitted to the appellant. State ex rel. v. Liebes, 19 Wash. 589, 54 Pac. 26; Braum v. Whatcom County, 19 Wash. 626, 54 Pac. 29; Puget Sound State Bank v. Gallucci, 82 Wash. 445, 144 Pac. 698, Ann. Cas. 1916A, 767. A discussion of the cases which relieve persons signing the bond as surety, which has been delivered in such a way that the person receiving it must have been charged with constructive notice that it was not intended to operate except upon compliance with certain conditions, is unnecessary here because there is nothing in this record that would justify a finding that the appellant either had actual or constructive notice of any conditions alleged to exist in this regard. This rule is recognized and stated in 21 R. C. L. 968, as follows: "Hence, the rule sustained by the great weight of authority is that the agreement of a surety with his principal that the latter shall not deliver a bond till the signature of another be procured as a cosurety will not relieve the surety of his liability on the bond, although the cosurety is not obtained, where there is nothing on the face of the bond, or in the attending circumstances, to apprise the taker order to complete the instrument. In such casthat such further signature was called for, in es the surety, having invested his principal with apparent authority to deliver the bond, is estopped to deny his obligation to the innocent holder, on the principle that where one of two |