terest, etc.,-as service to the school on such a scale would mean merely that the taxpayers of the municipality or the water consumers thereof must make up the deficiency for which the school-service rate did not compen

sate.

It was held, also, in Re Warren (1919; Ind.) P.U.R.1919F, 38, that a charge by a municipal utility to churches and charitable institutions, of a rate for electricity less than that charged other consumers for the same service, was discriminatory, and contrary to the provision of the Public Service Commission Act, prohibiting any public utility from charging a consumer a greater or less compensation for service then it charged any other consumer. To a similar effect is Re Warren (1920; Ind.) P.U.R. 1921A, 107.

And the Missouri Commission in Botts v. Brookfield (1917; Mo.) P.U.R. 1917D, 224, held that the furnishing of water free from a municipal water plant to churches and schools in the city, while other consumers were charged for a like service, constituted unlawful discrimination.

A similar conclusion has been reached by various commissions with regard to the furnishing of light or water for public purposes, as street lighting, fire protection, etc., the position being taken that a charge should be made therefor.

In Cavanaugh v. Whitefish Municipal Water Utility (1922; Mont.) P.U.R.1922E, 198, where it appeared that water was taken by the public from a municipal water plant for fire protection, public buildings, and other public purposes, the commission said that to render the public these services without charge constituted unlawful discrimination in favor of taxpayers and against the water con

sumers.

And on petition for the establishment of rates of a municipal electric utility, the commission in Re Hillis (1926; Ind.) P.U.R.1927A, 443, held that discrimination was shown against private consumers, in that the city paid nothing for street lighting, it being said that the utility should be

paid a fair rate for all service rendered, whether rendered to an individual or to the city. And it was held that the city's rate for service should be the same as the rate for the largest power consumer.

And that a city owning a municipal water plant should make a proper charge for its fire-protection facilities. and service and for other city service is the position taken in Re Hammond Waterworks (1918; Ind.) P.U.R.1919A, 180.

A city which operates a municipal lighting plant is not justified in charging itself for street lighting a sum per light which is less than the actual cost of rendering the service, since other consumers of electricity would thus be paying a part of the expense of lighting the streets. Bonser v. Electric Light Commission (1920; Me.) P.U.R.1920F, 183.

That a municipal waterworks should make a charge for fire protection furnished the municipality, especially where the utility is charged with interest on the funded debt, is supported also by Wood v. La Farge (1916; Wis.) P.U.R.1917A, 763, where the complaint was that the rates of the municipal waterworks were unjustly discriminatory.

And in Skogmo v. River Falls (1917; Wis.) P.U.R.1917E, 964, it was held that the fact that a city had built and practically paid for a municipal utility plant did not entitle it to furnish street lighting and fire protection service without charge, since this would be an unlawful discrimination under the Wisconsin statute. The commission said that the fact that the utility was owned by the city did not alter the conditions, because, under the public utilities act, privately owned and municipally owned public utilities were subject to the same treatment at the hands of the commission.

On the question of accounting and discrimination, the Wisconsin commission in Re Light & Water Commission (1915; Wis.) P.U.R.1915E, 539, said that it appeared to be good business policy to treat a municipal water or electric plant as an enterprise

separate and distinct from the municipality itself, and to have accounts kept accordingly; that, if this policy were followed, the city should pay the utility at a reasonable rate for all service rendered the city, in order to avoid unjust discrimination in favor of the taxpayers of the city as against consumers; and that the utility in turn should pay the city a reasonable amount as taxes and as interest on the city's equity in the property of the utility, in order to avoid unjust discrimination in favor of consumers as against taxpayers.

And in Re Kenosha (1918; Wis.) P.U.R.1918D, 751, it is said that, in view of the fact that the city had virtually set the water utility (operated by it) apart as a separate entity, and was requiring it ultimately to carry its own financing, it appeared only reasonable that the city should pay the cost of the service rendered to it. And it was recommended that the city should provide for paying an increased hydrant rental.

And, on an application for increased electric rates for a municipal plant, the commission in Re Argyle (1921; Wis.) P.U.R.1921E, 265, held that street lighting should bear its share of the cost of operation of the plant, and that a charge should be made for energy used to operate a municipal stone crusher.

The provisions of the New York statute exempting certain institutions in New York city from charges for water furnished such institution by the city, the provisions of the act being expressly applicable to benevolent, charitable, and religious corporations, and other institutions of a benevolent nature, have been before the courts in a few cases for construction. See, for example, Re Y. W. C. A. (1913) 156 App. Div. 295, 141 N. Y. Supp. 138, affirmed, without opinion, in (1913) 209 N. Y. 534, 102 N. E. 1118, and Re Y. W. C. A. (1912) 141 N. Y. Supp. 260, affirmed without opinion in (1913) 158 App. Div. 908, 142 N. Y. Supp. 1151, holding that the statute did not apply to the Young Women's Christian Association; also Bay Ridge Reformed (Dutch) Church

v. New York (1914) 162 App. Div. 49, 146 N. Y. Supp. 1014, holding that the statute obliged the municipality to furnish water for operation of a church organ free of charge. No attempt is made to cover cases of this class, in which the question is somewhat analogous to that of the construction of statutes exempting such institutions from taxation, and in which no question of municipal power is raised.

As to whether an incorporated board of water commissioners of a municipality may be compelled to furnish water free of charge to a public institution of the city, in this instance a house of correction, attention is called to Detroit v. Water Comrs. (1896) 108 Mich. 494, 31 L.R.A. 463, 66 N. W. 377, holding that there was no obligation to furnish water free to such an institution, which was under the control for the most part of a board of inspectors, and not of the city council, although the city was obliged to pay the expenses so far as they exceeded the earnings of the institution, since any such burden should be laid upon the whole body of taxpayers of the city, and not upon those only who were private consumers of water, the commissioners having no source of revenue for the running expenses of the waterworks except the water rates.

Attention is called, also, to several additional cases, among possibly others of the kind, involving the question whether water must be furnished free from a municipal water plant for certain purposes. Water Comrs. v. Parks & Boulevards (1901) 126 Mich. 459, 85 N. W. 1132 (holding that the board of water commissioners of a municipality were not under obligation to furnish water for park purposes free of charge); Water Comrs. v. Board of Education (1904) 137 Mich. 245, 100 N. W. 455 (holding that a municipal water board was entitled to receive pay for water furnished to the school board of the municipality); Water Comrs. v. Detroit Citizens' Street R. Co. (1902) 131 Mich. 1, 90 N. W. 657, 91 N. W. 171 (holding that water commissioners of a municipal

ity could not recover compensation for water furnished for street-sprinkling purposes).

V. Miscellaneous.

Attention is called below to several court or commission cases in which questions of discrimination in the operation of municipal plants are presented which are of a kind not apparently distinctive to this class of utilities, the cases, therefore, being cited merely for illustrative purposes.

And in Consolidated Ice Co. v. Pittsburgh (1922) 274 Pa. 558, 118 Atl. 544, where a consumer of water from a municipal plant, supplied on a meter basis, brought suit against the municipality for relief on the ground that the meter rates were excessive and, as against the flat rate, discriminatory, the court recognized the right to relief in case the rates in question did unfairly discriminate in favor of the flat-rate users; but held that discrimination was not shown merely by the fact that, owing to the wasting of water by consumers having flat rates, their rates per gallon were lower than the meter rates.

The decision, also, in such cases as Richardson v. Greensboro (1917) 174 N. C. 540, 94 S. E. 3, to the effect that there is not necessarily any discrimination because meter rates for water are charged against certain consumers and flat rates against other consumers of the same class, is not apparently distinctive to cases of ownership and operation of municipal plants, although in this case the applicant for a flat rate contended that the refusal of the municipal authorities to grant him such a rate was an unlawful discrimination against him in the operation of the plant.

In Youngman v. Waterworks Comrs. (1920) 267 Pa. 490, 110 Atl. 174, the court said that proper classification of patrons by water corporations, municipal or otherwise, is permitted; and held that the classification attacked in this instance was justifiable, where waterworks commissioners of a municipality, who were empowered to extend the public service under their charge beyond the city limits, adopted regulations requiring

users of water residing beyond the limits of the municipality to pay an advance of 25 per cent over the city rates, and, in addition, the actual cost of extension of the service to their respective properties, which charge was not made against patrons within the city.

And in Re Fennimore (1915; Wis.) P.U.R.1916A, 848, it was held that a municipal electric utility may be permitted to charge a higher rate to consumers without the municipality than to residents, where the rate to the former is not unreasonably high in comparison with the cost of service and other conditions affecting rates.

In Re Laurel (1921; Mont.) P.U.R. 1921D, 817, where a municipality permitted persons residing beyond its boundaries to connect their premises to the city water system, and was voluntarily furnishing such persons with water, the commission said that, having voluntarily assumed this exterritorial service, the city's plant was placed in much the same position as a privately owned public utility, and nondiscriminatory treatment of all persons served was required. It was held, however, that, while consumers within and without the city must be treated alike, yet that, in order that the consumers living without the city limits might properly share in the taxpayers' burden, resulting from the construction and installation of the system, it was necessary to fix a differential which should equalize the disparity between rates and taxes.

That a higher minimum rate may be made to patrons of a municipal electric light and power plant residing in the country than to resident consumers in the municipality, see also, for example, Re Pendleton (1921; Ind.) P.U.R.1921E, 602.

In Re Brodhead Municipal Electric Utility (1917; Wis.) P.U.R.1915B, 524, a municipal electric utility was ordered to discontinue certain discriminatory practices, as the supplying of certain users with free meters, and the granting of special rates to large power customers which yielded it less then the cost of supplying the service. R. E. H.

the court should ascertain whether or not operation will pay expenses and will be in the interest of conservation, rather than conducive to dissipation, of the property.

[See 23 R. C. L. 73; 6 R. C. L. Supp. 1360.]

Receivers, § 58 penditures.

11. The end in view in appointing a receiver for railroad property is the conservation of the property, and the rights of the parties interested therein and in the income therefrom, and expenditures for any other purpose or end are, as to owners or lien holders not parties to the suit or not estopped, beyond the power of the court. Receivers, § 37 duty of persons dealing with.

12. Persons dealing with a receiver must, at their peril, take notice of his authority and of the jurisdiction of the court.

[See 23 R. C. L. 77; 4 R. C. L. Supp. 1492.]

Constitutional law, § 652

operating

railroad at expense of lien holders. 13. A court cannot, in view of the

14. A hearing on petition for intervention in a suit to foreclose a mortgage on railroad property which is in possession of a receiver is not the equivalent of prior notice to holders of liens not parties to the original proceedings, so as to subordinate their lien to advances made by interveners for operating expenses.

Constitutional law, § 652 - due process - hearing on allowance of operating expenses by receiver.

15. Upon the question of due process of law in subordinating judgment liens to moneys advanced for operating a railroad in possession of a receiver, a hearing upon an application to charge to the corpus the loss after it has been fully sustained does not serve the purpose of an opportunity to resist in advance the incurring of the loss.

Statement by Morling, J.:

Railroad mortgage foreclosure. Interveners appeal from a decree denying their claim of priority for alleged operating liabilities during receivership over the lien of prior judgments obtained in actions for personal injuries. One of the judgment creditors appeals from denial of priority of lien on the railroad property in counties other than that in which the original judgment was recovered but in which transcripts of his judgments were docketed.

Messrs. J. G. Kammerer, J. G. Gamble, A. B. Howland, and Hughes, Taylor, & O'Brien, for interveners appellants:

Claims for traffic balances between connecting carriers of freight, interline freight account, car rentals, and similar items, are operating expenses of a railroad company, and entitled to classification and payment as such.

Shugart & Barnes Bros. v. Atlantic

Northern & S. R. Co. 161 Iowa, 351, 143 N. W. 90.

When the court expressly authorizes the receiver of a property to continue the operation of a business and to inoperating expenses of the receivership cur indebtedness in such operation, all become a lien upon the corpus of the property superior to that of pre-existing encumbrances or judgments against the principal defendant.

High, Receivers, ¶ 394B, p. 504; 34 Cyc. p. 353; 1 Elliott, Railroads, § 580; State Cent. Sav. Bank v. Fanning BallBearing Chain Co. 118 Iowa, 698, 92 N. W. 712; Union Trust Co. v. Illinois Midland R. Co. 117 U. S. 434, 29 L. ed. 963, 6 Sup. Ct. Rep. 809; Kneeland v. American Loan & T. Co. 136 U. S. 89, 34 L. ed. 379, 10 Sup. Ct. Rep. 950; Wallace v. Loomis, 97 U. S. 146, 24 L. ed. 895; St. Louis Union Trust Co. v. Texas Southern R. Co. 59 Tex. Civ. App. 157, 126 S. W. 300; Union Petroleum Co. v. Indian Petroleum Co. 192 Iowa, 1373, 186 N. W. 439; Gallagher v. Gingrich, 105 Iowa, 237,