Protection of Public Service Company Property
13
cidental to the franchise.* An exten sion of such right would violate property rights of the community, especially of a municipality.t "The present value of the property embarked in the enter prise" of a public service corporation adverted to by Mr. Justice Lacombe, has, therefore, attributes of precariousness not suggested by a consideration of the private property rights protected by the Constitution of the United States. The community's right in public prop erty is certainly no less sacred than that of its servant holding the property for a public purpose. Nothing short of abandonment of the use defined in the acquisition of the property will be a cause of a reverter to the public. Noth ing but the consent of the body-politic will extend the ownership of the corpo ration beyond the use already denned. The use, then, is the thing really owned by the corporation; the use is a benefit running to the public. The reversion, then, of all property of public service corporations, as well as the user, is held for the public. This principle affords the broadest and the most justifiable basis for the public regulation of their affairs. Public bodies proceeding upon this principle will not only avoid the pitfalls which are now regarded as guide posts in the path of regulation, but they will attain suc cess by processes largely automatic. If, for instance, the property belongs to the public, subject to and inseparable from the exercise of the public service franchise, what constitutional provis ion is violated, as is suggested by Mr. Justice Lacombe, by taxation or regu lation "securing to the public its fair share of unearned increment thereon?"!
Neither tangible property nor franchise is taken away by regulation of the exer cise of the franchise or by taxation of both the franchise and the tangible property. Neither is directly touched; taxation and regulation are directed at a distinct property created by the exercise of the franchise in conjunction with the tangible property. The gov ernment does not guarantee the value of either stocks or bonds. It does not guarantee even the value of tangible property or franchise. It must, how ever, guarantee the proper service of the public by those using public prop erty in the exercise of a franchise, and the reasonableness of charges to the public. Charges based upon the bond ing or capitalization of unearned in crement in the value of tangible prop erty above its cost and of franchises above their cost are by that very fact unreasonable and should be prohibited. The constitutional protection of the private property of a public service corporation cannot be supported upon any principle that does not take into account the nature of that property and the interest of the public therein. The justification of regulation, there fore, far from being negatived by the attribution of value to special fran chises as property by the New York Franchise Tax Act, is actually sup ported thereby.* "We regard the tan gible property," said the Court of Appeals,t "as an inseparable part of the special franchise mentioned in the stat ute, constituting with them a new en tity, which as a going concern can neither be assessed nor sold to advantage except as one thing single and entire." The new entity may be taxed as income-
• Metropolitan St. Ry. Co. v. Tax Commissioners, 174 U. S. 417. affirmed U. S. t Matter of New York and Long Island Bridge, 148 N. Y. 540, 557; Cahill v. Hogan, 180 N. Y. 304. % Consolidated Gas Co. v. Mayer, 146 Fed. 150, at p. 156.
- Special Franchise Tax Law, Laws 1899, chapter
712; upheld in Metropolitan Street Ry. Co. v. Com missioners, 174 N. Y. 714; affirmed in 199 U. S. 1. t Metropolitan Street Ry. Co. v. Commissioners. 174 N. Y. 714.
