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[225 N. Y.]

Opinion, per CARDOZO, J.

[Jan.,

For more than nine years the statutory rate was adequate. Abnormal conditions brought about a change, and now, when the return is figured upon the value of the property, the outcome is said to be a deficit. The defendants argue that courts must pay some heed to the average results; that the prosperity of one year may atone for the adversity of another; and that confiscation does not ensue unless there has been an unreasonable extension of the period of dearth. That dearth does not signify confiscation unless unreasonably prolonged, may be assumed to be true (Darnell v. Edwards, 244 U. S. 564). The difficult thing is to determine where the line is to be drawn. Its location will vary with the nature of the business, the exigencies of the present, the chances of the future. There is no other test than the rule of reason and fairness (Cedar Rapids Gas L. Co. v. City of Cedar Rapids, 223 U. S. 655, 669). One cannot crowd the governing principle into any formula more definite. It will seldom be important that rates have been inadequate for a day or a week or a month. Fleeting losses may be suffered, and yet the balance sheet may show a profit. Prolong the loss, however, for a year, and you may reach and cross the danger line. It is by the average of the year that business commonly reckons its losses and its gains. On the other hand, there may be times when the average must be distributed over periods still longer.

We make no attempt to solve these problems now. We cannot solve them fairly till all the evidence is in. Then only can the changes and chances of the business be probed and measured. This case is here upon demurrer. The only question to be determined is the adequacy of a pleading. Considered as a pleading, and accepting it with all its reasonable inferences, we think it is sufficient. There was no need to go back of 1917, and disclose the earnings of earlier years. Their significance, if they have any, is solely as evidence; they have no place in a

1919.]

Opinion, per CARDOZO, J.

[225 N. Y.]

complaint. We must presume, indeed, until the contrary is shown, that they were only reasonable in amount, for unfair and unreasonable rates are prohibited by statute (Public Service Commissions Law, secs. 65, 72; Consol. Laws, chap. 48). The plaintiff has the benefit of the presumption that it has kept within the law. The year 1917, therefore, is our point of departure. We have allegations that for that year the return has been unfair. We have allegations of a deficit for the first half of 1918, and of a prospective deficit of greater size for the second half of that year, and for the entire year to follow. We have allegations that the bounds of moderation have been passed, that confiscation has resulted and will indefinitely continue. Unexplained and undenied, these allegations make out a prima facie case of the denial of a just return. It may, of course, be impossible to prove them. The deficit, when analyzed, may be dissolved. The prophecies of evil may be the vain forebodings of timidity. The conditions engendered by the war may linger for months or years, or may vanish with the coming peace. Those questions are for the trial.

(3) The claim of confiscation is assailed along other lines. The argument is made that the plaintiff sells electric current as well as gas, and that the return from both branches of its business should appear in the complaint. At the outset, its charter confined it to the manufacture and sale of gas. The manufacture and sale of electric current was added in 1893. The complaint alleges that "the gas and electric operations of plaintiff have been and are now conducted as distinct and separate departments."

We think the statement of a cause of action does not involve the disclosure of the earnings from sales of electricity. That is not the business which this statute seeks to regulate. The act of 1907 (L. 1907, chap. 227) is limited to sales of gas. It makes no attempt to deal

[225 N. Y.]

Opinion, per CARDOZO, J.

[Jan.,

with sales of electricity. That a company which sells gas may sometimes sell electricity is one of the accidents of commerce. The fortuitous conjunction of two unrelated functions or activities does not change the rate of profit to be derived from the fulfillment or pursuit of either. The defendants would have us say that the plaintiff, if it makes enough from electricity, must supply its gas for nothing. The legislature had not the purpose, if we assume that it had the power, to bring that result to pass. But the conclusion becomes the surer when we recall that there is another statute limiting the charge for electricity. The plaintiff must make no charge for electricity that is not reasonable and just (Public Service Commissions Law, sec. 65), and if it violates the prohibition, the Public Service Commission will hold it to its duty (sec. 72). But a reasonable price for electricity does not mean a price that will make amends for unprofitable sales of gas. The legislature did not intend that a burden should be lifted from consumers of one commodity in order that it might be cast upon consumers of the other (Minnesota Rate Cases, 230 U. S. 352, 421, 435). In fixing the price of electricity, the plaintiff is not entitled to recoup its losses upon sales of gas. For the same reason, in fixing the price of gas, it is not required to make allowance for the just and reasonable profit which is the limit of permissible return upon its sales of electricity. The distinction is often a close one between separate lines of business, which, though run by one person, must severally earn rewards (Minn. Rate Cases, supra; Northern Pac. R. Co. v. North Dakota, 236 U. S. 585, 595; Norfolk & W. R. Co. v. Conley, 236 U. S. 605), and separate incidents or services of one composite business, which distributively may be unprofitable, if they are profitable collectively (Penn. R. R. Co. v. Towers, 245 U. S. 6; People ex rel. N. Y. & Queens Gas Co. v. McCall, 245 U. S. 345, 350; Puget Sound Traction, L. & P. Co. v. Reynolds, 244 U. S.

1919.]

Opinion, per CARDOZO, J.

[225 N. Y.]

574, 580, 581). It is sometimes said that even then, discrimination must not be arbitrary, but must have some basis in the social welfare (Penn. R. R. Co. v. Towers, supra; Nor. Pac. R. Co. v. Nor. Dakota, supra; Interstate Cons. St. Ry. Co. v. Mass., 207 U. S. 79, 86, 87). We need not go into such refinements now. In this instance, the legislature itself has drawn the distinction, and fixed the unit to be regulated. It has regulated the gas business as something separate and apart. It might have established a relation between the sale of gas and electricity. It has not chosen to do so. Neither business is an incident of the other. Neither has any relation to the other. Each bears its own burdens, and enjoys its own privileges.

(4) The final question is whether the remedy at law is exclusive of one in equity. The plaintiff has 26,000 customers in the city of Albany. Their rights cannot be adjudicated at law without endless litigation. They will not yield, unless under compulsion, to the demand for higher rates. If the plaintiff sues and wins, there will be delay and loss. If it sues and loses, even legal rates may be withheld (Public Service Commissions Law, sec. 75). Crushing also may be the penalties that will in that event be forfeited to the People of the state (L. 1907, chap. 227). Finally, there are complicated accounts to be unraveled, receipts and disbursements to be classified and distributed, the properties and transactions of a great business to be appraised and dissected. The defendants are public officers charged with special duties in the enforcement of the statute (Ex parte Young, 209 U. S. 123, 156). They assert a purpose to enforce it. With them may appropriately be joined representatives of the class of consumers, who will be bound by the decree (Code Civil Proced. sec. 448). In a single comprehensive action, the plaintiff seeks a judgment which will end the controversy forever.

[225 N. Y.]

Opinion, per CARDOZO, J.

[Jan.,

With notable

We think the suit is well conceived. consistency, it has been held, whenever like controversies have arisen, that equity will act (Consol. Gas Co. v. City of N. Y., 157 Fed. Rep. 849, 881; Willcox v. Consol. Gas Co., 212 U. S. 19; Smyth v. Ames, 169 U. S. 466, 517, 518; Raymond v. Chicago U. Traction Co., 207 U. S. 20, 39, 40; Ex parte Young, 209 U. S. 123, 163, 164; Minn. Rate Cases, 230 U. S. 352; Missouri Rate Cases, 230 U. S. 474; Missouri v. C., B. & Q. R. Co., 241 U. S. 533, 538). Many of the most distinctive features of equity jurisdiction are present (Board of Supervisors Sar. Co. v. Deyoe, 77 N. Y. 219, 226; Nat. Park Bank v. Goddard, 131 N. Y. 494, 502; Emp. Eng. Corp. v. Mack, 217 N. Y. 85, 94). There is the avoidance of multiplicity of actions. There is the saving of waste and friction. There is the opportunity to analyze accounts so complex and vast as to be unintelligible to juries (Ex parte Young, supra, at pp. 163, 164). There is protection against penalties that crush and against losses that cripple. Stress has been laid at times upon one element and at other times upon another. But resistance has yielded to their collective force.

We reach the same conclusion. Undoubtedly, the plaintiff has some remedy at law. The decisive point is that it is not as complete or efficient as the remedy in equity (Walla Walla City v. Walla Walla Water Co., 172 U. S. 1, 12). Nothing to the contrary of our present holding was held in such cases as Davis v. American Society P. C. A. (75 N. Y. 362); Delaney v. Flood (183 N. Y. 323), and Lee v. O'Malley (140 App. Div. 595). In none of them was there present the risk of irreparable loss or of multiplicity of actions. This is no attempt by equity to restrain the enforcement of the criminal law, even if we were to assume that such an objection would invariably be fatal (Ex parte Young, at p. 162). The very purpose of the suit is a declaration of the plaintiff's rights which will enable it to shape its conduct in conformity to law.

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