225 U.S. 430 (32 S.Ct. 741, 56 L.Ed. 1151)


No. 761.

Argued: March 7 and 8, 1912.

Decided: June 7, 1912.

Messrs. Clayton B. Blakey, Huston Quin, and Joseph S. Lawton for appellant.

Argument of Counsel from page 431 intentionally omitted

Messrs. William L. Granbery, Alexander Pope Humphrey, and Alexander Pope Humphrey, Jr., for appellee.


Mr. Justice Holmes delivered the opinion of the court:

This is a bill to prevent the enforcement of an ordinance of the city of Louisville fixing telephone rates, passed in 1909, after the attempt of the city to deprive the appellee of its franchise, when that seemed likely to fail. See Louisville v. Cumberland Teleph. & Teleg. Co. May 13, 1912, 224 U. S. 649, 56 L. ed. ——, 32 Sup. Ct. Rep. 572. The question raised is the usual one of confiscation. In consequence of the conclusion to which we have come we shall make a much more summary statement of the facts than in other circumstances might be necessary. The case was referred to a master and he reported in favor of the city. He was of opinion that in the first year after the ordinance should go into effect there would be a less of $30,000, but that in another year or so, in view of the probable increase of subscribers, the company would get back to its former net revenue with a probable continuous increase thereafter and would earn a sufficient return. The judge was of a different opinion, and for the purposes of the present decision only we shall adopt his figures, subject to the changes that we shall state, which leave us unprepared to sustain the decree without giving the ordinance a trial to show its actual effect.

The judge's values were:

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which is just above 5 per cent on the judge's valuation.

We express no opinion whether to cut this telephone company down to 6 per cent by legislation would or would not be confiscatory. But when it is remembered what clear evidence the court requires before it declares legislation otherwise valid void on this ground, and when it is considered how speculative every figure is that we have set down with delusive exactness, we are of opinion that the result is too near the dividing line not to make actual experiment necessary. The master thought that the probable net income for the year that would suffer the greatest decrease would be 8.60 per cent on the values estimated by him. The judge, on assumptions to which we have stated our disagreement, makes the present earnings 5 10/17 per cent, with a reduction by the ordinance to 36/17 per cent. The whole question is too much in the air for us to feel authorized to let the injunction stand.

Decree reversed without prejudice.

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