Allen v. Railroad Commission

Upon further consideration of this case we adhere to the opinion prepared by Mr. Justice Henshaw and rendered by the court upon the original submission. Some additional treatment of points discussed upon the rehearing is appropriate.

The principal reason for the order granting a rehearing was the desire of the court to re-examine the evidence upon the question of fact whether the Lake Hemet Water Company, at the time it executed to the respective petitioners the water contracts held by them, had dedicated to public use the water which the company thereby agreed to sell and deliver to the holders of the contracts, or whether these contracts were made without such dedication and in each case for the private advantage of the parties contracting. Further examination on this point has satisfied us -that our original conclusion was correct. The water was held in private ownership, it had not been dedicated to public use at the time these several contracts or water certificates were executed, and the right thereby vested in the land owners to whose land the water was thereby made appurtenant was private property.

In the subsequent briefs emphasis is laid on evidence to the effect that in the year 1898, prior to the execution of a large number of the water certificates in question, the Water Company sold to persons who were not owners or purchasers of any part of the land to which Whittier and his associates intended the water to be applied, an amount of water equal

In the argument by the attorneys for the commission great reliance is placed on the decision in Munn v. Illinois, 94 U. S. 113 , [ 24 L. Ed. 77 ], and especially on the phrase “affected with a public interest,” used in the opinion. This case and this phrase is frequently invoked to advance the idea that the general interest of the state in the welfare and prosperity of its citizens is a sufficient basis for the right of the state to regulate prices for the use or sale of private property. Because of the use of this phrase the case itself is misunderstood. The phrase was used in quotations from the old English authorities declaring that there could be public regulation of the tolls to be taken by millers for grinding grain. These millers, having invited all persons to bring their grain to the mill to be ground and having thus established a business, sought to increase the tolls, or to favor some customers above others, and claimed the right to do so. It was held that having thus dedicated the mill to this public use, the public had a right, or interest in it, and in describing this right it was said that when property was thus ‘1 affected with a public interest” it ceases to be exclusively private property. So with the great grain elevators involved in the Munn ease, which, by the development of modern commerce and steam machinery, had become established'as an adjunct to railroads, though managed by others, and were practically the only means of shipping grain on the railroads, it was said that they, too, as well as the ancient English mills, had become 11 affected with a public interest”; and were, therefore, no longer private property only, and were subject to public regulation. The parallel is obvious, but it does not apply to water sold with Hand for use upon the land and as an appurtenance thereto

There is no ground for the claim that the water distributing system used by the Water Company can be considered as a thing separate from the right to receive water and declared to be a separate and public service, the rates for which, as to these petitioners, can be fixed by the Railroad Commission, and made to exceed the rates specified in the water certificates. The distributing system is a species of real property. (Stanislaus Water Co. v. Bachman, 152 Cal. 726 , [ 15 L. R. A. (N. S.) 359 , 93 Pac. 858 ].) The right of a land owner to receive water not devoted to public use upon land for its benefit, from an outside source, through a system of canals or pipes for conducting it to the land, is an easement attached to the land and a corresponding servitude upon the source 'of supply and the distributing system. (Copeland v. Fair View Land & Water Co., 165 Cal. 154 , [ 131 Pac. 119 ] ; Palermo Land & Water Co. v. Railroad Commission, 173 Cal. 380 , 386, [ 160 Pac. 228 ].) The easement and the servitude constitute a single entity and the one cannot be separated from the other without destroying both. The petitioners have property interests in the distributing system, by reason of these easements and servitudes. The contract fixed the rate, not only for the water as such, but also for its delivery, that is, for the use of the system for that purpose. To raise the rate without consent of the land owner would impair the obligation of the contract, and, so far as the increase inured to the benefit of the public use of other water through the same system, it would be taking the private property of these petitioners for public use without compensation.

It may be that the rates fixed by the contracts with petitioners are too low and that the company will be unable to go on with the service, either to the public utility serving the town of Hemet or to the petitioners, unless both shall pay more for the service. That will demonstrate that the contracts which the Water Company voluntarily made for disposition of its own property were improvident and unwise. But that does not give the Railroad Commission power to interfere, however desirable such interference might be if the

All the other points that are material or important to the decision of this case are fully and adequately treated in the former opinion. It leaves nothing more to be said and we adopt it as the opinion of the court.

“The Lake Hemet Water Company, a corporation, hereinafter called the applicant, petitioned the Railroad Commission to fix the rates to be charged and collected by it for the sale and distribution of water, asserting itself, to be a public service corporation. Some three hundred or more land owners receiving water under contracts from the applicant appeared and made objection, insisting that so far as their water and water rights were concerned, these rights were held in private . ownership, and that, as to them at least, the applicant yas not a public seryice corporation, and jurisdiction to fix the rate charges for such water was therefore not in the commission. The commission heard evidence, made its finding and decree by which it was declared that the applicant, as to all of its' corporate functions, was a public utility, and.thereupon fixed water rates. From this determination the aggrieved, land owners sought and obtained this writ of review.

“This review is held under section 67 of the Public Utilities Act of 1915. It is plain, and indeed it has in effect been decided, that the declaration in that section that‘findings and conclusions of the commission on questions of fact shall be final and shall not be subject to review, has to do with the commission’s1, determinations upon questions of fact within its jurisdiction. When the question, ever one of mixed law and fact, goes, as here, to the jurisdiction itself, when the whole controversy revolves around the inquiry as to whether or not the corporation is a public utility, to say that the determination of the commission upon this matter is final and conclusive and is not subject to review, is the equivalent of denying to a petitioner a hearing upon a.right carefully preserved to him by the " language of section 67 itself—a hearing and a determination of whether the order and decision under review ‘yiolates any right of the petitioner under the constitution of the United States or of the state of California. ’ So- it will be found that in such petitions as Pacific Tel. & Tel. Co. v. Eshleman, 166 Cal. 640 , [Ann. Cas. 1915C, 822, 50 L. R. A. (N. S.) 652 , 137 Pac. 1119 ]; Del Mar Water etc. Co, v. Eshleman, 167 Cal.

“Thus we are brought to a consideration of the evidence upon which the. commission acted in holding this plaintiff to be in toto a public service corporation. The evidence, consisting for the most part, and indeed so far as value is concerned, wholly of undisputed refiord and written facts, is without substantial controversy. And indeed it may be added that the pure findings of fact set forth by the commission are not seriously disputed, petitioners’ grievance arising over the conclusion—one of mixed law and fact—that the applicant is wholly a public service corporation. ,

“Into a Mexican rancho, the San Jacinto Viejo, flows the San Jacinto River. This rancho was partitioned between Estadillo, Stone, Jordan, and others. The allotments to the named persons did not border on the stream; but the partition judgment provided that each of these and their successors should have a right of way for a ditch, flume, or aqueduct across the lands of intervening owners for the purpose of securing and using upon equal terms with the owners of all other allotments their due proportion of the waters of the San Jacinto River for irrigation and other purposes in connection with their land. In 1886 the Fairview Land & Water

“If it has not already become apparent it soon will be, that so far as Mr. Whittier and his associates are concerned, this was a purely private business venture for purposes of legitimate private gain. Vast areas of land in Southern California are valueless (except for grazing purposes) unless artificially supplied with water. Because of this, two methods of meeting the exigencies arose and both came into common use, the one the method whereby certain land owners associated themselves together and expended money in securing water to be used on their own lands, forming for this purpose a mutual water company; the second, the method here put in practice, whereby men of means—for only men of means could do this thing—secured tracts of land at almost nominal prices (because the land without water had so little value) upon which lands they knew or believed they could put water. They then developed'their water system and advertised the lands with appurtenant water rights for sale at a greatly enhanced price. The latter was the method here adopted by Mr. Whittier and his associates. In some of the minor details these companies moved along different plans. In their essentials, however, the methods were the same. Sometimes with the land went proportionate shares of water stock to the purchaser, entitling him to the use of a given amount of water on his land. Sometimes the land and water rights were held by a single corporation and the conveyance of the land in express terms carried with it the right to the use of a given quantum of water. Mr. Whittier and his associates soon after the official map of the Hemet Land Company was approved

“ ‘ The testimony shows that with possible minor exceptions all water regularly sold by petitioner for irrigation (as distinguished from “extra water”) was sold to persons, who are owners of water right certificates issued by petitioner. Under the plan originally formulated by Mr.. Whittier and his associates, owning both Hemet Land Company and Hemet Land & Water Company, whenever a parcel of land was sold by Hemet Land Company, the purchaser of such land desiring water thereon was obliged to purchase a water' right certificate from Hemet Land & Water Company. Later, when other lands were purchased by Mr. Whittier and his associates, in addition to the original Hemet Tract, a similar arrangement was made. The Land Company sold the land and the Water Company sold so-called “water certificates.” These certificates entitled the holder to one miner’s inch of water for eight acres of land. ’

“On the average these land purchasers paid $75 per acre for their land and $75 per acre for their water rights appurtenant to their land. The company issued prospectuses in 1887, 1902 and 1906, each prospectus in similar language declaring that ‘Each purchaser of land in the Hemet Tract is provided with a contract calling for both a domestic and irrigation supply of water. Domestic water is free during the irrigation season, and $1 per month for each family the remaining five months. The irrigation supply costs $2 per acre per annum. Each acre of land under this contract is entitled to one-eighth of a miner’s inch of water continuous flow during the irrigation season. That is the i water right is inseparable and is only transferable with the land. ’ These water right certificates contained a binding obligation upon the Water Company to deliver -to the purchaser a constant flow of one inch of water for each eight acres on his designated land during the irrigation season, with a right to cumulate the wafer, under such regulations as would best subserve the interest of all' parties. The purchaser agreed to pay and did pay the $75 per acre, or such other sum, as might have been designated in the contract for this water right, and the further sum of $2 per acre while the contract remained in force. The use of the water was limited to described land. Provision was made for the use of water for

1 ‘ The quantity of water which can be supplied by the applicant is limited. Of that ‘net, safe yield,’ not to exceed three per cent and perhaps but one and a half per cent is actually required and used by the city of Hemet. All the rest of this ‘net, safe yield’ is used under these water certificates, and after such use there is a protective remainder of water amounting to but three or four per cent of the total supply. This, of course, takes no account of excess waters which, being occasional, are not to be depended upon. Thus approximately ninety-four per cent of the waters of applicant are devoted to use under its water right certificates, three per cent in supplying the needs of the municipality and citizens of the city of Hemet, while the remaining three per cent remains in storage.

“The articles of incorporation of the Lake Hemet Land & Water Company declared the purposes of the corporation to be ‘to acquire by purchase and appropriation water and water rights and to develop water and to use, hold and enjoy the same . . ."and to acquire all other and further easements necessary for the storing, conveyance, use, sale and other disposal of such water in the county of San Diego and elsewhere in the state of California; and to construct dams, reservoirs, flumes and ditches and other conduits for the storage and distribution thereof; and to supply the inhabitants of the

“The petition of applicant to the Railroad Commission to fix its water rates upon the asserted ground that it was a public service corporation was based upon the allegation that the remuneration which was received by the applicant from the existing rates was wholly inadequate. In brief, the time had come when the applicant, Mr. Whittier, concluded that the duty was an onerous one and he sought a repudiation of these contracts and water right certificates upon the. ground, unquestionably sound in law, that if the corporation which entered into the contract was, at the-time of entering, a public service corporation, these contracts were subject to modification at the instance of the commission. (Southern Pacific Co. v. Spring Valley Water Co., 173 Cal. 291 , [L. R. A. 1917E, 680, 159 Pac. 865 ] ; Limoneira Co. v. Railroad Commission, 174 Cal. 232 , [ 162 Pac. 1033 ].) Certain facts in , addition to those above set forth were presented to the commission. Beginning with the year 1912, in response to a general order issued by the commission to all public utilities, this applicant filed its schedule of rates, rules and regulations for the service of water for irrigation and domestic use and did so each year thereafter. The applicant further'' recognized its own character and the jurisdiction of the commission by making an application before it for an order authorizing the sale of certain of its properties. No doubt can be entertained but that from 1912 Mr. Whittier, who as the sole owner of these corporations may be indifferently regarded with the Water Company itself as the applicant, did all that lay in his power to declare the company to be a public service corporation and to destroy the water rights of these petitioners, for which water rights he had received the sum of $438,938.60. The next series of facts presented to the commission comes, first, from the testimony of Mr. Whittier as to the ‘policy’ of the Water Company, which was to sell its water ‘to every one that wanted water. ’ Mr. Whittier at the time he gave this testimony was eighty-four years of age. But Mr. Whittier further testifies that he is giving his evidence from his recollection, and that he is quite sure the records are better evidence, and this, of course, may not be questioned. The final fact before the commission is that the applicant established and maintained a public

“It is well now, for a clear understanding of the question, to epitomize the position of these petitioners. They concede that the applicant is a public service corporation in so far as the city of Hemet is concerned and as to the amount of water which that city does or may require. They will not object to a finding that such present or future needs on behalf of the city constitute a first and preferential right to the use of the water. They insist, however, that subject to that public use only, they have a private right in ownership by virtue of their water right certificates to the use of all water provided for in those certificates, that their rights being private rights are governed wholly and exclusively by their contracts. Next, as to the excess waters, the rates for which have been fixed by the applicant itself, their attitude is one substantially of indifference as to whether or not the rates to be charged for those waters shall or shall not be fixed by the commission.

“The position of the commission and of the applicant before it is, first, that under the facts above set forth, applicant was from the time of its creation and continuously thereafter a public service corporation, and that it had dedicated all of its waters to public use; second, that whether or not it had so dedicated its waters and properties to public use, by virtue of the laws of this state and their definition of a public utility, the applicant was such a public utility. Necessarily resulting from the upholding of either of these positions it is declared (and granting the premise the conclusion is unescapable) that all of these water right certificates were, in contemplation of law, issued subject to the rate-fixing power of the commission, and that therefore in so fixing the rates in derogation of these contracts no right of contract is violated.

“1. Treating first of the facts above set forth as establishing or failing to establish the public service character of applicant, it may at once be said that when it engaged to supply the town site and the succeeding city of Hemet with water for municipal and domestic purposes and proceeded to do this thing, it became a public service corporation, at least in so far as the needs, present or future, of the growing city of Hemet were concerned. But, of course, it does not follow, either in law or in reason, that because of this, it had dedi

“So far as weight is to be attached to the purposes of the organization of the applicant as expressed in its articles of incorporation, amongst those purposes is one ‘to supply the inhabitants of the towns in San Jacinto Valley with pure "water for domestic purposes: ’ But this standing alone constitutes no dedication of applicant’s properties to a public use. A most thorough and elaborate exposition of this, and indeed it may be added, of many other matters pertaining to this consideration, having been made by this court, in Thayer v. California Development Co., supra, better cannot be done than to quote at some length from that exposition:

“ ‘The language plainly imports that the right, when acquired, is the property of the person who claims it and takes the steps prescribed to gain it . . . The property does not -become impressed with a public use or trust until after the owner has first acquired it and then dedicated it to the use. The acts of acquisition and of dedication, respectively, are distinct from each other. Technically the latter must follow7 the former and cannot precede or accompany it. An “appropriation of water” under the code is therefore not ipso facto, a dedication or appropriation to public use. The additional act of dedication is as necessary to the creation of a public use in a water right so acquired as it would be if the right was acquired by conveyance or in any other manner, or as in the case of any other property dedicated to public use. . . .

“ ‘According to the theory of the plaintiff in this case, whenever the owmer of a water supply determines to and does sell it for a price agreed on between himself and the purchasers, it immediately becomes subject to public use, and any other person to whom it can be conveniently distributed

“ ‘This provision of the constitution has been in force thirty-three years. It has never been understood that it had the effect here contended for. There have been many instances in which the owners of large tracts of land have ac

“The quotations above given relieve from the necessity of any further exposition of the matter. This applicant did carry out this declared purpose by dedicating so much of its water to public use as was or might be necessary to supply the town of Hemet. Further than that it has not gone. Further, the articles of incorporation as to the purposes, declare that the corporation will acquire its water and water right ‘by purchase and appropriation,’ both methods being wholly within the purview of private ownership of such rights when acquired. It is not without significance that there is omitted therefrom the declaration of the right to acquire by condemnation, which right runs only with a public service, and of similar significance is the fact that when this applicant, in the course of its activities needed to acquire and did acquire certain rights of way, it did not undertake to do so by condemnation, but effectuated its purpose by purchase.

“To hold that property has been dedicated to a public use is ‘not a trivial thing’ (San Francisco v. Grote, 120 Cal. 60 , [ 65 Am. St. Rep. 155 , 41 L. R. A. 335 , 52 Pac. 127 ]), and such dedication is never presumed ‘without evidence of unequivocal .intention.’ (Niles v. City of Los Angeles, 125 Cal. 512 , [ 58 Pac. 190 ].) The character of the contracts evidenced by these water-right certificates, the restriction upon transfer, the fixing of the acreage quantum, the enormous sum in the aggregate paid by these petitioners for their water rights, establish beyond the need of further discussion that the parties to those contracts believed that they were dealing in their private capacities and selling and receiving water for private use. But one suggestion here is sufficient. Is it conceivable that these land owners would have given Mr. Whittier and his associatesy a bonus of $438,938'.60 for the right to use water, which right the law had given them without the expenditure of one dollar of it?

“Upon this branch of the case then the conclusion is inevitable that the applicant was not, as to all of its water and

“2. The second position adopted by respondents, as above outlined, is that this applicant is a public service corporation, without regard to the question of the dedication of its properties to public use, by virtue of the definitions of such public service corporations found in our law. To begin with, the constitution, article XII, section 23, declares that every private corporation furnishing water 1 either directly or indirectly, to or for the public, ... is hereby declared to be a public utility, ’ subject to control and regulation by the Railroad Commission. Further, this section of the constitution declares that: ‘ . . . every class of private corporations, individuals, or association of individuals, hereafter declared by the legislature to be public utilities shall likewise be subject to such control and regulation. ’ And finally this section provides that the right of the legislature to confer powers upon the Railroad Commission respecting public utilities is plenary and unlimited by any provisions of the constitution. Pursuant to this constitutional definition and grant of power, the legislature in 1913 (Stats. 1913, p. 84, c. 80) declared, ‘Whenever any . . . corporation . . . sells, leases, rents or delivers water to any person, firm, private corporation, municipality or any other political subdivision of the state whatsoever, except as limited by section 2 hereof, whether under contract or otherwise, such person, firm or private corporation is a public utility, and subject to the provisions of the public utilities act of this state and the jurisdiction, control and regulation of the railroad commission of the state of California. ’ And the Public Utilities Act (Stats. 1915, p. 118) defines a water corporation in the following language: ‘The term “water

“What is a public utility, over which the state may exercise its regulatory control without regard to the private interests which may be affected thereby ? In its broadest sense everything upon which man bestows labor for purposes other than those for the benefit of his immediate family, is impressed with a public use. No occupation escapes it, no merchant can avoid it, no professional man can deny it. As an illustrative type one may instance the butcher. He deals with the public, he invites and is urgent that the public should deal with him. The character of his business is such that under the police power of the state it may well be subject td regulation, and in many places and instances is so regulated. The preservation of cleanliness, the inspection of meats to see that they are wholesome, all such matters are within the due and reasonable regulatory powers of the state or nation. But these regulatory powers are not called into exercise because the butcher has devoted his property to public service so as to make it a public utility. He still has the unquestioned right to fix his prices; he still has the unquestioned right to say that he will or will not contract with any member of the public. What differentiates all such activities from a true public utility is this, and this only: That the devotion to public use must be of such character that the public generally, -or that part of it which has been served and which has accepted the service, has the right to demand that that service shall be conducted, so long as it is continued, with reasonable efficiency under reasonable charges. Publip use, then, means the use by the public and by every individual member of it, as a legal right. Such is not only the accepted significance

“Our constitution and our statutory definitions above quoted therefore must be construed as applying only to such properties as have in fact been devoted to a public use, and not as an effort to impress with a public use properties which have not been devoted thereto. For if the latter be the true construction of our constitution and statutes, then manifestly in their operation they are void wherever they unjustly interfere with private property or private contractual rights by force of article I, section 10, and of the fourteenth amendment of the constitution of the United States. If the first alternative be selected then, for reasons already given, such parts of these properties as are affected by the contracts with these petitioners have not been devoted to public use and their private contractual rights must prevail.

“For these reasons the determination, conclusion, and judgment of the commission that these petitioners’ contractual and vested rights are subordinate to the regulatory powers of the commission is in excess of the commission’s jurisdiction and therefore void, and in so far the decree of the commission is annulled. ’ ’

Lorigan, J., Melvin, J., and Richards, J., pro tem., concurred.

I dissent. The main opinion holds that our state constitution, and laws passed in pursuance thereof, authorizing the Railroad Commission to fix rates for the use of water, are in conflict with the federal constitution prohibiting the impairment of contracts, and are to that extent void and of no effect. It concedes that the state has exerted to the full all its sovereign powers to regulate and control the rates for the use of water, but holds the state to be impotent in the presence.of the private rights to water and its distribution in this case. I concur in the main opinion in so far as it holds that the right to water (one-eighth inch per acre) is a private right. It was so held in Thayer v. California Development Co., 164 Cal. 117 , [ 128 Pac. 21 ], and the subsequent constitutional amendment and statute must be held to have been adopted in view of that decision. But the decision of the Railroad Commission does not interfere with that right. To an understanding of the case it is essential that some facts disclosed by the record be stated in addition to those set forth in the main opinion. The contracts under which the petitioners claim, in addition to securing to them a certain amount of water, require the Water Company to deliver such water “at such points on the pipes or conduits of the party of the first part (Water Company) as may be nearest the land” of the grantee. The contract 'thus recognizes that the distributing system belongs to the Water Company. For this system the Water Company has expended four hundred and forty-seven thousand dollars, paid in by its stockholders. It has also received $438,938.60 from the sale of its water, a part, or all of which, was expended in payment of current expenses. It would cost $657,385 to reproduce the distributing system. That the Wateh Company has done all in its power to dedicate its water and its distributing system to a public use is held in the main'opinion, and that having conceded and invoked the jurisdiction of the Railroad Commission the Water Company should be bound by its dedication is held in Palermo Land & Water Co. v. Railroad Commission, 173 Cal. 380 , 384, [ 160 Pac. 228 ], where it is said by the court in Bank: “ ... it appears that in December, 1912, the Palermo Company applied to the Railroad Commission to have its rates for water established and that the commission made its order allowing an increase in the rates theretofore in effect. (Opinions and

“Sec. 2. Whenever any private corporation or association is organized for the purpose solely of delivering water to its stockholders or members at cost, and delivers water to no one except its stockholders or members at cost, such private corporation or association is not a public utility, and is not subject to the jurisdiction, control or regulation of the railroad commission of the state, of California.

“See. 3. Whenever any private corporation or association organized for the purpose of delivering water solely to its stockholders or members at cost does deliver water to others than its stockholders or members for compensation, such private corporation or association becomes a public utility and subject to the terms of the public utilities act and t-he

“Sec. 4. Whenever any private corporation or association is organized both for the purpose of delivering water to its stockholders or members at cost and to persons, firms, corporations, municipalities or other political "subdivisions of the state in addition thereto, such private corporation or association is a public utility and subject to the provisions of the public utilities act and to the jurisdiction, control" and regulation of the railroad commission of the state of California.” (Stats. 1913, p. 85.)

It is, of course, the duty of the Railroad Commission to recognize private and constitutional rights and fix the rates with reference thereto. In this cáse, while finding, erroneously, as we hold, that all the water distributed by the Water Company was dedicated to a public usé, it nevertheless refused to consider the value of the water as a basis for fixing the rates, and, although the Water Company at first sought a reasonable interest upon the alleged value thereof (four hundred and ninety-four thousand dollars) the company abandoned its claim, and the Railroad Commission refused to recognize it. In short, in effect, the water-users who had paid four hundred and "thirty-eight thousand dollars therefor, were recognized as entitled to water claimed to be worth four hundred and ninety-four thousand dollars. The Railroad Commission fixed rates for water that would pay the operating and maintenance expenses and give a revenue to the company on a capitalization of less than one-half of the value of their distributing plant. It seems clear that the Water Company and the certificate-holders, by express dedication and by necessary implication, have consented to the jurisdiction of the Railroad Commission in so far as the distributing system is concerned, and that, therefore, it has jurisdiction, and that in the exercise of that jurisdiction it has not violated any rights of petitioners in the water or distributing system, such as would justify our interference. I, therefore, conclude that the jurisdiction of the Railroad Commission may be well predicated upon the consent of the Water Company and the implied consent of the certificate-holders whose property rights are given due consideration by the Railroad Commission. It is also true, I think, that the business of storing, conserving, and distributing water, whether privately owned

In Spring Valley Water Works v. Schottler, 110 U. S. 347 , [ 28 L. Ed. 173 , 4 Sup. Ct. Rep. 48 ], the supreme court o'f the United States said: 1 ‘ That it is within the power of the government to regulate the prices at which water shall be sold .by one who enjoys a virtual monopoly of the sale, we do not doubt. That question is settled by what wus decided on full consideration in Munn v. Illinois, 94 U. S. 113 , [ 24 L. Ed. 77 ]. As was said in that case, such regulations do not deprive a person of his property without due process of law.”

In Atlantic Coast Line R. R. Co. v. City of Goldsboro, 232 U. S. 548 , [ 58 L. Ed. 721 , 34 Sup. Ct. Rep. 364 ], the rule is thus stated: “It is settled that neither the ‘contract’ clause nor the ‘due process’ clause has the effect of overriding the 'power of the state to establish regulations that are reasonably necessary to secure the health, safety, good order, comfort or general welfare of the community; that this power can neither be abdicated nor bargained away and is inalienable even by express grant; and that all contract and property rights are held subject to its fair exercise. (Slaughter-house Cases, 6 Wall. 36 , 62, [ 21 L. Ed. 394 ]; Munn v. Illinois, 94 U. S. 113 , 125, [ 24 L. Ed. 77 ]; Beer Co. v. Massachusetts, 97 U. S. 25 , 33, [ 24 L. Ed. 989 ]; Mugler v. Kansas, 123 U. S. 665 , [ 31 L. Ed. 205 , 8 Sup. Ct. Rep. 273 ]; Crowley v. Christensen, 137 U. S. 86 , 89, [ 34 L. Ed. 620 , 11 Sup. Ct. Rep. 13 ]; New York etc. Co. v. Bristol, 151 U. S. 556 , 567, [ 38 L. Ed. 269 , 14 Sup. Ct. Rep. 437 ]; Texas etc. Co. v. Miller, 221 U. S. 408 , 414, 415, [ 55 L. Ed. 789 , 31 Sup. Ct. Rep. 534 ].) ”

It seems clear from these authorities, upon the facts found by the Railroad Commission, that the state had power to declare the water system a public utility. It finds that “The consumers concede that in so far as the supply of domestic water to persons other than the holders of water certificates is concerned, petitioner is a public utility.” That the “petitioner adopted rules and regulations for the sale of water for irrigation and domestic use, which rules were printed and distributed to its consumers and referred to in petitioner’s advertisements. Petitioner’s business has grown from its initial supply of domestic water to the first inhabitants of what is now the town of Hemet, until in 1915, as shown by petitioner’s annual report for the year ending December 31, 1915, on file with the Railroad Commission, petitioner sold water through 85 meters for irrigation, 481 meters for domestic use, 5 meters for manufacturing and power, and 6 meters for public use. During the same year petitioner sold water measured through other devices for the irrigation of 5,554 acres of land. Approximately two thousand five hundred people, including approximately one thousand five hundred in the town of Hemet, rely upon petitioner’s system as their sole source of water.” That the “petitioner is a water company, incorporated under the laws of this state. It is the only water system in control of water which it sells for compensation. For more than twenty-five years petitioner has been engaged in the sale of water to the entire public on the land to the service of which petitioner has dedicated its water. Petitioner has fixed and enforced rates, rules and regulations

It is also found that the Water Company had issued:

(a) Contracts covering 69.36 acres at the rate of five dollars per acre, per year.

(b) Contracts covering 5,874.77 acres at the rate of two dollars per acre per year, and that the amount of acres irrigated was 5,554. That “Petitioner’s total operating expenses to December 31, 1914, was $512,353.87; $93,607.43 was depreciation. Total cost of operation was $418,746.44. Total revenue, after deducting receipts from the sale of water rights, $239,824.47. It thus appears that the result of petitioner’s operations under its rates now in effect, has been a gross revenue of $178,921.97, less than bare operating and maintenance expenses.”

We are not called to pass upon the reasonableness of the rates fixed by the Railroad Commission, if no constitutional right is invaded.

I therefore conclude that the Railroad Commission had authority to fix rates under the constitution and law:

First, for the reason that the Water Company had consented thereto by the express dedication of all its interest in the system, and that the Railroad Commission was empowered and required in fixing rates to fix them with due regard to the

Second, for the reason that the owners of water certificates had consented to the use of the distributing system, and.. their interest therein by the public, and had thus jointly with the Water Company dedicated the distributing system to a public use.

Third, for the reason that the character of the business conducted by the Water Company and water users authorized the state .to declare the same a public utility, and to provide for the fixing of rates by the Railroad Commission, whose duty it was to fix rates in due recognition of the private rights of water certificate holders in such property, and that the intervention of this court is only proper where a clear violation of such rights appears.

Rehearing denied.