An opinion was filed in this case on July 6, 1909, written by Justice Angellotti, and concurred in by Justices Shaw, Sloss, and Lorigan. A rehearing was granted in order that further consideration might be given to certain matters discussed in the petition for rehearing and in briefs filed by plaintiff and other parties interested in the questions involved.

It was earnestly contended by learned counsel representing plaintiff and other public-service corporations that the portion of the opinion filed in this case relative to returns to the stockholders of about 3% per cent per annum on the value of the property of plaintiff may be construed as intimating that this court would not hold even such a rate confiscatory. We are satisfied that it cannot reasonably be construed as intimating anything of the kind. If is simply a statement to the effect that this question is not presented for decision in this case, and was made in view of the fact that there was some evidence to the effect that the annual depreciation might amount to two per cent per annum, which would reduce the net return to the stockholders on a basis of valuation of three million five hundred thousand dollars, to a little over 3% per cent per annum. But as the trial court had not found as to the annual depreciation and as the record would support a finding of not exceeding one per cent per annum for such annual depreciation, we freely concede that the expression was not at all necessary to the decision, and can see no objection to striking it from the opinion.

What was said in the opinion relative to a return to the stockholders of over 4% per cent net,—namely, 4.682 per cent,—was necessary to the decision, in view of the condition of the record, as the opinion clearly shows. If it had been admitted by the pleadings or established by evidence without conflict that the value of plaintiff’s property was such that the rates fixed by the ordinance would yield such a small return to the stockholders that the courts would be compelled to hold that the rates fixed were confiscatory we would not have felt called upon to reverse the judgment declaring the ordinance void, even though the finding of the seven-million-dollars valuation is not supported by the evidence. The ordinance being clearly void upon facts admitted by the pleadings or shown by undisputed evidence, it would have been unnecessary to put the parties to the expense and loss of time involved in another trial, as well as to delay the final disposition of the action. But no value in excess of three million dollars being admitted by the pleadings in this case, and there being evidence that would have sufficiently supported a finding of value as low as three million five hundred thousand dollars, we were constrained to deal with the appeal, in the absence of a finding of value sufficiently supported by evidence, on the theory that the value was no greater than the lowest amount as to which a finding would have been held to have been sufficiently supported by the evidence contained in the record. That amount we practically declared to be three million five hundred thousand dollars. If on that basis of valuation the rates fixed by the ordinance were confiscatory, it would have been useless and unprofitable to require plaintiff to further carry on this litigation to obtain the relief to which it was clearly entitled and which it must ultimately be granted. This situation presented the necessity for determining whether the return given by the ordinance on a three-miUion-five-hundred-thousand-dollar valuation was confiscatory. Upon the record we were compelled to assume that the ordinance would give a net return to the stockholders, after payment of all expenses, including taxes, and with sufficient allowance for annual depreciation of the value of the property, of 4.682 per cent per annum. The trial court has not in terms found that this percentage is unreasonable, but, in view of the nature and purpose of this proceeding, the finding that a fair return to plaintiff is seven per cent on the value of its plant, involves, by necessary implication, a finding that any lesser rate of return is unreasonable. As to this return (4.682 per cent) we said that while we were not to be understood as intimating that such a return would be considered by us a full and fair return under all the circumstances, were we engaged in the exercise of the function of fixing rates, we did not believe that upon the record before us a court would be warranted in holding it to be beyond the power of a legislative body to fix; in other words, that upon the record before us we could not hold that the rates fixed were confiscatory. We see no reason for modifying our expression of views in this regard. This conclusion does not involve any contradiction of the proposition, earnestly advanced by respondent, that the question whether the percentage of return allowed by a rate-fixing ordinance is reasonable or unreasonable is one of fact, to be determined in the first instance, like other questions of fact, by the trial court, upon the evidence given in the particular case. In the effort to determine whether a given rate is or is not confiscatory, two elements must necessarily be inquired into: 1. The court must ascertain the value of the property upon which the plaintiff is entitled to seek a- return; and 2. It must determine what is the percentage of return to which the plaintiff is entitled upon such value. In order to say whether or not a given scale of charges will take property without just compensation, it is as essential to know what is a fair ratio of return upon property devoted to the use in question as it is to know what amount or value of property is so devoted. The range of judicial investigation must be as wide in case of the one element as in that of the other. If the rates fixed yield less than the lowest percentage of profit which is ordinarily ^ obtained in the locality upon equally safe and permanent investments in enterprises of a kindred character the regulation is as clearly confiscatory as if no return at all is provided upon a portion of the property actually employed. The ultimate issue is whether the ordinance deprives plaintiff of its property without just compensation, but, in order to answer this issue in the affirmative, the trial court must find, either in terms or impliedly, that the return allowed will give less than the lowest reasonable percentage of profit upon the actual value of the property devoted to the public use. In fixing upon such percentage, however, the court is not to act upon what it, as an original question, might think -to be fair and reasonable, but is, rather, to determine what is the lowest percentage which could properly be thought by the rate-fixing body to be fair and reasonable. On this question, there must be a certain range of discretion which may be traversed by the city council without infringing upon constitutional rights. If the ordinance gives a rate of return which, although low, is not palpably unreasonable, the court is not to upset the action of the council because it may think a higher rate more appropriate. The presumption is in favor of the validity of the legislative determination, and the burden is on the party attacking the rate fixed to show its invalidity. Applying these principles, we held, in our former opinion, and now hold, that the evidence in this case did not warrant a finding that a net return of 4.682 per cent was less than the lowest rate of return which the city council might fairly have determined to be just. We did not, and do not, intend to declare that this rate is, as matter of law, adequate or above the dividing line which separates lawful regulation from confiscation. The minimum rate of percentage justly returnable must, in any other case, or in another trial of this case, be determined upon the evidence introduced in the trial of the particular case. All this, we think, is, in effect, stated in the original opinion. We have here amplified the discussion in order to meet the fears, expressed by counsel petitioning' for a rehearing, that our decision would be taken as announcing, as a rule of law applicable to all cases and under all circumstances, that a net return of 4% per cent upon property devoted to a public use will not be regarded by the courts as confiscatory.

As to all other questions, we adhere to the views expressed in the opinion.

The opinion heretofore filed, omitting the portion first discussed, being that portion relative to the return to the stockholders of about 31/2 per cent per annum, was as follows:—

“This action was commenced in the superior court of Ala meda County on April 5, 1900, by plaintiff, a corporation formed and existing for the purpose of supplying the city of Oakland and other cities and towns in Alameda County and the inhabitants thereof with water, against said city of Oakland and the members of the city council, to obtain a decree adjudging void an ordinance adopted on March 26, 1900, by such council, fixing the rates to be collected by plaintiff for the water to be furnished such city and its inhabitants for the year commencing July 1, 1900, and ending June 30, 1901, restraining its enforcement, and requiring the council to adopt, after full investigation and opportunity to plaintiff to be heard, an ordinance fixing just and reasonable rates for such year. The general ground stated for this relief was that such ordinance was adopted by the council arbitrarily and without any sufficient investigation or any opportunity to plaintiff to be heard upon the question of the reasonableness of the rates proposed thereby, that the rates fixed thereby were unreasonable, unjust and oppressive, and did not permit of nor provide for a just or fair compensation to plaintiff, and that the effect thereof would be to take away plaintiff’s property without due process of law by depriving it of any fair return upon its property and in such service of furnishing water.

“Judgment was given in favor of plaintiff on Elay 28, 1901. The bill of exceptions for use on motion for new trial and appeal was settled by the trial judge on April 8, 1905, on which day defendants’ motion for a new trial was denied. Appeals were taken by defendants from the judgment and the order denying a new trial, and these appeals were submitted to this court for decision in January of this year.

“The trial court found that the property of plaintiff necessary to enable it to furnish the city of Oakland and its inhabitants with water, being its reservoir sites, reservoirs, water-rights, and other rights necessary to secure the absolute ownership of the water caught and impounded, land, pumping and other works, many miles of water-pipe laid for distributing waters, buildings and improvements, are of the value of $7,000,000. There is nothing in the findings to indicate, except as just stated, what items of property were taken into consideration as constituting this aggregate of property found to be worth $7,000,000, or the value given to any particular item, except that it is further found that the properties known as the Pleasanton Sink, Central Reservoir, and the Glue Works Plant are not used for supplying the city of Oakland or its inhabitants with water, and constitute no part of the property which the court found to be of the value of $7,000,-000. The court further found, according to a stipulation of the parties, that the operating expenses of plaintiff! which must be incurred during the year ending June 30, 1901, including all taxes, will amount in the aggregate to $134,200, seven eights of which will be incurred in supplying the city of Oakland and its inhabitants, and the other one eighth in supplying the towns,of San Leandro and Emeryville and a portion of the city of Berkeley, and the inhabitants thereof, and also the county of Alameda for certain purposes. Adopting the theory of plaintiff that the ordinance would reduce the receipts under the ordinance of the next preceding year twenty-five per cent, a conclusion that we cannot hold is Avithout sufficient support in the evidence, it further found that the gross income under the ordinance in question for the year 1900-01 from all sources would not exceed $323,500, of Avhich $51,750 would be received from consumers other than the city of Oakland and its inhabitants. Except in so far as this failed to take into account and add to the gross receipts $13,230.91, the amount of rebates shown to have been made by plaintiff to certain consumers during the preceding year, and except also that under the stipulation of the parties the gross receipts would amount, without adding such rebates, and Avith a twenty-five per cent deduction, to $323,561, the finding was sufficiently supported by the stipulation of the parties and the evidence. This conclusion is based entirely on the assumption of the parties that there would be no increase in the business over that of the preceding year. Deducting from these gross receipts the amount of such operating expenses, including taxes, which we shall take in round numbers at $135,000, as the same are taken in the calculations contained in appellants’ brief, left the probable net revenue for the year under the ordinance in question at $188,561.66 under the findings without adding the rebates, and at $198,898.31 if the rebates are added to the gross receipts, as we are satisfied they should be. Upon these facts, it appears that the net revenue of plaintiff from its property on the basis of $7,000,000 valuation would be but 2.841 per cent, without any allowance for depreciation in the value of the plant. The court found that a fair return and rate of interest for the year 1900-01, and a just and reasonable rate for the water to be supplied, is seven per cent on $7,000,000, over and above the operating expenses and taxes, and that plaintiff is entitled to receive for the water furnished by it to the city of Oakland and its inhabitants at least that amount, less the income derived by it from consumers outside the said city, amounting as hereinbefore stated to $51,750. It further found substantially that the ordinance was passed without any opportunity to be heard against it on the part of the plaintiff or other persons interested, that no consideration was given to a large and material part of plaintiff’s property, that at the meeting at which the ordinance was finally passed, March 26, 1900, plaintiff offered to produce evidence to show that it was unreasonable but that the council refused to allow it to do so, although this was the first opportunity plaintiff had to present its objections,- that the rates fixed were fixed arbitrarily and wdthout any consideration of or regard to the right of plaintiff to a reasonable consideration, etc., and that the subject of said ordinance and water rates was not carefully considered by the individual members of the council.

“Upon these findings a decree was entered adjudging the ordinance null and void, and setting aside, vacating and annulling the same, adjudging that plaintiff is entitled to have rates for supplying fresh water to the city of Oakland and its inhabitants for the year commencing July 1, 1900, and ending June 30, 1901, so fixed that they will in the aggregate afford to plaintiff a just and reasonable compensation, and as will yield a sufficient income to pay its expenses and taxes and a reasonable rate of interest upon the value of plaintiff's property decreed to be the sum of $7,000,000, ordering the city council to forthwith fix the rates for said year ‘in accordance with the principles established in this decree,’ and enjoining the defendants from enforcing or attempting to enforce the said ordinance.

“The general principles applicable in cases of this character are now fairly well settled. Under the provisions of our state constitution, the use of all water appropriated for sale, rental, or distribution is a public use, subject to the regulation and control of the state, and the rates to be collected by any per son, company or corporation in this state for the use of water supplied to any city or town, or the inhabitants thereof, must be fixed, annually, by the city or town council or other governing body of such city or town. (Art. XIV, see. 1.) As was said in Spring Valley Water Company v. San Francisco, 165 Fed. 676 , this provision of our constitution is justified and sustained by the well-settled principle enunciated in Munn v. Illinois, 94 U. S. 113, 126 ; [ 24 L. Ed. 77 ], that where one devotes his property to a public use, ‘he in effect grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created, ... so long as he maintains the use. . . . When private property is devoted to public use, it is subject to public regulation.’ If the right to regulate exists, the right to establish the reasonable compensation for services as one of the means of regulation is implied. The exercise of this right on the part of the state is a legislative function. As is the case in regard to many other legislative acts, the legislative officers in determining what will be the proper rate of compensation are necessarily obliged to use some degree of judgment and discretion, and are ‘bound in morals and in law to exercise an honest judgment as to all matters submitted to their official determination.’ (Spring Valley Water Work's v. Schottler, 110 U. S. 354 , [4 Sup. Ct. 48, 28 L. Ed. 173 ].) To this extent, their duties in the exercise of their legislative function are judicial in their nature. But, as was said by the supreme court of the United States in the recent case of Knoxville v. Knoxville Water Co., 212 U. S. 1 , [29 Sup. Ct. 148, 53 L. Ed. 371 ] : ‘The function of rate-making is purely legislative in its character, and this is true, whether it is exercised directly by the legislature itself or by some subordinate or administrative body, to whom the power of fixing rates in detail has been delegated. The completed act derives its authority from the legislature and must be regarded as an exercise of the legislative power.’ This was fully recognized in the opinions in the case of San Diego Water Co. v. San Diego, 118 Cal. 556 , [ 62 Am. St. Rep. 261 , 38 L. R. A. 460, 50 Pac. 633 ]. The courts have no power to revise the action of the rate-fixing body in this regard. No authority is given by the law for any such review by a judicial tribunal. If an ordinance fixing rates is enacted in the man ner provided by law, it can be set aside by the courts only where it is invalid on some constitutional ground. Under our constitutional guaranties, federal and state, no one can be deprived of his property without just compensation, and if the effect of an ordinance fixing water rates is to deprive one engaged in the exercise of such public use of a fair return upon his property used in such service, such act deprives the party of the lawful use of his property, ‘and thus, in substance and effect, of the property itself,’ in violation of the constitutional provisions. (Chicago etc. R. R. Co. v. Minnesota, 134 U. S. 418, 458 , [10 Sup. Ct. 462, 702, 33 L. Ed. 970 ].) Where such is the effect, the courts, enforcing the mandate of the constitutional provisions, will hold the ordinance to be void and prevent its enforcement. This is the full extent of their power in such a matter, and the basis upon which such power rests. As said in San Diego Water Co. v. San, Diego, 118 Cal. 556 , [ 62 Am. St. Rep. 261 , 38 L. R. A. 460, 50 Pac. 633 ] : ‘The function of the courts is merely to ascertain whether the power has been carried beyond the constitutional limits so fixed; and, if such be found to be the case, to declare the acts of the council void. They do not sit as appellate tribunals to review the correctness of the council’s determination, nor need they know anything about the evidence on which that body has acted. All that they have to consider is, whether, in a given case, the result of the council’s action will be to take the property of the complaining party without just compensation.’ The ultimate question in any judicial proceeding of this character is whether the rates fixed are confiscatory. It is now settled that what one engaged in furnishing water to the public is entitled to demand ‘is a fair return upon the reasonable value of the property at the time it is being used for the public,’ over and above its necessary operating expenses, including current repairs and taxes. (San Diego etc. Co. v. National City, 174 U. S. 739, 757 , [19 Sup. Ct. 804, 43 L. Ed. 1154 ]; San Diego eto. Co. v. Jasper, 189 U. S. 442 , [23 Sup. Ct. 571, 47 L. Ed. 892 ] ; County of Stanislaus v. San Joaquin Co., 192 U. S. 201 , [24 Sup. Ct. 241, 48 L. Ed. 406 ].) To this should probably be added, in a case where the property is irrevocably devoted to a public use, as intimated by the United States supreme court in Knoxville v. Knoxville Water Co., 212 U. S. -1, [29 Sup. Ct. 148, 53 L. Ed. 371 ], an annual allowance to provide for making good the depreciation which must occur in much of the property used in such a service. The court said: ‘The company is not bound to see its property gradually waste, without making provision out of earnings for its replacement. It is entitled to see that from earnings the value of the property invested is kept unimpaired, so that, at the end of any given term of years the original investment remains as it was at the beginning.’ This is in line with what was said by Chief Justice Beatty in San Diego Water Company v. San Diego, 118 Cal. 556 , [ 62 Am. St. Rep. 261 , 38 L. R. A. 460, 50 Pac. 633 ], It is the plain duty of the legislative body fixing rates to take all of the elements properly involved in the determination of the question of the present value of the property used in the public service into consideration, and having ascertained that value, to fix such rates as will allow the person engaged in furnishing the water, over and above its operating expenses, taxes and current repairs, such amount as will fairly compensate him for the annual depreciation in the property, and leave him with what, under all the circumstances, will be a fair and just return for the use by the public of his property. All of these questions, the value of the property, the amount of expenses, the amount of allowance for depreciation, and what, under all the circumstances, will be a fair compensation to the owner, are, however, for the rate-fixing body, and the courts should never set aside the action of that body upon the ground that it deprives a party furnishing water of his property without fair compensation, unless that fact is very clearly made to appear. The burden of making this showing is on the person who assails the law. As was said in Knoxville v. Knoxville Water Co., 212 U. S. 1 , [29 Sup. Ct. 148, 53 L. Ed. 371 ], the judicial power of annulling legislation on this ground ‘ought to be exercised only in the clearest cases.’ In San Diego Land & Town Co. v. National City, 174 U. S. 739 , [19 Sup. Ct. 804, 43 L. Ed. 1154 ], the United States supreme court said: ‘Judicial interference should never occur unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of property under the guise of regulations as to compel the court to say that the rates prescribed will necessarily have the effect to deny just compensation for private property taken for public use.’ In Munn v. Illinois, 94 U. S. 113, 126 , [ 24 L. Ed. 77 ], the same court said, as has repeatedly since been said: ‘Every statute is presumed to be constitutional. The courts ought not to declare one to be unconstitutional; unless it is clearly so. If there is doubt, the expressed will of the legislature should be sustained.’

“With these general observations, we come to a consideration of a few of the many questions presented by this appeal.

“It is self-evident that there is no more material question of fact in a judicial investigation of this character than that of the present reasonable value of the property devoted to the public use. Only by a determination of that question can we have any foundation upon which to rest a conclusion as to the sufficiency of the compensation that will be given by the rates fixed. It is the question, too, which presents the greatest difficulty, and upon which the greatest difference of opinion ordinarily exists, both before the rate-making body and in any judicial proceeding in which the action of that body is assailed. As we have seen, the trial court found that the property of the plaintiff so devoted to this use was of the value of $7,000,000. The claim of defendants, as stated in their answer, was that such value did not exceed $3,000,000. This finding of the trial court is assailed by defendants as not being supported by the evidence. If this claim of defendants be well based, the judgment must, in our opinion, be reversed, for we would then be without any finding on the question of value, and without any power or ability to supply such a finding. There was evidence which probably would have supported a finding of value very slightly in excess of the amount claimed by the defendants in their answer, $3,000,000, and which certainly would have supported a finding of a value not exceeding $3,500,000. Taking the value to be $3,500,000 only, the ordinance would afford a net revenue over operating expenses and taxes of 5.682 per cent, which is not, in our judgment, so low a rate that a court, upon the record before us, would be warranted in holding that it was beyond the power of the council to fix, even if we hold that there must be deducted therefrom what would be a fair allowance for the ordinary annual depreciation in the value of the perishable portion of the plant. What such an allowance would be has not been determined by the trial court, and we cannot say from the record. It may be that it would not amount to more than one per cent of the value of all the property, perishable or nonperishable. Such an allowance for depreciation would be in excess of that testified to as a proper allowance on the application for an injunction in Spring Valley Water Co. v. San Francisco, 165 Fed. 676 , if the opinion correctly states such testimony. In that event, we would have over 4% per cent net for the stockholders. This certainly would be a very substantial net return, considerably more than is derived from many investments eagerly sought by capital. We do not wish to be understood as intimating that even such a return would be considered by us a full and fair return under all the circumstances, were we engaged in the exercise of the legislative power of fixing the rates. That, as said before, is not a function of the courts. We simply mean that we do not believe it to be so low, under the circumstances appearing here, as to warrant a court in holding it to be beyond the legislative power to fix. We have said this much for the purpose of showing that the judgment cannot stand if the finding of the trial court as to the value of plaintiff’s property is not sufficiently sustained by the evidence. Moreover, the judgment itself finally fixes as between the parties the value of the property of plaintiff, for all the purposes of fixing rates for the year 1900-01, at least, at the sum of $7,000.000.

“We have carefully examined the record on this appeal, consisting of over fifty-five hundred printed pages, for the purpose of acquainting ourselves with the evidence upon the value of plaintiff’s property used in the year 1900 in furnishing the city of Oakland and its inhabitants with water. We assume that the trial court was fully warranted in concluding that the portion of the system acquired by plaintiff from the Oakland Water Company in 1899 should be included as a portion of said property. So assuming, we are nevertheless unable to find such substantial evidence in the record as would warrant a trial court in a proceeding of this kind in concluding that the property of plaintiff was of the value of $7,000,000, or anything near that sum. All of the testimony as to the value Avas exceedingly unsatisfactory. It consisted almost wholly of the giAdng of opinions by expert witnesses as to the value, and the usual radical difference is to be found between the opinions of the experts produced by plaintiff and those produced by defendants. To add to the usual difficulty in ascertaining the real value in such a case is the fact that most of the hooks and records of the Contra Costa Water Company showing details of cost of construction and operating expenses had been destroyed by the plaintiff in the year 1899. As was said recently by the supreme court of the United States regarding a case of conflict between the evidence of experts in a case of somewhat similar character, it is apparent that the total value must necessarily be more or less in doubt, and becomes matter of speculation or conjecture to a great extent. (Willcox v. Consolidated Gas Co., 212 U. S. 19 , [29 Sup. Ct. 192, 53 L. Ed. 382 ].) But even an analysis of the evidence of plaintiff’s expert witnesses shows it to be without sufficient support for this finding. It is true that three of plaintiff’s expert witnesses testified that the value exceeded $7,000,000, Mr. Adams putting it at $7,077,527, without including certain real estate valued at about $200,000; Mr. Schuyler putting it at $7,633,447, including all real estate, and Mr. Kiersted putting it at about $7,500,000. The testimony given by these witnesses, however, showed very clearly that these conclusions were not based upon data sufficiently certain to warrant their acceptance by the trial court as against the ordinance adopted by the city council.

“Both Mr. Adams and Mr. Schuyler included as a part of their total an item of $184,000, as Mr. Adams put it, to replace past depreciation in the works not provided for, and as Mr. Schuyler put it, to provide a sinking fund for such past depreciation. Clearly this had nothing to do with the question of the value of the property. Nor is the person furnishing water entitled to have any allowance made in the annual fixing of rates to cover any past depreciation. It is the value of the property at the time of fixing the rates that is to be ascertained and upon which the party furnishing water is entitled to an income, and the only depreciation that can be allowed for is such as may properly be apportioned to the year for which the rates are being fixed. This is made clear by the opinion in Knoxville v-. Knoxville Water Co., 212 U. S. 1 , [29 Sup. Ct. 148, 53 L. Ed. 371 ]. It is agreed by counsel that the trial court excluded this item in arriving at its conclusion. Both of these witnesses also included in their totals an item of $500,000, as the value of the going business of plaintiff. Their theory in regard to this item was, as stated by learned counsel for plaintiff, that the property and business of the plaintiff had a value as being the property and business of a concern which, in the legal and commercial sense, is a ‘going concern’ and which has a thoroughly established business, over and above and in addition to the mere cost or cost of reproduction of its property and plant, and what the value of said property would be at the time when its works were just completed. So far as this may include what is generally known as ‘good will,’ it could not be considered at all in determining the question of value of the property. Like the Consolidated Gas Company of New York in Wittcox v. Consolidated Gas Co. etc., 212 U. S. 19, [29 Sup. Ct. 192, 53 L. Ed. 382 ], the plaintiff here had a monopoly in fact of the business in which it was engaged. It was the only party having water to furnish in the city of Oakland, and one having to purchase water had no other vendor to whom to resort. Of such a stipulation the supreme court of the United States said in the case last cited: ‘We are of the opinion that it is not a case for a valuation of “good will.” . . . The complainant has a monopoly in fact, and a consumer must take gas from it or go without. He will resort to the “old stand,” because he cannot get gas anywhere else. The court below excluded that item, and we concur in that action.’ It may be conceded that the fact that the works of plaintiff are in actual use as part of a going concern give them a greater value to the stockholders than they would otherwise have. It supplies the capacity to earn returns which would otherwise be wanting. Purely for the purposes of this decision, we may assume it to be true, as was said by Judge Farrington in Spring Valley Water Co. v. City and County of San Francisco, [ 165 Fed. 676 ], that the value of the going business and franchise depends upon their earning power. Where, as here, that earning power depends on the rates to be fixed annually by the city council in such a way as to give only a fair return on the property in use, and the franchise is neither exclusive nor defined by any special contract with the city, these elements would appear to play a very small part, if any, in the matter of valuation. However this may be, it is plain that none of the witnesses furnished any evidence upon which any value could be added on account of either of these items. The theory of both Mr. Adams and Mr. Schuyler was, as stated by plaintiff's counsel, that this value was measured by the losses sustained and the deficiencies of income accruing to it, in the early period of its operations, and up to the time that it had been brought to a paying basis. • Mr. Kiersted, the only other witness on this subject, measured the value of this element of ‘going concern’ in practically the same way. Mr. Adams, in one of his estimates, concluded as a matter of individual judgment that in an enterprise having the characteristics and magnitude of the old Contra Costa Water Company, there must have been in the inception of the concern losses or deficiencies in income to the extent of five hundred thousand dollars. In his other estimate, he made a computation of the early losses, treating them as the difference between the return of 5.63 per cent, which the company had actually received, as computed by him from its annual statements, and the return of seven per cent, which he believed it should have received. Mr. Schuyler and Mr. Kiersted followed the same general lines. This was all the evidence supporting this item. We think it very clear that it had no relation to the question of present value and afforded no basis for any valuation by the trial court of either of these elements, franchise or going concern. In this connection we quote the words of Judge Farrington in the case last cited: ‘Two of the experts estimated the value of the going business to be equal to the total amount by which current rates of interest exceeded the net profits of the business prior to 1880. In other words, the value of the going business is equal to the cost of establishing the Spring Valley Water Company’s business originally, and that cost is equal to the deficiency of the revenue prior to 1880. This.estimate is open to the objection that the deficiency of revenue may have been due to extravagant or wasteful management. The company may have purchased a plant larger and more expensive than necessary; current rates of interest may have been abnormally high; many causes which have absolutely no relation to the value of a company’s business now as a going concern may have increased or diminished the deficiency in revenue. Furthermore, if it be conceded that early deficiency of revenue is the proper measure of value for the present going concern, then it follows that the greater the deficiency and the more unprofitable the business, the greater the present value of the going concern; and if the business had yielded large profits from its very inception, the going business to-day would be worthless. These variant methods, leading to equally variant results, are not in accord with the actual conditions. None of the estimates can be followed.’ It is unnecessary to say that the burden was on plaintiff to furnish data showing that these elements had a distinct, independent productive value, before any such value could be included. (See in regard to value of franchises Willcox v. Consolidated Gas Co., 212 U. S. 19 , 29 Sup. Ct. 192, 53 L. Ed. 382 ].) In what we have said, we do not desire to be understood as deciding that in the matter of fixing water rates anything at all should be added to the value on account of the element of ‘going concern.’

“So far as the evidence of Mr. Adams and Mr. Schuyler afforded any basis for a valuation of plaintiff’s property by the trial court, other than the property acquired from the Oakland Water Company, such support was to be found in the evidence relating to the cost of the works and the cost of the reproduction thereof. The evidence of Mr. Adams that San Leandro Lake, including real estate and appurtenances, which was the main source of plaintiff’s water supply, was worth $1,537,500, was based solely upon the theory that it supplied ‘615 miner’s inches of water under four-inch pressure, practically constant and eertain yielding capacity, at $2,500 per inch.’ This valuation of $2,500 per inch was, as shown by his examination, a mere arbitrary conclusion, based upon his views as to what, under all the circumstances, would be fair, and in part upon what he thought the consumer would be able to pay. Mr. Schuyler does likewise. We find in this evidence no such certainty as renders it available as a guide to the value. Each of these witnesses included over $3,000,000 as the cost of construction of the plant (exclusive of the plant of the Oakland Water Company), or the cost of reproduction thereof. Neither of them made any deduction on account of depreciation which must have come from age and use. The Contra Costa Water Company had existed ever since 1866, and more than two-thirds of its construction work was done prior to 1886. In the case of Knoxville v. Knoxville Water Co., [ 212 U. S. 1 , 29 Sup. Ct. 148, 53 L. Ed. 371 ], the United States supreme court said: ‘The cost of reproduction is one way of ascertaining the present value of a plant like that of a water company, but that test would lead to obviously incorrect results if the cost of reproduction is not diminished by the depreciation which has come from age and use. . . . The cost of reproduction is not always a fair measure of the present value of a plant which has been in use for many years. The items composing the plant depreciate in value from year to year in a varying degree. Some pieces of property, like real estate for instance, depreciate not at all, and sometimes, on the other hand, appreciate in value. But the reservoirs, the mains, the service-pipes, structures upon real estate, standpipes, pumps, boilers, meters, tools and appliances of every kind begin to depreciate with more or less rapidity from the moment of their first use. It is not easy to fix at any given time the amount of depreciation of a plant whose component parts are of different ages with different expectations of life. But it is clear that some substantial allowance for depreciation ought to have been made in this case.’ A reading of the record cannot fail to convince one that the estimates of both Mr. Adams and Mr. Schuyler were practically of all the construction work that has been done since the year 1866, without any allowance whatever for the depreciation that must have occurred. It is apparent from the record that even upon the basis of an allowance of only one per cent annually for depreciation, the depreciation in the Contra Costa plant would have exceeded $500,000. According to all of defendants’ witnesses except one, Mr. Miller, it was practically $1,000,000 or more. Mr. Adams himself testified that from his investigation he believed that the prevailing rate of depreciation per annum in such property was two per cent, taking the property as a whole. There is nothing in the evidence of these witnesses or elsewhere in the record to indicate any basis upon which the trial court might properly hold this element of depreciation to be offset or materially affected by appreciation in the value of any portion of the property or of the plant as a whole. So far as real estate values were concerned, including the value of San Leandro Lake and the water-rights thereunto appertaining, the testimony given was of present value.

“Both Mr. Adams and Mr. Schuyler placed the value of the plant acquired from the Oakland Water Company in 1899, which in 1900 constituted a part of plaintiff’s system, at $2,550,000. This they did solely upon the theory that it was the price paid by plaintiff for the property. At the time of the arrangement between these two companies, they were and had been for some time competing companies in the business of furnishing water to the city of Oakland and its inhabitants. The deed by which plaintiff acquired the property and business of the other company recited a consideration of $1,500,000, and that the conveyance was subject to a bonded indebtedness in the sum of $1,500,000. It appears that no money passed in this transaction, the $1,500,000 expressed consideration being paid in stock of the Contra Costa Water Company at its par value. It was assumed that this stock was worth seventy cents on the dollar, viz.: $1,050,000, and by adding this to the bonded indebtedness of $1,500,000, the values of Mr. Adams and Mr. Schuyler of $2,550,000 are obtained. This seventy cents on the dollar was the market value of Contra Costa Company stock some few months after the arrangement was perfected, but it had no such market value at the time of the arrangement. What its value then was does not appear, except that it appears that it was lower than seventy cents, but it is claimed that such lower price was not the fair price. While the price paid for an article is ordinarily some evidence of its value, the evidence of price here is practically worthless. Regardless of other considerations, it appears that no estimate of the value of the various items composing that property, even including that of Mr. Adams, brought the aggregate higher than about $2,300,000, and the great weight of evidence in number of witnesses, at least, put it even far below the amount of the bonded indebtedness. (See Knoxville v. Knoxville Water Go., 212 U. S. 1 , [29 Sup. Ct. 148, 53 L. Ed. 371 ].) Of Mr. Kiersted’s testimony as to the value of this property it is sufficient to say that it shows simply a method of arriving at the value which does not appear to us to furnish the least particle of support for any judgment as to the actual value.

“Mr. Kiersted based his conclusion as to the total value of plaintiff’s property solely on two methods pursued in determining that value, one of which may properly be called the investment method, and the other the capitalization method. Mr. Adams and Mr. Schuyler also used somewhat similar methods in arriving at a conclusion, as confirmatory of their other method of valuation. The data upon which all these calculations were based were very uncertain, in view of the fact already stated that most of the books and records of the Contra Costa Water Company showing details of cost of construction and operating expenses had been destroyed by plaintiff in the year 1899, and to a great extent only certain incomplete memoranda testified to have been taken from the boobs by the president of the plaintiff, and certain very general statements filed by the company with the city council in the year 1886, and annually since, were available as a basis for the calculations. It was necessary for these witnesses in making their calculations to assume many things for which no basis existed in the evidence. Taking all of the evidence of this character together, it was too uncertain to afford any measure of or guide to the present value of the property.

“The only other expert witness on the part of plaintiff was Mr. Le Conte. He confined himself to estimates of the actual cost of construction, without undertaking to place any value on the aggregate property of plaintiff. If there be deducted from his estimate of actual cost anything like a fair .'allowance for depreciation, it would be impossible to find in the record a total value of $7,000,000 or anything near that sum for plaintiff’s property, based upon Mr. Le Conte’s estimate so far as the cost of construction was concerned.

“There is no other evidence in the record that would, taken alone or in connection with such portions of the testimony of the witnesses already named as furnish evidence of the value of plaintiff’s property, bring the present value of such property as high as $7,000,000. It is suggested by learned counsel that there are many other elements upon which no value was given by the testimony, that might properly have been taken into consideration, and must be assumed to have been taken into consideration by the trial court in arriving at a conclusion as to value, such as appreciation in value, the skill and good management in the upbuilding of the works, the obstacles and difficulties encountered in the construction of the works, the unusual natural advantages presented by the San Leandro Lake as a source of water supply, the fact that the system of plaintiff had been thoroughly tried and proved equal to all demands, the prospective value of the property, the fact that plaintiff was carrying on its business in the exercise of a franchise emanating from the state, and the risks of the business. As to all of these items, regardless of all other consideration, we find no foundation in the record for any additional valuation by the trial court. The burden of proof as to valuation is on the plaintiff seeking to show the invalidity of such an ordinance as the one we have before us, and he must supply such evidence as will clearly warrant the valuation he seeks to have placed upon his property. (See San Diego Water Co. v. San Diego, 118 Cal. 573 , [ 62 Am. St. Rep. 261 , 50 Pac. 633 , 38 L. R. A. 460].) A trial court is not warranted in indulging in mere conjectures or surmises as to the value of certain alleged elements, and in basing its conclusion as to the value of the whole property in part thereon. We are unable to conceive of any proper theory upon which the finding of the trial court as to value can be held to be sufficiently sustained by the evidence.

“As to the facts surrounding the adoption of the ordinance and the contention of plaintiff based thereon, it is necessary to say a few words. There is no claim, as we understand it, that there was any actual fraud on the part of the council, or that the members of the council did not act in good faith and with the belief that they were fixing rates that would insure a fair and just return upon the actual value of plaintiff’s property, and the findings do not, as we understand them, intimate anything of this kind. So far as the findings may imply that the ordinance was passed without any opportunity to plaintiff to be fully heard on the question as to the proper rates to be fixed, we think that the evidence does not support the conclusion. The time for the annual establishment of rates was fixed by law. Under the act of March 7, 1881 (Stats. 1881, p. 54), it was the duty of the plaintiff to furnish the council in the month of January with a detailed statement showing the names of water-rate payers during-the year preceding, and also ‘all revenue derived from all sources, and an itemized statement of expenditures made.’ This statement was. furnished. It was also the right of plaintiff to furnish with such statement, a detailed statement of the amount of money actually expended annually, since commencing business, in the purchase, construction and maintenance respectively, of the property necessary to the carrying on of its business, and also the gross cash receipts annually, for the same period, from all sources. Plaintiff had the right to fortify this statement by such explanations and proofs as it might see fit to insert. This was a full and sufficient opportunity to present its case. (San Diego L. & T. Co. v. National City, 174 U. S. 739 , [19 Sup. Ct. 804, 43 L. Ed. 1154 ].) It may be said that common fairness would demand that plaintiff should be allowed, if it so desired, to supplement its written statement with proof and argument before the council. The evidence shows that such opportunity was accorded- it, and that the president of plaintiff appeared before the council in its behalf on two occasions. No request made by plaintiff looking to a further opportunity to present proofs or argument or to be present at any investigation of the council or its committee to which the matter was referred was denied, except the request made after the investigations of the council were completed and the ordinance was about to be voted on. It certainly cannot be held that the refusal of the council to then suspend proceedings and enter into a further investigation, especially upon the very general statement of the president as to what he could show, amounted to a deprival of an opportunity to plaintiff to be fully heard in the matter of the fixing of the water rates, or indicated any unfairness on the part of the members of the council. We are satisfied that the evidence is not sufficient to sustain the conclusion that the rates were established by ‘a merely arbitrary conjecture . . . not based on investigation or the exercise of judgment or discretion.’ (See Railroad Commission v. Cumberland etc. Co., [ 212 U. S. 414 ], 29 Sup. Ct. 357, [ 53 L. Ed. 577 ].) We are not to be understood by what we have said as intimating that if these findings were sufficiently supported by the evidence it could make any difference in our disposition of this appeal, in the absence of a finding as to value sufficiently sustained by the evidence. We are satisfied that all of the other findings in this connection are immaterial on this appeal, in view of our conclusion that the finding as to the value of plaintiff’s property is not sustained by the evidence. In the absence of _ a finding on that question, we cannot determine that the compensation afforded by the ordinance is not a just and reasonable compensation, and if the compensation afforded be just and reasonable, plaintiff cannot complain in the courts as to the methods used by the council in arriving at the conclusion embodied in the ordinance. We cannot do better than to quote what was said by Judge Farrington in this connection, in Spring Valley Water Company v. City and County of San Francisco, [ 165 Fed. 676 ]: ‘This case comes here on one vital issue, Are the water rates confiscatory ? To this all other questions involved are mere incidents. If the water rates in question are confiscatory, then the ordinance is repugnant to the federal constitution, and must be pronounced invalid. Its invalidity cannot be healed by showing the supervisors were actuated by the purest motives, that they committed no error in applying the law to the facts, and that their deliberations were conducted in strict obedience to the rules which govern courts in the administration of justice, and in the admission and rejection of evidence. But, on the other hand, if it appears that the rates will afford complainant a just and reasonable compensation for the use of its property, the ordinance is not repugnant to the constitutional provision invoked, because it does not deprive the company of anything whatever. And this is so even though it be shown that the board in its proceedings violated every rule in the law of evidence. The rates are either just and reasonable or unjust and unreasonable, and that fact must be ascertained by this court from its own independent investigations, and not from a review of the proceedings before the board of supervisors to ascertain whether it erred in the admission or rejection of testimony, or whether, on the testimony before that body, it should have arrived at a different conclusion.’ We have already quoted from Justice Van Fleet in San Diego Water Co. v. San Diego, 118 Cal. 573 , [ 62 Am. St. Rep. 261 , 38 L. R. A. 460, 50 Pac. 633 ], as to the function of the courts in cases of this character, as follows: ‘All that they have to consider is, whether, in a given case, the result of the council’s action will be to take the property of the complaining party without just compensation.’ Indeed, we do not understand learned counsel for plaintiff to claim that they are entitled to any relief in the courts as against the ordinance, unless the rates fixed are unreasonable and unjust, and amount, legally, to a confiscation. We do not read the opinion in Spring Valley Water Co. v. San Francisco, 82 Cal. 286 , [ 16 Am. St. Rep. 116 , 6 L. R. A. 756, 22 Pac. 910, 1046 ], or the opinion of Judge Van Fleet in Sam, Diego Water Co. v. San Diego, 118 Cal. 573 , [ 62 Am. St. Rep. 261 , 38 L. R. A. 460, 50 Pac. 633 ], as declaring a contrary view.”

There are many other matters discussed in the briefs, but we do not deem it necessary for the disposition of this appeal to consider any of them.

This is adopted as the opinion of the court on this hearing.

The judgment and order denying a new trial are reversed.

Shaw, J., Sloss, J., and Allen, J., pro tern,., concurred.