text:
    CARRIE V. C. WANN, Appellant, v. JOHN SCULLIN, FESTUS J. WADE and MERCANTILE TRUST COMPANY.
    Division Two,
    July 1, 1911.
    1. PRINCIPAL AND AGENT: Fraud and Deceit: Ratification of Agent’s Unwarranted Act. A principal cannot accept the fruits of an unauthorized bargain made by his agent, and then sue the agent for exceeding his authority in making the bargain. By ratifying the contract the principal ratifies and endorses the agent’s unauthorized act and absolves the agent from any liability on account of his' exceeding his authority. So that where the agent was authorized to sell plaintiff’s stock in a ferry company to a trust company for $500 per share upon condition that the agent sold and the trust company acquired a majority of the ferry stock at that price, and plaintiff, with knowledge that the company had not acquired a majority of the stock, and with knowledge that the trust company was paying much more than $500 per share in order to obtain a majority of the ferry stock, accepted a check from the trust company, through her agent’s hands, for her stock at She rate of $500 per share, and retains that check, she will be held, in her action for fraud and deceit against the trust company and her agent, to have ratified the action of her agent, and to have absolved him from all liability to her.

      2. -: -: -- — : False Telegram from Agent. Where the agent, after he had contracted the sale of plaintiffs stock in a ferry company to a trust company at $500 per share and had under that contract delivered the stock, sent a telegram to plaintiff that the trust company had a majority of all the stock, which was not true, and did not inform her that the stock had two days previously begun to rise in selling value and had at that time reached $1500 per share, yet if the next day, when she went to the trust company and demanded the stock, she knew that it did not have a majority of the ferry stock and that its selling value had reached $1500 per share, and with full knowledge of these facts she retained the check which the company had sent her in payment for her stock at $500 per share and sued for fraud and deceit, she was not misled to her injury by the telegram or by her agent’s failure to inform'her of its rise in selling value, but ratified the sale, and cannot recover from either her agent or the trust company.
    3. --: -: Concealment: Opinion as to Different Conduct. Where a railroad company was endeavoring to purchase a majority of the stock of a ferry company, through a trust company, and plaintiff’s agent was a stockholder in all three companies, and concealed from her the fact that the railroad company was the probable purchaser from the trust company of the stock and that the trust company was to receive a commission for malting the purchase of her ferry company stock, her testimony that the concealment of these facts from her by her agent constituted a material inducement to send her stock to-her agent for sale and that she would not have sent it to him had she known them, is a matter of opinion as to 1 what she would have done had she known the facts, and the court cannot accept them as being an inducing cause for her agreement to-sell, in the absence of evidence of some material fact which would have constituted a reason for her to act otherwise, and in view of the fact that she then thought she was getting a high price for her stock, and there had been no rise in its selling price.
    Appeal from St. Louis City Circuit Court.— Hon. " George H. Williams, Judge.
    Affirmed.

      John A. Gilliam and Luther Ely Smith for appellant.
    (1) Upon receipt of plaintiff’s certificate of stares of stock by defendant Scullin in response to the telegram of April 24, 1902, to her, it became his duty to exercise judgment, discretion, vigilance and zeal in her behalf. He was bound to see that the terms of the offer that he transmitted to her, and under which she sent her stock to him, were complied with before he surrendered her stock. (2) Defendant Scullin was a stockholder to the extent of $1,750,000 in the purchasing company at the .time he sent the telegram of April 24, 1902, and received her stock in response thereto, and turned same over to the immediate agent of the purchasing company; and he was also a large stockholder in the Mercantile Trust Company, the immediate agent for the purchaser of this stock. Such interest on the part of defendant Scullin in the purchaser constituted an interest in the subject-matter adverse to plaintiff, and she knew nothing of it then or until long afterwards; it constituted in law, therefore, a fraud upon plaintiff. (3) Plaintiff upon discovery of that adverse interest is not restricted to the remedy of rescission. She is entitled, in law, to bring suit against defendant Scullin for the difference between the price which he could have obtained and that which he did obtain. Nor is she compelled, in order to establish her damages, to buy other shares, and sue for the difference. She may retain what she did obtain and sue for the difference between that figure and the price which he should have obtained but failed to obtain. Mulvane v. O’Brien, 58 Kan. 463; Bank v. Simon, 133 Mass. 415. (4) The fact that another purchaser came into the field and the further development that the situation changed rapidly, far from being any excuse to defendant Scullin as plaintiff’s agent, is all the more reason why he should be held to the full terms of the telegram of April 24, 1902. Had defendant Scullin retained plaintiff’s stock in order to make certain, before turning over plaintiff’s stock, that a majority had agreed to sell to his undisclosed purchaser at $500 a share, he would have had her stock a sufficient length of time to have informed plaintiff of the new offer and the higher prices, and to have enabled him to have obtained the highest price possible for plaintiff. His failure to exercise the discretion, zeal, vigilance and loyalty towards plaintiff with reference to her stock, under the conditions which he did know, made it impossible for him to serve plaintiff loyally under the conditions which unexpectedly arose. His zeal, vigilance and haste with reference to plaintiff’s stock were all manifested in behalf of the purchaser; he signed an option agreement without plaintiff’s ^authority, knowledge or consent; he turned over her stock immediately upon its receipt. Had he been absolutely free and independent of any connection with the purchaser (Rock Island) or the purchaser’s immediate agent (Mercantile Trust Company) he would most naturally and most unquestionably have gone about the matter cautiously and deliberately. He would have endeavored to ascertain first that the majority had agreed to sell at $500 a share. Failing in that endeavor, he would have communicated with plaintiff- before turning over her stock. The result of that deliberation and caution would have made it possible for defendant Scullinr to have informed plaintiff of the changed conditions and the new offer in ample time for her to have obtained $1,000 or $1,500 per share for her stock, even though defendant Scullin did not, when he sent the telegram of April 24, 1902, anticipate that the offer of $500 a share for a majority or all of the stock ever would be withdrawn or any other offer substituted for it.

      Klein & Hough, Ferriss, Zumbalen & Ferriss, and Joseph S. Laurie for respondents.
    (1) The action of the court in sustaining the motion for a new trial on the ground that plaintiff’s instruction number two should have been refused, was proper. Said instruction was based upon the theory that Scullin’s failure to disclose to plaintiff the fact that he was a stockholder in the Chicago, Rock Island & Pacific Railway Company, and that the offer to purchase was made by that company, was a fraud upon plaintiff which entitled her to recover against defendant Scullin. And as to the defendants Mercantile Trust Company and Wade, it was based upon the theory that they were liable jointly with Scullin if Wade knew that Scullin was a stockholder in the Rock Island Company and did not communicate the fact of such knowledge to plaintiff, (a) As to the defendant Scullin the instruction is erroneous because the failure to disclose to plaintiff the fact that he was a stockholder in the Rock Island Company and that said Company was the intending purchaser, was not in law a fraud upon the plaintiff, and did not disqualify him from receiving from plaintiff her stock and delivering the same to the Trust Co. under the terms of the telegram of April 24th, and did not entitle her to recover against him. Hardwick v. Jones, 65 Mo. 54; Kitchen, v. Railway, 69 Mo. 224; Gaty v. Sack, 19 Mo. App. 470; Van Dusen-Harrington Co. v. Jungeblut, 75 Minn. 299; Alexander v. Williams, 14 Mo. App. 13; Insurance Co. v. School District, 25 C. C. A. 492; Northrup.v. Ins. Co., 48 Wis. 420; 1 Thompson on Corporations, sec. 1071; 1 Morawetz on Corporations, sec. 521. (b) The rule requiring the agent to disclose his adverse interest applies only to agents who are intrusted with a discretion in the matter of the agency, and is not applicable where the principal makes his own bargain and the agent is a mere ministerial one, without any discretion. Tiffany on Agency, p. 418; Mechem on Agency, sec. 67; Pollatsehek v. Goodwin, 40 N. Y. Supp. 682; Mining Co. v. Fox, 4 Ired. Eq. 61; Spalding v. Mattingly, 89 Ky. 83; Knauss v. Brew. Co., 142 N. Y. 70; Ranney v. Donovan, 78 Mich. 318; Kilbourn v. Sunderland, 130 U. S. 505; Atwood v. Railroad, 85 Va. 966. (c) The instruction is erroneous for the further reason that it does not require the jury to find the essential elements in an action of this kind, that the facts concealed were material and that plaintiff would, not have sent her stock to Scullin had she known that he was a stockholder in the purchasing company. 14 Am. & Eng. Ency. Law (2 Ed.), p. 113; Wannell v. Kerm, 57 Mo. 478; Bailey v. Smook, 61 Mo. 213; Dunn v. White, 63 Mo. 181; Powell v. Adams, 98 Mo. 598; Feller v. McKillip, 100 Mo. App. ■664; Tinker v. Kier, 195 Mo. 183; 20 Cyc. 23 and 40; •Jordan v. Pickett, 78 Ala. 331. (2) The motion for a "new trial was properly sustained, because the trial court erroneously refused to give the instructions asked in behalf of each of the defendants at the close of the plaintiff’s case. These instructions should have been given as to all three defendants, because: (a) There was no evidence of any fraud having been perpetrated by either of the defendants nor of any fraudulent motive ■or intent on their part; hence there was no evidence which would authorize a recovery under the pleadings as against either of the defendants. 20 Cyc. 35; Koontz v. Kaufman, 31 Mo. App. 397; Florida v. Morrison, 44 Mo. App. 538; Tootle v. Lysaght, 65 Mo. App. 139; Culver v. Smith, 82 Mo. App. 390; Lovelace v. Suter, 93 Mo. App. 429; Bank v. Trust Co., 179 Mo. 662; Nations v. Pulse, 175 Mo. 86, 94; Boulder v. Stilwell, 100 Md. 543. (b) The plaintiff’s evidence disclosed the fact that there had been an accord and satisfaction between plaintiff and defendants as to the subject matter of this suit. McCormack v. St. Louis, 166 Mo. 335; Coal Co. v. St. Louis, 145 Mo. 651; McGregor v. Ware Co., 188 Mo. 611; St. Joseph v. Hull, 72 Mo. App. 403; Andrews v. Stubbs Co., 100 Mo. App. 599; Perkins v. Hedley, 49 Mo. App. 556; Cornelius v. Rosen, 111 Mo. App. 619; Lightfoot v. Hurd, 113 Mo. App. 612; Rogers v. Pub. Co., 118 Mo. App. 1; Railroad v. Clark, 178 U. S. 353; U. S. B. & S. Co., v. Tbistell, 69 C. C. A. 651; Nassoily v. Tomlinson, 148 N. Y. 326; Jackson v. Volkening, 80 N. Y. Supp. 1102; Goss v. Rishel, 85 N. Y. Supp. 1045; Paper Co. v. Tonawanda Co., 94 N. Y. Supp. 946; Gas Co. v. Johnson, 123 Pa. St. 576; Keek v. Hotel Co., 89 Iowa, 202; Truax v. Miller, 48 Minn. 62; Creighton v. Gregory, 142 Cal. 34; Leather' Co. v. Foyer, 104 111. App. 268; Coal Co. v. Parlin, 215 111. 244; Richardson v. Taylor, 100 Me. 175.
   ROY, C.

— This cause was begun in the circuit court of the city of St. Louis, May 15, 1902. There was a trial at the March term, 1904, on the second amended petition, resulting in a verdict for plaintiff for $50,000.

Defendant’s motion for a new trial was sustained and plaintiff appealed. The action of the trial court in granting a new trial was sustained by this court in an opinion reported in 210 Mo. 429.

The case was retried on June 2nd and 3d, 1909. The trial court sustained a demurrer to the evidence and entered its verdict for defendants, and the plaintiff, after her motion for new trial was overruled, perfected her appeal to this court.

It would be vain to try to improve upon the exhaustive statement of the facts in the case made by Gantt, J., and his statement will be used as the basis of the statement for the present purposes, and only such additions will be made thereto as are required to show the difference in the facts as developed at the last trial.

On May 27, 1908, a third amended petition was filed. This petition differs from that on the former trial in three points: first, it omits a number of allegations as to conspiracy and confidential relations which were in the second amended petition, and which counsel do not consider important; second, it alleges that had plaintiff known of Scullin’s interest in the Rock Island Company or the Mercantile Trust Company, and the 'agency of the latter for the Rock Island Company, she would not have sent her stock to Scullin; third, it states the legal effect of the telegram of April 24, 1902, from Scullin to plaintiff, and of the telegram of April 25,1902, from her to him,, according to their legal effect as the pleader interpreted them, instead of setting them out in haec verba as in the former petition.

The last trial occurred before the court sitting as a jury; and, by consent of counsel, all evidence given at the previous trial went in as though then and there adduced by the respective parties with the same objections and exceptions. In other words, the former bill of exceptions was made a part of the record on the last trial to the same extent as if the proceedings therein contained had occurred at the last trial.

The appellant claims that new evidence was introduced at the last trial which should have the effect of changing the result; and it is deemed proper to state the appellant’s claims in that respect, and at the same time call attention to the record on the former appeal, so as to understand what if any effect the new evidence should have on the questions involved.

A. Appellant claims that the contract between the Bock Island Company and the Trust Company by which the Trust Company undertook the purchase of the Wiggins Perry Stock for the Bock Island Company is new evidence. But an examination of the statement on the former appeal (210 Mo. l. c. 454) shows that this court fully considered that contract.

B. Likewise the Mercantile Trust Company’s contract of purchase of Wiggins Perry Company stock made with various stockholders was before this court on the former hearing. [L. c. 454.]

Appellant claims that there was new evidence tending to show that the Mercantile Trust Company failed to acquire a majority of the Wiggins Perry stock. On the former appeal, the petition alleged such failure, and while the answer contained a denial of all the facts not admitted, it did not allege that the Trust Company obtained a majority of the stock and plaintiff testified (210 Mo. l. c. 458) that she knew that the Trust Company did not have a majority of the stock, and that everybody was talking about it. It will thus be seen that while there may be more evidence on that point in the present record than on the former trial, yet the question now, as then, is not as to the amount of evidence on that point, but whether any amount of evidence on that point affects the cause.

C. Plaintiff offered in evidence d contract of sale by Joseph G. Holliday to James Campbell at $750 per share of 25 shares, theretofore signed by Holliday at $500 per share, the sale being upon indemnity against claim of Mercantile Trust Company and expressly concurred in by Mercantile Trust Company. The contract was excluded by the Court and plaintiff excepted.

D. Plaintiff offered to prove by H. 'W. Cox the value of the real estate and improvements of the Wiggins Ferry Company in St. Louis and East St. Louis in-April, 1902, to be $7,185,316, which was excluded, and exceptions taken.

E. The like offer was made as to the real estate in St. Louis, by C. C. Crone, and was excluded, and exceptions taken.

F. Plaintiff offered to prove by Alonzo C. Church that the net earnings of the Wiggins Ferry Company for five years preceding April 24, 1902, were approximately each year $253,000 and over, which was excluded and exceptions taken, and Church testified that Scullin told him on April 24, 1902, that, while he could not tell him the name of the proposed purchaser of Wiggins Ferry Company, the effect of the sale to the purchaser would be to revolutionize the traffic across the river at St. Louis, and that it was a large system, a large railroad system.

G. Breckenridge Jones testified that he bought Wiggins Ferry Company stock for some of the railroads which were a part of the proprietary lines of the Terminal Association, beginning April 26, 1902, and up to May 12, 1902, in all eight different purchases; amounting to 332 1-2 shares at from $1000 to $1500 per-share, and that the-Mississippi Valley Trust Company bought approximately 5800 shares, which was more than a majority.

H. Mrs. Wann testified that when she sent her stock to Scullin, she did not know that the Rock Island Company was the prospective purchaser, and did not know what had taken place between Scullin and the Rock Island Company, and that she would not have sent the stock if she had known that Scullin had an agreement with the Rock Island to secure a majority or all of the stock for that company at $500 per share, or if she had known that he was interested in these-other affairs, and she testified that , the absence of an agreement on the part of Scullin with the Rock Island was a material inducement to- her to send her stock to him, and that if she had known of such an agreement, she would not have sent the stock to Scullin.

The plaintiff makes three distinct, charges against, defendant Scullin, which will be taken up and discussed, not in their chronological order, but in the order most conducive to a clear and easy understanding of the case.

I. The following charge is made- in the petition r That on April 29, 1902, plaintiff “received by mail from the Mercantile Trust Company a cheek for twenty-five-thousand dollars, and from said Scullin a telegram drawn by said Wade which pledged the honor of himself, the Mercantile Trust Company and its president. Wade that they then had a majority of all of the stock of the Wiggins Ferry Company contracted for. And plaintiff states that said allegation in said telegram was. not true, and was made with intent to deceive and defraud plaintiff.”

. But by reference to' the court’s statement of the-case when it was first here, it will be seen on pages 446 and 447 that plaintiff made the statement in her petition that on April 29th she received at Chicago from the Mercantile Trust Company its check for $25,000 sent by that company as payment, for the stock, and that on April 31st she went to defendants .Wade and the Mercantile Trust Company with said check and informed said company and said Wade that she was. dissatisfied with said sale, when said Wade informed her that he had plaintiff’s stock and intended to keep it,, and that plaintiff saw Scullin, who said he would see what could be done about it, but'on the next day said he had no time to talk about it; and said petition continues in the following words: “And plaintiff, finding that the Mercantile Trust Company was determined to keep her stock and that Wade and Scullin refused to talk to her about the alleged saje, returned with said check to Chicago, Illinois, and plaintiff has retained the said cheek and elected to sue the defendants for their fraud and deceit.”

And plaintiff’s testimony on the. former trial (210 Mo. 459) shows that she knew while in St. Louis and while she still had said check in her possession that the Mercantile Trust Company did not have a majority of said stock and were paying others bigger prices, so. that if it be true that the failure of the Mercantile Trust Company to acquire a majority of the stock put it out of the power of Scullin under his agency to. deliver plaintiff’s stock, the plaintiff, with full knowledge, ratified the contract by retaining and cashing the check.

The law does not permit a principal to accept the fruits of a bargain made by the agent, and then sue the agent for exceeding his authority in making said bargain. By ratifying the contract the principal ratifies and indorses the agent’s act in exceeding his authority and absolves the agent from any liability on account of such excess.

Meehem in his work on Agency, section 171, says; “The general rule therefore is that by such ratification the principal absolves the agent from all responsibility for loss or damage growing out of the unauthorized transaction.”

It is said in Clark & Skyles on Agency, section 385: “Of course, if an agent departs from the instructions of his principal, the principal may ratify his act, either expressly or impliedly, and thus release him from liability,” and the same position is held by Tiffany on Agency, page 87.

In Kirkpatrick v. Pease, 202 Mo. l. c. 490, it is said: “The ratification of an act, done by one assuming to be an agent, relates back, and is equivalent to a prior authority.”

In Aetna Ins. Co. v. Sabine, 6 McLean (U. S. C. C.) 393, which was a suit against an agent for exceeding his authority as such, the court says: “If he be not authorized to act, the policy is not binding on the plaintiff, and a ratification of the policy by the company would relieve the defendant' from responsibility, and remove from the plaintiff all ground of complaint.”

We are aware that this doctrine requires that, in order to discharge the agent by ratification of his act, the principal must be in possession of all the material facts. But in considering this question, we must not confuse the facts on the point of ratification with the facts on the question of deceit. In order to make the ratification binding on her as against the agent, it was only necessary for her to know the facts as to the value of the stock and as to whether the Trust Company had a majority of it. She was, by her own statement, in possession of all those facts, and is bound by her ratification, so that she has no cause of action against Seullin for exceeding his authority.

II. Plaintiff charges defendant Seullin with representing to her in the telegram of April 29th that the Mercantile Trust Company had a majority of all the stock and with failing to inform her of the rise in the value of the stock which began late on April 26th and reacted $1500 per stare on Sunday tte 27tt. Ttat telegram was sent, and tte rise in tte value of tte stock occurred after Scullin tad subscribed plaintiff’s stock to tte Mercantile Trust Company’s contract of purchase, and after Scullin tad delivered plaintiff’s stock to tte Trust Company under ttat contract. Yet before plaintiff took any further action, ste went to St. Louis, ste found ttat tte Trust Company tad ter stock and refused to give it up; ste found ttat it was worth $1500 per stare; ste found ttat tte Trust Company did not have a majority of tte stock, and with a full' knowledge of all these facts, according to -ter statement in tte former petition, ste chose to ratify tte sale and sue for fraud and deceit. Ste was not misled to ter injury either by tte statement ttat tte Mercantile Trust Company tad a majority of tte stock or by tte failure of Sculhn to inform ter of tte rise in value of tte stock.

III. It is charged ttat defendant Scullin concealed from plaintiff tte fact ttat he was largely interested in tte Rock Island Railway Company and in tte Mercantile Trust Company, and concealed from ter tte fact ttat the Rock Island Company was tte probable purchaser of ter stock, and ttat tte Mercantile Trust Company was to receive a commission of two and one-half per cent for making tte purchase. Tte defendant testified ttat ste was ignorant of those facts and ttat tte absence of those facts constituted a material inducement to send ter stock to Scullin, and ttat ste would not have sent it to him if ste tad known those facts. Ttat testimony seems to have been furnished by tte plaintiff on account of tte following.language in tte former opinion of this court (l. c. 487):.

“In addition to what has already been said, we think this instruction is also fatally defective for tte reason ttat it did not require tte jury, to find that tte failure of Scullin to disclose his ownership of stock in tte Rock Island Company and that said company, was the intending purchaser, were material inducements to the plaintiff’s action in sending her stock to defendant Scullin in response to his telegram of April 24th, nor that she relied upon the non-existence of such facts and would not have sent her stock had she known the facts.”

We take it for granted that the above testimony was given conscientiously and in good faith; but, with due deference, we must say that her opinion as' to what she would not have done under circumstances which never occurred is worth no more than the. opinion of other persons on that subject. When she says that the failure of Scullin to disclose certain facts to her was a material inducement to her to do what she did, we must decline to yield our judgment to hers on the question as to what she would have done. If plaintiff had furnished evidence of some material fact which would have constituted a reason for the plaintiff to act otherwise than as she did, it might have changed the complexion of the case, but she has not done so. It still remains a fact that the only possible reason that would have caused her to act otherwise than as she did was the rise in the price of the stock, and she could not know of that because that rise did not occur until afterward; and when it did occur was probably almost as much of a surprise to the defendants as to the plaintiff.

There was another proposition in the opinion of this court on page 488, which there has been no attempt to satisfy. It is as follows: “The transactions involved in this case were the same as those which were before this court in the case of Newman v. Mercantile Trust Co., 189 Mo. 423. And this court in that case held, after a car.eful perusal and consideration of the evidence that was rejected in that case, being practically the same as that in this case, that there was no evidence tending to prove the perpetration or even the contemplation of any fraud on the plaintiff or any other person. . On the contrary, the evidence abundantly establishes that the defendants Scullin and Wade not only were not moved by any fraudulent purpose in advising plaintiff to sell her stock for $500 per share, but were actuated by a desire to deal justly and fairly, not only with the plaintiff, but with every stockholder of the Wiggins Ferry Company, in endeavoring to sell said stock to the Rock Island Company,”

As was said by Bond, C., in the ease of Clubb v. Scullin, ante, p. 585, growing out of a similar state of facts, recently decided by this court: “The agency entrusted to defendant was one which carried no power of judgment or discretion in the performance of the acts prescribed. It charged him neither with the duties nor responsibilities of a general agent. An agency confined to the acceptance of a fixed price and the turning over of the property for which it is paid is not one which saddles the agent with the same liabilities towards his principal, which attach, as a matter of law, when one person gives another the power to exercise full judgment and discretion in the sale of property..”

As no case has been made against the defendant Scullin, it follows, under all the facts, that none has been shown against the other defendants, and the judgment is affirmed.

Brown, G., concurs in result.

PER CURIAM.

— The foregoing report of the commissioners is hereby adopted as the opinion of the court.


source: Caselaw Access Project

author: KENNISH, J.

license: Public Domain

text:
    HOME TELEPHONE COMPANY v. CITY OF CARTHAGE, Appellant.
    In Banc,-
    July 1, 1911.
    1. TELEPHONE RATES: Public Utilities Act: Service Outside' Corporate Limits: Evidence. Under the Public Utilities Act of 1907, granting to municipalities power to fix by ordinance the charges for telephone service “within their corporate limits,” the power of a city to fix rates for telephone service is restricted to service within its corporate limits, and, therefore, in a suit to determine whether or not the rates fixed by an ordinance are reasonable or confiscatory, testimony tending to show a large amount of free service to resident subscribers with persons outside of said limits and in neighboring towns, is not relevant to the issue of the reasonableness of the rates prescribed by the ordinance for service wholly within the city. A subscriber cannot be legally charged a higher rate for service within the city because of free outside service, nor can he be burdened with additional and more expensive apparatus and facilities made necessary solely by reason of the extension of the company’s plant for business connections beyond the limits of the city.
    2. - — : -: Injunction: All Rates: Theory of Trial. An appellant cannot be permitted to shift its position on appeal. Where the statute provided that the telephone rates fixed by ordinance should be reasonable, and in pursuance' to that statute the city passed an ordinance fixing maximum rates, and the company brought its suit alleging such rates to be unreasonable and confiscatory, and the judgment sustained its contention, and the city appealed, the city will not on appeal be heard to contend that the judgment must be reversed because it enjoins the enforcement of all rates, those fixed by the ordinance as well as those fixed by the company’s original franchise, alleged to be valid regardless of the validity of the ordinance.
    3. -: -: -: -: Not Applicable to Whole City. Where the franchise fixed the rates within one mile of the central office, the city cannot, on an appeal from a judgment enjoining the enforcement of an ordinance fixing rates for the whole city, raise the question of its right to enforce the franchise rates.
    -Í. EQUITY: Exclusion and Admission of Evidence: Reversal. The exclusion of competent evidence offered by appellant in an .equity case, and the admission of incompetent evidence offered by respondent, is not a ground for reversal, where the evidence so excluded or admitted is preserved in the record, since the court will disregard such testimony as it finds incompetent and consider such as it regards as competent, and render such judgment as equity and justice may require, upon the pleadings and the proper evidence tendered.
    5. TELEPHONE COMPANY: Reasonableness of Rates: Evidence: Circular Showing Earnings. In a suit to enjoin the enforcement of telephone rates fixed by an ordinance, on the ground that they are unreasonable and confiscatory, a circular advertising for sale the bonds of the company, in which it is stated the earnings of the entire system were for the preceding year a certain sum, and sent out by an investment company whose president was also president of the telephone company, is not competent, if it is not shown that the telephone company, through its officers in the discharge of their official duties, were in some manner responsible for the issuance of said circular. The fact that the same man was president of both companies is not sufficient to make the circular competent as an admission against the telephone company.
    6. -: -: Constitutionality of Statute: Public Utilities Act. The Act of 1907, empowering a city by ordinance to fix telephone rates, requires such rates to “be reasonable,” and hence it is not in conflict with either the State or Federal1 Constitution inhibiting a law depriving. the company of its property and destroying its business without due process of law. The rates fixed by the city, must be reasonable, or else-the ordinance is invalid, and hence the validity of the statute-is not drawn in question by an ordinance fixing unreasonable rates.
    7. -: -: Questions Considered. In determining the reasonableness of telephone rates as fixed by an ordinance, four factors are to be considered: First, the value of the property upon which the company is entitled to a return; second, the gross earnings of the property; third, the amount the company is entitled to deduct from the gross earnings for the successful operation of the property; and, fourth, whether the amount remaining is sufficient to give a reasonable return on the investment.
    g. -; -: Value of Properties. In determining the value of the investment of the public service corporation, the rule is that' the company, in order that it may have a just compensation, is entitled to a fair return upon the reasonable value of the property at the time it is being used for the public.
    9. -: -: -: Cost of Properties. The company furnished an inventory of its properties, and the expert appointed by the court set opposite each item its catalogue or invoice pi'ice, among others, “Material, $66,256.64,” and, “Original Cost of Plant, Less Deductions $23,038.75.” This last item was arrived at as follows: The amount paid for the plasj; when purchased by the company was said to be about $37,000. In the inventory, as valued by this expert, it was estimated that property of the invoice or catalogue price of $13,961.25 was included, which was a part of the plant at the time of its purchase by the company. In estimating the total cost of the plant to the company at the time of the trial all the property in hand was valued as new, and therefore this item of $13,961.25, in order to avoid duplication, was deducted from the $37,000, and the remainder of $23,038.75, was added as a part of the cost' of the property upon which the company is entitled to a return. There is no testimony tending to prove that there was any tangible property whatever, at the time of the valuation,, represented by this item of $23,038.75. Held, that this item of $23,038.75 cannot be considered as a part of the property which, at the time of the enactment of the ordinance fixing the rates, was “being used for the public,” and therefore it is excluded. It is also held in this case, after a review of the evidence, and rejecting this item of $23,038.75 as no part of the original cost of the plant, and making an allowance for the depreciation of the plant from the time the company acquired it, that $100,000 is a reasonable value of the property upon which the company is entitled to a return.
    10. -: -: Net Earnings. Where the telephone rates fixed by the franchise were $24 for business houses and $18 for residences per year for all phones within one mile of the central exchange, and the rates fixed by the company at the time the ordinance in question was enacted were for a single phone $30 for business houses and $24 for residences, and for party line service $24 for business houses and $18 for residences, so much of an ordinance as fixed the rates at $24 for business houses and $18 for residences anywhere within the city, is a reason- ■ able regulation, where the value of the company’s properties is $100,000 and its net earnings, after deducting all operating expenses, including maintenance and repairs, are $11,473.29; but so much of the ordinance as prohibited party line service is void.
    11.--: -: -: Depreciation Fund. A wise and proper management of a public telephone plant requires and demands that a liberal amount should always be reserved from the earnings to keep the plant in a high degree of efficiency and to provide for emergencies. But a depreciation fund of four dollars per phone for each year or about five per cent of the total value of the company’s properties, to cover what is termed, “invisible rot,” where all the company’s properties are valued as new, and no deduction is,made for depreciation, although $5000 per year for two years has been set apart out of the earnings to cover depreciations, and the net earnings on such valuation, without making any allowance for such fund, are over eleven and two-thirds per cent, will not be considered in determining "the reasonable value of the properties at the time it is being used by the public.” And an ordinance fixing telephone rates at $24 per year for business houses and $18 for residences, will not be held unreasonable on the theory that the earnings of the company should be decreased each year by four dollars per phone on account of "invisible rot.”
    12. -: -: What are'Reasonable Rates. No fixed and unvarying rule has been or can be announced as to t¿hat rate of return upon the investment in a telephone plant will be considered reasonable or unreasonable by the courts. Each case must depend upon its own facts. The prevailing rates of interest on money loaned, the hazard of the business, the life of the property used, the reliance upon the constancy of the return, which depends upon the existence or probability of competition, and the fact , that no return whatever is guaranteed the owner of the public utility, are all proper matters for consideration. The maximum rate should be placed at a figure above the average_rate of return upon reasonably safe investments in private ventures, else capital will naturally turn to channels in which no maximum limit as to the return exists.
    13. -: -: -: Six Per -Cent. Telephone rates which would yield a less return upon the company’s properties, at a reasonable valuation, than six per cent upon the investment, cannot be sustained, and an ordinance fixing such rates would be void. But where the evidence shows a return of over eleven and two-thirds per cent, upon a reasonable valuation of the properties, and of over nine and one-third per cent upon the company’s own valuation, it will be Held, that the company failed to prove that the rates fixed by the ordinance were unreasonable.
    14'. -: Public Utilities: Ordinance Abolishing Party Lines. The Public Utilities Act granted to cities the power to fix reasonable rates for telephone service, but not to interfere with the right of the owner of the utility to make such use of his property as would not be inconsistent with the exercise of municipal authority in matters of local concern. So much of an ordinance as forbids, under penalty, the telephone company the right to establish party line service is void, but as that part of the ordinance fixing the rates was entirely independent of the provision forbidding party lines, it can be upheld.
    15. -: Presumptively Valid: Duty to Disclose Facts. When an ordinance is enacted by a city prescribing maximum rates to be charged for the service of a public utility, pursuant to a statute, such ordinance is attended with the same presumption of validity that attaches to other legislative acts; and when assailed on the ground that such rates are destructive of property rights in the utility affected, there should be no hesitancy on the part of the company in placing before the court all of the evidence and the best evidence bearing upon the issues in the case; and when such issue is raised, the city should he granted full opportunity to examine the books and property of the company, by experts of its own selection.
    Appeal from Jasper Circuit Court.— Hon. Hugh Dabbs, * Judge.
    Reversed and remanded.

      Perkins & Blair, J. D. Harris, H. L. Shannon and R. A. Hockensmith for appellants.
    (1) Tire court erred in excluding Circular No. 12, issued by Theodore Gary Investment Company. The evidence shows that Gary is the president of the respondent Home Telephone Co. and president of Theodore Gary Investment Co. It shows that the net earnings of the Telephone Co. for the year preceding the statement were $50,135. The effect of the evidence of R. W. Frey, secretary and' treasurer Home Telephone Co. is that he prepared the data contained in the circular relating to the Home Telephone Company. Exhibit B sworn to by Theodore Gary, president of Home Telephone Co., shows, that the total value of its property on June 1, 1907, was only $33,814.50. At the trial respondent’s witnesses arbitrarily fixed the value of the Carthage plant at one-fourth, which would make the total value of the Carthage plant amount to $8,453.62. (2) The investment on which a public service .corporation is entitled to base its compensation in determining the sufficiency of rates cannot include property not at present actually employed in collecting ,or distributing the . commodity, however useful it may have been in the past or may yet be in the future. Water Co. v. San Diego, 38 L. R. A. 460. Neither should estimated cost of supposed needed additions or future improvements be included. (3) Regardless of whether or not Carthage under its charter and the Act approved May 8, 1907, Laws 1907, p. 119, had power to fix telephone rates, the franchise under which respondent Telephone Co. is operating fixes the maximum rate it may charge and beyond the rate so fixed the respondent cannot go since the franchise is a contract and binding upon respondent, it having accepted the provisions' thereof and been operating thereunder during all the times mentioned in the petition. Where a city makes a contract which its charter does not permit, yet does not prohibit, although the contract is ultra vires the corporation, yet it is not illegal, because not prohibited by the charter. St. Louis v. Davidson, 102 Mo. 153; 2 Dillon, Mun. Corp. (4 Ed.) see. 936; McDonald v. Mayor, 68 N. Y. 23; Bigelow, Estop. (5 Ed.) 685. By the terms of the ordinance granting the Telephone Co. its franchise rights in the city of Carthage (including immunity from certain taxation) contractual relations were established between the city and the Telephone Co., and since the Telephone Company has derived benefits under that contract it cannot now retain those benefits and repudiate the source from which those benefits spring by denying the validity of the contract in which they originated. In short it is estopped to grasp the benefits of that contract with one eager hand, while thrusting aside its burden with the other. St. Louis v. Davidson, 102 Mo. 153; Unionville v. Martin, 95 Mo. App. 39; Devers v. Howard, 88 Mo. App. 261; Gas. Co v. Muneie, 160 Ind. 97; Rushville v. Gas Co., 164 Ind. 162; Nobles ville v. Gas Co., 157 Ind. 162. (4) The decree of the court fails to find and state the value of respondent’s telephone plant or property in the city of Carthage or the value of its property as a whole, fails to find and state the amount of its reasonable and necessary expenses or cost of maintenance, and fails to find and state the amount of revenue or income received therefrom and fails to state what, in the opinion of the court, would be a reasonable profit on respondent’s investment, so that this court is not informed by said decree or otherwise, what amount of profit the trial court deemed reasonable or unreasonable. By the decree, ordinance No. 926 is declared to be unreasonable and void and defendant is enjoined from taking any steps to enforce the maximum rates mentioned in said ordinance. The maximum rates mentioned in said ordinance are the same as the rates prescribed in the franchise ordinance No. 317 and that ordinance being a contract binding on the Telephone Co., the city is entitled to enforce the rates prescribed therein, hence, that part of the decree enjoining the city from taking any steps to enforce the maximum rates mentioned, in ordinance No. 926 is unwarranted and erroneous, even if the rest of the decree could be upheld. The evidence of respondent’s late superintendent shows that in February, 1908, the respondent established and undertook to put in force new rates in excess of the rates prescribed in said ordinances No. 317 and 926. Respondent’s position is that in arriving at the basis upon which to figure a percentage of earnings to provide a fair return, there should be included every dollar that ever has béen spent by itself and its predecessors in constructing and maintaining a telephone system in the city; appellant’s position is that there should be an allowance for depreciation and that the value of the telephone property in use for the benefit of the public at the time of the use is the proper criterion. Appellant contends that the decree is erroneous and for the wrong party and that this cause should be reversed.

      Howard Gray, Mooneyham & Phelps and E. L. Shepherd for respondent.
    (1) The court did not err in excluding the circular of the Gary Investment Company. There was no testimony that this circular was ever prepared by Mr. Gary or issued by him, but if it was, it shows plainly that it was issued by him as the representative of another corporation, and in the performance of no duty as the agent of the Home Telephone Co. (2) The appellant claims that in determining the sufficiency of rates, property not at the present actually employed cannot be included. This is true and was not done in this case, but it is proper to show all that has been invested in it. Water Works Co. v. San Francisco, 124 Fed. 592. (3) Appellant urges that whether the city had the right in 1895 to fix telephone rates, yet inasmuch as a franchise was granted and was accepted by the respondent, the respondent is estopped from now denying the validity of that franchise. There are several reasons why this proposition is not before this court. It is elementary in the practice in this State, that a party must try his case in the appellate court on the same theory it was presented in the trial court. In the trial court no issue of estoppel was raised. The appellant filed a general denial, denying there was a franchise granted in 1895, and the suit was brought to enjoin the city from putting into force the provisions of the ordinance of August, 1907. The city, if it intended to rely upon estoppel, should have so declared in its answer. Swinehart v. Railroad, 207 Mo. 423; Bank v. Doran, 109 Mo. 40; Golden v. Tyler, 180 Mo. 196; Carthage v. Light Co., 97 Mo. App. 20; Loving Co. v. Cattle Co., 176 Mo. 330. There was nothing in the pleadings raising the question of estoppel and nothing in the evidence, and the burden is on the party setting up an estoppel to make out the facts on which- it rests. Tring v. Krisler, 90 Mo. 649. The rule is also well settled that a party who has not been injured by another’s conduct cannot make such conduct grounds for an estoppel. Amy v. Ramsay, 4 Mo. 505; Burke v. Adams, 80 Mo. 504; Noble v. Blount, 77 Mo. 235; Bales v. Perry, 51 Mo. 449.' (4) Even admitting the appellant can change his theory in this- court, and admitting that he can have the benefit of an estoppel without pleading it, and admitting that it is not necessary to show any testimony upon which to base an estoppel, yet it is well settled that the city had no authority or power to enter into the contract of 1895. St. Louis v. Tel. Co., 96 Mo. 623; State v. Tel. Co., 189 Mo. 83; State v. Sheboggin, 86 N. W. 657; Tel. Co. v. Milwaukee, 104 N. W. 1009; Farmer v. Tel. Co., 74 N. E 1078; Wright v. Tel. Co., 99 N. Y. Supp. 85; Water Oo. v. Freeport, 180 U. S. 587. (5) To determine the reasonable value of the property at the time it is being used for the public service, and in determining this value, the following elements are to be included in the estimate: The cost of the plant, the cost per annum of •operating, including interest paid or money borrowed and reasonably necessary to be used in constructing the same; the annual depreciation of the plant from natural causes resulting from its use; the amount of repairs made necessary and which are not included in the item of natural depreciation. Land Co. v. National City, 174 U. S. 739; Water Works Co. v. Kansas City, 62 Fed. S53.
   KENNISH, J.

— This suit was instituted in the circuit court of Jasper county on the 28th day of August, 1907, by the respondent, the Home Telephone Company, herein referred to as the complainant, against the City of Carthage, appellant, and certain officers of said city. The Act of the General Assembly of 1907, known as the Public Utilities Act, now sections 9568, 9569 and 9570, Revised Statutes 1909, had gone into force and effect shortly before the filing of this suit, and pursuant to the power conferred upon municipalities by said act,' the city of Carthage had adopted an ordinance regulating the telephone business and prescribing maximum rates of charge for the use of telephones within said city. Immediately upon the taking effect of said ordinance, complainant brought this suit for the purpose of having the court decree and adjudge the ordinance invalid and the rates therein prescribed unreasonable, and to have the city and its officers restrained and enjoined’ from taking any steps for the enforcement thereof.

A restraining order was issued upon the filing of the petition, and upon final hearing at the February-term, 1908, the.said ordinance was adjudged invalid and the rates prescribed unreasonable, and the city and its officers were perpetually enjoined as prayed forín the petition. The city alone, in due time, appealed to this court. After the appeal was perfected complainant filed a motion in this court praying that the causabe advanced on the docket and assigning as a reason: therefor that under the provisions of said Act of 1907' the case was entitled to precedence over other civil causes. This motion was sustained and the ease is now before us for decision.

The petition alleged substantially the following facts:

That plaintiff was incorporated under the laws of this State in the year 1902, and now owns and operates a telephone exchange in the city of Carthage and adjoining territory. That the defendant is a municipal-corporation, organized under the laws of this State as a city of the third class, and that the other defendants-are officers of said city, charged with the enforcement of its ordinances. That on the 25th day of March, 1895, an ordinance, which is set out in extenso, was adopted, by the said city, granting a franchise to the American Electric Telephone Company, its successors and assigns, to construct and maintain a telephone exchange and telephone lines, with all of the-rights incident to and necessary for the carrying on of a telephone business in-said city. The provisions of said ordinance exempted; the said telephone company from the payment of special licenses and taxes and, in consideration therefor, the-company obligated itself, its successors and assigns,, for the period of twenty years from the date of the acceptance of the ordinance, to perform certain agreements therein set out, one of which was that tha grantee would furnish telephone service to subscribers at the rate of twenty-four dollars per annum for business houses and eighteen dollars for residences, within a radius of one mile from the exchange of said company, which exchange should be located as near as possible to the business center of said city. That the said grantee assigned and conveyed all of its property and franchise rights in said city of Carthage, including its exchange, to Wheeler & Clark, and that the latter made the same transfer and assignment to the Mineral Belt Telephone Company, which in turn, on the 6th day of September, 1902, made a like conveyance and assignment to the complainant, and that the latter has ever since owned and operated said telephone exchange, with all of the rights and privileges in connection therewith.

It is alleged that said property of. the plaintiff within the city of Carthage represents an investment of one hundred and fifty thousand dollars and is reasonably worth that amount, all of which is necessary •for the carrying on of said business. That to operate said telephone property in said city of Carthage and adjacent territory and to meet the fixed charges, consisting of interest and a renewal reserve, will require an outlay and total expense of $28,402.28 per annum. That plaintiff is supplying 1396 subscribers in said city with telephone service, and that plaintiff had established and put into effect a rate for single line telephones of thirty dollars per year for business houses and twenty-four dollars for residences, and for party line service, twenty-four dollars per year for business houses and eighteen dollars for residences. That the rates so fixed are fair, reasonable, equitable and just.

It is further alleged that the defendant, the city of Carthage, on the 28th day of August, 1907, pursuant to an act of the General Assembly of that year, known as the Public Utilities Act, adopted Ordinance No. •926, fixing maximum rates for telephone service in said city, which rates and ordinances are set ont in the petition, the rates being practically the same as those fixed by the franchise ordinance of 1895.

It is then alleged that the rates so fixed by Ordinance 926 are unreasonable, confiscatory and insufficient to permit plaintiff to operate its said property without loss. That said ordinance and the act of the General Assembly are violative of several designated provisions of the Constitution of this State and of the Federal Constitution. That the defendant and the defendant’s officers are threatening to enforce said ordinance, which would greatly injure the plaintiff in its business and subject it to a multiplicity of suits, and injunctive relief is prayed as before stated.

After an unsuccessful demurrer to the petition, the defendant answered by a general denial, and the cause was thus at issue.

Section 1 of Ordinance 926 is as follows:

“It shall be unlawful for any person or persons, firm or corporation owning or operating any telephone line, - system or exchange, within the corporate limits of the city of Carthage, to exact, require or demand, for the rental and use of telephones and for telephone service within the corporate limits of said city more than the following rates of charge therefor, to-wit:
“For business telephone and service thereof, $24 per year.
“For residence telephone and service thereof, $18 per year.
“Each of such telephones shall be directly connected by an individual telephone line with the central or exchange office of the system of which such telephone shall be a part; and no other telephone shall be connected'with the central or exchange office through or by the means of the same telephone line. And it shall be unlawful for any such person or persons, firm or corporation, so owning or operating any such telephone fine, system or exchange, in said city, to fail or refuse to connect any such telephone, whether the same be now installed or shall be hereafter installed with the central or exchange office of the system of which such telephone shall belong, by an individual telephone line; and it shall be unlawful for any such person or persons, firm or corporation to connect or cause to be connected any other telephone with the central or exchange office through or by means of any such individual line of any such telephone.”

At the trial much testimony was introduced by the respective parties in support of the issues presented. It need not be set out here, but will be referred to in connection with the points hereinafter discussed:

In order to a proper understanding of the case it should be prefaced that the complainant, Home Telephone Company, owned and operated a telephone system which extended to and included plants in three other large cities, besides the plant in the city of Carthage, concerning which the present controversy arose.

The earnings and receipts which were earned by the Carthage plant alone were credited to it, and the expenses incurred by that plant were charged to it, but as to the earnings and expenses which were common to the entire system, twenty-five per cent was assigned to the Carthage plant as a fair apportionment.

The foregoing is deemed a sufficient statement for a proper understanding of the questions presented.

The Public Utilities Act of 1907 granted to muni-' cipalities the power to fix by ordinance “the rates of charge for the services of such utilities within their corporate limits.” The power of the defendant city to fix telephone rates was thus restricted to the corporate limits of the city, and therefore the testimony of the complainant tending to show a large amount of free service afforded to resident subscribers with persons outside of said limits and in neighboring towns, was not relevant to the issue of the reasonableness of the rates provided by the ordinance for service which was ■wholly within the city. Complainant was as much entitled to remuneration for service extending beyond the city limits as for service within, but the ordinance does not include such service, and the subscriber could not legally be charged a higher rate for city service because of free service outside. Neither should the cost of serving subscribers with city service be burdened with additional and more expensive apparatus and facilities made necessary solely by reason of the extension of complainant’s plant for business connections beyond the limits of the city.

It is urged by appellant that the judgment should be reversed for the reason that it enjoins the enforcement of the rates prescribed in Ordinance 926 as well as the enforcement of the ordinance itself, and that as the city was entitled to the same rates under the franchise ordinance of 1895, regardless of the validity óf Ordinance 926, the court erred in perpetually enjoining the city from enforcing the said rates.

It appears that complainant and its predecessors,, since the granting of the franchise in 1895, had carried out the provisions of the franchise as to rates until February, 1907, being shortly before the said act of 1907 became a law, at which time a different and higher schedule of rates was announced by complainant.

If appellant had relied upon its contract rights under the franchise ordinance of 1895 and this appea' had been in a proceeding brought by the city to enforce such rights, the city in that case could have consistently asked the judgment of this court upon that issue, but it did not choose to adopt that course. On the contrary it proceeded to exercise the newly acquired power to legislate upon the subject of telephone rates by adopting Ordinance 926. The law which delegated to municipalities the power to fix maximum rates also provided that such rates must be reasonable, and complainant brought this suit as authorized by the express provisions of that law, alleging the unreasonableness and confiscatory character of the rates prescribed by said ordinance 926 and praying relief therefrom. The city filed a general denial, putting in issue the alleged unreasonableness of such rates, and it was upon that theory the case was tried and decided in the trial court. Having accepted the issue thus tendered and tried the case thereon, the city cannot now be permitted to shift its position on appeal. [Henry County v. Citizens’ Bank, 208 Mo. 209, l. c. 226; Sumner v. Rogers, 90 Mo. 324, l. c. 330; Bray v. Seligman, 75 Mo. 31.]

An additional reason why the appellant cannot raise the question as to its right to enforce the rates fixed by the franchise ordinance of 1895, is that the rates in controversy in this case were, by the act of appellant in ordinance 926, made applicable to the entire city, while the rates as fixed by the franchise ordinance applied only to telephones within a radius of one mile from the central office of the company.

Appellant complains of error in the admission of incompetent evidence' offered by the plaintiff and in the exclusion of competent evidence offered by the defendant.

The. testimony admitted over the defendant’s objections is in the record before us and as this is an equity case this court will not reverse the judgment upon the ground now under consideration, but will disregard such testimony as it finds incompetent and render such judgment as equity and justice may require upon the pleadings and the evidence properly admitted. [Hanson v. Neal, 215 Mo. 256; Reynolds v. Kroff, 144 Mo. 433; Padley v. Neill, 134 Mo. 364.]

The only testimony offered by defendant which was not admitted was a printed circular issued by the Theodore Gary Investment Company, advertising for sale the bonds of certain telephone companies, among which were alleged bonds of the Home Telephone Company, complainant in this suit. The statement is made in the circular that the net earnings of the complainant, -which included the entire system, for the preceding year, were $50,135.00. It was shown that Theodore Gary was the president of both the complainant telephone company and the investment company which issued the circular, but it was not shown that the complainant, through its officers in the discharge of their official duties, caused or was in any manner responsible for the issuance of said circular, and the fact that the president of the complainant was also the president of' the corporation which sent out the circular, was not alone a sufficient foundation to make it competent as an admission against complainant in this case, and. we hold that the evidence was properly excluded by the court. [Northrup v. Ins. Co., 47 Mo. 435; Costigan v. Michael Trans. Co., 38 Mo. App. 219; 1 Ency. of Ev. 556.]

The question of dominant importance presented is as to the sufficiency of the evidence to support the decree holding the rates fixed by ordinance 926 unreasonable and the ordinance void and unenforcible. That part of the decree making this finding is as follows:

“The court further finds from the evidence that, taking into consideration the value of the property of the plaintiff, to-wit, its telephone plant in the city of Carthage, and taking into consideration its reasonable and necessary expenditures for salaries for its officers, and its servants, agents and employees, together with the cost of maintenance and necessary expenses, the charges permitted and fixed in said ordinance of August 28, 1907, will not yield a revenue to the company so as to permit the plaintiff company to make a reasonable profit on its investment, and for that reason the court doth order and adjudge that the said ordinance of August 28, 1907, is unreasonable and void.”

Before entering upon a consideration of the law and the evidence bearing upon the question of the reasonableness of the rates as fixed by Ordinance 926, a preliminary question is presented, as to the statutory or constitutional authority by which the reasonableness of such rates and the validity of the ordinance are to be tested.

In plaintiff’s petition it is alleged that the Act of the General Assembly of 1907 and Ordinance 926, adopted pursuant thereto, are unconstitutional and void, because in conflict with section 30 of article 2 of the Constitution of this State, and section 1 of the Fourteenth Amendment to the Constitution of the United States, in that they deprive complainant of its property and destroy its business without due process, of law.

The Act of 1907, by authority of which alone cities were granted the power to fix rates of charge for the service of public utilities, gave full recognition tO' the right of persons, firms and corporations owning-such utilities, to receive reasonable compensation for the services rendered by providing that the rates fixed “must be reasonable.” In view of this inhibition, it is not clear how said act could be in conflict with the constitutional guaranties invoked, or have the effect ascribed to it in complainant’s petition.

Under that act the city was without power to fix rates that were not reasonable, and if the testimony in this case shows that the telephone rates prescribed by Ordinance 926 were not /reasonable, it must follow that the ordinance is void and the judgment should be affirmed, without regard to the constitutional provisions referred to. On other hand if, under the evidence,, the rates were such that after making the necessary deduction from the gross earnings for the proper operation and maintenance of the telephone property, a sufficient amount remains to pay a fair return upon the reasonable value of the property used in the telephone business then, whether tested by the statute or by the Constitution, the ordinance must be sustained and the judgment reversed.

In determining the question of the reasonableness ■of the rates as fixed by Ordinance 926, it. becomes necessary to consider four factors: First, the value of the property upon which complainant was entitled to a return. Second, the gross earnings of the property. Third, the amount which complainant was entitled to deduct from the earnings for the successful operation of the property. And, fourth, whether the amount remaining was sufficient to give a reasonable r-eturn on the investment. We shall consider these in the order given.

The rule of law now generally recognized as the basis upon which the reasonableness of the return is to be determined, so far as the value of the investment is concerned, is expressed as follows: “What the company is entitled to demand, in order that it may have just compensation, is a fair return upon the reasonable value of the property at the time it is being used for the public.” [San Diego Land and Town Co. v. National City, 174 U. S. 739; Smythe v. Ames, 169 U. S. 466; San Diego Land and Town Co. v. Jasper, 189 U. S. 439.]

. The question arises, what was the reasonable value of complainant’s property being used for the public at the time of the adoption of Ordinance 926? It is shown by the evidence that complainant had purchased the property less than five years before the filing of this suit, and no good reason appears why it could not have given the most satisfactory answer to the foregoing question by the production of its books and invoices. Instead of taking that course several expert witnesses, some from a distance and others who were connected with the company, gave 'in evidence their opinions as to the value of complainant’s property, basing such opinions on its value as an entirety, or by placing an estimated value thereon ranging from seventy-five to one hundred dollars per telephone in use. According to this testimony the value of the property was about one hundred and twenty-five thousand dollars. Some confusion exists in the record.upon the question of the value of complainant’s property, because of the fact that in speaking of the Carthage plant, as a part of the system a number of telephones were included which were outside of the limits of the city. One witness testified that while there were 1300 telephones in the Carthage exchange, there were only about 1040 actually within the city.

It appears in evidence that when the city council was considering the question of telephone rates, preparatory to the passage of Ordinance 926, complainant submitted a statement of its property, earnings and expenses, sworn to by one of its officers, in which the property of the Carthage plant was valued at one hundred and fifty thousand dollars, and it was therein stated that this “was a very conservative estimate.” The officer who verified that statement testified at the trial that it was an estimated value and that the true value, as since determined, was $125,875.64.

It appears in the record that, after the evidence was in and at the argument of the case, complaint was made by counsel for appellant that the city had not been given an opportunity for an expert examination of the complainant’s books and property, whereupon the court appointed an expert to make such examination and continued the case for two weeks in order that the testimony of such expert might be secured. The court named a second expert to assist in such examination. In due time these experts made their report to the court and one of them was examined as a witness by the city. This report was introduced in evidence, not by the city, but by the complainant.

The report of these experts sets out an itemized statement of the property of the company and the value of each article. The expert testified that they took the inventory made by the complainant and set opposite each item the catalogue or invoice price. By that means the total valuation was arrived at, of which the following summary was given in the report, namely:

Material____■......................... $66,256.64
Labor................................ 27,828.78
Incidentals........................... 9,408.54
Engineering, etc............%.......... 3,400.00
Tools................................ 410.00
Wagons and buggies................... 80.00
Furniture & Fixtures.................. 575.00
Wire chief’s desk...................... 70.25
Original cost of plant less deductions 23,038.75
Total cost of plant................ $131,066.86

This report, which made the value of.the plant over five thousand dollars more than the company claimed at the trial, contains some things which deserve mention. The separate item for “incidentals,” according to the testimony of this expert, was not found in the invoice or account of the company, but was included in the report after consultation with another telephone man. The item for “engineering” was obtained in substantially the same manner.

The large item of value in the report of this expert, “Original Cost of Plant Less Deductions, $23,038.75,” was arrived at as. follows: The amount paid for the plant when purchased by the complainant in 1902 was said, to be about thirty-seven thousand dollars, although no witness testified of his own knowledge as to the price actually paid. In the inventory as valued by this expert, it was estimated that property of the invoice or catalogue price of $13,961.25 was included, which was a part of the plant at the time of its purchase by complainant. In estimating the total cost of the plant to the complainant at the time of the trial all of the property on hand was valued as new and, therefore, this item of $13,961.25, in order to avoid’duplication, was deducted from the thirty-seven thousand dollars, and the remainder, $23,038.75, was added as a part of the cost of the property upon which complainant was entitled to a return.

There is no testimony tending to prove that there was any tangible property whatever, at the time of the valuation, represented by this item of $23,038.75. Whether it represented what had been paid for the good will or franchise value of the business when the plant was purchased, or whether the property originally purchased had depreciated or gone into disuse to that extent, does not appear, but in either case we are. not aware of any principle of law which would justify including it as a part of the property which, at the time of the adoption of Ordinance 926, was “being used for the public.”

Rejecting the item of $23,038.75 for the original cost of the plant, as not representing any property then in the service of the public, and making an allowance for the depreciation of the plant, we have arrived at the conclusion that one hundred thousand dollars is a reasonable value of the property upon which the complainant was entitled to a, return. This valuation does not differ materially from that of the experts as estimated upon the basis of a value per telephone in use, limiting the number to those actually within the city.

There was no conflict in the testimony as to the', gross earnings. Mr. Adams, vice-president and engineer of the company, testified that the total gross earnings for the year under consideration were $24,826.53. That statement was not contradicted by the defendant.

It is difficult to determine from the testimony what was the total amount of the expenses of the company for the year considered. The witnesses who testified upon this point were examined as to the items contained in a written statement and testified as to its contents, but the statement was not offered in evidence and does not appear in the record. The written sworn statement of expenses and earnings for the six months ending April 30, 1907, submitted to the city council by complainant, was introduced in evidence without objection, and we.shall take that as a basis for the expenses, as well as earnings, of complainant, assuming that for the year each item would be doubled. Accepting this statement, and omitting therefrom the two items of interest on the investment and renewal reserve for depreciation, we have left as expenses for the year a total of $12,352.24. The gross earnings were $25,031.32, and deducting the expenses therefrom, there remains the sum of $11,473.29 as a return on complainant’s property, and for depreciation, if the latter be a proper matter of charge against the earnings.' We thus have earnings in excess of the expenses for the year of over eleven and twQ-thirds per cent upon a property valuation of one hundred thousand dollars, and of over nine and one-third per cent on complainant’s valuation of one hundred and twenty-five thousand dollars.

It remains for consideration whether complainant by its evidence met the requirement, upon which alone it was entitled to relief, of showing that the rates fixed by ordinance 926 were not reasonable, but were confiscatory in their character and effect.

Upon this question the right of complainant to deduct from the earnings, after allowing for all operating expenses, including maintenance and repairs of the property, a depreciation fund of four dollars per telephone per year, or about five per cent of the total value of the property, becomes of primary importance.

The theory of complainant is that before any return upon the investment can be considered, this depreciation fund to cover what was termed “invisible rot” must be taken from the earnings of the plant. Complainant’s testimony upon this point is not at all satisfactory. It shows that no such fund had been provided until two years before the trial and even at the time of the trial no item of expense had ever been charged to that fund. When the direct question was asked complainant’s witness, an officer of the company, “How much have you in that fund now, do you know?” an objection was made by complainant that there was “no purpose to this cross-examination,” and the subject was pursued no further. The inconsistency of complainant’s theory of an accumulation of such a fund is shown by the fact that while the sum of five thousand dollars per year, for two years, had been set apart out of the earnings as a depreciation fund, the plant was valued as new and no deduction whatever was made for depreciation as represented by the amount on hand in that fund. It is obvious that upon that theory a time would be reached whe'n the depreciation fund would amount to almost the total value of the plant and yet, in determining the reasonableness of the rates, the plant, which theoretically would be the victim of almost complete “invisible rot,” would be valued as new in determining “the reasonable value of the property at the time it is being used for the; public,” while no corresponding credit would be given for the depreciation fund on hand.

It must be conceded that a wise and proper management of such a public utility as that under consideration requires and demands that a liberal sum should always be reserved from the earnings, whatever such fund may be designated, in order to keep the plant in a high degree of efficiency at all times and to provide for emergencies. For this reason the owner of the public utility is entitled to such rates as will produce sufficient revenue to operate the plant and-‘meet such charges and, in addition, pay a reasonable return upon the value of the property in use.

The question remains, what would be a fair return upon the reasonable value of the plaintiff’s property. This question as to what rate of return upon the investment will be considered reasonable or unreasonable by the courts has been considered in many cases. No fixed and unvarying rule has been or can be announced upon the subject. Each case must, of necessity, depend upon the surrounding facts and circumstances. The prevailing rate of interest on money loaned, the hazard of the business, the life of the property used, the reliance upon the constancy of a return, which depends largely upon the existence or probability of competition, these, as well as many others, are proper matter for consideration. And in passing upon the question the fact should not be overlooked that no return whatever is guaranteed to the owner of the public utility. Upon that score it occupies no better ground than the owner' of capital invested in a private enterprise. It follows that unless the maximum'rate be placed at such a figure as is above the average rate of return upon reasonably safe investments in private ventures, capital will naturally turn to channels in which no maximum limit as to the return exists.

In this case complainant asserts its right to a net return, as a profit on its investment, of at least six per cent, and under the facts and circumstances in evidence we are of opinion that rates which would yield a less return upon complainant’s property would be unreasonably low and could not be sustained. However, as the return on the investment, as shown by the evidence in this case, was in excess of nine and one-third per cent, even on complainant’s valuation of the property, and over eleven and two-thirds per cent, on what we consider a reasonable value, we hold that the complainant failed to prove that it was entitled to the relief prayed for and that the court erred in holding that the rates were unreasonable and the ordinance void.

We have discussed the subject upon the assumption of rates for single fine telephones and not for party line service. However, we do not mean to be understood as holding that the complainant did not have the right to install party line telephones and charge reasonable rates therefor. The Public Utilities Act granted to cities the power to fix reasonable rates, bnt not to-interfere with the right of the owner of the utility to make such use of its property as would not be inconsistent with the exercise of municipal authority in matters of local concern. We think the trial court, rightly adjudged the ordinance invalid so far as it. attempted to prohibit, under penalty, the use of party line telephones. But as that part of the ordinance fixing rates was entirely independent of the provision forbidding party lines, upon a well recognized principle of law, it can be upheld, although the party line provision be void. [State ex. inf. Major v. Kansas City, 233 Mo. 162; City of St. Louis v. Liessing, 190 Mo. 464; County Court v. Criswold, 58 Mo. 175, l. c. 199.]

We make the further observation suggested by the facts of this case, that when an ordinance is adopted prescribing rates of charge for the service of a public utility pursuant to legislative authority, it is attended with the same presumption of validity as in the case of other legislative acts, and when assailed on the ground that such rates are destructive of property rights in the utility affected, there should be no hesitancy on the part of the complainant in placing before the court all of the evidence and the best evidence within its control bearing upon the issues of the ease. And when such an issue is raised the defendant should be granted full opportunity for examination of the books and property of the complainant, by experts of its own selection, in order that the court may have before it all of the material facts as presented from the standpoint of each of the opposing parties to the controversy.

For the reasons given the judgment is reversed and the cause remanded.

All concur, except Graves, J., who dissents, and Valliant, C. J., not sitting.