Response or Comment
What is the effect of a city ordinance which proposes to a public utility company the terms on which it may dispose of its product to the users, but which is rejected by the company? As to a company not yet doing business it is clear that the ordinance when rejected becomes a mere legal nullity. It never was more than an offer that might ripen into a binding contract by acceptance. That it is by no means a nullity as to a utility actually operating in the city after the expiration of its franchise and as a mere tenant by sufferance of the streets, is held in City and County of Denver v. Denver Union Water Co. Supreme Court of the U. S. Nos. 294 and 295, decided March 4, 1918. The city of Denver may well be surprised to learn that by passing an ordinance which the company rejected it was considerably worse off than if it had done nothing. In effect, by passing an ordinance fixing the maximum charges permitted to be made by the company "during the time it shall further act as a water carrier and tenant by sufferance of said streets", the city gave to the plant a value that made the rates illegal and defeated the ordinance. That any unaccepted ordinance should have such an effect is indeed startling, the more so that in this case the city was careful to expressly recite in the preamble that the company had for four years been without a franchise and a mere tenant by sufferance of the streets and that this enactment was made without recognizing the right of the company to occupy the streets or to continue its service.
Goddard, Edwin C. "Public Utility Valuation." Mich. L. Rev. 16 (1918): 438–40.