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but there is an annual minimum charge of six dollars to each customer.

On December 28, 1912, the petitioner entered into a contract with the city of Kingston to provide for the public street lighting of the city. This contract contained the following provision:

"Tenth. It is further agreed that during the term of this agreement the party of the first part shall not increase its existing schedule of rates now on file with the Public Service Commission of the State of New York, for gas or electricity furnished the inhabitants of the city of Kingston. But this provision shall not be construed to take away any of the rights which the citizens of the city may now have regarding the rates, etc., as established by the Public Service Commission."

This contract became effective March 1, 1913, to extend for a period of ten years, or until March 1, 1923. It still has some two years and two months to run.

In violation of this covenant in its formal agreement, which was one of the considerations upon which it obtained the street lighting contract, from which it has received a substantial revenue for these many years, the company now comes before this Commission and asks for a very decided increase in rates. The city naturally objects to this breaking of the contract, raising the question of the jurisdiction of the Commission very vigorously and ably.

If this were a court of equity which could withhold its remedial processes from those who do not come before it with clean hands, the objection of the city could be very properly entertained. Ours, however, is a statutory body, impressed with certain duties, among which is the fixing of just and reasonable rates. This remedy we must apply if appealed to, even where

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the complaining party comes before us in direct violation of its solemn covenant. The breach of contract may relieve the other party from any obligation it is under, and it may even render the delinquent liable in an action for damages, but those are questions for the courts and not for us. Our sole duty is to proceed to fix a just and reasonable rate when applied to.

The case comes within direct scope of the decision of the Court of Appeals in People ex rel. South Glens Falls v. Pub. Serv. Comm., 225 N. Y. 216. In that case the court stated: "A municipal corporation is simply a political subdivision of the state and exists by virtue of legislative enactments. Rate regulation is a matter of the police power of the state and the terms and conditions such as here in question contained in a franchise to a service corporation may be modified without impairing the obligation of a contract within the provisions of the Constitution. (Louisville & N. R. R. Co. v. Mottley, 219 U. S. 467, 480, 482; Texas & N. O. R. R. Co. v. Miller, 221 U. S. 408, 414; Buffalo E. S. R. R. Co. v. Buffalo Street R. R. Co., 111 N. Y. 132; City of Rochester v. Rochester Ry. Co., 182 N. Y. 99; affd. 205 U. S. 236; Portland Ry. L. & P. Co. v. City of Portland, 201 Fed. Rep. 119, 125.)

Announcing this principle, the court proceeds to the finding that in such cases the Public Service Commission has power to increase the rate limited by a franchise. This authority has been frequently cited with approval in various later cases which have come before the court of last resort.

Council for the city seek to distinguish the instant case from this decision upon the theory that here we have a contract limited to ten years; whereas in that case there was a franchise involved. That franchise

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was not perpetual, as has been suggested, but was for a term of fifty years.

This distinction cannot prevail. Whatever effective force could be given to the franchise limitation would only be by reason of the fact that it constituted a contract, and the courts in considering these cases have treated the franchise limitations as in the nature of restrictions contained in a valid contract.

The principle of the case of Union Dry Goods Co. v. Georgia Pub. Serv. Corp., 248 U. S. 372, controls. In that case the Railroad Commission of Georgia fixed the rates to be charged by a corporation for supplying electricity to the inhabitants of a city, which superseded lower rates agreed on in an existing time contract made previously between the company and the consumer. This action of the commission was held to be legally effective and a valid exercise of the police power, not impairing the obligation of the contract or depriving the consumer of property without due process, within the prohibition of the United States Constitution.

In announcing and reiterating this principle, the court cited numerous authorities, and the opinion of Justice Clarke, referring to the contention of counsel to the contrary, contains the following paragraph which is peculiarly pertinent in the present situation: Except for the seriousness with which this claim has been asserted and is now pursued into this court, the law with respect to it would be regarded as so settled as not to merit further discussion."

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Of course the fact that here the contract was made on behalf of the consumer by a municipality can under no view add to its force. If an authorized contract made directly with a consumer has no binding force, as against a regulatory order, such force cannot be given it because the contract is made on behalf of

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consumers by a municipality, or any other third party acting as their agent.

A still further reason exists here why the contract in question does not remove the controversy from the sphere of our jurisdiction. The contract in question was made in 1912, after the enactment of the Public Service Commissions Law, and is therefore subject to it. It would be so subject even if it were a contract or franchise which would otherwise come within the decision of the Quinby case. This has been so held in a late decision of the Court of Appeals, in People ex rel. City of New York v. Nixon, 229 N. Y. 356. In this case Judge Cardozo writes as follows, referring to the Public Service Commissions Law (Laws of 1907, chap. 429, § 49, as amd. by Laws of 1911, chap. 546): "Contracts fixing rates, if made before the enactment of these statutes, were subject at the utmost to the possibility of the exercise by the state of its police power in the future. Contracts made thereafter were subject to a possibility which had become merged in a reality. It was no longer a question of what the state might do at some indefinite and unknowable time. It was a question of what the state had already done, drawing upon sources of energy, reserves of power, till then latent and potential, and manifesting its will in law. A new public policy had been initiated. A new right had been declared. Rates were thereafter to be just and reasonable alike for carriers on the one side and for passengers or shippers on the other. Neither class would be permitted for its own benefit to set the rule at naught. The state through its delegate, the commission, would lower the charges if too high. It would raise them if too low. (People ex rel. N. Y. Steam Co. v. Straus, supra; Arlington Board of Survey v. Bay State Street Ry. Co., supra; Postal Tel.-Cable Co. v.

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Associated Press, 228 N. Y. 370, 375; Armour Packing Co. v. U. S., 209 U. S. 56; Union Dry Goods Co. v. Georgia Pub. Serv. Corp., 248 U. S. 372.)

"One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the state by making a contract about them. The contract will carry with it the infirmity of the subject matter. (Hudson County Water Co. v. McCarter, 209 U. S. 349, 357.) "

The jurisdiction of the Commission cannot be successfully assailed, and it becomes our duty to proceed to a consideration of the reasonableness of the rates proposed by the petitioner in the petition filed.

Suggestion is made by the city that the investment and business of both the electric and gas departments of the petitioner should be taken into consideration in determining a just and reasonable rate. This is not the law. Minnesota Rate Cases, 230 U. S. 352, 435; Municipal Gas Co. v. Public Service Commission, 225 N. Y. 89.

In the latter case, page 100, the principle controlling here is expressed as follows: "That a company which sells gas may sometimes sell electricity is one of the accidents of commerce. The fortuitous conjunction of two unrelated functions or activities does not change the rate of profit to be derived from the fulfillment or pursuit of either. The defendants would have us say that the plaintiff, if it makes enough from electricity, must supply its gas for nothing.

In fixing the price of electricity, the plaintiff is not entitled to recoup its losses upon sales of gas. For the same reason, in fixing the price of gas, it is not required to make allowance for the just and reasonable profit which is the limit of permissible return upon its sales of electricity."

Separating therefore the gas and electric industries