(225 P.)

No objection was made or exception taken | claimed that he permitted the defendants to the instructions given, and the testimony to make whisky at his place, in return for is amply sufficient to sustain the verdict. which privilege he was to receive and did The defendant, from all that the record dis-receive a part of the manufactured product. closes, had a fair trial. The judgment of At the time of the trial of these defendants the lower court is accordingly affirmed.

Jeter was serving his sentence in jail. testimony of Jeter, who was an admitted acMATSON, P. J., and BESSEY, J., concur. complice with the defendants, was in part

The Attorney General and N. W. Gore, true. It appears that these defendants were Asst. Atty. Gen., for the State.

arrest. Jeter pleaded guilty, and MATSON, P. J., and DOYLE, J., concur. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

2. Electricity -Franchise rate for all under which the appellant was operating. purposes.

7. Electricity -Noncompensatory con- separate defense it did not state facts suffitract rates enforced.

Appeal from District Court, McKinley enjoining it from collecting more than the County; Hickey, Judge.

[1] 1. At the threshold of the inquiry, J. W. Chapman and E. A. Martin, both of there appears the question as to the action Gallup, and C. J. Roberts and C. F. Cornell, of the court in granting a motion for judgboth of Santa Fé, for appellant. ment on the pleadings. A solution of that Burkhart & Coors, of Albuquerque, and question, in turn, depends upon the action of Alfred Ruiz, of Gallup, for appellee.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(225 P.)

amended answer. The complaint is framed, watt hour. This provision is clear and unupon the theory, not that a charge for elec- ambiguous, and neither requires nor admits trical current actually supplied for power of construction. In such a case there is purposes is being made in excess of the con- nothing to do except to enforce the contract tract price, but that by means of a "ready to according to its plain terms. serve" and a "minimum charge," the service is so loaded that the ultimate charge to the consumer is in excess of the contract price. The amended answer denies that appellant is charging in excess of the contract price for current, but alleges it is making a "service" and a "minimum" charge, which charges are not controlled by the contract. There is no denial that the charge for current, plus the "ready to serve" and "minimum" charge, does exceed the contract price to the consumers. It thus appears that the answer did not tender an issue of fact, but rather an issue of law as to whether the "ready to serve" and the "minimum" charges are in legal effect charges for current. It appears that the court was correct in sustaining the demurrer to the answer in so far as this proposition is concerned, and the objection to the judgment on the pleadings cannot be sustained on the ground contended for.

[2] 2. It is argued that the contract does not regulate charges for power current, and that, consequently, the "ready to serve" and "minimum" charges for power purposes are allowable. The charter or contract, after fixing flat rates per month for each 16 candle power lamp for both residences and business places, and for arc lamps, contains the following provision:

"Meter Rates, Business and Residences.Fifteen cents per hour for one thousand watts."

A lengthy argument is put forward in the briefs to the effect that the contract must be viewed from the circumstances surrounding the parties at the time the contract was made (June 28, 1899); that at that time electricity was not commonly used for power purposes; that at that time meters for measuring electricity were so imperfect as to be almost impracticable; that commercial motors were unknown, except in large industrial plants and for operating street railways; and other suggestions are made along

the same line. Counsel admit that no direct provision was made in the contract limiting the rate of charge to current for lighting purposes, and that the contract does not specify for what purposes the current is to be used; but they argue that it would be a strained construction of the contract to hold that it regulates rates for power purposes, in view of the circumstances surround

ing the parties at the time it was made.

A single consideration would seem to be sufficient to dispose of this contention. The contract provides for a meter rate maximum charge for current used for light, power, or any other purpose of 15 cents per kilo

[3] 3. It is argued that the "ready to serve" and "minumum" charges are not controlled by the contract, and hence are allowable. This position is clearly untenable. Where a maximum charge is fixed by contract, no device or subterfuge can be resorted to to increase the charge over the con. tract rate. 20 C. J. Electricity, § 331; Iowa R., etc., Co. v. Jones Auto Co., 182 Iowa, 982, 164 N. W. 780; State v. Carrollton, 249 Mo. 649, 155 S. W. 826, Ann. Cas. 1914D, 452; McIninch v. Auburn Mut. Lighting, etc., Co., 99 Neb. 582, 156 N. W. 1075; Louisville Gas Co. v. Dulaney, 100 Ky. 405, 38 S. W. 703, 36 L. R. A. 125; Montgomery L. & P. Co. v. Watts, 165 Ala. 370, 51 South. 726, 26 L. R. A. (N. S.) 1109, 138 Am. St. Rep. 71.

[4] 4. Appellant urges that cities and towns in New Mexico have no power to make contracts of the kind involved here, and that, consequently, the contract is unilateral, and therefore not binding upon the appellant. The statutory provisions on this subject are as follows:

Section 3532, Code 1915:

this article shall be bodies politic and corporate, "Cities and towns organized as provided in, under such name and style as they may select at the time of their organization, and may sue, or be sued, contract, or be contracted with, acquire and hold property, real and personal, have a common seal which they may change and alter at pleasure, and have such other privileges as are incident to corporations of like character or degree, not inconsistent with the laws of the state."

Section 3564, Code 1915:

"The city council and board of trustees in towns shall have the following powers:

"Seventh. I. To lay out, establish, open, alter, widen, extend, grade, pave, or otherwise improve streets, alleys, avenues, sidewalks, parks, and public grounds, and vacate the same, and to direct and regulate the planting of ornamental and shade trees in such streets, avenues and public grounds. *

"III. To regulate the use of the same.

*

"Ninetieth. All towns and villages shall have power to grant, by ordinances, franchises and privileges for street car lines, water works, lighting purposes and other public conveniences and comforts, for the furnishing of which such franchises and privileges are necessary.

have the power to regulate by resolution or or"Ninety-Third. That any city or town shall dinance the prices to be charged by any individual firm, copartnership or corporation, for gas, electric lights and water furnished by said individual firm, copartnership or corporation, to such cities or towns of this state or any of the inhabitants resident therein."

It is argued by counsel for appellee, in support of the judgment below, that the fore going statutory provisions grant the power to cities and towns to make valid contracts for the use of their streets for conveying and distributing electrical current to such cities and towns and the inhabitants thereof, and that therefore, having the right to contract, the town of Gallup had the right to impose the conditions which it did in granting the charter to the appellant's predecessor in title. On the other hand, the appellant argues that these statutory provisions are insufficient to authorize the town of Gallup to make a valid contract, such as it did make, thereby rendering the contract of no binding force upon either of the parties thereto.

note; Muncie Natural Gas Co. v. Muncie, 160 Ind. 97, 66 N. E. 436, 60 L. R. A. 822; St. Mary's v. Hope Natural Gas Co., 71 W. Va. 76, 76 S. E. 841, 43 L. R. A. (N. S.) 994; City of Benwood v. Public Service Commission, 75 W. Va. 127, 83 S. E. 295, L. R. A. 19150, 261, and note; Bluefield Waterworks & Improvement Co. v. City of Bluefield, 69 W. Va. 1, 70 S. E. 772, 33 L. R. A. (N. S.) 759, 764; Athens Telephone Co. v. City of Athens, (Tex. Civ. App.) 182 S. W. 42; Town of Pocahontas v. Central Power & Light Co., 152 Ark, 276, 244 S. W. 712; Lenawee County Gas & Elec. Co. v. Adrian, 209 Mich. 52, 176 N. W. 590, 10 A. L. R. 1328; Hackensack Water Co. v. Board of Public Utility Com'rs, 96 N. J. Law, 184, 115 Atl. 528; Water, Light & Power Co. v. City of Hot Springs (D. C.) 274 Fed. 827; City of Mitchell v. Board of Railroad Comrs., 44 S. D. 430, 184 N. W. 246; Traverse City v. Michigan Railroad Commission, 202 Mich. 575, 168 N. W. 481, 482; Salt Lake City v. Utah L. & T. Co., 52 Utah, 210, 173 Pac. 556, 3 A. L. R. 715. See, also, 4 McQuillen, Mun. Corp. § 1738; 3 Dillon, Mun. Corp. (5th Ed.) § 1326; 7 Fletcher, Cyc. Corp. § 4473. It seems clear, therefore, that in so far as the fixing of rates by contract for electric current for power purposes is concerned, which is the only matter involved in this case, the town of Gallup had the power to make the contract, and both it and the utility company are bound thereby; there having been no attempt on the part of the state, or any state agency, to exercise the regulatory power.

In approaching the question, it may be well to note some important considerations. It is always to be borne in mind that the power to regulate rates is a governmental power and an entirely different and distinct power from the power to contract for rates. While it is true that the state may surrender, temporarily, this governmental power of regulation of rates to be charged the people for public service, either directly, or by granting municipalities power to make binding contracts as to rates for a reasonable time, owing to the importance to the people of the conservation of the regulatory power, its surrender is never to be presumed nor allowed except where so declared in express terms or by necessary implication. It is to be observed that the contract, spoken of in this connection, is a contract which gives the public utilities company a vested right to charge the rates specified, and one which can withstand the subsequent attempted exercise of the governmental power of regulation, either by the state directly, or any of its agencies, such as commissions or municipalities, when properly authorized to ex-islative power, the whole contract should be ercise the power, and is such å contract as is protected by the constitutional guaranties against the impairment of its obligation.

But there are contracts of another class which municipalities may make with public service corporations in regard to rates which are not intended by the parties to withstand the subsequent exercise of the governmental power of regulation, but which are valid as between the parties until the state elects to intervene and regulate rates. It is frequent ly said that such a contract is made by the municipality in its private or business capacity, not in its governmental capacity. That such contracts entered into by a municipality having the power to contract, and to regulate the use of the streets, and grant franchises, as ours have, are valid and binding upon both parties thereto, see Charles Simon's Sons Co. v. Maryland Teleph. & Teleg. Co., 99 Md. 141, 57 Atl. 193, 63 L. R. A. 727; Boerth v. Detroit City Gas Co., 152 Mich. 654, 116 N. W. 628, 18 L. R. A. (N. S.) 1197, and

[5] 5. In this connection counsel for appellant suggest that the contract for electric current for all forms of use must be construed as entire, and the town being at the time clothed with the legislative power to regulate rates for lights, and consequently having no power to contract away its leg

held void. Reliance is had upon the case of Fancher v. County Commissioners, 28 N. M. 179, 210 Pac. 237. In that case, however, it was clear that the whole quantity of serv ice was of the essence of the contract. Not so in this case. It cannot be said that the company would have refused to accept the contract and put in its plant because a part of its service was subject to the regulatory power granted to the town and part of it was not. Nor can it be said that the town would have refused the franchise because part of the service was subject to regulation and part was not. No intention of the parties can be drawn from the contract or the circumstances that the same rules must be applied to both forms of service. The argument therefore fails.

[6] 6. Appellant complains of the action of the court below in overruling its demurrer to the complaint upon the ground that the city was without power to maintain the action from lack of interest. That the town

(225 P.)

the decree so as to include in the sale to be made for the satisfaction of the amount found due to the plaintiffs the dairy herd and other personal property mentioned in the pleadings.

can maintain such an action under these cir- | plaintiffs have moved for a modification of cumstances, see Mobile Electric Co. v. Mobile, 79 South. 39, L. R. A. 1918F, 667; Cleburne Water, Ice & Lighting Co. v. City of Cleburne (Tex. Civ. App.) 35 S. W. 733; St. Marys v. Hope Natural Gas Co., 71 W. Va. 76, 76 S. E. 841, 43 L. R. A. (N. S.) 994, and authorities cited.

[7] 7. Appellant further complains of the action of the court in sustaining the appellee's demurrer to the paragraph of its answer in which it alleged that the present rates, as fixed by the ordinance, are noncompensatory and confiscatory. That such fact, if true, is no defense to the enforcement of a valid contract, see Columbus R. P. & S. Co. v. City of Columbus, 249 U. S. 399, 39 Sup. Ct. 349, 63 L. Ed. 669, 6 A. L. R. 1648 and note; Lenawee County Gas & E. Co. v. Adrian, 176 N. W. 590, 209 Mich. 52, 10 A. L. R. 1328, and note.

From all of the foregoing it appears that the judgment of the trial court is correct and should be affirmed, and the cause remanded, with directions to put the decree into effect; and it is so ordered.

It will be recalled that a decree was ordered finding that a certain amount was due to the plaintiffs which they had paid upon the purchase price of the lands and personal property, which was impressed as a lien upon the land in default of the payment of which the land was to be sold for the satisfaction of the money decree; but the personal property was not included in the order of sale.

It is an erroneous conception of counsel for the defendants to impute to the court the holding that the indulgence of the state land board in deferring the payment of the school fund mortgage and of Frank Berns in not requiring payment promptly of the interest due on his mortgage on the lands were waivers. We have not relied upon those nonactions of the board and Frank Berns as waivers affecting the decision of this case. By the terms of the contract the present plaintiffs

BRATTON, J., and HOLLOMAN, District were required to assume, or in other words Judge, concur.

JOHNSON et al. v. BERNS et al. (Supreme Court of Oregon. May 13, 1924.) I. Vendor and purchaser 78, 187-Clause making time of essence binding upon both parties; delay may be waived.

Clause making time of the essence of contract is binding upon both parties, and is not to be employed at mere discretion of vendor, and his inaction amounts to waiver of provision,

2. Liens 16-Lost by surrender of chattel in obedience to replevin.

In absence of statutory regulations a lien on chattels depends upon retaining possession, and is destroyed by surrender in obedience to replevin.

Department 1.

Appeal from Circuit Court, Tillamook County; George R. Bagley, Judge.

On petition for rehearing and motion for modification. Petition denied, and motion overruled. For former opinion, see 224 Pac. 624.

Geo. P. Winslow, of Tillamook (Botts & Winslow, of Tillamook, on the brief), for appellants.

S. S. Johnson, of Portland (Webster Holmes, of Tillamook, on the brief), for respondents.

BURNETT, J. The defendants have petitioned for rehearing of this cause, and the

to pay, the school fund mortgage and the Frank Berns mortgage. The former was entirely due, and from time to time installments of interest fell due on the latter.

[1] Thus far both securities were ripe for payment, and the holders thereof could be compelled to accept all money due thereon. What is imputed to the present defendants time of the essence of the contract. The deas waiver depends upon the clause making fendants having made such a contract, that condition, as pointed out in the former opinion, was as binding upon them as it was upon the plaintiffs herein. It was the business of the defendants to enforce their contract promptly if they would rely upon that feature of it. Their waiver rests in their failure to enforce that clause, and does not necessarily depend upon whether they were notified that either of the prior incumbrances had not been discharged. The clause making time the essence of the contract means what it says, is binding upon both parties, and is not to be employed at the mere discretion of the vendor. Unless he uses it according to its terms, his inaction amounts to a waiver of its provisions.

[2] Both parties, say the plaintiffs in their pleadings and the defendants in their brief, avow that the personal property was replevined and turned over to the possession of the defendants. As to personalty, in the absence of statutory regulations like those for the registration of chattel mortgages and the like, a lien depends upon retaining the possession of the chattels. For this reason no lien could be enforced against the personalty after possession thereof had been sur

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