Benjamin N. Cardozo

“ Plainly in all this there has been no infringement of constitutional immunities unless a higher value has been made out by evidence too strong to be rejected. But, for reasons already stated, the evidence is lacking in that high coercive power. Court and commission were free in their discretion to reject as unsatisfactory the conflicting opinions of a group of friendly experts. They were free in their discretion to refuse to draw an inference of value from the prices stated to have been paid upon a few purchases and sales. ”

“ An attempt is made to show that the price paid by the appellant to the affiliated seller was the current or market rate in contracts between producers and distributors in other towns and cities. To bolster up that argument, a schedule of contracts was marked as an exhibit. Twenty-five contracts are listed. There is a concession that in all but two the seller is the Ohio Fuel Gas Company or an affiliated corporation. There is no evidence as to the relation between the seller and the buyers. For all that appears the buyers in most instances are parts of the same system. ”

“ Men do not transact business without protest at confiscatory rates, at all events in the absence of extraordinary circumstances making submission to the loss expedient. If such circumstances exist, the appellant has not proved them. Nothing in the record lays the basis for a belief that the natural gas business in Ohio is unable to pay its way. ”

“ Both assumptions are erroneous, though the error results to the appellant's benefit. As to assumption (1) , the state court has held that there is no satisfactory evidence of the value of the leases in class No. 1 in excess of the value assigned to them upon the books. A depletion allowance must therefore be excessive if it is made in the belief that a value of $25 per acre is the amount to be restored. As to assumption (2) , there has been an underestimate of the life expectancy of the gas content of the wells, resulting once more in an exaggerated allowance for inroads upon capital. ”

“ Moreover, the very reason for including in operating expenses a depletion allowance that will amortize wasting assets is to make provision for a fund out of which capital may be replenished by the purchase of other leases if that use is thought to be preferable to dividing the fund among the shareholders and winding up the business. ”

“ Dally had made purchases at prices ranging from $2 an acre for leaseholds of the quality of class No. 4 up to $50 or $75 an acre for leaseholds of a higher grade. Over against the evidence of these prices must be set the evidence that class No. 1 leases, acquired by the appellant in 1927, 1928, and 1929, had been bought at an average price of $2.05 an acre, and, if three leases be excluded, at an average of 62 1/4 cents an acre. Then, too, there are quantitative considerations that are not to be ignored. ”

“ In the first place, the intrinsic value of the leases is dependent upon the capacity of the lands to yield productive wells, a capacity seldom to be judged with even a fair approach to certainty until tested by experience. Natural Gas Co. ”

“ The commission took the view that whatever increment of value had emerged from these sources was sufficiently reflected in the allowance of the cost of developing 'new business' and in the appraisal of the physical assets as parts of an assembled whole. A like conclusion has been reached by this court in very similar conditions. Los Angeles Gas & Electric Corporation v. Railroad Commission of California, supra, page 314 of 289 U.S., 53 S.Ct. 637. Going value is not something to be read into every balance sheet as a perfunctory addition. ”

“ In the second place, the profits to be earned in a regulated business must vary with the rates established by the supervising agencies of government, with the result that prophecies, however, radiant, may be upset over night by the publication of a lower schedule. ”

“ Young, 287 U.S. 488, 500, 53 S.Ct. 234, 77 L.Ed. 447. To this it is to be added that the item is of negligible importance. Its presence or absence would not make the difference between confiscation and a fair return. We do not figure to so fine a point in determining the application of the constitutional restraints of power. [4] An intelligent estimate of probable future values (Southwestern Bell Telephone Co. v. Public Service Commission, 262 U.S. 276, 288, 43 S.Ct. 544, 67 L.Ed. 981, 31 A.L.R. 807) , and even indeed of present ones, is at best an approximation. ”