views, said that, whatever rules might prevail if one of the parties to the contract should attempt to change the terms without the consent of the other, they were not applicable to a situation where the contracting parties themselves agreed to the change.

It is said, however, that these cases are to be distinguished, in that here the right to obtain hydrant service at rates not to exceed those specified in the franchise was held by the city purely in its proprietary capacity. But as the municipal corporation is but a political subdivision of the state, and exists by virtue of the exercise of the power of the state through its legislative department, it is our opinion that the city had no absolute property right to demand continued hydrant service at a given rate as against the right of the state to modify such rates of service with the consent of the water company, notwithstanding the fact that as to the water company itself the contract might be unalterable except with its consent.

In Worcester v. Worcester Consolidated Street Ry. Co., 196 U. S. 539, 25 Sup. Ct. 327, 49 L. Ed. 591, the railway company had been. granted a franchise on the condition that certain pavement be maintained between the rails for the entire distance covered by the tracks. When the franchise was negotiated the city council had authority to grant locations for the laying of a railroad under such restrictions as they deemed the interests of the public might require, and there was legislation in the state requiring that the paving of streets occupied. by railroad tracks should be kept in repair by the railroad companies. Afterwards the Legislature passed a law designed to relieve street railway companies of the obligation to keep paving between tracks in repair, and the street railway company refused to repair the paving between its tracks, with the result that the city made the repairs and attempted to hold the street railway company liable. The contention of the city was that the legislation which purported to relieve the street railway company from the obligation to keep the paving in repair was invalid, because the effect was to impair the obligation of the contract between the city and the railway company. The Supreme Court said it had no doubt that the Legislature of the state had the power to abrogate the provisions of the contract between the city and the railway company with the assent of the railway company, and concluded that the asserted right of the city to demand the continuance of the obligation to pave and repair streets did not amount to a property right held by the corporation, which the Legislature was unable to touch either by way of limitation or extinguishment. The court said:

"If these restrictions or conditions are to be regarded as a contract, we think the Legislature would have the same right to terminate it, with the consent of the railroad company, that the city itself would have."

The court, approving the doctrine of New Orleans v. New Orleans Waterworks Co., 142 U. S. 79, 12 Sup. Ct. 142, 35 L. Ed. 943, was of the opinion that a municipal corporation is in no contract relations with its sovereign, at whose pleasure its charter may be amended, changed, or revoked without the impairment of any constitutional ob

ligation, and furthermore that, while a municipal corporation may own private property not of a public or governmental nature, and that such property may be entitled to constitutional protection, still the asserted right in that case to demand the continuance of an obligation to pave and repair streets did not amount to property held by the corporation which the Legislature was unable to touch either by way of limitation or extinguishment. But, furthermore, the court held that, even if the restrictions or conditions contained in the orders of the board of aldermen examined in the case were to be regarded as a contract, still the Legislature had the same right to terminate it with the consent of the railroad company that the city itself would have.

In Woodburn v. Public Service Comm., 82 Or. 114, 161 Pac. 391, L. R. A. 1917C, 98, Ann. Cas. 1917E, 996, the court held that the city entered into the franchise contract between the city and telephone company subject to the reserved right of the state to exercise its police power and compel a change of rates, and that when the state exercised its power it did not work an impairment of any obligation of the contract. The court said:

"The regulation of rates for the purpose of promoting the health, comfort, safety, and welfare of society is an exercise of the police power, and is therefore an attribute of sovereignty"

-and was of the opinion that when seeking to determine whether the regulation of rates has been conferred upon the city, with or without limitations, the courts would be guided by the rule that the delegation of the sovereign right to regulate rates must be clear and express, and doubts would be resolved against the city.

Salem v. Anson, 40 Or. 343, 67 Pac. 190, 56 L. R. A. 169, 91 Am. St. Rep. 485, and other cases, are cited by plaintiff in error as holding that, under charter provisions like those under consideration, there was a delegation of exclusive power by the state Legislature to the city to regulate and control the use of the streets by a water company upon such terms and conditions as the city council might prescribe; and with ability counsel have argued that after acceptance of the terms of the franchise it was beyond the power of the Legislature to effect a change of its terms without impairing the obligation of the contract. The Oregon case does not pass upon the immediate question. In Cleveland v. Cleveland City Ry. Co., 194 U. S. 517, 24 Sup. Ct. 756, 48 L. Ed. 1102, specially relied upon, it was decided that the ordinance involved constituted a contract, but the court did not go farther than to hold that the car company, with which the contract was made, could not be relieved without the consent of the city. In Detroit v. Detroit Citizens' R. Co., 184 U. S. 368, 22 Sup. Ct. 410, 46 L. Ed. 592, the contract was made in obedience to an act expressly authorizing agreement between the corporation and the city.

It seems to us that the later case of Home Telephone Co. v. Los Angeles, 211 U. S. 270, 29 Sup. Ct. 50, 53 L. Ed. 176, more fully expresses the views of the Supreme Court, where the contention is that the state has authorized one of its municipal corporations to fix rates by inviolable contract to be charged by a public utility corporation

for a definite term. There the charter examined gave to the council "power * * * to regulate telephone service" and "to fix and determine the charges" for telephone service and connections. The court was of opinion that, unless the legislation granting such a power was perfectly clear, the city could not make a contract fixing unalterably the charges for telephone service during the life of the franchise, and thus deprive the city from exercising the power of regulation, and the ordinance was treated as not one "to agree upon the charges," but as empowering the city "to fix and determine the charges." The court said:

"It authorizes the exercise of the governmental power and nothing else."

Authority to contract away the power of regulation was not found either in the express words of the ordinance or by implication from its terms. In the examination of the ordinance now before us we must always have in mind that the contract bound the water company to but one matter; that is, not to charge for water in excess of $1.82 per hydrant per month. The municipality did not surrender all right of fixing terms on which the water company could use its streets. There was no agreement fixing unalterably the charges. Under certain limitations, as, for instance, if the reasonableness of the rate were questioned, the city could require the water company to decrease its charge for hydrant service, and to a reasonable extent might vary conditions under which there was an occupancy of the streets. Thus, while there is a contract, we are disposed to think the city never agreed and has not undertaken to yield wholly its charter right of allowing the use of the streets "upon such terms and conditions as the council may prescribe," and has not altogether yielded its power "to fix * * * water rates." Milwaukee Elec. R. Co. v. Wisconsin R. R. Comm., 238 U. S. 174, 35 Sup. Ct. 820, 59 L. Ed. 1254.

If we are correct in this view, then section 2 of chapter 80 of the Laws of 1911 was merely a ratification of the contract as made by the city, but did not sanction a contract which attempted to bargain away the rate-regulating power. Section 2 provided that all contracts heretofore made and then in effect for sale of water by any corporation"are hereby ratified and declared legal and valid contracts, in so far as the right of such city or town to contract with reference to same is concerned."

With these expressions of what seem to us to be the true view of the contract which is involved, we leave the last point without conclusive decision, and rest our ruling upon the ground that the city could agree that the state through the commission and the water company could consent to the modifications of the terms of the contract with respect to rates to be charged and paid. We believe, also, that as the city had no private property right for hydrant service that was not of a public or governmental nature, there could be no sound objection to a modification by the state with the consent of the water company, especially where the city sought a readjustment of rates for hydrants. Affirmed.

(255 Fed. 301)

KIRCHNER v. UNITED STATES.

(Circuit Court of Appeals, Fourth Circuit. December 5, 1918.)

No. 1655.

1. WAR 4-ESPIONAGE ACT--FALSE REPORTS.

It is not essential that false reports and statements, to constitute an offense under Espionage Act, tit. 1, § 3 (Comp. St. 1918, § 10212c), should be made in the presence of persons who are, or are liable to be, selected for military or naval service.

2. WAR 4-ESPIONAGE ACT-TRIAL EVIDENCE OF INTENT.

On a prosecution for making false reports and statements, in violation of Espionage Act, other statements than those charged, but of similar character, made by defendant at different times and places, even before the passage of the act, may be shown on the question of intent.

3. CRIMINAL LAW 309-EVIDENCE-PRESUMPTION OF GOOD CHARACTER. On the trial of a criminal case, where there is no evidence of defendant's character, there is no presumption of his good character.

4. CRIMINAL LAW 24-PRESUMPTION OF INTENT.

It is not error in a criminal case to instruct that defendant is presumed to have intended what he did.

In Error to the District Court of the United States for the Northern District of West Virginia, at Parkersburg; Alston G. Dayton, Judge. Criminal prosecution by the United States against H. E. Kirchner. Judgment of conviction, and defendant brings error. Affirmed.

William Beard, of Parkersburg, W. Va., for plaintiff in error.

Stuart W. Walker, U. S. Atty., of Martinsburg, W. Va. (Charles N. Campbell, Asst. U. S. Atty., of Martinsburg, W. Va., and J. J. P. O'Brien, Asst. U. S. Atty., of Wheeling, W. Va., on the brief), for the United States.

Before KNAPP and WOODS, Circuit Judges, and McDOWELL, District Judge.

MCDOWELL, District Judge. On January 14, 1918, the grand jury of the United States District Court for the Northern District of West Virginia, at Parkersburg, returned the following indictment:

“The grand jurors of the United States, duly impaneled, sworn, and charged to inquire within and for the said district, upon their oaths present that H. E. Kirchner on the day of, 1917, and after the 17th day of June, 1917, the United States then and there being at war with the imperial German government, did, at Elizabeth, in the Northern district of West Virginia, willfully, unlawfully, and feloniously make and convey to divers persons to the grand jurors unknown, some of whom said persons were at the time aforesaid between the ages of 21 and 31 years, and were then and there subject to be called into the service of the United States Army, under the provisions of the Selective Service Act, an act of Congress approved on the 18th day of May, 1917 [40 Stat. 76, c. 15 (Comp. St. 1918, § 2019a, 2019b, 2044a2014k)], certain false statements regarding the United States government. the army of the United States, the bonds of the United States then being offered to the citizens of the United States for sale to promote the success of the United States in the prosecution of the war then being conducted against the imperial German government, which said statements in their entirety are unknown to the grand jurors, but which in substance were to

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the effect that the United States government in the prosecution of the said war was corrupt, and controlled by the moneyed interests, that the Selective Service Act aforesaid was unconstitutional, that the people of the United 1 States could never meet the expense of the war with Germany, that the people of the United States should not buy the United States bonds then being offered for sale, he, the said H. E. Kirchner, then and there knowing said statements to be false, with intent to interfere with the operation and success of the military and naval forces of the United States in the said war with the imperial German government, and to promote the success of the imperial German gov ernment in said war, contrary to the form of the statute in such case made and provided, and against the peace and dignity of the United States of America. Stuart W. Walker, U. S. Attorney."

The indictment was founded on section 3, title 1, of the original Espionage Act of June 15, 1917, c. 30, 40 Stat. 219 (Comp. St. 1918, § 10212c):

"Whoever, when the United States is at war, shall willfully make or convey false reports or false statements with intent to interfere with the operation or success of the military or naval forces of the United States or to promote the success of its enemies and whoever, when the United States is at war, shall willfully cause or attempt to cause insubordination, disloyalty, mutiny, or refusal of duty, in the military or naval forces of the United States, or shall willfully obstruct the recruiting or enlistment service of the United States, to the injury of the service or of the United States, shall be punished by a fine of not more than $10,000 or imprisonment for not more than twenty years, or both."

The charge of the trial court is reported in the series of bulletins, issued by the Department of Justice, known as "Interpretations of War Statutes," bulletin No. 69. The defendant below demurred to the indictment, and saved an exception to the order overruling the de

murrer.

The first contention on the demurrer by counsel for defendant is based on the supposition that the indictment charges the defendant merely with the utterance of opinions. The indictment alleges that the defendant had said in substance that the United States government in the prosecution of the war was corrupt and controlled by the moneyed interests. Certainly such an assertion could be made and intended as a statement of fact. There is nothing on the face of the indictment on which to found an argument that the defendant was, in respect to the foregoing assertion, being prosecuted for an expression of opinion.

The assertion that the people of the United States could never meet the expenses of the war must be treated as a mere expression of opinion, and the statement that the people should not buy United States bonds is of course not a statement of fact. It is unnecessary to decide whether the statement that the Selective Service Act is unconstitutional be a statement of fact or of opinion. The indictment contains at least one clear statement of fact alleged to be false; the remaining statements alleged to have been made may properly be treated as surplusage.

[1] The remaining objections to the indictment are founded on the theory that the false statement must be made to, or at least within the hearing of, persons who are, or who are liable to become, members of the military or naval forces. We find no warrant for this contention in the statute. The success of the military and naval forces is aided