In 1930 the Commission by two separate orders promulgated ah entire schedule of rates effective throughout the State for telephone service of petitioner. At the same time, by its opinion, the Commission indicated that the rates would produce a fair return based upon the assumption that business recovery from the depression “ is certain and which cannot reasonably be expected to be long delayed.” The petitioner contended that the depression would be severe and long and that the rates would produce insufficient income to afford a reasonable return.
In 1932 the Commission, upon a complaint which it sponsored, commenced an investigation as to the rate of twenty-five cents a month for hand telephones. The petitioner, by its answer to *433that complaint, alleged that the rates and charges then existing which had been imposed by the Commission, had never yielded a fair return; that any reduction in the rate for hand telephones would result in making more inadequate the rates and charges already insufficient; that the Commission had fixed a net return of seven per cent as reasonable; that the net earnings have fallen below said return of seven per cent by many millions of dollars, and that said rates and charges are in the aggregate substantially less than lawful rates.
At the beginning of the hearing, petitioner’s counsel again asserted such contentions, and further asserted that the fair rate of return should be more than the seven per cent rate which the Commission had found to be reasonable; that while petitioner was willing to abide by the rates then in existence without complaint, although they failed to provide fair, adequate and reasonable return, if a further reduction were ordered the company would not consent thereto, but would stand upon and insist upon its rights. Petitioner’s counsel stated that petitioner was prepared to introduce proof of these defenses and offered such proof which was rejected by the Commission as immaterial.
It is firmly established by the decisions of our highest court that it is the right of a public utility to a fair and reasonable return upon its property actually used in the public service, and that when such utility is prevented by public authority from earning such reasonable return, such order or limitation results in confiscation, and that the utility is protected from such confiscation by constitutional mandate.
The defense of confiscation is here raised, and the petitioner •under the issues framed, was entitled to introduce proof to establish such contention, and any such proffered proof was not immaterial.
The general proposition is fully discussed in Matter of New York Edison Co. v. Maltbie (244 App. Div. 436) and cases therein cited, and in Matter of Rockland Light & Power Co. v. Maltbie (241 id. 122).
For these reasons the order under review should be annulled and matter remitted to the Commission for further proceedings in accordance herewith.