Morning journal and courier., 1881-09-17
Sonrnal arlb Gourier.
Morning, Sep. 17. 1881.
REPORT of the Cfty,s Water Committee.

"A committee. composed of one Alderman to be ap- to be appointed by the Board of counciimen, and two citizens, not members of the City Government to employ accountant and shall have sccess to- and power with the assistance Of said accountant to Water Committee, from time to time and make ab- stracts thereof and said Committee has pos ser to subpoena and examine witnesses." Your committee met June 16th, 1881. and organ ized by the appointment of MT. Baldwin chairman We commenced the investigation of the books and papers of the New Haven Water Company on the day, and have continued it to the present time with the aid of Dr. Robert Crane whom we appoint ed to act the accountant contemplated by said Act
 The terms which the city may if it sees fit, buy out the New Haven Water Company are fixed by it's contract with that Company of February 2Oth, 1862. printed in the City Year Book for 1861 as follows:
 Ut is mutually covenanted and agreed, by and between said parties that said party of the second part shall have the right to purchase, at any time years from the date of the same, franchises, property and assets of said Company of every name pany sum equa1 in snnoGnt to the capital stock of said Company actually paid in by the stockholders and expended by said Company in the construction of the works of said Company, together with an in terest of ten per cent per annum on the several n- when the same shall have been so paid in till time of said purchase less all dividends declared by said payment of s the bonds and other liabilities of said
 This right of purcnass expires Tn February. 1882. In order to ascertain the amount which would be required for the purchase money it is first necessary to determine s'the capital stock of said Company actually paid by the stockholders. and expended by said Company in the construction of the works of said Company"
 Only capital stock 'actually paid is to be taken into account, and only much of that has been expended in the construction of the works
 The total the capital stock issued is sta ted by the Company to be 22 800 shares of the par value of $50 each, all 125 ooo The entrssin the books of the Company which purpor to give the these issues in detail foot less than this 9S2.4o. Ry ae0"' three hundred o0'A''' n"'H'l'' '
 Of this stock about 5000 shares, amounting to the par value of nearly S400 not paid n in cash but issued to contractors. or in payment for property purchased. services rendered It is net certain far such stock is to be deemed actualy paid in" under the terms of the contract
 About 1000 shares of stock issued at discount of twenty per cent at $40 share, this discount being charged of to profit and loss. Some stock was also sold at auction for default of payment of calls in these capital stock to the amount of $22 385 is shown by the Company's books not to have been paid in at a1 This leaves the amount of capital claimed by the Company to have been paid in, at $ 1O2,615.
 tions should be made to considerable amount put do not deem it necessary at this time to go into any exact inquiries as to this point.
 the capital actually paid in has bsen in the construction of the works of the Company
 The construction account, kept on the Company 8 ledger states the amount expended on % m @ m m M np to obs1as Suy Of tO De guaranty of inst amount of bonds of the Fair Haven that company in is76. As this SIPS GOO has not yet been paid and will not be payable till lS95 1t should be deducted in ascertaining what the Company has spent construction account and by making the deduction accordingly this account shows an expen diture of $1 or less than the amount or the capital stock issued by about s2S5oo. This dlner- ence f all the expenditure from the capitaD, is accounted for by the discount the stock issued at $4J a share, and loss notes taken in payment for some of the stock and dishonored, etc. Since July l. 1881, additional expenditures have been charged. amounting to $4, ,6SS 6S
 In respect to charges for expense of construction which based upon stock issued to contractors 1t appears from the books that in some instances two prices were nan ed by the contractors; one cash price, and the other larger one for part cash and part stock and that the latter price and mode or payment were adopted by the Company A large quantity of six inch ppe for instance was offered st eighty cents foot, cash eightyeight cents for half casa and half stock. The latter offer was sc cspted but the arrangement subsequently closed the basis of ninetyfour cents onethird cash and two-thirds stock. The next year the pipe was contracted for, of the same manufacturer at $lO3 foot half cash and half stock, at $51. 50 share
 Under these contracts stock to the amount of $41- ! 900 issued for pipe.
 ! It would plain that the full amount of such stock cannot fairly be charged much actually ! paid in and expended in construction. Assuming that the terms first agreed of eighty eight cents foot half cash and half stock, equivalent to the terms aferward substituted of ninetyfour cents
 foot, one-third cash and tWo-thirds stock, we are able to calculate just what the stock called worth by parties eighteen cents in stock was called worth only twelve and tWothrds cents in | cash.
 In other words, the contractor charged about half much again. if paid in stock as if paid in cash, so that issued at par to pay for what worth ! in cash only about two-thirds as much.
 It appears to your Committee that stock issued on such terms cannot properly be regarded stock tually paid in par, and expended in construction within the meaning of the contract with the city but that, wherever S1OOoO of stock issued for of 666 the latter amount is the most that ! be claimed contemplated by the parties to that | agreement.
 The ten per cent. interest, chargeable under the contract upon the several nstaIments of capital paid
 n laid out in construction. is computed by the Companys accountant upon the basis of s1,102.6 615 the amount of capital paid in) at $966354 g, and I we believe his computation to be correct on that | basis A reduction of the amount of the principal such we have already said that think should be made would, of course correspondngly decrease the amount of interest This interest is reckoned to Nov l 1, 1881.
 | The amount of dividends declared by the Company ! up to July l. 1881, is $622, ,937.50
 The outside amount which the city would be liable | to pay, should it vote to make the purchase, is ! therefore, in the judgment of your committee, as l follows
 ! Capital stock paid in as claimed by the | Company -.-fI I1U2Oio ut ! Less error in posting from
 Unpaid notes for stock sub "
 scriptions, in drawer--.-.. 2,7sO OO- 3O4I 6t s1.O99, 567 4 Add ten Der cent. interest (as
 ! figured by Companyis
 Less interest allowed by him
 ! on the $3047.60 deducted
 | by us, as above.- 5,7S6 97- 99O 567 2t s2,o9o 134 6t Deduct dividends declared. ............ 1887 5( Balance payable to the Company s1, ,467 297 It
 The only liabilities of the Company according tc the statement Of it's officers Aug l. 1s8i were the ! bonds of the Fair Haven Water Company, due ir 1895, to the amount of s125.OOO bearing seven pel | cent. interest payable semi annually.
 ' Company on or before August 1st 1884, sdeliver the auditor of said city an itemized statement ver ! Company, of the amount which would be claimed bS said Water Company, under the said contract of Feb said franchises property assets by said city anG of the amount actually paid in by the stockholders
 such money expended in the construction of the
 works of said Company, the amount of dividends de
 cared by said Company, with the date of each, anC | also statement of all bonds and other liabilities O I said Water Company"
 statement of it's dividends with the following meagr
 statement as to the other particulars called for: ! Amount claimed under contract. S2 222 236 I Amount of capital stock paid in.. 1,1O2615 2 ! Amount expended in construction. 1,226 136 g
 AmoUnt of of 6fgidsnds 6on paid fa5S95 9aSo5 ! In the above claim we have compounded interest 8 the legal rate, which believe to be equitable accordance with the contract
 ! HENRY S. DAWSON, President" ! Your Committee inquired at the office of the Com pany to the items of the claim of g. 2s H. | were informed that it was made up as follows:
 TeP per Psaa oent interesto Nov. l.
 Six per cent. compound interest | above, compounded annuany........ 746,191 8 | Less dividends paid. 622s25 o ! sa222,2s6 l
 The principal difference between the amount O Committee lies in the addition of inc charge of near ! ly $750,Oo for compound interest.
 In the opinion of your committee, the terms of tn contract give support color of support to sucl 1 8 charge; but as the Company have included it il their claim, it will be necessary to have the question of its propriety determined by resort to the Supe rior Court under Section of April 14th, 1881, whcl \ reads as follows:
 'sSEc. 5. If said city and said Water Company fai to agree touching any question %hat may arise con cernn said purchase and eale the transfer of saiC franchises property and assets to said city as to thu amount to be paid therefor, the amount to be as ' stunned by said city, either party may apply to thu Superior Court in New Haven County, and said Court having given reasonable notice to the other party | shall appoint committee of three disinteresteC freeholders of this State to determine the matters | controversy; and the determination of said commit
 having been returned to said Court and accepted and recorded shall be final and conclusive. But ssiC
 Court shall have power to reject the dongs of saiC
 committee for improper and irregular conduct, anC
 submit said question to said committee to another \ committee, to be appointed in the same manner.
 'sEither party has the right to revise questions O \ law by motion in error for trial to the Su \ preme Court of Errors."
 AS the regular town election occurs early in Novem
 Der, your Committee would suggest that the vote oI
 the question of the purchase be taken on that sy | This will give opportunity to make tho applied
 tion to the Superior Court, and have the amount O
 the purchase money settled by it's judgment, befor
 the freemen called to express their opinion
 and will also give opportunity for full public dis | cussion.
 The books of the Company do not show any detailed | inventory of its assets.
 | The original contract with Whitney, Mcclellan \ COmpaDy n