The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1891-02-08
GROSS, OR NET?
Bills Affecting the Funded Debt of
This City.
nondholder Bates and Commissioner
Beatty Argue Against Them
Before Committee.

The two bills introduced in the Senate
oy Mr.. Sprague, affecting the bonded in
oebtedness of Sacramento City, were con-
sioered by the Senate judiciary Commit
zee yesterday. The only arguments pre-
scented to the committee were made by
george +. Bates, one of the bondholders,
and ID. o. Beatty, member of the city's
FUNDED Debt Commission. Both gentle
men We're opposed to the measures.
Briefly stated, the purpose of the bills
Is to provide that the word revenue" as
used in connection with the city's income,
shall mean the net proceeds of the water
works, after deducting the running ex-
penses, SO that the So per cent. of the rev.
enue (which goes to the holders of the
city's bonds shall not come from the
gross receipts of that department.
City Trustee Mclaughlin was present,
but did not reply to the arguments of
Messrs. Bates and Beatty, who had it all
their own way, and seemed to make an
impression on the committee adverse to
the bills in question.
In his argument Mr.. Bates reviewed
the history of legislation in regard to the
ponds and coupons, and the decisions of
tne courts In cases already tried. He
argued that the Income of the water
works" should be regarded in the same
light as taxes, of which 30 per cent. had to
be set aside. He relied chiefly on the
supreme Court decision in the case of
Bates VS.. Porter to show that the 'tre-
celpts'' lof the water works means the
gross receipts thereof If the Legislature
mad the right, he claimed, to reduce the
amount to be paid the bondholders it
could go further and cut them off alto
gether.
Il Hno ffxvc oi1
s1tions to be determined. When Legis-
lature makes a contract, that contract
cannot be set aside. The revenue of the
CITY comes from various sources, and the
supreme Court had held that it included
the revenue of the water works The
Legislature in 1861 enacted law declar-
that the revenue of the Water Works
should be held to mean what was left
after the expense of running the same.
Under this rule but little money was left
Tor the bondholders, and they brought
suits in the court and got the decision re-
ferred to-that the ''reyenue'' of the city
meant the gross receipts of the city from
all sources.
Judge Paterson held that the Act of the
Legislature was ambiguous and indefi-
mite, inasmuch as the City Trustees
might SO reduce the water rates of the
city as to practically leave no revenue
therefrom. He did not, however, agree
with Judge Paterson that the Legislature
could, by subsequent Act, alter the con-
dltons OF the law governing the contract
between the city and her bondholders.
Judge Beatty held that the passage of
the bills now before the Legislature would
be gross insult to the Supreme Court.
In reply to Senator Dray, Judge Beatty
said that If the Legislature should re-
enact the law of 1861, and a case should
go to the Supreme Court hereunder, the
court would refuse to entertain it, be-
cause it had already passed upon the
question of the meaning of the word
revenue,
Mr.. Dray-I understand, Judge Beatty,
that you are not here to object so much
to the passage of the proposed bills
through any fear that the court might re-
verse its decision, but because it would
involve litigation that would tie up the
city's revenue for an indefinite period,
Judge Beatty-Yes, that is the purpose
of my opposition to these bills.
He referred to former litigation when.
he said, $4,000 belonging to the Bond
Commission was tied up and could not
be had for the purpose Of buying in $780,
600 worth of coupons at 20 per cent.
Sam Davis, the bondholder, afterward
bought them in at II cents on the dollar,
and received from the city dollar for
dollar.
In reply to question by Mr.. Dray,
Judge Beatty admitted that no such
margin now existed in the bond market
Senator Dray said it was not desired to
embarrass the Bond Commission, and
asked Judge Beatty if the cost of oil and
fuel alone were taken out of the receipts of
the water works whether or not the COM
mission could not receive the undisputed
portion of the revenue and go right along
without serious hindrance while the
question was being adjudicated.
Judge Beatty replied that it would not
be satisfactory. The bondholders, he
said, had built the present water works,
and Sacramento should act with some
sense of justice toward them. Pass the
present law and the bank that is now the
custodian of the city's revenues would
fight the commission and embarrass it's
operations.
AT the conclusion of Judge Beatty's
argument the further hearing of the mat
ter was continued.