The herald., 1893-05-30
WATER RATES REGULATIONS,
The Rights of Cities in That
Connection.
An Important Decision Rendered Yes
terday by Judge Ross.
The Water Company Versus the City of
San Buenaventura-A Synopsis
of the Opinion Given
by the Court.

In an elaborate opinion that took
Judge E. M. Ross, sitting as United
States circuit court. over half an hour to
read, he yesterday touched upon some
very important points affecting the
rights Of cities to regulate water rates
under certain circumstances.
The case under consideration was that
Of the Santa Ana Water company OF
Ventura vs. the town of San Buenaven-
tura, ct al, and the opinion was upon
g demurrer to the complaint by the de-
fendants, which the court overules.
The town of Ventura was created by
an act OF the legislature approved March
10, 1865. at the time of its incorpora-
tion it had no water system.
December 7, 1868, Jose do Arnaz, Vic
tor Ustassauetegui and Francisco Mol
leda asked for an exclusive franchise for
fifty years to supply Ventura with q
water system, upon certain terms and
conditions.
The board Of trustees entered into an
agreement with Arnaz and his associ-
ates, granting the franchise, and subse-
quently at a regular meeting contract
for SO years was entered into between
the town and the water company. By
its terms they were to introduce suffi-
cient supply of water for the town within
two years from it's date.
Within one year Arnaz had built
dam in the San Buenaventura river
and bitches to the town, and had full
filed his part of the agreement.
The Santa Ana Water company was
Incorporated January 5. 1870 and in
January, 1871, Aranz and his associates
sold it their rights and privileges in and
to the water works they had con-
structed. The town board of trustees
approved the transfer by resolution, and
granted the new company further rights
looking to the improvement OF the sys-
tenn.
The complainant, to meet the growth
OF the town, borrowed over $40 900 dur
ing the past five years, besides what had
been supplied by the stockholders, and
mortgaged the property as security,
which, the company claims, renders it
necessary for them to have such rates
and compensation as will bring in $685.
600 per annum.
But in January, 1892, the town trus-
tees reqired statement of the business
Va WIG COA1 P0AH1 WAlCll bAOWCQ u IOt0-
nue. from all sources of only $13, 1851, i,
and that the disbursements exceeded
the receipts $1530.93. Then, February
10, 1892, they passed an ordinance to fix
the maximum rates which could be
charged by the company for the year
ending June 80, 1898.
The complainants assert under these
rates they could only collect $500, while
laf hn l. -
stockholders would be deprived of any
income. They claim that the act under
which the rates were fixed is not appli-
cable to their case.
In his discussion of the principle in.
volved, Judge Ross, said that if the
original contract entered into be-
tween the town and Mr.. Arnaz and
his associates was a valid one, and
passed by assignment to the complain
ant corporation, the obligations of the
contract were protected by the constitu-
tion OF the United States against impair
ment by any act of the state, constitu-
tional or statutory.
Also, that the power conferred by the
Legislature upon the board of trustees of
the municipality to provide for the pre-
vention and extinguishing of fires and to
provide the town with fresh water,
necessarily carried with it the implied
power to make any and all proper con-
tracts to accomplish those ends.
The court holds that the question as
to whether or not the trustees were au-
thorized, in view Of other provisions OF
the statutes, to confer by contract the
exclusive privilege of supplying the
town with water ie no where involved in
this case.
In conclusion, it is held that the con-
tract in question, in so far as it reserved
to the parties of the frat part the unre.
strained right to establish such rates for
the supply of water to private parties as
they may deem expadient, provided that
such rates be general, and subject also
to the implied condition that the rates
be reasonable, was valid one in the
hands OF Mr.. Arnaz and his associates.
This demurrer is overruled, with leave
to the defendants to answer within the
usual time.