Omaha daily bee., 1895-06-25
FORECLOSED Jon WArERWORKS
Judge Dundy Grants Petition Of Farmers
Loan and Trust Company.
WITH JUDGE RINeR'S C9NCURRtNC:
Decree and Order for Sale OF Omaha Plant
WIN lie Filed Soon-Hfstory OF the
Litigation - Talk that the
City wDl Buy.
decree granted as PRAYED for"

decree granted as prayed for"
with these few words delivered from the
bench Of the federal court yesterday morning,
Judge Dundy practically decided the fore
closure case Of the Farmers Loan and Trust
company against the American Water Works
company of New Jersey.
The decision involves the Omaha Water
Works plant, which has been staggering
along in the courts with burden Of com,
plex litigation for years. Judge Dundy will
prepare the decree and send it to Judge
Riner within few days for the signature OF
the latter jurist, who heard the case with
him. Judges Riner and Dundy conferred In
this city a few days ago and agreed upon
granting the decree of foreclosure asked for
by the plaintiff Judge Riner prepared
decree, which he left in Judge Dundy's pos
session, but the latter may revise it before
filing the same, or may prepare a new de-
cree. Judge Riner left the subject of re.
vision entirely in Judge Dundy's hands, and
it is regarded as probable that the latter will
prepare his opinion in few days and send
1t to his Wyoming colleague, whose con-
currence is said to be assured.
The decision yesterday was precipitated
daring the hearing Of motions, when John l..
Webster, attorney for Receiver Clarkson of
the American Water Works company of Illi-
nois, made application to file an answer in
the foreclosure case, in which the American
Water Works company Of New Jersey was
defendant. The application denied, and
the Judge then expressed some judicial senti-
ment, which authorizes an order of sale OF
the Omaha water works system.
The foreclosure is for SO 500 900 in bonds
held by the Farmers Loan and Trust company
Of New York, acting as trustees. The $400-
900 underlying bonds are not in controversy
There is every probability that John l..
Webster, attorney for the defendants, which
includes the Venner faction Will appeal the
case and carry it to the highest federal
tribunal, IL the decree now in course OF prep
aration is distasteful to the defendant. Mr..
Webster is authority for this statement and
| 1t is also the sentiment expressed by c. H.
Venner Of Boston while in Omaha recently.
The fight has been bitterly waged for years
| The story behind the case is an interesting
one.
| COMPLEX LITIGATION.
The present capitalization of stock OF the
American Water Works company Of New
Jersey consists of S400 900 in original city
| water works bonds, 50 800, 900 in underlying
bonds, $4,000, 600 in common stock and 81 ,000,-
| 900 in preferred stock, making a total OF
| 80 900, 900. The capitalization of the Ameri-
| can Water Works company Of Illinois at the
| time of the consolidation in 1891 was Sc, ,O00,.
| 900 in stock and $4000 600 in bonds. Th!a
| stock was transferred in the deal and many
| New Jersey" bondholders secured illinois
| stock. cash consideration exclusive o
| transfer Of stock also figured in the deal. The
| total capitalization of the Omaha and Denver
| plants on the date of consolidation was $13
| 900 000 of which the Omaha property wa!
| rated at $40 900 900. The bondhoders of the
| Omaha system are mostly in New York, New
| Jersey, Scotland, Germany, Switzerland ant
elsewhere Mr.. Venner has secured most o
| the stock
n lpey nft HI
attempt to consolidate the Omaha propert!
| with the Denver Water Works company thu
Omaha plant was placed in the hands o
| receivers in February, 1892, and 1t became
| necessary to use some portion of the earn
| ings for construction, thus requiring thu
| issuance of coupons. The constant growtl
| of the property made 1t evident that SOM
provision should be made for the capitaliza
tion of construction expenditures, so tina
| such outlay would not have to be paid from
| income, thus allowing the earnings to bt
used for payment of coupons. In June 1898
efforts were made for friendly reorganiza
tion on basis equitable to all interests. 4
| committee was formed with Mr. ThallmaI
| as chairman.
But in a short time Mr. Venner of tn,
| original bondholders crossed swords with th
| committee. Harmony seemed to be impos
sible in this instance, like preceding ones
| Mr.. Venner is the head of what is knowI
as the Venner faction, which recently Sc
cured control of the Denver plant after
bewilderng amount of litigation, in which h
had many up and downs. Mr.. Venne
stopped at Omaha on his return east afte
achieving that victory in January and tolC
The Bee at that time that he would eventu
ally win back the Omaha plant in the sam
manner and that it would be to the Interests
of Omaha to have the local plant out of tn
hands of the New Jersey company. UpoI
his return to Boston he sent out confidential
circulars to the bOndhoders of the Omaha sys
TEN of the American Water Works company
the significance of this literary" move bein
that he did so over the heads of the re
organization committee. In April 1896
Judge Riner at Lincoln made a decision re
storing the ownership OF the plant to tn
American Water Works company of Illinois
but not interfering with foreclosure.
CONTESTS OF FACTIONS.
There has always been more or less con
tention among rival factions in the waite
works company, the Omaha plant being tn
plant at stake.
In 1891 c. H. Venner and w. A. Under
wood at the head of a corporation organize
in the east and known as the America
Water Works company Of New Jersey con
ceived the idea OF creating a great trust b
buying out the local water works companie
in a number of western cities. With thi
idea in view the company purchased tn
water works plant in this city, which a
f that time was the property of the America
} | Water Works company of Illinois.
The negotiations were continued and over
| lures made to the owners of the plants /
| Denver, Kansas City, st. Louis and st. Pau
These all fell through, with the exceptio
Of the deal to purchase the Denver plan
In time this purchase was made, and the tw
plants the one in this city and the one
Denver consolidated under the name of tn
American Water Works company of Ne,
Jersey. The bonds OF this company wer
placed on the market, but they were withou
e purchasers, as legal complications concernin
I the issue arose. j 20
In February, 1892, the bondholders of tn
original company commenced foreclosure pro
ceedings, and both. the Denver and tn
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