The herald., 1897-10-14

in turn depends upon the fact that sale:
Of similar property have been and are
being made at ascertainab Bile prices. Bu
such property as this Is not so sold, a
least not often enough to furnish fail
criterion; and the very fact of govern
mental regulation would necessarily
control the price. Until the rates are
fixed, no one can say how much the prop
erty would sell for, and, therefore, that
price cannot be ascertained as basis
for fixing those rates.
1.-The second method is entirely inap-
plicable to property of this kind The
construction of municipal water works
is matter of growth. When constructed
they stimulate to that extent the prog
ress of the city and tend toward the
genera, cost of production of all things.
1t results that the first water system
occupies the position of a pioneer At
any expense the works must be con-
structed, and usually no reward can be
realized by the construction until some
time has elapsed. In the meantime, as
the city grows, in part by reason of this
very supply of water, the facility of con-
structing works of all kinds is increased,
and the cost of construction diminished.
permit the consumers to avail them
selves of the plea that at the present
time similar works could be constructed
at less cost, as preteXt for reducing
the rates to be paid for water
WATER WORKS A PUBLIC USE
"rhis is not an ordinary business en-
terpriSe. Those who engage in it put
their property entirely into the hands
of the public. Having once embarked,
it is beyond their power to draw back
They must always be ready to supply the
public demand, and must take the risk
of any falling off in that demand. They
cannot convert their property to any
other use. however Improbable the pub
lie use may become. Their money has,
in effect, been taken by the public; and
the public, while refusing to return that
money, cannot be heard to say that it no
longer has need for all of it.
"Nor would it, on the other hand, be
Just to the consumers TO require them
to pay an enhanced price for the water
on the ground that it would now cost
more to construct similar works. Such
a contingency may happen, but to allow
an increase of rates for such reason
to make a profit, not as a reward for its
services, but for the fortuit7l2 occur
renee of a rise in the price Of mate
rials or labor. The law does not intend
that this business shall be a speculation,
but that it is to receive reasonable, and
no more than a reasonab Bile, reward"
Passing on to the third method OF
valuation, the court draws attention to
the fact that what revenue money IS
capable of producing is a question OF
fact and, theoretically at least, sus-
ceptible of more or less exact ascertain
ment An important circumstance is the
rate of interest at which money can
be borrowed for investment in such a
business, and where the business is
honestly and prudently conducted the
rate which the company pays for bor
rowed money will furnish a safe cr-
terion of the rate of profit which will be
deemed reasonable.
FIGURING AT BAY'N CLIMATE
after deducting expenses for the
year." continues the court in its opin-
ion $4,000 from the revenue received
-$65, 7SS. 65-there would be left bu;
S25, 7SS 65, or but a little more than 1-3
per cent upon $4,000, the actula cost of
the works, while the evidence showed
that the company had to pay much
higher rate on money which it bor
rowed. But reckless and unnecessary
expenditures, not legitimately incurred
in the collection and distribution of water
or in the acquisition, construction or
preservation of so much of the plant as
is necessary for thai purpose, canno;
be allowed. Nor can the investm mt on
which the company is entitled to bass
its compensation be held to include
property not now employed in collect
ing or distributing water, however use
full it may have been in the past or may
be in the future. The books of the COM
pany show the cost of the property to
have been less than $3.50 600. and.the evil
dence clearly shows that portions of the
plant included in that cost are not now
in uSa, if they have not been altogether
abandoned
THE books of the company show the
expenses of the company to have been
S44 '25530. OF this amount appellants
object to items of about $4,000 as unnec-
essary and improper and object partic-
ularly to an item of ST., 500 being an un-
paid bill, which is disputed by plain tiff.
and on which its liability is left doubt
full. Counsel for respondents have not
attempted to answer these points. As
the evidence is in an unsatisfactory
shape, we say no more than that If
does not support the finding"
MODE OF VALUATION
In the concurrlng opinion of Justice
Garoutte the following mode of yalua-
tior' of plant is outlined:
In the fixing of water rates by CITY
as contemplated by the constitution, II
is evident that the valuation of the plant
is the basic element upon which the
whole investigation rests. The original
cost of construction is simply an element
to be considered in fixing the presert.
valuation. But, as to the amount of The
bonded Indebtedness, or the amount cf
interest annually accruing thereon. we
fail to see their materiality in determin
ing the value of the plant, or the sum
total of revenue to be raised from the
sales of water 1t is not a question. in
which ratepayers are concerned. wheth-
er the water company has not outstand
ing Indebtedness, or is flounderng under
a bonded debt which threatens TO sink
it at any moment. If the municipality
IS required to establish a scale of rates
which will produce a revenue sufficiert
to pay interest upon outstanding bonds
this provision Of the constitution would
not Only be perpetual guaranty to the
bondholders for the payment of their
annual interest but constant ir,oep+ivo