The herald., 1897-10-14
Supreme Court Decides the
San Diego Case
THE FIXING OF RATES
HOW REASONABLE CoMPENSA.
TIoN MAY BE ARRIVED AT
Plan Of the Reorganization for thu
Mt. Wilson Railroad-Why the
Davis Jury Hung

Davis Jury Hung
The highly important suit of the
San Diego Water company, respondent
against the City Of San Diego, appel
lants, has been decided on appeal by the
supreme court in favor of the city, the
Judgment and, order appealed from are
reversed and the cause remanded for a
new trial.
The point involved was whether the
city authorities had arbitrary power to
fix the water rates for the city over
the protests Of the water company, and
upon what basis the rates should be
calculated, In the case now passed up
on by the Supreme court the opinion is
written by Justice Van Fleet, with JUS
tices Mcfarland and Henshaw concur
ring. Justices Garroutte, Harrison and
Temple have each written separate
concurring opinion, while Chief Justice
Beatty dissents in a short opinion in
which he holds that the judgment and
order of the trial court should be af-
drmed
The facts in the case are somewhat as
follows:
A NEIGHBOR'S WATERPIPE
In February, 1890, the common coun-
ell OF the city passed an ordiylapce fixing
the water rates for the year beginning
July 1, 1890. In, May, 1890, the plain tiff
brought this action against the city, the
common council, the mayor, etc, TO an
nul this ordinance and enjoin its err
forcemeut. The complaint alleged, ;ha;
the entire revenue which plaintiff could
receive during the year in question, un-
der the rates so fixed would be nsuffi-
cient to pay its operating expenses and
hxed charges for that year. and would
therefore, afford no reward 10 plain tiff
for furnishing the water; and that the
ordinance would deprive plaintiff Of
its property without due process of law,
and without compensation. The action,
was tried after the expiration of the
year in question, and a judgment was
entered declaring the ordinance to be
void and setting the same aside. From
this judgment and from an order deny
ing their motion for new trial the city
Of San Diego appealed
The lower court found: That the
property and plant necessary to supply
water to the city cost $75O,OOO; that the
reasonable and necessary operating ex-
penses of plaintiff for the year in ques-
tioC. and actually expended by it for
that purpose amounted to $4,000; that
plaintiff was indebted upon, its bonds
for money borrowed, amounting TO the
sum of S1,000,000, bearing interest at the
70 Of
amount $500 had been necessarily
and properly expended for the coTastruc-
tion Of the plant; that the total re-
ceipts Of plaintiff for the year in ques-
tion derived from the rates fixed by the
ordinance, could not be and were not
greater than $657SS 65; that the annual
depreciation of the plant amounted to
l-3 per cent of its value; that no divi-
dends for the stockholders had, been or
could be earned from the rates fixed and
that such rates were unjust and unrea-
soma BILE
UNCONSTITUTIONALITY ALLEGED
The plaintiff contepded that section l
OF article xiv Of the State Constitution
Is opposed to the Constitution of the
United States in that 1t operates to de-
prive the water company of its proper
~ without due process of law. 1t was
argued that no provision for the fixing
OF water rates by the tribunal thereby
created can be valid without notice 10
those whose rights are to be effected.
and an opportunity TO them to appear
ard defend, the right to which must be
given by the constitution itself. The
supreme court in passing upon this
point, holds that as il appears that all
the water was acquired, siysce the ADOPT
ion of the present constitution, the
people Of the state in adopting that
constitution had the right to declare
that all water not then reduced to pri-
vate ownership should thereafter re-
main public, and that thereafter every
person undertaking the business of sup
plying cities, or their isaha abitants. with
water, should do so upon condition that
the rates to be charged should, be con-
clusively fixed by the state.
1t is apparent" says the court. that
the water company does not own the
water which it collects and supplies. or
the plant which it uses, in the same sense
that man is said to own his house or
his farm By the very nature of the use
to which 1t is applied the company has
devoted that property to a public use
Having once undertaken to perform that
pupnc DUTY. 1t must continue to perform
1t, ana must carry on its busin ess under
the lawful regulations of the govern
ment. In effect, the state may be said
to nave appropriated the water and the
plant to public use. For that appropri-
alton 1t is bound to make just compenea-
tion, and article XIV of the Constitution
must be construed as providing for that
just compensation.
TO CALCULATE COMPENSATION
IN determining compensation, three,
ana we pelleve only three, methods are
possible: First, either by ascertaining
what the property could be sold for Gts
market value); seconds by ascertaining
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