The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-09-22
THE VICTORY FOR PERU
JUDGE BAKER HOLDS 1T CAN RE-
DUCE NATURAL-GAS RATES.
Accepting an Ordinance Made q Con-
tract-Great Profits of the BUSH
ness Originally.

An important opinion was handed down
by Judge Baker in the Peru gas case in the
Federal Court yesterday at noon. This was
a suit by the gas company of that city de-
nying the right of the Council to regulate
the prices it should charge for natural gas.
Judge Baker decided in favor of the city,
holding that the Council of Peru had the
right, under the contract with the gas COM
pany to regulate the prices that might be
charged for natural gas. What bearing, If
any, the opinion rendered yesterday may
have upon the 75-cent gas case against the
Indianapolis Gas Company is not plain. 1t
would appear, however, that the decision
has not much bearing on the local case.
There is said to be wide difference be-
tween the two. In the Peru case the Coun-
Gil undertook to reduce the rates by virtue
of a contract between the city and the COM
pany. In the Indianapolis case, the efforts
of the Council to reduce the rates were
based upon the statutory provision of the
city charter, not upon a contract between
the parties.
In 1887 the Council of Peru authorized by
ordinance any company that might so wish
to do to lay natural gas mains in that city.
One section of the ordinance fixed a sched-
ule of rates that might be charged. This
ordinance was passed in June of that year.
No company offered to accept the provisions
of the ordinance. It was claimed that the
schedule of prices was so low no company
could exist under them. In November of the
same year the ordinance was modified. The
rates were increased, but the Council re-
served the right to revise the schedule of
prices at the end of ten years, and every
five years thereafter. A company was or
ganized and put in a plant, and began OPP
eratons under this ordinance. 1t was con-
tended, and the court sustains the conten-
ton, that when the company began opera
tions under this ordinance a contract be-
tween it and the city was established. After
operating for some time, the original COM
pany sold out to a company that was a
party in the case decided yesterday.
BUSINESS IMMENSELY PROFITABLE.
In 1897 the Council of Peru passed an or
dinance reducing the gas rates some % per
cent The gas company undertook to have
the ordinance declared invalid, contending
that the rates proposed were not sufficient
to afford the company a fair return on the
money invested. The contention of the city
of Peru was that in fixing rates the Coun-
Gil had the right to inquire into the bust
hess OIL the cOHpdIly. Inc cOInpdIly Gull
tended that the Council ought to fix rates
that would not only produce fair return
on the investment, but also pay taxes,
maintenance expenses and, in addition,
create sinking fund sufficient to cover the
cost of the original investment within ten
years. Evidence was adduced showing that
the earnings of the company in five years
had not only reimbursed the investors for
all the money put into the plant, paid taxes,
insurance and current expenses, but had
also paid net dividends of 10 per cent.
year on the money invested. The court held
that the Council had the right to take these
facts into consideration in determining
what would be a just and reasonable
schedule of rates to allow the company to
charge. The main point upon which the
court ruled that the Peru Council had a
right to fix rates, was that one section of
the ordinance of 1887 specifically provided
that at the end of ten years the rates might
be revised by the Council. He held that
when a company went into the gas business
under the specific provision of that ordi-
nance, a contract was created which was
binding upon the company and its success
SorS.
In his decision Judge Baker relied upon
a case in the United States Supreme Court.
A contract was made by the fe 1eral govern
ment with a contractor, who undertook to
deliver army supplies in the West. 1t was
stipulated that the contractor should be
paid according to the mileage usually TAX
en- to reach designated points, to be fixed
and determined by the quartermaster. A
controversy arose. The contractor held that
the quartermaster had made the mileage
less than it would have been by ordinary
travel, as the contract provided, as well as
less than by airline. In the absence of
fraud the Supreme Court held, the con-
tractor would have to abide by the decision
of the quartermaster, under the terms of
the contract.