Omaha daily bee., 1909-01-15
RECEIVER FOR WATERWORKS
E. W. Hart, Manager Of the Com
pany, Named as the Receiver.
HALF MILLION OF BONDS DUE
R~ecsivership Blocks Enort OF Council
20 Reduce water Rates, but Has
NO Eject on Proposal 70
Build Municipal Plant,

The Council Biuffs city Water Works
company has gone into the hands OF a re-
ceiver, r. w. Hart, manager OF the com
pany for nearly twenty years. has been
appointed receiver and yesterday filed his
bond In the sum OF 10000.
The placing OF the company In the hands
OF a receiver was made on the application
OF the Farmers Loan and Trust company
! Of New York city. trustee for the holders
OF the first issue OF bonds OF the company,
Amounting TO s5oo,Oo.
The petition OF the FarmerT Loan and
Trust company was filed on Monday OF
this week in the United States circuit
court In this city by Hall q Stout OF Om-
| aha attorneys for the Farmers Loan and
Trust company, but pending the APPOINT
ment Of a receiver, was not made public
until yesterday afternoon
The order appointing Mr.. Hart as re-
ceiver was made Tuesday at Kansas City
by Judge Smith Mcpherson and was placed
on record in the court here yesterday. The
appointment Of Mr.. Hart as receiver was
agreed upon by the trust company and
the water warks company. Under the order
Of his appointment Receiver Hart is vested
with full authority to conduct the man
agement of the business Of the company
as he had heretofore.
Reason for Recetvershtp.
The petition Of the Farmers Loan and
Trust company is a document of between
thirty and forty pages Of typewriter mat
ter. II asks for the appointment of a re-
ceiver on the alleged grounds that the
Water Works company is insolvent and
that the bonds for which the trust company
is trustee are past due and unpaid. These
bonds became due about the time Of the ex-
| .a..Aia- "a che NOnnanVsg franchise. over
two years ago.
Closely following the filing Of the petition
OF the Farmers Loan and Trust company,
the answer of the Water Works company
was placed on record by George s. Wright,
local attorney for the company, and all the
papers in the case were taken by him to
Kansas City and submitted to Judge Nc
Pherson. who granted the application Of
the trust company and made the appoint
ment of Mr.. Hart as receiver. Mr.. Wright
returned from Kansas City yesterday morn
ing, the bond OF Mr.. Hart was prepared
and filed and the appointment of a receiver
for the company then made public. The
Formally Of dispossessing Mr.. Hart as
manager and reinstalling him in charge as
receiver was gone through yesterday after
noon.
In its answer the Council Bluffs City
Water Works company denies that it is in
solvent, except that It admits It's inability
at this time to taxi up the $5OO,Oc bonds
issued by II.
The action looking towards the appoint
ment of a receiver, Mr.. Wright said, had
been brought at the request of a majority
| of the bondholders.
BIocIs New Water Rates.
The appointment of a receiver by the
United States court takes the company en-
tirely out OF the jurisdiction OF the state
courts, but the receivership does not in any
way affect the action OF the city in regard
. to the proposed issuance If $4,000 water
works bonds or the construction of the pro,
: posed municipal water plant.
The filing OF the receivership proceed.
a ings in the United States court on Monday, =
said Mr.. Wright yesterday, gave that court
jurisdiction of the matter before the meet.
: ing of the city council Monday night, wher
the new water rates ordinance was intro.
duced. The appointment OF a receiver b,
. the United States court takes the compan,
wholly out OF the jurisdiction Of the stat,
courts, and the city council now has M
power to fix rates for the company or e
do anything 20 interfere with the manage
ment of its affairs by the receiver"
THE business OF the water works com
pany will continue to be administered b.
: Mr.. Hart, but now under the direction an,
control Of the federal court continued MI
Wright. "If the city should finally decid
not to build a municipal plant and shout
decide to grant a water works franchise
the receivership would make 1t possible I
clear up the affairs Of the company an
n effect a reorganization more speedily tina,
If it did not exist"
city Solicitor elem F. Rimban does NO
"a agree with Attorney Wright as to the cit
IS council not having the power TO fix rate
for the company now that the company
e under the jurisdiction of the federal cour-
He said: 'The regulation OF rates rs
ID legislative action on the part Of the cit
council and question whether the cour
would have the right to interfere with sue
action. 1t certainly could not interfere INT
,e the council has made the rates and the
At only on a proper showing that the rate
Il 80 made by the city council were unreasor
able. The city still has the same power I
fix rates that Il had before the compan
l. went into the hands OF a receiver. c
course, the receiver might file such a show
n ing that the new rates contemplated by IN
ordinance now before the council are ur
So reasonable, that the court would issue a
injunction restraining the city from Ell
al forcing the rates, but the mere fact Of n
es receivership would not make il possible
" compel consumers to keep on paying a RAJ
So that was unreasonable. and the questio
al whether the rates are unreasonable ca
st only be determined now In the same maj
he ner as they would have been determine
had there been no appointment of a r
OF ceiver."
in Mr., Kimball said that the city's claim Il
IL recovery Of hydrant rental alleged 10 ha,
he been excessive and unreasonable. won
IS probably now be filed in the federal cour
TO but that II a purchase OF the company
nd plant were finally negotiated a claim
OK this character would probably be merg,
n In any settlement which might ultimate
be made.
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,y WORK ON FEDERAL BUILDIN
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