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
Receivership Blocks Effort of Council
to Reduce water Rates, but Has
No Eject ON PROPOSAL to
Build Municipal Plant.

u SbubNh ia SNJ '0
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 fned his
bond In the sum OF 10000.
The placing Of The company In the hands
Of q 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 Hoo,ooo.
The petition of the Farmers Loan and
Trust company was filed on Monday OF
this week In the United States circuit
court In this city by Hall & 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-
cefver 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 ReceivershiD.
The petition of the Farmers Loan and
Trust company Is a documen of between
thirty and forty pages OF typewritten mat
ter. It 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-
~piration of the ~company's. 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 on
the trust company and made the appoint
ment of Mr.. Hart as receiver. Mr.. Wright
returned from Kansas City yesterday morn
ing, the pond of Mr.. Hart was prepared
and filed and the appointment Of a receiver
for the company then made public. TIT
formality OF dispossessing Mr.. Hart as
manager and reinstalling him in charge as
receiver was gone through yesterday after
noon.
In it's answer the Council Bluffs City
Water Works company denies that it is in
solvent, except that 1t admits Its inability
at this time to take up the $4,000 bond!
issued by 1t.
The action looking towards the appoint
ment of a receiver. Mr.. Wright said. haC
been brought at the request of a majorlt,
OF the bondholders.
Blocks New Water Rates.
The appointment Of a receiver by tn
United States court takes the company en-
tirely out OF the Jurisdiction OF the stat
courts. but the receivership does not in an!
way affect the action of the city in regart
to the proposed issuanc of 100000 waite
works bonds or the construction OF the pro
posed municipal water plant.
The filing OF the receivership proceed
ings in the United States court on Monday,
said Mr.. Wright yesterday, gave thai cour
jurisdiction of the matter before the meet
ing of the city council Monday night, whe,
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 n
power to fix rates for the company or I
do anything to interfere with the manage
ment OF its affairs by the receiver"
THE business of the water works CON
pany will continue to be administered b
Mr.. Hart, but now under the direction an
control of the federal court" continued NJ
Wright. IF the city should finally decid
not to build a municipal plant and shoul
decide to grant a water works franchis
the receivership would mak It possible
clear up the affairs OF the company an
effect a reorganization more speedily tina
II it did not exist"
City Solicitor Glenn F.. Kimball does M
4 agree with Attorney Wright as to the eli
: ! council not having the power to fix rate
for the company now that the company
under the jurisdiction of the federal cour
He said: '"rhe regulation OF rates is
legislative action on the part of the Gil
. council and 1 question whether the cou
n would have the right to interfere with sue
action. 1t certainly could not interfere uni
e the council has made the rates and the
only on a proper showing that the rat,
so made by the city council were unreasol
able. The city still has the same power
fix rates that 1t had before the compaI
went into the hands of a receiver. {
. course, the receiver might file such a shoJ
ing that the new rates contemplated by Il
e ordinance now before the council are u
q reasonable, that the court would issue {
Injunction restraining the city from O.
forcing the rates, but the mere fact of h
receivership would not make 1t possible
3 compel consumers to keep on paying a ra
that was unreasonable. and the questi'
whether the rates are unreasonable CT
II only be determined now in the same ma
e ner as they would have been determin,
had there been no appointment OF a 7
c~eiver.'
n Mr.. Kimball said that the city's claim (
recovery OF hydrant rental alleged to ha
been excessive and unreasonable, won
probably now be filed in the federal couI
70 but that II a purchase Of the company
plant were finally negotiated a claim
X this character would probably be merg
in any settlement which might ultimate
be made.
~ WORK ON FEDERAL BUILDIN
"a P~relimiEaFieS 20 Construction