The San Francisco call., 1910-10-04
MCCUTCHEN AIRS
WATER RATE VIEWS
Spring Valley Attorneys Con-
ception Differs From Earring
toms Preliminary Decision
Argues That Income Value OF
Property or Worth of Stocks
Can Not Be Considered

Edward ]. McCutchen, attorney for
the Spring Valley water company, ex-
planning to United States District
Judge Edward harrington just where
Judge Farrington's decision in the pre-
l1minary proceedings of the water rates
case failed to agree with McCutchen's S
conception of the law, was the most
novei feature yesterday of the hnal
arguments in the suit which has been
on the federal court calendar since
1903
Since that year the Spring Valley
water company has enjoined the city
and county of San Francisco from en-
forcing the water rates established by
the board of supervisors and success
s1Ve temporary injunctions have been
issued every year since then. The tes-
tlmony on the original injunction suit
was concluded in December, 1905, and
since that date briefs and other papers
nave been filed by the city attorneys S
ofnce and the corporation attorneys,
prolonging the controversy; until yes
terday, when the final argument on the
application of the company for per-
manent injunction was begun by Nc
Cutchen. For the first time in seven
years San Francisco is about to know
what is the legal water rate.
LIE EMS kSOM THE
Judge harrington, sitting in one of
the preliminary injunction suits in
1908, delivered an opinion in which he
maintained, among other points at is
sue, that the value of the Spring Valley
companys plant could not be computed
on the basis of the cost to the city of
constructing a municipal plant with
the Tuolumne sources. 1t was on this
point that McCutchen reiterating with
all due respect to the court" main
tained that Judge Farrington's law was
not the law as McCutchen contemplat-
ed 1t.
Judge harrington, who is judge for
the United States district of Nevada,
will render the deciding opinion on the
case, based on the evidence which was
taken before Master in Chancery Hea-
cock, on the briefs submitted and on
the argument of counsel McCutchen
held the floor yesterday. He may con-
clude his argument today. and he will
be followed by Assistant City Attorney
Thomas E. Haven, who conducted the
water litigation during City Attorney
Longs incumbency. j. H. Dockw Ter
water expert for the city, was with
Haven in court yesterday. McCutchen
was hanked by Attorneys Heller and
Powers and Robson.
DOESN'T CONSIDER INCOME
In his argument McCutchen said yes
terday that in adiudicating the value
of the Spring Valley water companys
plant for the purpose of fixing water
rates the income value of the property
could not be considered. neither could
the value of the stock and bonds of the
corporation He quoted eruditely from
German political economist. who ex-
pressed himself in tones on the sub
ject of the com binat ton theory of val
ues. The feature of that theory is that
a well welded pair of gloves is worth
more than what the combined value of
the individual members of the team
would be If they were divorced. On
that analogy McCutchen contended that
the combined value of the Spring VAL
ley properties was more than the value
of sum total of the separate particles.
He declared that the only measure of
the property value would be the cost
of reduplicating the system, a method
OF which Judge harrington had dis
approved.
In the afternoon McCutchen elaborat-
ed on that point and quoted extensively
from the testimony of Engineers Ad-
ans and Grunsky to show that 1t
would cost the city upward of S4S,-
100000 to bring 54,000.000 gallons of
water daily into San Francisco from
the Tuolumne district