Los Angeles herald., 1910-12-17
WATER RATE SUIT
IS WON BY CITY
Court SustainS Ruling of Public
Utility Commission in
First Attack
UNION CONCERN IS TO APPEAL
Property Devoted to Public Use
Is Subject to Public Con-
troll, Judge Says

The first suit in the superior court
attacking the public utility rates es-
tablished by the city Of Los Angeles
was won by the municipality yesterday
when Judge Robert NJ Clarke of Ven
tura rendered an opinion upholdlng the
validity of the citys action and DIS
solving the injunction obtained against
it by the Hollywood Union Water COM
pany.
The water company claimed that the
establishment Of the rates by the CITY
was both arbitrary and unconstitutlon-
al. and asserted that it could not make
fair returns upon the money 1t had
invested if they were to remain in force
The rates were slips a month as Iue
minimum for 5000 gallons or less, while
each 1000 gallons in excess OF the 6OOO
was to cost 13 1-3 cents The company
asked that the former rates OF Sl.6O III
Hollywood city and $150 in the county
remain in force.
After the public utilities commission
had fixed these rates, and the council
refused to alter them, the water COM
pany took the matter to court
'The public interest arising in such
case" said Judge Clarke in giving MS
opinion, "and the various issues pre-.
scented by the pleadings require brleI
statement by the trial judge.
1T is conceded that the right to reg
allate does exist, and that he who de-
votes his property to the public use
must submit to be controlled by pupHG
authority for the common good, ana
that when private property IS devoted
to public use it is subject to pubic
regulation.
PROPERTY WORTH 100000
"The present value of the property
devoted to the public use, including the
value of the going concern, is placed
nv engineers for the plaintiff at Sl,345'-
POI "a. The figures given by others for
4he same property (nOt including now
ever. the jefferson street plant, valued
by PLAINTIFFS experts at S22740.66, eX-
elusive of the realty adjacent to IT. is
$685., ,S27.43.
"From the evidence the court finds
the present value of the property OF
plaintiff devoted to the public use to be
@rhe testimony shows that PLAINTIFF
Is sunplving with water a portion OIL
the city of Los Angeles which Is grow
ing very rapidly, and that subdlVlsionS
and tracts have been and are being lalo
out. and the mains of the company eX-
tended to these tracts. In order TO Sc
cure water for these tracts 1t has been
the practice of the owners to pipe the
tracts and turn them over to plalntliL
in consideration of which the pla1ntlIL
would extend it's mains, make service
connections and install meters to tse Iot
owners in these new supdlVlsloiisS is
THESE pipes, installed by tract subdl-
viders have become the property OF
plaintiff and become a part of its plant.
The receipt of these pipes has been
yariously styled as pipe bonuses
gifts and even 'holdups.'
''The city contends that these should
be treated as earnings and that the
rate-payer is entitled to consider these
pipe bonuses as earnings.
SAYS CITY Is RIGHT
1.-THE plaintiff replies that it makes
mo difference how this property comes
TO them as the consumer is required
ITO pay on the present value Oh the
plant devoted to the public use.
"Much can be said on both sides OF
this novel question. l am lncnneu TO
the view that one who deVotes ms
property to a public use, subject TO
regulation, has no right to charge the
rate-payer with property which mas
cost him nothing.
"Tn view of the rapid increase in
population in the district supplied by
reason of these new tracts 1t is rea-
tsonable to assume that the earnings
from this source would amount to at
least $4,000 annually
Il believe that q feuucIlon o1 9A7uu
should be made from the presidents
salary. as this now is an established
business, and I hold that $500 a month
is a fair and proper salary for the
president of this corporation to re-
ce1ve."
After going into figures, the judge
declared the net earnings of the com
pany to be $41, ,961 .45, or 1894 per cent
upon a valuation of 100000, and if
the pipe bonuses are added a net earn
ing of 7.423 per cent upon the same
valuation is realized.
Pending the settlement of the mat
Ter by the courts, the difference be
tween the old and the new rates has
been paid into the court, the amount
now accumulated there being $780, 1t
was agreed that this amount should
be refunded to water users if the COM
pany lost the case. The company
filed notice Of its intention to appeal.