City of Pocatello v. Murray

• Decision Date: 03 May 1909
• Citation: 173 F. 382
• Parties: CITY OF POCATELLO v. MURRAY.
• Court: U.S. District Court — District of Idaho

173 F. 382

CITY OF POCATELLO v. MURRAY.

United States Circuit Court, D. Idaho.

May 3, 1909

W. H Witty and H. V. A. Ferguson, for plaintiff.

D Worth Clark, for defendant.

DE HAVEN, District Judge.

The questions arising upon the demurrer to the bill have been ably argued by counsel for the respective parties, and have been fully considered by me. In order to clearly understand the questions involved, it is only necessary to say that the bill of complaint alleges, in substance, that the defendant is the owner, and in possession, of a system of waterworks in the city of Pocatello, under franchise granted to him by that city on June 1, 1901, by a certain ordinance numbered 86, alleged to be in full force and effect, and set out in the bill. This ordinance recites that the supply of water furnished the city--

' * * * is deemed inadequate for the present and future need of said city, and said James A. Murray agrees to bring in the waters of Mink creek and to make all extensions of street mains warranted by the growth of said city, thereby necessitating the laying of several miles of pipe, at a large additional expenditure of money; and

'Whereas said James A. Murray, before incurring so great an additional outlay, as a condition precedent to the expense of laying said pipe line, desires to be protected against unreasonable or arbitrary changes in the rates and charges for water and water service, and asks some reasonable assurance that such unreasonable or arbitrary changes shall not be made; and

'Whereas the demand of said James A. Murray is considered reasonable and just, and it is deemed to be for the best interest of the city of Pocatello to extend and give the assurance asked for'-- and then proceeds to name a schedule of water rates which the defendant was authorized to charge for a period of five years. The ordinance then further provides:

'Sec. 3. The foregoing rates and charges are hereby adopted by the city of Pocatello, by and for itself, and as trustee for the use and benefit of all private consumers of water within the corporate limits of said city, for a period of five years from and after the passage and approval of this ordinance. At the expiration of said time, if the earnings of said water system shall exceed 5 per cent. above reasonable expenses upon the value of said water system as then agreed upon, or as may be ascertained as hereinafter provided, then the rates as set forth in the 'Schedule of Water Rates' of section 2 of this ordinance may be readjusted so as to yield not less than 5 per cent. above reasonable expenses on the valuation, but no readjustment shall hereafter be made that will yield less than 5 per cent. above reasonable expenses, on the value of the investment ascertained as hereinafter provided for in section 4.

'Sec. 4. If, at the expiration of five years, or at any time thereafter, it should be deemed necessary to readjust rates under the provisions of section 3, and if the city of Pocatello and the said James A. Murray, or his successors or assigns, cannot agree upon the value of said water system, for the purpose of such readjustment, then the value of said water system shall be ascertained in the following manner, to wit: A committee of four experienced and disinterested hydraulic engineers, who must be members of the American Society of Civil Engineers, shall be selected, two by the city of Pocatello, and two by the said James A. Murray, or his successors or assigns, and the following questions shall be submitted to them: For what sum can the water system of James A. Murray be now duplicated? If a majority of the four cannot agree, they shall select a fifth; and, if they cannot agree upon a fifth, they shall request the president of the American Society of Civil Engineers to appoint a fifth member. The decision of a majority of the committee so selected shall fix the value of said water system for the purpose of readjusting said rates, and such decision shall be final.'

The five-year period for which rates and charges were fixed by section 3 of the ordinance expired on June 6, 1906, and the bill alleges:

'That said schedule of rates and charges has ceased to be reasonable and proper, and is no longer a just measure of the amounts that ought to be paid by the plaintiff and the inhabitants thereof for water furnished to them under said franchise, in view of the growth and expansion of said city and the inferior and unsatisfactory water service furnished by said defendant, and that said rates are now excessive, extortionate, and oppressive in each and every instance.'

It is also alleged that, under an act of the Legislature of Idaho approved March 16, 1907 (Laws 1907, p. 555), entitled 'An act to amend section 2711 of the...