Spring Val. Waterworks v. City and County of San Francisco

• Decision Date: 29 June 1903
• Docket Number: 13,395.
• Citation: 124 F. 574
• Parties: SPRING VALLEY WATERWORKS v. CITY AND COUNTY OF SAN FRANCISCO et al.
• Court: U.S. District Court — Northern District of California

124 F. 574

SPRING VALLEY WATERWORKS v. CITY AND COUNTY OF SAN FRANCISCO et al.

No. 13,395.

United States Circuit Court, N.D. California.

June 29, 1903

M. B Kellogg and Francis J. Heney, for complainant.

Franklin K. Lane, City Atty., and George W. Lane, for defendants.

Order to show cause why a preliminary injunction should not be granted restraining the city and county of San Francisco and its board of supervisors, and each of them, and all consumers of water in said city and county, during the pendency of this action and until its final determination, from bringing or causing to be brought any suit or action against the complainant, in law or in equity, to enforce a certain bill or ordinance passed by said board on March 9, 1903, or any suit or action against the complainant for the forfeiture of complainant's franchise, works, or property, or for any other purpose, on account of complainant's failure or refusal to conform to the rates prescribed by said bill or ordinance, and from any attempt or suit or action, directly or indirectly, to compel complainant to furnish water at any other rates than those which may be permitted by this court pending this litigation, or legally or reasonably fixed by said board of supervisors in obedience to any decree or mandate of this court in this action; and why the complainant should not, pending this litigation, be permitted by this court to collect rates for water supplied by it to said city and county of San Francisco and its inhabitants in accordance with the terms of a bill or ordinance passed by said board of supervisors on March 24, 1902, and now in force in relation to such rates.

MORROW Circuit Judge (after stating the facts).

The ground upon which the preliminary injunction is sought in this case is that the ordinance in question violates the Constitution of the United States by depriving complainant of its property without due process of law; that it takes complainant of the equal protection of the laws.

The complainant is a corporation incorporated under the laws of the state of California in the year 1858 for the purpose of supplying the city and county of San Francisco and its inhabitants with pure fresh water for domestic and other purposes. It is alleged in the bill of complaint that the company has complied with all the terms of the statutes of the state, and acquired the necessary lands, water rights and reservoir sites in and in close proximity to the said city, and has from the time of its organization in 1858 down to the present time, as the city has grown in territorial extent, wealth, and commercial importance, and in necessary anticipation thereof, added to and increased, under the advice of the most able and competent engineers, its means and appliances for supplying water to the said city and its inhabitants, and has distributed the same by means of pipes laid under ground of the city in extent and population, as well prospective as actual, its peculiar geographical position and climatic conditions, its great exposure to the dangers of fire and the necessity of providing for its requirements in advance of their occurrence, as well as the probable demand at any time for a very large supply of water to meet the contingency of contagious sickness, war, and the occurrence of a long period of drought. It is alleged that it acquired all the property and water rights of the San Francisco Waterworks in 1864; that the policy of the complainant is to have a storage capacity equaling at least a three-years supply, on account of the varying annual quantity of rain, which has been as low as 7.40 inches and as high as 50 inches, the average for the past 51 years having been about 25 inches, but the average for the last past 5 years previous to the winter season of 1902-1903 having been only 16.64 inches. It is alleged that complainant furnished:

In	the	year	1865	..... 865	million	gallons
"	"	"	1870	... 2,204	"	"
"	"	"	1875	... 4,266	"	"
"	"	"	1880	... 4,627	"	"
"	"	"	1885	... 6,223	"	"
"	"	"	1890	... 7,457	"	"
"	"	"	1895	... 7,264	"	"
"	"	"	1900	... 9,295	"	"
"	"	"	1901	... 9,736	"	"
"	"	"	1902	.. 10,101	"	"

The bill of complaint describes the principal properties acquired by the complainant for the purpose of supplying water to the city and county of San Francisco and its inhabitants including the ownership of nearly 20,000 acres of watershed lands in San Mateo county, on which four reservoir sites are situated; nine distributing reservoirs in the city and county of San Francisco; nine pumping stations (seven of which are in duplicate), having an aggregate capacity of 72,000,000 gallons daily or over, so located that they supply the high portions of the city with water under a first-class fire pressure up to 600 feet above tide, and are so arranged that the various districts can be supplemented when necessary; tunnels of an aggregate length of 35,141 feet, and the following pipe lines:

22	miles	of	pipe	44	inches	in	diameter
28 1/2	"		"	36	"		"
22 3/4	"		"	30	"		"
1 1/2	"		"	23	"		"
1 3/4	"		"	22	"		"

-- Four hundred and ten miles of distributing pipes laid in the streets of the said city, by which water is supplied under great pressure to consumers for domestic and other uses, and to the government authorities of said city for the extinguishment of fires and the cleansing of sewers, for which last-mentioned purpose and for other municipal purposes the complainant has, at the request of the said city, erected and connected with said distributing pipes 3,939 hydrants in the streets of said city, which, on being opened, delivered water for the purposes aforesaid under enormous pressure (greater than that of any others in any of the large cities in the United States), in consequence of the height of the said distributing reservoirs above the streets whereon said hydrants are situated.

It is alleged that 'all of the said reservoir sites, water rights, watersheds, and sources of supply have been purchased by the said complainant at prices much less than their present values, respectively, and the said reservoirs and other works have been erected and constructed as skillfully and economically as possible, under the direction of engineers of the highest skill and learning, and without any useless or unnecessary outlay; and have been so purchased, prepared, and constructed for the sole purpose of supplying the said city of San Francisco and its inhabitants with water as aforesaid, and are not profitably applicable to any other purpose. Taken together, they constitute a system of water supply for a great city, absolutely unique in the world, and are not ample for the needs of the city with its present population, but are capable of extension by the construction of additional dams and aqueducts, such as will store and supply sufficient water for the wants of more than 2,000,000 inhabitants and for a small expenditure, compared with the fundamental expenditures already made. The value of these properties already acquired for such extensions is not included in the value of the plant in use by complainant as hereinafter set forth. Taken together, they are reasonably worth over $50,000,000. In fact, if they had not, by the foresight of the complainant, been secured in advance of any visible actual necessity therefor, they would have been practically unattainable, not only on account of their largely increased value, but they would have been devoted to other uses, such as would have contaminated and unfitted them for domestic water sources. 'That the said complainant has caused the actual cost of said waterworks to its stockholders, down to the 1st of January, 1903, to be carefully computed by competent accountants, on the basis of setting down the sums derived by it from sales of its stock, and contribution by stockholders, at the date of their respective payments, and adding thereto interest thereon at contemporary current rates down to the next succeeding 1st of January, and deducting therefrom dividends paid during the year, with interest thereon at the same rate from the time the same became payable down to the same date, and carrying forward the difference as a new balance; and, so computed, the actual cost of said works to the stockholders of the said complainant at the date aforesaid has been ascertained to be, and the complainant at the avers that the same has been and is, the sum of $36,256,235.70, whereof there were derived from sales of stock and invested earnings belonging to stockholders and interest as aforesaid, $22,281,235.70, and from sales of bonds $13,975,000.'

The bill sets forth the rate of annual dividends complainant has divided with its stockholders from its organization in 1858, down to and including 1902, from which it appears that with the exception of six years, when no dividends were declared, the dividends have ranged from 3/5 of 1 per cent., in 1863, to 9 per cent. per annum in 1875 and 1876. The failure to declare dividends is explained by the bill in the allegation that for several years after its incorporation complainant divided none of its earnings among its stockholders, but reinvested the same in the increase and extension of its works.

It is further alleged that under the ordinance in controversy adopted by the Board of Supervisors on March 9, 1903, the complainant verily believes that...