Decision in Dallas Water Case

Decision in Dallas Water Case

A decision in an interesting water works case, that of Gates against the Public Service Commission of Oregon, has been given by Judge Percy R. Kelly in the Cirouit Court for Marion County, who has held that the water system of Dallas, Ore., was owned by H. V. Gates, that the city of Dallas had but an equity in it, and that, therefore, the system and the rates charged were under the supervision of the Public Service Commission. The case has been before the courts for more than three years. The matter originated in the action of J. H. Van Orsdel, then mayor of Dallas, seeking to reduce the water rates in the city. It appears that the rates in force were provided for in a contract made between the city and Mr. Gates in 1903, when the local water system was installed. Mayor Van Orsdel took the stand that Ga’cs was the owner of the plant and that the Public Service Commission of Oregon had power to fix rates. The matter was laid before the Commission and it reduced the rates. Mr. Gates then brought an action to restrain the Commission, and it was this ca3e that Judge Kelly has now decided. The city of Dallas, it appears, issued and sold $14,000 bonds in 1903 to construct a water system and a contract was entered into providing for the construction of the system by Mr. Gates. The city was to and did purchase the necessary right of way and was to pay Gates $12,000. Upon completion of. construction Mr. Gates was to continue in control and management of the works, agreeing to pay to the city one dollar each year and to furnish free water for the fire hydrants. The city was to have the option of purchasing the plant at the end of twenty years, and this option, if not exercised then, was given at each five-year period thereafter. Upon purchasing, the city was to be credited with the $12,000 previously paid Mr. Gates. This contract provided a schedule of rates. Under this contract Mr. Gates insisted he was a mere lessee and that the city owned the plant. Upon this theory Mr. Gates claimed that the Public Service Commission had no jurisdiction over the same, and, therefore, its action in reducing the rates was void. The city took the stand that Gates was the real owner of the system, and the city had no more than a mere equity in it to the extent of the $12,000 invested.

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