Niagara Falls Water Plant Suit
After examining W. J. Callahan, superintendent of the municipal water plant of Niagara balls, N. Y., and James Macbeth, superintendent of the Western New York Water Company, the referee in the Laverock case, on September 19, adjourned it to October 7. The case is the first of a series of six to be brought against the board of water commissioners. Mrs. Florence Laverock, as a taxpayer, seeks to have the water commissioners return to the city about $30,000 expended in making free connections when the water board paralleled the mains of the private company at the south end of the city two years ago.
That municipally owned water works systems sometimes place a greater burden upon the taxpayer than under private ownership is recognized in an opinion of the Iowa supreme court handed down last week. The case is that of W. J. Sloan brought against the city of Cedar Rapids, in which Sloan seeks to recover alleged excess payments for water rates. Cedar Rapids several years ago passed a resolution demanding that the water works company reduce its rates from 25 cents a thousand gallons to 15 cents. After considerable litigation the company finally gave up and sold out to the city, fihe city then continued to charge the 25-cent rate. Sloan attempted to recover the difference between the 25 and 15-cent rate upon the ground that the courts had declared the 15-ccnt rate was not confiscatory. Although the city is upheld ii. the opinion, the court recognizes that the taxpayers paid more for their water under the new plan than before. The same rate was paid for the water, and in addition to that a tax was paid for a sinking fund with which to purchase the water works and to make necessary extensions thereon. This would have been impossible, the court points out. had the system been owned by a corporation. “A private corporation could not, in determining its rates,” reads the opinion, “include an amount sufficient to make extensions, if such were beyond a reasonable return on the investment, for this would be but another way of increasing the capitalization. fihe power granted a city council, or commissioners, is necessarily broader; not, however, to the extent of permitting gross misuse of the taxing power by the indirect method of water rates, but to meet such conditions as must necessarily rise where the taxpayers themselves are owners of the property which supplies them.”