Redlands, Lugonia & Crafton Domestic Water Co. v. City of Redlands

HARRISON, J. The board of trustees of the city of Red-lands having in February, 1896, adopted an ordinance fixing the rates to he charged or collected for furnishing water to its inhabitants for domestic purposes during the year commencing July 1, 1896, the plaintiff brought the present action for a judgment annulling the ordinance, upon the ground that the rates therein prescribed would not yield a revenue sufficient to enable it to pay the interest on its indebtedness, its operating expenses and taxes, and for keeping its plant in repair, and replacing the same. At the trial of the cause the court found that the total amount of income which the plaintiff would receive during the year would he twenty thousand seven hundred and [313]forty-nine dollars and eight cents, and that its necessary expenditures would be twenty-two thousand three hundred and sixty-seven dollars and sixty cents, and also found that the plaintiff is entitled to have the rates so fixed that the aggregate income therefrom, together with its other income, will enable it' to meet the above amount of expenditures, “and such additional amount as, in the opinion of said board of trustees, said plaintiff is entitled to as profit upon its investment for furnishing water to said city of Redlands and its inhabitants”; and . thereupon rendered judgment annulling the ordinance and awarding to the plaintiff a mandatory injunction requiring said board of'trustees to forthwith fix the rates for said year “so as to assure an annual income to the plaintiff sufficient to pay the interest on its indebtedness, its operating expenses, taxes, and annual depreciation of plant, and to pay plaintiff a reasonable and just compensation for the services rendered in furnishing water to the said city of Redlands and its inhabitants.” From this judgment the defendants have appealed, presenting the appeal upon the judgment-roll without any bill of exceptions.

In the items of expenditure which the court found that the plaintiff is entitled to be reimbursed from the income derived from the rates fixed by the ordinance is the sum of seven thousand five hundred and eighty dollars for interest, and two thousand eight hundred and ninety-eight dollars and sixty cents for depreciation of plant, the latter item being the amount which the court finds will be the annual depreciation of the plant, aside from the amount requisite for its maintenance and repairs during the year.

In San Diego Water Co. v. San Diego, 118 Cal. 556, 62 Am. St. Rep. 261, it was held that the interest upon the indebtedness of the water company is not a proper item of expenditure to be provided for in fixing the annual rates to be charged or collected for furnishing water to the inhabitants of a city, and that the water company is not entitled to have the rates so fixed as to enable it to set apart a certain amount each year as a sinking fund for the depreciation of its plant.. The provision in the judgment herein directing that the rates be fixed so as to assure an income sufficient to pay these items