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Harnickell v. Omaha Water Co.

Supreme Court of New York, Appellate Division

November 3, 1911

H. C. HARNICKELL, Suing on Behalf of Himself and All Others Similarly Situated, Plaintiff,
v.
THE OMAHA WATER COMPANY and the GUARANTY TRUST COMPANY OF NEW YORK, as Trustee, Defendants.

Page 694

SUBMISSION of a controversy upon an agreed statement of facts, pursuant to section 1279 of the Code of Civil Procedure.

COUNSEL

Charles Howland Russell of counsel [Lansing P. Reed, attorney], for the plaintiff.

Edwin G. Baetjer, of counsel for the plaintiff.

Stetson, Jennings & Russell, attorneys for the Guaranty Trust Company.

Howard Mansfield of counsel [Lord, Day & Lord, attorneys], for the Omaha Water Company.

CLARKE, J.:

In 1880 the city of Omaha, Neb., provided by ordinance that any person, company, corporation or association who

Page 695

should construct and maintain a water works for the purpose of supplying said city with water should have the right of way along, upon and under the public streets of said city for the purpose of placing and repairing their mains, and provided for awarding the right to construct such water works, together with a contract for furnishing said city with water for fire protection and use, for twenty-five years, upon the completion of the works, to the lowest responsible bidder. Said ordinance contained the following provision: 'The City of Omaha shall have the right at any time after the expiration of twenty years to purchase the said water works at an appraised valuation, which shall be ascertained by the estimate of three engineers, one to be selected by the City Council, one by the water works company, and these two to select the third; provided, that nothing shall be paid for the unexpired franchise of said company.'

Thereafter such contract for water supply was awarded to one Sidney E. Locke, by whose assigns said water works were subsequently constructed and were accepted by said city as completed as in full and complete compliance with said contract and ordinances on September 4, 1883. Through various mesne conveyances and transfers the defendant the Omaha Water Company became on July 23, 1896, the owner of said water works and the assignee of said contract and of the grants and franchises. On that day the water company executed and delivered to the defendant the Guaranty Trust Company of New York, as trustee, a prior lien mortgage, mortgaging all of said water works and said grants, franchises and contract rights, together with other property, grants, franchises and rights, to secure bonds to the amount of not more than $1,500,000, such bonds being payable by their terms July 1, 1916, together with interest thereon until paid at the rate of five per cent per annum. On said day it also executed and delivered to the Farmers' Loan and Trust Company, as trustee, a consolidated mortgage mortgaging all of said water works, grants, franchises and contract rights to secure bonds to the amount of not more than $6,000,000, such bonds being payable by their terms July 1, 1946, together with interest until paid at the rate of five per cent.

Page 696

Bonds secured by said prior lien mortgage have been issued and are now outstanding to the amount of $1,262,000, and the interest thereon has been duly paid to and including January 1, 1911. Bonds secured by said consolidated mortgage have been issued and are now outstanding to the amount of $3,543,000, and the interest thereon has been duly paid to and including January 1, 1911, making a total of outstanding bonds of both kinds of $4,805,000.

March 2, 1903, the city of Omaha elected to purchase the system of water works operated by the Omaha Water Company, and thereby became irrevocably bound to purchase said system at an appraised valuation to be ascertained as provided. The appointment of three engineers, as appraisers, was duly made, and the valuation of said system of water works was duly ascertained by the estimate of a majority of the three appraisers to be $6,263,295.49 as of July 7, 1906. In a suit brought by the water company against the city in the United States Circuit Court for the district of Nebraska a decree was entered dated October 24, 1910, requiring the city to purchase the entire system of water works operated by the Omaha Water Company, wherever situate, to complete its purchase, and pay said ...


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