Spring Valley Water Company v. City and County of San Francisco

In 1908 the Spring Valley Water Company, the appellant, commenced in the Circuit Court of the United States for the Northern District of California a suit against the City and County of San Francisco to enjoin the enforcement of an ordinance fixing the water rates for that year. A preliminary injunction was granted upon the condition that all sums collected by the Water Company from its customers in excess of the ordinance rates should be deposited in a bank agreed upon by the parties or designated by the court to await the outcome of the litigation. The sums so collected, it was provided, should be received by the bank as a special deposit subject to the order of the court and should be paid out on checks drawn by a special master and countersigned by a judge of the court. Pursuant to a stipulation of the parties the court subsequently designated the Mercantile Trust Company of San Francisco as the depository for the impounded moneys and ordered that the account should be entitled 'Spring Valley Water Company Special Account' and should bear two per cent. interest per annum. Each year following down to 1913 the Water Company brought a similar suit to enjoin the ordinance fixing water rates for the respective year. In four of these five cases a preliminary injunction was granted upon the same condition expressed in the preliminary injunction awarded in the 1908 suit. In the fifth, although a preliminary injunction was granted, no order was made concerning the impounding of sums collected in excess of the ordinance rates, but the parties stipulated that the moneys collected during the year embraced by that suit should also be deposited in the bank designated by the court to await the final outcome of the case. Pursuant to these orders and stipulations the Water Company made deposits of the moneys in the Mercantile Trust Company of San Francisco and from time to time the court, to safeguard the funds, ordered portions of it transferred from that bank to six other banks in San Francisco. The money thus transferred and deposited in the six banks was placed in special accounts subject to the order of the court, to be withdrawn only by check signed by the special master and countersigned by a judge of the court.

The moneys on deposit in each of the seven banks on the first Mondays in March, 1913 and 1914, were by the local officer assessed for taxation for those years. In each assessment the bank was described as 'Receiver of Impounded Moneys' and 'Receiver or Depository under Order of Court of the Impounded Moneys in Equity Suits numbered 14275, 14735, 14892, 15131, 15569, 15344 and 26, District Court of the United States, wherein the Spring Valley Water Company is plaintiff and City and County of San Francisco et al., defendants.' With the exception of No. 14275 (which was a suit begun in 1907 to enjoin the water rates of that year and in which the court made no order concerning the impounding of funds and no deposits were made by the Water Company) the suits referred to are those which we have previously mentioned. On application of the tax collector of the City and County of San Francisco the District Court of the United States after notice and a hearing directed the payment of the taxes. As there were two assessments against each of the seven banks, the court issued fourteen orders and to reverse the decrees of the court below affirming the action of the trial court fourteen appeals are prosecuted. 225 Fed. 728, 140 C. C. A. 209. While the order under review on this record concerned the assessment of moneys in the possession of the Mercantile Trust Company of San Francisco in March, 1913, and directed the payment of taxes in the sum of $8,479.89, there is a stipulation that the appeals in the other thirteen cases (numbers 212 to 224) are to be determined by the decision in this.

Messrs. Ira A. Campbell, Edward J. McCutchen, and A. Crawford Greene, all of San Francisco, Cal., and Alex Britton and Evans Browne, both of Washington, D. C., for appellant.

Messrs. Robert M. Searles, and Percy V. Long, both of San Francisco, Cal., for appellees,

Mr. Chief Justice WHITE, after making the foregoing statement, delivered the opinion of the Court.