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Los Angeles - August 9, 1954 | 80-12 Referring to your Mailgram R-340, your file 2180, of August 5th, relative to expenses incurred by the Union Pacific after July 1, 1954, in connection with Railroad or LVL&W operation of the water properties: You received copy of my letter of August 4th to Mr. Sutton in yrhieh I stated that commencing July 1, 1954, no further charges should be made against the LVL&WCo, for services by Union Pacific under the contract dated November 30, 1950, between the Railroads and the Water Company. That contract covered primarily services furnished in connection with the construction, maintenance and operation of the distribution system of the Water Company, and there would normally be no further services rendered in connection with those items. I feel, therefore, that there will be no fur- y ther legal expenses to be charged to the Water Company under that contract. However, I do desire to draw your attention to the fact that there will be legal expenses Incurred by the Union Pacific indirectly in connection with the Water Company, I have in mind particularly two trips I made to Las Vegas in July in connection with the accounting matters, and my expenses therefor as shown on Form 137 for July were charged to the Water Company. I do not feel/however, that these legal services were rendered under the contract of 1 9 5 0 which, as I have stated, in my opinion is primarily an operating contract. There will undoubtedly be additional legal services rendered to the Water Company pending the final closing of the sale in question and the final termination of the escrow, ^ which, you will redall, pursuant to Section 5 of the agreement dated June 1, 1953* between the Railroads, the Water Company and the Water District, may continue for a period of two years after the sale date. The question of the allocation of these legal expenses would not, in my opinion, come under the contract between the Railroads and the Water Company dated November 30,1950, but I assume the Accounting Department will possibly set up some method of billing these services to the Water Company, - not, however, as an operating company. However, you may desire to discuss this matter with Mr. Sutton as I frankly do not knqw how he would handle such items of expense. E.E.Bennett Mr. W. R. Rouse: EEB:ps