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Los Angeles - April 20, 1956 80-11 Mr. C. M. Cory: ce: Mr* Leo A, McNamee | Mr. W, C. Renshaw Mr. C. M. Bates In connection with contract dated June 1, 1953, between the railroads and the Water District: You will recall that in Section 5 thereof the District was to place in escrow a so-called relocation fund of $352,000. Originally it was planned that as the District did the work they were required to do under the contract, they would draw on this fund, with our consent, for payment of such work. However, I understand that Instead of doing that, they did the work either out of capital funds or operating expenses and the relocation fund is still Intact. Some time ago I had a talk with Mr. Henshaw, suggesting that they might want to draw that fund down since they were getting no interest on it from the title company, assuming all the work was done under the contract and the District was entitled to this relocation fund under the provisions of Section 5» last paragraph, of the contract. At that time Mr. Renshaw told me there were certain unliquidated claims of some nature amounting to around $40,000, and technically they were not entitled to the relocation fund until those claims were settled. You will note that in his letter of April 6th to Mr, Hammlll, Mr. Renshaw asked if we would take the necessary steps to release the relocation fund. I discussed this matter with Mr. Reinhardt, and he stated he would have no objection to releasing most of this fund with the understanding that sufficient money would remain in the escrow to guarantee the payment, if required, of these unliquidated damages or sums of money, with a provision in the agreement that in the event the amount of money so retained was not sufficient to pay off these claims, the District would agree to hold us harmless. You have copy of Mr, Maag's letter of March 6th in which he states that he studied the provisions of the contract and made a physical inspection and found that all