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« and R egulations o f the W ater Com pany previously on file w ith the Public Service Com m ission of the State of Nevada. (b ) E xcept as hereinafter stated, the cost, determ ined as hereinafter provided, less the depreciation accrued thereon as o f Septem ber 1, 1952, o f any property m entioned in subpara­graphs (b ), (d ), (e ), (f) and (g ) of Section 1 hereof w hich was retired subsequent to Septem ber 1, 1952, and prior to the sale date. In the case o f such property ow ned either by the W a ter Com pany or the Railroad Com panies on Septem ber 1, 1952, said cost is to be determ ined b y using the book cost o f such property and depreciation thereon as recorded in said above m entioned books o f account. N otw ithstanding the provisions o f this subparagraph (b ) no deduction shall be m ade from the basic purchase price b y reason of the retirement of any property rem oved or retired pursuant to the provisions of Section 5 of this agreement. (c ) If the ledger value on the sale date o f the autom otive equipment, shop equipment and materials and supplies transferred to the D istrict by the W ater Com pany on the sale date is less than the ledger value o f such property ow ned b y the W ater Com pany on Septem ber 1, 1952, as stated in said Section 1 (h ) hereof, the difference shall be deducted from the basic purchase price. (d ) A ll advance paym ents for w ater service credited to A ccou n t 261— M iscellaneous U nadjusted Credits o f the W ater Com pany upon the sale date for water service to be thereafter perform ed, and the D istrict hereby agrees, effective on the sale date, to credit all custom ers w ith the am ounts of all unused portions o f said advances for water service made b y such custom ers and credited to said account as o f the sale date. (e ) T hat portion of any sums of m oney deposited with the W ater Com pany as advances for the construction by the W ater Com pany o f w ater mains under contracts made pursuant to R ule 9 o f its said Rules and R egulations w hich the W ater Com pany has not expended upon the sale date for the purposes stated in said contracts. Said unexpended sums of m oney shall be retained b y the W a ter Com pany on and after the sale date. Section 11. It is understood that the W ater Com pany has outstanding contracts w ith certain subdividers or applicants for w ater service made pursuant to Rule 9 o f its said Rules and R egulations under w hich such subdividers or applicants (a) have deposited sums o f m oney w ith W ater Com pany as advances for the construction by the W ater Com pany of certain water mains, or (b ) have at their ow n expense constructed and conveyed to the W ater Com pany certain w ater mains to serve properties developed or being developed by such subdividers or applicants subject to refund o f the cost pursuant to the Rules and Regulations o f the W ater Com pany on file w ith the P ublic Service Com m ission o f the State of Nevada. W ater Com pany hereby assigns to the D istrict, effective on the sale date, all such contracts w hich upon said date are still w h olly or partially unperform ed, and the D istrict hereby agrees, effective as of the sale date, to assume all liabilities, including liability for further refunds under said contracts, and to indem nify and save harmless the W ater Com pany from any liability for refunds under said contracts subsequent to the sale date. T h e D istrict hereby agrees to assume, effective as of the sale date, all liability under said contracts w ith respect to any unexpended portions in the possession of the W ater Com pany upon the sale date o f sums o f m oney deposited w ith the W ater Com pany under such contracts as advances for the construction o f water mains. 2 A P P E N D IX E Leo A. M on am ee J ohn h . MoNamee M c N a m e e & M c N a m e e A TTO R N EYS A T L A W EL PORTAE BUILDING LA S V E G A S, N EV A D A M arch 19, 1954 P . O . B O X -172 PHONE 1888 Las V egas V alley W ater D istrict 900 South Fifth Street Las V egas, N evada A tten tion : M r. Thom as A , Campbell, President D ear S ir: R e : E xisting W ater and W ater Rights. Pursuant to the agreement dated June 1, 1953, between L os A ngeles & Salt Lake Railroad Com pany, U nion Pacific Railroad Com pany and Las V egas Land and W ater Com pany ( “ First Parties” ), and Las V egas V alley W ater D istrict ( “ D istrict” ), the D istrict is purchasing certain land belonging to First Parties and all of the water and rights to any water rising upon or flow ing from any o f the springs or w ells located upon said land. U pon this land are located what has for years been called the Las V egas Springs, from w hich the T ow n (n ow C ity) o f Las V egas derived its municipal supply o f water. O riginally the water from these springs was used to irrigate what was know n as the Stewart Ranch. This ranch, and the land you are purchasing from First Parties and all of the waters and water rights pertaining thereto were purchased b y First Parties from the Stewarts prior to 1905, and as there was no com prehensive water law in the State o f N evada until the year 1905, the right to waters appropriated and used beneficially prior to said year are vested rights. T he First Parties’ rights to the waters from Las V egas Springs have never been questioned, and it is m y opinion that said rights are unassailable. (T h e Stewarts reserved a continuous flow of four miners inches for the purpose of irrigating what is know n as the “ Stewart Burial P lot,” a four acre tract, and this supply is now furnished b y pipe lines.) A b ou t 1923 the First Parties realized that steps w ould have to be taken to increase the supply o f water in order to keep up w ith the increase in population in said area, and First Parties decided to drill for water upon their lands located in the vicinity of said springs. W e ll N o. 1, a 12 inch well, was drilled to a depth of six or seven hundred feet, and resulted in tapping an artesian flow w hich produced a flow o f over six cubic feet of water per second. T hree separate applications were made to the State Engineer of the State o f N evada for perm ission to appropriate said w ater: O ne by Las V egas Land and W ater Com pany for 2.30 c.f.s. thereof for municipal supply and one by said W ater Com pany for 1.88 c.f.s. thereof for irrigation purposes; the third, for 2.5. c.f.s. thereof by the L os A ngeles & Salt Lake Railroad Com pany for railroad-purposes,,.fire protection and dom estic. Perm its w ere issued on said applications and all of the conditions o f said permits com plied w ith and there now appears o f record in the office o f the County R ecorder of Clark County, Nevada, certificates of appropriation issued by the State Engineer o f the State o f N evada certifying that the applicants have appropriated and have applied to a beneficial use the amounts o f water specified, and that the date of the priority o f each said appropriation is A ugust 23, 1924. T h e application by the Land and W ater Com pany for municipal purpose and its application for irrigation purposes recited that they were to be concurrent, the reason being that m ore water was developed than could be used for m unicipal purposes at the tim e and in order to prevent w astage the excess was used to irrigate the Stewart Ranch, but with the understanding that as the m unicipal demands increased the applicant w ould use the irrigation water for municipal supply, even to the extent of depriving the Stewart Ranch of irrigation water. 1