Case ID: misc_47/html/0315-01.html
Source: Caselaw Access Project
Author: {"author": "Gaynor, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Henry W. Wiggins, as Trustee, Plaintiff, v. The Neversink Light and Power Company, Defendant.
    (Supreme Court, Orange Special Term,
    May, 1905.)
    Receiver — Certificates of indebtedness — Motion for leave to issue denied.
    While a court of equity may authorize the receiver of a public service corporation to issue certificates of indebtedness to raise money to do repairs, or obtain supplies to keep the service going, and make such certificates prior liens to a mortgage, a motion by the receiver of a corporation, not engaged in such a service, for leave to issue like certificates, with like effect, will be denied.
    Motion by the receiver, appointed in this action to foreclose a mortgage, for leave to issue certificates of indebtedness to raise money to put the plant of the company in a condition to run; such certificates to be a lien prior to the mortgage. The company is not engaged in any public service of lighting but only sells electricity to other companies.
    W. B. Boyce for motion.
    Homblower, Byrne, Miller & Potter opposed.
   Gaynor, J.:

In the case of corporations engaged in a public service, like railroad, water and lighting companies, and which service cannot be interrupted without inconvenience and harm to the community, courts of equity authorize its receivers of such corporations to issue certificates of indebtedness to raise money to do repairs or obtain supplies to keep the service going, and make such certificates prior liens to the mortgage indebtedness.

But in the case of corporations not engaged in such a service, there is no such practice. It is justified only on the score of public necessity, and even when so exercised has become a great abuse and wrong to mortgage bondholders in many instances, as we all know. In the time at my disposal I cannot cite or discuss the authorities.

The motion is denied.