New-York tribune., 1906-05-12
FEARS FOR GAS BONDS.
TRUST co. FIGHTS Law.
Asks Court to Enjoin Use of 8O-Cemt
Rate by NeSC AMSTERDAM.

A long printed complaint was filed in the
United States Circuit Court late Yesterday after
noon BY the legal firm of JoIine. Iarl1in & Rath-
Done' as counsel for the Central Trust Company
OF new York, against the New Amsterdam Gas
company. Attorney General Mayer. District At
torney Jerome and the three members OF the
State Commission of Gas and Electricity The
complainant asks for injunctions restraining the
enforcement CT the sO-cent gas Law, on the
ground that it is the trustee of S20O00O00 )
per cent bonds issued by the New Amsterdam
Gas Company. the holders of which securities
would be irreparably injured if the law were to
be enforced.
Flgures are given to show that If compelled TO
comply with the SO-cent statute the defendant
gas company could not earn suficient money to
pay the interest the bonds thereby depriv-
ing the owners Of their property rights in direct
contraVention OF the provisions of the Fourteenth
Amendment to the Constitution. In addition to
temporary injunctions to prevent the officers
named as defendants from enforcing the law
restraining order is asked against the New Am
sterdam Company TO prevent il from complying
with the law. The complaint says the Central
Trust Company seeks to protect its bondholders
from unjust discrimination
STATUS OF COMPANY.
The complaint begins by stating the condi-
lions under which the New Amsterdam Gas
Company was formed in June 1898, through
merging of the older New Amsterdam Gas Com
pany with the New York and East River Gas
Company and the Equitable Gas Company At
that time the complainant was the trustee Of
Issue Of s3,5OOOOO per cent bonds Of the New
Amsterdam Gas Company. due in 1882; the New
York Guaranty and Indemnity Company the
trustee Of an issue of SS50O,oO0 bonds issued by
the New York and East River Company due
In 1914 and the Knickerbocker Trust Company,
the trustee of additional issue by the same
corporation of $1.5OO,OoO of bonds due in 1915
After the consolidation the new corporation
issued S20O00.000 bonds to the Central Trust
Company, as trustee. due in 194S OF the total
issue. it is stated, $11535 600 is outstanding. but
Ss,5Oooo0 was set aside to provide for the pay
ment when due of the outstanding bonds
amounting to that sum issued by the three orig
inal companies.
The complaint then cites the creation Of the
Commission Of Gas and Electricity, the powers
given it by statute. the subsequent passage Of
the gas laws and the order of the commission
for so cent gas and fixing penalty of $1,000
for each proved violation. The New Amsterdam
Gas Company. it is alleged has a capital stock
Of s2O,O0Oo0O and actual investment in plants
Of over that sum, not counting its franchise and
goodwill. Since its origin, in 1898 the New
Amsterdam company has never paid a dollar
Of dividends to its stockholders. the complaint
states, its entire profits having been used in
betterments. The cost of the manufacture Of
gas in 1906 is given 6s cents and the ccst
of manufacture in 1906 estimated at 70 cents.
thousand cubic feet
Estimates are given TO show that if It's income
was limited to so cents. the gas company would
derive only Ia per cent profit on its investment.
exclusive of the valuation of its franchises
goodwill. Complaint is also made that the
commission, in making its estimates on which
the 80 cent gas order was based. failed to con-
slider these equitable values. the right of the
gas companies 10 realize fair percentage Of
profit on them. The interest on its bonded in
debtedness, the complaint points out amounts
to over 81 cents for each 1000 cubic feet sold.
SAYS RATE WOULD CAUSE LOSS
The enforcemen. of the so cent rate would be.
il is held an unreasonable and confscatory
rate Of compensation for the gas and service
furnished II is a physical impossibility. the
complainant insists for the gas company to
comply with the provisions of the law and such
compliance would. loss of S1.5OO day
to the New Amsterdam company alone The
penalty Of $1,000 for each violation is pointed
out. together with the fact that the law gives
Attorney General Mayer and District Attorney
Jerome discretion about commencing actions
to recover the penalty.
The complaint deals at length with the hard
ship compliance with the law would work to
the bOndholders, and states that the New Am
sterdam company could NOT meet its interest
payments. which would result in foreclosure ac-
tions under the terms of the outstanding bonds.
and that as $SJOOO00 of these were issued by
the three original companies. It would result in
separate suits and consequently separate sales
of the property. This would greatly damage
the value. which is greatest as a unit ii says.
and would deprive the holders of the bonds OF
their rights without due process of law.
Attorney General Mayer, District Attorney
Jerome and Messrs Gunnison, Shedden and Da-
vies, of the State Gas Commission were served
with injunction, issued last Tuesday by the
United States Court. TO restrain them from put
ting the 50 cent gas law into effect. At that
time representative OF the Consolidated COM
pany said that gas would be sold for 80 cents.
despite the fling Of the injunction until the
courts had settled the matter. This order is re-
turnable next Monday.