New-York tribune., 1906-05-02
EIGHTY-CENT GAS NOW
REDUCED UNDER PROTEST
Company Begins Fight to Proue
Lao Unconstitutional.

while che Consolidated Gas Company On
zonnces that SC would supply gas TO its custom
.-s sn foss city, beginning yesterday, at so cents
a thousand cubic feet, IN compliance with th'
rev iasq. ifs attorneys yesterday filed in tht
vy-Itsd states Circuit Court the papers in an
action 20 test the constitutionality Of the law
This means that tie company Is 70 make a bit
ter aght against the law. meanwhile complying
with 81.
Tae action in the court is directed against the
city OF New York. the State Gas Commission
Attorney General Mayer and District Attorney
Jerome and the court is asked 70 enJoin al
she ohieials from enforcing the law, on the
ground that the law is in conttavention Of the
Fourteenth Amendment Of the Constitution OF
she United States. Papers in the suit were pre-
pared by Sherman & Sterling, attorneys for the
company
The papers contain a long statement as TO the
alleged injury to the company in compelling 1t
60 furnish SO-cent gas. coupled with the areu-
snent that the company should be permitted 10
earn a fair profit on its stock. AT the time OF
the formation OF the Consolidated Gas Company
q Is stated the properties merged were valued
aE S2sses 600 and the franchise rights were esti-
mated at 81. 7.7s1 900 in addition On that basis
g Is said, the company has issued stock IN the
amount Of S800GOO0O
scompsny's plants have been operated as eco
nom,eslly as possible. yet the company has been
able 20 pay dividends 20 its stockholders aver
aging less than s per cent annually because Of
she large expenditures for relaying street mains
and increasing the plants. These expenditures
nave amounted 20 s27.OOO.O0O since 1884, the
complaint says.
Il is declared that the State Gas Commission
Svill not permit an increase OF bonds and stock
Cor new plant unless the fair cash value OF the
plant Is equal to its outstanding stock ana
bonds" Therefore. it IS asserted. the company
will have TO charge enough for gas TO cover not
only the cost of manufacture and a fair profit
nut also the constant depreciation OF the plant
The company declares that its gas costs about
20 cents a thousand cubic feet to manufacture
and the law compelling the company to furnish
SO-cent gas therefore robs it Of profit sufficient
20 provide for depreciation OF plant.
The complaint asserts that the Attorney Cen
eral Of the state and the District Attorney of
New York County would be compelled by the
law TO institute suits for the recovery OF a PEN
atty OF $1,000 IN every case where the company
failed to furnish sO-cent gas. 1t says, also. that
Ehe company is Informed that she State Gas
Commission would institute mandamus proceed
Sings II the company failed to comply with the
requirements of the law. In such a case. it is
dilemma:
large number Of customers would decline to
nay the price fixed by the company, and would
refuse 10 pay any part OF the companys claim
upon the preteXt Of the company having made q
charge in excess of the S0-oent rate constitutes
a complete defence to the conpany's claim
against them. Any attempt to remove meters
under these circumstances would result in a
multiplicity Of suits On the other hand, IL the
company should permit the bills OF such consum-
ers run until the final determination OF the
Euit the amount would aggregate several million
dollars. IL the company should deIeaL tnese
suits il would he unable to collect the indebted
ness and an enormous loss would result.
Another reason why the company chooses to
comply with the law. while making a fight
against its consttutionality in the federal court,
IS disclosed in the-following statement:
If it should be held that every charge in ex-
cess Of the so cent rate is violation of the pro-
visions OF Chapter l25 Of the Laws Of 1906. for
which forfeiture OF 81 900 would be imposed,
and the company should make a charge in ex-
cess of the so cent rate each month to each of
ets consumers. numbering they do about 800.
e0O. the aggregate of the penalties so incurred
during one year would amount to over 81, ,0S0-
pVO.OOO. and would be over f1fty-four times as
great as the value Of all the assets belonging
20 the company and employed by il in it's busi-
ness ana would exceed in amount the entire
assessed valuation Of all the real estate situated
IN the boroughs Of Manhattan and The Bronx
and the damage 10 your orator would be irrep-
arabic and absolutely destructive of all its
assets. franchises and property. in violation of
che l4th amendment to the Constitution of the
United States.
In addition 70 the argument that the company
would be ruined by refusal to obey the law the
complaint declares that the new law violates the
constitutional right Of contract. II therefore
asks for an injunction 20 prevent the operation
Of the law. making an offer to pay into court
the sums II may receive in excess OF its lawful
receipts for gas i'm the oonstitutionality Of
the law shall be affirmed by the court of last re-
sort.
The complaint was placed in the hands OF
United States Marshal Henkel yesterday after
noon. To-day Marshal Henkel will serve comics
OF IL on Corporation Counsel Delany. the state
Gas Commission. Attorney General Mayer and
District Attorney Jerome