New-York tribune., 1908-12-18
BOND ISSUE DENIED
p. S. DECISION AGAINST
THE D. & H. COMP4NY.
4 ppIicotion to Raise Orer 81, ,OO0, 900
for Refunding Purposes Turned
Dozcn-Com pany May Fight.

Albany Dec. 1.-THE Public Service Commls-
sion ID District denied to-day the application
of the Delaware & Hudson Company for au-
thoritv to issue bonds under its first and re-
funding mortgage to refund notes amounting
to 81. .665 295 So covering the purchase Of stock
of the United Traction Company, an electric
railway operating between Albany and Troy, and
for advances to the Hudson Coal Company
amounting 10 81. 100000 for the purchase OF coal
lands in Pennsylvania The commission au-
thorfzes the company to issue bonds amounting
to $3.50, ,S6S ~ for the purpose of refundlng OF
discharging notes the proceeds OF which were
used to purchase securities Of the Troy & Ne"
England Railway, which the Delaware & Hud-
son Company acquired to extend its operation
eastward TO connect with the New YORK Ne"
Haven & Hartford system.
The main opinion in the case is by Comms-
sioner Decker, with a cOncurring opinion py
Chairman Stevens, in both Of which Commis-
soner Osborne concurs. Commissioner Decker
says:
The Delaware & Hudson Company steam
road carrier issued notes for S4.665295 50, and
with the proceeds purchased, through its sub
sidiary development company. near.y all OF the
stock and bonds of the Hudson valley company
an electric railway carrier. The price so paid
was considerably in excess Of the investment
value The Hudson Valley is not a feeder to the
Delaware & Hudson steam line, except to an
insignificant extent, and as to only small por-
tion of the Hudson Valley property. Ihe Dela-
Hudson Valley securities, but it caused its de-
velopment company to transfer them 10 tne
United Traction Company, another electric raiI-
wav carrier. and took assignment OF the
United Traction Company's certificate or IN
debtedness issued to the development company
The Hudson Valley and United traction prop
critics are electric railways, and the investment
of 81 .665. .295 So by the Delaware & Hudson Com
pany. first in the Hudson Valley and iater IN
the Rnited Traction. investment IN Ihe
securities of a company operating a properly
disconnected from its steam railroad operations
and having definite relation thereto Such
an investment in securities Of an electric ran
way company operating a wholly disconnected
property. is not. under the Public Service Com-
missions law. the proper subject of a bond issue
seCu1 ed by 4 mortgage solely upon the Delaware
& Hudson Companys steam railroad properties;
The Delaware & Hudson Company raise q
81 500 600 by notes prior TO the taking effect or
the Public Service Commissions law and ad-
vanced this money for the purchase Of certain
coal lands in PENNSYLVANIA. It now seeks 10
refund or discharge these obligations by the
issue Of bonds solely upon its railroad property
leaving its coal lands free from such 1ncum-
branCe. The applicant shows that IaIse
amount of money has been expended upon us
railroad for improvements which nave not oeeh
capitalized. The applicants contentlon mat Ihe
railroad company property may he fairly charged
with this additional debt because Of the large
tonnage its coal furnishes TO the railroad, there
bv adding greatly to the net revenue of the
road and furnishing revenue for its development
is stated and discussed Placing THIS burden
upon the railroad property would not operate AT
present or in the future to reduce single
freight rate or passenger fare, but can only tend
sufficiently valuable To bear separate mortgage
incumbranCe.
Commissioner Olmsted ConCurs in the opinions
Of commissioners Decker and Stevens as to the
principles laid down therein. but dissents as 10
the conclusion denying the application to fund
the whole amount Of capital involved in the
Hudson Valley branch Of the case on the ground
that in his opinion the Hudson Valley properties
are of present and permanent value 10 the Della
ware & Hudson as a railway property and
should therefore. be allowed to be capitalized at
a fair valuation.
commissioner Sague dissents and states tnat
after consideration of the evidence submitted in
this ard in the previous proceeding, he believes
the complete refunding proposed is consistent
with the public interest and should be approved
The Delaware & Hudson company last June
snnIfed to the Commission for authority 10 issue
bonds 10 the amount of $26,50O.o00. but the Com
mission held that an issue Of Sl9.S09'ooo was
sufficient and so authorized The company
tbereuuon made a further application. Whlch
vas decided to-day stated
W s Opdyke general counse! Of the Delaware
g. L4udscn COMPANY said last night that he had
not hoard officially of the decision Of the Pubic ser
,i,a Commission denying the railroad company
a,ncation to issue bonds in question. but that
- the facts we're as stated in the dispatches from
Albany the company would fight the decision IN
ne