New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-12-08
BLOW TO P. s. BOARD
COURT OF APPEALS
CURBS ITS POWER.
Commissions Not Intended to
Replace Pirate Financial
Managers.
IBy Telegraph to Tn. rr,sun..1


Albany. Dec The decision OF the
Court OF Appeals to-day in the Delaware
and Hudson Company. 100000 appeal
came as a surprise. II limits 10 large
extent the powers Of the Public Service
Commissions in regulating capitalization
However. the friends OF the Public Ser
vice Commissions law point significant
iy 10 this paragraph in Judge Haight's
decision:
For a generation or more the public
has been frequently imposed upon, by the
Issues OF stocks and bonds OF public
service corporations for improper pur-
poses. without actual consideration
theretor by company officers, seeking TO
enrich themselves at the expense OF
innocent and confdfng investors
One OF the legislative purposes in the
enactment Of this statute was TO correct
this, evil by enabling the commission TO
prevent the issue OF such stocks and
bonds. II upon an investigation OF the
facts II is found that they were not for
the purpose of the corporation enuner-
ated by the statute and reasonably re-
ouired therefor.
The court holds that the paramount
purpose Of the Public Service law Great
DrOLeCIlCn
and enforcement OF the rights OF the
public; that the commission must sim
ply see 10 ii that the railroad corpora
tions maintain their equipment, tracks
and roadbed in good order and operate
their railroad with safety 10 the public
and give proper service: that they should
also prevent fraud on the public by the
Of ~
through the overissue Of stocks and
bonds.
The court holds that the legislature
did not intend TO make the commission
the financial manager OF CORPORATIONS or
empower IL TO substitute its Judgment
and discretion for that OF the directors
and stockholders Of a corporation as TO
the wisdom OF a transaction: that a
statute that should make such substitu-
ton would probably be unconstitutional.
for the ownership OF property carries
with IL the right OF occupancy and man
agement. and a statute that would de-
prive an owner Of that right would
undermine his right 70 protect and make
his property remunerative.
The upstate Public Service Commits
sion last December refused to authorize
an issue Of bonds by the Delaware 4
Hudson Company 20 pay of the indebt-
edness incurred BY the purchase OF the
securities Of the Hudson Valley Com
pany and the coal lands The properties
in question We're rot included In the
mortgage upon the Delaware & Hudson
property. under which IL was proposed
70 issue these bonds. The property was
acquired before the commission came in
20 existence.
The Delaware Hudson Company ap-
pealed and the Appellate Division set
aside on certiorart the order Of the com
mission which refused assent to the bond
issue. The Court OF Appeals afirns tho
Appellate Division.
Chairman Stevens OF the upstate com
mission. who argued the appeal In per-
son. said in his brief nled with the
Court OF Appeals that II the commits
sion's ruling IN this case was set aside
IL would mean that the powers OF the
commission will be so limited in their
nature and so Insignificant in character
as practically 70 nullify the obvious in
tent OF the law and make the pretended
regulation OF capitalization a farce"
II was suggested tonight that pos
sibly Governor Hughes in his message
70 the Legislature would recommend
legislation 70 increase the powers Of the
commission in regulating capitalization.
as IL was pointed out that this was one
OF the main principles involved in the
Public Service Commissions law.