New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-05-02
COAL ROADS DROP FIGHT
Decide to Sell Lands or OutpuI
TO New Companies.
TO STOP ALL LITIGATION
Lehigh Valley Would Dispose OF
Property, While Others Would
Sell the Coal.

Seu tUe OOdl.
AS a consequence OF the decision OF 'ne
Supreme Court Of the United states on
April 3 In the Lehigh Valley Railroad test
case under the commodities clause OF me
Hepburn rate law. II was learned yester-
day the Lehign Valley. the Delaware &
Hudson Company and the New York. on
tario & Western Railroad Company are
planning to divest themselves or their own
ership of coal properties without waitin5
for The outcome OF the further proceedings
which the government has intimated may
be brought
Conferences have been held within the
last week by counsel for the several roads
but as yet no plans have been perfected.
although It g understood that the Lehigh
Valley will dispose OF its coal lands 10
an independent company. and that the Del
aware g. Hudson and the Ontario Sc west
ern are inclined 10 the plan adopted by
the Delaware, Lackawanna & Western, OF
selling its coal TO a new COMPANY organ
ICED Independently OF the railroad COM
pany. while retaining the ownership Of the
coal lands
The Laokawanna. II wa be remembered,
in July 1893. not long after the original
decision OF the Supreme Court holding that
a railroad company could not lawfully
transport in interstate commerce coal
oy ned by itself declared a special dividend
OF 80 per cent, or sl3,6JD,CCo. of which one
half was paid in cash and the option was
given the stockholders to take the other
half amounting 10 s., "" 900. in cash or 70
employ II in subscribing at par for stock
of the Delaware, Lackawanna & Western
Coal Company, which had just been incor-
porated with $4,000 capital stock. and
most OF the directors and officers Of which
We're Officially connected with the Lacka-
wanna Railroad
Contracts 70 Buy Al theCosl.
The coal company. the ownership OF
which was thus vested in the individuals
VINO were stockholders OF the railroad
company and not in the railroad company
Itself, made a contract with the railroad
COMPANY under which it agreed to pur-
chase all Of the coal Of the railroad COM
pany in transit and in storage az actual
market value and 70 purchase the entire
future output at the mines at g. per cent
o. its market value at tidewater the buyer
assuming also all transportation charges.
The Lehlsh Valley Railroad Company,
against which the test suit was brought,
owns the entire outstanding capital stock
o; the Lehigh Valley Coal Company which
stock is pledged under the railroad COM
panys general consolidated mortgage. The
Delaware g. Hudson Company owns the
entire stock of the Hudson Coal Company,
which in June, 1903 entered into an agree
r:ent 20 purchase the whcle present and
future coal output Of the railroad COM
pany. The New York, Ontario & Western
Railway Company holds mortgage issues
o. the Scranton Coal Company and the Elk
Hill Coal and Iron Company as security
for notes issued by the railway in aid OF
the coal companies. to enable them 10
secure extensive coal properties
San on Subsidiary Ownership.
Chief Justice White, in announcing the
decision Of the Supreme Court in April,
said that the lower court had erred in re-
fusing to allow the government 70 amend
ia original petition so as 10 al!ege that the
coal companies were mere devices or the
railroads 10 eyade the Law. and that the
railroads had a LEGAL or equitable interest
in the coal The error. however, he went
on. had obviously been due to 4 mscon-
ception Of the character Of the action Of the
Supreme Court and the scope of its man
date
Although the decision Of the latter tri-
tuna in 800 had expressly held that stock
ownership BY railroad company in a
bonallde corporation. without regard to the
cf ba IL,
a railroad from Transporting the COM
modify mined. owned or produced by tie
corporation. nothing in the decision pre-
vented the government from questioning
the power OF the railroad 10 transport such
commodity in interstate commerce in cases
where the railroad company and the cor
poratiOn in which il was stockholder were
virtually one corprat!on. This was inter-
preted as laying down the rule that a rail-
road company could not lawfully transport
in interstate commerce the coal owned by q
subsidiary company which was Itself owned
by the railroad company and ged in
such a manner as to make Il not in good
faith an independent corporation. The OFF,
GERS OF the Lehish Valley Coal Company
are virtually identical with those OF the
Lehigh Valley Railroad Company. a cir
cumstance which was supposed to have
had weight with the Supreme Court in
reaching its conclusion announced on
April 3.
The effect of that decision was TO instruct
the lower court TO allow the government to
amend its petition. as desired. In the cases
OF the Erie. the New York Central and the
Pennsylvania. II will he recalled, the gov
eminent asked the lower court to dismiss
the proceedings without prejudice. but the
court instead dismissed the cases abso-
lutey. a course which the Supreme Court
approved. This action has been understood
as making II unlikely that further proceed.
ings would be brought against these COM
panies