The copper era and Morenci leader., 1913-07-25
TEST OF
THE POWER OF
THE STATE
Bill In Equity To Be Filled In Federal
Court At San Francisco Denying
State Jurisdiction Over Pro-
posed Note ISSUE
ARIZONA COMMISSION
ALSO TO BE RESISTED.

| Road Says 1t Cannot Secure Pur-
chasers For Its Issues Upon Such
Terms AS Are Prescribed BY
the Commission.
SAN FRANCISCO, Cal, July 10
Basing a suit on the claim that the
California State Railroad Commission
has no power to prescribe the terms
and conditions upon which a corpora
ton doing business in several states
may secure money necessary for its
corporate purposes, the Southern Pa
cific filed in the United States dis
trict court at San Francisco today a
bill in equity to enjoin the commits
sion from asserting it's jurisdiction
over the proposed issue for equip
ment trust certificates which the
company plans to make for the pur-
pose of acquiring the rolling stock
necessary for local and interstate
business.
1t was announced that similar suit
would be filed on Monday with the
| United States district court at Phoe-
nix against the Arizona Corporation
Commission to enjoin the commission
from asserting it's jurisdiction over an
issue of twenty-year notes aggregat-
| ing S30,000,000 which the company
contem plates issuing for capital for
expenditures in several states through
which it operates.
Both suits represent further efforts
on the part of the railroads doing
local and interstate business to clear
up the question as to where state
authority ends its power over es-
sentially the interstate operations of
carriers The suit to be filed in
Arizona sets forth that the company
desires to provide capital for addi-
lions and Improvements. The bill
states that the claim of the Arizona
Corporation Commission proposed
that the notes shall be void without
its approval and it's claim to right
to impose terms and conditions in an
order authorizing the issue of the
notes made it impossible for the
Southern Pacific company to find
purchasers for its notes or to secure
the necessary money upon such terms
as may be imposed by the commits
sion.
1t is alleged in the bill filed here
today that the suits are rendered nee
essary because of the road provisions
of public utilities act of California
which declares void all notes, bonds
and other evidences of Indebtedness
by any public utility operating within
the state, where the approval of state
commission has not been obtained.
AS the Arizona statute is identical
with the California act the suit to
be filed in Phoenix will be substan
TALLY the same. Both bills assert
that with the state commissions
claiming their authority to pass upon
| all note and bond issues, it is lmpos-
sible for the. company to make imam
cial arrangements essential to its in
terstate business except upon such
terms as the respective state commits
sions may impose. This, the com
pany claims, is in contravent1on or
/ its right to engage in interstate COM
merce without interference by state
authority.
AS outlined in the suit, the actions
were not directed against the general
principle of stock and bond regula-
ton but against the right of single
state to interfere with the company S
financial arrangements for money to
be used in a number of states. The
company asserts that if this power is
conceded to one state it must be
conceded to all and this would result
in conflict of authority which would
prevent an interstate railroad from
working out financial plan that
would satisfy all state commissions.
In claiming it's right to issue the pro-
posed equipment trust certificates
without the approval of the California
commission, the railroad company
declares that a guaranty of these
certificates does not constitute a
lien upon any property situated In
the state but that the certificates to
be executed will be guaranteed out
side the state and the equipment Will
be distributed over the lines OF the
Southern Pacific company in the
various states through which 1t runs.