The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1913-07-04
right TO ISSUE !
BONDS DENIED
Application of Washington
Utilities Company Is
Vetoed.
MERGER ACT CONSTRUED
Decision of Utilities Commission Will
Not Prevent Big Company from
Putting Out Bonds.

Application of the. Washington Util-
tiles Company. dated June 4. 1913. for the
certificate of the Public Utilities Commits
sion OF the District OF Columbia author
izing an issue of 5o-year per cent gold
bonds is hereby denied"
Thus was made the official announce
ment of the utilities commission Of its
rejection of the so. 900 900 bond issue pro-
posal Of the holding corporation. Notice
of its decision and accompanying draft
Of the commissions opinion were served
late yesterday afternoon.
The commission held that it could not
approve the bond issue because the
Washington Utilities Company has &C
quired or seeks to acquire more than
20 per cent of the common and preferred
stock of the Washington Virginia Rail-
way Company. which is prohibited by the
La Toilette anti-merger law.
The opinion explaining the decision OF
the commission, in part. reads:
while it was argued at the hearing
by the counsel and other officers Of the
Washington Utilities Company that the
transfer of stock Of the Washington ana
Virginia Railway Company was entirely
consummated and completed prior to the
date of the so-called anti-merger law, the
commission nevertheless entertains grave
doubts in the matter, so far as the turis-
diction of the commission Is concerned.
In other words while II may be true that
the merger was consummated within the
State of Virginia and in compliance with
the laws of the State of Virginia. the
mere fact that the certificate of the
commission is necessary before the pur-
poses of the mortgage can be put into
effect is an Indication that the merger
has not been completed until such certifl-
cate by the commission is given, and, as
obviously and by the terms of the mort
gage the merger is not effective without
the possession and absorption of more
than 20 per cent of the capital stock Of
the Washington and Virginia Railway
Company by the Washington Utilities
Company, such merger and absorption
seems to be in conflict with the most lib
eral Interpretation of the anti-merger
law.
Must Have Certificate.
The language of the mortgage is to
the effect that certain of the proposed
bonds shall be authenticated and deliver
ed from time to time for the purpose of
acquiring and cancelling certain shares
of the preferred and common capital
stock of the Washington and Virginia
Railway Company. and it would be one
case IL the bond issue had been made
prior to March 4, 1913 1t is quite
another case when we find that the bond
issue had not been made prior to the
passage of the anti-merger law and the
public utilities act, and that il is
necessary for the petitioners to obtain
the certificate OF the Public Utilities
Commission before said bonds can be
issued.
The Commission has in mind the fact
that when. in November. 1912, it became
known that a merger was proposed in
volving the absorption by a foreign pub
lie utility or holding corporation of one
or more of the street railway lines in
the District of Columbia, the Commits
sioners of said District instituted legal
proceedings to prevent such an act.
With these facts in mind, and when
called upon to authorize the very thing
which the anti-merger law forbids, the
feels constrained to Withhold
its certificate of the bond issue requested
by the petitioners, for the reason that
II finds such issue to include as essential
parts thereof the acquisition and hold |
ing of public utility stocks in violation
Of Section II of the act of Congress ap- |
proved March 4. 1918. Public No. 49,"
May Make New Issue.
Securities in the Washington Railway |
and Electric Company and the Washing
Railway Company were |
listed by the Washington Utilities Com |
pany in the mortgage filed with the |
utilities commission in connection with |
its application for authority to issue |
SO. ooo, 600 worth of bonds. In reference |
to the s2.soo.0oo worth of stock of the
Railway and Electric Com
pany controlled by the holding corpora
ton, the commission ruled that this
stock. being less than 20 per cent Of all
stock OF the railway company, could be
held by the corporation under the anti
merger act.
not prevent the Washington Utilities
Company from presenting a new bond is
sue. leaving out of account the stock
of the Virginia Railway
Company.