Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1913-12-29
ON BOND ISSUE.
SupTeneCourt TakesUpAp-
peal Against New Haven.
Attack Validity Of Proposed Is
sue--Want Ruling Reversed.
The Board Declares II Business De-
cision and Not Renewable.

Boston, Mass, Dec. 2s.-The full
| bench of the supreme court heard ar
/ guments yesterday in the appeal OF
EX-Gov Buckley of Connecticut and
| other stockholders of the New Haven
Road from the recent order of the
Public Service Commission which au-
therized the railroad to issue $67,52,-
coo of 20-year per cent. bonds. The
court took the question under advise
ment.
/ EX-Mayor Nathan Matthews and
James F. Jackson appeared as coun-
sci for the petitioners and Charles F.
Choate and Z. d. Robbins for the rail-
road company. Atty. Gen. Swift APP
peared for the Public Service Com
mission.
The petitioners attacked the validity
of the proposed bond issue and asked
the court to annul the order of issue
by virtue of the provisions of the stat
ute under which the Public Service
Commission was created. They claim
ed that if the commissions order is
valid all confidence in the utility of
that body will disappear.
Ex-M Mayor Matthews said the COM
mission could not exercise discretion
in determining the amount of the bond
issue unless it knows what the mar
ket value of the stock will be in 1928,
and before it can know the amount
of money necessary to finance the
company it must know what the COM
pany can get. He pointed out that an
obnoxious feature of the convertible
bond issue was that the stockholders
Ix,4in 10 70 "a nf
stock on a condition. He contended
it was the duty of the commission to
I refuse to authorize any issue of bonds
: that it finds to be unlawful.
At this point Mr.. Matthews was in
terrupted at the request of Chief JUS
tice Rugg, to allow Counsel Choate
to state his view of the powers of the
Public Service Commission in the
case.
Mr. Choate claimed that decisions
of law by the commission could be
binding on nobody, as it was a body
of laymen.
He said the decision of the commits
sion that the debt limit of the road has
been exceeded or not is not conclu
sive on anybody when made by the
commission. He said The Public
Service Commission of this State is, of
all the commissioners of all quasi
judicial bodies in the world, the least
equipped to discharge those functions
which the petitioners say have been
placed upon it,
The contentious of the petitioners
in part as shown by their brief, are as
follows:
That the Public Service Commission
as an administrative body is bound to
enforce the law as written by the Leg
islature in every case that comes be-
fore it, and that its administrative
powers are subject to review by the
courts.
The petitioners further contended
that the commission has no authority
to approve an issue of stock or bonds
if such issue will violate any posi-
tive requirement of law.
The petitioners argued that the or
ders of the commission were unlaw-
full, because they approved an issue
Of stock to 10 years hence at a price
fixed at the present time.
They said that if stock can be APP
proved to is years in advance of
the date if issue, it can be approved
80, 40 or so years before the date of
issue; and the main feature of the
anti-stock watering laws of Massachu-
sets is repealed by administrative ac-
ton.
Counsel for the railroad in their
brief said:
The railroads Of Massachusetts, are
very generally owned by corporations
which are also corporations of other
states Differences in the laws of the
different states of Incorporation have,
as a matter of general knowledge, Sc
riously embarrassed the principal rail-
road corporations of this character I'M
til to the difficulties created by the
general conditions above briefly indi-
Gated there were added technical OBJ
stacles to the raising of money which
threatened to force these corporations
into the hands of receivers, not be-
cause they did not still have credit,
but because they were not able to
avail themselves of it by the issue of
securities whose lawfulness would be
everywhere unquestioned.
The railroad company contends that
the only orders of the commission to
be reviewed are orders which are I'M
| laNlul, anu tity may NC N'A'S
nulled, modified or amended to the
extent of such unlawfulness.
When the Legislature lays upon an
administrative board the unrestricted
duty Of determining the effect OF
business arrangement of a public SER
vice corporation, the company con-
tends, upon the public interest, this
duty, by it's very nature involving as it
does the exercise of a business Judg-
ment, is one not subject to review by
the courts. The company contends the
commission his discretion to approve
the future issue of stock. 1t contends
that the holders of outstanding con-
vertible bonds have right to pro-
portionate share of eny new issue OF
carital stock or of debentures con-
( yertible into stock, and that all OF
its stockholders are legally stopped
from contesting this right.
NEW HAVEN DISCUSSES