Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1913-10-15

before us, however, compels us to an
swer this question according to our
best judgment
Having in mind all considerations
pertinent to the case before us, we are
prepared to approve an issue of con-
vertible debentures for the amount set
forth in the petition and to authorize
an issue of an equivalent amount of
stock at par to be issued in exchange
for such debentures in accordance
with the terms thereof
After expressing doubt as to the
legality of the order, Commissioner
Anderson in this minority report SAYS:
IF the order is illegal, dire confu-
sion, great injury to the corporation
and much loss to innocent investors
will be the probable result. Apart
from its illegality, the order seems to
me inconsistent with the public in
terest in matters of vital and far
reaching Importance.
.The Legislature never contemplate
ed vesting this commission with any
such arbitrary, unguided personal
power as the argument of counsel
adopted by necessary implication by
the majority involves. The discretion
airy powers of this commission ought
not to be extended by construction,
particularly in favor of a corporation
and against the public interest and
the rights of the great body of small
stockholders, who, as their sad ex
perience for the last decade shows are
helpless unless protected by law fear
lessly enforced by such commissions
as this. To strain our legal powers in
order to facilitate another Director
banker melon cutting is a proceed
ing against which l must emphatical-
Iy protest. The deplorable condition
of this railroad at the present time
is due to persistent violations of the
wholesome provision of our Massachu-
sets laws. The enormous losses al
ready suffered by investors would
never have occurred had the law of
Massachusetts been observed"
The opinion then deals with the
purely legal objections to the issue,
which Mr.. Anderson states to be:
1.-THE company has not sufficient
amount of outstanding ciptal stock le-
galIy paid in under Massachusetts, law
to authorize the proposed issue
"2-The commission has no legal
power to authorize the issue of de-
Ventures convertible into stock in the
future.
"s-The issue is made available to
holders of outstanding debentures in
violation of the statutes of this COM
monweaith.
lit is impossible to find that the
floating debt sought to be funded was
properly incurred Tor lawful pur-
poses without absolutely disregarding
the material facts
Mr.. Anderson also attacked the con-
tract for underwriting the issue.
This is a fair sample of the vicious
banker director methods that charac-
terize our modern high finance, ne
said 1T is the same kind and char
acter of administration which has
brought this splendid property to its
present condition and has entailcd
losses of scores of millions of dollars
upon New England investors.
The way to end this vicious ana
indefensible exploitation of public ser
vice corporations for the benefit of
some of the directors whe control
them is to vote against the expioita-
tion. not to write against it and vote
for it. This commission will justly
be held responsible for the payment
of this sum of nearly S2.ooo,ooo as the
price of permitting the corporation 10
offer it's own stockholders something
that those stockholders can sell II they
do not want to take it themselves.
Arguing that the New Haven Has
no sufficient amount of outstanding
capital stock. legally paid in under
Massachusetts law, to authorize the
proposed issue, Commissioner Ander-
son declared:
This commission is now attempt
ing to over-rule the supreme court,
the attorney general and two LeSis-
latures not to mention the joint COM
mission and the valuation commits
sion. 1t is for the Legislature, not for
this commission, to validate stock if
ii ought to be validated
ITO find, as the majority have at
to find, on the showing maze
by this company that its floating debt
of 100000 was Properly incurred
for lawful purposes is in the language
of the supreme court, 'Capriciously to
i11tke INNINGS DN 49, '->@N
and Contrary to the indisputable
character of the evidence " the mi
nority report stated. 1t is utterly
of the whole theory of our
law as to controlling the capitaliza-
ton of public service corporations and
opens wide the door to unlimited fraud
and robbery"
The dissenting opinion closed with
two suggestions.
THAT application should be made
to the next Legislature to validate the
capital stock and premi-
um account, thereby furnishing clear
legal basis for the issuance of de-
bentures needed for steel ears and
other necessary additions to the rail-
road equipment.
'2-The present floating debt should
be paid from the price of securities,
which should be sold from time to
time
PRES. ELLIOTT INFORMED.