The Hawaiian gazette., 1916-07-25
Supreme Court Decides Company
May Increase Capital Stock
''SUp' TO si,6OO,ooo
HOLDS VALUE or PROPERTY
IN EXCESS OF LIMITATION
Action Instigated BY Governor
Fails When Judge Stuart Is I
w. Sustained Above

JOiu lhe hOuOlulu hhplu ITanht ana
Land Company from increasing its cap
italization, this being an action for an
injunction which was instituted by the
attorney general Of the Territory at the
instigation OF Governor Pinkham.
I'm this case, yesterday morning the
supreme court handed down a decision
affirming the decree made by Circuit
Judge Stuart, who found for the de-
PENDANT corporation in the lower court.
The case was strenuOusly contested
in the lower and higher courts, the Teri
ritory being represented by Attorney
General Stainback, Deputy Attorney
General Heen and Deputy City Attor-
ney, Garden, while the company was
represented by ,Frear, Prosser, Ander;
son q Marx, and Castle q Wilmington.
The opinion Of the court was written
by Chief Justice Robertson and con.
Cured in by Associate Justices, Watson
aud Quarles, who wrote short separate
opinions on the subject. Justice Rob.
ertson's opinion covers seventeen type
written pages, in addition TO the sylla.
bus, which runs two pages. The con
curing opinions cover three and two
pages, respectively. -
The contentious of the Territory and
the company are we'll set out in the
opinion, of the court.
Adverse oontentions In Case
e"The Territory, in q suit for an in
junction TO restrain the Honolulu Rapid
Transit and Land Company from carry.
ing out an alleged plan to increase its
capital stock, says Chief Justice Rob,
ertson, "averred that It is provided by
the charter and franchise Of the com
pany that it shall not be lawful to in.
crease the capital stock of the company
in excess of the sum of 100000 unless
the proposed increase shall when taken
with the original capital stock $780,
OOO), represent only the actual cost of
the property Of the railway Company
and not oyer twenty-five per cent Of
such cost in addition thereto; that the
amount of its capital stock now out
standing In of the par value Of 81 ,2O7, :,
$40, and that IL exceeds the actual cost
of the property Of the railway and
twenty-five per cent of such cost in ad.
dition thereto.
By an amt ndment to the bill, how.
ever. il was averred that neither the
actual cost nor the actual value of the
property exceeds the sum of 5000, 900.
The sum Of 100000 plus twenty-five
per cent amounts to $1y207 800, the
nresent outstanding capital of the conn
pany. ~.
Only One Issue Raised |
q" The. bill further averred that the
company plans and intends to and will,
unless. restrained, further increase its
capital stock TO the sum of 81 600 900
which would far exceed the actual cost
Of its property and twenty five per cent
of said cost in addition thereto.
"The company, in it's answer, denied
that the amount Of its present capital
stock exceeds the actual cost of its
property and twenty-five per cent in ad.
dition thereto, and averred that the
actual cost of it's property exceeds the
sum of $e,l71;s41.51. 1t was also
aveIred In, the answer that though
neither the, directors nor the stockhoid-
ers Of the company have taken any ac-
ton looking to the increase of the capi.
tai stock the cOmpanyShas just and
legal right to increase the same to the
SUN Of $l,600,000, and that it may do
so at any time unless restrained by or.
der of court.
Aside from the point whether the
company planned and intended, unless
restrained, TO increase its capital to
$l,6OO,00O or merely claimed the right
to do so ut any time, the only issue
raised by the pleadings was to the
amount of the capital stock which the
company is authorized to issue based
upon actual cost of its property.
Territory Made Admissions
AT the hearing, however, the com.
Plainant conceded that the items ng
gregating the sum of $2,lT,976li.
which the company submitted as capi:
tai expenditures represented the origi-
nal cost of the property, items to the
amount Of 81 1905, 056.6S were correctly
stated. Nevertheless q great mass of
testimony was offered and admitted o.
to the actual present value of the com
Pany's property.
1.-THE complainant advanced the con.
tcntion that the company could issue
stock only upon the value Of lis plant
after deducting depreciation. In ether
words, the alleged proposed inc.n rse If
stock could not legally be made unless
IT represented actual existing value.
THE circuit judge, in his deci siOn,
after referring TO some Of the tvsti. |
mony as TO the value of tho property, !
and the stipulation of the complain. |
ant as to its actual cost, but without
making any express findings as to the |
actual value or the exact cost Of the |
property, held that the right IF the |
company to increase its capital stock |
turned upon the actual cost and net |
upon it's present value; that by its |
franchise and charter the company is
authorized to issue stock,to the actual J
cost of its proprty and twenty five per !
cent in addition thereto; and that In.
der any view that may be taken of the |
evidence (as TO either cost or valued |
the company has. the right TO issue !
stock to the amount Of 1900, 900.
Stuart Dismissed Bin
"a decree Diminishing the bill was en-