Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1916-01-07

very doubtful one TO the stock sub
F scribers They were taking chances
that many a prudent man would moi
feel like taking. The public was very
/ The defendant company has the right
F 10 issue stock and the amount of thi!
/ stock is limited by the actual cost anG
| the 25 per cent added thereto NJ
/ question is raised as to the right oi
| the legislature TO grant this % pei
cent in addition TO the actual cost
Much may be said in favor of such q
grant and much may be said against
II, but must take the grant as | find
| it." ..i-"= :'..
The decision. in this respect, con
tinues as follows: 49, .....
!" In fixing rates, the amount OF
stock issued is only one of the very
many elements that may be consid
cred in arriving at the true value oil
the plant at the time the rate is fixed
ITO illustrate. $4,000 par value OF
stock may be issued in given enter,
prise that is only worth in the market
at the time OF the fixing OF the rates,
$2500 Really the two propositions
have only distant and uncertain re-
lation TO each other; If they have any
dependable relation at all 1t is on
the value of the plant at the time of
the fixing of the rates that rates are
fixed; and what the plant may have
cost has but little If any relation TO
this question. On the other hand, the
company is authorized to issue stock
in this case to the amount that the
plant legitimately cost with % per
cent added. and that this may have
but very little relation TO the present
value upon which rates might be fixed.
In making extensions and certain i'm.
proyements. the actual cost. of these
may properly be capitalized and stock
issued to represent them. ...-. ..
Had Urged Accounting. .*... ..
but the plaintiff says large nart
of this money came from the earn ings
of the system in which the territory
was to share upon 4 certain basis de-
fined by the charter. This may be
true; and il was for this reason that
the court has time and again sug-
gested an amendment TO the plead
ings, so that fun accounting might
be taken. but the plaintiff has steadily
refused to amend, and the court has
been reminded several times by the
parties that there was but one ques
ton before ito try, namely, whether
or not the stock could be increased to
$l,600,000, as being within the legiti-
mate cost of the plant .....'....-...
The decision at this point quotes in
full section II of the Rapid Transit's
franchise, granted by the Legislature
and approved by the president, relat-
ing to charges upon earnings. ~. ....-..
But have nothing to do about this
provision under the pleadings in this
case says Judge Stuart. ''If there
is surplus, left after providing for
all of the EXPENDITURES down to dfvi.
sion four OF the section, then this sur,
plus is to be applied by division four
as follows: The excess OF Income
shall be divided equally between the
government OF the Republic of Hawai-:
and the stockholders of said CORPORA
tion.' The use of the word 'stcckhold
ers' seems singular and it may be
quite significant They have been full
ly provided for before by lawful divi..
dends on their stock. -. .-=~@ .....--. II.
Franchise Unfair2 "..".~..
In some respects. says Judge Stuart
1t may be that the company's fran.
ehise is very unfair. l..
81 think" he says, that this could
be more properly claimed in reference
to the provision for the redemption Of
tho ranital stock without nroridino