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

very doubtful one 10 lie stock sub
scTiGers They were taking chances
that many a prudent man would not
feel ike taking, The rablic was very
The defendant company has the right
10 issue stock and the amount of this
stock is limited by the actual cost and
the 25 per cent added thereto. Ne
question is raised as to the right OF
the legislature to grant this % per
cent In addition to the actual cost.
Much may be said in favor OF such a
grant and much may be said against
IT, but | must take the grant as find
II ...:... -. .~...:.".
The decision, in this respect, con.
tinues as follows: -. ....- ...-.....
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 OF
the plant at the time the rate Is fixed.
ITO illustrate. $4,000 par value OF
stock may be issued in a given enter.
prise that is only worth in the market
at the time of the fixing OF the rates
s2500 Really the two propositions
have only a distant and uncertain re-
lation 10 each other. if they have any
dependable relation at all II 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 IS 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. H..
Had Urged Accounting. ....
''But the plaintiff says g. large part
Of this money came from the earnings
OF the system in which the territorE
was TO share upon certain basis, de
fined by the charter. This may he
true; and ii was for this reason that
the court has time and again sug.
gested an amendment to the plead
ings, so that full 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 cues
tion before it to, try, namely, whether
or not the stock could be increased to
$16G0,000, as being within the Iegiti-
mate cost of the plant" 3,-.-. ....~.>
The decision at this point quotes in
full section II of the Rapid Transits
franchise. granted by the legislature
and approved by the president, relat
ing to charges upon earnings. IT..
But ! have nothing to do about thie
provision under the pleadings in this
case says Judge Stuart IF there
is surplus left after providing for
all of the expenditures down to .divi-
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 Hawaii
and the. stockholders of said cor ora /
tion.' The use OF the word .stockhold-
ers' seems singular and it may he
quite significant They have been fill
~ provided fer. before by lawful divi
dends on their stock. .. s ~ -.
Franchise Unfair? ..- -..i5......::
In some respects, says Judge Stuart
1t may be that the company's fran.
chise is very unfair. -.
II think he says, that this could
be more properly claimed in reference
to the provision for the redemption of
the eanital stock withcut nrovidfro