New-York tribune., 1919-12-20
Bronx Company Upheld in
Contest OH Present Rates
by Decision on Demurrer
by Appellate Division
Fair Charge Called For
Other Companies Expected
to Emphasize the Increase
i'm Costs Since 1917

In overruling yesterday a decision
of Justice McAvoy, of the Supreme
Court, the Appellate Division is be-
lieved to have opened the way for
proceedings by the Bronx Gas and
Electric Company which may result
in having declared unconstitutional
the present statuatory rate Of 81
thousand cubic feet of gas and make
it possible to establish a rate of $1.5O
While the decision Of the higher
court, which was unanimous, in this
instance affects only the Bronx com
pany, it is said it may lead to sim
liar proceedings by other companies
most of which charge only 80 cents
a thousand cubic feet--on the ground
alleged by the Bronx company that
the present rate is confiscatory. In
fact, it is regarded not unlikely that
the final outcome if favorable to the
company will induce other public ser
vice corporations to move for increased
rates for their service.
GrOund tor Company Action
The Judgment of Justice McAvoy,
which the Appellate Division reversed,
was one sustaining a demurrer inter
posed by Lewis Nixon, Public Service
Commissioner, to the injunction pro-
ceeding of the gas company to enjoin
the Public Service Commission, the At
torney General, the District Attorney
and the Corporation Counsel from en-
forcing the present gas rate, pending
the court action for a permanent in
junction. The Appellate Division de-
cided that Commissioner Nixon may
withdraw his demurrer and file an
amended answer.
1t is The contention Of the gas com
pany that the present gas rate was not
predicated on the industrial conditions
that exist to-day. According to the
Bronx company, the cost of the pro-
duction of gas since January, 1917, has
so Increased because of the advance in
The price OF labor and supplies that it
now costs more than 81 thousand
cubic feet to produce and distribute
the gas. The company pointed out that
in the year 1917 the operating ex-
penses Of its gas business exceeded the
income by S117.3S, this without the
the company said would bring the
deficit up to S32 $50. In 1918, the ex~
cess over income amounted to $685.
471.66, which, with the bonded indebted
ness, interest would amount to $72 1866
Charged Conditions a Basis
"If it should be proved upon the
trial. said the opinion Of the Appel
late Division, written by Justice Page,
that the facts alleged IN the complaint
are true, the statute (Chapter 125,
Laws OF 19O6), although valid in its in
ception. would have become, by reason
Of changed conditions. unconstitutional
and void, because confiscatory, and the
court has jurisdiction to hear and de-
termine this question. The complaint
therefore, to this extent at least, states
facts to constitute a cause Of action
OF which the court would have juris-
diction."
AS to the power of the court to de-
termlnc that the proposed 81 so rate is
a Just and reasonable rate" the Ap-
pellate Division said: at is principle
of common law early declared and long
recognized that where any one devotes
ms property to a use in which the
public has an interest, he must submit
10 publc regulation and control to give
proper and adequate service, and to
charge only reasonable price. The
right to exercise this control and regu-
lstlon has always been vested in the
Legis ature and not in the judicial
branch Of the government"
Justice Page 2.<icd in the opinion
that the Supreme Court has plenarv
jurisdiction and that a corporation or
person devoting property to public ser
vice sis bound to render reasonably
adequate service, for which he is en-
titled to exact fair charge"
Legislative Appeal Planned
1t is regarded as likely that the
Bronx Gas and Electric Company and
probably the other gas companies. will
appeal to the next Legislature to
change the law fixing the gas rate by
increasing the charge
The Appellate Division also denied
yesterday the application of the Brook
lyn Gas Company to vacate stay
granted last August. preventing that
company from charging Sl.3o a thou
sand cubic feet. The present charge
is S1.l0 thousand, which the com
pany argued was contscatory and in
adequate. Edward NJ. Bassett, former
Public Service commissioner, and Will
son II. Thompson, counsel for the
company, argued that the stay is work
ing great in ury to the company
Counsel for the Public Service Com
mission did not oppose the motion to
have the stay vacated, saying that the
company had made out a prima facie
case that justified the proposed charge.
The court, however, denied the appli-
cation without prejudice TO the right
Of the gas company to apply to the
Public Service Commission for the re-
lief sought.