New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-02-22
City S Plan to
Sell $4 100000
Stocks Held Up
Justice Cropsey, in Service
Commission Expense De-
cision, Hits Hylan Regime
Asserts 1t Creates Chaos
Says Undoing of Other Adj
ministrations' Work Starts
Havoc, Destroys Finality

In granting an injunction restrain
ing the Board of Estimate from issu-
ing $4,000, 900 Of corporate stock to
pay the expenses of the Public Ser
vice Commission, Justice Cropsey in
the Supreme Court yesterday declared
that the present city administration
"seeks to upset and undo all that has
been done in the years past by prior
adm lnlstrations.'
followed would work havoc" he CON
tinucd 1T would make conditions
chaotic. There would be no hnaity
to any action, for each succeeding ad-
mnistration would undo what any Of
its predecessors had done or could
even reverse itself"
In defence of its proposed action,
the city contended it was within its
rights in the issuance of the corporate
stock, S1,000'000 of which was to pay
the commissions expenses, the re-
mainder to go into the general fund
Tor the reduction of taxes
Expenses Already Met
Leonard NJ. Wallstein, who presented
the case for the Citizens Union as
plaintiff, argued that the commissions
expenses had already been met by the
sale OF special revenue bonds, still
outstanding.
=, Justice Cropsey pointed ont that the
Estimate Boards resolution provid-
ing tor the corporate stock issue would
have Sf000.000 Of the revenue bonds
redeemed by the proceeds from the
proposed sale Of corporate stock.
Otherwise, the revenue bonds would
have to be paid out of the years taxes
The amount would be included in the
tax levy automatically through a char
ter provision.
Would Pay No Specific Debt
AT the outset Justice Cropsey stated,
IT was decided to meet the commits
sion's expenses by issuing revenue
bonds, and these cannot be issued pend
ing the issue of corporate stock. The
city charter provides for the issue of
corporate stock notes" pending the
issuance of corporate stock. but rcve-
nue. bonds may not be issued for such
purpose. AS 10 the $1,000 600 it was
proposed TO turn into the general fund
the decision said:
ut would pay no specific debt or
obligation. 1t would merely furnish so
much additional funds applicable by
the city for its general needs. The sum
to the credit of the general fund has
to be deducted from the sums neces-
sary to be raised by taxation. SO the
payment Of this sum into the general
fund would result in reducing the tax
rate and would generally dispense with
the necessity for raising an equal
amount by taxation to cover the needs
of the city for the current year
Would Violate Charter
cine charter prohibits the use of
the proceeds of the sale of corporate
stock to pay the city's Operating ex-
penses' and specifically provides that
corporate stock cannot be issued for
other than revenue producing i'm
provements' with a few exceptions
that do not affect this matter. This
is the so-called 'pay-as- you-g go pro
VISION OF the charter, added by Chapter
615, Laws Of 1916.
Paying the proceeds of the sale of
corporate stock into the general fund
would mean then the use of the money
Tor the very purpose prohibited by the
charter. 1T is unqucstioned that city
can issue bonds only as expressly au
thorlzed by statutes and unless so au-
thorizcd they are void. The CITY has
no general power in the absence of
express statute to issue corporate
stock or bonds to reimburse its treas
ury Tor payments made from it,
Justice Cropscy said that a step sim
liar to that proposed by the present
city officials was taken by prior city
administration in 1914, at which time
nothing was done 20 prevent it. How
ever, the justice stated, "if an act is
illegal 1T cannot be justified because
some other administration has also
dIsrcgardcd the law"