The herald and news. [volume] (Newberry S.C.) 1903-1937, 1922-05-26
DEFENDANTS MAKE
RATE CASE REPE Y
FULL DENIAL OF COMPANY'S
ALLEGATIONS
Railroad Commission and Attorney
General Deny Rates
Corhscatory
The State.

The State.
Charleston, May 23.-Answering
the original bill of complaint upon
which Judge H. A. NJ. Smith issued
an Injunction restraining the state au-
thorties from enforcing the telephone
rates provided for in the Foster act
passed by the general assembly this
wear. the railroad commission, attor-
nev general and others, defendants
in the proceedings, deny the main al
LEGATIONS of the plaintiff, the Sou
thern Bell Telephone & Telegraph
company, and allege that the rates
involved are not confscatory, and
they allege furthermore that in It's
relation with the American Telephone
E. Telegraph company and through
Improper charges and accounting
methods, the plaintiff shows thin
earnings, while the real party IN IN
terest. the American Telephone q
Telegraph company, is in fact recelv-
ing larger earnings from its invest
ments in this state, held in the name
of its subsidiaries, and is thereby in
ereasing constantly and largely pro-
fits and surplus, as we'll as It's dlvl-
dends and the value of its stock and
properties.
The following are some of the ALE
gators made by the defendants IN
answering the bill of complaint:
..That the plaintiff is mere in
strumentality, conduit or adjunct OF
the American Telephone & Telegraph
company, and the purpose and effects
of SAID form of organization is to set
up fictitious entity, which performs
the bidding of the parent company, is
Fed or bled as the exigencies OF con-
ditions may require, but always with
the intent and purpose that It: state
ment of earnings may show some
thing less than fair return on It's
property. so that at will it may show
to regulating commissions the need
for higher rates and support such
demand by a system of bookkeeping
and accounting, which misleads and
deceives.
."That the relations between this
real party in interest and the PLAIN
tiff are such as to carry out and Ell
fectuate the foregoing purpose, and
to drain the subsidiary company OF
its rightful revenue and earnings IN
this state specially
The defendants list the alleged
methods in which the results are
brought about, through purchase OF
supplies and equipment from the
Western Electric company, another
alleged subsidiary; the charge and
collection by the American Telephone
& Telegraph company of IL per
cent Of all the gross receipts of the
plaintiff; in It's long distance toll con-
tract with the American Telephone q
Telegraph company; through depict
ing earnings and income by charging
more than a fair share or proper or
average amount for repairs, deprecla-
ton. traffic and commercial expenses.
It is alle~ed by the defendants that
It is necessary to q full and adequate
hearing and understanding by the
court of the matters presented by the
plaintiff in it's bill, and to understand
and pass on proper and fair rate,
that the American Telephone & Tele-
graph company, which is also cor
porstion engaged in business in this
state, be made party to the acton.
and be required to appear before this
court and TO submit itself and it's
books. as well as the books Of the
plaintiff herein, to an inspection and
examination by the defendants and
their agents and by this court.
The defendants conclude the an
swer by praying that the bill of COM
plant be dismissed. At hearing held
May 6, Judge Smith refused to dis
miss the bill of complaint on grounds
as then set forth by the plaintiff, and
gave the defendants 80 days in which
to answer to the original bill of COM
plant. The case will in due time be
heard on its merits, it is thought.