The New York herald., 1922-05-27
us. COURT FORBIDS
|. CUT IN PHONE RATES
Injunction Says Return Set
by Service Commission
Is Unfair.
OPINION is UNANIMOUS
New Legal Battle Oh What
Is Adequate Tariff Is
to Come.
EXPENSE ITEMS DECIDED
Only Hope of Reduction Lies
in Appeal to U. S. Supreme
Court.
EXPENSE ITEMS DECIDED

The United States District Court
yesterday granted the application OF
the New York Telephone Company for
an injunction pending trial TO prevent
the Public Service Commission from
putting into effect Its two orders of
March 3 reducing rates in this city
by per cent. and in many districts
outside the city by Z per cent Tie
question OF what is fair rate is now
left to be settled in the courts much
after the fashion of the long drawn
out battle over gas rates, which was
settled only recently by the United
States Supreme Court in favor Of the
gas companies.
The decision was written by Circuit
Judge Charles NJ Hough, who with
District Judges A. N. Hand and John
c. Knox sat in the statutory court
which considered the case.
Tie opinion concluded with this
statement:
we do not undertake to make rate,
but We are of the opinion that such a
return as is hereinabove indicated .
is not and cannot possibly be fair
return for any business like the tele-
city of New York at the present time"
When the Public Service Commission
promulgated the orders reducing rates
the New York Telephone Company be-
gan an action In equity to enjoin the
commission from putting into effect the
orders which were to have become oper-
ative April 1. Application for tenn
porary stay was approved by Judge
Hand. and the motion for an injunction
was argued early In April.
1t was contended by the plaintiff,
represented by John w. Davis. former
Ambassador to Great Britain, and John
r.. Swayze that the two orders of the
Public Service Commission were confis-
catory and in violation Of the Constitu-
ton of the United States. .Ledyard p.
Hale represented the Public Service
| Commission. Charles d. Newton. At
! torney- General. and John r. O'Brien
| Corporation Counsel, appeared as party
defendants.
| The opinion says that. while the orders
that the New York Telephone Company
complains Of are called Temporary" by
ton is not essential. The opinion. says
the legal principle is admitted that the
telephone company, like every public
utility corporation. is entitled to receive
an income which is a fair return on its
property dedicated to public use.
After long exposition and discussion
of the facts set up regarding the esti-
mates placed by the telephone company
upo:. the value of its properties. upon
which a rate must be based, the opin-
ion says:
I'VE find it therefore. IL not admitted
rot seriously opposed that at the begin
ming of 1922 the cost, including work
ing capital, of the plaintiffs plant in
the State Of New York was in excess
of $240. 900, 900. The only statement in
opposition, IL IL can be called more than
an opinion. is that of Mr.. Maltbie. who
has, after making certain deductions
placed the valuation at s225, 600 .0o0."
The court then reviews the evidence
submitted in the form of affidavits. ex-
hibits, &C.. and finds the net returns
for 1921 to have been sS.l75,lS0. The
opinion continues:
"It Is so evident as to dispense with
discussion that to deduct anything from
This net revenue--if correctly stated-is
20 leave most unfair return on the
cost: therefore defendants attack what
The plaintiffs call expense"