Evening star., 1929-01-03
MaItbie and FIeharty Ques-
toned About Duration
of Arrangement.
SAUNDERS AND CLAYTON
OPINIONS ARE SOUGHT
Rights New Company. Would OBJ
tain Under Consolidation Reso-
lutions Being Investigated.

today by Chairman Capper of the Sen
ate District committee as to whether
the pending merger legislation would
give the new company perpetual fran
chise and whether it would be advisable
to limit the franchise to definite
period OF years.
The Senator put these questions in
letters to Dr. Milo r. Maltbie, the COM
mittee's expert consultant. and to
Ralph f. Fleharty, peoples counsel be-
fore the Public Utilities Commission
At the same time the Senator wrote
to William NICK. Clayton, of the util-
tiles committee of the Federation of
Citizens Association, asking him to
submit any recommendations he may
wish to make regarding changes in the
unification agreement.
The question of franchise rights the
new company would obtain under tho
merger resolution as 1t now stands was
raised by the Senator in the following
letter to DR.. Maltbie:
Letter to Maltbie.
Attention has recently been called
TO the possibility that passage of the
resolution ratifying the unification
agreement might give the new company
a perpetual. or, at least, indeterminate
franchise. This possibility is not dis
cussed in your report, nor In that OF
the Bureau of Efficiency.
las you know, the agreement calls
for Incorporation of the new company
under subchapter of chapter XVIII of
the District Code. Paragraph 2. of sec
ton 606 of that subchapter provides
that the corporations formed thereun-
der shall state in their certificates the
term of its existence, which may be per-
petual'
II note on page of the unification
agreement reference to the franchises
of the new company, and there is also
reference to franchises on pages 3,
IL and 16. I am informed that in
the cases OF some mergers or CONSOLE
dations, 1t has been held that the
successor company was entitled to the
benefit Of the longest franchise OBJ
tanned. What franchise the bus COM
pany may claim is not stated in your
report, nor the term of its existence
under its Delaware charter.
Under the circumstances tt seems
that there may be serious question as
to what rights the new company may
claim to the use of the streets OF the
District The suggestion has been
made that the agreement or resolution
should limit the use or franchise to a
definite period of years, say Is or 80.
We shall be glad to have your comment
on this. You are undoubtedly familiar
with what has been done elsewhere;
whether it is the practice to grant per-
petual or indeterminate franchises to
street railway companies: and, II not,
what restrictions are usual or custom
ary."
In his letter to Peoples Counsel
Fleharty Senator Capper inquired If
there is available definite information
as to the term of franchises or charters
aoW held by the principal and subsidiary
companies involved in the proposed
merger The Senator asked MIR.
Fleharty for his legal opinion on the
points raised regarding length of fran
chise, suggesting that this particular
problem may have been discussed either
in the hearings before the utilities COM
mission or the House District commit
tee.
Note to Clayton.
In the letter to Mr. Clayton Senator
Capper said the subcommittee directly
in charge of the merger plan desires
to take action as speedily as possible,
consistent, of course, with the public in
terest and welfare
Il think you will understand" the
letter to Mr.. Clayton concluded, that
we are not so much interested in gen.
eral discussion of the situation as we
are in definite, specific proposals for
changes or alterations You will tn.
derstand, of course. that the subcom-
If any, changes should be made"
Senator Capper also included in his
letter to DR. Maltbie request for COM
ment en- the suggestion of Henry J.
Saunders, consulting engineer, for
new rate base clause that would con-
template a revaluation of the new
company within one year after the
merger.
The Bureau of Efficiency and DR..
Maltbie are expected to file within
few days their answers to the letter
from the companies, and the Subcom-
mittee is likely to meet Tuesday or
Wednesday to begin it's deliberations.
The companies letter eliminated some
of the points of difference, but defended
the fairness of the $50.000,000 valua-
ton and contended the companies are
entitled to have an established rate base.
The agreement contained sugges-
ton that the companies believe the most
they should be asked to do would be to
shorten the time for which the estab-
lished rate base would be in effect, If
revaluation could be completed in less
time. The plan now provides for con-
tinuance of the rate base foT 10 years.