Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-15
Sale Made Without District
Utility Commissions A.
thoriZation.
AGAIN RAISES QUESTION
.OF TRANSACTION LEGALITY
Chesapeake & Potomac Manager
Files Report Of Deal With
Board Here.

Without the authority OF the Public
Utilities Commission the Chesapeake h
Potomac Telephone Co, June 80 last.
sold $4,000 600 Of its capital stock TO
the American Telephone d. Telegraph
Co, it was disclosed today. The sale
raises again the question Of legality of
the transaction under the provisions Of
the La Toilette Rnti-merger act.
Notice of the sale was filed with the
commission this morning by the COM
pany and at the same time John A.
Remon. general mana ger, issued q state
ment declaring that the transaction did
not constitute a violation Of the La Fol-
lette act and that there had been no
change in the relationship between the
company and the American Telephone 81
Telegraph as a result.
Previous Issue Cancelled.
previous issue OF s., 900 900 in stock
to the A. T. 81 T. was ruled illegal by
the commission The company sub
seQuently Cancelled the issue.
The telephone stock. constituting
so 900 shares was sold at par value Of
500 each. The $5000.000 realized
from the sale, it was announced, was
applied by the company in dischargirg
cent demand notes outstanding April
80. last
The Utilities Commission last month
authorized the company to issue $1,000
900 worth OF common stock, which would
have brought its capitalization up TO
$50 100000. The authority. however,
did not extend TO selling he stock to the
A. T. d T.. which owned up to June 80
all Of the then $4,000 900 common stock
0f tho Wa shin cJtn1O
Court Test Indicated.
The Utilities Commission did rot
sta what action it would take II th,
company sold the stock to the A. T. 4,
r, although there we've indications thst
it would bring action in court 10 test
The validity of the sale under the La
Toilette act. This act forbids the pur-
chase of more than 20 per cent OF the
capital stock OF q local public utility
oy q foreign public utility or nolding
corporation. Counsel for the commits
sion has previously held the A. T. l. +.
| to be both a foreign public utility
| poration with IN th. meaning Of the
act.
The statement issued by Mr. Remon
| regarding the sale OF the stock, follows:
The Chesapeake d Potomac Tele-
phone Co. is today filing the report re-
quired under formal order No. 92e of
the Public Utilities Commission of the
District OF Columbia, authorizing the
issuance OF additional common stock
by the telephone company.
The report sets forth that capital
stock in the amount Of 5000 900 has
been sold to the American Telephone d.
Telegraph Co. and the proceeds used to
retire short term notes.
Not Merger
Before this stock was issued the
Chesapeake e. Potomac Telephone Co
was owned entirely by the American
Telephone &, Telegraph Co. After this
stock was issued the chesapeake d.
Potomac Telephone Co was owned en-
tirely by the American Telephone S5
Telegraph Co. 1t was no more merged
after the issue OF the stock than it was
before. The relationship OF the two
companies is exactly as 1t was for the
FIVE wears before the La Toilette anti
merger act was passed and during the
l8 years since it was passed. There
has been no merger. There has been .
continuation of the same ownership.
The Chesa peake IL Potomac Tele-
phone Co has been doing a telephone
business in the District o: Columbia
for more than As years. Neither before
nor after the enactment Of the L.,
Toilette anti-mereer act has 1t done
anything in any way to circumvent or
attempt TO evade any law and the Of
fcers OF the company feel definitely
that it is not so doing by the issuance
OF this stock TO the American Teie-
phone e. Telegraph Co"
Notice FuIfiIs Order.
The company's formal notice of the
| sale. prepared by H. c. Gretz, general
| auditor, was filed with the commission
in compliance with its general order
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