Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-03-05
Court Upho|ds
Ban on Transit
FinanceP|an
Burs $50 Million
Bond Retirement
And Dividend
BY Howard l. Dutkin

Federal Judge Edward M.
Curran today refused to dissolve
court order which restraints
for 10 days a move by the Cap
itaI Transit Co. to redeem $50
million in bonds and pay a 40
cent dividend to stockholders.
Judge Curran made his ruling
following day-long arguments
yesterday by Attorney Lloyd 3.
Harrison. representing the Pub
lie Utilities Commission and At
torne1 Edmund L. Jones. repre-
senting the transit company.
He gave no formal opinion.
The commission is contending
that the bond redemption and
dividend payment, the latter due
April /. would shake the COM
pany'S financial structure to the
extent that the public would face
curtailed service or possibly none
at all.
The transit company, pointing
to assets OF more than $25 million,
including capital equipment and
properties. asserts that the COM
pany is in excellent financial
condition.
Order Expires Tuesday.
The restraining order originally
was issued by Judge David A.
Pine IN the U. S. District Court
for the District of Columbia.
The order expires next Tuesday.
at which time arguments are
scheduled to be heard on a mo-
ton for a preliminary injunction
to prevent the bond redemption
and dividend moves. The re-
straining order was the first step
in efforts by the commission to
forestall the moves pending COM
pletion of commission investi-
cation into the transit company
scheduled to start March 16.
After the preliminary injunc-
ton issue is determined there
will remain further arguments
on a permanent injunction.
Mr.. Jones told reporters that
while he believes the upholding
OF the restraining order is APP
pealable to the U. S. Court of
Appeals for the District of CO.
lumbia. he has no present inten-
ton to file for appeal, since the
injunction hearing is SO close
at hand.
Claims BondhOlders Lose.
He said that under the courts
ruling bondholders stand to lose
more than S400 a day starting
April /. His position was that
since Capital Transit had put
up the cash for redemption of
the bonds. all interest on them
ceases as of the redemption date.
Mr. Jones told the court that
even if the company's profit this
year is so per cent lower than
the forecast. the company will
wind up with a cash balance of
S2,063.692 after taxes and all
other expenses.
Mr.. Jones referred to a $4,000
net loss shown in company oper-
atoms for last January. He said
the average weekly revenue COW
ering two weeks in February was
S290,446 higher than the aver
age for a similar period in jan
uary. He pointed out that a fare
increase granted the company
was in effect for only one day
in January.
Other Motions Involved.
Denial of the Capital Transit
motion also referred to similar
motions made by the Union
Trust Co., trustee for the bond
redemption, and a group Of
stockholders.
Judge Curran said yesterday
he was disturbed over the con-
tractural status of the bond
holders.
The Union Trust Co. already
has ben given $50 million by
the company to pay over to the
bondholders.
Payment to the trustee is pay
ment to the bondholders," the
| judge pointed out.
Disturbed by Payments.
On the other hand, the Judge
declared: What also disturbs
me is the payment of So million
in excess of income in dividends
during a four-year period and
failure to redeem the bonds cat
that tinonl He cold ho NO .