Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-03-06
Union Attacks
Capital Transit
Plan
Proposal Seen as
Peril to Pension
Rights Of Employees


OOA1No dA1Q pdy q SU@CCLII QudI .
terly dividend to stockholders
would .endanger the pension
rights Of employees, the transit
union charged yesterday.
The allegation was contained
in a motion to intervene In It'll
cation involving the company
plans in a complaint asking
that the Federal Court enioin
the company from carrying out
the bond-redemption and divi-
dend payment.
The papers were fled late yes
terday afternoon in the U. s..
District Court for the District
of Columbia by Division $50,
Amalgamated Association Of
Street. Electric Railway and Mo-
tor Coach Employees.
Danger of Strike.
The injunction complaint de-
clared danger of a strike has
existed since about March, 1858,
following a union request to
modify the pension program.
No agreement has been reached
and the company has refused to
arbitrate or to appear before a
fact-flnding board, the complaint
alleged.
The company refused to arbi-
trate, the union asserted, "be-
cause of its continuing liquida-
ton Of invested capital"
The complaint declared that
the $384,000 to be paid out in
dividends under the company
plan now in litigation would
exceed by $294.464 the $50, 536
of free surplus available for divi-
dends as of January 81, 1854"
Capital Transit attorneys
have said that one reason for
desiring to redeem the bonds
is that the move would free
about $3.1 million in funds now
restricted.)
Deficiency Seen.
The union asserted that pay
ment of the dividend and re-
demption of the bonds would
result in a cash deficiency "aS-
Stunning no net income" of $780,
956.
Capital Transit has argued
there is no basis for assuming
that the company will gain no
net income this year and cited a
Public Utilities Commission fore
cast of last January that the
company expected to make STA
million this year. The same
month the forecast was made,
the company lost $4,000. But
company attorneys point to the
fact that the fare increase was
in effect for only one day of
that month.
The union declared that when
the pension plan was adopted.
the company elected to amortize
accrued past service pension Ii
ability out of current operating
income. rather than from sur
plus earned during the period
when such past services were
performed.
At the time Of the agreement,
the union asserted the cash
working capital Of the company
was available in large part as the
result of the outstanding bond
issue.
Surplus Seen in Danger.
by its proposed payment Of
dividends out of earned surplus,
the company threatens not only
to reduce present operating in
come but as well to dissipate the
surplus earned while such past
services were perform ed. and said
earned surplus constituting the
only other source from which the
company may meet its past serv-
ice liabilities. :"
In an affidavat accompanying
the motion and the complaint,
Walter j. Bierwagen, president
OF the union division, cited rec
concentrations made for CONVEX
sion from streetcar service to bus
service. If the conversion were
to be made today it would cost
a total of $9.8 million. he said,
while admitting the conversion
probably would be spread out
over a period Of years.
The union asked that the mo-
ton to intervene be heard next
Thursday.
Meanwhile arguments on a
complaint for a preliminary in
junction. sought by the Public
Utilities Commission to block
the bond-redemption and divi-
dend payment, will be heard
next Tuesday in the District
Court.
Yesterday Judge Edward M.
Curran refused to lift re-
straining order. which tempo
rarily blocks the bond and divi-
dend moves. The restraining or
der expires next Tuesday.
Attorney Edmund L. Jones,
representing the transit COM
pany. told reporters that while
he believes the upholding of the
restraining order can be taken
to the U. S. Court of Appeals
for the District of Columbia,
he has no present intention to
file for appeal. since the injunc-
Ia l.