Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-03-16
Transit Wins
Court Approval
For Dividends
Bon on Restraint
Permits Redeeminq
Of Bond Issue

@SASAo a. ONNSC GQWdIQ M. SuIS
ran today refused to prevent the
Capital Transit Co. from redeem
ing $50 million in bonds and
paying $384,000 in a quarters
dividend to stockholders.
In his ruling, which denied an
injunction to the Public Utili-
ties Commission, the Judge said:
1.-THE utility is not the prop
erty Of the Public Utilities Com
mission, but rather belongs to
the company and the stock
holders. :"
Judge Curran, sitting in the
U. S. District Court for the Dis
trict of Columbia, held further
that under terms of an agree
ment with bondholders which
was approved by the utilities
commission, the company prop
erly posted funds for the bond
recall.
The money was placed with
the Union Trust Co. as trustee
under the bond agreement, and
the Judge held that the bank
had an obligation to proceed
with the bond redemption.
Appeal Is Considered.
The judge said he would de-
lay signing a formal order until
Lloyd B. Harrison, commission
attorney. had opportunity to set
appeal machinery in motion.
Mr.. Harrison told reporters he
would confer with commission
officials today as to what steps
to take.
He added that he would ask
Judge Curran to enjoin the bond
and dividend plan until appeal
is filed with the u. S. Court of
Appeals for the District if such
action is recommended by the
commission.
Mr.. Harrison also said that If
an appeal is filed he would
ask the appellate court to enjoin
the company's moves pending
hnal determination of the issue
by that tribunal.
Public Seen Unframed.
The public Utilities Commits
sion has sought the injunction on
the grounds that the proposed
bond-dividend actions were an
other step in what Mr.. Harrison
termed the milking" of the
company by management.
Mr.. Harrison contends that
the bond redemption and the
dividend payment might so affect
the financial structure of the
utility as to impair its service
to the public.
But Judge Curran held that
there had been no clear showing
that the public was in danger
of immediate and irreparable
injury ="
An inquiry into the affairs of
the transit company by the Pub
lie Utilities Commission which
was scheduled to start today has
been indefinitely postponed.
Creature of Statute"
In his opinion, which Judge
Curran delivered from notes, he
declared:
THE Public Utilities Commits
sion is creature of statute and
its jurisdiction is limited to
powers expressly conferred by
Congress =.
while much power is given
the Public Utilities Commission
in the regulation of utilities, the
utility is not the property of the
Public Utilities Commission bus
rather belongs to the company
and the stockholders.
Regulation by the Public Util-
tiles Commission must not con-
stitute management and opera
ton :" The judge then cited
the right of stockholders ito
share in the property" in which
they have stock ownership.
While he declared that the
company is limited to a reason
able rate of return, he asserted
1.-The Public Utilities Commits
sion has not the power to con-
troll the internal affairs of the
utility :"
The bond redemption, he said
lis payment of a just and law
full debt . " BY redeeming the
bonds before the 1864 maturity
date, the judge pointed out, the
company has saved a large
amount in interest payments.
Trustees Obligation Stressed.
Under the agreement with the
bondholders, Judge Curran said.
1.-The trustee Union Trust Coz is
under legal obligation to pay off
the bonds"
Turing to the question of divi-
dends, Judge Curran declared:
1T is not clear from the evi-