Evening star., 1954-05-07
Transit Co. Dividend Barred,
Redemption Of Bonds Upheld
In Decision by Appeals Court
Possible Injury to
Public in Depletion
Of Funds Is Seen
By Howard L. Dutkin

1lC " ~ NOQA VI 1PpCd1S 4OA
the District of Columbia today
temporarily ruled out proposed
payment of a $384,000 quarterly
dividend but held that the Capt.
tai Transit Co. may redeem $50
million in bonds.
The courts ruling upheld in
part and reversed in part a de-
cision by Judge Edward M. Cur
ran in the U. S. District Court
for the District of Columbia.
1t upheld Judge Curran's rul-
ing in denying a preliminary in
junction to the Public Utilities
Commission which had sought to
block the bond redemption.
But the appellate court re-
versed him in the matter of the
quarterly dividend which he had
refused to enjoin.
Remanded to District Court.
Today's ruling remanded the
case to District Court with direc-
tions to modify the previous
ruling "or if it prefers to set it
aside and enter a new order,
so that an injunction will issue,
pending further order of the
District Court, against the pay
ment of the dividend. :"
The appellate court also in
structed the Public Utilities Com
mission to complete a current
investigation into the financial
structure of the transit company
insofar as it would affect mat
tiers involved in this litigation,
within a time fixed by the Dis
trict Court and within that time
to make any order it determines
to be right and proper under
the law. . d"
Possible Injury to Public.
The Appellate Court decided
there was sufficient basis in light
OF possible injury to the public
through depletion of company
funds, to warrant blocking the
dividend until completion of the
investigation.
I'm nothing we have said," the
opinion declared, do we intimate
what decision the commission
should reach. nor do we attempt
to delimit the scope OF its inves-
tlgatlon
But it stressed that the COM
mission must be given "a reason
able opportunity to decide in the
first instance what if anything
it validly =. should do affecting
the surplus from which the divi-
dend would be paid, and affect
ing the responsibilities of the
company -"
The court cited a SIS million
loan made by the company to
clear the way for its financial
moves. 1T said the fact of the
loan supports the view that the
program sought to be enjoined
could not be completed in safety
without the loan.
While declaring that this
makes the bond and loan trans
actions appropriate for commlS-
sion study, the court declared:
I'VE are unable to conclude,
however, that there is SuDStan-
tlal likelihood the commission
valldly can require a cancellation
Or modification of the bond re-
oemption program"
Would Virtually Clear Debt.
This is so, the court said, be-
cause the redemption virtually
Will tree the company OF DEBT.
The opinion admitted that the
outlay OF nearly 81 million for
the bond redemption mlgnt pe
unWiSe.
But the money will be used
to pay a bonded Indebtedness;
and the commission is quite un-
likely to be able to find that
the immediate total redemption
of all bonds is SO improvident
that it can be validly pro-,
hibited. :"
Turning to the question of
dividends, the court pointed out
that. disregarding a four -to-one
split in its common stock. the
company since January /, 1850,
has paid $29 in dividends on each
share or las per cent of the $40
paid for each share by the
present management.
In addition, it said, the market
value Of the stock has greatly
(See TRANSIT, Page A-4)