54 A.D.2d 10, Public Service Commission v. Jamaica Water Supply Co.
|Citation:||54 A.D.2d 10, 386 N.Y.S.2d 230|
|Party Name:||Public Service Commission v. Jamaica Water Supply Co.|
|Case Date:||August 05, 1976|
|Court:||New York Supreme Court Appelate Division, Third Department|
[386 N.Y.S.2d 231] Peter H. Schiff, Albany (Charles R. Gibson, Albany, of counsel), for appellant.
Meyer, English & Cianciulli, P.C., Mineola (Bernard S. Meyer, Mineola, of counsel), for respondents.
W. Bernard Richland, Corp. Counsel, New York City (John C. Brennan, New York City, of counsel), for City of New York, amicus curiae.
Before SWEENEY, J.P., and MAIN, LARKIN, HERLIHY and REYNOLDS, JJ.
Respondent Jamaica Water Supply Company (hereinafter Jamaica) is a waterworks corporation 96% Of whose common stock is owned by respondent Welsbach Corporation. By orders of February 27 and 28, 1974 and an amended order of March 26, 1974 issued by the Public Service Commission, Jamaica was prohibited from declaring or paying dividends on its common stock. The Commission found that it had accumulated some $275,000 in overdue accounts payable and concluded that the company's failure to pay its bills could impair its credit and impede its ability to provide adequate service at just and reasonable rates. At such time, Jamaica's total accounts payable amounted to nearly $1,000,000, of which a substantial amount was overdue; it had a negative working capital of over $1,000,000; it had no unused line of credit; and it was operating at a net loss. It had retained earnings, however, of approximately $3,370,000.
Thereafter, in May of 1975, Jamaica filed an application with the Commission to have the prohibition lifted in view of its alleged improved financial condition. On October 15, 1975 Jamaica withdrew the application and paid a common stock dividend in violation of the outstanding Public Service Commission orders. The Commission then instituted this proceeding pursuant to section 89--m of the Public Service Law to enforce its orders. Special Term dismissed the petition on the ground that the Commission had no statutory authorization to issue such orders.
The issue raised in this case is whether or not the Commission has the Power to restrain a water supply company from paying dividends on its common stock.
The Commission may exercise such powers as are expressly conferred upon it by the Legislature...
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