Attorney General v. Trustees of Boston Elevated Ry. Co.
| Decision Date | 03 June 1946 |
| Citation | 67 N.E.2d 676,319 Mass. 642 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | ATTORNEY GENERAL v. TRUSTEES OF BOSTON ELEVATED RAILWAY COMPANY & another. |
December 5, 1944.
Present: FIELD, C.
J., QUA, DOLAN RONAN, & WILKINS, JJ.
Boston Elevated Railway Company. Attorney General. Equity Jurisdiction Information, Public control act, Declaratory judgment. Equity Pleading and Practice, Parties, Bill, Demurrer. Public Utilities. Limitations, Statute of. Words "Depreciation," "Obsolescence."
Resolve 1941, c 89, did not authorize the Attorney General to bring in his own name an information in equity to obtain a declaratory decree and injunctive relief with reference to certain items alleged to have been wrongfully and illegally charged by the trustees of the Boston Elevated
Railway Company to the cost of service, thereby lessening the amounts payable by the Commonwealth under the contractual arrangement with the company established by the public control act, Spec. St. 1918, c. 159, as amended; proceedings under the resolve should have been a suit in equity brought by the members of the department of public utilities.
Interpretation of the contractual arrangement, established by the public control act, Spec. St. 1918, c. 159, as amended, between the
Commonwealth and the Boston Elevated Railway Company, as to the authority of the trustees thereunder as agents of the company to make certain charges to the cost of service, was a proper subject for a suit in equity brought under Res. 1941, c. 89, by the members of the department of public utilities for a declaratory decree.
The mere inclusion of a prayer for an injunction in a bill in equity for a declaratory decree did not require reversal of an interlocutory decree overruling a demurrer to the bill where it appeared that the averments of the bill were sufficient to present a case for a declaratory decree and the question, whether an injunction should issue, could not be determined until after a hearing of the suit on the merits. The provision of Section 6 of the public control act, Spec. St. 1918, c.
159, enumerating, among items which the trustees of the Boston Elevated Railway Company might charge to cost of service in their accountings with the Commonwealth, "such allowance as they may deem necessary or advisable, for depreciation of property and for obsolescence and losses in respect to property sold, destroyed, or abandoned, [and] all other expenditures and charges which under the laws of the Commonwealth now or hereafter in effect may be properly chargeable against income or surplus," and the provision of Section 13 that they were to "maintain the property of the company in good operating condition and to make such provision for depreciation, obsolescence and rehabilitation, that, upon the expiration of the period of public management and operation, the property shall be in good operating condition," did not authorize the trustees to charge to cost of service in their accountings with the Commonwealth amounts which represented losses the company had sustained with reference to capital assets retired before the trustees took over possession and management, or depreciation or obsolescence which had accrued on the property prior to that time. The determination of what sums should be expended by the trustees of the
Boston Elevated Railway Company under Section 13 of the public control act, Spec. St. 1918, c. 159, for "rehabilitation," if the $2,000,000 furnished by the company for additions and improvements proved insufficient for that purpose, was left in the first instance to the trustees, whose judgment could not be set aside in a suit in equity under Res. 1941, c. 89, unless it was shown, upon proof of averments of fact in the bill, that they could not have reasonably arrived at conclusions which they reached. The reimbursement of the Commonwealth by the Boston Elevated Railway
Company pursuant to St. 1931, c. 333, did not constitute such a final settlement of all financial matters then pending between them as to preclude the Commonwealth's thereafter questioning the validity of items previously included by the trustees in cost of service in their operation of the railway under the public control act.
A suit in equity in behalf of the Commonwealth to require the trustees of the Boston Elevated Railway Company to account for sums improperly charged by them to cost of service in their accountings under the public control act was not shown on demurrer to have been barred by the statute of limitations where the averments of the bill did not disclose that the suit was not brought within the statutory period after an alleged breach of the statute by reason of such charges had been, or should have been, discovered by the public authorities.
The trustees of the Boston Elevated Railway Company are not required during the period of public control to keep their books in conformity with regulations of any governmental agency which are directed to privately owned and operated railway systems.
An averment in a bill in equity by members of the department of public utilities against the trustees of the Boston Elevated Railway Company under Res. 1941, c. 89, that the trustees had no power to use the straight line method of depreciation in their accountings, stated no ground for relief; nor did an averment that the trustees did not have an appraisal made of the company's property when they took possession on
July 1, 1918, and did not ascertain by an examination of the property the amount that it had been depreciated. In their accountings under the public control act, the trustees of the
Boston Elevated Railway Company were not without power to include as items of cost of service depreciation of viaducts and elevated structures.
A demurrer to a bill in equity properly was overruled where sufficient grounds for relief were averred although the bill included some paragraphs dealing with matters concerning which no relief could be granted: the demurrer must be treated as a unit.
INFORMATION IN EQUITY, filed in the Superior Court on January 26, 1942, and afterwards amended, against the trustees of the Boston Elevated Railway Company and that corporation.
A petition by the city of Boston for leave to intervene was allowed. A demurrer by the Boston Elevated Railway Company was heard by Forte, J., by whose order an interlocutory decree overruling the demurrer was entered, and who reported to this court "for determination the questions raised by the causes of demurrer therein set out, the said interlocutory decree overruling said demurrer to be affirmed, modified or reversed."
R. H. Holt, (T.
W. Cousens with him,) for Boston Elevated Railway Company.
J. K. Collins, Assistant Attorney General, for the Attorney General. J. W. Kelleher, Assistant Corporation Counsel, for the city of Boston.
This is an information in equity, alleged to have been brought in accordance with Res. 1941, c. 89, by the Attorney General in his own name as such officer against the trustees of the Boston Elevated Railway Company appointed under Spec. St 1918, c. 159, as amended, and against the Boston Elevated Railway Company, seeking a declaratory decree as to the manner in which the trustees should keep the books, accounts and balance sheets of the company and defining the authority of the said trustees to include certain charges as a part of the cost of service rendered by the company under their management and operation, and praying for an injunction to restrain the trustees from charging in the future against the cost of service such items as may be determined in this suit to be beyond their authority to charge. The demurrer of the Boston Elevated Railway Company was overruled in the Superior Court, and the judge reported to this court the questions raised by the demurrer.
We summarize the material allegations of the information. The Boston Elevated Railway Company, hereinafter called the company, raised $3,000,000 by an issue of preferred stock, $1,000,000 of which was used to create a reserve fund for the purposes mentioned in Spec. St. 1918, c. 159, hereinafter called the public control act, and the balance was by said act put at the disposal of the public trustees, hereinafter called the trustees, for the purchase of additions and improvements. When the trustees took over the management and operation of the company on July 1, 1918, a substantial part of its property, especially the surface tracks, roadbed and cars, was not in good operating condition due to the failure of the company to make necessary repairs and to make provision for depreciation and obsolescence. The cost of much of the property, the use of which had been abandoned, continued to appear on the books of the company and was in excess of the amount of the depreciation reserve shown as "Accrued Depreciation," and, if an equal annual charge for depreciation had been made, the total accrued depreciation unprovided for by the company would have exceeded $22,000,000 and consequently the books and accounts of the company on July 1, 1918, did not reflect the true financial condition of the company.
The trustees have continued the books and accounts of the company, and have failed to write off from the road and equipment accounts amounts carried therein on account of property retired from service prior to July 1, 1918. The trustees have failed to revise the balance sheet of the company to show the accrued depreciation which had not been provided for by the company, and to keep the books of the company in such manner as to show the true financial condition of the company.
The trustees between July 1, 1918, and December 31, 1923, charged to the cost of service as maintenance expense $154,460.75 for...
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