Great Lakes Stages, Inc., v. Pub. Util. Comm.

• Decision Date: 01 May 1929
• Docket Number: 21532
• Citation: 166 N.E. 404,120 Ohio St. 491
• Parties: Great Lakes Stages, Inc., v. Public Utilities Commission Of Ohio.
• Court: Ohio Supreme Court

166 N.E. 404

120 Ohio St. 491

Great Lakes Stages, Inc., v. Public Utilities Commission Of Ohio.

No. 21532

Supreme Court of Ohio

May 1, 1929

Public Utilities Commission - Jurisdiction to approve stock and bond issues - Sections 614-53 and 614-55, General Code - Inapplicable to interstate public utilities, when - Proceeds of securities to be used outside Ohio - Motor transportation company.

Under Sections 614-53 and 614-55, General Code, the Public Utilities Commission has not jurisdiction to grant to an interstate public utility authority to issue stock, bonds notes or other evidence of indebtedness for the acquisition of property, the construction, completion, extension or improvement of its facilities or the improvement or maintenance of its service outside of the state.

This case arises as an error proceeding to an order of the Public Utilities Commission of Ohio, in which the commission dismissed an application of the Great Lakes Stages, Inc., for authority to issue and dispose of common and preferred capital stock. The application recited that the applicant is the holder of a certificate of public convenience and necessity, both intrastate and interstate, its intrastate route running from Cleveland east to the Pennsylvania line through Willoughby, Mentor, Painesville, Geneva, Ashtabula and Conneaut, Ohio, and that in July, 1924, and in April 1928, the commission authorized the issuance and disposal of certain common capital stock and preferred stock of the plaintiff in error, in amounts stipulated in such orders. Upon December 29, 1928, as shown by the application, the board of directors of the applicant, by resolution, authorized the issuance of 1,233 shares of common stock and 893 shares of preferred stock for cash, the funds secured thereby to be used for additional working capital to purchase additional equipment to carry on its interstate business.

The application further states that in the past year the character of the applicant's business has greatly changed, and, while its original operation was entirely within the geographical limits of the state of Ohio, it now operates interstate lines between Cleveland and Buffalo, Buffalo and New York City, Pittsburgh and Buffalo, and between Scranton, Pa., and Philadelphia, covering in its entire operation the four states of Ohio, Pennsylvania, New Jersey, and New York. The application sets forth that the plaintiff in error carries both intra state and interstate passengers on all of its busses, and is in need of additional working capital to carry on its business and to further its general corporate purposes.

It is conceded that the authority to issue and dispose of common capital stock given by the commission in 1924 and 1928 was granted prior to the time that the applicant extended its operations into an interstate transaction. Upon January 16, 1929, the commission denied the application in the following order:

"This day it appearing to the commission from the verified allegations in said application and the sworn statements and exhibits filed in connection therewith and other documentary evidence submitted, that the taking of oral testimony herein is unnecessary, this matter came on for consideration upon the application of Great Lakes Stages, Inc., a corporation which, among others, is engaged in the maintenance and operation of a motor transportation company carrying passengers in interstate commerce from Conneaut, Ohio, to the city of New York, New York, asking consent and authority to issue and sell, at the par value thereof, eight per cent. preferred capital stock of the par value of $82,500.00, the proceeds arising from the sale of such issue to be used to provide additional equipment and working capital for such interstate operation aforesaid.

"The commission, being fully advised in the premises finds:

"That the jurisdiction of this commission to authorize the capitalization of property does not extend to property the permanent situs of which is not within the geographical boundaries of the state of Ohio, and

"That the permanent situs of none of the items of property proposed to be capitalized by such issue of preferred capital stock is within the geographical boundaries of the state of Ohio.

"It is therefore, ordered, That, for want of jurisdiction, said application be, and hereby the same is dismissed."

Messrs. McConnell, Blackmore & Cory, for plaintiff in error.

Mr. Gilbert Bettman, attorney general, and Mr. T. J. Herbert, for defendant in error.

ALLEN J.

It is conceded that the plaintiff in error is a public utility within the purview of the General Code of Ohio, and that the sole legal ques- tion to be determined is whether the Public Utilities Commission of Ohio has jurisdiction to pass upon the issue of securities of an interstate public utility when the proceeds from the sale of such issue are to be used to provide additional equipment and working capital to be used outside of the state.

For the solution of this question, we must examine Sections 614-53 and 614-55, General Code, which read as follows:

Section 614-53. "A public utility or a railroad, as defined in this act, may, when authorized by order of the commission and not otherwise, issue stocks, bonds, notes and other evidences of indebtedness, payable at periods of more than twelve months after date thereof, when necessary for the acquisition of property, the construction, completion extension or improvement of its facilities or for the improvement or maintenance of its service, or for the reorganization or readjustment of its indebtedness and capitalization, or for the discharge or lawful refunding of its obligations, or for the reimbursement of moneys actually expended from income or from any other moneys in the treasury of the public utility or railroad not secured or obtained from the issue of stocks, bonds, notes or other evidences of indebtedness of such public utility or railroad within five years next prior to the filing of an application therefor as herein provided, or for any of the aforesaid purposes except maintenance of service and except replacements in cases where the applicant shall have kept its accounts and vouchers of such expenditures in such manner as to enable the commission to ascertain the amount of money so expended and the purposes for which said expenditure was made. * * *

"The commission may, by order duly made authorize the issue of bonds, notes, or other evidences of indebtedness, for the reimbursement of money heretofore actually expended from income for any of the aforesaid purposes, except maintenance of service and replacements prior to five years next preceding the filing of an application therefor, if such application for such consent be made prior to January 1, 1913. Any bonds, notes, or other evidences of indebtedness,...