People ex rel. New York Edison Co. v. Willcox

• Decision Date: 31 December 1912
• Parties: PEOPLE ex rel. NEW YORK EDISON CO. v. WILLCOX et al.
• Court: New York Court of Appeals Court of Appeals

207 N.Y. 86

100 N.E. 705

PEOPLE ex rel. NEW YORK EDISON CO.

v.WILLCOX et al.

Court of Appeals of New York.

Dec. 31, 1912.

Appeal from Supreme Court, Appellate Division, First Department.

Certiorari by the People on the relation of the New York Edison Company to review proceedings of the Public Service Commission for the First District. From an order of the Appellate Division (151 App. Div. 832,136 N. Y. Supp. 1031) affirming an order of the Public Service Commission and dismissing the writ of certiorari, the plaintiff appeals. Reversed.

Morgan J. O'Brien and John A. Garver, of New York City, for appellant.

Charles F. Brown, of New York City, for respondent.

Long Acre Electric Light & Power Co.

COLLIN, J.

The determination of the Public Service Commission, which the certiorari brought under review, was made in the proceeding instituted by the respondent the Long Acre Electric Light & Power Company to obtain authority to issue stock and bonds under section 69 of the Public Service Commissions Law. The first question to be considered is whether or not we should dismiss the appeal of the relator, the New York Edison Company, and the answer to that depends, in turn, upon the question whether the relator was, within the meaning of section 2127 of the Code of Civil Procedure, aggrieved by the determination. Section 69 of the Public Service Commissions Law (L. 1907, c. 429) provides: ‘A gas corporation or electrical corporation organized or existing, or hereafter incorporated, under or by virtue of the laws of the state of New York, may issue stocks, bonds, notes or other evidence of indebtedness payable at periods of more than twelve months after the date thereof, when necessary for the acquisition of property, the construction, completion, extension or improvement of its plant or distributing system, or for the improvement or maintenance of its service or for the discharge or lawful refunding of its obligations, provided and not otherwise that there shall have been secured from the proper commission an order authorizing such issue, and the amount thereof, and stating that, in the opinion of the Commission, the use of the capital to be secured by the issue of such stock, bonds, notes or other evidence of indebtedness is reasonably required for the said purposes of the corporation. For the purpose of enabling it to determine whether or not it should issue such an order, the Commission shall make such inquiry or investigation, hold such hearings and examine such witnesses, books, papers, documents or contracts as it may deem of importance in enabling it to reach a determination. Such gas corporation or electrical corporation may issue notes, for proper corporate purposes and not in violation of any provision of this or of any other act, payable at periods of not more than twelve months without such consent; but no such notes shall, in whole or in part, directly or indirectly be refunded by any issue of stock or bonds or by any evidence of indebtedness running for more than twelve months without the consent of the proper commission. * * *’

When the present proceeding was commenced, section 68 of the Public Service Commissions Law contained this provision: ‘No gas corporation or electrical corporation incorporated under the laws of this or any other state shall begin construction, or exercise any right or privilege under any franchise hereafter granted, or under any franchise heretofore granted but not heretofore actually exercised without first having obtained the permission and approval of the proper commission.’ The Public Service Commissions Law took effect July 1, 1907.

The Long Acre Company was incorporated April 23, 1903, pursuant to the provisions of article 6 of the Transportation Corporations Law (Consol. Laws 1909, c. 63). Its objects were to manufacture and distribute electricity for light, heat, power, or other purposes throughout the boroughs of Manhattan and The Bronx of the city of New York. By the statute and incorporating certificate, it became empowered to lay, erect, and construct suitable wires, poles, and conduits on and under the streets and public places, with the consent of the municipal authorities, and in such manner and under such reasonable regulations as they might prescribe.

In February, 1908, the respondent commenced this proceeding. The Public Service Commission, by its order of June 26, 1908, refused to authorize the issuance of the securities upon a ground, among others, that no authority to begin construction had been obtained from the Commission or its predecessor, the commission of gas and electricity. The Appellate Division, upon a review under a writ of certiorari, reversed the order and ordered that the application be referred back to the Commission for consideration and action within the limits of its authority.People ex rel. Long Acre Electric L. & P. Co. v. Public Service Commission, 137 App. Div. 810,122 N. Y. Supp. 641.

In December, 1910, the Commission, by its order, fixed the time and place for proceeding under the order of the Appellate Division, and caused the order to be served upon the appellant. The respondent, at the outset, urged upon the Commissioner, who was hearing the application under section 11 of the Public Service Commissions Law, its assertion that the appellant had not the right to intervene in, or be a party to, and had no standing in, the proceeding; that the only question remaining for the Commission to decide was the amount of stock and bonds to be authorized, and the purposes to which their proceeds should be applied. The appellant, in opposition, asserted that the hearing and the determination involved the right of the respondent to construct a plant dnd operate, and the questions whether the franchise under which the respondent claimed the right to operate had been actually exercised prior to July 1, 1907, whether the respondent had the right to begin construction without first having obtained the permission and approval of the Commission, and asserted that it, as the operating company, had the right to intervene and appear as a party to the proceeding and produce evidence in its behalf. The Commissioner, without making a ruling, permitted the appellant to introduce the evidence received upon the prior hearing, and to call ‘on behalf of the New York Edison Company’ two witnesses. At the close of their examinations, the counsel for respondent formulated their position in the motions ‘that the Edison Company be not allowed to appear or give evidence in this proceeding, except as to the securities to be allowed and the application of the proceeds,’ and that the testimony of the two witnesses by stricken from the record as improper and as relating to irrelevant matters. The motions were denied, with exceptions to the respondent, and the ruling made that the Commission ‘will hear such testimony as may be presented; that is germane upon the question whether the franchise has been or has not been exercised.’ Testimony in behalf of the appellant was then given by a score of witnesses. The respondent called witnesses in rebuttal, and the issues and proof were submitted to the Commission as a body upon oral and written arguments. Their order authorized the issuance of stock and bonds. Under a writ of certiorari granted the appellant, the order was affirmed by the Appellate Division and the writ dismissed (People ex rel. New York Edison Co. v. Willcox, 151 App. Div. 832,136 N. Y. Supp. 1031), and this appeal is from the order of affirmance and dismissal.

The petition by which the respondent instituted the proceeding alleged, as uses to which the securities to be issued were to be put, the acquisition of property upon which to construct power houses and substations, their construction, and the purchasing and laying of underground cables and ducts.

[1] The Legislature did not intend or enact that a corporation, subject to the provisions of section 69 or section 55 (of identical effect in relation to railroads, street railroads, and common carriers) of the Public Service Commissions Law, should be given authority by the Commissions to issue stock and bonds for the purposes prescribed in those sections until its right to effect those purposes was certain and complete. That law was enacted in response to a pronounced and insistent public opinion, and was a radical and important modification of the relations and policy of the people toward the corporations, which are its subjects. Its paramount purpose was to protect and enforce the rights of the public. It made the Commissions the guardians of the public by enabling them to prevent the issue of stock and bonds for other than statutory purposes, or in appreciable and unfair excess of the value of the assets securing them, and to prevent, also, unneeded or extortionate competition, or indifferent and unaccommodating methods of operation, or oppressive or discriminating charges or rates. It provided for a regulation and control which were intended to prevent, on the one hand, the evils of an unrestricted right of competition, and, on the other hand, the abuses of monopoly. People ex rel. D. & H. Co. v. Stevens, 197 N. Y. 1, 90 N. E. 60. The purpose and intent of the law forbids the Commissions to authorize the issue of stock and bonds under sections 69 or 55, when prescribed requirements and conditions precedent to the right of the applicant to construct and operate a plant and system or a railroad have not been fulfilled or complied with, and when, perhaps, the property to be acquired or constructed may never be acquired or constructed and the bonds or stock, the issue of which is applied for, have no substantial security to rest upon. A contrary conclusion would make the authorization and avouchment of the Commissions a bait and a trap for insnaring the investing public.

The language of the sections 69 and 55 establishes the conclusion that the Commissions are not empowered to authorize the...