People ex rel. New York Rys. Co. v. Pub. Serv. Comm'n of First Dist.
| Decision Date | 14 May 1918 |
| Parties | PEOPLE ex rel. NEW YORK RYS. CO. et al. v. PUBLIC SERVICE COMMISSION OF FIRST DISTRICT et al. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from Supreme Court, Appellate Division, First Department.
Certiorari by the People, on the relation of the New York Railways Company and others, against the Public Service Commission of the First District and others. From an order of the Appellate Division (181 App. Div. 338,168 N. Y. Supp. 760), dismissing the writ, relators appeal. Reversed.
Richard Reid Rogers and Burt D. Whedon, both of New York City, for appellants.
William L. Ransom and Oliver C. Semple, both of New York City, for respondents.
Though this is an important proceeding, it presents nevertheless a simple question. The issue involves simply the interpretation and meaning of certain sections of the Public Service Commissions Law.
The Metropolitan Street Railway Company was in the hands of receivers for several years, and on December 29, 1911, the properties of the company were sold, pursuant to a decree in foreclosure of the United States Circuit Court, to a committee of the bondholders of the company. The bondholders committee had prepared a plan of reorganization of the company under sections 9 and 10 of the Stock Corporation law of this state. The plan was approved by the Public Service Commission, and, pursuant thereto, the properties of the company were to be taken over by a new corporation to be organized, and bonds and stock of the new company were to be issued as follows:
+--------------------------------------------+
¦Refunding 4 per cent, gold bonds¦$16,768,100¦
+--------------------------------+-----------¦
¦5 percent, income gold bonds ¦31,933,400 ¦
+--------------------------------+-----------¦
¦Stock ¦17,500,000 ¦
+--------------------------------------------+
Pursuant to this plan the New York Railways Company was organized and the properties of the old company were conveyed to it. Then mortgages were prepared to secure the bonds issued, and were presented to the Public Service Commission for approval. Subsequently, and on February 27, 1912, the Public Service Commission consented to the execution of the mortgages.
The mortgages required the mortgagor to maintain, replace, and renew the mortgaged property out of the earnings of the company. The interest on the income bonds was to be paid solely out of the net income of the mortgagor, and the net income was to be determined after setting aside the reserve provided for in the mortgage. The interest on the income bonds was not cumulative, and if not earned in any year was lost to the bondholders. Subsequently, by a further order dated on the same day, February 27, 1912, the Public Service Commission required the relator before paying any dividends on its stock or interest on its income bonds to expend each month beginning January 1, 1912, for maintenance and depreciation during the month 20 per cent. of its gross operating revenue for such month, and if this amount was not expended within the month, to credit the unexpended portion thereof to an account called ‘Accrued Amortization of Capital.’ The relator objected to the provisions of this last-mentioned order, and brought this proceeding to review the same. The sole question here is whether the commission had power to make the order. The Public Service Commission bases its authority to make the order under review on section 52 of the Public Service Commissions Law. Cons. Laws, c. 48.
Section 52 provides that the Public Service Commissions may establish a system of accounts to be used by railroad corporations or other common carriers, and prescribe the manner in which such accounts shall be kept, and may, after a hearing,...
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