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10 F.(20) 167 fully confirm the fact, which is well within ther waiving the filing of the original exthe common knowledge of residents of the hibits marked in evidence. borough of Richmond, as to the urgent need There appeared before me the following: that this plaintiff gas company shall be per- For the plaintiff : Frank H. Innes, solicmitted to earn at all times an adequate rate itor, by Frank H. Innes, William L. Ransom, of return, to the end that it may be able to and Jacob H. Goetz, of counsel. attract freely the substantial quantities of For the defendants William A. Prendernew capital which are necessary for its nor- gast, William R. Pooley, Charles Van Voormal growth. The welfare of this company his,, Oliver C. Semple, and George R. Van and of the communities which it serves are Namee (who was substituted in place of shown to have been seriously prejudiced, at James A. Parsons), constituting the Public times, by the inability of the company to Service Commission of the state of New charge rates yielding net earnings which in- York: Charles G. Blakeslee, solicitor, by duce ready contributions of new capital for Melvin Krulewich, of counsel. additions to plant and extensions of mains For the defendant Albert Ottinger (who and facilities. Curtailment of the company's was substituted in place of Carl Sherman), earnings below an adequate return would be as Attorney General of the state of New no boon to this Richmond territory.

York: John Holley Clark (who was substiFor the purpose of this case, I fix 8 per tuted in place of James A. Donnelly), solicicent. as a moderate and reasonable rate of tor, by Harry Hertzoff, of counsel. annual return, if figured upon the present Upon the proofs as taken I find and revalue of the plaintiff's property as herein- port as follows: above found. Whether a larger return 1. The plaintiff, New York & Richmond should be allowed by the rate-making body, Gas Company, was incorporated under and I express no opinion here.

pursuant to the provisions of article 6 of

the Transportation Corporations Law of the Conclusion.

state of New York (Laws 1890, c. 566) by I have carefully considered the testimony

a certificate dated June 15, 1901, and filed submitted to me in this case, as also the June 17, 1901, in the office of the secretary briefs of the parties, and, on the grounds of state of the state of New York, and in stated in the foregoing report

, it is my opin- the office of the clerk of the county of Richion that the plaintiff is entitled to judgment mond, for the purpose, among other things, adjudging unconstitutional and void the pro

of manufacturing and supplying gas for visions of chapters 898 and 899 of the Laws public and private consumers in the borough of 1923, and for the further relief recom

of Richmond, county of Richmond, city and mended in the annexed findings of fact, all state of New York. as is more particularly specified therein.

2. The Richmond County Gaslight Com

pany was a gaslight corporation organized Report of the Special Master.

June 25, 1856, pursuant to an act of the

Legislature of the state of New York passed To the Honorable Judges of the United February 16, 1848, entitled “An act to au

States District Court for the Eastern thorize the formation of gaslight compaDistrict of New York:

nies.” Laws 1848, c. 37. The Richmond I, the undersigned, the special master County Gaslight Company built a coal gas appointed by Hon. Marcus B. Campbell, Dis- plant and started supplying gas to its contrict Judge, by an order entered October 11, sumers in and about the year 1858. 1923, directing such special master "to take 3. The Consumers' Gaslight Company of the testimony and evidence upon the issues Richmond County was a gaslight corporaherein, make all needed computations and tion, organized February 17, 1887, pursuant fully hear the facts, and to report to the to the last above mentioned act of the Legiscourt his findings of fact and conclusions of lature of the state of New York, and therelaw, together with the evidence for the ad- after acquired, possessed, and used certain visement of the court,” do hereby respect- property, consisting of mains and appurtefully report that, having been attended by nances and franchises. counsel as below stated, I proceeded to take 4. The Staten Island Gaslight Company the proofs submitted and filed, together with was a gaslight corporation organized June a stipulation signed by the various solicitors 25, 1884, pursuant to the last above menwaiving the signatures of the various wit- tioned act of the Legislature of the state of nesses to their several depositions and fur- New York. Shortly after its organization, it erected a manufacturing plant and in- York & Richmond Gas Company of first stalled a distribution system, and for a num- mortgage bonds of said last-named company, ber of years operated as a public utility of the amount of $1,000,000, and of the capPursuant to a judgment of foreclosure and ital stock of said New York & Richmond sale, the property of the Staten Island Gas- Gas Company, of the par value of $1,450,light Company was sold to one Norman I. 000, with the privilege of delivering the reRees, and by Rees conveyed to the Richmond maining 500 shares of the Richmond County County Gaslight Company by deed dated Gaslight Company, and receiving therefor June 26, 1893.

500 shares of said New York & Richmond 5. On the 24th day of June, 1901, and Gas Company. This offer was subsequently theretofore, the Richmond County Gaslight modified, so as to provide for the payment Company owned and used certain lands, of cash to the amount of $1,000,000, instead buildings, and other property, real and per- of corporate bonds, with the option to the sonal, for, and was actually engaged in, the vendee to pay in corporate mortgage bonds manufacture, sale, and distribution of gas instead of cash to that amount, and for the in the borough of Richmond, city of New reduction of the number of shares of capital York. In addition to such property, the stock to be issued by 10 shares. Richmond County Gaslight Company owned, 7. On June 19, 1901, the board of direcand was in the actual enjoyment of, fran- tors of the New York & Richmond Gas Comchises and rights to be a corporation and to pany, after making inquiry to enable them to exercise the privileges and rights of a cor- form a judgment of the value of the properporation, to lay and maintain mains, pipes, ty, duly adopted a resolution that it was the and conductors in and under the streets, high- judgment of the said directors that the propways, alleys, lanes, and other public places erties to be acquired under the said proposal in the territory then constituting the borough were necessary and desirable for the purof Richmond, in the county of Richmond poses of the business of the corporation, and and the city of New York, for the purpose that the value of the said property and servof supplying gas to the inhabitants of the ices, over and above the $1,000,000 in cash said borough, and sundry other intangible to be given in part payment therefor, is at rights. The Richmond County Gaslight least equal to the face value of the 13,490 Company had also developed the gas busi- shares of the capital stock of the corporaness in the said territory of the borough of tion proposed to be issued in consideration of Richmond, and had secured consumers suf- the balance of the consideration for the said ficient in number and requirements to con

property and services. stitute a going and remunerative business.

8. Pursuant to the said offer and accept6. On June 17, 1901, Forrest & Co., in behalf of the owners of practically all of the ance, an agreement was duly made and en

tered into on the 21st day of June, 1901, by capital stock of the Richmond County Gaslight Company and all of the stock of the and the New York & Richmond Gas Com

and between Forrest & Co., on the one part, Consumers' Gaslight Company of Richmond County, offered to sell to the said New York pany, on the other part, embodying the terms & Richmond Gas Company 6,500 shares of

of the said offer and acceptance, and therethe capital stock of said Richmond County after such agreement was carried out and Gaslight Company, and all of the capital complied with. stock of the Consumers' Gaslight Company

9. Pursuant to the provisions of section of Richmond County, to procure the satisfac- 58 of the Stock Corporation Law of the tion of the corporate mortgage of the said state of New York, as the same then existed Richmond County Gaslight Company, and (Laws 1890, c. 564, § 58, as added by Laws to relieve the property of said latter compa- 1896, c. 932), the said New York & Richny from the lien of the bonds then issued mond Gas Company, then being the owner and outstanding thereunder, to pay in cash of all the capital stock of the said Consumfor $100,000 par value capital stock of said ers' Gaslight Company of Richmond CounNew York & Richmond Gas Company, and to ty, by an instrument dated and executed pay all expenses in connection with such ac- June 24, 1901, and filed in the office of the quisition and the merger or consolidation secretary of state of the state of New York, of the Richmond County Gaslight Company July 1, 1901, merged the said Consumers' and the Consumers' Gaslight Company of Gaslight Company of Richmond County with Richmond County with the vendee, in con- the said New York & Richmond Gas Comsideration of the delivery by the said New pany. .

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10 F.(20) 167 10. In order to carry into effect the plan been dealt in by the public since its issue, and of the said transaction, and pursuant to the until at least the year 1916. provisions of the Business Corporations Law Bonds of the par value of $1,000,000 were of the state of New York, constituting chap- issued in part payment for the plant, propter 41 of the General Laws of the state of erty, franchises, stock, and effects so acNew York, as then existing, by an agreement quired by it, and $500,000 of the said bonds in writing dated June 24, 1901, and filed in were issued from time to time, the proceeds the office of the secretary of state of the of the sale of which were used for improvestate of New York on July 13, 1901, and in ments and betterments of the plant and propthe office of the clerk of the county of Rich- erty of the plaintiff. All of said bonds were mond on the same day, the said Richmond dealt in by the public, and were generally County Gaslight Company and the said New distributed among numerous holders, until York & Richmond Gas Company consolidat- they were discharged or refunded. ed with the consent of the directors and By an order made by the Public Service stockholders of each of said corporations, Commission of the state of New York, for which said consolidated corporation the First district, on or about April 23, 1921, formed was known as “New York & Rich- the said commission authorized the issuance mond Gas Company,” for the period of fifty by the plaintiff of $1,956,000 of bonds, inyears.

cluding $1,500,000 of such bonds for dis11. The said New York & Richmond Gas charging or refunding the principal of the Company, so formed by said consolidation bonds of the plaintiff to the aggregate agreement, is the plaintiff corporation in amount of $1,500,000, which had been issued this action.

by it as aforesaid, and which had matured 12. The plaintiff, by virtue of the pur- on May 1, 1921. chase of the capital stock and the merger 15. The defendants William A. Prenderwith it, of the Richmond County Gaslight gast, William R. Pooley, Charles Van VoorCompany, acquired all of the property and his, Oliver C. Semple, and George R. Van succeeded to the rights, privileges, and fran- Namee, or the successor in office of any of chises of the said Richmond County Gas- them, whose term may have expired since light Company, and has been continuously the commencement of this action, constitute furnishing gas under said franchises from the Public Service Commission of the state of 1901 to the present time.

New York, and are now acting as such com13. The principal office and place of busi- mission, having been duly appointed under ness of the plaintiff is located at Stapleton, and by virtue of the provisions of chapter in the Second ward of the borough of Rich- 480 of the Laws of 1910 of the state of New mond, city and state of New York, and the York, known as chapter 48 of the Consoliplaintiff is, and since the time of its incor- dated Laws of the state of New York, as poration as aforesaid has been, engaged in amended and supplemented by several acts, manufacturing and distributing gas for light, including chapter 134 of the Laws of 1921, heat, and power, in the First, Second, Third, prescribing their powers and providing for and Fourth wards of the borough of Rich- the regulation of certain public service cormond, within which territory it has, main- porations, including the plaintiff. The detains, and operates a system of mains, pipes fendants are citizens of, and reside in, the and conductors in the public streets, high- state of New York, and at least one of the ways, and places.

defendants at the time of the commence14. In pursuance of the said agreement ment of this action resided in the borough of of June 21, 1901, there was issued by the Brooklyn, city of New York, in the Eastern plaintiff to the vendors $1,450,000 par value district of New York. of its capital stock, $50,000 par value of George R. Van Namee, as public serysuch stock being reserved to exchange for ice commissioner of the state of New York, $25,000 par value of capital stock of the was substituted as such defendant in the Richmond County Gaslight Company, and place and stead of James A. Parsons, named thereafter the last-mentioned stock was ac

as an original defendant in this action, by quired by the plaintiff, which issued therefor an order dated January 9, 1925, and made the $50,000 par value of the capital stock of and entered in this action. the plaintiff. There is now issued and out- 16. The defendant Albert Ottinger, as standing capital stock of the plaintiff of the Attorney General of the state of New York, par value of $1,500,000, and such stock has is a citizen of the state of New York, and resides in the city of New York and state sumers, plaintiff has made various additions, of New York, and was substituted as de- extensions and improvements in its plant, in, fendant in this action in place and stead of cluding the erection of an additional water Carl Sherman, as Attorney General of the gas generator set, 11 feet in diameter, and state of New York, named as an original de- accessory equipment, increasing the total fendant in this action, by the said order rated generating capacity to 8,000,000 cubic dated January 9, 1925.

feet of gas per day, and the normal working 17. Prior to and since June 1, 1923, the and dependable capacity for the entire plant plaintiff has been the owner and in the pos- to 3,500,000 cubic feet of gas per day. session of a parcel of land at Clifton, in

21. Upon the said parcel of land, the the borough and county of Richmond, locat- plaintiff owned and used as of June 1, 1923, ed upon the northerly side of Willow ave

and since then has owned and used various enue and the westerly side of Bay street, buildings constructed of brick and other perhaving a frontage of approximately 539 feet manent material, and owns, has, and uses, on Willow avenue, 92 feet on Bay street, various other machinery, boilers, and other and abutting on the right of way of the

apparatus and appliances. Staten Island Rapid Transit Railway Com

22. Upon the parcel of land on the northpany for a distance of approximately 727

of approximately 727 erly side of Willow avenue, the plaintiff feet. 18. Prior to and since June 1, 1923, the owned and used as of June 1, 1923, a storage

gas holder in a steel tank having a capacity plaintiff has been the owner and in posses- of 1,000,000 cubic feet, and also a 100,000 sion of another parcel of land at Clifton, cubic foot capacity relief holder. on the southerly side of Willow avenue, hay

Upon the parcel of land on the southerly ing a frontage of approximately 150 feet, side of Willow avenue, the plaintiff owned and a depth of about 145 feet. 19. Prior to and since June 1, 1923, the in a brick tank, having a capacity of 200,000

and used as of June 1, 1923, a storage holder plaintiff has been also the owner and in the cubic feet, which has since been converted inpossession of another parcel of land, locat

to a relief holder. ed at West New Brighton, in the borough and county of Richmond, city and state of

Upon the parcel of land at the corner of New York, at the southwest corner of Post Clovo road and Post avenue, the plaintiff avenue and Clove road, and having a front- owned and used as of June 1, 1923, a storage age of approximately 118 feet on Clove road, gas holder in a brick tank, having a capacity and 490 feet on Post avenue.

of about 180,000 cubic feet of gas. 20. Upon the parcel of land on the north

Subsequently to June 1, 1923, the plaintiff erly side of Willow avenue (excepting for acquired a parcel of land located at Washingpart of the time the westerly portion thereof ton and Van Name and Simonson avenues, acquired by the plaintiff in 1922), the plain

Mariners' Harbor, Staten Island, upon which tiff since July 15, 1901, has owned and used, the plaintiff has erected and now uses a gas and still owns and uses, a plant for the man- storage holder of 1,000,000 cubic foot gas caufacture and distribution of carbureted wa

pacity. ter gas. Additions and improvements have

23. As of June 1, 1923, and prior therebeen made to the said plant and property so to, plaintiff also necessarily kept, under acquired, and renewals and replacements lease, and used in the conduct of its business, have have been made from time to time.

an office and show room at 691 Bay street, As of June 1, 1923, the plaintiff's gas Stapleton, in the borough and county of manufacturing plant, exclusive of the exten- Richmond, for the use and accommodation sions in progress, consisted primarily of of its general office, bookkeeping staff, and four modern Lowe type water gas generator commercial department, and a display room sets, one set being 6 feet in diameter, two for the exhibition and sale of domestic insets being 7 feet 6 inches in diameter, and dustrial gas appliances. Subsequent to June one set being 9 feet in diameter, which pro- 1, 1923, the plaintiff acquired the said office vided a total rated generating capacity of building and land upon which the same is 4,500,000 cubic feet of gas per day, and a located. normal working and dependable capacity for 24. The plaintiff owned and used, as of the entire plant of 2,500,000 cubic feet of June 1, 23, in the First, Second, Third and gas per day.

Fourth wards of the borough of Richmond, Subsequent to June 1, 1923, in order to mains and services of various sizes as folmeet the reasonable requirements of its con- lows:

21,346 583.22.

10 F.(20) 167 Mains.

per cent. preferred capital stock, $116,780.35 Size.

Quantity of Mains, of current obligations, and $424,402.87 of Low Pressure:

Feet. 16-inch cast iron

9,306

surplus and reserves, or a total of $4,825,12-inch cast iron 10-inch cast iron

17,700 26. Subsequently to January 1, 1909, the 8-inch cast iron

50,047 books of account of the plaintiff company, 6-inch cast iron

.130,712 4-inch cast iron

as well as of all other gas companies in the

..276,470 3-inch cast iron

72,783 city of New York, have been required to be 4-inch steel

13,647 kept in accordance with the rules and regu3-inch steel..

2,640 lations of the defendant Public Service Com24-inch steel

1,321 2-inch steel

.118,284

mission of the state of New York, or its 149-inch steel

15,252 predecessor the Public Service Commission 14-inch steel

15,611 for the First district, which commissions 1-inch steel

3,427 have had certain jurisdiction over said com4-inch steel

425

panies pursuant to the provisions of the PubHigh Pressure:

lic Service Commission Law (formerly the 12-inch cast iron

26,800 Public Service Commissions Law) of the 6-inch steel

32,142

state of New York, and I find that the books, 4-inch steel

1,850 2-inch steel

33,735 accounts, and records of the plaintiff com

pany have been kept in conformity with such Services.

rules and regulations so prescribed by auSize.

Number,

thority of the state of New York; that such 4-inch

4 2-inch

books, accounts, and records have been kept

359 114-inch

572 under the continuing supervision of the duly 1/4-inch

.8,650 authorized representatives of the Legislature 1-inch

..5,908

of the state of New York; and that such 25. As of June 1, 1923, the plaintiff had books, accounts and records accurately set outstanding $1,500,000, par value, of com- forth the receipts, outlays and other facts mon capital stock, consisting of 15,000 therein undertaken to be shown. shares, par value, of $100 each, and $2,125,- 27. By subdivision 5 of section 66 of 000, par value, of 6 per cent. first mortgage chapter 480 of the Laws of 1910, as supplelien bonds; it also had other invested re- mented and amended by several acts, includsources consisting of current obligations of ing chapter 134 of the Laws of 1921, known $201,501.19 and surplus and reserves of as the “Public Service Commission Law,” $405,775.49, or a total investment in its gas it is provided that, whenever the said combusiness of $4,232,276.68.

mission shall be of opinion, after a hearing As of December 31, 1922, the outstanding had upon its own motion or upon complaint, capitalization and other invested resources that the rates, charges, or classifications or of the gas business of the plaintiff consisted the acts or regulations of any gas corporaof $1,500,000, par value, of common capital tion, the definition of which includes the stock, $2,125,000, par value, of 6 per cent. plaintiff, are unjust, unreasonable, unjustly first mortgage lien bonds, $272,141.79 of discriminatory, or unduly preferential or in current obligations, and $350,806.38 of sur- any wise in violation of any provision of plus and reserves, or a total of $4,247,948.17. law, the said commission shall determine and

As of December 31, 1923, the outstanding prescribe, in the manner provided by and subcapitalization and other invested resources of ject to the provisions of section 72 of the said the gas business of the plaintiff consisted of chapter, the just and reasonable rates, $1,500,000, par value, of common capital charges, and classifications thereafter to be stock, $2,125,000, par value, of first mortgage in force for the service to be furnished, notlien bonds, $120,000, par value, of 7 per cent. withstanding that a higher or lower rate or preferred capital stock, $370,122.66 of cur- charge has theretofore been prescribed by rent obligations, and $351,589.91 of surplus general or special statute, contract, grant, and reserves, or a total of $4,466,712.57. franchise condition, consent, or other agree

As of July 31, 1924, the outstanding capi- ment, and the just and reasonable acts and talization and other invested resources of the regulations to be done and observed. plaintiff consisted of $1,500,000 of common 28. By subdivision 3 of section 66 of the capital stock, $2,125,000 of 6 per cent. first said chapter, as so supplemented and mortgage lien bonds, $25,000 of purchase. amended, it is provided that the said commoney mortgage, $334,400, par value, of 7 mission shall have power by order to fix and

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