With reference to the issue of bonds for extensions, the company has now filed a copy of a certificate of Vice-President and Chief Engineer upon this application showing the construction of 1.49 miles of double track of an extension of that portion of the road of the Manhattan Company formerly included in the lines of the Suburban Rapid Transit Company from One Hundred and Seventy-seventh street to Bronx Park, and it appears that the expense of constructing the said extension has been paid by the Manhattan Railway Company out of moneys in its treasury derived from the operation of the road and that the cost was $1,408,302.43. From a legal standpoint, it would appear that there is no reason why the issue of $10,818,000 of said bonds set aside and reserved to meet the like amount of 6 per cent bonds of the Metropolitan Elevated Railway Company should not be authorized as being reasonably requisite under the provisions of the statute for the discharge or lawful refunding of its obligations. In respect to the second application for the allowance of an issue of $894,000, by reason of the construction of the extension above mentioned, the company says that as between that company and the trustee of the consolidated mòrtgage, the trustee is authorized to certify and deliver to it that amount of the bonds of the company, and asks that inasmuch as the proceeds of an issue of $10,818,000 of 4 per cent bonds under the consolidated mortgage will be insufficient to meet the amount necessary to pay $10,818,000 on July 1, 1908, the Commission should authorize the issuance and sale by the company of the $894,000 of bonds to raise the further amount required to pay off on July 1, 1908, the said Metropolitan bonds. I am of the opinion that the bonds allowed by the mortgage to be certified by the trustee, to the amount of $894,000, by reason of the construction or acquisition of the extension of 1.49 miles from Tremont to Bronx Park, have and can have no inception or validity as bonds of the Manhattan Railway Company until authorized to be issued by this Commission, under the provisions of section 55 of the Public Service Commissions Law, and that the Commission is without power to authorize an issue of such bonds unless it shall be of the opinion that the issue is reasonably requisite for one of the four following purposes, namely: 1. When necessary for the acquisition of property. 2. The construction, completion, extension or improvement of its facilities. 3. The improvement or maintenance of its service, or 4. Discharge or lawful refunding of its obligations. think, therefore, the Commission may, under said section, authorize the issue of the said $894,000 bonds in case it shall be of the opinion that this issue is reasonably requisite for the discharge or lawful refunding by the said Manhattan Railway Company of the said $10,818,000 of 6 per cent bonds of the Metropolitan Elevated Railway Company, and in this connection I refer to the recent opinion of the Public Service Commission for the Second Distrlet, In the Matter of the Lehigh and Hudson River Railway Company, decided May 7, 1908. in which, upon page 8, Stevens, Commissioner, in writing the opinion, refers to circumstances arising in the financing of corporations which are substantially similar to those existing in the present case. As to the necessity and propriety of the issue in this case it appears that to take up and pay off the principal of $10,818,000 Metropolitan 6 per cent bonds on July 1, 1908, at least that amount must be realized, and that from the $10,818,000 of consolidated four per cent bonds under the mortgage of 1890, reserved for the purpose, there will not in any reasonable probability be realized in the present state of the money market a sufficient amount to meet the debt. The Manhattan Company's property is now held under lease by the Interborough Rapid Transit Company, by the terms of which the Manhattan Company receives from the lessee as rental $10,000 a year and its stockholders receive from the lessee on account of rental 7 per cent on stock annually. The Manhattan Company is not, therefore, now an operating company or in the position to utilize its earnings from operation in making up any discount or deficit in the proceeds of the sale of said bonds, nor to incur a floating debt or secure the same, as may be done in the case of an active company. It does not seem to me that ordinarily bonds should be sold at less than par, or that a deficiency owing to discount should be made up by a sale of long term bonds, which adds to capital account. I think that discount should be carried as an operating expense. In view, however, of the peculiar circumstances of this case, I think that a further issue of the said $894,000 of said bonds at 4 per cent is necessary and should be authorized for the discharge or refunding of the said Metropolitan bonds, but only so many should be sold as will realize an amount sufficient to meet the necessities of refunding the obligations, and the order authorizing the issue should contain a condition that bonds issued to refund the obligations should be offered for sale at public letting before being issued and sold, and that a strict account shall be kept of the proceeds derived from the sale of the bonds and of the disposition of the same, which shall be subject to the audit of the Commission. Thereupon the following final order was issued: ORDER No. 572. June 12, 1908. Whereas, the Manhattan Railway Company filed with the Public Service Commission for the First District its petition, verified May 14, 1908, and a supplemental petition dated May 16, 1908, praying for the authorization by said Commission of the issue of $10,818,000 of bonds under and pursuant to a mortgage, bearing date the 26th day of February, 1890, and executed by said Manhattan Railway Company and the Metropolitan Elevated Railway Company to the Central Trust Company of New York, as Trustee, which said mortgage, known as a Consolidated Mortgage, covers, with other property the railroad structures and properties which were acquired by said Manhattan Railway Company from said Metropolitan Elevated Railway Company under a lease dated May 20, 1879, and a subsequent merger, pursuant to law, of said companies, consummated on May 7, 1894, the said $10,818,000, of bonds to be dated February 26, 1890, payable April 1, 1990, and bearing interest at the rate of 4 per cent per annum; and Whereas, the purpose for which said bonds are proposed to be issued is the discharge of refunding of obligations of said Metropolitan Elevated Railway Company consisting of $10,818,000 of its First Mortgage Bonds dated July 10, 1878, and payable on July 1, 1908, the payment of which $10,818,000 of bonds of the Metropolitan Elevated Railway Company was assumed by the Manhattan Railway Company; and Whereas, the said Public Service Commission did thereupon, by order dated May 19, 1908, direct the said petition to be heard on Tuesday, May 26, 1908, at 2:30 o'clock in the afternoon, and that the petitioner publish a notice of the said application and of the time and place of the said hearing, in the manner and as provided in said order, and the petitioner did thereupon cause notice of said application and of the time and place of said hearing to be published in pursuance of such order, and did file proof thereof with the Secretary of the said Commission before the opening of said hearing; and the matter coming on to be heard on said May 26, 1908, upon sald petition and said supplemental petition, and said petltioner having duly appeared by Julian T. Davies, Esq., and Charles A. Gardiner, Esq., its counsel, and no one appearing in opposition, and the petitioner having submitted proofs in support of said application, and the hearing having been duly adjourned from time to time, and the Commission having taken the testimony and having examined witnesses, books, records and accounts of the petitioner and being fully advised in the premises; It being now the opinion of the Commission that the use of the capital to be secured by the issue of said bonds by the said Manhattan Railway Company is reasonably required for the discharge or lawful refunding of its obligations, it is hereby Ordered, That the Public Service Commission for the First District does hereby authorize, subject to the conditions hereinafter set forth, the issue by the petitioner, Manhattan Railway Company, of $10,818,000 face value of bonds, at 4 per cent interest, from April 1, 1908, payable semi-annually, under and pursuant to the said Consolidated Mortgage, bearing date the 26th day of February, 1890, executed by said Manhattan Railway Company and Metropolitan Elevated Railway Company to the Central Trust Company of New York as Trustee; the issue to be made upon the conditions and for the purposes following and not otherwise, to wit: 1. That the Manhattan Railway Company may sell the bonds hereby authorized, but only so many thereof shall be sold as shall be sufficient to realize an amount which will pay the principal of the bonds of the Metropolitan Elevated Railway Company, due July 1, 1908, and the reasonable expenses of refunding, which expenses shall not include, however, any commission for the sale of said bonds or for entering into any underwriting or purchase agreement; and the said proceeds of the sale of the bonds hereby authorized shall be applied by said Manhattan Railway Company only to or toward the payment on July 1, 1908, of the principal of said Metropolitan bonds and the said reasonable expenses of such refunding. 2. Unless the said bonds shall be sold at private sale on a basis of not exceeding 4 4-10 per cent and accrued interest, the treasurer of the company shall invite proposals for the purchase of said bonds to be publicly advertised daily for not less than six days in at least four daily newspapers published in the city of New York to the end that the time and place of the sale shall be generally known; and the treasurer shall award the said bonds to the highest bidder or bidders therefor. Said proposals shall only be opened publicly by the treasurer of the company and in the presence of all the Public Service Commissioners for the First District, or such of them as shall attend at the time and place specified in said public advertisement. It shall be a condition of said sale (and the advertisement calling for proposals therefor shall so declare) that any bidder may bid as to said bonds for all or none at one price, or for all or any part at one price, or for portions of said bonds at different prices, and any bidder who shall bid for a portion of said bonds may be required to accept a part of the amount bid for by him at the same rate, or proportionately, as may be specified in his bid, and any bid which conflicts with this condition may be rejected; and if the board of directors deems it to be in the interest of the company so to do it may award the bonds to the bidder offering the highest price for all or a number of said bonds, provided, however, that if the board of directors deems it to be in the interest of the company it may reject all bids. The board of directors may prescribe such other conditions incident to and providing for the proposal for the purchase of bonds as to it may seem fit. 3. That the company shall keep true and correct accounts, showing the application by it of the proceeds of the sale of all bonds authorized to be issued hereby, and said accounts shall be audited from time to time by an impartial accountant or accountants, appointed for such purposes by this Commission. Said accounts shall specifically show the amounts received by the company from time to time upcu the sale of the bonds issued hereunder. And it is further Ordered, That this order shall take effect on the 12th day of June, 1908, and shall continue in force for a period of one year, or until otherwise ordered by the Commission. That within five days after the service upon the said Manhattan Railway Company of this order, the said Manhattan Railway Company notify the Public Service Commission for the First District whether the terms of this order are accepted and will be obeyed. Manhattan Railway Company.- Application for authority to issue $894,000 of bonds. Hearing Order No. 502. Opinion of Chairman Willcox. In the Matter of the May 19, 1908. Application of the MANHATTAN RAILWAY COM-ORDER No. 502. Whereas, the Public Service Commission for the First District has received the petition of the Manhattan Railway Company, verified the 14th day of May, 1908, praying an order of the Commission authorizing the immediate issue of bonds to the amount of eight hundred and ninety-four thousand dollars ($894,000) under and pursuant to the consolidated mortgage of said company dated February 26, 1890, and stating that in the opinion of the Commission the use of the capital to be secured by the issue of such bonds is required for the purposes of the corporation and for the discharge or lawful refunding of its obligations, Resolved, That the said petition of the said Manhattan Railway Company be heard by and before the Public Service Commission for the First District on Tuesday, the 26th day of May, 1908, at 2:30 o'clock in the afternoon, and that the said company publish a notice of the said application and of the time and place of the said hearing in the following newspapers, namely: the Evening Mail, the World (Morning), published in the borough of Manhattan, city of New York, on at least three separate days before said hearing and file proof of such publication with the Secretary of this Commission on or before the opening of the said hearing. Hearings were held May 26th, June 1st and 5th. See opinion of Chairman Willcox in preceding case upon which the following final order was issued: ORDER No. 573. June 12, 1908. Whereas, the Manhattan Railway Company filed with the Public Service Commission for the First District its petition, verified May 14, 1908, praying for the authorization by said Commission of the issue of $894,000 of bonds under and pursuant to a mortgage, bearing date the 26th day of February, 1890, and executed by said Manhattan Railway Company and the Metropolitan Elevated Railway Company to the Central Trust Conipany of New York, as trustee, which said mortgage, known as a consolidated mortgage, covers, with other property, the railroad structures and properties which were acquired by said Manhattan Railway Company from said Metropolitan Elevated Railway Company under a lease dated May 20, 1879, and a subsequent merger, pursuant to law, of said companies, consummated on May 7, 1894, the said $894,000 of bonds to be dated February 26, 1890, payable April 1, 1990, and bearing interest at the rate of 4 per cent per annum, as provided in said consolidated mortgage; and Whereas, the purpose for which said bonds are proposed to be issued is the discharge or refunding of obligations of said Metropolitan Elevated Railway Company consisting of $10,818,000 of its first mortgage bonds dated July 10, 1878, and payable on July 1, 1908, the payment of which $10,818,000 of bonds of the Metropolitan Elevated Railway Company was assumed by the Manhattan Railway Company; and Whereas, the said Public Service Commission did thereupon by order dated May 19, 1908, direct the said petition to be heard on Tuesday, May 26, 1908, at 2:30 o'clock in the afternoon, and that the petitioner publish a notice of the said application and of the time and place of the said hearing, in the manner and as provided in said order, and the petitioner did thereupon cause notice of said application and of the time and place of said hearing to be published in pursuance to such order, and did file proof thereof, with the Secretary of the said Commission before the opening of said hearing; and the matter coming on to be heard upon said petition, and said petitioner having duly appeared by Julien T. Davies, Esq., and Charles A. Gardiner, Esq., its counsel, and no one appearing in opposition, and the petitioner having submitted proofs in support of said application, and the hearing having been duly adjourned from time to time, and the Commission having taken the testimony and having examined witnesses, books, records and accounts of the petitioner, and being fully advised in the premises; and Whereas, the Commission has contemporaneously herewith, upon application of said Manhattan Railway Company, by order duly authorized an issue of $10,818,000 face value of said bonds under and pursuant to said mortgage, for the discharge or lawful refunding of said bonds of the Metropolitan Elevated Railway Company to the amount of $10,818,000 face value, due July 1, 1908, upon the conditions and for the purposes in said order specified; and It being now the opinion of the Commission that the use of the capital to be secured by the further issue of said bonds by the said Manhattan Railway Company to the amount of $894,000 is reasonably required for the discharge or lawful refunding of its obligations, it is hereby Ordered, That the Public Service Commission for the First District does hereby authorize the issue by the petitioner, Manhattan Railway Company, of $894,000 face value of bonds, at 4 per cent interest from April 1, 1908, payable semiannually, under and pursuant to the said consolidated mortgage, executed on the 26th day of February, 1890, by said Manhattan Railway Company and Metropolitan Elevated Railway Company to the Central Trust Company of New York as trustee. The issue is to be made upon the conditions and for the purposes following, and not otherwise, to wit: 1. That the Manhattan Railway Company may sell the bonds hereby authorized, but only so many thereof shall be sold as shall be necessary, with the proceeds of bonds sold under the said order of this Commission, authorizing the issue of said $10,818,000 of said bonds, to realize an amount which will pay the principal of the bonds of the Metropolitan Elevated Railway Company, due July 1, 1908, and the reasonable expenses of refunding, which expenses shall not include, however, any commission for the sale of said bonds or for entering into any underwriting or purchase agreement; and the said proceeds of the sale of the bonds hereby authorized shall be applied by said Manhattan Railway Company only to or toward the payment on July 1, 1908, of the principal of said Metropolitan bonds and the said reasonable expenses of such refunding. 2. Unless the said bonds shall be sold at private sale on a basis of not exceeding 4 4-10 per cent and accrued interest, the treasurer of the company shall invite proposals for the purchase of said bonds to be publicly advertised daily for not less than six days in at least four daily newspapers published in the city of New York, to the end that the time and place of the sale shall be generally known; and the treasurer shall award the said bonds to the highest bidder or bidders therefor. Said proposals shall only be opened publicly by the treasurer of the company and in the presence of all the Public Service Commissioners for the First District, or such of them as shall attend at the time and place specified in said public advertisement. It shall be a condition of said sale (and the advertisement calling for proposals therefor shall so declare) that any bidder may bid as to said bonds for all or none at one price, or for all or any part at one price, or for portions of said bonds at different prices, and any bidder who shall bid for a portion of said bonds may be required to accept a part of the amount bid for by him at the same rate, or proportionately, as may be specified in his bid, and any bid which conflicts with this condition may be rejected; and if the board of directors deems it to be in the interest of the company so to do it may award the bonds to the bidder offering the highest price for all or a number of said bonds, provided, however, that if the board of directors deems it to be in the interest of the company it may reject all bids. The board of directors may prescribe such other conditions incident to and providing for the proposal for the purchase of bonds as to it may seem fit. 3. That the company shall keep true and correct accounts, showing the application by it of the proceeds of the sale of all bonds authorized to be issued hereby, and said accounts shall be audited from time to time by an impartial accountant or accountants, appointed for such purpose by this Commission. accounts shall specifically show the amounts received by the company from time to time upon the sale of the bonds issued hereunder. And it is further Said Ordered, That this order shall take effect on the 12th day of June, 1908, and shall continue in force for a period of one year, or until otherwise ordered by the Commission. That within five days after the service upon the said Manhattan Railway Company of this order, the said Manhattan Railway Company notify the Public Service Commission for the First District whether the terms of this order are accepted and will be obeyed. ORDERS FOLLOWING APPLICATIONS FOR CERTIFICATES OF CONVENIENCE AND A NECESSITY. East River Terminal Railroad Company.- Application for a certificate of convenience and a necessity. Opinion of Counsel. Hearing Order No. 634. Report of Commissioner Bassett. Certificate of Convenience and a Necessity. [1. A certificate under section 53 of the Public Service Commissions Law should await the obtaining of a franchise from the local authorities. 2. A certificate under sections 59 and 59a of the Railroad Law may be granted by the Commission prior to the obtaining of a franchise. 3. The steps which must be taken by a railroad corporation about to construct a railroad in the city of New York are: File certificate of incorporation. Obtain a certificate of public convenience and a necessity. Obtain a franchise from the board of estimate and apportionment to use streets and public places. Obtain consents in writing of the owners of one-half in value of the abutting property owners or in lieu thereof the consent of the Appellate Division. If a steam railroad corporation desiring to cross any public street, obtain a determination from the Public Service Commission whether such crossing should be above, below or at grade of such street. Obtain the consent of the Commission for the issue of securities. 4. Whether a proposed railroad is a steam railroad or a street surface railroad is to be determined from its certificate of incorporation. A street surface railroad must state in its certificate the names and descriptions of the streets, avenues and highways in which the road is to be constructed. 5. The Commission will not grant a certificate of convenience and a necessity to a street surface railroad for the carrying of freight. 6. A railroad for the carrying of freight in the location proposed by the company is desirable. 7. The application should be permitted to be withdrawn and a new one presented in the proper form, as, if the application is denied, a new application may not be made until one year has elapsed.] The East River Terminal Railroad presented a petition for a certificate of necessity under Section 53 of the Public Service Commissions Law. The counsel to the Commission rendered the following opinion concerning the application: * See footnote, page 9. Vol. II - 6 |