Show 1 SCRIP DIVIDEND IS NOT ALLOWED Public Service Commission Sits Down on Erie Rail Railway Railway way Company AUTHORITY IS QUESTIONED CONDITIONS OF STATUTE CAN CANNOT CANNOT CANNOT NOT BE COMPLIED WITH WITHA r A bony bany N X Y March 1 IThe The public serVice commission has decided that scrip s dividends cannot be bo authorized under the public service commission law Jaw and has hag denied the application of the Erie Railroad company for author authority authority ity Hy from the commission to issue such dividends upon upon Its first firt and second pre preferred preferred stock The board hoard of directors of the Erie Railroad company com pan on Aug 28 1307 1907 declared de declared declared a dividend of 2 per pcr cent upon Its preferred stock payable Oct 1 I 1907 and a dividend of 4 per cent upon its second preferred stock payable Nov 1 1907 It further determined to Issue warrants evidencing the right of or the stockholders to the dividends so declared subject to the approval of the public service commis commission commission commission sion Opinion of Commission Chairman Stevens in his opinion says Assuming that the dividends de declared declared dared would have been lawful prior to the 1st day of July 1907 the inquiry I is ls as tot to the he proper construction of sec section tic I tion 55 of the public service commis I Ision lion slon law which provides for the is issuing issuing I suing of stocks bonds notes and other 1 evidences of indebtedness payable at periods of ot more than twelve months I which provides that a railroad j i ration organized or existing under or orby orby orby by virtue of ot the laws of the slate ate of New York may issue stocks bonds notes or other evidences of Indebtedness payable at periods of more than twelve twelvemonths twelvemonths twelvemonths months after the date thereof when necessary for 1 t the acquisition of property 8 the construction comple completion completion completion tion extension or Improvement of its facilities or 3 for the improvement or maintenance of its service or 4 J for the discharge dl harge of ot 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 inthe Inthe Inthe the opinion of the commission the use of the capital to be secured by the Is Issue IsI issue sue of such stock in bonds notes or I other evidences of indebtedness Is rea reasonably reasonably required for the said purpose of the corporation When any anyone one of the conditions of he the statute cannot be complied with within in a given case the commission has not authority to Issue an order author authorizing authorIzing authorizing izing the desired issue No Profit In Scrip Dividend By the declaration of a scrip divi dividend dividend dividend and the Issuing of the warrants warrant evidencing the same the company se secures s cures nothing which it does not possess before A dividend Is the dividing of property among the stockholders It is the direct opposite of the securing of capital It is parting with it A prom promise promIse promise ise to divide in the future Is simply a promise to part with that property in inthe Inthe inthe the future The corporation secures nothing by the dividend d After declaring declaring ing the dividend it possesses no capital I which it did not possess before The money which it promises to divide at ata ata ata a future time will remain the money of the corporation It can be applied to any lawful purpose of the corpora corporation tion at the discretion of the directors and after the declaration of a dividend payable in the future it has no more power or authority over the fund that thai It promises to divide than it had be before before before fore the declaration of the dividend Since one of the conditions of the Issuing of an evidence of Indebtedness under section 55 is the securing of cap capital capItal capital ital for the uses of the corporation and the commission must certify that the capital to be so secured Is reason reasonably reasonably ably abl required for certain purposes it is clear lear that warrants evidencing 31 fl scrip dividend cannot be issued under that section for the plain reason that no capital is secured thereby a |