Brooklyn Borough Gas Co. v. Prendergast, 16 F.2d 615 (E.D.N.Y. 1926)

US District Court for the Eastern District of New York - 16 F.2d 615 (E.D.N.Y. 1926)
December 13, 1926

16 F.2d 615 (1926)

BROOKLYN BOROUGH GAS CO.
v.
PRENDERGAST et al.

No. E-1275.

District Court, E. D. New York.

December 13, 1926.

*616 *617 *618 *619 *620 *621 *622 *623 *624 *625 *626 *627 *628 *629 *630 *631 *632 *633 *634 *635 *636 *637 *638 Whitman, Ottinger, Ransom, Coulson & Goetz, of New York City (William L. Ransom, Jacob H. Goetz, and Robert E. Coulson, all of New York City, of counsel), for plaintiff.

Charles G. Blakeslee, of Binghamton, N. Y. (Charles E. Murphy, of Brooklyn, N. Y., of counsel), for defendant Public Service Commission.

John Holley Clark, Jr., of New York City (Francis R. Stoddard, Sp. Deputy Atty. Gen., of counsel), for defendant Attorney General.

Before MANTON, Circuit Judge, and CAMPBELL and INCH, District Judges, holding Court pursuant to Section 266 of the Judicial Code (Comp. Statutes, ยง 1243).

MANTON, Circuit Judge.

The special master appointed in this suit has reported that the New York state statute (chapter 899 of the Laws of 1923) which prohibits the plaintiff, as a public utilities corporation engaged in furnishing gas to inhabitants of the borough of Brooklyn, city of New York, from making a charge in excess of $1 per thousand cubic feet and requiring gas furnished to have a standard of not less than 650 British thermal units, is unconstitutional as to this plaintiff because it is confiscatory. The District Courts for the Southern and Eastern Districts of New York have held the law to be unconstitutional: New York & Richmond Gas Company v. Prendergast (D. C.) 10 F.(2d) 167; Kings County Lighting Company v. Prendergast (D. C.) 7 F.(2d) 192; Brooklyn Union Gas Company v. Prendergast (D. C.) 7 F.(2d) 628; Consolidated Gas Company v. Prendergast (D. C.) 6 F.(2d) 243; New York & Queens Gas Company v. Prendergast (D. C.) 1 F.(2d) 351. This result has been affirmed by the Supreme Court of the United States in Ottinger v. Brooklyn Union Gas Company, 47 S. Ct. 199, 71 L. Ed. ___; Ottinger v. Kings County Lighting Company, 47 S. Ct. 199, 71 L. Ed. ___; and Ottinger v. Consolidated Gas Company, 47 S. Ct. 198, 71 L. Ed. ___ (decided November 29, 1926).

The valuations in the present case justify the same holding; they also allow an 8 per cent. return. The commission unanimously determined on May 10, 1922, that this plaintiff requires an 8 per cent. return to pay its bond interest, other fixed charges and dividends in order to carry on its business successfully and attract new capital. Such a rate is permissible under McCardle v. Indianapolis Water Company, 47 S. Ct. 144, 71 L. Ed. ___, decided by the Supreme Court in November, 1926.

On the argument, so far as we were able to ascertain the position of the Attorney General and the commission, objection was made to the allowances for depreciation, going value, reproduction, and working capital. We have examined these various items and the method of arriving at the values as fixed by the master, and the views he expresses and the reasons advanced are satisfactory to us. We have likewise examined the exceptions filed by the plaintiff to these items of valuation for reproduction cost of tangible property, the allowance for working capital, and the going value possessed by the plaintiff in its business. We think the decision of the master as to these items is correct. He has been guided by, and followed, the rule announced in the authoritative decisions of the Supreme Court, which found utterance in *639 its latest pronouncement (Indianapolis Water Company Case, 47 S. Ct. 144, 71 L. Ed. ___, decided November, 1926).

The opinion and report of the special master deserves commendation for its careful consideration and analysis of the issues. We deem it unnecessary to add more than to say that his conclusions and reasons therefor meet with our approval.

Motion to confirm the report is granted.