188 Pa. 205 | Pa. | 1898
Opinion by
The defendant railroad is 53.66 miles in length, running from Scranton, Pennsylvania, to Hanover Junction in New York; the number of miles in this state, is 50.75. It has a paid-up capital of $1,500,000, divided into 15,000 shares of the par value of $100 per share; its funded debt is $1,300,000. It is operated by the New York, Ontario and Western Railroad Company under a lease for ninety-nine years; an annual rental
From the judgment entered on this finding the company appeals, assigning eleven errors, which may be treated as practically two, for, except the first, the alleged errors are the construction put by the court upon the act of 1891. The court adopted the same view of that act as in Com. v. New York, Penna. & Ohio R. R. Co., in which opinion of this court is handed down this day, ante, p. 169.
There being no sales of the stock for that year, of course, the court had not the aid of sales or average sales in finding the actual value of the capital stock; if such sales had been made, what effect they would have had on the finding is altogether problematical. There is nothing, however, on the face of the report or in the facts proved which point to any error in the judgment. In the report of the company’s officers the “ gross earnings during the year, from the lease of the road,” are put at $103,867. The application of the larger part of this income to indebtedness of the lessor company, is claimed to be shown from the book account, leaving only a surplus of $26,269.89. But, however this may bo, it seems to us, a road with such an earning capacity must necessarily have a very valuable property and franchise. In the return the actual value of the capital stock is put at only $150,000. The court below found the actual value to be much higher. There is nothing in the
Appellant does no.t seriously contend that the rule adopted by the court below and expressly affirmed by this Court in Com. v. Delaware, Susquehanna & Schuylkill R. R., 165 Pa. 44, does not, in ascertaining the actual value of the capital stock, authorize an estimation of the value of the franchise, but he does argue that that was a novel and extreme case, and should not be extended to cases where the facts are entirely different. But we see no reason why the same principle should not be applied to any case of undervaluation of the capital stock by the company’s officers. In that case the company appraised its capital stock at $2,000,000; the total cost of its road was about $1,160,000, yet the evidence showed it had paid one dividend during the year of forty per cent on its full paid-up capital of $1,000,000. The court below was of the opinion that the actual value of the capital stock, including the franchises and privileges enjoyed by the company, was $4,000,000, exactly doubling the amount of the appraisement by the company’s officers. On appeal, in opinion by our Brother McCollum, the judgment was affirmed on the ground that the actual value of the capital stock was a fact to be found by the court under the agreement waiving a jury trial, and in ascertaining the fact it was proper, under the act of 1891, to take into consideration the value of the franchise.
Why is not that case a precedent in such as the one before us? In it there was a large undervaluation by the company’s officers which, it was held, was not binding on the commonwealth’s officers or the court; it is the same here. In that case, in doubling the valuation, the court took into view the value of the franchises and privileges enjoyed by the corporation; in this case, the court considers the corporation’s tangible property, assets and franchises. The construction of the sixth preamble of the act of 1891, and the method adopted by the court in ascertaining the actual value of the capital stock in the case cited, are directly in point here, and in all cases of undervaluation. We see no reason to modify or restrict the decision in
As to the first assignment, that the court did not find as a fact that, by the lease, the lessor company was to furnish the equipment, and having failed to do so, it was furnished by the lessee company at an expense of about $800,000, we do not think the failure to formally find the fact of record material. If the fact be as claimed, then the lessor company failed to keep its covenant with the lessee in that particular; if this had the effect of depreciating the actual value of the capital stock, we have no doubt appellant had the benefit of it. It is by no means clear to us that it could have had any such effect; certainly not to the extent which would warrant a reversal of the judgment.
All the assignments of error are overruled, and the judgment is affirmed.