§ 68. Approval of incorporation and franchises; certificate; *[permits for a municipal system].- No gas corporation or electrical corporation incorporated under the laws of this or any other state shall begin construction, or exercise any right or privilege under any franchise hereafter granted, or under any franchise heretofore granted but not heretofore actually exercised without first having obtained the permission and approval of the proper commission. Before such certificate shall be issued a certified copy of the charter of such corporation shall be filed in the office of the commission, together with a verified statement of the president and secretary of the corportation,† showing that it has received the required consent of the proper municipal authorities. No municipality shall build, maintain and operate for other than municipal purposes any works or systems for the manufacture and supplying of gas or electricity for lighting purposes without a certificate of authority granted by the commission. If the certificate of authority is refused, no further proceedings shall be taken before the commission, but a new application may be made therefor after one year from the date of such refusal.

As to granting of franchises by The City of New York,- see Greater N. Y. Ch., §§ 71-77.

Ordinances of municipalities consolidated to form Greater New York, relating to franchises or grants of rights, are subject to modification, amendment or repeal by the Board of Estimate and Apportionment,- see Greater N. Y. Ch., § 41.

Ordinances made by the Board of Aldermen of New York City as to the use of streets do not affect any franchise or grant authorized or approved by the Board of Estimate and Apportionment or the former Board of Rapid Transit Railroad Commissioners,— see Greater N. Y. Ch., § 50, as amd. by L. 1905, ch. 629, § 9. Powers of Board of Estimate and Apportionment of New York City as to franchises,- see Greater N. Y. Ch., § 242, as amd. by L. 1905, ch. 629, § 14.

Parallel provision of N. Y. Gas & Electricity Commission Act,— see N. Y. Gas & El. Com. Act, § 11.

Approval by Commissions of organization and franchises of railroad corporations, see ante, § 53.

General power of the state to regulate property devoted to public use,- see ante, § 1, notes [1]-[22].

Exemption from public control,- see ante, § 1, notes [16]-[21]. General rules of statutory construction,—see ante, § 1, notes [23][40].

*Words in brackets not a part of section heading as enacted.-Ed.

†So in the original

Effect of receivership on power to regulate,- see ante, § 2, note [15]. Effect of vacancies on power of Commission,- see ante, § 4, note [5]. Validity of Commission plan of regulation,- see ante, § 4, note [4].

[1] Organization of gas corporation.

A corporation formed Dec. 21, 1895, to bore natural gas wells, and pipe and sell gas, was properly organized under the N. Y. Business Corporations Law and not under the N. Y. Transportation Corporations Law. Wilson v. Tennent, 61 App. Div. (N. Y) 100, 70 N. Y. Supp. 2, affg. s. c. 32 Misc. (N. Y.) 273, 65 N. Y. Supp. 852; affd. 179 N. Y. 546, 71 N. E. 1142.

[2] Municipal and legislative consents.

The right to grant or withhold consent to the occupation of the streets of a municipality for electric lighting purposes is one thing; the right to regulate such occupation after consent is given is another thing.- People ex rel. W. S. El. Co. v. Consolidated T. & E. S. Co., 187 N. Y. 58, 79 N. E. 892.

Under the Greater New York Charter, the administrative officers of the city are not authorized to grant franchises or "consents" to a gas corporation, etc., but such franchise must come only from the municipal legislature, in the absence of express and unequivocal provision of the state legislature to the contrary.- Ghee v. Northern Union Gas Co., 158 N. Y. 510, 53 N. E. 692, revg. s. c. 34 App. Div. (N. Y.) 551, 56 N. Y. Supp. 450.

The consent of local authorities of a town that a gas company might place gas conduits in the streets of the town, gives a right to use not only streets then existing, but streets thereafter opened or used.People ex rel. Woodhaven Gas Co. v. Deehan, 153 N. Y. 528, 47 N. E. 785, revg. 11 App. Div. (N. Y.) 175, 42 N. Y. Supp. 1071.

It is competent for the legislature to provide for the creation of gas corporations and for the laying of pipes and mains in streets and other highways in order to transport gas to consumers.- La Harpe v. Elm Tp. Gas, L. F. & P. Co., 69 Kan. 97, 76 Pac. 448.

Only the state can confer the right to use public streets for the transmission and sale of electricity.- Purnell v. McLane, 98 Md. 589, 56 Atl. 830.

[3] Municipal lighting.

The erection of a municipal gas plant, where the city already has granted a franchise to an existing plant, is not an impairment of contract.- Hamilton Gas L. & C. Co. v. Hamilton City, 146 U. S. 258, 13 Sup. Ct. R. (U. S.) 90.

A municipality may supply not only itself but its inhabitants with electric lights.- Hequembourg v. Dunkirk, 49 Hun (N. Y.), 553, 2 N. Y. Supp. 447.

A municipality has inherent power, independent of statutory authorization, to erect plants and procure equipment for furnishing light for its streets and public places.- Crawfordsville v. Braden, 130 Ind. 149, 28 N. E. 849, 14 L. R. A. 268n.

The legislature may confer power upon a municipality to manufacture gas or electricity for its own use in lighting and for the purpose of selling the same to its own citizens.- Opinion of Justices, 150 Mass. 592, 24 N. E. 1084, 8 L. R. A. 487n.

Where the capacity of a municipal electric lighting plant is greater than is necessary for the lighting of the streets of the city, the city has power to sell the excess to private citizens.- Crouch v. City of McKinney, Tex. Civ. App, 104 S. W. 518.

[4] Contracts with municipality.

The grant to a municipality of power to confer the privilege of furnishing light for the streets thereof and to the inhabitants of said municipality does not necessarily grant the power to make such privilege exclusive. Water, Light & Gas Co. of Hutchinson v. Hutchinson, 207 U. S. 385, 28 Sup. Ct. R. (U. S.) 135, affg. s. c. 144 Fed. 256.

The power of a municipality to grant an exclusive privilege must be expressly given to it, or if inferred from other powers, must be indispensable to them.- Water, Light & Gas Co. of Hutchinson v. Hutchinson, 207 U. S. 385, 28 Sup. Ct. R. (U. S.) 135, affg. s. c. 144 Fed. 256.

The borough of Muncie was authorized by the legislature to light its streets and to manufacture electricity to supply its inhabitants.- Held, that these provisions empower the borough to make a ten-year exclusive contract with a private company, with an option in the borough to renew or purchase at the expiration of the ten years.- Muncy Elec. L. H. & P. Co. v. Peoples' Elect. L. H. & P. Co., 218 Pa. 636, 67 Atl. 956.

[5] Limit of period of corporate existence.

The fact that a municipal franchise to a gas corporation to dig into the streets for the purpose of laying gas pipes is limited to a certain term of years, in no way limits the period of corporate existence of the corporation. Matter of Consolidated Gas Co., 56 Misc. (N. Y.) 49.

§ 69. Approval of issues of stock, bonds and other forms of indebtedness; * [merger; capitalization of franchises].-A gas corporation or electrical corporation organized or existing, or hereafter incorporated, under or by

*Words in brackets not a part of section heading as enacted.-Ed.

virtue of the laws of the state of New York, may issue stocks, bonds, notes or other evidence of indebtedness payable at periods of more than twelve months after the date thereof, when necessary for the acquisition of property, the construction, completion, extension or improvement of its plant or distributing system, or for the improvement or maintenance of its service or for the discharge or 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 the opinion of the commission, the use of the capital to be secured by the issue of such stock, bonds, notes or other evidence of indebtedness is reasonably required for the said purposes of the corporation. For the purpose of enabling it to determine whether or not it should issue such an order, the commission shall make such inquiry or investigation, hold such hearings and examine such witnesses, books, papers, documents or contracts as it may deem of importance in enabling it to reach a determination. Such gas corporation or electrical corporation may issue notes, for proper corporate purposes and not in violation of any provision of this or of any other act, payable at periods of not more than twelve months without such consent; but no such notes shall, in whole or in part, directly or indirectly be refunded by any issue of stock or bonds or by any evidence of indebtedness running for more than twelve months without the consent of the proper commission. Provided, however, that the commission shall have no power to authorize the capitalization of any franchise to be a corporation or to authorize the capitalization of any franchise or the right to own, operate or enjoy any franchise whatsoever in excess of the amount (exclusive of any tax or annual charge) actually paid to the state or to any political subdivision thereof as the consideration for the grant of such franchise or right. Nor shall the capital stock of a corporation formed by the merger or consolidation of two or more other corporations, exceed the sum of the capital stock of the corporations, so consolidated, at the par value thereof, or such sum and any additional sum actually paid in cash; nor shall any contract for consolidation or lease be capitalized in the stock of any corporation whatever; nor shall any corporation hereafter issue any bonds against or as a lien upon any contract for consolidation or merger.

Parallel provisions of New York Gas & Electricity Commission Act, -see N. Y. Gas & El. Com. Act, § 12.

Approval of issues of stocks, bonds, etc., by railroad corporations,see ante, § 55.

General power of the state to regulate property devoted to public use,- see ante, § 1, notes [1]-[22].

Exemption from public control,- see ante, § 1, notes [16]-[21]. General rules of statutory construction,- see ante, § 1, notes [23][40].

Effect of receivership on power to regulate,-see ante, § 2, note [15]. Effect of vacancies on power of Commissions,- see ante, § 4, note [5].

Validity of commission plan of regulation,- see ante, § 4, note [14]. Compelling production of books and papers,—see ante, § 19, notes

[3]-[6].

Punishment of witnesses for contempt,- see ante, § 19, notes [7][12].

Commission not bound by technical rules of procedure,- see ante, § 20, note [1].

Immunity of witnesses, see ante, § 20, notes [2]-[9].

A light and power company made application under N Y. Pub. Serv. Com. L., § 69, for authority to issue ten-year 5 per cent. debenture bonds to the extent of $350,000 bearing 8 per cent. interest, convertible at the option of the holders, not less than two years from date and prior to maturity, into common stock of the corporation at par. The Commission approved the issue to the extent of $330,000 provided that the conversion into common stock should take place only upon a particular day in each year fixed by the corporation, with at least thirty days' notice to the corporation by bondholders and upon previous formal approval of such conversion by the Commission upon application in writing by the corporation.- Application of Newburgh L. H. & P. Co. Decided by the N. Y. Public Service Commission of the Second District, April 29, 1908.

It is not now lawful for electrical corporations subject to the provisions of the Public Service Commissions Law to issue stock in payment of a dividend. Such purpose is not one of the purposes enumerated in section 69 of that law for which issues of stock may be made.Application of Babylon Elect. L. Co. Decided by the N. Y. Public Service Commission of the Second District, March 9, 1908.

A statute of New Jersey provided that whenever it might be necessary for a gas company incorporated under an act of that state to increase its bonded indebtedness, it might by a vote of the directors after consent of a majority of stockholders, increase its bonded indebtedness to any amount not exceeding two-thirds of its capital stock.