People ex rel. Western Union Telegraph Co. v. Public Service Commission

192 A.D. 748, 183 N.Y.S. 659, 1920 N.Y. App. Div. LEXIS 7549
Appellate Division of the Supreme Court of the State of New York·Decided July 8, 1920·Published·Cited by 1 cases

Opinions

Woodward, J.:

The Public Service Commission, Second District, has ordered: That Western Union Telegraph Company shall, beginning January 1, 1920, discontinue its present practice of requiring Postal Telegraph-Cable Company to pay cash for such intrastate telegraph messages as shall be delivered to said Western Union Telegraph Company by Postal Telegraph-Cable Company for transmission, and shall in lieu thereof charge such messages to an account against Postal Telegraph-Cable Company which shall be rendered to said Postal Telegraph-Cable Company not more often than every thirty days; or in the case of the message being one for a person who is a charge [750] customer of the Western Union Telegraph Company, shall charge said message to said customer’s account with the Western Union Telegraph Company.”

The Western Union Telegraph Company has brought this writ of certiorari to determine the right and power of the Public Service Commission to thus intervene in its affairs, and urges that it is not called upon to provide facilities for the carrying on of the business policies of the Postal Telegraph-Cable Company beyond the strict letter of the statutes governing its conduct. It is evident from the discussion of the learned chairman of the Public Service Commission, and the attitude of the intervenor in its brief, that the order proceeds largely upon the theory that as the Western Union Telegraph Company had heretofore permitted a credit to the Postal Telegraph-Cable Company it was bound to continue this practice for the special convenience of that portion of the public which chose to file its messages with the Postal Telegraph-Cable Company, and the determination of this question requires that we recur to certain fundamental principles underlying corporate action.

The Public Service Commissions Law (Consol. Laws, chap. 48; Laws of 1910, chap. 480) does not purport to repeal any statutes subsequent to 1907 (chap. 429), and we may assume that the General Corporation Law, the Stock Corporation Law and other statutes contained in the general revision of 1909 are still in effect. These statutes, including the Public Service Commissions Law, belong to a group of enactments dealing with the creation, maintenance, management and control of corporations, and are to be conn strued with reference to the provisions found in each one of them. (People ex rel. Haberman v. James, 5 App. Div. 412.) We may not, by an interpretation of the broad general language of one of these enactments, override and control the particular provisions of another; they must all be read and harmonized into an intelligent and workable whole, preserving to the individual or corporation all of those rights which belong to it under the law of its being, and which are not inconsistent with the rights of the public as defined in the statutes, or as exist under the common law. The revisers of the statutes have placed in the General Corporation Law all the provisions [751] which they deemed applicable to all classes of corporations (Matter of Ringler & Co., 204 N. Y. 30, 40) and these are enumerated in section 2 of that act and include transportation corporations.

When we find in section 34 of the General Corporation Law (as amd. by Laws of 1917, chap. 538) that “ the affairs of every corporation shall be managed by its board of directors,” and that, with certain exceptions, the directors may make necessary by-laws of the corporation,” we are bound to give some effect to this language; we are bound to assume that it means something, and if the granting or withholding of credit is not an affair of a corporation, as distinguished from its duty to the public, then we are at a loss to know what would constitute an affair of a corporation. Almost every corporation transacting any considerable business has a credit department; it is necessary to the well-being of the corporation, the earning of dividends, that the credits should b.e intelligently handled. It is as important to give credit where the interests of the stockholders require it as it is to withhold it where these interests would be adversely affected, and these are matters which peculiarly belong to the board of directors. Powers of those entrusted with corporate management are largely discretionary ” and courts will not interfere unless the powers have been illegally or unconscientiously executed, or unless it be made to appear that the acts were fraudulent or collusive .and destructive of the rights of the stockholders.” (Leslie v. Lorillard, 110 N. Y. 519; Burden v. Burden, 159 id. 287, 307; Schwab v. Potter Co., 194 id. 409, 415.) In the latter case the court quotes from Flynn v. Brooklyn City R. R. Co. (158 N. Y. 493, 507) that all questions within the scope of the corporate powers which relate to the policy of administration, to. the expediency of proposed measures, or to the consideration of contracts, provided it is not so grossly inadequate as to be evidence of fraud, are beyond the province of the courts,” and unless the Legislature in clear and direct terms has withdrawn from transportation corporations the rights which are declared to belong to the duties of the board of directors of “every corporation,” we must reach the conclusion that the power attempted to be exercised by the Public Service Commission is without warrant in law. [752] The word affairs ” has been judicially declared to be a word of broad signification, more comprehensive than that of business ” (Morrison v. Bachert, 112 Penn. St. 322, 328), and in Tompkins v. Little Rock, etc., R. R. Co. (15 Fed. Rep. 6, 13) it was said that it was “ a word of large import, and a receiver having the management «of the affairs of a railroad company must necessarily have the control and management of its road.” We see no reason why a telegraph company should not have the control and management of its lines, of all matters of expediency and of administrative policy, to the extent that this is not denied them by positive law. (Great Northern Ry. v. Minnesota, 238 U. S. 340, 346; Chicago, Mil. & St. Paul R. R. v. Wisconsin, Id. 491, 501.) On the provisions of section 34 of the General Corporation Law there is the unmistakable power to deal with the affairs of the corporation generally, and it is important to see whether this power has been limited to transportation corporations, to the extent that they may not determine for themselves the question of allowing credits.

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People ex rel. Western Union Telegraph Co. v. Public Service Commission, 192 A.D. 748, 183 N.Y.S. 659, 1920 N.Y. App. Div. LEXIS 7549 (N.Y. Ct. App. 1920).

192 A.D. 748 (People ex rel. Western Union Telegraph Co. v. Public Service Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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