Epitomized Opinion

Application was made by The Lima Toledo R. Co. before The Public Utilities Commission for authority to issue and deliver to one Thomas Newhall its common capital stock of the par value of $1,000,000, its 7 per cent preferred capital stock of the par value of $750,000, and its first mortgage 6 per cent 25 year gold bonds of the principal sum of $1,000,000 as the agreed consideration for the Interurban Electric System formerly owned by the Ohio Electric Railway Company extending from the city of Lima to the city of Toledo. Such a transaction was favorable to Newhall, the owner. The application was denied by the Commission upon the ground that the property was not of sufficient value for the issuance of the proposed capital securities, but it did not go further and fix a value of the property for such proposition. Error proceedings were then prosecuted to the Supreme Court. In sustaining the order of the Public Utilities Commission, this court held:

1. The application was properly denied, as^^ earnings of the property over a considerable p^^t of time had been insufficient to pay operating expenses and fixed charges, depreciation charges, and to provide a reasonable return upon the value, equal to the capitalization sought to be issued.

Under 614-53 to 614-55 GC., authorizing the Public Utilities Commission to supervise the issue of security by utilities and railroads, such Commission is authorized to deny an application for the issuance of securities based upon an overvaluation, or upon which a fair return may not be probably realized or reasonably expected.