Northwestern Elec. Co. v. Fpc, 321 U.S. 119 (1944)

Northwestern Electric Co. v. Federal Power Commission

No. 195

Argued January 4, 5, 1944
Decided January 31, 1944
321 U.S. 119

CERTIORARI TO TO CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

Pursuant to authority granted by the Federal Power Act to prescribe a uniform system of accounts for utilities subject to the Act, the Federal Power Commission, having found an item in the accounts of a utility company to be a "write-up" -- balancing a liability on an issue of common stock in respect of which the company received no value -- ordered the company to dispose of it by applying toward its elimination all net income above preferred stock dividend requirements.

Held, that the order was authorized by the Act, and was constitutional. P. 123.

1. The method adopted by the Commission for the disposition of the write-up, supported by expert evidence and not plainly arbitrary, may not be set aside on review, even though it may not accord with the best accounting practice. P. 124.

2. That the accounting method prescribed interferes with the function of management is not a valid constitutional objection. P. 124.

3. That the order prevents the company from redressing the deficiency of paid-in capital by entering among its assets subsequent appreciation in value does not constitute a taking of the property of the company or its stockholders. P. 124.

4. That a successor company might have been allowed to carry as an asset the actual cost to it of the physical property of the company is irrelevant. P. 124.

5. The order does not violate the reserved powers of the States under the Tenth Amendment. P. 125.

6. No conflict exists between the authority here exercised by the Federal Power Commission and that exercised by the Securities and Exchange Commission. P. 125.

134 F.2d 740 affirmed.

Certiorari, 320 U.S. 722, to review the affirmance of an order of the Federal Power Commission. See also 125 F.2d 882; 36 P.U.R.(N.S.) 202; 43 P.U.R.(N.S.) 148.