MATTER OF PUB. SERV. COMM'N OF THE STATE OF NEW YORK v. Jamaica Water Supply Co.

Memorandum. Order of the Appellate Division affirmed, with costs, on the opinion of Mr. Justice J. Clarence Herlihy at the Appellate Division. It is only necessary to add the following: People ex rel. New York Rys. Co. v Public Serv. Comm. (223 NY 373) may seem to suggest a more restricted view of the powers of the commission to assure adequacy of service. Its discussion, however, is concerned with a less direct effort to protect the financial *882 structure of the railroad company. Indeed, the less direct effort there, it could be said, involved a closer and greater encroachment on the internal managerial policies and decisions of the company. It had then been recently reorganized, and the commission sought to enforce a program for replenishment of the capital accounts behind the bonds and stocks recently issued in replacement of the securities of the old company. In this case, on the other hand, the systematic withdrawals of earnings and the reduction therefore of the working capital of the water company had, at the time of the commission’s order, imperiled the water company’s capacity to maintain adequate service, sustained only by rate increases. The order stops the drain of working capital by the water company’s payment out of cash to the parent company to cover losses by the parent’s other subsidiaries. There was no abuse of discretion, as a matter of law, by the Appellate Division in declining to grant leave to serve an answer under subdivision (a) of CPLR 404. Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Cooke concur. Order affirmed, with costs, in a memorandum.