People ex rel. Cayuga Power Corp. v. Public Service Commission, Second District

John M. Kellogg, P. J.: I think it is unnecessary to determine whether, as matter of law, the original certificate created a business or a transportation corporation. Apparently the company originally only intended to generate and distribute electricity upon or through private property, for railroad or street railroad purposes, or for its use, or for the use of its tenants, as stated in the articles of incorporation, and if that was the intention it was proper and necessary to so state the facts. No sinister motive is to be attributed to the company because it stated its real purposes which deprived the Public Service Commission of supervision over it. No advantage could come to the company from misstating its purpose, or for incorporating for one purpose and subsequently altering its certificate so [783] as to include another purpose, for it is evident that the corporation as changed must conform to the laws relating to corporations formed for the business proposed to be transacted. There is apparently no necessity for attributing bad faith to the corporation in its original formation or in the alteration of its certificate. After having operated in a limited way for a while, the corporation determined that it would be an advantage to the public and to itself if it would extend its operations and render a general electric service to whomsoever might desire it, and it filed an amended certificate under section 18 of the Stock Corporation Law which, if valid, enables it, with the certificate of the Public Service Commission, to perform the business of an electrical corporation. If all the powers sought to be conferred by the original and amended certificate had been included in the original certificate, the corporation would have been a legally formed electrical corporation. The new certificate extends the powers and operations of the corporation. Instead of being confined to distribution of electricity over private property and for certain particular persons, it seeks to distribute over private and public property and for the use of whomsoever desires it. The business of the original corporation was to generate and distribute electricity. That is still its purpose. The original corporation clearly would be compensated for electricity furnished the railroads, street railroads and its tenants. It, therefore, had power to generate and sell electricity. The new certificate only gives it a larger field for distribution and new customers. The extension of the business by the alteration of the certificate is well within the provision of section 18 of the Stock Corporation Law. That section permits any stock corporation “ organized under any general or special law ” to alter its certificate of incorporation so as to include therein any purposes, powers or provisions “ which might be included in the certificate of incorporation of a corporation organized under any general law of this State for a business of the same general character.” The new powers are not confined to those permitted to a corporation organized under the same law as the original corporation, but include those which may be exercised by any corporation organized under any general law, indicating [784] clearly that the law under which the corporation was formed is immaterial. The test is that the corporation sought to be formed under the original and amended certificate shall be limited to the powers which might be included in a certificate of incorporation under any law, and that the business shall be of the same general character. We have seen that the business contemplated under the original and amended certificate is of the same general character, that is the generation, distribution and sale of electricity. The corporation only seeks a larger field of operation. Aside from the provision of section 18, the stockholders of a corporation, who desire to enlarge its operation and scope, may form a new corporation and transfer the business from the old to the new corporation. It' was open to the stockholders of this corporation to take that course, but the section referred to furnished an easier way, but one which cannot be detrimental to the public or the stockholders. The rights of all are conserved. The alteration of a certificate can only be made by the president and secretary upon the vote of a majority of the directors and a vote of three-fifths of the stock taken at a meeting called upon due notice for that purpose. A natural gas company incorporates under the Business Corporations Law. (Wilson v. Tennent, 61 App. Div. 100; affd., 179 N. Y. 546; Farnsworth v. Boro Oil & Gas Co., 216 id. 40, 42.) But a lighting company may carry on such a business under the Transportation Corporations Law (§ 61, subd. 1). The Public Service Commission has supervision of a business corporation engaged in supplying natural gas. (Pub. Serv. Comm. Law, § 2, subd. 13; Id. § 64.) The name of the statute under which a corporation is formed is immaterial after it is formed; the Stock Corporation Law applies to it, and section 18 refers in no way to the law under which the corporation was formed. The nature of the corporation as changed, and the fact that the business is of the same general character, are the only material considerations under that section. I think the Commission erred in holding that the relator is not legally incorporated to carry on a lighting business and in refusing to consider the applications upon the merits. [785] I favor a reversal of the determination and the remission of the matter to the Commission for its further action. All concurred, except Woodward, J., dissenting with an opinion in which Cochrane, J., concurred.