§ 129. Approval of securities. A common carrier existing, or hereafter
incorporated, under or by virtue of the laws of the state of New York,
may issue stocks, bonds, notes or other evidences of indebtedness
payable at periods of more than twelve months after the date thereof, or
a receiver of such a corporation, if duly authorized by law, may issue
receiver's certificates, when necessary for the acquisition of property,
the construction, completion, extension or improvement of its
facilities, or for the improvement or maintenance of its service or for
the discharge or lawful refunding of its obligations or for the
reimbursement of moneys actually expended from income or from any other
moneys in the treasury of the corporation not secured by or obtained
from the issue of stocks, bonds, notes or other evidences of
indebtedness of such corporation, within five years next prior to the
filing of an application with the commissioner for the required
authorization, for any of the aforesaid purposes except maintenance of
service and except replacements in cases where the applicant shall have
kept its accounts and vouchers of such expenditure in such manner as to
enable the commissioner to ascertain the amount of moneys so expended
and the purposes for which such expenditure was made; provided and not
otherwise that there shall have been secured from the commissioner an
order authorizing such issue, and the amount thereof and stating the
purposes to which the issue or proceeds thereof are to be applied, and
that, in the opinion of the commissioner, the money, property or labor
to be procured or paid for by the issue of such stock, bonds, notes or
other evidences of indebtedness is or has been reasonably required for
the purposes specified in the order, and that except as otherwise
permitted in the order in the case of bonds, notes and other evidences
of indebtedness, such purposes are not in whole or in part, reasonably
chargeable to operating expenses or to income; but this provision shall
not apply to any lawful issue of stock, to the lawful execution and
delivery of any mortgage or to the lawful issue of bonds thereunder,
which shall have been duly approved by the board of railroad
commissioners before July first, nineteen hundred seven. Stock may be
issued to stockholders as a stock dividend provided that there shall
have been secured from the commissioner an order authorizing such issue
and a transfer of surplus to capital in an amount equal to the par or
stated value of the stock so authorized and stating that a sum equal to
the amount to be so transferred was expended for the purposes enumerated
in this section. The issue of stocks, bonds or other evidences of
indebtedness, within the meaning of this section, shall include the sale
by any such corporation of any such securities previously issued in
compliance with this section and subsequently reacquired by such
corporation, provided, however, for good cause shown the commissioner
may exempt from the restriction hereof stocks, bonds or other evidences
of indebtedness. For the purpose of enabling him to determine whether he
should issue such an order, the commissioner shall make such inquiry or
investigation, hold such hearings and examine such witnesses, books,
papers, documents or contracts as he may deem of importance in enabling
him to reach a determination. Such corporation shall not without the
consent of the commissioner apply said issue or any proceeds thereof to
any purpose not specified in such order. Such common carrier may issue
notes for proper corporate purposes and not in violation of law, payable
at periods of not more than twelve months without such consent but no
such notes shall, in whole or in part, directly or indirectly, be
refunded, by any issue of stock or bonds or by any evidences of
indebtedness running for more than twelve months without the consent of
the commissioner. The commissioner shall have power to require every
such carrier to file with the commissioner after the issuance of stocks,
bonds, notes or other evidences of indebtedness, issued with or without
the approval of the commissioner as herein provided, a notice of such
transaction in such form as the commissioner may prescribe. Provided,
however, that the commissioner shall have no power to authorize the
capitalization of any franchise to be a corporation nor to authorize the
capitalization of any franchise or the right to own, operate or enjoy
any franchise whatsoever in excess of the amount (exclusive of any tax
or annual charge) actually paid to the state or to a political
subdivision thereof as the consideration for the grant of such franchise
or right, nor to authorize the issuance of any stocks or other
securities for any purposes other than those enumerated in this section;
nor shall the capital stock, bonds and other evidences of debt of a
corporation formed by the merger or consolidation of two or more other
corporations, exceed the sum of the capital stock, bonds and other
evidences of debt of the corporations so consolidated, at the par value
thereof, or such sum and any additional sum actually paid in cash; nor
shall any contract for consolidation or lease be capitalized in the
stock of any corporation whatever; nor shall any corporation hereafter
issue any bonds against or as a lien upon any contract for consolidation
or merger.