PUBLIC SERVICE COMPANIES ‑- COMMON STOCK DIVIDENDS
The Washington Public Service Commission may not concern itself with common stock dividends of a public service company which is engaged otherwise than solely in intrastate business in this state.
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May 20, 1952
Washington Public Service Commission
Olympia, Washington Cite as: AGO 51-53 No. 309
You have asked that we review our opinion number 51-53-102 of August 20, 1951 [[to the Washington Public Service Commission]], in the light of considerations presented by counsel for one of the public service companies affected thereby. It appears that the company in question believes that the opinion as issued is not consistent with the holding of our Supreme Court in State ex rel. Washington Water Power Company v. Murray, 181 Wash. 27, 42 P. (2d) 429.
We are always glad to review opinions upon request, and in this particular instance, feel that the opinion as issued, in some respects, is not in accord with the law and should be revised as hereinafter set forth.
Our conclusion as reached in the initial opinion was that as long as a public service company is engaged in business in this state, even though also engaged in doing business in another state, it cannot utilize securities as dividends on its common capital stock. We herein modify such opinion so that our holding is that the commission may not concern itself with securities issued as dividends unless the public service company proposing the issue is solely engaged in intrastate business.
[[Orig. Op. Page 2]]
This conclusion was arrived at after holding that although by the terms of theMurray case,supra, interpreting section 11, chapter 165, Laws of 1933 (Rem. Supp. 10458-5), the commission has no jurisdiction over dividends paid by a public service company engaged in both intrastate and interstate business, nevertheless, where such dividends take the form of a stock dividend, they are prohibited by the provisions of section 3, chapter 151, Laws of 1933, as amended by section 1, chapter 30, Laws of 1937 (Rem. Supp. 10439-3).
While we adhere to that portion of the opinion affirming the jurisdiction of the commission over stock issues of a public service company doing business in this state even though it also be engaged in doing interstate business or business in another state, we believe that under the Murray decision, supra, the commission may not concern itself withcommon stock dividends of a company engaged other than solely in intrastate business in this state. Section 11, chapter 165, Laws of 1933,supra, purports to cover entirely the matter of dividends regardless of the form thereof, and accordingly by theMurray decision, such section can have application only to public service companies doing business only in this state.
As stated in theMurray decision,
"We are, however, convinced that there was no intent by this act to regulate the payment of dividends by those engaged in interstate as well as an intrastate business, and that, as it now appears the appellant was so engaged, we find no occasion to discuss the other questions raised. * * *"
TheMurray decision was rendered in 1935, and there have been repeated sessions of the legislature since that date with no resulting legislation to overcome the holding of that case. Although the decision followed from a divided court (four justices dissenting), in view of the long period of apparent legislative acquiescence in the court's interpretation of the legislative intent, we are compelled to conclude upon reconsideration that the court would not distinguish between a cash dividend and a stock dividend in so far as the application of the particular statute is concerned.
It may well be that the commission is of the opinion that it is as much in the public interest to have some supervisory control, within constitutional limits, over the payment of dividends by a public service company doing both an [[Orig. Op. Page 3]] intrastate and interstate business as where it does only an intrastate business in this state. This, of course, is a matter for presentation to the legislature should it be considered warranted.
Very truly yours,
FRANK P. HAYES
Assistant Attorney General