be construed to prevent the holding of stock heretofore lawfully acquired.63

§ 268. Power to Issue Stock, Bonds, etc.-Special Privileges-Control of.-The power of public utilities to issue stocks and stock certificates, and bonds, notes and other evidences of indebtedness and to create liens on their property situated within this state is a special privilege, the right of supervision, regulation, restriction and control of which is and shall continue to be vested in the state, and such power shall be exercised as provided by law and under such rules and regulations as the Commission may prescribe."

63 Ib.

64 Section 52 (a), p. 45.

The terms and conditions upon which railroad companies may be created, the powers and capital stock they may have, the purposes for which they may increase their capital stock, and the limitations and conditions to be imposed upon the right to such increase, are exclusively matters for legislative action which cannot be delegated. The state having created such corporations and conferred upon them, for public purposes, great and extraordinary powers and franchises, including the sovereign power of eminent domain, and the right to levy tolls or taxes upon those who use for traffic or travel the modern highways and railroads. It logically follows that the legislature has the undoubted right to enact statutes regulating the increase and disposition of their capital stock. In the exercise of this right it may pass a statute providing generally for what purposes and upon what terms, conditions, and limitations an increase of capital stock may be made, and confer upon the Commission the administrative duty of supervising any proposed increase of stock. It may also delegate to the Commission the duty of finding the facts i each particular case, and authorize and require it, if it find the existence of facts that bring the case within the statute, to allow the proposed increase; otherwise to refuse it. Any statute, however, which attempts to authorize the Commission in its judgment to allow an increase of the capital stock of the corporation for such purposes and on such terms or conditions as it may deem advisable, would be a delegation of legislative power and void. State v. Great Northern R. Co., 100 Minn 445, 111 N. W. 289, affirmed, 216 U. S. 206, 54 L. ed. 446.

Even where an act or charter can be construed as conferring upon a corporation the power to issue stock without limit, nevertheless the legislature would have the right to prescribe such reasonable regulations for the exercise of the right to issue stock as might be necessary to prevent fraud in the issuing of fictitious stock and to protect the public

§ 269. Purpose for Which Bond, etc., may be Issued. A public utility may issue stocks and stock certificates, and bonds, notes and other evidences of indebtedness payable at periods of more than twelve months after the date thereof, for the following purposes and no others, namely, for the acquisition of property, or for 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 public utility not secured by or obtained from the issue of stocks or stock certificates, or bonds, notes or other evidences of indebtedness of such public utility, within five years next prior to the filing of an application with the Commission for the required authorization, for any of the aforesaid purposes except maintenance of service and replacements, in cases where the applicant shall have kept its accounts and vouchers for such expenditures in such manner as to enable the Commission to ascertain the amount of moneys so expended and the purposes for which such expenditure was made." § 270. Power of Commission on Authorizing Bonds.-Provided, that such public utility, in addition to the other requirements of law, shall first have secured from the Commission an order authorizing such issue and stating the amount thereof and the purpose or purposes to which the issue or the proceeds thereof are to be applied, and that, in the opinion of the Commission, the money, property or labor to be procured or paid for by such issue is reasonably refrom the consequences thereof; because the police power of the state cannot be abdicated. State v. St. Paul M. & M. R. Co., 98 Minn. 380, 118 N. W. 261; State v. Great Northern R. Co., 100 Minn. 445, 111 N. W. 289.

65 Section 52 (b), p. 45.

quired for the purpose or purposes specified in the order, and that, except as otherwise permitted in the order in the case of bonds, notes or other evidences of indebtedness, such purpose or purposes are not, in whole or in part, reasonably chargeable to operating expenses or to income.66

§ 271.

Hearing to Determine Whether to Authorize Bond Issue, etc.-To enable it to determine whether it will issue such order, the Commission shall hold a hearing and may make such additional inquiry or investigation, and examine such witnesses, books, papers, documents and contracts and require the filing of such data as it may deem of assistance."7

§ 272. Commission to Fix and Determine Amount of Issue.-The Commission may by its order grant permission for the issue of such stocks or stock certificates, or bonds, notes or other evidences of indebtedness in the amount applied for, or in a lesser amount, or not at all, and may attach to the exercise of its permission such condition or conditions as it may deem reasonable and necessary.

68

§ 273. Authorizing Bond Issue, etc., Greater or Less Than Authorized Stock.-The Commission may authorize issues of bonds, notes or other evidences of indebtedness, less than, equivalent to or greater than the authorized or subscribed capital stock of a public utility corporation, and the provisions of section 309 and 456 of the Civil Code of this state, in so far as they contain inhibitions against the creation by corporations of indebtedness, evidenced by bonds, notes or otherwise, in excess of their total authorized or sub

66 Ib.

67 Ib., p. 46.

scribed capital stock shall have no application to public utility corporations."

§ 274. Application of Proceeds of Bond Issue, etc., to be Made as Commission Directs.-No public utility shall, without the consent of the Commission, apply the issue of any stock or stock certificate, or bond, note or other evidence of indebtedness, or any part thereof, or any proceeds thereof, to any purpose not specified in the Commission's order, or to any purpose specified in the Commission's order in excess of the amount authorized for such purpose, or issue or dispose of the same on any terms less favorable than those specified in such order, or a modification thereof.70

§ 275. Notes may be Issued, Without Authorization, When.-A public utility may issue notes, for proper purposes and not in violation of any provision of this act or any other act, payable at periods of not more than twelve months after the date of issuance of the same, without the consent of the Commission, but no such note shall, in whole or in part, be refunded by any issue of stocks or stock certificates, or of bonds, notes of any term or character or any other evidence of indebtedness, without the consent of the Commission."1

§ 276.

Capitalization of Franchises, etc., not to be Authorized.-The Commission shall have no power to authorize the capitalization of the right to be a corporation, or to authorize the capitalization of any franchise or permit whatsoever or the right to own, operate or enjoy any such franchise or permit, in excess of the amount (exclusive of any tax or annual

69 Ib.

70 Ib.

charge) actually paid to the state or to a political subdivision thereof as the consideration for the grant of such franchise, permit or right; nor shall any contract for consolidation or lease be capitalized, nor shall any public utility hereafter issue any bonds, notes or other evidences of indebtedness against or as a lien upon any contract for consolidation or merger."2

§ 277. Disposition of Proceeds of Bond Issue, etc., to be Accounted for.-The Commission shall have the power to require public utilities to account for the disposition of the proceeds of all sales of stocks and stock certificates, and bonds, notes and other evidences of indebtedness, in such form and detail as it may deem advisable, and to establish such rules and regulations as it may deem reasonable and necessary to insure the disposition of such proceeds for the purpose or purposes specified in its order."

§ 278. Issue of Bonds, Stock, etc., Without Authorization, Void-Effect of Failure to Authorize.— All stock and every stock certificate, and every bond, note or other evidence of indebtedness, of a public utility, issued without an order of the Commission authorizing the same then in effect shall be void, and likewise all stock and every stock certificate, and every bond, note or other evidence of indebtedness, of a public utility, issued with the authorization of the Commission, but not conforming in its provisions to the provisions, if any, which it is required by the order of authorization of the Commission to contain, shall be void; but no failure in any other respect to comply with the terms or conditions of the order of authorization of the Commission shall render void any stock or stock certificate, or any bond, note or other evidence of in

T8 Section 52 (c), p. 46.