Third Department, March, 1922. [Vol. 200 never became the property of the estate of the deceased, and that there has not been and cannot be a transfer of the proceeds of the policies under the will of the deceased or the intestate laws of the State. The decision of the surrogate should, therefore, be affirmed, with costs. Order of the surrogate unanimously affirmed, with costs. Before STATE INDUSTRIAL BOARD, Respondent. In the Matter of the Claim of MARIE BANDASSI, Respondent, on Behalf of Herself and Minor Children for Compensation under the Workmen's Compensation Law, for the Death of Her Husband, POMPEO BANDASSI, v. CHARLES P. MOLLA and AMEDEO ARRIGONI, Copartners, doing Business as MOLLA & ARRIGONI, Employers, Uninsured, Appellants. Third Department, March 8, 1922. Workmen's Compensation Law injury arising out of and in course of employment - decedent killed by burning caused by hot metal dropping on him from plant of third person on upper floor of same building. The injury which resulted in the death of claimant's intestate arose out of and in the course of his employment, where it appeared that his employer's plant was on the lower floor of the building; that an iron pipe full of hot emery dropped through the fire escape, skylight and shafting from the eighth floor of the same building and set fire to the decedent's clothing, which caused the burns from which he subsequently died, and that the iron pipe fell from the place of business of a third person which had no connection with or relation to the employer's business. APPEAL by the defendants, Charles P. Molla and another, from a decision and award of the State Industrial Board, entered in the office of said Board on the 11th day of May, 1921. Almond D. Fisk, for the appellants. Charles D. Newton, Attorney-General [E. C. Aiken, Deputy Attorney-General, of counsel], for the respondents. KILEY, J.: This case is peculiar in that the award is based upon admissions contained in the report of the employer and on hearsay evidence given by one of the partners who was not present at the time of the accident. The date of the accident was November 22, 1920, at twelve-fifty-five P. M. The accident is described in the employer's report as follows: "Iron pipe fell from eighth floor full of hot emery, through fire escape, sky light and shafting that are in our shop. The emery emptied onto the deceased and immediately App. Div. 266] Third Department, March, 1922. caught fire, he was a mass of flames." He died next day. The business of the employers, a copartnership, was making tools for the manufacture of artificial flowers. Claimant's intestate was a forger. At the time of the accident the forge was out; this was five minutes of one o'clock P. M. and the employer swore that at the time the employee was injured "he was going to tap out some work, some antique stands." The employer's place of business was on the ground floor of the building; the pipe of hot metal came from the place of business of the "General Specialty Company on the seventh or eighth floor of the building, which business had no connection with or relation to the employer's business. The defense is that the accident did not arise out of nor in the course of deceased's employment.* The employer was not insured. The parties, without question, seem to have finally submitted the questions involved to the State Industrial Board. An award was made to the claimant and her three dependent children, which requires the employer to make provision to pay or secure the payment of a lump sum, to be distributed according to the provisions of the award. The lump sum totals about $9,000. Appellants have collated, upon their brief, a lot of cases that seem to uphold their contention, that both elements," arising out of" and "in the course of" must be present to sustain an award. A late case (Matter of Leonbruno v. Champlain Silk Mills, 229 N. Y. 470), in which Judge CARDOZO wrote for the court, seems to change that rule somewhat, and is against the contention of appellants. This phrase from the opinion contains the meat of the holding: "He was brought by the conditions of his work 'within the zone of special danger.' This ruling is made on the authority of an English case decided by the House of Lords (Thom v. Sinclair, L. R. [1917] A. C. 127, 142), and from which the counsel for the Industrial Board quotes very extensively. It would seem to sustain the award made herein. The Court of Appeals case cited above arose out of the circumstance where an employee was struck in the eye by an apple thrown by a fellow-servant. Before the citation from the opinion above quoted the judge said: "That it arose in the course of employment' is unquestioned. That it arose 'out of' employment, we now hold." Under that decision, and from the English holding upon which it is based, applying the same to this case, this award can be maintained. I report in favor of the affirmance. Award unanimously affirmed, with costs. *See Workmen's Compensation Law, § 10; Id. § 3, subd. 7, as amd. by Laws of 1917, chap. 705.- [REP. Third Department, March, 1922. [Vol. 200 THE PEOPLE OF THE STATE OF NEW YORK ex rel. ADIRONDACK POWER AND LIGHT CORPORATION, Relator, v. PUBLIC SERVICE COMMISSION OF THE STATE OF NEW YORK, CITY OF SCHENECTADY and VILLAGE OF SCOTIA, Respondents. Third Department, March 8, 1922. -- Gas and electricity certiorari to review proceedings of Public Service Commission fixing rates for gas - burden of showing that rates fixed are unfair is on relator rules for determination of fair value of property — present cost of reproduction less depreciation not controlling - actual investment as shown by books generally safe rule to follow in fixing fair value of plant - no evidence of appreciation Commission justified in accepting books as evidence of fair value depreciation reserve deductible from assets in fixing value — rule not changed by investment of depreciation reserve in additions to plant item entered on books on reorganization to offset value of securities issued by old corporation not part of assets receivership expenses on reorganization considered as assets going concern value allowable as assets no allowance can be made for estimated expenses which books do not show were incurred allowance for working capital at value of materials and supplies on hand plus one-eighth of yearly operating expenses proper calculation of expenses at less than present high cost not improper since order fixing rates was limited to six months quære whether eight per cent is sufficient return. On certiorari to review the proceedings of the Public Service Commission in fixing the rates which a public service corporation may charge for gas, the court will review both the facts and the law, and on such review the findings of fact made by the Commission are presumed to be right and the rates fixed are prima facie fair and valid; the burden of showing them unfair or inadequate rests on the relator. 66 In determining the fair value of the plant for the purpose of fixing the price for gas there is no single, fixed basis or rule which may be followed in all cases to the exclusion of all other considerations. The Commission may consider all the facts which in its judgment have a bearing with due regard to a reasonable average return upon capital actually expended," above all necessary operating expenses and "to the necessity of making reservations out of income for surplus and contingencies;" and, where there has been actual appreciation in the value of property acquired by capital actually expended, the corporation is entitled to have that appreciation included in calculating the fair present value. The present cost of reproduction less depreciation is not a necessary or controlling element in fixing the fair present value of the plant, and the Commission was right in refusing to be controlled thereby in the present case. Except where there has been an actual, considerable and more than temporary increase in values and in costs, the actual investment shown upon the books of the corporation, fully, fairly and honestly kept, is a more certain and more true guide to that "reasonable average return upon capital actually expended " which the statute contemplates, than is the fluctuating uncertainty which attends upon the attempt to apply the present reproduction cost, less depreciation, as the sole or controlling element in determining the fair present value. There is no evidence in the record which the Commission was bound to accept showing that there had been an actual, considerable appreciation above the capital expended in the value of the plant of the relator. The determination as to the fair present value of the plant of a public service corporation must in each case depend upon the special facts, and in this case the App. Div. 268] Third Department, March, 1922. Commission was justified in accepting the books of the relator as better proof of the capital actually expended and the present fair value of the property than the estimates made by witnesses for the relator. A depreciation reserve carried on the books of the corporation must be deducted from the assets of the company for the purpose of determining the fair present value on which to base rates, and this rule is not changed by the fact that the money reserved against depreciation has been actually expended in the construction of additions or extensions to the plant. The item which the relator, on the reorganization of an old corporation whose assets the relator acquired, charged to the account of franchise, etc., which was entered to offset the par value of securities issued by the old corporation, and which did not represent an investment of any moneys at the time of the reorganization, was properly deducted from the assets of the relator. But it was proper for the Commission to allow as a part of the assets the receivership expenses paid on the reorganization. The allowance made by the Commission to cover the going concern value of the relator, which was determined by deducting certain intangible items from the book value and allowing twelve per cent of the value of the tangible property shown on the books, was proper, and the Commission was justified in failing to recognize or follow the testimony on the part of the witnesses for the relator of estimates covering organization expense, engineering and other items which did not appear on the books of the relator to have been incurred or paid. The allowance by the Commission of working capital represented by the value of materials and supplies on hand, plus one-eighth of the operating expenses of the relator for one year, less taxes and uncollectible bills, was proper, though it would not have been wrong if the Commission had made an allowance of one-sixth of the expenses instead of one-eighth. The failure of the Commission, in calculating the operating expenses, to recognize the unusually high cost of materials, coal, oil, freight and labor and to recognize that increased consumption of gas was due to unusual causes of a temporary nature, was not error, since the order fixing the rates was limited to a period of six months, which has expired, and if the rates thus fixed have actually furnished a return less than fair the Commission may immediately correct the mistake in such manner as to make good any losses suffered. At the present time, when interest rates are much higher than they formerly were, it is doubtful whether an eight per cent return is sufficient, but it cannot be said from the evidence in the case that the allowance made by the Commission is too small, and if actual experience demonstrates that the return is too small, application may be made to the Commission for a modification and then the actual experience of the company can be shown. CERTIORARI issued out of the Supreme Court and attested on the 23d day of April, 1921, directed to the Public Service Commission of the State of New York, Second District, commanding it to certify and return to the office of the clerk of the county of Albany all and singular its proceedings had in requiring the relator to amend its schedules of rates for gas and to file new schedules, and denying a rehearing. A company, with a small capital, was supplying artificial gas in the city of Schenectday for many years prior to 1894. There was an outstanding mortgage upon its plant of $100,000. The company failed and its property was sold by the receiver for the sum of $25,000. There was a reorganization under the name of the Schenectady Illuminating Company, which continued furnishing Third Department, March, 1922. [Vol. 200 gas until May, 1919, when it was merged with the Mohawk-Edison Company. In August, 1920, there was a further merger and the business was continued under the present Adirondack Power and Light Corporation. On June 11, 1920, the relator fixed and filed rates for the use of gas for light, fuel and power in the city of Schenectady, the village of Scotia and other places within its district. The city of Schenectady and the village of Scotia complained to the Commission that the rates so fixed and filed were unjust, unreasonable and excessive. The relator answered this complaint. After a trial of the issues raised, the Commission fixed the prices for gas that should be charged for six months and thereafter until other order was made and requiring the relator to amend its schedules accordingly. The prices so fixed were smaller by twenty-five cents per 1,000 feet of gas than those filed by the relator. The relator then asked for a rehearing, which was denied. Naylon, Robinson & Maynard [Daniel J. Kenefick and C. Pascal Franchot of counsel], for the relator. George B. Smith, for the respondent the City of Schenectady. John P. O'Brien, Corporation Counsel (James A. Donnelly and Judson Hyatt of counsel), for the City of New York, amicus curiæ. VAN KIRK, J.: The relator complains of several errors made by the Public Service Commission. The principal complaint is that the Commission disregarded some rules of law that have been applied by the courts to cases of this character. The court is to review both the facts and the law. On such review, the findings of fact made by the Commission are presumed to be right and the rates fixed are prima facie fair and valid; the burden of showing them unfair or inadequate rests on the relator. (Louisiana R. R. Comm. v. Cumberland Tel. Co., 212 U. S. 421, 423; Pub. Serv. Comm. Law, § 72, as amd. by Laws of 1920, chap. 542, and Laws of 1921, chap. 134.)* The relator is a public service corporation. We must seek to ascertain the fair value of its property which it is using for the convenience of the public. (Smyth v. Ames, 169 U. S. 466.) Stockholders of such a corporation retain their holdings and others invest in its stock for the return they feel confident of getting. Such return should be comparable with the return from other investments. In such public service *By Laws of 1921, chap. 134, the short title of statute was changed to Public Service Commission Law.- [REP. |