Although this statement shows a surplus of $442,297.63, it includes income from securities in sinking funds to the amount of $478,153.78, and it does not include payments by the corporation to its sinking fund during the year from earnings of the road to the amount of $777,784.56. The report of the directors of the corporation for the year 1896 includes the payments into the sinking fund among the expenses of the road, and omits the income from sinking fund securities, and thus shows an apparent deficit after the payment of a dividend of four per cent.

The precise question proposed, therefore, is whether payments to sinking funds should be charged to income, and interest earned on sinking funds held by the company should be added thereto. If such payments are to be charged to income, and the interest upon sinking funds is not to be included in the income, then there is a deficit, and the company has not brought itself within the limits of the proviso above quoted; otherwise, it has.

A railroad may be said to have earned its dividend when its income from its property and business exceeds the amount of its fixed charges, including operating expenses and interest on its debt, by more than the amount of the dividend. The payment, in whole or in part, by the company of a pre-existing debt is no part of the expenses which are to be deducted in determining the question of its earnings for any given year. The company is neither better nor worse off by the payment of its debts or any portion of them. It might well use all its gross earnings in any given year for the payment of maturing bonds, and still be war

ranted in borrowing money temporarily to pay a dividend to its stockholders. It would be as well able to pay a dividend as it would have been if it had not paid its debts, but had used its income for the purposes of dividend. The debts of a railroad corporation represent, ordinarily, and perhaps in all cases, that portion of the cost of the road which is not paid for. If a road does not earn dividends until the expense of the cost of the road is paid, there is probably not a road in the country which could properly be said to earn the dividends it pays from year to year. For example, if a road were built wholly upon credit, and earned in the first five years enough to pay for the cost of the road over and above its operating expenses, it would make no difference whether the amount so earned should be appropriated wholly to pay the debt, or in part to pay the debt and the balance to pay dividends. In either case it earned enough to pay dividends. In other words, the net earnings, whether of a railroad or of any other corporation, or even of an individual, are none the less real, whether invested in the payment of debts or used for other purposes. If, in the case of a corporation, they are used to pay dividends and not debts, they are still earned.

I understand this principle to be universally recognized as sound. It follows that the same rule should apply to payments to sinking funds. A sinking fund is merely a sum of money set aside to pay a debt. It remains the property of the company, and, although it may be pledged for the payment of the debt, as I understand to be the case here, payments to such fund do not weaken the earning capacity of the road, any more than would the payment of the debt itself. If, instead of being appropriated to sinking funds, the amount had been used for the payment of a portion of its bonds, the result would be the same, and would bring the case within the doctrine above stated.

So, too, with earnings from sinking funds. Such earnings are from the property of the road, and are no less earnings. than those which accrue from other parts of its plant. They belong to the credit side of the earning account, and, whether added to the sinking fund itself, or used to pay interest on a debt (as I understand may be the case here), are a part of the

income of the road, and are to be considered in ascertaining the total amount of its net earnings.

I am of opinion, therefore, upon the facts stated, that the Chicago, Burlington & Quincy Railroad Company earned and paid a regular dividend of four per cent. in the year 1896, within the meaning of the statute referred to. I am informed that no question arises upon any other years; and it follows that its bonds are a lawful investment under the existing law for savings banks and institutions for savings.

To the State
Board of
Health.
1899

May 18.

STATE BOARD OF HEALTH

AUTHORITY TO EXTEND TIME ORIG

INALLY FIXED FOR DISCHARGE OF SEWAGE OF PITTSFIELD
INTO HOUSATONIC RIVER.

The State Board of Health did not exhaust its authority, under St. 1890, c. 357, § 1, by approving a general plan for the construction of a system of sewerage for the city of Pittsfield, and may entertain a petition by the city for an extension of the time originally fixed for the discharge of sewage into the Housatonic River.

The city of Pittsfield has applied to the State Board of Health for an extension of time during which sewage may be discharged into the Housatonic River, and the State Board of Health requests the opinion of the Attorney-General upon the question whether it has a right to make such extension.

St. 1890, c. 357, § 1, provides: "The city of Pittsfield, upon the organization of its municipal government, is hereby authorized, through a board of commissioners to be elected as hereinafter provided, to lay out, construct and maintain a system or systems of sewerage and sewage disposal for said city in accordance with any general plans which have been or may be approved by the state board of health." On May 12, 1891, under the authority of this act, the Board of Health approved a general plan for a system of sewerage and sewage disposal, which provided for the permanent disposition of the sewage by intermittent filtration through certain areas of upland, and allowed the temporary discharge of the sewage into the Housatonic River during the construction of the works; but provided that such discharge should not continue after June 1, 1900. The city now desires to continue the discharge after that date.

The question upon which an opinion is requested is, whether the Board of Health, by approving a general plan once, providing that the temporary discharge into the river should not continue after 1900, thereby exhausted its authority, so that it cannot now entertain a petition by the city for an extension of the time during which sewage may be discharged into the river.

If the Board had the right to authorize for any period of time the discharge of sewage into the Housatonic River, I have no doubt of its authority to authorize an extension of the time so limited. The statute gives to the Board authority to approve the general plans for the construction of a sewerage system in the city of Pittsfield. That authority is not, in my judgment, exhausted by a single act of approval. Modifications of the general plan may be shown to be necessary; and I cannot believe it to be the intention of the act that the State Board, having once approved a plan submitted to it, cannot for good reasons approve a modification of the original plan. The act does not contemplate a single act of jurisdiction upon the subject, whereby the authority of the Board is exhausted, but a general supervision, extending as far as may be necessary to the accomplishment of the work proposed.

If it may act, from time to time, in relation to the approval of general plans, it may, in my judgment, also act to extend the time approved for the temporary discharge of sewage made necessary by the execution of such plans.

PILOTS OF BOSTON HARBOR

REGULATION TO COMBINE PILOT

BOATS AND PILOTAGE FEES.

The regulations for the pilotage of Boston harbor, annexed to St. 1862, c. 176, and expressly continued in force by Pub. Sts., c. 70, § 40, forbid the commissioners of pilots to combine the pilot boats and earnings, so that all the Boston pilots will receive the same amount.

Commis

1899

Your letter of March 15 requires the opinion of the Attorney- To the Pilot General upon the question whether your Board has the right sioners. "to combine the pilot boats and earnings, so that all the Boston May 25. pilots will each receive the same amount."

The regulations for the pilotage of Boston harbor, annexed to St. 1862, c. 176, are expressly continued in force under the provisions of Pub. Sts., c. 70, § 40. Among those regulations is the following: "Any commissioned pilot for the harbor of Boston, that may be found mating or combining, or in any way interested with any other pilot in the business of pilotage, except with those pilots belonging to the same boat with himself, shall be liable to forfeit his commission. The obvious purpose of this regulation, in connection with the statutes (Pub. Sts., c. 70, §§ 25, 26 and 27) which make the pilotage fees payable to the first pilot offering his services, is to secure the vigilance and attention to duty which comes of competition and rivalry. It would be otherwise if a combination were made by which pilots were assured of their fees, whether they were diligent or not.

Pilots, therefore, have no right to combine their earnings; much less has your Board, charged with the duty of enforcing the law, the right to establish by regulation what would amount practically to a repeal of the provisions I have referred to.

To the Com-
missioner of

Public
Records.

1899

May 26.

The duty imposed upon selectmen by St. 1897, c. 439, § 10, to provide fire-proof vaults for the public records of the town, is not conditioned upon action or appropriation by the town, and such officers may incur the expense of compliance with the law, and the city or town is obliged to reimburse them.

The duty resting upon selectmen by St. 1897, c. 439, § 10, to "provide and maintain fireproof rooms, safes and vaults" for the keeping of the public records of their towns, is not conditioned upon appropriation for that purpose by the town or action thereto by the town in a town meeting. It rests upon the town officers. I have heretofore advised you, in a letter dated September 21, 1897 (1 Op. Atty.-Gen. 484), that a person upon whom such a duty rests may incur the expense of compliance with the law, and that the city or town is obliged to reimburse him therefor. The same principle applies in the case submitted.