Document: 329 U.S. 607 67 S.Ct. 583 91 L.Ed. 547 INSURANCE GROUP COMMITTEE et al.v.DENVER & R.G.W.R. CO. al. No. 690. Argued Jan. 6, 1947. Decided Feb. 3, Rehearing Denied March See 330 854, 860. [Syllabus from pages 607-609 intentionally omitted] Messrs. George D. Gibson, of Richmond, Va., and Kenneth F. Burgess, Chicago, Ill., for petitioners. C. Nicodemus, Jr., New York City, William V. Hodges, Denver, Colo., respondents. 1 Mr. Jus ice REED delivered the opinion Court. 2 On November 29, 1944, District Court Colorado confirmed a plan reorganization debtor, Denver Rio Grande Western Railroad Co., 62 F.Supp. 384, notwithstanding rejection by holders General Mortgage bonds pursuant to § 77, sub. e, Bankr. Act, 11 U.S.C.A. 205, e. Upon appeal Circuit Appeals reversed order confirmation. 10 Cir., 150 F.2d 28. This granted certiorari, Reconstruction Finance Corp. v. S.L.W.R. 326 699, 66 50, 51, affirmed 328 495, 1282. The debtor consistently opposed throughout those proceedings. After this was filed on June 10, 1946, petitioned rehearing which denied October 28, 1946. At about same time as that filing its petition rehearing, it moved in (September 17, 1946) re- examination light circumstances had changed since Interstate Commerce Commission's hearings May, 1941. 254 I.C.C. 6. specified three categories conditions: '(a) decline money rates level far below prevailing at these dates; (b) recent public offering Government purchase private capital operation steel plant Geneva, near Provo, Utah, been constructed exigencies War cost excess $200,000,000; (c) A permanent elevation National income through intensified industrial activity involving indefinite future greatly increased demand railway transportation.' 3 prayed upon re-examination set aside 25, 1943, approving plan, confirming refer proceeding back Commission formulation new plan. hearing motion dismiss debtor's but without introduction evidence, dismissed 30, grounds confirmation determined rights participation did not now have power reopen also held failed state case justified reconsideration. notice requested stay execution day; latter time. Thereupon docketed applied an staying until should be considered. application 2, Judge Phillips proceedings consummate certiorari under Judicial Code, 240(a), 28 347(a), asked we grant writ Appeals, before judgment, urged were action respondent violation mandate issued even if violated denial appealable because reality rehearing. Further, petitioner take decide whole claim change repetitious rejected June, decision no allegations made sufficient justify account changes decision. Because importance questions raised fficient administration railroad reorganizations Bankruptcy certiorari. 708, 371. 4 We may assume, arguendo, both bankruptcy, bankruptcy court itself, after has review, U.S.C. 205(f), f, cognizance subsequent conditions re-examined Commission. assumption, are allege existence our kind 'envisaged considered deliberations or explanations plan.' 522, 1296. do therefore think would case. 5 conclusion foregoing paragraph removes necessity considering question whether disregarded effect judgment orders approval Likewise disposes any determine request Cf. United States Socony-Vacuum Oil 310 150, 247, 60 811, 855, 84 1129. 6 assumption employed above, ruled 534, 1302, circumstances, up date, presented us other respondents review confirmed. ruling binding arising prior When matters decided appellate court, rulings, unless superior bind lower court. Thus cause proceeds final determination. While rests federal passes position cause, orderly judicial action, except unusual requires refuse permit relitigation issues previously former review.1 7 brief make clear period between 1941, like character with alleged, relied effort Court's argued again argues, 'radical lowering rates.' And emphasized capitalizing issuance greater volume securities against earnings consequently larger allotment presently dissatisfied creditors. Every example refinancing, listed respondent's present support illustration argument falling interest rates, last purpose. purpose forth instances issue definitely than borne issues. beneficial effects 'permanent national income' anticipated debtor. Lastly, there pointed out 'establishment construction great Geneva certain revolutionary contribution earning * *'. Although then rely, does now, corporation capital, argument, prospective business factor indicating higher earnings. turn strategically located low distribution. shift ownership only moderate significance. 8 In sum, very kinds here formerly reasons why vacate confirmation, remand argues refusal so bar proving Our holding based could economic concluded that, weighed, alleged 1302. 9 14, appraised hearings. 349, 356, 358, 359. gave consideration proposed bear. 515, 516, 1293. There forecast available $6,215,423 annual charges normal year. It thought capitalization $155,000,000 plus, though more $35,000,000 represented common stock participated above estimated long range advantages investments bond sinking fund payments increasing value equities. 15,356. As appears tables capitalization, distribution securities, 502, 503, 1286, 1287, chosen varied type security. none authorized shown values much par, return proven excessive. note infra. From various recommendations proper first mortgage bonds, selected finally fixed rate per cent contingent additional one cent.2 233 537, 542, 554-5; 15,387. To guard drain reorganized fall, provision plan3 refunding maximum premium cent. gives protection road unpaid creditors excluded stockholders. Much situation exists Steel Plant. discussion occurred 23, 1942, recognized substantial traffic road. basis further reconsideration 356. received 34, 38, 43. 12 indicated increases briefed contrary contention review. Nothing called attention indicate actual when beyond Commission.4 Earnings depend costs well revenue. might added comments increases, 1297, footnote handing down December 5, granting meeting costs.5 13 finding cash allocated senior paid them full. fully secured partially secured, given opportunities participate profits chance anticipated. priority rule satisfied allocation. explained 517, 1294. allegation, either before, existing allotted creditor ever aggregated amount creditor's debtor.6 absence such allegation demonstrates is not, excessive interest, unfair whom allowed appear. 14 Until can contended some show reasonableness stockholders represents face their claims, insistence support. Northern Pacific Ry. Co. Boyd, 228 482, 33 554, 57 931; Group Institutional Investors Milwaukee, St. P. P.R. 318 523, 541, 63 727, 738, 87 959. 15 Not fail sales claims radically improved railroad's interest.7 distortions varying causes appear reports Trustees, important figure capitalization. Traffic comparisons specifically out.8 into need contain primary facts, ultimate just referred to, factual re-examination. specificity caused 1932 direct injunction 1930 antedated depression, beginning 1929.9 extended authorize reopening conditions. For cases type, out, must showing injury.10 approved statement Atchison rested exceptional facts.11 16 open reorganization, assuming so, accepted years consideration, injustice complaining junior stronger made. Compare Pewabic Mining Mason, 145 367, 887, 888, 892, 36 732; 543, 739, 17 what ritten directed suggestion plenary proposals Grande. suggestion, record affirmatively shows valuation allocation Commission, fails sound 18 So concerned, anything judicially known significant traffic. Nor see Congress passing S. 1253, July 31, persuade require await enactments affect reorganization. vetoed. President's Memorandum Disapproval, August 13, understanding duties Reorganization strong criticism provisions, expressed 509, 1290. repeated. continue act law. Whether will know. quite understandable strive preserve equities feel, case, they recovered investment. Such convictions respected. 19 persons corporations hold controlling voice management railroad. matter 367 seq. adopted contains year voting trust regulated provisions sale. 400. ground concluding owners less solicitous welfare who, present, certificates. 20 However, nothing indicates disregard courts operators, stockholders, public. finds system means, correctness result cannot mathematically proved disproved. difficulties appraisal multiplied looking estimate estimates allowance changing rates. All everyone found better way among classes different rights. Corporation W.R. 505—509, 1288—1290. 21 carried out. directing consummation vacated denying affirmed. 22 Order vacated. 23 24 Justice FRANKFURTER (dissenting). 25 Formally, litigation litigants, quarreling over share enterprise. Intrinsically, concerns serious importance. Control major systems country stake. Disposition controversy brings play considerations policy President clearly themselves relevance problem 26 peculiar aspect taken Government. frequently intervenes amicus curice so-called dominant aspects litigation. earlier stages fact party record. Through agencies, Corporation, itself creditor. ordered 'fair equitable', justifiably general bondholders whose constituted one-fourth entire debt railroad, joined petitioners urging reversal here, went begun proceedings, stayed opportunity consider duly docketed. lift heard, longer approve supported March. Instead, bowed What happened abstain standing obtained June? That constrains me view calls scrutiny, stand, 27 rendered Government, memorandum abstention, states succinctly candor: 'Because Summer Bill 1253 reasoning dated disapproval features Section 77 law, RFC, agency created virtue Congressional enactment, taking petitions granted.' decisive relevant thus originally, essential debtor-railroad's unsuccessful secure presumably observation 'the 1946.' But vetoed bill he it. left doubt regarding his veto. adequate appreciation full text part (Appendix I). veto disapproved purposes. He too weak, carrying 'By withholding my signature bill' wrote Truman, 'I intend I favor pending plans. am agreement objectives prevent undesirable control railroads, immediately within few years, forfeitures securities.' continued: believe next pass meet stated objections best interests public, reditors, stockholders.' These merely views States. They expert knowledge subject, gained active most elaborate investigation organizations conducted congressional committee. 29 elicited prompt response leaders Conference Committee came. Houses parties. deserves quotation full: 30 'Statement Members Regarding Further Legislation 31 'The bill, culmination intensive save $2,000,000,000 hundreds thousands railroads process section Act. Those wiped plans legislation enacted designed passed primarily 32 'Those who heartened declaration principles contained stating withheld bill. broad announced shared proponents supporters legislation. Broadening requirements drafted. promptly introduced session Congress. already overwhelmingly committed declared he, too, favors purposes, enactment measure certain. 'While committees Senate House, number appropriateness cooperating abstained steps forward 77. months came vote House. Now legislation, form reported respective House conference report overwhelming each Chamber approbation President, confidently hoped furtherance instead giving favored both. 34 'Clyde M. Reed. 35 'James Tunnell. 'Sam Hobbs. 37 'Chauncey W. 38 'Washington, D.C., 39 'August 40 difficult signed sustained dismissing hand reexamination underlay hardly disregarded, inequities extensively cited demonstrating correction. although fit withdraw entirely jurisdiction emphasize policy. equity scrutiny bi-partisan underwrites Of course, neither hopes nor confidence insures legi lation. realization desires expectations concerned affect, enforce ought proceed outlined forthcoming. 41 dealing ordinary exercising conventional authority. legislative role judiciary guided. responsibility lodged Congress, once limited novel. If duty reconsider really prospect, imperative emergency engage race disposition State Pennsylvania Wheeling Belmont Bridge How. 518, 249 421, 435. 42 Moreover, intention latent conjectural summer. Legislation, suggested every prospect submitting joint resolution (see Appendix II opinion) reorganizations, referring Disapproval Statement supra, Senator Reed 'preliminary discussions agreed expediting Eightieth up, preliminary stage, White greatest possible speed Congress.' 43 rightly assumes June. Changed First last, equity, decree consummating instrument inequity. Peculiarly where paramount formal restricted apecific litigants. specific financial factors which, opinion, affected posed President. real whether, events decision, solid enforce. sure, adjudicated relitigated still open, always decree. Usually interim determination 'changed conditions' implies nature. old facts hitherto unexplored constitute circumstances. 44 essence this. give imprimatur far-reaching implications nation. born confused uncertainties war incubation many changes. Judgment often involves prophecy, all rophecy element guesswork. guessing rather more. How guesswork involved candidly members Comission. expect 'normal' period, sense assured stability, good stretch ahead doubtless pursue will-o'-the-wisp. message certainly 45 spoke 'evil, permitting improper reorganization:' Repeatedly vital 'that shall place transportation communities served nation whole, strings indirect, conditional otherwise, institutions others distant centers.' 46 Here prime ascertaining sanction. hands insurance group two largest lending banks. directions companies past exerted calculated them. geographical functional remoteness powerful York, relation operating bars single-minded attentiveness pioneering enterprise characterized men Edward H. Harriman, James J. Hill Daniel Willard. 47 Another Truman's dissatisfaction failure deal adequately 'grossly wasting funds proceedings.' unmindful levels 1943 safe say, however, significance sharp drop recently manifest inquiry lay bare. 48 Finally, seemed needless conspicuous example. avoidance involve large capitalizations. avoided ways, calling tenders trustees below-par market prices. 49 financing painless structure', speech Vandenberg, 1939, 76th Cong., 1st Sess., Cong.Rec. 11127), slender indeed, barren. 50 lines crucial authoritative here. satisfy own initiative litigants framed parties narrow press Abstractly, reject principle 'reorganizations interest.' keeping courts. safeguarded regard manner represent interest. 51 compelling reexamined vas transforming six closed particularly case? serves, creditors, suffer delay necessary explore basic turning institutions. No effectively while control, dissipates heavy clouds resting organization. 1935. took four another formulate Learned Hand said applicable: 'There despatch business, delays existed legally protected opposing preserved reason deny reasonable protect asserting them.' Knight Wertheim 158 838. Surely special awarded possibly properly safeguarded. APPENDIX 52 Disapproval. 53 entitled 'An Act enable corporations, properties during seven provided pay charges, readjustment structures; alter modify obligations; purposes.' 54 Even familiar deficiencies evils exist fear accomplish intended. 55 sections, contemplates prevention practicable; second carriers institution affairs. 56 Objections include following: immediate reduction grossly Millions dollars saved reducing reiterate Union follows, 'low force promoting production employment post-war striving.' 58 cure evil, 59 provide forfeiture investments. fees expenses corrected Affirmative curb evil bring strict included enacted. 61 excludes benefits bro ght become $50,000,000 limitation exclude exclusion logical justification. correct abuse condemned course investigation. diverting cover stocks market. hand, incorporate sponsers Senate. commend emphasis places being reorganized. 64 things centers. 65 help employees invested work, investors, desirous safeguarding investment, helping capture justly seeks forfeiture, get protection, enabling use acquire control. By securities. Harry Truman 68 69 70 II. 71 (S. Res. 65, 80th 22, 1947, Cong. Rec. p. 543.) 72 Whereas continental receivers insolvency brought procedure; 73 mileage approximately 40,000, investment equipment amounts several billion dollars; 74 roads entered 1933, 1934, 1935, 1936, ago, accumulate amounts, placed solvent position; 75 Whereas, according information available, condition impossible approximate completed, feasible retire indebtedness, discount, refund extend maturity date balance desirable discharge drastic 77; 76 continued trustee receiver insolvent roads, efforts reorganize, policy; going modifications legislati n appropriate Representatives strengthening adoption carry principles: Therefore 78 Resolved, committee, subcommittee, surrounding handling receivership trusteeship; ascertain extent elimination exceptions heretofore subject; inquire failures, (a) reduce proceedings; arrange payable outstanding indebtedness; extension dates theindebtedness courts; (d) call tender discount trustees, hands; (e) subjected Act; (f) possible; investigate receivers, counsel, bankers bank syndicates, experts, relating thereto, methods possibility eliminating, costly undergoing obtain local Communities, shippers, passengers serve, free domination affirmative express security subsequently reorganization; voluntary Seventy-ninth subject useful businesslike basis; procedures, investors railroads. committee early practicable, law desirable. 79 purposes resolution, subcommittee thereof, hearings, sit times sessions, recesses, adjourned periods employ clerical assistants, subpena otherwise attendance witnesses correspondence, books, papers, documents, administer oaths, testimony, expenditures, deems advisable. stenographic services cents 0 words. Great Telegraph Burnham, 162 339, 344, 850, 852, 991; King West Virginia, 216 92, 101, 225, 229, 396; Messinger Anderson, 225 436, 444, 740, 1152; Wichita Royalty City Nat. Bank Falls, 306 103, 106, 420, 83 515. Chaffin Taylor, 116 567, 572, 520, 727. contingency payment technical detail 393—94, net charges. 387. income* publication Department Commerce, Survey Current Business, following was, billions: 1940...... 77.6. 149.4 1941...... 96.9. 1944 160.7 1942..... 122.2. 1945 161.0 computed tentatively 164.0 billions 1946; expected increase. Economic Report January 8, H.Doc. 49, required Employment Stat. 1021 Dow-Jones average grade rails 117.25 fallen 110.73 bid when, as, 101 89 figures Commercial Financial Chronicle, total earned individuals businesses. individual intended supply means increase substantially prewar years. 264 695, 722, 728; I.C.C., Ex parte 162, mimeographed report, 7. revenue costs, pp. 4, 5. readily ranges road's traded follows: 1946 .......................... High Low Bonds............... 103 82 102 Income Bonds.............. 1/2 89...................... Preferred Stock........... Common Stock.............. Bond Year's End Edition Moody's Record, Vol. 1, 1947; Standard Poor's Ratings Stock Guide, Edition, January, highest bids are, us: Bonds............................... Bonds.............................. Stock........................... Stock.............................. Editons 20, Trustees 1942...................................... $17,044,420.39 1943...................................... 11,573,667.94 1944...................................... 8,157,880.25 1945...................................... 1,503,289.07 Dr.* end eleven $3,405,118.00. Revenue freight carloading weekly American Association Railroads car loadings month 1941 1941........... 14,045 1944.......... 15,308 1942........... 16,915 1945.......... 12,007 1943........... 14,571 1946.......... 13,517 Atchison, Topeka Santa Fe Railway States, 284 248, 256, 146, 148, 273. 288 490, 494, 406, 407, 914. Jersey 322 1129, 1135, 88 1420.

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