Document: 353 U.S. 151 77 S.Ct. 763 1 L.Ed.2d 726 ALLEGHANY CORPORATION et al., Appellants,v.BRESWICK & CO., as Common Stockholders of Alleghany Corporation, etc. BAKER, WEEKS CO. Appellants, v. BRESWICK al. INTERSTATE COMMERCE COMMISSION, Appellant, Nos. 36, 82, 114. Argued Jan. 23 and 24, 1957. Decided April 22, Rehearing Denied June 3, See 989, 1278. Mr. Whitney North Seymour, New York City, for appellant corp'n. Robert W. Ginnane, Washington, D.C., the Interstate Commerce Commission. Harold H. Levin, appellants Joseph S. Gruss, Alexander Kahan, Adelaide Neuwirth. George Brussel, Jr., appellees Breswick Co. Myron Neisloss. Randolph Phillips, appellee, pro se. Justice FRANKFURTER delivered opinion Court. These are direct appeals under 28 U.S.C. § 1253, U.S.C.A. from a final judgment three-judge District Court Southern setting aside orders Commission restraining Corporation issuing new class preferred stock that had been approved by The case raises numerous questions regarding jurisdiction powers Commission, especially 5 Act, 49 5, understanding which rather detailed statement facts is necessary. 2 Section 5(2)(a), in its pertinent portions, provides: 'It shall be lawful with approval authorization * (i) person not carrier to acquire control two or more carriers through ownership their otherwise; has one another otherwise *.' 54 Stat. 899, 905. 5(2)(a).1 3 Appellant Maryland corporation whose charter provides extensive investment no express limitation. After passage Investment Company Act 1940, 789, 15 80a—1 seq., registered an company Securities Exchange In 1944, connection application Chesapeake Ohio Railroad acquisition property Norfolk Terminal Transportation Company, Alleghany, alleging it controlled Ohio, filed supplementary joining Ohio's seeking own action Ohio. 1945, 'acquisition control' transaction within 5(2) further found 'shall considered subject (reporting securities) provisions section 20(1) (10) 20a(2) (11) act (49 §§ 20(1—10), 20a(2—11)).' 261 I.C.C. 239, 262. 4 Shortly thereafter, 3(c)(9) Act,2 held was longer meaning Act. 20 S.E.C. 731. March, April, May 1954, several petitions complaints were Central Railroad, stockholder, protective committee, bondholder creditors Central, assering violations law Alleghany's purchases stock. view statements officials disposed holdings stock, June, ordered show cause why 1945 order providing should 'considered carrier' set aside. Allegheny replied would accept terminating but requested delay until could file which, alleged, require Commission's continuance status noncarrier 6 present proceedings commenced filing such Central—after ousting old management proxy fight. contents described fully Report Division Commission: 7 'The Cleveland, Cincinnati, Chicago St. Louis Railway (the Big Four), Louisville Jeffersonville Bridge Jeffersonville), on September 20, jointly applied (1)(a) merger properties franchises into Four management, operation; (b) modification lease January 2, 1930, lessee, operates Four, lessor, give effect additional pursuant proposed Four; (2) virtue Jeffersonville; (3) continuation (10), inclusive, (11), act, provided 5(3) thereof.' 290 725—726. 8 already owned all capital Jeffersonville. itself ceased operating 1930; since then operated lessee. addition, owns 98.98% common, 86.45% preferred, Four. 9 On March 1955, authorized continued Alleghany; modified between Central; non-carrier reporting securities Act; terminated effective portions proceeding. 725. 10 reconsideration, whole affirmed conclusions 4. It acquired over at time filed, fact 'a established system'; 5(2)'s requirement approval; rearrangement subsidiaries controlling party necessary party; terms conditions transactions fair reasonable. Rejecting suggestion intervened, also discretion yield former agency.3 295 11. 11 Subsequent respect Jeffersonville, December 17, 'acquire Boston Albany Pittsfield Adams Ware River purchase little than 16% Pittsfield's none other railroads. Albany, Pittsfield, leases due expire 1999, 1975, 2873 respectively. less three weeks after proceeding, Central. (Opinion reported.) 12 A third February 18, sought permission issue 6% convertible amendment, classes stockholders, permitted consummation plan allowing outstanding cumulative 1/2% exchanged 26, days 4's (conditioning term), full denied reconsideration. 13 An brought before minority common stockholders granting subsequent approving restrain three- judge Court, convened Urgent Deficiencies 1336, 1337, 2321 2325, 2321—2325, granted first preliminary injunction, United States, 134 F.Supp. 132 (Circuit Judge Hincks, dissenting), permanent injunction designating 'carrier' issue. 138 123.4 14 moved trial based involved proceeding gave validity because failure provide specifically carrier.' 138. appeal here below, we noted probable jurisdiction. 351 903, 76 694, 100 L.Ed. 1440; Co., 352 816, 39, 43. urges initially dealing reviewable suit appellees, standing. We find do have standing challenge these orders. This where 'the attack does deal interests investors,' 'injury feared indirect harm may result every stockholder corporation.' Pittsburgh Va. R. 281 479, 487, 50 378, 381, 74 980. Alleghany. convertible, relevant notions standing, threatened 'dilution' equity sufficient financial interest them American Power Light S.E.C., 325 385, 388—389, 65 1254, 1255—1256, 89 1683. 16 Having institute injury, conferring source injury. If acted out bounds decreeing order, power approve plaintiffs entitled relief.5 17 brings us substantive issues litigation. main, involve defining powers.6 turns compliance statutory 'for Appellants contend both support assertion disagreed and, seen, 159, 768, supra, unnecessary pass latter. 18 Whether met questions. (1) Was required? Did Central? Jeffersonville? 19 whatever did fit carriers' given subsidiaries, 'two carriers.' single, integrated system need decide this question, however, intimate it, even if necessary, refers 'control' 'approved control.' There seems reason read word 'approved.' Such holding mean engaging requiring apply deprive Remedies against violator 5(7), (8), (9) To punish depriving indeed quixotic. As points out, problem appear clearer contesting, acquiescing in, 21 Control satisfy 5(2). reported following: 22 widely public, functions reposes officers contest preceding stockholders' meeting nominees choosen elected Central's board directors. undivided half 600,000 shares voting rights jointventure agreements, 15,500 shares. represent almost percent total outstanding. chairman directors who holds same position beneficially 100,200 latter's president director 300,100 vice similar Central.' I.C.C.A., 727. recognized passed regular corporate procedures Id., 741. 24 reached conclusion: 25 contention individual ignores realities situation. allied succeeded electing members permit organize elect officers. Clearly tenure office depends upon conformance views them. our thus reposing constitutes 11, 16. 26 'if opinions contain conclusion those lack findings conclusion.' F.Supp page 147. 'discloses beneficial combined Kirby, Young, Richardson Murchison group,' concluded say someone else, controls They whether alone, Ibid. 27 think took too restricted what 'control.' 1939, Rochester Telephone Corp. 307 125, 145—146, 59 754, 767, 83 1147, arising Federal Communications 48 1064, 1065, 47 152(b), rejected artificial tests 'control', left determination particular practican concept agency charged enforcement.7 broad scope designed employed Congress 899—900, 1(3)(b), 1(3)(b).8 States Marshall Transport 322 31, 38, 64 88 1110. That added 1(3)(b) providing: 29 'For purposes (section) reference made (in referring relationship any persons persons), construed include actual well legal control, maintained exercised method circumstances surrounding organization operation, directors, officers, trust trusts, companies, means; exercise 1(3)(b). 1(3)(a) 30 term 'person' used part includes individual, firm, copartnership, corporation, company, association, joint-stock association; trustee, receiver, assignee, personal representative 1(3)(a), 1(3)(a). 31 findings, forth events fight both, stockholdings sworn Central-Alleghany amply footnote 7, supra. 32 question remains second portion Has met. What control? interpretation: 33 'A noncarrier, where, merger, acquires (direct indirect) previously controlled; But instant case, (Alleghany) (according assumption, arguendo) (Bridge Company), still leaves property, results pages 127—128.9 34 narrow reading statute. Not labels nature changed relation crucial determining railroad 35 twice 287 12, 53 45, 46, 138, interpreted 1920, 41 456, 481: 36 "Whenever commission acquisition, extent indicated commission, either manner involving consolidation single will public interest, authority authorize rules regulations consideration just reasonable premises." 37 permitting lease, systems Michigan Companies, review. Minority contended, inter alia, "acquisition control" railroads ownership. 'disjunctive phrasing statute 'either stock' must light obvious purpose cannot taken exclusive other.' U.S., 23, 47. Nowhere control," though fact, refusal necessarily finding control,' stated: 38 served economy efficiency operation. expected advantages inadequately secured better affords basis latter although exists. precedes regarded determinative desired coordination obtainable.' 39 Acts 1933, 211, 898, rewrote retained language, except phrase relating 'under system'—became, acquisitions non-carriers, all-inclusive 1940 Act—'through otherwise.' changes lessen control'.' amended 905, 5. parent (Union) (Refiners) (Marshall) 'acquired vendor therefore course different there prior vendor-carrier. reaching decision, explicit 5: 40 doubted Union, having Refiners, Marshall, Union required 5(2)(b) so. said may, procuring Refiners' extend indefinitely merely directing business without subjecting 5(3), so long directly purchaser carriers. 'We neither language nor legislative history admits construction. 5(4) makes unlawful, otherwise. only enough embrace purchase, carrier, indicates purpose.' 36—37, 902. id., 37—40, 902—903. 42 words, gain free regulation subsidiaries. 43 crux each inquiry determine change relations companies approval. Does accomplish significant increase other, example, increased voice ability operational greater ease? issue, immediacy remoteness transaction, for, can always, make remote. deciding type course, constitute overruled 'there warrant record expert body 146, 764, 1147. 44 principal therefore, from, closeness to, itself. largely (By agreement Central.) proposal merge While immediate practical effects operation might small, minimal, ultimate obtaining another. So existed separate always possibility sell, forced divest of, railroad. considering possibility, important note connect physically connects Four's trackage Baltimore few miles track, Pennsylvania, Nashville, Illinois Railroads. 45 virtually precludes lines system. more. this, reasonably them, profitable analogize 'fact' 'fiction,' La Fontaine's fable crow, cheese, fox demonstrates substantial difference piece cheese beak putting stomach. 46 Denial regulate elimination national transportation scene disregard responsibility placed oversee combinations consolidations 'to promote safe, adequate, economical, efficient service foster sound economic among 'All administered enforced carrying above declaration policy.' National Policy, 1, U.S.C.A., 1. hold justified Since supportable consider Court's denial motion, trial. Several matters urged remain considered. Appellees lessor lessee Bir discuss distinction seek assert lessors carriers, carrier. urge 1110, requires dismissal alleged dominate join absence indispensable parties, proceed. refusing subsidiary's unless submitted jurisdiction, upheld refuse application. Although 'jurisdiction,' strictly jurisdictional sense wrongly decides B (which carrier') B's C, loses B, B. activities fall depend parent. For contending reshuffle approval, original proceedings, context. carriers,' oust so, submitting attacked basis. argue, held, F.Supp., 147—149 136—137, 17(3), evidentiary hearing some sort merger-status (as distinguished proceeding) dispense 'public hearing.' 5(2)(b), portion, 51 'Whenever subparagraph (a) notify Governor State situated, applicant applicants afford opportunity interested parties heard. cases determines interest. *' 906, amended, 63 485—486, 5(2)(b). 52 17(3) provides, part, hearings division, Commissioner, request interested.' 914, 17(3). with, limit, appellees' claim right fail reason—lack requisite 'interested parties.' parties,' like 1(20) 'party interest,' accordance become 'interest' equivalent 'concern.' easy usual formulation general principle governing standing—e.g., complaint plaintiff has, represents others having, injuriously affected order.' Moffat Tunnel League 289 113, 119, 543, 545, 1069. sufficiency situations determined context seeks position. 55 grounds proceeding: they benefits unfair. 56 insufficient 'interest.' Jeffersonville-Big 'another 5(2)(a)(i), 5(2)(a)(i). Unlike injury confer bring special 19—20, Nor regulated pose individualized threat welfare appellees. 57 Reliance protection subtly begs question. lacked gives investors immaterial falls consequences not. No arises mere When retroactively mergerstatus 58 Appellees' governed 20a(6) hearings, sees fit, enable decision authority.' 495, 20a(6), 20a(6). reasons, reversed remanded claim, discussed, violation disposition renders needless motion dismiss No. 82. 60 Reversed remanded. 61 WHITTAKER case. 62 DOUGLAS, whom CHIEF JUSTICE BLACK concur, dissenting. supervision exempt 80a—3(c)(9), (a)(i), 'Control' defined 1(3)(b): '* 66 means 'actual' 'legal' 'indirect' 'direct' means. obvious, thereofre—so beyond realm dispute argument—that whereby he commands power, 'control,' 5(3). wno defined, when exercise. Yet clear that. 67 68 Most (Cleveland, Co.) 69 about lease. 70 thereafter operate intra-system affect whit Company. Before merger. 71 says caused Corp., roads leases—two being 99 years 999 years. 72 reasons status. place, England 73 place 'actual evident long-term companies. form acquisition. master afterwards. stated 'already relied 'still merger.' 123, 127—128. court ruling late Frank, superior came ways high finance analysis regulatory measures it. I see answer Frank his colleagues phase 75 plainly reflected history. noncarriers introduced 1933. Commissioner Eastman pointed evil remedied—'holding bringing hence combining commission.'1 Senate amendment 'effect commission.'2 put separate. strain construction run shelter because, rearrangements readjustments internal structure alarm loopholes created 'acquire' created. things 5(2)(a) many force loophole comes Then escapes far rigorous imposed liquidated. status, issued 'unless ordered' 1955. 78 litigation come later, viz. At plain obtain intercorporate relies. 79 affirm below. authorized, entered paragraph (2), shall, following applicable control: inclusive sections 204(a)(1) 220 II, 313 III, relate reports, accounts, forth, carriers), 214 assumptions liability including penalties provisions. 20a person, assumption finds consistent proper performance impair perform service, interest.' 907, 'Notwithstanding subsections (b), section, title: 'Any entire company: Provided, assets consist substantially Act.' 799, 80a—3(c) (9), 80a—3(c)(9). appeal, amicus, 'correctly ICC thereunder; below.' granted, suspension pending judges heard divided, denied. Circuit Harlan, stay granted. 912. Stock Exchange, suspend trading 144, 'contested immediately carried direction obedience formulated mandatory addressed generally conjunction orders, Commission.' reviewability more, deemed matter review finality administrative action, same: complant, or, here, qualified sue, sufficiently allow attack? (This allows other.) brief summary Joe Paper Atlantic Coast Line 347 298, 315, 574, 583, 98 710 (appendix). 'Investing (Federal Communications) duty ascertaining jurisdiction), imply control. stand. regard conclusive former's invalidate finding, disregards actualities relations. draw did, travels province concurrence therewith judicial function exhausted rational body.' Mississippi Valley Barge 292 282, 286—287, 692, 693—694, 1260; Swayne Hoyt, Ltd. 300 297, 303, 478, 480, 81 659.' 764. 'This ('control') recently benefit interpretation Supreme decided 1939.' H.R.Rep. 2832, 76th Cong., 3d Sess. 63. Conference Report.) supported Hearings, House Committee Foreign H.R. 9059, 72d 1st Sess., p. 250. S.Rep. 87, 73d

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