Source: http://www.chanrobles.com/usa/us_supremecourt/322/31/case.php
Timestamp: 2017-10-20 07:16:05
Document Index: 791342070

Matched Legal Cases: ['§ 206', '§ 306', '§ 5', '§ 47', '§ 5', '§ 5', '§ 5', '§ 407', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 1', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5']

Appellee Refiners holds certificates of public convenience and necessity from the Interstate Commerce Commission to operate as a common carrier, by motor vehicle, of gasoline and petroleum products in Pennsylvania and eight of the central states. Refiners, as the Commission chanroblesvirtualawlibrary
Page 322 U. S. 33
found, is controlled through ownership of 82.6% of its outstanding common stock by Union Tank Car Company, a noncarrier corporation. Marshall, a corporation, holds a certificate of public convenience and necessity under the grandfather clause § 206 of the Interstate Commerce Act, 49 U.S.C. § 306, authorizing carriage as a common carrier of petroleum products in bulk in tank trucks over irregular routes in Maryland, Delaware, Pennsylvania, Virginia and Washington, D.C. By their joint application, Refiners and Marshall sought authority of the Commission under § 5(2)(a) for Refiners to acquire by purchase the operating property and rights of Marshall.
Union having failed to apply for that authority within the twenty days allowed for that purpose by the Commission's order, the Commission dismissed the pending application of Refiners and Marshall. Upon the suit of appellees, chanroblesvirtualawlibrary
Page 322 U. S. 34
the District Court for Maryland, three judges sitting, set aside the Commission's order, Circuit Judge Soper dissenting, 52 F.Supp. 1010, and the case comes here on appeal under 28 U.S.C. §§ 47a, 345.
"unlawful for any person, except as provided in paragraph (2), to enter into any transaction within the scope of subparagraph (a) thereof, or to accomplish or effectuate, or to participate in accomplishing or effectuating, the control or management in a common interest of any two or more carriers, however such result is attained, whether directly or indirectly, by use of . . . a holding or investment company or companies, a voting trust or trusts, or in any other manner whatsoever. . . . As used in this paragraph and paragraph (5), the words
Page 322 U. S. 35
'control or management' shall be construed to include the power to exercise control or management."
But this overlooks the fact, which the Commission thought controlling, that the present transaction may fall chanroblesvirtualawlibrary
Page 322 U. S. 36
within both the purchase provision and the noncarrier control provision of the statute, since it involves not only the purchase of Marshall by Refiners, but also the acquisition of control of Marshall by Union, through its control of Refiners. The question, then, is not whether the noncarrier control provision limits or supersedes the purchase provision, but whether, as the Commission thought, both apply, and, if so, the extent to which they restrict the Commission's authority to approve the acquisition of control by a noncarrier which has not filed an application pursuant to § 5(2)(b).
It is not doubted that, if Union, having control of Refiners, sought to acquire stock control of Marshall, Union would be required by § 5(2)(b) to apply for the Commission's authority to do so. But it is said that, having control of Refiners, Union may, by procuring Refiners' compliance with the purchase provisions of the statute alone, extend its control indefinitely to other carriers merely by directing the purchase of their property and chanroblesvirtualawlibrary
Page 322 U. S. 37
business by Refiners, without subjecting itself to the jurisdiction of the Commission as provided in § 5(3), so long as Union does not act directly as the purchaser of the property. * or of a controlling stock interest in such other carriers.
Congress, by § 407 of the Transportation Act of 1920, 41 Stat. 480, amended the Interstate Commerce Act so as to provide in § 5(2) that the Commission should have authority to permit a rail carrier or carriers to acquire control of another by lease or purchase of stock; by § 5(8), the carriers affected were relieved from the operation of the antitrust laws, and, by § 5(6), the Commission was authorized upon special conditions to approve the actual consolidation of rail carriers. By the 1933 amendment of § 5(2), 48 Stat. 217, the Commission was given further authority to permit unified control of two separate carriers "through ownership of their stock," and, in 1940, § 5(2)(a) was amended to read as at present by the addition chanroblesvirtualawlibrary
Page 322 U. S. 38
of the words "or otherwise" to the phrase last quoted, and the section was made applicable to motor carriers, 54 Stat. 905. Section 1(3)(b) of the Act, as amended in 1940, declares that "control"
§ 5(4). "Control or management" is defined to include "the power to exercise control or management." § 5(4). The control chanroblesvirtualawlibrary
Page 322 U. S. 39
or management whose acquisition is prohibited unless the approval of the Commission is secured is that which is obtained "in any . . . manner whatsoever," "however such result is attained, whether directly or indirectly," § 5(4). It includes "actual as well as legal control," § 1(3)(b), and "the power to exercise control or management," § 5(4).
The statute is thus concerned not merely with the acquisition of control of one corporation by another, but with the acquisition of control of a corporation which is doing the business of a carrier, because such control is in effect control of its carrier business. Control of that business, which may be effected by stock ownership, may also be "otherwise" effected through a contract of a controlled carrier to purchase the business of the other carrier if the purchase receives the approval of the Commission. The power thus acquired over the vendor carrier by the contract of purchase is the power "to exercise control or chanroblesvirtualawlibrary
Page 322 U. S. 40
management" over its carrier business which, under § 5(4), can become effective only with the approval of the Commission. As the Commission pointed out in its report, there can be no more direct or positive manner of obtaining control than by outright purchase of another carrier's business and property, and the purpose of the Act would be defeated if outright purchase, through the medium of a controlled subsidiary carrier, of another carrier's property and operating rights were exempted, while control by purchase of stock of the other carrier through the same subsidiary remained within the Act.
The question remains whether the Commission had authority to proceed in the absence of any application by Union. By § 5(4), any transaction within the scope of chanroblesvirtualawlibrary
Page 322 U. S. 41
subparagraph (a) of paragraph (2) is unlawful except as provided by that paragraph, which includes subparagraph (b). Section 5(2)(a), read with § 5(4), requires the acquisition of control to be with the approval of the Commission. And § 5(2)(b) requires the "person" seeking authority for a transaction covered by subparagraph (a), here the noncarrier control of Marshall, to present an application to the Commission. The Commission may approve the application "subject to such terms and conditions and such modifications as it shall find to be just and reasonable." The purpose of these provisions of §§ 5(2)(b) and 5(4) is apparent when they are read with § 5(3), which authorizes the Commission, by its order permitting noncarrier control, to require such noncarrier to be considered a carrier subject to the Act to the extent provided in the order made in conformity to § 5(3).
The control over the noncarrier contemplated by § 5(3) can be acquired only if the noncarrier subjects itself to the jurisdiction of the Commission by filing its application with the Commission for its approval of such noncarrier control as is provided by § 5(2)(b). The purpose of § 5(3) to subject the noncarrier thus acquiring control to specified provisions of the Act would be defeated if the noncarrier were not to become subject to the Commission's order. That is avoided by making it unlawful to acquire noncarrier control save on the noncarrier's application to the Commission in conformity to § 5(2)(b). As appellees' application to the Commission involved the acquisition of noncarrier control of Marshall by Union, Union was a person seeking authority for such control, and, as such, was required by § 5(2)(b) to make application to the Commission. To approve the transaction involving such noncarrier control without the application of the noncarrier would be to authorize chanroblesvirtualawlibrary
Union's noncarrier control of Marshall without subjecting the former to the Commission's jurisdiction as required by § 5(3).