Opinion ID: 109117
Heading Depth: 1
Heading Rank: 5

Heading: A.The Alleged Conveyance Taking

Text: The District Court declined to decide whether the provisions governing the procedures for and terms of the final conveyance of rail properties to Conrail (the conveyance taking issue) violate the Fifth Amendment, thus rendering the Rail Act invalid in its entirety. [20] The District Court was persuaded that these issues are premature. 383 F. Supp., at 517. Briefly, the challenges to the final-conveyance provisions assert that the Rail Act is basically an eminent domain statute and, because compensation is not in cash but largely in stock of an unproved entity, will necessarily work an unconstitutional taking. [21] A variant of the argument is that, even if a reorganization statute, the Rail Act would be unconstitutional unless the Tucker Act remedy is now held to assure payment of any amount by which the market value of stocks and securities awarded by the Special Court is less than the value of the rail properties conveyed. The New Haven Trustee goes further; he argues that even if a reorganization statute, the Rail Act violates substantive due process by failing to assure the fair and equitable equivalent of the rail properties valued at their highest and best use. The New Haven Trustee also contends that the conveyance provisions constitute a taking such as that threatened by interim erosion: they require operations of the railroad to continue, albeit in a different form, even if the liquidation value for highest and best use is greater than the value of the railroad as a going concern. Finally, the New Haven Trustee and the creditor parties contend that the conveyance provisions deny procedural due process, because they mandate the final conveyance before any meaningful determination of its fairness, and because no provision is made for creditor or stockholder consideration of or voting upon the Final System Plan. All of the parties now urge that the conveyance taking issues are ripe for adjudication. However, because issues of ripeness involve, at least in part, the existence of a live Case or Controversy, [22] we cannot rely upon concessions of the parties and must determine whether the issues are ripe for decision in the Case or Controversy sense. Further, to the extent that questions of ripeness involve the exercise of judicial restraint from unnecessary decision of constitutional issues, [23] the Court must determine whether to exercise that restraint and cannot be bound by the wishes of the parties. The District Court's holding of prematurity was influenced by the statutory scheme that requires several decisional steps before the final conveyance. The possibility that the reorganization court might determine under § 207 (b) that the Rail Act process is not fair and equitable to the railroad estate, or that Congress might disapprove the Final System Plan, § 208 (a), or that the Special Court would not order the final conveyance pursuant to § 303 (b), led the District Court to conclude that the question whether the final-conveyance provisions are constitutional was too speculative to warrant anticipatory judicial determinations. Eccles v. Peoples Bank, 333 U. S. 426, 432 (1948). [24] But subsequent to the District Court's opinion, the Penn Central Reorganization Court determined that the Rail Act did not provide a process that would be fair and equitable to the estate, In re Penn Central Trans. Co., 382 F. Supp. 856 (ED Pa. 1974). On appeal to the Special Court under § 207 (b), that determination has been reversed, although the Special Court has not rendered its judgment, pending our decision of this case. 384 F. Supp., at 955. See n. 14, supra. We agree with the parties that this change in circumstance has substantially altered the posture of the case as regards the maturity of the final-conveyance issues. Whatever may have been the case at the time of the District Court decision, there can be little doubt, for reasons to be detailed, that some of the conveyance taking issues can and must be decided at this time. And, since ripeness is peculiarly a question of timing, it is the situation now rather than the situation at the time of the District Court's decision that must govern. [25] First, the implementation of the Rail Act will now lead inexorably to the final conveyance, although the exact date of that conveyance cannot be presently determined. It is true that Congress can reject the first plan presented to it by the USRA, § 208 (a), and that the Rail Act, while prescribing with precision the timing of the presentation of that plan, §§ 207 (c) and (d), does not mandate the presentation of successive plans at any particular time. The Rail Act does, however, contemplate that USRA will continue to present plans, § 208 (b), until one becomes effective, § 209 (a). Thus, we must assume there will be compliance with the Rail Act's mandatory terms in this respect and that a Final System Plan will at some time be certified to the Special Court. § 209 (c). [26] Second, the Special Court is mandated to order the conveyance of rail properties included in the Final System Plan and is granted no discretion not to order the transfer. [27] While mandatory language does not necessarily deny a court of equity flexibility, Hecht Co. v. Bowles, 321 U. S. 321, 329 (1944), the central scheme of the Rail Act defers decision of any controversies over the terms of the transfer of rail properties until after the transfer has occurred. H. Rep. 55; S. Rep. No. 93-601, p. 34 (1973) (hereinafter S. Rep.). [28] The Special Court's opinion suggests that the mandatory order to convey probably could not prevent the Special Court from refusing to order the conveyance, indirectly if not by a direct injunction, if it were convinced that appellees' constitutional rights were certain to be violated. 384 F. Supp., at 931; Marbury v. Madison, 1 Cranch 137 (1803). But the possibility that a court may later decline to enforce the Rail Act as written because of its unconstitutionality cannot constitute a contingency itself pretermitting earlier consideration of the constitutionality of the Act. Cf. Albertson v. SACB, 382 U. S. 70, 76-77 (1965). It appears, then, that the conveyance of Penn Central's rail properties to Conrail cannot be prevented by the debtor or its creditors or stockholder; and, while the exact terms of the conveyance remain to be decided, an order of the Special Court directing the conveyance is virtually a certainty. The Rail Act empowers no court, including this Court, to prevent it. Thus, occurrence of the conveyance allegedly violative of Fifth Amendment rights is in no way hypothetical or speculative. Where the inevitability of the operation of a statute against certain individuals is patent, it is irrelevant to the existence of a justiciable controversy that there will be a time delay before the disputed provisions will come into effect. Pennsylvania v. West Virginia, 262 U. S. 553, 592-593 (1923); Pierce v. Society of Sisters, 268 U. S. 510, 536 (1925); Carter v. Carter Coal Co., 298 U. S. 238, 287 (1936). One does not have to await the consummation of threatened injury to obtain preventive relief. If the injury is certainly impending that is enough. Pennsylvania v. West Virginia, supra, at 593. [29] True, there are situations where, even though an allegedly injurious event is certain to occur, the Court may delay resolution of constitutional questions until a time closer to the actual occurrence of the disputed event, when a better factual record might be available. Cf. Public Affairs Press v. Rickover, 369 U. S. 111 (1962). Several factors militate, however, against that course in this case. First, decisions to be made now or in the short future may be affected by whether or not the conveyance taking issues are now decided. The constitutionality of the final conveyance may be interwoven with the validity of the abandonment provisions. See n. 24, supra. The Penn Central Trustees may delay expending funds for maintenance in the interval before the final conveyance if constitutional doubts linger about ultimate reorganization under the Rail Act. See Reply Brief for Penn Central Trustees 12. Second, the Act is a carefully structured method for planning and implementing a reorganization scheme. It necessitates the present denial to the railroads in reorganization of options otherwise available. For example, the New Haven Trustee filed in the District Court a motion to dismiss the § 77 proceeding, and to set up an equity receivership to liquidate Penn Central's assets. So long as reorganization under the Rail Act remains possible, an equity receivership is not available. Third, and particularly significant, because of the structure of the Act there is no better time to decide the constitutionality of the Act's mandatory conveyance scheme to minimize or prevent irreparable injury. The precise contours of the Final System Plan will not be known until shortly before its certification to the Special Court. [30] Until that Plan has been finally developed, the courts will not have any more settled facts concerning the rail properties to be conveyed, the valuation of those properties, or the value of Conrail stock and other securities to be transferred to the Penn Central estate than they do now. After the Final System Plan is effective, the Rail Act prohibits initial judicial review of its terms except by the Special Court. §§ 209 (a), 303 (b) (2). And this review is to occur after conveyance, not before. [31] Further, as all parties agree, the conveyance, because of its complexity and because of the long time lapse probable before valuation review is completed, in practical effect will be irreversible once it is made. Thus, we will be in no better position later than we are now to confront the validity of the final-conveyance provisions. Rather, delay in decision will create the serious risk that consideration of the validity of those provisions may either be too hasty to afford protection of rights or too late to prevent the conveyance or assure compensation if the Rail Act were found unconstitutional. [32] We hold, therefore, that the basic conveyance taking issues are now ripe for adjudication. This does not mean however that we need decide now all of the contentions pressed upon us. Even where some of the provisions of a comprehensive legislative enactment are ripe for adjudication, portions of the enactment not immediately involved are not thereby thrown open for a judicial determination of constitutionality. Communist Party v. SACB, 367 U. S. 1, 71 (1961). For example, the controversy over the proper valuation theory to be applied to both the rail properties and the stock of Conrail provided as compensation depends upon contingencies that argue forcefully for postponement of its resolution. The parties have stipulated that it will be impossible to ascertain until the Final System Plan is effective which rail properties will be transferred to Conrail, or their value on any valuation theory, or the value of the consideration to be exchanged for the rail properties. App. 205, 319, 371. Thus, it cannot be determined now what impact any particular theory of valuation may have when applied to either side of the equation, nor can we know where the interests of the various parties liethat is, which methods of valuation would result in higher compensation to the estate or lower cost to Conrail. Rulings on these questions would plainly be rulings upon hypothetical situations that may or may not [arise]. Longshoremen's Union v. Boyd, 347 U. S. 222, 224 (1954). Moreover, valuation issues peculiarly require a much more developed record than has been prepared. Without evidence of actual figures supporting various valuation theories, a court is not able to discern what legal issues it is deciding, what effect its decision will have on the adversaries, [or] some useful purpose to be achieved in deciding them. Public Service Comm'n v. Wycoff Co., 344 U. S. 237, 244 (1952). Clearly the record on these issues does not yet provide the confining circumstances of particular situations, Communist Party v. SACB, supra, at 72, which best inform constitutional adjudication. Finally, there will be ample opportunity later to litigate valuation controversies after the factual record has matured. The Rail Act in terms vests the Special Court with the initial responsibility for valuation determinations, [33] subject to review by this Court. In that circumstance, we should surely await the Special Court's determinations. Public Service Comm'n v. Wycoff Co., supra, at 246. Were we to attempt decisions of valuation questions before the Special Court's determinations, we would necessarily be forced to a speculative interpretation of a statute not clear on the subject of valuation before the court entrusted with its construction has given us the benefit of its views. [34] Cf. Public Service Comm'n v. Wycoff Co., supra ; Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U. S. 412 (1937). In sum, of the conveyance taking issues, we hold ripe for adjudication the questions (a) of the availability of the Tucker Act remedy if the consideration exchanged upon final conveyance of the rail properties is less than the constitutional minimum, (b) whether stocks, however valued, can be part of the consideration for the rail properties, and (c) whether procedural due process will be denied by the statutory process for conveyance. We hold further that decision of the questions concerning the method of valuation to be applied to either the rail properties or the consideration therefore is premature. B. Availability of Tucker Act Remedy for Any Conveyance Taking Whether the Rail Act precludes the availability of the Tucker Act remedy for any amount by which the consideration exchanged for the rail properties finally conveyed falls short of the constitutional minimum need not detain us. The reasons that led to our conclusion that the Rail Act, insofar as it may work an unconstitutional taking due to interim erosion, does not render a Tucker Act remedy unavailable apply equally to the conveyance taking issue. No party has suggested that a difference in result can be supported. The Rail Act authorizes inclusion in the Final System Plan of different kinds of consideration in exchange for the rail properties, subject to adjustment by the Special Court to assure fairness and equity. Congress fully expected that this consideration would provide the minimum compensation required by the Constitution; it wished to provide no more. If, however, that hopeful expectation should not be fulfilled, and the consideration exchanged for the rail properties should prove to be less than the constitutional minimum, the Tucker Act will be available as the jurisdictional basis for a suit in the Court of Claims for a cash award to cover any constitutional shortfall. C. Adequacy of the Tucker Act Remedy for Conveyance Taking It is argued, however, that, even if a Tucker Act remedy remains open, the remedy is inadequate because it fails to cure basic deficiencies in the conveyance provisions of the Rail Act. [35] We hold, to the contrary, that while the conveyance provisions of the Rail Act might raise serious constitutional questions if a Tucker Act suit were precluded, the availability of the Tucker Act guarantees an adequate remedy at law for any taking which might occur as a result of the final-conveyance provisions. Further, with the Tucker Act remedy, the payment of fair and equitable consideration in compliance with the reorganization statutes is assured, and procedural due process is satisfied. Primarily, it is contended that the Tucker Act remedy is inadequate because the conveyance taking is an exercise of the eminent domain power and therefore requires full cash payment for the rail properties. [36] Since our reasons supporting the availability of the Tucker Act remedy assume that the basic compensation scheme of the Act is valid but could result in payment of less than the constitutional minimum, it might indeed be inconsistent with the Rail Act to suppose that a Tucker Act suit would lie for the entire value, in cash, of the rail properties. This argument fails, however, for two reasons. First, it is extremely questionable whether, even if the Rail Act were on its face an acquisition of private property for public use, the entire value of the property acquired would have to be paid in cash. More important, we believe that there is nothing in the Act fundamentally at odds with the expressed purpose of Congress to supplement the reorganization laws, see H. Rep. 29, and, with the Tucker Act, the Rail Act is valid as a reorganization statute. No decision of this Court holds that compensation other than money is an inadequate form of compensation under eminent domain statutes. Statements can be found in opinions that the compensation must be a full and perfect equivalent for the property taken, Monongahela Navigation Co. v. United States, 148 U. S. 312, 326 (1893); must reimburse the full and perfect equivalent in money of the property taken, United States v. Miller, 317 U. S. 369, 373 (1943); and must be the full monetary equivalent of the property taken, United States v. Reynolds, 397 U. S. 14, 16 (1970); see also Almota Farmers Elevator & Warehouse Co. v. United States, 409 U. S. 470, 473 (1973). [37] Yet, in none of these cases was compensation in a form other than cash at issue. The clear implication of other decisions is that consideration other than cashfor example, any special benefits [38] to a property owner's remaining propertiesmay be counted in the determination of just compensation. Bauman v. Ross, 167 U. S. 548, 584 (1897); see 3 P. Nichols, Eminent Domain § 8.62 et seq. (rev. 3d ed. 1974). [39] We need not, however, determine whether compensation in the form of securities would be constitutional if the Rail Act were merely an eminent domain statute; for the arguments in favor of this construction have no merit. First, it is contended that despite the express provision of § 301 (b) that Conrail shall not be an agency or instrumentality of the Federal Government, 45 U. S. C. § 741 (b) (1970 ed., Supp. III), federal participation through federally appointed members of the board of directors constitutes Conrail a federal instrumentality. [40] From that premise the contention proceeds that the conveyance is an exercise of eminent domain. But Conrail is not a federal instrumentality by reason of the federal representation on its board of directors. That representation was provided to protect the United States' important interest in assuring payment of the obligations guaranteed by the United States. Full voting control of Conrail will shift to the shareholders if federal obligations fall below 50% of Conrail's indebtedness. The responsibilities of the federal directors are not different from those of the other directorsto operate Conrail at a profit for the benefit of its shareholders. Thus, Conrail will be basically a private, not a governmental, enterprise. Second, it is contended that the Rail Act's provisions for a compelled conveyance and for the continuation of rail services pending formulation of the Final System Plan constitute the Act a condemnation statute. We see no significance in these features of the Act either. Congress, in enacting those provisions, clearly intended to legislate pursuant to the bankruptcy power. The Rail Act, like § 77 of the Bankruptcy Act, which the Rail Act supplements, merely advances another step in the direction of liberalizing the law on the subject of bankruptcies, Continental Illinois Nat. Bank & Trust Co. v. Chicago, R. I. & P. R. Co., 294 U. S. 648, 671 (1935), and far-reaching though [it] be, [it has] not gone beyond the limit of congressional power . . . . Ibid. That is the teaching of RFC v. Denver & R. G. W. R. Co., 328 U. S. 495 (1946), where the Court sustained the cram-down provision of § 77 authorizing a reorganization court to confirm a plan despite its rejection by creditors. The Court said: We think that the provisions for confirmation by the courts over the creditors' objection are within the bankruptcy powers of Congress. Those powers are adequate to eliminate claims by administrative valuations with judicial review and they are adequate to require creditors to acquiesce in a fair adjustment of their claims, so long as the creditor gets all the value of his lien and his share of any free assets. Id., at 533. [41] Similarly, under the Rail Act, the Special Court has the duty to provide the railroad estates with the fair and equitable equivalent in Conrail securities for the rail properties conveyed. Finally, it is argued that there are defects in the Rail Act's provisions for judicial review that identify the Act as an exercise of the eminent domain power. The argument is frivolous. Although the time has not yet arrived for the mandatory transfer to Conrail, the reorganization courts have had a full opportunity to assess the fairness of the Rail Act's scheme to the rail estates. § 207 (b). The Special Court has reviewed those determinations and under § 303 (c) will have an opportunity to review the terms of the transfer, although not the conveyance itself. In addition, neither the Rail Act itself nor the procedures thereunder finally determine the interests of the respective creditors. Those will be decided in the § 77 reorganization courts, which will distribute to creditors the consideration received for the rail properties. There are, therefore, ample adequate [s]afeguards . . . to protect the rights of secured creditors . . . to the extent of the value of the property. Wright v. Union Central Life Ins. Co., 311 U. S. 273, 278 (1940); cf. North American Co. v. SEC, 327 U. S. 686 (1946). We are not to be understood to intimate that the Rail Act proceeding could not result in a compensable taking. We hold only that, since the Rail Act does not on its face exceed the broad scope of congressional power under the Bankruptcy Clause, cf. Continental Illinois Nat. Bank & Trust Co. v. Chicago, R. I. & P. R. Co., supra, at 670, [42] Congress has not formulated an unconstitutional reorganization plan in compelling a reorganization wherein the compensation to appellees consists of Conrail and USRA securities and other benefits so long as the creditor gets all the value of his lien and his share of any free assets. RFC v. Denver & R. G. W. R. Co., supra, at 533. This Act does differ from other reorganization statutes such as § 77, however, in that it requires a conveyance before it is possible to ascertain whether this last condition will be met. Thus, the conveyance is mandated without any prior judicial finding that there will be adequate resources in the reorganized company of whatever kind to compensate the debtor estates and, eventually, their creditors. Because of this congressional insistence upon accomplishing the transfer whatever the ultimate equity of the compensation provisions, any deficiency of constitutional magnitude in the value of the limited compensation provided under the Act will indeed be a taking of private property for public use. Cf. North American Co. v. SEC, supra, at 710. [43] Since we have already determined, however, that there would then be recourse to a Tucker Act suit in the Court of Claims for a cash award to cover any constitutional shortfall, the Rail Act does provide adequate assurance that any taking will be compensated. The remaining contentions regarding the validity of the final-conveyance provisions require little discussion in view of the availability of a Tucker Act suit. The first contention is that, even if considered as a reorganization statute, the Rail Act fails to assure that creditors will receive the full value of their liens in stock or securities. However, we have already held that, because of the possibility that the Rail Act will work a taking, there must be assurance of consideration equal to any constitutional shortfall, and that a Tucker Act remedy is available to provide that assurance. Thus, the value of the stocks and securities provided under the Act is backed up by what is essentially a guarantee of cash payment for any lack of fairness and equity of constitutional dimensions. The Tucker Act remedy fulfills perfectly, then, the function of the underwriting provision approved in the New Haven Inclusion Cases, 399 U. S., at 486-488. Similarly, the availability of the Tucker Act cures what might otherwise be a troublesome problem of procedural due process. The Tucker Act assures that the railroad estates and the creditors will eventually be made whole for the assets conveyed. Complainants evidence no interest in retaining their property for longer than the Rail Act requires. Indeed, their position is really that they want to be free to dispose of it sooner. Thus, there is no interest asserted in retaining the properties themselves; the only interest is in making sure that creditors receive fair compensation for those properties. On the other hand, the procedural sequence is vital to accomplishing the goals of the Act. If judicial review of the terms of the transfer was required before the conveyance could occur, the conveyance might well come too late to resolve the rail transportation crisis. As long as creditors are assured fair value, with interest, for their properties, the Constitution requires nothing more.