Court Opinion

ID: 9661192
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:31:56.62197+00
Date Added: 2024-06-11T18:14:25.910157
License: Public Domain

*436CAMPBELL, Chief District Judge
(dissenting).
I would remand this case to the Commission for a reconsideration of Missouri Pacific’s § 5(4) violations in light of a corrected legal construction of the stock trust agreement.
In arriving at its final Order the Commission acknowledged that the Missouri Pacific had violated § 5(4) of the Act by acquiring control of Eastern. I agree with Judge Decker’s learned majority opinion herein, that such a finding does not automatically require a disapproval of Missouri Pacific’s § 5(2) application to acquire control of Eastern. However, in stating the reasons for its final Order the Commission concluded, upon what I believe was an erroneous legal predicate, that Missouri Pacific’s violation was redressed or eliminated by its trust agreement with the Marine Midland Bank. The Commission, upon its legally erroneous conclusion and belief that the trust was irrevocable, found that the Missouri Pacific had divested itself and relinquished control over its prior acquired Eastern stock. The Commission therefore, in reaching its public interest conclusion, in summarily dismissing the § 5 (4) violation, in finding a divestiture of control and in evaluating the good faith of Missouri Pacific did so on the basis of its conclusion that the trust was irrevocable.* The importance of this conclusion to the Commission’s final determination can only be stated by the Commission and should not be conjectured by this court.
Interestingly, in rejecting the Cotton Belt’s argument addressed to the practicalities of it or of other railroads considering merging with Eastern, first the Commission and now this court necessarily assume that the trustees are independent. I feel that the legal correctness of such an assumption must be challenged where as here the trust is revocable.
The general rule of law applicable to trusts such as that created here where the settlor is the sole beneficiary is well stated by Judge Decker at page 426 of the majority opinion. I need not repeat or requote from § 339 of the Restatement of the Law of Trusts. Such trusts are revocable at the will of the settlor-beneficiary.
Applying this principle of law to the instant facts it follows that Missouri Pacific had the right at any time to compel a termination of' the trust; the Marine Midland Bank trust was not irrevocable and Missouri Pacific was not divested of control over its Eastern stock holdings.
Missouri Pacific’s legal arguments which attempt to except or distinguish the Marine Midland Bank trust from the general rule of law succinctly stated in Restatement of the Law of Trusts § 339, arguments apparently accepted by the majority opinion, are in my opinion, unavailing. Those arguments, three in number, are briefly as follows:
1) In Delaware an exception exists as to commercial trusts designed to achieve a specific business purpose where third parties have an interest in its purpose. Although possibly this argument might apply were the law of Delaware controlling, the fact remains the situs of the Marine Midland Bank trust is New York.
2) The power of the Commission to redress illegal control situations “is practically plenary”.
3) Missouri Pacific is not likely to eliminate or revoke the trust.
The inapplicability of (2) and (3) above is apparent. As pointed out throughout Judge Decker’s Opinion the issue is one of control; whether or not *437Missouri Pacific’s § 5(4) violation was redressed. The issue is not whether Missouri Pacific would take advantage of a position it gained by reason of its § 5 (4) violation or what the Commission could do in the face of Missouri Pacific’s exercise of control.
I am further unable to agree with the majority of the court that this trust issue has little to do with the case or is of minor importance.
The nature of the trust, necessarily determined by its legal effect, is a paramount public interest issue and an evaluation of Missouri Pacific’s § 5(4) violation. It necessarily affects the control or absence of control Missouri Pacific had over its Eastern stock, and any determination of Missouri Pacific’s good or bad faith.
In the same context I should like to observe that the Commission in similar but subsequent § 5(2) acquisition proceedings directed towards the Chicago South Shore and South Bend Railroad issued an Order (Finance Docket Nos. 23141, 23566 and 23587) directing further investigation into a similar trust agreement.
I agree that the determination of this revocability issue is only part, (however I believe it to be a major part) of matters considered by the Commission in its determination of the overriding issue of control of Eastern stock by Missouri Pacific. From this I necessarily agree that the Commission could have arrived at the same determination of the case notwithstanding it having determined the trust to be revocable. The fact remains, however, that the Commission has not made such a determination. In effect the majority opinion now makes this determination for the Commission and I feel without legal authority.
Similarly related to Missouri Pacific violations of § 5 (4) were its later actions, subsequent to the creation of the aforementioned trust, wherein it further acquired additional stock in Eastern. For reasons not entirely apparent to the court the Commission arbitrarily and in an apparent abuse of its discretion refused to consider such evidence, evidence which in my opinion necessarily relates to the initial § 5(4) violation and might well tend to show a further violation in flagrant disregard of the Commission and of the Act. Central of Georgia Ry. Co. Control, 307 ICC 39 (1958).
Although apparently reasonable and proper in the context of the limited facts before it and of its own erroneous legal conclusion, the question now arises whether the public interest is still preserved or whether a consideration of these additional related facts viewed in their proper legal setting might not lead the Commission now to conclude that this case falls within or more closely approximates its prior holding in the Central of Georgia case.
In dissenting I should like also to note that I am fully aware of the Commission’s recent Order of June 23rd denying herein the St. Louis Southwestern Railway Company’s petition for reopening, further hearing and reconsideration. It seems to indicate what I somewhat suspected. If the case were referred back to the Commission, as legally I believe it should be, the Commission would probably reach the same results with negligible concern to new facts or corrected legal constructions. Notwithstanding this seeming apparent uselessness of remand I am still of the belief that it would be better and more accurate legal procedure to return this case to the Commission and require it go on record as to the consequences of the additional facts and corrected legal conclusions herein expressed.
Were I to prevail in remanding this case to the Commission I would also direct the following further inquiry and necessary finding and conclusion adjustments.
The Commission’s order of 1965 was based, and significantly depended upon, the pre-1962 depressed financial condition of Eastern. It is apparent on the basis of the pleadings and briefs now *438before the court that Eastern has benefited from major and significant advancements in its financial status since 1962. Many of these changes were activated and took place prior to the entry of the Commission’s final order in 1965. By way of a petition to reopen the record, attempts were made to present this information to but were rejected by the Commission. Whether or not this information would have caused a change in the Commission’s final order is again purely conjectural. However, the relevancy and significance of this information can not be questioned and I would have the Commission reopen the record to give it proper consideration.
In the course of considering 1962 to 1965 changes in Eastern’s financial status, the Commission would be further enlightened by the more recent Eastern financial statements.
Further, I would direct the Commission to review and make findings as to the facts surrounding the Dempsey-Tegeler and Eastman-Dillon convertible bond purchases, specifically inquiring into the length of time the bonds were held and to whom they were sold.
Also, the Monon’s evidence, heretofore ignored by the Commission, should be heard and a finding should be made as to what effect, if any, the Commission’s present ruling will have on the Monon— L&N dispute. The intended scope and extent of the Commission’s directive, if renewed, that the Missouri Pacific negotiate the sale of what has been referred to as the Evansville line to the L&N should be made more exacting and definitive. Necessarily, the effect of this directive on the Monon or on a subsequent § 5(2) application should be spelled out. The briefs and arguments before the court demonstrate a complete and total uncertainty and disagreement among all parties as to this issue.
A remand would also serve to enable our most recent intervenor, the St. Louis Southwestern (Cotton Belt), properly to be heard.

 This court’s majority opinion, page 427, footnote 5 characterizes one of the Commission’s references to the trust as being irrevocable as purely descriptive and not conclusionary. I am unable to agree with this characterization. In light of the Commission’s opinion there can be little question but that the Commission clearly concluded that the trust was legally irrevocable and so treated it.