Court Opinion

ID: 9442491
Source: CourtListenerOpinion
Date Created: 2023-08-03 18:49:37.455382+00
Date Added: 2024-06-11T17:29:06.775343
License: Public Domain

WILBUR K. MILLER, Circuit Judge
(dissenting).
Certain stockholders of the Long Island Lighting Company, a registered public utility holding company involved in a reorganization proceeding before the Securities and Exchange Commission, designated a protective committee to represent their interests before the Commission and the courts. The committee functioned actively and energetically, but when it proposed to solicit from its signatory stockholders voluntary contributions to pay fees and expenses, the Commission prohibited it from doing so. Being convinced that the Commission’s prohibitory action exceeded its authority, I cannot concur in the majority decision which upholds it.
Of course the Securities and Exchange Commission cannot forbid a protective committee to solicit operating funds from stockholders whom it represents unless the power to do so has been granted to it by legislation. The majority opinion finds the requisite statutory grant of authority in §§ 12(e) and 11(f) of the Public Utility Holding Company Act, 15 U.S.C.A. §§ 791 (e) and 79k(f). I cannot find it in either section.
The provision more heavily relied on by the court to justify its decision is § 12(e), which makes it unlawful to solicit “any proxy, power of attorney, consent, or authorization regarding any security of a registered holding company” without Commission approval. The majority say that for a stockholders’ committee to ask its principals for expense money is to solicit an “authorization” within the meaning of the section. I disagree because it seems plain that the statutory expression “authorization regarding any security of a registered holding company” refers to the general designation of an agent or representative regarding such a security, just as do the companion words “proxy, power of attorney, consent”.
If Congress had intended to authorize administrative prohibition against solicitation of voluntary contributions from stockholders by a committee already lawfully designated by them by proxy, power of attorney, consent, or authorization, it could easily have said so. Had it so intended, I am sure Congress would not have been content to describe a voluntary contribution to the expense fund of a lawful agent as a “proxy, power of attorney, consent, or authorization regarding” a security. It would have found and used words or terms more aptly expressive of its intention. So I conclude that § 12(e) of the Act does not support the court’s decision.
The other statutory provision which the court thinks authorizes the Commission to forbid the solicitation of expense money by a protective committee is the following oortion of § 11(f) of the Act:
*672“ * * * The Commission may, by such rules and regulations or order as it may deem necessary or appropriate in the public interest or for the protection of investors or consumers, require that any or all fees, expenses, and remuneration, to whomsoever paid, in connection with any reorganization, dissolution, liquidation, bankruptcy, or receivership of a registered holding company or subsidiary company thereof, in any such proceeding, shall be subject to approval by the Commission.”
In the legal proceedings mentioned in the foregoing excerpt, fees and expenses ordinarily are allowed by the court and ordered paid from the estate being administered. The language quoted from the statute simply requires Commission approval before allowance by the court. In my view, the obvious reference of the statute is to official allowances payable out of the funds of the holding company which is being liquidated or adjusted, for the language is “fees, expenses, and remuneration * * * in any such proceeding(Emphasis supplied.) This protective committee had no official role and performed no official function. It merely represented certain individuals in an attempt to protect their personal interests. In such circumstances it would seem that the fees and expenses of the committee could not be allowed and ordered paid out of the funds of the Long Island Lighting Company. That is why § 11(f) does not apply here. It seems immaterial that the committee here involved -has announced it will ultimately seek compensation from company funds, in which event the section would apply; it has not done so and that situation is not before us.
No matter how pressingly necessary it may really be for the Commission to have power to prevent protective committees from asking their signatories for expense money, and no matter how much the Commission may desire to have that power, the simple fact is. that Congress has not conferred it. Administrative authority, legislatively granted, should not be judicially extended beyond the express terms of the grant.1 I think the court’s opinion violates this principle.

. Mr. Justice Frankfurter, speaking for the Supreme Court in Addison v. Holly Hill Fruit Products, Inc., 1944, 322 U.S. 607, 617, 64 S.Ct. 1215, 1221, 88 L.Ed. 1488, 153 A.L.R. 1007, said:
“Legislation introducing a new system is at best empirical, and not infrequently administration reveals gaps or inadequacies of one sort or another that may call for amendatory legislation. But it is no warrant for extending a statute that experience may disclose that it should have been made more comprehensive.” See also E. O. Schroeder Co. v. Clifton, 10 Cir., 1946, 153 F.2d 385, 390, certiorari denied 328 U.S. 858, 66 S.Ct. 1351, 90 L.Ed. 1629.