Court Opinion

ID: 9639836
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:49:44.053123+00
Date Added: 2024-06-11T18:10:22.268895
License: Public Domain

L. HAND, Circuit Judge
(concurring).
I agree with what Judge CLARK has said, but I should like to say a few word's of my own about the statute. If one translates the language into the particular relation of banker and utility company, the banker becomes an “affiliate,” if the Commission finds him to “stand in such relation” to the company “that there is liable to be such an absence of arm’s-length bargaining * * * as to make * * * appropriate * * * for the protection of investors” the imposition upon him of “the * * * duties * * * imposed * * * upon affiliates.” I read this clause as a whole as imposing upon the Commission the duty of deciding whether there is a danger — immediate enough to make its removal “appropriate” to the protection of investors — that the utility company in its bargaining with the banker may be actuated in part by motives other than driving the hardest bargain it can. The Commission is not charged with finding that such a motive has in fact entered into the bargaining, or will do so; it is enough that there is a fair chance that it may. I construe “liable” as including more than those cases in which the “absence” is more probable than not; that is, as covering cases in which the probability is enough to be what I have called “a fair chance.” Again, I-construe “arm’s-length bargaining” as going beyond conventional fiduciary relations; indeed, this seems to me obvious, else the definition would have been redundant. Such an in-' terpretation of the clause does indeed sweep along with transactions in which the evil aimed at actually exists, transactions as innocent as this one seems to have been. I see no objection to it on that score; it is' a frequent consequence of legislation of this root and branch type. It is notoriously difficult to ascertain just what motives prompt an act — the actor is often the worst witness — and it is legitimate to avoid such a treacherous issue even at the expense of condemning transactions, blameless if the whole truth could be known. Indeed, the whole law of fiduciaries is built upon just the difficulty of learning the truth with the crude means available. It recognizes the fallibility of any conclusion, but considers the evils that will be prevented as outweighing the limitations imposed upon otherwise lawful conduct. The statute at bar merely extends such a precaution beyond those relations which the common-law thought to require it, and clearly we have no warrant for denying the power of Congress to go so far. There had been very grave evils in the marketing of the securities of utility companies, and it was at least a possible remedy to vest power in the Commission to declare when the motives of the utility companies — quite unconsciously perhaps, as *333in the case of an avowed fiduciary — might not be as untinctured as was “appropriate” to the uncompromising pursuit of their interests.
If the clause be so read, there was “substantial evidence” to support the finding; that is to say evidence from which a reasonable man might conclude that such a chance existed and that the danger was immediate enough to make its removal “appropriate.” I do not say that personally ■ I should have come to that conclusion, but there had been enough in the relations be-, tween the United Company and the Morgan, firm to permit the conclusion that the-familiarity, recourse for advice, reliance, control and habitude of the past might perhaps unconsciously prove the casting straw. Congress appears to me to have been jeal-. ous of the results of the slow cumulation of such factors and to have wished to endue the Commission with power to decide when it was the course of prudence to eliminate-the possibility of its influence. The Supreme Court in decisions of which Gray v. Powell, 62 S.Ct. 326, 86 L.Ed. _, is the latest, has unequivocally set the narrowest limits upon our review in such situations. The vague outlines of the issue itself, coupled with this circumscription of our powers, leaves us little or no scope,
I have spoken only of the relations between the United Company and the Morgan firm because that is the only doubtful link in the chain. The Dayton,,Company and the Columbia Company were one in interest; and quite aside from any implications from the statutory definition of “subsidiary”, § 2(a) (8), I think we can take judicial notice of the fact that the ownership of twenty per cent of the voting power of a company makes the owner “liable” to have practical control. Whether this action, or other such stringent action, was necessary, is not for me to say. The Commission has apparently found the regulation impracticable in application; and in order to cut out the possibility of influences which it could not detect, it has gone further and stopped all underwriting except upon competitive bidding. Nevertheless, while the regulation stood upon the books, it was valid and it authorized the action taken in this case.