Court Opinion

ID: 8721303
Source: CourtListenerOpinion
Date Created: 2022-11-26 08:32:11.751536+00
Date Added: 2024-06-11T16:59:04.167258
License: Public Domain

WEINFELD, District Judge (concurring).
I concur in the Court’s primary holding annulling the Commission’s order on the ground of lack of jurisdiction since upon the undisputed facts and the findings the proposed plan was beyond the scope of Section 20b. However, I dissent from my colleagues’ further holding that the Commission was correct in its ruling that (1) the B & O as the beneficial owner of the trusteed stock retained the right to vote the shares in favor of the plan and (2) all the stock should be deemed “outstanding” for the purposes of Section 20b(3).
The language of the Trust Indenture is clear and unambiguous. It provides: “The Trustee will exercise the voting power of the Western Maryland Railway stock and will exercise its best judgment from time to time to select suitable directors to the end that the affairs of the Western Maryland Railway Company shall be properly managed, and in voting and in acting on other matters which may come before it as stockholders or at any meeting of the stockholders will exercise like judgment.” (Emphasis supplied.)
The Commission’s holding that the trust agreement does not entitle the Chase National Bank to assent the stock in connection with a modification proposal disregards this plain language of the indenture. No reservation of voting power in favor of the B & O, whether to assent the stock to a modification plan or for any other purpose, is contained in the trust agreement.
The argument that the proxy given by the B & 0 to Chase as trustee limits the latter to voting the stock “at meetings of the stockholders of said Western Maryland Railway Company” is unpersuasive. It is the Trust Indenture and not the proxy which defines the relationship of the parties and the power granted to, or withheld from, the trustee. The proxy was delivered under the terms of the Trust Indenture to enable “the Trustee to vote said shares” and to perform its functions in accordance with the power conferred upon it by the indenture and the proxy may not be seized upon to limit that power. Thus it seems to me that the unrestricted grant of voting power to Chase and the lack of reservation in B & 0 indicates that Chase’s right to vote the stock is not limited, as the Commission found, to action to be taken at stockholders meetings but extends to every action which stockholders themselves might take. Under this circumstance, the finding by the Commission that the applicant railroad is controlled by the Chase National Bank by virtue of the trust, necessarily required *597a determination that the trusteed stock should not be deemed “outstanding” under Section 20b(3) which in pertinent part states: “For the purposes of this section a security or an evidence of indebtedness shall not be deemed to be outstanding if in the determination of the Commission the assent of the holder thereof to any proposed alteration or modification is within the control of the carrier or of any person or persons controlling the carrier.”
The further contention that the ICC had the power to amend the trust agreement so as to reserve in the B & 0 the power to vote the stock in connection with any modification plan, and exercised that power here, appears to me to be untenable. In altering its pre-existing order the Commission was bound to grant a full hearing to interested parties, including notice of the nature of the proceedings and an opportunity to be heard.1 The instant hearing was ordered to consider a proposed securities modification. It was not called to consider a proposed modification or interpretation of a longstanding trust indenture. If the ICC or the B & 0 wished to amend the indenture, it should have done so in the regular course.
I find no basis for the assumption by my colleagues that “Had the B & 0 asked the Commission to allow the trust agreement to be amended to include such a reservation [in B & 0 to assent to the plan] no doubt the Commission would have granted the request.” The specific reservation in the trust agreement also referred to by my colleagues in citing Alleghany v. James Foundation, 2 Cir., 214 F.2d 446, instead of supporting their position suggests that the absence of such a reservation in the instant case indicates lack of power in the B & 0 to assent the stock.
Finally, the argument that the sole purpose of the trust was to remove managerial control of the applicant from the B & O is not altogether persuasive. The Commission itself took no such position. It stated “One of the primary purposes of the trust, * * * was to remove control of the applicant from the B & O.”2

. Morgan v. United States, 304 U.S. 1, 58 S.Ct. 999, 82 L.Ed. 1129; Jordan v. American Eagle Fire Ins. Co., 83 U.S. App.D.C.192,169 E.2d 281.

. Joint Appendix, pp. 114r-115 (emphasis supplied).