Court Opinion

ID: 9444366
Source: CourtListenerOpinion
Date Created: 2023-08-03 20:58:17.632996+00
Date Added: 2024-06-11T17:29:50.351680
License: Public Domain

RUSSELL, Circuit Judge
(concurring specially).
Even casual consideration of the past proceedings and rulings1 in this matter will reveal grounds for substantial argument as to what is, as often denominated, “the law of the case”. However, it would be unusual, to say the least, to attribute to the Supreme Court an intention to abandon determination of the important, if indeed not the controlling, question which had underlain the prior decisions of the trial and the Appellate Courts, and to which alone the Supreme Court had restricted itself upon the grant of certiorari. With much more logic and respect might it be assumed that the court was deciding the case as made and presented with the result that the decision should be construed to hold that the equitable owners of the property supplant in interest the holders of the worthless stock and are thus entitled to the say-so on the question of merger which would ordinarily be enjoyed by *839the stockholders of a corporation. This view certainly finds abundant support in the unquestioned principle that in bankruptcy creditors are, and always have been, considered the real parties at interest as concerns the property of the bankrupt until their claims are satisfied. In any event, and this I think controlling here, no court, acting on the premise that a “forced merger” was illegal (as now determined) has ever held the plan of reorganization promulgated by the Interstate Commerce Commission fair and equitable in the face of the objections of the overwhelming majority in amount of the equitable holders of the property. This feature of the case, if not determined by the Supreme Court as above indicated, is an open question. Clearly, an illegal plan is not fair and equitable. Even if the taint of illegality should be removed, in this case, where this is effected by the acts of those having no interest in the res, and is opposed by the real owners of the property, I should still be of the opinion that such a plan is inherently unfair and should not be approved by the court. The tail of form should not be permitted to wag the dog of substance. In the circumstances here, there is no necessity of doing the vain thing of proceeding further to determine whether the “cramdown” provisions of the statute should be employed. One who buys railroad securities is charged with knowledge that his rights of property are subject to the lien of the “public interest”, and therefore subject to be modified when necessary to effectuate that interest, but except for this an owner of railroad securities is entitled to hold and enjoy the incidents of ownership in the same way as is the owner of any other class of property. In this case, it has not been made to appear that the public interest requires the obliteration of private rights.
The trial court properly refused to approve the plan. The matter should have been returned to the Interstate Commerce Commission for the formulation of a fair and lawful plan which would protect both public and private interests.

. In re Florida East Coast Railway Co., D.C., 81 F.Supp. 926, affirmed Atlantic Coast Line R. Co. v. St. Joe Paper Co., 5 Cir., 179 F.2d 638, certiorari denied 339 U.S. 929, 70 S.Ct. 627, 94 L.Ed. 1349 ; In re Florida East Coast Railway Co., D.C., 103 F.Supp. 825; Atlantic Coast Line Ry. Co. v. St. Joe Paper Co., 5 Cir., 201 F.2d 325, certiorari granted 345 U.S. 948, 73 S.Ct. 866, 97 L.Ed. 1372, reversed 347 U.S. 298, 74 S.Ct. 574, rehearing denied 347 U.S. 980, 74 S.Ct. 734. See also, In re Florida East Coast Ry. Co., D.C., 49 F.Supp. 527 and In re Florida East Coast Ry. Co., D.C., 52 F.Supp. 420.