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November 18, 1955

BRESWICK & CO., and Randolph Phillips, as common stockholders of Alleghany Corporation, Plaintiffs,
UNITED STATES of America, the Interstate Commerce Commission, Alleghany Corporation, the New York Central Railroad Company, Joseph S. Gruss, Charles H. Blatt, Albert B. Cohen, Arthur A. Winner and Alvin J. Delaire, a copartnership, doing business as Gruss & Co., and Samuel A. Mehlman, Edward Gornish and others, Defendants

Per Curiam

This is an action to enjoin, or vacate and set aside as void, orders of the Interstate Commerce Commission.

Since the filing of our previous opinion dealing with the preliminary injunction, *fn1" and of our order granting such an injunction, we have held a hearing on the merits, at which we received evidence, heard extensive arguments, and received elaborate briefs, concerning final relief.1A As a result, we adhere, for the most part, to what was said in the previous majority opinion.

 1. However, we now think the following considerations are pivotal: Defendants' chief contention runs thus: (1) Under the doctrine of United States v. Marshall Transport Co., 322 U.S. 31, 64 S. Ct. 899, 88 L. Ed. 1110, Alleghany was a necessary party to the merger proceedings. (2) The Commission, by its order in those merger proceedings, held it in the public interest that, by the merger, Alleghany should acquire control of the Bridge Company. (3) That order, authorizing Alleghany to acquire that control, made Alleghany, pursuant to Section 5(3), a carrier for purposes of Section 20a, 49 U.S.C.A. §§ 5(3), 20a.

 We think item (1) of this argument untenable. For, assuming, arguendo, that, before the merger, Alleghany already controlled New York Central, *fn2" we think the merger of Bridge Company and Big, Four did not involve any further acquisition by Alleghany, a non-carrier. We rest this conclusion on an analysis of 49 U.S.C.A. § 5(2)(a)(i). For convenience, we print, as follows, its provisions in separate sub-paragraphs, assigning each sub-paragraph a Roman number:

 'It shall be lawful, with the approval and authorization of the Commission, as provided in subdivision (b) --

 '(I) for two or more carriers to consolidate or merge their properties or franchises, or any part thereof, into one corporation for the ownership, management, and operation of the properties theretofore in separate ownership; or

 '(II) for any carrier, or two or more carriers, jointly, to purchase, lease, or contract to operate the properties, or any part thereof, of another; or

 '(III) for any carrier, or two or more carriers, jointly, to acquire control of another through ownership of its stock or otherwise; or

 '(IV) for a person which is not a carrier to acquire control of two or more carriers through ownership of their stock or otherwise; or

 '(V) for a person which is not a carrier and which has control of one or more carriers to acquire control of another carrier through ownership of its stock or otherwise; * * *'. *fn3"

 Subparagraphs (I), (II), and (III) deal solely with carriers. Subparagraph (I) deals with a merger, (II) with a purchase, lease or contract to operate, and (III) with a case where a carrier or carriers seek to 'acquire control.' In contrast, subparagraph (IV) and (V) deal solely with situations which involve 'a person which is not a carrier;' as to such a person, those two subparagraphs significantly say nothing whatever about a merger, but relate exclusively to cases in which a non-carrier seeks to 'acquire control.'

 A merger of carriers may involve an acquisition of control by a non-carrier, where, through the merger, the non-carrier acquires control (direct or indirect) of a carrier or carrier property which the non-carrier had previously not controlled; United States v. Marshall Transport Co., 322 U.S. 31, 64 S. Ct. 899, 88 L. Ed. 1110. But where, as in the instant case, the non-carrier (Alleghany) is (according to our assumption, arguendo) already in indirect control of a carrier (Bridge Company), and the merger still leaves the non-carrier in indirect control of such property, no acquisition by the non-carrier results from the merger. *fn4" This seems to us the plain, clear and obvious interpretation of the statute. Therefore, United States v. Marshall Transport Co., supra, is inapposite. We think the Commission had no power to make any order, in the merger proceedings, which authorized the Alleghany Corporation to 'acquire control' of Bridge. Accordingly, so much of the order as purported to do so was a legal nullity.

 Defendants argue that this interpretation of Section 5(2)(a)(i) is erroneous because the Commission's decisions disclose a contrary well-settled administrative interpretation of that section. We find no such well-settled administrative interpretation. See point I of the Appendix to this opinion, where we discuss the pertinent Commission decisions; it shows that the Commission's interpretations have been not at all consistent and uniform. We assume, arguendo, that, were they clear, uniform and consistent, we would be obliged to abide by them, (a proposition by no means certain when the administrative interpretation is patently irrational). *fn5" But when administrative interpretations lack consistency and uniformity, the courts give them little or no weight. *fn6"

 Alleghany did not seek, nor did the Commission enter, any order approving Alleghany's control of New York Central as in the public interest. Consequently, assuming, arguendo, that Alleghany had acquired control of Central, there is no Commission order, under Section 5(2) which brings Alleghany within the Commission's jurisdiction under Section 5(3).

 2. Defendants contend, in the alternative, that Alleghany still has the status of a carrier by virtue of the I.C.C.'s order of June 5, 1945. We rejected that contention in our previous opinion, and see no reason for abandoning that rejection. Alleghany points to 49 U.S.C.A. § 15(2) which provides that 'all' orders of the I.C.C. 'shall take effect within such reasonable time, not less than thirty days, and shall continue in force until its further order, or for a specified period of time, according as shall be prescribed in the order, unless the same shall be suspended or modified or set aside by the commission * * *'. But we think Section 15(2) must be read in connection with Section 15(1) which relates solely to rate orders or the like. A single sentence in the opinion of the Chicago Junction Case, 264 U.S. 258, 270, 44 S. Ct. 317, 68 L. Ed. 667 (per Brandeis, J.) otherwise intimates. But subsequently, in United States v. American Ry. Express Co., 265 U.S. 425, 430, note 3, 44 S. Ct. 560, 562, 68 L. Ed. 1087, the Court (again per Brandeis, J.) said: 'Paragraph 2 of section 15 deals only with the time when orders under paragraph 1 take effect.' *fn7" It is noteworthy that Section 16(6) dealing with the suspension or modification of orders of the Commission contains no clause continuing them in effect until such suspension or modification.

 Accordingly, when Alleghany divested itself of the control of all carriers, the order of June 5, 1945, became inoperative.7A This occurred before the I.C.C. order authorizing Alleghany to issue its new preferred. But, even if we are wrong in this respect, there remains the fact that the I.C.C., in its 'status' order, issued by Division Four on March 2, 1955, and affirmed by the full Commission on May 24, 1955, expressly terminated the June 5, 1945 order so that when, on June 22, 1955 the I.C.C. purported to authorize the issuance of the preferred stock, the June 5, 1945 order had already been explicitly nullified.

 Consequently, as Alleghany was not within I.C.C. regulation when it proposed to issue its new preferred stock, the issuance of that stock would violate the Investment Company Act for this reason: The S.E.C. order of October 25, 1945, which terminated Alleghany's registration under the Investment Company Act, 15 U.S.C.A. § 80a-1 et seq., ceased to have any effect, at the very latest, on May 24, 1955, and Alleghany was then forthwith within the coverage of the Investment Company Act. Alleghany could not thereafter lawfully issue any new securities because of Section 7 of that Act, 15 U.S.C.A. § 80a-7.

 Alleghany contends, however, that the S.E.C. order of October 25, 1945, exempted Alleghany from the Investment Company Act; that, to bring Alleghany within the coverage of the Act required another § .E.C. order; and that no such order has been entered. We cannot agree for this reason: Section 3(c)(9) of that Act, 15 U.S.C.A. § 80a-3(c)(9), exempts from that Act's provisions any company subject to I.C.C. regulation. The S.E.C. order of October 25, 1945 was but a formal recognition of that exemption, which became operative when the I.C.C. made its order of June 5, 1945, since, by that order, Alleghany became subject to I.C.C. regulation. When, however, at the latest on May 24, 1955, the June 5, 1945 I.C.C. order lost its efficacy, thereupon the S.E.C. order of October 25, 1945 became automatically inefficacious, with the result that Alleghany immediately became again subject to the Investment Company Act. *fn8"

 Alleghany cites Securities and Exchange Commission v. Long Island Lighting Co., 2 Cir., 148 F.2d 252, judgment vacated on the ground of mootness, 325 U.S. 833, 65 S. Ct. 1085, 89 L. Ed. 1961, and In re United Corporation, D.C., 128 F.Supp. 725, as authority in support of its contention that the October 25, 1945 order of the S.E.C. continued in effect. The Long Island Lighting Company Case is inapposite. *fn9" There the S.E.C. had exercised the discretionary power granted to it under Section 3(a) of the Public Utility Holding Company Act -- 15 U.S.C.A. § 79c(a) -- to exempt the company from the registration and regulatory provisions of the Public Utility Holding Company Act. Accordingly, before the company could again the subject to the Public Utility Holding Company Act, it was necessary that the S.E.C. take action authorized by 15 U.S.C.A. § 79c(c) to revoke its prior exemption order.9A The statute involved in the instant case is materially different from that in Long Island Lighting Company. Here the exemption from the Investment Company Act under Section 3(c)(9) was not at all discretionary with the S.E.C.;9B the exemption depended upon the fact that Alleghany, controlling carriers, came within I.C.C. regulation through the I.C.C. order of June 25, 1945. As we said above, when that order lost its effect, the S.E.C. order of October 25, 1945 likewise lost its effect.

 In re United Corporation, D.C., 128 F.Supp. 725, dealt with a contention of preferred stockholders that the district court was without jurisdiction to approve the second half of a plan, under Section 11(e) of the Public Utilities Act, providing for the elimination of option warrants held by the preferred stockholders after the completion of the first part of the plan, which required the sale of subsidiaries in order to transform the company from a public utilities holding company into an investment company. Since a single and unified plan was involved, we think the district court correctly rejected the preferred stockholders' contention. However, we do not agree with the district court's statement that it had jurisdiction because the S.E.C. had not yet made an order terminating its jurisdiction.

 3. Our previous opinion held that the I.C.C. orders are reviewable and that the plaintiffs have 'standing to sue'. We adhere to this ruling but modify our discussion to this extent: Defendants rely primarily on New York Central Securities Corp. v. United States, D.C., 54 F.2d 122, affirmed 287 U.S. 12, 53 S. Ct. 45, 77 L. Ed. 138, as authority for their contention that plaintiffs have no such standing. We think that case at most holds that a stockholder cannot, in a suit under the Urgent Deficiencies Act, 28 U.S.C.A. § 1253, 2101, 2284, 2324, 2325, assert harm to the corporation; *fn10" it does not hold that he cannot assert a threatened direct harm to himself as a stockholder. Such a threatened harm exists here, since the right to convert the preferred into common stock may dilute the interest of plaintiffs as common stockholders of Alleghany. *fn11" The fact that all the common stockholders are threatened with harm does not convert an injury, individual to each common stockholder, into an injury to the corporation which cannot be enforced except derivatively. Nor is it relevant that many of the injured common stockholders have approved Alleghany's action and do not choose to oppose it. Since the plaintiffs are threatened with harm as individuals, it suffices that they owned Alleghany stock when they brought suit.

 4. The order granting Alleghany carrier status and approving the issuance of the new preferred stock is reviewable under the test enunciated in Rochester Tel. Corp. v. United States, 307 U.S. 125, 59 S. Ct. 754, 83 L. Ed. 1147. Rochester held that, when an administrative order causes a plaintiff some individual harm, he may seek review of the administrative action in the courts, but that, until the administrative action causes such harm, no review is possible, since the suit would ask 'review of interim steps in a proceeding' and would therefore be premature. Although the plaintiffs perhaps suffered no injury from the I.C.C. order granting Alleghany carrier status, they were surely threatened with serious harm by the second order approving the issuance of the new preferred stock. Thus, while the status order, by itself, may not have been reviewable, nevertheless, once the I.C.C. made its order approving the issuance of the new preferred, there arose a right to seek review of the preferred stock order and also of the status order on which the preferred stock order was based.

 5. In the majority opinion on the preliminary injunction, it was held that plaintiffs had shown that they were entitled to injunctive relief. The showing necessary to justify a preliminary injunction is probably greater than that necessary for final injunctive relief. See our opinion on the preliminary injunction; see also Restatement of Torts, Section 933, special note at p. 683, as to 'inadequacy,' and cf. Section 936(2) and Comment d. It follows that the plaintiffs are entitled to final relief.

 6. The intervening preferred stockholders urge that we should deny this relief because they have changed their position in reliance upon the orders of the I.C.C. *fn12" But, as we observed in our previous opinion, any such reliance was upon void orders. The Investment Company Act, and some other statutes relative to the S.E.C., specifically provide that one who, in good faith, relies on the Commission's 'rule, regulation or order' shall be protected from liability imposed by the statute even if later a court holds it invalid. *fn13" ...

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