New York, C. & St.L. R. Co. v. Frank - 314 U.S. 360 (1941)
U.S. Supreme Court
New York, C. & St.L. R. Co. v. Frank, 314 U.S. 360 (1941)
New York, Chicago & St. Louis Railroad Co. v. Frank
Reargued October 16, 17, 1941
Decided December 8, 1941
314 U.S. 360
The attempt of a consolidated interstate carrier to escape liability for debts of a constituent, upon the ground that permission to assume such liability was never applied for or obtained under § 20(a) of the Interstate Commerce Act, although, according to the state law under which the consolidation took place, the liability was one which attached to the consolidated corporation upon its creation, cannot be upheld in this case in view of a consistent and longstanding interpretation placed upon § 20(a) by the Interstate Commerce Commission, in relation to this particular carrier system and with full knowledge of its affairs, as not requiring such
permission, and in view of the fact that to reject that interpretation now would result in the enrichment of stockholder equity which itself was capitalized, with no thorough scrutiny by the Commission, by virtue of that interpretation. P. 314 U. S. 372.
24 N.Y.S.2d 854 affirmed.
Appeal from a Judgment affirming a judgment of the municipal court of the City of New York in favor of the above-named appellee in an action against the appellant to recover interest due on bonds issued by the Northern Ohio Railway Company which were guaranteed by the Lake Erie & Western Railroad Company. 175 Misc. 902, 24 N.Y.S.2d 846. The latter company was a constituent of the appellant in this case, a consolidated railroad corporation embracing a number of railroad systems. The case was first argued at the 1940 Term, and the judgment below was affirmed by an equally divided Court, 313 U.S. 538. Rehearing was granted, 313 U.S. 596.