Under § 5(2) of the Interstate Commerce Act, the Commission was
confronted with rival applications by several railroads for
authority to acquire control of the Toledo, Peoria & Western
Railroad, an independent, short-line, "bridge carrier" of through
east-west traffic bypassing the congested Chicago and St. Louis
gateways and connecting with 16 other railroads. After extended
hearings, the Commission found that the plan for joint control of
Western by the Santa Fe and Pennsylvania Railroads contemplated
that Western would continue to be operated as a separate and
independent carrier with responsible local management, and that all
existing routes via Western would be maintained and kept open
without discrimination between connecting lines of railroads; but
that the plan of the Minneapolis & St. Louis Railroad to
acquire sole control of Western contemplated its disappearance as
an independent and neutral connection for 15 other carriers, that
it would be extremely harmful to other carriers, and that it would
result in termination of the employment of most of Western's 24
executives and 225 other employees. The Commission concluded that
the acquisition and plan of operation by the Santa Fe and
Pennsylvania, subject to stated conditions, was within the scope of
§ 5(2) of the Act, that the proposed terms and conditions were just
and reasonable, and that the transaction would be consistent with
the public interest. It therefore approved the Santa
Fe-Pennsylvania application, dismissed the Minneapolis application,
and denied applications by several intervening railroads for
permission to participate in the acquisition of Western's stock.
The District Court sustained the Commission's order.
Held: the judgment is affirmed. Pp.
361 U. S.
176-194.
Page 361 U. S. 174
1. The record shows that the Commission's finding that continued
operation of Western as a "separate and independent carrier" was
required by the "public interest" did not deprive the Minneapolis
& St. Louis Railroad of "fair comparative consideration" and
that it was made after full and fair consideration, and the
District Court did not err in so holding. Pp.
361 U. S.
184-185.
2. Notwithstanding appellants' contention that acquisition of
Western by Santa Fe and Pennsylvania would create a combination in
restraint of commerce in violation of § 1 of the Sherman Act and
would lessen competition or tend to create a monopoly in violation
of § 7 of the Clayton Act, the record shows that the Commission
fully estimated the scope and appraised the effects of any
resulting curtailment of competition, and concluded that the
proposed acquisition and plan of operation would not result in any
significant lessening of competition, and this determination rests
upon adequate findings, supported by substantial evidence, and is
well within the limits of the Commission's discretion under the
Act. Pp.
361 U. S.
185-189.
(a) Although § 5(11) does not authorize the Commission to
"ignore" the antitrust laws, it does authorize the Commission to
approve acquisitions which might otherwise violate the antitrust
laws if it finds that such acquisitions are in the public interest,
and, upon approval of the acquisitions by the Commission, it
relieves the acquiring carriers from the operation of the antitrust
laws. Pp.
361 U. S.
185-187.
(b) As respects railroad acquisitions, the Commission is not so
bound by the antitrust laws that it must permit them to overbear
what it finds to be in the public interest, and the wisdom and
experience of the Commission, not of the courts, must determine
whether the proposed acquisition is in the public interest. Pp.
361 U. S.
187-188.
(c) The Commission gave extensive consideration to this
contention of appellants and determined that the acquisition of
Western by Santa Fe and Pennsylvania and their plan of operation of
Western would not result in any significant lessening of
competition, and that determination was based upon adequate
findings, supported by substantial evidence, and was well within
the limits of the Commission's discretion under the Act. Pp.
361 U. S.
188-189.
3. Notwithstanding appellants' contention that Pennsylvania
actually contracted to purchase 50% of Western's stock from a trust
company which had four common directors with Pennsylvania, and that
such purchase would violate § 10 of the Clayton
Page 361 U. S. 175
Act, the Commission's action in approving Pennsylvania's
acquisition of the stock, after fully considering all factors
bearing thereon, did not exceed the statutory limits of the
Commission's discretion. Pp.
361 U. S.
189-191.
4. Whether or not § 5(11) operates only
in futuro is
immaterial in this case, since the existing contractual
arrangements through which Pennsylvania asked authority to acquire
50% of Western's stock looked entirely to the future. Pp.
361 U. S.
191-192.
5. Notwithstanding appellants' contention that the Commission
violated § 8(b) of the Administrative Procedure Act by failing to
make findings which, they think, were compelled by the evidence,
the record discloses that the Commission made adequate subsidiary
findings upon all material issues, and made the ultimate findings
required by § 5(2), that they support the Commission's order, and
that they are, in turn, supported by substantial evidence. Pp.
361 U. S.
192-194.
6. The District Court fairly considered and decided all of the
issues raised by appellants, accorded to them a full and fair
judicial review, and reached a right result. P.
361 U. S.
194.
165 F.
Supp. 893, affirmed.
Page 361 U. S. 176
MR. JUSTICE WHITTAKER delivered the opinion of the Court.
These appeals present questions arising out of rival
applications by several rail carriers to the Interstate Commerce
Commission under § 5(2) of the Interstate Commerce Act [
Footnote 1] for authority to acquire
control of Toledo, Peoria & Western Railroad Company.
Page 361 U. S. 177
"Western" is an independent, short-line "bridge carrier"
[
Footnote 2] of through
east-west traffic bypassing the congested Chicago gateway. Its line
is about 234 miles long, extending from its connection with the
Pennsylvania Railroad Company ("Pennsylvania") at Effner, on the
Illinois-Indiana state line, westward, through Peoria, to its
connection with the main line of the Atchison, Topeka & Santa
Fe Railway Company ("Santa Fe") at Lomax, Illinois, and thence
southwesterly a short distance to Keokuk, Iowa. Its headquarters,
shops, and yards are located in East Peoria, where it has 24
executives and where, and elsewhere along its line, it has about
225 other employees. It has connections for the interchange of
traffic with 16 railroads, the principal ones being with the
Pennsylvania at Effner, with the Santa Fe at Lomax, and with the
New York, Chicago & St. Louis Railroad Company ("Nickel
Plate"), the Illinois Terminal Railroad Company, the
Page 361 U. S. 178
Chicago, Burlington & Quincy Railroad Company ("Burlington")
and the Minneapolis & St. Louis Railway Company ("Minneapolis")
at Peoria. Its interchange connections with the other 10 railroads
are at 17 other towns along its line.
Western has outstanding 90,000 shares of common capital stock,
82% of which is owned by the testamentary trustees of the estate of
George P. McNear -- Wilmington Trust Company and Guy Gladson -- and
the remaining 18% is owned by members of the McNear family, a bank
and the president of Western. In 1954, the trustees determined to
sell their Western stock, and rival efforts were commenced by
Minneapolis, on the one hand, and by the Santa Fe and Pennsylvania,
on the other hand, to purchase it. (Four of Wilmington Trust
Company's directors were also directors of Pennsylvania.) Those
negotiations culminated in a contract between the trustees and the
Santa Fe, dated May 26, 1955, providing for the sale by the former
and purchase by the latter of the stock at a price of $135 per
share, subject to the Commission's approval. [
Footnote 3] Soon afterward, like agreements
Page 361 U. S. 179
were made by the Santa Fe with the holders of the remaining 18%
of the Western stock.
On June 28, 1955, the Santa Fe entered into a contract to sell
to the Pennsylvania Company, a wholly owned subsidiary of
Pennsylvania, 50% of the outstanding capital stock of Western at
$135 per share, [
Footnote 4]
subject to approval of the Commission.
On July 8, 1955, the Santa Fe and Pennsylvania Company and its
parent, Pennsylvania, applied to the Commission under § 5(2) of the
Act [
Footnote 5] for approval
of
Page 361 U. S. 180
those stock purchase agreements and the consequent joint control
of Western. The Minneapolis intervened and objected to the
application, as did also the States of Minnesota and South Dakota
and their respective public service regulatory commissions.
Thereafter, on October 13, 1955, the Minneapolis applied to the
Commission, under the same section of the Act, for authority to
acquire sole control of Western, expressing its willingness to
enter into contracts with Western's stockholders to purchase their
stock at the same price and on the same terms as set forth in their
existing contracts with the Santa Fe. The Santa Fe, the
Pennsylvania Company, and Pennsylvania intervened in the latter
proceeding and objected to the Minneapolis application.
On motion of Minneapolis, the Commission consolidated the two
proceedings. Thereafter, seven other railroads having interchange
connections with Western's line intervened. Two of them sought
authority, at all events, [
Footnote
6] and two others of them sought authority, under stated
conditions, [
Footnote 7] to
participate, under § 5(2)(d) of the Act,
Page 361 U. S. 181
in the acquisition of the Western stock on an equal basis with
the successful applicant. The State of Illinois, 18 cities or towns
and seven chambers of commerce located on or along Western's line,
two labor organizations representing Western's employees, and a
large number of shippers over Western's line intervened in support
of the Santa Fe-Pennsylvania application and in opposition to the
Minneapolis application.
After an extended consolidated hearing before him, the
Commission's examiner issued a proposed report recommending
approval of the Santa Fe-Pennsylvania application and dismissal of
the Minneapolis application. Thereafter, upon exceptions, and
briefs and arguments in their support, Division 4 of the Commission
issued its report. It was confronted, as it said, with four
alternative proposals, (1) for authorization of joint control of
Western by the Santa Fe and Pennsylvania, (2) for authorization of
sole control by the Minneapolis, (3) for authorization of two other
railroads, at all events, and of two more railroads, under stated
conditions, to participate in the acquisition of the Western stock
on an equal basis with the successful applicant, [
Footnote 8] and (4) denial of both
applications.
The Commission observed that
"[t]hese proceedings represent a new and more complicated phase
in the administration of section 5, since [they involve] 2
applications for authority to control the same property, and
petitions by 4 other carriers for inclusion in the transaction
under varying circumstances."
It recognized that, under § 5(2)
Page 361 U. S. 182
of the Act and the National Transportation Policy, [
Footnote 9] it was required to
"weigh whether each application is consistent with the public
interest, with or without inclusion of other railroads, considering
not only other intervening petitioners seeking such inclusion, but
also the other applicant and nonparticipating railroads as
well."
It thought that the burden of proof was
"most heavy for an applicant ill a proceeding like this, because
it must not only overbalance the claims of those seeking to share
in the control, but also of those seeking to exclude it from the
transaction."
It conceived it to be its duty, under the Act and the National
Transportation Policy, to "arrive at a standard of public interest
and determine which of the various plans of control most nearly
approximates it."
The Commission found that the Santa Fe-Pennsylvania plan
contemplates that Western "will continue to be operated as a
separate and independent carrier with responsible management
located along its lines"; that it
"will continue to maintain its own solicitation forces and will
be entirely free to solicit traffic in such manner as best to serve
the interests of the Western,"
and that all
"existing routes and channels of trade via the Western will be
maintained and kept open without discrimination between connecting
lines of railroad."
It found, on the other hand, that the Minneapolis plan
"unequivocally contemplates the disappearance of the Western as
an independent and neutral connection for the other 15 carriers
with which it presently works;"
that,
"[f]or all practical purposes, the Western would be integrated,
consolidated, and merged into the Minneapolis for ownership,
management, and operation;"
that features of the Minneapolis plan "would be extremely
harmful to other carriers"; that Western's headquarters office at
Peoria would be eliminated, leaving only a trainmaster and a
roadmaster at
Page 361 U. S. 183
that point, and that the employment of most of Western's 24
executives and 225 other employees would be severed.
The Commission further found that
"[o]nly the Minneapolis and its supporting interveners, the
States of Minnesota and South Dakota, advocate the disappearance of
the Western as a separate and independent operating carrier,"
and that all other parties to, and intervenors in, the
proceedings "insist that the separate and independent operation of
the Western under its present local management is a public
necessity." It then found that the "[p]ublic interest demands that
the present policies of the Western in all respects be continued."
It thereupon made the ultimate finding, required by § 5(2)(b) of
the Act, that the acquisition and plan of operation by the Santa Fe
and Pennsylvania, subject to stated conditions, was
"within the scope of section 5(2) of the Interstate Commerce
Act, as amended; that the terms and conditions proposed [by them]
are just and reasonable, and that the transaction will be
consistent with the public interest."
The Commission then entered its order approving the Santa
Fe-Pennsylvania application, dismissing the Minneapolis
application, and denying the petitions of the several intervening
railroads which sought to participate in the acquisition of the
Western stock. 295 I.C.C. 523.
Thereafter, Minneapolis petitioned the whole Commission for a
reconsideration, and alternatively requested that, if the approval
of the Santa Fe-Pennsylvania application be permitted to stand, it
be authorized to participate equally with those railroads in the
purchase of Western's stock on the same terms. That petition was
denied.
Minneapolis then timely filed a complaint in the District Court
for Minnesota against the United States and the Interstate Commerce
Commission to vacate the Commission's order. The States of
Minnesota and South Dakota and their respective regulatory
commissions,
Page 361 U. S. 184
being interested in strengthening the Minneapolis, which
operates in those States, intervened in support of the complaint.
The defendants answered, asserting the full legality of the
Commission's order. The Santa Fe, the Pennsylvania, the
Pennsylvania Company, the State of Illinois, the 18 cities and
seven chambers of commerce, and the numerous shippers who were
intervenors before the Commission, intervened in opposition to the
complaint. The Nickel Plate intervened, complaining that the
Commission had improperly denied its request to participate in the
purchase of the Western stock.
A three-judge court was convened and, after hearing, rendered
its opinion and judgment sustaining the Commission's order.
165 F.
Supp. 893. On separate appeals by the Minneapolis, the State of
Minnesota and its regulatory commission, and the State of South
Dakota and its regulatory commission, the case was brought here,
and we noted probable jurisdiction. 359 U.S. 933. All of those who
were defendants and intervenors in opposition to the complaint in
the District Court, except the Nickel Plate, are appellees in this
Court.
Minneapolis, supported by the States of Minnesota and South
Dakota, contends first that the Commission improperly adopted at
the outset of its report the standard of "separate and independent
management" of Western as the criterion governing the comparative
merits of the rival plans, which was antithetic to its application,
and thereby deprived it of "fair comparative consideration," and
that the District Court erred in approving the Commission's
action.
The record does not support that contention. Rather, it shows
that the Commission's governing standard was the "public interest,"
although it ultimately did find that the public interest would be
best served by Western's continued operation as a "separate and
independent carrier." We believe that the recited findings show
that the Commission
Page 361 U. S. 185
carefully "weighed" and considered "each application" in its
labors to determine which, if either, of them was "consistent with
the public interest." Its subsidiary findings (a) that the
Minneapolis plan "unequivocally contemplates the disappearance of
the Western as an independent and neutral connection for the other
15 carriers with which it presently works,"(b) that certain
features of the Minneapolis plan "would be extremely harmful to
other carriers,"(c) that the Minneapolis plan contemplates the
elimination of Western's office and the separation of its
employees, and (d) that numerous witnesses insisted "that the
separate and independent operation of the Western under its present
local management is a public necessity," fully support its
conclusional finding that the "[p]ublic interest demands that the
present policies of the Western in all respects be continued." That
finding, though antithetic to Minneapolis' application, did not
deprive it of "fair comparative consideration," but, on the
contrary, it seems to us, was made by the Commission after full and
fair consideration, and the District Court did not err in so
holding.
Appellants' principal contention appears to be that acquisition
of control of Western by Santa Fe and Pennsylvania will create a
combination in restraint of commerce in violation of § 1 of the
Sherman Act, [
Footnote 10]
and will lessen competition or tend to create a monopoly in
violation of § 7 of the Clayton Act, [
Footnote 11] and that the Commission's approval of their
application was an abuse of power.
On their face, these contentions would seem to run in the teeth
of the language and purpose of § 5(11) of the Interstate Commerce
Act. That section, in substance, provides that
"The authority conferred by this section shall be exclusive and
plenary, and any carrier or corporation
Page 361 U. S. 186
participating in . . . any transaction approved by the
Commission thereunder, shall have full power . . . to carry such
transaction into effect and to own and operate any properties and
exercise any control or franchises acquired through said
transaction . . . and any carriers . . . participating in a
transaction approved or authorized under the provisions of this
section shall be and they are hereby relieved from the operation of
the antitrust laws and of all other restraints, limitations, and
prohibitions of law . . . insofar as may be necessary to enable
[it] to carry into effect the transaction so approved or provided
for in accordance with the terms and conditions, if any, imposed by
the Commission, and to hold, maintain, and operate any properties
and exercise any control or franchises acquired through such
transaction."
24 Stat. 380, as amended, 54 Stat. 908, 49 U.S.C. § 5(11).
Section 5(11) is both a more recent and a more specific
expression of congressional policy than § 1 of the Sherman Act and
§ 7 of the Clayton Act, and in terms relieves the acquiring
carrier, upon approval by the Commission of the acquisition, "from
the operation of the antitrust laws. . . ." Although § 5(11) does
not authorize the Commission to "ignore" the antitrust laws,
McLean Trucking Co. v. United States, 321 U. S.
67,
321 U. S. 80,
there can be "little doubt that the Commission is not to measure
proposals for [acquisitions] by the standards of the antitrust
laws." 321 U.S. at
321 U. S. 85-86.
The problem is one of accommodation of § 5(2) and the antitrust
legislation. The Commission remains obligated to
"estimate the scope and apprise the effects of the curtailment
of competition which will result from the proposed [acquisition]
and consider them along with the advantages of improved service
[and other matters in the public interest] to determine whether the
[acquisition] will assist in effectuating the over-all
transportation policy."
321 U.S. at
321 U. S.
87.
Page 361 U. S. 187
Even though such acquisitions might otherwise violate the
antitrust laws, Congress has authorized the Commission to approve
them, if it finds they are in the public interest,
"because it recognized that, in some circumstances, they were
appropriate for effectuation of the national transportation policy.
It was informed that this policy would be furthered by 'encouraging
the organization of stronger units' in the . . . industry. And, in
authorizing those [acquisitions], it did not import the general
policies of the antitrust laws as a measure of their
permissibility. It in terms relieved participants in appropriate
[acquisitions] from the requirements of those laws. § 5(11)."
321 U.S. at
321 U. S. 85. It
must be presumed that, in enacting this legislation, Congress took
account of the fact that railroads are subject to strict regulation
and supervision.
"Against this background, no other inference is possible but
that, as a factor in determining the propriety of [railroad
acquisitions], the preservation of competition among carriers,
although still a value, is significant chiefly as it aids in the
attainment of the objectives of the national transportation
policy."
321 U.S. at
321 U. S.
85-86.
As respects railroad acquisitions, the Commission is not so
bound by the antitrust laws that it must permit them to overbear
what it finds to be in "the public interest." A contrary view
would, in effect, permit the Commission to authorize only those
acquisitions which would not offend those laws.
"As has been said, this would render meaningless the exemption
relieving the participants in a properly approved [acquisition] of
the requirements of those laws. . . ."
321 U.S. at
321 U. S. 86.
Resolution of the conflicting considerations
"is a complex task which requires extensive facilities, expert
judgment and considerable knowledge of the transportation industry.
Congress left that task to the Commission"
"to the end that the wisdom and experience of that Commission
may be used not only in connection with this form of
transportation,
Page 361 U. S. 188
but in its coordination of all other forms."
"79 Cong.Rec. 12207. 'The wisdom and experience of that
commission,' not of the courts, must determine whether the proposed
[acquisition] is 'consistent with the public interest.'
Cf.
Interstate Commerce Commission v. Illinois Central R. Co.,
215 U. S.
452;
Pennsylvania Co. v. United States,
236 U. S.
351;
United States v. Chicago Heights Trucking
Co., 310 U. S. 344;
Purcell v.
United States, 315 U. S. 381."
321 U.S. at
321 U. S.
87-88.
Here, the Commission gave extensive consideration to the
anticompetitive contentions advanced by appellants, devoting more
than five pages of its report to that matter. It found that "[a]ll
the carriers endeavoring to participate in its control are in
competition with Western"; that the
"important thing is not whether there is possibility of
competition, but whether there is probability of existing or
potential competition being diminished or strangled by the Western
under the control of the Santa Fe and the Pennsylvania."
After an extended analysis of the complex facts and conflicting
evidence, the Commission found that control of Western by the Santa
Fe and Pennsylvania would not result in any significant lessening
of competition. It pointed to the fact that, although the Santa
Fe's "long haul" is to Chicago and the Pennsylvania's "next to
longest haul" is also to Chicago (its longest haul being to St.
Louis), the Santa Fe has agreed, and is bound,
"to place Lomax on a parity with Chicago from a solicitation
standpoint, and . . . the Pennsylvania will recognize Effner as one
of its principal interchanges along with Chicago and St.
Louis;"
that
"there may be some diversion of traffic, but such diversion
would not jeopardize the maintenance of adequate transportation
service by the objecting intervening carriers."
The Commission also pointed to the fact that Western had been in
a prolonged receivership until 1927 when George P. McNear acquired
its stock at a receiver's sale,
Page 361 U. S. 189
Toledo, P. & W. R. Co. Acquisition, 124 I.C.C. 181.
It further found that Western's modern existence began at that time
and, under the guidance of McNear, was built into a fine railroad;
that, since McNear's death in 1947, the present management has
continued, with much success, the policies he established. Those
policies, the Commission found, were, and are,
"to maintain strict neutrality between all connections, and to
participate in any haul of traffic no matter how slight [as a
bridge] carrier through Peoria as an alternative route, bypassing
the congested terminals of Chicago and St. Louis,"
and that those policies are to be continued under the Santa
Fe-Pennsylvania plan.
We think it is clear from this summary of its analysis and
findings that the Commission fully estimated the scope and
appraised the effects of any curtailment of competition which might
result from the acquisition of Western by the Santa Fe and
Pennsylvania, and, after having done so, concluded that their
acquisition and plan of operation of Western would not result in
any significant lessening of competition. Congress has left the
task of making that determination to the wisdom and experience of
the Commission. The determination it has made rests upon adequate
findings, which are, in turn, supported by substantial evidence and
is well within the limits of its discretion under the Act.
Appellants argue that the Pennsylvania, in actuality, contracted
to purchase 50% of the Western stock from Wilmington Trust Company,
a co-trustee of the McNear trust, and that, since four persons were
directors of both companies, that proposed stock purchase violates
§ 10 of the Clayton Act; that the Commission was without power to
approve it; that, in any event, its action in "condoning" it was an
abuse of power, and that the District Court, for those reasons
also, erred in upholding the Commission's order.
Page 361 U. S. 190
The Commission found that the Santa Fe, in entering into the
contract of May 26, 1955, with the trustees of the McNear trust,
was "acting on behalf of that carrier alone." But even if we
assume, for present purposes, that it was acting as well for the
Pennsylvania, the result must be the same. Section 10 of the
Clayton Act prohibits a common carrier engaged in commerce from
having "any dealings in securities" of more than $50,000, in the
aggregate, in any one year,
"with another corporation, . . . when the said common carrier
shall have upon its board of directors . . . any person who is at
the same time a director [of] such other corporation . . except
such purchases [as] shall be made . . . by competitive bidding
under regulations to be prescribed by [the] Commission."
38 Stat. 734, 15 U.S.C. § 20.
Section 10 of the Clayton Act is, of course, an antitrust law,
[
Footnote 12] and much of
what we have just said relative to the problem of accommodation of
§ 5(2) of the Interstate Commerce Act and the antitrust laws is
equally applicable to this contention. The evident purpose of § 10
of the Clayton Act was to prohibit a corporation from abusing a
carrier by palming off upon it securities, supplies, and other
articles without competitive bidding and at excessive prices
through overreaching by, or other misfeasance of, common directors,
to the financial injury of the carrier and the consequent
impairment of its ability to serve the public interest. [
Footnote 13] But, even if this
purchase
Page 361 U. S. 191
of securities might, under other circumstances, violate § 10 of
the Clayton Act, Congress, by § 5(11) of the Interstate Commerce
Act, has authorized the Commission to approve it if it finds that
so doing is in the public interest. And Congress has expressly said
that, upon such approval, the carrier shall be relieved "from the
operation of the antitrust laws. . . ." A contrary view would, in
effect, permit the Commission to authorize only those stock
purchases which would not, in the absence of § 5(11), offend the
antitrust laws.
"As has been said, this would render meaningless the exemption
relieving the participants in a properly approved [acquisition] of
the requirements of those laws. . . ."
McLean Trucking Co. v. United States, supra, at
321 U. S.
86.
Here, the Commission fully considered the contracts under which
the Pennsylvania proposes to acquire a 50% interest in the Western
stock and all other factors bearing on that matter, and, after
doing so, approved them. That action by the Commission did not
exceed the statutory limits within which Congress has confined its
discretion.
Minneapolis contends that § 5(11) operates only
in
futuro, and confers "no authority to purge the taint of a
transaction illegal at the time it was brought to the Commission."
Whether there is merit in that contention, as a legal abstraction,
we need not decide, for here the existing contractual arrangements
through which Pennsylvania asks authority to acquire 50% of the
Western stock look entirely to the future. Neither the stock sale
and purchase contract between the trustees and the Santa Fe nor the
one between the Santa Fe and the Pennsylvania
Page 361 U. S. 192
Company is a consummated transaction, but each is expressly
subject to, and will become effective only upon, approval by the
Commission. Apart from criminal prosecutions, with which we are not
here concerned, it seems plain that approval of an acquisition by
the Commission operates under § 5(11), as that section says, to
relieve the acquiring carrier "from the operation of the antitrust
laws. . . ."
Appellants next contend that the Commission violated § 8(b) of
the Administrative Procedure Act by failing to make findings which,
they think, were compelled by the evidence.
There can be no doubt that the Administrative Procedure Act
applies to proceedings before the Commission,
Riss & Co. v.
United States, 341 U.S. 907,
and see Chicago & Eastern
Illinois R. Co. v. United States, 344 U.S. 917.
The last sentence of § 8(b) provides:
"All [administrative] decisions . . . shall become a part of the
record and include a statement of (1) findings and conclusions, as
well as the reasons or basis therefor, upon all the material issues
of fact, law, or discretion presented on the record, and (2) the
appropriate rule, order, sanction, relief, or denial thereof.
[
Footnote 14]"
Upon the basis of that language, appellants argue that the
Commission should have found that the price which the Santa Fe
agreed to pay for the Western stock of $135 per share was
excessive. Though the Commission made no express finding upon that
matter, it did discuss it, pointing out that the certified value of
Western's properties for ratemaking purposes was more than
$13,500,000; that it has no outstanding preferred stock, and is
relatively free of debt; that it has a fine earning record; that
the transaction was at arm's length; that Minneapolis had
Page 361 U. S. 193
offered $133 per share for the stock within a few days of the
time when the Santa Fe contracted for its purchase at $135 per
share, and that the Minneapolis sought authority in this proceeding
to acquire the stock at the same price. The Commission concluded
that, if $135 per share was a fair price for the one, it was also
for the other.
Appellants challenge the Commission's failure to make a number
of other subsidiary findings, all of which have been considered,
but we find that they relate to contentions that are so collateral
or immaterial that the law did not require specific findings upon
them. By the express terms of § 8(b), the Commission is not
required to make subordinate findings on every collateral
contention advanced, but only upon those issues of fact, law,
or
Page 361 U. S. 194
discretion which are "material." From a thorough examination of
the record, we are persuaded that the Commission has made adequate
subsidiary findings upon all material issues and has made the
ultimate findings required by § 5(2), that they support the
Commission's order, and are, in turn, supported by substantial
evidence.
Finally, appellants contend that the District Court, because of
inadequate subsidiary findings by the Commission, was unable to, or
at least did not, afford them a proper judicial review, and merely
"rubber-stamped" the Commission's order. Whether or not we approve
all of the reasons and legal conclusions of the District Court, it
is clear that it fairly considered and decided all of the issues
raised by appellants, accorded to them a full and fair judicial
review, and reached a right result. Accordingly, the judgment
is
Affirmed.
MR. JUSTICE DOUGLAS dissents.
* Together with No. 27,
South Dakota et al. v. United States
et al., and No. 28,
Minnesota et al. v. United States et
al., also on appeals from the same Court.
[
Footnote 1]
Section 5(2) of the Interstate Commerce Act (24 Stat. 30, as
amended, 54 Stat. 905, 49 U.S.C. § 5(2)) provides, in pertinent
part, that:
"(a) It shall be lawful, with the approval and authorization of
the Commission, as provided in subdivision (b) of this paragraph --
"
"(i) for . . . two or more carriers jointly, to acquire control
of another through ownership of its stock or otherwise. . . ."
"
* * * *"
"(b) Whenever a transaction is proposed under subdivision (a) of
this paragraph, the carrier . . . seeking authority therefor shall
present an application to the Commission, and thereupon the
Commission shall notify . . . [designated parties], and shall
afford reasonable opportunity for interested parties to be heard.
If the Commission shall consider it necessary in order to determine
whether the findings specified below may properly be made, it shall
set said application for public hearing, and a public hearing shall
be held in all cases where carriers by railroad are involved unless
the Commission determines that a public hearing is not necessary in
the public interest. If the Commission finds that, subject to such
terms and conditions and such modifications as it shall find to be
just and reasonable, the proposed transaction is within the scope
of subdivision (a) of this paragraph and will be consistent with
the public interest, it shall enter an order approving and
authorizing such transaction, upon the terms and conditions, and
with the modifications, so found to be just and reasonable . . .
."
"(c) In passing upon any proposed transaction under the
provisions of this paragraph, the Commission shall give weight to
the following considerations, among others: (1) the effect of the
proposed transaction upon adequate transportation service to the
public; (2) the effect upon the public interest of the inclusion,
or failure to include, other railroads in the territory involved in
the proposed transaction; (3) the total fixed charges resulting
from the proposed transaction, and (4) the interest of the carrier
employees affected."
"(d) The Commission shall have authority in the case of a
proposed transaction under this paragraph involving a railroad or
railroads, as a prerequisite to its approval of the proposed
transaction, to require, upon equitable terms, the inclusion of
another railroad or other railroads in the territory involved, upon
petition by such railroad or railroads requesting such inclusion,
and upon a finding that such inclusion is consistent with the
public interest."
"
* * * *"
"(f) As a condition of its approval, under this paragraph, of
any transaction involving a carrier or carriers by railroad subject
to the provisions of this chapter, the Commission shall require a
fair and equitable arrangement to protect the interests of the
railroad employees affected. . . ."
[
Footnote 2]
The term "bridge carrier" appears to mean a short-line carrier
which transports through traffic from one long-line carrier to
another.
[
Footnote 3]
During the negotiations, Minneapolis first offered $69.50, and
later $80, per share for the stock. On April 15, 1955, the Santa Fe
and Pennsylvania each obtained letter commitments from the trustees
for the sale to each of them of 26% of the Western stock at a price
of $100 per share. (Near the same time the Rock Island made a like
offer to the trustees for 26% of the Western stock, but that offer
was not accepted.) But a dispute arose -- and apparently still
exists between the trustees and Pennsylvania -- with respect to the
validity of those commitments. Thereupon, Minneapolis offered the
trustees $133 per share for the Western stock, but that offer was
not accepted, and, on May 26, 1955, the Santa Fe, acting, as the
Commission found, "on behalf of that carrier alone," agreed with
the trustees for the sale by the latter and purchase by the former
of all the Western stock held by the trustees at a price of $135
per share, and those parties on that date entered into a contract,
accordingly, subject to approval of the Commission.
[
Footnote 4]
The contract of June 28, 1955, between the Santa Fe and the
Pennsylvania Company provided that it was without prejudice to any
claims, causes of action, or rights which Pennsylvania may have
against the trustees of the McNear estate with respect to the
letter commitment of April 15, 1955, for the sale by the trustees
to Pennsylvania of 26% of the Western stock, and that, in the event
Pennsylvania should acquire from the trustees, under that letter
commitment, all or any part of such shares, the obligation of the
Santa Fe under the contract to sell Western shares to the
Pennsylvania Company was to be reduced accordingly. It appears that
litigation was then, and is yet, pending by Pennsylvania against
the trustees for the enforcement of the letter commitment of April
15, 1955.
The contract also contained a covenant which, in essence,
provided that (1) Western
"will continue to be operated as a separate and independent
carrier with responsible management located along its lines in
order to preserve to shippers and communities the present direct
access to its officials,"
(2) that Western's properties will be maintained and improved,
(3) that Western
"will continue to maintain its own solicitation forces and will
be entirely free to solicit traffic in such manner as best to serve
the interests of"
Western, (4) that all
"existing routes and channels of trade via [Western] will be
maintained and kept open without discrimination between connecting
lines of railroad,"
and (5) that the Board of Directors of Western shall consist of
11 members, of whom one shall be the president of the company, two
shall be officers of the Santa Fe, two shall be officers of the
Pennsylvania Company, or Pennsylvania, or both, and the remaining
six shall be prominent citizens not connected with either of the
parties but selected by them through mutual agreement.
[
Footnote 5]
See note 1
[
Footnote 6]
[
Footnote 7]
The Chicago, Burlington & Quincy Railroad Company
("Burlington") and the Wabash Railroad Company ("Wabash") did not
object to approval of the Santa Fe-Pennsylvania application,
provided the order required continuation of present routes and
channels of trade via existing junctions and gateways and of all
existing traffic and operating relations and arrangements, but they
asked, in the event any railroad other than the Santa Fe and
Pennsylvania be authorized to acquire an interest in Western's
stock, that they, too, be authorized to participate therein to the
same extent as any such other railroad.
The Illinois Central Railroad Company ("Illinois Central"), the
Gulf, Mobile & Ohio Railroad Company ("Gulf") and the Chicago
& North Western Railway Company ("North Western") asked that,
if either application be approved, the order be conditioned to
require the maintenance of all routes and channels of trade via
existing gateways. The Monon Railroad Company asked that, if the
Santa Fe-Pennsylvania application be approved, the order contain a
requirement that Pennsylvania shall grant to it certain trackage
rights, and, if not done, that the Santa Fe-Pennsylvania
application be denied.
[
Footnote 8]
See notes
6 and |
6 and S. 173fn7|>7.
[
Footnote 9]
49 U.S.C. n. preceding § 1, 54 Stat. 899.
[
Footnote 10]
15 U.S.C. § 1, 26 Stat. 209.
[
Footnote 11]
15 U.S.C. § 18, 38 Stat. 731.
[
Footnote 12]
It is clear that § 10 of the Clayton Act is included in the
"antitrust laws" referred to in § 5(11) of the Interstate Commerce
Act. Section 1 of the Clayton Act, 15 U.S.C. (1952 ed.) § 12,
provides that "
Anti-Trust laws,' as used in sections 12, 13,
14-21, and 22-27 of this title, includes sections 1-27 of this
title." Moreover, § 5(11) avoids any ambiguity by including "all
other restraints, limitations, and prohibitions of law, Federal,
State, or municipal."
[
Footnote 13]
The legislative history of § 10 of the Clayton Act, though
meager, supports the view stated in the text. In fact, the language
of the several drafts of § 10, together with the types of abuses
cited in support of its enactment, suggests strongly that the words
"dealings in securities" were intended to cover only a carrier's
dealings with related persons in its own securities.
See
H.R.Rep. No. 627, 63d Cong., 2d Sess., p. 3; S.Rep. No. 698, 63d
Cong., 2d Sess., pp. 4748; S.Doc. No. 585, 63d Cong., 2d Sess., pp.
8-9; 51 Cong.Rec. 15943.
[
Footnote 14]
60 Stat. 242, 5 U.S.C. § 1007(b).