tion does not stand up. The two cases D.C.S.D.N.Y., 64 F.2d 122, affirmed on which it relies are Weinstein-Con- 287 U.S. 12, 53 S.Ct. 45, 77 L.Ed. 138, trol-Capital Transit & Montgomery Bus stands for the proposition that, where Lines, supra, and Seaboard Airline Ry. a parent corporation which has thereCo. Receivership, 261 I.C.C. 689. It is tofore controlled a subsidiary by virsaid that the former relates to a motor tue of stock ownership modifies that carrier and motor carriers in order to form of control by entering into a lease obtain a certificate of public convenience of the properties of the subsidiary, the and necessity under §§ 306-307 must be transaction constitutes an acquisition of found "fit, willing and able properly to control within the terms of Interstate perform the service proposed" whereas Commerce Act, § 5(3), 49 U.S.C.A. § there is no such requirement in the case 5(3). Suffice it to say that in the New of rail carriers. This observation is York Central Securities case the court true but irrelevant. The holding in the dealt with section 5(2) of the TransporWeinstein case was in no sense based up- tation Act of 1920, 49 U.S.C.A. § 5(2), on §§ 306 and 307. The only section which did not distinguish between transunder discussion was the same one be- actions which did and did not constitute fore us now, § 5(2). Similarly, an at- acquisitions of control. tempt is made to distinguish the Seaboard case because one of its subsidiaries was a water carrier. This fact may be true, but again that was in no way the basis for the I.C.C. determination and it is not commented on in connection with the holding that acquisition of control of a previously combined system required I.C.C. approval under § 5(2). An additional case supporting the need for this finding is Arkansas & L. M. Ry. Co. Control, 282 I.C.C. 254, Division 4, (Mahaffie, Rogers and Mitchell). In that case a corporation acquired four small rail carriers previously owned directly or indirectly by the selling corporation. Its acquisition was held to require I.C.C. approval. (p. 260). Further the individuals who, by a voting trust, controlled the acquiring corporation were also held to be in indirect control of the four carriers and therefore approval of their acquisition was necessary. (p. 263). On Motion for Reargument. Defendants Baker Weeks & Co. et al. have moved for reargument of this case. Only one of the points raised in the elaborate brief submitted in support of the motion requires comment. The earnestness with which defendants' position is advanced leads us to take note of it. It is said that New York Central Securities Corp. v. United States, [20] The statute here involved, Interstate Commerce Act, § 5(2), 49 U.S. C.A. § 5(2), draws just that distinction and classifies transactions between those which are mere mergers, leases, etc. and those which involve the acquisition of control. It is only those transactions which involve the acquisition of control which may form the basis for an order under section 5(3) that a person not a carrier shall be considered as a carrier. The motion for reargument is denied. On Motion for New Trial. This is a motion by defendant Alleghany Corporation to set aside a judgment and for a new trial upon the strength of evidence newly presented to the court. [21] The assailed judgment, among other things, set aside (a) orders of the Interstate Commerce Commission insofar as they determined that Alleghany Corporation was in control of the New York Central Railroad and insofar as they determined that Alleghany Corporation should be considered as a carrier subject to the provisions of section 20(1) to (10), inclusive, and section 20a (2) to (11), inclusive, of the Interstate Commerce Act, 49 U.S.C.A. §§ 20(1-10), 20a (2-11), and (b) orders of the I.C.C. authorizing issuance of 6% convertible preferred stock, As a ground for our 42560 0-59- 39 conclusion of the invalidity of the determination that Alleghany Corporation should be considered as a carrier, we pointed out that the action of the I.C.C. relied upon as having that effect was the approval of a merger of the Louisville & Jeffersonville Bridge & Railroad Co. into the Cleveland, Cincinnati, Chicago and St. Louis Railway Company, known as "the Big Four". These two carriers were already controlled by the New York Central. In turn Alleghany claimed that it controlled the New York Central. Alleghany was not actually a carrier but sought status as a carrier by virtue of Interstate Commerce Act, § 5(3), 49 U.S.C.A. 5(3), which provides that, whenever a person which is not a carrier is authorized, by an order entered under paragraph (2) of the same section to acquire control of a carrier or carriers, "such person thereafter shall, to the extent provided by the Commission in such order, be considered as a carrier ✶ ✶ We held that, since the I.C.C. approved only a merger of carriers already controlled by a single parent, no acquisition of control was involved and the I.C.C. had no jurisdiction, by virtue of its approval of the merger, to provide that Alleghany should be considered as a carrier. Since the I.C.C.'s power to authorize the issuance of the preferred stock de pended upon the existence of a valid order authorizing Alleghany to acquire control of a carrier or carriers and providing that it be considered as a carrier, we set aside the orders authorizing the issuance of the preferred stock. The matter which Alleghany now, for the first time, presents to us as a basis for setting aside our judgment is an order of the I.C.C. in Boston and Albany Railroad Company et al., Control, Finance Docket 18789, decided March 22, 1955. That proceeding, it is said, involved new acquisition of subsidiaries of the New York Central, rather than mere merger, so that an order authorizing that acquisition might validly have provided that Alleghany should be considered as a carrier. The order actually en tered contained no such provision. It was, however, entered prior to the orders authorizing the issuance of the preferred stock so that, as far as chronology is concerned, it might have lent support to the I.C.C.'s power to make those orders of approval. While the cause of the omission from the Boston and Albany order of a provision that Alleghany should be considered as a carrier may perhaps have been the belief of the I.C.C. that there was a valid outstanding order to that effect in the proceeding here under review, that does not alter the fact that the Boston and Albany order contained no such provision. Without a direction that the non-carrier shall be considered as a carrier the authorization of the acquisition of a carrier does not create that status. Section 5(3) merely provides that the authorization shall create that status "to the extent provided by the Commission in such order". The plain meaning of the statute that, no matter how eligible may be the controlling corporation, status as a carrier shall be conditioned on a provision to that effect in the order, has been recognized by the I.C.C. In Warrior & Gulf Nav. Co. Control, 250 I.C.C. 26, the I.C.C. says in so many words, p. 28, that the United States Steel Corporation, by the transaction authorized, "unquestionably will acquire control of the company"; it nevertheless concludes, p. 32, that it will not include any provision that the steel corporation shall be considered as a carrier since it perceives no reason for its regulation under the Interstate Commerce Act. Thus the Boston and Albany order gave no validity to any of the orders set aside by our judgment. If the judgment was correct in the light of the information before us when it was rendered, it is still correct. The existence of the Boston and Albany order in its present form does not change the legal situation. We presume that what we are really asked to do is to vacate our judgment and hold proceedings in abeyance while Alleghany applies to the I.C.C. for an amendment of the Boston and Albany order so as to contain a direction that Alleghany shall be considered as a carrier. Even if such an amendment should be obtained, nothing would be settled since, for example, difficult questions would arise as to the effect of such an amendment on proceedings taken before its accomplishment. We are advised that a prompt appeal to the Supreme Court is contemplated and our view is that the ends of justice will be better served by an immediate and authoritative determination of the questions raised in the existing record than by a delayed and doubtful nunc pro tunc repair job. There remains the possibility that Alleghany may wish to take, concurrently with the appeal, proceedings in the Boston and Albany case before the I.C.C. in order to obtain determinations there that Alleghany is in control of New York Central and that that control is in the public interest. Henry A. C. SAGGAU, Plaintiff, V. Philip YOUNG et al., Defendants. United States District Court Action to review plaintiff's removal from position of postmaster by Post Office Department. On defendant's motion for summary judgment, the District Court, McGarraghy, J., held that plaintiff having received a hearing by Civil Service Commission pursuant to statutes and pursued his remedy on appeal to Commission's Board of Appeals and Review, which sustained Department's action, District Court could not examine merits of grounds for his removal, and that plaintiff not being deprived of his rights under constitution, Administrative Procedure Act, Performance Rating Act, or Veterans' Preference Act, had no claim as matter of law. Motion granted, We express no view as to the propriety of such a course. It may be that the Boston and Albany case does not really involve an acquisition of control or that there are other reasons which render the course improper or impracticable. We 1. Officers →72(2) do emphasize, however, that if authorization of Alleghany's control of Central is to be considered in connection with the Boston and Albany case that proceeding must be so conducted that this issue is not subordinated. This means that applications to intervene, pleadings, testimony, and findings with respect to this issue must receive the same full consideration which would be given if it were the sole application before the Commission. Alleghany moves in the alternative that the judgment be amended so as to lift the prohibition therein contained against the carrying out of the offer to exchange the new preferred stock. We see no reason for modifying the decision which we reached after careful consideration of all of the arguments now advanced. Both motions are denied. Post Office Department's and Civil Service Commission's administrative determinations, sustained by Commission's Board of Appeals and Review, that a postmaster's removal would promote efficiency of postal service, as contemplated by Veterans' Preference Act, are not subject to judicial review. Veterans' Preference Act of 1944, § 1 et seq., 5 U.S.C.A. § 851 et seq. 2. Officers —72(2) Courts cannot pass on a person's qualifications for government position nor weigh merits of his claim thereto, and judicial relief from administrative determinations, such as Post Office Department's and Civil Service Commission's decisions, sustained by substantial evidence, that a postmaster should be removed to promote efficiency of postal service, as contemplated by Veterans' Preference Act, will not be granted, in ALLEGHANY CORPORATION ET AL. v. NO. 36. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.* Argued January 23-24, 1957.-Decided April 22, 1957. In a suit by appellees, who are minority common stockholders of Alleghany Corporation (an investment company), a three-judge District Court set aside orders of the Interstate Commerce Commission granting Alleghany the status of a non-carrier to be "considered as a carrier" under §§ 5 (2) and 5 (3) of the Interstate Commerce Act and approving Alleghany's issuance of new preferred stock convertible into common stock. It also enjoined Alleghany from issuing the new preferred stock. The Commission's orders were based on its holding that Alleghany, being in control of the New York Central Railroad, needed Commission approval under §5 (2) to merge one subsidiary of the New York Central into another. Held: 1. As common stockholders whose equity might be "diluted" by the issuance of the new preferred stock, appellees had sufficient financial interest to give them standing to sue to set aside the Commission's orders. Pp. 159-160. 2. Since the Commission's order conferring on Alleghany the status of a non-carrier to be "considered as a carrier" gave the Commission jurisdiction to approve the preferred stock issue, appellees could attack that order. P. 160. 3. The Commission had jurisdiction over Alleghany under §§ 5 (2) and 5 (3). Pp. 160-172. (a) It is unnecessary to decide whether Commission approval of acquisition of control of a single integrated railroad system is required; if Alleghany in fact controlled Central, that was sufficient to meet the statutory requirement of "a person which is not a carrier and which has control of one or more carriers." Pp. 161-162. *Together with No. 82, Baker, Weeks & Co. et al. v. Breswick & Co. et al., and No. 114, Interstate Commerce Commission v. Breswick & Co. et al., also on appeals from the same court. (b) The Commission's findings amply support its conclusion that "control" of Central was in Alleghany. Pp. 162-165. (c) The Commission was justified in finding that the merger of one of Central's subsidiaries into another involved an "acquisition of control" of a "carrier" by Central and Alleghany within the meaning of § 5 (2). Pp. 165-171. (d) The failure to join two stockholders alleged to control Alleghany did not oust the Commission of jurisdiction. 172. Pp. 171 4. Appellees were not entitled to a hearing in the proceedings in which the Commission approved the merger of two of Central's subsidiaries and granted Alleghany the status of a non-carrier to be "considered as a carrier" under § 5 (2), since they were not "interested parties" within the meaning of §5 (2) (b). Pp. 172-175. (a) The fact that appellees were common stockholders of Alleghany is insufficient "interest," since that proceeding had no special effect on appellees and did not pose any individualized threat to their welfare. P. 174. (b) That assertion of jurisdiction by the Commission would deprive appellees of the benefits of the Investment Company Act of 1940 did not give them sufficient "interest" in that proceeding. Pp. 174-175. 5. Appellees' claim that they were entitled to a hearing in the preferred stock proceeding is governed by § 20a (6), which provides that "The Commission may hold hearings, if it sees fit, to enable it to determine its decision on application for authority." P. 175. 6. The judgment of the District Court is reversed and the case is remanded for consideration by the District Court of appellees' claim that the preferred stock issue, as approved by the Commission, was in violation of the Interstate Commerce Act. P. 175. 138 F. Supp. 123, reversed and remanded. Whitney North Seymour argued the cause for the Alleghany Corporation, appellant in No. 36. With him on the brief were David Hartfield, Jr., Edward K. Wheeler, Robert G. Seaks and Morton Moskin. Harold H. Levin argued the cause for Gruss et al.. appellants in No. 36. With him on the brief were Joseph M. Proskauer and Allen L. Feinstein. |