New York Trust Co. v. Securities and Exchange Com.
| Decision Date | 12 November 1942 |
| Docket Number | No. 6.,6. |
| Citation | 131 F.2d 274 |
| Parties | NEW YORK TRUST CO. et al. v. SECURITIES AND EXCHANGE COMMISSION et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Humes, Buck, Smith & Stowell, of New York City (Ben LeRoy Stowell, of New York City, of counsel), for petitioners.
Donald R. Richberg, of Chicago, Ill., Park Chamberlain, of New York City, and John Dern, of Chicago, Ill. (Davies, Richberg, Beebe, Busick & Richardson, of Washington, D. C., and Sidley, McPherson, Austin & Burgess, of Chicago, Ill., of counsel), for United Light & Power Co.
Chester T. Lane, Gen. Counsel, of Washington, D. C., John F. Davis, Asst. Gen. Counsel, of Washington, D. C., Homer Kripke, Sp. Counsel, of Philadelphia, Pa., Roger Foster, Counsel to Public Utilities Division, of Washington, D. C. (Theodore L. Thau, of Washington, D. C., and Aaron Levy, of New York City, of counsel), for Securities and Exchange Commission.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
This petition to review an order of the Securities and Exchange Commission made under the Public Utility Holding Company Act of 1935, 15 U.S.C.A. §§ 79, 79a et seq. was brought by the trustee under two debenture agreements of the United Light and Power Company, and by certain holders of the debentures of that company. The order denied the right claimed by the debenture holders to be paid, upon the dissolution of the corporation under a plan approved by the Commission, a premium in addition to the principal and accrued interest on the bonds.
The corporation, which will herein be called Power, is a registered holding company at the top of a system comprising fifty-two companies of which seven are themselves registered holding companies. Its position in this set-up was established previous to the effective date of the above mentioned statute now to be referred to as the Act, and after that took effect the Commission in due course and on March 20, 1941, entered an order under § 11(b) (2) requiring the liquidation and dissolution of Power. This order has become final. Power has undertaken to comply with it and in so doing has made various applications to the Commission for approval of proposed steps to that end with the result that it has ample funds to pay all of its obligations whether or not the premiums here involved are payable.
The order now on review was made upon the application of Power to the Commission for approval of a plan providing inter alia for the retirement by the payment of principal and accrued interest only of debenture bonds on dates, far in advance of maturity, as of which Power, had it exercised an option it had in the debenture agreements to call the bonds, would have had to pay a premium of nine per cent. The sole issue now is whether the petitioners are entitled to the same premium which would have been payable upon a call by the corporation.
Much of the elaborate argument of the petitioners becomes irrelevant when once it is realized that the order of March 20, 1941 requiring the liquidation and dissolution of Power was not only clearly within the scope of the statute under which the Commission acted and justified by the facts but having become final has thereby become the fixed point from which to survey the right they now claim. It was the duty of the Commission under § 11(b) (2), (d) and (e) of the Act to supervise the carrying out of its order of dissolution and to that end it properly entertained applications for its approval of the steps proposed to be taken. How these bonds should be dealt with was one of the questions requiring decision and as such was clearly within the proper scope of a plan to be submitted to the Commission under above subsection (e). The petitioners argue that even so the Commission was powerless to find as the subsection required that the payment of the bonds was "necessary to effectuate the provisions of subsection (b)" if there were alternative ways to dispose of the bonds upon dissolution of the issuing corporation. They suggest that such an alternative would have been to require the holding company to be left at the top of the system to assume them. We need not, however, discuss the virtues or the opposite of that suggestion. Obviously Congress gave the Commission the power, subject to the review provided for its orders, to decide what was necessary in each instance to effectuate the provisions of subsection (b). It is quite as obvious...
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