United States v. Boston and Maine Railroad

• Decision Date: 08 March 1965
• Docket Number: No. 232,232
• Citation: 13 L.Ed.2d 728,85 S.Ct. 868,380 U.S. 157
• Parties: UNITED STATES, Appellant, v. BOSTON AND MAINE RAILROAD et al
• Court: U.S. Supreme Court

380 U.S. 157

85 S.Ct. 868

13 L.Ed.2d 728

UNITED STATES, Appellant,

v BOSTON AND MAINE RAILROAD et al.

No. 232.

Argued Jan. 21, 1965.

Decided March 8, 1965.

Robert B. Hummel, Dept. of Justice, Washington, D.C., for appellant.

Edward O. Proctor, Sr., Boston, Mass., for appellees.

Mr. Justice DOUGLAS delivered the opinion of the Court.

This is a direct appeal under the Criminal Appeals Act, 18 U.S.C. § 3731, from the District Court's order dismissing Count I of an indictment (225 F.Supp. 577) for failure to state an offense under § 10 of the Clayton Act, 38 Stat. 734, 15 U.S.C. § 20. That section provides in relevant part:

'No common carrier engaged in commerce shall have any dealings in securities, supplies, or other articles of commerce, or shall make or have any contracts for construction or maintenance of any kind, to the amount of more than $50,000, in the aggregate, in any one year, with another corporation, firm, partnership, or association when the said common carrier shall have upon its board of directors or as its president, manager, or as its purchasing or selling officer, or agent in the particular transaction, any person who is at the same time a director, manager, or purchasing or selling officer of, or who has any substantial interest in, such other corporation, firm, partnership, or association, unless and except such purchases shall be made from, or such dealings shall be with, the bidder whose bid is the most favorable to such common carrier, to be ascertained by competitive bidding under regulations to be prescribed by rule or otherwise by the Interstate Commerce Commission. * * *' (Italics added.)

Count I charged that appellee railroad and the three other appellees, the road's sale on August 14, 1958, of 10 be with, the bidder whose bid is the coaches valued in excess of $50,000 to the International Railway Equipment Corp. in which the three officers had 'a substantial interest,' competitive bidding not having been used. That count charged that appellee McGinnis knowingly voted for the sale and that all three appellee officers knowingly directed the act. A bill of particulars¹ described the 'substantial interest' of those officers in the purchasing corporation as follows:

'The substantial interest of defendants McGinnis and Glacy in defendant International consisted of an understanding, agreement, relationship, arrangement and concert of action among the said defendants McGinnis, Glacy, and International, and others, for, among other things, the purpose of producing profits for International from dealings by it in property acquired from the B&M through the intervention, direction or assistance of defendants McGinnis, Glacy, and Benson, and pursuant to which defendants McGinnis, Glacy, and Benson were to and did receive substantial monies.'

The District Court held:

'The statute is limited to one who has a then present legal interest in the buying corporation and does not include one whose only interest is in the outcome of what may have been an illegal and illicit plan to siphon off for his personal benefit property of the Boston and Maine Railroad through the medium of International.' 225 F.Supp., at 578.

A criminal statute is to be construed strictly, not loosely. Such are the teachings of our cases from United States v. Wiltberger, 5 Wheat. 76, 5 L.Ed. 37, down to this day. Chief Justice Marshall said in that case:

'The rule that penal laws are to be construed strictly, is, perhaps, not much less old than construction itself. It is founded on the tenderness of the law for the rights of individuals; and on the plain principle that the power of punishment is vested in the legislative, not in the judicial department.' Id., p. 95.

The fact that a particular activity may be within the same general classification and policy of those covered does not necessarily bring it within the ambit of the criminal prohibition. United States v. Weitzel, 246 U.S. 533, 38 S.Ct. 381, 62 L.Ed. 872.

What is the reach of § 10? It is not strictly a conflict of interest statute such as we dealt with in United States v. Mississippi Valley Co., 364 U.S. 520, 81 S.Ct. 294, 5 L.Ed.2d 268. In Minneapolis & St. Louis R. Co. v. United States, 361 U.S. 173, 190, 80 S.Ct. 229, 239, 4 L.Ed.2d 223, we described § 10 as 'an antitrust law.'

Section 10, indeed, has its roots in President Wilson's message to Congress of January 20, 1914, on the subject of 'trusts,' in which he denounced the abuses of 'interlockings of the personnel of the directorates of great corporations.' 51 Cong.Rec.1962—1964; H.R.Rep.No. 627, 63d Cong., 2d Sess., pp. 17 18. Section 10 started as part of § 9 of the House bill and forbade certain types of interlocking office-holding. See S.Doc.No. 584, 63d Cong., 2d Sess., p. 10. The Senate made two main changes. First, it did not prohibit interlocking officeholding but seized rather on competitive bidding as the control. S.Rep.No. 698, 63d Cong., 2d Sess., pp. 47—48. Second, the Senate required competitive bidding not only when a director or other officer or agent of a common carrier was also a director or other officer of any firm with which the carrier had dealings to the amount of more than $50,000 in any one year, but also when the director or other officer of a common carrier had 'any direct or indirect interest in' the other firm. S.Doc.No. 584, 63d Cong., 2d Sess., p. 13. The Conference changed the phrase 'any direct or indirect interest in' to the present wording 'any substantial interest in.' Id., pp. 13 14. As Senator Chilton, one of the Conferees, reported:

'* * * It not only prevents corporations which are interlocked by officers and directors, but it says: 'Or who has any substantial interest in such of them.'

'The Senator will recall all we had before us, the ease by which interlocking directorates could be...