Dyer v. Securities and Exchange Commission

• Decision Date: 29 May 1961
• Docket Number: No. 16205.,16205.
• Citation: 289 F.2d 242
• Parties: Nancy Corinne DYER and J. Raymond Dyer, Petitioners, v. SECURITIES AND EXCHANGE COMMISSION, Respondent, Union Electric Company, Intervenor-Respondent.
• Court: U.S. Court of Appeals — Eighth Circuit

289 F.2d 242 (1961)

Nancy Corinne DYER and J. Raymond Dyer, Petitioners, v. SECURITIES AND EXCHANGE COMMISSION, Respondent, Union Electric Company, Intervenor-Respondent.

No. 16205.

United States Court of Appeals Eighth Circuit.

April 14, 1961.

Rehearing Denied May 29, 1961.

J. Raymond Dyer, St. Louis, Mo., for petitioners.

Arthur Blasberg, Jr., Atty., Securities and Exchange Commission, Washington, D. C., for respondent.

Thomas G. Meeker, Gen. Counsel, Solomon Freedman, Asst. Director, Aaron Levy, Asst. Chief Counsel, Div. of Corporate Regulation, Mahlon M. Frank-hauser, Atty., Securities and Exchange Commission, Washington, D. C., were with Arthur Blasberg, Jr., Washington, D. C., on the brief.

Robert J. Keefe, St. Louis, Mo., for intervenor-respondent, Union Electric Co.

Wm. H. Ferrell, Keefe, Schlafly, Griesedieck & Ferrell, St. Louis, Mo., were with Mr. Keefe on the brief.

Before JOHNSEN, Chief Judge, and VAN OOSTERHOUT and BLACKMUN, Circuit Judges.

JOHNSEN, Chief Judge.

The attack of petitioners on the Security and Exchange Commission's order of authorization for the solicitation of proxies by management of Union Electric Co. as to the corporation's 1957 annual meeting was before us in Dyer v. Securities and Exchange Commission, 8 Cir., 251 F.2d 512, and 287 F.2d 773.

Their attack on the proxy-solicitation order of the Commission as to the 1958 annual meeting was before us in Dyer v. Securities and Exchange Commission, 8 Cir., 266 F.2d 33.

There is now before us, under 15 U.S. C.A. § 79x(a), the attack of petitioners on the order made by the Commission in relation to the meeting of 1959. As in the two preceding cases, it is insisted that everything the Commission had authorized or directed "should be set aside in toto as being unfounded in law and in fact."

When management made filing of its declaration of proxy material for the 1959 meeting, petitioners, as they had done in the previous years, poured in a torrent of objections against it. Thirty challenges were made to the declaration. Once again, the Commission exercised its discretion to hold a hearing and allowed petitioners to participate therein.

What petitioners wanted principally to accomplish was to force management to include in its proxy material 11 resolutions, by-law amendments and amendments to articles of incorporation framed by them. One of the proposals management voluntarily agreed to allow to be so included, although it was opposed to the resolution itself. The other 10 proposals the Commission held that management was entitled to exclude from its proxy material.

Four of the excluded proposals have been the subject of decision by us against petitioners in the 1958 situation, 266 F.2d at pages 42-44. Three others had been the subject of a submission, vote and defeat at the 1957 meeting or the 1958 meeting or both. These the Commission held fell within its Rule 14A-8(c) (4) (i) and (ii), 17 CFR § 240.14a-8(c) (4) (i) and (ii), which authorizes management to refuse to include, for the next succeeding three years, any proposal which has been submitted at a meeting and has received less than 3% of the votes cast on it, or one which has been submitted a second time and has received less than 6% of the votes at that meeting.

Petitioners contend that the Commission was not at liberty in arriving at its 1959 order to accord any recognition or effect to what it had done in its 1957 and 1958 orders, or what the voting results had been at the 1957 and 1958 meetings as to any of the proposals which they were undertaking to renew. This, they assert, is so, because the Commission's 1957 and 1958 orders were then still pending on judicial review and thus the validity of the orders had not yet been finally settled.

The argument made is that the according of any recognition or effect to either of such orders in relation to the 1959 situation would violate the provision of 15 U.S.C.A. § 79x(a) that, when proceedings to review an order of the Commission have been perfected to a Court of Appeals, "such court have have exclusive jurisdiction to affirm, modify, or set aside such order, in whole or in part". The effect of this provision, however, is merely to insure that any question as to the validity or propriety of such an order is in such a situation confined to the jurisdiction of the reviewing court exclusively, by depriving the Commission during that period of the right to engage in any changing of the order, and by precluding other courts from making any determination of the validity or propriety of the order during that time through some collateral reach.

Were the provision to be construed as leaving the Commission's order without right to administrative operation and effect from the circumstance of the institution of a proceeding for review, it would be in conflict with and would render nugatory the provision of subsection (b) of 15 U.S.C.A. § 79x, that "The commencement of proceedings under subsection (a) of this section shall not, unless specifically ordered by the court, operate as a stay of the Commission's order".

We had specifically refused to grant a stay of either the 1957 order or the 1958 order of the Commission, and accordingly, notwithstanding the pendency of proceedings for their review, each of the orders was, under § 79x(b), entitled to have administrative operation and effect during the disposition of those proceedings. The Commission thus clearly could accord them such a relationship and significance, and would not be guilty of any administrative abuse in so doing, for purposes of its order as to the 1959 situation.

True, if the 1957 and 1958 orders had thereafter been reversed, that obliterating result might then become a factor in the judicial action necessary to be taken as to the consequences of such parts of the 1959 order as had been predicated on the validity allowed by § 79x(b) to be accorded to it.

But this question is not of concern here. The 1957 and 1958 orders were both upheld by us, so that all that is capable of being involved in this proceeding is the naked question, answered above, whether the according of operativeness and effect by the Commission to those orders for purposes of its 1959 order, when review proceedings were pending as to them but they were unstayed, was in itself invalid or improper administrative action.

As a matter of fact, our opinion in 266 F.2d at pages 41 and 42 undertook to put this question at rest and ought to have caused petitioners not to make renewal of it here. But from the arguments which they have made, petitioners seem to be unable to comprehend how such a holding could have been arrived at, and thus enlargement of the expression of our previous opinion has been accommodatingly engaged in for their benefit. Possibly it further may assist to understanding and acceptance by them to add the comment that, in thus permitting an unstayed order of the Commission to have administrative operation and effect, § 79x(b) is of no different legal nature than a statute which allows an unstayed judicial decree or an unsuperseded judgment to be enforced, while an appeal therefrom is pending.

Again in the present situation, as in the two cases which have preceded, we do not feel called upon or warranted to engage in a discussion of each of petitioners' numerous contentions. The three successive review proceedings which have been before us do not leave us with much hope that petitioners will come to realize, or at least acceptingly recognize, the scope of the regulatory function, judgment and discretion which has been entrusted to the Commission, under the general statutory language "as the Commission deems necessary or appropriate". In all of petitioners' review proceedings, we have particularly sought to make emphasis of the significance of this grant of authority and discretion in its relation to a matter of privilege, not an inherent stock-ownership right, such as the according of inclusion to some proposal by a stockholder in management's proxy material — which privilege has its...