PUBLIC UTILITIES COM'N v. Capital Transit Co.

• Decision Date: 07 May 1954
• Docket Number: No. 12145.,12145.
• Citation: 214 F.2d 242,94 US App. DC 140
• Parties: PUBLIC UTILITIES COMMISSION OF DISTRICT OF COLUMBIA v. CAPITAL TRANSIT CO. et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

94 US App. DC 140, 214 F.2d 242 (1954)

PUBLIC UTILITIES COMMISSION OF DISTRICT OF COLUMBIA v. CAPITAL TRANSIT CO. et al.

No. 12145.

United States Court of Appeals District of Columbia Circuit.

Decided May 7, 1954.

Petition for Rehearing Denied May 20, 1954.

COPYRIGHT MATERIAL OMITTED

Mr. Lloyd B. Harrison, Asst. Corp. Counsel for the District of Columbia, for appellant. Messrs. Vernon E. West, Corp. Counsel, Chester H. Gray, Principal Asst. Corp. Counsel, and Lyman J. Umstead, Asst. Corp. Counsel, also entered appearances for appellant.

Mr. Edmund L. Jones, Washington, D. C., for appellee Capital Transit Co. Messrs. George E. Monk and Merle Thorpe, Jr., Washington, D. C., also entered appearances for appellee Capital Transit Co. Mr. George E. Hamilton, Washington, D. C., for appellee Union Trust Co. of District of Columbia. Mr. William A. Glasgow, Washington, D. C., also entered an appearance for appellee Union Trust Co. Mr. Hugh H. Obear, Washington, D. C., for certain stockholders, appellees. Mr. Godfrey L. Munter, Washington, D. C., for certain bondholders, appellees.

Before EDGERTON, WILBUR K. MILLER and FAHY, Circuit Judges.

Petition for Rehearing in Banc Denied May 20, 1954.

FAHY, Circuit Judge.

On February 26, 1954, the Public Utilities Commission of the District of Columbia, appellant, by Order No. 4060, instituted an investigation into certain aspects of the operations of the Capital Transit Company, principal transportation utility in the District of Columbia. The Company operates under a Congressional franchise and is subject to detailed regulation in accordance with the provisions of Title 43 and Chapter 2 of Title 44, D.C.Code, 1951. The order of the Commission recited that the investigation would cover the action of the Company in transferring approximately $4,000,000 to the Union Trust Company for call of its bonds, the proposed distribution to stockholders of certain nontransit properties, the dividend policies and financial practices of the Company, and the adequacy of depreciation reserves and of provisions for future adverse contingencies. On February 27 the Commission filed its complaint in the District Court praying that (1) the payment on April 1, 1954, of a proposed quarterly dividend declared February 25, amounting to 40 cents per share, or $384,000, and (2) the redemption of all the Company's outstanding bonds, involving a disbursement of $3,910,277.17, be temporarily enjoined,

"* * * until the Public Utilities Commission has completed its investigation authorized by it on February 26, 1954, relating to the declaration and payment of dividends and the call for redemption of the said bonds."¹

A temporary restraining order was issued and the case came before the District Court on the Commission's application for a preliminary injunction. After a full hearing the court issued its findings of fact and conclusions of law and denied a preliminary injunction, whereupon the Commission appealed to this court as authorized by 28 U.S.C. § 1292.

The Commission applied to us for an injunction pending the appeal.² We neither granted it as prayed nor denied it altogether, but enjoined the Company and other appellees³ until April 26, 1954, extended thereafter to May 7, 1954, from going forward with the bond redemption and dividend payment, and requested the Commission to file a report with us on or before April 19, 1954, of whatever facts it had ascertained which might bear upon the injunction. The appellees were requested to reply to such report as early as possible.^*

Our authority thus to enjoin appellees until May 7, 1954, is clear. Rule 62(g), Fed.Rules Civ.Proc., 28 U.S.C., makes plain that other provisions of Rule 62 which recognize the authority of the District Court to grant relief pending an appeal,

"* * * do not limit any power of an appellate court * * * to suspend, modify, restore, or grant an injunction during the pendency of an appeal or to make any order appropriate to preserve the status quo or the effectiveness of the judgment subsequently to be entered."

This Rule, read with 28 U.S.C. § 1651, formerly § 377, known as the All Writs Statute, amply supports the authority we exercised. In Scripps-Howard Radio v. Federal Communications Commission, 316 U.S. 4, 9, 62 S.Ct. 875, 879, 86 L.Ed. 1229, it is said,

"No court can make time stand still. The circumstances surrounding a controversy may change irrevocably during the pendency of an appeal, despite anything a court can do. But within these limits it is reasonable that an appellate court should be able to prevent irreparable injury to the parties or to the public resulting from the premature enforcement of a determination which may later be found to have been wrong. It has always been held, therefore, that as part of its traditional equipment for the administration of justice, a federal court can stay the enforcement of a judgment pending the outcome of an appeal. * * *"⁴

The Court referred to the power as one "as old as the judicial system of the nation." 316 U.S. at page 17, 62 S.Ct. at page 883.

Our power being clear there remained the question whether it should be exercised, at least in part. Two principal reasons prompted us to do so, Circuit Judge Miller dissenting. The first was that otherwise the case would have become moot and our jurisdiction to review the order of the District Court would have been destroyed. We would have been confronted with a fait accompli because of the proposed timing of the bond redemption and dividend program. The appeal must be insubstantial indeed to cause us to stand aside and let the mere passage of a few days oust our jurisdiction of an appeal which has been brought to us. In the second place, the moving party in the litigation was the Public Utilities Commission of the District of Columbia, a governmental agency clothed by Congress with special responsibility in the matters involved.⁵ The Commission sought the assistance of the courts to obtain time to investigate matters directly related to the actions of appellees sought to be enjoined. Resort to the District Court for this purpose did not transfer to the court the Commission's own administrative responsibility of investigation and decision, which it had been unable fully to perform. In this situation, after balancing the equities on each side, discussed later in connection with our final decision, a compelling case was made for this court to preserve the status quo for a limited time. The findings of fact and conclusions reached by the court below were not at this point in the proceedings required to be accepted by us under the "clearly erroneous" or any other rule.⁶ The granting or withholding of relief pending appeal turned primarily upon other factors. These were the probability of mootness, a regard for the responsibility of the Commission, and the absence of likelihood of significant injury to private as compared with public interests by reason of some delay. Scripps-Howard Radio v. Federal Communications Commission, supra, 316 U.S. at page 15, 62 S.Ct. 875; Yakus v. United States, 321 U.S. 414, 440-441, 64 S.Ct. 660, 88 L.Ed. 834. We accordingly entered our order of March 29, 1954, with its request that the Commission make a report by April 19, the appellees to reply as soon as possible. This was not designed to retry the factual issues in this court. However, additional factual data were acceptable on the separate application to us for relief pending appeal. It is common practice to receive additional information on such an application, in the form of affidavits or otherwise. That the information we invited was to come in part from the Commission as a result of its investigation did not render it less acceptable.

All parties have consented that we now finally dispose of the appeal, which obviates the need for further consideration of relief during its pendency. We accordingly come to the issue whether denial by the District Court of a preliminary injunction was erroneous, in whole or in part.

The complaint alleges that the Company has deposited with the Union Trust Company $3,797,000, plus call premium and accrued interest, making a total of $3,910,277.17, for the purpose of redeeming its bonds. Under the Indenture of Mortgage securing these bonds the Company may not, while any of the bonds are outstanding, pay a dividend on its common stock except from earned surplus accumulated subsequent to November 30, 1944, plus $120,000 accumulated prior thereto. All other is restricted. As of January 31, 1954, the remaining unrestricted earned surplus was only $89,536. That held under the Indenture restriction, however, was $3,153,721. The quarterly dividend declared February 25, 1954, to be paid April 1, amounted to $384,000, far more than the available unrestricted surplus from which it could be paid. It was necessary therefore to free the restricted surplus, $3,153,721, if the dividend was to be paid. This could be accomplished only by redeeming all the bonds, and the Company decided to do so.

In determining now whether we should require this proposed program to be enjoined beyond May 7, 1954, we are confronted with the fact that the special tribunal created by Congress with primary responsibility for the regulation of the Transit Company in the public interest has not completed its investigation into whether or not this program can be carried out consistently with the Company's legal obligations. The courts should be reluctant to take action which would deprive the Commission of opportunity to perform its function under governing statutes.⁷ On the other hand, unless the Commission has shown some likelihood that the Company's conduct might interfere with its ability to meet its legal obligations, the courts should stand aside and permit management to carry out its decision. In deciding between these courses we must consider also the possible harm to appellees of further judicial restraint, and compare it with the...