Walker v. United States

Decision Date10 August 1962
Docket NumberCiv. A. No. 2864.
Citation208 F. Supp. 388
PartiesJ. W. WALKER, Plaintiff, v. UNITED STATES of America, Interstate Commerce Commission, Central Freight Lines, Inc., and W. W. Callan, Defendants.
CourtU.S. District Court — Western District of Texas

Maynard F. Robinson, Moursund, Ball & Bergstrom, W. B. Jack Ball, Henry W. Moursund, San Antonio, Tex., Dan Felts, J. Malcolm Robinson, R. Dean Moorhead, Austin, Tex., for plaintiff.

George Nokes, Waco, Tex., Roland Rice, Washington, D. C., Carl Wright Johnson, Nat L. Hardy, San Antonio, Tex., Robert A. Bicks Asst. Atty. Gen., John H. D. Wigger, Atty., Dept. of Justice, Washington, D. C., Ernest Morgan, U. S. Atty., Western Dist. of Texas, San Antonio, Tex., Robert W. Ginnane, Gen. Counsel, Leonard S. Goodman, Atty., Interstate Commerce Commission, Washington, D. C., for defendants.

Before BROWN, Circuit Judge, and RICE and INGRAHAM, District Judges.

JOHN R. BROWN, Circuit Judge.

The subject of this case is the proposed acquisition by Central1 and its principal owner and officer-director Callan2 of Express,3 a motor carrier, and two non-carrier affiliate enterprises, Cartage and W & H.4 The sellers were Walker and Hart who owned 60% and 40%, respectively, of the capital stock of these companies. The purchase price as proposed in the 1956 contracts aggregated $2 million.5

After a series of orders the Commission has granted a § 5 approval to Central and Callan for the acquisition of control of these enterprises. The sole plaintiff here is Walker, one of the two sellers. In a broad sort of way his position therefore is that the Commission may not legally approve the sale which he contracted to make. The Government and the Commission, quite understandably, attack the standing of Walker to challenge the order of the Commission approving the sale and transfer Walker proposed to make.

On the initial submission and argument to us, a very serious question arose as to just what the Commission had or had not intended. This grew out of the orders which in effect approved acquisition of Express and Cartage by Central since the acquisition (and obligation for payment) of W & H was, with Commission approval, to be made by Callan as assignee of Central. The problem then thought to be acute was whether by these orders and certain conditions imposed on Callan, the Commission in effect had simultaneously granted a § 214 approval for the issuance by Central of the promissory notes payable to Walker in part payment of the purchase price of his stock in W & H.6 This Court by brief opinion remanded the matter to the Commission for clarification and further orders. Walker v. United States, W.D.Tex., 1961, 204 F.Supp. 918.7

The Commission, pursuant to this remand, has taken further action and has, as directed by us, now certified to us two additional separate, but simultaneous, orders and reports.8 Before discussing these supplemental reports or assaying their legal significance, we think it helpful to repeat here the broad latitude we afforded the Commission in its reconsideration under our interim remand:9

"1 The matter is therefore remanded to the Commission for clarification whether the approval of the § 5 application does or does not constitute appropriate authorization under § 214 for the issuance of the promissory notes to Walker (and Hart as appropriate) as called for in the initial contracts of June 30, 1956. 2 We do not undertake to prescribe the manner in which the Commission is to conduct further proceedings except that it is requested that the matter be expedited to the maximum possible extent, and that in the supplemental orders or reports, the Commission indicate with appropriate required specifications its findings, reasons and conclusions with respect to the total amount of promissory notes payable to Walker (or Hart as appropriate) which Central is authorized under § 214 to issue. 3 In the event the Commission were to approve the issuance of promissory notes payable to Walker (or Hart as appropriate) in sums less than the aggregate called for by the initial contracts of June 30, 1956, the findings, reasons and conclusions should also cover expressly the general problem of whether there may be a § 5 approval as a proposed transaction since any such limitation on the amount of securities might mean that the transaction could not be consummated in literal compliance with the terms of the private contracts." 204 F.Supp. 921.

Insofar as the report in the so-called control case Docket MC-F-6339 is concerned, the Commission's supplemental report reflects that as a current interpretation of a prior event, the Commission holds that its approval of the assignment to Callan of Central's proposed purchase of W & H and the condition requiring Callan to furnish a surety bond against contingent liabilities on Central's part did not impliedly authorize the issuance of Central's promissory notes payable to Walker in the additional amount of $450,000.10

If the matter stood there, a considerable question might exist as to whether there was not such a marked departure from the terms of Walker's 1956 contract with Central that it would be a wholly academic thing for the Commission (or this Court in review thereof) to go through the motions of approving such a drastically revised contract as the "proposed transaction," § 5, 49 U.S.C.A. § 5. But it does not stand there. This is so because the Commission, simultaneously with its consideration of the Control Case, conducted an additional proceeding under the new Finance Docket No. 21819 (see note 8, supra) and in its simultaneous order it likewise approved the issuance by Central of the additional $450,000 promissory notes payable to Walker at times, amounts and at interest rates precisely in accord with the 1956 agreement.

This whole case — both before and subsequent to our limited remand — has been needlessly complicated by the Commission's persisting in the fiction that the "control" and the "Finance" matters are separate. We can acknowledge, of course, that as to each, different statutory requirements and principles must be satisfied. Likewise, as a matter of administrative housekeeping, it perhaps makes for a more neat and orderly disposition to segregate them by separate docket numbers. At the same time, they are one proceeding. Each must be read in the light of the other. The express deficiency of one may be overcome by the express or implied conclusions of the other and, conversely, the express grant in one might be markedly affected by an implied condition in the other. Thus, issuance of a § 5 approval of the "proposed" transaction necessarily has to take into account the method of financing. On the other hand, approval of the issuance of securities in a § 214, 49 U.S.C.A. § 314 finance proceeding necessarily takes into account the occasion (i. e., necessity) for such financing. Each is interdependent. Each is interlocked.

And whatever might be the treatment to be accorded this segregation of dockets in the normal situation (either on a statutory review or while pending before the Commission for administrative action), the terms of our remand to the Commission obviously contemplated that the Court was seeking guidance and direction from this expert body on whether the transaction as a whole was or was not presently approved. The language used by us in sentence 1 does speak in terms of "clarifying" whether the existing order or orders now constitute appropriate authorization. But it is plain by sentence 2 that three things were contemplated. First, it was recognized that the Commission had to hold further proceedings. As to these we disclaimed any purpose "to prescribe the manner in which the Commission is to conduct further proceedings," 204 F.Supp. 921. Second, we recognized that its action might be in several papers as we referred to "the supplemental orders or reports" which the Commission would issue. Third, and of more importance, we expressly required that "the Commission indicate with appropriate required specifications its findings, reasons and conclusions with respect to the total amount of promissory notes payable to Walker * * * which Central is authorized under § 214 to issue." 204 F.Supp. 921. We italicize the word "is" to emphasize that we were seeking current, contemporary determination by the Commission. We were not concerned merely with previous determinations. The issue was squarely presented to us: what notes, if any, has the Commission authorized Central to issue to Walker for W & H stock? We needed, and we sought, determination of that precise problem by the Commission. Moreover, our order invested it with adequate authority to undertake such proceedings as in the Commission's judgment might be required. This is made doubly clear by the terminology of sentence 3 which in terms of futurity spoke of "in the event the Commission were to approve the issuance of promissory notes * * * in sums less than the aggregate called for * * *." 204 F.Supp. 921.

This Court was concerned with the amount of promissory notes which the Commission authorized Central to issue to Walker for W & H stock. This Court was not concerned with the manner in which the Commission, under its procedures, felt obliged to manifest that decision. Where the Commission chooses to chop a single thing into two bits, we are not so handicapped. Rather, we interpret the simultaneous reports growing out of one transaction as a single determination. In this approach, we are able to distill from two simultaneous decisions the following: in addition to the authority to issue promissory notes payable to Walker and Hart in the amount of $750,000 in payment for stock in Express and Cartage (see note 5, supra), Central is also now formally authorized to issue a note payable to Walker in the sum of $450,000 representing the agreed deferred price for his stock in W & H (see note 6, supra). Thus an aggregate of $1,200,000 in promissory...

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