Cleveland, C., C. & St. L. Ry. Co. v. Jackson, 22 F.2d 509 (6th Cir. 1927)

*510 Robert J. Cary, of Chicago, Ill., and Harry N. Quigley, of Cincinnati, Ohio (Harmon, Colston, Goldsmith & Hoadly, of Cincinnati, Ohio, on the brief), for appellants.

Robert A. Taft, of Cincinnati, Ohio (Root, Clark, Buckner, Howland & Ballantine, of New York City, and Taft, Stettinius & Hollister, of Cincinnati, Ohio, on the brief), for appellee.

Before DENISON and MOORMAN, Circuit Judges, and HICKS, District Judge.

MOORMAN, Circuit Judge (after stating the facts as above).

The right of plaintiff to an injunction depends on what would be the effect of the threatened acts if permitted to be consummated. This is to be considered in the light of the Transportation Act of 1920, the main purpose of which was to permit the consolidation of railway properties in the United States into a limited number of systems in the interest of economical and efficient railway service. To that end Congress conferred upon the Interstate Commerce Commission enlarged powers, and imposed upon it the duty of evolving plans for, without giving it the right to compel, such consolidations. It also conferred upon the Commission the power to approve and authorize the acquisition by one carrier, either by lease or the purchase of stock, of another carrier, under such rules and regulations and for such consideration and on such terms and conditions as should be found by the Commission to be just and reasonable in the premises.^[1] By a subsequent paragraph in the act the carrier seeking to acquire the control of another carrier, under a lease or by the purchase of stock, was relieved from the operation of the anti-trust laws and all other restraints or prohibitions by law, state or federal, in so far as might be necessary to enable such carrier "to do anything authorized or required by any order made under and pursuant" to the enlarged powers of the Commission. U. S. Comp. Stat. Anno. Supp. 1923, § 8567 (8) (49 USCA § 5).

It is clear, we think, and, indeed it is not denied, that a lease like the one involved here, if approved by the stockholders of both companies and executed on behalf of those companies, could have no effect until the Commission found that the making of the lease would "be in the public interest," and until it approved, not only the terms and conditions of the lease, but the consideration therefor, finding that such terms, conditions and consideration were "just and reasonable in the premises." The plaintiff doubts that in determining the reasonableness of the terms the Commission has the right to consider the interest of minority stockholders, but admits that it "has assumed such jurisdiction, although never confirmed by any court decision." We think it is the duty of the Commission to protect both the public and private interests, and although it finds *511 that the acquisition will be in the public interest, it may not approve the lease unless it further finds that the consideration, terms and conditions thereof are just and reasonable just to the lessor, the lessee, and necessarily to the stockholders of each. The ruling in the Nickel Plate Case, 105 Interst. Com. Com'n R. 425, evidences such an interpretation of its duties by the Commission.

While it is true, as plaintiff contends, that the law does not require that minority stockholders be made parties to a proceeding before the Commission seeking the approval of a lease, it is also true that the Commission has heard such stockholders when requested to do so, and that the statute itself, as we construe it, requires that the interest of the stockholders be considered and protected. Furthermore, the orders of the Commission authorizing a lease are subject to review on behalf of a stockholder in a court proceeding. Chicago Junction Case, 264 U.S. 258, 44 S. Ct. 317, 68 L. Ed. 667; 38 Statutes at Large, p. 220 (28 USCA § 47). It results, therefore, that before the lease can be made effective, an objecting stockholder has the right to present his case before two tribunals, both of which are charged with the duty of protecting his interest.

In view of these rights of the plaintiff, we do not find it necessary to consider the claims of fraud or inadequacy of consideration, or to determine what effect, if any, the Transportation Act had upon the ordinary rules of law and equity or upon the laws of Ohio (sections 8809-8813, both inclusive, General Code of Ohio), prescribing the conditions upon which railways may be leased. It is enough, we think, to measure the exigencies of the case by the principles applicable to injunctional relief. The general rule on that subject is that the granting of an interlocutory injunction rests in the sound judicial discretion of the trial court, and unless the court has departed from the principles of equity established for its guidance, its order will not be reversed by the appellate court without clear proof of an abuse of discretion.^[2] This court has held that such an injunction should not issue unless a reasonably clear case of necessity and other irreparable injury is made out. L. & N. R. R. Co. v. Western Union Telegraph Co. (C. C. A.) 252 F. 29. Other courts have said that the question should be determined by balancing the injuries which would result from granting or refusing the injunction.^[3]

In applying these rules we fail to find grounds for equitable intervention. If the threatened action is taken, no right which plaintiff has would be imperiled, and no irreparable injury could result. Before the lease could be made effective, it would still be necessary for the Commission to pass upon its terms as they affected the plaintiff, and if he should be dissatisfied with its order, the courts would be open to him. The inconvenience, if any, that he would be put to in presenting his case to the Commission before bringing it to court, and the force and effect of the Commission's findings of fact in a court proceeding to review its order, are not the character of injury, if they be injury at all, that warrants an injunction. On the other hand, defendants are prohibited by the order of injunction from approving or executing the lease. The effect of the order is to take away from them the power of asking the Commission in good faith to act upon their application, for so long as the order stands, neither this lease nor any modified form of it can be executed, although a revised form might be found by the Commission to be in the public interest and to be fair and just to all parties concerned. Besides, the Commission could not be expected to pass upon an application which neither party, as it stands, could carry out. In this respect the injunction nullifies the application that has been made. We think the injury resulting to defendants, by issuing the order, so far outweighs the inconvenience, if any, which plaintiff would have suffered by refusing it, that it should not have been issued.

The decree is accordingly reversed.

[1] "Whenever the Commission is of opinion, after hearing, upon application of any carrier or carriers engaged in the transportation of passengers or property subject to this act, that the acquisition, to the extent indicated by the Commission, by one of such carriers of the control of any other such carrier or carriers either under a lease or by the purchase of stock or in any other manner not involving the consolidation of such carriers into a single system for ownership and operation, will be in the public interest, the Commission shall have authority by order to approve and authorize such acquisition, under such rules and regulations and for such consideration and on such terms and conditions as shall be found by the Commission to be just and reasonable in the premises." 3 U. S. Comp. Stat. Anno. Supp. 1923, § 8567 (2).

[2] American Grain Separator Co. v. Twin City Separator Co. (C. C. A.) 202 F. 202; Cruickshank v. Bidwell, 176 U.S. 73, 20 S. Ct. 280, 44 L. Ed. 377; Behre v. Insurance Co. (C. C. A.) 297 F. 986; Denver & R. G. R. Co. v. United States (C. C. A.) 124 F. 156; State of Ohio v. Cox (D. C.) 257 F. 334; Southern Pacific Co. v. Earl (C. C. A.) 82 F. 690.

[3] Allison v. Corson et al. (C. C. A.) 88 F. 581; Cohen v. Delavina (C. C.) 104 F. 946; Colorado Eastern R. Co. v. C., B. & Q. Ry. Co. (C. C. A.) 141 F. 898; Carpenter et al. v. Knollwood Cemetery et al. (C. C.) 188 F. 856; Wilmington City Ry. Co. et al. v. Taylor et al. (D. C.) 198 F. 159.