Corporation commission

“ Article 15, entitled, 'The Corporation Commission,' consists of nineteen sections, [1] and confers broad powers of regulation. The character of the service, that is, whether it is public or private, and not the character of the ownership, determines ordinarily the scope of the power of regulation. The need of such regulation and the manner of exercising it are the same whether a public utility is incorporated or not; and the purpose of a public service commission could easily be frustrated if concerns owned by individuals were excluded from its operation. ”

“ Commission rules prohibit any 'member, allied member, member firm or member corporation' from making 'a proposition for the transaction of business at less than the minimum rates of commission.' Before a member is allowed trading privileges he must sign a pledge to abide by the constitution and rules of the Exchange, and any member or allied member adjudged guilty of violating the constitution or a rule may be suspended or expelled by the Board of Governors. ”

“ The attempt to define in a comprehensive statute just what corporations may do, or must in the public interest be forbidden from doing, is not being tried, because of the apparent impossibility of providing in advance against every possible perversion of the public interest in the interest of the private corporation. The responsibility of the legislature for the protection of the public interest is consequently delegated to a commission whose duties are partly administrative and partly either legislative or judicial. ”

“ Plaintiff in error, an Ohio corporation, complains that the Supreme Court of Appeals of Virginia improperly affirmed an order by the Corporation Commission assessing a fine against it for transacting business in the state without certificate of authority required by law. ”

“ The corporation commission may, however exempt those roads which submit proof that they cannot earn a just compensation for the services rendered by them to the public if not permitted to charge more than 2 cents a mile. "No corporation may issue stock except for money, labor done or property actually received to the amount of the par value thereof and all fictitious increase of stock or indebtedness shall be void. "No corporation doing business in the state may be permitted to influence elections or official duty by contributions of money or anything of value. ”

“ That the proviso is unconstitutional as contravening the equal protection clause of the Fourteenth Amendment; that the remainder of the statute is separable and affords the sole rule in respect of the questions here to be determined; that the Corporation Commission is without power to issue permits to corporations organized under the act of 1919 without a showing of public necessity; that the Durant Company is without authority to do business in the absence of a permit thus issued; and that appellant is entitled to the relief for which he prays. ”

“ So long as the banks obey the law, they need have no fear of the Treasury Department. But in commission government the official authority, in a sense, both makes and administers the law. The commission is empowered to use its own discretion about many matters, such as rates, service, equipment, and the like, in relation to which the law places the corporation absolutely in its hands. Such official interference is of a kind which can hardly fail in the long run to go wrong. ”

“ The person, partnership, or corporation so complained of shall have the right to appear at the place and time so fixed and show cause why an order should not be entered by the commission requiring such person, partnership, or corporation to cease and desist from the violation of the law so charged in said complaint. ”

“ Such commission should make a thorough inquiry into the advisability of inaugurating a system of federal license or incorporation as a condition for the entrance of certain classes of corporations upon interstate commerce and also into the relation to the public interest of the purchase by one corporation of the franchises or corporate stock of another. "On no one of these subjects must what has been gained be sacrificed until something better appears for enactment. On each, this conference recognizes differences between good men. ”

“ If, therefore, the rule applied by the Commission is to be judged solely on the basis of its adherence to principles of equity derived from judicial decisions, its order plainly cannot stand. As the Commission concedes here, the courts do not impose upon officers and directors of a corporation any fiduciary duty to its stockholders which precludes them, merely because they are officers and directors, from buying and selling the corporation's stock. ”

“ Such a Commission would furnish a steady expert control, a control adapted to the problem; and dissolution is neither control nor regulation, but is purely negative; and negative remedies are of little permanent avail. Such a Commission would have complete power to examine into every big corporation engaged or proposing to engage in business between the States. It would have the power to discriminate sharply between corporations that are doing well and those that are doing ill ”

“ Provided further, if the corporations cannot agree upon the times at which the cars shall be drawn, or the compensation to be paid, the said commission shall, upon petition of either party and notice to the other, after hearing the parties interested, determine the rate of compensation and fix such other periods, having reference to the convenience and interests of the corporation or corporations and the public to be accommodated thereby, and the award of the commission shall be binding upon the respective corporations interested therein until the same shall have been revised. ”

“ If the commission is granted the power to promulgate rates, to control the service granted to the public, or to order the purchase of new equipment, it has become more than a regulative official body. It has become responsible for the business management of the corporation committed to its charge; and again it must be asserted that mixed control of this kind is bound to take the energy and initiative out of such business organizations. ”

“ This body should have power not only to enforce publicity, but to secure justice and fair treatment to investors, wage-workers, business rivals, consumers, and the general public alike.
Such an industrial commission should do as the Interstate Commerce Commission should do, that is, remember always its dual duty, the duty to the corporation and individual controlled no less than to the public. It is an absolute necessity that the investors, the owners, of an honest, useful, and decently managed concern, should have reasonable profit. It is impossible to run business unless this is done. ”

“ REJECTION.— The Corporation may reject a State Commission if the Corporation determines that the composition, membership, or duties of the State Commission do not comply with the requirements of this section. The Corporation may reject a request to use an alternative administrative entity in lieu of a State Commission if the Corporation determines that the entity does not provide for the individuals described in paragraph (1) , and some of the individuals described in paragraph (2) , of subsection (c) to play a significant policymaking role as described in paragraph (2) . ”

“ The essential condition of efficiency is always concentration of responsibility; and the decisive objection to government by commission as any sufficient solution of the corporation problem is the implied substitution of a system of divided for a system of concentrated responsibility.
This objection will seem fanciful and far-fetched to the enthusiastic advocates of reform by commission. They like to believe that under a system of administrative regulation abuses can be extirpated without any diminution of the advantages hitherto enjoyed under private management ”

“ The essential facts are few and are not in dispute. [2] This corporation filed with the Securities and Exchange Commission a voluntary plan of reorganization. While the reorganization proceedings were pending sixteen officers and directors bought on the open market about 7 1/2% of the corporation's preferred stock. Both the Commission and the Court admit that these purchases were not forbidden by any law, judicial precedent, regulation or rule of the Commission. ”

“ Corporations, argued Dru, could be dealt with under the new laws in a way that, while fair to them, would protect the public. In the future, he reminded his commission, there would be upon the directorates a representative of either the National, State, or Municipal governments, and the books, and every transaction, would be open to the public. This would apply to both the owner of the raw material, be it mine, forest, or what not, as well as to the corporation or individual who distributed the marketable product. ”

“ The order authorized Power to submit to the Commission a plan for compliance with the order 'on a basis which is fair and equitable to its security holders.' Power with its registered holding company subsidiary, The United Light and Railways Company, a Delaware corporation, all of whose common stock was owned by Power, submitted such a plan and after examination by the Commission and modification it was approved by order of April 5, 1943. The Plan was held specifically to be fair and equitable to all security holders. ”

“ Surely an administrative agency is not a law unto itself, but the Court does not really face up to the fact that this is the justification it is offering for sustaining the Commission action.
Even if the Commission had, as the Court says, utilized this case to announce a new legal standard of conduct, there would be hurdles to be cleared, but we need not dwell on them now. Because to promulgate a general rule of law, either by regulation or by case law, is something the Commission expressly declined to do. ”

“ The reasons which will lead it to take one course as against the other remain locked in its own breast, and it has not and apparently does not intend to commit them to any rule or regulation. This administrative authoritarianism, this power to decide without law, is what the Court seems to approve in so many words: 'The absence of a general rule or regulation governing management trading during reorganization did not affect the Commission's duties * * *' (Par. 13) . ”

“ While this litigation is not formally between Dow and the Medical Committee, but between the SEC and the Medical Committee, it does involve a whole panoply of substantive [2] and procedural [3] rights in connection with a corporation's obligation to include shareholder proposals in proxy materials. The modern super-corporations, of which Dow is one, wield immense, virtually unchecked, power. Some say [4] that they are 'private governments,' whose decisions affect the lives of us all. ”

“ Any corporation failing or refusing to obey any valid order or requirement of the commission, within such reasonable time, not less than ten days, as shall be fixed in the order, may be fined by the commission (proceeding by due process of law as aforesaid) such sum, not exceeding five hundred dollars, as the commission may deem proper, or such sum in excess of five hundred dollars, as may be prescribed, or authorized, by law ”

“ The differences relied upon to justify the classification are, for that purpose, without substance. The provision for paying a portion of the profits to members or, if so determined, to nonmembers, based upon the amounts of their sales to or purchases from the corporation, is a device which, without special statutory authority, may be and often is resorted to by ordinary corporations for the purpose of securing business. ”

“ If it is of no consequence that no rule of law be existent to support an administrative order, and the Court of Appeals is obliged to defer to administrative experience and to sustain a Commission's power merely because it has been asserted and exercised, of what use is it to print a record or briefs in the case, or to hear argument? Administrative experience always is present, at least to the degree that it is here, and would always dictate a like deference by this Court to an assertion of administrative power. ”

“ The Court interpreted the Commission's order approving this amended plan as grounded solely upon judicial authority. The Commission appeared to have treated the preferred stock acquired by the management in accordance with what it thought were standards theretofore recognized by courts. If it intended to create new standards growing out of its experience in effectuating the legislative poliy, it fail ed to express itself with sufficient clarity and precision to be so understood. Hence the order was judged by the only standards clearly invoked by the Commission. ”

“ It was thought that the Commission should have estimated the future earning power of Engineers, absent a Holding Company Act, and apportioned that power between preferred and common stockholders in accordance with their respective claims. ”

“ The facts being undisputed, we are free to disturb the Commission's conclusion only if it lacks any rational and statutory foundation. In that connection, the Commission has made a thorough examination of the problem, utilizing statutory standards and its own accumulated experience with reorganization matters. In essence, it has made what we indicated in our prior opinion would be an informed, expert judgment on the problem. ”