US SUPREME COURT DECISIONS

Mr. Justice DOUGLAS.

As I was in dissent when these cases were decided on the merits, I am not entitled to vote for a rehearing, unless one of the four Brethren who joined in the opinion of the Court first votes to grant it. Hence I do not urge reconsideration of the decision of the Court that mergers of railroads under 77 of the Bankruptcy Act, 11 U.S.C.A. 205, cannot be initiated by the Interstate Commerce Commission but must be 'proposed by the merging carriers.'

There is, however, a phase of the case which was not considered by the Court and which, if meritorious, will change the result of the decision. [ St. Joe Paper Co v. Atlantic Coast Line Railroad Co. 74 S.Ct. 734 (1954) ][980-Continued]

The plan of reorganization approved by the Commission (see 282 I.C.C., p. 213) provides that the assets of the debtor, Florida East Coast R. Co., shall be vested in the Atlantic Coast Line in one of three ways:

(1) 'by merger of the debtor' into Atlantic Coast Line;

(2) by 'consolidation of the debtor with' Atlantic Coast Line; or

(3) 'if the court shall approve, by transfer and conveyance' of the property of the debtor by the trustees to Atlantic Coast Line.

Page 347 U.S. 980, 981

Merger and consolidations in corporation law are statutory procedures. They are devices whereby two corporations can become one entity, either by the absorption of one corporation by the other or by the creation of a new corporation out of the two old ones. The statutory procedures vary from state to state. But, all problems of bankruptcy reorganization aside, they are always effectuated by a consensual agreement between the corporations being merged or consolidated. The issue discussed in the opinion of the Court of April 5, 1954, pertained to the question as to what constitutes the necessary consensual agreement for a merger or consolidation when one of the corporations is a railroad company being reorganized under 77 of the Bankruptcy Act. Some one's consent is obviously necessary. The majority held that it was necessary to get consent from 'those who in the absence of 77 would wield the corporate merger powers ....' 347 U.S. 298, 309, 74 S.Ct. 574, 581, note 12. The minority maintained that those who under 77 had the power to approve a plan of reorganization had the power to give consent to a merger or consolidation.

Mr. Justice BLACK, Mr. Justice JACKSON, and Mr. Justice CLARK took no part in the consideration or decision of these applications.

That issue is not present on the phase of the case now tendered for decision. Even though the reorganization may not be consummated under the merger and consolidation provisions of the plan, it may be consummated under the provision of the plan which allows the transfer and conveyance, with the approval of the reorganization court, of the property of the debtor to Atlantic Coast Line. Trustees in bankruptcy have traditionally had the right to dispose of the bankrupt's assets under the supervision of the bankruptcy court. That power is as ancient as bankruptcy itself.

Why may not the trustees of Florida East Coast sell its property to Atlantic Coast Line, if the reorganization court approves? [347 U.S. 980, 982]

Full Text of Opinion