HASTIE, C.J. - In this petition Cities Service Co. (hereinafter, Cities), Arkansas Fuel Oil Corp. (hereinafter, Fuel Oil), and M.L. Benedum, a principal stockholder of Fuel Oil, are asking that we review an order of the Securities and Exchange Commission requiring either the elimination of the publicly held minority interest in the common stock of Fuel Oil or the disposition of Cities' majority holding of this stock. This order was based upon the Commission's conclusion that the present distribution of ownership rights and voting power in Fuel Oil constitutes such a complexity within a registered holding company system as the Commission may and in the circumstances should disapprove and correct under Section 11(b) (2) of the Public Utility Holding Company Act of 1935.
The petitioners now say that the Commission erred in finding a Section 11(b) (2) violation in the present ownership and control of Fuel Oil. Beyond defending its ruling on the merits, the Commission asserts that this issue is now foreclosed as res judicata. Exploration of this res judicata claim necessitates examination not only of the issues of this case, but also of the matters involved and decided in a related S.E.C. proceeding recently reviewed by the Court of Appeals for the Second Circuit with all of the present petitioners participating as parties.
Section 11 of the Public Utility Holding Company Act of 1935, 49 STAT. 803, 15 U.S.C. § 79, is concerned with the integration and simplification of registered holding company systems. For a number of years the Securities and Exchange Commission has been exercising its Section 11 powers with reference to a utility holding company system of which the petitioner Cities has been the dominant entity. In the course of the numerous steps required and taken for divorcing utility and non-utility interests and otherwise simplifying the system there came a time when Cities owned some 52% of the common stock of its subsidiary Fuel Oil, a registered holding company in the fuel oil field, while 48% of this stock was publicly held. In sanctioning the Section 11(e) plan which left the common stock of Fuel Oil thus divided the Commission noted that the continued existence of a publicly held minority interest in Fuel Oil "presents a problem which may require corrective action" under Section 11(b) (2)*fn1 Accordingly, the Commission reserved jurisdiction over "the resolution of problems presented by the continued existence of a minority public interest in Fuel Oil after consummation of the plan." In the meantime, both Cities and Fuel Oil continued of record to be registered holding companies. But at this stage of the reorganization Fuel Oil applied to the Commission for an order declaring that it was no longer a holding company within the meaning of the Act. Such an order was entered, but qualified, with the consent of Fuel Oil, to provide that for the purpose of resolving the unsettled question of the minority public stock interest, as to which the Commission earlier had reserved jurisdiction, Fuel Oil should still be considered a registered holding company.
Thereafter, Cities, invoking Section 3(a) (5) of the Act, applied to have itself and its subsidiaries declared exempt from the provisions of the statute. This application noted the Commission's reservation of jurisdiction of the question of the minority interest in Fuel Oil and recited that the granting of Cities' application would make this reserved question moot. In these circumstances, the Commission ordered a hearing for consideration of both the requested exemption and the unresolved question of what, if anything, to do about the minority public interest in Fuel Oil. The order for this consolidated hearing recited that "the application of Cities for exemption and the reserved issue in the Section 11(e) plan proceeding are related and involve common issues of fact and law." The order also listed specific questions to be considered; among them, "[whether] the continued existence of the publicly-held minority interest in Fuel Oil complies in all respects with the provisions of Section 11(b) (2) of the Act and is fair and equitable to the persons affected thereby."
Thus, it was apparent from the beginning that the question whether the distribution of the common stock of Fuel Oil created a complexity requiring correction under Section 11(b) (2) of the Act was common and vital to both controversies in the consolidated proceedings. On the one hand, it was the very question reserved in the earlier proceeding. On the other, this item of unfinished business under Section 11(b) (2) made doubtful the propriety of immediately exempting Cities from the obligations of a registered holding company. Although the petitioners now argue that the Section 11(b) (2) question was in some way different in the two controversies, we do not find the slightest indication of such a thought in anything said or done by the Commission in constituting or deciding the consolidated administrative proceeding, or by any part in briefing or arguing its contentions.
The decisive finding of the Commission at the conclusion of the consolidated hearing was that the existence of a publicly held minority interest in Fuel Oil, while Cities exercised voting control through its majority holding, was a complexity which caused an inequitable distribution of voting power and which should be removed either by disposition of Cities' interest in Fuel Oil or by the elimination of the public minority interest.By the same token, the Commission concluded that it would be detrimental to the public interest to relieve Cities of the status and obligation of a registered holding company while this complexity remained*fn2 Two orders followed, one directing the elimination of the Section 11(b) (2) complexity, and the other denying the requested exemption*fn3 The petitioners have seen fit to seek review of these two orders by different courts of appeals. Review of the order denying Cities and its subsidiaries exemption from the provisions of the Act was sought in the Court of Appeals for the Second Circuit. On the other hand, the aggrieved parties have now appealed to this court to review the order requiring a change in the ownership of the common stock of Fuel Oil.
The Court of Appeals for the Second Circuit sustained the Commission's denial of the requested exemption. Cities Service Co. v. Securities and Exchange Commission, 2d Cir. 1957, 247 F.2d 646. In its opinion the court explicitly addressed itself to the question "whether the elimination of the minority interest is required by § 11(b) (2) ...," 247 F.2d at 651, treating the existence of complexity requiring correction under Section 11(b) (2) as decisive of the ultimate question whether Cities was entitled to exemption under Section 3(a) (5). The court reviewed the evidence and the law and concluded its opinion with this statement of what was being decided:
"Since we find that the Commission still has jurisdiction over both Cities and Fuel and can require Fuel Oil to comply with § 11(b) (2) by eliminating the minority interest, and since there is substantial evidence to support its finding of an inequitable distribution of voting power, we affirm the decision and order of the Commission denying the application of Cities Service for exemption. ..." 247 F.2d at 655.
This decision made the litigated Section 11(b) (2) issue res judicata. For the accepted rule is that "where there is an appeal from a judgment, the determination by the appellate court of issues actually litigated is conclusive between the parties in a subsequent action on a different cause of action." PESTATEMENT, JUDGMENTS, § 69(1). Cf. Southern Pacific R.R. v. United States, 1897, 168 U.S. 1, 48-49. We think our statement of what actually occurred before the Commission and in the Court of Appeals for the Second Circuit has sufficiently demonstrated that the court fully considered and explicitly sustained the Commission's finding and conclusion as to a Section 11(b) (2) violation in the divided ownership of Fuel Oil stock.
The petitioners have sought to avoid the impact of this conclusion by arguing that what has been found to constitute a violation of Section 11(b) (2) for a particular purpose by the Second Circuit may not amount to a violation of that section for a different purpose here. The argument is thought to be supported by United States v. Champlin Refining Co., 1951, 341 U.S. 290, in its relation to Champlin Refining Co. v. United States, 1946, 329 U.S. 29. However, in attempting comparisons between rulings on res judicata in various circumstances we must not forget the reminder of the Supreme Court that "[what] was involved and determined in the former suit is to be tested by an examination of the record and proceedings therein, including the pleadings, the evidence submitted, the respective contentions of the parties, and the findings and opinion of the court. ..." See Oklahoma v. Texas, 1921, 256 U.S. 70, 88. In the Champlin litigation a finding that a pipeline company was a "common carrier" subject generally to regulation under the Interstate Commerce Act was held not to foreclose as a matter of res judicata the question whether the company should be subject as a "common carrier" to particular requirements of the Interstate Commerce Act which were not involved in the first case. A majority of the Court analyzed the circumstances and issues of these two cases as presenting different legal problems controlled by different considerations. But in the present litigation all concerned have recognized - at least until after the present res judicata claim was advanced - that both branches of the consolidated proceedings turned on a single conception of what amounts to a complexity inconsistent with the standards of Section 11(b) (2). This matter was not decided twice or in the light of differing criteria for the two branches of the consolidated proceeding. But once it was decided, separate types of implementation appropriate to the two branches of the consolidated proceedings were required. Both the denial of the exemption requested by Cities and the requirement that appropriate affirmative steps be taken to correct the complexity were direct consequences of a single legal characterization of the Fuel Oil stock situation as a violation of Section 11(b) (2). Indeed, even now, although the petitioners assert that the Section 11(b) (2) problem was different in the two aspects of the proceedings before the Commission, they do not describe or analyze the alleged difference.We are satisfied that there is no difference and that the legal conclusion reached by the Court of Appeals for the Second Circuit, that the existence of the minority interest in Fuel Oil was properly held to violate Section 11(b) (2), is res judicata in the context of the petitioners' present claims.
Petitioners urge a second point as to which no claim of res judicata is made. Even if the present arrangement of ownership rights and control within Fuel Oil is properly condemned under Section 11(b) (2) there is an additional question whether the actual elimination of the minority interest or some less drastic remedy is appropriate to correct the situation. The petitioners say that the Commission decided upon the most drastic remedy without giving them a reasonable opportunity to be heard on this matter of choice among remedies. Accordingly, they say they are now entitled at least to have the cause remanded with direction to hear the parties on this question.
We already have pointed out that the Commission's formal order which called for these consolidated proceedings listed specific "matters and questions ... presented for consideration", among them: "Whether the continued existence of the publicly held minority interest in Fuel Oil complies in all respects with the provisions of Section 11(b) (2) of the Act and is fair and equitable for the persons affected thereby." We think this was rather plain notice that the Commission proposed to decide whether the elimination of the minority interest should be required and invited the parties to address themselves to this, among other questions, at the hearing. In fact, any other procedure would have been rather surprising, for an administrative proceeding under Section 11(b) (2) is not like a criminal trial in which the question of guilt and the determination of sentence are characteristically the subject of separate hearings at different times. One of the characteristic virtues of the administrative handling of such problems as we have here is freedom from any such formalism as would require the separate consideration and adjudication of wrong and remedy.Indeed, the very language of Section 11(b) (2) pictures the administrative hearing on an alleged violation of that Section as a proceeding to determine what remedies, if any, are necessary and appropriate. Thus, it is the stated function and duty of the Commission "to require by order, after notice and opportunity for hearing, that each registered holding company ... shall take ... steps ... to correct certain inequities."
Perhaps even more important for present purposes, the parties themselves made it clear by their actions at the hearing that they understood that the Commission was considering both what, if anything, was wrong with the Fuel Oil stock situation and what, if anything, should be done about it. Thus, the opening brief of Cities for the consolidated proceedings discussed and rejected as unreasonable and unfair various proposals for dealing with the minority stock interest, including a proposal for its elimination. Fuel Oil in its brief stressed the contention that the Commission was without power to eliminate the minority public interest. Benedum, the third petitioner here, submitted a memorandum objecting to any action which would require him to sell his holdings which constitute a substantial part of the publicly ...