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Bondholders Protective Committee v. Interstate Commerce Commission

decided: September 29, 1970.

BONDHOLDERS PROTECTIVE COMMITTEE (OF THE 3 1/4 GENERAL MORTGAGE BONDS OF THE CENTRAL RAILROAD COMPANY), APPELLANT
v.
INTERSTATE COMMERCE COMMISSION



Biggs, Staley and Adams, Circuit Judges.

Author: Biggs

Opinion OF THE COURT

BIGGS, Circuit Judge.

This appeal presents a novel issue of statutory construction involving our parallel consideration of Section 77 of the Bankruptcy Act, 11 U.S.C. § 205, and the Urgent Deficiencies Act, 28 U.S.C. §§ 2321-2325. The specific problem before us concerns the proper forum for judicial review of an Interstate Commerce Commission order under Section 77(p) of the Bankruptcy Act granting to one party and denying to another leave to solicit authorizations to represent and act for a class of creditors in a railroad reorganization.

I.

On or about March 22, 1967, the Central Railroad Company of New Jersey filed a Section 77 petition for reorganization in the district court. The plaintiff-appellant (Marx Committee) applied to the Interstate Commerce Commission (ICC) pursuant to Section 77(p) for permission to solicit authorizations to represent and act for the holders of Central Railroad's 3.25% general mortgage bonds in the reorganization proceedings. A similar application was made by a rival group of bondholders (the Saltzberg Committee). The ICC denied the application of the Marx Committee and granted that of the Saltzberg Committee.*fn1

The Marx Committee then filed suit against the ICC in the district court, contending that the ICC order was contrary to law and seeking to have it set aside or, in the alternative, to have itself substituted for the Saltzberg Committee as the sole representative of the 3.25% bondholders. The sole basis for jurisdiction alleged in the complaint was Section 1336(a), Title 28, U.S.C., but it became evident soon thereafter that the Marx Committee sought to have the ICC's representation order reviewed by a three-judge court to be convened pursuant to the Urgent Deficiencies Act, 28 U.S.C. §§ 2321-2325. The district court dismissed the action for want of jurisdiction over the subject matter. In the course of oral argument prior to the dismissal Chief Judge Augelli expressed his view that the matter was not reviewable in a plenary action before a three-judge court but that it could be reviewed only by the bankruptcy court in the context of the reorganization proceedings. Accordingly, the order dismissing the action was entered "without prejudice to the plaintiff's right to seek the same relief by filing an appropriate application in the bankruptcy proceeding." The Marx Committee, however, chose not to heed the district court's suggestion and this appeal followed.

The statutory provisions directly pertinent to this appeal are as follows. Section 1336(a), Title 28, U.S.C., provides:

" Except as otherwise provided by Act of Congress, the district courts shall have jurisdiction of any civil action to enforce, enjoin, set aside, annul or suspend, in whole or in any part, any order of the Interstate Commerce Commission." (Emphasis added).

Section 2321, Title 28, U.S.C., provides:

"The procedure in the district courts in actions to enforce, suspend, enjoin, annul or set aside in whole or in part any order of the Interstate Commerce Commission other than for the payment of money or the collection of fines, penalties and forfeitures, shall be as provided in this chapter." (Emphasis added).

And Section 2325, Title 28, U.S.C., provides:

"An interlocutory or permanent injunction restraining the enforcement, operation or execution, in whole or in part, of any order of the Interstate Commerce Commission shall not be granted unless the application therefor is heard and determined by a district court ...


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