Section 20a. (7) Jurisdiction of commission as exclusive and plenary. The jurisdiction conferred upon the commission by this section shall be exclusive and plenary, and a carrier may issue securities and assume obligations or liabilities in accordance with the provisions of this section without securing approval other than as specified herein. (Feb. 28, 1920, c. 91, sec. 439, 41 Stat. 494.) For text of complete section, of which this paragraph is a part, see pp. 63–66, ante. 8. bond. To authorize purchases on deferred payments. 1. Jurisdiction prior to transportation act, 1920.-The commission has no jurisdiction over stock and bond issues of corporations engaged in interstate commerce.-A. P. Morgan Grain Co. v. Atlantic Coast Line R. Co., 19 I. C. C. 460. The commission is without control over capitalization, and can not place limitations on the purposes for which stocks or bonds may be issued, nor designate what property they shall represent.-Advances in Rates, Western Case, 20 I. C. C. 307. The commission has no jurisdiction over the issuance of securities by railroads.-New York Central & H. R. R. Co. Bond Issue, 30 I. C. C. 147. 2. Jurisdiction under this section.Carriers subject to the commission's jurisdiction under this section, see sec. 20a (1), this title. The commission as a statutory body can not under the guise of administering this or any other section draw to itself any powers not conferred on it by the act.-Chicago, M., St. P. & P. R. Co. v. United States, 33 Fed. (2d) 582, holding invalid in part orders, Chicago, M. & St. P. Reorganization, 131 I. C. C. 673, 138 I. C. C. 291, finding of probable cause on appeal, United States v. Chicago, M. & St. P. R. Co., 280 U. S. 74 L. ed., 50 Sup. Ct. Rep. 68. This section in authorizing the commission to approve securities issues if it finds certain facts, limits the commission's jurisdiction.-Chicago, M.. St. P. & P. R. Co. v. United States, 33 Fed. (2d) 582. This paragraph confers exclusive and plenary jurisdiction on the commission to authorize security issues by carriers.-New York Central R. Co. Bonds, 65 I. C. C. 534; Michigan Central R. Co. Bonds, 65 I. C. C. 544; Cleveland, C., C. & St. L. Ry. Co. Bonds, 65 I. C. C. 549; Toledo & O. C. Ry. Co. Bonds, 65 I. C. C. 556; Zanesville & W. Ry. Co. Note, 65 I. C. C. 559; Kanawha & M. Ry. Co. Note, 65 I. C. C. 562; Lake Erie & W. Ry. Co. Note, 65 I. C. C. 565; Cincinnati N. R. Co. Note, 65 I. C. C. 568; Chicago & N. W. Ry. Co. Equipment Certificates, 67 I. C. C. 198; North Texas & S. F. Ry. Co. Bonds, 94 I. C. C. 747; Mississippi Export R. Co. Securities, 124 I. C. C. 492; Condon, K. & S. R. Co. Operation, 145 I. C. C. 427; Erie R. Co. and Pere Marquette Ry. Co. Control, 150 I. C. C. 751. The commission has jurisdiction over security issues as against the contention that the issue involves no Federal question and that the carrier, a State corporation, is not answerable to the Federal Government so far as securities are concerned.-New York Central R. Co. Bonds, 65 I. C. C. 534, 714; Michigan Central R. Co. Bonds, 65 I. C. C. 544; Michigan Central R. Co. Note, 65 I. C. C. 790; Cleveland, C., C. & St. L. Ry. Co. Bonds, 65 I. C. C. 549; Toledo & O. C. Ry. Co. Bonds, 65 I C. C. 556; Zanesville & W. Ry. Co. Note, 65 I. C. C. 559; Kanawha & M. Ry. Co. Note, 65 I. C. C. 562; Lake Erie & W. R. Co. Note, 65 I. C. C. 565; Cincinnati N. R. Co. Note, 65 I. C. C. 568; Federal Valley R. Co. Notes, 65 I. C. C. 623; Cleveland, C., C. & St. L. Ry. Co. Notes, 65 I. C. C. 764; New York Central R. Co. Notes, 65 I. C. C. 787; Chicago, M. & St. P. Ry. Co. Guaranty of Note, 65 I. C. C. 795; Chicago & N. W. Ry. Co. Equipment Trust Certificates, 67 I. C. C. 198. The commission has jurisdiction to authorize the assumption of liability on bonds of a company of which applicant owns all the stock, and a considerable part of the property of which it uses for railroad purposes.-Central R. Co. of New Jersey Bond Guaranty, 67 I. C. C. 721. Application for authority to withdraw cash from a trustee under a refunding and general mortgage is not within the commission's jurisdiction under this section.-Central of Georgia Ry. Co. Deposited Cash, 90 I. C. C. 1. Protests of bondholders against an Exchange of bonds for stock contemolated by a reorganization plan is a matter to be brought before the court having jurisdiction in the premises.— Chicago & E. I. Ry. Co. Securities, 67 L. C. C. 61. 3. As to securities previously issued. The commission is without anthority to approve the issue of notes dated prior to the effective date of this section.-Wisconsin & N. R. Co. Notes, 67 I. C. C. 14. The commission has jurisdiction over the issue of securities in conversion of other securities issued prior to the effective date of this section as against the contention that the proposed transaction is merely a reclassification of stock already issued and not an issue of securities and that applicant's obligation to convert the stock became absolute and the right of the holders thereof to have it converted was vested prior to the effective date of this section.-Wheeling & L. E. Ry. Co. Stock, 117 I. C. C. 755; Western Maryland Ry. Co. Stock, 117 I. C. C. 759. 4. As to changes in dividend rates. Increase in dividend rate on preferred stock through agreement with the holders for surrender by them, on the increase in rate being made, of the right to accrued and unpaid dividends is a matter within the jurisdiction conferred by par. (2), this section.-Virginian Ry. Co. Preferred Stock Dividend Rate, 72 I. C. C. 473. 7. To authorize execution of indemnity bond.-The commission has no jurisdiction to authorize a carrier's execution of an indemnity bond to the stockholders of a car company.-New York, N. H. & H. R. Co. Indemnity Bond, 70 I. C. C. 517. 8. To authorize purchases on deferred payments.-An agreement for the purchase of a line of railroad and other property providing for deferred payments of installments of the purchase price is not such as can be passed on by the commission under this section.-Grand Trunk W. Ry, Co. Con tract, 70 I. C. C. 555, Section 20a. (8) Guaranty of securities.-Nothing herein shall be construed to imply any guaranty or obligation as to such securities on the part of the United States. (Feb. 28, 1920, c. 91, sec. 439, 41 Stat. 494.) For text of complete section, of which this paragraph is a part, see pp. 63– 66, ante. Historical Note See historical note to sec. 20a (1), this title. Notes of Decisions (SCOPE NOTE.-The commission has consistently included in its orders authorizing securities issues a proviso specifically disaffirming any implied guaranty or obligation by the United States. The following notes from the early cases are illustrative.) 1. Government not guarantor.No guaranty or obligation of the United States as to payment of principal or interest is to be implied by any order of the commission granting an issue of bonds.-Central of Georgia Ry. Co. Bonds, 65 I. C. C. 65; Western Maryland Ry. Co. Note and Bond Issue, 65 I. C. C. 83; Central Vermont Ry. Co. Bond Issue, 65 I. C. C. 126; Erie R. Co. Extension Contracts, 65 I. C. C. 131. The commission's authorization of a stock issue shall not be construed as an implied guaranty or obligation of such stock or the dividends thereon by the United States.-Raritan River R. Co. Stock, 67 I. C. C. 8; Delaware & H. Co. Stock, 67 I. C. C. 20; Chi-cago, B. & Q. R. Co. Stock, 67 I. C. C. 156; Chicago & A. R. Co. Stock, 67 I. C. C. 386. An authorization of an issue of notes carries no implication by the United States of any guaranty or obligation with respect thereto, or as to interest thereon.-Central of Georgia Ry. Co. Bonds, 65 I. C. C. 65; Western Maryland Ry. Co. Note and Bond Issue, 65 I. C. C. 83; Ashland, C. & I. Ry. Co. Note, 65 I. C. C. 94; Norfolk & P. B. L. R. Co. Note, 65 I. C. C. 111, 129; Pittsburgh & L. E. R. Co. Note, 65 I. C. C. 117, 119; Louisiana & A. Ry. Co. Note, 65 I. C. C. 122. No guaranty of obligation by the United States is to be implied in the authorization of an issue of equipmenttrust certificates.-Long Island R. Co. Equipment Trust, 65 I. C. C. 144; Paris & M. P. R. Co. Certificates, 65 I. C. C. 153; Pittsburgh & L. E. R. Co. Equipment Trust, 65 I. C. C. 159. Section 20a. (9) Issue of short-term notes; certificate of notification; proviso.-The foregoing provisions of this section shall not apply to notes to be issued by the carrier maturing not more than two years after the date thereof and aggregating (together with all other then outstanding notes of a maturity of two years or less) not more than 5 per centum of the par value of the securities of the carrier then outstanding. In the case of securities having no par value, the par value for the purposes of this paragraph shall be the fair market value as of the date of issue. Within ten days after the making of such notes the carrier issuing the same shall file with the commission a certificate of notification, in such form as may from time to time be determined and prescribed by the commission, setting forth as nearly as may be the same matters as those required in respect of applications for authority to issue other securities: Provided, That in any subsequent funding of such notes the provisions of this section respecting other securities shall apply. (Feb. 28, 1920, c. 91, sec. 439, 41 Stat. 494.) For text of complete section, of which this paragraph is a part, see pp. 63–66, ante. Historical Note See historical note to sec. 20a (1), this title. Notes of Decisions 1. Short-term notes issuable without commission's approval.-Pledge | and repledge of bonds to secure shortterm notes under continuing authority of the commission, see note 167, par. (2), this section. Short-term notes were exempted from the regulatory power of the commission in recognition of the necessity of leaving to the carrier, to enable it to quickly and easily meet current financial exigencies, a certain leeway and freedom of action in the negotiation of short-term loans. The exemption is, however, confined to the issue of short-term notes, and does not extend to securities which the carrier may desire to pledge as security for such notes.-Baltimore & O. R. Co. Bonds, 67 I. C. C. 10. Refusal to authorize an issue of securities based solely on the value of applicant's property does not deprive applicant of its right under this paragraph to issue short-term notes without the commission's authorization.— Louisiana Ry. & Nav. Co. Securities, 99 The language of this paragraph is unequivocal, and in determining the amount of notes that may be issued without the commission's authority there is no warrant, in view of the plain letter of the law, for excluding from all other then outstanding notes of a maturity of two years or less, notes of such maturity issued under the commission's authority.-Louisiana Ry. & Nav. Co. of Texas Notes, 124 I. C. C. 603. Congress, in partly exempting shortterm notes from regulatory power, did not intend that carriers should exhaust their freedom of action in short-term financing by borrowing for purposes not strictly germane to the maintenance aud operation of their properties and then be forced to come to the commission for authority to issue short-term notes for purposes related to their service to the public as common carriers.-New York, C. & St. L R. Co. Notes, 131 I. C. C. 579. Section 20a. (10) Reports by carriers as to securities or proceeds. The commission shall require periodical or special reports from each carrier issuing any securities, including such notes, which shall show, in such detail as the commission may require, the disposition made of such securities and the application of the proceeds thereof. (Feb. 28, 1920, c. 91, sec. 439, 41 Stat. 494.) For text of complete section, of which this paragraph is a part, see pp. 6366, ante. Historical Note See historical note to sec. 20a (1), this title. 1" hereafter in original act at this point. |