# Petition for Writ of Certiorari — Rubin v. Chicago, South Shore & South Bend Railroad > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386417_2547%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1955 - **Citation:** 348 U.S. 972 ## Text FEB 23 1955 HAROLD B. WILLEY, Clerk IN THE Supreme Court of the United States Octroser TERM, 1954. No. 615 WILLIAM HENNING RUBIN, MORTON H. BERN- STEIN, JOHN E. KELLY, SR., anv LILLIAN M. KELLY, His Wre; JOHN E. KELLY, JR., anv CHARLES TURNER, Petitioners, vs. CHICAGO SOUTH SHORE & SOUTH BEND RAIL- ROAD, an Inpiana Corporation; JAY SAMUEL HARTT, Presment; EDWARD H. BROSS, Secretary; W. A. KISSEL anp WILLIAM A. QUAIL, pore sust- NEss as THE KISSEL ORGANIZATION, a PARTNERSHIP . or New York City, New York, Respondents. PETITION FOR WRIT OF CERTIORARI. WruumM Hennine Rvusin, 33 South Clark Street, Chicago 3, Illinois, Attorney for Petitioners. INDEX. PAGE Summary of the Matter Involved.................... 2 Ere Bra ee ree ee 2 Pe NE ea ee A a ah 3 NN I 269 o's Sb cee tho No a 4-5 ca one Ske 4 NON SieNieiew sce hehe cuss oekaki Gan ¢ Chad ns tabecee + Reasons for Granting the Writ...................... 10 I 2ae aw aaa subindWhba vive o0 Ae ds kuna sansa 33 Appendix A—Application to Issue Securities Under Sec. 20a of Interstate Commerce Act............... 35 Appendix B—Opinion Below....................... 44 TABLE oF CasEs. Anderson v. Abbott, 23 Fed. Supp. 265.............. 29 Baker v. Farnsworth, 221 N. W. 71.................. 30 Brown v. Dupuy, 4 Fed. 2d 467..................0005 31 Candler v. Rose, 80 Fed. 2d 407.................000. 24 Chicago, South Shore & South Bend R. R. Co. v. Flem- ing, 109 Fed. 2 419...... 2, 3, 9, 10, 14, 18, 19, 22, 23, 24, 26 Claude Neon Lights v. E. Machlett & Son, 31 Fed. 2d EN PEEL PEL COE EE OT DPR SH MI EO i 24 Committee of Long Island Lighting Co. v. Securities and Exchange Commission, 183 Fed. 2d 45......... 23 Comstedt v. Gilmore, 96 Fed. 2d 766................ 29 Florida v. United States, 292 U. S. 1, 54S. Ct. 603..... 26 Francis Mohawk Mining & Leasing Co. v. McKay, 141 li Great Western Telegraph Co. v. Burnham, 162 Ill. 339 24 Gordon v. Bowles, 153 Fed. 2d 614........--+++++-++: 32 Guaranty Trust Co. of New York v. Williamsport Wire Rope Co., 20 Fed. Supp. 634........----+- +++ +e: 29 Harvey v. Harvey, 231 N. W. 580......-.-+-+++++ 005: 30 Holly Hill Citrus Growers Association v. Holly Hill Fruit Products, 75 Fed. 2d 13.......-----+-e+eee+> 29 Hovel v. Minneapolis & St. Louis Railroad Co., 206 2 & 3eiieiean rrr rest rer tk 30 In Re Chicago North Shore & Milwaukee R. R. Co., 131 caro céaeevascavenqacescncendn 16, 25 In Re Williams, 50 Pac. 729. .......--++- eee eee eeeee 30 Insurance Group Committee v. Denver, R. G. W. R. Co., 67 Sup. Ct 583.......... cece cece eee e eee eer eees 23 Interstate Commerce Commission Proceedings: I. C. C. Electric Docket No. 7, 234 I. C. C. 34 ..8, 18, 27 I. C. C. Finance Docket No. 14551 .......9, 18, 27, 29 L. GC. C. Railway Labor Act Docket No. 8, 214 1. US at eee eee 8, 18, 26, 29 ee 2 Se ee er. 8, 29 8 ee Se rr eee re ee oe. 8 i cacaccoscaaes coussonenss 8 Interstate Commerce Commission v. Delaware, L. & W. R. RB. Co., 220 U. S. 235 ... 6. ee eee eee ee eee 26 Interstate Commerce Commission v. Louisville & Nash- ville R. R. Co., 227 U. S. 88, 33 S. Ct. 185 ........-- 26 Jorgenson v. Swope, 114 Fed. 2d 988 ......------+-+: 24 King v. State of West Virginia, 216 8S Peer 24 Messenger v. Anderson, 225 U. S. 436 .......-.--++: 24 Papani v. United States, 84 Fed. 2d 160 ......-----. 24 -- Sawyer v. Dollar, 190 Fed. 2d 623 ........-..-..++5. 24 Shields v. Utah-Idaho C. P. Railway Co., 305 U. S. pi ee RR seeps OP rE PME ry eer ig f 23, 25 Sinclair v. Hyatt, 86 Fed. Supp. 828 ..........------ 23 Skinner & Eddy Corporation v. United States, 249 me | ee | Serr ere rr ee eer reer ee 26 Sprague v. Woll, 122 Fed. 24 128 .......-....--++-s 10, 26 Tabor v. Hoffman, 118 N. Y. 30, 23 N. BH. 12 ........ 31 Texas Electric Railroad Co. v. Eastus, 25 Fed. Supp. 825, affirmed without opinion, 308 U.S. 512 ...... 14, 25 Todd Seattle Dry Docks v. O’Leary, 87 Fed. Supp. 907 23 Toolson v. New York Yankees, 101 Fed. Supp. 93, affirmed in 200 Fed. 2d 198 ..........-.eeeeeeeees 26 United States v. Chicago North Shore & Milwaukee ee ee ie eeecreverer str sere 10, 13, 17, 21 United States v. Inter Island Steam Navigation Com- pany, 87 Fed. Supp. 1010 .............- eee ee eee 23 United Office and Professional Workers of America v. Monumental Life Insurance Co., 88 Fed. Supp. 602 23 Western Paper Makers’ Chemical Co. v. United States, Ee nas eras ei boar iKeuas 9 26 Wichita Royalty Co. v. City National Bank of Wichita ee Se re er errr 24 ' Statutes. Section 77B(m) of Bankruptcy Act, 11 U. S. C. A, ES Sa) cc vigs sh vee news 8, 13, 17, 18, 21, 28, 33 Section 1254 of Judiciary Act of 1948 (28 U.S. C. A., Rd iv Section 1(a), Carriers Taxing Act............... 8, 27, 33 Section 1(a), Railroad Retirement Act of 1937... .8, 27, 33 Railway Labor Act, 45 U. 8. C. A., see. 151...... 9, 23, 33 Section 20a of Interstate Commerce Act, 49 U.S. C. A., re ate a SE aia ag de a ween eae 8 10, 21, 28 ae i i Rs inne Boek Oe Rae} sn aN 17 Act for the incorporation of street railroad companies ; Act of June 4, 1861 (Indiana Statutes).......... 6, 11 Indiana ‘‘General Corporation Act’’, approved March 16, 1929, Ch. 215 of Acts of Indiana General Assem- ER ey Pee ad gree eee 6, 11, 12, 13 Section 54-501, 502, 503, 504, 505, 506 of Ch. 5 of Indi- ana Public Service Commission Act (Burns 54-501, i A, Wy Sa hes ies Sa dae cine eeely 19 Section 5, Ch. 1 of Indiana Public Service Commission PE SE PDD enh inriccdi lagacstdewnadeiaews 21 Text Authorities. 9 GC. dB abe: SF Pee Bhi. Sise ee es 11 me Gye. Os Be, POS Ee i a a i eS 25 IN THE Supreme Court of the United States Ocroser Term, 1954. Rea % WILLIAM HENNING RUBIN, MORTON H. BERN- STEIN, JOHN E. KELLY, SR., ann LILLIAN M. KELLY, His Wire; JOHN E. KELLY, JR., anv CHARLES TURNER, Petitioners, vs. CHICAGO SOUTH SHORE & SOUTH BEND RAIL- ROAD, an Inpirana Corporation; JAY SAMUEL HARTT, Presment; EDWARD H. BROSS, Secrerary; W. A. KISSEL anp WILLIAM A. QUAIL, pore susi- NESs aS THE KISSEL ORGANIZATION, a ParTNERSHIP oF New York Crry, New York, Respondents. PETITION FOR WRIT OF CERTIORARI. To the Honorable Chief Justice and Associate Justices of the United States: Petitioner, William Henning Rubin, et al., petition this Court for the issuance of.a Writ of Certiorari to the United States Court of Appeals for the 7th Circuit to review its judgment of November 24, 1954, affirming the judgment of the District Court of the United States for the North- ern District of Illinois, Eastern Division, to the end that its judgment be reversed with directions to reverse the judgment of the court below. TF 2 SUMMARY OF THE MATTER INVOLVED. Petitioners, shareholders of in excess of 5 per cent of the issued and outstanding common stock of respondent railroad, an Indiana corporation, filed a Complaint for a temporary injunction restraining the corporation from proceeding with its annual meeting to be held on March 25, 1954, until the further Order of the Court, that the court decree that a by-law of the corporation requiring a majority of the directors to be residents of the State of Indiana is illegal and void, that a permanent mandatory injunction issue causing the directors to remove said by-law from the minute books, that the officers and directors of the corporation be permanently restrained from using certain proxies secured for said meeting until said by-law has been rescinded by the Board of Directors, and from paying for the solicitation of said proxies, that the Court appoint a Master in Chancery to conduct the meeting, and for general relief. On March 23, 1954, on motion of petitioners, the Court authorized the contemplated meeting to be called and or- ganized and directed that it be continued to March 29, 1954. Thereafter, respondents filed a Motion to Dismiss the Com- plaint, which Motion was sustained, and the Court of Ap- peals affirmed the decision. This petitioner seeks to re- view the decision. QUESTIONS PRESENTED. 1. Whether the decision of the Court of Appeals in the case of Chicago South Shore and South Bend Railroad v. Fleming, 199 Fed. 2d 419, which found that respondent was a railroad engaged in interstate commerce, and not a street car or interurban line, which is a determination of a question of fact, can be relitigated or whether respondents are bound by such former determination. r 3 2. Whether the findings of the Interstate Commerce Commission that respondent railroad is engaged in inter- state commerce and is not an interurban line or street car line, is binding upon respondents. 3. Whether directors of a corporation can restrict the voting rights of its shareholders by a by-law where such restriction is not founded upon a statute. 4. Whether respondent, by applying to the Interstate Commerce Commission for consent and approval of all its acts and doings which it normally would be exempt from doing if it were an interurban or street railway, has brought itself within the definition of a full-fledged rail- road and is estopped to deny a similar classification with reference to other corporate matters. 5. Whether proxies obtained through the use of confi- dential and privileged information by an agent formerly employed by petitioners should be prohibited. 6. Whether the decision in Chicago South Shore and South Bend Railroad v. Fleming, 109 Fed. (2d) 419, and the judgment entered pursuant to the mandate was bind- ing upon the Trial Court and the Court of Appeals, so that petitioner was entitled to have the by-law of respond- ent corporation declared null and void or in the alternative a trial on the merits of the case with the right to introduce evidence. JURISDICTION INVOKED. The jurisdiction of this court is invoked under Sec. 1254 of the Judiciary Act of 1948 (28 U. S. C. A. Sec. 1254). The judgment was entered November 24, 1954, and the time to file the Petition was extended here to February 23, 1955, pursuant to Sec. 2101 (c) (28 U. S. C. A. See. 2101). 4 OPINION BELOW. The opinion in the instant appeal appears as Appendix B of this Petition and is published in 217 Fed. (2d) 177. STATEMENT. Appellants are shareholders of record of 16,677 shares of common stock of appellee railroad, which is in excess of five per cent of all the issued and outstanding common stock of said railroad. A Complaint for mandatory in- junction was filed on the 22nd day of March, 1954, to re- strain appellee railroad from proceeding with its annual meeting; that the court determine and decree that the by- law of appellee corporation requiring a majority of the directors to be residents of the State of Indiana illegal and void; that the officers and directors of appellee corpora- tion be restrained from using proxies secured for the annual meeting’; and that the Court appoint a master in chancery to conduct the annual meeting of shareholders scheduled to be held on March 25, 1954, and other relief. On the 22nd day of March, 1954, appellants filed a com- plaint (Tr., p. 4) against the appellee Chicago South Shore & South Bend Railroad, an Indiana corporation; Jay Samuel Hartt, President; Edward H. Bross, Secre- tary; W. A. Kissel and William A. Quail, doing business as the Kissel Organization, a partnership of New York City, New York, to restrain the holding of the annual meet- ing scheduled to be held on March 25, 1954. The purpose of the postponement of the meeting was to enable the appellants to contact the shareholders of railroad and to secure their proxies for the election of directors and the establishment of cumulative voting. Appellants contended that they were restricted in their solicitation of proxies and their ability to elect a board of directors, as appellee 5 railroad had enacted a by-law on its books making it man- datory that a majority of the appellee’s board of directors be residents of the State of Indiana (Tr. pp. 12-13) ; The appellants and the management of appellee rail- road became involved in a great deal of correspondence with the Securities and Exchange Commission over the question of including certain statements regarding the ille- gal by-law; the appellants did not secure final approval of their proxy letter from the Securities and Exchange Commission until the 22nd day of March, 1954, and the annual meeting of shareholders was scheduled to be held on the 25th day of March, 1954. (Tr. p. 18.) Appellant Rubin, on February 19, 1954, filed with the Securities and Exchange Commission a copy of the proxy statement which he intended to use in connection with the solicitation of proxies for the annual meeting scheduled to be held on the 25th day of March, 1954, but approval was not obtained till March 22nd, 1954, just 3 days before the meeting. (Tr. p. 13.) Appellant’s proxy letter solicited proxies for only three directors since appellant intended to nominate certain in- cumbent members of the board of directors. Appellant was then advised by the Securities and Exchange Commission that under Rule X-14 A-4d, no proxy could confer author- ity to vote for election of any person to office for which a bona fide nominee was not named in the proxy statement. (Tr. p. 12) Appellant Rubin then.contacted six incumbent directors, who advised appellant Rubin that they would not act as nominees since they were nominees of management. Ap- pellants contended that incumbent directors’ refusal to act if nominated by appellants, was a conspiracy to prevent appellants from securing five Indiana residents to act as directors in order to comply with the illegal by-law. (Tr. p. 14.) 6 Appellees had hired a proxy soliciting firm, W. A. Kissel and William A. Quail, doing business as the Kissel Organi- zation, a partnership of New York City, New York, to solicit proxies on their behalf. Appellants contended that the Kissel Organization hav- ing been employed by appellant Rubin to solicit proxies for the annual meeting of March 26, 1953, obtained certain information in trust and in confidence from appellant Rubin and said proxy firm was now using said information in favor of management and against appellant Rubin. (Tr. p. 16.) Appellee railroad operates an electric railroad between Chicago, Illinois and South Bend, Indiana, approximately 90 miles in length. Appellee parallels and competes with lines of the New York Central System. Approximately 6.39 miles of its line between the Indiana-Illinois State Line and Kensington, Illinois, is leased from the Kensing- ton and Eastern Railroad Company, a subsidiary of the Illinois Central Railroad Company, and appellee has track- age rights over the Illinois Central’s electrified suburban line between Kensington and Randolph Street in Chicago, 14.2 miles. Although the appellee originally incorporated in 1925 under the Act of June 4, 1861, entitled ‘‘An Act for the incorporation of street railroad companies,’’ the appel- lee, by virtue of the Articles of Reorganization which it filed on the 18th day of September, 1929, dropped its status as a ‘‘street railway company’’ and became a com- mon carrier, upon filing said Articles of Reorganization which specifically provided on page 1, paragraph 5 of said Articles of Incorporation, ‘‘This Corporation hereby ac- cepts all of the terms and conditions of the Indiana ‘Gen- eral Corporation Act’, approved March 16, 1929, Chapter 215, of the Acts of the Indiana General Assembly, 1929.”’ 7 Appellee is a common carrier engaged in the transporta- tion of freight and passengers in Interstate Commerce be- tween the cities of South Bend, Indiana and Chicago, Illi- nois, and operates a bus line through a subsidiary from Michigan City, Indiana to Benton Harbor, Michigan. In excess of 50 per cent of the revenue of the railroad is derived from freight moving in Interstate Commerce, 90 per cent of which originates off the line of the appellee company and is delivered to the appellee by other rail- roads. The commodity handled in largest volume is coal, which is received from lines on the east and delivered to other lines on the west. The appellee railroad is a party to a large number of tariffs publishing joint rates to and from points through- out the country and has arrangements with all other rail- roads for the division of inter-line freight revenues. The appellee railroad maintains traffic solicitation offices in the City of Chicago, Illinois; Milwaukee, Wisconsin; Washington, D. C.; South Bend, Indiana; New York, New York; Philadelphia and Pittsburgh, Pennsylvania; Minne- apolis, Minnesota; Cedar Rapids, Iowa; Kansas City, Mis- souri; Seattle, Washington; Portland, Oregon and San Francisco, California. Employees of appellee railroad who operate over the Illinois Central tracks are required to take the same ex- amination that the latter carrier gives to its own employees. The tracks of appellee railroad are of standard gauge, generally with 100-pound rails, and the line used to Chicago in spots is elevated as are the other railroads in the same vicinity. Steara locomotives could operate over this line and were used over it for construction purposes when the overhead system was rebuilt in 1925 and 1926. CPT Poe PEE ERLE RN RRM SE: thy MERIT G8 PEM ULES SEC. the PERE fake tendon 8 On September 30, 1933, appellee railroad filed a petition in bankruptcy under Section 77B(m) of the Bankruptcy Act, 11 U.S. C. A., section 205, sub. m. of the United States of America, in the United States District Court for the reorganization of appellee railroad, claiming it was a com- mon carrier engaged in the transportation of persons and property in Interstate Commerce, and that more than 50% of its operating revenues were from the transporta- tion of freight in standard steam railroad freight equip- ment. That pursuant to the plan of reorganization in the 77B bankruptcy case, $1,341,000.00 of bonds and $212,800.00 of five-year notes and two classes of preferred and common stock were issued. The plan of reorganization for the issuance of new se- curities by appellee railroad under the 77B reorganization in the United States District Court could not be consum- mated until authority was granted by Division 4 of the Interstate Commerce Commission in Chicago South Shore and South Bend reorganization. 212 I. C. C. 547, 217 I. C. C. 423, 221 I. C. C. 605. The Interstate Commerce Commission, in a number of cases, determined that the appellee railroad was a com- mon carrier and not exempt from the Railway Labor Act as amended June 21, 1934, as an interurban railway, Rail- way Labor Act docket No. 8, 214 I. C. C. 167. (Tr. p. 7.) The appellee railroad sought a determination from the Interstate Commerce Commission as to whether it was ex- empt from Sec 1(a) of the Carriers Taxing Act, Sec. 1(a) of the Railroad Retirement Act of 1937. (Tr. p. 8.) The Interstate Commerce Commission, in Electric docket No. 7, 234 I. C. C. 34, found that the appellee railroad was part of the general steam railroad system of transportation and not a street, suburban or interurban electric railway. (Tr. pp. 8-9.) 9 In 1934, appellee railroad instituted a suit in the United States District Court for the Northern District of Indiana against James R. Fleming, the district attorney for the United States for the Northern District of Indiana, from instituting a proceeding against appellee railroad for vio- lation of the Railway Labor Act, 45 U. S. C. A. See. 151, wherein the Interstate Commerce Commission intervened. (Tr. p. 10.) The United States District Court for the Northern Dis- trict of Indiana, found that appellee railroad was not within the scope of the Railway Labor Act. An appeal was taken, and the United States Court of Appeals for the Seventh Circuit in 109 F. 2d 419, reversed the district court and found that the Interstate Commerce Commission was correct in its interpretation of the Rail- way Labor Act and that the appellee railroad was uot an interurban or street railway but a common carrier engaged in interstate commerce. (Tr. p. 10.) The appellee railroad has pursued its policy as a com- mon carrier and has been operating subject to the rules and regulations of the Interstate Commerce Commission as evidenced by its filing on May 29, 1944, Finance Docket 14551, of an application for authority to issue securities under Sec. 20(a) of the Interstate Commerce Act, whereas said Act exempts interurban railroads. (Tr. p. 11.) The majority of the meetings of the board of directors to amend the Articles of Incorporation of appellee railroad from 1930 to 1944 were held in the City of Chicago and State of Illinois instead of in the State of Indiana. On the 23rd day of March, 1954, plaintiff filed a motion for temporary injunction to restrain the meeting scheduled to be held on the 25th day of March, 1954, until the further order of the court. (Tr. pp. 22-23.) On the 23rd day of March, 1954, an order was entered 10 by the Honorable Michael L. Igoe, Judge of the United States District Court, that the annual meeting scheduled for Thursday, March 25, 1954, be called, organized and continued until March 29, 1954, to enable appellants to solicit proxies. (Tr. p. 24.) That on the 12th day of April, 1954, defendant railroad filed a motion to dismiss the complaint. (Tr. p. 25.) That on the 4th day of June, 1954, a hearing was had on the motion of appellee to dismiss and an order was entered dismissing the cause with prejudice. REASONS FOR GRANTING THE WRIT. This Writ of Certiorari is sought because the issues presented herein raise important questions of Federal law. At the present time there is a conflict in the decisions of the United States Court of Appeals and the Supreme Court of the United States. In Chicago South Shore & South Bend Railway v. Fleming, 109 Fed. (2d) 419 the Court held that the carrier is a railroad and obligated to comply with the terms of the Railway Retirement Act. In United States v. Chicago North Shore & Milwaukee Railroad, 228 U. S. 1, 53 S. Ct. 235, the Court held that the North Shore Rail- road was not a common carrier within the meaning of See- tion 20-a of the Interstate Commerce Act, 49 U. S. C. A, Sec. 20-a and that the carrier was exempt as an interurban line. In Sprague v. Woll, 122 Fed. (2d) 128, the Court of appeals held that the Chicago North Shore & Milwaukee Railroad Company was obligated to comply with the pro- visions of the Railway Labor Act, 45 U. S. C. A., See. 151 and found the carrier to be a railroad. Both the Chicago South Shore & South Bend and the North Shore Railway were incorporated as interurban lines. Appellee railroad contends that, even though it has as- 11 sumed the status of a carrier engaged in interstate com- merce for all intents and purposes and complies with all of the Statutes of the United States and that of the Inter- state Commerce Commission relating to carriers engaged in interstate commerce, it has the right to conduct the cor- porate operations of the railroad as an interurban line by virtue of its original Articles of Incorporation. The effect on appellants is that appellee railroad, al- though incorporated in 1925, did not adopt a by-law until 1930, which curtails the voting rights of appellants and other shareholders of the corporation by adding qualifica- tions of Indiana residence to candidates for the office of director, and that said by-law is not based on a statute. There is no provision in the General Corporation Act of the State of Indiana that a majority of directors of any Indiana corporation are required to be residents of the State of Indiana. Nor is there any requirement in the Corporation Act of the State of Indiana that the majority of directors of any railroad be residents of the State of Indiana. (See 19 C. J. S., Sec. 937, Page 371 on inability of directors to restrict stockholders’ rights.) Appellee relies mainly on the original Articles of In- corporation filed by appellee railroad which described its activities as a street and interurban railway. The Act of June 4, 1861 entitled ‘‘An Act for the Incor- poration of Street Railroad Companies Act’’, which is the Act under which the original charter was issued to the ap- pellee railroad, was repealed by the General Corporation Act approved March 16, 1929, Chapter 215, of the Acts of the Indiana General Assembly, 1929. The General Cor- poration Act of the State of Indiana further provides, Section 25-245 (4856-11) : Acceprance or Act—Any corporation heretofore organized under the laws of this state for any purpose ‘Sa ———. a = REINS CRS Ka Roe PEER NI IER E MIME AL TREN DD WINE A OER ER TE IE OG RCSA OTT 12 or purposes for which a corporation might be organized under this act, and existing on March 16, 1929, may accept the provisions of this act, and thereafter avail itself of the rights, privileges, immunities and fran- chises provided by this act, by complying with the pro- visions of this article, without limitation of the fore- going, such right to accept the provisions of this act shall extend to any corporation formed under this or any other general law of this state, for any purpose or purposes for which a corporation might be organized under this act, which corporation existed on or after March 16, 1929, and ‘whose articles of incorporation fix a time of corporate existence which has terminated or shall hereafter terminate, provided such corporation shall file its articles of acceptance within two (2) years after such termination. Such acceptance of this act may be effected by the officers, directors and stockholders of such corporation or by the persons acting as such. Upon such acceptance and compliance with the re- quirements of this act such corporation shall be deemed to have existed since such termination and its acts during such time shall have the same validity as if per- formed prior to such termination. This section shall not apply to any corporation whose corporate fran- chise shall have been forfeited, pursuant to the provi- sions of section 51 (b) (§ 25-250) of the Indiana Gen- eral Corporation Act approved March 16, 1929, or pursuant to the provisions of an act concerning cor- porations, approved February 26, 1907, or of any other act of this state. (Acts 1929, ch. 215, § 46, p. 723; 1941, ch. 226, § 3, p. 729; 1943, ch. 94, § 1, p. 294; 1947, ch. 57, § 6, p. 160.) The 1929 Act makes no reference to any interurban lines. It is the contention of appellants that the Act of June 4, 1861, entitled ‘‘An Act for the Incorporation of Street Railroad Companies’’ having been repealed and appellee railroad having filed Articles of Reorganization pursuant to the General Corporation Act of March 16, 1929, Chap- ter 215, the railroad is no longer a street railway or inter- 13 urban line merely because it received its original charter pursuant to said Act. Appellants are entitled to their day in court to prove that the acceptance of the General Corporation Act of the State of Indiana, Section 25-245 (4856-11) Burns, takes them out of the Public Utility class and that appellants are not complying with the Public Utility sections. The acts and activities of appellee railroad indicate that defendant, itself, acknowledged its existence as a rail- road in lieu of an interurban line when it sought the pro- tection of the Bankruptcy Laws of the United States and filed a petition for reorganization under Section 77 B (m) of the Bankruptcy Act of the United States. Chapter VIII, Sec. 77, sub. m, defines a railroad corpora- tion, to which that section is applicable, as ‘‘Any common carrier by railroad engaged in the transportation of persons or property in interstate commerce, except a street, a suburban or interurban electric railway which is not operated as a part of a general railroad system of transportation or which does not derive more than 50% of its operating reve- nue from the transportation of freight in standard, steam railroad freight equipment.’’ 11 U.S. C. A., See. 205, sub. m. The Court of Appeals in the Seventh Circuit, in the case of In Re Chicago North Shore and Milwaukee Railroad Company, 131 Federal (2d) 458, determined that the North Shore was not a railroad but an interurban line and, there- fore, was not entitled to reorganization under Section 77 B (m) of the Bankruptcy Act and was relegated to re- organization under Chapter X of the Bankruptcy Act. Appellee railroad sought a determination from the United States District Court as to whether or not it was obligated to comply with the provisions of the Railway 14 Labor Act. If defendant was a railroad it was obligated to comply. If it was an interurban line it was exempt. Texas Electric Railroad Company v. Eastus, D. C., 25 Fed. Supp. 825, affirmed without opinion, 308 U. S. 512, 60 S. Ct. 134, Appellee railroad instituted a suit against the District Attorney for the Northern District of Indiana, and in that case entitled Chicago South Shore and South Bend Rail- road v. Fleming, 109 Fed. 2d 419, the Court of Appeals for the 7th Circuit in that case said: ‘‘(4) An additional element appears in the case at bar which does not appear to have been present in the other cases. Section 77 B (m) of the Bankruptcy Act, 11 U.S. C. A., Sec. 205, sub. m, which was not changed by the Chandler Act, defines ‘railroad corporation’ as used in that section as any common carrier by railroad engaged in the transportation of persons or property in interstate commerce, except a street, a suburban, or interurban electric railway which is not operated as a part of a general railroad system of transportation or which does not derive more than fifty per cent of its operating revenues from the transportation of freight in standard steam railroad freight equipment. Appellee has undergone reorganization under the pro- visions of section 77 which was designed to provide a means for the reorganization of railroads engaged in interstate commerce. This was permitted at appellee’s request, and upon its disclosure that it was an inter- state carrier, and that more than fifty per cent of its operating revenues was derived from the transporta- tion of freight in standard steam railroad freight equipment. Having brought itself within the definition of railroad for that purpose, we think it cannot now deny similar classification for purposes of the Rail- way Labor Act. This, we think, constitutes substan- tial evidence in support of the Board’s determination, and we are not permitted to disturb it.’’ 15 From this decision it is apparent that the determining fac- tor of whether or not defendant was an interurban railroad or a ‘‘full-fledged’’ railroad is whether or not in excess of 50% of the revenue of the railroad is derived from the transportation of freight in standard steam railroad freight equipment. This is the basis of determination used by the Interstate Commerce Commission, as set forth in its opin- ion in 214 I. C. C. 167. A copy of said decision is attached as Exhibit ‘‘A’’ to the Complaint. The finding and deci- sion of the Commission is as follows: ‘‘Briefly summarizing, the South Shore derives the largest portion of its revenue from freight traffic, over 90 percent of which is interchanged with other railroads and moves in interstate commerce, includ- ing a considerable amount of through traffic handled as an intermediate carrier, and all of such traffic is generally handled in standard equipment under joint rates maintained with the steam railroads to and from points throughout the country. The South Shore was found not to be an interurban within a similar exem- ption provision in Rules for Testing Other Than Steam Power Locomotives, Supra, and it has the char- acteristics of a commercial railroad operated with electric power within the rule laid down in Texas Electric Ry., supra. We find that the line of the Chicago South Shore and South Bend Railroad is not a street, interurban, or suburban electric railroad within the meaning of the exemption proviso in the first paragraph of sec- tion 1 of the Railway Labor Act, as amended June 21, 1934, and it is therefore subject to the provisions of that Act.’’ In fact, it has become a ‘‘rule of thumb”’ that if a rail- road derives in excess of 50 percent of its revenue from the transportation of freight in standard steam railroad freight equipment, it is a railroad and not an interurban or streetcar line for all intents and purposes. This is cor- 16 roborated by the decision In re Chicago, North Shore and Milwaukee Railroad Company, 131 Fed. (2d) 458. In that case the Court had to make a determination as to whether or not the North Shore was an interurban line or a rail- road. If it was an interurban line it was entitled to re- organization under Section 77 (B) (m). Otherwise, it could only reorganize under Chapter 10 of the Bankruptcy Act. It is interesting to note that this same Court rendered the decision in the North Shore case, supra, as the case at bar, that the North Shore Railroad was not a common carrier engaged in Interstate Commerce, but an interur- ban line, since over 50 percent of its revenue was not derived from freight. The Court said: ‘*We note that one important new element appeared in the section 77 definition of a carrier for purposes of the Bankruptcy statute. We refer to the statutory alternate exception of the street, suburban or inter- urban electric railway, ‘which does not derive more than 50 per centum of its operating revenues from the transportation of freight in standard steam rail- road freight equipment.’ We consider this of con- siderable significance in the light of the emphasis placed by the Commission on the carriage of freight in its classification of the various roads. The Commission has formulated a definition in har- mony with its various decisions, and which it seems to have followed generally, ‘* * * an electric railway which is engaged in the general transportation of freight, whether the revenue therefrom is greater or less than its passenger revenue, which handles the bulk of such freight in standard equipment similar to that used by the steam railroads, which freely inter- changes the same with the steam railroads for trans- portation to or from points on their lines, a consid- erable portion thereof being handled in interstate or foreign commerce, and which participates in joint rates with the steam railroads for interstate transporta- tion, has more of the characteristics of a commercial railroad operated by electric power than of an inter- i ee 17 urban as that term is used in the-exemption provision under consideration.’ (Our italics.) Texas Electric Railway, 208 I. C. C. 193; upheld, Texas Electric Ry. Co. v. Eastus, D. C., 25 F. Supp. 825, affirmed without opinion, 308 U. S. 519, 60 S. Ct. 134, 84 L. Ed. 437. It is in the light of this definition, with its primary emphasis placed on the revenues from the transporta- tion of freight, whether such revenues are greater or less than those from the passenger traffic, that we con- sider the introduction by Congress of the alternate requirement of 50% of revenues from freight to pre- vent operation of the exemption provided in Section 77, significant. We think there can be no question but that this Road is not ‘operating as a part of a general steam-railroad system of transportation.”’ The same Judge which rendered the decision in Chicago, North Shore and Milwaukee Railroad (supra) and deter- mined that the latter railroad was an interurban electric railway, since it did not derive more than 50 percent of its operating revenues from transportation of freight in standard steam railroad freight equipment, and hence was not eligible for reorganization under Section 77 of the Bankruptcy Act, rendered the decision in the case at bar, dismissing plaintiff’s Complaint on the ground that it was an interurban railroad, has reversed himself. It is the contention of plaintiff that once a determination was made that defendant railroad is a common carrier and not an interurban railroad, its status could not be changed. Appellee railroad, by seeking the advantages of Section 77 (B) (m) of the Bankruptcy Act, acknowledged its status as a railroad and urged upon the District Court for the Northern District of Indiana that the latter had juris- diction and that its petition was filed in good faith. 11 U. 8. OC. A, Sec. 531. The petition for reorganization could not have been found to have been filed in good faith if defendant railroad did not come within the purview of the Act. 18 This Court is faced with a determination as to whether or not the appellee railroad whose status has been deter- mined ‘‘by a Court of competent jurisdiction’’ can change its corporate status to meet every situation when it finds it advantageous, irrespective of the fact that its status has already been determined. Certainly, appellee railroad should be estopped from denying its existence as a common carrier in lieu of an interurban line. The decree of the United States District Court in ap- proving the plan of reorganization under Section 77 (B) (m) of the Bankruptey Act was an adjudication of the corporate status of the railroad as a common carrier, espe- cially since the Court was obligated to point out that it was not exempt under the provisions of the Act as an inter- urban line. 11 U. S. C. A., Section 205, sub (m). The Chicago South Shore and South Bend Railroad v. Fleming, 109 Fed. (2d) 419, was a further adjudication as to the corporate status of appellee as a railroad and not as an interurban line. The Interstate Commerce Commission has determined in the following proceedings that appellee railroad is a railroad: Commission’s Railway Labor Act, Docket No. 8, 214 I. C. C. 167; A copy of the Commission’s report together with the findings in the proceeding is attached as Exhibit ‘¢A?? to Plaintiff’s Complaint. Interstate Commerce Commission Electric Railway Dock- et No. 7, 234 I. C. C. 34; A copy of the report and decision of the Commission is attached as Exhibit ‘‘B’’ to Plain- tiff’s Complaint. Application of Chicago, South Shore and South Bend Railroad for Authority to Issue Securities Under Section 20a of the Interstate Commerce Act, filed May 29, 1944, Finance Docket #14551; A copy of said application is 19 attached as Exhibit ‘‘C’’ to Plaintiff’s Complaint; A copy of the report of the Commission is attached as Ex- hibit ‘‘D’’ to Plaintiff’s Complaint; A copy of the order approving the report of the Commission entered on the 29th day of May, 1944 is attached as Exhibit ‘‘E’’ to Plaintiff’s Complaint. The Courts have held that determinations of the Com- merce Commission are binding if supported by substantial evidence and the Court of Appeals in the Seventh Circuit in Chicago South Shore and South Bend Railroad v. Flem- ing, 109 Fed. (2d) 419, bid, upheld the findings of the Com- mission that respondent was a railroad and not an inter- urban line. There is nothing to the contention of defendant railroad that ence it incorporated as an interurban line it had to remain such, since the Act of June 4, 1861 entitled ‘‘An Act for the Incorporation of Street Railway Companies’’ was repealed; the defendant filed Articles of Reorganiza- tion on the 17th day of December, 1929, dropping its status as ‘‘street railway’’ and the corporation’s mode of conduct by filing a petition for reorganization under Chapter 77 (B) (m) of the Bankruptcy Act and its institution of legal proceedings in the case entitled Chicago South Shore and South Bend Railroad v. Fleming, ibid, which determined defendant railroad to be a railroad and common carrier and not an interurban line. Record 5. Furthermore, the railroad’s mode of conduct in filing a petition with the Interstate Commerce Commission under Section 20a of the Interstate Commerce Act for the issuance of new secu- rities, as set forth in its application dated May 29, 1944, Finance Docket #14551, plaintiff’s Exhibit ‘‘C’’, is fur- ther evidence that defendant railroad has adopted and ac- quiesced to its status as a common carrier. Section 54- 501, 502, 503, 504, 505 and 506 of Chapter 5 of the Indiana Public Service Commission Act (Burns 54-501, 502, 503, 20 504, 505 and 506) sets forth the procedure to be followed in connection with the issuance of stock by any Public Utility in the State of Indiana. /n examination of plain- tiff’s Exhibit ‘‘C’’ which is attached hereto as Appendix ‘¢A?? indicates that no petition was filed with the Public Utility Commission of the State of Indiana, and that it was not contemplated to file any petition with the Public Util- ity Commission for the State of Indiana. Attention is called to the last paragraph on page 4 and which extends over to page 5 of Exhibit ‘‘C’’, which is included as Ap- pendix ‘‘A’’, ‘‘Upon obtaining authorization of this Commission to issue said Common Capital Stock of the par value of $12.50 per share in accordance with the proposed plan for recapitalization, the directors of Applicant having adopted a resolution pursuant to the provi- sions of Section 23 of The Indiana General Corpora- tion Act (25-222 Burns Ind. St. Anno.) setting forth the proposed amendment, directing that it be sub- mitted to a vote of the shareholders entitled to vote in respect thereof at a meeting of such shareholders called for that purpose, notice thereof having been mailed to each shareholder, the shareholders will vote on said amendment to the Articles of Incorporation and upon the said amendment being adopted by the affirmative vote of at least a majority of the outstand- ing shares, the Articles of Amendment (in the form of Exhibit No. 11 hereto attached) will be completed, signed in triplicate, and filed with the Secretary of State by the officers of Applicant, and thereafter filed for record with the County Recorder of La Porte County, Indiana, as required by Section 29 of The Indiana General Corporation Act (25-228 Burns Ind. St. Anno.) and will thereupon become effective and the said securities authorized by this Commission herein will then be issued.’’ The situation in the case at bar is quite different from that of the Chicago, North Shore & Milwaukee Railroad 21 Company, 131 Fed. (2d) 458, where the Court held that the North Shore was an interurban line and could not re- organize under Chapter VIII, Sec. 77, sub. m, 11 U.S. C. A., Sec. 205, sub. m. The Court of Appeals in the North Shore ease had for its support the decision of the Supreme Court of the United States in the case of United States v. Chicago, North Shore & Milwaukee Railroad, 288 U. S. 1, 53 S. Ct. 245, where that Court held that the North Shore Railroad was exempt from complying with Sec. 20a of the Interstate Commerce Act, 49 U.S. C. A., Sec. 20a, in connection with the issuance of its securities, because the road was an independently operated electric interurban railway ex- pressly excepted from the requirements of the section. Furthermore, when all of the cases in connection with the determination by the courts that the various railroads were determined to be either an interurban line or railroad are analyzed, it is found that in each case the Interstate Commerce Commission in the first instance made a de- termination, after hearing all the evidence introduced by both the railroad and the moving parties, that either the railroad was a railroad or was an interurban line and ex- empt from complying with various statutes passed by Congress in connection with the moving of both passengers and freight in interstate commerce and certain rules and regulations applicable to the employees of the railroad and the general public. In the case at bar, the District Court erroneously dis- missed the complaint of plaintiffs-appellants on a motion to dismiss based on the fact that the original charter pro- vided for the incorporation of appellee as an interurban line, and further erroneously reached the conclusion that if it was so incorporated as an interurban line, it must necessarily follow that it is a public utility under Sec. 5, Chapter I, of the Indiana Public Service Commission Act (Burns, 54-105). 22 It is quite evident that whether or not appellee railroad is a utility and subject to the rules and regulations as such, of the Indiana Public Service Commission Act, is a question of fact. In all of the cases hereinabove referred to, where the determination was made that a railroad was a railroad or a railroad was an interurban line, the courts had before them the findings of the Interstate Commerce Commission, and the only function of the courts in those cases was to determine whether such findings were legally made and supported by substantial evidence. In the case at bar, the Interstate Commerce Commission has ruled in each and every instant that the railroad has before it, and the Court of Appeals for the Seventh Circuit in Chicago, South Shore & South Bend Railroad v. Fleming, ibid, concurred that appellee railroad was a railroad and not an interurban line. There is nothing indicated in the record to show why either the District Court or the Court of Appeals should permit a determination to be made as to the status of appellee railroad in contradiction to the rulings of the Interstate Commerce Commission and the Court of Appeals for the same Circuit by the recent ruling of the Court of Appeals in the case at bar. It is, therefore, urged that certiorari should issue to enable the litigants to have their day in court and prove their case. The only facts that the District Court Judge had before him were the statements of counsel de hors the record that appellee railroad was complying with the rules and regulations of the Public Service Commission of the State of Indiana, since it was originally incorporated as an interurban line, which was denied by counsel for plaintiff-appellants. The District Court in the case at bar was bound to fol- low the decision of the United States Court of Appeals in Chicago, South Shore and South Bend Railroad v. Flem- ing, 109 Fed. (2d) 419 (7th Circuit), that defendant rail- 23 road was a common carrier engaged in interstate commerce and not an interurban railroad. In the Fleming case the United States Court of Appeals reversed the District Court of the State of Indiana which had earlier ruled that it was an interurban railroad and, therefore, exempt from the proviso of the Railway Labor Act, 45 U.S. C. A., Section 151. The Cireuit Court of Appeals in the Fleming case approved the findings of the Interstate Commerce Commis- sion to that effect and approved the findings of the Com- mission on the authority of Shields v. Utah-Idaho C. P. Railway Co., 305 U. 8. 177. The District Court, in the case at bar, could not review the findings of the United States Court of Appeals in Chicago, South Shore and South Bend Railroad v. Fleming (supra), nor could it make a redetermination. Sinclair v. Hyatt, 86 Fed. Supp. 828; United States v. Inter-Island Steam Navigation Company, 87 Fed. Supp. 1010; United Office and Professional Workers of America v. Monumental Life Insurance Company, 88 Fed. Supp. 602; Todd Seattle Dry Docks v. O’ Leary, 87 Fed. Supp. 907. The decision of the Fleming case that the defendant rail- road was a common carrier engaged in interstate com- merece and not an interurban line was conclusive on the District Court in the case at bar. Committee of Long Island Lighting Company v. Securities € Exchange Commission, 183 Fed. (2d) 45. The United States Supreme Court stated the proposition very clearly in Insurance Group Committee v. Denver, R. G. W. R. Company, 67 Supreme Court, 583, page 5835, when it said: ‘‘When matters are decided by an Appellate Court its rulings, unless reversed by it or a superior court, bind the lower court. Thus a cause proceeds to final de- termination. While power rests in a Federal Court that passes an order or decision to change its position on a 24 subsequent review in the same case, orderly judicial action, except in unusual circumstances, requires it to review to permit the re-litigation of matters or issues previously determined on a former review.’’ Great Western Tele- graph Company v. Burnham, 162 U. S. 339; King v. State of West Virginia, 216 U. S. 92; Messenger v. Anderson, 225 U. S. 486; Wichtta Royalty Company v. City National Bank of Wichita Falls, 306 U. S. 103. The Order of the Court of Appeals in Chicago, South Shore and South Bend Railroad v. Fleming, ibid, was not appealed from and the Court of Appeals for the same Circuit in the case at bar was bound by the determination of the Court of Appeals of the same Circuit in the Chicago, South Shore and South Bend Railroad v. Fleming case, ibid. Candler v. Rose, 80 F. 2d 407; Claude Neon Lights v. E. Machlett & Son, 31 F. 2d 983; Papani v. United States, 84 F. 2d 160; Jorgenson v. Swope, 114 F. 2d 988. In fact, the Court of Appeals in Sawyer v. Dollar, 190 Fed. (2d) 623, gives a very good resume of the theory under which District Courts, Courts of Appeal, and the Supreme Court of the United States respect each other’s decisions. ‘‘A Supreme Court decision is not necessary to make an order of a Court binding or finally dispositive of a controversy. If an order of a District Court is not appealed it is just as final in this sense as if the Su- preme Court had itself entered the order. An order of any court having jurisdiction of the parties and of the subject matter is binding. It may not be res judicata as to other parties, but it is conclusive as to the parties before the court.’’ The Court of Appeals in the case at bar under ‘‘The Stare Decisis Rule’’ was bound to follow the principle of law which became settled by the decisions of the Court of Appeals of the Seventh Circuit in Chicago, South Shore 7S ae, eae eS 25 and South Bend Railroad v. Fleming, 109 Fed. (2d) 419, in the case of In re Chicago, North Shore and Milwaukee Railroad Company, 131 Fed. (2d) 458; Tewas Electric Railway Company v. Eastus, D. C. 25 Fed. Supp. 825, af- firmed without opinion, 308 U. 8. 512; Shields v. Utah-Idaho C. P. Railroad Company, 305 U. 8. 177, that the determin- ing factor as to whether or not defendant railroad was a railroad or an interurban line is whether in excess of 50 percent of the railroad’s revenue is derived from the hauling of freight, the type of equipment such as railroad cars and rails. Corpus Juris, in discussing ‘‘The Stare Decisis Rule’’, 21 C. J. S., Section 187, p. 303, says: ‘‘This rule, which has been stated, infra, See. 193, to be merely an application of the doctrine of estoppel to court decisions, and which is usually known and referred to as the rule of stare decisis, is founded largely on considerations of expediency and sound principles of public policy, to preserve the harmony and stability of the law, and to make as steadfast as possible judicially declared principles affecting the rights of property, it being indispensable to the due administration of justice, especially by a court of last resort, that a question once deliberately examined and decided should be considered as settled and closed to further argument.’’ In the railroad cases, the purpose of the Interstate Com- merce Commission is to regulate common carriers in a uniform manner on the question of rates, wages, operating standards and many other problems. Congress has seen fit to delegate to the Commission the power to make de- terminations of fact and, thereby, relieve the Courts of the duty and obligation of referring such matters to special Masters and others who may be unacquainted with railroad procedure. To bolster the findings of the Commission, the Courts have taken the position that findings of the Inter- 26 state Commerce Commission will not be disturbed unless they are clearly erroneous and said findings are not based on the facts. Sprague v. Woll, 122 F. 2d 128, 131; Chicago, South Shore and South Bend Railroad Co. v. Fleming, 109 F. 2d 419; Interstate Commerce Commission v. Delaware, L. € W. R. R. Co., 220 U. 8. 235, 31 S. Ct. 392; Interstate Com- merce Commission v. Louisville € Nashville R. R. Co., 227 U. 8. 88, 33 S. Ct. 185; Skinner d Eddy Corporation v. United States, 249 U. 8. 557, 39 S. Ct. 375; Western Paper Makers’ Chemical Co. v. United States, 271 U. S. 268, 46 S. Ct. 500; Florida v. United States, 292 U.S. 1, 12, 54 S. Ct. 603, 608. The District Court in the case of Toolson v. New York Yankees, 101 Fed. Supp. 93, which case was affirmed by the Court of Appeals in 200 Fed. 2d 198, says: ‘ 49 inally set for March 25, 1954, was continued to March 29, 1954, and that the meeting was held and its business trans- acted, it may be that this entire case became moot. How- ever we shall resolve any doubt against that conclusion and proceed to a determination of certain aspects of the merits. fF Section 2 of the Indiana General Corporation act’ provides : ‘‘Corporations may be organized for pecuniary profit under this act for any lawful business purpose or pur- poses, except rural loan and savings associations, credit unions or corporations for the conduct of a bank- ing, railroad, insurance, surety, trust, safe deposit, mortgage guaranty or building and loan business.’’ Section 7 of the same act™ provides in part: ‘‘The power to make, alter, amend or repeal the by- laws of a corporation shall be vested in the board of directors, unless otherwise provided in the articles of incorporation. * * *’’ Section 9 of said act!” provides in part: ‘The business of every corporation shall be managed by a board of directors, at least a majority of whom are citizens of the United States. Directors need not be shareholders in the corporation unless the articles of incorporation or by-laws so require, but shall have other qualifications as the by-laws prescribe. * * *.”’ Section 73 of said act’ repealed certain sections of the street railroad companies act of June 4, 1861. Article 2(b) of South Shore’s articles of incorporation, as amended in 1944, provides in part, as follows: 10. 11, 12. 13. Burns Indiana Statutes, 25-201. Thid., 25-206. Ibid., 25-208. Thid., 25-404. 50 ‘To maintain and operate, and to that end to con- struct, purchase, lease or otherwise acquire, own and control street railroad, interurban street railroad and suburban street railroad lines and systems, * * *.’’ Section 1 of Article IV of South Shore’s by-laws pro- vides: ‘‘A majority of the directors shall be residents of the State of Indiana.’’ The source of South Shore’s corporate powers is the State of Indiana, by virtue of whose act for the incorpora- tion of street railroad companies it was originally organ- ized and by virtue of whose general corporation act it has existed since September 18, 1929. From that source South Shore’s board of directors derived general power to make by-laws and specific power to make by-laws prescribing qualifications for directors, which are in addition to the statutory qualification that at least a majority of the board of directors are to be citizens of the United States. Moreover, it is apparent that its adoption was not be- cause of any ulterior or improper motive aimed at plain- tiffs. It was adopted in 1930 and obviously is authorized by the Indiana Public Service Commission act. That act provides that the term ‘‘public utility’’ as therein used means and embraces every corporation owning, operat- ing, managing or controlling any street railway or inter- urban railway", and requires that a majority in number of the board of directors thereof shall be bona fide residents and citizens of the State of Indiana”. Under these statutory provisions South Shore’s by-law now under attack is valid. If, in the conduct of its business, it is exceeding or deviating from its charter powers, that 14. Burns Indiana Statutes, 54-105. 15. Ibid., 54-212. 51 is a matter for the state itself to assert in a direct proceed- ing brought for that purpose. It is immaterial in the litigation before us that the agen- cies of governments other than the state of Indiana may have determined for their own legislative or administra- ' tive purposes that South Shore is a railroad engaged in interstate commerce. South Shore’s corporate structure, including such matters as the qualifications required of its directors, is a matter controlled entirely by Indiana law. Plaintiffs argue that South Shore, when it accepted all of the terms and conditions of the Indiana general cor- poration act in 1929, dropped its status as a ‘‘street rail- way company’’ which it had acquired when it was orig- inally incorporated in 1925 under the act of June 4, 1861, and became a common carrier engaged in the transporta- tion of freight and passengers in interstate commerce. We assume that by this argument plaintiffs mean that South Shore’s status thereby was changed from a street railway company to a railroad. Without that construc- tion the argument is meaningless. However, if it is meant that South Shore became a railroad, that conclusion is erroneous for at least one reason, which is that section 2 of the Indiana general corporation act does not permit railroads, as distinguished from street or interurban rail- ways, to be organized thereunder. Railroads are spe- cifically excepted from that act.’* Therefore, it is clear that South Shore could adopt and continue to exist under that act only as a street or interurban railway. South Shore’s status is the same under the general corporation act as it was when that corporation was created under the Indiana law for the formation of street and interurban railways.’* The validity of the by-law in question is not 16. Burns Indiana Statutes, 25-201. 17. Burns Indiana Statutes, 1926, ed., §§ 13,297 et seq. 52 affected by the fact that South Shore, as a common carrier, engages in interstate commerce in the conduct of its stree railway or interurban railway business. 2. Whether or not South Shore should have been re- strained by the District Court from using at its ann meeting the proxies secured by the Kissel Organization, is a moot question, the meeting having been held and a journed. As to the prayer of the complaint that South Shore’ ~ be enjoined from paying Kissel Organization for its work in securing the proxies pursuant to an agreement with South Shore, no reason has been assigned by plaintiffs indicating that the agreement is unenforceable for any rea- son. Whether the proxies were obtained by Kissel Or- 7 ganization by means of an improper use of confidential in- ~ formation, which might make it liable to plaintiffs, is ir- relevant because plaintiffs pray for no relief against Kissel Organization. On the record before us no reason appears that indicates it is not entitled to enforce its contract against South Shore for services rendered. Hence it would be improper to enjoin South Shore from performing its obligation under that contract. For the reasons hereinbefore set forth, the order of the’ ~ District Court dismissing the action with prejudice i AFFIRMED. PAGE POTEET CE ee eee ee eee Te oe Te eee 1 I 6s aka d a cba 6 pike 49:0 15-60 aonb MaeN ohn hi ae 1 I INE oo sev. Wa vs ein sure as + oa0 a4 OWewns ee 2 Pe leiscksvkceensvbhenanee cewnheece 2 ERS RIS I SES Pe RD OE ye 7 eR CEN eeereereereeeeereee eee eeeeeeereeeeeeeeeeeeeee eereeeeeereeeeeeeeeeeeeeeereeeeeeeeeeeeeee CITATIONS Aetna Life Insurance Co. v. Carrillo, 164 F. 2d 883 Sed a MEE