This action was originally brought for an injunction requiring the Interstate Commerce Commission to set aside two of its orders to the extent that they granted the application of Alleghany Corporation to be “considered as a carrier” subject to the provisions of sections 20(1) to (10) inclusive and sections 20a(2) to (11) inclusive of the Interstate Commerce Act, 49 U.S.C. §§ 20(1)-(10) inclusive, 20a(2)-(ll) inclusive.
By supplemental complaint and stipulation the scope of the action has since been extended so as to include a prayer for an injunction against the enforcement of two orders of the I.C.C. approving a proposed exchange of preferred stock of Alleghany.
The matter now before this court is an application for an interlocutory injunction vacating the said orders that Alle-ghany be considered as a carrier and enjoining the enforcement of the two orders dealing with the preferred stock.
On September 17, 1954, Alleghany, The New York Central Railroad Company and two subsidiaries of the New York Central, Louisville & Jeffersonville Bridge & Railroad Co. and The Cleveland, Cincinnati, Chicago and St. Louis Railway Company, known as “the Big Four”, filed with the I.C.C. an application pursuant to section 5(2) of the Interstate Commerce Act, 49 U.S.C. § 5(2). On its face, the principal object of the application was to obtain approval for a merger of the Bridge Company into the Big Four. The substantial effect of the granting of the application, however, would have been, as claimed by Alle-ghany, to constitute Alleghany, pursuant to the provisions of section 5(3), a non-carrier “considered as a carrier” subject to the above-designated provisions of the Interstate Commerce Act for the purpose of the issuance of securities, etc. It is agreed on all hands that, except for the effect of such an order that Alleghany should be “considered as a carrier”, it would be an investment company subject to the provisions of the Investment Company Act, 15 U.S.C. § 80a-l et seq., for the purposes of the issuance of securities, etc. Thus, according to Alleghany’s theory, the granting of the application constitutes a determination that Alle-ghany in issuing securities is subject to supervision of the I.C.C. rather than the Securities and Exchange Commission. The immediate importance of this is in connection with the issuance of a new class of preferred stock pursuant to a voluntary exchange offer authorized by the Alleghany directors, made public on February 2, 1955 and approved by the I.C.C. in the orders under review but not by the S.E.C.
*136Alleghany filed with'the I.C.C. its application for leave to issue the new class of preferred stock on February 18, 1955.
On March 2, 1955, the I.C.C., through its Division 4, approved the merger application and, on May 24, 1955; the I.C.C. through the whole Commission, affirmed this approval. These two orders of approval are the ones now being reviewed by this court and which were included in the original complaint. Since their effect was the same they will usually be referred to herein in the singular.
On May 26, 1955, two days after the order of the full Commission approving the merger, Division 4 of the I.C.C. approved the issuance of the preferred stock.
On June 6, 1955, the complaint in this action was filed and, on June 15, 1955, plaintiffs made this application seeking a preliminary injunction against enforcement of the jurisdiction assuming orders. Attack on the preferred stock order was postponed prior to the action of the full Commission on the theory that review would be premature.
On June 22, 1955, the entire Commission affirmed the preferred stock order of Division 4. These two preferred stock orders are also now being reviewed by this court but they were added by supplemental complaint. Like the jurisdiction assuming orders they will usually be referred to in the singular.
On June 23, 1955, Alleghany, immediately upon learning of the full Commission’s order finally approving the issuance of the preferred stock, began distribution of the new stock pursuant to the exchange offer. That distribution was halted by a temporary restraining order issued by this court but not before more than half of the proposed issue had been exchanged. The effect of that temporary restraining order has been to prevent the transfer of the shares of new preferred stock and consequently to halt trading therein on the New York Stock Exchange. We are advised that, before trading was actually stopped, there had been sales amounting to 2,400 shares of stock.
Since the institution of the proceeding, The New York Central Railroad, Alleghany and two holders of Alleghany preferred stock, Gruss & Co., a copart-nership, and Samuel A. Mehlman, have been .granted leave to intervene as defendants.
As above indicated, Alleghany’s theory is that, as a result of the determination of the merger application, Alleghany obtained the status of a non-carrier deemed to be a carrier for the purpose of coming under the supervision of the I.C.C. for matters relating to the issuance of securities, as distinguished from the status of an investment company coming under the supervision of the S.E.C. for such matters.
The statutory provisions involved are the following:
Interstate Commerce Act, § 5, 49 U.S.C. § 5.
“(2) Unifications, mergers, and acquisitions of control.
“(a) It shall be lawful, with the approval and authorization of the Commission, as provided in subdivision (b)—
“(i) for two or more carriers to consolidate or merge their properties or franchises, or any part thereof, into one corporation for the ownership, management, and operation of the properties theretofore in separate ownership; or for any carrier, or two or more carriers jointly, to purchase, lease, or contract to operate the properties, or any part thereof, of another; or for any carrier, or two or more carriers jointly, to acquire control of another through ownership of its stock or otherwise; or for a person which is not a carrier to acquire control of two or more carriers through ownership of their stock or otherwise; or for a person which is not a carrier and which has control of one or more carriers to acquire control of another carrier *137through- ownership of its., stock or otherwise; f * *. , '
“(3) Non-carrier .deemed carrier upon acquiring control.
“Whenever a person which is not a carrier is authorized, by. an order entered under paragraph (2),'to acquire control óf .ány carrier ór of two or more carriers,' such person thereafter shall, to the .extent provided by the Commission in such order, be considered as' a carrier subject to such of the following provisions as are applicable to any carrier involved in such acquisition of control: Sections 20(1) to (10), 304(a) (1) and (2), 320 and 913 of this title, (which relate to reports, accounts, and so forth, of carriers), and sections 20a(2) to (11), and 314 of this title, . (which relate to issues of securities and assumptions of liability of carriers), including in each case the penalties applicable in the case of violations of. such provisions.”
At the threshold defendants make two objections: first, that the jurisdiction assuming order is not reviewable and second, that, even if it is reviewable, plaintiff has no standing to review it.
Reviewability of the Orders.
Shannahan v. United States, 303 U.S. 596, 58 S.Ct. 732, 82 L.Ed. 1039, is said to be authority against the reviewability of the jurisdiction assuming order. The determination .there held to be unreviewable was a finding that the carrier concerned was not an interurban railroad and was therefore subject to certain provisions as to labor dispute mediation.
The Supreme Court in Rochester Tel. Corp. v. U. S., 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147, seemed to.disagree with the Shannahan decision on the facts but Justice Frankfurter, 307 U.S. at page 131, 59 S.Ct. at page 757, explained its principle by quoting the statement of Justice Brandeis in United States v. Los Angeles & S. L. R. Co., 273 U.S. 299, 310, 47 S.Ct. 413, 71 L.Ed. 651, to the effect that there can be no review of an order “which, does not. change- the. • carrier’s existing or future status”.
■. Here the status of Alleghany, absent an order of the I.C.C. under sections 5(2)-Und .5 (3),.that it should be considered as a carrier subject to the Interstate Commerce Act, was that of an investment company subject to the provisions of the Investment Company Act. The orders, sought to'be reviewed changed its “existing or future status”. Hence the quoted principle of the Shannahan-Case does not prevent their review.
Justice Frankfurter in the Rochester case, besides quoting from Justice Bran-déis, stated the rule for himself as follows, 307 U.S. at page 132, 59 S.Ct. at page 758, “Where a complainant seeks the Commission’s authority under the terms of a statute and the Commission’s action is followed by legal consequences * * or where the Commission’s order denies an exemption from the terms of the statute * ' * ' * the road to the courts’ jurisdiction seems to be clear.”
Here the I.C.C. granted an. exemption from the terms of the Investment Company Act. That act, by section 3(c) (9), 15 U.S.C. § 80a-3(c) (9), excepts from the “investment company” class, “[a]ny company subject to regulation under the Interstate Commerce Act”. Section 5(3) of the Interstate Comhierce Act, under Which the I.C.C. acted in making the order here, provides that the non-carrier shall, “to the extent provided by the' Commission in such order”, be considered as a carrier subject to the enumerated provisions of the Interstate Commerce' Act. By making Alleghany subject to the Interstate Commerce Act,the I.C.C. exempted it from the Investment Company Áct and thereby brought the order within the test for review-ability laid down in the Rochester case.
There is no room here for any idea that might be generated by the Shanna-. han case that an attempt to review the jurisdiction assuming orders is premature. The jurisdiction has been exer-. cised by the adoption of the order approving the issue of the preferred stock. ’
*138Defendants intimate that the order approving the issue of preferred stock is permissive only and that it is therefore unreviewable citing a statement in Miller v. United States, D.C.S.D.N.Y., 277 F. 95, that an order of the I.C.C. approving the issuance of securities does not direct the issuance but only puts the carrier in a position where, if the securities are issued they will be valid.1 If this statement were intended to lay down a rule that permissive orders of the I.C.C. may not be reviewed, the law has since been settled to the contrary. In New York Central Securities Corp. v. United States, D.C.S.D.N.Y., 54 F.2d 122, affirmed 287 U.S. 12, 53 S.Ct. 45, 77 L.Ed. 138, a stockholder was allowed to review an order of the I.C.C. which authorized, but did not direct, action by the corporation. Accord: Chicago Junction Case, 264 U.S. 258, 263, 44 S.Ct. 317, 68 L.Ed. 667.
Plaintiffs’ Standing to Review the Orders and “Irreparable Damage”.
The Investment Company Act, Aug. 22, 1940, c. 686, Title I, §§ 1-53, 54 Stat. 789, tit. 15 U.S.C. §§ 80a-l to 80a-52, begins with legislative findings and a declaration of policy. Section 1(b) declares that the “interest of investors” is “adversely affected * * * when investment companies are * * * operated [or] managed * * * in the interest of directors, officers, investment advisors, depositors, or other affiliated persons thereof”. That section ends with a declaration “that the policy and purposes of this subchapter * * * are to mitigate and, so far as is feasible, to eliminate the conditions enumerated in this section which adversely affect the national public interest and the interest of investors.”
One of the purposes of the Investment Company Act is thus to protect investors in investment companies against the managing of those companies in the interests of persons other than the investors.
The complaint here charges in substance that one Robert R. Young and one Allan P. Kirby are in control of Alle-ghany and have been conducting Alle-ghany’s affairs primarily in the interest of themselves and a small group of insiders and secondarily in the interest of the other stockholders. It further charges that the application for the orders under review was made at the instance of Young and Kirby for the purpose of escaping the provisions of the Investment Company Act.
The stockholders here allege that, by obtaining an erroneous ruling from the I.C.C., persons in control of the corporation have succeeded in escaping the provisions of an act passed for the express purpose of protecting stockholders from persons in control. Since the corporation, by hypothesis, is helpless, plaintiffs say that they have standing to sue to prevent the thwarting of the declared will of Congress. We are convinced that a stockholder, who seeks only that which Congress has provided for him as matter of right, need not show money damage to entitle him to sue. It is enough if he shows that no one else will act on his behalf. Here the corporation, which is controlled by those he is attacking and which has sought the ruling to which he objects, will not help him. While it would perhaps be too much to expect of the S.E.C. to engage in a jurisdictional fight with another great administrative body of coordinate standing, the hard fact is that it has limited its participation to a request to the I.C.C. to surrender part of its jurisdiction as a matter of grace. Moreover no such remedy via the S.E.C. is provided by statute. See Goldstein v. Groesbeck, 2 Cir., 142 F.2d 422, 154 A.L.R. 1285.
*139A plenary action by the stockholders against Alleghany to enjoin the issuance of the preferred stock while the orders of the I.C.C. stand in full force and effect would quite properly be met with the defense that they were collaterally attacking an administrative body’s determination.2 3 The present proceeding, where the I.C.C.’s orders are directly attacked and where as a party it may be heard in their behalf, affords fair play to both sides.
Where the question is that of unlawful usurpation of regulatory control as distinguished from the reasonableness of regulatory action by an agency with conceded jurisdiction, a stockholder has standing to attack an administrative order in which the corporate management has acquiesced even though he cannot show an interest other than a derivative one on behalf of the corporation. See Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 56 S.Ct. 466, 80 L.Ed. 688. There relief was accorded to stockholders against a “breach of duty [which consists] in yielding, without appropriate resistance, to governmental demands which are without warrant of law or are in violation of .constitutional restrictions”, 297 U.S. at page 319, 56 S.Ct. at page 470, even when the stockholders sued “in the right of”, 297 U.S. at page 318, 56 S.Ct. at page 469, the corporation.
Yet, even if we applied the narrower test as to standing to sue applied where a stockholder challenges the reasonableness of the I.C.C.’s regulation rather than its jurisdiction to regulate at all, plaintiffs have sufficient interest apart from the corporation to give them standing to sue. Indeed what they claim here is a right to protection as stockholders against management regardless of the effect of that protection upon the welfare of the corporation. That which they seek is the right of a stockholder not the right of a corporation.
Stockholders were accorded standing to sue under the Urgent Deficiencies Act to review action of the I.C.C. under section 5(2) in New York Central Securities Corp. v. United States, 54 F.2d 122, supra. In that case plaintiff held stock of two kinds: stock of a lessee corporation and stock of lessor corporations. The plan of acquisition involved payment of rent by the lessee corporation to stockholders of the lessor corporations in lieu of dividends. The court held that, as stockholder of a lessee corporation, plaintiff had no standing because “plaintiff cannot have sustained any injury in this respect other than indirectly through the lessee corporation.” 54 F.2d 125. “As a minority stockholder of lessor corporations, however, its alleged injury is not merely derivative through its ownership of stock, but is an independent injury to itself as a member of a class created by the leasing agreements between lessors and lessee.” 54 F.2d 126.
In Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958, 92 L.Ed. 1305, stockholders were permitted to review the I.C.C.’s treatment of their class of stock in a merger plan under section 5 (2).
The principle was expressed by Brandeis, J., in Pittsburgh & W. Va. Ry. Co. v. U. S., 281 U.S. 479, 487, 50 S.Ct. 378, 381, 74 L.Ed. 980, where he said “Finally, the claim that the order threatens the Wheeling’s financial stability, and consequently appellant’s financial interest as a minority stockholder, is not sufficient to show a threat of the legal injury necessary to entitle it to bring a suit to set aside the order. This financial interest does not differ from that of every investor in Wheeling securities or from an investor’s interest in any busi*140ness transaction or lawsuit of his corporation.”
The complaint of plaintiffs is that the I.C.C. unlawfully extended the management’s power to adjust their relations with other security holders. Except for the allegedly unlawful act of the I.C.C. the preferences and privileges of plaintiffs would have been protected by the Investment Company Act against the manipulation of those in control of the corporation.3
The situation is precisely the same as that in the New York Central Securities case, abstracted above, where the stockholder’s standing was upheld. The suing stockholder was complaining not because it was to receive rentals but because the corporation was not to receive them. That wrong the stockholder suffered in common with all other stockholders yet the court held that the injury was “not merely derivative * * *, but * * * independent.” 54 F.2d 126. In a literal sense nothing could be more derivative than the loss that the stockholder suffered when the I.C.C. permitted the corporation to renounce the right to rent but, in effect, the action of the I.C.C. deprived the stockholders of an independent right to dividends earned by the property of the corporation. So here, it is the whole Alleghany corporation which the I.C.C. has made subject to the Interstate Commerce Act instead of the Investment Company'Act but the effect of the action of the I.C.C. is to deprive the stockholders of an independent right not to have their status changed except as permitted by the terms of the Investment Company Act.
Any construction that would identify the interests of these plaintiffs and the corporation would render nugatory the Investment Company Act as an accomplishment of its declared purpose to eliminate the condition that exists when “investment companies” “fail to protect the preferences and privileges of the holders of their outstanding'securities”. 15 U.S.C. § 80a-l(b) (3),
In none of the cases cited by counsel in support of the argument that plaintiffs have no standing did the plaintiffs have such a direct interest in the question as the suitors here. In Pittsburgh & W. Va. Ry. Co. v. U. S., 281 U.S. 479, 50 S. Ct. 378, supra, the plaintiff minority stockholder sought to attack an order permitting the abandonment of a railroad station. In Alexander Sprunt & Son v. United States, 281 U.S. 249, 50 S.Ct. 315, 74 L.Ed. 832 and Edward Hines Yellow Pine Trustees v. U. S., 263 U.S. 143, 44 S.Ct. 72, 68 L.Ed. 216, the plaintiffs were shippers who complained that rates, not attacked as unreasonable, worsened their competitive positions. Merchant Truckmen’s Bureau v. United States, D.C.S.D.N.Y., 16 F.Supp. 998, was a similar case where the plaintiff did not even have the qualification of being a shipper. In Moffat Tunnel League v. U. S., 289 U.S. 113, 53 S.Ct. 543, 545, 77 L.Ed. 1069, the Supreme Court characterized the plaintiff’s interest as “no more than a sentiment”. In Miller v. United States, 277 F. 95, supra, the plaintiff alleged that he was a stockholder in a railroad whose properties were in process of foreclosure. He was said to be without standing to review an order of the I.C.C. approving issuance of securities of a new corporation for the properties of the old.
It is said that plaintiffs do not show that .“legal injury” which is necessary to give plaintiffs standing. We believe that they show legal injury when they demonstrate that, because of an erroneous ruling by the I.C.C. as to their status, they are subject to possible injury from which they would otherwise be protected. The order under review has exempted the management from the restrictions of the Investment Company Act.
*141The Investment Company Act was adopted for the protection of investors. Congress has declared that an investor in an investment company shall have the protection of the act and the protection of the S.E.C. It is no answer to tell plaintiffs that they may come out better under the liberal Interstate Commerce Act than under the strict Investment Company Act. The law forbids the management to subject the investor to that hazard.
Of course it cannot be gainsaid that plaintiffs cannot demonstrate that over the years they would fare better as stockholders if Alleghany had to operate under the Investment Company Act rather than the Interstate Commerce Act. That is immaterial, however. The stockholder in the New York Central Securities case, 54 F.2d 122, supra, was permitted to raise many points other than its point that the rental was inadequate.
The rule that a plaintiff, to entitle himself to an injunction, must show irreparable damage has no bearing on plaintiffs’ right to maintain this action. All that it means is that they cannot have an injunction if they have an adequate remedy at lav/.4 If plaintiffs have, as we think, this right to invoke the protection of the Investment Company Act against an unlawful assumption of jurisdiction by the I.C.C., they have no adequate remedy at law to vindicate that right.
Plaintiffs’ right to a preliminary injunction is a different matter.
To support a preliminary injunction in an injunction suit the plaintiff must show not only that any other remedy than a final injunction would be inadequate but also that an injunction issued after the time involved in waiting for trial would be inadequate protection. Here, unless the issuance of the proposed preferred stock is enjoined it will be issued and in many cases reach the hands of bona fide purchasers so that an unscrambling, in the event of a determination that the I.C.C. approval was unlawful, would be a practical impossibility. Plaintiffs would then find themselves in the position of common stockholders faced with the possibility of dilution of their interest by conversion of this new preferred stock and yet be remediless in spite of the adjudged illegality of the preferred stock. There can be no doubt that without a preliminary injunction the new preferred stock will be issued since distribution had already begun when halted by the temporary restraining order in this case.
The Claim that Alleghany Must Be Considered as a Carrier Irrespective of the Order Under Review.
Defendants make the further point that plaintiffs were not harmed by the determination of the I.C.C. because Al-leghany already had the status of being “considered as a carrier”.
That claim is based on the fact that, by an order dated June 5, 1945, in Finance Docket No. 14692, Alleghany was given that status. Chesapeake & O. Ry. Co. Purchase, 261 I.C.C. 239. That order was made in a proceeding begun by the C. & O. September 2, 1944, under section 5(2) of the act, for the acquisition of the Norfolk Terminal and Transportation Company. On September 5, Alleghany filed a supplemental application, joining the C. & O.’s application and “seeking approval and authorization under § 5(3) of the act of control by it, through the C. & 0., of the properties of the Terminal Company”, and asked approval of the continuance of Al-leghany’s relationship with the carriers controlled by it, directly or indirectly, including the C. & 0., the Nickel Plate and the Pere Marquette.
*142In making the order of June 5, 1945, the I.C.C. made, among others, the finding, p. 261, that “acquisition by Alle-ghany Corporation of control, through ownership of stock as above described, of Chesapeake & Ohio, Nickel Plate, Pere Marquette and their subsidiaries and affiliates, is a transaction within the scope of section 5(2) of the Interstate Commerce Act * * * ” and provided in the order that “unless and until otherwise ordered by this Commission said Al-leghany Corporation shall be considered as a carrier subject to the provisions of Section 20(1) to (10), inclusive, and Section 20a(2) to (11) inclusive, of the Interstate Commerce Act”.
On January 19, 1954, Alleghany divested itself of the C. & O. stock that it had theretofore held. The Nickel Plate stock had been earlier sold and the Pere Marquette merged with the C. & O. Upon the suggestion of those facts the I.C. C. requested Alleghany to show cause why the order of June 5, 1945, in Finance Docket No. 14692, should not be vacated and set aside insofar as it applied to and provided that Alleghany should be “considered as a carrier”. Al-leghany responded that it would be ready at a proper time to accept an order terminating its control of the C. & O. and requested that action regarding its status be withheld until the proceedings resulting in the order below could be begun. The I.C.C. allowed Alleghany a period of sixty days for that purpose and the proceedings under review were begun before its expiration.
In the proceedings under review the application alleged that Alleghany had “recently” relinquished control of the C. & O. By the orders under review, the effective portions of the order of June 5, 1945, were expressly terminated and declared to be of no further force or effect.
Whatever might have been the terms of the order of June 5, 1945, they could not have conferred upon Alleghany qualifications to be “considered as a carrier” which it did not possess. From the instant of Alleghany’s relinquishment of control of the C. & O. and the Nickel Plate, plaintiffs here were entitled to the special protection which Congress has provided for stockholders in investment companies which do not control railroads. Although failure to apply for vacation of the order might estop Alle-ghany, it could not shield it from the S.E.C. and it would not be binding upon such third persons as stockholders of Al-leghany. As to all except Alleghany, which had accepted the 1945 order as it read, its provision for regulation by the I.C.C. after the factual basis for I.C.C. jurisdiction ceased, was empty fiat.
Even if the order of June 5, 1945, were effective until terminated, the object of the proceedings below was to substitute control of the New York Central for control of the C. & O. and the Nickel Plate as a basis for declaration of status to be “considered as a carrier”. Plaintiffs were entitled to be heard on Alle-ghany’s qualification for that status upon the new basis. Carriers are not interchangeable at will.
Failure to Find that Alleghany’s Control of the New York Central is “Consistent with the Public Interest.”
A fundamental question presented is whether the I.C.C. was empowered by section 5(3) to direct that Alleghany should be “considered as a carrier” even though Alleghany, in applying for consideration as a carrier, did not seek authority to acquire control of a carrier.
To us it seems that the I.C.C. had no such power. It will be noted that section 5(2) empowers the I.C.C. to authorize transactions of two classes:First, transactions involving carriers alone and, second, transactions where persons which are not carriers are involved in relations with carriers. “[A] person which is not a carrier” may be authorized “to acquire control of two or more carriers through ownership of their stock or otherwise” and “a person which is not a carrier and which has control of one or more carriers” may be authorized “to acquire control of another [car-*143tier] through ownership of its stock or otherwise”.
When we come to section 5(3), we find that “a person which is not a carrier” may be “considered as a carrier” only when it is authorized by an order under paragraph (2) “to acquire control of any carrier or of two or more, carriers”.
The jurisdiction assuming order in this case did not authorize Alleghany to acquire control of any carrier or of two or more carriers. What it did was to permit a merger of two carriers which were already controlled by a parent carrier, the New York Central, which is said to be controlled by a non-carrier, Alle-ghany. The case certainly does not fall within the language of the statute in the ordinary acceptance of words.
The effect of the Commission’s position is that whenever a holding company in the position of Alleghany deems it desirable to bring itself within the class “considered as a carrier” it needs only to join with its subsidiaries in applying to the I.C.C. for approval of some transaction such as the merger of a railroad bridge company into one of the subsidiary railroad companies. Such a transaction, as, indeed, the transaction here, is completely without significance so far as concerns the question whether the issuance of securities of the top corporation is subject to the jurisdiction of the I.C.C. or the S.E.C. The prayer for approval of the merger is treated as if it were an effective but meaningless incantation to propitiate a medicine man.
Alleghany and the Commission contend that by administrative interpretation such • an intra-system merger subjects the non-carrier parent to I.C.C. regulation pursuant to section 5(3). They rely on Chesapeake & Ohio Railway Company-Purchase, 261 I.C.C. 239, supra; Nicholas, Fayette & Greenbrier R. Co. Lease, 261 I.C.C. 546; and Warrior & Gulf Nav. Co. Control, 250 I.C.C. 26. These cases in turn refer to two others: United Parcel Service of Portland — Purchase — Wiese, 37 M.C.C. 473, and Atchi-son, T. & S. F. Ry. Co. — Control—Santa Fe Trail Transp., 15 M.C.C. 469. Although these cases show the need for I. C.C. authorization for consolidation under section 5(2), they do not support the present contention that such consolidation between already acquired subsidiaries constitutes “acquisition of control”, or that a non-carrier parent not previously subject to section 5(3) becomes subject to that section by such a consolidation. In Chesapeake & Ohio Railway Company-Purchase, supra, Alleghany, the non-carrier parent, was held subject to section 5(3) but this was not upon the basis of the intra-system consolidation in that case. It was upon the basis of Alle-ghany’s application for retroactive approval of its acquisition of control over the Chesapeake & Ohio, the Nickel Plate and the Pere Marquette. Neither does Warrior & Gulf Nav. Co. Control, supra, constitute such a holding. There the Commission asserted that the acquisition of direct control of a subsidiary in place of indirect control through another subsidiary subjected the non-carrier parent to regulation under section 5(3). It concluded, however, that, because the parent was not primarily in the transportation business, it would not seek to exercise such regulation. Thus, the assertion in that case was but a dictum never put to the test of execution.
By another construction of the statute, also erroneous we think, the I. C.C. has created a situation where a non-carrier may, without approval of the I. C.C. acquire control of a railroad system and then, if and when it suits the non-carrier’s convenience to seek refuge with the I.C.C., ask its approval of an intrasystem merger and, as a result, obtain a declaration under section 5(3) that the non-carrier must thenceforth be considered as a carrier subject to the security issuance provisions of the Interstate Commerce Act. This second construction which we think erroneous is the one adopted in the opinion of the full Commission where it said “As Central, at the time of [Alleghany’s] acquisition of control was recognized as a single established system, we conclude that the *144transaction was not within the scope of the above-stated provisions of section 5(2) of the act and that our approval was not necessary.”
Under Section 5(2) I.C.C. approval is required for the acquisition of two or more carriers. The statute says “carriers”, not “systems”, yet the I.C.C. has here held that control of a previously affiliated system may be obtained by a non-carrier corporation without its approval. Under similar circumstances the I.C.C. entertained applications for approval of the acquisition of a carrier holding company in Weinstein-ControlCapital Transit Co. and Montgomery, 56 M.C.C. 127, ancl Seaboard Air Line Ry. Co. Receivership, 261 I.C.C. 689. We believe that where a non-carrier acquires control of the parent corporation of a railroad system it acquires control of the subsidiaries and consequently of “two or more carriers” so as to require I.C.C. approval. The Commission mentions no authority in support of its position but it does express its distaste for the controversies into which it would be projected if it complied with a literal reading of the statute. We believe its position unsound and that it constitutes a surrender of power which Congress regarded as important to the public interest. The attendant difficulties conjured up by the Commission are greatly exaggerated. Without undue trouble it should be able to distinguish the usual proxy contest from the acquisition of holdings by a single person or corporation of such a block of stock that it has taken control from the other stockholders.
Consideration of the purposes of the statute emphasizes the destructive aspect of the construction put forward by the Commission. Congress was concerned with three problems: the consolidation of carriers into economically sound systems in accordance with a national plan of transportation to be developed by the I.C.C.; the affiliation of carriers through common parents; and the regulatory control of non-carrier parents. Each presented questions of fundamental nationwide importance, and constituted the very heart of the constructive, progressive program for which Congress looked to the Commission, rather than something to be avoided under the pressure of less important though perhaps more immediate tasks. Further, contrary to the views which apparently guided the Commission, Congress did not seek to hide or quiet controversy. It felt that the protection of the public lay in public exposure, as well as the expertness of the Commission. In section 5(2) (b), it set forth not only the mandate that interested parties be heard but also the authorization for public hearing and the requirement of notice to the governors of affected states for both consolidation and acquisition of control.
Here the Commission would escape any responsibility as to the acquisition of the Central by Alleghany and focus public attention only upon the merger of the Louisville and Jeffersonville Bridge & Railroad Company into the Big Four, all the while trying to keep regulatory control of Alleghany and thus preclude any consideration of the matter by the S.E.C. The undesirable ' consequences of the Commission’s double misinterpretation of section 5 thus become all the more pointed. Alleghany’s actions with respect to the New York Central and the use of its funds in that connection were transactions of a nature that Congress regarded with particular concern. Its concern was expressed in the Investment Company Act which imposed restrictions upon management of companies similar to Alleghany, and provided for regulation of these companies by the S.E.C. Its concern was also manifested in section 5 which, before the advent of the S.E.C., attempted to enable the I.C.C. to reach companies such as Al-leghany. Here, the I.C.C.’s action defeats both plans for regulation.
The S.E.C. had commenced its own proceeding looking to a possible reassertion of its jurisdiction over Alleghany as an investment company. It suspended this proceeding to avoid conflict with *145the I.C.C. and submitted to it its plea that the I.C.C., in its discretion, recognize that, regardless of its claim to jurisdiction over Alleghany as a carrier, it was primarily an investment company rather than a transportation company, and that accordingly the I.C.C. not subject it to regulation under section 5(3). This is what the I.C.C. had done in other cases. See Warrior & Gulf Nav. Co. Control, 250 I.C.C. 26, supra. The I.C.C. denied the application of the S.E.C. apparently upon the ground that it had no power to comply with it, saying “We believe that unless Congress amends either or both of the statutes involved herein, the results which S.E.C. desires to achieve are not within our power under the Interstate Commerce Act.” Such a conclusion is without foundation. Weinstein-Control, 56 M.C.C. 127, supra; Arkansas & L. M. Ry. Co., 282 I.C.C. 254; Columbia Investment Co.-Control, 55 M. C.C. 375; Warrior & Gulf Nav. Co. Control, 250 I.C.C. 26, supra; Cambria & I. R. Co. Control, 275 I.C.C. 360; Cuya-hoga Valley Ry. Co. Control, 252 I.C.C. 683; Saginaw Dock & Term. Co. Contract Carrier Application, 260 I.C.C. 657. It is not necessary now for us to pass upon the question of whether the I.C.C.’s failure to comply with the S.E.C.’s petition is reviewable as an abuse of discretion.
Our conclusion that, where no acquisition of a carrier is involved, the I.C.C. has no jurisdiction under sections 5(2) and 5(3) to provide that a non-carrier shall “be considered as a carrier” subject to the security-issuance provisions of the Interstate Commerce Act does not mean that the proceeding below must be dismissed. Alleghany sought a finding that it controlled New York Central. It was on that theory that it considered itself a necessary party to the application under its interpretation of U. S. v. Marshall Transport Co., 322 U.S. 31, 64 S.Ct. 899, 88 L.Ed. 1110. Regardless of whether the merger application involving the Bridge Company and the Big Four could have been presented without Alleghany’s participation, the facts remain that Alleghany did participate, that it did ask for a determination of its control of New York Central as a condition to a declaration of its status as a non-carrier “considered as a carrier” and that the I.C.C. did so declare. The mere fact that Alleghany based its plea for consideration “as a carrier” on a request for approval of the merger rather than on a request for approval of acquisition of control of the New York Central is of no consequence where a finding of control of the New York Central was essential to the granting of its plea.
We do not think that the I.C.C. was without jurisdiction in the proceeding below to approve that acquisition. Indeed, if Alleghany was correct in its contention that it had acquired control of New York Central in a proxy fight preceding the stockholders’ meeting of May 26, 1954, I.C.C. consideration of the question was long overdue. Under our interpretation of the statute the I.C.C. could not have made a finding of control without approving control, yet it failed to make the prerequisite finding that the control was “consistent with the public interest” required by subdivision (b) of section 5(2). The case must go back for consideration of that question if Al-leghany persists in its claim that it has acquired control of New York Central and in its desire for a declaration of its right to be “considered as a carrier”.
Adequacy of the Finding of Control.
Even if we were to ignore the absence of a finding of consistency with the public interest, the I.C.C. made no adequate finding of control in the jurisdiction assuming order.
The findings in the determination under review on this subject are very oblique.
The provisions contained in the determination of Division Four are as follows :
“The capital stock of Central is widely held by the public, but control of its functions reposes in Alle-ghany and its officers as a result of *146a proxy contest preceding a stockholders’ meeting of May 26, 1954, at which the nominees chosen by Alle-ghany were elected as Central’s board of directors. Alleghany has an undivided half interest in 600,-000 shares of Central stock with voting rights to the 600,000 shares under joint venture agreements, and in addition, owns 15,500 shares. The voting rights of Alleghany represent almost 10 percent of the total shares of Central stock outstanding. The chairman of the board of directors of Alleghany, who holds the same position with Central, beneficially owns 100,200 shares of the latter's stock. The president of Al-leghany is a director of Central, and beneficially owns 300,100 shares of the latter's stock. A vice-president of Alleghany holds a similar position with Central. (Sheet 3).
“We recognize that the present control of the Central system has passed to Alleghany by regular corporate procedures even though our approval in the premises has not been sought. * * * The important thing is that Alleghany does control one of our largest railroad systems and the regulation thereof in the public interest is our responsibility. * * * (Sheet 16).
“For the reasons stated we think that we are warranted in continuing Alleghany in its present status. Accordingly, we -will, pursuant to section 5(3), subject Alleghany to the provisions of section 20(1) to (10), inclusive, and section 20a(2) to (11), inclusive, of the Interstate Commerce Act. In the event that future circumstances warrant any change or modification of this finding, we retain jurisdiction to enter any order we deem necessary to protect the public interest.” (Sheet 17).
The full Commission in its opinion said: (Sheet 9).
“The contention that Alleghany does not control the individual directors on Central’s board ignores the realities of the situation. Allegha-ny and its allied interests have succeeded in electing sufficient members of the board to permit them to organize and elect their own officers. Clearly the tenure in office of such directors as permitted this action depends upon their conformance to the views of the stockholders who elected them. In our opinion the power thus reposing in Alleghany constitutes control of Central.”
The full Commission also said: (Sheet 11).
“ * * * We affirm the findings of Division 4 that these transactions and the continued control by Central and Alleghany are within the scope of section 5(2) of the act, as amended, that the terms and conditions are just and reasonable and that the transactions and continued control will be consistent with the public interest.
“As appears from the foregoing discussion, Alleghany at the time it filed its application was in fact a person not a carrier which controlled an established system, and which was seeking authorization under section 5(2) for modified control of one of the system subsidiaries. * * * It is our opinion that division 4 properly applied the quoted provisions of the act. We affirm that ruling.”
It will be observed from the above that Division 4 made an unqualified statement that it recognized that control of the Central had passed to Alleghany. That conclusion can stand, however, only if ultimate facts to support it are expressly found in the order of the Commission. State of Florida v. United States, 282 U.S. 194, 215, 51 S. Ct. 119, 75 L.Ed. 291; City of Yonkers v. United States, 320 U.S. 685, 692, 64 S.Ct. 327, 88 L.Ed. 400. To serve that purpose we have the statement of Division 4 that control of the functions of Central “reposes in Alleghany and its officers as a result of a proxy contest preceding a stockholders’ meeting of *147May 26, 1954, at which the nominees chosen by Alleghany were elected as Central’s board of directors.” There is, however, nothing to support the statement that the nominees were actually chosen by Alleghany and some doubt is cast upon that by the fact that the preceding statement is that control reposes “in Alleghany and its officers”. That statement in turn is much like the statement of the full Commission to the substantial effect that Alleghany “and its allied interests” control New York Central.
To return to the findings of Division 4, its order discloses the fact that Alle-ghany’s beneficial holdings of the Central stock are less than the combined individual holdings of Kirby, Young, Richardson and the Murchison group.
In a proceeding before Judge Walsh involving the application for approval of the issuance of new preferred stock, Breswick & Co. v. Briggs, 130 F.Supp. 953, supra, he filed an opinion, dated April 6, in which he noted that Alle-ghany’s voting power was increased by a joint venture agreement which gave it the power, at that time to vote 300,000 shares of the Murchison stock. He called attention to the fact that the details of this joint venture agreement as to ter-minability and other matters did not appear from the opinion of Division 4.
In spite of the fact that consideration of the applications for the orders now under review was undertaken subsequent to the filing with the Commission of Judge Walsh’s opinion, no evidence supplementing the evidence outlined in the order of Division 4 in this case on the subject of control of the Central by Al-leghany was introduced.
The position taken by the plaintiffs throughout has been that Alleghany was but an instrument employed by the Young-Kirby-Murchison group in the control of the New York Central and was in no sense in control. It is to be observed that the findings of neither Division 4 nor the I.C.C. meet this issue squarely.
We are forced, therefore, to the conclusion that the findings do no more than say that Alleghany, with someone else, controls New York Central. They do not even say whether the someone else, alone, has control. Does that satisfy the statute ?
There is internal evidence in the statute itself that a non-carrier to have control within the meaning of that term as used in the statute must be in sole control. Section 5(2) enumerates cases, as we have said, of two kinds: one class dealing with carriers alone and the other class dealing with persons who are not carriers but are in control of one or more carriers. In the first class of cases, the statute enumerates instances where two or more carriers may be in control of another carrier, but when the statute comes to deal with the case of a non-carrier in control of carriers, it enumerates only the instances where “a person which is not a carrier” acquires control. Thus, the statute, by its terms, makes no attempt to cover the case where a carrier or carriers is controlled jointly by non-carriers.
This is not to say that where a group is nominally in control of a carrier no member of the group may be subjected to the obligation of section 5. The supervisory jurisdiction over such combinations will turn on the facts of the case, but those facts must at least be made explicit in the findings of the Commission. The purpose of a finding is to explain the basis of action, not to mask it.
We thus conclude that, if the Commission’s opinions contain a conclusion that Alleghany is in control of New York Central, those opinions lack sufficient findings to support that conclusion.
The Failure to Grant Plaintiffs a Hearing.
Section 5(2) (b) provides that, in such a proceeding as the jurisdiction assuming proceedings below, the Commission “shall afford reasonable opportunity for *148interested parties to be heard”. Plaintiffs made repeated applications for leave to be heard in the jurisdiction assuming proceedings. It was only after Judge Walsh’s opinion in the case involving the preferred stock, Breswick & Co. v. Briggs, 130 F.Supp. 953, supra, was filed with the I.C.C. that plaintiffs’ application for intervention was granted, and then it was granted only in the very order which approved the merger, foreclosed the issue and constituted Alle-ghany a person “considered as a carrier”. All of that appeared in the order of May 24, 1955 of the full Commission. Division 4 had theretofore consistently denied intervention by the plaintiffs.
The action of the Commission in permitting intervention “as of the date” of the order of May 24, 1955 was completely insufficient, except perhaps to strengthen plaintiffs’ standing as one entitled to review the order.
' Plaintiffs' papers on this application are full of allegations of fact bearing on the question of control which should have been before the Commission and to which the Commission made no reference in its orders.
If plaintiffs were “interested parties” and thus entitled to be heard under the statute, there can be no doubt that the loss of their opportunity to present their evidence requires the setting aside of the determination. The Administrative Procedure Act, section 2(b), 5 U.S.C. § 1001(b), defines “party” as follows:
“ ‘Party’ includes any person or agency named or admitted as a party, or properly seeking and entitled as of right to be admitted as a party, in any agency proceeding”.
It will be recalled that plaintiffs were finally permitted to intervene in the jurisdiction assuming proceeding. Under the Administrative Procedure Act there is no such thing as permission to intervene without permission to be heard and present evidence. Administrative Procedure Act, section 5(b), 5 U.S.C. § 1004(b), reads as follows:
Ҥ 100 U. Adjudications
“In every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing, — * * *.
“(b) Procedure
“The agency shall afford all interested parties opportunity for (1) the submission and consideration of, facts, arguments, offers of settlement, or proposals of adjustment where time, the nature of the proceeding, and the public interest permit, and (2) to the extent that the parties are unable so to determine any controversy by consent, hearing, and decision upon notice and in conformity with sections 1006 and 1007 of this title.”
Section 7(c), 5 U.S.C. § 1006(c) provides:
“Every party shall have the right to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts.”
Even before the passage of the Administrative Procedure Act the necessity of granting a hearing to interested parties before the I.C.C. seems to have been settled. See U. S. v. Abilene & So. Ry. Co., 265 U.S. 274, 44 S.Ct. 565, 68 L.Ed. 1016; Chicago Junction Case, 264 U.S. 258, 44 S.Ct. 317, supra; Interstate Commerce Comm. v. Louisville & Nashville R. R. Co., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431.
Defendants in opposition to this urge only that the matter of granting a hearing has been placed in the absolute discretion of the I.C.C. by section 5(2) (b) where it says:
“If the Commission shall consider it necessary in order to determine whether the findings specified below may properly be made, it shall set said application for public hearing; and a public hearing shall be, held in all cases where carriers by railroad are involved unless the *149Commission determines that a public hearing is not necessary in the public interest.”
The above-quoted language is in addition to and follows immediately after the mandatory direction “and shall afford reasonable opportunity for interested parties to be heard”. It is thus clear that the public hearing referred to is something quite different from merely hearing the interested parties.
The Effect of the Views Above Expressed.
To paraphrase slightly the language of the Supreme Court in Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 60 S.Ct. 517, 84 L.Ed. 774, three-judge courts are admonished that, upon applications to them for preliminary injunctions, the question before them is whether the showing made raises serious questions and discloses that enforcement of the act complained of, pending final hearing, would inflict irreparable damage on the plaintiffs.
We cannot believe that the Supreme Court intends that in a case such as this which presents only questions of law that have been fully argued and briefed by the parties we should limit our consideration to the degree of their seriousness. Our conviction that, more than being serious, they must be answered in favor of plaintiffs is a factor in our determination that an injunction should issue. If, however, a conclusion that the questions are serious is required, it is included in our conclusion that they must be answered in favor of the plaintiffs.
What we have said as to the damage which threatens plaintiffs supports the finding hereby made that unless the enforcement of the orders complained of is enjoined pending final hearing plaintiffs will suffer irreparable damage.
We are authorized to say for the full court that it is prepared to do all in its power to expedite a final disposition of the cause.
An injunction will issue restraining, pending final judgment in this cause, the defendants Interstate Commerce Commission and Alleghany Corporation from enforcing or taking any action pursuant to (a) the orders of the I.C.C. made March 2, 1955 and May 24, 1955, in Finance Dockets 14629 and 18656, insofar as they determine that Alleghany Corporation is in control of The New York Central Railroad, and insofar as they determine that Alleghany Corporation shall be considered as a carrier subject to the provisions of section 20(1) to (10) inclusive and section 20a(2) to (11) inclusive of the Interstate Commerce Act, or (b.) the order of the I.C.C. made May 26, 1955, and June 22, 1955, in Finance Docket 18866 authorizing issuance of 6% convertible preferred stock. The temporary restraining order against exchange of Alleghany Corporation’s 6% Convertible Preferred Stock for its Cumulative 5y2% Preferred Stock Series A, issued herein on June 23, 1955, is hereby continued pending final judgment.
Settle order on notice.
Walsh, District Judge, concurring.
. It is to be noted that the question at issue in that case was whether the section regulating approval of securities had been complied with. Here the question is not merely one of compliance with seetíon 20a but whether any order of the I.O.C., under that section or any other, may stand upon its conclusion that Alleghany is to be deemed a carrier under section 5.
. Alleghany did in fact take this position in successfully opposing a preliminary injunction in Breswick & Co. v. Briggs, D.C.S.D.N.X., 130 F.Supp. 953. It there argued that the I.C.C. determination, if subject to attack by plaintiffs, could only be attacked in a proceeding before a three-judge court to enjoin its enforcement and not collaterally in a stockholders’ derivative action against the directors of Alleghany.
. The I.C.C. control with respect to the issuance of securities is merely to protect against over-issue, not to hold the balance between management and investor. See Miller v. United States, D.C.S.D. N.Y., 277 F. 95, supra. Of. Investment Company Act §§ 1-23, 15 U.S.C. §§ 80a-l to 23.
. Kerr on Injunctions, 3rd Ed. Chap. III, § 1, p. 14; Charles C. Wilson & Son v. Harrisburg, 107 Me. 207, 218, 77 A. 787; Smith v. Shiebeck, 180 Md. 412, 24 A.2d 795; Hodge v. Giese, 43 N.J.Eq. 342, 11 A. 484, 487; Columbia College of Music, etc., v. Tunberg, 64 Wash. 19, 116 P. 280, 282; Miles Laboratories v. Seignious, D.C.E.D.S.C., 30 F.Supp. 549.