Levin v. Mississippi River Fuel Corporation

PETITIONER: Levin
RESPONDENT: Mississippi River Fuel Corporation
LOCATION: Smith County Jail

DOCKET NO.: 352
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 386 US 162 (1967)
ARGUED: Jan 19, 1967
DECIDED: Feb 27, 1967

Facts of the case

Question

Media for Levin v. Mississippi River Fuel Corporation

Audio Transcription for Oral Argument - January 19, 1967 in Levin v. Mississippi River Fuel Corporation

Earl Warren:

Number 352 Betty Levin, et cetera Petitioner, versus Mississippi River Fuel Corporation et al., and number 359 Alleghany Corporation et al., Petitioner versus Mississippi River Fuel Corporation.

Mr. McAllister.

Breck P. Mcallister:

Mr. Chief Justice, May it please the court.

The central issue I’ll come to it at once is whether these shareholders in Missouri Pacific Railroad MoPac as it is generally called, there are 39,000 outstanding shares and petitioners here represent a majority of them.

Whether these petitioners have --

Byron R. White:

Do you know how many shareholders there are?

Breck P. Mcallister:

I don’t Mr. Justice White.

We really don’t have those records, the railroad would have those records, we hold a majority.

The question is whether we have the right to vote separately as a B class on a proposed consolidation proposed by the Board of Directors of the railroad and filed with the Interstate Commerce Commission.

Whether we have this right to vote separately under Section 5 and the parenthetical clause of paragraph 11 of the Interstate Commerce Act, the A shareholders numbered 1,800,000 in each of these shares has one vote.

We’re constantly told by the respondents and I want to make this clear at the outset that we have sort of a tiny minuscule interest because we have only 2% of the number of the votes, but the fact of the matter is that our participating interest in the company even three years ago exceeded that of the A shareholders.

Today, we have an interest of some $260 million compared to the interest, fixed interest of the A group of a $180 million.

Byron R. White:

Do you mean by that if the company were liquidated you’d have distributed rights of that much --

Breck P. Mcallister:

Yes, precisely.

And that brings me at once really Mr. Justice White what is this A & B business, what are these A and B shares, how do they come about?

And they came about as a result of the final plan and reorganization of MoPac under Section 77 of the Bankruptcy Act back in 1954 and this plan was approved by the Interstate Commerce Commission.

It was approved and confirmed by the District Court for the Eastern District of Missouri and by the Court of Appeals for the Eighth Circuit.

Now it is this plan that created these two groups of stock, the A shares, the 1,800,000 of them were provided for in the plan to compensate fully, the former preferred shareholders not only for the par of their preferred stock, but also for unpaid cumulative dividend, they’d pay it in full and their dividend under the A shares is a $5 maximum and their interest is $100.

William O. Douglas:

These were securities issued under a Section 77, reorganization plan?

Breck P. Mcallister:

Yes, Mr. Justice.

William O. Douglas:

And approved by the commission?

Breck P. Mcallister:

And by the, and confirmed by the reorganization court.

William O. Douglas:

Yeah.

Breck P. Mcallister:

That is correct.

Each of these shares is entitled to one vote, each of the 1,800,000 shares and a maximum dividend of $5.

And these A shares have the characteristics, we submit of a preferred stock.

Now the B shares were issued to the old common stockholders and these B shares have the characteristics of a common shareholder.

The situation that developed under this plan was that with the A group holding 98% of the number of shares than the B group, they may have 2%.

It was perfectly obvious that the A, -- the B group was at the mercy of the A group and here comes the protective clause that the Interstate Commerce Commission directed, they included in the charter of MoPac and this was part of the reorganization plan and it was inserted at the direction of commission.

And the essence of this protective clause is that the company shall not do certain things without a majority vote of each class of stock to protective clause and the point that we passing on is that the company shall not offer or change the preferences and the special or relative rights of the A or the B.