United States v. Atlantic Refining Co., 360 U.S. 19 (1959)

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

A suit by the Government under the Interstate Commerce Act and the Elkins Act against appellees and several other major oil companies and their common carrier pipeline subsidiaries, charging that the pipelines were granting illegal transportation rebates to their shipper-owners under the guise of paying dividends, was settled in 1941 by a consent decree which allowed each shipper-owner to receive only a dividend equal to "its share of 7 percentum (7%) of the valuation" of the common carrier pipeline’s property. From then until 1957, appellees, with the acquiescence of the Government, computed allowable dividends by taking 7% of the total valuation of the pipeline’s property and giving each owner a proportion of this sum equal to the percentage of stock it owned. In 1957, the Government brought this suit, contending that, despite the language of the decree, only 7% of that part of the valuation of a pipeline’s property which remained after deducting the amount owed to creditors could be paid as dividends to stockholders. The trial court rejected the Government’s interpretation.

Held: the judgment is affirmed. Pp. 20-24.