Otis & Co. v. Sec, 323 U.S. 624 (1945)

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Otis & Co. v. Securities and Exchange Commission

No. 81

Argued November 17, 1944
Decided January 29, 1945
323 U.S. 624

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE THIRD CIRCUIT

Syllabus

1. Whether a provision of a corporate charter granting the preferred stock a specified preference upon liquidation applies to a liquidation in a simplification pursuant to § 11(b)(2) and (e) of the Public Utility Holding Company Act of 1935 is a question of federal law. P. 636.

2. A provision of a corporate charter granting the preferred stock a specified preference upon liquidation, adopted six years prior to the enactment of the Public Utility Holding Company Act of 1935, held inoperative in a simplification by liquidation under § 11(b)(2) of that Act. P. 637.

Congress did not intend that its exercise of power to simplify holding company systems should mature rights which were created without regard to the possibility of such exercise of power and which otherwise would mature only by voluntary action of stockholders or involuntarily through action of creditors.

3. Continental Insurance Co. v. United States, 259 U.S. 156, distinguished. P. 638.

4. In a liquidation pursuant to § 11(b)(2) of the Public Utility Holding Company Act of 1935, allocation of the assets a between different classes of securities may be made without dollar valuation so long as each security holder in the order of his priority receives the equitable equivalent of rights surrendered. P. 639.

142 F.2d 411 affirmed.

Certiorari, 322 U.S. 724, to review the affirmance of a judgment approving a plan for the liquidation and dissolution of a holding company pursuant to an order of the Securities & Exchange Commission under the Public Utility Holding Company Act of 1935.