U.S. Supreme Court Bowles v. Seminole Rock & Sand
Co., 325
U.S. 410 (1945) Bowles v. Seminole Rock & Sand
Co. No. 914 Argued April 26, 27,
1945 Decided June 4, 1945 325
U.S. 410 CERTIORARI TO THE CIRCUIT COURT OF
APPEALS FOR THE FIFTH
CIRCUIT Syllabus 1. Under Rule (i) of § 1499.163(a)(2) of Maximum Price
Regulation No. 188, issued by the Administrator of the Office of
Price Administration under § 2(a) of the Emergency Price Control
Act of 1942, a seller's ceiling price for an article which was
actually delivered during March, 1942, is the highest price charged
for the article so delivered, regardless of when the sale or charge
was made. P. 325 U. S.
416 . Page 325 U. S. 411 2. In interpreting an administrative regulation, a court must
necessarily look to the administrative construction of the
regulation if the meaning of the words used is in doubt. The
intention of Congress or the principles of the Constitution in some
situations may be relevant in the first instance in choosing
between various constructions. But the ultimate criterion is the
administrative interpretation, which becomes of controlling weight
unless it is plainly erroneous or inconsistent with the regulation.
Pp. 325 U. S.
413 -414.

															3. This Court does not here determine the constitutionality or
statutory validity of the regulation as so construed (matters
determinable in the first instance by the Emergency Court of
Appeals), nor any question of hardship of enforcement of such
ceiling price (the procedure for relief therefrom being prescribed
by § 2(c) of the Act and § 1499.161 of the Regulation). P. 325 U. S.
418 .

															145 F.2d 482 reversed.

															Certiorari, 324 U.S. 835, to review a judgment affirming the
dismissal of a suit by the Price Administrator to enjoin the
respondent from violation of the Emergency Price Control Act of
1942 and Regulations issued pursuant thereto.

															MR. JUSTICE MURPHY delivered the opinion of the Court.

															Our consideration here is directed to the proper interpretation
and application of certain provisions of Maximum Price Regulation
No. 188, [ Footnote 1 ] issued by
the Administrator of the Office of Price Administration under
Section 2(a) of the Emergency Price Control Act of 1942. [ Footnote 2 ] Page 325 U. S. 412 Respondent is a manufacturer of crushed stone, a commodity
subject to Maximum Price Regulation No. 188. In October, 1941,
respondent contracted to furnish the Seaboard Air Line Railway
crushed stone on demand at 60 cents per ton, to be delivered when
called for by Seaboard. This stone was actually delivered to
Seaboard in March, 1942.

															In January, 1942, respondent had contracted to sell crushed
stone to V. P. Loftis Co., a government contractor engaged in the
construction of a government dam, for $1.50 a ton. [ Footnote 3 ] This stone was to be delivered by
respondent by barge when needed at the dam site. A small portion of
stone of a different grade than that sold to seaboard was delivered
to Loftis Co. during January pursuant to this contract. For some
time thereafter, however, Lotfis Co. was unable to pour concrete or
to store crushed stone at the dam site. Respondent thus made no
further deliveries under this contract until August, 1942, at which
time stone of the same grade as received by Seaboard was delivered
to Loftis Co. at the $1.50 rate.

															Subsequently, and after the effective date of Maximum Price
Regulation No. 188, respondent made new contracts to sell crushed
stone to Seaboard at 85 cents and $1.00 per ton. Alleging that the
highest price at which respondent could lawfully sell crushed stone
of the kind sold to Seaboard was 60 cents a ton, since that was
asserted to be the highest price charged by respondent during the
crucial month of March, 1942, the Administrator of the Office of
Price Administration brought this action to enjoin respondent from
violating the Act and Maximum Price Regulation No. 188. [ Footnote 4 ] The District Court
dismissed the action Page 325 U. S. 413 on the ground that $1.50 a ton was the highest price charged by
respondent during March, 1942, and that this ceiling price had not
been exceeded. The Fifth Circuit Court of Appeals affirmed the
judgment. 145 F.2d 482. We granted certiorari because of the
importance of the problem in the administration of the emergency
price control and stabilization laws. 324 U.S. 835.

															In his efforts to combat wartime inflation, the Administrator
originally adopted a policy of piecemeal price control, only
certain specified articles being subject to price regulation. On
April 28, 1942, however, he issued the General Maximum Price
Regulation. [ Footnote 5 ] This
brought the entire economy of the nation under price control, with
certain minor exceptions. The core of the regulation was the
requirement that each seller shall charge no more than the prices
which he charged during the selected base period of March 1 to 31,
1942. While still applying this general price "freeze" as of March,
1942, numerous specialized regulations relating to particular
groups of commodities subsequently have made certain refinements
and modifications of the general regulation. Maximum Price
Regulation No. 188, covering specified building materials and
consumers' goods, is of this number.

															The problem in this case is to determine the highest price
respondent charged for crushed stone during March, 1942, within the
meaning of Maximum Price Regulation No. 188. Since this involves an
interpretation of an administrative Page 325 U. S. 414 regulation, a court must necessarily look to the administrative
construction of the regulation if the meaning of the words used is
in doubt. The intention of Congress or the principles of the
Constitution in some situations may be relevant in the first
instance in choosing between various constructions. But the
ultimate criterion is the administrative interpretation, which
becomes of controlling weight unless it is plainly erroneous or
inconsistent with the regulation. The legality of the result
reached by this process, of course, is quite a different matter. In
this case, the only problem is to discover the meaning of certain
portions of Maximum Price Regulation No. 188. Our only tools,
therefore, are the plain words of the regulation and any relevant
interpretations of the Administrator.

															Section 1499.153(a) of Maximum Price Regulation No. 188 provides
that

															"the maximum price for any article which was delivered or
offered for delivery in March, 1942, by the manufacturer, shall be
the highest price charged by the manufacturer during March, 1942
(as defined in § 1499.163) for the article."

															Section 1499.163(a)(2), [ Footnote 6 ] in turn, provides that, for purposes of this
regulation, the term:

															"'Highest price charged during March, 1942' means"

															"(i) The highest price which the seller charged to a purchaser
of the same class for delivery of the article or material during
March, 1942; or"

															"(ii) If the seller made no such delivery during March, 1942,
such seller's highest offering price to a purchaser of the same
class for delivery of the article or material during that month;
or"

															"(iii) If the seller made no such delivery and had no such
offering price to a purchaser of the same class during March, 1942,
the highest price charged by the seller during March, 1942, to a
purchaser of a different class, adjusted Page 325 U. S. 415 to reflect the seller's customary differential between the two
classes of purchasers; . . ."

															It is thus evident that the regulation establishes three
mutually exclusive rules for determining the highest price charged
by a seller during March, 1942. The facts of each case must first
be tested by rule (i); only if that rule is inapplicable may rule
(ii) be utilized, and only if both rules (i) and (ii) are
inapplicable is rule (iii) controlling.

															The dispute in this instance centers about the meaning and
applicability of rule (i). The Administrator claims that the rule
is satisfied, and therefore is controlling, whenever there has been
an actual delivery of articles in the month of March, 1942, such as
occurred when respondent delivered the crushed rock to Seaboard at
the 60-cent rate. The respondent, on the other hand, argues that
there must be both a charge and a delivery during March, 1942, in
order to fix the ceiling price according to rule (i). Since the
charge or sale to Seaboard occurred several months prior to March,
it is asserted that rule (i) becomes inapplicable, and that rule
(ii) must be used. Inasmuch as there was an outstanding offering
price of $1.50 per ton for delivery of crushed stone to Loftis Co.
during the month of March, 1942, although the stone was not
actually delivered at that time, respondent concludes that the
requirements of rule (ii) have been met, and that the ceiling price
is $1.50 per ton.

															As we read the regulation, however, rule (i) clearly applies to
the facts of this case, making 60 cents per ton the ceiling price
for respondent's crushed stone. The regulation recognizes the fact
that more than one meaning may be attached to the phrase "highest
price charged during March, 1942." The phrase might be construed to
mean only the actual charges or sales made during March, regardless
of the delivery dates. Or it might refer only to the charges made
for actual delivery in March. Whatever may be the variety of
meanings, however, rule Page 325 U. S. 416 (i) adopts the highest price which the seller "charged . . . for
delivery" of an article during March, 1942. The essential element
bringing the rule into operation is thus the fact of delivery
during March. If delivery occurs during that period, the highest
price charged for such delivery becomes the ceiling price. Nothing
is said concerning the time when the charge or sale [ Footnote 7 ] giving rise to the delivery
occurs. One may make a sale or charge in October relative to an
article which is actually delivered in March, and still be said to
have "charged . . . for delivery . . . during March." We can only
conclude, therefore, that, for purposes of rule (i), the highest
price charged for an article delivered during March, 1942, is the
seller's ceiling price, regardless of the time when the sale or
charge was made.

															This conclusion is further borne out by the fact that rule (ii)
becomes applicable only where "the seller made no such delivery
during March, 1942," as contemplated by rule (i). The absence of a
delivery, rather than the absence of both a charge and a delivery,
during March is necessary to make rule (i) ineffective, thereby
indicating that the factor of delivery is the essence of rule (i).
It is apparent, moreover, that the delivery must be an actual,
instead of a constructive, one. Section 1499.20(d) of General
Maximum Price Regulation, incorporated by reference into Maximum
Price Regulation No. 188 by Section 1499.151, defines the word
"delivered" as meaning "received by the purchaser or by any carrier
. . . for shipment to the purchaser" during March, 1942. Thus, an
article is not Page 325 U. S. 417 "delivered" to a purchaser during March because of the existence
of an executory contract under which no shipments are actually made
to him during that month. In short, the Administrator, in rule (i),
was concerned with what actually was delivered, not with what might
have been delivered.

															Any doubts concerning this interpretation of rule (i) are
removed by reference to the administrative construction of this
method of computing the ceiling price. Thus, in a bulletin issued
by the Administrator concurrently with the General Maximum Price
Regulation entitled "What Every Retailer Should Know About the
General Maximum Price Regulation," [ Footnote 8 ] which was made available to manufacturers as
well as to wholesalers and retailers, the Administrator stated (p.
3):

															"The highest price charged during March, 1942 means the highest
price which the retailer charged for an article actually
delivered during that month or, if he did not make any
delivery of that article during March, then his highest
offering price for delivery of that article during March."

															He also stated (p. 4) that "It should be carefully noted that actual delivery during March, rather than the making of a
sale during March, is controlling." In his First Quarterly Report
to Congress, the Administrator further remarked (p. 40) that

															"'Highest price charged' means one of two things: (1) It means
the top price for which an article was delivered during March,
1942, in completion of a sale to a purchaser of the same class. . .
. (2) If there was no actual delivery of a particular article
during March, the seller may establish as his maximum price the
highest price at which he offered the article for sale during that
month."

															Finally, the Administrator has stated that this position has
uniformly been taken by the Office of Price Administration Page 325 U. S. 418 in the countless explanations and interpretations given to
inquirers affected by this type of maximum price determination.

															Our reading of the language of Section 1499.163(a)(2) of Maximum
Price Regulation No. 188 and the consistent administrative
interpretation [ Footnote 9 ] of
the phrase "highest price charged during March, 1942," thus compel
the conclusion that respondent's highest price charged during March
for crushed stone was 60 cents per ton, since that was the highest
price charged for stone actually delivered during that month. The
two courts below erred in their interpretation of this regulation,
and the judgment below must accordingly be reversed.

															We do not, of course, reach any question here as to the
constitutionality or statutory validity of the regulation as Page 325 U. S. 419 we have construed it, matters that must in the first instance be
presented to the Emergency Court of Appeals. Lockerty v.
Phillips, 319 U. S. 182 ; Yakus v. United States, 321 U. S. 414 , 321 U. S.
427 -431. Nor are we here concerned with any possible
hardship that the enforcement of the 60-cent price ceiling may
impose on respondent. Adequate avenues for relief from hardship are
open to respondent through the provisions of Section 2(c) of the
Act and Section 1499.161 of the regulation. Reversed. MR. JUSTICE ROBERTS thinks the judgment should be affirmed for
the reasons given in the opinion of the Circuit Court of Appeals,
145 F.2d 482.

															[ Footnote 1 ]

															7 Fed.Reg. 5872, 7967, 8943.

															[ Footnote 2 ]

															56 Stat. 23.

															[ Footnote 3 ]

															The contract actually spoke in terms of $1.50 per cubic yard,
but there is no appreciable difference between a cubic yard of
crushed stone and a ton of crushed stone.

															[ Footnote 4 ]

															The Administrator also sought to recover from respondent a
judgment under Section 205(e) of the Act for three times the amount
by which the sales price of the crushed stone sold by the
respondent to Seaboard after the effective date of Maximum Price
Regulation No. 188 exceeded 60 cents per ton. The District Court
held that the purchaser, rather than the Administrator, was vested
with whatever cause of action existed to recover a judgment under
Section 205(e). The Circuit Court of Appeals, however, held that
Section 205(e), as amended by Section 108(b) of the Stabilization
Extension Act of 1944, 58 Stat. 640, entitled the Administrator,
rather than the purchaser, to bring suit under the circumstances of
this case. This aspect of the case is not now before us.

															[ Footnote 5 ]

															7 Fed.Reg. 3156.

															[ Footnote 6 ]

															7 Fed.Reg. 7968, 7969.

															[ Footnote 7 ]

															Respondent points to the provision in Section 302(a) of the Act,
56 Stat. 36, to the effect that the term "sale," as used in the
Act, includes "sales, dispositions, exchanges, leases, and other
transfers, and contracts and offers to do any of the foregoing," as
well as to a similar provision in Section 1499.20(r) of the General
Maximum Price Regulation. But such a definition is of no assistance
in determining the meaning of the Administrator's use of the phrase
"charged . . . for delivery" during March, 1942.

															[ Footnote 8 ]

															General Maximum Price Regulation, Bulletin No. 2 (May, 1942).
Maximum Price Regulation No. 188 established prices "at the
identical level of the General Maximum Price Regulation" for
articles dealt in during March, 1942. 7 Fed.Reg. 5873.

															[ Footnote 9 ]

															Respondent points to two allegedly inconsistent interpretations
made by the Administrator:

															1. On August 20, 1942 (OPA Press Release No. 564), he made
certain statements with reference to Amendment 23 to the General
Maximum Price Regulation, 7 Fed.Reg. 6615, allowing a different
method of maximum price computation where general price increases
were announced prior to April 1, 1942, and deliveries at lower
prices were made in March under previous contracts. The provisions
and applicability of this amendment are not in issue in this case,
and statements interpreting that amendment have no bearing
here.

															2. On December 5, 1942 (OPA Press Release No. 1223), he issued a
statement interpreting Amendment 38 to the General Maximum Price
Regulation and Amendment 3 to Maximum Price Regulation No. 188, 7
Fed.Reg. 10155. These amendments authorized sellers who made
general price increases prior to April 1, 1942, to apply the
increases to ceiling prices for goods and services delivered during
March under long-term contracts. The Administrator's explanation of
these amendments, which are not presently before us, is likewise
irrelevant in this case.

															Indeed, the fact that the Administrator found it necessary to
make such amendments is some evidence that, under the rules here in
issue, the price established under a previous contract is the
maximum price if that was the highest price for goods actually
delivered during March, 1942.


U.S. Supreme Court SEC v. Chenery Corp., 332
U.S. 194 (1947) Securities and Exchange Commission
v. Chenery Corporation No. 81 Argued December 13, 16,
1946 Decided June 23, 1947 332
U.S. 194 ast|>* 332
U.S. 194 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE DISTRICT OF
COLUMBIA Syllabus 1. In approving a plan for the reorganization of a holding
company under the Public Utility Holding Company Act of 1935, the
Securities and Exchange Commission required that preferred stock
purchased by the management without fraud or concealment while
plans of reorganization were before the Commission should not be
converted into stock of the reorganized company, like other
preferred stock, but should be surrendered at cost plus interest.
In SEC v. Chenery Corp., 318 U. S. 80 , this
Court held that this requirement could not be sustained on the sole
ground upon which it was based by the Commission -- i.e., principles of equity judicially established. On remand, the
Commission reexamined the problem and reached the same result, but
based this requirement on the ground that to permit the management
to profit from purchases of stock made while reorganization
proceedings were pending would be inconsistent with the standards
of §§ 7 and 11 of the Act. Held: the new order is
sustained. Pp. 332 U. S.
196 -199, 332 U. S.
209 .

															2. This Court's earlier decision held only that the requirement
could not be supported on the sole ground stated by the Commission
in its first order, and, on remand for such further proceedings as
might be appropriate, the Commission was not precluded in the
performance of its administrative function from reaching the same
result on proper and relevant grounds. Pp. 332 U. S.
200 -201.

															3. The Commission's action was not precluded by the fact that
the Commission had not anticipated this problem and adopted a
general rule or regulation governing management trading during
reorganization. Pp. 332 U. S.
201 -202.

															4. The choice between proceeding by general rule or by ad
hoc decisions is one that lies primarily in the informed
discretion of the administrative agency. Pp. 332 U. S.
202 -203.

															5. That an ad hoc decision of the Commission might have
a retroactive effect does not necessarily render it invalid. P. 332 U. S.
203 . Page 332 U. S. 195 6. The scope of judicial review of an administrative decision in
which a new principle was announced is no different from that in
the case of ordinary administrative action. P. 332 U. S.
207 .

															7. The judicial function on review of an order of the Commission
is at an end when it becomes evident that the Commission's action
is based upon substantial evidence and is consistent with the
authority granted by Congress. P. 332 U. S.
207 .

															8. In determining whether to approve a plan of reorganization
under the Act, the Commission may properly consider that some
abuses in the field of corporate reorganization may be dealt with
effectively only by prohibitions not concerned with the fairness of
a particular transaction. Pp. 332 U. S.
207 -208.

															9. In its interpretation and application of the "fair and
equitable" rule of § 11(e), and of the standard of what is
"detrimental to the public interest or the interest of investors or
consumers" under §§ 7(d)(6) and 7(e), the Commission did not abuse
its discretion in this case. P. 332 U. S.
208 .

															10. There was reasonable basis in this case for the conclusion
that the benefits and profits accruing to the management from the
stock purchases should be prohibited, regardless of the good faith
involved. P. 332 U. S.
208 .

															11. The Commission's conclusion in this case is the product of
administrative experience, appreciation of the complexities of the
problem, realization of the statutory policies, and responsible
treatment of the uncontested facts, and constitutes an allowable
administrative judgment which cannot be disturbed on judicial
review. P. 332 U. S.
209 .

															154 F.2d 6 reversed.

															Upon remand to the Securities and Exchange Commission of the
case decided by this Court in SEC v. Chenery Corp., 318 U. S. 80 , the
Commission denied an application for approval of an amendment of
the plan of reorganization. Holding Company Act Release No. 5584.
The court below reversed. 154 F.2d 6. This Court granted
certiorari. 328 U.S. 829. Reversed, p. 332 U. S.
209 . Page 332 U. S. 196 MR. JUSTICE MURPHY delivered the opinion of the Court.

															This case is here for the second time. In SEC v. Chenery
Corp., 318 U. S. 80 , we
held that an order of the Securities and Exchange Commission could
not be sustained on the grounds upon which that agency acted. We
therefore directed that the case be remanded to the Commission for
such further proceedings as might be appropriate. On remand, the
Commission reexamined the problem, recast its rationale, and
reached the same result. The issue now is whether the Commission's
action is proper in light of the principles established in our
prior decision.

															When the case was first here, we emphasized a simple but
fundamental rule of administrative law. That rule is to the effect
that a reviewing court, in dealing with a determination or judgment
which an administrative agency alone is authorized to make, must
judge the propriety of such action solely by the grounds invoked by
the agency. If those grounds are inadequate or improper, the court
is powerless to affirm the administrative action by substituting
what it considers to be a more adequate or proper basis. To do so
would propel the court into the domain which Congress has set aside
exclusively for the administrative agency.

															We also emphasized in our prior decision an important corollary
of the foregoing rule. If the administrative action is to be tested
by the basis upon which it purports to rest, that basis must be set
forth with such clarity as to be understandable. It will not do for
a court to be compelled Page 332 U. S. 197 to guess at the theory underlying the agency's action; nor can a
court be expected to chisel that which must be precise from what
the agency has left vague and indecisive. In other words, "We must
know what a decision means before the duty becomes ours to say
whether it is right or wrong." United States v. Chicago, M.,
St. P. & P. R. Co., 294 U. S. 499 , 294 U. S. 511 .

															Applying this rule and its corollary, the Court was unable to
sustain the Commission's original action. The Commission had been
dealing with the reorganization of the Federal Water Service
Corporation (Federal), a holding company registered under the
Public Utility Holding Company Act of 1935, 49 Stat. 803. During
the period when successive reorganization plans proposed by the
management were before the Commission, the officers, directors and
controlling stockholders of Federal purchased a substantial amount
of Federal's preferred stock on the over the counter market. Under
the fourth reorganization plan, this preferred stock was to be
converted into common stock of a new corporation; on the basis of
the purchases of preferred stock, the management would have
received more than 10% of this new common stock. It was frankly
admitted that the management's purpose in buying the preferred
stock was to protect its interest in the new company. It was also
plain that there was no fraud or lack of disclosure in making these
purchases.

															But the Commission would not approve the fourth plan so long as
the preferred stock purchased by the management was to be treated
on a parity with the other preferred stock. It felt that the
officers and directors of a holding company in process of
reorganization under the Act were fiduciaries, and were under a
duty not to trade in the securities of that company during the
reorganization period. 8 SEC 893, 915-921. And so the plan was
amended to provide that the preferred stock acquired by the
management, unlike that held by others, was not to be converted Page 332 U. S. 198 into the new common stock; instead, it was to be surrendered at
cost plus dividends accumulated since the purchase dates. As
amended, the plan was approved by the Commission over the
management's objections. 10 SEC 200.

															The Court interpreted the Commission's order approving this
amended plan as grounded solely upon judicial authority. The
Commission appeared to have treated the preferred stock acquired by
the management in accordance with what it thought were standards
theretofore recognized by courts. If it intended to create new
standards growing out of its experience in effectuating the
legislative policy, it failed to express itself with sufficient
clarity and precision to be so understood. Hence, the order was
judged by the only standards clearly invoked by the Commission. On
that basis, the order could not stand. The opinion pointed out that
courts do not impose upon officers and directors of a corporation
any fiduciary duty to its stockholders which precludes them, merely
because they are officers and directors, from buying and selling
the corporation's stock. Nor was it felt that the cases upon which
the Commission relied established any principles of law or equity
which, in themselves, would be sufficient to justify this
order.

															The opinion further noted that neither Congress nor the
Commission had promulgated any general rule proscribing such action
as the purchase of preferred stock by Federal's management. And the
only judge-made rule of equity which might have justified the
Commission's order related to fraud or mismanagement of the
reorganization by the officers and directors, matters which were
admittedly absent in this situation.

															After the case was remanded to the Commission, Federal Water and
Gas Corp. (Federal Water), the surviving corporation under the
reorganization plan, made an application for approval of an
amendment to the plan to provide Page 332 U. S. 199 for the issuance of now common stock of the reorganized company.
This stock was to be distributed to the members of Federal's
management on the basis of the shares of the old preferred stock
which they had acquired during the period of reorganization,
thereby placing them in the same position as the public holders of
the old preferred stock. The intervening members of Federal's
management joined in this request. The Commission denied the
application in an order issued on February 7, 1945. Holding Company
Act Release No. 5584. That order was reversed by the Court of
Appeals, 154 F.2d 6, which felt that our prior decision precluded
such action by the Commission.

															The latest order of the Commission definitely avoids the fatal
error of relying on judicial precedents which do not sustain it.
This time, after a thorough reexamination of the problem in light
of the purposes and standards of the Holding Company Act, the
Commission has concluded that the proposed transaction is
inconsistent with the standards of §§ 7 and 11 of the Act. It has
drawn heavily upon its accumulated experience in dealing with
utility reorganizations. And it has expressed its reasons with a
clarity and thoroughness that admit of no doubt as to the
underlying basis of its order.

															The argument is pressed upon us, however, that the Commission
was foreclosed from taking such a step following our prior
decision. It is said that, in the absence of findings of conscious
wrongdoing on the part of Federal's management, the Commission
could not determine by an order in this particular case that it was
inconsistent with the statutory standards to permit Federal's
management to realize a profit through the reorganization
purchases. All that it could do was to enter an order allowing an
amendment to the plan so that the proposed transaction could be
consummated. Under this view, the Commission would be free only to
promulgate a general rule Page 332 U. S. 200 outlawing such profits in future utility reorganizations; but
such a rule would have to be prospective in nature, and have no
retroactive effect upon the instant situation.

															We reject this contention, for it grows out of a misapprehension
of our prior decision and of the Commission's statutory duties. We
held no more and no less than that the Commission's first order was
unsupportable for the reasons supplied by that agency. But when the
case left this Court, the problem whether Federal's management
should be treated equally with other preferred stockholders still
lacked a final and complete answer. It was clear that the
Commission could not give a negative answer by resort to prior
judicial declarations. And it was also clear that the Commission
was not bound by settled judicial precedents in a situation of this
nature. 318 U.S. at 318 U. S. 89 .
Still unsettled, however, was the answer the Commission might give
were it to bring to bear on the facts the proper administrative and
statutory considerations, a function which belongs exclusively to
the Commission in the first instance. The administrative process
had taken an erroneous, rather than a final, turn. Hence, we
carefully refrained from expressing any views as to the propriety
of an order rooted in the proper and relevant considerations. See Siegel v. Federal Trade Commission, 327 U.
S. 608 , 327 U. S.
613 -614.

															When the case was directed to be remanded to the Commission for
such further proceedings as might be appropriate, it was with the
thought that the Commission would give full effect to its duties in
harmony with the views we had expressed. Ford Motor Co. v.
Labor Board, 305 U. S. 364 , 305 U. S. 374 ; Federal Radio Commission v. Nelson Bros. Bond & Mortgage
Co., 289 U. S. 266 , 289 U. S. 278 .
This obviously meant something more than the entry of a perfunctory
order giving parity treatment to the management holdings of
preferred stock. The fact that the Commission had committed a legal
error in its first disposition of the case certainly gave
Federal's Page 332 U. S. 201 management no vested right to receive the benefits of such an
order. See Federal Communications Commission v. Pottsville
Broadcasting Co., 309 U. S. 134 , 309 U. S. 145 .
After the remand was made, therefore, the Commission was bound to
deal with the problem afresh, performing the function delegated to
it by Congress. It was again charged with the duty of measuring the
proposed treatment of the management's preferred stock holdings by
relevant and proper standards. Only in that way could the
legislative policies embodied in the Act be effectuated.

															The absence of a general rule or regulation governing management
trading during reorganization did not affect the Commission's
duties in relation to the particular proposal before it. The
Commission was asked to grant or deny effectiveness to a proposed
amendment to Federal's reorganization plan whereby the management
would be accorded parity treatment on its holdings. It could do
that only in the form of an order, entered after a due
consideration of the particular facts in light of the relevant and
proper standards. That was true regardless of whether those
standards previously had been spelled out in a general rule or
regulation. Indeed, if the Commission rightly felt that the
proposed amendment was inconsistent with those standards, an order
giving effect to the amendment merely because there was no general
rule or regulation covering the matter would be unjustified.

															It is true that our prior decision explicitly recognized the
possibility that the Commission might have promulgated a general
rule dealing with this problem under its statutory rulemaking
powers, in which case the issue for our consideration would have
been entirely different from that which did confront us. 318 U.S.
at 318 U. S. 92 -93.
But we did not mean to imply thereby that the failure of the
Commission to anticipate this problem and to promulgate a general
rule withdrew all power from that agency to perform Page 332 U. S. 202 its statutory duty in this case. To hold that the Commission had
no alternative in this proceeding but to approve the proposed
transaction, while formulating any general rules it might desire
for use in future cases of this nature, would be to stultify the
administrative process. That we refuse to do.

															Since the Commission, unlike a court, does have the ability to
make new law prospectively through the exercise of its rulemaking
powers, it has less reason to rely upon ad hoc adjudication to formulate new standards of conduct within the
framework of the Holding Company Act. The function of filling in
the interstices of the Act should be performed, as much as
possible, through this quasi -legislative promulgation of
rules to be applied in the future. But any rigid requirement to
that effect would make the administrative process inflexible and
incapable of dealing with many of the specialized problems which
arise. See Report of the Attorney General's Committee on
Administrative Procedure in Government Agencies, S.Doc. No. 8, 77th
Cong., 1st Sess., p. 29. Not every principle essential to the
effective administration of a statute can or should be cast
immediately into the mold of a general rule. Some principles must
await their own development, while others must be adjusted to meet
particular unforeseeable situations. In performing its important
functions in these respects, therefore, an administrative agency
must be equipped to act either by general rule or by individual
order. To insist upon one form of action to the exclusion of the
other is to exalt form over necessity.

															In other words, problems may arise in a case which the
administrative agency could not reasonably foresee, problems which
must be solved despite the absence of a relevant general rule. Or
the agency may not have had sufficient experience with a particular
problem to warrant rigidifying its tentative judgment into a hard
and fast rule. Or Page 332 U. S. 203 the problem may be so specialized and varying in nature as to be
impossible of capture within the boundaries of a general rule. In
those situations, the agency must retain power to deal with the
problems on a case-to-case basis if the administrative process is
to be effective. There is thus a very definite place for the
case-by-case evolution of statutory standards. And the choice made
between proceeding by general rule or by individual, ad
hoc litigation is one that lies primarily in the informed
discretion of the administrative agency. See Columbia
Broadcasting System v. United States, 316 U.
S. 407 , 316 U. S.
421 .

															Hence, we refuse to say that the Commission, which had not
previously been confronted with the problem of management trading
during reorganization, was forbidden from utilizing this particular
proceeding for announcing and applying a new standard of conduct. Cf. Federal Trade Commission v. R. F. Keppel & Bro., 291 U. S. 304 .
That such action might have a retroactive effect was not
necessarily fatal to its validity. Every case of first impression
has a retroactive effect, whether the new principle is announced by
a court or by an administrative agency. But such retroactivity must
be balanced against the mischief of producing a result which is
contrary to a statutory design or to legal and equitable
principles. If that mischief is greater than the ill effect of the
retroactive application of a new standard, it is not the type of
retroactivity which is condemned by law. See Addison v. Holly
Hill Co., 322 U. S. 607 , 322 U. S.
620 .

															And so, in this case, the fact that the Commission's order might
retroactively prevent Federal's management from securing the
profits and control which were the objects of the preferred stock
purchases may well be outweighed by the dangers inherent in such
purchases from the statutory standpoint. If that is true, the
argument of retroactivity becomes nothing more than a claim that
the Commission lacks power to enforce the standards of Page 332 U. S. 204 the Act in this proceeding. Such a claim deserves rejection.

															The problem in this case thus resolves itself into a
determination of whether the Commission's action in denying
effectiveness to the proposed amendment to the Federal
reorganization plan can be justified on the basis upon which it
clearly rests. As we have noted, the Commission avoided placing its
sole reliance on inapplicable judicial precedents. Rather, it has
derived its conclusions from the particular facts in the case, its
general experience in reorganization matters, and its informed view
of statutory requirements. It is hose matters which are the guide
for our review.

															The Commission concluded that it could not find that the
reorganization plan, if amended as proposed, would be "fair and
equitable to the persons affected [thereby]" within the meaning of
§ 11(e) of the Act, under which the reorganization was taking
place. Its view was that the amended plan would involve the
issuance of securities on terms "detrimental to the public interest
or the interest of investors" contrary to §§ 7(d)(6) and 7(e), and
would result in an "unfair or inequitable distribution of voting
power" among the Federal security holders within the meaning of §
7(e). It was led to this result

															"not by proof that the interveners [Federal's management]
committed acts of conscious wrongdoing, but by the character of the
conflicting interests created by the interveners' program of stock
purchases carried out while plans for reorganization were under
consideration."

															The Commission noted that Federal's management controlled a
large multi-state utility system, and that its influence permeated
down to the lowest tier of operating companies. The financial,
operational and accounting policies of the parent and its
subsidiaries were therefore under the management's strict control.
The broad range of business judgments vested in Federal's
management Page 332 U. S. 205 multiplied opportunities for affecting the market price of
Federal's outstanding securities, and made the exercise of judgment
on any matter a subject of greatest significance to investors.
Added to these normal managerial powers, the Commission pointed out
that a holding company management obtains special powers in the
course of a voluntary reorganization under § 11(e) of the Holding
Company Act. The management represents the stockholders in such a
reorganization, initiates the proceeding, draws up and files the
plan, and can file amendments thereto at any time. These additional
powers may introduce conflicts between the management's normal
interests and its responsibilities to the various classes of
stockholders which it represents in the reorganization. Moreover,
because of its representative status, the management has special
opportunities to obtain advance information of the attitude of the
Commission.

															Drawing upon its experience, the Commission indicated that all
these normal and special powers of the holding company management
during the course of a § 11(e) reorganization placed in the
management's command

															"a formidable battery of devices that would enable it, if it
should choose to use them selfishly, to affect in material degree
the ultimate allocation of new securities among the various
existing classes, to influence the market for its own gain, and to
manipulate or obstruct the reorganization required by the mandate
of the statute."

															In that setting, the Commission felt that a management program
of stock purchase would give rise to the temptation and the
opportunity to shape the reorganization proceeding so as to
encourage public selling on the market at low prices. No management
could engage in such a program without raising serious questions as
to whether its personal interests had not opposed its duties

															"to exercise disinterested judgment in matters pertaining to
subsidiaries' accounting, budgetary and dividend policies, to
present Page 332 U. S. 206 publicly an unprejudiced financial picture of the enterprise,
and to effectuate a fair and feasible plan expeditiously."

															The Commission further felt that its answer should be the same
even where proof of intentional wrongdoing on the management's part
is lacking. Assuming a conflict of interests, the Commission
thought that the absence of actual misconduct is immaterial; injury
to the public investors and to the corporation may result just as
readily.

															"Questionable transactions may be explained away, and an abuse
of investors and the administrative process may be perpetrated
without evil intent, yet the injury will remain."

															Moreover, the Commission was of the view that the delays and the
difficulties involved in probing the mental processes and personal
integrity of corporate officials do not warrant any distinction on
the basis of evil intent, the plain fact being "that an absence of
unfairness or detriment in cases of this sort would be practically
impossible to establish by proof."

															Turning to the facts in this case, the Commission noted the
salient fact that the primary object of Federal's management in
buying the preferred stock was admittedly to obtain the voting
power that was accruing to that stock through the reorganization
and to profit from the investment therein. That stock had been
purchased in the market at prices that were depressed in relation
to what the management anticipated would be, and what in fact was,
the earning and asset value of its reorganization equivalent. The
Commission admitted that the good faith and personal integrity of
this management were not in question; but as to the management's
justification of its motives, the Commission concluded that it was
merely trying to

															"deny that they made selfish use of their powers during the
period when their conflict of interest vis-a-vis public
investors was in existence owing to their purchase program."

															Federal's management had Page 332 U. S. 207 thus placed itself in a position where it was "peculiarly
susceptible to temptation to conduct the reorganization for
personal gain, rather than the public good," and where its desire
to make advantageous purchases of stock could have an important
influence, even though subconsciously, upon many of the decisions
to be made in the course of the reorganization. Accordingly, the
Commission felt that all of its general considerations of the
problem were applicable to this case.

															The scope of our review of an administrative order wherein a new
principle is announced and applied is no different from that which
pertains to ordinary administrative action. The wisdom of the
principle adopted is none of our concern. See Board of Trade v.
United States, 314 U. S. 534 , 314 U. S. 548 .
Our duty is at an end when it becomes evident that the Commission's
action is based upon substantial evidence and is consistent with
the authority granted by Congress. See National Broadcasting
Co. v. United States, 319 U. S. 190 , 319 U. S.
224 .

															We are unable to say in this case that the Commission erred in
reaching the result it did. The facts being undisputed, we are free
to disturb the Commission's conclusion only if it lacks any
rational and statutory foundation. In that connection, the
Commission has made a thorough examination of the problem,
utilizing statutory standards and its own accumulated experience
with reorganization matters. In essence, it has made what we
indicated in our prior opinion would be an informed, expert
judgment on the problem. It has taken into account

															"those more subtle factors in the marketing of utility company
securities that gave rise to the very grave evils which the Public
Utility Holding Company Act of 1935 was designed to correct,"

															and has relied upon the fact that

															"[a]buse of corporate position, influence, and access to
information may raise questions so subtle that the law can deal
with them effectively only by prohibitions Page 332 U. S. 208 not concerned with the fairness of a particular
transaction."

															318 U.S. at 318 U. S.
92 .

															Such factors may properly be considered by the Commission in
determining whether to approve a plan of reorganization of a
utility holding company, or an amendment to such a plan. The "fair
and equitable" rule of § 11(e) and the standard of what is
"detrimental to the public interest or the interest of investors or
consumers" under § 7(d)(6) and § 7(e) were inserted by the framers
of the Act in order that the Commission might have broad powers to
protect the various interests at stake. 318 U.S. at 318 U. S. 90 -91.
The application of those criteria, whether in the form of a
particular order or a general regulation, necessarily requires the
use of informal discretion by the Commission. The very breath of
the statutory language precludes a reversal of the Commission's
judgment save where it has plainly abused its discretion in these
matters. See United States v. Lowden, 308 U.
S. 225 ; ICC v. Railway Labor Executives Ass'n, 315 U. S. 373 .
Such an abuse is not present in this case.

															The purchase by a holding company management of that company's
securities during the course of a reorganization may well be
thought to be so fraught with danger as to warrant a denial of the
benefits and profits accruing to the management. The possibility
that such a stock purchase program will result in detriment to the
public investors is not a fanciful one. The influence that program
may have upon the important decisions to be made by the management
during reorganization is not inconsequential. Since the officers
and directors occupy fiduciary positions during this period, their
actions are to be held to a higher standard than that imposed upon
the general investing public. There is thus a reasonable basis for
a value judgment that the benefits and profits accruing to the
management from the stock purchases should be prohibited,
regardless of the good faith involved. And Page 332 U. S. 209 it is a judgment that can justifiably be reached in terms of
fairness and equitableness, to the end that the interests of the
public, the investors and the consumers might be protected. But it
is a judgment based upon public policy, a judgment which Congress
has indicated is of the type for the Commission to make.

															The Commission's conclusion here rests squarely in that area
where administrative judgments are entitled to the greatest amount
of weight by appellate courts. It is the product of administrative
experience, appreciation of the complexities of the problem,
realization of the statutory policies, and responsible treatment of
the uncontested facts. It is the type of judgment which
administrative agencies are best equipped to make and which
justifies the use of the administrative process. See Republic
Aviation Corporation v. Labor Board, 324 U.
S. 793 , 324 U. S. 800 .
Whether we agree or disagree with the result reached, it is an
allowable judgment which we cannot disturb. Reversed. MR. JUSTICE BURTON concurs in the result.

															THE CHIEF JUSTICE and MR. JUSTICE DOUGLAS took no part in the
consideration or decision of this case.

															MR. JUSTICE FRANKFURTER and MR. JUSTICE JACKSON dissent, but
there is not now opportunity for a response adequate to the issues
raised by the Court's opinion. These concern the rule of law in its
application to the administrative process and the function of this
Court in reviewing administrative action. Accordingly, the detailed
grounds for dissent will be filed in due course.

															* Together with No. 82, Securities & Exchange Commission
v. Federal Water & Gas Corp., also on certiorari to the
same Court.

															MR. JUSTICE JACKSON, dissenting.*

															The Court by this present decision sustains the identical
administrative order which only recently it held invalid. Page 332 U. S. 210 Securities and Exchange Commission v. Chenery Corp., 318 U. S. 80 . As
the Court correctly notes, the Commission has only "recast its
rationale and reached the same result." (Par. 1.) [ Footnote 1 ] There being no change in the
order, no additional evidence in the record, and no amendment of
relevant legislation, it is clear that there has been a shift in
attitude between that of the controlling membership of the Court
when the case was first here and that of those who have the power
of decision on this second review.

															I feel constrained to disagree with the reasoning offered to
rationalize this shift. It makes judicial review of administrative
orders a hopeless formality for the litigant, even where granted to
him by Congress. It reduces the judicial process in such cases to a
mere feint. While the opinion does not have the adherence of a
majority of the full Court, if its pronouncements should become
governing principles, they would, in practice, put most
administrative orders over and above the law. I The essential facts are few, and are not in dispute. [ Footnote 2 ] This corporation filed with
the Securities and Exchange Commission a voluntary plan of
reorganization. While the reorganization proceedings were pending,
sixteen officers and directors bought on the open market about 7
1/2% of the corporation's preferred stock. Both the Commission and
the Court admit that these purchases were not forbidden by any law,
judicial precedent, regulation or rule of the Commission.
Nevertheless, the Commission has Page 332 U. S. 211 ordered these individuals to surrender their shares to the
corporation at cost, plus 4% interest, and the Court now approves
that order.

															It is helpful, before considering whether this order is
authorized by law, to reflect on what it is and what it is not. It
is not conceivably a discharge of the Commission's duty to
determine whether a proposed plan of reorganization would be "fair
and equitable." It has nothing to do with the corporate structure,
or the classes and amounts of stock, or voting rights or dividend
preferences. It does not remotely affect the impersonal financial
or legal factors of the plan. It is a personal deprivation denying
particular persons the right to continue to own their stock and to
exercise its privileges. Other persons who bought at the same time
and price in the open market would be allowed to keep and convert
their stock. Thus, the order is in no sense an exercise of the
function of control over the terms and relations of the corporate
securities.

															Neither is the order one merely to regulate the future use of
property. It literally takes valuable property away from its lawful
owners for the benefit of other private parties without full
compensation, and the Court expressly approves the taking. It says
that the stock owned by these persons is denied conversion along
with similar stock owned by others; "instead, it was to be
surrendered at cost plus dividends accumulated since the purchase
dates." (Par. 5.) It should be noted that this formula was
subsequently altered to read "cost plus 4% interest." That this
basis was less than its value is recognized, for the Court says

															"That stock had been purchased in the market at prices that were
depressed in relation to what the management anticipated would be,
and what in fact was, the earning and asset value of its
reorganization equivalent."

															(Par. 24.) Admittedly, the value above cost, and interest on it,
simply is taken from the owners, Page 332 U. S. 212 without compensation. No such power has ever been confirmed in
any administrative body.

															It should also be noted that neither the Court nor the
Commission purports to adjudge a forfeiture of this property as a
consequence of sharp dealing or breach of trust. The Court says,
"The Commission admitted that the good faith and personal integrity
of this management were not in question; . . . " (Par. 24.) And
again, "It was frankly admitted that the management's purpose in
buying the preferred stock was to protect its interest in the new
company. It was also plain that there was no fraud or lack of
disclosure in making these purchases." (Par. 4.) II The reversal of the position of this Court is due to a
fundamental change in prevailing philosophy. The basic assumption
of the earlier opinion as therein stated was,

															"But before transactions otherwise legal can be outlawed or
denied their usual business consequences, they must fall under the
ban of some standards of conduct prescribed by an agency of
government authorized to prescribe such standards." Securities and Exchange Commission v. Chenery Corp., 318 U. S. 80 , 318 U. S. 92 -93.
The basic assumption of the present opinion is stated thus:

															"The absence of a general rule or regulation governing
management trading during reorganization did not affect the
Commission's duties in relation to the particular proposal before
it."

															(Par. 13.) This puts in juxtaposition the two conflicting
philosophies, which produce opposite results in the same case and
on the same facts. The difference between the first and the latest
decision of the Court is thus simply the difference between holding
that administrative orders must have a basis in law and a holding
that absence of a legal basis is no ground on which courts may
annul them.

															As there admittedly is no law or regulation to support this
order, we peruse the Court's opinion diligently to find Page 332 U. S. 213 on what grounds it is now held that the Court of Appeals, on
pain of being reversed for error, was required to stamp this order
with its approval. We find but one. That is the principle of
judicial deference to administrative experience. That argument is
five times stressed in as many different contexts, and I quote just
enough to identify the instances: "The Commission," it says, "has
drawn heavily upon its accumulated experience in dealing with
utility reorganizations." (Par. 9.)

															"Rather it has derived its conclusions from the particular facts
in the case, its general experience in reorganization matters and
its informed view of statutory requirements."

															(Par. 19.) "Drawing upon its experience, the Commission
indicated . . . ," etc. (Par. 22.)

															". . . the Commission has made a thorough examination of the
problem, utilizing statutory standards and its own accumulated
experience with reorganization matters."

															(Par. 26.) And finally, of the order the Court says, "It is the
product of administrative experience," etc. (Par. 29.)

															What are we to make of this reiterated deference to
"administrative experience" when, in another context, the Court
says, "Hence, we refuse to say that the Commission, which had
not previously been confronted with the problem of management
trading during reorganization, was forbidden from utilizing
this particular proceeding for announcing and applying a new
standard of conduct. "? (Par. 17.) (Emphasis supplied.)

															The Court's reasoning adds up to this: the Commission must be
sustained because of its accumulated experience in solving a
problem with which it had never before been confronted!

															Of course, thus to uphold the Commission by professing to find
that it has enunciated a "new standard of conduct" brings the Court
squarely against the invalidity of retroactive lawmaking. But the
Court does not falter. "That such action might have a retroactive
effect Page 332 U. S. 214 was not necessarily fatal to its validity." (Par. 17.) "But such
retroactivity must be balanced against the mischief of producing a
result which is contrary to a statutory design or to legal and
equitable principles." (Par. 17.) Of course, if what these parties
did really was condemned by "statutory design" or "legal and
equitable principles," it could be stopped without resort to a new
rule, and there would be no retroactivity to condone. But if it had
been the Court's view that some law already prohibited the
purchases, it would hardly have been necessary three sentences
earlier to hold that the Commission was not prohibited "from
utilizing this particular proceeding for announcing and applying a new standard of conduct. " (Par. 17.) (Emphasis
supplied.)

															I give up. Now I realize fully what Mark Twain meant when he
said, "The more you explain it, the more I don't understand
it." III But one does not need to comprehend the processes by which other
minds reach a given result in order to estimate the practical
consequences of their pronouncement upon judicial review of
administrative orders.

															If it is of no consequence that no rule of law be existent to
support an administrative order, and the Court of Appeals is
obliged to defer to administrative experience and to sustain a
Commission's power merely because it has been asserted and
exercised, of what use is it to print a record or briefs in the
case, or to hear argument? Administrative experience always is
present, at least to the degree that it is here, and would always
dictate a like deference by this Court to an assertion of
administrative power. Must the reviewing court, as this Court does
in this opinion, support the order on a presumptive or imputed
experience even though the Court is obliged to discredit such
experience in the very same opinion? Is Page 332 U. S. 215 fictitious experience to be conclusive in matters of law and
particularly in the interpretation of statutes, as the Court's
opinion now intimates, or just in factfinding which has been the
function which the Court has heretofore sustained upon the argument
of administrative experience?

															I suggest that administrative experience is of weight in
judicial review only to this point -- it is a persuasive reason for
deference to the Commission in the exercise of its discretionary
powers under and within the law. It cannot be invoked to support
action outside of the law. And what action is, and what is not,
within the law must be determined by courts, when authorized to
review, no matter how much deference is due to the agency's fact
finding. Surely an administrative agency is not a law unto itself,
but the Court does not really face up to the fact that this is the
justification it is offering for sustaining the Commission
action.

															Even if the Commission had, as the Court says, utilized this
case to announce a new legal standard of conduct, there would be
hurdles to be cleared, but we need not dwell on them now. Because
to promulgate a general rule of law, either by regulation or by
case law, is something the Commission expressly declined to do. It
did not previously promulgate, and it does not by this order
profess to promulgate, any rule or regulation to prohibit such
purchases absolutely or under stated conditions. On the other hand,
its position is that no such rule or standard would be fair and
equitable in all cases. [ Footnote
3 ] Page 332 U. S. 216 IV Whether, as matter of policy, corporate managers during
reorganization should be prohibited from buying or selling its
stock is not a question for us to decide. But it is for us to
decide whether, so long as no law or regulation prohibits them from
buying, their purchases may be forfeited, or not, in the discretion
of the Commission. If such a power exists in words of the statute
or in their implication, it would be possible to point it out, and
thus end the case. Instead, the Court admits that there was no law
prohibiting these purchases when they were made, or at any time
thereafter. And, except for this decision, there is none now.

															The truth is that, in this decision, the Court approves the
Commission's assertion of power to govern the matter without law,
power to force surrender of stock so purchased whenever it will,
and power also to overlook such acquisitions if it so chooses. The
reasons which will lead it to take one course as against the other
remain locked in its own breast, and it has not and apparently does
not intend to commit them to any rule or regulation. This
administrative authoritarianism, this power to decide without law,
is what the Court seems to approve in so many words: "The absence
of a general rule or regulation Page 332 U. S. 217 governing management trading during reorganization did not
affect the Commission's duties . . ." (Par. 13). This seems to me
to undervalue and to belittle the place of law, even in the system
of administrative justice. It calls to mind Mr. Justice Cardozo's
statement that "[l]aw as a guide to conduct is reduced to the level
of mere futility if it is unknown and unknowable." [ Footnote 4 ] V The Court's averment concerning this order that "[i]t is the
type of judgment which administrative agencies are best equipped to
make and which justifies the use of the administrative process,"
(Par. 29) is the first instance in which the administrative process
is sustained by reliance on that disregard of law which enemies of
the process have always alleged to be its principal evil. It is the
first encouragement this Court has given to conscious lawlessness
as a permissible rule of administrative action. This decision is an
ominous one to those who believe that men should be governed by
laws that they may ascertain and abide by, and which will guide the
action of those in authority as well as of those who are subject to
authority. [ Footnote 5 ]

															I have long urged, and still believe, that the administrative
process deserves fostering in our system as an expeditious and
nontechnical method of applying law in specialized Page 332 U. S. 218 fields. [ Footnote 6 ] I can
not agree that it be used, and I think its continued effectiveness
is endangered when it is used, as a method of dispensing with law
in those fields.

															MR. JUSTICE FRANKFURTER joins in this opinion.

															* Filed October 6, 1947.

															[ Footnote 1 ]

															For convenience of reference, I have numbered consecutively the
paragraphs of the Court's opinion, and cite quotations
accordingly.

															[ Footnote 2 ]

															^2, The facts and the law of the case generally are fully set
forth in the first opinion of Mr. Chief Justice Groner of the Court
of Appeals, which reversed the Commission's order (75 U.S.App.D.C.
374, 128 F.2d 303), and in his second opinion (80 U.S.App.D.C. 365,
154 F.2d 6), again reversing the Commission's order after it had
"recast its rationale."

															[ Footnote 3 ]

															The Commission, speaking of such a rule appends the following
note to its opinion:

															"Without flexibility, the rule might itself operate unfairly.
Limitation to cost appears appropriate here, but would be
inappropriate in a case where the cost of the security purchased
was in excess of its reorganization value, and, in some instances,
cash payment by the company would not be feasible. In addition,
special treatment of any sort might be inappropriate for incidental
purchases not made as part of a program in contemplation of
reorganization benefits. In this connection, we wish to emphasize
that our concern here is not primarily with the normal corporate
powers which make it possible for officers and directors to
influence the market for their own gain, in the absence of
reorganization, by a choice of dividend policies, accounting
practices, published reports, and the like. The questions of
fairness and detriment here presented arise before us in the
context of a capital readjustment. At that point, our scrutiny is
called for, and that our scrutiny is to be vigilant cannot be
doubted. See Appendix to Sen.Rep. No. 621 (74th Cong., 1st
Sess.) on S. 2796, at p. 58, quoted supra. "

															[ Footnote 4 ]

															The Growth of the Law, p. 3.

															[ Footnote 5 ]

															On the same day, the Court denied its own authority to recognize
and enforce without Congressional action, an unlegislated liability
much less novel than the one imposed here, and that in the field of
tort law which traditionally has developed by decisional, rather
than by legislative, process. The result is to confirm in an
executive agency a discretion to act outside of established law
that goes beyond any judicial discretion, as well as beyond any
legislative delegation. Compare United States v. Standard Oil
Co., 332 U. S. 301 .

															[ Footnote 6 ] See statement before House of Delegates, American Bar
Association, 1939. (1939 Proceedings, House of Delegates, XXXV
A.B.A. Journal 95.) Also see Report as Attorney General to
President Roosevelt recommending veto of Walter-Logan Bill -- made
part of veto message, Vol. 86, Part 12, Congressional Record, 76th
Congress, 3d Session, p. 13943.