debtor's interest in an after-acquired branch line; and the debtor's title to certain "non-carrier" realty, are here affirmed. Pp. 489, 503. 25. The provision of the plan directing that "All collateral pledged by the debtor as security for notes to the Reconstruction Finance Corporation, the Railroad Credit Corporation, and the A. C. James Company shall be reduced to possession by the respective pledgees thereof, and shall be by them surrendered to the reorganized company and canceled," is sustained. P. 503.

26. The showing made before the District Court as to changed conditions since the certification of the plan by the Commission, affords no basis for rejection of the Commission's plan. P. 508.

27. The Commission's selection of January 1, 1939, as the effective date of the plan was within its authority under subsection (b) of § 77. P. 509.

28. On this review of the action of the District Court, costs are here properly assessed against the losing parties, without prejudice to an allowance for disbursements under subsection (c) (12). P. 510. 124 F.2d 136, reversed.

CERTIORARI, 316 U. S. 654, to review the reversal of an order of the District Court approving a plan of reorganization for the Western Pacific Railroad Company, 34 F. Supp. 493. See also 230 I. C. C. 61; 233 I. C. C. 409, and 236 I. C. C. 1.

Mr. Robert T. Swaine, with whom Messrs. Herbert W. Clark and Benjamin R. Shute were on the briefs, for the Institutional Bondholders Committee, petitioner in No. 7 and respondent in Nos. 8, 20, 33, and 61. Mr. Russell L. Snodgrass, with whom Solicitor General Fahy and Mr. Emmet McCaffery were on the brief, for petitioner in No. 33. Mr. Orville W. Wood, with whom Mr. Arthur A. Gammell was on the briefs, for Crocker First National Bank et al., Trustees of First Mortgage, petitioners in No. 8 and respondents in Nos. 7, 20, 33, and 61. Mr. Frank C. Nicodemus, Jr., filed a brief on behalf of the Western Pacific R. Co., petitioner in No. 20 and respondent in Nos. 7, 8, 33, and 61. Mr. H. C. McCollom, with

Opinion of the Court.

318 U.S.

whom Mr. Orrin G. Judd was on the briefs, for the Irving Trust Co., Trustee of General Refunding Mortgage, petitioner in No. 61 and respondent in Nos. 7, 8, 20, and 33.

Mr. M. C. Sloss for the Western Pacific Railroad Corporation; Mr. Robert E. Coulson, with whom Mr. Horace E. Whiteside was on the brief, for A. C. James Co.; and Mr. Edward G. Buckland, with whom Mr. William J. Kane was on the brief, for the Railroad Credit Corporation, respondents.

Solicitor General Fahy and Messrs. Daniel W. Knowlton and Daniel H. Kunkel filed a brief on behalf of the Interstate Commerce Commission as amicus curiae, urging reversal.

MR. JUSTICE REED delivered the opinion of the Court.

Petitioners seek review of a decree of the Circuit Court of Appeals in the reorganization of the Western Pacific Railroad Company under § 77 of the Bankruptcy Act. That decree reversed the order of the District Court which had approved the plan for reorganization certified to it by the Interstate Commerce Commission.1

The petitions for certiorari ask adjudication of questions which are important in the field of railroad reorganization. They involve the respective function of Commission and court, the method of valuation of railroad property by the Commission, the legality of the exclusion of stockholders and certain creditors from participation in the estate, a more favorable participation of a Reconstruction Finance Corporation claim because of new money furnished for the plan, allocation of securities

1 Sec. 77, Bankruptcy Act, Reorganization of Railroads, 47 Stat. 1474, as amended, 11 U. S. C. § 205; In re Western Pacific R. Co., 124 F.2d 136; In re Western Pacific R. Co., 34 F. Supp. 493; Western Pacific R. Co. Reorganization, 230 I. C. C. 61; 233 I. C. C. 409; 236 I. C. C. 1.

among claimants, priorities of liens created by different mortgages and subsidiary issues. Heretofore this Court has not passed upon them. For their determination we granted certiorari. 316 U. S. 654.

The debtor railroad company filed its petition in the District Court for the Northern District of California on August 2, 1935, alleging its inability to pay and discharge its indebtedness as it matured and praying for reorganization under § 77. The petition was approved as properly filed, trustees were appointed, their appointment ratified, 207 I. C. C. 793, and the appropriate steps taken to bring the plan of reorganization before the Commission for consideration. Public hearings were held by the Commission at which other plans for reorganization were filed, one by a group of bondholders known as the Institutional Bondholders Committee and one by the A. C. James Company, a secured creditor of the debtor which also was financially interested in the treatment accorded the preferred and common stock of the debtor. After full consideration of the problems of the debtor's reorganization and after the development of a plan deemed in accordance with § 77, the Commission certified its plan to the District Court on September 28, 1939.

The Commission's conclusions and orders were reached upon exceptions to the report of its Bureau of Finance. Its plan was the outgrowth of a study of the financial condition and economic situation of the debtor, viewed in the setting of the public interest in a national transportation system. The competing claims of the various classes of creditors and stockholders were appraised in the light of the requirements of the Act that they be accorded fair and equitable treatment. There is little if any dispute concerning the primary facts from which factual or legal inferences are to be drawn.

The debtor is a California corporation with its principal operating office in San Francisco. It carries on an interstate railroad business between the States of California,

Nevada and Utah. For an understanding of this opinion the obligations of the debtor as of January 1, 1939, the

2 The summary of the debtor's property prepared by the Interstate Commerce Commission as of October 10, 1938, 230 I. C. C. 62, follows:

"Location and general description of the property.—The debtor owns or operates a total of 1,207.51 miles of standard-gage steam railroad. The main lines extend eastward 924.17 miles from Oakland, Calif., to Salt Lake City, Utah, and northward 111.81 miles from Keddie to Bieber, Calif., with operating rights over the Great Northern Railway, 46.38 miles, from Bieber to Hambone, Calif. The debtor also operates 4.2 miles of ferry service from Oakland to San Francisco, and 185.3 miles of second main track, of which 182.91 miles between Weso and Alazon, Nev., are owned by the Southern Pacific. This territory is known as the 'paired-track district,' since the two lines are used as a double-track railroad by both companies. Various branch lines springing from the Oakland-Salt Lake City line are as follows:

"Owned or controlled and jointly affiliated railroad companies.-The debtor owns all the outstanding capital stock of the Sacramento Northern Railway, an electrically operated standard-gage freight and passenger railroad, consisting of 276.2 miles of road serving and connecting San Francisco and Oakland with various Sacramento Valley cities, principally Pittsburg, Vacaville, Sacramento, Woodland, Marysville, Colusa, and Oroville, all in California.

"By ownership of more than 99 percent of the outstanding capital stock, the debtor controls the Tidewater Southern Railway, which operates a standard-gage steam freight line 61.38 miles in length, connecting Stockton with Manteca, Escalon, Modesto, and Turlock in the San Joaquin Valley of California.

"The debtor owns all the outstanding capital stock of the Deep Creek Railroad Company, which owns and operates a standard-gage steam railroad extending from Wendover to Gold Hill, Nev., a distance of

date proposed for the beginning of the operation of the plan, may be stated as follows:

*The "other collateral" does not belong to the debtor and is unaffected by the plan. See p. 503, infra.

Payment of this indebtedness was secured by liens, collateral or priority, as follows:

The trustees' certificates of $10,000,000 are secured by a lien on the entire estate and priority over all claims beyond reorganization expenses.

44.6 miles. In addition it owns 50 percent of the capital stock of the Salt Lake City Union Depot & Railroad Company; 33% percent of the capital stock of the Central California Traction Company, operating an electrically operated freight railroad extending from Stockton to Sacramento, Calif., with a road mileage of 53.78 miles; and 50 percent of the capital stock of the Alameda Belt Line, operating 15.86 miles of terminal switching line in the city of Alameda on San Francisco Bay.

"None of the above subsidiary or affiliated companies has filed a petition under section 77 of the Bankruptcy Act, as amended."