"Section 21 (a). Dual Operations Under Certificates and Permits, Motor Carriers.

"The conference substitute in section 21 (a) amends section 210 of the Interstate Commerce Act which prohibits a person from holding at the same time both a certificate as a common carrier of property by motor vehicle and a permit as a contract carrier of property by motor vehicle over the same route or within the same territory, unless for good cause shown the Commission shall find that both forms of operating authority may be held consistent with the public interest and with the policy declared in part II, so that the section will apply not only to a particular motor carrier but also to any person controlling, controlled by, or under common control with, such person."

It is unnecessary, however, to decide whether the Commission correctly applied § 210 as originally enacted to such common control as the Commission found in appellant and Ziffrin Truck Lines, Inc. We are convinced that the Commission was required to act under the law as it existed when its order of May 29, 1941, was entered. The permit was effective for the future and the amendment forbade persons under common control holding both a permit and a certificate. Previously appellant had been operating under an ex parte permit. Protests to the grant had been made on account of the dual operation, the formal hearing was held and the question raised by these protests was heard at length. A change in the law between a nisi prius and an appellate decision requires the appellate court to apply the changed law. Vandenbark v. Owens-Illinois Glass Co., 311 U. S. 538, and cases cited. Cf. Duplex Printing Press Co. v. Deering, 254 U. S. 443, 464. A fortiori, a change of law pending an administrative hearing must be followed in relation to permits for future acts. Otherwise the administrative body would issue orders contrary to the existing legislation.

73

Opinion of the Court.

We find no basis for appellant's contention that it was given improper notice of the hearing and denied an opportunity to show compliance with the amended section. The steps of notice and hearing detailed above demonstrate the error of the former contention. As to the latter, it is met completely by the report and order of the Commission, made while this suit was pending in the District Court, and denying appellant's motion for reconsideration of the order of May 29, 1941. Ziffrin, Incorporated, Contract Carrier Application, 33 M. C. C. 155. This opinion was called to our attention by the Government in brief and argument. In the circumstances, we will not disregard it. The Commission there said, p. 156:

"At the conclusion of the trial on applicant's suit before the three-judge court, a conference was held between the counsel for all the parties to the suit in the court's chambers. It was there suggested by the court that applicant submit to this Commission some method for divorcing applicant herein from Ziffrin Truck Lines, Inc., which might eliminate the conflict with section 210 of the act on which the denial of the application was grounded. Pursuant to this suggestion, applicant has filed a petition seeking reopening and reconsideration of the proceeding, and, as a basis therefor, proposes a plan for elimination of the common control of applicant and Ziffrin Truck Lines, Inc. The petition is opposed by an association of motor common carriers. It is understood that the filing of this petition and action by us thereon does not terminate the court proceeding. Pending our action on the petition, however, the entry of judgment by the court is being held in abeyance. In view of the pendency of the litigation, we believe that a statement of the reasons for our action with respect to this petition will be helpful." The Commission then restated the evidence showing common control of the two corporations and concluded that the plan proposed would not change the situation.

See 33 M. C. C. 155; 28 M. C. C. 683, 692 et seq. The evidence is ample to support the conclusion of the Commission entered at the earlier hearing. This is sufficient to support the order upon judicial review. Shields v. Utah Idaho Central R. Co., 305 U. S. 177, 185; United States v. Maher, 307 U. S. 148, 155.

Affirmed.

SECURITIES AND EXCHANGE COMMISSION v. CHENERY CORPORATION ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA.

No. 254. Argued December 17, 18, 1942.-Decided February 1, 1943. By an order of the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935, approval was given, over objections, to a plan for the reorganization of a registered holding company, whereby preferred stock which had been acquired by officers and directors of the company while plans for its reorganization were before the Commission, would not be converted into stock of the reorganized company, as would all other preferred stock, but would be surrendered at cost plus interest. The Commission explicitly based its order on its view of principles of equity judicially established. However, the Commission did not find, but on the contrary disavowed, that the specific transactions showed misuse by the officers and directors of their position as reorganization managers, or that as such managers they took advantage of the corporation, other stockholders, or the investing public. Held:

1. On review under § 24 (a) of the Act, the validity of the order of the Commission must be judged on the grounds upon which the record discloses that its action was based. P. 87.

2. Tested by principles of equity judicially established, the order of the Commission can not be sustained. P. 88.

3. It is immaterial that the Commission might have made findings which would justify its order as an appropriate safeguard of interests which the Act was designed to protect. Such findings are essential to the validity of the order, and here there is none.

80

Opinion of the Court.

4. Such an administrative order can not be upheld if not sustainable by the grounds upon which it was based by the Commission. P. 95.

75 U. S. App. D. C. 374, 128 F. 2d 303, remanded.

CERTIORARI, 317 U. S. 609, to review a judgment setting aside an order of the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935.

Mr. Chester T. Lane, with whom Solicitor General Fahy and Messrs. Richard S. Salant, John F. Davis, Homer Kripke, and Theodore L. Thau were on the brief, for petitioner.

Mr. Spencer Gordon for respondents.

Mr. Allen S. Hubbard was on a brief for the Federal Water and Gas Corporation, respondent.

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

The respondents, who were officers, directors, and controlling stockholders of the Federal Water Service Corporation (hereafter called Federal), a holding company registered under the Public Utility Holding Company Act of 1935, c. 687, 49 Stat. 803, 15 U. S. C. § 79, brought this proceeding under § 24(a) of the Act to review an order made by the Securities and Exchange Commission on September 24, 1941, approving a plan of reorganization for the company. Under the Commission's order, preferred stock acquired by the respondents during the period in which successive reorganization plans proposed by the management of the company were before the Commission, was not permitted to participate in the reorganization on an equal footing with all other preferred stock. The Court of Appeals for the District of Columbia, with one judge dissenting, set the Commission's order aside, 128 F. 2d 303, and because the question presented looms large in the administration of the Act, we brought the case here.

The relevant facts are as follows. In 1937, Federal was a typical public utility holding company. Incorporated in Delaware, its assets consisted of securities of subsidiary water, gas, electric, and other companies in thirteen states and one foreign country. The respondents controlled Federal through their control of its parent, Utility Operators Company, which owned all of the outstanding shares of Federal's Class B common stock, representing the controlling voting power in the company. On November 8, 1937, when Federal registered as a holding company under the Public Utility Holding Company Act of 1935, its management filed a plan for reorganization under §§ 7 and 11 of the Act, the relevant portions of which are copied in the margin. This plan, as well as two other plans later

1"SEC. 7. (a) A registered holding company or subsidiary company thereof may file a declaration with the Commission, regarding any of the acts enumerated in subsection (a) of section 6, in such form as the Commission may by rules and regulations prescribe as necessary or appropriate in the public interest or for the protection of investors or consumers. Such declaration shall include

"(1) such of the information and documents which are required to be filed in order to register a security under section 7 of the Securities Act of 1933, as amended, as the Commission may by rules and regulations or order prescribe as necessary or appropriate in the public interest or for the protection of investors or consumers; and

"(2) such additional information, in such form and detail, and such documents regarding the declarant or any associate company thereof, the particular security and compliance with such State laws as may apply to the act in question as the Commission may by rules and regulations or order prescribe as necessary or appropriate in the public interest or for the protection of investors or consumers. . . .

...

"(d) If the requirements of subsections (c) and (g) are satisfied, the Commission shall permit a declaration regarding the issue or sale of a security to become effective unless the Commission finds that

"(6) the terms and conditions of the issue or sale of the security are detrimental to the public interest or the interest of investors or

consumers.

"(e) If the requirements of subsection (g) are satisfied, the Cominission shall permit a declaration to become effective regarding the exercise