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UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDEBAL RE3FRVE SYSTEM IN THE MATTER OF TRANSAMERICA CORPORATION STATEMENT AND ORDER ON MOTIONS TO DISQUALIFY AND TO DISMISS COMPLAINT On December 1, 1948, respondent f i l e d w i t h the Board a motion to d i s q u a l i f y Marriner S. Eccles and Lawrence Clayton, members of t h i s Board, and on December 7, 1948, three motions to dismiss the complaint. The motions were o r a l l y argued by counsel f o r respondent and the s o l i c i t o r f o r the Boprd on December 13, 1948. Supporting b r i e f s were f i l e d by couns e l f o r respondent on December 13 and 27, 1948, and l e t t e r s i n the nature of b r i e f s on January 4 and January 13, 1949. A b r i e f i n opposition was f i l e d by the s o l i c i t o r f o r the Board on January 5, 1949. Having f u l l y and c a r e f u l l y considered the motions, and the arguments and b r i e f s of counsel* the Board i s o f the opinion that the motions must be dismissed i n part aafl i n a l l other respects denied, as hereafter stated. In so f a r as respondent objedts to Governor Eccles p a r t i c i p a t i n g i n t h i s proceeding, no consideration o f the merits of respondent's motion to d i s q u a l i f y i s necessary. On December 1, 1948, promptly a f t e r the motion was f i l e d , Governor Eccles p u b l i c l y announced that he had d i s q u a l i f i e d himself. Respondent's motion to d i s q u a l i f y Governor Eccles i s therefore moot, and i s dismissed f o r that reason. Respondent's motion to d i s q u a l i f y Governor Clayton assumes that the Board has authority to take the a c t i o n requested. We cannot agree with t h i s assumption. Members of the Board of Governors of the Federal Reserve System are "appointed by the President, by and w i t h the advice and consent of the Senate, * * * f o r terms o f fourteen years" (12 U.S.C. sec. 241), and the powers of the Board are set f o r t h i n d e t a i l i n the Federal Reserve Act (12 U.S.C. sec. 248), the Clayton Act (15 U.S.C. sec. 21) and numerous other statutes* No statute r e l a t i n g to the Board, however, e i t h e r expressly or by i m p l i c a t i o n , authorizes or d i r e c t s the Board t o d i s q u a l i f y i t s e l f or any member from p a r t i c i p a t i n g i n any Board a c t i o n or proceeding, and no statute provides f o r the appointment o f substitute members, or authorises any other Government agency t o exercise the powers o f the Board, i n the event that a member or a majority of members d i s q u a l i f y . I n addition to this> the Administrative Procedure Act, designed as a comprehensive regulation of procedure before administrative agencies, i s s i g n i f i c a n t l y s i l e n t with respect to d i s q u a l i f y i n g any agency or any member o f an agency from p a r t i c i p a t i n g i n the agency's d e c i s i o n . - 2 In the circumstances, the Board i s of the opinion that i t has no authority t o d i s q u a l i f y Governor Clayton from p a r t i c i p a t i n g i n t h i s proceeding. See Federal Trade Commission v. Cement I n s t i t u t e . 333 U.S. 683, 700-703 (19IB) s Marquette Cement Mfq. Co. v . Federal Trads Cnrmni salon r 147 F. 2d 589, 591-593 (C,C,A, 7, 1945) s Loughran v. Federal Trade Commission, 143 F. 2d 431, 433 (C.C.A. 8, 1944)? Montana Power Co. v. P u b l i c Service Commission, 12 F. Supp. 946, 948-950 (D. Mont., 1935). See a l s o concurring opinion upon d e n i a l of p e t i t i o n f o r rehearing i n Jewell Ridge Coal Corp, v. L o c a l No, 6167, 325 U.S. 897 (1945). I f the Board i s mistaken i n t h i s , however, i t i s f u r t h e r of the opinion, and therefore holds, that the a f f i d a v i t s submitted by respondent i n support of i t s motion do not warrant Governor Clayton's d i s q u a l i f i c a t i o n . A f f i d a v i t s of d i s q u a l i f i c a t i o n must set f o r t h f a c t s . as d i s tinguished from mere conclusions. Beland v . United States. 117 2c1. 958, 960 (C.C.A. 5, 1947), c e r t , denied 313 U.S. 585? State v f Chapman. 1 S. D. 414, 47 N.W. 411, 412-413 (1890). And such f a c t s must be s u f f i c i e n t both t o overthrow the presumption i n favor of the i n t e g r i t y of the o f f i c i a l sought to be d i s q u a l i f i e d and reasonably to warrant a strong inference that he possesses personal bias and prejudice of such character as i s calculated s e r i o u s l y to impair h i s i m p a r t i a l i t y , sway h i s judgment and preclude h i s dealing f a i r l y xfith the p a r t i e s . See E i s l e r v. United States. 170 F, 2d 273, 278 (App. D. C . , 1948); Benedict v. S e i b e r l i n g , 17 F. 2d 831, 836 (N.D. Ohio, 1926) j Ex Parte H, K, Fairbank Co.. 194 F . 978, 990 (M. D. A l a . , 1912); State v. Chapman, supra: 48 C . J . S . Judges sec. 82 b. Examined i n the l i g h t of these p r i n c i p l e s , i t seems c l e a r that respondent's a f f i d a v i t s are wholly i n s u f f i c i e n t to sustain i t s charge of personal bias and prejudice on the part of Governor Clayton. Respondent makes two contentions i n t h i s connection. F i r s t , i t asserts that Governor Clayton was formerly associated i n business with or employed by Governor E c c l e s , and l a t e r served as a s s i s tant to Governor Eccles while the l a t t e r was chairman of the Board. But t h i s does not warrant respondent's conclusion that Governor Clayton i s i n capable of exercising, or w i l l not exercise, h i s own independent and 1lap a r t i a l judgment upon e i t h e r the f a c t s or the law. C e r t a i n l y , respondent has not pointed t o any a c t i o n on the part of Governor Clayton which j u s t i f i e s i t s assertion of subordination and subservience to the views of Governor E c c l e s , and the Board believes that i t may be said of Governor Clayton and i t s other members, as has been said of cabinet o f f i c e r s , that o f f i c i a l s "charged by Congress with adjudicatory functions * * * are assumed to be men of conscience and i n t e l l e c t u a l d i s c i p l i n e , capable of judging a part i c u l a r controversy f a i r l y on the basis of i t s own circumstances." United States v. Morgan. 313 U.S. 409, 421 (1941)• Respondent's second contention as t o Governor Clayton i s that he has developed a " f e e l i n g of b i t t e r n e s s " against a member of respondent's board of d i r e c t o r s and executive committee, Mr. L . M. G i a n n i n i , and against - 3 - the corporations with which Mr* Giannini i s associated. T h i s , i t i s said, r e s u l t e d from the f a c t that i n 1940 and the e a r l y part of 1941> while Governor Clayton was an employee of the Board, he sought, and f a i l e d to obt a i n , a p o s i t i o n with the Bank of America. "Within one year thereafter, 1 1 i . e . , February 1942, respondent continues, the Board "adopted a c o n s i s t e n t l y adverse and punitive a t t i t u d e toward Transamerica," as evidenced by c e r t a i n a l l e g e d "unauthorized", "unprecedented and discriminatory" acts and the advocacy by Governor Eccles of c e r t a i n alleged "discriminatory l e g i s l a t i o n . " Ths " a t t i t u d e " and acts of which respondent complains, however, were the " a t t i t u d e " and o f f i c i a l acts of the Board. They were not the " a t t i t u d e " or acts of Governor Clayton. They occurred long p r i o r to the date on which he became a member of the Board, and they evidence no bias or prejudice toward respondent on the part of Governor Clayton, of any other member of the Board or o f the Board i t s e l f * See Federal Trade Commission v. Cement I n s t i t u t e , 333 U.S. 683, 700-702 (1948)j Oregon Shipbuilding Corp. H*IyR«B.. 49 F. Supp* 386, 388 (D. Ore., 1943)• As f o r Governor Clayton f s negotiations f o r a p o s i t i o n with the Bank of America, respondents evidence shows that the negotiations were terminated i n February 1942. I t does not show that they were terminated on a note of " b i t t e r n e s s , " nor does i t warrant respondents conclusion that Governor Clayton i s biased or prejudiced. On the contrary, as shown by respondent's evidence, a f t e r the acts of which respondent complains, Governor Clayton, on February 2, 1943, r e p l i e d to a communication from respondents board chairman, Mr. A. P. Giannini, i n a l e t t e r unmistakably f r i e n d l y and cardial i n tone. In i t s b r i e f s f i l e d December 27, 1948, and January 13, 1949, but not otherwise, respondent requests that the Board, a f t e r d i s q u a l i f y i n g Governors Eccles and Clayton, re-examine i t s f i l e s "\d.th a view to determini n g whether they substantiate a reasonable b e l i e f that Transamerica has v i o l a t e d Section 7." Such action, respondent asserts, i s " e s s e n t i a l to due process." This contention i s without merit and the request i s denied. The Board i s s a t i s f i e d that the evidence i n i t s f i l e s warranted the conclusion that i t had "reason to b e l i e v e " that respondent had v i o l a t e d section 7, and that such conclusion i s f r e e of any t a i n t o f bias or prejud i c e . Moreover, due process does not require, nor does the Clayton Act authorize, j u d i c i a l review of the Board's i n i t i a l determination to issue a complaint. See Ostler Candy Co. v. Federal Trade Commission. 106 F. 2d 962, 965 (C.C.A. 10, 1939), cert, denied 309 U* S. 675j 15 U.S.C. sec. 21. Such determination i s administrative, not j u d i c i a l i n character, and i s i n no sense a prejudgment of the f a c t s . The Board's a u t h o r i t y t o issue an order of divestment depends upon the evidence to be adduced i n support of the Board's complaint. Such authority may not, and i t w i l l not, be exercised upon the basis of the evidence on which the complaint was issued, except i n so f a r as such evidence becomes a part of the record* -4Turning now to respondent f s several motions to dismiss, respondent contends that i f the Board i s authorised t o i n s t i t u t e t h i s proceeding, section 11 of the Clayton Act (1$ U.S.C. sec. 21) i s unc o n s t i t u t i o n a l and void as i n contravention o f the F i f t h Amendment to the Constituion of the United States. The argument i s that, since, as respondent asserts, the Act does not authorize the Board t o issue subpoenas, i t f o l l o w s that the Act does not provide f o r a f a i r hearing, and any order of divestment entered under the complaint w i l l deprive respondent of i t s property without due process of law. This motion must be dismissed f o r two reasons. F i r s t , i t i s premature. Assuming, as respondent contends, that the Board has no subpoena power, i t by no means f o l l o w s e i t h e r t h a t respondent w i l l be unable to obtain and o f f e r a l l the evidence and testimony i t desires, or that a divestment order i s c e r t a i n to issue. The Act under which the Board i s proceeding provides a p l a i n , adequate and exclusive remedy f o r any prejudice which respondent may s u f f e r by reason o f the Board's asserted lack of the power to issue subpoenas, MacFadden P u b l i c a t i o n s v. Federal Trade Commission. 37 F . 2d $22 (App. D. C . , 1930), and a mere supposed or threatened i n j u i y does not warrant the d i s m i s s a l of an administrat i v e proceeding. Anniston Manufacturing Co. v. Davis, 301 U. S. 337, 352-353 (1937)? Myers v, Bethlehem Shipbuilding Corp.. 303 U. S. 41, 50-51 (1938). Secondly, as an administrative agency created by Congress, the Board's duty i s to enforce, not to n u l l i f y , the acts committed to i t to adm i n i s t e r . Hence, i t has no authority to pass upon the c o n s t i t u t i o n a l quest i o n r a i s e d by respondent. Engineers Public Service Co. v. S. F». C . . 138 F . 2d 936, 951-953 (App. D. C . . 1943); P a n i t z v . D i s t r i c t o f Columbia. 112 F . 2d 39, 41-42 (App* D. C . , 1940); Matter o f Rite-Form Corset C o . . Pike and F i s c h e r , Administrative Law 33c,51-7 (N.L.B.B.. 1947); Simon S i e g e l 0o*v* Heaton. Pike and F i s c h e r , Administrative Law 41b.l-28 (U.S. Dept. A g r i c . , 1946)j Matter of East Ohio Gas Co.. Pike and Fischer, Administrative Law 48e.l-2 ( F . P . C . , 1939)• See a l s o Pike and Fischer, Administrative Law, Decision Notes 18, 381, 431, 732, 813. Respondent's t h i r d motion asks dismigpal o f the complaint on the ground of improper venue and i n s u f f i c i e n c y of the a l l e g a t i o n s of the complaint. As to venue, the contention i s t h a t t h i s i s a "proceeding under the a n t i t r u s t laws'1 w i t h i n the meaning of s e c t i o n 12 of the Clayton Act (15 U.S.C. sec. 22), and i t must therefore be brought, as that section r e quires, w i t h i n the " j u d i c i a l d i s t r i c t " of which respondent i s an inhabitant or where i t may be found or transacts business. Since respondent i s not a D i s t r i c t of Columbia corporation and does no business i n the D i s t r i c t , i t f o l l o w s , respondent asserts, that no hearing may be l a w f u l l y convened i n the D i s t r i c t and the n o t i c e of hearing appearing i n the Board's complaint i s therefore n u l l and v o i d . The Board does not agree with t h i s contention. -5- I t has been h e l d repeatedly that s e c t i o n 12 i s a l i b e r a l i z i n g provision, intended m a t e r i a l l y to enlarge the j u r i s d i c t i o n o f Federal d i s t r i c t courts, being "designed to a i d p l a i n t i f f s by g i v i n g them a wider choice o f venues, and thereby t o secure a more e f f e c t i v e , * * * enforcement of a n t i t r u s t p r o h i b i t i o n s U n i t e d States v . National C i t y L i n e s . 334 U.S. 573, 586 (1948); United States v . Scoxfeony Corporations. 333 U. S. 795, 804-808 (1948); Eastman Kodak Co. v . Southern Photo M a t e r i a l s Co., 273 U.S. 359, 371-374 (1927). That being true, i t would be anomalous indeed i f , a t the same time, the section had been intended to narrow and r e s t r i c t the l o r c a l i t i e s i n which hearings might be h e l d by administrative agencies. That such was not the purpose of the section seems obvious; and the Board bel i e v e s i t c l e a r that the word "proceeding," as used i n section 12, was employed i n the same sense as that i n which i t was used i n sections 5, 13, 15, 16 and 25 (15 U.S.C. sees. 16, 23, 25, 26; 28 IT.S.C. sec. 390), namely, to r e f e r t o court proceedings. Administrative proceedings under the Act are governed fcy section 11, which s p e c i f i c a l l y f i x e s the venue o f actions brought by the Board to enf o r c e , or by a respondent to s e t aside, a Board order, but which contains no provision l i m i t i n g the venue o f the Board's hearings. On the contrary, the section provides i n that connection only that the Board s h a l l issue a complaint " s t a t i n g i t s charges * * * and containing a n o t i c e of a hearing * * * a t a place therein f i x e d . " I n the opinion of the Board, t h i s means that i n the reasonable exercise o f i t s d i s c r e t i o n , the Board may notice a complaint f o r hearing and take testimony thereon a t any piece w i t h i n the United States. I f such had not been the i n t e n t i o n of Congress, i t would have been a simple matter indeed f o r i t t o have s p e c i f i e d the venue of proceedings before the Board, as i t s p e c i f i e d the venue of court proceedings to enforce or set aside the Board's orders. The Board's conclusion that section 12 has no a p p l i c a t i o n here i s e n t i r e l y consistent with section 5 (a) o f the Administrative Procedure A c t , which imposes upon administrative agencies i n respect o f venue the duty only to f i x "places f o r hearings" with "due regard * * * f o r the convenience and necessity of the p a r t i e s " (5 U.S,C, sec. 1004 ( a ) ) . And the Board i s f u r t h e r f o r t i f i e d i n t h i s view by the f a c t that the Federal Trade Commission — as the Board o f f i c i a l l y n o t i c e s from the Commission's p u b l i c records — has long exercised the power, i n proceedings under the Clayton Act, t o hold hearings e t places other than those s p e c i f i e d i n sect i o n 12. No court has ever h e l d the Commission's p r a c t i c e improper. Nor has Congress, i n any of i t s numerous amendments of the Act, ever indicated i t s disapproval of the p r a c t i c e . - 6 Respondent's objections t o the s u f f i c i e n c y of the Board's complaint are, i n substance, a mere restatement i n motion form of the p o s i t i o n taken by respondent i n i t s "Demand f o r More D e f i n i t e Statement o f Matters of Fact and Law Asserted", which, by i n f e r e n c e , respondent incorporates i n i t s motion t o dismiss f o r improper venue land i n s u f f i c i e n c y of the complaint. The motion i n t h i s respect must be denied f o r the reasons set f o r t h i n the Board's statement and order o f September 21, 194-8, denying the demand r e f e r r e d t o . We a l s o p o i n t out, however, t h a t i n considering the s u f f i c i e n c y of a complaint i n a proceeding such as t h i s , " i t i s necessary t o bear i n mind t h a t the nature of the proceeding i s not p u n i t i v e but preventive and i n the i n t e r e s t of the general p u b l i c . * * * I t does not r e q u i r e the p a r t i c u l a r i t y of pleading i n an indictment, d e c l a r a t i o n a t law, or a b i l l i n equity, f o r no s e c u r i t y against double jeopardy or p r i n c i p l e of res j u d i c a t a commands the utmost o f p r e c i s i o n . Matters o f evidence need not be r e c i t e d i n the complaint and a d e t a i l e d knowledge of the Board's case i n advance *is o f s l i g h t value i n a t r i a l by hearings a t i n t e r v a l s . ' " Consumers Power Co. v. N . L . R . B . . 113 F . 2d 38, 42-43 (C.C.A. 6, 1940)j g. B. M u l l e r & Co. v. Federal Trade Commission. 142 F . 2d 511, 519 (C.C.A. 6, 194'4); Locomotive F i n i s h e d Material. Co. v. N . L . R . B . . 142 F . 2d 802, 804 (C.C.A. 10, l9A'A)z A. E . Stalev Manufacturing Co. v. Federal Trade Commission. 135 F . 2d 453, 454 (C.C.A. 7, 1943). See a l s o N.L.R.B. v* Express P u b l i s h i n g C o . . 312 U. S. 426, 431-432 (1941). Nothing i n s e c t i o n 5 (a) of the Administrative Procedure Act (5 U.S.C. sec. 1004 l a ) ) was intended to change t h i s r u l e . See Attorney General's Manual on the Adminis t r a t i v e Procedure Act (1947) 46-47, 129. Respondent's f i n a l motion i s based upon the contention that the Board has no j u r i s d i c t i o n or a u t h o r i t y to enforce s e c t i o n 7 o f the Clayton A c t , and the complaint should be dismissed f o r that reason. The argument has been pressed e a r n e s t l y and a t l e n g t h , but i n the Board's opinion i t f i n d s a complete answer i n the language of the statute and cannot be sustained. I t i s s a i d t h a t j u r i s d i c t i o n i s l a c k i n g because respondent i s not a bank, i s not engaged i n commerce and i s not i n competition w i t h any banks named i n the complaint. Even i f these f a c t s are true, they n e i t h e r defeat the Board's j u r i s d i c t i o n , nor c o n s t i t u t e a defense t o i t s charge. For the second paragraph of s e c t i o n 7, i n language which cannot be misunderstood, p r o h i b i t s anjv corporation from a c q u i r i n g the stock of two or more other corporations engaged i n commerce, where the e f f e c t may be t o l e s s e n competit i o n between the acquired corporations or to r e s t r a i n commerce or tend t o monopoly. Nothing i n the Act provides, or lends any support to the content i o n , that i f the acquired corporations are banks the a c q u i r i n g corporation must a l s o be a bank, or t h a t the a c q u i r i n g corporation must i t s e l f be engaged i n commerce or i n competition w i t h the corporations whose stock i t acquires. See F r u i t Growers' Express v. Federal Trade Commission. 274 P. 205 (C.C.A. 7, 1921). Suqh a construction of the paragraph would make i t merely r e p e t i t i v e o f the f i r s t paragraph of s e c t i o n 7 and deprive i t of a l l independent f o r c e and e f f e c t . That such was not the i n t e n t of Congress i s obvious from the language of the paragraph, as w e l l as from i t s l e g i s l a t i v e history. 51 Congf Rec. 9073, 14313, 14317, 15940; H. R. Rep. No. 627, 63rd Cong., 2nd Sess. (1914) 17; H. R. Rep. No. 627 (Part 2 ) , 63rd Cong., 2nd Sess. (1914) 6 (minority r e p o r t ) . - 7 Respondent a l s o asserts that j u r i s d i c t i o n i s l a c k i n g because the complaint does not a l l e g e that any banks mentioned i n the complaint have v i o l a t e d any provision of the Clayton Act, But no such a l l e g a t i o n i s necessary. The Board's complaint i s directed against Transamerica Corporation, and nothing i n the Act provides or implies that the l e g a l i t y of the a c q u i s i t i o n s here i n question depends upon whether or not the acquired corporations have themselves v i o l a t e d the Act. Respondent f u r t h e r argues that section 7 i s not a p p l i c a b l e to banks. But here again the words of the A c t , as w e l l as i t s l e g i s l a t i v e h i s t o r y , f u r n i s h a complete answer. The language of section 7 i s a l l i n c l u s i v e — !fHo corporation s h a l l acquire * * * the stock * * * of two or more corporations engaged i n commerce * * These words are not sus*c e p t i b l e of a construction making them i n a p p l i c a b l e to banks. Efforts t o exempt banks from the a p p l i c a t i o n of s e c t i o n 7 were rejected by Congress (51 Cong. Rec. 14317 et sea.. 14473 e£ sea,), and section 11 of the Act s p e c i f i c a l l y d i r e c t s the Board " t o enforce" the Act "where applicable to banks, banking associations and t r u s t companies" (15 U.S.C. sec* 21). There i s no merit t o respondent's contention that banks are n e c e s s a r i l y excluded from section 7 because they are not engaged i n i n t e r state commerce and therefore are not subject t o r e g u l a t i o n by Congress under the commerce clause of the C o n s t i t u t i o n . Since the complaint alleges that the banks r e f e r r e d to are engaged i n commerce, we must, f o r the purpose of considering a motion t o dismiss, accept the a l l e g a t i o n as true. Moore v. Chesapeake & . Ohio R v . . 291 U.S. 205, 209-211 (1934); Hart v. B. F. K e i t h Vaudeville Exchange. 262 U.S. 271, 273 (1923): Swartz v . Forward Association. 41 F . Supp. 294, 295 (D. Mass., 1941;. See also National Candy Co. v. Federal Trade Commission. 104 F. 2d 999, 1003 (C.C.A. 7, 1939), c e r t , denied 308 U.S. 610. Further than t h i s , we are not prepared to say as a matter of law that banks cannot be engaged i n i n t e r state commerce and be regulated accordingly. To do so, we b e l i e v e , would require us not only t o disregard recent court decisions to the contrary, but a l s o to ignore f a c t s of x-jhich we might w e l l take o f f i c i a l n o t i c e . See H.L.R.B. v. Northern Trust Co.. 148 F. 2d 24, 26, 28 (C.C.A. 7, 1945) cert* denied 326 U. S. 731j Rosenberg v. Semeria, 137 F. 2d 742, 743 (C.C.A. 9, 1943), cert* denied 320 U.S. 770; N.L.R.B. v. Bank of America. 130 F. 2d 624, 626 (C.C.A. 9, 1942), c e r t , denied 318 U.S. 791. See a l s o United States v. South-Eastern Underwriters Association. 322 U.S. 533, 546-553 (1944). Respondent's f i n a l contention i s that the Board's j u r i s d i c t i o n under s e c t i o n 11 i s l i m i t e d t o the enforcement of section 8. We believe t h i s argument unsound. -8- I n so f a r as here p e r t i n e n t , section XI provides "That aut h o r i t y t o enforce compliance w i t h sections two, three, seven, and eight of t h i s Act tgr the persons r e s p e c t i v e l y subject thereto i s hereby vested * * * i n the Board o f Governors o f the Federal Reserve System where app l i c a b l e to banks, banking associations and t r u s t companies; and i n the Federal Trade Commission where a p p l i c a b l e to a l l other character of commerce11 (15 U.S.G. sec. 21). Respondent lays great enphasis upon the words M persons r e s p e c t i v e l y subject thereto," and argues that since banks are mentioned only i n section 8, they are "subject" only t o that section. But t h i s argument assumes — and erroneously so that banks are not subj e c t to section 7, which, o& heretofore stated, a p p l i e s without exception to a l l corporations. I n a d d i t i o n to t h i s , we point out that the word "person," as used i n the Clayton A c t , includes "corporations and a s s o c i a t i o n s , " as w e l l as i n d i v i d u a l s (15 U.S.C. sec. 12), and that the enforcing agencies are directed fcy s e c t i o n 11 to issue a complaint against "any person * * * v i o l a t i n g * * * any of the provisions of sections two, three, seven and eight*" But, v h i l e sections 2, 3 and 8 apply t o a l l persons, section 7 i s l i m i t e d t o corporations. Hence, i t seems obvious that the words "persons r e s p e c t i v e l y subject thereto," as used i n section 11, were employed merely f o r the sake of grammatical p r e c i s i o n , and they mean simply that compliance with sections 2, 3 , 7 and 8 i s to be required only o f thpse "persons" subject respectively to those s e c t i o n s . Thus construed, the phrase "persons r e s p e c t i v e l y subject thereto" i s assigned i t s n a t u r a l meaning and the Board i s vested w i t h authority to enforce s e c t i o n 7 where the "character o f commerce" concerned involves, or r e l a t e s to, the business of "banks, banking associations and t r u s t companies." See F r u i t Growers* Express v. Federal Trade Commission, 274 F . 205, 207 (C.C.A. 7, 1921) • Under no other construction of the Act i s i t p o s s i b l e to give e f f e c t to the i n t e n t o f Congress t o conmit to each o f the several enforcement agencies mentioned i n section 11, the duty to enforce the Act i n the p a r t i c u l a r f i e l d i n which i t has p e c u l i a r competence. L i t t l e need be said of respondent's argument that the Board's Qwn construction of the Clsyton Act has been t o the e f f e c t that the Board has no j u r i s d i c t i o n to enforce section 7. Considered i n the l i g h t o f i t s attendant circumstances, the course o f condupt to which respondent r e f e r s i n t h i s connection vas not a construction of the Act by tee Board and i t neither warrants nor supports respondent's conclusion. Since section 7 contains merely a l i m i t e d and c o n d i t i o n a l rather than an absolute p r o h i b i t i o n , the Board's f a i l u r e previously to proceed under section 7 cannot be regarded as a disclaimer o f i t s authority to proceed i n a matter i n which i t has concluded that i t has "reason to believe" i t should proceed; nor d i d i t s f a i l u r e to proceed previously cause i t s authority to "evaporate". See Federal Trr.de Commission v. Bunte Brotfreys. 312 U.S. 349, 352 (1941). - 9 - ORDER For the reasons set f o r t h i n the foregoing statement, i s ORDERED thats it 1. Respondent's Motion to. D i s q u a l i f y Marriner S. Eccles and Lawrence Clayton be, and i t hereby i s , dismissed i n so f a r as i t r e l a t e s t o Marriner S. Eccles, and be, and i t hereby i s , i n a l l other respects denied. 2. Respondent's Motion t o Dismiss f o r Lack of Due Process of Law be, and i t hereby i s , dismissed* 3* Respondent's Motion that Complaint Be Dismissed and Notices of Hearing Quashed and Vacated f o r Improper Venue, I n s u f f i c i e n c y of A l legations and F a i l u r e t o Comply with Administrative Procedure Act be, and i t hereby i s , denied* 4* Respondent's Motion that Complaint Be Dismissed f o r Lack of J u r i s d i c t i o n be, and i t hereby i s , denied* This 17th day of January, 1949* By the Board* (Signed) S. R. Carpenter Secretary (SEAL) Governors Eccles and Clayton took no part i n the consideration or d e c i s i o n of the motions referred t o i n the foregoing statement and order* BtAMD f I &0VERN0RS OF THE FEDERAL RESERVE SYSTEM Statement f o r the Press For immediate release. January 17, 1949. Mr, Joseph J . Smith, J r . , of the law f i r m of Hogan & Hartson of Washington, D. C., has been retained as s p e c i a l counsel ty the Board of Governors of the Federal Reserve System, e f f e c t i v e January 1, 1949, to advise i t i n connection w i t h matters r e l a t i n g to the Transamerica proceedi n g coming before the Board f o r consideration.
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