THE UNITED STATES OF AMERICA, PETITIONER, vs. LEHIGH VALLEY RAILROAD COMPANY, ET AL., DEFEN­ DANTS. FINAL DECREE. A decree of this court having been entered in the above cause on February 8, 1915, dismissing the Government's petition, and the said cause having been appealed to the Supreme Court of the United States, and that court hav­ ing reversed the decree of this court, a mandate from the Supreme Court containing directions as to the decree to be entered was filed herein on February 24, 1921. On February 24, 1921, this court entered an interlocu­ tory decree on mandate containing adjudications that the defendants have been and are violating the Federal Anti­ trust Law and the Commodities Clause of the Interstate Commerce Act, canceling and annulling the illegal con­ tract between the Lehigh Valley Coal Company and the Lehigh Valley Coal Sales Company, providing injunctive relief pending the entry of a final decree, and ordering: "That within sixty clays from the entry of this decree the defendants shall submit to this court a plan for the dis­ solution of the unlawful combination effected through the intercorporate relations subsisting between the Le­ high Valley Railroad Company, Lehigh Valley Coal Com­ pany, Coxe Brothers & Company, Inc., Delaware, Sus­ quehanna & Schuylkill Railroad Company, and Lehigh Valley Coal Sales Company, with such provision for the disposition of all shares of stock, bonds, or other evi­ dences of indebtedness, and of all property of any char­ acter, of any one of said companies owned or in any man­ ner controlled by any other of them, as may be necessary to establish their entire independence of and from each other." Thereafter the time within which to present said plan IN THE DISTRICT COURT OF THE UNITED STATES was extended by this court until October 7, 1921, on which SOUTHERN DISTRICT OF NEW YORK. date a plan was filed herein pursuant to said interlocu­ In Equity No. 11-129. tory decree, together with the Government's objections thereto. Hearing on said plan and objections was held in or other capital expenditures by the Coal Company as abeyance pending the outcome of the appeal to the Su­ occasion may demand. preme Court in the case of UNITED STATES V. READING 2. The stock of the Lehigh Valley Coal Company is COMPANY ET AL., in the Eastern District of Pennsylvania, which was decided May 29, 1922. pledged with the Girard Trust Company, of Philadelphia, as trustee under the Railroad Company's General Con­ On February 7, 1923, defendants filed their proposed solidated Mortgage of September 30, 1903, which mort­ amended plan of dissolution as follows: gage matures in 2003. The Lehigh Valley Railroad Com- 1. The Lehigh Valley Coal Company will create a new pany will sell for $1,212,160 all of its right, title, and in- mortgage bond issue in the amount of $40,000,000, ma­ terest in the equity of redemption which it owns m said turing at the end of fifty years, carrying 5 % interest stock, also voting rights and dividends payable thereon, and protected by adequate Sinking Fund arrangements. to a new trustee which will issue certificates for 1,212,160 This mortgage until January 1, 1933, will be a second shares of interest therein carrying voting rights and mortgage on a small part of the Coal Company's proper­ dividends, thus making certificates on the basis of one ties, and thereafter will be a first mortgage on all its pro­ share of interest in Lehigh Valley Coal Company stock perties. $15,000,000 of said bonds will be sold at once and for each share of Lehigh Valley Railroad Company stock, the proceeds paid over to the Lehigh Valley Railroad both common and preferred. The shareholders of the Rail­ Company in satisfaction of all indebtedness on account road Company will be given the right by the said new of advances for capital expenditures and otherwise in trustee to subscribe to said shares of interest at the rate the past. Said proceeds will be devoted by the Lehigh of $1.00 per share. Shares of interest not subscribed for Valley Railroad Company to the improvement of the rail­ on or before September 30, 1923, will be sold by the new road properties pledged under its General Consolidated trustee to the Lehigh Valley Coal Company at the rate of mortgage of 1903, the income from said fund, however, $1.00 per share. in the meantime to be received by the Railroad Company Shareholders of the Railroad Company who subscribe and used for general purposes. and buy shares of interest as aforesaid will be obliged to dispose of their shares of interest on or before December The remaining $25,000,000 of bonds provided for by 31, 1927, unless in the meantime they shall have disposed the new Lehigh Valley Coal Company mortgage will be of their Railroad Company stock. Neither the Lehigh Val­ reserved for the purpose of retiring the present outstand­ ley Railroad Company nor any corporation controlled by ing bonds of the Lehigh Valley Coal Company when due it, nor any person acting in its interest, shall acquire by -that is, on January 1, 1933-to the extent not provided purchase or otherwise any of said shares of interest. for by the then existing fund. The Lehigh Valley Coal Company bonds now outstanding amount to $11,514,000 3. All certificates for shares of interest as above stated par value, and it is estimated that the Sinking Fund, shall, at the time of sale, be registered by the Lehigh Val­ which now amounts to $2,871,000 par value of securities ley Coal Company in appropriate form, in the names of therein, will by January 1, 1933, with accumulations and the purchasers or their nominees, upon information fur­ additions thereto, have a value of at least $5,000,000, so nished by the Trustee, and thereafter transfer may be that the bonds then to be paid off from new funds will made only on the books of the Coal Company. not amount to more than $6,500,000 par value. This will Until the registered holder or owner files an affidavit leave approximately $18,500,000 of the new mortgage that he is not the owner of any Lehigh Valley Railroad bonds of the Coal Company available for improvements Company stock, he shall not be entitled to receive any divi- dends in respect of his shares of interest. Dividends de distributed to them accordingly, each certificate of in­ c1ared by the Coal Company will be declared in respect of terest entitling the holder to a pro rata share of the Coal all shares of interest por-rata, but payment will be with­ Company's stock. held by the Coal Company on any shares in respect of 6. The stock of Coxe Brothers & Company, Inc., will which an affidavit of non-ownership of railroad stock has remain in pledge under the Collateral Trust Agreement not been filed, and dividends so withheld will be accumu­ of November, 1905, until the maturity of that agreement lated without interest and paid to the holder or transferee on February 1, 1926, except that the voting power in the when such affidavit is filed. meantime will be assigned to a trustee to be appointed by After original registration, the Coal Company will not the District Court. At the maturity of the aforesaid Col­ transfer any certificate of interest until the proposed lateral Trust Agreement, the stock will be sold by the transferee files an affidavit to the effect that he is not the Lehigh Valley Railroad Company. owner ofany Lehigh Valley Railroad Company stock, and 7. The stock of the Delaware, Susquehanna & Schuyl­ this provision will remain operative until December 31 kill Railroad Company will remain in pledge under the 1927. The Lehigh Valley Railroad Company will also aforesaid Collateral Trust Agreement also until the ma­ adopt a by-law effective until December 31, 1927, pro­ turity of the said agreement on February 1, 1926, the vot­ v1dmg that transfers of shares of its capital stock may ing power in the meantime to be assigned to a trustee to be made in the names only of persons who shall make be appointed by the District Court. In the meantime, ap­ affidavit that they are not owners, registered or actual, plication will be made to the Interstate Commerce Com­ of any of the aforesaid shares of interest in the Lehigh mission for authority to merge and consolidate this com­ Valley Coal Company stock and do not hold proxies to pany with the Lehigh Valley Railroad Company, in vote any of said shares of interest therein. accordance with the provisions of the Interstate Com­ 4. The Girard Trust Company, as trustee under the merce Act, which permits authority to be granted not­ aforesaid General Consolidated Mortgage, holds the legal withstanding the status of the petitioners under the title to all of the Coal Company stock and gives the Rail­ Federal antitrust laws. road Company a proxy to vote the same, the giving of this 8. The Lehigh Valley Coal Sales Company will nego­ proxy being dependent upon there being no existing de­ tiate and enter into a lawful sales contract with the min­ fault under the said mortgage. After the sale of the Rail­ ing companies (Lehigh Valley Coal Company and Coxe road Company's equity in the Lehigh Valley Coal Com­ Brothers & Company, Inc.) pany's stock, as stated above, the trustee holding said On March 3, 1923, the Government filed the following equity will exercise its voting power for the benefit of and at the direction of the owners of the shares of inter­ suggestions in reference to said amended plan: est, that is to say, the registered owners of the coal certi­ FIRST: As regards the provisions for the segregation ficates as shown by the transfer book of the Coal Com­ of the Lehigh Valley Railroad Company and the Lehigh pany will exercise their voting power exclusively through Valley Coal Company (paragraphs 1 to 5 inclusive), their trustee.