Bond & Share Decision

"Our duty is to save unless in saving we pervert. When all the world can see what sensible legislators in such a contingency would wish that we should do, we are not to close our eyes as judges to what we must perceive as men. This need is all the greater in fields where the Law is in a state of transition and readjustment."

Quoting these sentences of Associate Supreme Court Justice Benjamin Cardozo,

Federal Judge Julian William Mack last week rendered a decision which gave the Securities & Exchange Commission an important preliminary victory in its great test case against Electric Bond & Share (TIME, Nov. 23). Perverting nothing, he saved the registration provisions of the Public Utility Act of 1935 by declaring them constitutional regardless of the constitutionality of the act as a whole, ordered Bond & Share to register with SEC or be enjoined from interstate business. This restricted ruling was what SEC wanted and what Bond & Share, itching to get the whole act up before the Supreme Court, did not want.

Judge Mack found that, contrary to Bond & Share's argument, the provisions of the act which compel utility holding companies to register and file information with SEC could themselves "be given legal effect as a separate, workable act," that they were thus separable from the other provisions and had been so intended by Congress. On the question of their constitutionality he ruled that, as Congress has the power to regulate electricity and gas rates in interstate commerce, it can require, as an aid to that regulation, full information from the companies involved. Dismissing Bond & Share's cross bill for an injunction against SEC, Judge Mack observed that the question of constitutionality of other sections of the Public Utilities Act could only arise from Bond & Share's "post-registration activities." Said he:

"A difference of opinion between the parties as to the constitutionality of statutory provisions which are now inapplicable, and some of which may not apply even after registration, does not constitute at this time a justifiable actual controversy within the statute."

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