application in No. MC-64744, between intersection of Georgia Highways 12 and 11, near Covington, and Milledgeville,1 via Monticello and Gray, Ga., and has filed registration application in No. MC-676182 which describes operations under the second proviso of section 206 (a), as a motor-vehicle common carrier of passengers in interstate or foreign commerce, between, among others, Waynesboro and Statesboro, via Millen, Ga. Applicant also conducts brokerage operations pursuant to authority granted in Southeastern Stages, Inc., Broker Application, 13 M. C. C. 711.

Vendor, a Georgia corporation, is a wholly owned subsidiary of Central of Georgia Railway Company (H. D. Pollard, receiver), herein called the railroad. On March 5, 1938, in No. MC-1048, issuance of a certificate to vendor under the "grandfather" clause was authorized, covering operations in interstate or foreign commerce as a motor-vehicle common carrier of passengers and their baggage, and of express, mail, and newspapers, between Augusta and Millen, via Waynesboro, serving all intermediate points and the off-route points of Perkins and Munnerlyn, Ga. Pursuant to authority granted in Central of Georgia M. Transport Co. Ext.-Barnesville, 8 M. C. C. 689, a certificate was issued to vendor on October 18, 1938, covering similar operations between Barnesville and Thomaston, Ga., with no service to intermediate points. The railroad substantially parallels the Augusta-Millen route, and connections are made by vendor with trains No. 1 and No. 2 of the former at Millen. This route is duplicated by applicant's present route between Augusta and Statesboro, but the latter has no right to serve the off-route points mentioned.

Under agreement of September 15, 1939, between the receiver and applicant, the former would cause vendor to discontinue operations between Millen and Augusta and transfer its interstate and intrastate operating rights between these points to applicant. Applicant would rearrange its present schedules so as to protect connections with trains No. 1 and No. 2 of the railroad at Millen. Busses on such schedules would await arrival of train No. 1 from Savannah for as much as 30 minutes, provided the bus operator is notified there are passengers aboard destined for Augusta or points between Millen and Augusta; and applicant would serve Perkins and Munnerlyn to take on and dis

1 On September 29, 1938, in No. MC-FC-2466, modifying previous action of October 21, 1937, arrangements were made to substitute applicant in lieu of E. H. Pace, doing business as Pace Bus Lines, as to rights over this route claimed by latter, among others, in No. MC-64744.

2 This application was filed by J. A. Booker, doing business as Atlantic Stages, and covers operations between Waynesboro and Reidsville, via Millen and Statesboro, Ga. On April 28, 1938, in No. MC-FC-1494, modifying previous action of April 16, 1937, arrangements were made to substitute applicant in lieu of Booker as to rights over the segment between Waynesboro and Statesboro.

charge passengers of the railroad at those points, and would pick up and discharge passengers and their baggage at the rail stations at Augusta and Millen for movement between those points. It is further provided that the "contract shall terminate" if and when applicant shall permanently discontinue its operations between Millen and Augusta, or if the service rendered by it is deemed by the receiver, who is to be the sole judge, to be unsatisfactory, or upon termination of the receivership of the railroad. In event of any of the above conditions, applicant has agreed to retransfer the operating rights to vendor, subject to approval by regulatory authorities, and further agrees not to object to or oppose latter's resumption of operations. No monetary consideration is involved. Applicant does not propose to record any increase in its "Other Intangible Property" account as result of the transaction.

The provision in the agreement that the contract shall terminate under the conditions indicated raises a doubt as to the nature of the transaction intended by the parties, but it appears clear from the agreement as a whole and from testimony of record that purchase of vendor's rights between Millen and Augusta is intended, and the proposed transaction will be so considered here. Since the hearing the parties advised that they are not opposed to an outright purchase and sale of the rights, but desire, if authorized, to effect the transfer under the terms presently provided. The previously mentioned provisions of the contract, in connection with its termination and reacquisition of the operating rights by vendor, would appear to retain in vendor a reversionary interest for exercise under certain conditions. Moreover, retention by vendor of dominion over applicant's properties to the extent indicated, and over the free disposition of its operating rights to some other possible purchaser, is, in our opinion, inconsistent with the nature of a purchase transaction within the meaning of section 213. Under our view of such transactions the operating rights acquired are unified with those of the purchaser, and operations by the single carrier (purchaser) under such unified rights cannot thereafter preserve in existence the former separate operating rights over any duplicating routes so unified. We accordingly do not approve the considered provisions of the contract.

Applicant's balance sheet as of September 30, 1939, shows assets aggregating $225,136, consisting of: Current assets $29,792, principally cash and accounts receivable; carrier operating property, including 21 motor vehicles, less depreciation, $120,854; intangible property $55,830, consisting of franchises $615, goodwill $43,100, and other intangible property $12,115; investments and advances $13,750; and prepayments $4,910. Liabilities were: Current liabilities $97,175,

principally notes payable $68,921, and accrued taxes $16,700; equipment obligations $385; capital stock $50,000; and surplus, unearned $17,975 and earned $59,601. Income statements for the last 8 months of 1937, the year 1938, and the first 9 months of 1939 show net incomes of $23,642, $49,388, and $43,052, respectively.

Vendor's balance sheet as of September 30, 1939, shows assets aggregating $12,457, consisting of: Current assets $2,566; carrier operating property, including approximately three motor vehicles, less depreciation, $8,391; intangible property $290, consisting of organization $216 and franchises $74; and prepayments $1,210. Liabilities were: Current liabilities $388; long-term obligations $122,504, representing advances due the railroad and its receiver; operating reserves $1,621; capital stock $5,000; and surplus (debit balance) $117,056. Income statements, reflecting result of operations between Augusta and Millen only, for 1937, 1938, and the first 9 months of 1939 show deficits of $4,399, $3,344, and $2,355, respectively.

Vendor's operations over the considered route were instituted to replace certain passenger schedules of the railroad on its branch line between Millen and Augusta. Vendor has been operating one round trip daily leaving Millen 10: 10 a. m., arriving at Augusta 12: 10 p. m., leaving Augusta 12:30 p. m., and arriving at Millen 2:30 p. m., to coordinate, at Millen, with trains No. 1 and No. 2 of the railroad running between Savannah and Atlanta. Applicant also provides one round trip daily over the route under schedules calling for departures within approximately 30 minutes of vendor but does not serve Perkins and Munnerlyn. Vendor's operations are and have been unprofitable, and those of applicant over this route have neither fully utilized vehicular capacity nor produced revenue comparable to its system operations. Under the instant proposal applicant, through a slight rearrangement of its present schedules, including service to Perkins and Munnerlyn, to connect with trains of the railroad, would accommodate both its own patrons and those of the railroad with little increase in operating costs. Vendor would be relieved of what it considers a burdensome operation, and the unification would tend to promote highway safety and increase the efficiency of applicant's operations with resulting benefits to the traveling public. Rates would remain unchanged, but applicant would concur in the tariffs of the railroad and would receive compensation, on a mileage basis not to exceed its published fares, on rail tickets sold to passengers using

It was testified that notes payable consist almost entirely of obligations due the president and vice president of applicant.

It was testified that applicant's average gross revenue for its entire system produces 17.77 cents per bus-mile, with operating costs of 15.06 cents per bus-mile. Average gross revenue from its Statesboro-Millen-Augusta route produces 10.95 cents per bus-mile.

its facilities. Another motor carrier of passengers operates over a portion of the route.

We find that purchase by Southeastern Stages, Inc., of operating rights of Central of Georgia Motor Transport Company, between Millen and Augusta, Ga., including the right to a certificate covering rights confirmed in No. MC-1048, herein authorized to be unified with rights otherwise confirmed in Southeastern Stages, Inc., with duplications eliminated, upon the modified terms and conditions above set forth, which terms and conditions as so modified are found to be just and reasonable, will be consistent with the public interest, and that the conditions of section 213 have been or will be fulfilled.

An appropriate order will be entered.

35 M. C. C.

No. MC-F-989

YELLOW CAB TRANSIT CO. (OKLAHOMA)-PURCHASE— FRANK L. HOLSAPPLE

Submitted December 8, 1939. Decided February 16, 1940

Purchase by Yellow Cab Transit Co. (Oklahoma) of the operating rights and property of Frank L. Holsapple, doing business as Holsapple Truck Line, approved and authorized, subject to condition.

James T. Blair, Jr., for applicant.

George W. Holmes and B. W. LaTourette for interested parties. REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER

BY DIVISION 4:

Yellow Cab Transit Co. (Oklahoma), of Oklahoma City, Okla., by application filed August 15, 1939, seeks authority under section 213, Motor Carrier Act, 1935, to purchase, for $15,171, the operating rights and property of Frank L. Holsapple, of Vincennes, Ind., doing business as Holsapple Truck Line. Hearing was held before an examiner, and all parties waived service of report and recommended order. The application was unopposed.

Pursuant to authority granted under section 210a (b), applicant leased vendor's operating rights for a period expiring not later than March 15, 1940, at a rental of $50 per month.

Applicant, an Oklahoma corporation, is controlled through majority stock ownership by A. J. Harrell. It operated 252 motor vehicles as of the hearing date. Its organization, financial position, and operations as a motor-vehicle common carrier of property in interstate or foreign commerce in Texas, Oklahoma, Kansas, Missouri, Illinois, and Indiana are described in Yellow Cab Transit Co.-Purchase-Kern 25 M. C. C. 263, and Yellow Cab Transit Co. (Oklahoma)—Merger, 25 M. C. C. 543, and cases therein cited. The case last above cited authorized merger into applicant of the motor-carrier properties of its subsidiaries, a Missouri corporation of the same name, and Bryan Motor Freight Lines, Incorporated, which merger was consummated September 30, 1939. Applicant operates over a route, among others, between Houston, Tex., and Evansville, Ind., via Dallas, Tex., Okla