Vendor, also an Alabama corporation, on February 12, 1936, and November 26, 1937, in Nos. MC-28816 and MC-28816 (Sub-No. 1), respectively, filed registration applications, based on Alabama intrastate certificate of public convenience and necessity 76, which describe operations under the second proviso of section 206 (a),2 herein called the proviso, as a motor-vehicle common carrier of passengers and their baggage, and newspapers and light express, between Birmingham and Huntsville via Pinson, Palmerdale, Village Springs, Oneonta, Blountsville, and Arab; between Pinson and Bradford; between Birmingham and Praco via Blossburg; and between Lehigh and Village Springs, serving all intermediate points. Vendor's operations between Birmingham and Huntsville, approximately 106 route miles, are over the same highway as is used by applicant between Birmingham and Oneonta, 39 miles.

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Under agreement of November 30, 1938, applicant would purchase part of vendor's intrastate rights (included in Alabama certificate No. 76) over that portion of its routes between Village Springs and Huntsville, approximately 83 miles. Applicant has paid $4,500 of the purchase price, and under the agreement the remainder would be represented by two promissory notes of $4,000 each, payable on or before 1 and 2 years, respectively, from the effective date of transfer of the rights, said notes to bear interest at 6 percent from date of such transfer, and to be secured by a mortgage against the rights sold. Vendor would retain the remaining portions of its operations and continue to provide local intrastate service between a resettlement project near Palmerdale (adjacent to Village Springs) and Birmingham. Under the terms of the agreement applicant would operate with closed doors between Village Springs and Birmingham, except that it would have the right to pick up or discharge passengers traveling to or from points north of and including Village Springs. On December 23, 1938, the State authorities approved transfer of the considered intrastate rights, and applicant has since conducted the intrastate operations over the route. Vendor ceased all operations over the segment sold on or about January 1, 1939.

2 This proviso reads: "And provided further, That this paragraph shall not be so construed as to require any such carrier lawfully engaged in operation solely within any State to obtain from the Commission a certificate authorizing the transportation by such carrier of passengers or property in interstate or foreign commerce between places within such State if there be a board in such State having authority to grant or approve such certificates and if such carrier has obtained such certificate from such board. Such transportation shall, however, be otherwise subject to the jurisdiction of the Commission under this part."

The contract does not specifically refer to purchase of rights to operate in interstate or foreign commerce but states that transfer of the intrastate certificate shall become effective January 1, 1939, subject to the approval of the Alabama Public Service Commission “(and the approval of the Interstate Commerce Commission, if such approval is necessary)".

Applicant's balance sheet as of May 31, 1939, shows assets aggregating $141,274, consisting of: Current assets $19,908, principally cash, material and supplies, and accounts receivable; carrier operating property, including 24 motor vehicles, less depreciation, $74,686; intangible property, franchises, $39,700; investment securities and advances $3.276; miscellaneous assets $1,535; and prepayments $2,169. Liabilities were: Current liabilities $26,115, principally accounts payable $13,436 and unredeemed tickets $6,133; equipment notes $27,230; advances payable to Crescent Motors, Inc.,5 $57,773; other advances $10,000; reserves $6,137; capital stock $2,000; unearned surplus $20,000; and earned surplus (debit balance) $7,981. Its income statements for 1937, 1938, and the first 5 months of 1939 show net incomes of $2,649, $23,521, and $5,163, respectively. No financial statements covering vendor's operations were available, but it was stated that operations over the route here considered were conducted at a loss.

The route which applicant here proposes to purchase would permit the latter to provide direct service between Birmingham and Huntsville over routes approximately 40 miles shorter than its authorized" operation between those points via Attala and Albertville. Under applicant's present method of operation, it requires passengers traveling between Birmingham and Huntsville to transfer to another bus at either Gadsden or Albertville, and available service by other motor carriers requires transfer at either Decatur or Athens. Prior to discontinuance of its operations, vendor provided daily service between Birmingham and Arab, and triweekly service, by passenger car, between the latter point and Huntsville. Upon approval herein, applicant would afford two daily through schedules between Birmingham and Huntsville and would reduce transit time as compared with its present circuitous operation by approximately 12 hours. Service between Oneonta (junction point on vendor's route) and Albertville would be provided by a shuttle bus and would eliminate approximately 160 bus-miles per day. Applicant considers that its present organization and facilities are adequate and estimates that economies and increased revenue anticipated from the new service will yield additional net income of approximately $2,500 per year.

Vendor is not controlled or managed by any other carrier and had no arrangements for the sale of through tickets or interchange of

Includes $4,500 paid under the instant contract.

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*Controlled through ownership of its capital stock by applicant. It conducts local intrastate operations by bus in the cities of Anniston and Gadsden.

*It appears from the record that the applicant is at present operating between Birmingham and Huntsville via Oneonta, Horton, and Albertville, and testimony is based on such operations. It will be noted, however, that the order of October 8, 1937, in No. MC-61916, does not include the segment of this route between a point near Snead and Albertville, over Alabama Highway 32.

* Compare Red Star Lines, Inc., Extension of Operations, 3 M. C. C. 313; Tamiami Trail Tours, Inc.-Purchase-Elliott-Young (embracing No. MC-F-569, Same-Purchase-H. O.

passengers with other carriers at any point which it served; nor does the record show that vendor actually transported any passengers who originated at or were destined to points outside the State of Alabama. Although no official of vendor was present at the hearing to testify in connection with its operations, applicant's president and counsel (also counsel for vendor) and its traffic manager stated that vendor did not operate into a terminal at Birmingham but stopped his busses on the side of the street, that he sold no tickets, and that he operated on a cash-fare basis for the transportation performed.

We find that the instant record fails to establish that vendor operated in interstate or foreign commerce; and, as it is not shown to be a common carrier by motor vehicle within the meaning of section 203 (a) (14), the instant transaction, involving as it does the purchase of intrastate rights only, is not one within the purview of section 213, and the application accordingly will be dismissed. It might be observed further that any potential right which vendor may have had to conduct operations in interstate or foreign commerce under the proviso over the considered route was forfeited upon transfer of the basic intrastate rights to applicant. Notwithstanding, following Tamiami Trail Tours, Inc.-Purchase-Elliott-Young, supra, purchase of a potential right to operate in interstate or foreign commerce is not a matter which we may authorize under section 213.

An appropriate order will be entered.

Rooks), 15 M. C. C. 22; Garden State Lines-Purchase-Hollander, 25 M. C. C. 243; and the following from Virginia Stage Lines, Inc.-Purchase-Southern Passenger, 15 M. C. C. 519, 523:

"There is plainly an essential difference between freight and passenger traffic, in that the passenger can control his own movements. The difference can be illustrated in this way. Assume that a passenger carrier does not wish to engage in interstate commerce but desires to confine itself wholly to intrastate operations. It is difficult to see what practical steps it can take to control this matter except to refrain from participation in joint fares with connecting carriers and from entering into any common arrangement with any such carrier relative to through interstate movements. Certainly a carrier cannot control a passenger after he alights and prevent him from going to an interstate destination by some other means of conveyance. Nor can he even require the passenger to state his intentions in this respect. Similarly the carrier cannot prevent from boarding its vehicle a passenger who has come by some other means of conveyance from a point of origin in another State."

35 M. C. C.

No. MC-F-1015

INTERSTATE TRANSIT LINES (NEBRASKA)-MERGERUNION PACIFIC STAGES OF CALIFORNIA

Submitted November 21, 1939. Decided December 29, 1939

Merger in Interstate Transit Lines (Nebraska) of operating rights and property of Union Pacific Stages of California, approved and authorized, subject to condition.

Edward C. Renwick for applicants.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER BY DIVISION 4:

Interstate Transit Lines (Nebraska), a Nebraska corporation, and Union Pacific Stages of California,1 a California corporation, both with operating headquarters at Omaha, Nebr., by joint application filed September 20, 1939, seek authority under section 213, Motor Carrier Act, 1935, to merge the operating rights of Stages into Interstate for ownership, management, and operation. Hearing has been held, at which the parties waived service of a report and recommended order by the examiner.

The outstanding capital stock of Interstate, consisting of 263,829 shares of common stock, par value of $10 per share, has been owned since the date of its incorporation, June 20, 1928, approximately 71 percent by the Union Pacific Railroad Company and 29 percent by the Chicago and North Western Railway Company, herein called the railroads. Interstate, in turn, owns all the outstanding capital stock, except directors' qualifying shares, of Stages and of Interstate Transit Lines, Inc.,2 an Illinois corporation. In Interstate Transit Lines Common Carrier Application, 9 M. C. C. 758, issuance of a certificate to Interstate was authorized covering operations in interstate or foreign commerce as a motor-vehicle common carrier of passengers between points in Minnesota, Iowa, Missouri, South Dakota, Nebraska, Kansas,

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1 Herein called Interstate and Stages, respectively.

In Interstate Transit Lines, Inc., Com. Car. Application, 18 M. C. C. 281, issuance of a certificate to this company was authorized, covering operations in interstate or foreign commerce as a motor-vehicle common carrier of passengers between Chicago, Ill., on the one hand, and, on the other, Milwaukee, Wis., and the Illinois-Iowa State line near Fulton, and near Rock Island, Ill.

A petition for reopening and argument with respect to charter operations is pending.

Wyoming, Colorado, Utah, Arizona, and Nevada. Pursuant to authority subsequently granted, certificates have been issued under section 207 to Interstate, covering certain extensions to its passenger operations in the above-named States. On June 13, 1938, in No. MC-62379, issuance of a certificate to Interstate was authorized covering operations in interstate or foreign commerce as a motor-vehicle common carrier of general commodities over a regular route between Las Vegas and Boulder Dam, Nev., serving all intermediate points. Stages was organized July 10, 1930, by Interstate for the purpose of complying with the laws of California, which, at that time, required that intrastate operations in that State be conducted by domestic corporations. The two companies have common officers and directors and the same general headquarters. Pursuant to authority granted in Union Pac. Stages of California Com. Car. Application, 3 M. C. C. 706, and Union Pac. Stages of Calif. Ext.-Los Angeles-Long Beach, 7 M. C. C. 437 and 8 M. C. C. 431, certificates were issued to Stages February 14 and December 9, 1938, respectively, covering operations in interstate or foreign commerce as a motor-vehicle common carrier of passengers wholly within California in territory principally between Los Angeles and the California-Nevada State line near Wheaton Springs. Routes of Interstate and Stages are complementary, connecting at the said State line.

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With its subsidiaries and an affiliated company, Union Pacific Stages, Inc., Interstate conducts a unified bus operation under the names of Interstate Transit Lines, Union Pacific Stages, and Chicago and Northwestern Stages, in territory extending between Chicago and Pacific coast points. Insofar as operations of applicants are concerned, busses owned by each are leased to the other, pursuant to a lease agreement dated February 8, 1932. The agreement provides that the equipment so leased shall pass into the possession and control of the respective lessee as it crosses the Nevada-California State line, that the owning company shall receive 5 cents for each mile its busses are operated over the routes of the other company, that each party shall bear the insurance, maintenance and operating costs, other than drivers' wages and taxes, properly attributable to such equipment while in its possession, that drivers of the leased equipment shall be the sole employees of, and their wages shall be paid by, each party while the said equipment is in its possession, and that each party shall pay taxes on its own busses.

The corporate history of this company, its relationship to the Union Pacific Railroad Company, and its operations in interstate or foreign commerce as a motor-vehicle common carrier of passengers in Oregon, Washington, Idaho, Utah, and Montana are described in Union Pac. Stages, Inc.-Purchase-Burns and Lamb, 5 M. C. C. 63.