homa City, Baxter Springs, Kans., St. Louis, Mo., Salem and Lawrenceville, Ill., and Vincennes and Princeton, Ind.

On October 13, 1938, in No. MC-63376, issuance of a certificate under the "grandfather" clause to vendor was authorized, covering operations as a motor-vehicle common carrier of general commodities in interstate or foreign commerce over regular routes in Missouri, Illinois, Indiana, and Kentucky, aggregating approximately 380 miles, between St. Louis and Evansville, via Salem, Lawrenceville, Vincennes, and Princeton, duplicating a portion of applicant's above-described route; between Lawrenceville and Robinson, Ill., over Illinois Highway 1 to its junction with Illinois Highway 163, and thence over the latter highway; between Vincennes and Louisville, Ky., via Washington, Shoals, and New Albany, Ind.; and between Alton and East St. Louis, Ill., over U. S. Highway 67; serving all intermediate points, but with service on the Alton-East St. Louis route being restricted to traffic originating at or destined to points other than St. Louis.

Pursuant to two separate agreements dated July 20, 1939, applicant would purchase vendor's above-described operating rights, certain operating authority granted by Illinois, Indiana, and Kentucky (including particularly Indiana permits 81-A-1 and 81-A-2 and Kentucky permits 402 and TS-136), covering so-called "road rights", and physical property valued at $8,000, including 16 motor vehicles and furniture and fixtures. The purchase price includes certain State taxes paid by vendor in the amount of $171. The agreements provide for deposit in escrow of $7,000, which amount, together with the remainder of the purchase price, would be paid to vendor upon approval by us and upon approval of transfer of intrastate rights by appropriate State regulatory bodies. Indiana and Kentucky authorities have given their temporary approval of transfer of intrastate rights.

Vendor's balance sheet statement as of March 31, 1939, the latest available, shows cash $465 and carrier operating property, less depreciation, $9,050. Liabilities were: Notes payable $7,804, accounts payable $11,048, and sole proprietorship capital (debit balance) $9,337. His income statements for the last 8 months of 1938 and the first 3 months of 1939 show net incomes of $5,374 and $862, respectively. Income statements for applicant for 1938 and the first 7 months of 1939 show net incomes of $81,369 and $59,752, respectively.

Applicant's balance-sheet statement as of September 30, 1939, giving effect to the transaction authorized in Yellow Cab Transit Co. (Oklahoma)-Merger, supra, shows an amount of $83,766 in its intangibleproperty account, which amount would be increased, as a result of the instant transaction, by $7,000. Subsequent to the hearing herein, applicant advised us of its intention to amortize or otherwise to write off

the amount of increase in its "Other Intangible Property" account resulting from the instant purchase, over a period of 10 years, and our findings will be appropriately conditioned to secure this result.

Applicant maintains 11 terminals and 5 garages at principal points on its routes, and it has terminal facilities available at other points through rental or contract-agency arrangements. Consummation of the purchase would permit numerous economies to be realized through elimination of duplicate administrative and operating functions; and necessity for interchange and expenses and delays incident thereto would be eliminated on traffic moving between points on the nonduplicate portion of vendor's routes and points on the routes of appli cant. It was testified that a saving of from 8 to 10 hours in transit time can be effected on shipments moving from Louisville via St. Louis to southwestern points. For the past year applicant has studied the operating situation, on the basis of which it estimates that tonnage handled can be increased and that the amount of the instant purchase price for intangibles may be regained in less than 2 years through profits realized from unification of the properties. Other motor carriers of property operate over the routes served by vendor.

We find that purchase by Yellow Cab Transit Co. (Oklahoma) of the operating rights and property of Frank L. Holsapple, doing business as Holsapple Truck Line, including the right to a certificate covering rights confirmed in No. MC-63376, and rights confirmed or which may be confirmed in Yellow Cab Transit Co. (Oklahoma), all of which rights are herein authorized to be unified, with duplications eliminated, upon the terms and conditions above set forth, which terms and conditions 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; provided, however, that, if the authority herein granted is exercised, applicant shall amortize in equal annual amounts over a maximum period of 10 years, commencing with the date of consummation herein, the amount of increase in the "Other Intangible Property" account as result of the instant transaction, in a manner consistent with the provisions of the uniform system of accounts for class I motor carriers, or, in lieu of amortization in any year of the 10-year period, applicant may write off to surplus, in accordance with said accounting provisions, one-tenth or more of the amount of such increase in the "Other Intangible Property" account, so as to remove from such account within said 10-year period, either through amortization or write-off, the entire amount of the increase. An appropriate order will be entered.

35 M. C. C.

No. MC-F-1085

READY TRUCK LINES, INC.-CONSOLIDATION-FRANK AND SIDNEY J. WILLIAMS

Submitted January 23, 1940. Decided February 27, 1940

Consolidation of Frank Williams and of Sidney J. Williams, doing business as Ready Truck Lines, into Ready Truck Lines, Inc., approved and authorized, subject to condition.

Harold T. Halfpenny for applicants.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER

BY DIVISION 4:

Ready Truck Lines, Inc., hereinafter called the corporation, Frank Williams, and Sidney J. Williams, doing business as Ready Truck Lines, all of Chicago, Ill., by application as amended December 7, 1939, seek authority under section 213, Motor Carrier Act, 1935, to consolidate the operating rights and properties of Frank Williams and of Sidney J. Williams into the corporation for ownership, management, and operation. At the hearing the parties waived service of a report and recommended order by the examiner.

The

corporation, organized in Illinois April 22, 1939, is authorized to engage in the transportation of property by motor vehicle, it having been formed to take over the respective individual operations of Frank Williams and of Sidney J. Williams. Its charter authorizes the issuance of 1,000 shares of no-par-value capital stock.

On October 30, 1939, in No. MC-50104, Frank Williams was issued a permit1 authorizing operations in interstate or foreign commerce as a motor-vehicle contract carrier of paper-mill products and supplies over a regular route between Hamilton, Ohio, on the one hand, and Hammond, Ind., and Chicago, on the other, via Muncie and Logansport, Ind., serving no intermediate points.

Sidney J. Williams, who is the son of Frank Williams, operates in interstate or foreign commerce pursuant to a pending "grandfather" application, in No. MC-28005, as a motor-vehicle contract carrier of

On May 3, 1939, in No. MC-FC-11803, substitution of Frank Williams in lieu of Ernest R. Verne and Richard Gourdine, a partnership, as to rights in No. MC-50104, was authorIzed. The permit in No. MC-50104 was originally authorized to be issued to Ernest Bozzy in Bozzy Contract Carrier Application, 2 M. C. C. 289.

specified commodities 2 over irregular routes between points in Illinois, Indiana, and southwestern Ohio, and between points in those States and Louisville, Ky. While the territory served includes the regular route over which Frank Williams operates, the commodities transported by each carrier are dissimilar.

Under agreement of August 26, 1939, as modified, all assets of Frank Williams and Sidney J. Williams as of August 31, 1939, including all interstate and intrastate operating rights and 40 motor vehicles with net book value of $45,375, would be taken over by the corporation, and the latter would assume all of their liabilities. As of August 31, 1939, such liabilities aggregated $12,871, of which $8,480 represented equipment obligations of Sidney J. Williams that have since been discharged. The agreement further provides that the corporation shall issue 500 shares of its capital stock as follows: To Sidney J. Williams, who will be president and director, 378 shares; to Frank Williams, vice president and director, 121 shares; and to James Sullivan, secretary-treasurer and director, 1 share.

Frank Williams' balance sheet as of August 31, 1939, shows assets aggregating $12,378, consisting of: Current assets $2,039, representing cash $1,408 and accounts receivable $631; carrier operating property, including eight motor vehicles, less depreciation, $8,717; and intangible property $1,622. Liabilities were: Accounts payable $7; and soleproprietorship capital $12,371. Income statement for period May 3 to August 31, 1939, shows net income of $581.

Balance sheet of Sidney J. Williams as of August 31, 1939, shows assets aggregating $47,281, consisting of: Current assets $9,686, representing cash $1,188, special deposits $70, accounts receivable $7,301, and material and supplies $1,127; carrier operating property, including 32 motor vehicles, less depreciation, $36,658; and prepayments $937. Liabilities were: Current liabilities $4,384, principally accounts payable; equipment obligations $8,480; and sole-proprietorship capital $34,417. Income statements for 1937, 1938, and the first 8 months of 1939 show net incomes of $475, $17,524, and $19,340, respectively. The corporation's balance sheet giving effect to the transaction as of September 1, 1939, shows assets aggregating $65,037, consisting of: Current assets $11,003, representing cash $2,597, special deposits $70, accounts payable $7,931, and material and supplies $405; carrier operating property, less depreciation, $45,855; intangible property $7,000; prepayments $938; and other deferred debits $241. Liabilities were: Current liabilities $4,391, consisting of accounts payable $3,959, wages payable $99, and other current liabilities $333; equipment obligations

Principally packing house products, fertilizer, canned goods, groceries, and roofing

materials.

$8,480; capital stock (assigned value) $50,000; and unearned surplus $2,166.

The agreement between the parties provides that the operating rights, contracts, and goodwill of Frank Williams and Sidney J. Williams be valued at $2,000 and $5,000, respectively, and, accordingly, the above balance sheet of the corporation reflects an item of $7,000 for intangible property, representing an increase of $5,378 over the amount of $1,622 shown on the balance sheet of Frank Williams. We have disapproved the practice of reflecting increases in a carrier's intangible-property account under similar circumstances, and do likewise here. Compare Trek, Inc.-Control-L & L Freight Lines, Inc., 25 M. C. C. 675, 681. The corporation will be expected, therefore, to revise the accounting for intangible property to eliminate the proposed increase and to reflect the amount which may properly be recorded in a manner consistent with the provisions of the uniform system of accounts for class I motor carriers, when it submits proposed journal entries recording the consolidation upon its books as required by our order. In this connection, the corporation proposes to amortize, over a period of 5 years, any amount properly assignable to its "Other Intangible Property" account (No. 1550) as a result of the transaction, and our findings will be appropriately conditioned to secure that result.

Frank Williams is aged and because of poor physical condition is unable to continue active management of his individual motor-carrier operations. Upon approval here, which will permit his son, as president and principal stockholder, to manage the consolidated operations of the corporation, he expects to assume duties which are lighter and less active in character. As previously indicated, the two operations are in much the same territory. While in some instances the same points are served, traffic handled by Frank Williams moves preponderantly in a northwesterly direction, while that of Sidney J. Williams is principally from Chicago to points in southwestern Ohio. The unification would result in reduced operating costs by eliminating considerable mileage operated in the return movement of empty vehicles. Consolidation of separate administrative and other functions is expected to effect further economies and to result in improved service to shippers.

We find that consolidation of the operating rights and property of Frank Williams and the operating rights and property of Sidney J. Williams, doing business as Ready Truck Lines, into Ready Truck Lines, Inc., for ownership, management, and operation, including the right to operate pending determination of the "grandfather" application of Sidney J. Williams, doing business as Ready Truck Lines