No. MC-F-1088 1

HEMINGWAY BROTHERS INTERSTATE TRUCKING COMPANY-PURCHASE-EDWARD J. WOODS

Submitted February 15, 1940. Decided March 15, 1940

Purchase by Hemingway Brothers Interstate Trucking Company of operating rights of Edward J. Woods, doing business as E. J. Woods Trucking Company, and certain operating rights of Clarence H. Eccleston, doing business as Merchants Service Trucking Co., approved and authorized, subject to condition.

Francis E. Nute and Mary E. Kelley for applicant and vendors. REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER

BY DIVISION 4:

Hemingway Brothers Interstate Trucking Company, a Massachusetts corporation, of New Bedford, Mass., by separate applications filed December 9 and 28, 1939, seeks authority under section 213, Motor Carrier Act, 1935, to purchase the operating rights of Edward J. Woods, of Springfield, Mass., doing business as E. J. Woods Trucking Company, and certain operating rights of Clarence H. Eccleston, of Waterford, Conn., doing business as Merchants Service Trucking Co., for $4,500 and $2,500, respectively. At the hearing the parties waived service of a report and recommended order by the examiner.

Applicant's operations as a motor-vehicle common carrier of general commodities in interstate or foreign commerce over a network of regular routes in eastern Massachusetts, Rhode Island, and eastern Connecticut, radiating from Boston, Mass., and Providence, R. I., are described in Hemingway Bros. Interstate Trucking Co. Com. Car. Applic., 11 M. C. C. 267. Its organization, affiliation with Pine State Express, Inc., and certain operations authorized to be purchased by applicant are described in Hemingway Bros. Interstate T. Co.-Purchase-Finkel Motor, 15 M. C. C. 702, and HemingwayControl-Pine State Exp., Inc., 5 M. C. C. 575.

Applicant's balance sheet as of December 31, 1939, shows assets aggregating $168,651, consisting of: Current assets $86,629, prin

1 This report also embraces No. MC-F-1097, Hemingway Brothers Interstate Trucking Company-Purchase-Clarence H. Eccleston.

cipally cash $6,769, receivables from associated companies $28,336, and accounts receivable, less reserve for uncollectible accounts, $40,680; carrier operating property, including approximately 90 motor vehicles, less depreciation, $64,323; nonoperating property, less reserve for depreciation, $5,027; intangible property $2,500; and prepayments $10,172. Liabilities were: Current liabilities $61,539, principally notes payable $15,658 and accounts payable $36,036; equipment obligations $18,891; other long-term obligations $14,500; capital stock, preferred $15,400 and common $34,600; and earned surplus $23,721. Its income statements for 1937, 1938, and 1939 show deficit of $6,010 and net incomes of $18,248 and $9,235, respectively. The reduction in net income for the latter year is attributed to labor difficulties at several points in the territory served.

No. MC-F-1088.-In Woods Common Carrier Application, 16 M. C. C. 173 and 18 M. C. C. 718, issuance of a certificate to Woods under the "grandfather" clause was authorized, covering operations as a motor-vehicle common carrier of general commodities in interstate or foreign commerce, over regular routes, between Manchester, N. H., and New York, N. Y. (including points within the commercial zone as defined in New York, N. Y., Commercial Zone, 1 M. C. C. 665), via Lowell, Greenfield, and Springfield, Mass., and Hartford, New Haven, and Bridgeport, Conn. (also over alternate routes between Manchester and Boston, Mass., via Lawrence and Lowell, Mass., and between Boston and Springfield over two routes, one via Worcester and the other via Sturbridge); between Springfield and Bridgeport via Westfield, Mass., and Torrington, Conn.; and between Hartford and New London, Conn., via Willimantic and Norwich, Conn.; serving intermediate and specified off-route points. For approximately 150 miles, Woods' operating rights principally over routes between Lowell and Boston and between the latter point, on the one hand, and Worcester and Sturbridge, on the other, duplicate applicant's routes.

Balance sheet of Woods as of December 31, 1939, shows assets aggregating $9,277, consisting of: Current assets $1,207, representing cash $185 and accounts receivable $1,022; carrier operating property, less depreciation, $6,150; and prepayments $1,920. Liabilities were: Current liabilities $3,873, principally notes and accounts payable; and sole-proprietorship capital $5,404. Income statements for 1937, 1938, and 1939 show net incomes of $3,788, $2,848, and $1,183, respectively.

Under agreement of November 23, 1939, applicant would purchase Woods' interstate operating rights for $4,500. The purchase price has been deposited in escrow pending our approval herein.

In addition to the rights described, Woods also has intrastate operating rights in Massachusetts, principally in the Springfield area.

The preponderance of his tonnage moves within this area, and he now finds that he cannot, with present equipment, provide adequate service for the increased movement of both interstate and intrastate shipments. Because of limited financial resources he is unable to purchase additional equipment and is desirous of disposing of the interstate rights in order that he may devote his entire time to the development of intrastate operations. A large portion of applicant's revenue is derived from the movement of textile products in New England and between points in that territory and New York City. Its claim to "grandfather" rights to serve the New York area was denied in Hemingway Bros. Interstate Trucking Co. Com Car. Applic., supra, and in order to serve that area it has relied upon the rights it was authorized to purchase in Hemingway Bros. Interstate T. Co.-Purchase-Finkel Motor, supra. The validity of claimed rights to transport general commodities purchased from the vendor in that case has been questioned, and the instant purchase is being made principally for the purpose of securing confirmed rights enabling it to continue the transportation of general commodities, including particularly textile products, into New York.

The unification would substantially enlarge applicant's operations, permitting it to serve additional shipping points, such as Manchester, Nashua, N. H., and Springfield and Hartford, now served through interchange at connecting points. Applicant is in position to render an improved service with superior equipment and facilities, proposes to establish necessary terminals, and would provide a daily single-line service between the additional New England points to be served, on the one hand, and New York City and points within the New York area, on the other. Substantial savings are contemplated through quantity purchases of supplies and by consolidation of duplicate administrative and operating functions. A number of other motor carriers of property operate in the considered territory.

No. MC-F-1097.-On May 10, 1938, in No. MC-47158, issuance of a certificate to Eccleston under the "grandfather" clause was authorized, covering operations as a motor-vehicle common carrier of gen

In this proceeding, No. MC-61020, now docketed as No. MC-30204 (Sub-No. 1), the examiner recommended, to which recommendation exceptions have been filed, that "grandfather" rights be confirmed authorizing the transportation (1) of artificial leather, leather handbags, fresh fish, including shellfish, and empty fish containers, over regular routes, from New Bedford, and nails from Wareham, Mass., to New York and Brooklyn, N. Y., serving certain intermediate and off-route points, and (2) of cranberries, over regular and irregular routes, from Barnstable, Bristol, and Plymouth Counties, Mass., to Philadelphia, Pa., returning over such routes to Providence, R. I., New Bedford, and Fall River, Mass., serving certain intermediate points and the off-route points of Hartford, Conn., Camden, N. J., and points within the commercial zone as defined in New York, N. Y., Commercial Zone, supra.

eral commodities in interstate or foreign commerce (a) over regular routes between Westerly, R. I., and Hartford, via New London and Willimantic, Conn.; between New London and Hartford, via Colchester, Conn.; between Hartford and Waterbury, Conn., via Meriden, Conn.; between New Haven and New London, over U. S. Highway 1, serving intermediate and certain off-route points; and (b) over irregular routes between points on the regular routes, on the one hand, and points in that part of Connecticut bounded on the east by the Connecticut-Rhode Island State line south of U. S. Highway 44, on the south by U. S. Highway 1 to Stratford, Conn., on the west by Connecticut Highway 8 from Stratford to Winsted, Conn., and on the north by U. S. Highway 44 from Winsted to the Connecticut-Rhode Island State line, including points on the indicated portions of the highways specified.

Pursuant to agreement of December 12, 1939, applicant would purchase that portion of vendor's interstate regular-route rights between New London and New Haven, over U. S. Highway 1, serving all intermediate points and the off-route points of West Haven, Fair Haven, South Lyme, Niantic, and Flanders, Conn., and corresponding intrastate rights, for $2,500, of which $500 was paid in cash. The remainder of purchase price would be paid following our approval. The intrastate rights are valued by the parties at $500. Applicant now has confirmed rights, east-bound only, over a 15mile segment of the route to be purchased between a point near Old Lyme, Conn., and New London.

Balance sheet of Eccleston as of December 31, 1939, shows assets aggregating $7,528, consisting of: Current assets $2,038, representing cash $797 and accounts receivable $1,241; and carrier operating property, less depreciation, $5,490. Liabilities were: Current liabilities $1,076, representing accounts payable $891 and notes payable $185; equipment obligations $2,942; and sole-proprietorship capital $3,510. Income statements for period November 12 to December 31, 1937, and for 1938 and 1939, show net incomes of $576, $1,973, and $2,305, respectively. Income statement for operations for 1939, over the route which would be purchased, shows net income of $628.

Eccleston's operations between New Haven and New London are somewhat apart from his principal operations extending northwestward from New London. He would dispose of these rights in order that more equipment may be utilized for the improvement of service in his other operations. The route involved forms a connecting link between applicant's present operations and that part of Woods' operations which would be purchased between New York and New Haven. Unification would provide a more direct route between New England points and New York and eliminate necessity for

interchange of shipments at New London. A number of other motor carriers of property operate over the route to be purchased from Eccleston.

Applicant proposes to amortize, over a period of 5 years, any amount properly assignable to its "Other Intangible Property" account resulting from the instant transactions, and our findings will be conditioned to secure this result.

We find that purchase by Hemingway Brothers Interstate Trucking Company of the operating rights of Edward J. Woods, doing business as E. J. Woods Trucking Company, and certain operating rights of Clarence H. Eccleston, doing business as Merchants Service Trucking Co., including the right to a certificate covering such rights confirmed in Woods Common Carrier Application, supra, and in No. MC-47158, respectively, herein authorized to be unified with rights otherwise confirmed in applicant, 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 5 years, commencing with the date of consummation herein, the amount of increase in the "Other Intangible Property" account as result of the instant transactions, 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 5-year period, applicant may write off to surplus, in accordance with said accounting provisions, one-fifth or more of the amount of such increase in the "Other Intangible Property” account, so as to remove from such account within said 5-year period, either through amortization or write-off, the entire amount of the increase.

An appropriate order will be entered.

COMMISSIONER MILLER did not participate in the disposition of these proceedings.

35 M. C. C.