No. MC-F-834

F. W. STRECKER AND F. W. STRECKER, JR.-PURCHASEAUGUST H. BOCK

Submitted December 12, 1939. Decided March 28, 1940

Purchase by F. W. Strecker and F. W. Strecker, Jr., doing business as F. W. Strecker Transfer Company and as Alton Transport Company, of operating rights and property of August H. Bock, doing business as Bock's Express, approved and authorized, subject to conditions.

C. D. Todd, Jr., for applicants.

REPORT OF THE COMMISSION

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

F. W. Strecker and F. W. Strecker, Jr., of St. Louis, Mo., partners, doing business as F. W. Strecker Transfer Company and as Alton Transport Company, by application filed March 20, 1939, seek authority under section 213, Motor Carrier Act, 1935, to purchase the operating rights and property of August H. Bock, also of St. Louis, doing business as Bock's Express, for $2,500. Hearing has been held. The joint board has made no recommendation and has indicated that it is agreeable to having the matter disposed of without its filing its report and recommended order.

1

Applicants' operations, pursuant to pending "grandfather" application in No. MC-70415, in local cartage and pick-up and delivery service, as a motor-vehicle carrier of general commodities between points and places within the St. Louis commercial zone as defined in St. Louis, Mo.-East St. Louis, Ill., Commercial Zone, 1 M. C. C. 656, are generally described in Strecker-Purchase-Berhorst, 15 M. C. C. 261. On June 15, 1939, in No. MC-70415 (Sub-No. 1), issuance of a certificate to applicants was authorized, covering rights purchased pursuant to authority granted in the case last cited, as a motor-vehicle common carrier of general commodities, in interstate or foreign commerce, between St. Louis and Alton, Ill., via the east bank of the Mississippi River, over U. S. Highway 67, serving all intermediate points and the off-route point of Monsanto, Ill.; and between

In report on reargument by the entire Commission in Dick's Transfer & Truck Term. Contr. Car. Application, 20 M. C. C. 785, it was found that performance of terminal collection and delivery service for line-haul motor common carriers similar to that performed by applicants was that of a common carrier. Prior report in that case, 10 M. C. C. 74.

St. Louis and Alton via the west bank of the river over Missouri Highway 99, serving no intermediate points. Applicants have been operating as Alton Transport Company under the rights last described.

On May 9, 1938, in No. MC-9396, 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 general commodities, with exceptions, over irregular routes, between points and places in the St. Louis commercial zone as defined in St. Louis, Mo.-East St. Louis, Ill., Commercial Zone, supra, on the one hand, and St. Charles, Mo., and points and places in St. Louis County, Mo., on the other. For the most part, vendor's operating rights are complementary to those of applicants, but within St. Louis County his irregular-route operations are in territory through which applicants' regular-route service is conducted. Under the unified operations herein authorized, applicants will be expected to preserve the separate nature of their regular-route and irregular-route operations. O'Brien-Purchase-Charles Noeding Trucking Co., Inc., 25 M. C. C. 131.

Under agreement of January 16, 1939, applicants would purchase, free of encumbrances, vendor's operating rights, including Missouri intrastate certificate of public convenience and necessity T-6293, and four motor vehicles and miscellaneous office equipment valued at $1,500. Applicants paid $400 in cash on date of contract and would pay the remainder upon approval of the transaction by us.

Applicants' balance sheet as of February 28, 1939, shows total assets of $37,945, consisting of: Current assets $6,198, principally accounts receivable; carrier operating property, including 37 motor vehicles, less depreciation, $29,978; intangible property $1,369; and deposit on instant transaction $400. Liabilities were: Current liabilities $9,872, consisting of accounts payable $3,919, bank loan $5,600, and accrued taxes $353; equipment obligations $3,000; and partnership capital $25,073. Income statements for 1937, 1938, and the first 2 months of 1939 show net incomes of $17,050 and $6,579 and deficit of $322, respectively.

Vendor's balance sheet as of February 28, 1939, shows total assets of $2,744, consisting of: Current assets $244, composed of cash $144 and accounts receivable $100; carrier operating property (estimated value) $1,500; and intangible property $1,000. There were no liabilities; sole proprietorship capital was $2,744. Income statements for 1937, 1938, and the first 2 months of 1939 show net incomes of $3,693, $1,593, and $250, respectively.

Vendor is desirous of retiring from motor-transportation business in order to devote his time to other activities. Under the proposed

unification, his former operations would be conducted out of applicants' terminal at St. Louis with but slight increase in overhead costs, and continuance of twice-daily service to patrons in vendor's territory would be assured. One of the partners testified that he knew of no other motor carrier performing such frequent service in this area. Applicants' superior financial resources and operating method should assure to the public an improved and reliable service. There are at least five competing motor carriers of property operating within the general territory.

Applicants have advised since the hearing that they have no plan for amortizing or writing off that portion of the proposed purchase price which would be assigned to the "Other Intangible Property" account if the transaction is consummated. Following Herrin Transp. Co.-Purchase-Malbrough, 25 M. C. C. 710, 712, and for the reasons there stated, our findings will be conditioned to require elimination, within 5 years, of any increase in applicants' "Other Intangible Property" account as result of this purchase.

We find that purchase by F. W. Strecker and F. W. Strecker, Jr., doing business as F. W. Strecker Transfer Company, and as Alton Transport Company, of the operating rights and property of August H. Bock, doing business as Bock's Express, including the right to a certificate covering rights confirmed in No. MC-9396, herein authorized to be unified with rights confirmed in applicants in No. MC-70415 (Sub-No. 1), and which may be confirmed as result of their pending "grandfather" application in No. MC-70415, 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, applicants 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 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 5-year period, applicants may write off to partnership capital, 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.

No. MC-F-999

SERVICE TANK LINES AND HORACE W. STEELECONTROL-CONSOLIDATED COPPERSTATE LINES

Decided March 28, 1940

Acquisition by Horace W. Steele of control of Consolidated Copperstate Lines through purchase of its capital stock, approved and authorized. Prior report, 35 M. C. C. 193.

Additional appearance: W. L. Barnum for applicant.

SUPPLEMENTAL REPORT OF THE COMMISSION

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

In the prior report, 35 M. C. C. 193, decided February 16, 1940, we found that the proposed acquisition of control, jointly, of Consolidated Copperstate Lines, hereinafter called Consolidated, by Service Tank Lines, of Los Angeles, Calif., and Horace W. Steele, of Phoenix, Ariz., hereinafter called Service and Steele, respectively, through purchase of 40 percent each of the capital stock of Consolidated, was not a transaction falling within the lawfully permissive terms of section 213 (a), and accordingly we dismissed the application without prejudice to submission of a revised plan by the parties in conformity with the provisions of that section.

By petition filed March 6, 1940, Steele represents that pursuant to assignment of February 21, 1940, Service has transferred to him all of its right and interest in the original stock-purchase agreement of July 22, 1939. In the light of these changed circumstances, Steele asks that we reopen the proceeding for reconsideration upon the record as made, and requests authority to acquire control of Consolidated through purchase of 80 percent of its stock. The prior report, except as indicated below, discusses the pertinent facts, and they need not be restated herein.

Steele's personal balance sheet as of January 31, 1940, shows assets aggregating $136,364, consisting of: Current assets $36,682, principally notes, accounts, and salary receivable from Alabam Freight Lines; 1 investments $68,080, representing stock and undivided profits

1 Hereinafter called Alabam.

in Texas Independent Oil Company $47,296, and stock of Alabam $20,784; advances $2,500; assigned claims due by Alabam $20,629; land and equipment, less depreciation, $5,673; and other physical property $2,800. Liabilities were: Notes payable $2,500; balance due on purchase of stock $6,600; and net worth $127,264.

Consolidated's balance sheet as of December 31, 1939, shows assets aggregating $102,034, consisting of: Current assets $29,017, principally cash, notes, and accounts receivable; carrier operating property, less depreciation, $61,632; intangible property $10,193; and prepayments $1,192. Liabilities were: Current liabilities $25,354, principally notes and accounts payable; equipment obligations $23,086; capital stock $13,000; and surplus, unearned $47,510 and earned (debit balance) $6,916. Income statement for the year 1939 shows net income of $7,186.

As result of the assignment of February 21, 1940, Service has no further interest in acquiring any of Consolidated's stock, and Steele agrees to perform and carry out all obligations of Service under their joint contract with L. R. Martin, the present owner of 80 percent, or 104 shares, of Consolidated's stock. The total purchase price, $31,000, and the terms for payment, providing for $5,000 to be placed in escrow and the balance to be paid in monthly installments of $750, with interest at 52 percent, would remain the same. In the prior report, we discussed certain of the evidence, and purposes of the transaction as originally proposed, as follows:

Consolidated and its predecessors have been handicapped by insufficient financial resources and have experienced difficulty in meeting operating expenses. With the additional capital which applicants are willing and able to furnish, together with additional tonnage they are in position to direct over its routes, if the transaction is approved, it is expected that service improvements would follow and that more-profitable operations would result. Consolidated's common-carrier routes, except between Phoenix and Globe, are complementary to those of Alabam, and it is planned to conduct both operations so as to minimize interchange delays at connecting points and thus speed up service between Los Angeles and El Paso, and intermediate points. Another purpose of the transaction is to provide a satisfactory connection or outlet for Alabam's traffic mov ing westward from El Paso, and, at the same time, make available the facilities of Consolidated in connection with tonnage originating at Los Angeles destined to points served by Alabam east of Phoenix.

The record is convincing that the benefits expected to follow consummation of the transaction as originally proposed may be more fully realized if Steele, who now controls Alabam through stock ownership, also acquires control of Consolidated as here proposed. As indicated above, the lines of Alabam and Consolidated form a continuous route between Los Angeles and El Paso, and service improvements possible under common control should materially benefit the