No. MC-F-886 L. G. HOGSHIRE-CONTROL-N. B. & C. MOTOR LINES, INCORPORATED Submitted July 12, 1939. Decided December 22, 1939 Acquisition by L. G. Hogshire of control of N. B. & C. Motor Lines, Incorporated, through ownership of its capital stock, approved and authorized. John W. Oast, Jr. for applicant. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER BY DIVISION 4: L. G. Hogshire, of Norfolk, Va., by application filed April 27, 1939, seeks authority under section 213, Motor Carrier Act, 1935, to acquire control of N. B. & C. Motor Lines, Incorporated, hereinafter called Motor Lines, of Washington, N. C.,1 through retirement of 20 shares of its capital stock. At the hearing, applicant waived service of a report and recommended order by the examiner. Applicant is president of Norfolk, Baltimore and Carolina Line, Incorporated, hereinafter called the boat line, a Virginia corporation controlled through stock ownership by applicant and members of the Hogshire family. The boat line operates six boats in interstate or foreign commerce as a common carrier of freight by water between Baltimore, Md., Norfolk, Va., and a number of points in North Carolina reached by water, including Wilmington, Beaufort, New Bern, Washington, Williamston, and Winton. In addition to these operations, and pursuant to pending "grandfather" application in No. MC10429, the boat line operates one motor vehicle in pick-up and delivery service at Norfolk in conjunction with its water operations to and from that point. On June 15, 1938, in No. MC-35460, issuance of a certificate to Motor Lines was authorized, under the "grandfather" clause, covering operations in interstate or foreign commerce as a motor-vehicle common carrier over regular routes (1) of general commodities from Wilmington to Lake City, S. C., (2) of tobacco in hogsheads, sheets, and baskets only, from Florence, S. C., to Wilmington, and (3) of general commodities between Greenville and Richmond, Va., over five routes, and 1 All points mentioned are in North Carolina unless otherwise indicated. between Greenville and Norfolk over four routes, serving specified intermediate points and the off-route point of Newport News, Va., and over irregular routes (4) of general commodities between points in North Carolina on and east of U. S. Highway 501. Motor Lines was incorporated February 4, 1933, in North Carolina. Its authorized capital stock consists of 100 shares, par value $100 each, of which 60 shares were outstanding, 20 shares each having been issued to applicant, W. O. Moore, and B. H. Ellington, as original subscribers. These three individuals retained such interest in Motor Lines until January 29, 1937, and on that date Ellington sold his stock to Motor Lines for $3,577, which amount was paid from its treasury. The reduction in outstanding shares to 40 left applicant and Moore each owning 50 percent, and resulted in joint stock control of Motor Lines being obtained by applicant. Compare Zabarsky-Control-Fulton Fast Freight, Inc., 15 M. C. C. 43. For purposes of this proceeding and pending determination of the "grandfather" application of the boat line, the latter will be considered a motor carrier as well as a carrier by water. Hence, acquisition of control of Motor Lines by applicant is a transaction requiring our approval under section 213, and it falls within the permissive forms of unification enumerated in that section, the pertinent provision reading as follows: It shall be lawful * * * for any such person [applicant] which has control of one or more motor carriers [the boat line] to acquire control of another such carrier [Motor Lines] through ownership of its stock * Although the boat line operates but one motor vehicle and Motor Lines operates 15 such vehicles, the transaction is not within the exemption of section 213 (e) because of applicant's affiliation with the boat line, which is also "a carrier other than a motor carrier". In connection with its transportation service by water, the boat line does not file annual reports with us, does not concur in joint freight tariffs filed by common carriers by railroad subject to our jurisdiction under part I of the Interstate Commerce Act, and does not transport property in conjunction with such railroads under arrangements for continuous carriage or shipment. In our opinion, therefore, it is not a carrier as defined in section 1 (3) of part I, and applicant's affiliation therewith does not render the instant transaction subject to the proof requirements of the proviso of section 213 (a) (1), as amended, reading as follows: Section 213 (e) reads: "Except where a carrier other than a motor carrier is an applicant or any person which is controlled by such a carrier or carriers by railroad or affiliated therewith within the meaning of section 5 (8) of part I, the provisions of this section requiring authority from the Commission for consolidation, merger, purchase, lease, operating contract, or acquisition of control shall not apply where the total number of motor vehicles involved is not more than twenty." Provided, however, That if a carrier as defined in section 1 (3) of part I, or any person which is controlled by such a carrier or affiliated therewith within the meaning of section 5 (8) of part I, is an applicant, the Commission shall not enter such an order unless it finds that the transaction proposed will promote the public interest by enabling such carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition. It follows that the instant transaction may be approved if shown to be consistent with the public interest. Compare Public Service Interstate Transp. Co.-Purchase-Healy, 5 M. C. C. 735. As previously stated, applicant's acquisition of control of Motor Lines was accomplished in January 1937. While the resulting law violation is not to be condoned, it is not necessarily a bar to approval, as it occurred in the early stages of regulation. Potashnick Truck Serv., Inc.-Control— Bryant Truck Lines, 5 M. C. C. 723. Applicant's personal balance sheet as of April 30, 1939, shows assets aggregating $153,630, consisting of: Current assets $3,974; investment securities $100,756, including book value of stock in the boat line $74,962 and in Motor Lines $3,271; personal property $11,400; and real estate $37,500. Liabilities were: Notes payable $4,127; mortgages payable $10,800; and net worth $138,703. Condensed balance sheet of the boat line as of March 31, 1939, shows assets aggregating $263,458, consisting of: Current assets $36,037; investment securities $41,620; fixed properties, less depreciation, $174,652; and prepayments $11,149. Liabilities were: Current liabilities $44,055; replacement reserve $14,826; capital stock $30,000; and surplus $174,577. Income statements for 1937, 1938, and the first 3 months of 1939 show a deficit of $4,106 and net incomes of $2,686 and $1,431, respectively. Balance sheet for Motor Lines as of April 30, 1939, shows assets aggregating $12,250, consisting of: Current assets $2,415, principally cash; carrier operating property, less depreciation, $3,918; treasury stock (cost of reacquiring 20 shares from Ellington) $3,577; and prepayments $2,340. Liabilities were: Current liabilities $1,787; capital stock $6,000; and surplus, unearned $6,000 and earned (debit balance) $1,537. Income statements for the years ending January 31, 1938, January 31, 1939, and the period February 1 to April 30, 1939, showed deficits of $113, $1,512, and $854. Specific attention is called to the fact that Motor Lines has included among its assets $3,577, representing cost of 20 shares of capital stock reacquired for retirement, and to the desirability of revising the accounting for such item to a manner consistent with the provisions of the uniform system of accounts for class I motor carriers, subsequent to which appropriate journal entries, in triplicate, reflecting such revision should be submitted to our Bureau of Motor Carriers. Approximately 95 percent of the business handled by Motor Lines is traffic having a prior or subsequent haul by the boat line. This traffic moves on joint water-truck rates somewhat lower than all-truck rates, and is interchanged between the carriers at Norfolk or at the North Carolina point reached by water which is most convenient to the origin or destination of the traffic involved. Approval here will assure the continued close coordination of this joint water and truck service under applicant's supervision and control. There are numerous other common carriers by rail, water, and motor vehicle serving the territory jointly served by the boat line and Motor Lines, although some of the points served by the latter in the coordinated water-truck operation are not reached by other carriers. We find that acquisition by L. G. Hogshire of control of N. B. & C. Motor Lines, Incorporated, through ownership of its capital stock, 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. An appropriate order will be entered. 35 M. C. C. No. MC-F-892 BLUE ARROW TRANSPORT LINES, INC.-PURCHASEJOSEPH R. MAMMINA Submitted December 8, 1939. Decided December 22, 1939 Purchase by Blue Arrow Transport Lines, Inc., of certain operating rights of Joseph R. Mammina, doing business as Michigan Tri-State Motor Express, approved and authorized, subject to condition. David Axelrod for applicant and vendor. Claude H. Anderson, Arthur Van Duren, and Robert C. Winter for protestants. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER BY DIVISION 4: Blue Arrow Transport Lines, Inc., of Grand Rapids, Mich.,1 by application filed May 2, 1939, seeks authority under section 213, Motor Carrier Act, 1935, to purchase for $5,000 certain operating rights of Joseph R. Mammina, of Benton Harbor, doing business as Michigan Tri-State Motor Express. Interstate Motor Freight System, Holland Motor Express, Inc., Rooks Transfer Lines, Inc., and Wolverine Express, Inc., opposed the application. At the hearing, all parties waived service of the examiner's report and recommended order. On March 4, 1938, in No. MC-2990, issuance of a certificate to appli-. cant, a Michigan corporation, was authorized under the "grandfather" clause covering operations in interstate or foreign commerce as a motor-vehicle common carrier of general commodities, with exceptions, over regular routes between Bay City and Chicago, Ill., via Saginaw, Flint, Owosso, Grand Rapids, Holland, and Benton Harbor, serving all intermediate points and specified off-route points. In Blue Arrow Transport Lines, Inc.-Alternate Routes, 12 M. C. C. 803, applicant was authorized to operate, as an alternate route only, serving only points authorized in No. MC-2990, between Flint and Benton Harbor via Lansing and Battle Creek, and between Perry and Saginaw via Owosso. Applicant utilizes in its operations 32 owned and 22 leased motor vehicles. All points mentioned are in Michigan unless otherwise indicated. |