No. MC-F-1108 KEESHIN FREIGHT LINES, INC.-ISSUANCE OF NOTES Decided June 10, 1940 Findings in prior report, 35 M. C. C. 119, authorizing issuance by Keeshin Freight Lines, Inc., of $400,000, principal amount, of series-III notes, modified to the extent that certain further conditions imposed with respect to $150,000 principal amount thereof. Luther M. Walter for applicant. SUPPLEMENTAL REPORT OF THE COMMISSION BY THE COMMISSION: In the prior report, 35 M. C. C. 119, we authorized Keeshin Freight Lines, Inc., of Chicago, Ill., to issue promissory notes of three series in aggregate amount not exceeding $2,850,000, the notes of series I to be issued at par for cash and those of the other two series to be exchanged for applicant's securities outstanding. The notes of series III, in aggregate amount $400,000, would be exchanged for a like amount of applicant's series-C debentures. The condition was imposed that any note issued pursuant to the authority granted should bear on its face, printed in bold type, the notation: "This note has been authorized by the Interstate Commerce Commission in its order of February 3, 1940, for issue to and holding by the original payee (or payees) whose name has been inscribed hereon prior to issuance, and is not valid in the hands of, or if reissued, sold, pledged, repledged, or otherwise disposed of to, other than said original payee, or payees." Applicant represents that $150,000 principal amount of its series-C debentures outstanding were issued to New York Transit & Terminal Co., Ltd., of New York, N. Y., a subsidiary of The Baltimore and Ohio Railroad Company, hereinafter called the railroad company. In letter dated January 24, 1939, the Reconstruction Finance Corporation, hereinafter called the Finance Corporation, has advised that it permitted the railroad company to substitute those series-C debentures for part of the collateral held by the Finance Corporation to secure loans made to the railroad company, pursuant to our approval granted January 6, 1938, in Baltimore & O. R. Co. Reconstruction Loan, 224 I. C. C. 396. By petition filed May 15, 1940, applicant requests that a supplemental order be entered modifying the authority granted to the extent necessary to authorize the railroad company to pledge with the Finance Corporation $150,000, principal amount, of the series-III notes as aforesaid, in lieu of the series-C debentures, and to assign said notes to the Finance Corporation, and also to authorize the latter to reassign the notes to the railroad company, if and when such action is desired. No opinion is here expressed as to the adequacy, as partial collateral for the outstanding loan to the railroad company, of the notes which the latter may pledge as such collateral with the Finance Corporation. Under the circumstances stated, the reason for the restriction against pledging these notes imposed in the prior report is not present, and such restriction will be removed to the extent necessary. Upon further consideration, we find, our prior findings being modified accordingly, that issuance by Keeshin Freight Lines, Inc., of $150,000 of the total of $400,000 of series-III notes authorized to be issued in the prior report, 35 M. C. C. 119, for the purposes stated in said report and as aforesaid (a) is for lawful objects within the corporate purposes of applicant and compatible with the public interest, which are necessary and appropriate for and consistent with the proper performance by it of its obligations under the Motor Carrier Act, 1935, and which will not impair its ability to fulfill those obligations, and (b) is reasonably necessary and appropriate for such purposes; provided, however, that notes issued pursuant to authority herein granted shall bear on the face thereof, printed in bold type, in addition to the notation which said series-III notes are required to bear under our findings in the prior report, the following notation: By supplemental report and order of June 10, 1940, the Interstate Commerce Commission has authorized modification of the above restriction but only to the extent that this note, as one of $150,000 aggregate principal amount, may be pledged, assigned, and reassigned in accordance with such supplemental report and order. An appropriate order will be entered. COMMISSIONER JOHNSON did not participate in the disposition of this proceeding. 35 M. C. C. No. MC-F-1125 COLUMBIA MOTOR SERVICE CO.-PURCHASE- Submitted March 22, 1940. Decided June 12, 1940 Purchase by Columbia Motor Service Co. of contract-carrier operating rights and certain property of Columbia Terminals Company, and acquisition of control of Columbia Motor Service Co. by Columbia Terminals Company through stock ownership, approved and authorized. Edgar S. Idol for applicants. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND JOHNSON BY DIVISION 4: Columbia Motor Service Co., a Delaware corporation, of St. Louis, Mo., herein referred to as Motor Service, by application filed January 29, 1940, seeks authority under section 213, Motor Carrier Act, 1935, to purchase the contract-carrier operating rights and certain property of Columbia Terminals Company, a Delaware corporation, also of St. Louis, herein referred to as Terminals. In the same application, as supplemented February 15, 1940, Terminals seeks authority under the same section to acquire control of Motor Service through ownership of its capital stock, concurrent with the latter's purchase of the properties mentioned. Hearing has been held, at which the parties waived service of a report and recommended order by the examiner. Pursuant to authority granted on February 3, 1940, under section 210a (b), Motor Service leased the contract-carrier operating rights of Terminals, effective February 8, 1940, for a period expiring August 5, 1940. Terminals' corporate history and operations generally, including such operations as were found to be exempt from regulation under part II of the act, are described in Columbia Terms. Co. Contract Carrier Application,1 18 M. C. C. 662. In that case, which embraced also No. MC-84791, issuance of a certificate to Terminals under the 'On petition of the applicant, this proceeding was reopened for reconsideration by division 5, on February 5, 1940, and the matter is now pending. Our findings herein are based on the situation reflected by the findings in the case cited, and may necessarily require modification following decision by the Commission on reconsideration in that proceeding. "grandfather" clause was authorized, covering operations in interstate or foreign commerce as a motor-vehicle common carrier (a) over regular routes, of baggage, between St. Louis and Elsah, Ill., and (b) over irregular routes, of general commodities, in the performance of pickup and delivery service for line-haul motor carriers, within the St. Louis, Mo.-East St. Louis, Ill., commercial zone, herein called the commercial zone, as defined in St. Louis, Mo.-East St. Louis, Ill., Commercial Zone, 1 M. C. C. 656 and 2 M. C. C. 285. In the same proceeding, in No. MC-48704, issuance of a permit under the "grandfather" clause was also authorized, covering operations as a motor-vehicle contract carrier of general commodities, in interstate or foreign commerce, over irregular routes, "limited to a service in which it leases trucks with drivers to shippers for the transportation of such shippers' property," between points in the commercial zone, on the one hand, and points in St. Louis, St. Charles, and Jefferson Counties, Mo., and points in Illinois within 150 miles of St. Louis, on the other. Pursuant to authority granted in Columbia Terms. Co. Extension-Roxana, Ill.-St. Louis, Mo., 9 M. C. C. 727, and Columbia Terms. Co. Extension-Terre Haute, 13 M. C. C. 805, in Nos. MC-48704 (SubNo. 1) and MC-48704 (Sub-No. 2), on October 9 and August 11, 1939, respectively, permits were issued to Terminals covering operations as a motor-vehicle contract carrier, in interstate or foreign commerce, of liquid petroleum products, in tank trucks, over regular routes, between Roxana, Ill., on the one hand, and, on the other, St. Louis, Truesdail, Bowling Green, and Union, Mo., with no service to or from intermediate points, and of welding machinery and supplies, compressed gas, and empty cylinders, over regular routes, between Paris and Marshall, Ill., and Terre Haute, Ind., with no service to or from intermediate points. Terminals controls, through stock ownership, Columbia Terminals Company, Inc., an Indiana corporation, of Indianapolis, Ind., and Columbia Terminals Company of Kansas City, a Missouri corporation, of Kansas City, Mo. On March 1, 1939, in No. MC-3149, issuance of a permit to the Indiana corporation was authorized, covering operations as a motor-vehicle contract carrier, in interstate or foreign commerce, of merchandise for mail-order houses in defined territories in Ohio, Indiana, Kentucky, and Illinois. The Missouri corporation has pending application under the "grandfather” clause, in No. MC-33442, seeking a permit to operate as a contract carrier, in interstate or foreign commerce, of general commodities, within the metropolitan district of Kansas City, Mo., in local cartage pick-up and delivery service for railroads and over-the-road motor carriers. In Columbia Terms. Co. Contract Carrier Application, supra, division 5 found that a holding by Terminals of the previously described dual operating authority as a contract carrier and as a common carrier would be consistent with the public interest and the policy declared in section 202 (a) of the act. For some time the Missouri Public Service Commission has contended that all services performed by Terminals in Missouri are subject to its regulation, and that under the State statute a single operator may not be permitted to conduct both common-carrier and contract-carrier service; and it so decided in case No. T-6388 on July 26, 1939, in connection with an application filed by Terminals. As result of such ruling, a number of Terminals' drivers were arrested, and, in order to prevent further arrests, Terminals obtained a temporary restraining order in the Federal District Court for the Eastern District of Missouri against the State authorities. A permanent injunction was denied by that court, however, and an appeal to the Supreme Court of the United States was dismissed on January 29, 1940. To obviate continuing conflict with the Missouri commission, Terminals proposes, by the instant application, to separate its common-carrier and contract-carrier operations by transferring the latter to a separate corporation, and for that purpose Motor Service was organized on November 20, 1939. The authorized capitalization of Motor Service is 50,000 shares of nopar value common stock, of which 10 shares were issued to Terminals soon after its incorporation, for a cash consideration of $1,000. Under contract of January 24, 1940, Terminals agreed to convey to Motor Service for 16,335 shares of the latter's stock, (a) all its contract-carrier operating rights, including Missouri intrastate permit T-288-X, and Indiana "interstate" permit 1139-B-1, (b) approximately 404 motor vehicles, (c) interest as lessee in certain real estate situated at 1422 North Tenth Street, St. Louis, together with all improvements to said leased property made by Terminals, and all garage equipment and office furniture located on the premises, (d) insurance policies covering liability insurance on certain of the above properties, and (e) an amount in cash equal to the difference between the net book value of said properties on the "closing date"," and the sum of $325,711.13. The agreement further provides that Terminals shall lease to Motor Service 34 additional vehicles with depreciated book value of $48,288.87 as of December 31, 1939, which The Missouri commission was not represented at the hearing in the instant proceeding, but so far as we are informed, by reference to its decision in No. T-6025, Transfer of Contract Haulers Permit T-291-X from Brashear Freight Lines, Inc., to Brashear Truck Company, a Corporation, that commission has no objection to the holding of a commoncarrier certificate by one corporation and a contract-carrier permit by another, although both may be controlled and managed in a common interest. The term "closing date" as used in the contract means "the first day of the month following date upon which approval of the transfer of said permits and authorizations shall have been granted." |