of Central Greyhound Lines, Inc., herein called Central, whose voting stock is owned 55 percent by Greyhound and 45 percent by The New York Central Railroad Company, hereinafter called the railroad. Central operates in interstate or foreign commerce as a motorvehicle common carrier of passengers entirely within the United States, principally between New York, N. Y., and Chicago, Ill., via Buffalo and Detroit.

By motion concurrently filed with its application, Greyhound contends that, as it already indirectly controls Toronto, acquisition of direct control as proposed in No. MC-F-1098 does not require our approval under section 213, and it moves dismissal of that application. In other cases, transactions involving somewhat similar circumstances have been found to be subject to our approval under section 213. In Atchison, T. & S. F. Ry. Co.-Control-Santa Fe Trail Transp., 15 M. C. C. 469, it was stated that "a change in the character of control must be regarded as a transaction requiring our approval and authorization under section 213 (a) (1)." The motion to dismiss the application in No. MC-F-1098 is therefore denied.

Toronto operates as a motor-vehicle common carrier of passengers principally between Detroit, Mich., and Toronto, Canada, via Windsor, Chatham, London, and Hamilton, Canada. Its operations in interstate or foreign commerce within the United States, between Detroit and the international boundary near Windsor, are conducted pursuant to a pending "grandfather" application in No. MC-30053. Canadian conducts similar operations between Detroit and Buffalo, N. Y., via Windsor, Leamington, Talbotville, and Dunnville, Canada, and between London and Sarnia, Canada. Its operations in interstate or foreign commerce within the United States, conducted pursuant to a pending "grandfather" application in No. MC-1512, are between Detroit and the international boundary near Windsor, and between the international boundary near Niagara Falls, N. Y., and the international boundary near Buffalo, via Tonawanda, N. Y. In Canadian Greyhound Lines-Extension, 17 M. C. C. 801, issuance of a certificate to Canadian was authorized under section 207, covering similar operations in interstate or foreign commerce between Port Huron, Mich., and Sarnia, over Blue Water Bridge, without authority to transport passengers originating at Sarnia destined to Port Huron or the reverse.

Pursuant to agreement of December 5, 1939, Greyhound would purchase from Canadian for $100,000 the capital stock of Toronto, and, as an integral part of the same transaction, Canadian would transfer to Toronto its operating rights between London and Port Huron. The purchase price for the stock is payable by Greyhound to Canadian in cash upon approval herein. The railroad has ap

proved sale of Toronto's stock to Greyhound, and Dominion authorities have approved transfer of Canadian's operating rights to Toronto.

The same agreement recites that Toronto contemplates purchasing, for $140,000, the assets of Canadian-American Trailways, Limited,2 of Windsor, and will deposit in, escrow (presumably with acquiescence of Canadian) all of its outstanding stock as security for the purchase price of such assets. Greyhound agrees to carry out the provision of said purchase and to hypothecate the stock of Toronto under a trust agreement as security for deferred payments to be made by Toronto under the agreement. Toronto acquired Trailway's properties and operating rights on December 30, 1939, having given notice on November 30, 1939, of its intent to exercise its option to purchase under agreement of October 28, 1939, and it has paid $50,000 of the purchase price. The balance would be paid in two installments of $45,000, represented by promissory notes due December 31 in 1940 and 1941, respectively. The option agreement between Toronto and Trailways provided for purchase of all of the latter's motor-carrier properties for the consideration stated, but no application has been filed with respect to this matter, and our findings are not to be construed as approval of terms and conditions of this purchase, or as expressing any opinion as to the legality of such purchase within the meaning of section 213. It appears from available facts that Greyhound has guaranteed payment of the notes issued by Toronto Greyhound, as well as having pledged Toronto's stock as security for such payment. If such is the fact, then, notwithstanding that issuance of such notes by Toronto Greyhound may not require our prior authority under section 214, assumption of obligation by Greyhound as guarantor of same is unlawful within the meaning of that section. Gulf, M. & N. R. Co. Assumption of Obligation, 187 I. C. C. 31. This matter is receiving independent consideration.

Greyhound's balance sheet as of March 31, 1940, shows assets aggregating $28,343,652, consisting of: Current assets $1,928,473, composed of cash $1,623,100 and accounts and notes receivable, less reserve for uncollectible accounts, $305,373; tangible property, less depreciation, $164,910; intangible property, less reserve for amortization, $111,222; contracts receivable $316,713; investment securities

• Herein called Trailways, a motor-vehicle common carrier of passengers, formerly operating principally between Detroit and Buffalo, via Windsor, Chatham, London, Hamilton, and Niagara Falls. On June 1, 1938, in No. MC-1118, issuance of a certificate to Trailways under the "grandfather" clause was authorized covering operations in interstate or foreign commerce between Detroit and the international boundary near Windsor, and between the international boundary near Niagara Falls and Buffalo via Tonawanda, serving all intermediate points. On December 22, 1939, Trailways advised that it desired to surrender its rights to operate within the United States.

and advances $25,789,462, principally associated Greyhound companies $24,764,360; special funds $20,495; and deferred debits $12,377. Liabilities were: Current liabilities $180,574, principally taxes accrued $156,709; deferred credits $253,370; reserves for injuries, damages, and contingencies $139,305; capital stock, 512-percent preference $3,272,530 and common $17,246,194; and surplus, earned, $7,251,679. Income statements for 1938, 1939, and the first 3 months of 1940 show net incomes of $4,000,605, $4,996,981, and $113,541, respectively.

Toronto's balance sheet as of March 31, 1940, shows assets aggregating $269,152, consisting of: Current assets $46,474, principally cash; tangible property, less depreciation, $116,415; intangible property, less reserve for amortization, $101,246; and deferred debits $5,017. Liabilities were: Current liabilities $149,734, principally accounts payable; long-term obligations $80,100; deferred credits $174; reserves for injuries and damages $358; capital stock $50,600; and surplus (debit balance) $11,814. Income statements for 1938, 1939, and the first 3 months of 1940 show net incomes of $16,980 and $11,735 and deficit of $23,312, respectively. Toronto estimates that its operations in 1940, giving effect to the acquisition of the properties of Trailways and the London-Sarnia division of Canadian, will result in a net income of $37,400.

It is represented that, because of the territory through which it operates, the operating problems of Toronto are distinctly different from those of Central and Canadian. Central is primarily an eastwest carrier between New York and Chicago. Canadian forms an integral part of Central's operations and provides the latter with an optional short route between Buffalo and Detroit, supplementing Central's services on the American side of the international boundary. Toronto, on the other hand, is primarily a Canadian carrier, its principal business being the movement of passengers between Detroit and Toronto, where connection is made for points beyond, such as Ottawa, Montreal, and Quebec, Canada. The London-Port Huron route is disconnected from Canadian's main operations and will more appropriately fit into operations of Toronto, affording the latter a more direct route between Toronto and Port Huron.

Toronto is in need of additional funds for working capital and for purchase of busses and equipment. Central is not in position to finance such expenditures, and the railroad does not desire to advance any funds to Central for such purposes. Greyhound has advanced considerable money to Central during the past few years and, rather than make further advances for the use of Toronto, prefers to acquire direct control of this carrier. Direct control by

Greyhound would simplify the corporate and operating relationship between the two companies.

In the event of approval herein, Toronto would increase its intangible-property account by the amount of the cost of the considered rights to Canadian, stated to be $10,041. Toronto proposes to amortize such increase over a period of 50 years in accordance with its present practice. Such an extended period for amortization, in our opinion, is undesirable, and our findings herein will require amortization or write-off within a maximum period of 10 years of any increase in its "Other Intangible Property" account as a result of the transaction in No. MC-F-1099. Compare Herrin Transp. Co. -Purchase-Malbrough, 25 M. C. C. 710.

We find that acquisition by The Greyhound Corporation of control of Toronto Greyhound Lines, Limited, by purchase of capital stock, and purchase by Toronto Greyhound Lines, Limited, of the previously described operating rights of Canadian Greyhound Lines, Limited, including the right of Toronto Greyhound Lines, Limited, to a certificate covering such rights as are confirmed in No. MC-1512 (Sub-No. 1), herein authorized to be unified with rights which may be otherwise confirmed in the latter, upon the terms and conditions above set forth, which terms and conditions as herein modified 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, Toronto Greyhound Lines, Limited, 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 its "Other Intangible Property" account as result of the transaction in No. MC-F-1099, in a manner consistent with the provisions of the uniform system of accounts for class I motor carriers, or, as an alternative, in any year of the 10-year period, Toronto Greyhound Lines, Limited, 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-1140

RED ARROW FREIGHT LINES, INC.-PURCHASEC. E. CURTIS

Submitted May 13, 1940. Decided July 2, 1940

Purchase by Red Arrow Freight Lines, Inc., of operating rights of C. E. Curtis, doing business as Curtis Freight Line, approved and authorized, subject to condition.

Frank H. Rawlings for applicant.

REPORT OF THE COMMISSION

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

Red Arrow Freight Lines, Inc., of Houston, Tex.,1 by application filed February 21, 1940, seeks authority under section 213, Motor Carrier Act, 1935, to purchase the operating rights of C. E. Curtis, of Smithville, doing business as Curtis Freight Line, for $5,000. Hearing has been held. Affirmative recommendation has been made by the joint board without accompanying order.

Applicant's corporate history and operations as a motor-vehicle common carrier of general commodities, in interstate or foreign commerce wholly within Texas, in territory bounded by Palestine and Houston on the east, Brownsville and Pharr on the south, Roma, Alice, San Antonio, Austin, and Stephenville on the west, and Fort Worth and Dallas on the north are described in Red Arrow Freight Lines, Inc.-Purchase-Tyler, 15 M. C. C. 549, and cases therein cited. Applicant has pending a section 213 application 2 for authority to lease operating rights between Fort Worth and Cleburne, via Dallas and Waxahatchie, and operates substantially in excess of 20 motor vehicles.

On March 29, 1938, in No. MC-9830, issuance of a certificate to vendor under the "grandfather" clause was authorized, covering operations as a motor-vehicle common carrier of general commodities, in interstate or foreign commerce, over a 44-mile regular route between Austin and Smithville, via Bastrop, over Texas Highway 71, serving all intermediate points.

1 All points mentioned are in Texas.

No. MC-F-1163, Red Arrow Freight Lines, Inc.-Lease-Willie O. Brown.