Applicant operates approximately 85 motor vehicles, has terminal facilities at all principal points and appropriately located shops for maintenance of equipment, and is in a position to provide an efficient and expedited service. We find that lease by Red Arrow Freight Lines, Inc., of operating rights of Willie O. Brown, doing business as D. L. & W. Motor Lines, including the right to operate pending determination of the "grandfather" application of the latter, and thereafter under any rights which may be confirmed in the latter herein authorized to be leased, for a term expiring March 31, 1945, 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-1003 1 ATLANTIC GREYHOUND CORPORATION-PURCHASE ABNER MACK STOKES Submitted November 29, 1939. Decided August 31, 1940 1. Purchase by Atlantic Greyhound Corporation of operating rights of Abner Mack Stokes, doing business as Stokes Bus Line, approved and authorized, subject to condition. 2. Application of Atlantic Greyhound Corporation to lease operating rights of Abner Mack Stokes, doing business as Stokes Bus Line, dismissed. John R. Turney and Nat Turner for applicant.. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND JOHNSON BY DIVISION 4: Atlantic Greyhound Corporation, a Virginia corporation of Charleston, W. Va., by application filed August 22, 1939, seeks authority under section 213, Motor Carrier Act, 1935, to purchase the operating rights of Abner Mack Stokes, of Columbia, S. C., doing business as Stokes Bus Line, for $15,000. Hearing 2 has been held, at which the parties waived service of a report and recommended order by the examiner. Subsequent to the hearing, applicant filed application in No. MCF-1072 under section 213, for authority to renew its lease of the operating rights it would purchase from vendor. No hearing on the latter application appears necessary. Applicant's corporate history, affiliations, financial position, and general operations as a motor-vehicle common carrier of passengers, in interstate or foreign commerce, in numerous eastern States, including South Carolina, are generally described in Atlantic Greyhound Corp.-Purchase-Carpenter, 35 M. C. C. 293. Applicant operates substantially in excess of 20 motor vehicles. No. MC-F-1003.-Vendor claims rights to operate pursuant to pending "grandfather" application in No. MC-75833, as amended, as a motor-vehicle common carrier of passengers, in interstate or foreign 1 This report also embraces No. MC-F-1072, Atlantic Greyhound Corporation-LeaseAbner Mack Stokes. This proceeding was heard jointly with No. MC-F-985, Atlantic Greyhound Corporation-Purchase-Clyde M. Carpenter et al., and No. MC-F-986, Atlantic Greyhound Cor poration-Issuance of Stock, decided by separate report in Atlantic Greyhound Corp.— Purchase-Carpenter, 35 M. C. C. 293. commerce, between Columbia and Orangeburg via Swansea and North, S. C., and in pending section 206 (b) application in No. MC-75833 (Sub-No. 1), filed February 10, 1936, vendor seeks authority to continue similar operations alleged to have been instituted in September 1935 between Columbia and Georgetown via Sumter, Manning, and Kingstree, S. C. Vendor also filed registration application on August 8, 1939, in No. MC-54796, describing operations under the second proviso of section 206 (a), as a motor-vehicle common carrier of passengers, in interstate or foreign commerce, over routes identical with those described in Nos. MC-75833 and MC-75833 (Sub-No. 1). As hereinafter indicated, vendor has not conducted the operations there described, and at the hearing he stated that request for withdrawal of that application would be made in the event that the instant transaction is approved. Our findings are based on the assumption that such withdrawal will be accomplished. Vendor's claimed rights are over routes complementary to those of applicant, except that the latter claims rights other than as lessee of vendor over that portion of the Columbia-Orangeburg segment between Columbia and Swansea, and over the Columbia-Georgetown segment between Columbia and Manning. Vendor has conducted no physical operations over any of the abovedescribed routes for some years. Applicant and its predecessors have conducted operations over the route between Columbia and Orangeburg since 1931 and between Columbia and Georgetown since 1935, and applicant has pending a "grandfather" application in No. MC-1504 describing its operations over the considered routes solely as lessee from vendor, with the exceptions above noted. The question whether lessor (vendor) or lessee (applicant) is entitled to the claimed operating rights over these routes is not for determination in this proceeding. Brooks Transp. Co., Inc.-Purchase-Jacobs Transfer Co., 5 M. C. C. 85. Compare also Atlantic Greyhound Corp.—Purchase-Carpenter, supra; Inter-Carolinas Motor Bus Co. Com. Car. Application, 21 M. C. C. 633; Kerrville Bus Co., Inc.-LeaseSouthwestern Greyhound, 5 M. C. C. 715; Bowen Motor CoachesPurchase-Burt, 5 M. C. C. 635; and Airline Motor Coaches, Inc.— Lease-Dixie M. Coach Corp., 15 M. C. C. 380. Under an agreement of June 13, 1939, applicant would purchase the above-described claimed operating rights of vendor, and corresponding intrastate rights covered by South Carolina intrastate certificates 77 and 135, for $15,000, payable within 10 days following approval of transfer of the intrastate rights by the South Carolina commission. On October 26, 1939, that commission approved transfer of the intrastate rights, and the purchase price has been paid. The purchase agreement also contains a provision for lease to applicant of vendor's operating rights pending our approval. Our findings are not to be construed as approval of such lease provision. No financial data covering vendor's operations were submitted. However, applicant estimates that its annual net income from operations over the considered routes, based upon a test for a typical week, from September 6 to 12, 1939, inclusive, was $5,120. The number of persons carried over the routes in both directions during that week aggregated 2,057, of whom 86.85 percent were intrastate passengers and 13.15 percent were interstate passengers. Applicant has used the considered routes as an integral part of its system operations. The route between Columbia and Orangeburg forms part of one of applicant's routes between Columbia and Charleston, S. C., and that portion of the same route between Columbia and North is a segment over which express operations are conducted by applicant and its affiliates between Detroit, Mich. and Miami, Fla. The route between Columbia and Georgetown forms part of applicant's most direct through route between eastern Georgia and western North Carolina points, and points on the Atlantic seaboard, including certain beach resorts. Numerous witnesses from representative points on vendor's routes testified to the satisfactory service being offered by applicant and the need for continuance thereof, in both intrastate and interstate traffic, and the evidence is convincing that the application should be approved. Applicant, as lessee, is the only carrier providing bus service over vendor's routes. No. MC-F-1072.-Operations between Columbia and Orangeburg were conducted by applicant from 1931 to September 20, 1935, under an oral lease agreement with vendor. On the latter date the parties entered into a written lease agreement covering vendor's claimed "grandfather" rights, as well as operations claimed to have been instituted by vendor in September 1935 between Columbia and Georgetown. By its terms the lease expired September 19, 1937, but applicant was given an option to renew it for an additional 3-year period, and also an option, expiring September 1, 1940, to purchase all the rights for $15,000. On August 30, 1937, applicant exercised its option to renew the lease, and the instant application, filed subsequent to the hearing herein, seeks our authority for such renewal. As our findings in No. MC-F-1003 will authorize purchase of the considered operating rights, it appears unnecessary to consider further the application in No. MC-F-1072, and it will be dismissed. Applicant proposes to amortize the amount of the instant purchase price, as well as its present recorded investment in intangible prop erty, which was shown as $3,186,907 as of August 31, 1939, at the rate of 2 percent per year. Amortization of amounts recorded by motor carriers in their intangible-property accounts is desirable in the public interest. Following similar action in numerous other cases, our findings will require amortization or write-off of the amount of the increase, in applicant's "Other Intangible Property" account resulting from the instant transaction, within 10 years. We find that purchase by Atlantic Greyhound Corporation of operating rights of Abner Mack Stokes, doing business as Stokes Bus Line, including the right to operate pending determination of the latter's "grandfather" and section 206 (b) applications in Nos. MC-75833 and MC-75833 (Sub-No. 1), respectively, and the right to any certificate which may be issued as a result of such applications, covering rights herein authorized to be unified with rights which may be 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 10 years, commencing with the date of consummation herein, the amount of increase in its "Other Intangible Property" account as result of the instant purchase, 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 10-year period applicant may write off to surplus, in accordance with said accounting provisions, one-tenth or more of the amount of such increase in its "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. |