No. MC-F-1067 PHOENIX MOTOR FREIGHT, INC.-LEASE-ROOT Submitted September 9, 1940. Decided September 19, 1940 Application of Phoenix Motor Freight, Inc., to lease operating rights of Root Transit, Inc., dismissed. George O. Cowan for applicant and lessor. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND JOHNSON BY DIVISION 4: Phoenix Motor Freight, Inc., of Louisville, Ky., by application filed November 25, 1939, seeks authority under section 213, Motor Carrier Act, 1935, to lease the operating rights of Root Transit, Inc., of Indianapolis, Ind. Hearing has been held, at which the parties waived service of a report and recommended order by the examiner. The application was unopposed. Applicant is an Indiana corporation organized May 11, 1938. Its outstanding capital stock is owned by a number of individuals, none of whom is affiliated with any other carrier. In Hoosier Highways, Inc., Common Carrier Application, 9 M. C. C. 631, issuance of a certificate to applicant in No. MC-146301 was authorized, covering operations as a motor-vehicle common carrier of general commodities, except household goods, over regular routes, approximately 310 miles, between Chicago, Ill., and Louisville, over U. S. Highways 41, 52, and 31, via Morocco, Fowler, La Fayette, Indianapolis, Seymour, and Sellersburg, Ind., serving all intermediate points. On October 25, 1937, in No. MC-664, issuance of a certificate to lessor, an Indiana corporation, was authorized under the "grandfather" clause, covering operations as a motor-vehicle common carrier of general commodities, with exceptions, over 119 miles of regular routes, between Indianapolis and Cincinnati, over Indiana Highways 29, 46, and 48 and U. S. Highway 50 via Shelbyville, Greensburg, Batesville, and Lawrenceburg, Ind., serving all intermediate points, and Acton, London, Fairland, and St. Paul, Ind., as off-route points. 1 On June 11, 1938, in No. MC-FC-4177, arrangements were made to substitute applicant in lieu of Hoosier Highways, Inc., an Indiana corporation of Jeffersonville, Ind., in the latter's then-pending "grandfather" application in No. MC-14630. Under lease agreement of June 22, 1939, applicant would lease lessor's above-described operating rights, corresponding intrastate rights in Indiana covered by Indiana certificate of public convenience and necessity 734A-1, and Ohio "interstate" certificate 5118-RX, for a term to expire on January 16, 1941, unless extended by agreement of the parties. Applicant would pay an amount equal to 4 percent of the gross monthly revenue derived from conducting such operations, but, in any event, not less than $160 per month. 3 Applicant operates 1 truck, 9 tractors, and 9 semitrailers, and lessor operates 7 trucks, 2 tractors, and 2 semitrailers. Prior to June 6, 1940, it was our policy, in determining the applicability of section 213 (e) to a given transaction, to count each unit of equipment, such as tractor, trailer, semitrailer, and truck, as a separate vehicle. See Waldo Peterson, Inc.-Purchase-Garber, 25 M. C. C. 182. Under such an interpretation, more than 20 motor vehicles would be involved in the instant transaction, and the exemption of section 213 (e) would be inapplicable. On June 6, 1940, the Commission entered an order, the pertinent part of which reads as follows: It is ordered, That the combination of a tractor and a semitrailer shall be deemed a single motor vehicle in computing the number of motor vehicles of a person involved in unifications under the provisions of said section 213, and that in such computation any one tractor may be paired with any one semitrailer as a single motor vehicle, but any tractor or semitrailer in excess of those so paired shall be computed as one motor vehicle; and It is further ordered, That for the purposes of this order the term "tractor" shall mean any motor vehicle designed and used primarily for drawing other vehicles and so constructed as to carry a part of the weight of the vehicle and load so drawn, and the term "semitrailer" shall mean any motor vehicle, other than a pole-trailer or a single motor vehicle transported in drive-away operations by means of a saddle-mount, with or without motive power and designed to be drawn by another motor vehicle and so constructed that some part of its weight and that of its load rests upon the towing vehicle. Under the rule prescribed by that order, we find that, as the total number of vehicles involved in the instant transaction is less than 20, the transaction proposed in the application does not present a matter requiring our authorization under section 213, and said application accordingly will be dismissed. An appropriate order will be entered. 2 Section 213 (e) provides in part that "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." * Section 203 (a) (13), as amended June 29, 1938, reads: "The term 'motor vehicle' means any vehicle, machine, tractor, trailer, or semitrailer propelled or drawn by mechanical power and used upon the highways in the transportation of passengers or property, or any combination thereof determined by the Commission, but does not include any vehicle, locomotive, or car operated exclusively on a rail or rails." The words "or any combination thereof determined by the Commission," were added by the amendment. No. MC-F-1229 NORWALK TRUCK LINE COMPANY-PURCHASE-MIDWEST MOTOR FREIGHT COMPANY Submitted August 1, 1940. Decided September 19, 1940 Purchase by The Norwalk Truck Line Company of certain operating rights of Mid-West Motor Freight Company approved and authorized, subject to condition. E. J. Shover for applicant and vendor. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND JOHNSON BY DIVISION 4: The Norwalk Truck Line Company, of Norwalk, Ohio, by application filed May 24, 1940, seeks authority under section 5, Interstate Commerce Act, as amended,1 to purchase certain operating rights of Mid-West Motor Freight Company, of Detroit, Mich., for $15,000. At the hearing, service of a proposed report by the examiner was waived. Applicant's organization, affiliation, and operations as a motorvehicle common carrier, in interstate or foreign commerce, (1) of general commodities, over regular routes in northern Ohio, northern Indiana, northwestern Illinois, and the Lower Peninsula of Michigan, including routes between Detroit and Benton Harbor, Mich., via Jackson, Mich., between Detroit and Chicago, Ill., via Toledo, Ohio, and between Toledo and Fort Wayne, Ind., (2) of general commodities over irregular routes between points in the Chicago commercial zone, as defined in Chicago, Ill., Commercial Zone, 1 M. C. C. 673, and (3) of oleomargarine and spices, over irregular routes from Norwalk and points within 5 miles thereof to points in West Virginia and southwestern Pennsylvania, are generally described in Norwalk Truck Line Co.-Merger, 35 M. C. C. 459. In Norwalk Truck Line Co. Extension of Operations-Household Goods, 23 M. C. C. 857, applicant was granted authority 2 under section 207 to transport household goods over irregular routes, between points in 1 This application was filed under former section 213, Motor Carrier Act, 1935. The effect of the Transportation Act of 1940 was to incorporate the substance of section 213 in amended section 5 of the Interstate Commerce Act. 'Certificate has not as yet been issued covering these additional operations. Huron County, Ohio, on the one hand, and points in the States named and New York, on the other. On February 24, 1938, in No. MC-5908, issuance of a certificate to vendor under the "grandfather" clause was authorized, covering operations as a motor-vehicle common carrier, in interstate or foreign commerce, of general commodities over numerous regular routes between points in Indiana, western Ohio, and the Lower Peninsula of Michigan, including routes between Detroit and Gary, Ind., via Jackson and Benton Harbor, Mich.; between Detroit and Elkhart, Ind., via Sturgis, Mich.; between Coldwater, Mich., and Fort Wayne, via Angola, Ind.; between Toledo and Lagrange, Ind., via Angola ; between Michigan City, Ind., and the junction of U. S. Highways 6 and 35; between Jackson and the junction of U. S. Highways 24 and 127, via Bryan, Ohio; between Sturgis and the junction of U. S. Highway 6 and Indiana Highway 9, via Lagrange; and between Michigan City and the junction of Indiana Highway 43 and U. S. Highway 6, via Westville, Ind.; serving all intermediate points on certain routes, specified intermediate points on other routes, and off-route points in Wayne County, Mich., Montgomery and Lucas Counties, Ohio, and Marion, Madison, and Delaware Counties, Ind. A portion of vendor's routes involved herein duplicates similar routes of applicant, principally between Detroit and Benton Harbor, via Jackson, approximately 150 miles. Under agreement of May 10, 1940, applicant would purchase that portion of vendor's above-described operating rights embraced in a territory "extending between Detroit, Michigan, and Gary, Indiana, and lying north of Fort Wayne, Indiana, and U. S. Highway 6" for $15,000, of which $5,000 has been deposited in escrow. The remainder of the purchase price would be paid in cash following our approval and upon consummation of the instant transaction. Applicant's balance sheet as of June 30, 1940, shows assets aggregating $572,335, consisting of: Current assets $261,914, principally cash $73,789 and accounts receivable, less reserve for uncollectible accounts, $174,772; carrier operating property, including approximately 317 motor vehicles, less reserve for depreciation, $259,292; intangible property, less reserve for amortization, $6,650; investments and advances, associated companies, $1,000; and prepayments $43,479. Liabilities were: Current liabilities $103,511, principally accounts payable $64,855 and taxes accrued $36,931; reserves $16,500; capital stock $159,080; and surplus, unearned $10,060 and earned $283,184. Its income statements for 1938, 1939, and the first 6 months of 1940 show net incomes of $103,636, $167,861, and $163,603, respectively. The latter amount is without provision for Federal income taxes. Vendor's balance sheet as of June 30, 1940, shows assets aggregating $12,821, consisting of: Current assets $3,170, chiefly special deposits $1,534 and accounts receivable $1,584; carrier operating property, less reserve for depreciation, $7,641; and deferred debits $2,010, including prepayments $1,770. Liabilities were: Current liabilities $18,733, principally accounts payable $10,749 and taxes accrued $4,468; equipment obligations $5,460; other long-term obligations $150; deferred credits $682; capital stock $5,000; and surplus (debit balance) $17,204. Its income statements for 1938, 1939, and the first 6 months of 1940 show deficits of $2,182, $2,719, and $7,384, respectively. Vendor's operations are extensive and have been unprofitable for some time. Its present distressed financial condition is attributed to lack of sufficient capital necessary to conduct the operations efficiently and to the failure of several insurance companies, which necessitated the assumption by it of payment of a number of substantial claims. Vendor, by disposing of its outlying routes, will bring the remaining portion of its operations under closer supervision, and its officers expect, with the additional capital obtained through the instant transaction, to render an improved service to the public on a more profitable basis. The operating rights involved, with the exception of some short connecting routes, are largely in a territory intermediate to applicant's operations in Indiana and those in the Lower Peninsula of Michigan. In addition to substantially extending its present operations, applicant will, by the proposed unification, secure a connecting route between Michigan City and Benton Harbor, obviating the necessity of using present circuitous routes between the principal part of its Michigan operations, on the one hand, and Chicago and Gary, on the other. This will result in less mileage and in reduction of present operating costs. Applicant, with shorter routes between its principal termini, will be able to give single-line, overnight service between practically all points on both operations. This will eliminate the present necessity of changing drivers at intermediate points and will result in reduction of operating costs, estimated to approximate $5,000 per annum. Other economies are expected in connection with insurance and through volume purchases of supplies. There are other motor carriers operating over the considered routes. Applicant proposes to write off to surplus any increase in its intangible-property account that may result from the proposed purchase, and our findings herein will be conditioned accordingly. We find that purchase by The Norwalk Truck Line Company, of certain of the previously described operating rights of Mid-West Motor Freight Company, including the right to a certificate covering |