thorized upon its books. Our findings will be appropriately conditioned to secure this result.

Applicant's balance sheet, as of April 30, 1940, shows assets aggregating $93,816, consisting of: Current assets $32,481, composed of cash $13,325 and accounts receivable $19,156; carrier operating property, less depreciation, $46,328; and prepayments $15,007. Liabilities were: Current liabilities $24,952, principally payables to associated companies $6,291 and accounts payable $17,414; equipment obligations $2,532; reserves $589; capital stock $30,500; and surplus, unearned $8,000 and earned $27,243. Income statements for 1938, 1939, and the first 4 months of 1940 show net incomes of $3,166, $5,896, and $3,808, respectively.

Vendor's balance sheet as of April 24, 1940, shows assets aggregating $13,185, consisting of: Current assets $162; carrier operating property, less depreciation, $2,750; intangible property $10,000; and prepayment $273. Liabilities were: Current liabilities $11,964, principally notes and accounts payable; equipment obligations $312; and sole-proprietorship capital $909. Income statements for 1938, 1939, and period January 1 to and including April 24, 1940, show deficit of $2,273, net income of $2,183, and deficit of $1,045, respectively.

Vendor was in a critical financial condition prior to exercise of temporary operating authority by applicant. His credit had become impaired, equipment was in need of repair, and cessation of operations was imminent. Upon taking over the operations, applicant paid vendor's most pressing obligations (aggregating approximately $168, which amount would be deducted from the total purchase price), eliminated interchange delays at Cincinnati, and expedited shipments to Kentucky points served by vendor by as much as 1 full day. Upon consummation of the transaction, economies will be possible through elimination of duplicate terminal facilities, tariffs, accounting, billing, and reports to regulatory authorities; and increased revenue is anticipated from the unified operation. Applicant will be expected to preserve the separate nature of its regular-route and irregular-route operations after the unification. ThurstonPurchase-Merritt, 15 M. C. C. 358. There is substantial motorcarrier competition in the considered territory.

Protestant argues, in effect, that vendor, prior to exercise of temporary operating authority by applicant, had abandoned his operations over the Cincinnati-Lexington route and that therefore the proposed purchase of his operating rights over that route is not a matter which we may authorize. Vendor's terminal in Cincinnati remained open only during the daytime. Consequently, on occasions, trucks arriving in Cincinnati late at night destined for Louis

ville would not unload Lexington traffic but would transport such traffic over the Cincinnati-Louisville route to Louisville and there interchange it with other carriers, who made delivery. However, there is substantial uncontroverted evidence that vendor did maintain service between Cincinnati and Lexington on other traffic and was so operating at the time that applicant assumed his operations. It cannot be found, on this record, that vendor abandoned operations between these points.

In arriving at our conclusions herein, we have given consideration to the applicable matters enumerated in section 5 (2) (c).

We find that purchase by C. & D. Motor Delivery Company of operating rights and property of L. M. Krout, doing business as Cincinnati & Louisville Motor Delivery Company, including the right to a certificate covering rights confirmed in No. MC-56197, herein authorized to be unified with rights 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 transaction proposed is within the scope of section 5 (2) (a); provided, however, that, if the authority herein granted is exercised, applicant shall amortize in equal annual amounts over a maximum period of 5 years, commencing with the date of consummation herein, any amount recorded in its "Other Intangible Property" account as result of the instant transaction, 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 5-year period applicant may write off to surplus, in accordance with said accounting provisions, one-fifth or more of the amount so recorded in its "Other Intangible Property" account, so as to remove from such account within said 5-year period, either through amortization or write-off, the entire amount thereof.

An appropriate order will be entered.

35 M. C. C.

No. MC-F--1248

ROBERT A. AND WILLIAM H. WATT-PURCHASEPILGRIM MOTOR SERVICE, INC.

Submitted July 18, 1940. Decided October 21, 1940

Purchase by Robert A. and William H. Watt, doing business as Watt Brothers, of operating rights and property of Pilgrim Motor Service, Inc., approved and authorized, subject to condition.

Horace P. Moulton for applicants.

Mary E. Kelley for vendor.

REPORT OF THE COMMISSION

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

Robert A. and William H. Watt, partners, of Central Falls, R. I., doing business as Watt Brothers, by application filed June 6, 1940, seek authority under section 5, Interstate Commerce Act, as amended,1 to purchase, for $11,000, the operating rights and property of Pilgrim Motor Service, Inc., of Boston, Mass. Hearing has been held, at which the parties waived service of a proposed report.

Applicants operate pursuant to a pending "grandfather" application in No. MC-75981,2 as amended, as a motor-vehicle common carrier of general commodities in interstate or foreign commerce, claiming rights (a) over regular routes principally between Central Falls, on the one hand, and Piermont, N. Y., and Haverhill, Lawrence, and Boston, Mass., on the other, serving New York, N. Y., Hoboken, Newark, and Jersey City, N. J., New Haven, Conn., and Lowell, Mass., as intermediate points, and Bloomfield, N. J., and Brooklyn, N. Y., as off-route points; (b) over irregular routes between points in Connecticut, Massachusetts, New Jersey, New York, and Rhode Island; and (c) to perform pick-up and delivery service for rail and water carriers in the vicinity of Providence, R. I., including Central Falls. They have pending an application in No. MC-75981 (Sub-No. 1), under section 207, for extension of their common-carrier operations over a

1 This application was filed under former section 213, Motor Carrier Act, 1935, as amended. 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.

2 An order entered February 25, 1938, in No. MC-75981, confirming certain specificcommodity, irregular-route operating rights in applicants, was vacated October 6, 1938, and the proceeding was set for hearing.

regular route between Pawtucket, R. I., and Newark via New London, New Haven, and New York, serving specified intermediate points and off-route points in Rhode Island and within a 50-mile radius of Newark. Applicants utilize in excess of 20 motor vehicles in their operations.

Vendor, a Massachusetts corporation, was organized December 6, 1938, and is controlled through stock ownership by George A. Paulson, its president and manager. On January 5, 1939, in No. MC-FC11264, a certificate of convenience and necessity in No. MC-22193, issued November 16, 1937, under the "grandfather" clause to David Blair, doing business as Blair Motor Transportation, was transferred to vendor, and the latter began operations January 6, 1939. On September 25, 1939, the certificate in No. MC-22193 was reissued in vendor's name, covering operations over irregular routes as a motorvehicle common carrier of (a) candy-making and bakery machinery and bakery products, between points in Suffolk (which includes Boston) and Middlesex Counties, Mass., on the one hand, and points in New York east of New York Highway 14, on the other; and (b) general commodities between points in said Massachusetts counties, on the one hand, and points in Connecticut, Massachusetts, New Hampshire, and Rhode Island, on the other.

3

On June 10, 1940, in No. MC-22193 (Sub-No. 1), a certificate of registration was issued to vendor, describing operations under the second proviso of section 206 (a) in interstate or foreign commerce as a motor-vehicle common carrier of general commodities over irregular routes throughout Massachusetts. The application in No. MC-22193 (Sub-No. 1) was filed by Paulson on January 3, 1939, supported by Massachusetts intrastate certificate of public convenience and necessity 1657, and, on November 17, 1939, in No. MC-FC-12435, substitution of vendor in lieu of Paulson, doing business as Commonwealth Motor Service, was arranged in that application.

Under agreement of May 16, 1940, applicants would purchase from vendor the later's operating rights evidenced by the certificate in No. MC-22193, as amended by the transfer referred to in footnote 3, intrastate rights under Massachusetts certificate 1657, and rights under the

By order entered September 26, 1939, in No. MC-FC-12283, that part of the certif cate in No. MC-22193 covering operations between points in Suffolk and Middlesex Coun ties, on the one hand, and points in New Hampshire, on the other, was transferred from vendor to Albert J. Demelle, doing business as Curley's Transportation Company.

Hereinafter called the proviso, which reads: "And provided further, That this paragraph shall not be so construed as to require any such carrier lawfully engaged in opera tion solely within any State to obtain from the Commission a certificate authorizing the transportation by such carrier of passengers or property in interstate or foreign commerce between places within such State if there be a board in such State having authority to grant or approve such certificate and if such carrier has obtained such certificate from such board. Such transportation shall, however, be otherwise subject to the jurisdiction of the Commission under this part."

proviso described in No. MC-22193 (Sub-No. 1). The parties value the operating rights at $7,000, and the physical property (consisting of 1 tractor, 1 trailer, and 3 trucks), at $4,000. Of the purchase price, $1,000 was paid upon execution of the agreement, $5,000 would be paid 10 days after approval herein, and the remainder would be evidenced by 25 promissory notes of $200 each, due monthly, bearing interest at 3 percent per annum, with the privilege of accelerating payments. The resulting increase in applicants' fixed charges would not be contrary to public interest. The agreement further provides that the initial payment of $1,000 shall be refunded in the event of denial herein. Applicants have indicated their willingness to amortize over a period of 10 years any amount to be recorded on their books in their "Other Intangible Property" accounts resulting from consummation of the transaction proposed, and our findings will be conditioned accordingly.

Applicants' balance sheet as of May 31, 1940, shows assets aggregating $53,362, consisting of: Current assets $10,801, principally accounts receivable $8,041; carrier operating property, less depreciation, $39,906; deferred debits $1,000; and investment $1,655. Liabilities were: Current liabilities $14,462, principally accounts and notes payable; and partnership capital $38,900. Income statements for 1938, 1939, and the first 5 months of 1940 show net incomes of $27,154, $20,148, and $17,033, respectively. Vendor's income statements for 1939 and the first 5 months of 1940 show deficits of $44 and $1,930, respectively.

Applicants at present operate in the same general territory as is served by vendor, but the validity and scope of their rights under the "grandfather" clause are in doubt. Consummation of the instant transaction would assure applicants the right to continue transporting traffic between Boston, on the one hand, and points in Massachusetts, Rhode Island, and Connecticut, on the other, without interchange. Separate terminals of applicants and vendor at Providence would be consolidated, with resulting savings in overhead expenses. Applicants propose to continue their Jersey City, Newark, and Pawtucket terminals, and vendor's terminal at Boston. Vendor's operations have been handicapped by labor difficulties and the diminution of water-borne commerce moving through the port of Boston as a result of war conditions. There are numerous motor-carrier competitors operating in the territory considered.

As previously indicated, certain of vendor's operations in Massachusetts are conducted under the exemption of the proviso, and without a certificate of public convenience and necessity issued by this Commission, notwithstanding that it operates in States other than Massachusetts. However, at the time of their institution, such operations were lawfully conducted under the exemption by vendor's predecessor.