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York, creating said trust and providing for the issue of said certificates with dividend warrants attached, (b) by indorsing upon each of said certificates, substantially in the form set forth in said agreement, its unconditional guaranty of the payment of the principal thereof and of the dividends thereon, and (c) by entering into a lease of the trust equipment with said First National Bank of the City of New York, thereby agreeing to pay as advance rental the difference between the cost of the trust equipment and the ag. gregate principal amount of the trust certificates issuable in respect thereof, the dividends thereon, and certain other charges; said agreement and lease to be substantially in the respective forms set forth in the application; said certificates to entitle the bearer or registered owner thereof to a share in said trust and to semiannual dividends thereon at the rate of 412 per cent per annum, to be dated September 1, 1924, to be in the denomination of $1,000, and to mature successively in amounts of $300,000 on September 1 in each of the years 1925 to 1939, inclusive; said certificates to be sold at not less than 96 per cent of par and accrued dividends, and the entire proceeds used solely in the procurement of said equipment.

It is further ordered, That, except as herein authorized, said certificates shall not be sold, pledged, repledged, or otherwise disposed of by the applicant, unless and until so ordered by this commission.

It is further ordered, That the applicant shall report concerning the matters herein involved in conformity with the commission's order dated May 25, 1922, respecting applications filed under section 20a of the interstate commerce act.

And it is further ordered, That nothing herein shall be construed to imply any guaranty or obligation as to said certificates, or dividends thereon, on the part of the United States.

90 I. C. C.

FINANCE DOCKET No. 1621

PUBLIC-CONVENIENCE CERTIFICATE TO KANSAS &

OKLAHOMA SOUTHERN RY.

Approved August 4, 1924

DIVISION 4, COMMISSIONERS MEYER, AITCHISON, AND POTTER

ORDER It appearing, That on February 15, 1922," the commission, division 4, issued a report and certificate in the above-entitled proceeding authorizing the applicant to construct a line of railroad approximately 10 miles long, in Craig County, Okla.: Provided, however, That the construction of said line should be completed on or before December 31, 1922;

It further appearing, That on January 5, 1924, division 4 entered an order extending the time within which said line of railroad should be constructed to and including June 30, 1924; and on June 27, 1924,3 entered an order again extending the time within which said line of railroad should be constructed to and including August 1, 1924;

And it further appearing, That, for good cause shown, the applicant has been unable to complete said line of railroad within the period prescribed in such certificate, as extended, and has requested that the time limit for the completion of such extension be extended to and including August 10, 1924:

It is ordered, That the time prescribed in said certificate within which the applicant may complete said line of railroad be, and it is hereby, further extended to and including August 10, 1924.

COMMISSIONER POTTER did not participate in the consideration of this certificate.

7 86 I. C. C. 195.

390 I. C. C. 349.

171 I. C. C. 130. 90 I. C. C.

FINANCE DOCKET No. 4232

PLEDGE OF BONDS BY ANN ARBOR RAILROAD

Submitted August 9, 1924. Decided August 14, 1924

Authority granted to pledge with the Director General of Railroads not ex

ceeding $450,000 of improvement and extension mortgage 30-year 6 per cent

gold bonds as security for a demand note for $337,000. Curtis, Mallet-Prevost & Colt for applicant.

REPORT OF THE COMMISSION
DIVISION 4, COMMISSIONERS MEYER, AITCHISON, AND POTTER
BY DIVISION 4:

The Ann Arbor Railroad Company, a common carrier by railroad engaged in interstate commerce, has duly applied for authority under section 20a of the interstate commerce act to pledge $300,000 of its improvement and extension mortgage 30-year 6 per cent gold bonds with the Director General of Railroads as security for a demand note for $337,000. The applicant also requests that we ratify the pledge of $150,000 of such bonds heretofore made to the director general without authority from us having first been obtained. No objection to the granting of the application has been presented to us.

It appears that under date of April 1, 1921, the applicant gave to the Director General of Railroads its note for $337,000, payable on demand, and bearing interest at the rate of 6 per cent per annum, in settlement of certain indebtedness arising out of Federal control. To secure this note, the Ann Arbor Boat Company, a subsidiary of the applicant, under date of April 1, 1921, made a mortgage to the director general covering all of the capital stock of the boat company and a car ferry known as the Ann Arbor No. 6. On or about February 14, 1924, the applicant secured the release of the capital stock of the boat company from the lien of the mortgage upon the pledge with the director general of $150,000 of the applicant's improvement and extension mortgage 30-year 6 per cent gold bonds. It is for this pledge of bonds that the applicant asks ratification. The provisions of section 20a of the interstate commerce act relating to the grant by us of authority to common carriers by railroad to issue securities, and the provisions of paragraph (11) of said section 20a that securities issued without our authority having first been obtained shall be void, contemplate the obtaining of such authority by such carriers prior to the issue of securities, and not the ratification of the issue of securities without our authority. That part of the application referring to the pledge of $150,000 of bonds with the director general will, therefore, be treated as a request for authority to pledge that amount of bonds with that officer.

Under date of June 1, 1924, the boat company made a new mortgage to the Union Trust Company, Cleveland, Ohio, trustee, covering two car ferries, viz, the Ann Arbor No. 6, a car ferry under lease to the applicant and being the same car ferry mentioned above, and the Ann Arbor No. 7, an additional car ferry to be constructed and leased to the applicant, for the purpose of securing $800,000 of the boat company's first-mortgage floating-equipment serial gold bonds, the proceeds from the sale of the bonds at 9012 to be used in procurement of the additional car ferry.

By our order dated June 28, 1924, in Guaranty of Bonds by Ann Arbor R. R., 90 I. C. C. 331, we authorized the applicant to assume obligation and liability, as guarantor and lessee, in respect of the $800,000 of floating-equipment bonds. The record in that proceeding did not disclose the existence of the mortgage of April 1, 1921, upon the Ann Arbor No. 6. The applicant states that in arranging for the issue and sale of the floating-equipment bonds and in applying for our authority to assume obligation and liability in respect of them, it inadvertently overlooked the existence of this mortgage, the release of which it now develops is necessary to close the sale of the floating-equipment bonds. With the consent of the director general the applicant proposes to pledge $300,000 of its improvement and extension mortgage 30-year 6 per cent gold bonds with that officer for the purpose of securing the release of the mortgage. The $300,000 of bonds are now in the treasury of the applicant.

We find that the proposed pledge of not exceeding $450,000 of bonds by the applicant as aforesaid (a) is for a lawful object within its corporate purposes, and compatible with the public interest, which is necessary and appropriate for and consistent with the proper performance by it of service to the public as to a common carrier, and which will not impair its ability to perform that service, and (6) is reasonably necessary and appropriate for such purpose.

An appropriate order will be entered.

COMMISSIONER POTTER did not participate in the disposition of this case.

ORDER

Entered August 14, 1924

Investigation of the matters and things involved in this proceeding having been had, and said division having, on the date hereof, made and filed a report containing its findings of fact and conclusions thereon, which report is hereby referred to and made a part hereof:

It is ordered, That the Ann Arbor Railroad Company be, and it is hereby, authorized to pledge not exceeding $450,000, principal amount, of its improvement and extension mortgage 30-year 6 per cent gold bonds with the Director General of Railroads as security for a note for $337,000, dated April 1, 1921, payable on demand, and bearing interest at the rate of 6 per cent per annum, given by the applicant in settlement of certain indebtedness arising out of Federal control, said bonds being dated May 1, 1911, maturing May 1, 1941, and bearing interest at the rate of 6 per cent per annum, payable semiannually, and being secured by the improvement and extension mortgage dated May 1, 1911, made by the applicant to the Empire Trust Company, trustee, amended by the supplemental mortgage dated November 1, 1920, made to the same trustee.

It is further ordered, That, except as herein authorized, said bonds shall not be sold, pledged, repledged, or otherwise disposed of by the applicant, unless and until so ordered by this commission.

It is further ordered, That the applicant shall report concerning the matters herein involved in conformity with the commission's order dated May 25, 1922, respecting applications filed under section 20a of the interstate commerce act.

And it is further ordered, That nothing herein shall be construed to imply any guaranty or obligation as to said bonds, or interest thereon, on the part of the United States.

90 I. C. C.

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