It appears that on January 16, 1923, a suit was brought in the United States District Court for the District of Maryland to foreclose a mortgage upon its properties made by the Maryland Company to the Girard Trust Company, Philadelphia, Pa., and that on May 7, 1923, the properties were sold at foreclosure in pursuance of a decree of the court in that proceeding. At the judicial sale all the railroad properties and the ferry were sold to the E. B. Leaf Company, of Philadelphia, for $225,000, and 11 other vessels, together with wharves, landing places, etc., were sold to other purchasers for the aggregate price of $425,000.

It is stated that the purpose of the Leaf Company was to dispose of the railroad property as junk, but that this course was strongly opposed by inhabitants of the Eastern Shore of Maryland and of Delaware residing along the line. An application is now pending before us for the acquisition of that part of the line extending from West Denton to Love Point by the Baltimore & Eastern Railroad Company, which, we understand, is a subsidiary of the Pennsylvania Railroad Company.

On March 4, 1924, the Leaf Company gave to Jesse Rosenfeld, of Baltimore, an option to purchase the part of the line extending from West Denton, Md., to Lewes, Del., a distance of approximately 40 miles, for $70,000. It appears that after the judicial sale of the properties the Pennsylvania Railroad Company conducted operations over a part of the line, including a section about 8 miles long between Milton and Ellendale, a point of junction with a line owned by it. The option to purchase was conditioned upon reimbursement of the Pennsylvania Railroad Company for expenditures amounting to $4,628 made for rehabilitating the line between Ellendale and Milton. Rosenfeld agreed to purchase the property upon that basis. Thereafter an offer of $125,000 for the property was made to Rosenfeld by the Boston Iron & Metal Company, of Baltimore, which was declined because it was desired that operation of the line be continued for the benefit of the adjacent territory and for the maintenance of the through route from Baltimore, through Lewes, to Rehoboth.

It appears that Rosenfeld then brought about the organization of the applicant to take over the ownership and operation of the property. On April 15, 1924, the applicant was incorporated under the laws of the State of Maryland with an authorized capital stock consisting of 17,500 shares without nominal or par value and all of one class. By appropriate corporate action purchase of the property from Rosenfeld was authorized for a consideration of $70,000 in cash and the 17,500 shares of the applicant's stock, a value of $1 per share being assigned to the stock for the purpose of fixing the ag

gregate amount to be paid for the property. Title to the property was conveyed to the applicant by deed from the Leaf Company, dated May 14, 1924. By our certificate of public convenience and necessity issued June 5, 1924, in Operation of Line by Maryland & Delaware Coast Ry., 90 I. C. C. 209, we authorized the applicant to operate the line.

The applicant states that the 17,500 shares of stock are to be issued to Rosenfeld to cover personal services rendered by him over a period of nearly a year, liabilities incurred for legal assistance in consummating the transaction, etc. Certain portions of the stock will be transferred by him to various persons in discharge of liabilities thus incurred.

The applicant proposes to make a mortgage of its properties under date of May 1, 1924, to the Atlantic Exchange Bank & Trust Company, Baltimore, Md., to secure bonds authorized to be issued thereunder in an amount not to exceed $350,000 at any one time outstanding. These bonds are to be coupon bonds in denominations of $1,000, $500, and $100, bearing date of May 1, 1924, maturing May 1, 1944, and bearing interest at the rate of 6 per cent per annum, payable semiannually. They are to be redeemable at 105 and accrued interest. The mortgage contains a provision that beginning with November 1, 1929, and semiannually thereafter, the applicant will pay into a sinking fund a sum of money equal to 1 per cent of the face amount of all bonds issued and outstanding at the date of such payments, which shall be applied to the purchase and redemption of the bonds. The bonds so purchased or redeemed will be canceled. The applicant now proposes to issue $300,000 of the $350,000 of bonds provided for by the mortgage. Under a contract dated May 12, 1924, the applicant agreed to sell $187,500 of the bonds to M. Joseph Levine, of Boston, Mass., at 80 per cent of par ́and accrued interest, and gave to Levine an option to purchase the remainder of the $300,000 of bonds at the same price at any time within one year. The proceeds from the sale of $300,000 of the bonds at 80 will amount to $240,000. The applicant contemplates using the proceeds for the following purposes:

Included in the equipment to be acquired by the applicant are three four-wheel gasoline-motor cars, which it is contemplated will enable the applicant to effect operating economies in the handling of passenger and express traffic.

The sale of the 6 per cent bonds at 80 will make the annual cost of the money to the applicant 8 per cent. In this connection the applicant states that so far as it was able to obtain advice from reliable bankers it is believed that the bonds can not be sold at a better figure. The sale of the bonds at 80 has received the approval of the Public Service Commission of Maryland.

The applicant has submitted an estimate of revenues and expenses in connection with the operation of its line. The estimate shows annual revenues of $131,756.63 and expenses (including interest on bonds and amortization of discount on funded debt) of $117,585, leaving net income of $14,171.63. Based on this estimate, it would appear that the applicant should be able to care for the interest upon the $300,000 of bonds and to make the required payments into the sinking fund.

It is stated that the applicant will operate from Hillsboro, a point about 8 miles west of West Denton, to the last-named point, and from Lewes to Rehoboth, under trackage agreements.

In view of the importance of the continued operation of the applicant's line, we find that the issue of 17,500 shares of capital stock without nominal or par value and not exceeding $300,000 of first-mortgage bonds by the applicant as aforesaid (a) is for lawful objects within its corporate purposes, and compatible with the public interest, which are necessary and appropriate for and consistent with the proper performance by it of service to the public as a common carrier, and which will not impair its ability. to perform that service, and (b) is reasonably necessary and appropriate for such purposes.

An appropriate order will be entered.

COMMISSIONER MEYER did not participate in the disposition of this

case.

ORDER

Entered August 22, 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 Maryland & Delaware Coast Railway Company be, and it is hereby, authorized to issue not exceeding 17,500

shares of capital stock without nominal or par value; said stock to be delivered to Jesse Rosenfeld, of Baltimore, Md., in part payment for approximately 40 miles of railroad and other property formerly owned by the Maryland, Delaware & Virginia Railway Company, as set forth in the application and aforesaid report.

It is further ordered, That the Maryland & Delaware Coast Railway Company be, and it is hereby, authorized to issue not exceeding $300,000, principal amount, of first-mortgage 20-year sinking-fund 6 per cent gold bonds under and pursuant to, and to be secured by, a first mortgage to be made by the applicant under date of May 1, 1924, to the Atlantic Exchange Bank & Trust Company, Baltimore, Md., as trustee; said bonds to be dated May 1, 1924, to mature May 1, 1944, and to bear interest at the rate of 6 per cent per annum, payable semiannually, and to be in the form and denominations, redeemable, and entitled to the benefit of a sinking fund, as set forth in the application and the aforesaid report; said bonds to be sold at not less than 80 per cent of par and accrued interest, and the proceeds used to complete payment for the said railroad and other property, for rehabilitation of road, for acquisition of equipment, for working capital, etc., as set forth in said application and report. It is further ordered, That the applicant shall file, within 10 days after the execution thereof, a copy of the proposed mortgage in the form in which executed.

It is further ordered, That, except as herein authorized, said stock and 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 stock and bonds, or dividends or interest thereon, on the part of the United States.

90 I. C. C.

FINANCE DOCKET NO. 573

GUARANTY STATUS OF LAKE PROVIDENCE, TEXARKANA & WESTERN R. R.

Submitted June 28, 1924. Decided July 12, 1924

No amount found to be due to or from the Lake Providence, Texarkana & Western Railroad Company under section 209 of the transportation act, 1920. Proceeding dismissed.

Max Sondheimer for the carrier.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MEYER, EASTMAN, AND POTTER BY DIVISION 4:

The Lake Providence, Texarkana & Western Railroad Company, hereinafter termed the carrier, is a carrier by steam railroad, which during the guaranty period engaged as a common carrier in general transportation in the State of Louisiana. Its line of railroad connected at Floyd, La., with the Illinois Central Railroad, which was under Federal control at the termination thereof, and it is therefore a carrier within the meaning of paragraph (a) of section 209 of the transportation act, 1920. The carrier filed with us a written statement accepting the provisions of section 209 on March 15, 1920.

The carrier was incorporated in the State of Louisiana on September 18, 1911, and is owned by and operated primarily for the benefit of the E. Sondheimer Company, lumber manufacturer, with offices at Sondheimer, La., and Memphis, Tenn. The operating expenses and revenues of the carrier during the test and guaranty periods were combined with the accounts of the Sondheimer Company, and the carrier has been unable to separate accounts relating to railroad operation from those relating to operations of the Sondheimer Company. The carrier did not file returns in response to our orders of October 18, 1920, January 5, 1921, and December 15. 1921, relating to settlements under section 209. In view of the fact that the carrier has been unable to state its accounts relating to its operations separately during the test and guaranty periods we are unable to determine what amount, if any, may be due to or from it under