methods previously described. They also collected and delivered interstate traffic for United; and they transported interstate traffic moving under joint through rates of United with other motor carriers, between the terminals of United and those of the connecting carriers participating in such through rates, such service being performed as a part of the through movements. For such of this service as was performed for United, Distributing was compensated on the basis of a fixed charge per 100 pounds. The vehicles were employed at times by at least one other line-haul motor carrier engaged in interstate or foreign commerce, apparently also for collection and delivery service. It also appears that there was some solicitation of line-haul traffic which was collected by the trucks of Distributing and transported over the road by United.

Operation of these vehicles by Distributing within Spokane and Seattle, transporting general commodities, was continued in the manner described until some time in 1937, when Distributing was advised by a representative of our Bureau of Motor Carriers that the conduct of such cartage operations in connection with its socalled "forwarding" operations might be unlawful, and it was suggested that the two types of operations be "divorced" from each other. The president of Distributing stated that solely because of this suggestion and his desire to stay within the law he attempted to separate the concerned operations.

It appears that there was in existence at this time the Service Transportation Company, the functions of which are not of record and the ownership of which is not clear. Lewis Manlowe, president of Distributing, proposed to that corporation that it change its name to Manlowe Transfer Co., Inc., whereupon he would transfer to it any rights which Distributing had to engage in motor-vehicle operations within Spokane and Seattle. The name was so changed, and, as previously indicated, we approved the substitution of Transfer for Distributing, as applicant in No. MC-11179, on September 4, 1937. Transfer has continued the so-called transfer operations in the manner just described, except that Distributing has paid to it a specified sum per hundred pounds (apparently 3 cents) for the collection and delivery of shipments for Distributing. Certain protestants contend that the documentary evidence offered to establish proof of motor-carrier operations of Transfer and its predecessor was incompetent for that purpose. Such documentary evidence was supplemented by uncontroverted testimony of applicant's witnesses, and the evidence of record establishes, in our opinion, that Transfer and its predecessor in interest have been engaged in motor-vehicle operations at Spokane and Seattle and in territory included within

3 miles of the corporate limits of such cities, and at Renton, Wash., in the manner just described, since prior to June 1, 1935.

The evidence shows that no cash payment to Distributing was made, nor were promissory notes issued to it, covering the abovedescribed acquisition by Transfer. Of 1,000 shares of capital stock of Transfer outstanding, 998 were issued to one Al Huson, and 1 each to Lewis Manlowe's father-in-law and mother-in-law. The certificate for the 998 shares issued to Huson was immediately endorsed in blank by him and delivered to Lewis Manlowe, who still held it at the time of the hearing, for the purpose, it is stated, of securing the indebtedness of Transfer to Distributing for the rights and equipment taken over by Transfer. The 3 shareholders of Transfer were designated as its officers but have had no active part in the conduct of its business, which has continued to be under the direction of Lewis Manlowe, nor have they received compensation as officers. Thus it may be seen that the "divorce" of the activities was not actual but only apparent. However, the determination of whether the separate corporate entities should be disregarded in the circumstances presented will be made after a discussion of the contentions of parties with respect to such action.

John Manlowe, president of United, acted as manager of Transfer. at Seattle during a few months in 1937 or early in 1938 but had relinquished that position prior to the time of the hearing. He stated that he had no financial interest in Transfer, was compensated for his services by Transfer at $200 per month and took over the management at that time in addition to his duties with United only because of a natural interest in its success, inasmuch as it furnished United with collection and delivery service. He further stated that he had no desire to manage Transfer "because it might jeopardize my position with United *" The solicitors and local managers of Transfer at Spokane and Seattle were said to be employees of that concern exclusively at the time of the hearing, although they formerly had been employed by Distributing.

*

A brief discussion of additional evidence respecting coordination of the activities of all three applicants is deemed necessary. The evidence shows that Distributing is the lessee of the terminal space used by the three applicants in both Spokane and Seattle. It controls a space of approximately 90 feet by 90 feet in Seattle, in which a space of approximately 30 feet by 30 feet is used by United and Transfer. It also controls a large building occupying about onefourth of a block in Spokane, one-third of which building is used by Distributing and the balance by United and Transfer. The amount of space used by Transfer is not of record, but it is clear that both United and Transfer are sublessees, occupying the same

terminals with Distributing. They all have the same telephone number. The employees of each are said to be separate; and although the same accountant is used by all three, he is compensated separately by each for the respective services rendered.

Discussion of general issues.-On brief, applicants in Nos. MC-11179 and MC-31910 urge the denial of the broker application of Distributing and a finding that the operations of Distributing are not subject to the act, citing in support of this contention the Commission's decision on reargument in Acme Fast Freight, Inc., Com mon Carrier Application, 8 M. C. C. 211.

One protestant, on brief, contends that Distributing should be found to be a common carrier subject to the act, that its present services should be found unlawful, and that it should be ordered to cease and desist from such unlawful operation. On brief, other protestants urge a finding that the service and operations of Distributing are not those of a broker; that its services (the status of which under the act is not suggested) have not been consistent with the public interest and with the policy declared in section 202 (a) of the act; and that they are unlawful and should be discontinued.

The joint board proposed the issuance of a certificate to Transfer as sought, and the majority of the joint board, with one member dissenting, proposed a finding that Distributing is a common carrier subject to the act "at Seattle and at Spokane and at no other place." Exceptions were filed by applicants only and concern solely the proposed finding in No. 31910 with respect to the status of Distributing.

On argument, protestants contend that the operations of United, Distributing, and Transfer have been shown, in effect, to be but one operation; that Transfer is merely an "arm" of Distributing and that Distributing is merely a soliciting agent of United. They point out that United and Distributing were incorporated at the same time and that the operations of each are shown by the evidence to be closely coordinated. They cite as incidents of the rela tionship between the companies the fact that the president of United served for a time as manager of Transfer; that the stock of each corporation is held by members of the respective families of the two brothers who are the respective moving factors in the two operations; that the applicants occupy the same terminals and use the same telephone; and that the solicitors of United advise prospective shippers of the availability of Distributing's service. The protestants agree with the joint board's conclusion that United has been shown to be entitled to a certificate in these proceedings but argue that the granting of such a certificate is the only authority warranted by the evidence in the three applications.

With respect to Transfer, applicants are of the opinion that the incorporation of Transfer was not necessary to bring the concerned motor-vehicle operations of Distributing into compliance with the act and that no evasion or infringement of the terms of the act has occurred through its establishment. They recognize that, under proper circumstances, we could ignore the separate corporate identity in the light of the evidence of record, but they urge that such action by us would not invalidate any "grandfather" rights which have been proved in No. MC-11179, which would then be issuable to Distributing. They state that the separate corporate identity of Transfer should not be disregarded "because *

separate

corporate entities are generally recognized unless employed to accomplish a wrong, which ignoring the entities will avert."

For the purpose of this proceeding we conclude that no good purpose will be served by ignoring the corporate identities of Transfer and Distributing and construing the operations of Transfer to be those of Distributing. Pursuant to this conclusion and in accordance with the evidence as previously set forth herein, it is apparent that Transfer is entitled to the grant of a certificate. See decision of the Commission on reargument in Dick's Transfer & Truck Term. Contr. Car. Application, 20 M. C. C. 785.

The above conclusion with respect to Transfer leaves for determination the application of Distributing. Protestants oppose the contentions of Distributing that its operations should be found to be not subject to the act. They argue that, although the evidence clearly supports a conclusion that Distributing is not a broker, it does not necessarily follow that its operations are not subject to the act. They cite, as differences between the forwarding operations of Acme and the operations of Distributing, the broad national scope of Acme's operations, its utilization of motor-vehicle, rail, and water transportation facilities, and the fact that over 2,100 motor carriers were used by Acme, whereas Distributing operates only between Spokane and Seattle and uses for the most part only the services of United. They advance the theory that Distributing is a common carrier by motor vehicle operating through the agency of, or by arrangement with, United without the required common-carrier certificate therefor, and that it is not entitled to authority to continue such operation.

The order setting the application of Distributing down for hearing provides that in the event the evidence indicates that Distributing is entitled to receive a form of authority other than that applied for, such other form of authority will be granted. We shall therefore determine in this proceeding what authority under the act, if any, should be issued to Distributing, instead of confining the issue

to whether or not it is a broker. We have consistently found that activities similar to those disclosed by the evidence in this proceeding with respect to Distributing's present operation are neither those of a common or a contract carrier by motor vehicle nor those of a broker under the act. Accordingly the application should be denied.

We deem it unnecessary to definitely determine the relationship between United and Distributing in the instant proceedings. The foregoing conclusions herein dispose of the question of what authority should be granted to the applicants. However, the situation disclosed by the record in the proceeding impels us to a further discussion of the matters involved.

We recognize that certain of the practices engaged in by Distributing, including numerous services for shippers for which it receives no apparent compensation or for which it apparently receives insufficient compensation to cover the cost of such services, the aggregation of shipments over long periods of time without charge for storage, and others of its practices, particularly in view of the fact that it utilizes the services of a single motor carrier whose operations are closely coordinated with that of Distributing, and which is controlled by members of the same family, have clearly been shown to have resulted in destructive competition with respect to the other motor carriers operating between Spokane and Seattle.

In an effort to meet the situation in part, two of the principal motor carriers so operating in competition with United have set up corporations similar to Distributing, and a third is prepared to do so. The proceedings in Consolidation Rule on Shipments at Seattle and Spokane, supra, which was argued before us jointly with the three applications herein considered, were directly brought about by efforts of the motor carriers operating in competition with United to meet the situation created by the activities of Distributing. In that case certain motor carriers which are in competition with United between Spokane and Seattle proposed to establish a provision in their tariffs which would permit the aggregation of traffic, at those two points, over a period of 10 days, to be transported as a single consignment at truckload or quantity rates, with no charge for storage during the period of aggregation. The provision was suspended upon protest of United. The purpose of the proposed provision was to attempt to meet the competition brought about by the previously described practice of Distributing in aggregating traffic over unlimited periods of time, without storage charge, for movement by United at truckload or quantity rates. We found the proposed provision to be unlawful and entered an order requiring its cancelation.