Coaches. The payment of $15,000 made by Smoky Mountain for the 1,000 shares of Coaches' stock which it proposes to acquire was advanced by Wright and he would make a further advance on open account to Smoky Mountain to enable it to complete its payment under the purchase agreement. The advance by Wright in the aggregate amount of $58,333 would bear interest at the rate of 3 percent per annum. The increase in Smoky Mountain's fixed charges as a result of the transaction would not be contrary to the public interest.

Considering the ownership by Wright of the majority of the outstanding capital stock of Smoky Mountain and his ownership of the largest block of the outstanding capital stock of Queen City, we are of the opinion, and find, that Queen City and Smoky Mountain are controlled or managed in a common interest, and that, upon consummation herein, they would jointly control or have the power to control Coaches. Our authority herein will be granted accordingly.

We find that acquisition by Queen City Coach Company and Smoky Mountains Stages, Incorporated, of joint control of Georgia-Florida Coaches, Inc., through purchase of capital stock, and by Joel W. Wright, Guy D. Carpenter, Ruth Beam Carpenter, J. F. Martin, Mattie D. Martin, C. H. Bost, E. E. Bost, James A. Hardison, Lillian H. Hardison, and W. Erskine Smith, through said acquisition, upon the terms and conditions above set forth, which terms and conditions are found to be just and reasonable, constitute a transaction within the scope of section 5 (2) (a) and will be consistent with the public interest; provided, however, that, if the authority herein granted is exercised, Coaches shall first file a certified copy of an amendment to its articles of incorporation authorizing the reorganization of its capital structure as proposed herein; and provided further, that, if the authority herein granted is exercised, Queen City and Smoky Mountain shall immediately write off that part of the amount assigned to their respective "Investments and Advances-Associated Companies" accounts by which the purchase price paid by each for the capital stock of Coaches exceeds the net book value thereof, exclusive of intangibles, as of the date of consummation, such write-off to be accomplished in the manner to be determined upon the submission of the journal entries proposed to record the transaction as required by our order herein.

An appropriate order will be entered.

COMMISSIONER MILLER Concurs in the result.

No. MC-F-3355

H. J. BISCHOFF, ET AL.-CONTROL; SOUTHERN CALIFORNIA FREIGHT LINES, LTD.-CONTROL; PEOPLES TRANSFER, INC.-PURCHASE-BUFORD S. HODGES AND JOHN C. HODGES

Submitted February 5, 1948. Decided February 19, 1948

On reconsideration, findings in the prior report, 45 M. C. C. 827, affirmed. Appearances as shown in the prior report.

REPORT OF THE COMMISSION ON RECONSIDERATION

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

In the prior report, 45 M. C. C. 827, we conditionally authorized the purchase by Peoples Transfer, Inc., of Yuma, Ariz., of the operating rights and certain property of Buford S. Hodges and John C. Hodges, doing business as Hodges Brothers Truck Line, also of Yuma, and the acquisition of control of the said operating rights and property by Southern California Freight Lines, Ltd., herein called the holding company, Motor Service Corporation, herein called Motor Service, H. J. Bischoff, and R. E. McConnell, all of Los Angeles, Calif., through the purchase by vendee. Our order provided that, upon consummation of the transaction, the holding company and Motor Service should be considered as motor carriers subject to the provisions of sections 204 (a) (1) and (2), 214, and 220 of part II of the act, the report stating:

Under the provisions of section 5 (3), we may, in our discretion, provide that, as a result of the instant transaction, the holding company and Motor Service shall be considered as motor carriers subject to the provisions of sections 204 (a) (1) and (2) and 220 of part II of the act (which relate to reports and aecounts of carriers), and to the provisions of section 214 of part II (which relates to issues of securities and assumption of liability of carriers.) See Tri-State Transit Co. of Louisiana, Inc.—Merger, 39 M. C. C. 469 and 40 M. C. C. 137 and 488. The primary function of the holding company and Motor Service is the holding of stock of corporations which are engaged in transportation. In our opinion, for the reasons discussed in the case cited, the public interest requires that they be considered carriers to the extent indicated and be made subject to the provisions of the above sections. Our order herein will so provide.

The authority therein granted has not been exercised, and the order ceased to be effective on July 1, 1947. By separate petitions filed June 30, 1947, vendee sought (a) modification of the order of June 5, 1947, by the elimination of the requirement subjecting the holding company and Motor Service to the provisions of sections 204 (a) (1) and (2), 214, and 220, or, in the alternative, assignment of the proceeding for hearing, and (b) extension of the lease authority granted under section 210a (b) by our order of January 3, 1947, which expired July 1, 1947. By order of October 8, 1947, the proceeding was reopened for hearing, and authority was granted under section 5 for lease of vendor's operating rights pending further order herein. Hearing has been held. The facts concerning the control of vendee, four other motor carriers, and a freight forwarder by the holding company, and control of the holding company by Motor Service, H. J. Bischoff, and R. E. McConnell, and the terms of the proposed transaction are set forth in the prior report.

As grounds for modification of the order, to the extent it subjected the holding company and Motor Service to certain provisions of the act, vendee represents that the total revenue of the five motor carriers and one freight forwarder, all of which are wholly owned subsidiaries of the holding company, was $3,800,000 in 1947, that only 5 to 7 percent of that revenue was derived from traffic moving in interstate or foreign commerce, and that the ratio of the intrastate revenue to the interstate revenue of those companies is increasing. It contends that, under the circumstances, the subjection of the holding company and Motor Service to the provisions of sections 204 (a) (1) and (2), 214, and 220 would impose additional burdens on those companies out of proportion to any benefits it would obtain by the acquisition of vendor's operations, and would not serve any public need. It represents that, rather than to accept the condition subjecting the holding company and Motor Service to those provisions of the act, it would not consummate the transaction.

The question of whether a noncarrier person, who controls carriers engaged in interstate transportation activities, should be made subject to the provisions of the act indicated does not depend upon the amount of traffic which its subsidiary carriers may transport in interstate or foreign commerce or the amount of revenue derived from such traffic. Compare Wells Truckways-Purchase-Fulton, 39 M. C. C. 528. The question depends more upon the function of the noncarrier person in relation to the transportation activities controlled. In American Liberty Pipe Line Co.-Control and Merger, 40 M. C. C. 745, it was found that, upon consummation of the transaction there considered, one noncarrier corporation should be made subject to the

afore-mentioned provisions because its primary purpose would be the holding of the stock of the carrier there involved, but that the other noncarrier corporation should not be subjected to those provisions because it was primarily a producing oil company and only a portion of its investments would be represented by its holdings in the said carrier. See also Tri-State Transit Co. of Louisiana, Inc.-Merger, 39 M. C. C. 469 and 40 M. C. C. 137 and 488.

In the instant case, the holding company is not engaged in any business other than that of owning stock in six subsidiary corporations, all of which are engaged in transportation activities, and the sole function of Motor Service is the ownership of stock in the holding company. As of December 31, 1946, the holding company had assets of $912,014 and its investments in its subsidiary companies was $885,662. The assets of Motor Service and its investment in the holding company are not of record. We are not convinced on this record that the holding company and Motor Service should be permitted to extend their control in the field of transportation as here proposed, except upon their accounting and financial practices being subject to our jurisdiction under the provisions of the act indicated. Vendee's petitions, except to the extent previously granted, will be denied.

Upon reconsideration, we affirm our findings in the prior report. An appropriate order will be entered.

50 M. C. C.

No. MC-F-34911

JAY L. SHEPPARD ET AL.-CONTROL; GRAY LINE NEW YORK TOURS CORP.-PURCHASE-GRAY LINE MOTOR TOURS, INC.

Submitted January 12, 1948. Decided March 17, 1948

Purchase by Gray Line New York Tours Corp., of the operating rights and certain property of Gray Line Motor Tours, Inc., and purchase by Royal Blue Tours of New York, Inc., of the operating rights and certain property of Royal Blue Sightseeing Corp., and acquisition of control of the operating rights and property by Jay L. Sheppard, Robert W. Budd, Dollie Sheppard, and Margery C. Budd through the purchases, approved and authorized, subject to conditions.

Harold J. Drescher and Robert E. Quirk, for applicants.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MAHAFFIE, MILLER, AND ROGERS

BY DIVISION 4:

Exceptions were filed by applicants to the examiners' proposed report. Our conclusions differ from those of the examiners.

Gray Line New York Tours Corp., and Gray Line Motor Tours, Inc., hereinafter called New Gray Line and Old Gray Line, respectively, both of New York, N. Y., by a joint application filed June 4, 1947, in No. MC-F-3491, seek authority under section 5 of the Interstate Commerce Act for purchase by the former of the operating rights of the latter. By a supplemental application filed July 16, 1947, Jay L. Sheppard and Robert W. Budd, also of New York, as president and vice president, respectively, and directors, and Dollie Sheppard, of Stamford, Conn., and Margery C. Budd, of Detroit, Mich., as the sole stockholders of New Gray Line, seek authority under the same section to acquire control of the operating rights through the proposed purchase by New Gray Line.

Royal Blue Tours of New York, Inc., and Royal Blue Sightseeing Corp., doing business as Royal Blue Line Motor Tours, hereinafter called New Royal Blue and Old Royal Blue, respectively, both of New York, N. Y., by a joint application filed July 16, 1947, in No. MC-F3492, seek authority under section 5 for purchase by the former of the

1 This report embraces No. MC-F-3492, Jay L. Sheppard et al.-Control; Royal Blue Tours of New York, Inc.-Purchase-Royal Blue Sightseeing Corp.

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