No. MC-F-34411

MAJOR A. RIDDLE-CONTROL; HANCOCK TRUCK LINES, INCORPORATED-PURCHASE (PORTION) — SPECTOR MOTOR SERVICE, INC.

Submitted March 31, 1948. Decided May 7, 1948

1. Purchase by Hancock Truck Lines, Incorporated, of certain operating rights of Spector Motor Service, Inc., and acquisition of control of the operating rights by Major A. Riddle, through the purchase, approved and authorized, subject to condition.

2. Purchase by Hancock Truck Lines, Incorporated, of the operating rights of W. A. Burch, doing business as Burch Truck Line (D. A. Winters, W. C. Cohen, and Jay H. McClure, trustees), and acquisition of control of the operating rights by Major A. Riddle, through the purchase, approved and authorized, subject to condition.

Ferdinand Born for applicants.

H. W. Goodwin for vendor in No. MC-F-3474.

E. G. Minor and Paul L. Shriver for protestants in No. MC-F-3474. REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MILLER, ROGERS, AND MITCHELL

BY DIVISION 4:

Hancock Truck Lines, Incorporated, of Evansville, Ind., and Spector Motor Service, Inc., of Chicago, Ill., herein called Hancock and Spector, respectively, by a joint application filed April 7, 1947, in No. MC-F-3441, seek authority under section 5 of the Interstate Commerce Act for the purchase by the former of certain operating rights of the latter for $10,000. By a second joint application filed May 7, 1947, in No. MC-F-3474, Hancock and W. A. Burch, doing business as Burch Truck Line (D. A. Winters, W. C. Cohen, and Jay H. McClure, trustees), of Wichita, Kans., seek similar authority for the purchase by Hancock of the operating rights of Burch now held by the trustees for $9,250. By supplemental applications filed May 7, 1947, in both proceedings, Major A. Riddle, of Chicago, who owns a majority of Hancock's outstanding capital stock, seeks au

1 This report embraces No. MC-F-3474, Major A. Riddle-Control; Hancock Truck Lines, Incorporated-Purchase-W. A. Burch (D. A. Winters, W. C. Cohen, and Jay H. McClure,

Trustees).

thority under the same section to acquire control of the considered operating rights of Spector and Burch through the respective transactions. The application in No. MC-F-3441 is not opposed, and no public hearing in that proceeding appears necessary. A hearing has been held in No. MC-F-3474 at which two motor carriers, Western Trucking Company, Inc., and Hayes Freight Lines, Inc., opposed the application and introduced evidence, and, with applicants, agreed to the omission of an examiner's proposed report.

The corporate history of Hancock, an Indiana corporation, is set out in No. MC-F-2440, Hancock Truck Lines, Inc.-Purchase-Davidson, 40 M. C. C. 804, embracing No. MC-F-2441, Same-Purchase McNamara Motor Express, Inc., decided November 2, 1945. As stated in that report, Major A. Riddle owns 76 (50.33 percent) of the 151 shares of Hancock's outstanding capital stock, and United States Freight Company, of New York, N. Y., herein called Freight Company,2 owns the remaining 75 shares (49.67 percent) of its stock. In considering the questions as to who controlled Hancock, and who was the real party in interest and a necessary party applicant in that proceeding, it was stated in that report as follows:

It is apparent that Riddle has the power to control vendee [Hancock] through ownership of a majority of its capital stock and is a necessary party applicant herein for authority to acquire control of the properties sought to be purchased by vendee. Our jurisdiction to consider these applications on their merits under section 5 (2) is clear under the principle in Refiners Transport & Term. Corp.-Purchase-Marshall, 39 M. C. C. 271, without Freight Company also becoming a party.

In that proceeding it was also found that Hancock was not affiliated with The New York Central Railroad Company within the meaning of section 5 (6). There has been no change in the stock ownership, officers, or directors of Hancock since the above decision, except that Frances R. Riddle, the deceased wife of Major A. Riddle, has been replaced by the latter's mother, Susie A. Riddle, as a director. On the basis of the present record, the conclusions are warranted that Riddle continues to have the power to control Hancock through ownership of a majority of its stock, that Freight Company is not a necessary party applicant within the meaning of the principle enunciated in the report last cited, and that Hancock is not affiliated with The New York Central Railroad Company within the meaning of section 5 (6).

The corporate history and affiliations of Freight Company and Universal Carloading & Distributing Company, of New York, and their relationship to The New York Central Railroad Company, are set forth in United States Freight Co.-Investigation of Control, 39 M. C. C. 623.

4

Hancock operates in interstate or foreign commerce as a motor common carrier of general commodities, with exceptions, unrestricted as to the person for whom the transportation is performed, (a) over regular routes, principally between Evansville, on the one hand, and, on the other, Chicago, Ill., Henderson and Louisville, Ky., St. Louis, Mo., Milwaukee, Wis., Indianapolis, Ind., and Detroit, Mich., serving numerous intermediate and specified off-route points; and (b) over irregular routes, between Chicago, on the one hand, and points in a defined area in northeastern Illinois, on the other, and between points on certain of its regular routes in Missouri, Illinois, and Indiana, on the one hand, and, on the other, Paducah, Ky., and points in a defined area in southern Illinois. Included among the above regular routes are those extending between St. Louis and Indianapolis, over U. S. Highway 50 and Indiana Highway 67, via Vincennes and Spencer, Ind., and between St. Louis and Louisville, over U. S. Highways 50 and 150, via Vincennes, Shoals, and Paoli, Ind. On April 3, 1946, in No. MC25567 (Sub-No. 8), a certificate was issued to Hancock * authorizing the transportation of general commodities, with exceptions, which are at the time moving on bills of lading of freight forwarders, over regular routes, between certain of the principal points in Illinois, Indiana, Kentucky, Michigan, Missouri, New York, Ohio, and Pennsylvania, in some instances over the same routes and between the same points between which it may perform an unrestricted service for the general public. Operations of this restricted nature include those between Chicago and St. Louis, over U. S. Highway 66, via Bloomington and Springfield, Ill., also over U. S. Highways 66, 45, 54, Illinois Highway 48, and U. S. Highway 66, via Kankakee, and Decatur, Ill., and between St. Louis and Cincinnati, over U. S. Highways 50 and 52, via Terre Haute and Indianapolis, Ind., and also over U. S. Highway 50 to Shoals, and thence over either U. S. Highway 50, via Seymour, Ind., or over U. S. Highways 150 and 42, via Louisville. On December 18, 1947, in No. MC-25567 (Sub-No. 17), a certificate was issued to it authorizing the transportation of general commodities, with exceptions, which are at the time moving on bills of lading of freight forwarders, over certain alternate regular routes for operating conveniences only, in connection with its regular-route operations between Chicago and Louisville. Hancock utilizes more than 20 motor vehicles in its operations. It has pending certain section 207 applications for authority to

Pursuant to certificates issued in Nos. MC-25567, MC-25567 (Sub-No. 13), MC-25567 (Sub-No. 15), and MC-25567 (Sub-No. 16), on December 4, 1946, January 22, 1946, October 1, 1946, and March 5, 1947, respectively.

These operating rights were acquired by Hancock pursuant to authority granted in Hancock Truck Lines, Inc.-Purchase-Globe Cartage Co., 38 M. C. C. 382.

extend its operations, and in No. MC-F-3680, Major A. RiddleControl; Hancock Truck Lines, Incorporated-Purchase (Portion)— Anderson Motor Service Company, seeks authority under section 5 to purchase certain operating rights of another carrier.

Hancock's balance sheet as of June 30, 1947, shows assets aggregating $568,424, consisting of: Current assets $194,358, principally cash $66,650 and accounts receivable, less reserve for uncollectible accounts, $93,295; carrier operating property, less depreciation, $353,430; and prepayments $20,636. Its liabilities were: Current liabilities $123,742, chiefly accounts payable $36,043 and accrued taxes $67,903; equipment obligations $245,116; reserves $2,785; capital stock $37,718; and surplus $159,063. Its income statements for 1945, 1946, and first 6 months of 1947, show net incomes, before provision for income taxes, of $254, $107,779, and $58,995, respectively; and, after such provision, a deficit of $9,541, and net incomes of $65,106 and $36,470, respectively.

No. MC-F-3441.-Spector is authorized to operate in interstate or foreign commerce as a motor common carrier of general commodities, with exceptions, over a network of regular routes in Connecti cut, Illinois, Indiana, Maryland, Massachusetts, Missouri, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and the District of Columbia, serving specified intermediate and off-route points. Its operating authority directly involved herein is contained in a certificate issued October 31, 1942, in No. MC-69116, authorizing operations, among others, between Chicago and St. Louis, over two combinations of highways, and in another certificate issued May 1, 1942, in No. MC-69116 (Sub-No. 1), authorizing operations between Chicago and St. Louis, over four combinations of highways which, in part, are the same as those covered by the certificate in No. MC-69116. All the above operating rights between Chicago and St. Louis are described in detail in appendix A.

Under an agreement of February 18, 1947, Hancock would purchase for $10,000, those portions of Spector's operating rights between Chicago and St. Louis described in the agreement as follows:

From Chicago over U. S. Highway 66 via Edwardsville, Ill., to junction Bypass U. S. Highway 40, thence over By-pass U. S. Highway 40 to junction Illinois Highway 157; thence over Illinois Highway 157 to junction U. S. Highway 40, and thence over U. S. Highway 40 to St. Louis, Mo.

Pursuant to certificates issued October 31, 1942, May 1, 1942, and April 21, 1942, in Nos. MC-69116, MC-69116 (Sub-No. 1), and MC-69116 (Sub-No. 2), respectively. This is an exact description of route 1 appearing in the certificate in No. MC-69116 (Sub-No. 1), and duplicates the route described in the certificate in No. MC-69116, between Chicago and a point near Edwardsville.

From Chicago over U. S. Highway 66 to Hamel, Ill., thence over Illinois Highway 140 to junction unnumbered highway; thence over unnumbered highway to East Alton, Ill., thence over Illinois Highway 159 to Edwardsville, and thence as specified above to St. Louis."

From Chicago over U. S. Highway 66 to Bloomington, Ill., thence over U. S. Highway 150 to Peoria, Ill., thence return over U. S. Highway 150 to Bloomington, Ill., thence over U. S. Highway 51 to Decatur, Ill., thence over Illinois Highway 48 to junction U. S. Highway 66, thence over U. S. Highway 66 to Hamel, Ill., and thence to St. Louis, Mo., and specified above.

And return over these routes to Chicago Ill.

Service is authorized to and from the intermediate points of Joliet, Bloomington, Springfield, Peoria, Alton, East Alton, and Wood River, Ill., and the off-route points of Roxana, Ill., University City, and Clayton, Mo.

Of the purchase price, $2,000 has been deposited in escrow to be paid to Spector immediately upon approval of the transaction, and the remainder is payable within 30 days after receipt by Hancock of notice and a copy of the order of approval. In the event of a denial of the applications the amount of the purchase price in escrow is to be returned to Hancock.

Hancock proposes to acquire rights between St. Louis, and Chicago via Springfield and Bloomington, about 296 miles. At present Hancock is authorized to operate between those points, over almost the identical route, but it is restricted to the handling of traffic which moves on bills of lading of freight forwarders. It is also authorized to transport general commodities, without such restriction, between St. Louis and Chicago over circuitous routes via Vincennes. Hancock maintains terminals and personnel staffs at both Chicago and St. Louis, and any additional traffic resulting from acquiring the unrestricted operations between those points can be handled without a material increase in overhead expenses. As a result of the purchase, Hancock expects to increase the load factor of its equipment and reduce the amount of deadhead mileage now operated under its restricted rights between St. Louis and Chicago.

In connection with its purchase of the above-described regular routes, Hancock also proposes to purchase Spector's rights to serve the intermediate points of Joliet, Bloomington, Springfield, Peoria, Alton, East Alton and Wood River, and the off-route points of Roxana, University City, and Clayton. Of the above-named intermediate points,

This is an exact description of that portion of route 2 in No. MC-69116 (Sub-No. 1) between Chicago and East Alton, and a portion of route 4 in the same certificate between East Alton and St. Louis. It also duplicates the route described in the certificate in No. MC-69116, between Chicago and Hamel, over U. S. Highway 66.

This is substantially the same description as route 3 in No. MC-69116 (Sub-No. 1) with the omission of the segment between Chenoa and Peoria over U. S. Highway 24. It also duplicates the portions of the routes described in No. MC-69116, between Chicago and Bloomington, and between Decatur and St. Louis, via Hamel and Edwardsville.