of those who are actively protesting the transaction, and it follows that any possible loss of traffic by other carriers as a result of the through service would be lost by carriers who did not appear at the hearing. We find that purchase by E. J. Scannell, Inc., of the previously described portion of the operating rights of J. Norman Marshall, doing business as Marshall's Express, and acquisition of control of the operating rights by E. J. Scannell, through the purchase, 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, and that, if the transaction is consummated, E. J. Scannell, Inc., will be entitled to a certificate covering the described portion of the operating rights granted in No. MC-30276, which rights are herein authorized to be unified with rights otherwise confirmed in E. J. Scannell, Inc.; provided, however, that, if the authority herein granted is exercised, E. J. Scannell, Inc., shall immediately write off the amount assigned to its "Other Intangible Property" account as a result of the instant transaction, such write-off to be accomplished in the manner to be determined upon submission of the journal entries proposed to record the transaction as required by the order herein. An appropriate order will be entered. 50 M. C. C. No. MC-F-3512 J. V. BRASWELL-PURCHASE (PORTION)-HERRIN TRANSPORTATION COMPANY Submitted February 16, 1948. Decided June 16, 1948 Purchase by J. V. Braswell of certain operating rights of Herrin Transportation Company approved and authorized, subject to condition. T. S. Christopher and Carl L. Phinney for applicants. Scott L. Daly, Rollo E. Kidwell, and Reagan Sayers for interveners in opposition. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS MAHAFFIE, MILLER, AND MITCHELL BY DIVISION 4: Exceptions were filed by applicants to the report proposed by the examiner, and six interveners in opposition replied. Our conclusions differ from those of the examiner. 2 J. V. Braswell, of El Paso, Tex.,1 and the Herrin Transportation Company, of Houston, herein called Braswell and Herrin, respectively, by a joint application filed July 14, 1947, seek authority under section 5 of the Interstate Commerce Act for the purchase by Braswell of certain operating rights of Herrin for $20,000. A hearing has been held, at which Brown Express, Central Freight Lines, East Texas Motor Freight Lines, D. C. Hall Motor Transport, Southern Express, Inc., and its lessor, English Freight Company, Gillette Motor Transport, Inc., Red Arrow Freight Lines, Inc., and Sproles Red Ball Lines, Inc., intervened in opposition to the application. The 5 carriers last named presented evidence. Herrin operates in excess of 20 motor vehicles. Braswell does not at present conduct any operations. He controls Braswell Motor Freight Lines, a Texas corporation, herein called Braswell Motor, through ownership of approximately 99 percent of 1 Unless otherwise indicated, all points mentioned are in Texas. By order dated September 17, 1946, in No. MC-F-3142, J. V. Braswell-Purchase (Portion)—Herrin Transportation Company, an application for the purchase by Braswell of the same operating rights was dismissed at the request of the parties. 3 its outstanding capital stock. Braswell Motor operates as lessee of the operating rights of Braswell, in interstate or foreign commerce, as a motor common carrier of general commodities with exceptions, over regular routes, between Los Angeles, Calif., and Houston via El Paso and Van Horn, and between Van Horn and Dallas via Fort Worth. Herrin, a Texas corporation, operates in interstate or foreign commerce, as a motor common carrier of general commodities, with exceptions, principally over regular routes in southwestern Louisiana and southeastern Texas. Pursuant to authority granted in Herrin Transp. Co.-Purchase-Coleman, 35 M. C. C. 88, herein called the Coleman case, it purchased on January 8, 1940, for $17,375, the operating rights and property of Ben Coleman, including interstate rights valued by Herrin at $13,500, between Houston and Fort Worth via Huntsville, Fairfield, Ennis, and Dallas; and between Houston and Dallas via Hempstead, Hearne, Waco, Hillsboro, and Waxahachie, serving all intermediate points. A certificate covering those rights was issued to Herrin on January 7, 1941, in No. MC-1124 (Sub-No. 3). Because of circumstances hereafter discussed, Herrin purchased, for $25,000, on May 23, 1942, pursuant to authority granted, in No. MC-F-1706, Herrin Transportation Company-Purchase-Wald Transfer & Storage Co., reported in Wald Transfer & Storage Co. of GalvestonPurchase-Wald, 38 M C. C. 365, herein called the Wald case, interstate operating rights between Galveston and Fort Worth over routes which entirely duplicate between Dallas and Houston, the previously described routes acquired by it in the Coleman case, but serving Waco only as an intermediate point. On September 18, 1942, in No. MC1124, a certificate was issued to Herrin embracing the operating rights purchased in the Wald case. Under an agreement dated January 28, 1946, Braswell would purchase, for $20,000, the previously described interstate operating rights acquired by Herrin in the Coleman case and which, as indicated, are now embraced in the certificate issued January 7, 1941, in No. MC1124 (Sub-No. 3). The purchase price would be payable by Braswell from his personal funds, without borrowing, within 30 days after approval of the transaction by us. The agreement specifically provides that it shall be null and void, unless the operating rights in No. MC1124 (Sub-No. 3) may be transferred by Herrin without affecting in any manner Herrin's right to operate between Houston and Dallas acquired in the Wald case, and now embraced in the certificate issued On March 13, 1947, in No. MC-FC-81397, lease to Braswell Motor for a period expiring March 12, 1957, of the operating rights granted Braswell, doing business as Braswell Motor Freight Lines, in certificates issued in Nos. MC-72257, MC-72257 (Sub-No. 4), and MC-72257 (Sub-No. 8), was authorized. September 18, 1942, in No. MC-1124. The routes to be acquired from Herrin duplicate those of Braswell (now under lease to Braswell Motor), between Fort Worth and Dallas, over U. S. Highway 80, approximately 33 miles. Braswell's sole proprietorship capital account as of September 30, 1947, was $264,612, including $52,212 cash. He is willing to write off immediately the amount to be recorded in his "Other Intangible Property" account as a result of the purchase, and in view of the large credit balance in his sole proprietorship capital account, our findings will be conditioned accordingly. Employees would not be adversely affected by a consummation of the proposed transaction. Herrin's income statements for 1945, 1946, and the first 9 months of 1947, covering its entire operations, show net incomes of $58,534, $105,398, and $136,711, respectively, before provision for income taxes, and $35,120, $63,123, and $84,761, respectively, after such provision. Revenue and income from operations over the routes here considered are not of record. In the event the proposed transaction is approved and consummated, an application under section 5 would be filed for approval of a lease of these operating rights from Braswell by Braswell Motor. Apparently Braswell does not intend to operate under the rights. No reason is given why it is desired that Braswell should own the rights and lease them to the corporation which he controls, except that, since March 1947, Braswell Motor has leased and operated all of Braswell's other operating rights, and the new rights would be handled in the same manner. As there is no proposal now before us for Braswell Motor to lease these rights from Braswell, nothing herein contained is to be construed as expressing an opinion on such a transaction. If the authority herein granted is exercised by Braswell, he will be expected to provide the service authorized under the rights. Operations of Braswell Motor between Los Angeles, on the west, and Houston and Dallas, on the east, are over the same highway from Los Angeles to Van Horn, at which point one route extends to Dallas and the other to Houston. The flow of traffic varies and at times freight moves in volume east-bound to Houston and west-bound from Dallas, or vice versa. When equipment is concentrated at Houston, for example, and there is considerable tonnage to be moved from Dallas, it has no way at present of getting equipment from Houston to Dallas other than via Van Horn, a distance of approximately 1,180 miles. The acquisition of operating rights by Braswell Motor's controlling stockholder between Dallas and Houston would close the third side of the triangle formed by Van Horn, Dallas, and Houston, and would permit equipment to be shifted between Dallas and Houston, of those who are actively protesting the transaction, and it follows that any possible loss of traffic by other carriers as a result of the through service would be lost by carriers who did not appear at the hearing. We find that purchase by E. J. Scannell, Inc., of the previously described portion of the operating rights of J. Norman Marshall, doing business as Marshall's Express, and acquisition of control of the operating rights by E. J. Scannell, through the purchase, 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, and that, if the transaction is consummated, E. J. Scannell, Inc., will be entitled to a certificate covering the described portion of the operating rights granted in No. MC-30276, which rights are herein authorized to be unified with rights otherwise confirmed in E. J. Scannell, Inc.; provided, however, that, if the authority herein granted is exercised, E. J. Scannell, Inc., shall immediately write off the amount assigned to its "Other Intangible Property" account as a result of the instant transaction, such write-off to be accomplished in the manner to be determined upon submission of the journal entries proposed to record the transaction as required by the order herein. An appropriate order will be entered. : 50 M. C. C. |