Vendor's contract-carrier operations, for several years prior to 1941, consisted principally of transportation for the Banning Canning Company from its cannery at Banning to Long Beach Harbor and Los Angeles Harbor for movement by water carriers to points beyond. In the summer of 1940, the cannery discontinued the motor shipments from Banning to the two harbors because of the suspension of the connecting water-carrier service to eastern ports. Vendees acquired vendor's operating rights in order to be in a position to serve the Banning Canning Company in the event of the resumption of water-carrier service and of the movement of canned goods from the Banning cannery to Los Angeles Harbor and Long Beach Harbor.

The evidence fails to disclose what services were rendered by vendor for the Banning Canning Company, other than the transportation of canned goods from Banning to Los Angeles Harbor and Long Beach Harbor. As previously indicated, that service was discontinued in 1940 and has not been resumed. It appears, however, that vendees have been performing motortruck service for the canning company since taking over vendor's operations. The evidence in this connection shows that vendees' revenues from hauling for that company were approximately $8,000 in 1946 and "about that much or more" in 1947. The nature and the details of the services rendered by vendees for the canning company are not of record. With respect to the taking over of vendor's business, Hunt testified that he knew our prior approval was necessary and that time was not of the essence in securing that approval before consummation. His only justification for the consummation in 1946 is that "I thought it (approval) was a matter of course." Under the circumstances, there is no excuse for vendees' action and more particularly so in view of the fact that, as two of the three members of a predecessor partnership, they were parties to another section 5 proceeding," wherein the transaction was also consummated before approval was sought.

In addition to the fact that the transaction has been unlawfully consummated, it is objectionable on another ground. As previously indicated, vendor's operating authority to transport canned goods as a contract carrier is from and to the same points between which vendees transport such commodities as citrus fruits, deciduous fruits, salt, and fertilizer as a common carrier. Vendees contend, in their exceptions, that operations by them as a common carrier and as a contract carrier in the same territory and between the same points would not be contrary to the provisions of section 210 because the commodities transported are of different classes. They argue that the Banning Canning

Hunt-Purchase-Happe, 39 M. C. C. 826.

Company is the only shipper of canned goods from Banning to Los Angeles Harbor and Long Beach Harbor; that they are not authorized to transport canned goods between those points; that citrus fruits are not grown in Banning and are not transported to and from that point by vendees; and that the movement of canned goods would ordinarily be at a different season of the year than the movement of citrus fruits. They further argue that it is not reasonable to assume in the instant situation that the dual services which they would render as a common carrier and as a contract carrier would afford opportunities for discriminatory practices and that the mere possibility of such practices is insufficient to warrant denial.

In the event of approval herein, vendees would direct both types of operations from their headquarters in Redlands and, so far as the record shows, would utilize the same vehicles in both operations. Although vendor's contract-carrier rights authorize only the transportation of canned goods in a one-way movement from Banning to Los Angeles and Long Beach Harbors, the service which vendees are authorized to perform under their common-carrier authority includes the transportation of citrus fruits, deciduous fruits, and honey, from Banning to Los Angeles and Long Beach Harbors, and of fertilizer, salt, and supplies used in the packing of citrus fruits from those harbors to Banning. Vendees also may transport as a common carrier those and various other commodities between the harbors and points in the general area surrounding Banning, including the transportation, under the proviso of section 206 (a), of packed and unpacked citrus and deciduous fruits and canned goods from points in San Bernardino and Los Angeles Counties to Los Angeles Harbor, and of sugar and packing-house supplies on return to those points. While vendees in the past may not have served Banning to the full extent authorized by their common-carrier rights and, although the evidence indicates that, in the event of approval herein, they would not expect to serve it except in transporting canned goods therefrom for the Banning Canning Company under the contract-carrier rights purchased from vendor, nevertheless, if the transaction were approved, they would be authorized to render common-carrier service between Banning and Los Angeles Harbor and Long Beach Harbor and, at the same time, to render contract-carrier service from Banning to those harbors.

Our views on the question of dual operations in the same general territory by a carrier, or carriers, under common control, are set forth in Gallot-Purchase-Holst, 45 M. C. C. 1, as follows:

In section 210 of the Motor Carrier Act, 1935, as amended and strengthened by the Transportation Act of 1940, Congress evidenced a clear policy not to permit

the same carrier, or carriers under common control, to conduct both contractcarrier and common-carrier operations within the same territory, except upon our specific finding that such dual operations would be consistent with the public interest. The prohibition is in recognition of the opportunity for discriminatory practices which is present when a carrier is authorized to offer both kinds of service to shippers. A shipper who is able to utilize both the common-carrier and contract-carrier services of a motor carrier, by assuring the carrier of certain of his traffic for transportation as a common carrier, is in a position to obtain special treatment on such of his traffic as would be transported under contracts. Conversely, the carrier, by giving the shipper special treatment in his contract operations, would have an undue competitive advantage over other common carriers in respect to such traffic as the shipper might have available for transportation by common carrier. By consenting to contract-carrier charges lower than it would otherwise accept, the carrier would, in effect, accomplish a rebate of part of its common-carrier charges. We do not imply that vendee herein would necessarily indulge in discriminatory practices, but the opportunity to do so would be present, and the policy of the statute is against the creation of the opportunity by permitting the conduct of dual operations. In determining proceedings arising under section 5, it is our duty to give effect to the letter and spirit of the statute by not approving transactions resulting in objectionable dual operations. Arco Auto Carriers, Inc.-Purchase-Automobile Convoy, 37 M. C. C. 115, 121. In other words, we should not approve a transaction which would result in a situation where discrimination may be practiced, regardless of whether the dual operator has any intention of indulging in such practices. The fact that an opportunity to conduct such practices would be present is sufficient to warrant disapproval of the dual operations and a denial of the application. Otherwise, if the transaction is approved, it is doubtful whether we would be in a position to police the situation.

The dual operations which would result, in the event the instant transaction were approved, would not, in our opinion, be consistent with the public interest and the national transportation policy declared in the act. Vendees will be expected to terminate their unlawful control of vendor's operations.

We find that the instant transaction would not be consistent with the public interest and that the application should, therefore, be denied. An appropriate order will be entered.

50 M. C. C.

No.-MC-F-3108

JAMES ROLLO AND RALPH NAPPI-CONTROL; ROLLO TRUCKING CORPORATION, INC.-PURCHASE-ANNE MARGUERITE YATES

Submitted April 22, 1948. · Decided July 12, 1948

On further hearing, purchase by Rollo Trucking Corporation, Inc., of the operating rights and property of Anne Marguerite Yates, doing business as George Burton Yates, and acquisition of control of the operating rights and property by James Rollo and Ralph Nappi through the purchase, approved and authorized, subject to condition. Prior report, 45 M. C. C. 255. Appearances as shown in prior report.

REPORT OF THE COMMISSION ON FURTHER HEARING

BY THE COMMISSION:

In the prior report, 45 M. C. C. 255, decided December 9, 1946, division 4 denied the application under section 5 of the Interstate Commerce Act, seeking authority for Rollo Trucking Corporation, Inc., of Keyport, N. J., to purchase the operating rights and property of Anne Marguerite Yates, doing business as George Burton Yates, also of Keyport, for $63,516, and for James Rollo and Ralph Nappi, both of Keyport, who control vendee through ownership of 85 percent of its outstanding capital stock, to acquire control of the operating rights and property through the purchase. Thereafter, we denied a joint petition of applicants, filed January 20, 1947, for reconsideration and for further hearing. Upon leave granted, on November 19, 1947, applicants filed another joint petition, upon consideration of which we reopened the proceeding for further hearing, which has been held. No one appeared in opposition to the authority sought and the parties agreed to the omission of an examiner's proposed report.

The capitalization and stock ownership of vendee and the affiliation of James Rollo with Rollo Transit Corporation and Asbury Park-New York Transit Corporation, motor common carriers of passengers, are described in the prior report and will not be repeated. As of the date of the prior report, vendee was operating, in interstate or foreign commerce, under a permit issued in No. MC-107545, as a contract carrier

by motor vehicle, of petroleum and petroleum products, in tank trucks, over irregular routes, from Port Socony, N. Y., to points generally in southeastern New York and northern New Jersey. It had taken over the physical properties of vendor, as of June 30, 1945, and thereafter had exercised complete control over the common-carrier operations which it sought authority to purchase. Division 4 found that vendee had failed to show that the dual operations which would result from the transaction would be consistent with the public interest and the national transportation policy declared in the act, and denied the application, stating that vendee would be expected to terminate its unlawful control of vendor's rights and properties. Developments since the prior report, as hereinafter set forth, have eliminated the question of dual operations. On or about October 18, 1946, vendee discontinued its unlawful control of vendor's operations, although it did not return the physical properties. As a result of proceedings instituted by us in the United States District Court for the District of New Jersey, vendee, certain of its officers, and vendor have paid fines aggregating $500 in connection with the unlawful control of the operations.

On November 6, 1947, the permit under which vendee's contract-carrier operations were conducted, was revoked, and a certificate was issued to it concurrently, in No. MC-108188, pursuant to the findings in Rollo Trucking Corp., Inc., Common Carrier Application, 47 M. C. C. 984, authorizing operations, in interstate or foreign commerce, as a motor common carrier of petroleum and petroleum products, in bulk, in tank trucks, over irregular routes, from Port Socony to points in southeastern New York and northern New Jersey. On April 2, 1948, in No. MC-108188 (Sub-No. 1), another certificate was issued to vendee covering the transportation, over irregular routes, of crude oil of coal tar, in bulk, in tank trucks, from Chester, Pa., to Keyport, and of washed 537 oil and hi-solvent spirits, in bulk, in tank trucks, from Keyport to Chester. It has an application pending under section 207 to extend its operations.

On February 8, 1941, in No. MC-59467, a certificate was issued to vendor, authorizing operations over irregular routes, in interstate or foreign commerce, as a motor common carrier (1) of chemicals, petroleum, and petroleum products, between points in Essex, Union, Hudson, and Middlesex Counties, N. J., on the one hand, and, on the other, Keyport and points in New York, New Jersey, and Pennsylvania within 150 miles of Keyport; (2) of brick, crushed stone, sand, gravel, and building materials, not including lumber, between points in Middlesex County, on the one hand, and, on the other, Cliffwood, N. J., and points in New York and New Jersey within 100 miles of Cliffwood; (3)