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INDEX DIGEST

ABANDONMENT. See LEASE; MERGER; OPERATION; PURCHASE; THROUGH
ROUTES (Single-Line Service).

ACCOUNTS. See INTANGIBLE PROPERTY; NONCARRIERS.

ADEQUACY OF SERVICE. See COMPETITION (Rights of Competitors);
CONVENIENCE AND NECESSITY; HOUSEHOLD GOODS; INTERCHANGE; PURCHASE
(Abandoned Operations); SPECIAL SERVICES (Drive-Away or Truck-Away);
TRANSPORTATION.

AFFILIATION. See also COMMON CONTROL, MANAGEMENT, OR ARRANGE-
MENT; NONCARRIERS; VIOLATION OF ACT. Father and son ceased to be affiliated
within sec. 5 (6) when the father divested himself of all stock in carrier of which
the son then became majority stockholder, and resigned as officer and director; and
the son purchased the father's shares at a price comparable to net book value,
financing the purchase through a loan obtained on his sole credit and responsibility,
and agreed to divest himself of all interest in two noncarrier companies controlled
by the father. Their financial interests were thus no longer identical or even
parallel. Rodgers Motor Lines, Inc.-Purchase-Ovens, 11 (17).

Although three of seven directors of vendee and its controlling noncarrier, re-
spectively, were officials of a railroad, and a subsidiary of the railroad owned 30
percent and vendee's parent company 70 percent of stock of another carrier,
which performed service for the railroad, vendee was not affiliated with the rail-
road within the proviso of sec. 5 (2) (b), since none of its administrative officers
or employees were selected by or connected with the railroad, and it was managed
and operated without regard to the railroad. Motor Frt. Exp.-Purchase-Alko
Exp. Lines, 143 (145).

Although railroad subsidiary would receive 39.1 percent of vendee's stock and
debentures as payment for its passenger operating rights, vendee would not
become affiliated with a railroad within sec. 5, since neither the railroad nor its
subsidiary had any interest in two other companies which would hold the remain-
der of the securities, and the subsidiary would name only two of vendee's nine
directors. Transcontinental Bus System, Inc.-Control-Continental, 193 (212).
Vendee of operating rights and properties of railroad's subsidiary bus line would
not become affiliated with the railroad within sec. 5 although vendor would
receive 39.08 percent of vendee's stock, since only 2 of vendee's 9 directors would
be representatives of vendor, there was no evidence that vendee would be operated
in the railroad's interest or that the railroad intended to participate in any
material degree in its management, and vendee's acquisition of substantial
independent bus operations indicated the contrary. Transcontinental Bus
System, Inc.-Control-Continental, 305 (308).

Conditions on purchase of operating rights and properties of railroad's sub-
sidiary bus company, for which latter would receive stock and debentures of
vendee, that the stock be trusteed and that the railroad should have no repre-
sentation on vendee's board of directors or in management, could not be imposed
without a finding of control or affiliation with the railroad. Id. (309).

832

Individual carrier applicant and his mother and sister were affiliated, and would
jointly control carrier corporation all of whose stock was owned by his deceased
father, except 5 shares each held by the sister and her husband, when each would
inherit equal shares of the father's stock, and applicant had been selected by the
family to succeed his father in active management. Elliott-Control-Elliott
Delivery Service, Inc., 562 (565).

AGENTS. See also EQUIPMENT (Lease); HOUSEHOLD GOOds; Purchase (Con-
sumation). Arrangement whereby independent carriers leased equipment from
agents of Allied Van Lines and performed service as subagents was a subterfuge
contravening letter and spirit of decision in 40 M. C. C. 557, which disclaimed
approval of addition of other hauling agents by Allied without prior authority.
Such practices should be discontinued. Allied Van Lines, Inc.-Purchase-

Johnston, 273 (285).

Allied Van Line's approved agents are merely its employees to move its traffic;
and arrangements made by them in its behalf must be imputed to its knowledge.
Id. (286).
APPEARANCES.

APPLICATIONS.

See AsSOCIATIONS; WITNESSES.

See also PURCHASE.

DENIAL: Commission may not deny an application merely to relieve vendor
from effects of a bad bargain or from result of its failure to protect itself appro-
priately in purchase contract against protracted proceedings. Marion Trucking
Co., Inc.-Purchase-Harwood Trucking, Inc., 613 (632).

SERVICE: Although copy of purchase application which had been mailed to
State commission about 3 months before hearing could not be located when pro-
testant's counsel sought to examine it 3 days before hearing, applicants' counsel,
when notified, immediately mailed another copy, which was made available to
protestant's counsel at hearing, and as he had received adequate notice of hearing,
any lack of opportunity to prepare additional evidence was due to his own delay.
Marcell-Purchase-Rowley, 699 (706).

ASSIGNMENTS. When Reconstruction Finance Corp. bid in vendor's oper-
ating rights in foreclosure proceeding and the court confirmed the sale, it acquired
power to assign the right to purchase them. Breeding Motor Frt. Lines, Inc.-
Purchase-Lee Way Motor Frt., Inc., 447 (455).

ASSOCIATIONS. Applicants' objection to intervention by motor carrier asso-
ciations on ground that they did not show that any of their members had a direct
interest in the issues, overruled, since 14 carriers who were directly interested in
the applications because they operated in territory involved had requestea formal
hearing, and they chose to be represented by the associations of which they were
members, instead of appearing individually. Emery Transp. Co.-Control and
Merger, 43 (44).

BACK HAULS. See THROUGH ROUTES (Irregular-Route Service)
BURDEN OF PROOF. See also LEASE (Renewal); SPECIAL SERVICES (Drive-
Away or Truck-Away). In every sec. 5 proceeding, burden is on applicants to
submit evidence to support a finding that the transaction will be consistent with
public interest. Fleet Carrier Corp.-Lease-George F. Burnett Co., Inc., 489

(499).

CAPITALIZATION. See also WORKING CAPITAL. Merger could not be
approved when survivor's capitalizable assets would amount to only $393,362,
against proposed capitalization of $731,000, consisting of $261,000 in stock and
$470,000 in long-term notes, and even if valuation of its operating properties was
increased by $152,093 to reflect claimed true value, capitalization would still exceed
supporting assets by $185,545. Moreover, reduction of working capital from
$278,457 to $80,000, maximum allowance justified by the old company's monthly

operating expenses, would further increase the excess of capitalization. Southern
Stages Co.-Control and Merger, 21 (38, 39).

CARRIERS. See PARTIES.

CERTIFICATES. See CONVENIENCE AND NECESSITY; OPERATING RIGHTS;
PURCHASE (Consummation); ROUTES (Scope of Operation).
CHARTER SERVICE. See EXEMPTIONS; PASSENGERS.

COMMODITIES. See DUAL OPERATION; MERGER (Abandoned Operations);
OPERATING RIGHTS (Split).

COMMON CARRIERS. See LEASE (In General).

See also

COMMON CONTROL, MANAGEMENT, OR ARRANGEMENT.
AFFILIATION; CONTROL; DUAL OPERATION; EXEMPTIONS; LEASE (Term);
PURCHASE (Consummation).

IN GENERAL: When father and son who each controlled a carrier had terminated
their affiliation within sec. 5 (6) by divestiture of all financial interest in each
other's carrier or noncarrier enterprises, and the son was an experienced operator,
the two carriers were not under common control, notwithstanding family relation-
ship and past business association of their stockholders. Rodgers Motor Lines,
Inc.-Purchase Ovens, 11 (17, 18).

When operations of a family partnership were managed by one of its members,
who also conducted individual operations, acquisition of a third carrier entity, to
be controlled in common interest through a noncarrier corporation created by the
partnership, would be inconsistent with policy of encouraging corporate simpli-
fication. Southern Stages Co.-Control and Merger, 21 (40).

When three individuals, of whom one was sole stockholder and others managerial
employees of one carrier, acted together with a fourth in acquiring joint control of
a second carrier, there was a conclusive presumption under sec. 5 (5) (c) that
the two carriers would be controlled in common interest. Donohue-Control-
Charlton Bros. Transp. Co., Inc., 259 (265).

When two intrastate carriers who each sought to purchase interstate rights had
common officers and stockholders, the purchases were in reality a single transaction
which would effect common control of two carriers subject to the act, and as they
owned more than 20 vehicles the transaction was subject to sec. 5 (2) (a) rather
than to sec. 212 (b). Gray Line New York Tours Corp.-Purchase-Gray Line
Motor Tours, Inc., 339 (343, 344).

Lack of conflict of interest between vendee corporations and operating com-
panies of Greyhound system, of which individuals who controlled vendees were
officers, directors, and stockholders, was not controlling on question whether
control would be effected to their mutual advantage, which is the "control or
management in a common interest" contemplated by sec. 5. Id. (346).

COMPETITIVE OPERATIONS: Although maintenance of multiple corporations
for conduct under common control of service which would otherwise be competi-
tive is uneconomical and contrary to public interest, creation of a new Greyhound
system company to conduct north-south operations in Missouri was consistent
with public interest when other system operations in that State were primarily
east-west and competition between them would be negligible. Southwestern
Greyhound Lines, Inc.-Control-Northeastern Missouri Greyhound Lines,
Inc., 441 (445).

VIOLATION OF ACT: Unlawful common control of vendee and two vendors was
effected when vendors' respective sole stockholders had purchased the stock with
money advanced by the uncle of one and had paid neither principal nor interest
thereon, and neither had invested his own funds in vendors' operations or par-
ticipated in active management; vendee's general manger supervised operations
of both carriers, which used vendee's office, terminal, and employees, advertised

jointly with vendee, and used same vehicles; and operations of all three were
conducted in fact as a single carrier. Deaton Truck Line-Purchase-B. C.
Truck Lines, Inc., 5 (9).

Acquisition by a family partnership, over a period of time and without prior
authority, of 41.7 percent of stock of a carrier, coupled with actual management
of its affairs by one partner and his father, effected unlawful common control
with a carrier controlled by the father. However, while such unlawful consum-
mations should not be sanctioned, control authority was granted the partnership
when need was shown for continuance of acquired carrier's service, which depended
on management and assistance of the family. L. & E. Investment Co.-Control
Sooner Frt. Lines, 163 (168).

Unauthorized acquisition by a carrier of one-third, and by its two principal
stockholders of another third, of stock of company holding all stock of another
carrier effected common control of the two carriers in violation of sec. 5 (4);
and although, on acquisition of stock control of the first carrier by a third, the
first would distribute the holding company's stock pro rata to its stockholders,
they would also become stockholders of the third carrier and as a group would
still have power to control the second carrier. The first carrier and its stockholders
should promptly terminate the unlawful control. Transcontinental Bus System,
Inc.-Control-Continental, 193 (217).

Atlantic Greyhound's unauthorized purchase of 40 percent of stock of South-
eastern Stages, with right to name one of its directors, restriction of its right to
amend charter, create new stock, or increase shares without Atlantic's consent,
and promise that Atlantic should have first opportunity to buy any additional
stock sold, did not effect unlawful common control, despite their close business
relations, when, except for the one director, no one connected with any Grey-
hound company had ever attempted to influence Southeastern's policy or interfere
in management, and it was still controlled by two closely affiliated individuals
who controlled majority of its stock, neither of whom was affiliated with Atlantic.
Greyhound Corp.-Control-Southeastern Stages, Inc., 709.

Agreement whereby one of four brothers who lawfully controlled three carriers
took over management of a fourth carrier's business, pending purchase of its
operating rights by a company created by them for the purpose, unlawfully
effected control of the fourth carrier in common interest with the other three.
As such control contravened policy against common control of multiple carriers
rendering substantially same service, it should be terminated promptly. Prince
Whse. Co., Inc.-Purchase-Larson Seed House, 772 (777, 779).
COMPETITION. See also COMMON CONTROL, MANAGEMENT, OR ARRANGE-
MENT; CONVENIENCE AND NECESSITY (Proof); OFF-ROUTE POINTS; PURCHASE
(Abandoned Operations); ROUTES (Restriction); TRANSPORTATION.

IN GENERAL: It is generally true that competitors suffer some loss of revenue
following consummation of a sec. 5 transaction when acquiring carrier is better
equipped and stronger financially than carrier acquired, and disapproval is not
warranted solely for that reason. Michigan Exp., Inc.-Lease-Premier Motor
Transp. Co., 401 (406).

ELIMINATION: Transactions otherwise consistent with public interest may be
approved even though some restraint of competition results. Pacific Greyhound
Lines-Control and Merger, 123 (140).

PRESERVATION: While it is Commission's policy to preserve existence of
independent carriers to foster competition, it does not follow that every proposal
which would eliminate an independent carrier tends to stifle competition or is
contrary to public interest. Pacific Greyhound Lines-Control and Merger,
123 (139).

776209-49 vol. 50—56

RIGHTS OF COMPETITORS: Competitors which have developed facilities to
handle available traffic are entitled to protection against new competitive services,
in absence of need therefor, both in their behalf and to promote stability and
sound economic conditions in the industry and adequate service for the public.
Auto Convoy Co.-Lease-Automobile Shippers, Inc., 61 (69); Fleet Carrier
Corp.-Lease-George F. Burnett Co., Inc., 489 (501);

-Thus, although amount of traffic which would be diverted from other carriers
through purchase and resumption of abandoned operations could not accurately
be determined, all would face keen competition from vendee's additional operation,
and approval would penalize carriers, most of whom could ill afford to lose any
of the traffic, for continuing their service under adverse conditions and at con-
siderable cost over a 4-year period in which vendor elected not to do so. Fish
Transport Co., Inc.-Purchase-Aiello, 729 (738);

-And preference of a few shippers for one carrier's service is not sufficient
basis for authorization of additional service to detriment of existing carriers.
Auto Convoy Co.-Lease-Automobile Shippers, Inc., 61 (68);

-But possible loss of traffic and impairment of service of competing carriers
can be determined only on evidence submitted by the parties, and purchase was
approved when little such evidence was introduced and record as a whole did not
warrant finding that competitors would be harmed. Northern Transp. Co.-
Purchase-Mikulich, 375 (382);

-And mere showing by protestants that vendee would directly compete with
them after purchase, without any evidence as to results of their operations, density
of traffic in the territory, extent to which their traffic and revenues might be
affected, or importance of the affected operations to their system operations, did
not warrant denial of purchase which on applicant's evidence was consistent
with public interest. Hancock Truck Lines, Inc.-Purchase-Spector Motor
Service, Inc., 509 (517);

-Especially when vendee had been operating over considered route for some
time under temporary authority. Bridgeways, Inc.-Purchase-Consolidated
Frt. Co., 175 (181).

TRAFFIC AVAILABLE: Whether sale of one of vendor's routes between same
termini to a new competing carrier would be consistent with public interest should
be determined on the evidence, with consideration of effect on existing carriers
in view of amount of available and potential traffic in the territory. Grove and
Sirbaugh -Purchase-Novick, 170 (173).

COMPLAINTS. See PRICES; PURCHASE (Pendency of Other Proceedings).
CONDITIONS. See also AFFILIATION; DUAL OPERATION; EMPLOYEES; Exemp-
TIONS; OPERATING RIGHTS (Split); PURCHASE (Operating Rights or Property);
ROUTES (Regular vs. Irregular). Since special master in foreclosure proceeding
was the party with whom vendee should consummate purchase, neither vendor
nor Reconstruction Finance Corp., which had bid in vendor's properties, had
power to accept or reject such terms and conditions as Commission might impose,
although interest of each in the transaction was entitled to consideration. Breed-
ing Motor Frt. Lines, Inc. -Purchase-Lee Way Motor Frt., Inc, 447 (458, 459).
CONNECTING CARRIERS. See INTERCHANGE.

CONSOLIDATION. See FOREIGN CARRIERS.

Authorizations: Consolidated Truck Lines Ltd.-Consolidation, 230.
CONSTRUCTION AND INTERPRETATION. FIFTH-SECTION TRANSACTIONS:
"Any carrier," in sec. 5 (2) (a), is the same one referred to in sec. 5 (2) (b) as
the carrier seeking approval of a transaction within sec. 5 (2) (a). The person
required by the statute to present an application is the acquiring carrier, and
such an application must be considered on its merits even though presented only

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