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Although permission to abandon was granted on a showing that revenues were insufficient to support cost of operation, application was not withdrawn when line was requisitioned prior to effective date of certificate and no other action indicated that applicant believed that the Commission's jurisdiction had ended. Benefits that might accrue from the certificate were accepted, but responsibilities which might later be attached were sought to be avoided. St. Louis-S. F. Ry. Co. Trustees Abandonment, 781 (790).

The Commission was and is the only governmental agency to which Congress delegated the duty of determining whether present and future public convenience and necessity permit abandonment of a particular line of railroad. Id. (790, 793).

Certificate authorizing abandonment of operation did not excuse carrier temporarily, when prior to effective date line was requisitioned on behalf of the United States Government for war emergency. Certificate relieved carrier of permanent obligation to operate, therefore, the Commission has power to attach conditions for protection of employees as convenience and necessity require. Id. (790, 793).

Protection afforded employees should commence the date operation actually was discontinued, when line was requisitioned. Id. (792, 793).

The Commission's jurisdiction over abandonment of an independently owned and operated line, located wholly within one State, is limited to interstate and foreign commerce. 258 U. S. 204. However, nothing herein is to be construed as expressing any opinion as to whether purchase by Gulf, M. & O. R. Co. of portions of applicant's track and construction of a connecting track at Holt, Ala., with one of the sections acquired, authorized by Alabama State Commission, are matters within the Interstate Commerce Commission's jurisdiction. Alabama Power Co. Abandonment, 794 (796).

Based on findings in 263 I. C. C. 540, applicant, a public utility company engaged principally in manufacture, distribution, and sale of electricity, whose railway operations are incidental to that business, is not an electric, street, suburban, or interurban railway within the exemption of sec. 1 (22), therefore, the Commission has jurisdiction to authorize its abandonment under sec. 1 (18). Id. (796).

Certificate issued permitting: Alabama Power Co.-Entire line, as to interstate and foreign commerce, from Tuscaloosa to Holt, Ala., granted conditionally. Certificate withheld, 794. Chicago, B. & Q. R. Co.-Line from Burch to Osceola, Iowa, granted conditionally, 549. Pere Marquette Ry. Co.-Elk Rapids branch, Williamsburg to Elk Rapids, Mich., granted conditionally, 586.

ACQUISITION OF LINES AND/OR OPERATION: Operation of railroads should not be limited to carriage of particular commodities. Wheeling & L. E. Ry. Co. Operation, 453 (456).

Applications denied: Illinois Central R. Co.-Application to operate line constructed by Chicago, St. L. & N. O. R. Co., in Muhlenberg County, Ky., denied, since the Chicago was denied authority to construct the line. Applicant has been granted authority to operate over the extension to be constructed by the Louisville & N. R. Co., 7.

Certificate issued authorizing: Northern Pac. Ry. Co.-Operation of line owned by United States, from Shelton to Bangor Magazine Area and branch line from Bremerton Junction to Bremerton, all in Washington, authorized, 631.

CERTIFICATES: In acting under certificate issued, applicant must recognize the reserve power of the Congress under the commerce clause of the Constitution, and the Commission's belief that intercorporate relations between the applicant and the Clinchfield Coal Corp. through Pittston Co. and Alleghany Corp. should

cease and ownership of the coal company divorced from ownership or control of the carrier which is to transport the coal. Chesapeake & O. Ry. Co. Construction, 655 (668).

CONNECTING TRACKS: Applications granted: Chicago, B. & Q. R. Co.-Connecting tract between its and Chicago G. W. Ry. Co. main lines, at or near Talmage, Iowa, granted conditionally, 549. Pere Marquette Ry. Co.-Construction of cross-over track connecting with Grand Rapids & I. Ry. Co., Pennsylvania R. Co., lessee, Grand Rapids, Mich., granted conditionally, 750.

EXTENSION OF LINES: Construction of an extension authorized since it would strengthen the applicant, a weak carrier performing important public service, although principal traffic could be moved over existing lines of other carrier. Hampton & B. R. Co. Construction, 733 (746).

Applications denied: Chicago, St. L. & N. O. R. Co.-Construction of extension in Muhlenberg County, Ky., denied. Authority has been granted the Louisville & N. R. Co. to construct an extension to serve the new mines and there are no prospects of any other immediate development of the area, 7.

Certificate issued authorizing construction of: Atchison, T. & S. F. Ry. Co.— Extension of Wilmington, part of Los Angeles, to Long Beach, Calif., authorized, 227. Chesapeake & O. R. Co.-Construction of extension of Sandy Valley and Elkhorn subdivision, Letcher County, Ky., and Wise County, Va., authorized conditionally, 655. Hampton & B. R. Co.-Extension of line connecting with Seaboard Air Line Ry. from a point at or near Hampton, and the Southern Ry., at Luray and north of Lena, S. C., authorized conditionally, 733.

NEW LINES: When line was constructed by the Navy Department primarily to eliminate hazards of transferring explosives and ammunition from rail to water transportation, convenience and necessity required operation and it was in interest of the Government that such operation be conducted by a carrier subject to the Commission's jurisdiction. Northern Pac. Ry. Co. Operation, 631 (632, 642, 643). Since determination of both present and future public convenience and necessity is required in authorizing construction of line, both prospective and immediately available traffic should be considered. Chesapeake & O Ry. Co. Construction, 655 (662).

RESTORATION OF ABANDONED LINES: If convenience and necessity did not permit abandonment of a line, requisitioned on behalf of the United States: Government for war emergency, it would be carrier's duty to restore it to service, when and if, material could be obtained without prejudicing the war effort. St. Louis-S. F. Ry. Co. Trustees Abandonment, 781 (790).

COORDINATION. Findings in 247 I. C. C. 285, that proceedings under secs. 1 (18) and 5 (2) were component parts of an inseparable plan of operation and all employees adversely affected were entitled to appropriate protection under sec. 5, are not controlling in considered proceeding when the only coordination is of facilities. Baltimore & O. R. Co. Operation, 535 (544).

CORPORATIONS. See CONVENIENCE AND NECESSITY (Certificates); DIRECTORS (Interlocking Directorates); STATES (Statutes).

COST OF REPRODUCTION NEW. See CAPITALIZATION (Reorganized Carriers).

COURTS. See also FINANCING (Reorganized Carriers); REORGANIZATION OF RAILROADS; TAXES; TRUSTEES.

BANKRUPTCY JURISDICTION: Any effect on the amount of cash distributed in debtor's reorganization by changing the effective date would be made only if ordered by the court. Central of Georgia Ry. Co. Reorganization, 627 (629). DAMAGES. See DUTY OF COMMISSION.

DEBT SERVICE. See CAPITALIZATION (Reorganized Carriers).

DEBTS OF CARRIERS. Payment of debt which would necessitate sale of
material and supplies to meet current obligations and leave applicant with a
balance insufficient to meet contingent interest earned to October 31, 1944,
raised the question as to how, without working capital, in face of certain maturing
obligations it could continue to operate. Baltimore & O. R. Co. Debt Adjust-
ment, 51 (87).

DEFICITS. See FEDERAL CONTROL.

DIRECTORS. IN GENERAL: When plan of reorganization did not contemplate,
or permit, cumulative voting of stock in election of directors, such rights given
after approval of that plan would involve its modification and require resub-
mission to the courts. Seaboard Air Line Ry. Co. Receivership, 689 (719).
INTERLOCKING DIRECTORATES: Although denial of application would not be
justified, approval was conditioned so that no interlocking directorates now or in
the future shall exist between the Alleghany Corp., applicant, or its affiliated
companies on the one hand, and the Clinchfield Coal Corp. on the other hand.
Chesapeake & O. Ry. Co. Construction, 655 (668, 669, 671).

REORGANIZED CARRIERS: Holders of preferred stock, voting as a class, shall
have right to elect not less than two directors after default of the equivalent
of six quarterly dividends, whether or not earned and whether or not the defaults
are consecutive. New York, S. & W. R. Co. Reorganization, 101 (118).

Under approved plan of reorganization, directors elected by voting trustee
appointed by the court should have right to appoint one member of any finance
and executive committee of the board of directors created by the board. Florida
East Coast Ry. Co. Reorganization, 151 (185).

For protection of interest of holders of preferred and common stock, plan of
reorganization provides for cumulative voting in election of directors, and for
right of preferred stockholders, under specified conditions, to elect stated pro-
portions of the board of directors by separate class vote. Central of Georgia Ry.
Co. Reorganization, 263 (326).

The management of the reorganized company should be vested in a board of
directors of not less than five nor more than nine members to be elected by com-
mon stockholders not later than 90 days after consummation of the plan.
Middletown & U. R. Reorganization 457 (463, 479).

Elimination from approved plan of reorganization of provisions for cumulative
voting in election of directors, disapproved as without it holders of a bare majority
of voting stock could exclude all others from electing any of the directors. Central
of Georgia Ry. Co. Reorganization, 501 (502).

DIVIDENDS. See also EARNINGS (Power to Earn); SECURITIES (Assumption
of Obligation and Liability). Restrictions on dividends, outlined. Baltimore &
O. R. Co. Debt Adjustment, 51 (73).

Although issue of interest-bearing securities for payment of dividends is not
approved, in principle, overdue dividend payment is an acceptable basis to support
in part the issue of bonds when property to be leased is unencumbered by mortgage
debt, stockholders' claims are paramount, and fixed charges payable by applicant
and annual return to investors would be less than those under existing lease.
Gulf, M. & O. R. Co. Purchase, Securities, 405 (420).

Guaranty or assumption of payment of dividends contemplated under considered
unification and issue of securities is not inconsistent with public interest. Id. (434).
DIVISION OF RATES. Although proposed divisions between applicant and
trustee in reorganization proceedings of Central R. Co. of New Jersey involve
consequences unacceptable to State of New Jersey, they were found to be just,

reasonable, and equitable as they are in accord with practice generally prevailing
in the territory, and this is the concern of sec. 15 (6). 320 U. S. 368. Central R.
Co. of Pennsylvania Lease, 755 (776).

DUTY OF COMMISSION. It is the Commission's duty in exercise of admin-
istrative authority vested in it to apply to proposed sec. 5 (2) transactions,
authorized by the court having jurisdiction of reorganization proceedings subject
to authorization from the Commission, tests which the statute prescribe. Central
R. Co. of Pennsylvania Lease, 755 (767).

The Commission's duty to award specific damages in abandonment proceed-
ings, on specific showing of adverse effect on employees past or prospective, is
discharged when it prescribes conditions indicating the type of injury for which
the employee is entitled to relief, extent of protection to be afforded, and formula
to be followed in making final determinations with respect thereto. St. Louis-
S. F. Ry. Co. Trustees Abandonment, 781 (792).

EARNINGS. See also CAPITALIZATION (Reorganized Carriers); CASH; FIXED
CHARGES; INCOME; POOLING; REORGANIZATION OF RAILROADS (In General;
Plan); SECURITIES (Bonds).

ESTIMATED: Expectable earnings available for corporate purposes in a normal
year may range from $700,000 to $775,000. New York, S. & W. R. Co. Reor
ganization, 101 (106).

POWER TO EARN: Abnormal earnings realized under war conditions should not
be indicative of earnings in normal times. New York, N. H. & H. R. Co. Reor-
ganization, 195 (202, 206).

While the Alleghany Corp. must increase its earnings before it can begin liqui-
dating accumulated dividends on prior preferred and preferred stock which must
be paid or otherwise provided for before any earnings will be available for the
common stock which controls Alleghany, the record does not warrant the conclu-
sion that these facts may furnish an incentive by Alleghany to use its influence
to increase unreasonably dividends of controlled companies. Chesapeake & O.
Ry. Co. Purchase, 239 (257).

Wartime earnings offer no fair basis for apportionment of new securities and
available cash under a plan of reorganization intended to serve for the indefinite
future. Central of Georgia Ry. Co. Reorganization, 263 (310).

In event of loss of substantial portion of debtor's traffic, almost all of which is
bridge traffic which comes from New York, O. & W. Ry. Co., now in trusteeship,
debtor's revenues would be seriously affected, and as a moderate decline in reve-
nues, or small increase in estimated operating expenses would seriously affect
amount of income available for fixed charges, interest on bonds issued by debtor
should be contingent upon earnings. Middletown & U. R. Co. Reorganization;
457 (469).

SEGREGATION: While earnings resulting from contributed traffic should be
considered in determining value of Old Colony R. Co. properties, results developed
by severance studies and to prescribing precise money value to certain other
intangible assets must be used cautiously as in the case of segregation studies.
New York, N. H. & H. R. Co. Reorganization, 195 (208).

Since comparison of operating ratios show that distribution of earnings under
the severance formula is more closely adjusted to relative costs of service than
is distribution under the segregation formula, and comparison of net revenues per
mile of road shows that revenues of South Western R. Co., lessor, were less
than the system average, earning power of its roadway property, in a competitive
situation, is less than system average mile for mile at normal levels of business.
Central of Georgia Ry. Co. Reorganization, 263 (306, 307).

The segregation formula of Chattahoochee & G. R., lessor, for 1942 and the
first 6 months of 1943 showed net income of $89,694 before rental, organization
expenses, and income taxes, however, such earnings were not all profits to lessee,
and whether lessor is entitled to any part of them, other than stipulated rental,
is a question for the court to decide. Id. (310).

Studies of segregation of income are essentially a distribution of revenues on
basis of transportation services performed, and a distribution of expenses intended
to reflect as nearly as practicable expenses actually incurred in performance of
transportation service. Id. (313).

Since segregation formula earnings of earnings mortgage lines from August 1,
1933, to June 30, 1943, shows less than one-third paid out in interest or proposed
to be distributed under debtor's plan of reorganization, and nearly 80 percent
paid out under the lease of Augusta & S. R. by debtor in rentals, organization
expenses, and income taxes, and large sums paid or set aside for property improve-
ments and purchase of equipment, lessor has no cause for complaint in respect
of proportion of system earnings allocation in connection with reorganization.
Id. (315).

Distribution of securities and cash based only in part on earnings reflected in
the formula for segregation of revenues and expenses of receiver and trustees,
among mortgaged and leased lines for the period August 1, 1933, to June 30, 1943,
with exceptions, approved. Id. (321).

EFFECTIVE DATE. See REORGANIZATION OF RAILROADS.
EMERGENCY RAILROAD TRANSPORTATION ACT, 1933. The broaden-
ing provisions of the Emergency Transporation Act, 1933, confirm and carry for-
ward the purpose which led to enactment of the Transportation Act, 1920. It is
the primary aim of railroad policy introduced by the Transportation Act, 1920,
to avoid waste, and authority given the Commission by sec. 5 (2) was to aid that
policy. The criterion to be applied in exercise of the Commission's authority to
approve such transactions, and by amendments to Emergency Railroad Trans-
portation Act, 1933, is that of controlling public interest, 292 U. S. 522. Central
R. Co. of Pennsylvania Lease, 755 (767).

EMPLOYEES. See also CONDITIONAL CERTIFICATES AND ORDERS; CONSTRUC-
TION AND INTERPRETATION (Interstate Commerce Act); COORDINATION; DUTY
OF COMMISSION. Although cars destined to, from, or through Seattle from or to
points on northerly portion of Olympic Peninsula are ferried across Puget Sound
on Chicago, M., St. P. & P. Ry. Co. barges under an operating agreement, and all
work is performed by its crews, such crews are considered as employees of vendor
during time they operate on its line. Fox Purchase, 95 (97).

Dismissal allowance shall cease prior to expiration of protective period if em-
ployee fails, without good cause, to return to service after being notified of a posi-
tion for which he is qualified and eligible. His eligibility would be determined by
rules and regulations governing employment of persons in character of work
offered. Seaboard-All Florida Ry. Receivers Abandonment, 334 (340).

The conditions for protection of lease or purchase of a home by a carrier's em-
ployee affected by abandonment provides that a fair value shall be determined as
of a date sufficiently prior to date of filing of abandonment application to be un-
affected thereby, and necessarily presupposes that purchase was made not later
than date of filing of application. Id. (341).

Carriers may hold to a minimum any costs assumed because of effect of aban-
donment on displaced or dismissed employees. Recognizing the impossibility of
prescribing conditions which would permit exact justice in each instance, and
effects on their home investments, arbitration provisions sufficient to permit
equitable adjustments were prescribed. Id. (341).

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