that extension of his operations into Vermont would affect protestants only to the extent shippers might use his service in preference to the service offered by protestants. He represents that he has had requests from shippers to provide a single-line service to Vermont points, that his present interchange arrangements are expensive and unsatisfactory, and that he can better develop business in Vermont if he has authority to serve the entire State instead of the southern portion as at present. The unification, in his opinion, would permit him to effect savings in interline expenses and to offer a better service to the public. He estimates that under the unified rights he would obtain traffic sufficient to increase his revenues by $15,000 to $20,000 a year. The traffic would be obtained one-third each in the New York-New Jersey, MassachusettsRhode Island, and Maine territories served by him. The fact that he proposes to continue to interchange traffic to Vermont points, however, except when the volume warrants operations by him to those points, gives rise to doubt as to his contention that his present interline arrangements are unsatisfactory and as to the savings estimated through the elimination of interchange.

The New Hampshire territory authorized to be served by vendor is located in the extreme northern part of that State. In serving points in central and northern Vermont on traffic originating at Maine points, for example, it would be necessary, under the unified rights, for vendee to move that traffic southwestward to Portsmouth, thence northward practically the entire length of New Hampshire to a gateway point in the Colebrook area, and thence, depending upon the destination of the traffic, westward or south westward. On traffic moving from the New York-New Jersey area it would be necessary for him to haul the traffic northeastward to a point in the Manchester area, thence northward to a point in the Colebrook area, and thence westward or southwestward to destination in Vermont. In other words, approval would, in most instances, sanction operations by vendee over various combinations of regular and irregular routes which are excessively circuitous in comparison to direct routes between the territories involved. Transactions which would have had similar results were disapproved in Bonacci-Purchase-Meyer, 38 M. C. C. 361 and Novick-Purchase-Fischetto Trucking Co., Inc., 38 M. C. C. 477. Although those cases were decided during the war, the principle enunciated therein is applicable to transactions such as here proposed, which would result in excessively circuitous routing and wasteful transportation.

Another aspect of the transaction which is objectionable is the service proposed to be rendered by vendee in Vermont. Vermont is not a State where the population is concentrated in large centers. Of the 131 towns in that State previously referred to, there are only 3

points with population between 10,000 and 30,000 and only 7 points with population between 5,000 and 10,000. The population of the other 121 points are as follows: 9 points with population between 2,000 and 5,000, 23 points with population between 1,000 and 2,000, 35 points with population between 500 and 1,000, and 54 points with population between 100 and 500. Approximately 40 percent of the population of the State live in small communities of less than 100 and on farms. Motor-carrier traffic in the State is predominately inbound and consists principally of less-than-truckload shipments. Except for the larger towns, practically all points in the State are dependent upon peddle-run service such as that provided by protestants. In this connection, the witness for Trucking testified that of the 14 or 15 peddle runs which his company operates in the northern one-third of Vermont, only 1 or 2 are profitable.

Vendee does not propose, under the unified rights, to serve all points in Vermont. Instead he would operate his equipment into that State only when the volume of traffic would permit of profitable operations. Small shipments, which would not be profitable to handle, would be transferred to other carriers. In other words, he would use the considered rights for his own benefit and not in the best interest of the public. Operations in the manner proposed would be likely to impair the ability of existing carriers in the Vermont area to continue their present service and perhaps cause them to render service inferior to that now provided. Any decrease in the service now afforded by protestants would not be supplied by vendee, and there is no evidence that present service is inadequate. The many small communities in the State would be dependent as in the past upon the carriers at present serving them. On the basis of the evidence of record, the transaction has not been shown to be consistent with the public interest.

We find that the transaction proposed would not be consistent with the public interest, and that, accordingly, the application should be denied.

An appropriate order will be entered.

COMMISSIONER MITCHELL dissents.

50 M. C. C.

No. MC-F-2486

T. M. RINEHART AND H. G. RICE-CONTROL; SQUARE DEAL CARTAGE COMPANY-LEASE-B. W. PREUSSEL

Submitted January 23, 1948. Decided March 10, 1948

Lease by Square Deal Cartage Company of certain operating rights of B. W. Preussel, doing business as Trailer Convoy, and acquisition of control of the operating rights by T. M. Rinehart and H. G. Rice, through the lease, approved and authorized, subject to condition. Prior report 45 M. C. C. 835. Additional appearance: Frank C. Aldrich, Jr., for applicants. SUPPLEMENTAL REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MAHAFFIE, MILLER, AND MITCHELL BY DIVISION 4:

In the prior report and order herein, 45 M. C. C. 835, decided October 13, 1944, Square Deal Cartage Company, of Detroit, Mich., herein called Square Deal, was authorized to lease the operating rights of B. W. Preussel, doing business as Trailer Convoy, of Mount Clemens, Mich., for a term expiring April 30, 1949, and T. M. Rinehart and H. G. Rice, both of Detroit, were authorized to acquire control of the operating rights through the lease. The authority was exercised October 16, 1944.

By a joint petition filed October 31, 1947, applicants sought reopening and modification of the order of October 13, 1944, and by order of December 8, 1947, the petition was granted to the extent that it sought reopening. Hearing has been held with respect to the relief sought in the petition, at which the parties agreed to the omission of an examiner's proposed report.

The corporate organization of Square Deal, the affiliations of certain of its officers and stockholders with other motor carriers, and its operations in interstate or foreign commerce as a motor common carrier of automobiles and related commodities over irregular routes are set forth in the prior report. It was found in that report that Square Deal, Complete Auto Transit, Inc., of Detroit, a contract carrier, and Contract Cartage Company, of Pontiac, Mich., a common carrier, were controlled in a common interest. Square Deal is authorized to transport, among other things, freight trailers and trailer chassis, restricted to initial movements, in truck-away, tow-away, and

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drive-away service from points in the commercial zones of Cincinnati, Ohio, and St. Louis, Mo. and from Springfield, Mo., and Charlotte, N. C., to points in the United States, returning with damaged or rejected shipments, and new trailers and semitrailers, other than those designed to be drawn by passenger automobiles, and chassis therefore, in initial movements in truck-away service, over irregular routes from Elizabeth and Linden, N. J., Fort Smith, Ark., and points within 10 miles of Fort Smith, to points in the United States, returning with rejected shipments.

Certificates were issued to Preussel in Nos. MC-101295 and MC101295 (Sub. No. 2), on February 17, 1942, and August 14, 1943, respectively, authorizing operations in interstate or foreign commerce as a motor common carrier over irregular routes (1) of commercial trailers, house trailers, cabin trailers, bungalow trailers, and trailers containing special equipment, in drive-away, tow-away, and truckaway service, (a) in initial movements from Elkhart, Ind., and points in Michigan to points in the United States, and (b) in secondary movements between points in the United States; and (2) of wheels, tires, axles, springs, racks, undercarriages, and all other support which has been used, or is to be used, in connection with the transportation of trailers, in truck-away service, in secondary movements between points in the United States.

The agreement considered in the prior report provided for the lease of all of Preussel's interstate operating rights and certain Michigan intrastate rights at a rental of $3,000 a year, payable quarterly in advance, plus 22 percent of the annual operating revenues in excess of $120,000 derived from the operations leased. The lease agreement gave Square Deal an option to renew the lease for an additional 5-year term or to purchase the operating rights upon expiration of the lease term for $1 in the event the total rental received by Preussel during the first 5 years was equal to or in excess of $75,000. If, however, the lease rental during the first 5 years did not aggregate $75,000 and Square Deal exercised the option to renew the lease for an additional 5 years, the purchase price was to be $75,000, less all rental payments theretofore made.

Under a new lease agreement executed in October 1947, as clarified at the hearing, the present lease between the parties would be canceled and Square Deal would lease for a period of 5 years only that portion of Preussel's interstate rights covering the transportation of commercial trailers in initial and secondary movements. As rental, Square Deal would pay 22 percent of the gross revenue derived from its operations under such authority. The lease rental would be payable on or before the tenth day of each month and is subject to a minimum

guarantee of $50 a month. The new lease agreement grants Square Deal an option to renew the lease for an additional 5-year period upon the same terms and conditions, and an option to purchase the rights for $44,000, less any amounts paid as rental subsequent to October 1, 1947, either under the present or proposed lease. Our findings herein are not to be construed as approving purchase of the rights.

Square Deal's balance sheet as of October 31, 1947, shows assets aggregating $304,262, consisting of: Current assets $74,906, principally cash $13,945 and accounts receivable $46,982; carrier operating property, less depreciation, $192,205; intangible property $1,000; and deferred debits $36,151. Liabilities were: Current liabilities $50,157, chiefly accounts payable $25,991, wages payable $9,948, and taxes accrued $10,925; advances payable, other $17,297; equipment obligations $103,181; reserves $10,773; capital stock $41,700; and urplus $81,154. Its income statement for the first 10 months of 1947 shows a net income of $36,902, before provision for income taxes, and a net income of $26,129, after such provision.

Square Deal's operations under the leased rights have been confined exclusively to the transportation of commercial trailers. It has not solicited and has not been tendered for transportation any of the other types of trailers and related commodities covered by the leased operating rights. Between May 1, 1944, when it began operations under those rights, and September 30, 1947, it transported a total of 11,841 commercial trailers, of which 10,030 moved in initial movement service and 1,811 moved in secondary movement service. During that period, its gross revenue from those operations was $1,180,451, and it paid Preussel lease rental aggregating $30,512. Beginning in December 1946, there was a decided decline in the volume of commercial trailers handled, because of the institution of private carriage by one of Square Deal's principal shippers. There is now an indication that this shipper will resume the use of for-hire carriers, which will result in a substantial increase in the available traffic. Square Deal is reluctant to make commitments to increase its equipment and personnel without assurance that the operations can be continued lawfully beyond the present lease term. Preussel is willing that the present lease be extended insofar as it relates to the transportation of commercial trailers. He desires, however, to resume the transportation of house trailers, cabin trailers, bungalow trailers, and trailers containing special equipment. He entered into the prior lease because of his ill health, but he is now completely recovered and is able physically and financially to resume such operations. His net worth as of January 22, 1948, was $157,620.