erty" 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 purchase as required by our order herein.

An appropriate order will be entered.

50 M. C. C.

No. MC-F-3708

THE CHICAGO, ROCK ISLAND AND PACIFIC RAILWAY COMPANY (JOSEPH B. FLEMING AND AARON COLNON, TRUSTEES)-CONTROL; THE ROCK ISLAND MOTOR TRANSIT COMPANY-PURCHASE (PORTION)—LITTLE DIXIE FREIGHT LINES, INC.

Submitted March 9, 1948. Decided June 17, 1948

1. Purchase by The Rock Island Motor Transit Company of certain operating rights of Little Dixie Freight Lines, Inc., approved and authorized, subject to conditions.

2. Application, to the extent it seeks issuance of a certificate of public convenience and necessity to Little Dixie Freight Lines, Inc., denied.

Martin L. Cassell, Jr., and Robert E. Lee for applicants.

W. T. Brunson for vendor.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MAHAFFIE, MILLER, AND MITCHELL By Division 4:

The Rock Island Motor Transit Company, of Chicago, Ill., and Little Dixie Freight Lines, Inc., of Ada, Okla.,' herein called Motor Transit and Little Dixie, respectively, by a joint application filed January 26, 1948, seek authority under section 5 of the Interstate Commerce Act for the purchase by Motor Transit of certain operating rights of Little Dixie for $5,000. In the application, Joseph B. Fleming and Aaron Colnon, as trustees of The Chicago, Rock Island and Pacific Railway Company, who, at that time, controlled Motor Transit through ownership of all its outstanding capital stock, except directors' qualifying shares, sought authority under the same section to acquire control of the operating rights through the proposed purchase. For the purpose of consummating a plan of reorganization approved in Finance Docket No. 10028, and confirmed by the District Court of the United States for the Northern District of Illinois, Eastern Division, and pursuant to authority granted in a report in that proceeding, Chicago, R. I. & P. Ry. Co., Reorganization, 267 I. C. C. 867, decided December 23, 1947, the trusteeship was ter

1 Unless otherwise indicated, all points mentioned are in Oklahoma.

minated December 31, 1947, and the properties of the debtor, including the stock in Motor Transit, were transferred to the Chicago, Rock Island and Pacific Railroad Company, a Delaware corporation formed December 16, 1947, herein called the railroad, effective January 1, 1948. The railroad, which now controls vendee through stock ownership, is not a party applicant herein, but this omission is immaterial because the principle in Refiners Transport & Term. Corp.— Purchase-Marshall, 39 M. C. C. 271, has been found not to apply when the person in control of the vendee is a "carrier" as defined in the act. Burlington Transp. Co.-Purchase-Chicago, B. & Q. R. Co., 39 M. C. C. 547.

As a matter directly related to the transaction, Little Dixie seeks a certificate of public convenience and necessity authorizing it to continue operations over that portion of the route involved in the purchase between the junction of U. S. Highway 270 with Oklahoma Highway 3 and Shawnee, over U. S. Highway 270. A hearing has been held, at which no one opposed the application and the applicants agreed to the omission of an examiner's proposed report.

The railroad operates as a common carrier by rail, serving Minneapolis and St. Paul, Minn., on the north, Chicago, St. Louis, Mo., and Memphis, Tenn., on the east, Fort Worth and Dallas, Tex., on the south, and Santa Rosa, N. Mex., and Colorado Springs and Denver, Colo., on the west. Its operations include a main line between Memphis and Santa Rosa via Little Rock and Booneville, Ark., and Howe, McAlester, and Oklahoma City. It also operates as a motor common carrier of passengers between St. Joseph, Mo., and Topeka, Kans., and as a motor common carrier of property between St. Joseph and Kansas City, Mo.

Motor Transit operates in interstate or foreign commerce as a motor common carrier of property over regular routes generally parallel to portions of the railroad's lines in Arkansas, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Oklahoma, Tennessee, and Texas. Its operations here directly involved are between Memphis and McAlester via Little Rock, Booneville, and Howe, and are subject to the following restrictions: (1) The service to be performed by Motor Transit shall be limited to service which is auxiliary to, or supplemental of, rail service of the railroad; (2) Motor Transit shall not serve, or interchange traffic at, any point not a station on the railroad; (3) no shipments shall be transported by Motor Transit between Memphis, Little Rock, Howe, and McAlester, or through, or to, or from more than one of said points; (4) all contractual arrangements be

* Pursuant to certificates issued in No. MC-29130 and various subnumbered proceedings.

tween Motor Transit and the railroad shall be reported to the Commission and shall be subject to revision, if and as the Commission finds it necessary in order that such arrangements shall be fair and equitable to the parties; and (5) such further specific conditions as the Commission, in the future, may find it necessary to impose in order to restrict Motor Transit's operations to service which is auxiliary to, or supplemental of, train service.

On June 17, 1947, in No. MC-106708, a certificate was issued to Little Dixie authorizing operations in interstate or foreign commerce as a motor common carrier of general commodities, with exceptions, over regular routes principally between Oklahoma City and McAlester, over U. S. Highway 270, serving the intermediate points of Shawnee, Seminole, Wewoka, Holdenville, and those between McAlester and Holdenville and the off-route point of Earlsboro; between Seminole and Texarkana, Ark., via Ada, Antlers, and Idabel, and Ashdown, Ark., serving specified intermediate and off-route points; between Shawnee and Ada, via Stratford, serving specified intermediate and off-route points; between Oklahoma City and the junction of U. S. Highway 270 and Oklahoma Highway 3 (3 miles west of McLoud), over Oklahoma Highway 3, serving all intermediate points; and between Antlers and Fort Smith, Ark., serving specified intermediate and off-route points.

Under agreement of October 27, 1947, Motor Transit would purchase for $5,000, that portion of Little Dixie's above-described operating rights between Oklahoma City and McAlester over U. S. Highway 270, 131 miles, and generally corresponding "interstate" and intrastate operating rights covered by Oklahoma Corporation Commission certificate A357. The purchase price would be payable by Motor Transit from its current cash when it institutes operations under the considered rights. Motor Transit values the interstate rights at $1,000 and the intrastate rights at $4,000. The agreement provides, among other things, that the sale and transfer of the above-described operating rights is upon the express condition that Little Dixie shall have the right to continue to traverse U. S. Highway 270 between its junction with Oklahoma Highway 3 and Shawnee, 17 miles, for operating convenience only in connection with its retained operating authority. The agreement also provides that, should the application be approved subject to conditions by regulatory authorities, Motor Transit would have the option of accepting or rejecting such approval and, if it elects to reject the approval, the agreement would be canceled. Oklahoma authorities have approved the transfer of the intrastate rights without restriction or limitation on the kind of service to be rendered by Motor Transit.

Motor Transit's balance sheet as of December 31, 1947, shows assets aggregating $1,397,377, including cash $200,876, and earned surplus (debit balance) $5,673. Its income statements for 1946 and 1947 show net incomes, before provision for income taxes, of $108,903 and $165,468, respectively, and net incomes after provision for income taxes, of $62,055 and $97,802, respectively.

Little Dixie's income statements for 1946 and the first 9 months of 1947 show deficits of $33,086 and $63,007, respectively.

Under the transaction proposed, Motor Transit would extend its Memphis-McAlester operation from McAlester westward to Oklahoma City. It considers Oklahoma City a more desirable terminal than McAlester, for the reason that Oklahoma City is the distribution center for a wide territory in Oklahoma and nearby States. The tonnage available at Oklahoma City would greatly exceed that now originated by Motor Transit at McAlester. Most of the traffic over the route moves in intrastate commerce and the movement is principally eastward from Oklahoma City. Motor Transit has recently acquired four additional tractors and trailers which would be used in the territory here involved, if the transaction is approved and consummated. Its pick-up and delivery service at Oklahoma City would be provided by a local carrier which now renders such service for the railroad. Under the acquired rights it proposes to serve only those points which are stations on the railroad, and as a result of the acquisition, it expects to effect a material improvement in the service of the railroad. It is willing to amortize the amount of the increase in its "Other Intangible Property" account as a result of the purchase, and our findings will be conditioned accordingly.

The Oklahoma City-McAlester route proposed to be purchased by Motor Transit is complementary to its present routes, connecting at McAlester, and is generally adjacent to the Memphis-Santa Rosa main line of the railroad. Points on the route authorized to be served by Little Dixie in interstate commerce, which are stations on the railroad, and their population (1947) are: Oklahoma City 204,424, Shawnee 22,053, Earlsboro 486, Seminole 11,547, Wewoka 10,315, Holdenville 6,632, Calvin 589, Stuart 340, and McAlester 12,401. Arpelar and Cabaniss, each having a population of less than 50, are the only points on the route authorized to be served by Little Dixie in interstate commerce, which are not stations on the railroad. Five points, Chowtaw, Harrah, McLoud, Dale, and Lima, which are stations on the railroad and have populations ranging from 271 to 620, are authorized to be served by Little Dixie in intrastate commerce only. At least 1 motor carrier, other than Little Dixie, is authorized to