Oklahoma, and Texas. As a result of his proposal to purchase the duplicating rights of Dixon in Oklahoma and Texas, he proposes, upon approval and consummation of the transaction, to render a through service between points in Arkansas, Louisiana, Illinois, Nebraska, South Dakota, Missouri, Oklahoma, Kansas, and Texas, with crosshauls between points in Arkansas and Louisiana, on the one hand, and, on the other, points in Illinois, Nebraska, South Dakota, Missouri, and Kansas via gateway points either in Texas or Oklahoma. Compare Farmer-Purchase-Crouse, 45 M. C. C. 267.

The operating rights proposed to be sold, as well as those proposed to be retained by the respective vendors, involve the transportation of related commodities generally used in the natural gas and petroleum industry from, to, and between points in the same general territory. The question is presented whether a division of the operating rights in the manner proposed should be approved, particularly as the vendors would continue to hold authority to transport related commodities in the same general territory covered by the rights sold.

In Mercer Extension-Oil Field Commodities, 46 M. C. C. 845, hereinafter called the Mercer case, division 5 found that considerable doubt existed in the industry as to the scope of the authority held by the carriers there involved when that authority covered the transportation of commodities incidental to and used in the construction, development, operation, and maintenance of facilities for the discovery, development, and production of natural gas and petroleum; particularly was there doubt whether this authority embraced the right to transport pipe-line materials and supplies used in the construction, operation, repair, servicing, stringing, and dismantling of pipe lines, including the stringing and picking-up thereof. The division stated in that report:

The phraseology used in certain of the certificates issued to applicants and other oil field haulers has served to cause doubt and confusion on the part of carriers, shippers and others in the natural gas and petroleum industry as to the exact extent and character of services which the carriers may perform. It is clear that the various services performed by the oil field haulers are of such nature and so closely related as to make it impracticable to segregate them in any of the authority which may be granted herein. The impracticability of a grant of authority for one or a group of carriers to perform a specified service, and for other carriers to perform a different service, has been previously pointed out herein. As interpreted, the authorities now held by applicants under their certificates have fallen short of affording the complete services desired.

It seems not only logical but necessary, in order to remove doubt and confusion on the part of motor carriers, shippers, contractors and others in the natural gas and petroleum industry, to adopt a more uniform commodity description and description of the services authorized, which will be susceptible of easy interpretation by the carriers, shippers or other interested parties, and enable the

carriers to provide a complete service to those in the industry. The form of authority herein adopted is designed to bring about such result.

The authority granted will authorize the transportation of machinery, equipment, materials, and supplies used in, incidental to, or in connection with the discovery, development, production and preservation of natural gas and petroleum, and in the construction, operation, maintenance, repair, servicing and dismantling of plants and facilities for the refining, manufacture, processing, storage, transmission and distribution of natural gas and petroleum and their products and by-products, including the stringing of pipe and the picking up of pipe from dismantled pipe lines, except in the two instances hereinafter referred [In the two instances referred to, at the requests of the applicants in that proceeding, the division restricted the service authorized by excluding authority to string or pick up pipe in connection with "main" pipe lines.]

to.

From the report in the Mercer case, it is clear that division 5, in granting certificates to the oil-field carriers there concerned, did so on the basis of providing them with an operating authority under which they could provide a complete transportation service to the oil-field industry. No attempt was made to segregate the various services involved under separate grants, but rather a full and complete description was used, with the clear implication that it should constitute authority to conduct a single service. Any attempt to "cut out" or segregate particular portions of such rights so as to obtain authority to perform some phase of the oil-field service would tend to destroy the purpose of the grants made in the Mercer case, and would leave certain of the carriers without authority to perform the complete service which it was intended they should have authority to perform. Moreover, if we were to approve the proposed segregation, it would be necessary to condition our approval in such a manner as to make it clear that no "split" of the rights by commodities or services would be permitted. The result of such a condition, in the case of the partnership under the rights purchased, and in the case of Dixon under the rights retained, would be to prevent them from transporting pipe, pipe-line materials, pipe-line machinery, and pipe-line equipment and supplies incidental to and used in connection with the construction, repairing, maintenance, stringing, and dismantling of lateral and gathering pipe lines, as well as main pipe lines, and the stringing and picking up of pipe.

For the reasons set forth above and in line with the views of division 5 as expressed in the Mercer case, we conclude that carriers holding authority (a) to transport machinery, materials, supplies, and equipment, incidental to, or used in, the construction, development, operation, and maintenance of facilities for the discovery, development, and production of natural gas and petroleum, and (b) to transport pipe, pipe-line materials, machinery, and equipment and supplies, incidental to, or used in, the construction, operation, repair, servicing, dismantling, and maintenance of lateral, gathering, and main pipe lines,

2

Vendee, a Texas corporation, operates in interstate or foreign commerce as a motor common carrier of general commodities, with exceptions, over a network of regular routes, principally in Texas, Oklahoma, and Arkansas, extending from Beaumont, Houston, and San Antonio, Tex., on the south, to Oklahoma City and Tulsa, Okla., on the north via Dallas, Fort Worth, and Wichita Falls, Tex.; from Amarillo, Tex., on the west, to Memphis, Tenn., on the east via Texarkana and Little Rock, Ark.; from Texarkana to Shreveport, La.; from Little Rock to Monroe, La., and Greenville, Miss.; and from Memphis to St. Louis, Mo., via Jonesboro, Ark. Vendee operates substantially more than 20 motor vehicles.

A. W. Gordon controls vendor, a Tennessee corporation, and Gordons Transports, Inc.,3 herein called Transports, through ownership of a majority of the capital stock of each. On April 22, 1941, in No. MC-52509, a certificate was issued to vendor, authorizing operations in interstate or foreign commerce as a motor common carrier, (a) of general commodities, with exceptions, over regular routes, between Memphis and Oklahoma City via Little Rock, Russellville, and Fort Smith, Ark., and Warner, Henryetta, Checotah, and Harrah, Okla., serving all intermediate points, and 25 off-route points in Oklahoma; (b) of lard substitutes, over irregular routes, from Memphis to Oklahoma City and points in Oklahoma within 125 miles of Oklahoma City; and (c) of glass, pecans, and petroleum products from the above-specified Oklahoma area to Memphis, also over irregular routes. A second certificate was issued to vendor on December 16, 1941, in No. MC-52509 (Sub-No. 3), authorizing the transportation of general commodities over additional regular routes, principally between Warner and Oklahoma City via Muskogee, Tulsa, and Edmond, Okla., between Muskogee and Henryetta via Okmulgee, Okla., between Tulsa and Oklahoma City via Keystone, Enid, and El Reno, Okla., between Keystone and Edmond via Guthrie, Okla., and between Checotah and Harrah via McAlester, Calvin, and Seminole, Okla., serving most intermediate points. A third certificate was

* Pursuant to certificate issued June 2, 1947, in No. MC-59680, which embraces operating rights purchased under authority granted in No. MC-F-3237, Strickland Transp. Co., Inc.-Purchase-Eddy, 45 M. C. C. 817, and No. MC-F-3195, Strickland Transp. Co., Inc.-Purchase-Rountree, 45 M. C. C. 814; and pursuant to operating rights leased under authority granted in Strickland Transp. Co., Inc.-Lease-Dallas & Fort Worth, 40 M. C. C. 327 and 45 M. C. C. 591, and in No. MC-F-3385, Strickland Transp. Co., Inc.— Lease-Fraps Truck Line, 45 M. C. C., 829.

Transports is authorized to operate in interstate or foreign commerce as a motor common carrier of general commodities over a network of regular routes in Tennessee, Missouri, Mississippi, Louisiana, Kentucky, Illinois, and Alabama, principally between Chicago, Ill., and Memphis, between Chicago and Cape Girardeau, Mo., via St. Louis, and between Memphis and New Orleans, La. The routes of vendor and Transports are complementary, connecting at Memphis and Greenville, Miss.

issued June 23, 1941, in No. MC-52509 (Sub-No. 5), authorizing vendor to serve Camp Joseph T. Robinson as an off-route point in connection with the regular-route operation extending to North Little Rock, Ark., authorized in No. MC-52509.

Under an agreement of January 27, 1947, as amended March 15, 1947, vendee, for $15,000, would purchase all the operating rights covered by the certificates issued in Nos. MC-52509 and MC-52509 (Sub-No. 3), except those authorizing operations over the regular route between Memphis and Little Rock, and would purchase vendor's Arkansas and Oklahoma intrastate rights. The agreement does not mention the right granted in No. MC-52509 (Sub-No. 5) to serve Camp Joseph T. Robinson as an off-route point. Such right, however, is appurtenant to those proposed to be transferred and may not be separated therefrom. Accordingly, if the purchase is consummated, vendor's right to serve Camp Joseph T. Robinson will be included among the rights transferred. One-half of the amount of the purchase price has been deposited in escrow for delivery upon approval of the transaction by us, at which time vendee would be obligated to pay the remainder.

The agreement recites that vendor has agreed to sell the remainder of its operating rights to one W. O. Harrington, and that, if the sale to Harrington is not approved by this Commission, vendor may elect to declare the contract between it and vendee of no further effect, in which event the amount deposited in escrow would be returned to vendee. No application has been filed with this Commission seeking approval of the Harrington purchase.

Vendee's balance sheet as of May 31, 1947, shows assets aggregating $815,062, consisting of: Current assets $381,587, chiefly cash $15,865, and accounts receivable $363,659; carrier operating property, less depreciation, $360,020; intangible property, less reserve for amortization, $19,407; deferred debits, prepayments $35,689 and other $18,359. Liabilities were: Current liabilities $401,024, mainly notes payable $233,170, accounts payable, $73,424, and c. o. d.'s unremitted $48,385; equipment and other long-term obligations $175,896; advances payable, other $11,413; deferred credits, other $105,329; capital stock $1,000; and unappropriated surplus, unearned $29,483, and earned $90,917. Vendee's income statements for 1944, 1945, and 1946, show net incomes, before provision for income taxes, of $62,810, $63,014, and $7,408, and, after such provision, $37,232, $39,303, and $7,289, respectively. A similar statement for the first 5 months of 1947 shows net income of $45,354. No provision is made in this latter statement for income taxes because of an anticipated refund for the previous year.

Vendor's balance sheet as of January 31, 1947, shows assets aggregating $7,614, consisting of: Cash (credit balance) $2,103; special deposits $648; accounts receivable $1,178; carrier operating property, less depreciation, $7,530; and intangible property $361. Its liabilities were: Current liabilities $12,116, mainly payables to associated companies $9,945; capital stock $4,500; and surplus, unearned $1,178, and earned (debit balance) $10,180. Vendor's income statements for 1945, 1946, and the first month of 1947, show deficits of $10,208, $30,370, and $1,371, respectively.

Vendor has rendered no transportation service since about January 14, 1946, when its drivers stopped working for it. The work stoppage was caused by a controversy between the labor union, to which those drivers belonged, and Transports, which, as indicated, is affiliated with vendor. Since the date mentioned, vendor has made numerous attempts to adjust matters with the union and to resume operations, but its efforts have been unsuccessful.

In Nos. MC-C-896, Keystone Freight Lines, Inc., et al. v. Gordons Interstate, Inc., and MC-C-904, Arkansas Motor Freight Lines, et al. v. Gordons Interstate, Inc., filed under section 212 of the act, complainants request, among other things, that certificates of the defendant (vendor herein) under Nos. MC-52509 and the subnumbered proceedings be canceled, vacated, and set aside for willful failure to render reasonably adequate and continuous service to the public for a period of from 2 to 5 years. The defendant (vendor) filed a reply denying the allegations of complainants.

Vendee's routes coincide with those proposed to be acquired between Tulsa and Oklahoma City, over U. S. Highway 66, 120 miles, and between Okmulgee and Pharaoh, Okla., 23 miles. In addition, connection is made with vendor's route at Little Rock. At present vendee has terminal facilities available at Oklahoma City, Tulsa, and Little Rock, and, if the purchase is approved and consummated, it expects to establish a terminal at Fort Smith. Use of vendee's present terminals in the combined operation would result in substantial economies. The fixed expenses incurred by vendor in 1945 in maintaining its terminals at Little Rock, Tulsa, and Oklahoma City amounted to $25,500.

Vendee has sufficient personnel, motor vehicles, and other facilities available immediately to commence operations over the routes involved, although it expects, as traffic is developed, to acquire additional motor vehicles. It proposes to render a daily service over the routes. The record shows the existence of a demand for additional through service between Memphis and Little Rock and Tulsa and Oklahoma City. Keystone Freight Lines is the only motor carrier of property now affording such service. Vendee proposes to pay