No. MC-F-3628

ISIDOR EISEN-CONTROL; B. & E. TRANSPORTATION CO., INC.-PURCHASE (PORTION)-DANA TRUCKING CO.,

INC.

Submitted May 3, 1948. Decided July 6, 1948

Application of B. & E. Transportation Co., Inc., for authority to purchase certain operating rights of Dana Trucking Co., Inc., and of Isidor Eisen for authority to acquire control of the operating rights through the proposed purchase, denied.

Harris J. Klein for applicants.

F. X. Masterson for protestants.

REPORT OF THE COMMISSION

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

No exceptions were filed to the examiner's proposed report.

B. & E. Transportation Co., Inc., of Secaucus, N. J., and Dana Trucking Co., Inc., of New York, N. Y., both New York corporations, by joint application filed November 17, 1947, seek authority under section 5 of the Interstate Commerce Act for purchase by the former of certain operating rights of the latter for $12,000. In the same application, Isidor Eisen, of Brooklyn, N. Y., who controls vendee through ownership of its entire outstanding capital stock, seeks authority under the same section to acquire control of the operating rights through the proposed purchase. A hearing has been held, at which rail carriers in trunk-line territory, except the Chesapeake & Ohio Railway Company, opposed the application but confined their participation to the cross-examination of applicants' witnesses. Vendee utilizes more than 20 motor vehicles in its operation.

Vendee is authorized to operate in interstate or foreign commerce, as a motor common carrier, principally of general commodities, with exceptions, under 5 certificates.1 No. MC-17778 covers (a) regular

1 Pursuant to certificates in No. MC-17778, issued June 15, 1942; No. MC-17778 (Sub-No. 3), issued June 13, 1942; No. MC-17778 (Sub-No. 4), issued February 3, 1942, embracing rights acquired under section 5 authority granted in Nos. MC-F-1039, B. & E. Transp. Co. Inc.-Purchase-New Haven Trucking Co., 35 M. C. C. 181, and MC-F-1446,

route general-commodity operations between New York and Amsterdam, N. Y., serving specified intermediate and off-route points; between New York and Boston, Mass., via New Haven, Conn., and Springfield, Mass., and also via New Haven and Providence, R. I., serving the intermediate points of Bridgeport, New Haven, New London, and Hartford, Conn., Springfield and Brookline, Mass., and Providence, R. I., and those between Bridgeport and New York, and the off-route points of Waterbury and New Britain, Conn., Mount Vernon and Westchester, N. Y., and Roxbury, Mass.; between New York and Washington, D. C., serving specified intermediate and off-route points; 2 between New York and Walton, N. Y., serving no intermediate points; and (b) irregular route general-commodity operations between New York, on the one hand, and, on the other, points in Nassau County, L. I., N. Y. No. MC-17778 (Sub-No. 3) covers regular-route operations between New Haven and New Britain and Bridgeport, Conn., and irregular-route operations between New Haven, on the one hand, and, on the other, points in Massachusetts. No. MC-17778 (Sub-No. 4) covers similar irregular-route operations between New York, on the one hand, and, on the other, points in Bergen, Essex, Hudson, Middlesex, Morris, Passaic, and Union Counties, N. J. No. MC-17778 (Sub-No. 6) covers the transportation of the commodities classified as meat, meat products, and meat byproducts, and as dairy products, in sections A and B of the appendix to the report in Modification of Permits-Packing House Products, 46 M. C. C. 23, and fresh fruits and vegetables, over irregular routes, from New York to points in Florida, and fresh fruits and vegetables from points in Florida to New York. No. MC-17778 (Sub-No. 16) covers regular-route general-commodity operations between Secaucus and the junction of U. S. Highway 1 and New Jersey Highway 3, on vendee's New York-Washington regular route; and irregularroute operations between Secaucus, on the one hand, and, on the other, points in the 7 New Jersey counties previously listed. The last certificate broadened its then existing authority by relieving it of the necessity of using New York as a gateway on traffic moving to or from points in the New Jersey territory covered by the rights acquired under circumstances described in B. & E. Transp. Co., Inc.-Purchase-Merchants Transp. Co., Inc., supra.

(Sub-No. 3), issued June 13, 1942, No. MC-17778 (Sub-No. 4), issued February 3, 1942, B. & E. Transp. Co., Inc.-Purchase-Merchants Transp., Inc., 36 M. C. C. 561, respectively; No. MC-17778 (Sub-No. 6), issued April 11, 1947; and No. MC-17778 (Sub-No. 16), issued February 5, 1947.

Including the off-route points directly involved herein of Bergenfield and Edgewater in Bergen County, N. J.; Bloomfield and Newark in Essex County, N. J.; Bayonne, Hoboken, Jersey City, and Kearny in Hudson County, N. J.; and Paterson and Passaic in Passaic County, N. J.

On June 2, 1943, in No. MC-31729, a certificate was issued to vendor authorizing operations, in interstate or foreign commerce, as a motor common carrier of general commodities, with exceptions, over irregular routes, between New York, and points in Bergen, Essex, Hudson, and Passaic Counties, on the one hand, and, on the other, points in Massachusetts on and east of U. S. Highway 5, those in Connecticut on and south of U. S. Highway 6, and Providence and points in Rhode Island within 15 miles of Providence. On March 24, 1944, in No. MC-31729 (Sub-No. 1), a certificate was issued to vendor, authorizing similar transportation of textile-mill products, over irregular routes, between points in New Hampshire within 1 mile of the junction of U. S. Highway 3 and the Massachusetts-New Hampshire State line, on the one hand, and, on the other, New York and points in the same four New Jersey counties.

Under letter agreement dated April 14, 1947, signed by vendor's president and accepted by vendee, the latter would purchase, for $12,000, that portion of the previously described operating rights of the vendor authorizing the transportation of general commodities, with exceptions, between New York and points in the four New Jersey counties, on the one hand, and, on the other, points in Connecticut on and south of U. S. Highway 6. Of the purchase price, $2,000 was deposited in escrow with the applicant's attorney to be turned over to vendor with the remaining $10,000 within 5 days after approval of the transaction herein. Contingently upon our approval of the application and consummation of the transaction, vendor would pay $2,000 to Klein for "legal fees, commission, etc." If the application should be denied, neither applicant would have any claim against the other. Vendee's balance sheet as of June 30, 1947, shows assets aggregating $212,936, consisting of: Current assets $39,017, principally cash $7,007 and accounts receivable $31,052; carrier operating property, less depreciation, $137,886; intangible property $1,177; investment, B. & E. Holding Corp., $21,000; prepayments $10,243; and other deferred debits $3,613. Its liabilities were: Current liabilities $78,301, principally accounts payable $52,571; equipment obligations $62,444; other long-term obligations $6,500; deferred credits, other $232; capital stock $35,000; and earned surplus $30,459. Its income statements for 1945, 1946, and first 6 months of 1947, show net incomes before provision for income taxes of $7,144, $1,294, and $32,592, respectively, and net incomes after such provision of $5,144 and $27,392 for the year 1945 and the first 6 months of 1947, respectively.

Vendor's balance sheet as of March 31, 1947, shows assets aggregating $123,487, consisting of: Current assets $29,315, principally cash $8,308

and accounts receivable $15,993; carrier operating property, less depreciation, $68,645; nonoperating property $2,233; intangible property $7,400; and deferred debits $15,894. Its liabilities were: Current liabilities $24,069, chiefly accounts payable $16,068; advances payable $21,435; equipment obligations $32,520; other long-term obligations $5,571; capital stock $40,000; and surplus (debit balance) $108. Its income statements for 1945, 1946, and first 3 months of 1947, show net incomes before provision for income taxes of $7,941, $1,758, and $2,047, respectively.

8

Vendee's existing authority includes the right to transport general commodities between a number of points included in the authority which it would purchase. Vendee would acquire irregular-route authority between vendor's base territory, on the one hand, and, on the other, points in Connecticut on and south of U. S. Highway 6. Under its existing regular-route authority extending between New York and Boston, it may serve points in Connecticut common to those under the authority sought to be purchased, namely Bridgeport, New Haven, New London, Hartford, those on U. S. Highway 1 between Bridgeport and New Haven, Waterbury, and New Britain. It has irregularroute authority between New York, on the one hand, and, on the other, points in 7 New Jersey counties, including those in Bergen, Essex, Hudson, and Passaic Counties.

Vendee has been operating into Connecticut for about 30 years, and at present dispatches from 8 to 15 motor vehicles daily into the area. Between 40 and 45 percent of its total traffic originates at or is destined to points in Connecticut, of which about 60 percent is delivered to or received from interchange carriers. It now originates north-bound shipments destined to points which it may not directly serve in Connecticut, such as Danbury, East Hartford, Manchester, Meridian, Middletown, Milldale, Naugatuck, Southington, and Willimantic, and accepts for delivery from other carriers south-bound shipments from such points as Ansonia, Derby, Naugatuck, and Shelton. As a result of the interchange and difficulty in securing the close cooperation of its connections, the transit time on such shipments ranges from 48 hours to as much as a week. Vendee also has had difficulty with its connections respecting accounting and payment of c. o. d. claims. Under the unified rights, vendee would provide a direct, single-line service to the points in Connecticut on and south of

As used herein vendor's base territory consists of New York City, and points in Bergen, Essex, Hudson, and Passaic Counties.

In addition to these points vendee listed New Millford, Torrington, and Winsted, but they are not in the considered area in Connecticut.

U. S. Highway 6. On shipments moving from or to points which it may not now serve in Connecticut, but could serve under the acquired rights, vendee would reduce transit time to less than 24 hours, would eliminate troublesome accounting problems with its connections, and would promptly remit collections on c. o. d. shipments to shippers. Vendee does not expect to increase its traffic under the unified rights, but it does expect to render to shippers and receivers of freight a more complete and efficient service.

Vendor principally serves the woolen industry. Although it has authority between its base territory, on the one hand, and, on the other, points in specified portions of Connecticut, Massachusetts, and Rhode Island, the preponderance of its tonnage moves between points in its base territory and points in northeastern Massachusetts, around Lowell and Lawrence. It also provides service to the Worcester-Springfield area of Massachusetts, and it renders daily or weekly service in the Rhode Island area. It now operates 15 motor vehicles daily between its base and Massachusetts territories. In the past it has attempted to develop traffic in the Connecticut area, but the volume was not sufficient to establish regular service, including the pick-up and delivery of shipments, because it had interchange difficulty with local carriers in Connecticut and because of competition afforded in the area by numerous other carriers. The service that was provided was not profitable. In its present operation, vendor uses 2 routes through Connecticut, 1 via New Haven and New London, and the other via New Haven and Hartford. Upon approval herein it would dispose of all rights to render service from or to points in Connecticut, but it would retain the right to traverse the same highways now used in Connecticut in providing service between its base territory and the more distant authorized areas in Massachusetts and Rhode Island. Vendor considers that it is not practicable to operate between its base and destination territories without passing through that part of Connecticut included in the purchase. It would retain all its employees and would use the funds obtained from the sale to finance the purchase of new equipment. There are at least 6 motor common carriers operating between New York City and points in Connecticut.

Protestants oppose the application principally on the ground that the proposed division of vendor's operating rights is not along cleancut geographical lines. They argue that vendor here would sell its authority to serve points in a part of Connecticut, but would retain authority to traverse the same highways now used in that part of Connecticut in operating between points in its base territory and the