FINANCE DOCKET No. 10061

MIDDLETOWN & UNIONVILLE RAILROAD COMPANY BONDS

Submitted October 23, 1933. Decided October 27, 1933

Authority granted to extend from November 1, 1933, to November 1, 1943, the maturity of $200,000 of first-mortgage 20-year 6 percent gold bonds and the maturity of $165,500 of 20-year adjustment-mortgage 6 percent income gold bonds; interest during the extended period to be payable on the first-mortgage bonds at the rate of 5 percent per annum and on the adjustment-mortgage bonds at the rate of 4 percent per annum. Conditions

prescribed.

J. A. Smith and C. A. Miller for applicant.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS Meyer, Brainerd, and MAHAFFIE BY DIVISION 4:

The Middletown and Unionville Railroad Company, on July 1, 1933, applied for authority to extend from November 1, 1933, to November 1, 1943, the maturity of $200,000 of its first-mortgage 20-year 6 percent gold bonds and $165,500 of its 20-year adjustmentmortgage 6 percent income gold bonds. No objection to the application has been offered.

The applicant has issued $200,000 of bonds under the first mortgage executed by it under date of November 1, 1913, to the Empire Trust Company, as trustee, and constituting a first lien upon its properties. Of these bonds $185,000 is outstanding and $15,000, reacquired by the applicant, is now in its treasury. It also has outstanding $165,500 of bonds issued under and secured by the adjustment mortgage executed by it on November 1, 1913, to the Bankers Trust Company, as trustee, which is a second lien on its properties. All the bonds, which bear interest at the rate of 6 percent per annum, will mature November 1, 1933. As the applicant is without funds to meet the maturity, it requests authority to extend the bonds to November 1, 1943, and to reduce the rate of interest to 5 percent on the first-mortgage bonds and to 4 percent on the adjustment-mortgage bonds, payable semiannually on May 1 and November 1. In the case of the adjustment-mortgage bonds the interest is to be payable if and when earned and declared by the applicant's board of directors.

While the applicant has not yet made any definite arrangements with the holders of the bonds for their extension, it states that the members of its board of directors hold a majority of the bonds, and have given informal assurance of their consent. Apparently no arrangements have been made with respect to the disposition of bonds the holders of which do not assent to the extension, or of the first-mortgage bonds held in the treasury.

Extension of the first-mortgage bonds will be effected by entering into agreement with the holders, a copy of which, it seems, is to be attached to each bond, by stamping upon each bond an appropriate legend referring to the agreement, and by attaching sheets of interest coupons for the extended period. The agreement will provide for the extension of the maturity of the bonds, without impairment of lien, to November 1, 1943, with interest during the extended period at the rate of 5 percent per annum, payable semiannually on May 1 and November 1. It will also provide for the redemption of the bonds, at the option of the applicant, at any time during the extended period, at par and accrued interest plus a premium of 5 percent of the par value. As a consideration for the extension the applicant will pay the holders of the bonds $1 per $1,000 of bonds.

Extension of the adjustment-mortgage bonds will be effected by stamping upon each bond deposited with the Bankers Trust Company a short statement to the effect that the holder has agreed to the extension to November 1, 1943, and to the reduction of the rate of interest from 6 percent per annum to 4 percent per annum, payable semiannually on May 1 and November 1, when the applicant's board of directors shall declare such interest payable. Sheets of interest coupons for the extended period will also be attached to each bond. No cash payment is to be made to holders of the adjustment-mortgage bonds in connection with the extension, but interest on such bonds at the rate of 12 percent, due November 1, 1933, will be paid on that date on coupon no. 36.

In addition to the $165,500 of adjustment-mortgage bonds mentioned above, the applicant has in its treasury $84,500 of such bonds, which it states it intends to cancel. Authority to extend the firstmortgage bonds will be granted upon the express condition that the $15,000 of first-mortgage bonds now in the applicant's treasury and any of the first-mortgage bonds now outstanding and reacquired by the applicant, either before or after their extension, shall not be sold, pledged, repledged, or otherwise disposed of by the applicant without our further authority.

The bonds provide for the payment of both principal and interest in gold coin of the United States of America, of the standard of weight and fineness existing November 1, 1913, and the proposed

extension contract relating to the first-mortgage bonds provides for the payment of principal and interest on such bonds, as extended, in gold coin of the standard existing November 1, 1933. Public Resolution 10 of the 73d Congress, approved June 5, 1933, provides:

That (a) every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts.

Authority to extend the maturity of the first-mortgage and adjustment-mortgage bonds will be granted only upon the further condition that the legend to be stamped upon each bond shall include a statement to the effect that the obligation contained therein is subject to Public Resolution 10 of the 73d Congress, approved June 5, 1933, relating to obligations purporting to be payable in gold, and to the discharge thereof upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts.

We find that the extension by the Middletown and Unionville Railroad Company, upon the conditions stated, of the maturity of $200,000 of its first-mortgage 20-year 6 percent gold bonds and the maturity of $165,500 of its 20-year adjustment-mortgage 6 percent income gold bonds, as aforesaid, (a) is for a lawful object within its corporate purposes, and compatible with the public interest, which is necessary and appropriate for and consistent with the proper performance by it of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose.

An appropriate order will be entered.

193 I.C.C.

FINANCE DOCKET No. 9653

ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY ABANDONMENT

Submitted October 20, 1933. Decided October 28, 1933

Certificate issued permitting the Atchison, Topeka & Santa Fe Railway Company to abandon a branch line of railroad in Anderson, Allen, and Woodson Counties, Kans.

Lee F. English, William R. Smith, and C. J. Putt for applicant. Charles W. Steiger and Leo W. Mills for protestants.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MEYER, BRAINERD, AND MAHAFFIE BY DIVISION 4:

Exceptions were filed to the report proposed by the examiner. The Atchison, Topeka and Santa Fe Railway Company, on September 23, 1932, applied for permission to abandon a line of railroad extending from Colony in a general southwesterly direction to Yates Center, approximately 24.74 miles, all in Anderson, Allen, and Woodson Counties, Kans. Objections to the application were filed in behalf of citizens of Woodson County and the city of Neosho Falls, Kans. The protestants were assisted by counsel for the Public Service Commission of Kansas.

The line was completed in 1887. The applicant acquired it on April 10, 1901, and has since operated it as a branch line. The only incorporated cities or villages reached by the branch are Colony, population about 500, also served by a main line of the applicant and by the Missouri Pacific Railroad; Neosho Falls, population about 478, also served by the Missouri-Kansas-Texas Railroad; and Yates Center, population about 2,017, also served by two lines of the Missouri Pacific. The branch connects with no railroad other than with the applicant's main line at Colony.

The principal commodities shipped from Neosho Falls are hay, grain, livestock, and crude oil. The principal inbound commodities are coal, lumber, building material, sand, gravel, and grain products. During 1931 and the first 11 months of 1932 all livestock shipped from territory tributary to Neosho Falls to markets was hauled by truck, and trucks have handled from 50 to 60 percent of the less-thancarload traffic since 1930.

Hay is the principal commodity from Yates Center. It is estimated that about 70 percent of the less-than-carload traffic there is hauled by trucks, which include trucks of nine contract carriers, two common carriers, and private trucks. The contract carriers also handle considerable outbound livestock which formerly moved from Yates Center by rail.

The stations not reached by another railroad are Geneva and Lomando. At Geneva there are a general store and a cream buyer. It is 11 miles from Iola, 6 from Carlyle, and 10 from Colony, all stations on the applicant's main line, which are connected with Geneva by gravel and dirt highways. Practically all the less-thancarload traffic is trucked. Lomando, no population, has a sidetrack but is only a hay-shipping station. There are four stations on the Missouri Pacific Railroad, 2.5 miles, 4 miles, 2.5 miles, and 3.5 miles distant, respectively, by dirt roads. The freight traffic at Geneva declined from 90 carloads and 46,851 pounds of less-than-carload freight in 1927 to 14 and 3,718, respectively, in 1932; at Neosho Falls from 254 carloads and 624,781 pounds of less-than-carload freight in 1927 to 86 and 108,340, respectively, in 1932; and at Lomando from 81 carloads and 1,450 pounds of less-than-carload freight in 1927 to 67 and none, respectively, in 1932. At Yates Center there were handled 115 carloads and 972,033 pounds of less-thancarload freight in 1927, and 129 and 251,913, respectively, in 1932. During the period 1927-1931 the total freight tonnage handled on the branch was 12,059 tons in 1927, 10,400 in 1928, 9,865 in 1929, 7,160 in 1930, and 5,468 in 1931. This tonnage included 1,605 carloads outbound, of which hay constituted 66.8 percent, grain 11 percent, livestock 10 percent, crude oil 5.9 percent, and all other freight 6.3 percent. In 1931 products of agriculture, except hay and alfalfa, originated on the branch, amounted to 797 tons, and livestock and crude oil amounted to 33 and 318 tons respectively. The total number of carloads handled during the period 1927-1932 was 2,425, of which 1,307 carloads were hay. The average number of tons of revenue freight in a train was 14 in 1927, 13 in 1928 and 1929 respectively, 10 in 1930, and 7 in 1931. Practically all the freight originated at, or was destined to, points beyond the branch. Passengers carried decreased from 1,965 in 1927 to 492 in 1931. Train service consists of one mixed train in each direction daily, except Sunday.

Railway operating revenues allocated to the branch were $14,106.21 in 1927, $12,590.56 in 1928, $11,111.60 in 1929, $9,268.66 in 1930, and $6,448.54 in 1931, an average of $10,505.11 a year. Railway operating expenses decreased from $85,361.81 in 1927 to $33,594.80 in 1931. The annual average for the 5-year period was $61,175.59. Taxes de