D&RGW Goshen Valley Branch

Finance Docket No. 6205. Control Of Goshen Valley R. R. Co. By Denver & Rio Grande Western R. R. Co. Submitted April 19, 1927. Decided April 26, 1927.

(This report also embraces Finance Docket No, 6282, Lease of Goshen Valley Railroad by Denver & Rio Grande Western Railroad Company.)

Acquisition by the Denver & Rio Grande Western Railroad Company of control of the Goshen Valley Railroad Company by purchase of capital stock and by lease of its railroad approved and authorized.

The Denver & Rio Grande Western Railroad Company, on March 23, 1927, filed an application for an order authorizing it to acquire control of the Goshen Valley Railroad Company, hereafter called the carrier, by purchase of capital stock, and on April 11, 1927, filed an application, Finance Docket No. 6232, for an order authorizing it to acquire control, by lease, of the carrier's railroad.

The carrier owns a railroad extending from a connection with the applicant's Tintic branch at Pearl Junction in a general southerly and westerly direction to Dividend, with a branch line from Flora to Iron King, all in Utah County, Utah. The total main-line mileage is 9.05 miles, with 1.5 miles of side and spur tracks.

The carrier's railroad was built in 1919, pursuant to a contract made December 10, 1918, between E. J. Raddatz, the Director General of Railroads, and the receiver of the Denver & Rio Grande Railroad Company, hereinafter called the Denver, the predecessor of the applicant. The contract provided that the line should be built in accordance with standards of railroad constructiorf to be approved by the chief engineer of the Denver, and granted an option to the receiver of the Denver, to purchase the line within one year after the expiration of Federal control, at a price not in excess of the actual cost of right of way and construction. The option to purchase was not exercised, because of financial limitations. The carrier was incorporated under the laws of Utah on December 27, 1918, and on the same day received from Raddatz an assignment of all of his right, title, and interest in the contract. This assignment was duly approved by the general manager of the Denver under the Director General of Railroads and by the receiver of the Denver.

In Stock of Goshen Valley R. R., decided March 15, 1927 (124 ICC 117-118), we authorized the carrier to issue $50,000 of capital stock, consisting of 500 shares of the par value of $100 each, and to deliver 334 shares of said stock to the Tintic Standard Mining Company and 166 shares to the Iron King Consolidated Mining Company in partial payment of the advances made by said companies for the construction of the carrier's railroad.

On January 24, 1927, the [D&RGW] contracted to purchase from the two mining companies the entire capital stock of the carrier for $488,861.12. The mining companies agree to pay all indebtedness of the carrier, and to indemnify the applicant against all claims. The proposed purchase price equals the actual cost of construction and right of way. The railroad was built under the supervision of the Denver's engineers. The track is laid with 75 and 85 pound rail and has been well maintained. The agreed consideration is to be paid in cash.

The carrier's railroad serves the Tintic mining district. It does not connect with any railroad except that of the [D&RGW]. The carrier does not own any equipment. Operations are conducted by the [D&RGW]. In 1926 the interchange between the two railroads totaled 165,320 tons. The total revenue therefrom was $220,786.31, of which $156,731 accrued to the applicant and $64,055.31 to the carrier. Development work in progress is expected to produce a substantial increase in traffic.