Washington, DC May 21, 1941 Mr. Secretary Indiana

Washington, D. C. May 21, 1941 Mr. Secretary Indiana Service Corporation Utility Building Fort Wayne, Indiana Dear Sir: Thank you for your letter of January 9, 1941, enclosing your reply to our questionnaire of October 29, 1940. On the basis of the information supplied, and other data and information secured from the records of the Interstate Commerce Commission and other sources in the course of our investigation, it is my opinion that Indiana Service Corporation, at least in the operation of the North Division of its electric railway, was on August 29, 1935, and has been since that date, an "employer", as defined in the Railroad Retirement and Rail road Unemployment Insurance Acts. In your reply to our questionnaire you state that, "Although the Company is not subject to the jurisdiction of the Interstate Com merce Commission, it has for the sake of uniformity of accounting pro cedure, followed largely, the Interstate Commerce Commission System of Accounts for electric railway companies". Your belief that the company is not subject to the Interstate Commerce Act apparently arises out of the fact that effective with the close of the year 1928 Indiana Service Corporation was excused by a division of the Interstate Commerce Com mission from filing further annual reports with the Commission. How ever, the company was excused from filing annual reports upon the representation to the Interstate Commerce Commission that its revenues from interstate freight during the year 1928 constituted a small pro portion of its total revenues, the principal part of which was derived from its electric power and light business. The Railroad Retirement Board, upon inquiry of the Commission, was informed in October 1934, in a letter from Commissioner that "this action on the part of the Commission did not relieve the company from under our jurisdic tion", The company has continued to be regarded by the Commission as subject to the Interstate Commerce Act, but merely has been relieved from compliance with certain of the provisions of the Act. As a common carrier by railroad subject to the Interstate Commerce Act, Indiana Service Corporation has continued to file freight and passenger tariffs, powers of attorney, and concurrences with the Commission. Since Indiana Service Corporation is a carrier by railroad subject to Part I of the Interstate Commerce Act, it is an "employer" within the meaning of the Railroad Retirement and Railroad Unemployment Insurance Acts unless it falls within the electric railway exemption proviso in section 1(a) of the Acts, which provides in substance that the term "employer" shall not include any "street, interurban or sub urban electric railway" unless it is operating as a part of a or the general steam-railroad system of transportation. In the operation of its North Division, Indiana Service Corporation is more than a street, interurban, or suburban electric railway and therefore does not fall within this exemption. Indiana Service Corporation was incorporated January 15, 1920, originally as successor to the Fort Wayne and Northern Indiana Traction Company. Through acquisitions since 1920, the railway lines of Indiana Service Corporation eventually consisted of lines extending from Kendallville south through Garrett to Fort Wayne with a branch from Garrett to Waterloo, the street railway system in the city of Fort Wayne, lines extending south from Fort Wayne to Bluffton and thence southwest to Marion, and lines extending southwest from Fort Wayne through Peru to Lafayette. Local street railway service, and later, bus service, was also provided at some intermediate points. For many years Indiana Service Corporation and its predecessors, together with Indiana Railroad and its predecessors, had provided through service from Fort Wayne to Indianapolis via Peru, Logansport and Bluffton, the line of the Inter state Public Service Company (later known as Public Service Company of Indiana) providing through service south from Indianapolis to Louisville. Control of Indiana Service Corporation was acquired in 1925 by the Insull interests through the Midland Utilities Company. The Central Indiana Power Company, an Insull affiliate, had controlled since 1922 the Northern Indiana Power Company, whose line of railroad, extending from Marion through Kokomo to Frankfort, had been acquired from the Indiana Railways and Light Company. In 1929 Midland United Company, which controlled Midland Utilities Company, acquired control of Public Service Company of Indiana. Integration of all these proper ties into one operating unit, known as the "Indiana Railroad System" followed the acquisition of control by the Insull interests in 1930, through purchase by the Indiana Railroad of the main line properties of the Union Traction Company of Indiana, whose lines formed the link between the previously unconnected properties already acquired. The system thus formed consisted of lines radiating from Indianapolis, in a network covering the northeast, central, and eastern portions of the State of Indiana and extending south to Louisville, Kentucky. In 1931, also, the line of the Terre Haute, Indianapolis and Eastern Traction Company, running both east and west of Indianapolis, was acquired and merged into Indiana Railroad. This latter acquisition combined under one management the four dominant and connected systems of electric railway in Indiana, comprising by far the major portion of the electric railway mileage of the state, together with certain smaller lines. As you indicated in a previous questionnaire, the interurban and city lines of Indiana Service Corporation were operated as a unit of, and were Mr. Secretary coordinated into the "Indiana Railroad System". Following establish ment of unified management, certain paralleling, as well as some unprofitable lines were abandoned. Indiana Railroad was placed in receivership in 1933, but operation of all these lines as the "Indiana Railroad System" seems to have continued until late in 1934. In that year, the Public Service Company of Indiana contemplated abandoning its line and Indiana Service Corporation contemplated abandonment of its lines south of Fort Wayne. The receiver of Indiana Railroad, in order to prevent the dismemberment of the through route from Fort Wayne to Louisville, which would have resulted from abandonment of these segments, undertook their operation under leases effective October 1, 1934. The lines so leased were oper ated by the receiver on August 29, 1935. Perfection into unified management of the system of electric lines in 1930 and 1931 had been followed by negotiations with the steam railroads serving the same territory, as a result of which through rates and through routes with the steam railroads were established late in 1931. The extent to which the electric railway lines operated by Indiana Railroad dovetailed into the national system of railroad trans portation may be judged by the fact that, during a period described as typical in testimony in Electric Railway Docket No. 1 Indiana Railroad (transcript of testimony pp. 58-61) by representatives of the Indiana Railroad, it handled carload and less-than-carload freight originating at or destined to almost every state in the Union and Canada. Accord ingly, both as to its owned and leased lines, Indiana Railroad has been held to be an "employer" on the ground that it was more than a street, interurban, or suburban electric railway and on the further ground that its operations constituted it a part of the general steam-railroad system of transportation. Indiana Railroad, 229 I.C.C. 48 (1938). After the lease to the receiver of the Indiana Railroad, the Indiana Service Corporation continued to operate its city lines in Fort Wayne, and the North Division, acquired in 1924 from the Fort Wayne and Northwestern Railway Company. The North Division of Indiana Service Corporation, although more of a branch of the main lines to the south and a feeder to and from Fort Wayne, performed substantially the same transportation functions as other component parts of the "Indiana Rail road System", such as the lines operated by the Indiana Railroad, which were found to constitute an "employer" entity. The extent to which the North Division has been divorced from the remainder of the system since the lease of 1934, and the extent to which the common management pre viously prevailing has persisted, is not clear.1/ However, whether 1/ Service continued for a number of years after the lease to be offered in the Official Guide jointly by Indiana Railroad and Indiana Service Corporation as the Indiana Railroad System with the same supervisory and management officials listed. Likewise, many tariffs have been issued jointly by the Indiana Railroad and Indiana Service Corporation. the North Division continued to be operated with Indiana Railroad as part of the same system, under common or separate ownership (See Excess Income of St. Louis and 0 1Fallon Ry. Co., 124 I.C.C. 3,10; St. Louis and 0 1Fallon Ry. Co. v. United States, 279 U.S. 461, 483; Missouri Pacific R. Co. v. Ault, 256 U.S. 554, 560; Hines v. Dahn, 267 Fed. 105, 109 (C.C.A. 8th), aff'd sub nom, Dahn v. Davis, 258 U.S. 421; Deficit Settlement With Cripple Creek and Colorado Springs Railroad, 90 I.C.C. 271, 273, 274) need not be considered here, since the facts clearly show that the North Division has been in itself more than a street, interurban, or suburban electric railway and, therefore, not within the exemption proviso in section 1(a). On August 29, 1935, the North Division of Indiana Service Corporation consisted of the line from Fort Wayne through Garrett to Kendallville, about 31.5 miles, and the branch line from Garrett to Waterloo, about 9.8 miles. Early in 1937 the lines from Garrett to Kendallville and from Garrett to Waterloo, about twenty-one miles in all, were abandoned, and passenger service on the North Division dis continued. Today the North Division of Indiana Service Corporation consists of a line from Fort Wayne to Garrett, 20.3 miles long.

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