653 F.2d 1123 (7th Cir. 1980), 79-2120, Town of East Troy v. Soo Line R. Co.

Docket Nº:79-2120.
Citation:653 F.2d 1123
Party Name:TOWN OF EAST TROY, a municipal Corporation, Plaintiff-Appellee, v. SOO LINE RAILROAD COMPANY, Defendant-Appellant.
Case Date:October 08, 1980
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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653 F.2d 1123 (7th Cir. 1980)

TOWN OF EAST TROY, a municipal Corporation, Plaintiff-Appellee,



No. 79-2120.

United States Court of Appeals, Seventh Circuit

October 8, 1980

Argued April 30, 1980.

Rehearing and Rehearing En Banc Denied Dec. 3, 1980.

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Hugh C. Griffin, Chicago, Ill., for defendant-appellant.

John L. Maier, Jr., Rockford, Ill., for plaintiff-appellee.

Before CUMMINGS and BAUER, Circuit Judges, and EAST, [*] District Judge.

EAST, District Judge.

The Soo Line Railroad Company (Soo Line) appeals the judgment of the District Court, 476 F.Supp. 252, entered on June 14, 1979 pursuant to a jury verdict of $500,000 in favor of the Town of East Troy, Walworth County, Wisconsin (the Town). The verdict was based on the Town's costs to remedy a ground water pollution problem caused by Soo Line's negligence.

We note jurisdiction under 28 U.S.C. § 1291 and affirm.


On July 16, 1974 at about 3:15 P.M., a tank car and 18 other cars being transported by Soo Line through an unincorporated area known as Lake Beulah or Beulah Station within the limits of the Town derailed. The tank car, carrying 20,000 gallons of phenol, or carbolic acid, ruptured and spilled approximately half its contents onto the ground. The phenol, manufactured by the Georgia-Pacific Corporation (Georgia-Pacific) was en route from Georgia-Pacific's plant in Louisiana to Borden Chemical Ltd. in British Columbia. The parties' stipulation of facts presented to the jury described phenol:

"Phenol is a by-product of quemene which is derived from benzene which in turn comes from oil. It is a colorless to light pink crystalline material which melts at 106o Fahrenheit. The Interstate Commerce Commission lists phenol as a Class B Poison. It is widely used in commerce and industry in the manufacture of hospital disinfectants and other drugs

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and pharmaceuticals. It is also used in the manufacture of certain glues and resins and in some plastics."

The Lake Beulah area contains scattered homesites, a tavern, and a small manufacturing plant. At the time of the spill, there was no public water supply system. Residents relied on shallow private wells for domestic water use. Despite clean-up efforts, including the removal by Soo Line at the advice of the State Department of Natural Resources of over one million pounds of contaminated dirt, residents of the area complained of a bad taste and unusual smell in their water and experienced headaches, nausea, mouth sores, diarrhea, and dark urine. A toxicologist with the Environmental Protection Agency advised that no individual should be exposed for more than five days to concentrations greater than .001 milligrams of phenol per liter of water. A number of wells close to the spill site had phenol concentrations in excess of this standard. The distance the phenol spread and the extent of future hazards are disputed.

The Town is a rural area of 36 square miles and has approximately 3,000 residents. At the time of the accident, there was no Town Sanitary District and no centralized water supply for any part of the Town. The only properties owned by the Town in 1974 were the Town Hall and some lake landings and roads, none of which were damaged by the spill.

In early 1975, the Town retained private engineering firms to study the feasibility of constructing a public water supply system to serve Lake Beulah. The Town then formed a Sanitary District, purchased land, and engaged various engineers and contractors to build a centralized deep well public water system. The Town well was drilled to a deep aquifer separated by an impermeable layer of shale from the contaminated aquifer from which the individual property owners obtained their water. Those residents who elected to use the Town's system paid a tap-on fee and a monthly bill for water used. The system has the capacity for serving all lots in the Lake Beulah area.

The cost of constructing the well and the related mains, pumps, and pump house was $125,000. The Town paid for the well and for the services of its engineers, planners, excavators, chemists, attorneys, geologists, plumbers, hydrogeologists, etc. with a $500,000 Community Development Grant from the U. S. Department of Housing and Urban Development (HUD).


The Town, together with the individuals who claimed damage from the spill, filed suit against Soo Line and Georgia-Pacific on February 24, 1975. All individual plaintiffs settled, and the claim against Georgia-Pacific was dismissed. The case proceeded to trial as a public nuisance action in which the Town sought to recover $543,000 for its expenses incurred as a result of the spill. Soo Line's motion for summary judgment on the ground that Wisconsin law does not permit the Town to maintain such an action or to obtain such a windfall recovery was denied, and Soo Line was precluded from introducing any evidence of the HUD grant at trial. In a special verdict, the jury found Soo Line guilty of negligently creating a public nuisance and awarded the Town $500,000. The jury rejected the claim that Soo Line was guilty of wilful and wanton conduct. Soo Line's post-trial motions for judgment notwithstanding the verdict, for an alteration in the judgment, and for a new trial were denied. This appeal followed.


1. Was the Town's public nuisance action barred by the "injury peculiar to the complainant" requirement of § 823.01 of the Wisconsin Nuisance Statute?

2. Did the Town's receipt of the HUD grant prevent recovery of damages against Soo Line?

3. Did various errors in jury instructions and evidentiary rulings entitle Soo Line to a new trial?


Issue 1: Town's Standing to Bring Public Nuisance Action.

This case was tried on a public nuisance theory under the Wisconsin Nuisance Statute. Wis.Stats. § 823.01 reads as follows:

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"823.01 Jurisdiction Over Nuisances

"Any person, county, city, village or town may maintain an action to recover damages or to abate a public nuisance from which injuries peculiar to the complainant are suffered, so far as necessary to protect the complainant's rights and to obtain an injunction to prevent the same."

Thus, in order to recover its damages, the Town had to show that it suffered injuries peculiar to itself.

Soo Line does not appeal the finding that the phenol spill created a public nuisance. It contends, however, that the Town can claim damages only if land it owned was injured by the spill or if some Town function was impaired. It relies on cases decided under predecessor statutes to § 823.01. See Algoma v. Peterson, 233 Wis. 82, 288 N.W. 809 (1939); Juneau v. Badger Cooperative Oil Co., 227 Wis. 620, 279 N.W. 666 (1938); City of Madison v. Wisowaty, 211 Wis. 23, 247 N.W. 527 (1933); City of Milwaukee v. Milwaukee and Beloit Railroad Co., 7 Wis. 85 (1858). Soo Line contends that the statute does not permit recovery for expenses incurred by the Town in its "voluntary" efforts to alleviate the public nuisance. See Carey v. Brooks, 1 Hill 365 (S.C.1833). Soo Line argues that only the individual property owners had the right to bring actions under the nuisance statute.

The District Court agreed with Soo Line's statement of the question but arrived at a different answer in denying Soo Line's motion for summary judgment:

"Since the sole relief sought by the town is damages, the question is whether the town alleges any injuries peculiar to itself. In my judgment, the town has done so. The expenses incurred by the town in assisting the residents affected by the phenol spill are an injury peculiar to the town; none of the other plaintiffs or town residents may properly claim those items of injury as their own.

"In addition, the water system which the town constructed is the result of an injury peculiar to the town, to the extent such system was necessary to overcome the damage caused by the phenol spill."

There is no question that the Town has the power to expend money for the public health and welfare. Wis.Stats. § 60.18 (Supp. 1979-80) states:

"The qualified electors of each town shall have power at any annual town meeting by vote:

"(12) ... To direct, by resolution, the town board to exercise all powers relating to villages and conferred on village boards by ch. 61, except such power, the exercise of which would conflict with the statutes relating to towns and town boards. Any such resolution heretofore adopted pursuant to existing law or hereafter adopted pursuant to this law shall remain in force until rescinded."

The Town passed such a resolution on April 14, 1973 and has never rescinded it. Wis.Stats. § 60.29(13) vests the Town board with authority "(t)o exercise powers relating to villages and conferred on village boards when lawfully authorized so to do by resolution of the town meeting adopted pursuant to subsection (12) of section 60.18."

Section 61.34 enumerates powers of a village board which the Town became authorized to exercise upon passage of its resolution. Section 61.34(1) provides:

"61.34 Powers of village board

"(1) General grant. Except as otherwise provided by law, the village board shall have the management and control of the village property, finances, highways, streets, navigable water, and the public service, and shall have power to act for the government and good order of the village, for its commercial benefit and for the health, safety, welfare and convenience of the public, and may carry its powers into effect by license, regulation, suppression, borrowing, taxation, special assessment, appropriation, fine, imprisonment, and other necessary or convenient means. The powers hereby conferred shall be in addition to all other grants and shall be limited only by express language." (Emphasis supplied).

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Thus, by adopting its...

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