Georgia Southern & F. Ry. Co. v. Atlantic Coast Line R. Co.

• Decision Date: 17 March 1967
• Docket Number: No. 23461.,23461.
• Parties: GEORGIA SOUTHERN AND FLORIDA RAILWAY COMPANY, Appellant, v. ATLANTIC COAST LINE RAILROAD COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

373 F.2d 493 (1967)

GEORGIA SOUTHERN AND FLORIDA RAILWAY COMPANY, Appellant, v. ATLANTIC COAST LINE RAILROAD COMPANY, Appellee.

No. 23461.

United States Court of Appeals Fifth Circuit.

February 16, 1967.

Rehearing Denied March 17, 1967.

H. P. Osborne, Jacksonville, Fla., Peter S. Craig, James A. Bistline, Washington, D. C., for appellant.

Albert B. Russ, Jr., William H. Maness, Jacksonville, Fla., for appellee.

Before TUTTLE, Chief Judge, and BELL and GOLDBERG, Circuit Judges.

GOLDBERG, Circuit Judge:

Georgia Southern and Florida Railway Company (GS&F) and Atlantic Coast Line Railroad Company (ACL) are two railroads whose lines cross in Jasper, Hamilton County, Florida. ACL runs approximately in a north to south direction, and GS&F runs approximately in a northwest to southeast direction. Somewhat southeast of Jasper and, accordingly, somewhat closer to GS&F than ACL, lies a large area of phosphate deposits. One company, Occidental of Florida, Inc., is now mining those deposits, and another, Owens-Illinois, owns a portion of the deposits but does not mine it.

Before June 23, 1965, neither ACL nor GS&F had any track running to the phosphate deposits. On that date GS&F began construction of a line of track starting from the GS&F main line at a point about 12 miles southeast of the Jasper crossing, running generally northeasterly for about 5.4 miles into the area of phosphate deposits, and ending at Occidental's phosphate plant. This line was completed in October, 1965.¹

On July 19, 1965, less than a month after GS&F started construction of its new track, ACL began construction of a line of track starting at a point on its main line just north of the Jasper crossing and intended to run about 8.5 miles in a generally southeasterly direction. This would have brought ACL also into the area of phosphate deposits. The new ACL line was to end in the area of the deposits owned by Owens-Illinois, at the site of a plant which Owens-Illinois planned to build. This proposed plant site was about 1.5 miles from the main GS&F track and about 5 miles from the Occidental plant. The GS&F main line actually passes through some of the Owens-Illinois reserves.

On November 2, 1965, GS&F filed a civil action asking the district court to enjoin the ACL construction, under 49 U.S.C.A. § 1(20).² GS&F moved for a preliminary injunction, and on the date of the hearing on that motion ACL filed a motion to dismiss for failure to state a claim, with four accompanying affidavits. The court heard testimony from five witnesses and heard oral argument. Several weeks later, on January 27, 1966, the trial judge dismissed the complaint, with prejudice, and made findings of fact and law.³

The plaintiff, GS&F, appealed and the trial judge enjoined ACL to preserve the status quo pending appeal.

After submission of the briefs on appeal, and less than a month before oral argument, GS&F filed a motion asking the district court to vacate its final judgment under Fed.R.Civ.P. 60(b). An attached affidavit by counsel for GS&F stated that he had just learned that Owens-Illinois had leased the right to mine its phosphate deposits to Occidental. The obvious conclusion from this statement is that the new facts changed the picture by showing that if ACL were allowed to build its proposed trackage, that would lead to both ACL and GS&F serving the same customer, Occidental.

The district court denied the motion to vacate, and GS&F now appeals that denial. We consolidated the appeal from this motion and the appeal from the original final judgment. We reverse.

I.

The trial court, in granting the motion to dismiss for failure to state a claim, considered matters outside the pleadings; therefore the motion must be considered as a motion for summary judgment.⁴ F.R.Civ.P. 12(b) reads in part:

"If, on a motion asserting the defense * * * of dismissal for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." emphasis added

Rule 56(c) provides in part:

"The motion for summary judgment shall be served at least 10 days before the time fixed for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits. * * *" Emphasis added.

The motion to dismiss and its accompanying affidavits were filed the morning of the hearing on the motion for preliminary injunction. The parties and the trial court treated this hearing as limited to the question of whether the preliminary injunction should issue. The trial judge opened the hearing by saying:

"Good morning. This is No. 65-349-Civil-J. It comes on plaintiff\'s * * * motion for preliminary injunction. * * *

At the close of the hearing, in the course of setting a bond should a preliminary injunction later be issued, the trial court indicated again the limited nature of the hearing:

"Well, it would seem to me that the case can be reached and disposed of on final hearing, * * * that it could be heard on final hearing within three or four months. * * *"

Nothing said before the hearing indicated that a summary judgment, a final judgment, might result from it.⁵ There was no prior notice of the nature of the hearing; there was no notice that affidavits would be filed. In fact, the hearing itself provided no notice of how the oral testimony and affidavits would later be used.⁶ The first indication that this material would be used to support a summary judgment was the judgment itself. In sum, there was no hearing on summary judgment at all. The case falls squarely within the rule of Enochs v. Sisson, 5 Cir. 1962, 301 F.2d 125, where we held it an abuse of discretion to grant summary judgment without proper notice and hearing as required by Rule 56.

In Enochs, we cited Bowdidge v. Lehman, 6 Cir. 1958, 252 F.2d 366. That case says in part:

"* * * Rule 56(c) provides that a motion for summary judgment requires service `at least 10 days before the time fixed for the hearing.\' We think the spirit of the rule requires the same notice and hearing where the court contemplates summary dismissal on its own motion. Since attorney for appellants was given neither notice nor opportunity to be heard upon the question of summary dismissal the judgment was erroneous." 252 F.2d at 368-369.

See Ullah v. Hoy, 9 Cir. 1960, 278 F. 2d 194.

The notice and hearing requirements of Rules 12(b) and 56(c) are far more than formalities. GS&F was cut off from opportunity to present rebutting evidence and argument relevant to the issue of summary judgment. Stated most baldly, GS&F lost its case without a full opportunity to be heard. ACL's argument that the hearing on preliminary injunction effectively presented all of the issues which GS&F could or would have presented at a hearing on summary judgment is inapposite, for loss of a motion for preliminary injunction means only temporary lethality. Final judgment is not then a possibility. When such a limited adjudication is the order of the day, we cannot say with assurance that the parties will present everything they have. The very intimation of mortality when summary judgment is at issue assures us that the motion will be rebutted with every factual and legal argument available.

The notice requirements of Rule 12 guarantee that the automatic change of a motion to dismiss into a motion for summary judgment will not be accomplished by an unforeseeable thrust with no chance to parry. Notice is ascendant and primary in the Federal Rules. They do not tolerate foils of obfuscation.

II.

The trial court held, on the merits, that the new construction of ACL was a "spur, industrial, team, switching, or side" track under 49 U.S.C.A. § 1(22)⁷ and that, therefore, ACL need not seek a certificate of public convenience and necessity from the Interstate Commerce Commission to build it, as is ordinarily required for building an "extension" under § 1(18).

The Rule 60(b) motion alleges facts which, if true, will change the whole face of this action: if Occidental has leased the Owens-Illinois property so that it is the only company mining the phosphates in the area, then ACL would be seeking to build a line to serve a company already served by another railroad. As we hold that the cause must be reheard, we need not rule on whether GS&F's new allegations alone would justify a Rule 60(b) motion for a new trial. We assume that the matter alleged in the Rule 60(b) motion will be introduced on remand; and because we do not know what effect the new evidence may have, we refrain from ruling explicitly on the merits.

However, we feel it proper to say that the trial court's almost exclusive reliance on Pennsylvania R. Co., v. Reading Co., E.D.Pa.1955, 132 F.Supp. 616, aff'd per curiam 3 Cir. 1955, 226 F.2d 958, is misplaced. That case used eight "tests", distilled from former cases construing § 1(22). These tests have no statutory basis, and were developed for a case different from the one before us. But the present case adopts those tests as an exclusive, controlling list of the relevant considerations. We think that the tests are, at most, helpful factors to be considered, and not fiats to be bound by. We disapprove of rubricating such "tests" into talismans of magical power.⁸

We invite the court's attention instead to the classic opinion of Mr. Justice Brandeis in Texas & Pacific R. Co. v. Gulf, Colorado & Santa Fe F. Co., 1926, 270 U.S. 266, 46 S.Ct. 263, 70 L.Ed. 578. Justice Brandeis said in part:

"A truer guide for courts to the meaning of the terms `extension\' and `industrial track,\' as used in paragraphs 18 to 22, is furnished by the context and by the relation of the specific provisions here in question to the railroad policy introduced by Transportation Act of 1920.

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