Chicago & Eastern Illinois R. Co. v. Illinois Central R. Co.

• Decision Date: 16 December 1966
• Docket Number: No. 66 C 1842.,66 C 1842.
• Parties: CHICAGO & EASTERN ILLINOIS RAILROAD COMPANY, a corporation, Plaintiff, v. ILLINOIS CENTRAL RAILROAD COMPANY, a corporation, Defendant.
• Court: U.S. District Court — Northern District of Illinois

261 F. Supp. 289

CHICAGO & EASTERN ILLINOIS RAILROAD COMPANY, a corporation, Plaintiff, v. ILLINOIS CENTRAL RAILROAD COMPANY, a corporation, Defendant.

No. 66 C 1842.

United States District Court N. D. Illinois, E. D.

November 17, 1966.

Supplemental Opinion and Ruling on Motions December 16, 1966.

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Merrill Shepard, Ellis A. Ballard, W. McNeil Kennedy, Chicago, Ill., Pope, Ballard, Uriell, Shepard, Kennedy & Fowle, Chicago, Ill., of counsel, for plaintiff.

John Foster, W. J. O'Brien, Lawrence Lawless, Thomas F. McFarland, Jr., Chicago, Ill., Robert Mitten, Chicago, Ill., of counsel, for defendant.

OPINION AND ORDER

AUSTIN, District Judge.

This is a suit arising under Sections 1(18)¹ and 1(20)² of the Interstate Commerce Act, 49 U.S.C. §§ 1(18), 1(20). Both parties are interstate carriers by rail subject to the Act. Jurisdiction of the Court is founded upon 28 U.S.C. § 1337 as a proceeding arising under an Act of Congress regulating commerce, and venue is laid in this District pursuant to 28 U.S.C. § 1391.

In its verified complaint, plaintiff seeks an injunction against the continued construction of, and future operation over, trackage facilities being built by defendant from the terminal point of defendant's trackage at Orient Mine No. 3 in Jefferson County, Illinois, to a mine to be opened by the Inland Steel Company, located some three and one half miles southeast of Orient Mine No. 3, unless and until the defendant shall have obtained from the Interstate Commerce Commission a certificate of public convenience and necessity in compliance with 48 U.S.C. § 1(18). (See Appendix.)

Defendant has filed a verified counterclaim in which it seeks to enjoin plaintiff from continuing to operate over trackage built by plaintiff in 1960 extending from the city of Nason, in Jefferson County, to Old Ben Mine No. 21 in Franklin County, Illinois, until such time as plaintiff shall have applied for and received a certificate of public convenience and necessity authorizing the alleged extension as required by 49 U.S.C. § 1(18). The trackage which is the subject of the counterclaim runs in a north-south direction approximately one mile east of the proposed Inland mine. (See Appendix.) Defendant also seeks an accounting of past revenues collected by plaintiff as a result of its operation over the challenged trackage as well as the right to share in any future revenues, all pursuant to rights defendant claims it has as the result of an Agreement between it and plaintiff hereinafter described.

Numerous affidavits have been filed by both parties in support of their respective claims. A hearing was held on October 26, 1966, as to the questions of fact and law raised by both the complaint and counterclaim. Briefs have been filed by both parties.

The principal question presented by both the complaint and counterclaim is identical, and that is, whether as a matter of law the challenged trackage is an "extension" or "spur" as those terms are used in the Act. This is a mixed question of fact and law which is left by Congress to the decision of a court and not to the final determination of the Commission. United States v. State of Idaho, 298 U.S. 105, 56 S.Ct. 690, 80 L.Ed. 1070 (1936). The question is properly presented here first, rather than before the Commission, because the exclusive remedy of a "party in interest" who may be injured by allegedly unlawful construction of trackage, where no application for a certificate of public convenience and necessity has been made by the constructing carrier, is by way of an injunction. Texas & P. Ry. v. Gulf, C. & S. F. Ry. Co., 270 U.S. 266, 46 S.Ct. 263, 70 L.Ed. 578 (1926).

This dispute arises out of the desire of the two carriers to serve a coal mine to be opened by the Inland Steel Company not far from the trackage of either railroad. The mine is located in the southwest quarter of Jefferson County, Illinois, an area rich in coal fields, which provides a significant source of revenue for the carriers serving the area. For example, the proposed Inland mine is stated by the parties to represent as a source of freight approximately 1.5 to 2.5 million tons of coal per annum for an indefinite number of years in the future.

There are, at this time, four railroads effectively operating in the southwest quarter of Jefferson County, plaintiff (C&EI), defendant (IC), the Missouri Pacific Railroad Company (MP), and the Chicago, Burlington & Quincy Railroad (CB&Q). A fifth railroad, the Jefferson Southwestern Railroad (JSW), is there in name only as it is owned and operated by the plaintiff, defendant, and the MP.

The JSW extends southwesterly from Mt. Vernon to Nason, a distance of 12.84 miles. It was constructed in approximately 1924 by the Jefferson Southwestern Railroad Company, a subsidiary of the Illinois Coal Corporation, to serve about 22,000 acres of land in the southwestern quarter of Jefferson County, and particularly to serve a mine located at Nason. Nason, therefore, is the terminal point of the JSW. Nason is approximately 4.5 miles north of the proposed Inland mine. The JSW connects at Mt. Vernon with a main line of the C&EI. (See Appendix.)

In 1941, the IC and the trustee of the MP obtained authority from the ICC to operate under contract the properties of the JSW. Illinois Central Railroad Company, et al., Operation, 247 I.C.C. 415 (1941). The Commission found that the JSW was granting to the IC and MP "the exclusive right" to use the JSW trackage "for the purpose of * * serving any and all persons located on or near" the JSW trackage and any connecting "service tracks" that might be installed and operated by the IC and MP. The Commission noted that it was more economical to permit the IC to operate over the JSW than to permit it to construct its own lines into the area served by the JSW. The nearest IC main line to Nason was its north-south line approximately 15 miles west. The Commission also noted that "No other railroads are known to be interested in the JSW." The JSW was operated continuously by the MP and IC from 1941 until 1952. During those years, all motive power over the JSW was provided exclusively by the MP, although cars of both the MP and IC were used to haul freight. Thus in 1941, the C&EI had no interest of any nature in the JSW.

In 1949, the IC received authority from the Commission to construct an extension of its line running from its north-south main line south of Bois, in Perry County, easterly across the line of the MP to a connection with a spur track of the CB&Q at Orient Mine No. 3, in Jefferson County. The length of this extension is approximately 9.45 miles. The extension, commonly referred to as the IC's "Bois extension," was constructed after obtaining Commission approval. Illinois Central Railroad Company—Construction, 271 I.C.C. 811 (1949). It is approximately 3.5 miles from the terminal point of the IC extension at Orient Mine No. 3 to the proposed Inland mine. Thus in 1949, the closest IC trackage of its own to the Inland mine was this extension, approximately 3.5 miles away, and the closest C&EI trackage of its own to the Inland mine was its main line running south from Mt. Vernon, approximately 6.5 miles away. (See Appendix.)

In 1952, the C&EI purchased the entire stock of the JSW from the Zeigler Coal Company, which at that time owned the JSW, pursuant to an agreement with Zeigler that it would sell one-third of the stock to each of the two railroads that had been operating the JSW up to that time. Thus in 1952, the C&EI, IC and MP entered into a tri-partite Agreement to own and operate the JSW. The Agreement was approved by the Commission in Jefferson Southwestern Railroad Company, et al., Finance Dockets No. 17602, 17726, and 17727, (1952 and 1954). The Agreement provided, among other things, that any proprietary line had the right to construct an extension, spur or industrial trackage subject to any necessary approval by any regulatory body having jurisdiction, and that either of the other proprietary lines had the option within six months' notice of completion of any such construction to acquire an equal interest.³ The Agreement also provided that each of the three proprietary railroads would have trackage rights over the JSW and thus the right to operate under each railroad's own power. Prior to granting of Commission approval, however, the mine at Nason closed, and no carrier has moved coal from the Nason mine after 1952. Thus it was in 1952 that the IC and C&EI first acquired a proprietary interest in the JSW.

In 1960, Old Ben Mine No. 21 opened. It is located in Franklin County approximately 2 miles east of the CB&Q's northsouth main line. Franklin County is located directly south of Jefferson County. The first service to the mine was furnished through the construction by the CB&Q of a spur track extending from its north-south main line to the mine. The IC and MP carried freight from the mine over the CB&Q tracks pursuant to a contractual switching agreement with the CB&Q. In September, 1960, the C&EI, pursuant to a request from the owners of Old Ben Mine No. 21, completed construction of trackage, its "Old Ben trackage," southward from the terminus of the JSW at Nason, across the land holdings of Inland, to Old Ben Mine No. 21, a distance of approximately 5.9 miles. It is this segment of trackage that defendant contends by its counterclaim is an "extension" and not a "spur." To construct this trackage, it was necessary for the C&EI to rehabilitate the JSW trackage from Mt. Vernon to Nason which apparently fell into disuse by its three owners when the mine at Nason closed.⁴ This trackage lies approximately one mile east of the proposed Inland mine. The C&EI, pursuant to the JSW owners' agreement, notified the IC and MP by telegram on September 13, 1960, that it had completed construction of the trackage from Nason to Old Ben Mine No. 21....