Interstate Commerce Commission v. Maine Cent. R. Co.

• Decision Date: 22 October 1974
• Docket Number: D,No. 355,355
• Citation: 505 F.2d 590
• Parties: INTERSTATE COMMERCE COMMISSION, Plaintiff-Appellee, and Ethan Allen, Inc., et al., Intervenors, v. MAINE CENTRAL RAILROAD COMPANY, Defendant-Appellant. ocket 74-2062.
• Court: U.S. Court of Appeals — Second Circuit

Page 590

505 F.2d 590

INTERSTATE COMMERCE COMMISSION, Plaintiff-Appellee, and Ethan Allen, Inc., et al., Intervenors, v. MAINE CENTRAL RAILROAD COMPANY, Defendant-Appellant.

No. 355, Docket 74-2062.

United States Court of Appeals, Second Circuit.

Argued Oct. 2, 1974.

Decided Oct. 22, 1974.

Peter J. Nickles, Washington, D.C. (Eugene D. Gulland, and Covington & Burling, Washington, D.C., on the brief), for defendant-appellant.

John J. Mahoney, Jr., Interstate Commerce Commission, Washington, D.C. (Bernard A. Gould, Interstate Commerce Commission, Washington, D.C., on the brief), for plaintiff-appellee.

G. Clark Cummings, New York City (Kelley, Drye, Warren, Clark Carr & Ellis, New York City, on the brief), for intervenor-appellee Ethan Allen, Inc.

John T. Collins, Sp. Counsel for New Hampshire Public Utilities Commission, Boston, Mass.

Richard H. Saudek, Sp. Counsel for the State of Vermont, Montpelier, Vt.

Before HAYS, ANDERSON and MANSFIELD, Circuit Judges.

ROBERT P. ANDERSON, Circuit Judge:

The Maine Central Railroad Company (Maine Central), the appellant, is a common carrier subject to Part I of the Interstate Commerce Act, 49 U.S.C. 1, et seq.; and it is operating under franchises granted by several states, including Vermont and New Hampshire. Through a combination of outright ownership and trackage agreements with the Boston and Maine Railroad and the Canadian National Railway, Maine Central operates a 57.52 mile rail line from Quebec Junction in Carroll, New Hampshire, to Beecher Falls, Vermont. This line is divided into four segments, the fourth or terminal segment is a 22.96 mile deadend stretch, known as the Beecher Falls Branch, which is owned by Maine Central and extends from North Stratford, New Hampshire to Beecher Falls. ¹ Except for approximately 1.5 miles in Vermont, all of this segment is located in New Hampshire, and the Maine Central is the only railroad which makes use of these tracks.

Prior to June 30, 1973, Maine Central's principal customers on the terminal segment were Ethan Allen, Inc., a furniture manufacturer, and the Woodland Division of the St. Regis Paper Company, a pulpwood processor. ² In the early part of 1973, St. Regis notified Maine Central of its decision to terminate its operations in Beecher Falls at the end of June, 1973, which it thereafter did.

Following this announcement and a review of the current and former business and profitability of the entire 57.52 mile rail line from Quebec Junction to Beecher Falls, Maine Central's Board of Directors voted on June 27, 1973, to take the necessary steps to secure approval from the Interstate Commerce Commission (I.C.C.) to abandon this 57.52 mile portion of the railroad. At that time it was its intention to continue the operation of the line until its petition for abandonment had been decided. ³

Before the Maine Central had completed its petition to the I.C.C., however, heavy rains on June 29, 30 and July 1, 1973, resulted in extensive flood damage to roadbed, culverts, bridges, tracks and other installations on the Beecher Falls Branch, which rendered this segment unsafe and inoperable. Consequently an embargo on all types of freight was formally filed on July 3, 1973 on behalf of Maine Central by the Association of American Railroads for the 22.96 mile length of the fourth or terminal segment. The embargo, amended in minor detail on July 13, 1973, was still in effect on March 20, 1974, when the I.C.C. filed its complaint in this action in the district court, in which it alleged that Maine Central had illegally abandoned the embargoed segment in violation of 1(18) of the Interstate Commerce Act (49 U.S.C. 1(18)). ⁴

The I.C.C. sought a mandatory injunction under 1(20) of the Act (49 U.S.C. 1(20)) ⁵ to compel the Maine Central to repair and operate the Beecher Falls Branch of the rail line and discontinue its illegal abandonment. The Public Service Board of the State of Vermont, Ethan Allen, Inc., and the New Hampshire Public Utilities Commission were allowed to intervene.

The district court found that, since the end of June, 1973, as the result of the flood damage and Maine Central's continued embargo, Ethan Allen, Inc., had been forced to ship by motor carrier at rates greatly in excess of those which it was required to pay in 1972 for shipments via Maine Central. The district court also found that Ethan Allen, Inc.'s Beecher Falls facility was specifically designed for product shipment by rail; a 700 foot rail siding was installed in 1964 at Ethan Allen, Inc.'s own expense as well as an indoor loading area that can accommodate nine railroad cars.

Because of its dependence on rail transportation, Ethan Allen, Inc., in the latter part of 1973 offered to pay Maine Central the sum of $30,000 (the estimate of damage contained in Maine Central's abandonment petition) to restore rail service to the Beecher Falls Branch. At the hearing before the district court Ethan Allen, Inc. increased its offer of assistance to $52,000 which equaled Maine Central's updated total storm and flood damage repair figure. It is not disputed that Maine Central has the resources in labor, material, equipment and financial means to repair the damage caused by the flood and to resume operations on the Beecher Falls Branch, and the district court specifically so found.

After the conclusion of the hearings in May and June of 1974, the district court denied Maine Central's motion to dismiss the complaint, granted a mandatory injunction requiring Maine Central to restore rail service on the embargoed section to the level provided prior to the flood, and ordered Ethan Allen, Inc. to contribute the proffered $52,000 to the cost of repairing the storm and flood damage. ⁶

A motion by Maine Central for a stay of the district court's order was, after a hearing, denied on August 8, 1974; and this court on August 16, 1974 denied Maine Central's motion for a stay pending appeal, but, on September 10, 1974, it ordered the appeal expedited.

In this court the Maine Central makes three points which are: (1) that the district court erred in finding that Maine Central had abandoned the Beecher Falls Branch in violation of 49 U.S.C. 1(18); (2) that the district court should have deferred to the primary jurisdiction of the I.C.C. in resolving this dispute; and (3) that, in view of the posture of the case and the existing equities, the district court committed an abuse of discretion in granting mandatory injunctive relief.

The first of these involves the question whether Maine Central's continuation for over a year of its initially justifiable embargo of July 3, 1973, is warranted by the I.C.C.'s long failure to take action on Maine Central's abandonment petition, particularly despite Ethan Allen, Inc.'s willingness to advance the cost of repair, or constitutes, instead, an unlawful abandonment in violation of 1(18) of the Interstate Commerce Act.

Maine Central argues that because the original cessation of service was brought about by storm and flood damage and through no voluntary act on its part and because it has not taken any action since that time which would render it unable to restore the damaged portion of line in question, the district court could not properly infer the 'intent' necessary to a finding of unlawful abandonment under 1(18). While the term 'abandonment' is not defined anywhere in the Interstate Commerce Act, and although this court in Zirn v. Hanover Bank, 215 F.2d 63, 69 (2d Cir. 1954), cited by Maine Central, stated that 'abandonment' in the context of that case meant 'to give up permanently,' the later case of Meyers v. Jay Street Connecting Railroad, 259 F.2d 532 (2 Cir. 1958), held that an embargo could be an expression of an intention to suspend service indefinitely, and that, for the purposes of P(18) and P(20) of the Interstate Commerce Act, such an indefinite suspension was not conceptually distinguishable from a permanent discontinuance of service. See 259 F.2d at 535. At the time the district court rendered its decision, the embargo had been in effect for more than a year in spite of the fact the Railroad possessed the financial and physical ability to repair the damage and resume service.

It is, of course, understandable that Maine Central would like to seize the opportunity to rid itself of the marginal operation of the Beecher Falls Branch, whthout being compelled to expend its funds for the repair and restoration of the embargoed line without a prior determination by the I.C.C. of its abandonment petition-- a decision which may render the restoration project entirely unnecessary. Nevertheless, Maine Central cannot be permitted to take the law in its own hands and it may not utilize the extraordinary remedy of an embargo, which should be a temporary measure, see Froehling Supply Co. v. United States, 194 F.2d 637, 641 (7 Cir. 1952); New Orleans Traf. & Trans. Bureau v. Miss. Valley Barge, 280 I.C.C. 105, 117 ( ), to accomplish its purpose and at the same time deny the public the protection which 1(18) and 1(20) were designed to afford. A railroad has a duty under both the Interstate Commerce Act and under its state franchises...