Lowden v. United States, 615.

• Decision Date: 31 July 1939
• Docket Number: No. 615.,615.
• Citation: 29 F. Supp. 9
• Parties: LOWDEN et al. v. UNITED STATES et al.
• Court: U.S. District Court — Northern District of Illinois

29 F. Supp. 9

LOWDEN et al. v. UNITED STATES et al.

No. 615.

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

July 31, 1939.

Wm. F. Peter, of Chicago, Ill., for plaintiffs.

William J. Campbell, U. S. Atty., of Chicago, Ill., for defendants.

Before EVANS, Circuit Judge, and WOODWARD and DUFFY, District Judges.

DUFFY, District Judge.

The Chicago, Rock Island and Pacific Railway Company, comprising 8,138 miles of railroad (hereinafter referred to as the "Pacific Company"), and The Chicago, Rock Island and Gulf Company, comprising 652 miles of railroad (hereinafter referred to as the "Gulf Company"), are both in bankruptcy for the purpose of reorganization under Section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205. The plaintiffs were appointed trustees of both properties. The Pacific Company owns all of the capital stock and the bonds of the Gulf Company. Notwithstanding the separate organization, the Gulf Company is a component part of the Rock Island System.

On November 8, 1937, the petitioners, who are the plaintiffs herein, filed with the Interstate Commerce Commission an application for authority under Paragraph (4) of Section 5 of the Interstate Commerce Act, 49 U.S.C.A. § 5(4) to lease the railway and properties of the Gulf Company. Hearings were had by the Commission, and Division Four thereof issued its report, dated October 29, 1938, in which it was found:

"Subject to the foregoing conditions, we find that the proposed lease by Frank O. Lowden, James E. Gorman and Joseph B. Fleming, as trustees in reorganization proceedings of The Chicago, Rock Island and Pacific Railway Company and of the properties of The Chicago, Rock Island and Gulf Railway Company, of which they are also trustees in reorganization proceedings, upon the terms and conditions proposed, will be in harmony with and in furtherance of the Commission's plan for the consolidation of railroad properties, and will promote the public interest.

"No order will be entered approving and authorizing the lease pending notice to us that the applicants accept the foregoing conditions."

Said findings further stated: "No change in train operations is herein involved. Operation by the Rock Island under the proposed lease will not impose upon the public any conditions pertaining to transportation of freight different from those now in effect, will result in no change in service to the public, and will have no effect upon rates or routes."

The findings also contained the following provision: "The only change which will be effected, if the lease be approved, will be in the accounting department of the Gulf at Fort Worth. The applicants show that duplication of accounting could be eliminated in connection with interline and foreign freight, equipment rents and repairs, purchase of company material, payrolls, and to a minor extent in connection with passenger traffic, and that unified operation as proposed would permit discontinuance of the compilation of separate statistics and the making of separate reports. This change would be brought about by the transfer of 20 employees from Fort Worth to the accounting department of the Rock Island at Chicago, and the dismissal of 49 employees, unless business increased sufficiently to warrant the retention of a greater number of men, resulting in an estimated annual saving of $100,000 of which $6,000 or $7,000 would accrue to the Gulf and the remainder to the Rock Island. On argument counsel for the applicants stated that since the hearing in this case, it has been determined that the 20 employees referred to will be retained at Fort Worth for the present. The estimate does not include a possible saving of $5,925 for office rent at Fort Worth, which is dependent upon whether the vacated office space can be sublet. The general officers of the Gulf will continue to represent Rock Island interest but as officers of the Rock Island, and as at present some of them will have jurisdiction of Rock Island lines outside of the State of Texas. The testimony is that no saving could be effected except by the dismissal and transfer of employees involved."

The following finding also was made: "It is clear from the record that the duplicate accounting now necessary under the present plan of operating the properties of the applicants requires excessive expenditures not in the public interest and which are a burden on interstate and foreign commerce. We are of the opinion, however, that provision should be made for the protection of the employees who will be forced to accept positions at reduced compensation, or who will be dismissed, or who will be required to change the place of their employment as a result of operation under the lease herein considered."

The entire Commission affirmed the findings of Division Four.

The petitioners obtained a reargument before the entire Commission and on April 3, 1939, the Commission issued its report and entered an order authorizing said lease, but only upon conditions which may be summarized as follows:

Retained Employees.

(a) No employee of either party to the lease shall, for 5 years after lease operation begins, be placed, as a result of lease operations, in a worse position with respect to compensation and rules governing working conditions than he occupied at the rate of commencement of lease operations, as long as he is unable in the exercise of seniority rights, to obtain a position producing compensation equal to or exceeding the compensation of the position held by him at such date of commencement; as long as he is unable to obtain such equal compensation, he shall be entitled to a monthly allowance equal to the difference between the monthly compensation actually received under lease operations and monthly compensation of the position in which he was displaced.

(b) If required to change the point of his employment as the result of lease operation, and if required thereby within one year from commencement thereof to move his place of residence, he shall be reimbursed for expense of moving his household effects and traveling expenses of himself and immediate family; also his actual wage loss, not exceeding two days.

(c) Any employee shall be protected against any loss suffered in the sale of his home within one year of the effective date of lease operations, for not less than its fair value; or against loss in securing the cancellation of an unexpired lease of a dwelling house occupied as a home by such employee.

Dismissed Employees.

(a) Any employee who is dismissed because his position is abolished or because he loses it by exercise of seniority rights by an employee whose position is abolished as a result of lease operation, shall be accorded a monthly allowance while deprived of employment, equal to 60% of his average monthly compensation during the last 12 months of his employment. The period of such monthly allowance is as follows:

                    Length of Service               Period of Employment
                1 yr. and less than    2 yrs.              6 months
                2 yrs. and less than   3 yrs.             12 months
                3 yrs. and less than   5 yrs.             18 months
                5 yrs. and less than  10 yrs.             36 months
                10 yrs. and less than 15 yrs.             48 months

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