Missouri & Iowa Ry. Co. v. Norfolk and Western Ry. Co.

• Decision Date: 05 September 1995
• Docket Number: Nos. WD,s. WD
• Citation: Missouri & Iowa Ry. Co. v. Norfolk and Western Ry. Co., 910 S.W.2d 261 (Mo. App. 1995)
• Court: Missouri Court of Appeals
• Parties: MISSOURI & IOWA RAILWAY CO., a Missouri Railroad Corporation, Appellant, v. NORFOLK AND WESTERN RAILWAY CO., a Virginia Corporation, Respondent. MISSOURI & IOWA RAILWAY CO., a Missouri Railroad Corporation, Respondent, v. NORFOLK AND WESTERN RAILWAY CO., a Virginia Corporation, Appellant. 50044, WD 50061.

Page 261

910 S.W.2d 261

MISSOURI & IOWA RAILWAY CO., a Missouri Railroad

Corporation, Appellant, v. NORFOLK AND WESTERN RAILWAY CO., a Virginia Corporation, Respondent.

MISSOURI & IOWA RAILWAY CO., a Missouri Railroad

Corporation, Respondent, v. NORFOLK AND WESTERN RAILWAY CO., a Virginia Corporation, Appellant.

Nos. WD 50044, WD 50061.

Missouri Court of Appeals Western District.

Sept. 5, 1995.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Oct. 31, 1995.

Application to Transfer Denied

Dec. 19, 1995.

David Allen Masters, Macon, for appellant/respondent.

Stephen M. Schoenbeck, St. Louis, for respondent/appellant.

Before KENNEDY, P.J., and SMART and LAURA DENVIR STITH, JJ.

KENNEDY, Presiding Judge.

This is an appeal by condemnation plaintiff Missouri & Iowa Railway Company from a judgment which awarded to the condemnation defendant (which was another railroad, the Norfolk and Western Railway Company) interest on the condemnation award from and after filing of the commissioners' report on December 7, 1993 to August 11, 1994, the date of the jury verdict, and which taxed court costs against the condemnation plaintiff. The amount of the commissioners' award was $4,000,000, and the jury award upon trial was $3,925,465. The amount of interest accrued to the time of the verdict (August 11, 1994) was $160,289.76. The subject of the condemnation action was a 87.82-mile length of railroad track and right-of-way, beginning at Moberly, Missouri, and going north to the Missouri-Iowa boundary.

The condemnation defendant also appeals, claiming that the trial court had no subject matter jurisdiction of the case, since its railroad property sought to be condemned was under the exclusive jurisdiction of the Interstate Commerce Commission. The condemnation plaintiff, on the other hand, claims that defendant had abandoned this segment of track and right-of-way under order of the Interstate Commerce Commission granting permission for abandonment, and that the Interstate Commerce Commission did not have jurisdiction.

DEFENDANT'S APPEAL--SUBJECT MATTER JURISDICTION

We of course must take up first the cross-appellant's claim that the trial court did not have subject matter jurisdiction of the action for condemnation of the railroad property. This calls for a recounting of the history of the action.

Norfolk and Western owned and operated a 121.8-mile length of track and right of way extending from Moberly, Missouri, to Albia, Iowa, operating trains over it in the regular course of its railway business. This length of track and right-of-way includes the 87.82-mile portion from Moberly north to the Missouri-Iowa line.

The operation of the Moberly-Albia section was not profitable. Norfolk and Western, by petition filed September 30, 1992, applied to the Interstate Commerce Commission for permission to abandon this section. The ICC authorized the abandonment by order dated February 16, 1993, and served February 24, 1993.

Norfolk and Western claims that Federal law has pre-empted Missouri state law with respect to the railway property sought to be condemned here, and that the exercise of Missouri's laws of eminent domain conflict with Federal law that gives to the Interstate Commerce Commission jurisdiction over the abandonment of railroads. "Pre-emption arises in a wide array of contexts, from circumstances in which federal and state laws are plainly contradictory to those in which the incompatibility between state and federal laws is discernible only through inference." Hayfield Northern R.R. v. Chicago and N.W. Transp., 467 U.S. 622, 627, 104 S.Ct. 2610, 2614, 81 L.Ed.2d 527 (1984).

It is clear that the Interstate Commerce Commission has jurisdiction over the abandonment of railroads. In pursuance of that jurisdiction, it entered an order dated February 16, 1993, upon the petition of Norfolk and Western, authorizing the abandonment of its Moberly-Albia section of 121.8 miles. Plaintiff Missouri and Iowa Railway cites for the proposition that the Interstate Commerce Commission had surrendered jurisdiction of this section of roadbed and track Hayfield Northern, 467 U.S. 622, 104 S.Ct. 2610, 81 L.Ed.2d 527, also a case in which one railroad corporation was seeking to acquire by state eminent domain procedures the abandoned right-of-way and track of another railroad corporation. Against the contention that the ICC's jurisdiction under Federal statutes excluded the exercise of eminent domain under state statutes, the Supreme Court held that the issuance of a certificate of abandonment by the ICC terminated its jurisdiction. Eminent domain proceedings were allowed to proceed.

Defendant N & W, on the other hand, cites footnote 11 of Hayfield Northern as authority for its position that the ICC had retained jurisdiction of this segment of railroad track and right-of-way to the exclusion of state eminent domain jurisdiction. Footnote 11 reads as follows:

11. This does not mean that in the postabandonment period, States are free to undo the very purposes for which the Commission authorized an abandonment. For example, if the Commission authorized an abandonment on the ground that relocation of the track was essential to enable the carrier to provide adequate service elsewhere, pre-emption would almost certainly invalidate a subsequent order by a state court barring such transfer.

467 U.S. at 633, 104 S.Ct. at 2617.

The parties debate the question whether the process of abandonment by N & W is complete, N & W arguing that its abandonment is not complete, and is therefore not abandonment. It appears to us that "abandonment" means abandonment as a railroad and does not mean the disavowal and disposition of all interest in the right-of-way and track. "[T]he disposition of rail property after an effective certificate of abandonment has been exercised is a matter beyond the scope of the Commission's jurisdiction, and within a State's reserved jurisdiction. Questions of title to and disposition of the property are matters subject to State law." Abandonment of Railroad Lines and Discontinuance of Service, 365 I.C.C. 249, 261 (1981) quoted in Hayfield Northern, 467 U.S. at 634, 104 S.Ct. at 2617. The key question is, whether the Missouri condemnation statute, applied in the manner M & I proposes, "would obstruct the accomplishment of the objectives for which Congress enacted section 10905." ¹ This principle does not require that ICC jurisdiction be terminated for every purpose before State jurisdiction may be exercised for any purpose.

We hold that the trial court had subject matter jurisdiction to proceed with the State eminent domain proceeding. The post-abandonment conditions contained in the ICC's exemption order, discussed in succeeding paragraphs, do not have the effect of excluding state court jurisdiction in the state eminent domain proceedings.

N & W, after applying for and receiving the certificate of exemption, took the following steps toward termination of its railroad operation on the line in question: It cancelled, effective May 25, 1993, all service to and from all stations between Moberly, Missouri, and Moulton, Iowa, both inclusive. It entered into a contract for track removal and began removing the track and track materials. (The continued track removal was stopped by the issuance of an injunction in connection with the condemnation suit.) N & W's intention permanently to cease service on the segment in question is unmistakable.

N & W emphasizes the provision in the ICC order of February 16, 1993, which states:

"2. Subject to the conditions set forth above, N & W may discontinue service, cancel tariffs for the line on not less than 10 days' notice to the Commission, and salvage track and track material consistent with interim trail use/rail banking after the effective date of this decision and notice. Tariff cancellations must refer to this decision and notice by date and docket number." (Emphasis added).

N & W argues this brings the case within footnote 11 of Hayfield Northern, quoted above. We do not interpret the footnote to include such a case as the one before us. The footnote contemplates an ICC order that would find that "relocation of the track was essential to enable the carrier to provide adequate service elsewhere." There is no such finding here; the order simply allows the salvaging of the track, without any direction how or where it should be used. N & W did not interpret the order to have placed any restrictions on its use of the removed track. In one letter from N & W to a prospective buyer of the segment of the railroad, N & W indicated a purpose to place the salvaged track "in inventory." There is no difference between N & W's situation in this case and that of the abandoning railroad in Hayfield Northern, wherein the Supreme Court found that the fact that the condemnation suit would prevent the shifting of the track to "higher-value uses" elsewhere was not an impediment to the state court's eminent domain jurisdiction.

N & W points out that it continued, after the ICC's abandonment order of February 24, 1993, to serve Associated Electric Cooperative's power plant at Thomas Hill, over the south 15.3 miles of the track segment. Then on November 30, 1993, it leased that section of track to Lakeside Transportation L.L.C. The latter was formed to provide service temporarily to the Electric Cooperative. (Associated Electric on January 19, 1993, had entered into a contract with Burlington Northern to furnish rail service, and Burlington Northern was in the process of building track to the power plant. We gather the formation of Lakeside Transportation and its operation was to fill the gap between N & W's cessation of service to the power plant, and the commencement of Burlington Northern service.) The lease was for a year's term, from November 30, 1993, to November 30, 1994. When Lakeside actually ceased operations is not clear, but it had done so by March 10, 1995, when the ICC gave...