Southern Railway Co. v. Louisville and Nashville R. Co.

• Decision Date: 29 June 1960
• Docket Number: Civ. No. 3700.
• Citation: 185 F. Supp. 645
• Parties: SOUTHERN RAILWAY COMPANY, Plaintiff, v. LOUISVILLE AND NASHVILLE RAILROAD COMPANY, Defendant.
• Court: U.S. District Court — Western District of Kentucky

185 F. Supp. 645

SOUTHERN RAILWAY COMPANY, Plaintiff, v. LOUISVILLE AND NASHVILLE RAILROAD COMPANY, Defendant.

Civ. No. 3700.

United States District Court W. D. Kentucky, Louisville Division.

June 29, 1960.

COPYRIGHT MATERIAL OMITTED

Albert F. Reutlinger, Louisville, Ky., for plaintiff.

Robert P. Hobson, Joseph L. Lenihan, Louisville, Ky., for defendant.

BROOKS, District Judge.

1. By this action, plaintiff (herein called Southern) seeks to recover of the defendant (herein called L&N) more than $157,000 for placing cars of L&N at, or removing such cars from, the plant of General Mills, Inc., located on Farmington Avenue in Louisville, Kentucky, during the period June 27, 1955, through August 31, 1959. Southern rests its claim upon a certain tariff (and reissues thereof) which it published and which undertakes to assess a charge on such cars as are "interchanged" between the Southern and L&N on a track adjacent to the General Mills plant.

2. L&N denies liability to Southern for the amount claimed and alleges that switching service to the General Mills plant is the subject of a contract between the two railroad companies and General Mills, under which the plant was to be served by the two railroads jointly and the two railroads were to alternate the switching service on an annual basis; and that Southern breached the contract and locked the L&N out of the plant, thereby preventing the L&N from performing its part of the service. The L&N, in its answer and at the trial, expressed its willingness to perform the contract and to switch the plant for a period of time equal to that during which L&N has been excluded from the plant by Southern and thus repay Southern in kind for the services it has performed.

3. The L&N, in its answer, also pleads that Southern is estopped to charge the L&N any sum for switching L&N cars to and from the plant, alleges that the tariffs are not a proper issue in the case and, in any event, are inapplicable and unreasonable, and by counterclaim seeks a declaratory judgment as to the existence and validity of the contract covering service to the plant. It also seeks recovery of $2,109.58 which it claims it paid to the Southern in error.

4. The case was tried to the court without a jury on December 3 and 4, 1959, and while the Southern confined its proof in chief to the tariff issue, the L&N put in much testimony and numerous documents in support of its case, the transcript of testimony numbering more than 500 pages.

5. The evidence shows without contradiction that beginning in 1951 there were extended negotiations by and among General Mills, L&N and Southern concerning the establishment by General Mills of a new plant at Louisville. One of the major requirements of General Mills was that the new plant site be served by both the L&N and the Southern. The site on Farmington Avenue was eventually selected by General Mills because it had this attribute, and General Mills' Director of Traffic, A. M. Thomas, testified at the trial that his Company paid a premium for the land because of this feature, saying that there are not many sites in the Louisville area that can be reached by both the L&N and the Southern.

6. The plant site on Farmington Avenue lies east of Floyd Street and north of Farmington Avenue. Between Floyd Street and the plant site there now is, and was in 1951, an industrial-lead track of the L&N, and between the L&N track and the plant site there was in 1951 a track owned by the Southern which had long been unused if not completely abandoned, known as the Highland Park Spur. The Highland Park Spur has since been rehabilitated by Southern and extends to near the north edge of Farmington Avenue.

7. In order to make the plant site available to, and suitable for use by, General Mills a number of ancillary transactions had to be accomplished. For example, L&N had a right of way through the plant site, and it quitclaimed that right of way to General Mills. L&N acquired certain parcels of land from adjacent property owners so that the necessary track construction of the two carriers to serve the plant could be accomplished, and General Mills made an exchange of property with another adjacent property owner so that the connecting track might be built into the plant site.

8. With the definite agreement and understanding among all of the parties that the new plant would be jointly served by the two railroads and switched by them on an alternate yearly basis, General Mills erected its new plant, spending approximately $1½ million on the project. L&N and Southern spend about $15,000 each in constructing their respective track connections, and General Mills spent about $22,000 for its plant tracks, which were constructed for it by L&N.

9. During the preliminary negotiations, a number of different plans were considered for connecting the tracks of the two railroad companies with the plant tracks. The first plan called for the plant tracks to turn out of the L&N track and for the Southern to use the L&N track to reach the plant. The second plan also contemplated a direct connection between the L&N track and the plant tracks. The third plan, which was finally adopted because it afforded the two railroads the greatest ease of operation, provided for the plant tracks to connect with the Southern track and for the L&N to connect its track to the Southern's and use a small portion of the Southern's track to reach the plant.

10. Construction of the plant was started in 1953, and when L&N on May 4, 1953, attempted to make a delivery of construction materials to the plant, it found the switch from the L&N track to the Southern track spiked against it. Upon remonstrance by the L&N to the Southern, the spike was removed and the L&N enjoyed uninterrupted access to the plant until September 3, 1953, on which date Southern's Superintendent telegraphed L&N's Superintendent that the switch would again be spiked. Protest by the L&N again resulted in the removal of the spike. The L&N again encountered difficulty on November 30, 1953, on which date the Southern placed a lock on the switch. Once again, the L&N's protests resulted in the opening of the switch.

11. The General Mills plant began operations in the latter part of 1953, and the L&N and the Southern agreed that while the formal contract was being prepared, switching for the plant should be alternated between L&N and Southern on a monthly basis. Accordingly, L&N did all of the switching for both L&N and Southern during the month of January, 1954, Southern did all of the switching for both carriers during February, 1954, the L&N in March, the Southern in April, and the L&N in May of 1954, until May 21, 1954, when Southern again locked the switch against the L&N. The switch has remained locked since that day, the L&N thereby being denied access to the plant.

12. By stipulation made in open court, Southern and L&N agreed that the contract which appears at pages 214-236 of the transcript, although never formally executed, constitutes the agreement by and among the parties. That contract is a 3-way agreement between L&N, Southern and General Mills. It recites that General Mills selected the Farmington Avenue plant site on the assurances of the two carriers "that it would be served by both of them, with all of the plant's switching to be handled by one railroad at a time on an alternate yearly basis." In paragraph 2 of the contract, Southern grants the L&N the right to use certain of its tracks to reach the General Mills plant, and the L&N grants the Southern similar rights on certain of its tracks and, in addition, grants Southern the right to use the L&N's track to serve the plants of two adjacent industries, Steel Fabricators, Inc., and Steel Suppliers, Inc. In Paragraph 4 each carrier agrees to maintain its tracks which are to be jointly used, in good condition, at its own expense. Paragraph 5 provides that L&N and Southern "shall each have equal rights with the other in and to the joint use of said tracks of the Southern Company and the Louisville Company, respectively, so to be jointly used hereunder," as well as the General Mills tracks. Paragraph 10 of the contract provides that inasmuch as the industry desires that the Southern and L&N alternate in the performance of switching service to the plant on an annual basis, "it is hereby agreed that the Southern Company shall perform such switching for itself and the Louisville Company during the first years of the life of this agreement, and the Louisville Company shall perform such switching for itself and the Southern Company during the second year of the life of this agreement, and thereafter such switching shall be rotated by the Southern Company and the Louisville Company in the order aforementioned for like periods of time during the life of this agreement." Paragraph 15 of the contract provides that, except as to the alternate annual switching arrangement, the contract shall take effect as of April 1, 1954, and that the alternate annual switching arrangement shall become effective June 1, 1954. The reason for the exception as to the annual switching was that when the contract was being placed in final form in May of 1954, L&N was performing the switching during that month under the interim monthly arrangement.

13. As an excuse for its failure to perform the contract which it admits having entered into, Southern alleges that it was impossible for it to perform such contract. Specifically, it alleges that the Southern, instead of performing all of its own switching service at Louisville, employs the Kentucky & Indiana Terminal Railroad Company (herein called K&I) to do some of such work, including switching service to the General Mills plant; that the K&I is owned by the Monon, the B&O and Southern one-third each; that it pays the K&I on "an engine hour basis" (not a tariff basis) for doing the work; that by contract the K&I has the right to perform substantially all of...