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Baltimore & O.R. Co. v. Chicago Junction Ry Co.

July 8, 1946

BALTIMORE & O.R. CO. ET AL. (INTERSTATE COMMERCE COMMISSION, INTERVENER)
v.
CHICAGO JUNCTION RY CO.



Author: Sparks

Before SPARKS, MAJOR, and KERNER, Circuit Judges

SPARKS, Circuit Judge.

By this action plaintiff companies sought damages against the defendants, and a preliminary and permanent injunction. The action sought damages and to enjoin defendants' alleged disobedience of a condition contained in an order of the Interstate Commerce Commission of May 16, 1922, see Chicago Junction Case, 71 I.C.C. 631, and to enforce an alleged agreement said to have arisen by operation of law out of that order. A preliminary injunction was issued against all three defendants, and the cause was set for final hearing on September 20, 1946. From this interlocutory decree the appeal is prosecuted by Chicago Junction Railway Company.

All the facts have been stipulated: The plaintiffs are eight operating railroads. The Interstate Commerce Commission was given leave to intervene as a plaintiff, and filed an intervening complaint.

Defendants are The Chicago River and Indiana Railroad Company, Chicago Junction Railway Company, and The New York Central Railroad Company. They are referred to respectively as the River Road, the Junction, and the Central.

Plaintiffs and Central are competing trunk-line railroads whose lines extend easterly and southeasterly from the City of Chicago, and each of them is engaged in the transportation of live stock, other than hogs and sheep, from the Union Stock Yards in Chicago to points of destination east and southeast.

The Junction is a non-operating, lessor railroad corporation. Prior to May 19, 1922, it operated a small but important switching road in and around the Union Stock Yards in the City of Chicago in conjunction with a connecting but separate switching line owned and operated by the River Road. Both of these terminal railroads are now, and since May 19, 1922, have been operated by the River Road, which is a wholly-owned subsidiary of Central

On May 16, 1922, on the application of Central, the Interstate Commerce Commission entered an order in Chicago Junction Case, supra, in which it approved and authorized (1) the acquisition by Central of the control of River Road by the purchase of its capital stock, and (2) the acquisition by River Road of control of the property of Junction by lease for ninety-nine years, and in perpetuity thereafter, at the option of the lessee. The approval and authorization were made subject to the observance of certain conditions, one of which, not here material, was modified in a supplemental order, in Chicago Junction Case, 150 I.C.C. 32, on December 3, 1928. The order of May 16, 1922, was upheld as valid by a decree of a three-judge District Court for the Northern District of Illinois, Eastern Division, on January 15, 1929.

On May 19, 1922, pursuant to such approval and authorization of the Interstate Commerce Commission, Central acquired all the capital stock of River Road, and the latter leased from Junction, at a fixed annual rental, all the lines of railroad and other railroad properties of Junction, including all of the locomotives and cars, for a term of ninety-nine years, and thereafter, at the option of River Road, in perpetuity. Both terminal properties thus came under the control of Central which has continued ever since.

The lease referred to expressly provides that River Road "shall have the right to conduct, operate and manage * * * the premises and properties by this instrument demised." This provision is in accord with the Commission's order, which approved and authorized the acquisition by River Road of the control of the property of the Junction. The authorizing words of the order are in conformity with the language of Section 5(2) of the Interstate Commerce Act as it then read, 49 U.S.C.A. ยง 5(2), which provided that the Commission should have authority to approve and authorize the acquisition, to the extent indicated by the Commission, by one of such carriers of the control of any other such carrier or carriers under a lease.

Upon making the lease referred to, River Road took over the personnel of Junction, except a few of its officers. Since that time the demised properties of Junction have been in the possession of River Road, which has been the sole operator of it under the name of Chicago Junction Railway, Chicago River and Indiana Railroad Company, Lessee. Since making the lease, Junction has not had any tariffs on file with either the Interstate Commerce Commission or the Illinois Commerce Commission, and has not operated, or in any way participated in the operation of the properties leased by it to River Road, nor had any voice in its management or operation. At no time since the date of the lease has Junction had any traffic or operating relationships, arrangements or agreements with plaintiffs, River Road, Central or any other railroad.

The sole activities of Junction, since the execution of the lease, have been those of a non-operating lessor railroad corporation, consisting principally of the collection and distribution of the rentals received from River Road. Junction has only three officers: a president, a secretary and treasurer, and an auditor. It has neither a traffic nor an operating department, nor officers or employees engaged in any of those activities.

On May 16, 1922, the date of the authorizing order of the Commission, and for many years prior thereto, plaintiffs or their predecessors in interest were permitted to operate with their own power and crews over the line of Junction to and from the Union Stock Yards in Chicago for the purpose of placing empty stock cars, used in transporting livestock other than hogs and sheep, at points of loading in the Union Stock Yards, and for the purpose of removing such cars after they had been loaded. For this privilege plaintiffs or their predecessors in interest paid a trackage charge. These operating arrangements were continued in effect by River Road from May 19, 1922, until and including January 31, 1946.

On or about January 25, 1946, Central and River Road notified plaintiffs that on and after February 1, 1946, Central and River Road would not permit plaintiffs to operate over the demised line of Junction for the purpose of placing empty stock cars at the Union Stock Yards for loading, or for the purpose of removing such cars after they had been loaded. Plaintiffs were further notified by Central and River Road that on and after February 1, 1946, the terminal switching work on the demised railroad formerly performed by plaintiffs with their own power and crews would be performed by River Road with its own power and crews. The change in operating arrangements was placed in effect by River Road on that date, and ...


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