The opinion of the court was delivered by: Mercer, Chief Judge.
This suit, instituted by plaintiff, Chicago and North Western
Railway Company, against Peoria and Pekin Union Railway Company
and other railroads, prays relief by declaratory judgment.
Plaintiff has now moved for summary judgment in its favor upon
its complaint, as amended. The nature of the case and the scope
of plaintiff's position that it is entitled to summary judgment
necessitates a rather thorough summary of the pleadings.
The complaint, as amended named as defendants, in addition to
the Peoria and Pekin Union, Illinois Central Railroad Company,
Peoria and Eastern Railway Company, the New York, Chicago & St.
Louis Railroad Company, Chicago & Illinois Midland Railway
Company, and The Pennsylvania Railroad Company. Upon leave of
court first had, the United States Trust Company of New York, as
Trustee of Peoria & Pekin Union Railway Company First Mortgage
dated January 1, 1950, intervened as a defendant. Hereinafter,
for convenience, the parties are referred to as plaintiff
(sometimes C. & N.W.), P. & P.U., I.C., Nickle Plate, P & E., C.
& I.M., Penn., and intervener. In the course of the summary and
analysis of the pleadings reference will be made to the Toledo,
Peoria & Western Railroad Company, Minneapolis & St. Louis
Railway Company, The Peoria Terminal Company, Chicago, Rock
Island and Pacific Railroad Company and Gulf, Mobile and Ohio
Railroad Company, which, respectively, are hereinafter referred
to as T.P. & W., M. & St. L. Terminal, Rock Island and G.M. & O.
P. & P.U. is a corporation, the stock of which is owned by
plaintiff, C. & I.M., P. & E., Nickle Plate, Penn. and the
Mississippi Valley Corporation, a wholly owned subsidiary of I.C.
The board of directors of P. & P.U. consists of the principal
officers of all owner railroads, who act in their official
capacity as representatives of their respective railroads.
Historically, P. & P.U. was organized by certain proprietary
railroad lines to handle terminal and switching traffic in the
City of Peoria, Illinois. The rights and obligations of those
proprietary lines and P. & P.U. relating, inter alia, to the
transfer, switching or handling of freight cars coming into or
going out of, or through the City of Peoria, were defined by a
contract dated February 1, 1881. That contract is still in effect
and has been extended for a term to February 1, 1981. I.C., P. &
E., Nickle Plate, C. & I.M. and Penn. are successors in interest
to the original proprietary lines and to the rights and
obligations under the 1881 contract.
On December 1, 1911, plaintiff entered into a contract with P.
& P.U. whereby it was agreed, among other things, that P. & P.U.
would handle the transfer and switching of all cars of plaintiff
coming into or going out of or through the City of Peoria at a
uniform rate per car. That contract has been extended to February
1, 1981, and is the subject matter of the present suit.
Jurisdiction of the court is invoked in the cause upon
diversity of citizenship, the claim involved exceeding the
jurisdictional amount of $10,000.00.
With relationship to Peoria, plaintiff is a north-south trunk
line railroad, operating over its line extending from Chicago to
St. Louis, Missouri. Its main line passes westerly of the Peoria
City limits, transversing, among others, places in the Peoria
area known as Kickapoo Junction, Sommer and Hollis.*fn1
T.P. & W. is an east-west trunk line railroad, operating over
its main line which, with trackage rights granted by other
railroads, extends from Effnor, on the Illinois-Indiana State
Line, through Peoria, to its western terminus at Lomax, Illinois,
and Keokuk, Iowa. Its line
intersects the main line of plaintiff at or near Hollis.
Prior to March 6, 1957, plaintiff and T.P. & W. constructed a
new track connection between their respective lines at Sommer,
located several hundred feet south of Hollis, designed to permit
the direct interchange of freight between the two lines.*fn2 On
March 6, 1957, direct interchange of freight between plaintiff
and T.P. & W. was commenced at Sommer, a practice which has since
continued, with the exception of one interruption not here
material. Plaintiff and T.P. & W. sought, and obtained, approval
of construction of the connecting line and of the arrangement for
direct interchange of traffic, with exceptions not here material,
from the Interstate Commerce Commission. F.D. No. 19922.
Sommer is in the Peoria vicinity, located southwesterly from
and outside the corporate limits of the latter city. By use of
the Sommer connection with T.P. & W., plaintiff has interchanged
and now interchanges directly with the T.P. & W. substantial
amounts of freight of a type which had, prior to March 6, 1957,
been handled by the P. & P.U. within Peoria under the terms of
the 1911 agreement, as extended. Therein lies the crux of the
dispute which gave rise to the initial complaint.
After the direct interchange between plaintiff and T.P. & W.
began, P. & P.U. took the position that that interchange was a
violation of plaintiff's obligations under the 1911 contract,
claiming the right under the contract to handle all C. & N.W.
freight traffic destined for interchange in the Peoria vicinity
to or from other railroads and all freight moving between
plaintiff's line and consignees or shippers in the area served by
P. & P.U.P. & P.U. demanded from plaintiff an accounting under
the contract with respect to all freight interchanged directly
with T.P. & W., and the payment to P. & P.U. by plaintiff of the
contract rate for all cars so interchanged which, in the absence
of the direct interchange connection at Sommer, P. & P.U. would
Prior to, and at the inception of this suit plaintiff took the
position that the 1911 contract, as extended, would not preclude
the direct interchange arrangement with the T.P. & W. and that
plaintiff's operations in that respect did not constitute a
violation of its contract with P. & P.U. Further, plaintiff
alleged in its complaint that public benefit, added service
efficiency and operating economy are derived from plaintiff's
direct interchange connection with T.P. & W., which would be
disrupted and destroyed if the claim of P. & P.U. were
The complaint prayed a declaratory adjudication of the
controversy which thus existed, and a judgment that the direct
interchange connection between plaintiff and T.P. & W. at Sommer
does not constitute a violation of the terms and provisions of
the 1911 contract.*fn3
P. & P.U. answered the complaint and filed a counterclaim for
injunctive relief and an accounting. Answers were filed by the
Thereafter, on May 22, 1961, pursuant to leave of court,
plaintiff filed an amendment to its complaint.
In its amended complaint, in addition to the allegations above
summarized, plaintiff alleged that neither the 1911 contract nor
the extension of that contract have been approved by the I.C.C.
under Section 5(1) of the Interstate Commerce Act;*fn4 that the
agreement between plaintiff and P. & P.U. extending the contract
to February 1, 1981, had been approved by the I.C.C. under
Section 5(2) of the Act,*fn5 under Finance Docket No. 15354, and
no appeal was taken from the I.C.C. decision; that plaintiff,
with I.C.C. approval, acquired the M. & St. L. on October 31,
1960, a railroad with which the tracks of P. & P.U. connect
within the City of Peoria; that the M. & St. L. is now operated
by plaintiff as a division of its railroad; that the M. & St. L.
had for many years prior to October 31, 1960, interchanged
traffic directly with T.P. & W., and with other railroads within
Peoria, and that plaintiff, on its M. & St. L. division, has
continued that interchange practice since the last-mentioned
date; that the I.C.C. found in F.D. No. 19922, in which the
Sommer interchange connection was approved, that P. & P.U. was
unable to provide as efficient and economical service on certain
traffic as is possible with the direct interchange between
plaintiff and the T.P. & W.; and that no appeal was taken by
anyone from the I.C.C. decision in F.D. No. 19922.
In its amendment to the complaint, plaintiff prays judgment
that that part of the 1911 contract, as extended, which purports
to grant to P. & P.U. exclusive rights to perform terminal
services on, and to transfer, switch and handle all of
plaintiff's cars destined to or from industries in Peoria and to
switch or transfer all of plaintiff's cars destined for
interchange to or from railroads other than the P. & P.U. in the
Peoria vicinity constitutes a pooling arrangement within the
meaning of Section 5(1) of the Act which has not been approved by
the I.C.C. and is therefore, unenforcible as a violation of that
Section and of the antitrust laws. 15 U.S.C.A. §§ 1, 2. Plaintiff
further prays judgment that the portion of the 1911 contract, as
extended, which purports to reserve to P. & P.U. all freight and
passenger business originating at points on the line of P. & P.U.
and which permits P. & P.U. to fix the rates to be charged on
such traffic for companies using P. & P.U. tracks constitutes a
pooling agreement and a contract in restraint of trade within the
meaning of Section 5(1) and Section 1 and 2 of the Sherman Act.
15 U.S.C.A. §§ 1, 2. Finally, it is prayed, by the amendment to
the complaint, that the court enjoin P. & P.U. from enforcing, or
attempting to enforce, those provisions of the 1911 contract, as
By its answer to the complaint, as amended, P. & P.U. admits
the allegation of historical facts, the factual basis for its
corporate existence, the ownership of its stock and the makeup of
its directorship as alleged in the complaint, the substantial
similarity of the contracts in existence relating to operation of
its proprietary lines and tenant lines,*fn6 the existence of an
actual controversy and the existence of diversity of citizenship.
Further answering the complaint as amended, P. & P.U. avers
that the 1911 contract, as extended, also defines rights and
duties between plaintiff and P. & P.U. relating to the transfer,
switching or handling by P. & P.U. of all cars of plaintiff
coming into, out of or through Peoria and to the transfer,
switching and handling of all of plaintiff's cars in and near the
City of Peoria, intended for transfer to all freight houses,
warehouses, industries and to and from the tracks and yards of
other railroads with which the tracks of P. & P.U. are connected.
It further avers that the contract reserves to P. & P.U. all
local freight business between the cities of Peoria and Pekin,
and all intermediate points. P. & P.U. avers that the meaning,
intent and effect of the contract was and is to vest P. & P.U.
with the exclusive right to make up, break up and make
transfers of all cars, both loaded and empty, consigned to or
from plaintiff in the Peoria vicinity, and that the contract
requires that all freight cars of plaintiff coming into, out of
or through Peoria be delivered by plaintiff to P. & P.U. to be
transferred, switched or handled. Finally, P. & P.U. avers that
the contract requires that all of plaintiff's freight trains
moving to or from Peoria shall pass over P. & P.U.'s track in
accordance with the terms of the agreement.
Under its contract with plaintiff and the proprietary and
tenant lines, P. & P.U. avers an exclusive right to the entire
local rail traffic between Peoria and Pekin and intermediate
points; to make transfers, switch and handle all cars consigned
to or from any party to the several contracts; to transfer,
switch and handle all cars consigned to or from all locations to
which the tracks of P. & P.U. extend and to handle all cars
moving between all points on P. & P.U. lines; to have all cars of
the other contracting parties coming into, out of or through
Peoria delivered to P. & P.U. to be by it transferred, switched
or handled; and to have all freight trains of the other
contracting parties moving to or from Peoria pass over P. & P.U.
With respect to the direct interchange between plaintiff and
T.P. & W., P. & P.U. admits the establishment of the direct
interchange connection at Sommer; the geographical location of
Sommer outside the corporate limits of Peoria; and that plaintiff
and T.P. & W. have, since the establishment of the Sommer
connection, and now do, directly interchange freight traffic of a
type which plaintiff formerly handled within the City of Peoria
by utilizing the services of P. & P.U.
With respect to the M. & St. L. phase of the case, P. & P.U.
admits that for many years prior to October 31, 1961, M. & St. L.
had interchanged traffic directly with the T.P. & W. and other
railroads within Peoria; that plaintiff, with I.C.C. approval,
purchased the M. & St. L on the latter date and now operates that
line as a C. & N.W. division; and that plaintiff on its M. & St.
L. division has continued to direct interchange of traffic with
railroads other than P. & P.U. within Peoria.
As to the I.C.C. proceedings, P. & P.U. admits that extension
of the 1911 agreement was approved by the I.C.C. under Section
5(2) of the Act in F.D. No. 15354, and that no appeal was taken
from that decision. It avers however, that the I.C.C. order
constituted a ratification and approval of the agreement. It
denies that the I.C.C. in F.D. No. 19922 found that the P. & P.U.
is unable to provide service as efficiently on traffic
interchanged between plaintiff and T.P. & W. or that switching of
that interchange traffic by P. & P.U. would involve wasteful and
unnecessary transportation. It admits that no appeal was taken by
anyone from the decision in F.D. No. 19922, but it denied that
the I.C.C. decision has any bearing upon the present controversy.
In support of the same premise, P. & P.U. denies that the
public has any interest in the controversy and that there has
been or will be any public benefits derived from the direct
interchange of traffic between plaintiff and T.P. & W. at Sommer.
Alternatively, P. & P.U. avers that any public interest in the
controversy, arising out of any public benefits which might arise
from the Sommer interchange, is slight and subordinate to the
rights of P. & P.U. under its contract with plaintiff. Finally,
by way of defense, P. & P.U. denies that the exclusive terminal
and switching rights given to it by the 1911 contract constitutes
a pooling agreement within the meaning of Section 5(1) of the
Act, or that such provisions are unenforcible as a violation of
the antitrust laws.
By its counterclaim, P. & P.U. prays judgment requiring
plaintiff to produce books and records of its operation and
account as to all aspects of business handled by plaintiff by
direct interchange with the T.P. & W. at Sommer since March 6,
1957, as to all other direct interchanges with other carriers and
as to all aspects of its operations through and by means of the
track connections and facilities of plaintiff's M. & St. L.
division, subsequent to October 31, 1960, for an accounting as to
revenues allegedly lost by P. & P.U. by reason of such operations
by plaintiff. It prays a judgment for damages as determined by
means of such accounting and enjoining plaintiff from further
violation of the 1911 contract, as extended.
The answer of the intervener parallels the averments of the
answer of P. & P.U., averring that P. & P.U. has the exclusive
right to handle the traffic which plaintiff now interchanges
directly with T.P. & W. at Sommer and the traffic which plaintiff
now interchanges directly with T.P. & W. and other railroads by
operation of its M. & St. L. division since October 31, 1960. It
prays that the court will sustain the 1911 contract as extended,
as a valid, binding and subsisting agreement and that ...