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Chicago & N.w. Ry. v. Toledo

APRIL 29, 1968.

CHICAGO AND NORTH WESTERN RAILWAY COMPANY, A CORPORATION, PLAINTIFF-APPELLANT,

v.

TOLEDO, PEORIA & WESTERN RAILROAD COMPANY, A CORPORATION, J. RUSSELL COULTER, ET AL., DEFENDANTS-APPELLEES, AND ROBERT J. STRAND AND LOCAL LODGE NO. 926 OF THE BROTHERHOOD OF LOCOMOTIVE FIREMEN AND ENGINEMEN, AND JOHN W. TOWLES AND LOCAL LODGE NO. 1084 OF THE BROTHERHOOD OF RAILROAD TRAINMEN, INTERVENORS-APPELLEES. ROBERT J. STRAND AND LOCAL LODGE NO. 926 OF THE BROTHERHOOD OF LOCOMOTIVE FIREMEN AND ENGINEMEN AND JOHN W. TOWLES AND LOCAL LODGE NO. 1084 OF THE BROTHERHOOD OF RAILROAD TRAINMEN, COUNTER-CLAIMANTS,

v.

CHICAGO AND NORTH WESTERN RAILWAY COMPANY, A CORPORATION, AND TOLEDO, PEORIA & WESTERN RAILROAD COMPANY, A CORPORATION, COUNTER-DEFENDANTS.



Appeal from the Circuit Court of Peoria County; the Hon. ROBERT E. HUNT, Judge, presiding. Decree affirmed.

SCHEINEMAN, J.

In the vicinity of Peoria, Illinois, the Chicago and North Western Railway and the Toledo, Peoria & Western Railroad have main line tracks which traverse upon or along a large area of land suitable for industrial use. Much of this space was owned by TP&W. The main lines are parallel for some distance and at Sommer are in close proximity. TP&W runs generally east and west from Indiana to Iowa while the North Western runs generally north and south.

There were a few industrial users in this area in 1956, which were served by one of these railroads upon side tracks or spurs. However, most of the acreage was vacant and producing no revenue or business for the owner.

At that time there was in Peoria a local railroad known as Peoria and Pekin Union (P&PU) which did switching to transfer freight cars from each of these main lines to the other. For this service a fee was charged but, besides the cost, there was the disadvantage that a substantial delay occurred in the delivery of cars to their ultimate destination.

The management of TP&W desired to improve these conditions. Mr. Coulter, its president, had a meeting with Mr. Fitzpatrick, president of C&NW and they looked over the situation.

Among Mr. Coulter's suggestions were these: At Sommer a crossover track and siding could be built at comparatively small cost thereby permitting direct transfer of cars between the two railroads. Also they could enter into a mutual trackage agreement whereby each could operate on the tracks of the other, including small portions of main line and the sidings or spurs of both companies, thereby avoiding the large expense of duplicate trackage.

It was known that shippers deemed it highly desirable to have two-line haul railroads serve their plants as this produced a number of advantages.

Mr. Fitzpatrick saw merit in the proposals. It was then agreed that negotiations should proceed to the end that a mutual trackage contract be prepared. There followed extensive negotiations including personal interviews, telephone conversations, and correspondence. Eventually a written contract was executed dated July 25, 1957, and introduced in evidence as Plaintiff's Exhibit 1 (PX1).

The contract with map attached specified 5.9 miles of C&NW main line (called North Western Segment) over which TP&W could operate, and 4 miles of TP&W main line (called Toledo Segment) plus the extension to Kingston Lake, on which C&NW could operate. Obligations of maintenance of side tracks and new construction were set forth, also liability for injuries or damages.

The two companies then filed a joint application to the Interstate Commerce Commission for approval of their proposal. The Commission heard evidence and entered an order which approved the joint trackage use and also abolished the switching contract of P&PU.

The contract and the Commission order contained authority for each railroad to operate over the other's specified tracks in either of two methods, i.e., "either directly with its own engines and crews or through an arrangement with the other party upon such terms and conditions as may be mutually agreed upon."

The industrial sites with double railroad service were nationally advertised and produced the desired result. New industries moved in and provided freight for the companies. One had already started to build a coal burning electric plant which would eventually require a very large annual tonnage. Later Archer-Daniels-Midland Co. (ADM) built its plant and required movement of a large number of freight cars. There were other plants that became established in the area. For the time being the railroads had an operating agreement, introduced in evidence as Defendant's Exhibit 1 (DX1).

During the period of negotiations officials of operating unions of TP&W became alarmed over the possibility that the North Western would operate on their lines with North Western engines and crews. Protests were made and they were going to resist the application to the Interstate Commerce Commission. Mr. Coulter assured them orally and by letter that the railroads were not going to operate on each other's tracks with their own engines and crews. With this understanding the unions then approved the application before the Commission and the Commission in its order found that the employees of the railroads were not adversely affected by the proposed plan.

The cooperation of the managements of the two railroads had resulted in profitable additions to the business of both. Then came a time in which cordial relations ceased and disputes arose. In March 1962 C&NW notified TP&W it was going to serve ADM with its own engines and crews, and cease turning their cars over to TP&W for switching. However, when it undertook to act, it was prevented by direct action of TP&W employees and officials. Thereafter it filed suit in Federal District Court asking for enforcement of its contractual rights. The suit was dismissed by the Circuit Court of Appeals for lack of jurisdiction, on the ground there was no Federal question involved. This present suit was then filed in the Circuit Court of Peoria County to obtain specific performance of the contract and to enjoin ...


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