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INDIANA HARBOR BELT RAILROAD v. SOO LINE RAILROAD

June 25, 1973

INDIANA HARBOR BELT RAILROAD COMPANY, A CORPORATION, AND THE BALTIMORE AND OHIO CHICAGO TERMINAL RAILROAD COMPANY, A CORPORATION, PLAINTIFFS,
v.
SOO LINE RAILROAD COMPANY, A CORPORATION, DEFENDANT AND COUNTER-PLAINTIFF, V. INDIANA HARBOR BELT RAILROAD COMPANY, A CORPORATION, COUNTER-DEFENDANT.



The opinion of the court was delivered by: Robson, Chief Judge.

MEMORANDUM AND OPINION CONCERNING CERTAIN DAMAGE ISSUES

This litigation arises from the collapse of one span of a railroad bridge over the Chicago Sanitary and Ship Canal owned by the plaintiff railroads on June 19, 1964.*fn1 Previous rulings of this court have limited plaintiffs' claims for damages to those arising from the Trackage Agreement (Agreement) between the Indiana Harbor Belt Railroad Company (IHB) and the predecessor of the Soo Line Railroad Company (Soo), dated November 20, 1959. In particular, paragraph Fifth (c) of the Agreement has been held to govern this suit on the basis of "the facts thus far adduced." The parties now request advance determination of damage issues arising under the Agreement in order to clarify the issues and to simplify further proceedings. This court agrees that an advance ruling would be advantageous.

The first issue to be decided is the proper construction of paragraph Fifth (c). In essence, that provision declares that all liability for property damage or personal injuries connected with the use of the covered trackage and facilities shall, regardless of fault, be assumed by each party as to its own property, employees, passengers, and bailments. However, all damage to joint property and employees, or to third persons is to be shared equally.*fn2 The only joint property (defined in paragraph Fifth (a) as "all property used jointly") here involved is the collapsed span of the bridge.

The Soo argues that the provision for each party assuming all damage to its sole property precludes an IHB claim for any expense except damages to the bridge itself, since by definition such expenses involved the sole property of the IHB. Soo contends that expenses of the IHB resulting from the collapse, such as detour and additional crew costs, are merely consequential damages to its franchise and business and therefore not recoverable under the Agreement, as they constitute damage to the sole property of the IHB or are incidental to such damage. The IHB, on the other hand, contends that the Agreement

  "clearly states that the term `damage' as used in
  the Agreement embraces not only loss of or damage
  to property but expenses incidental thereto as
  well. It is the IHB's basic position that certain
  of the expenses incurred by it are expenses
  incidental to the damage to the bridge and thus
  to be apportioned under paragraph Fifth (c) of
  the Agreement."

Both parties have focused exclusively upon paragraph Fifth (c) and constructed a plausible argument based upon a portion of it. Obviously, resolution of the dispute must proceed from an analysis of the scope and purposes of the entire liability provision. 3 A. Corbin, CORBIN ON CONTRACTS § 549 (Rev.ed. 1960).*fn3

The crux of the Agreement is that the parties plainly agreed to substitute for the imprecise and often contentious principle of liability for fault or negligence their own principle of liability based upon the "involvement" of the trains, cars, or motive power of one or both of them. Thus, paragraph Fifth (b) manifests an intent that when only one party is involved in an occurrence, that party shall bear all damages involved, whether to its own property or employees, to third persons, or to joint property or employees.*fn4 While damage to the sole property of the party not involved is not explicitly mentioned, such expenses as are here in dispute must be deemed to be included within the scope of or to be incidental to damage to joint property and employees. Otherwise, the provision of sub-paragraph (c), which provides that when the trains of both parties are involved, each shall assume all damages to its sole property, becomes superfluous because such damages would be born whether or not the party's train was involved.

As the Agreement defines the term in sub-paragraph (a), "joint" property — and expenses incidental to damage to joint property — must have precisely the same meaning in both sub-paragraphs (b) and (c). So construing the terms of the Agreement, its apparent intent to apportion liability without affecting the scope of damages which might arise from such liability becomes clear. The rules of apportionment so adopted can be summarized thusly:

  (1) If one party only is involved, that party
      assumes all damages to its own property,
      employees, passengers, and to joint property
      and passengers and employees, and to third
      parties and assumes all expenses naturally
      and probably resulting from such damages in
      accordance with the applicable rules of law,
      which are not modified by the Agreement.
  (2) If both parties are involved, each assumes
      all damages to its sole property, passengers,
      and employees and all expenses which result
      from such damage. All damages to and expenses
      resulting from damage to joint property,
      passengers, and employees and to third
      parties shall be shared equally.

The applicable law governing the scope of damages is, of course, that of Illinois because jurisdiction in this action is based upon diversity of citizenship pursuant to 28 U.S.C. § 1332. The leading Illinois case in the ". . . untried and uncharted field of [the] law" of damages resulting from injury to a fixture or structure on real property appears to be Central Illinois Light Co. v. Stenzel, 44 Ill.App.2d 388, 394, 195 N.E.2d 207, 210 (1964) (appeal denied).*fn5 In Stenzel plaintiff's damages for a broken utility pole were limited to labor costs including regular and overtime rates, fringe benefit labor costs, operating expenses for equipment, and material cost less a percentage of that cost equal to the percentage of the life expectancy of the pole remaining at the time of the damage. Store expense, supervision, and general overhead were disallowed as being too remote and not being attributable to the fault of the defendant.*fn6

Most of the items listed in the summary of IHB recapitulation of expenses appear to be expenses incurred as a result of the damage to the bridge rather than the ". . . fixed and continuing expenses of operation that are in no way dependent upon and bear no relation to . . . [the damage] and in no way flow as a natural or proximate result of . . . [the damage]." Id. at 398, 195 N.E.2d at 212. Such items of expense would include, for example, detour expenses, additional crew costs, and pilot expenses and must be apportioned in accordance with paragraph Fifth (c). Some expenses, however, are concededly damage to the sole property of IHB or relate to such damage, for example, damage to the IHB locomotive and to the cars of other railroads and loss of livestock which must be assumed by the IHB. However, this court cannot determine any category of expense definitely is or is not the proximate result of the damage to the bridge on the basis of the limited information now before it. If Soo believes that any IHB expense is not a proper element of damages under the standard herein outlined, it may raise specific objections to it.

The second issue to be decided is the proper measure of damages for the collapsed span of the bridge. IHB contends that it will not be made whole unless the amount of damages to be apportioned is the sum of the costs of the temporary span now in service and a permanent span which must eventually replace the present one. Soo advances several contentions which limit the amount of the recovery against it.

Primarily, Soo argues that there is no necessity that the present span will ever have to be replaced at all and, therefore, that damages are limited to the actual costs of building it. The possible necessity of replacement arises from the fact that the bridge was originally a swing truss with each span connected to a center pier creating two navigable channels in the canal. Although the swing mechanisms were abandoned in place by the Navy Department in 1962, the bridge had not, prior to the accident, obstructed the navigation of the canal since its creation except for ...


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