Appendix — Chicago & North Western Transp. Co. v. Kalo Brick & Tile Co.

No.

In the

Supreme Court of the Anited States

CHICAGO AND NORTH WESTERN TRANSPORTA-

TION COMPANY, A Corporation,

Petitioner,

vs.

KALO BRICK & TILE COMPANY,

Respondent.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

SUPREME COURT OF IOWA

Lovis T. Dvuertnck

James P. Da.ey

Sruart F. GassNER

400 West Madison Street

Chicago, Illinois 60606

Telephone: (312) 454-6506

Frank W. Davis, JR.

Bruce E. JoHNsSON

2600 Ruan Center

Des Moines, Iowa 50309

Telephone: (515) 243-6251

Attorneys for Petitioner

The Scheffer Press, Inc*=(312) 263-6850

INDEX TO APPENDIX

—_——

PAGE

APPENDIX:

Order of the Supreme Court of Lowa ......000 la

Opinion of the Court of Appeals OF TOWS :<...00.0000 2a-12a

Findings of Fact, Conclusions of Law, and Judg-

ment of the District Court of the State of Iowa

in and for Webster County .......cscccccceeereeneeeneeees 12a-33a

April 30, 1976, Order of the Interstate Commerce

CommMissiON ........0eeeee csamssininansesiieanisiinaaeaa 33a-40a

September 23, 1976, Order of the Interstate

Commerce CommMissiONn ........ccsesseeerersreeseneeennenneess 40a-41a

Excerpt of Testimony of Plaintiff’s Officer Jerry

SOWNUIT cesccscecssscsescsssescsssesscesscsesenensneesnenseseeesenasesanesenserenens 42a

Constitutional Provisions and Statutes ........++ 42a-52a

Answer of Chicago and Northwestern Transporta-

tion Company to Plaintiff’s Petition ........0.ec000 52a-56a

Answer of Chicago and Northwestern Transporta-

tion Company to Plaintiff’s Amendment to Pe-

LILIOTL .cccocccscceesrecccserernccssssccesseesoressnccscnncesonsnsnsscososecesenss 57a-64a

Motion for Summary Judgment Filed by Chicago

and Northwestern Transportation Company ....64a-67a

Motion to Dismiss Filed by Chicago and North-

western Transportation Company +--+ 68a-76a

a 1g, —-

APPENDIX

IN THE SUPREME COURT OF IOWA

KALO BRICK AND TILE COMPANY,

Plaintiff-A ppellant-Resister,

VS.

CHICAGO NORTHWESTERN TRANSPORTATION

COMPANY,

Defendant-A ppellee-A pplicant.

No. 2-60942

Filed Nov 30 1979

ORDER

After consideration by the court en banc defendant-

appellee’s application for further review is hereby over-

ruled and denied.

Done this 30th day of November, 1979.

The Supreme Court of Iowa

By /s/ W. W. Reynoldson

W. W. Reynoldson, Chief Justice

Copies to:

Bruce E. Johnson

2600 Ruan Center

Des Moines, Iowa 50309

M. G. Blackburn

142 North 9th Street

Fort Dodge, Iowa 50501

John H. Mitchell

200 North 10th Street

Fort Dodge, Iowa 50501

an

IN THE COURT OF APPEALS OF IOWA

KALO BRICK & TILE COMPANY,

Plaintiff-Appellant,

vs.

CHICAGO & NORTHWESTERN TRANSPORTATION

COMPANY and JACK CHMELER,

Defendants-A ppellees.

Filed October 18, 1979

Appeal from Webster District Court - Russell J. Hill,

Judge.

Plaintiff appeals judgment for defendant in tort action

based on failure to provide adequate railroad service.

Reversed and Remanded.

M. Gene Blackburn & John H. Mitchell of Murray &

Blackburn, P.C., of Fort Dodge, for plaintiff-appellant.

Bruce E. Johnson of Gamble, Riepe, Burt, Webster &

Davis, of Des Moines, for defendants-appellees.

Heard by Oxberger, C.J., Donielson, Shell and John-

son, JJ. Carter, J., takes no part.

DONIELSON, J.

Plaintiff, Kalo Brick and Tile Company, appeals judg-

ment for defendant, Chicago and Northwestern Trans-

portation Company, in a tort action based on alleged

failure to provide adequate rail service. For reversal,

plaintiff asserts the action was not within the exclusive

or primary jurisdiction of the Interstate Commerce Com-

mission (ICC), ICC orders in the abandonment proceed-

ing are not preclusive of issues presented in the trial

court, and a remand order of the federal district court

precludes the defendant from challenging the jurisdic-

tion of the trial court. We reverse and remand for a

new trial.

Our scope of review is limited to correction of errors

at law. Iowa R. App. P. 4.

—

I.

In April 1973 defendant-railroad discontinued service

on a branch line serving plaintiff’s plant after numerous

interruptions of service due to earth slides. Plaintiff

notified its customers, shortly thereafter, it was going

out of business due to its inability to ship by rail. It is

undisputed the railroad had not yet made a decision to

abandon permanently the branch line. In November 1973,

subsequent to plaintiff going out of business, defendant

applied to the ICC for permission to abandon the branch

line. An ICC order, entered April 30, 1976, directed the

issuance of a certificate of abandonment and forbid any

abandonment prior to the effective date of the certifi-

cate. The April 30 ICC order found plaintiff to be a

protestant in default, but a further inquiry by plain-

tiff’s counsel was treated as a petition for reconsidera-

tion. In September 1976 the ICC entered an order deny-

ing the petition for reconsideration and setting the effec-

tive date of the abandonment at 20 days from the date

of the service of the order.

Plaintiff brought this action in September 1974. In

July 1977 the trial court entered judgment for the defen-

dant, making findings of fact concerning the earth slides

and the ICC proceedings. The trial court concluded that

the question in the case was the reasonableness of the

railroad’s abandonment of direct rail service to plaintiff’s

plant; a question held to be within the jurisdiction of the

ICC, not the state court. Further, the defendants were

not found to be precluded from challenging the Iowa

court’s jurisdiction by the federal court’s remand order

because that order was based on lack of diversity juris-

diction, not the merits of the jurisdictional issue. Finally,

the trial court concluded that the ICC’s factual determina-

tion of the reasonableness of the railroad’s abandonment

collaterally estopped plaintiff from relitigating that issue.

Judgment was entered dismissing the petition.

a ae

II.

Plaintiff has moved to strike divisions IV, V, VI, and

IX of defendant’s brief, asserting those divisions raise

issues not assigned as error in its brief and argument or

raised by defendant in a cross-appeal. It is plaintiff’s

contention that defendant is asking in these divisions this

court for relief not granted by the trial court. A party

that neither appeals nor cross-appeals can have no greater

relief or redress on appeal than accorded it by the trial

court. See Bartels v. Hennessey Brothers, Inc., 164 N.W.

2d 87, 92 (Iowa 1969). See also In re Marriage of Novak,

220 N.W.2d 592, 598 (Iowa 1974); Randolph Foods, Inc.

v. McLaughlim, 253 Iowa 1258, 1277, 115 N.W.2d 868,

879 (1962); Schlotfelt v. Vinton Farmers’ Supply Co.,

252 Iowa 1102, 1115, 109 N.W.2d 695, 702 (1961). Accord-

ingly, we hold defendant is entitled, if at all, only to

the relief accorded by the trial court—dismissal of the

action due to absence of jurisdiction. We grant plaintiff’s

motion to strike divisions IV, V, VI, and IX of defen-

dant’s brief.

III.

The starting point of our analysis is whether defen-

dant is precluded from raising the issue of the trial:

court’s jurisdiction following the remand by the federal

district court. Defendant removed the case to federal

district court by petition for removal. Plaintiff filed a

motion to remand and a motion to dismiss was then

filed by defendant. The motion to dismiss alleged the

federal district court lacked subject matter jurisdiction of

the action.

The federal district court remanded the case on juris-

dictional grounds because of the absence of diversity of

citizenship. This ruling did not decide, however, the

state court had jurisdiction but merely that the federal

court could not hear the case. Since this issue is separate

from the one on appeal, the federal court’s ruling is not

res judicata and defendant is not precluded from raising

the issue of the state court’s jurisdiction to hear this

an 5a =

ease. Mauer v. Rohde, 257 N.W.2d 489, 497 (Iowa 1977 )

(quoting Schneberger v. United States Fidelity & Guar-

anty Co., 213 N.W.2d 913, 917 (Lowa 1973)). We move

to that issue.

IV.

The central and controlling issue in this case is whether

the trial court possessed jurisdiction to hear plaintiff’s

claims, concerning violations of sections 479.3 and 479.122,

The Code 1973, involving a railroad’s duty to furnish

cars, and tortious interference with plaintiff’s business.

In resolving this issue, we must first determine whether

the Interstate Commerce Act preempts these statutes and

the common law on which plaintiff relies for relief. If we

conclude the state court has concurrent jurisdiction, we

must then decide whether the doctrine of primary juris-

diction is applicable to this case such that the issues

presented are exclusively within the jurisdiction of the

ICC. After reviewing the arguments and cases cited

by the parties, we conclude the Interstate Commerce

Act does not preempt state statutory or common law and

the doctrine of primary jurisdiction is not applicable to

this case.

The Iowa Legislature has imposed on the railroads the

unqualified and unconditional duty to furnish car service

and transportation to all persons who apply. §§ 479.3,

122. Defendant argues this statutory duty has been

preempted by the Interstate Commerce Act, 49 US.C.

§§1, 8, 9 (1976) (current versions in relevant part at

49 U.S.C.A. §§ 10501, 11705 (Supp. 1979)), which ren-

dered invalid state statutes and common law to the ex-

tent they purport to regulate railroad car service in

interstate commerce. We do not agree the Interstate

Commerce Act preempted the particular sections relied

on by plaintiff, but view them as complimentary, alter-

native means of relief for injured parties.

We find support for our position in cases of the

United States Supreme Court and the Iowa Supreme

—

Court. In Pennsylvania Railroad Coal Mining Co. v.

Puritan C al Mining Co., 237 U.S. 121, 35 S. Ct. 484,

59 L. Ed. 867 (1915), the Supreme Court, in-

terpreting the various sections of the Interstate

Commerce Act, held that state and federal courts have

concurrent jurisdiction, without a preliminary finding

by the ICC, of a suit brought by a shipper under state

common law against an interstate carrier to recover dam-

ages arising out of the latter’s duty to furnish cars

needed by the shipper. Id. at 132; 35 S.Ct. at 488; 59

L.Ed. at 873; Eastern Railroad v. Littlefield, 237 US.

140, 143, 35 S.Ct. 489, 490, 59 L. Ed. 878, 882 (1915).

Focusing on section 22 of the Act, the Court found all

remedies existing under state common law are preserved

unless they are inconsistent with or interfere with re-

medies contained in the Act. Puritan, 237 U.S. at 132;

35 §.Ct. at 488; 59 L. Ed. at 872-73. The Court discussed

the effect of section 22 in the following language:

* The Interstate Commerce Act was revised without sub-

stantive change in 1978. Act of Oct. 17, 1978, Pub. L.

95-473, §1, 92 Stat. 1337. Section 22 was repealed except

as it vested in the ICC functions related to the trans-

portation of oil. Act of Oct. 17, 1978, Pub. L. 95-473,

$4(b), (c), 92 Stat. 1466-1470. The revised Interstate

Commerce Act, however, contains the following language

that substantially retains the effect of sections 22 and

1(17(a) of the old Act.

This subtitle [outlining the general jurisdiction of

the ICC] does not affect the power of a State, in

exercising its police power, to require reasonable in-

trastate transportation by carriers providing trans-

portation subject to the jurisdiction of the Com-

mission under this subchapter unless the State re-

quirement is inconsistent with an order of the Com-

mission issued under this subtitle or is prohibited

under this subtitle.

49 U.S.C.A. § 10501(¢) (Supp. 1979). This organizational

revision of the Act does not affect our analysis or hold-

+3 Act of Oct. 17, 1978, Pub. L. 95-473, 43, 92 Stat.

—_—

That proviso was added at the end of the statute, not

to nullify other parts of the act, or to defeat rights

or remedies given by preceding sections, but to pre-

serve all existing rights which were not inconsistent

with those created by the statute. It was also in-

tended to preserve existing remedies, such as those

by which a shipper could, in a state court, recover

for damages to property while in the hands of the

interstate carrier; damages caused by delay in ship-

ment; damages caused by failure to comply with

its common-law duties and the like. But for this

proviso to §22 it might have been claimed that. Con-

gress having entered the field, the whole subject of

liability of carrier to shippers in interstate com-

merce had been withdrawn from the jurisdiction of

the state courts, and this clause was added to in-

dicate that the commerce act, in giving rights of

action in Federal courts, was not intended to deprive

the state courts of their general and concurrent juris-

diction.

Id. See also Pennsylvania Railroad v. Sonman Shaft

Coal Co., 242 U.S. 120, 123-25, 37 S.Ct. 46, 47-48, 61 TL.

Ed. 188, 191 (1916). The Puritan analysis was sub-

sequently applied in Illinois Central Railroad v. Mulberry

Hill Coal Co., 238 U.S. 275, 35 S.Ct. 760, 59 1. Ed. 1306

(1915), to allow recovery under a state statute for a

earrier’s failure to furnish cars. Id. at 281-83, 35 S.Ct.

at 763-64, 59 L. Ed. at 1309-10.

In accordance with Puritan, the Iowa Supreme Court

in Baird Brothers v. Minneapolis € St. Louis Railroad,

181 Towa 1104, 169 N.W. 412 (1917), held that in suits

brought for the enforcement of rights concerning inter-

state commerce but not for specifie performance of pro-

visions of the Interstate Commerce Act, an Iowa dis-

trict court has concurrent jurisdiction with federal courts.

Id. at 1122, 169 N.W. at 418. The remedy sought to be

enforced, the court concluded, did not conflict with the

—

—= 8g

Interstate Commerce Act and no burden was placed on

interstate commerce. Id. It is clear, then, that remedies

existing under state statute or state common law are

preserved unless they are inconsistent with or interfere

with remedies contained in the Interstate Commerce Act.

Baird, 181 Iowa at 1117; 165 N.W. at 416. See State

Public Utuities Commission v. Baltimore & Ohio South-

western Railroad, 281 Ill. 405, 412-13, 118 N.E. 81, 84

(1917). As the supreme court in Baird stated:

There is nothing in the [Interstate Commerce Act]

the enforcement of hich would interfere with or

abridge the rights of the shipper in demanding his

right to reasonable shipping facilities, such as are

in controversy here and to recover damages. A

shipper’s demanding of the defendant reasonable

shipping facilities does not abridge or interfere with,

nor is it inconsistent with, the provisions of the

Commerce Act.

Baird, 181 Iowa at 1117, 165 N.W. at 416.

An analogous case decided by the Iowa Supreme Court

is Chicago, Rock Island & Pacific Railroad v. Linwood

Stone Products Co., 258 Iowa 1378, 138 N.W.2d 902

(1965). In that case, the supreme court held the Iowa

district court had concurrent jurisdiction with the federal

court to decide a question involving a counterclaim, based

on the railroad’s alleged failure to furnish clean cars,

in an action by the railroad to recover demurrage on cars.

Id. at 1382; 138 N.W.2d at 905. The underlying ra-

tionale of these cases is that as long as the state stat-

ute or common law is not inconsistent with federal law

and. does not attempt to regulate interstate commerce,

state and federal courts have concurrent jurisdiction.

Defendant seeks to distinguish Puritan and Baird

Brothers by pointing out they were decided without a

consideration of the effect of the Hepburn Act and con-

tends the case of Chicago, Rock Island & Pactfic Railway

v. Hardwick Farmers Elevator Co., 226 U.S. 426, 33 S.Ct.

—

174, 57 L. Ed. 284 (1913), determined the effect of that

act on the power of states to regulate car service in

interstate commerce. Not only is Hardwick inapposite be-

cause of its facts, but there is direct authority contrary to

such contention.

Specifically, in Pennsylvania Railroad v. Sonman Shaft

Coal Co., 242 U.S. 120, 3 S.Ct. 46, 61 L.Ed. 188 (1916),

the Supreme Court held that an action for failure to

furnish sufficient cars ‘‘may be enforced in either a

federal or state court without any preliminary finding by

the Commission, and this whether the carriers’ default

was a violation of its common law duty existing prior

to the Hepburn Act of 1906, or of the duty prescribed

by that act... .’’ Id. at 124, 37 S.Ct. at 48, 61 L. Ed.

at 191. Moreover, the Supreme Court in Illinois Central

Railroad stated:

It is true that the Puritan Case arose before the

passage of the Hepburn Act of 1906; but there is

nothing in the amendments introduced by that Act to

affect the jurisdiction of the state court in an action

as the present.

238 U.S. at 283, 35 S.Ct. at 763, 59 L. Ed. at 1310.

Lastly, in a case concerning jurisdiction of actions in-

volving the failure to furnish cars, the Illinois Supreme

Court stated:

The law as settled by the Supreme Court of the

United States,—the final authority on the question,

—is, that a State statute requiring an inter-State

carrier to furnish cars at points within the State

within a reasonable time is in entire harmony with

the Hepburn amendment of the Inter-State Com-

merce act, and the State and Federal courts have

concurrent jurisdiction of actions for a failure to

perform the duty....

State Public Utilities Commission v. Baltimore & Ohio

Southwestern Railroad, 281 Ill. 405, 413, 118 N.E. 81, 84

— 10a —

(1917). These cases unequivocally support the view

adopted here that there is no preemption of state law,

even after consideration of the Hepburn Amendment.

We find the other cases cited by defendant unpersuasive

as they do not address precisely the issue of this case.

This is not a question of a regulatory state state law

in conflict with a federal law. If that were the case, it

could not be gainsaid that federal law is supreme, ren-

dering state law void. Rather, this state law is remedial

only and exerts no burden on interstate commerce, nor

does it interfere with regulatory powers and duties of

the ICC. This same line of reasoning is equally applicable

to the tortious interference claim as it is a remedy pro-

vided by Iowa common law. Statutory and common law

grounds relied on by plaintiff’s relief are not preempted

by the Interstate Commerce Act.

V.

The rationale supporting our holding that the state

court has concurrent jurisdiction with the federal court

to hear this case leads us also to conclude the doctrine

of primary jurisdiction is inapplicable to this case and

there need be no deferral to the ICC. Plaintiff has as-

serted primarily three grounds for relief: The railroad’s

violation of statutory duty to furnish cars under section

479.3; the railroad’s negligent maintenance of tracks and

roadbeds; and tortious inference with conduct of plain-

tiff’s business. Analysis of these questions does not re-

quire any administrative expertise; thus deferral to ICC

is unnecessary.

The principles underlying the doctrine of primary juris-

diction are set forth in Far East Conference v. United

States, 342 U.S. 370, 72 S.Ct. 492, 96 L. Ed. 576 (1952):

[I]n cases raising issues of fact not within the con-

ventional experience of judges or cases requiring the

exercise of administrative discretion, agencies created

by Congress for regulating the subject matter should

—lla—

not be passed over. This is so even though the facts

after they have been appraised by specialized com-

petence serve as a premise for legal consequences to

be judicially defined. Uniformity and consistency in

the regulation of business entrusted to a particular

agency are secured, and the limited functions of

review by the judiciaries are more rationally exer-

cised, by preliminary resort for ascertaining and in-

terpreting the circumstances underlying legal issues

to agencies that are better equipped than courts by

specialization, by insight gained through experience,

and by more flexible procedure.

Id., 342 U.S. at 745-52, 72 S.Ct. at 494, 96 L. Ed. at

582 (1952).

We find the grounds asserted for relief raise issues

of fact coming within the conventional experience of

judges and do not require exercise of administrative dis-

cretion. Linwood Stone Products, 258 Iowa at 1389-90;

138 N.W.2d at 908; see Johnson v. Chicago, Milwaukee,

St. Paul & Pacific Railroad, 400 F.2d 968, 972 (9th Cir.

1968). Regarding defendant’s failure to furnish car ser-

vice as a violation of section 479.3, we discern no need

for the unique administrative expertise of the ICC to

decide whether car service was not provided or the

railroad was negligent in its track maintenance. Lin-

wood Stone Products, 258 Iowa at 1389-90, 1388 N.W.2d

at 908. This argument is even stronger when applied

to the common law tortious interference claim. Jd. Nor is

there any problem with uniformity, another interest pro-

tected by the primary jurisdiction doctrine. This is not

a determination of what reasonable service was due

plaintiff, but whether reasonable service, as determined

by the ICC, was provided. The Iowa district court is

= oy good a position to adequatedly decide this as the

— 12a —

VI.

Our decision in this case to reverse the trial court’s

decision and remand for a new trial makes it unnecessary

to reach plaintiff’s other issue concerning whether an

unlawful abandonment occurred.

REVERSED AND REMANDED.

IN THE

District Court Or Tue State Or Iowa

In Anp For Wesster County

Law No. 45664

KALO BRICK & TILE COMPANY,

Plaintiff,

VS.

CHICAGO & NORTHWESTERN TRANSPORTATION

COMPANY, and JACK CHEMLER,

Defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW,

and JUDGMENT

BE IT REMEMBERED that on the 19th day of Oc-

tober, 1976, the within cause came on for trial to the

Court, the parties appearing by their attorneys of record.

Said trial concluded on the 26th day of October, 1976, and

the within matter was submitted to the Court on or about

the 23rd day of February, 1977. The Court having heard

the proofs of the parties, having read and considered the

briefs and arguments of counsel, and being fully advised

in the premises, FINDS the facts as follows:

FINDINGS OF FACT

Plaintiff Kalo Brick & Tile Company, hereafter “Kalo,”

is an Iowa corporation with its principal place of busi-

ness at Fort Dodge, Webster County, Iowa.

— 13a —

Defendant Chicago & North Western Transportation

Company, hereafter “Railroad,” is a common carrier by

railroad engaged in the interstate transportation of

freight for hire and at all times material herein operated

a railroad in Webster County, Iowa.

Defendant Jack Chmeler, mistakenly named “Scemel-

er,” was employed by the Defendant railroad as a freight

agent in Fort Dodge, Iowa, from July 17, 1972 through

December 15, 1974. Mr. Chmeler was a resident of the

State of Iowa.

Prior to April, 1973, Plaintiff was engaged in the map-

ufacture of clay products near Kalo, Webster County,

Towa. Plaintiff’s raw materials and manufacturing facili-

ties were located near the Des Moines River and near a

track owned and operated by the Defendant Railroad.

Plaintiff had been in operation for in excess of fifty

years and in April, 1973, manufactured simulated antique

brick which was sold and distributed through nine mid-

western states. Plaintiff had relied upon the Defendant

Railroad, and its predecessors in interest, as its primary

and principal source of transportation for the transpor-

tation of its products in interstate commerce ; Kalo having

relied upon truck transportation for intrastate transpor-

tation.

Defendant Railroad commenced servicing Kalo in ap-

proximately the fall of 1950 when Defendant Railroad ac-

quired the assets of the Minneapolis & St. Louis Rail-

road, shown in orange on Exhibit “A” attached hereto

and made a part hereof for illustrative purposes only.

This portion of the old Minneapolis & St. Louis Railroad

extended from Fort Dodge, Iowa to Kalo, Towa for a dis-

tance of approximately 5.6 miles. Said line terminated

at Plaintiff’s plant in Kalo, Iowa. The Minneapolis & St.

Louis Railroad was constructed on the side hills of the

Des Moines River. As this line left Fort Dodge in a

southerly direction it generally followed the northeast

bank of the Des Moines River, intersected the Fort

—l4a —

Dodge, Des Moines & Southern Railway at the Shady

Oak transfer, bridged the Des Moines River, and fol-

lowed the west bank of said river in a southerly direc-

tion at Kalo.

The Fort Dodge, Des Moines & Southern Railway,

shown in green on Exhibit “A”, travels in a southerly

direction from the City of Fort Dodge and was con-

structed on a side hill of Gypsum Creek as it approached

the Des Moines River and the tracks of the Defendant

Railroad.

The general area may be described as rugged terrain,

but the hills in the area are not high. Quarries and clay

pits are located on the high ground between the afore-

said railroads and north of the Des Moines River. Ma-

terials have been removed from these quarries and clay

pits for many years which result in ponded water. In ad-

dition, waste materials from the mined areas constituted

an overburden in this same area. The soil contains clay

which is hard and stable when dry but moves and be-

comes unstable when moist.

In 1961 earth slides oceurred to the north and west of

the Shady Oak Transfer which damaged the tracks of the

Defendant Railroad in several areas and this portion of

the tracks had to be taken out of service. Repairs were

effected and service reinstated over these tracks.

In the spring of 1966 slides again occurred in this same

area and service over these tracks was terminated for

approximately six to seven months for repairs to be com-

pleted. Repairs were effected and the line again placed

back in service.

In March, 1967, slides again occurred in the same gen-

eral area and the repairs effected in 1966 failed to hold

and the railroad embankment disappeared in places into

the Des Moines River. Service over this line was never

again reinstated.

In 1967 the Defendant Railroad leased at least a por-

tion of the Fort Dodge, Des Moines & Southern Railway

— 15a —

and service was made to Kalo over the leased track to the

Shady Oak Transfer and then on track belonging to the

Defendant Railroad to Kalo. Defendant Railroad had an

obligation to maintain the track of the Fort Dodge, Des

Moines & Southern Railway north of the Shady Oak

Transfer.

In March, 1973, officers of Kalo observed ponded water

to the west of the Shady Oak Transfer, and near the red

“xX” on Exhibit “A”, and adjacent to the railroad em-

bankment leased by the Defendant Railroad. Kalo at-

tempted to pump water over the roadbed in an attempt

to clear the culvert draining the damned up body of

water. Officers of Kalo had found the outfall end of said

culvert and were looking for the intake. They were un-

successful and abandoned the project.

During the first few days of April, 1973, slides occurred

on the line leased from the Fort Dodge, Des Moines &

Southern Railway and north of the intersection of said

railway with the tracks of the Defendant Railroad.

The slide at the Shady Oak Transfer, shown generally

by the red “X” on Exhibit “A” occurred over a 150 foot

area of the leased embankment. A slide also oceurred

north of this area which affected approximately 60 feet

of track. Other sides were developing along this portion

of the Fort Dodge, Des Moines & Southern Railway.

On the 4th day of April, 1973, Defendant Railroad noti-

fied Kalo that it could no longer provide cars at the Kalo

plant and service to the Kalo plant was terminated at

that time.

Defendant Railroad then provided cars to Kalo at Fort

Dodge which required Kalo to transport its product to

Fort Dodge by truck for delivery to Defendant Railroad.

Kalo was required to bear the cost of said transportation

to Fort Dodge.

On the 18th day of April, 1973, Kalo notified its cus-

tomers that it was going out of business but would com-

plete existing contracts.

—

— l6a—

Between the 4th day of April, 1973, and the 25th day

of April, 1973, a decision was made that the Defendant

Railroad could not maintain safe rail passage over the

tracks leased from the Fort Dodge, Des Moines & South-

ern Railway and it was taken out of service by the road-

master. Defendant Railroad concluded that it could not

stabilize the alignment of the tracks but no decision was

made at that time as to whether Defendant Railroad would

attempt to abandon service to Kalo.

In August, 1973, Kalo stopped production, sold its in-

ventory, and disposed of its assets.

The washout at the northern junction of the Shady Oak

Transfer was comparatively simple for the Defendant

Railroad to repair. The reason this line was removed

from service was because of the slides which were taking

place along many points of the line and the above wash-

out of the railroad embankment was a single factor in

the decision to terminate service over the line. There has

been a long history of slides on the Fort Dodge, Des

Moines & Southern Railway because of the composition

of the soil. The slopes are unstable and several of the

slopes are moving. The tracks are built on an unstable

area.

The tracks near the Shady Oak switch, after April 4,

1973, were out of place horizontally and vertically and

showed results of failure of the railroad embankment.

The ponded water near the embankment had been ther>

sometime and was a factor in the displacement of the

roadbed because (1) it weakened the soil because of sat-

uration; (2) it created hydrostatic pressure; (3) forces

induced by seepage water passed through the embank-

ment; and (4) the embankment was on a steep slope de-

scending to Gypsum Creek and gravity pulled the em-

bankment toward the creek.

Permitting ponded water to stand near a railroad em-

bankment is not good maintenance practice,

— iva —

After the slides on or about the 4th day of April, 1973,

no cars were received at the Kalo plant and all of Plain-

tiff’s products had to be loaded at Fort Dodge.

On the 14th day of November, 1973, Defendant Rail-

road made an application to the Interstate Commerce

Commission pursuant to the provisions of the Interstate

Commerce Act, 49 U.S.C.A., Section 1, Et. seq., for a cer-

tificeate of public convenience and necessity authorizing

the Defendant Railroad to abandon its line to Kalo. This

proceeding pertained to the trackage belonging to the

Defendant Railroad, formerly owned by the Minneapolis

& St. Louis Railroad, and not the line owned by the Fort

Dodge, Des Moines & Southern Railway and leased by

the Defendant Railroad.

Kalo filed objections to the abandonment of the 5.6

miles of track in said proceeding. On the 30th day»of

April, 1976, the Interstate Commerce Commission Re-

view Board Number 5 made a finding of fact “that the

cessation of service occurred because of conditions over

which applicant (Defendant Railroad) had no control,

not because of wilful abandonment”; that continued op-

eration of the line would be an unnecessary burden on

said applicant and on interstate commerce; and said

commission issued an order for appropriate certificate

of abandonment. Upon Kalo’s petition for reconsidera-

tion of said order, the Interstate Commerce Commission,

Division 3, acting as an Appellate Division denied Kalo’s

petition for reconsideration on the 23rd day of Septem-

ber, 1976, and affirmed the order of the Commission Re-

view Board Number 5.

During the winter of 1972-1973, Kalo experienced the

energy crunch and was forced to curtail its operations

during the winter months, which are a slack period in

the brick industry. The brick industry, including Kalo,

experiences labor problems because it is hard work and

low paying.

— 18a —

During this same period of time, Defendant Railroad

was also experiencing labor problems as it was short of

help and could not train the employees fast enough.

CONCLUSIONS OF LAW

On the 13th day of September, 1974, Plaintiff filed its

petition herein alleging generally that the Defendants

failed to furnish cars and service to Plaintiff after April,

1973, with resulting damages to Plaintiff in the amount

of $350,000.00.

On the 28th day of April, 1976, Plaintiff filed its

Amendment to Petition herein, Division II thereof al-

leging negligence on the part of the Defendants in April,

1973, with resulting damages of $350,000.00 and punitive

damages of $150,000.00.

Division III of said amendment alleges that the Defen-

dants are guilty of tortious interference with contract

rights because of Defendants conduct in April, 1978, with

resulting damages to Plaintiff in the sum of $100,000.00.

STATUTE OF LIMITATIONS

The answers of the Defendants, as amended, allege that

Divisions II and III of the petition, as amended, are

barred by the limitations of actions in that the causes

of action alleged therein were not commenced within two

years of the accrual thereof, to-wit: April, 1973.

Section 614.1, The Code, provides in part as follows:

“Actions may be brought within the times herein

limited, respectively, after their causes accrue, and

not afterwards,, except when otherwise specially de-

clared: \

1.

2. Injuries to person or reputation—relative

rights—statute penalty. Those founded on injuries

to the person or reputation, including injuries to rel-

— 19a —

ative rights, whether based on contract or tort, or

for a statute penalty, within two years.

3.

4. Unwritten contracts—injuries to property—

fraud—other actions. Those founded on unwritten

contracts, those brought for injuries to property, or

for relief on the ground of fraud in cases heretofore

solely cognizable in a court of chancery, and all other

actions not otherwise provided for in this respect,

within five years, except as provided by subsection

ae ad

Division II, founded on negligence, and Division III,

founded on tortious interference with contract rights, al-

lege that Plaintiff was forced to close its business because

of the negligence and tortious interference with contract

rights, respectively. Divisions II and III constitute al-

legations of injuries to property and are fundamentally

proprietary in nature. Consequently, the five year statute

of limitation of Section 614.1(4) is applicable rather

than subparagraph two of said section (CLARK V.

FIGGE (Iowa, 1970) 181 N.W. 2d 211, 58 A.L.R. 3d

1019).

The Court CONCLUDES that Divisions II and III

were brought within the prescribed period of time.

CAR SERVICE

Plaintiff has characterized its case as a car service

ease, alleging that the Defendants failed to perform their

common law and statutory duty to furnish Plaintiff with

suitable cars. Defendant has challenged this characteriza-

tion and contends that this case involves issues of an

abandonment of a railroad line, which is exclusively with-

in the domain of the Interstate Commerce Commission

(hereafter I.C.C.), which has approved the abandonment.

Defendant also contend that if this is a car service case,

questions as to car service are also questions of the L.C.C.

and not within the jurisdiction of a state court. Further,

— 0a —

Defendants contend that if there is a state court question,

Defendants have fulfilled their obligations under Iowa

law.

A railroad’s common law duty to furnish cars to its

customers has been superseded by statute both in Iowa

(SEC. 479.3, 1975 Code of Iowa; SEC. 327D.3, 1977 Code

of Iowa) and under federal law, The Interstate Commerce

Act, as amended (49 U.S.C. See. 1(11)). The carrier is

under an obligation to provide cars which are sufficient

in number, type and condition to fulfill a shipper’s needs

unless it has a valid excuse (PENNSYLVANIA R.R. V.

PURITAN COAL MINING CO. (1914) 237 U.S. 121, 35

S. Ct. 484, 59 L. Ed. 867; CHICAGO, R.I. & P. R.R. V.

LINWOOD STONE PRODUCTS CO. (1965) 258 Iowa

1378, 1388 N.W. 2d 902).

Defendant contends that the area of car service has

been preempted by the Interstate Commerce Act and that

a car service case must be brought before the I.C.C. rather

than the courts. Plaintiff contends that the courts do have

jurisdiction of car service cases in spite of 49 U.S.C.A.

See. 1(11).

The correct rule as to the primary jurisdiction of the

I.C.C. appears to be that under the Interstate Commerce

Act, as amended, there has been a partial preemption of

the car service area by the I.C.C. Thus, if the allega-

tion against the railroad is that it has discriminated

against a shipper by failing to furnish him cars in ac-

cord with established rules and practices of the railroad,

the question of whether such rules or practices have in

fact been followed is one which a court may determine.

However, if the allegation is that the rule or practice it-

self is unreasonable and discriminates against the ship-

per, the question of the reasonableness of the rule or the

practice thereof is for the I.C.C. to determine (BALTI-

MORE & OHIO R.R. V. BRADY (1933) 288 U.S. 448,

58 S. Ct. 441, 77 L. Ed. 888; MIDLAND VALLEY COAL

CO. V. BARKLEY (1927) 276 U.S. 482, 48 S. Ct. 342,

72 L. Ed. 664; PENNSYLVANIA R.R. V. PURITAN

— 2la —

COAL MINING CO., Supra; ANDERSON V. CHICAGO,

M. & ST. P. R.R. (Mich., 1919) 175 N.W. 246).

The failure of Defendant Railroad to continue service

to Plaintiff’s plant site does not of itself constitute a

failure to provide car service. A shipper does not have

an absolute right to service at his plant site. Although a

shipper may in fact have such a right in a particular

case, the right does not exist at common law and must

arise by contract, statute, or custom (GREAT LAKES

STEEL CORP. V. DETROIT, T. & I. R.R. (Mich, 1947)

96 N.W. 2d 704; Me DONALD V. CHICAGO & N.W.

R.R. (Wis., 1936) 266 N.W. 246; RICHEY AND GIL-

BERT CO. V. NORTHERN PAC. R.R. (Minn., 1910)

125 N.W. 897).

The fact that Plaintiff’s cost of shipping under the

practice of shipping from the Tort Dodge facility was

so high that it was forced out of business would go to

the reasonableness of the practice, a question for the

LC.Cc. (MIDLAND VALLEY COAL CO. V. BARKLEY,

Supra; TAYLOR COUNTY SAND & GRAVEL CO. V.

SEABOARD C. L. R.R. (5th Cir. 1971) 446 F. 2d 853;

ELGIN COAL CO. V. LOUISVILLE & N. R.R. (6th Cir.

1969) 411 F. 2d 1043; LC.C. V. BALTIMORE & A. R.R.

(D.C. Md. 1975) 398 F. Supp. 454).

The Court CONCLUDES that this is not a car service

case, but to the extent that car service issues are raised,

it involves issues which are within the jurisdiction of the

L.C.C. rather than a court.

DUTY TO PROVIDE TRANSPORTATION

Closely related to a railroad’s obligation to provide car

service is its general obligation to transport all goods

tendered to it. This duty to provide transportation, facili-

ties and service is another common law obligation which

has been made statutory (SEC. 479.3, 1975 Code of Iowa;

SEC. 327 D.3, 1977 Code of Iowa).

— 22a —

At common law and under state statutes, there is a

cause of action for failure to provide transportation serv-

ice, whether by failure to provide car service or otherwise

(PENNSYLVANIA R.R. V. PURITAN COAL CO.,

Supra; MINNEAPOLIS & ST. L. RY. V. PACIFIC,

GAMBLE, ROBINSON CO. (8th Cir. 1954) 215 F. 2d 26;

CHICAGO, R.I. & P. R.R. V. LINWOOD STONE PROD-

UCTS CO., Supra; BAIRD BROS. V. MINNEAPOLIS

& ST. L. RY. (1916) 181 Iowa 1104, 165 N.W. 840; CARR

V. CHICAGO, R.I. & P. R.R. (1916) 173 Iowa 444, 155

N.W. 840; ANDERSON V. CHICAGO, M. & ST. P. RR.,

Supra).

Kalo alleges that there was a general failure to pro-

vide transportation service and alleges that the railroad

negligently allowed its track to become unuseable. Kalo

contends that the result of the railroad’s negligence in

failing to keep up its track resulted in a failure to pro-

vide transportation service and cites the case of Johnson

v. Chicago, M. St. P. & P. R.R. (9th Cir. 1968) 400 F. 2d

968 in support of the proposition that a railroad is liable

in damages for a failure to maintain its track if such re-

sults in a failure to provide service to a shipper.

The Johnson case is distinguishable from the instant

case in that the Johnson case did not involve an abandon-

ment, as there was no intention on the part of the rail-

road to permanently discontinue service. Where an aban-

donment is involved, the rights of the parties are signifi-

cantly different.

ABANDONMENT

A certificate of public convenience and necessity from

the L.C.C. is required before a line may be abandoned

(49 U.S.C.A. See. la(1) (1977), 49 U.S.C.A. See. 1(18)

(1975) (Amended, Pub. L. 94-210, Tit. VIII, Secs. 802,

809(c), 90 Stat. 127, 146 (Feb. 5, 1976); Pub. L. 94-555,

Tit. IT, See. 218, 90 Stat. 2628 (Oct. 19, 1976). Failure

to keep a railroad line in repair, with the result that it

becomes unuseable, coupled with the cessation of service

— 23a —

on the line without the I.C.C. permission, constitutes an

illegal abandonment of a line (1.C.C. V. MAINE C. R.R.

(2nd Cir. 1974) 505 F. 2d 590; LC.C. V. CHICAGO, R.I.

& P. RR. (8th Cir. 1974) 501 F. 2d 908, Cert. Den. 420

U.S. 972, 95 S. Ct. 1393, 48 L. Ed. 2d 652; LC.C. V.

CHICAGO & N.W. TRANSPORTATION CO. (D.C. Ia.

1975) 407 F. Supp. 827; I.C.C. V. BALTIMORE & A.

R.R., Supra).

Generally, the remedies for an illegal abandonment are

solely in federal court. A party may have a state court

remedy if a state statute provides one or if the party

has a contract with the railroad obligating the railroad.

to keep the track in service (MONTGOMERY V. ATCHI-

SON, T. & S.F. R.R. (10th Cir. 19387) 89 F. 2d 94; But

see MOELLER V. I.C.C. (D.C. Ta. 1962) 201 F. Supp.

583).

There are no Towa statutes providing a remedy for an

illegal abandonment.

Absent statutory authority, however, there is no com-

mon law right to prevent abandonment of a railroad line,

or to sue for damages as a result thereof (SCULLY V.

CENTRAL NEBRASKA PUBLIC POWER & IRRIGA-

TION DISTRICT (Neb. 1943) 9 N.W. 94 207, 215;

WOODRUFF V. USS. (D.C. D.C. 1941) 40 F. Supp. 949;

BROWNWOOD N. & S. RY. V. RAILROAD COMMIS-

SION OF TEXAS (D.C. Tex. 1926) 16 F. 2d 297, 298).

The remedies under federal law are:

(1) The right to enjoin the abandonment. Until 1976,

this could be done by “any court of competent jurisdic-

tion,” (49 U.S.C.A. See. (20) (1975)), which would ap-

parently include state courts. After 1976, the injunctive

remedy is solely in a federal eourt (49 U.S.C.A. See. la

(9) (1977)); and

(2) Damages to the shipper for the period of time

from the date of the unlawful abandonment until the

abandonment is approved by the L.C.C. (49 U.S.C.A. Sees,

—

8, 9 (1977); LC.C. V. CHICAGO, RI. & P. R.R., Supra;

JOHNSON V. CHICAGO, M. ST. P. & P. RR, Supra;

But see ASBURY V. CHESAPEAKE & O. RR. (D.C.

D.C. 1970) 314 F. Supp. 310).

In pursuing the damages remedy, a shipper may pro-

ceed either before the I.C.C. or before a federal court,

but not both, and not in a state court (49 U.S.C.A. Sees.

8, 9).

In determining whether the railroad has fulfilled its

obligation to provide adequate facilities, the test is one

of reasonable diligence; and its business as a whole, the

character of the service required, the need of its per-

formance, and the various rights of the public and of the

carrier should in this respect be considered (MIDLAND

VALLEY COAL CO. V. BARKLEY, Supra; STATE OF

NEBRASKA V. UNITED STATES (D.C. Neb. 1966)

255 F. Supp. 718).

The abandonment proceedings involved herein con-

cerned the trackage owned by the Defendant Railroad

(that shown in orange on Exhibit “A”) the northern por-

tion of which had not been in service since 1967. The

trackage leased from the Fort Dodge, Des Moines &

Southern Railway (shown in green on Exhibit “A”) was

not involved directly in said abandonment proceedings.

This controversy involved questions which demand the

exercise of administrative discretion requiring the special

knowledge, experience, and services of the I.C.C. to de-

termine technical and intricate matters of fact, and a

uniformity of ruling is essential to comply with the pur-

poses of the Interstate Commerce Act, as amended.

The Court CONCLUDES that although a carrier has

an absolute duty to provide transportation service, in

providing the service the carrier is not required to do

any more than what is reasonable. The questions raised

in an abandonment proceeding all involve a reasonable-

ness standard—what the public convenience and _ neces-

sity require ((49 U.S.C.A. See. 1a(4); I.C.C. V. MAINE

— 25a —

C. R.R., Supra; MIDLAND VALLEY COAL CO. V.

BARKLEY, Supra). The public’s general right to rail

transportation is therefore qualified by a railroad’s right,

with permission, to abandon a particular line. When an

abandonment has occurred, the question is not whether

there has been a failure to provide transportation serv-

ice, but whether such failure was justified. The rights of

the parties in such a case must be governed by the rules

relating to abandonments rather than the rules on the

general duty of providing transportation service.

In this case, since an abandonment was involved, Kalo’s

remedy lay in the federal court and it has no cause of

action in this court.

RES JUDICATA/PRECLUSION

Both Kalo and the Defendants raise issues of issue

preclusion.

The philosophical basis for the doctrine of collateral

estoppel is that a party should have a full and fair day

in court to be heard on the issue. On the other hand, the

basis on which the doctrine of issue preclusion rests is

that the parties ought not to be permitted to litigate the

same issue more than once (GOOLSBY V. DERBY

(Iowa, 1971) 189 N.W. 2d 909, 915).

To bar further litigation on a specific issue four re-

quirements must be established:

(1) Issue concluded must be identical.

(2) Issue must have been raised and litigated in the

prior action.

(3) The issue must have been material and relevant

to the disposition of the prior action, and

(4) The determination made of the issue in the prior

action must have been necessary and essential to the re-

sulting damage (SCHNEBERGER V. UNITED STATES

FIDELITY & GUAR. CO. (Iowa, 1973) 213 N.W. 2d 918,

917).

— 26a —

Plaintiff brought suit against the Defendant Railroad,

a Delaware corporation with its principal place of busi-

ness in Illinois, and Jack Chmeler, a resident of Iowa.

The within cause was removed to the United States Dis-

trict Court, Northern District of Iowa, Central Division

and Defendant Railroad contended that Defendant Chme-

ler was fraudulently joined solely for the purpose of

defeating removal jurisdiction.

Thereafter Kalo filed its motion to remand and Defen-

dant Railroad filed its motion to dismiss in that said

United States District Court lacked jurisdiction over the

subject matter in that Kalo’s sole remedy was injunctive

relief pursuant to 49 U.S.C.A. See. 1(20) when it was al-

leged there was an illegal abandonment under 49 U.S.C.A.

See. 1(18).

Plaintiff contends that the order of the Honorable Wil-

liam C. Hanson, Judge, United States District Court,

Northern District of Iowa, constituted a finding and ad-

judication that the state court had jurisdiction of the sub-

ject matter and Defendants are precluded from raising

the issue again.

Said order concludes as follows:

“The Court has carefully studied the plaintiff’s pe-

tition and in particular Paragraphs 2 and 5 thereof.

While the allegations therein contained are rather

broad, the Court without introduction of evidence

cannot discern whether Jack Chmeler’s alleged acts

border on active negligence or mere nonfeasance.

Thus, the Court must conclude that “there is a possi-

bility that the plaintiff has stated a cause of action,”

and that the joinder of Jack Chmeler was not

fraudulent.

Accordingly, IT IS ORDERED that the plaintiff’s

Motion to Remand be, and the same is, hereby sus-

tained for want of subject matter jurisdiction.

IT IS FURTHER ORDERED that this cause of

action be remanded to the District Court of the State

of Iowa, in and for Webster County.”

— 27a —

Notwithstanding language contained in said order, said

order was a ruling upon Kalo’s Motion to Remand only.

Said order specifically recites that the basis of the order

was upon the allegations contained within Kalo’s petition

without the introduction of evidence and was bottomed

on the conclusion that there was a “possibility that the

plaintiff has stated a cause of action” against Jack Chme-

ler and therefore not fraudulent. The basis of said order

was that with the inclusion of Jack Chmeler, a citizen of

Iowa, as a defendant, the diversity of citizenship re-

quirement of 28 U.S.C.A. Sec. 1332 was defeated and. the

subject matter jurisdiction of said court was therefore

defeated.

The Court CONCLUDES that there is not an issue of

identical nature in the instant case.

The Defendants contend that factual issues that are

determinative of the present lawsuit have already been

decided by a valid and final judgment of the Interstate

Commerce Commission in the Kalo Line Abandonment

Proceedings, in which both the Defendant Railroad and

Kalo were parties.

On the 16th day of November, 1973, the Defendant

Railroad filed with the I.C.C. an application seeking a

certificate of public convenience and necessity permitting

abandonment of the Kalo line (the line marked in orange

on the attached Exhibit “A”).

Notice of the proposed abandonment was served on

Kalo on the 19th day of November, 1973. On or about the

18th day of September, 1975, the I.C.C. gave notice to

Kalo as to the procedure to be followed in this particular

proceeding and Kalo became a party in said proceedings

protesting said abandonment.

On the 19th day of May, 1976, after hearing on April

30, 1976, the Interstate Commerce Commission, Review

Board Number 5 found that Kalo, the protestant therein,

was in default; that service on the Kalo line had been

disrupted several times in the past by landslides; that

—_

in 1967 a landslide occurred on the line which caused the

Defendant Railroad to continue service to Kalo through

the lease of tracks from another carrier; that, in 1973, a

landslide caused the termination of service over the leased

tracks; that, due to the soil condition and mining activi-

ties in the area, repairs of the leased track would not be

sufficient to insure continuous operation on the line; that

the cessation of service occurred because of conditions

over which Defendant Railroad had no control, not be-

cause of wilful abandonment; and, that under the cir-

cumstances, continued operation of the line would be an

unnecessary burden on Defendant Railroad and on inter-

state commerce.

Thereafter Kalo filed its petition for reconsideration of

said I.C.C. order which contained a service date of May

19, 1976.

On the 30th day of September, 1976, the Interstate Com-

merce Commission, Division 3, acting as an Appellate

Division, found that the order of the Commission, Review

Board Number 5 was not erroneous; that the petition for

reconsideration of Kalo set forth no material facts or ar-

guments in addition to those previously considered in the

proceedings; denied Kalo’s petition for reconsideration;

and, affirmed the previous order of May 19, 1976.

In order for Kalo to be successful against the Defen-

dant Railroad in this court, there must be proof by a

preponderance of the evidence that Defendant Railroad

failed to provide cars or transportation to Kalo or that

Defendant Railroad was negligent in the maintenance of

its line, as opposed to failure to provide ears and trans-

portation because of lawful abandonment.

The L.C.C. made a final determination of fact that this

is an abandonment case.

The I.C.C. further made a final determination of fact

“that the cessation of service occurred because of con-

ditions over which applicant (Defendant Railroad) had

no control, not because of wilful abandonment,” and, that,

—

“due to the soil condition and mining activities in the

area, the repairs would not be sufficient to insure con-

tinuous operations on the line.”

In abandonment proceedings before the I.C.C. the ques-

tion of whether the deterioration of a line is due to a

railroad’s negligence or due to conditions beyond its con-

trol is always a concern in abandonment proceedings

(MISSOURI-KANSAS-TEXAS RAILROAD COMPANY

ABANDONMENT BETWEEN ALTOS AND FORGAN,

OKLAHOMA 338 I.C.C. 728, 743-748 (1971)).

It was upon a finding that Defendant Railroad had done

nothing illegal or negligent that the final determination

of the I.C.C. was reached.

The rule of res judicata/preclusion applies to judicial

and quasi-judicial acts of public officers and boards as

to the judgments of courts having general judicial powers

(RILEY V. BD. OF TRUSTEES OF POLICEMEN’S

PENSION FUND (1930) 210 Iowa 449, 455, 228 N.W.

578, 851; BANKERS LIFE Co. V. CITY OF EMMETS-

BURG (1938) 224 Iowa 1287, 278 N.W. 311; TIDE-

WATER OIL COMPANY V. JACKSON (10th Cir. 1963)

320 F. 2d 157, 161; LANDRETH V. WABASH R. CO.

(7th Cir. 1948) 153 F. 2d 98, 100).

Where a federal agency has, within the scope of its

authority, made a formal administrative determination

of a factual issue, a party that had an opportunity to

litigate the issue before the federal agency may take ad-

vantage of statutory provisions or appeal of the agency’s

decision, but the party may not relitigate the issue by

commencing an action in a court of original jurisdiction

(SIBA CORP. V. WEINBERGER (1973) 412 U.S. 640,

644, 93 S. Ct. 2495, 37 L. Ed. 2d 230, 234). This doctrine

is applicable to judgments rendered by the [.C.C. (SEA-

TRAIN LINES, INC. V. PENNSYLVANIA R. CO. (3rd

Cir. 1953) 207 F. 2d 255, 259).

The present parties took opposite sides in the proceed-

ing in the I.C.C.; said proceedings were in the I.C.C.

_ ae

which has specialized knowledge and experience in this

area; Kalo’s claim was sizeable which reasonably should

have been known on or about the 14th day of November,

1973, the date Defendant Railroad made its application to

the I.C.C., and, certainly known as of the 13th day of

September, 1974, the date the petition was filed herein;

and, future litigation was reasonably foreseeable at or

about the time that the Defendant Railroad filed its ap-

plication to abandon the line in November, 1973.

The Court CONCLUDES that the matters now raised

by the petition, as amended, have been determined ad-

versely to Kalo by the I.C.C. and that, because of the

determination by the I.C.C., Kalo is collaterally estopped

from again litigating them.

AGENT/EMPLOYEE

Plaintiff’s petition alleges that the Defendant Jack

Chmeler is and was an agent for the Defendant Railroad

and has been in charge of the operation of said railroad

at all times material herein. Plaintiff further alleges that

Jack Chmeler operated as a railroad common earrier in

Webster County, Iowa, and prior to April, 1973, provided

railroad service to the Kalo plant. Further that Defen-

dant Chmeler after April, 1973, refused to give service

to Kalo or furnish cars after repeated requests to him.

As a consequence thereof Kalo prays for a judgment

against him for $350,000.00 and costs.

The undisputed evidence is that Defendant Chmeler

was the freight agent in Fort Dodge, Iowa, from July

17, 1972-December 15, 1974, and as such either he or his

subordinates received car orders. His immediate superior

is the trainmaster which is a separate department head

as distinguished from the roadmaster. The evidence shows

that the Kalo line was taken out of service by the road-

master because of inability to stabilize the alignment of

tracks.

There is a complete failure of proof to show that De-

fendant Chmeler at any time acted as a railroad common

— 3la —

earrier. There is also a failure of proof to show that De-

fendant Chmeler personally, refused to give service to

Kalo or furnish ears to Kalo.

The Court CONCLUDES that there has been a failure

of proof to show that Defendant Chmeler had a duty to

provide car service or transportation to Kalo as a com-

mon earrier by railroad in either intrastate or interstate

transportation of freight for hire.

In Divisions II and III Kalo alleges again that Defen-

dant Chmeler operated as a railroad common carrier in

Webster County, Iowa, and operated a line to the Kalo

plant; that Kalo shipped its products over Defendant

Chmeler’s line; that Defendant Chmeler failed to main-

tain the tracks in a proper manner and neglected and re-

fused to deliver cars on order; that he delivered cars to

Kalo which were unsuitable for use by reason of being

dirty, broken and unworthy; that he failed and neglected

to properly maintain the railroad right-of-way; and, as a

result of the negligence of the Defendant Chmeler Kalo

suffered damages in the amount of $350,000.00 and puni-

tive damages in the amount of $150,000.00. Further, as a

result of the Defendant Chmeler’s acts of interference

with Kalo’s contracts, Kalo was damaged in the amount

of $100,000.00.

An agent is not responsible to a third person for in-

jury resulting from mere nonfeasanee, meaning the omis-

sion of the agent to perform a duty owed solely to its

principal by reason of his agency (CRAMBLITT V.

PERCIVAL-PORTER CO. (1916) 176 Iowa 733, 742-743,

158 N.W. 541, 545; KNIGHT V. ATLANTIC COAST

LINE (5th Cir. 1934) 73 F. 2d 76; TOADVINE V. CIN-

CINNATIT, N. 0. & T. P. RY. (D.C. Ky. 1937) 20 F. Supp.

996: DAVIS V. ST. LOUIS & S. F. RY. CO. (N.D. Okl.

1934) 8 F. Supp. 519). ,

“An agent, while obeying the command or performing

the service of the principal, is not justified in committing

a tort; and if he does, not only the principal, but the

agent, may be made to answer in damages therefor. But

— ee

where a duty rests on the principal, and not on the agent,

its nonperformance by the latter creates no liability as

against him, if injury results. True, he may owe a duty

to the principal to faithfully discharge his duties as

agent; but he owes no duty to others, except that, in the

performance of those duties, he shall not do anything

which will cause injury to them. If the agent fails to per-

form a duty which he owes to the principal, and, by rea-

son of such nonperformance or neglect of duty, a third

person sustains injury, no action can be maintained

against the agent by such third party person on account

thereof” (CRAMBLITT V. PERCIVAL-PORTER CO.,

Supra, 176 Iowa at 744-745, 158 N.W. at 545).

The evidence does not show that Chmeler had any duty

with respect to Kalo except such as was imposed by his

contract of employment as freight agent for Defendant

Railroad. The evidence fails to show facts giving rise to

a duty of Chmeler to Kalo with reference to providing

car service, maintenance of the roadbed, or providing

transportation.

The Court CONCLUDES that Kalo has failed to prove

a cause of action against the Defendant Chmeler.

IT IS THEREFORE ORDERED, ADJUDGED AND

DECREED, as follows:

(1) That the Defendants, the Chicago and North

Western Transportation Company and Jack Chmeler

a/k/a Jack Scemeler, have judgment against the Plain-

tiff, Kalo Brick & Tile Company, dismissing its petition

herein.

(2) That the Defendants, The Chicago and North

Western Transportation Company and Jack Chmeler,

a/k/a Jack Scemeler, have judgment against the Plain-

tiff, Kalo Brick & Tile Company, dismissing Division II

of its petition, as amended, herein.

(3) That the Defendants, The Chicago and North

Western Transportation Company and Jack Chmeler,

- $90

a/k/a Jack Scemeler, have judgment against the Plaintiff,

Kalo Brick & Tile Company, dismissing Division III of its

petition, as amended, herein.

(4) That said Defendants have judgment against said

Plaintiff for the costs of this action taxed by the Clerk

hs Se I IES os snassettisccccsiceneestioes

By The Court

Russell J. Hill, Judge

Copies To:

Mitchell, Murray, Blackburn & Coleman, P.C.

Gamble, Riepe, Burt, Webster & Fletcher

TESTIMONY OF JERRY SCHNURR, CORPORATE

OFFICER OF KALO, FROM TRANSCRIPT PAGE

$21, LINE 17, TO PAGE 322, LINE 2:

Q. In other words, some of your shipping would have

been local? A. Correct.

Q. And that wouldn’t—you wouldn’t have intended to

ship that by rail anyway? A. No, sir.

Q. Basically, you shipped long haul rail and short haul

truck? A. Basically we shipped the majority of our

products by rail. The product that went to our dis-

tributor, the local (Tr. p. 322) product and the prod-

uct within the State of Iowa, I could say would have

been shipped by truck.

INTERSTATE COMMERCE COMMISSION

Washington, D.C. 20423

I, ROBERT L. OSWALD, Secretary of the INTER-

STATE COMMERCE COMMISSION, do hereby certify

that the attached is a true copy of the Order of the Com-

mission, entered April 30, 1976, in Docket No. AB-1 (Sub

No. 24), Chicago & North Western Transportation Com-

pany—Abandonment Between Fort Dodge and Kalo, in

)

;

! — 34a —

Webster County, Iowa, the original of which is now in

file and of record in the office of said Commission.

IN WITNESS WHEREOF I have hereunto set my

hand and affixed the Seal of said Commission this

8th day of October, A.D., 1976.

/s/ Robert L. Oswald

SECRETARY OF THE

INTERSTATE COMMERCE

COMMISSION

ORDER

SERVICE DAY — May 19, 1976

At a Session of the INTERSTATE COMMERCE COM-

MISSION, Review Board Number 5, held at its office in

Washington D.C., on the 30th day of April, 1976.

AB-1 (Sub-No. 24)

CHICAGO & NORTH WESTERN TRANSPORTATION

COMPANY—ABANDONMENT BETWEEN FORT

DODGE AND KALO, IN WEBSTER COUNTY, IOWA

It appearing, That by application filed November 16,

1973, Chicago & North Western Transportation Company,

pursuant to sections 1(18-20) of the Interstate Commerce

Act, seeks a certificate of public convenience and neces-

sity permitting abandonment of the line of railroad begin-

ning at mile post 222.0 at Fort Dodge and extending in

a south-easterly direction to milepost 227.6 at Kalo, a

distance of approximately 5.6 miles, all in Webster Coun-

ty, Lowa;

It further appearing, That by order of September 12,

1975, the proceeding was set for handling under the modi-

fied procedure; that applicant timely filed a verified state-

ment; that United States Gypsum Company, which was

permitted to intervene by order of September 3, 1975,

filed a statement in support of the application, but pro-

testant, Kalo Brick & Tile Company did not file a veri-

— 35a —

fied statement in opposition as required; and that, pur-

suant to section 1100.46(b) of the Commission’s General

Rules of Practice, protestant is deemed to be in default

and entitled to no further formal proceedings;

It further appearing, That by order of September 12,

1975, the proceeding was set for handling under the modi-

fied procedure; that applicant timely filed a verified

statement; that United States Gypsum Company, which

was permitted to intervene by order of September 3, 1975,

filed a statement in support of the application, but pro-

testant, Kalo Brick & Tile Company did not file a verified

statement in opposition as required; and that, pursuant

to section 1100.46(b) of the Commission’s General Rules

of Practice, protestant is deemed to be in default and en-

titled to no further formal proceedings;

It further appeartmmg, That service on the line has been

disrupted several times in the past by landslides, but ap-

plicant made necessary repairs to enable continuation of

service; that, in 1967, a landslide occurred which could

have been repaired, but, due to the soil condition, said

repairs would have been only of a temporary nature; that

service to shippers was continued through the lease of

tracks from another carrier; that, in 1973, a landslide

caused the cessation of operations over this leased track;

that the cost of rehabilitation of the applicant’s line is

estimated to be in excess of $150,000; that the cost of

rehabilitation of the leased track is estimated to be in

excess of 100,000; that, due to the soil condition and

mining activities in the area, the repairs would not be suf-

ficient to insure continuous operations on the line; that

Kalo Brick & Tile Company was the only shipper located

on the line when it was last in operation; and that the

company has been closed for two years;

It further appearing, That the cessation of service oc-

curred because of conditions over which applicant had no

control, not because of willful abandonment; that it is

well settled that a shipper cannot insist that a burden-

— 36a —

some line be maintained solely for its own use; Moeller

v. 1.C.C., 201 F. Supp. 583 (S. D. Iowa, 1962); Village of

Candor v. U. S., 151 F. Supp. 889 (N. D. N Y 1957);

United States Feldspar Corporation v. U. S. 38 F. 2d 91

(N. D. N Y 1930); and that, under these circumstances,

continued operation ‘of the line would be an unnecessary

burden on applicant and on interstate commerce;

RECEIVED

MAY 21, 1976

LAW DEPARTMENT

C. & N. W. TRANS. CO.

It further appearing, That an environmental threshold

assessment survey has been prepared by the Commission

and made available for public inspection upon request;

that such survey has found that no significant impact on

the environment would result from the approval of the

application; that by order of the Commission, Commis-

sioner Tuggle, served June 25, 1975, it was determined

that based on the aforesaid threshold assessment survey,

no environmental impact statement need be issued in this

proceeding as it does not represent a major Federal ac-

tion significantly affecting the quality of the human en-

vironment within the meaning of the National Environ-

mental Policy Act of 1969, 42 U.S.C. & 4331 et seq.; that

appropriate notice of such determination has been pub-

lished as directed by this Commission; that this Commis-

sion received no substantive comments as to said deter-

mination as of the date hereof; that said threshold as-

sessment survey is a part of the record in this proceeding

and has been weighed in considering the issues herein;

and that, and the Board so finds, the economic advantages

to be gained by applicant and the burdens to be avoided

by the applicant and imterstate commerce through the

abandonment outweigh any adverse environmental fac-

tors; and

— 37a —

It further appearing, and the Board so finds, That the

present and future public convenience and necessity per-

mit abandonment by the Chicago & North Western Trans-

portation Company of the above-described line of rail-

road, subject to the condition that employees shall be en-

titled for protection, to the conditions as set forth in

Chicago, B. & Q. R. Co. Abandonment, 257 I.C.C. 700;

and provided, however, that any responsible State agency

and/or local government or other interested responsible

organization be given the opportunity, for a period of 120

days from the date of actual abandonment to negotiate

the purchase of all or any portion of the right-of-way

of the line to be abandoned for public use at a purchase

price on such terms as the parties may agree as just and

reasonable, but not less than a purchase price ascertained

in accordance with the principles controlling in condemna-

tion proceedings ;

It is ordered, That this order shall be effective 30 days

from the date of service; and that upon this order be-

coming administratively final an appropriate notice of the

finding heretofore made is to be published in the Federal

Register pursuant to the requirements of section 1la(6)

(a) of the Interstate Commerce Act, as amended, as pro-

vided in the Notice of the Commission entitled ‘‘Proce-

dures for Pending Rail Abandonment Cases’’, served

March 31, 1976, and published in the Federal Register,

41 FR 13691 (March 31, 1976), which also describes the

procedures to be used in submitting offers of subsidy;

It is further ordered, That in the event any person or

government entity is considering an offer of financial as-

sistance for the continued operations or acquisition of the

subject line, then such person or government entity should

give notice that it is considering an offer to provide

financial assistance in written form by certified mail to

carrier applicant and by first class mail to all parties of

record and the Commission; that within 10 days from the

date of receipt of such written notification, whether such

notification is received before or after the Federal Regis-

— 38a —

ter publication, applicant shall furnish, with a copy to

this Commission, to any person considering an offer of

financial assistance the following: (1) its most recent

report on the physical condition of the subject line of rail-

road; (2) a current report on the train service on the

line and a current report on traffic and revenue attribut-

able to the subject line; (3) an actual computation of the

extent to which avoidable cost of providing rail service

plus a reasonable return on the value of the rail proper-

ties involved exceed the revenues attributable to the line

of railroad, as determined by the ‘‘Standards for Deter-

mining Rail Service Continuation Subsidies’’, 49 CFR

1125, which data will be used by the Commission to assist

it in making the determination required by the statute;

It is further ordered, That within 15 days of the date

of publication of notice of the finding in this proceeding

in the Federal Register any person, including a govern-

ment entity, who may have been considering the making

of an offer of financial assistance for the purpose of con-

tinuation of the rail service involved herein shall make

a bona fide offer of financial assistance to carrier ap-

plicant and shall file with the Commission with an ap-

propriate reference to this proceeding the following: (1)

a bona fide offer of financial assistance; (2) information

and data which demonstrates that the offeror of financial

assistance is financially responsible, including, in the

event the offeror is a person other than a government

entity, appropriate financial data (a) consisting of a bal-

ance sheet and accompanying schedules as of a date not

earlier than 6 months prior te the date of such submission,

and (b) an income statement showing its revenues, ex-

penses, and net income for the current calendar year to

the latest available date and for each of the two preceding

calendar years, or in the event the offeror is a govern-

ment entity, a statement indicating that it has appropriate

authority and necessary funds enabling it to enter into

contracts affording financial assistance for rail service

operations or acquisitions of rail lines, and (3) informa-

tion to support a finding by the Commission that such

wy

&

— 39a —

offer of financial assistance will likely cover the difference

between the revenues attributable to the line of railroad

and the avoidable costs of providing rail freight service

over the line, plus a reasonable return on the value of

the line; or that it is likely to cover the cost of acquiring

all or a portion of the line and thereby meet the require-

ments of section la(6)(a) (ii)(A) or (B) of the Act, as

amended ;

It is further ordered, That if the Commission finds that

a financially responsible person has offered financial as-

sistance in accordance with the procedures outlined above,

as published in the above-referenced Notice of March 31,

1976, in the Federal Register, the Commission shall post-

pone the issuance of a certificate of abandonment for such

reasonable time, not to exceed 6 months, as is necessary

to enable such person or government entity to enter into

a binding agreement with the applicant railroad to pro-

vide financial assistance for continued rail service or to

effect a purchase of the rail line;

It ts further ordered, That when the Commission is

informed of the execution of any financial assistance

agreement or acquisition and operating agreement, the

issuance of the certificate of abandonment shall be post-

poned for such period of time as such an agreement, in-

cluding any extensions or modifications, is in effect;

It is further ordered, That all correspondence to the

Commission with respect to offers of financial assistance

for the continued operations or acquisition of the subject

line shall contain an appropriate reference to the subject

proceeding; and that on the lower left hand corner of

envelopes containing such correspondence the following

notation shall be typed in boldface ‘‘AB-RSCP”’:

And it is further ordered, That, subject to the condi-

tions set forth above, an appropriate certificate of aban-

donment will be issued, and that the applicant shall not

effect abandonment prior to the effective date of such cer-

tificate of abandonment.

—=- 4D,

By the Commission, Review Board Number 5, Members

Krock, Pohost, and Taylor.

ROBERT L. OSWALD,

Secretary.

(SEAL)

INTERSTATE COMMERCE COMMISSION

Washington, D.C. 20423

I, H. GORDON HOMME, JR., Acting Secretary of the

INTERSTATE COMMERCE COMMISSION, do hereby

certify that the attached is a true copy of the Order of

the Commission, entered September 23, 1976, in Docket

No. AB-1 (Sub No. 24), Chicago & North Western Trans-

portation Company—Abandonment Between Fort Dodge

and Kalo, in Webster County, Iowa, the original of which

is now on file and of record in the office of said Commis-

sion.

IN WITNESS WHEREOF I have here-

unto set my hand and affixed the Seal

of said Commission this 8th day of Oc-

tober, A.D., 1976.

/s/ H. Gordon Homme, Jr.,

ACTING SECRETARY OF THE

INTERSTATE COMMERCE

COMMISSION

SERVICE DATE— Sep. 30, 1976

ORDER

At a Session of the INTERSTATE COMMERCE

COMMISSION, Division 3, acting as an Appellate

Division, held at its office in Washington, D.C.,

on the 23rd of September ........ , 1976.

AB 1(Sub-No. 24)

— 41a —

CHICAGO & NORTH WESTERN TRANSPORTATION

COMPANY—ABANDONMENT BETWEEN

FORT DODGE AND KALO, IN WEBSTER

COUNTY, IOWA

Upon consideration of the record in the above-entitled

proceeding including the order of the Commission, Re-

view Board No. 5, served May 19, 1976, authorizing the

Chicago & North Western Transportation Company to

abandon the line described above; the pleading of protes-

tant Kalo Brick & Tile Company, filed June 9, 1976, which

will be treated as a petition for reconsideration of the

order of the Commission, Review Board No. 5, served

May 19, 1976; and the replies to protestant’s petition for

reconsideration filed by applicant on July 2, 1976, and

by intervenor, United States Gypsum Company, filed on

July 19, 1976;

It appearing, That the order of the Commission, Review

Board No. 5, is not shown to be erroneous on the basis

of the record made by the parties complving with the

order for modified procedure; that said petition sets

forth no material facts or arguments in addition to those

previously considered in the proceeding: and that no

showing has been made warranting reconsideration of said

order of the Commission, Review Board No. 5:

It is ordered, That the petition for reconsideration be,

and it is hereby denied.

It is further ordered, That the order of the Commission,

Review Board No. 5, served May 19, 1976, shall be ef-

fective 20 days from the date of service of the order

herein.

By the Commission, Division 3, acting as an Appellate

Division, Commissioners Brown, MacFarland and Corber

(Commissioner MacFarland not joining in the majority

statement).

/s/ H. Gordon Homme, Jr.

Acting Secretary

(SEAL)

_

TESTIMONY OF JERRY SCHNURR, OFFICER OF

KALO BRICK AND TILE COMPANY; (transcript page

321, line 17 to page 322, line 2; addendum to appendix in

the Supreme Court of Iowa, number 2-60942, page 5)

Q. In other words, some of your shipping would have

been local? A. Correct.

Q. And that wouldn’t — you wouldn’t have intended to

ship that by rail anyway? A. No, sir.

Q. Basically, you shipped long haul rail and short haul

truck? A. Basically we shipped the majority of our

products by rail. The products that went to our dis-

tributor, the local product and the product within the

State of Towa, T could say would have been shipped

by truck.

49 US.C.A.

§ 1, par. (4). Duty to furnish transportation and es-

tablish through routes; division of joint rates. It shall be

the duty of every common carrier subject to this chapter

to provide and furnish transportation upon reasonable

request therefor, and to establish reasonable through

routes with other such carriers, and justgand reasonable

rates, fares, charges, and classifications # licable there-

to; and it shall be the duty of common carriers by rail-

road subject to this chapter to establish reasonable

through routes with common carriers by water subject

to chapter 12 of this title, and just and reasonable rates,

fares, charges, and classifications applicable thereto. It

shall be the duty of every such common carrier estab-

lishing through routes to provide reasonable facilities

for operating such routes and to make reasonable rules

and regulations with respect to their operation, and pro-

viding for reasonable compensation to those entitled

thereto; and in case of joint rates, fares, or charges, to

establish just, reasonable, and equitable divisions there-

of, which shall not unduly prefer or prejudice any of such

participating carriers. Feb. 4, 1887, c. 104, Pt. I, $1, 24

Stat. 379; June 29, 1906, ¢. 3591, § 1, 34 Stat. 584; June

—

18, 1910, c. 309, § 7, 36 Stat. 544; Feb. 28, 1920, c. 91,

$ 400, 41 Stat. 474; Aug. 9, 1935, c. 498, § 1, 49 Stat. 543;

Sept. 18, 1940, c. 722, Title I, § 2(c), 54 Stat. 899.

Section 1, of which this paragraph is apart, is set out

in toto at pp. 18-28.

§ 1, par. (10). “Car service” defined. The term “ear

service” in this chapter shall include the use, control,

supply, movement, distribution, exchange, interchange,

and return of locomotives, cars, and other vehicles used

in the transportation of property, including special types

of equipment, and the supply of trains, by any carrier

by railroad subject to this chapter. Feb. 4, 1887, ¢. 104,

Pt. I, § 1, 24 Stat. 379; May 29, 1917, c. 23, 40 Stat. 101,

Feb. 28, 1920, c. 91, 4 402, 41 Stat. 476; Aug. 9, 1935, e.

498, §1, 49 Stat. 543.

Section 1, of which this paragraph is a part, is set out

in toto at pp. 18-28.

Historical Note

Codification. This paragraph was added to section 1

of the Act of 1887, by the amendatory Act of May 29,

1917, and was amended to read as above by the Trans-

portation Act of Feb. 28, 1920, and given the number

"(io)".

1935 Amendment. Act Aug. 9, 1935, substituted “this

part’’ for ‘‘this Act’’, which has been translated to read

‘this chapter’’.

§ 1, par. (11). Duty to furnish ear service; rules and

regulations. It shall be the duty of every carrier by rail-

road subject to this chapter to furnish safe and adequate

car service and to establish, observe, and enforce just

and reasonable rules, regulations, and practices with re-

spect to car service; and every unjust and unreasonable

rule, regulation, and practice with respect to car service

is prohibited and declared to be unlawful. Feb. 4, 1887, e.

104, Pt. I, § 1, 24 Stat. 379; May 29, 1917, c. 23, 40 Stat.

ancien

101; Feb. 28, 1920, c. 91, § 402, 41 Stat. 476; Aug. 9, 1935,

c. 498, § 1, 49 Stat. 543.

Section 1, of which this paragraph is a part, is set out

in toto at pp. 18-28.

Historical Note

Codification. This paragraph was added by Act May

99, 1917 and was amended to read as above by the Trans-

portation Act of Feb. 28, 1920, and was given the number

=(30)."

1935 Amendment. Act Aug. 9, 1935, substituted “this

part” for “this Act”, which has been translated to read

‘this chapter’’.

§ 1, par. (13). Rules and regulations as to car service

to be filed, etc. The Commission is authorized by general

or special orders to require all carriers by railroad sub-

ject to this chapter, or any of them, to file with it from

time to time their rules and regulations with respect to

ear service, and the Commission may, in its discretion,

direct that such rules and regulations shall be incorpo-

rated in their schedules showing rates, fares, and charges

for transportation, and be subject to any or all of the

provisions of this chapter relating thereto. Feb. 4, 1887,

ce. 104, Pt. I, § 1, 24 Stat. 379; May 29, 1917, c. 23, 40 Stat.

101; Feb. 28, 1920, c. 91, $402, 41 Stat. 477; Aug. 9, 1935,

ec. 498, § 1, 49 Stat. 543.

Section 1, of which this paragraph is a part, is set out

in toto at pp. 18-28.

Historical Note

Codification. This paragraph is not found in original

Interstate Commerce Act of 1887 or the earlier amenda-

tory acts, but was added to section 1 by the Act of May

29, 1917, and was amended to read as above by the Trans-

portation Act of Feb. 28, 1920, and given the number

“(13).”

an 458 oo

1935 Amendment. Act Aug. 9, 1935, substituted “this

part” for “this Act”, which has been translated to read

“this chapter”.

§ 1, par. (14). Establishment by Commission of rules,

ete., as to car service. (a) The Commission may, after

hearing, on a complaint or upon its own initiative with-

out complaint, establish reasonable rules, regulations, and

practices with respect to car service by common carriers

by railroad subject to this chapter, including the compen-

sation to be paid and other terms of any contract, agree-

ment, or arrangement for the use of any locomotive, car,

or other vehicle not owned by the carrier using it (and

whether or not owned by another earrier), and the penal-

ties or other sanctions for nonobservance of such rules,

regulations, or practices.

(b) It shall be unlawful for any common carrier by

railroad or express company, subject to this chapter, to

make or enter into any contract, agreement, or arrange-

ment with any person for the furnishing to or on behalf

of such carrier or express company of protective service

against heat or cold to property transported or to be

transported in interstate or foreign commerce, or for

any such carrier or express company to continue after

April 1, 1941, as a party to any such contract, agreement,

or arrangement unless and until such contract, agreement,

or arrangement has been submitted to and approved by

the Commission as just, reasonable, and consistent with

the public interest: Provided, That if the Commission is

unable to make its determination with respect to any such

contract, agreement, or arrangement prior to said date,

it may extend it to not later than October 1, 1941. Feb.

4, 1887, ec. 104, Pt. I, § 1, 24 Stat. 379; May 29, 1917, e.

23, 40 Stat. 101; Feb. 28, 1920, e. 91, § 402, 41 Stat. 476;

Aug. 9, 1935, ¢. 498, § 1, 49 Stat. 543; Sept. 18, 1940, e.

722, Title I, § 4(a), 54 Stat. 901.

Section 1, of which this paragraph is a part, is set out

in toto at pp. 18-28.

—- 46a, —

Historical Note

Codification. This paragraph is not found in the orig-

inal Interstate Commerce Act of 1887 or the earlier amen-

datory acts, but was added to section 1, by the amend-

atory Act of May 29, 1917 and was amended by the Trans-

portation Act of Feb. 28, 1920, and given the number

“(14).”

1940 Amendment. Act Sept. 18, 1940, amended par-

agraph generally.

1935 Amendment. Act Aug. 9, 1935, substituted “this

part” for “this Act”, which has been translated to read

“this chapter”.

§ 1, par. (17). Directions of Commission as to car

service; disobedience; rights of States; bribery. (a) The

directions of the Commission as to car service and to the

matters referred to in paragraphs (15) and (16) of this

section may be made through and by such agents or

agencies as the Commission shall designate and appoint

for that purpose. It shall be the duty of all carriers by

railroad subject to this chapter, and of their officers,

agents, and employees, to obey strictly and conform

promptly to such orders or directions of the Commission,

and in case of failure or refusal on the part of any car-

rier, receiver, or operating trustee to comply with any

such order or direction such carrier, receiver, or trustee

shall be liable to a penalty of not less than $100 nor more

than $500 for each such offense and $50 for each and

every day of the continuance of such offense, which shall

accrue to the United States and may be recovered in a

civil action brought by the United States: Provided, how-

ever, That nothing in this chapter shall impair or affect

the right of a State, in the exercise of its police power,

to require just and reasonable freight and passenger

service for intrastate business, except insofar as such re-

quirement is inconsistent with any lawful order of the

Commission made under the provisions of this chapter

and except as otherwise provided in this chapter,

— 47a —

(b) It shall be unlawful for any person to offer or give

or cause or procure to be offered or given, directly or

indirectly, any money, property, or thing of value, or

bribe in any other form whatsoever, to any person act-

ing for or employed by any carrier by railroad subject

to this part with intent to influence his decision or action,

or because of his decision or action, with respect to the

supply, distribution, or movement of cars or other vehi-

cles, or vessels, used in the transportation of property.

It shall be unlawful for any person acting for or em-

ployed by any carrier by railroad subject to this chapter

to solicit, accept, or receive, directly or indirectly, any

money, property, or thing of value, or bribe in any other

form whatsoever, with intent to be influenced thereby in

his decision or action, or because of his decision or ac-

tion, with respect to the supply, distribution, or move-

ment of cars or other vehicles, or vessels, used in the

transportation of property. Any person who violates the

provisions of this subparagraph shall be deemed guilty

of a misdemeanor and be subject for each offense to a

fine of not more than $1,000, or imprisonment in the pen-

itentiary for a term of not more than two years, or both

such fine and imprisonment. Feb. 4, 1887, ¢. 104, Pt. I.

§ 1, 24 Stat. 379; May 29, 1917, ¢. 28, 40 Stat. 101; Feb.

28, 1920, c. 91, § 402, 41 Stat. 477; Aug. 9, 1935, ¢. 498,

§ 1, 49 Stat. 543; Sept. 18, 1940, ¢. 722, Title I, § 4,

(b), 54 Stat. 899; Aug. 12, 1958, Pub. L. 85-625, § 3, 72

Stat. 570.

Section 1, of which this paragraph is a part, is set out

in toto at pp. 18-28.

Historical Note

Codification. This paragraph is not found in the orig-

inal Interstate Commerce Act of 1887 or the earlier

amendatory acts. The first part of this paragraph down

to the proviso was added by the amendatory Act of May

29, 1917, was amended by the Transportation Act of Feb.

28, 1920, and was given the number “(17).”

—_— “a

1958 Amendment. Subd. (a) amended by Pub. L. 85-

625 which inserted “and except as otherwise provided in

this chapter” following “made under the provisions of

this chapter”.

1940 Amendment. Act Sept. 18, 1940, amended para-

graph by designating existing provisions as subd. (a)

and by adding subd. (b).

Subd. (b) added by Act Sept. 18, 1940.

1935 Amendment. Act Aug. 9, 1935, substituted “this

part” for “this Act”, which has been translated to read

“this chapter”.

§ 1, par. (18). Extension or abandonment of lines;

certificate required; contracts for joint use of spurs,

switches, etc. No carrier by railroad subject to this chap-

ter shall undertake the extension of its line of railroad,

or the construction of a new line of railroad, or shall

acquire or operate any line of railroad, or extension

thereof, or shall engage in transportation under this

chapter over or by means of such additional or extended

line of railroad, unless and until there shall first have

been obtained from the Commission a certificate that the

present or future public convenience and necessity re-

quire or will require the construction, or operation, or

construction and operation, of such additional or ex-

tended line of railroad, and no carrier by railroad subject

to this chapter shall abandon all or any portion of a line

of railroad, or the operation thereof, unless and until

there shall first have been obtained from the Commission

a certificate that the present or future public convenience

and necessity permit of such abandonment. Nothing in

this paragraph or in section 5 of this title shall be con-

sidered to prohibit the making of contracts between car-

riers by railroad subject to this chapter, without the

approval of the Commission, for the joint ownership or

joint use of spur, industrial, team, switching, or side

tracks. Feb. 4, 1887, c. 104, Pt. I, § 1, 24 Stat. 379; May

29, 1917, c. 23, 40 Stat. 101; Feb. 28, 1920, ¢. 91, § 402,

am 408

41 Stat. 477; Aug. 9, 1935, c. 498, § 1, 49 Stat. 543; Sept.

18, 1940, ec. 722, Title I, § 4(c), 54 Stat. 901.

Section 1, of which this paragraph is a part, is set out

in toto at pp. 18-28.

Historical Note

Codification. This paragraph is not found in the origi-

nal Interstate Commerce Act of 1887 nor in the earlier

amendatory acts. It was added by the Transportation Act

of Feb. 28, 1920, and given the number “(18).”

1940 Amendment. Act Sept. 18, 1940, amended para-

graph by adding last sentence.

1935 Amendment. Act Aug. 9, 1935, substituted “this

part” for “this Act”, which has been translated to read

“this chapter”.

§ 1, par. (20). Issuance of certificate by Commission;

unlawful extension or abandonment of lines. The Com-

mission shall have power to issue such certificate as

prayed for, or to refuse to issue it, or to issue it for a

portion or portions of a line of railroad, or extension

thereof, described in the application, or for the partial

exercise only of such right or privilege, and may attach

to the issuance of the certificate such terms and condi-

tions as in its judgment the public convenience and neces-

sity may require. From and after issuance of such cer-

tificate, and not before, the carrier by railroad may,

without securing approval other than such certificate,

comply with the terms and conditions contained in or

attached to the issuance of such certificate and proceed

with the construction, operation, or abandonment covered

thereby. Any construction, operation, or abandonment

contrary to the provisions of this paragraph or of para-

graph (18) or (19) of this section may be enjoined by

any court of competent jurisdiction at the suit of the

United States, the Commission, any commission or regu-

lating body of the State or States affected, or any party

in interest; and any carrier which, or any director, officer,

cones

receiver, operating trustee, lessee, agent, or person, acting

for or employed by such carrier, who knowingly author-

izes, consents to, or permits any violation of the provi-

sions of this paragraph or of paragraph (18) of this

section, shall upon conviction thereof be punished by a

fine of not more than $5,000 or by imprisonment for not

more than three years, or both. Feb. 4, 1887, ¢. 104, Pt. I,

§ 1, 24 Stat. 379; May 29, 1917, c. 23, 40 Stat. 101; Feb.

28, 1920, c. 91, § 402, 41 Stat. 478.

Section 1, of which this paragraph is set out in toto at

pp. 18-28.

Historical Note

Codification. This paragraph is not found in the origi-

nal Interstate Commerce Act of 1887, nor in the earlier

amendatory acts. It was added by the Transportation

Act of Feb. 28, 1920, and given the number “(20).”

§ 8. Liability in damages to persons injured by violation

of law

In case any common carrier subject to the provisions

of this chapter shall do, cause to be done, or permit to

be done any act, matter, or thing in this chapter pro-

hibited or declared to be unlawful, or shall omit to do

any act, matter, or thing in this chapter required to he

done, such common carrier shall be liable to the person

or persons injured thereby for the full amount of damages

sustained in consequence of any such violation of the

provisions of this chapter, together with a reasonable

counsel or attorney’s fee, to be fixed by the court in every

ease of recovery, which attorney’s fee shall be taxed

and collected as part of the costs in the case. Feb. 4, 1887,

ce. 104, Pt. I, § 8, 24 Stat. 382; Aug. 9, 1935, ec. 498, § 1,

49 Stat. 543.

Historical Note

1935 Amendment. Act Aug. 9, 1935, substituted “this

part” for “this Act”, which has been translated to read

“this chapter”.

—5la—

§ 9. Remedies of persons damaged; election; witnesses

Any person or persons claiming to be damaged by any

common carrier subject to the provisions of this chapter

may either make complaint to the Commission as herein-

after provided for, or may bring suit in his or their own

behalf for the recovery of the damages for which such

common carrier may be liable under the provisions of

this chapter in any district court of the United States

of competent jurisdiction; but such person or persons

shall not have the right to pursue both of said remedies,

and must in each case elect which one of the two methods

of procedure herein provided for he or they will adopt.

In any such action brought for the recovery of damages

the court before which the same shall be pending may

compel any director, officer, receiver, trustee, or agent

of the corporation or company defendant in such suit to

attend, appear, and testify in such case, and may compel

the production of the books and papers of such corpora-

tion or company party to any such suit; the claim that

any such testimony or evidence may tend to criminate

the person giving such evidence shall not excuse such

witness from testifying, but such evidence or testimony

shall not be used against such person on the trial of any

criminal proceeding. Feb. 4, 1887, c. 104, Pt. I, § 9, 24

Stat. 382; Mar. 3, 1911, ce. 231, § 291, 36 Stat. 1167: Aug.

9, 1935, c. 498, § 1, 49 Stat. 543.

Historical Note

1935 Amendment. Act Aug. 9, 1935, substituted “this

part” for “this Act”, which has been translated to read

“this chapter”.

479.3 Duty to furnish cars and transport freight

Every railway corporation shall upon reasonable notice,

and within a reasonable time, furnish suitable cars to

any and all persons who may apply therefor, for the

transportation of any and all kinds of freight, and re-

ceive and transport such freight with all reasonable dis-

patch, and provide and keep suitable facilities for the

— 52a —

receiving and handling thereof at any depot on the line

of its road.

479.122 Liability for negligence of employees

Every corporation operating a railway shall be liable

for all damages sustained by any person, including em-

ployees of such corporation, in consequence of the neglect

of the agents, or by any mismanagement of the engineers,

or other employees thereof, and in consequence of the

willful wrongs, whether of commission or omission, of

such agents, engineers, or other employees, when such

wrongs are in any manner connected with the use and

operation of any railway on or about which they shall be

employed, and no contract which restricts such liability

shall be legal or binding.

This Constitution, and the Laws of the United States

which shall be made in Pursuance thereof; and all Treat-

ies made, or which shall be made, under the Authority

of the United States, shall be the supreme Law of the

Land; and the Judges in every State shall be bound

thereby, any Thing in the Constitution or Laws of any

State to the Contrary notwithstanding.

Ix Tue District Court Or Tue State Or Iowa

In Anp For Wesster County

Kavo Brick & Tite Company,

Plaintiff,

vs.

Cuicaco Anp NorTHWESTERN TRANSPORTATION COMPANY,

Successor in Interest in Carcaco ANp NorTHwESTERN RalL-

way Company and Jack ScEMELER,

Defendants.

Law No. 45,664

SEPARATE ANSWER OF CHICAGO AND NORTH

WESTERN TRANSPORTATION COMPANY

Comes Now defendant Chicago and North Western

Transportation Company, and, for its separate answer

aw §8e ....

to the Petition filed herein by the plaintiff, Kalo Brick

& Tile Company, respectfully states:

1. This defendant does not have sufficient information

to form a belief as to the allegations contained in para-

graph 1 thereof and therefore denies the same.

2. For its answer to the allegations contained in para-

graph 2 thereof, this defendant specifically denies that

defendant Jack Chmeler (erroneously referred to herein

as “Scemeler”) and his predecessor agents have been in

charge of the operation of the business of the Chicago

and North Western Transportation Company and _ its

predecessor at all times material hereto. This defendant

admits the balance of the allegations of paragraph 2

thereof.

3. This defendant does not have sufficient information

to form a belief as to the allegations contained in para-

graph 3 thereof and therefore denies the same.

4. For its answer to the allegations contained in

paragraph 4 thereof, this defendant specifically denies

that defendant Jack Chmeler operated as a railroad

common carrier in Webster County, Iowa, and in par-

ticular a line from Fort Dodge, Iowa, to Kalo, Iowa, and

to plaintiff’s plant. This defendant further specifically

denies that, for many years, the foregoing line of track

was operated by defendant Jack Chmeler and his prede-

cessors. This defendant further specifically denies that,

for many years, the plaintiff shipped its products over

defendant Jack Chmeler’s line. This defendant further

specifically denies that plaintiff built up its business on

the basis of the railroad service that was available until

April of 1973. This defendant admits the balance of the

allegations of paragraph 4 thereof.

5. For its answer to the allegations contained in

paragraph 5 thereof, this defendant specifically denies

that, prior to April of 1973, defendant Jack Chmeler

gave railroad service to the plaintiff and that, after April

of 1973, defendant Jack Chmeler failed and refused to

4

—

give service to the plaintiff or to furnish any railway

cars or to send trains to the plaintiff’s plant at Kalo,

Iowa. This defendant further specifically denies that

plaintiff made repeated requests for service and for cars

to defendant, its agent and, in particular, its agent de-

fendant Jack Chmeler. This defendant further specifically

denies that defendant Jack Chmeler owed any common

law or statutory duties as a common carrier of freight

to plaintiff. This defendant further specifically denies that

this defendant failed and refused to perform the common

law and statutory duties of a common carrier of freight

to plaintiff. This defendant further specifically denies

that, as a result, plaintiff was forced to give up its busi-

ness resulting in substantial damages to it. This defen-

dant further specifically denies that defendant Jack

Chmeler had any duty to operate as a common carrier.

This defendant further specifically denies that this de-

fendant failed and refused to operate as a common car-

rier and to perform its duty to plaintiff as such and that

plaintiff has been damaged in the sum of not less than

$350,000.00.

6. For its further answer to the allegations thereof,

this defendant affirmatively alleges that Petition herein

fails to state a claim on which any relief can be granted.

7. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, at all times

material hereto, this defendant was a common carrier

by railroad was engaged in the interstate transportation

of freight for hire, and the furnishing of services in

connection therewith, and was subject to the provisions

of the Interstate Commerce Act, 49 U.S.C.A. $§ 1, et seq.

8. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, at all times

material hereto, this defendant was the owner of a line of

railroad which ran from Mile Post 222.0 in Fort Dodge,

Iowa, to Mile Post 227.6 at Kalo, Iowa, a distance of

5.6 miles.

— 55a —

9. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, prior to April

of 1973, this defendant provided its services as a common

carrier by railroad to the facility owned and operated

by plaintiff at Kalo, Iowa, by means of said line of

railroad.

10. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, prior to April

of 1973, plaintiff shipped its products in interstate com-

merce from the facility owned and operated by plaintiff

at Kalo, Iowa, to various points in the United States by

means of said line of railroad.

11. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, in April of 1973,

an embankment slide occurred on said line of railroad.

12. For its further answer to the allegations thereof,

this defendant affirmatively alleges that said embankment

slide made it impossible for this defendant to provide

its services as a common carrier by railroad to the facility

owned and operated by plaintiff at Kalo, Iowa, by means

of said line of railroad.

13. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, on November

14, 1973, this defendant made application to the Inter-

state Commerce Commission pursuant to the provisions

of the Interstate Commerce Act, 49 U.S.C.A. §§ 1, et seq.,

for a certificate of public convenience and necessity au-

thorizing this defendant to abandon said line of railroad.

14. For its further answer to the allegations thereof,

this defendant affirmatively alleges that said application

is still pending before the Interstate Commerce Com-

mission and the Interstate Commerce Commission has

not granted or denied said application.

15. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, by reason of

the foregoing, the sole remedies available to plaintiff

— 56a —

are either participation in the abandonment proceeding

before the Interstate Commerce Commission pursuant to

the provisions of 49 U.S.C.A. $$ 1(18) and 1(19) or a suit

for an injunction pursuant to the provisions of 49 U.S.

C.A. § 1(20).

16. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, by reason of

the foregoing, this court does not have jurisdiction of

the subject matter hereof.

Wherefore, having fully answered, this defendant prays

that the Petition filed herein be dismissed at plaintiff’s

costs.

GAMBLE, RIEPE, BURT, WEBSTER

& FLETCHER

By ORIGINAL SIGNED

FRANK W. DAVIS, JR.

1021 Fleming Building

Des Moines, Iowa 50309

Telephone: 515-282-0216

Attorneys for Defendant,

Chicago and North Western

Transportation Company.

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true copy of

the foregoing instrument was served upon each of the

attorneys of record of all parties to the above-entitled

cause by enclosing the same in an envelope addressed

to each such attorney at his respective address as dis-

closed by the pleadings of record herein, with postage

fully paid, and by depositing said envelopes in a United

States Post Office depository in Des Moines, Iowa, on

the 13 day of May, 1975

/s/ Barbara Natt

— 57a —

In Tue District Court Or Tue State Or Iowa

In Anp For Wesster County

Kavo Brick & Tre Company,

Plaintiff,

Vs.

Cuicaco AND NorTHWESTERN TRANSPORTATION COMPANY,

Successor in Interest in Cutcaco AND NorTHWESTERN RatL-

way Company and Jack SCHMELER,

Defendants.

Law No. 45,664

ANSWER OF DEFENDANT RAILROAD TO PLAIN-

TIFF’S AMENDMENT TO PETITION

Filed District Court ’76 Oct 15

DIVISION II

For answer to Division IT of plaintiff’s Amendment To

Petition, defendant Chicago and North Western Trans-

portation Company states:

1. This defendant does not have sufficient information

to form a belief as to the allegations contained in Para-

graph 1 of Division II of plaintiff’s Amendment to Peti-

tion.

2. Paragraph 2 of Division II of plaintiff’s Amend-

ment To Petition is admitted.

3. This defendant does not have sufficient information

to form a belief as to the allegations contained in Para-

graph 3 of Division IT of plaintiff’s Amendment to Peti-

tion.

4. For answer to Paragraph 4 of Division IT of plain-

tiff’s Amendment To Petition, this defendant repleads

Paragraph 4 of its Separate Answer to plaintiff’s Peti-

tion as if fully set out herein.

5. For answer to Paragraph 5 of Division IT of plain- °

tiff’s Amendment To Petition, this defendant states that

— 58a —

during the early 1960s this defendant succeeded in interest

to the rights, obligations and liabilities of the Minneapolis

and St. Louis Railroad Company and began to operate

its trains over the track referred to in plaintiff’s Petition.

This defendant specifically denies that defendant Schmeler

ever succeeded in interest to the rights, obligations and

liabilities of the Minneapolis and St. Louis Railroad Com-

pany and specifically denies that defendant Schmeler ever

operated trains over the track referred to in plaintiff’s

Petition.

6. The allegations of Paragraph 6 of Division II of

plaintiff’s Amendment To Petition are specifically denied.

7. The allegations of Paragraph 7 of Division II of

plaintiff’s Amendment To Petition are specifically denied.

8. The allegations of Paragraph 8 of Division II of

plaintiff’s Amendment To Petition are specifically denied.

9. The allegations of Paragraph 9 of Division II of

plaintiff’s Amendment To Petition are specifically denied.

10. The allegations of Paragraph 10 of Division II of

plaintiff’s Amendment To Petition are specifically denied.

11. The allegations of Paragraph 11 of Division II of

plaintiff’s Amendment To Petition are specifically denied.

DIVISION Til

For answer to Division III of plaintiff’s Amendment

To Petition, defendant Chicago and North Western Trans-

portation Company states:

1. For answer to Paragraph 1 of Division III of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 1 of Division IT of this answer as if fully set

out herein.

2. For answer to Paragraph 2 of Division IIT of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 2 of Division II of this answer as if fully set

out herein.

— 59a —

3. For answer to Paragraph 3 of Division III of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 3 of Division II of this answer as if fully set

out herein.

4. For answer to Paragraph 4 of Division ITI of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 4 of Division II of this answer as if fully set

out herein.

3. For answer to Paragraph 5 of Division III of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 5 of Division II of this answer as if fully set

out herein.

6. For answer to Paragraph 6 of Division III of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 6 of Division IT of this answer as if fully set

out herein.

7. For answer to Paragraph 7 of Division TIT of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 7 of Division II of this answer as if fully set

out herein.

8. For answer to Paragraph 8 of Division ITT of plain-

tiff’s Amendment To Petition this defendant repleads

Paragraph 8 of Division IT of this answer as if fully set

out herein.

9. This defendant specifically denies the allegations of

Paragraph 9 of Division IT of plaintiff’s Amendment To

Petition.

10. The allegations of Paragraph 10 of Division IIT of

plaintiff’s Amendment To Petition are specifically denied

by this defendant.

WHEREFORE, defendant Chicago and North Western

Transportation Company prays that Division IIT of plain-

tiff’s Amendment To Petition be dismissed at plaintiff’s

costs.

_

DIVISION IV

AFFIRMATIVE DEFENSES

As affirmative defenses to the allegations of Division

II and Division III of plaintiff’s Amendment To Petition,

defendant Chieago and North Western Transportation

Company states:

1. On November 16, 1973 this defendant filed with the

Interstate Commerce Commission an Application seeking

a Certificate of Public Convenience and Necessity per-

mitting abandonment of the line of railroad (‘‘Kalo

Line’’) beginning at mile post 222.0 at Fort Dodge and

extending in a southeasterly direction to mile post 227.6

at Kalo, Iowa, the line of railroad that is the subject of

Division II and III of plaintiff’s Amendment To Petition.

2. Plaintiff Kalo Brick & Tile Company was a party-

protestant to the Kalo Line Abandonment proceedings

before the Interstate Commerce Commission.

3. The following issues were raised in the Kalo Line

Abandonment proceedings before the Interstate Commerce

Commission :

(a) Had service on the line been disrupted prior to

1973 by landslides?

(b) If so, had this defendant made necessary re-

pairs to enable continuation of service?

(ec) Did a landslide occur in 1967 which, due to soil

condition, could have been repaired only upon a tempo-

rary basis?

(d) When the 1967 landslide occurred, was service

to shippers continued through the lease of tracks from

another carrier?

(e) Did a landslide in 1973 cause cessation of opera-

tions over the tracks leased from the other carrier?

(f) What would be the cost of rehabilitation of this

defendant’s tracks?

(g) What would be the cost of rehabilitation of the

tracks leased from the other carrier?

— 6la —

(h) Would such repairs be sufficient to insure con-

tinuous operations on the line?

(1) Was Kalo Brick & Tile Company the only ship-

per located on the line when it was last in operation?

(j) Did the cessation of service on the line occur

because of willful abandonment by this defendant or did

it occur because of conditions over which this defendant

had no control?

(k) Under the circumstances, would continued Op-

eration of the line have been an unnecessary burden on

this defendant?

4. Each of the issues set out in the preceding Para-

graph 3 is also an issue in the instant lawsuit.

5. The order of Review Board Number Five of the

Interstate Commerce Commission, entered April 30, 1976,

rendered judgment on the issues set out in Paragraph

15 in the following manner:

(a) Service on the Kalo Line has been disrupted

several times in the past by landslides.

(b) When such service disruptions occurred, this de-

fendant made necessary repairs to enable continuation

of service.

(c) In 1967 a landslide occurred which could have

been repaired, but, due to the soil condition, such repairs

would have been only of a temporary nature.

(d) Following the 1967 landslide, service to shippers

was continued by this defendant through the lease of

tracks from another carrier.

(e) In 1973 a landslide caused the cessation of op-

erations over the track this defendant had leased from

another carrier.

(f{) The cost of rehabilitation of this defendant’s

railroad line would have been in excess of $150,000.

(g) The cost of rehabilitation of the track leased

from the other carrier would have been in excess of

$100,000,

— 62a —

(h) Due to soil condition and mining activities in

the area, such repairs would not have been sufficient to

insure continuous operation on the Kalo Line.

(i) Plaintiff Kalo Brick & Tile Company was the

only shipper located on the line when it was last in opera-

tion.

(j) The cessation of service on the Kalo Line oc-

curred because of conditions over which this defendant had

no control, and not because of any intent by this defen-

dant to abandon the line or cause a cessation of service.

(k) Under the circumstances, continued operation

of the line would have been an unnecessary burden on this

defendant.

6. By order of Review Board Number Five, entered

April 30, 1976, the Board determined that the public

convenience and necessity justified abandonment by this

defendant of the Kalo Line.

7. By order of Review Board Number 5, entered April

30, 1976, protestant Kalo Brick & Tile Company was

deemed to be in default and entitled to no further formal

proceedings before the Commission. Protestant Kalo

Brick & Tile Company was later allowed to file a Petition

for Reconsideration.

8. By order entered September 23, 1976, served Sep-

tember 30, 1976, and received by this defendant’s trial

counsel October 8, 1976, the Interstate Commerce Commis-

sion, Division Three, acting as an Appellate Division,

denied protestant Kalo Brick & Tile Company’s Petition

for Reconsideration and determined:

(a) That the order of the Commission, Review

Board Number Five, was not shown to be erroneous on

the basis of the record made by the parties complying

with the order for modified procedure.

(b) That protestant Kalo Brick & Tile Company’s

Petition For Reconsideration set forth no material facts

or arguments in addition to those previously considered

in the proceeding.

— 63a —

(c) That no showing had been made by protestant

Kalo Brick & Tile Company warranting reconsideration

of the order of the Commission, Review Board Number

Five.

9. The issues set out in Paragraph 3 of this Division

IV have been determined by a valid final judgment to

which such determination was necessary, and relitigation

of those issues in the instant lawsuit is therefore pre-

cluded.

10. This defendant repleads Paragraph 6 of its Sepa-

rate Answer to plaintiff’s Petition as if fully set out

herein.

11. This defendant repleads Paragraph 7 of its Sepa-

rate Answer to plaintiff’s Original Petition as if fully

set out herein.

12. This defendant repleads Paragraph 8 of its Sepa-

rate Answer to plaintiff’s Original Petition as if fully

set out herein.

13. This defendant repleads Paragraph 9 of its Sepa-

rate Answer to plaintiff’s Original Petition as if fully

set out herein.

14. This defendant repleads Paragraph 10 of its Sepa-

rate Answer to plaintiff’s Original Petition as if fully

set out herein.

15. This defendant repleads Paragraph 11 of its Sepa-

rate Answer to plaintiff’s Original Petition as if fully

set out herein.

16. This defendant repleads Paragraph 12 of its Sepa-

rate Answer to plaintiff’s Original Petition as if fully

set out herein.

17. This defendant repleads Paragraph 13 of its Sepa-

rate Answer to plaintiff’s Original Petition as if fully

set out herein.

—ta—

18. For its further answer to the allegations thereof,

this defendant affirmatively alleges that, by reason of

the foregoing, the sole remedies available to plaintiff

were either participation in the Kalo Line Abandonment

proceeding before the Interstate Commerce Commission

pursuant to the provisions of 49 USCA Sections 1 (18)

and 1 (19) or a suit for an injunction pursuant to the

provisions of 49 USCA Section 1 (20).

19. This defendant hereby repleads Paragraph 16 of its

Separate Answer to plaintiff’s Petition as if fully set out

herein.

WHEREFORE, this defendant prays that Divisions II

and III of plaintiff’s Amendment To Petition be dis-

missed at plaintiff’s costs.

GAMBLE, RIEPE, BURT, WEBSTER

& FLETCHER

By /s/ James D. Polson

By /s/ Bruce Johnson

2600 Ruan Center

Des ‘Moines, Iowa 50309

(515) 243-6251

—Attorneys for Defendant

In Tue District Court Or Tue State Or Towa

In Anp For Wesster County

Kato Brick & Tre Company,

Plaintiff,

vs.

Cuicaco AND NorRTHWESTERN TRANSPORTATION COMPANY,

Successor in Interest in Cutcaco ANp NorTHWESTERN Rat-

way Company and Jack SCHMELER,

Defendants.

Law No. 45,664

— 65a —

MOTION FOR SUMMARY JUDGMENT IN FAVOR

OF DEFENDANT RAILROAD AND

DEFENDANT SCHMELER

(Filed Oct 18 76)

The Defendant Chicago and North Western Transpor-

tation Company and Defendant Schmeler respectfully

move the Court for an Order granting summary judgment

in favor of Defendants and against Plaintiff Kalo Brick

& Tile Company, and as grounds therefore state:

1. On November 16, 1973 the Defendant Railroad filed

with the Interstate Commerce Commission an Application

seeking a Certificate of Public Convenience and Necessity

permitting abandonment of the Kalo Line.

2. Plaintiff Kalo Brick & Tile Company was a party-

protestant to the Kalo Line Abandonment Proceedings

before the Interstate Commerce Commission.

3. In the Kalo Line Abandonment Proceedings the

Interstate Commerce Commission made the folowing

factual determinations:

(a) Service on the Kalo Line has been disrupted

several times in the past by landslides.

(b) When such service disruptions occurred, this

defendant made necessary repairs to enable continuation

of service.

(c) In 1967 a landslide occurred which could have

been repaired, but, due to the soil condition, such repairs

would have been only of a temporary nature.

(d) Following the 1967 landslide, service to shippers

was continued by this defendant through the lease of

tracks from another carrier.

(e) In 1973 a landslide caused the cessation of

operations over the track this defendant had leased from

another carrier.

ry

— 66a —

(f) The cost of rehabilitation of this defendant’s

railroad line would have been in excess of $150,000.

(g) The cost of rehabilitation of the track leased

from the other carrier would have been in excess of

$100,000.

(h) Due to soil condition and mining activities in

the area, such repairs would not have been sufficient to

insure continuous operation on the Kalo Line,

(i) Plaintiff Kalo Brick & Tile Company was the

only shipper located on the line when it was last in

operation.

(j) The cessation of service on the Kalo Line

occurred because of conditions over which this defendant

had no control, and not because of any intent by this

defendant to abandon the line or cause a cessation of

service.

(k) Under the circumstances, continued operation

of the line would have been an unnecessary burden on

this defendant.

4. The factual determinations listed above in Para-

graph 3 are now part of and were necessary to a valid

and final judgrient of the Interstate Commerce Com-

mission in the alo Line Abandonment Proceedings.

5 The issues decided by the factual determinations

listed above in Paragraph 3 are material to the claim

contained in Plaintiff’s original Petition and to the claims

contained in Division TT and TIT in Plaintiff’s Amend-

ment to Petition.

6. The prior determination of the factual matters

listed above in Paragraph 3 by the Interstate Commerce

Commission in a proceeding to which Plaintiff Kalo Brick

& Tile Company was a party precludes Plaintiff from

relitigating those factual issues in the present litigation.

— 67a —

7. When the factual determinations of the Interstate

Commerce Commission listed above in Paragraph 3 are

adopted and applied to the claims made by the Plaintiff

in the present lawsuit there remains no genuine question

of material fact, and Plaintiff has, as a matter of law,

failed to prove the claims stated in its original Petition

and in Divisions I and II of its Amendment to Petition.

Wherefore, Defendant Chicago and North Western

Transportation Company and Jack Schmeler pray that

the Court grant this Motion For Summary Judgment in

favor of Defendants and against the Plaintiff and dismiss

this action, with costs taxes to the Plaintiff.

GAMBLE, RIEPE, BURT, WEBSTER,

& FLETCHER

By /s/ Bruce E. Johnson

Bruce EK. Johnson

By /s/ J D Polson

James D. Polson

Attorneys for Defendants

Of Counsel

Gamble, Riepe, Burt, Webster & Fletcher

2600 Ruan Center

Des Moines, Iowa 50309

(515) 243-6251

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true copy of the

foregoing instrument was served upon each of the at-

torneys of record of all parties to the above entitled

cause by enclosing the same in an envelope addressed

to each such attorney at his respective address as dis-

closed by the pleadings of record herein, with postage

fully paid, and by depositing said envelope in a United

States Post Office depository in Des Moines, Iowa

on the 18th day of Oct. 1976

/s/ B. Johnson

—

In Tue District Court Or Tue State Or lowa

In Anp For WEeEsSTER COUNTY

Kato Brick & Tite Company,

Plaintiff,

vs.

Cuicaco ANp NorTHWESTERN TRANSPORTATION COMPANY,

Successor in Interest in CH1caco AND NorTHWESTERN RatL-

way Company and JAcK SCHMELER,

Defendants.

Law No. 45,664

DEFENDANT RAILROAD’S MOTION TO DISMISS

(Filed Nov 2 76)

Pursuant to a Stipulation of Record with plaintiff’s

Counsel that this Motion To Dismiss shall be treated

as though it was first made at the close of plaintiff’s

evidence and renewed now at the close of all the evidence,

the defendant Chicago and North Western Transporta-

tion Company resptctfully submits the following Motion

To Dismiss:

DISMISSAL. OF PLAINTIFF’S ORIGINAL PETITION

The defendant Chicago and North Western Transporta-

tion Company respectfully moves that the claim for

relief alleged in plaintiff’s Original Petition filed on or

about September 16, 1974, be dismissed and in support

thereof states the following grounds:

1. This defendant incorporates in this paragraph as

if fully set out herein this defendant’s Motion For Sum-

mary Judgment filed in this court on or about May 29,

1975, the affidavit of Frank Davis, Jr. filed therewith,

and the Memorandum Brief filed in support of that

Motion For Summary Judgment.

9. This defendant incorporates in this paragraph as

if fully set out herein its Motion For Summary Judgment

— 69a —

filed on October 18, 1976 and the supporting Memorandum

Brief filed therewith.

3. After April 4, 1973, this defendant had no duty to

provide car service to plaintiff’s plant because on that

date this defendant’s railroad line to plaintiff’s plant

became impassable and plaintiff was notified that car

service could not be provided.

4. This defendant had no duty to provide car service

from April 4, 1973, until the time plaintiff decided to

close down its business because during that time period

plaintiff placed no legally sufficient orders for cars to be

delivered to plaintiff’s plant.

do. This defendant had no duty to provide car service

to plaintiff’s plant at any time after April 4, 1973, because

after that date plaintiff placed no legally sufficient orders

for cars to be delivered to plaintiff’s plant.

6. There is not sufficient evidence to support a finding

that this defendant has committed a breach of any appli-

cable common law or statutory duty to provide car ser-

vice to plaintiff.

7. There is not sufficient evidence to support a finding

that this defendant has committed a breach of any appli-

cable common law or statutory duty to provide car ser-

vice that was a proximate cause of the closing of plain-

tiff’s business or damages claimed therefor.

8. Even if this defendant is guilty of any breach of a

duty to plaintiff to provide car service, there is not

sufficient evidence to support a finding that any such

breach by this defendant was the proximate cause of any

damages that are legally recoverable by a shipper for

breach by a carrier of a duty to provide car service.

9. There is not sufficient evidence to support a finding

that this defendant had timely and effective notice that

cessation of rail service to plaintiff’s plant would cause

7

—

plaintiff to close down its business, and therefore this

defendant cannot be liable for the special damages claimed

by plaintiff for loss of value of plaintiff’s business.

10. This Court has no subject matter jurisdiction in

this action and therefore has no power to rule on plain-

tiff’s claim. This defendant’s rail service was at all times

utilized by plaintiff only for interstate shipments. 49

USCA $$1, 8, 9, 16, and other applicable sections of the

Interstate Commerce Act, constitute the applicable law

in this case. Claims for damages like the present one

that arise under the Interstate Commerce Act can be

prosecuted only in a United States District Court, or

before the Interstate Commerce Commission. A_ state

court of original jurisdiction does not have subject matter

jurisdiction over plaintiff’s claim for relief.

11. This Court has no subject matter jurisdiction over

plaintiff’s claim and therefore has no power to rule on it

because a ruling on the merits of this case necessitates

the determination of questions that raise issues of trans-

portation policy which ought to be considered by the

Interstate Commerce Commission in the interest of effect-

ing the uniform and expert administration of the regula-

tory scheme laid down by the Interstate Commerce Act.

The primary jurisdiction doctrine requires that the ques-

tions that raise issues of transportation policy should

be determined by the Interstate Commerce Commission

and not by a state court of original jurisdiction.

12. There is no sufficient evidence to support a finding

that this defendant is guilty of willful and malicious con-

duct as alleged in plaintiff’s claim for exemplary damages.

Wherefore, defendant Chicago and North Western

Transportation Company prays that the Court render

judgment dismissing the claim alleged in Plaintiff’s Origi-

nal Petition and taxing costs to the plaintiff.

—Tla—

DISMISSAL OF DIVISION II OF PLAINTIFF’S

AMENDMENT TO PETITION

The defendant Chicago and North Western Transpor-

tation Company respectfully moves that the claim for

relief alleged in Division II of Plaintiff’s Amendment

To Petition be dismissed and in support thereof states

the following grounds:

13. There is not sufficient evidence to support a finding

that this defendant was guilty of any negligence in the

maintenance of the roadbed of its railroad line to plain-

tiff’s plant.

14. There is not sufficient evidence to support a finding

that this defendant was guilty of any negligence in

maintaining its roadbed that was a proximate cause of

the closing of plaintiff’s business or the damages claimed

therefor.

15. Even if this defendant is guilty of negligence in

failing to maintain its roadbed, plaintiff is not entitled

to recover damages for the value of its business because

such damages for economic loss where there is no physi-

cal damage to plaintiff's property and no intent by defen-

dant are, under the facts of this case, too remote to be

recoverable and are not a proper element of damage.

16. Under the facts of this case the plaintiff is not a

party contemplated by §479.122 of the Iowa Code as one

entitled to recover damages under that statute.

17. Plaintiff cannot recover for damage to property

under $479.122 because that statute provides a right to

recover only for personal injuries sustained.

18. There is no sufficient evidence to support a finding

that this defendant is guilty of willful and malicious

conduct as alleged in plaintiff’s claim for exemplary

damages.

19. If this defendant does owe any duty to plaintiff

under the facts of this case to maintain its roadbed

— 72a —

with ordinary care, any such duty is dependent upon

the existence of a duty owed by this defendant to plaintiff

to provide car service, and any duty this defendant may

owe to plaintiff to maintain its roadbed with ordinary

care cannot extend beyond the limits of the duty this

defendant may have to provide car service to plaintiff.

In Divisions II and III of Plaintiff’s Amendment To

Petition, plaintiff alleges as a necessary element of its

claims for relief in those Divisions II and III a breach

by this defendant of its duty to provide car service under

the laws and statutes of the State of Iowa. This defen-

dant therefore states as grounds for dismissal of plain-

tiff’s Division II the following reasons, all of which have

previously been set out in paragraphs 1-11 of this Motion

as grounds for dismissal of Plaintiff’s Original Petition:

a. This defendant incorporates in this paragraph as

if fully set out herein this defendant’s Motion For Sum-

mary Judgment filed in this court on or about May 29,

1975, the affidavit of Frank Davis, Jr. filed therewith,

and the Memorandum Brief filed in support of that

Motion For Summary Judgment.

b. This defendant incorporates in this paragraph

as if fully set out herein its Motion For Summary Judg-

ment filed on October 18, 1976 and the supporting Memo-

randum Brief filed therewith.

e. After April 4, 1973, this defendant had no duty

to provide car service to plaintiff’s plant because on

that date this defendant’s railroad line to plaintiff’s plant

became impassable and plaintiff was notified that car

service could not be provided.

d. This defendant had no duty to provide ear ser-

vice from April 4, 1973, until the time plaintiff decided

to close down its business because during that time period

plaintiff placed no legally sufficient orders for ears to be

delivered to plaintiff’s plant.

— 73a —

e. This defendant had no duty to provide car ser-

vice to plaintiff’s plant at any time after April 4, 1973,

because after that date plaintiff placed no legally sufficient

orders for cars to be delivered to plaintiff’s plant.

f. There is not sufficient evidence to support a find-

ing that this defendant has committed a breach of any

applicable common law or statutory duty to provide car

service to plaintiff.

g. There is not sufficient evidence to support a find-

ing that this defendant has committed a breach of any

applicable common law or statutory duty to provide car

service that was a proximate cause of the closing of

plaintiff’s business or damages claimed therefor.

h. Even if this defendant is guilty of any breach

of a duty to plaintiff to provide car service, there is not

sufficient evidence to support a finding that any such

breach by this defendant was the proximate cause of any

damages that are legally recoverable by a shipper for

breach by a carrier of a duty to provide car service.

i. There is not sufficient evidence to support a find-

ing that this defendant had timely and effective notice

that cessation of rail service to plaintiff’s plant would

cause plaintiff to close down its business, and therefore

this defendant cannot be liable for the special damages

claimed by plaintiff for loss of value of plaintiff’s business.

j. This Court has no subject matter jurisdiction in

this action and therefore has no power to rule on plain-

tiff’s claim. This defendant’s rail service was at all times

utilized by plaintiff only for interstate shipments. 49

USCA §$§1, 8, 9, 16, and other applicable sections of the

Interstate Commerce Act, constitute the applicable law

in this case. Claims for damages like the present one that

arise under the Interstate Commerce Act can be prose-

euted only in a United States District Court, or before

the Interstate Commerce Commission. A state court of

— 74a —

original jurisdiction does not have subject matter juris-

diction over plaintiif’s claim for relief.

k. This Court has no subject matter jurisdiction

over plaintiff’s claim and therefore has no power to rule

on it because a ruling on the merits of this case necessi-

tates the determination of questions that raise issues

of transportation policy which ought to be considered

by the Interstate Commerce Commission in the interest

of effecting the uniform and expert administration of

the regulatory scheme laid down by the Interstate Com-

merece Act. The primary jurisdiction doctrine requires

that the questions that raise issues of transportation

policy should be determined by the Iaterstate Commerce

Commission and not by a state court of original juris-

diction.

Wherefore, defendant Chicago and North Western

Transportation Company prays that the Court render

judgment dismissing the claim alleged in Division IT of

Plaintiff’s Amendment To Petition and taxing costs to

the plaintiff.

DISMISSAL OF DIVISION ITI OF PLAINTIFF’S

AMENDMENT TO PETITION

The defendant Chicago and North Western Transporta-

tion Company respectfully moves that the claim for relief

alleged in Division III of Plaintiff's Amendment To

Petition be dismissed and in support thereof states the

following grounds:

90. This defendant repleads paragraph 13 of this

Motion To Dismiss as if fully set out herein.

21. There is not sufficient evidence to support a finding

that this defendant was guilty of any negligence in

maintaining its roadbed that was a proximate cause of

the alleged loss by plaintiff of future income from un-

fulfilled contracts.

— 75a —

22. Even if this defendant is guilty of negligence in

failing to maintain its roadbed, plaintiff is not entitled

to recover damages for loss of future income from un-

fulfilled contracts because such damages for economic loss

where there is no physical damage to plaintiff’s property

and no intent by defendant are, under the facts of this

case, too remote to be recoverable and are not a proper

element of damage.

23. This defendant repleads paragraph 16 of this

Motion To Dismiss as if fully set out herein.

24. This defendant repleads paragraph 17 of this

Motion To Dismiss as if fully set out herein.

25. This defendant repleads paragraph 18 of this

Motion To Dismiss as if fully set out herein.

26. This defendant repleads paragraph 19 of this

Motion To Dismiss as if fully set out herein and hereby

states as grounds for dismissal of Division III of Plain-

tiff’s Amendment To Petition the reasons set forth in

paragraph 18, including subparagraphs 19(a)-19(k).

27. If plaintiff is granted recovery under Division

II of Plaintiff’s Amendment To Petition, plaintiff cannot

recover under Division III because alleged loss of future

income from unfulfilled contracts claimed in Division TIT

is an element included in the value of plaintiff’s business

claimed as damages in Division II. Allowing recovery

for damages claimed in both Division IT and III would

amount to allowing plaintiff a double recovery.

Wherefore, defendant Chicago and North Western

Transportation Company prays that the Court render

judgment dismissing the claim alleged in Division III

— 76a —

of Plaintiff's Amendment To Petition and taxing costs

to the plaintiff.

GAMBLE, RIEPE, BURT, WEBSTER,

& FLETCHER

By /s/ J D Polson

James D. Polson

By /s/ Bruce E. Johnson

Bruce E. Johnson

2600 Ruan Center

Des Moines, Iowa 50309

(515) 243-6251

Attorneys for Defendants

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true copy of the

foregoing instrument was served upon each of the at-

torneys of record of all parties to the above entitled

cause by enclosing the same in an envelope addressed

to each such attorney at his respective address as dis-

closed by the pleadings of record herein, with postage

fully paid, and by depositing said envelope in a United

States Post Office depository in Des Moines, Iowa

on the 18th day of Oct. 1976

/s/ B. Johnson