Contracts – railroads — exclusive lines

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United States Court of Appeals

CIVIL

Contracts

Railroads; exclusive lines

Where a contract between railroads gave one exclusive rights to serve a business, the exclusivity is lost if the business is sold.

“When Wisconsin & Southern struck out, as being confusing, the term that DM&E had inserted—‘each industry, shipper, receiver, or other facility’ on the Janesville lines that DM&E was selling (including therefore the spur)—this should have cued DM&E to propose to dispel the confusion by substituting for the deleted words ‘the facility now owned by Freedom Plastics.’ Its failure to do so would indicate to Wisconsin & Southern that DM&E cared about the specific customer, that is, Freedom Plastics, and not about the plant owned by Freedom Plastics should ownership of the plant change. For all Wisconsin & Southern knew, DM&E might have had some highly advantageous deal with Freedom Plastics that made it want to retain exclusive access to that company—for if the deal was indeed highly advantageous to DM&E, Freedom Plastics would have an incentive to negotiate with another railroad for carriage at a lower price if another railroad had access to its plant, as it would were it not for DM&E’s retention of exclusive rights to serve Freedom Plastics. So far as Wisconsin & Southern could know, DM&E really did intend just to retain exclusive access to the customer, and not to the facility.”

Affirmed.

10-3177 Dakota, Minnesota & Eastern Railroad Corp. v. Wisconsin & Southern Railroad Corp.

Appeal from the United States District Court for the Western District of Wisconsin, Conley, J., Posner, J.