In re Chicago

This appeal forms another chapter in the reorganization litigation of the Chicago, Milwaukee, St. Paul and Pacific Railroad (Milwaukee Road). It raises questions of whether the Reorganization Court has jurisdiction to decide issues relating to real and personal property that are part of a railroad spur line on which service has been abandoned and whether, assuming that it does, the court should nonetheless have referred the case to the Montana state courts because of unsettled questions of state law and matters of convenience. The Reorganization Court held that it has exclusive jurisdiction over the property and that there is no reason for it to decline to exercise it. We agree and therefore affirm. The Facts The Milwaukee Road, on November 30, 1977, filed with the Interstate Commerce Commission (ICC) a notice of intent to abandon its railroad operations over certain lines including a line in Gallatin County, Montana, and on December 19, 1977, petitioned for reorganization in the United States District Court for the Northern District of Illinois. Order No. 1 of the reorganization, which was entered on December 20, 1977, in paragraph 10, stayed the continuance or commencement of all third party proceedings against the railroad, with certain exceptions not applicable here. With approval of the Reorganization Court, the Milwaukee Road, on December 30, 1977, filed an application with the ICC to abandon certain branch lines, including the approximately 45 miles in Gallatin County. On February 24, 1978, the ICC issued an Order and Certificate of Public Convenience and Necessity permitting the abandonment and on May 8, 1978, the Reorganization Court authorized the trustee to take that action.