Opinion ID: 513313
Heading Depth: 2
Heading Rank: 2

Heading: Effect of the Bankruptcy Orders of the District Court

Text: 16 TNW next argues that three of the bankruptcy orders entered by the district court restrained Santa Fe from terminating the Trackage Rights Agreement. It maintains that Orders No. 1, 248, and 297 contained injunctive language restraining unilateral interference with Rock Island's rail interests, including its trackage rights over the Etter-Amarillo line. 3 TNW asserts that this injunctive proscription prohibited Santa Fe from taking any action affecting Rock Island's trackage rights without first obtaining the approval of the district court. Because Santa Fe failed to petition the court for approval prior to terminating the Trackage Rights Agreement, that termination is ineffective. The district court, however, held that its orders did not prevent Santa Fe from exercising its termination rights. See Mem. op. at 7. We agree. 17 The district court held that Santa Fe's election to terminate the Agreement was not subject to any stay resulting from either Order No. 248 or Order No. 297. Id. Order No. 248 mandated the abandonment of Rock Island rail lines and the discontinuance of all rail services. This abandonment had been recommended by the Interstate Commerce Commission in its May 23, 1980 report. See R.9, Ex. 5 at 33; R.15, Ex. 5 at 33. The order, however, also directed the trustee to retain for 180 days those rail lines designated in Appendix D to the ICC Report. R.9, Ex. 4; R.15, Ex. 6. The Etter-Amarillo trackage was not listed in that appendix. Therefore, the district court concluded that the Rock Island-Santa Fe Trackage Rights Agreement was not subject to the Order No. 248 stay. Order No. 297 decreed that until the Court's further order, all persons, firms or entities are restrained from physically or otherwise interfering with ... [the] rail interests of Rock Island. R.17, Ex. C. This order, however, was entered on December 1, 1980. Because Order No. 297 was entered after Santa Fe sent written notice of its election to terminate the Agreement in October 1980, the district court held that Order No. 297 did not apply in this case. 18 We agree with the district court's interpretation of Orders No. 248 and 297. That court is in the best position to interpret its own orders. We will not reverse a district court's interpretation of its own order unless the record clearly shows an abuse of discretion. Arenson v. Chicago Mercantile Exch., 520 F.2d 722, 725 (7th Cir.1975). We have applied this principle in the railroad reorganization context, stating that [t]he district court best knows the meaning of its own orders. The meaning of these documents is reasonably clear; even if it were not, we would defer to the district court's construction of them. In re Chicago, M. St. P. & P.R.R., 784 F.2d 831, 834-35 (7th Cir.1986). The meaning of the orders in the case at hand is similarly clear and the district court's interpretation of them is reasonable. 19 Order No. 1, entered on March 17, 1975, contained injunctive language similar to that found in Order No. 297. 4 TNW argues that this order also restrained Santa Fe from terminating the Agreement. The district court, however, noted that this order did not prevent the termination of Rock Island contracts under general principles of contract law. See Mem. op. at 7. Therefore, this order did not prevent Santa Fe from exercising its right of termination under the Trackage Rights Agreement. A trustee in bankruptcy takes the debtor's contracts cum onere, that is, subject to existing burdens. [A] trustee cannot accept the benefits of an executory contract without accepting the burdens as well. Schokbeton Indus. v. Schokbeton Prods. Corp., 466 F.2d 171, 175 (5th Cir.1972). 5 Thus, the Rock Island trustee assumed the railroad's contracts subject to any limitations contained in those contracts. In this case, Rock Island's interest under the Trackage Rights Agreement was subject to Santa Fe's existing right to terminate that contract. 6 Therefore, Santa Fe's exercise of its right to terminate was not an interference with Rock Island's interests precluded by Order No. 1. Rather, Rock Island's contract interest itself was always, and continued to be, subject to the termination provision.