Opinion ID: 395213
Heading Depth: 2
Heading Rank: 1

Heading: The Character of the Property

Text: 42 Entry into and withdrawal from a railroad operation (as well as many other aspects of the railroad business) are events heavily freighted with the public interest and pervasively subject to public regulation. Railroad property is burdened with an obligation to serve the public, and that obligation frequently takes precedence over the interests of the owners or creditors of the railroad. While the courts agree that a railroad may not be compelled to operate at a loss indefinitely, it is also well-settled that the rights of the owners are not absolute. The Supreme Court explained long ago that shareholders of a bankrupt carrier 43 cannot be called upon to sacrifice their property so that a depression proof railroad system might be created. But they invested their capital in a public utility that does owe an obligation to the public.... (B)y their entry into a railroad enterprise, (they) assumed the risk that in any depression or any reorganization the interests of the public would be considered as well as theirs. 44 New Haven Inclusion Cases, 399 U.S. 392, 491-92, 90 S.Ct. 2054, 2109, 26 L.Ed.2d 691 (1970) quoting Reconstruction Finance Corp. v. Denver & R.G.W.R. Co., 328 U.S. 495, 535-36, 66 S.Ct. 1282, 1303, 90 L.Ed. 1400 (1946). 45 When the continuation of rail service is essential for the protection of the public interest, the courts have also determined that the shareholders' right to realize the value of the property may be held in abeyance for a reasonable period while a solution, acceptable to both the public and private interests, can be devised. New Haven Inclusion Cases, 399 U.S. 392, 90 S.Ct. 2054, 26 L.Ed.2d 691 (1970); Penn Central Merger Cases, 389 U.S. 486, 88 S.Ct. 602, 19 L.Ed.2d 723 (1967); In re Boston & Maine Corp., 484 F.2d 369 (1st Cir. 1973); In re Valuation Cases, 439 F.Supp. 1351 (Sp.Ct. RRRA 1977); In re Penn Central Transportation Company, 384 F.Supp. 895 (Sp.Ct. RRRA 1974). Thus, the character of the property of a bankrupt railroad is that of property continuously subject to onerous regulation carried on in the public interest. It is relatively difficult to perceive how such property, which is already subject to extensive restrictions as to use and, most importantly, financially burdensome impediments to liquidation, can be the likely subject of a taking by emergency regulatory action.