Eaton v. B, C & M. R.R.

Introduction

Eaton versus Boston, Concord & Montreal Railroad (B.C.& M.R.R.) was a New Hampshire Supreme Court Case decided in 1872 between a farmer (Eaton) and a Railroad company (BCM). The action brought to the court by Eaton asked the New Hampshire Supreme Court to decide if BCM's flooding of Eaton's farm was considered a taking under the Fifth Amendment's Eminent Domain clause, and if BCM was responsible for compensating the farmer for the taking. The case specifically deals with two major legal concepts Eminent Domain, and strict liability. Justice Smith, delivering the opinion of the court states, “The vital issue then is, whether the injuries complained of amount to a taking of the plaintiff's property, within the constitutional meaning of those terms.”[1]

These two legal concepts gained a significant amount of attention and focus as a result of the need to address new and expanding issues created by the emergence and growth of the rail road in America during the latter half of the 19th century. Eaton vs. BCM occupies a significant space in the historical ideology of the New Hampshire Supreme Court during the latter half of the 19th century when the decision was written, and as a major historical reference point for the progeny of Eminent Domain cases.

Background

Eaton, had signed a legal waiver of damages, waiving liability resulting from the "laying out of railroad over his land," for which he was compensated for by the the railroad company under the 'just compensation clause,' of the Fifth Amendment. During 'construction' of the railroad, B,C & M made a deep cut into a protective ridge that bordered Eaton's farm, which removed the natural land barrier that prevented occasioned flooding to the surrounding farms, including Eaton's. Subsequently, as a result of the cut made to the ridge, several farms including Eaton's was damaged from flooding, which deposited sand and stone onto the property preventing the damaged area from being cultivated.

In court, the railroad alleged that they were not liable for the damage, and produced Eaton's signed waiver of liability as support for their claim. Eaton's signed waiver read as followed:

"I, the subscriber, do hereby acknowledge that I have received of the Boston, Concord, & Montreal Railroad the sum of two hundred and seventy-five dollars, in full for the amount of damages assessed to me by the railroad commissioners of the State of New Hampshire, in conjunction with the selectmen of Wentworth, on account of the laying out of the said Boston, Concord, & Montreal Railroad through and over my land; and I do hereby release and discharge the said corporation from said damages."

The court ruled that the waiver only protected the railroad from liability resulting from the taking of Eaton's property to construct the railroad, but not for damages resulting from the construction of the railroad on land other than Eaton's. This case, like similar cases involving railroads during the latter half of the 19th century, are important because they dealt with novel legal issues and created precedences for law that emerged from the development of the railroad system. Because the railroad was a new technology, courts in the past had not been faced with these issues. Eaton specifically addressed important issues regarding Law and Regulation, that begin to emerge in the years proceeding its decision in 1872. Specifically, the issues raised in Eaton v. B.C.& M.R.R., and that would be readdressed throughout the remainder of the century and well into the 20th, surround the Exercise of Power Conferred by Charter, and Eminent Domain issues that question: what constitutes a taking, what is considered public good, and what is just compensation.

The Railroad's development, connecting America during the latter half of the 19th century, did what the steam boat had done to colonize the Louisiana territory and much of the south at the beginning of the century. Through an intricate system of canals funded by local governments, expedient travel was made possible by the steam boat to much of the southern territory of the United States during the 19th century. Still, while the railroad was developing its infrastructure, canals continued to be expanded.

The effects that resulted from the creation of the railroad industry are enormous. Aside from being the first industry in the history of the United States to be so extensively regulated, the impact of the railroad could be seen in nearly every aspect and facet of life. America's Legal system developed as a reaction to policies attempting to regulate railroads and their effects. From 1891 to 1906, nearly 25% of appeals heard by the 9th circuit Federal Court were railroad related[2]. And, as expansive as the industry was, so too was the legislative activity that followed it. In many ways, as Ely writes, “the law of railroads reflected the goals and concerns of American Society” [3].

Canals and Exclusive Franchise Rights

Through a system of interconnected canals and rivers, an entirely new form of transportation grasped the country with great force, connecting people from throughout the colonies and propelling them west. The utilization of steam powered boats to connect the remote territories of the United States during the first half of the 19th century did what the railroad would do in the latter half of the century. Railroads were expensive, and obtaining funding for a vast system of interconnected track that stretched throughout distinct municipalities and states was challenging. A lot of money had been invested in developing a system of canals in America, and those canals were being threatened by the emergence of a more cost effective way of transport. As a result Canal charters resisted new Railroad charter grants that allowed the opportunity for new rail lines to be built alongside existing canals. Having been previously been granted earlier charters, Canals were quick to use this as a premise to retain exclusively in charter grants. And, for some time during the 1820’s through the 1830’s, their attacks against the legitimacy of the railroad charters were successful. One case in particular in 1832, Chesapeake and Ohio Canal Company v. Baltimore and Ohio Rail Road Company, involved a dispute over the Potomac River Valley and proprietary rights over the selection of land. While both parties had rights to purchase the land, the court upheld the exclusive privilege of the Canal.[4] This threatened new railroad ventures as the court’s decision effectively protected the Canal’s rights to purchase land and excluding potentially viable rail charters from doing so. In 1837 however the United States Supreme Court rejected the premise of exclusive privilege in purchasing rights in the case of Charles River Bridge v. Warren Bridge. Citing the jeopardy to the development of modern transportation that allowing a proprietary right to purchase land through conferred exclusivity of a charter would create, the court struck down any assumed conference of exclusive purchasing rights that Canal charters had argued existed. [5] This decision greatly benefited the railroad, as it allowed rail charters equal opportunity to purchase land for development and stimulated the growth of the railroad infrastructure. Horwitz, Morton J. The transformation of American law, 1780-1860. Cambridge, Massachusetts: Harvard University Press, 1977. p.X U.S. Census Bureau, Statistical Abstract of the United States: 1899(22nd Edition) Washington, DC, 2011; <http://www.census.gov/compendia/statab/>

Monopoly Model of Development

The conflict between local economic interests and a need for a national transportation network was manifest in the Erie War [6]. Railroad development primarily followed a monopoly model of development for the entire first half of the 19th century. Building railroads was expensive, and required a large, upfront capital investment. While many of the well developed canals and turnpikes remained in operation, it was becoming clearer that the flexibility and efficiency of the railroad would eclipse status-quo of transportation and freight networks currently in existence. Local and state governments, having held a vested economic interest in the canals and turnpikes, and who would too hold heavier interests in railroads were prudent to protect their investment. While the early railroad was funded by local investors, it had state and local economic interests directly reliant on its performance [7]. Local governments were eager to invest in railroads through bonds as development in local municipalities promised to turnover economic benefits to the local economy [8]. In 1832 for instance, the New Jersey state legislature issued exclusive charter rights to the Camden and Amboy Railroad Company, giving them privileges to carry passengers or goods exclusively across New Jersey, and between New York City and Philadelphia [9]. “The Camden and Amboy was immediately a financial success, and the payment of dividends and transit duties constituted the principal source of revenue in the state budget” [10]. The monopoly model was advantageous as the first step in the development of the railroad because it allowed secured private investments in doubtful ventures [11]. As railroads became a promising source of revenue for local and state governments, legislative protections were taken to sustain the exchange. Mandating the differences in track gauge was one primary way for state and local governments to ensure that other out-of-state rival railroads could not connect with one another and bypass local lines. The Gauge Act of 1851 was a legislative initiative by Pennsylvania to ensure that Erie would remain a viable rail line. Competition from New York and

Erie War

Growth and Expansion

With any expansive industry, of course, comes along with it money and capitalists. And, the industry more than doubled within 13 years, between 1877 and 1890. In 1877, there was 66 thousand miles of railroad track throughout the United States, the majority of which occupied the north-eastern coast of the country, in New England. By 1890, there was 169 thousand miles of track, which accounted for 1/3rd of the worlds railroad track. Additionally, in 1890, steel production for the railroad industry accounted for 90% of total production. Between these 13 years, the net value of railroad companies rose from $100 million to over $10 billion, in 1892 (GET CITATION); to place this into perspective, the total net value of the United States was estimated at $100 billion. (CITATION).