Extra Train Stuff, Etc.: A Rhapsody in Claims

On any day in any given year, Canada’s railways have originated and terminated hundreds of trains and in the process have moved thousands of carloads of cargo. Most of these movements have been unremarked, uneventful and without incident. And so it should be!

But what happens when things do not quite move as they should?

CNR train and containers on the ground in the middle of nowhere in winter and definitely not where they should be. Not the same incident as follows but the problem is no different: an expensive mess to clean up and no one benefits.

This leads to one aspect of the railway business that has rarely been mentioned let alone written about in railfan publications. The subject, of course, is claims. In the transportation industry, claims departments are almost always regarded with disdain; perceived as the outflow of cash that will never generate any returns. They are the sometimes quasi-legal departments which will afterward take over the handling of matters for the movements which were remarked, or had been eventful, or with incident. Claims are proof of less than perfect systems and services. The “Raison d’etre” for the Claims Department remains unchanged by time. The concept still remains the struggle between loss versus compensation for a perceived liability of an alleged breach of the contract of carriage.

Settling claims is not a public relations exercise. Claims personnel are knowledgeable and dedicated professionals who strive to limit their employer’s exposure to liabilities and at the same time try to negotiate and reach fair and equitable settlements with claimants.

Derailment

Derailment! Not a four-letter word but certainly regarded as one in many claims departments. Derailments are almost always reported and written about in Branchline Magazine, but what goes on behind the scenes afterwards? Let’s take a look at a recent incident from a different perspective; from a railway customer’s perspective.

Shortly after 08:20 on December 22, 1992, an urgent telephone call came in from CNR. A derailment had occurred in western Canada at about 00:45 the same date, involving Train 260, at Evansburg, Alberta, near mile 70.00 on the Edson Subdivision. The CN main line was expected to be closed for about 24 hours, perhaps longer. Not much else was known at the moment but further details would follow as they were known.

What a way to start the day! Word of CNR’s last minute Christmas gift quickly spread around the office. CN’s call was not completely unexpected though. New about the derailment had already been reported on the radio. Following only four days after CN’s Oakville, Manitoba, pile-up, the media was quick to pounce on news of a second mess involving the same railway. What the radio station did not report was the type of train involved in the upset.

Not long afterward another call came in from CNR. Quite a wreck involving 33 double-stack cars carrying 71 OOCL containers and an unspecified number of containers belonging to another ocean carrier. Damage to the containers varied from nil to total loss. CNR carries virtually all of OOCL’s containers moving between Vancouver and eastern Canada. While OOCL is not CNR, OOCL is certainly one of CNR’s major customers. Inevitably CNR’s mishaps will involve railcars carrying OOCL containers. 260 was an eastbound train, meaning the containers were carrying import cargo and all were on the way to either Toronto or Montreal.

Later, a fax was received from CN listing the container numbers involved. OOCL could now identify what commodities were involved and which customers would have to be notified. Telephones would almost literally be ringing off their hooks. No hazardous cargo; a sigh of relief. No personal effects; another sigh of relief. Personal effects claims would have to be rated as the most difficult because, 1.) they involve individuals rather than corporations and, 2.) cargo values are more difficult to determine because personal effects are used items and are not accompanied by invoices attesting to their values. This does not by any means imply that corporations are easier to deliver bad news to. Call a production manager to inform him that parts he was expecting were destroyed and then listen if common sense prevails.

Who pays if a customer’s plant has to shut down? Only an occurrence such as a derailment will prompt individuals to finally notice the fine print on the back of the bill of lading and then try to figure out what liabilities carriers are actually responsible for. In Canada, the rail carrier’s maximum limit of liability for cargo conveyed by rail in non-domestic import-export containers is surprisingly low. $10.000.00 for cargo in a 20FT container and $20,000.00 for cargo in a 40FT container. These amounts are Canadian dollars and apply only to the cargo. Most claims for total cargo loss, even for low value commodities, will usually exceed these limits. Pity the cargo interests that did not arrange for insurance coverage. Consequential damages are virtually impossible to recover.

OOCL will also incur losses greater than the maximum compensations provided for the destroyed and damaged containers. In Canada, the rail carrier’s limit of liability for non-domestic import-export containers is $1500.00 per 20FT container and $2500.00 per 40FT container. Neither amount will cover the cost of replacing a destroyed container. Worse, these are only starting amounts which are depreciated by a reproduction value formula dependent upon the age of the container at the time of the derailment. Unless the containers are almost brand new, OOCL will end up with only a fraction of the starting amounts.

Trains following cannot drive around obstacles like this. They wait.

Gridlock quickly occurs on the main line as trains are held up, so the railway’s first priority after a mishap is to reopen the line. This takes precedence over cleaning up the mess. Neutralizing hazardous cargo may be the only exception. Restoring the line to service involves either moving of or destruction of the wreckage. The railway’s claims personnel sent to the scene have to quickly determine which badly damaged shipments can be salvaged and which have to be condemned. Their on-the-spot decisions can involve several millions of dollars of freight and equipment, however, with little or no information at hand only years of experience and gut feelings can be relied upon. It is a thankless job.

The following day OOCL was informed that their damaged containers would be moved from the wreck site to Edmonton to be surveyed and to have the cargoes reloaded into undamaged equipment. Containers which were involved in the derailment but escaped major damage would be moved to their intended destinations later in the week. Eastbound and westbound CN trains tied up because of the mishap were being re-routed over CP Rail. Delays were running 24 to 48 hours behind pro forma schedules.

CN’s main line was reopened within 48 hours and train schedules slowly returned to normal. As of this writing the derailment has been quickly forgotten by most as old news, however, OOCL’s claims against CNR for cargo and container damages are still in process. These claims cannot be discussed at this time, but we can instead take a look into another incident that occurred quite some time ago…

Twenty years later OOCL (and others) containers still suffer the occasional beating while moving by rail. On September 23, 2010, at approximately 23:35 Eastern Daylight Time, Canadian Pacific Railway freight train 159-23 derailed 2 locomotives and 11 loaded cars at Mile 22.2 of the Winchester Subdivision near Saint-Lazare, Quebec.

The Four Heifers

We may laugh at scenes of old like this, but...

Claim investigators often assume the role of reluctant archivists as they prod people’s memories for seemingly useless details and compile files of notes and documents about incidents no longer of interest. In the course of investigating some claims, a lot of information can be accumulated and stored. Old claim files, often overlooked, can on occasions be a valuable source of information about unusual events that may not otherwise have been recorded. This next section will be about the recounting of an actual claim which was made against the Canadian Pacific Railway eighty-two years ago.

On July 12, 1911, four heifers belonging to Donald A. Macdonald were struck and killed by a train on the Canadian Pacific Railway right of way near Milan, Quebec. (This incident occurred near mile 16 of today’s CP Rail Sherbrooke Subdivision.) Macdonald did not keep copies his letters written to the CPR and what is now unknown are the circumstances which resulted in the cattle being on the track.

...but this unfortunately, is the usual result when an animal argues with a train over the right of way. Not a pretty picture. In the late 1800's and early 1900's, loss of cattle in distant rural areas often proved to be a difficult hardship for farms and homesteads that were dependent upon the animals for livelihood and food.

A letter dated July 31, 1911, was sent from the Superintendent at Farnham, Quebec, to acknowledge receipt of Macdonald’s claim in the amount of $140.00 and also to inform him that the claim was forwarded to N. S. Dunlop in Montreal. How the amount of the claim was calculated is not known. A subsequent letter, dated August 5, 1911, was received from the CPR Law Department in Montreal to acknowledge that the claim had been received.

Evidently processing of the claim was moving slowly and prompted Macdonald to write a letter to the CPR. A September 18, 1911 message from the CPR Law Department acknowledged Macdonald’s September 15, 1911 inquiry and advised that the claim was on hand but had not yet been investigated.

Macdonald wrote again to the CPR on October 23, 1911 to inquire again about his claim and the response from the CPR Law Department stated, “We have been so very busy recently that my representative has not had a chance to go into your claim, but I expect to receive his report within a couple of weeks.”

Perhaps it was the nature of the claim, or possibly CPR’s reluctance to eventually have to make a settlement; indications were that the claim had been placed aside on someone’s desk.

On the same date that Macdonald wrote to the CPR, a note dated October 23, 1911 was dispatched from P.G. Charlebois, Claims Agent, CPR Law Department to inform Macdonald that Charlebois would call on him next week to discuss the four heifers killed. It is not known if the meeting between Charlebois ever took place but most probably did not. This conclusion is drawn from a scathing December 4, 1911 letter from the CPR Law Department to C.H. Chatfield, the CPR station agent at Milan, Quebec, which concluded with, “I would have had a man see the family sooner but for the fact of the bereavement they had on November 7, 1911.

C.H. Chatfield had inquired about the claim at the request of the Macdonald family and Chatfield was admonished for a comment made in his letter.

What the CPR letter does not reveal is the tragedy which had occurred. On the evening of November 7, 1911, Donald A. Macdonald was walking home alone on the railway track from town to his farm. He never arrived. Early the next morning, George Macdonald set out to search for his father. He found the remains of Donald A Macdonald on the Canadian Pacific Railway right of way. What circumstances occurred will never be known. It is possible the crew of the train which struck Macdonald were not even aware someone or something had been struck. Several subsequent trains had also passed before the discovery was made. None of the trains were known to have stopped or to have reported anything untoward. By some strange twist of circumstance, Donald A. Macdonald did not live to see his claim concluded; he met the same fate as his four heifers close to the same location.

On January 25, 1912, W. F. Bailey, a representative of the CPR Law Department met with George Macdonald. An agreement was made to settle the claim for $115.00. Why the claim was settled for this amount was not recorded. A confirmation letter dated January 29, 1912, was sent from the CPR Law Department to George Macdonald to inform him that the agreed settlement had been approved for payment.

The final letter, dated February 22, 1912, from the CPR Law Department reveals that payment had not yet been made. In response to George Macdonald’s February 18, 1912 inquiry, the CPR stated, “As you are probably aware it takes some little time for a voucher to go through the various departments, but you should receive your cheque any day now.”

In 1912 the CPR empire was under the reigns of Thomas Shaughnessy and the processing of payments in that era was known to have been exceedingly slow. The payment was eventually made.

Epilogue

For three years I was employed in one of Canadian Pacific’s claims departments, however, my interests in transportation claims then was purely occupational. The cattle claim recounted here was not discovered until after my departure from Canadian Pacific.

In 1976 after my grandparents had vacated their house in Milan, Quebec, a last search was made for anything that might be important. These letters were found is a box of old documents which I turned over to my mother to look after. At the time I regarded them as dusty old letters about some ancient claims and gave them no further thought. Why my grandfather kept the letters all those years is a mystery. George Macdonald was my maternal grandfather and Donald A. Macdonald was my great-grandfather.

Life's tragedies are often the stuff of stories

During my last visit with my parents I remarked about wishing that I had kept the old claim letters found in Milan. To my surprise, my mother had kept the letters.

When one’s youth is further distanced by the passing of time, one’s perceptions do change. In 1976 the letters were ignored as trash; today they are all that remain to recount the history of people long departed and who were involved in the history of CPR’s Megantic Subdivision.

If there is a lesson in all this, aside from the danger of walking on railway tracks, it is the danger of waiting too long. In 1976 George Macdonald could have provided first hand details about this event had only the questions been asked. C. H. Chatfield, former station agent at Milan, Quebec, also survived into the 1970’s.

Readers and writers of Branchline: if you have an old story on the back burner, railway or otherwise, do not wait too long to ask your questions or tell your stories. Better yet, do it now while there is still time.

The Oddblock Station Agent

Addendum