Arbiter awards steam locomotive owner $200,000

Mid-Continent Railway Museum must also foot the bill for relocating Saginaw Timber No. 2 2-8-2 anywhere in the continental US
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Saginaw Timber No. 2, lettered for later owner Polson Logging, makes a test run following work at the Mid-Continent Railway Museum in May 2016.
Ken Hojnacki
NORTH FREEDOM, Wis. — A longstanding dispute over restoration of a steam locomotive ends in victory for the engine's owner and major financial implications for one of the nation's well-known railroad museums.

In a Feb. 10 binding decision, arbitrator William Parker awarded Roland "Skip" Lichter $200,000 for his out-of-pocket expenses in restoring Saginaw Timber No. 2 at the Mid-Continent Railway Museum in North Freedom, Wis. Parker also awarded interest on those expenses, legal fees, and relocation of the 1912 Baldwin 2-8-2 at the museum's expense to any destination of Lichter's choosing in the continental U.S.

There was no immediate estimate of the total cost to Mid-Continent although the figure could approach or exceed $300,000.

The roots of the dispute date to the early 1990s when Lichter leased the operating locomotive to the museum. Lichter sued, alleging the museum was neither maintaining the engine nor reimbursing him for maintenance expenses.

That led to a new 15-year lease under a 2003 court-approved agreement known as a stipulation between Lichter and the museum. Lichter, who has owned No. 2 for more than 40 years, sought no rental fees during the first 15-year lease but asked for $100 per run be set aside for maintenance under the second lease.

"The stipulation and lease were very favorable to Mid-Continent," Parker writes in his decision. "Clearly Lichter was not trying to obtain a financial advantage."

While Parker says he is aware the judgment may be a financial burden for the museum, he also notes Mid-Continent "made no significant attempt to raise funds" while the restoration progressed.

Lichter's attorney Martin Hansen tells Trains News Wire, "He only wanted to see it running again near his home." Lichter lives only a few miles from the museum's property.

The museum's attorney tells Trains News Wire she can't comment on Parker's decision until she meets with the board of directors, and board President Jeffery Bloohm replied to Trains News Wire saying, "Sorry, no comment at this time."

The new lease was to begin when the restoration was completed, and the Federal Railroad Administration certified the locomotive for operations last year. In December, however, the museum board voted not to run No. 2 claiming the engine came without any warranties as to workmanship but with potentially large expenses for any repairs, according to a statement posted on the museum website.

The statement also says the museum board is committed to running only its own steam engines.

Parker rejects the board's action as a one-sided attempt to break the lease in violation of the 2003 court agreement. In his decision, he says all payments cited in his decision are due to Lichter immediately.

"Mid-Continent had an obligation arising out of the stipulation to work with Lichter to overhaul the engine," he writes. "Essentially [Mid-Continent] failed to fulfill this commitment and eventually repudiated the stipulation.

"[The museum's] attempt to void the lease, let alone some of the spurious reasons put forward to justify it, could almost certainly have been avoided."

Hansen refers to the museum board's action as "an ill-conceived plan poorly executed." Lichter is actively looking for a new home for the No. 2, he adds.

The locomotive spent most of its working life with a succession of timber haulers in the rain forests of Washington's Olympic Peninsula.

As Trains News Wire previously reported in covering the dispute, Mid-Continent is restoring its own locomotive, Chicago & North Western No. 1385, a 4-6-0 that last ran in 1998. A purchase order for a new boiler was issued last year with delivery anticipated in March.

The museum has not operated regular steam trains since No. 2 was pulled from service in 2000.

NEWSWIRETrains News Wire

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