Locomotive Monson No. 3 returned to the Sandy River and Rangeley Lakes Railroad Museum in Phillips on May 24, 2017. Sun Journal file photo

FARMINGTON — The Sandy River & Rangeley Lakes Railroad is suing a Portland nonprofit railroad company and museum over Sandy River’s more than $144,000 investment and what it claims was wrongful termination of a 15-year contract.

The nonprofit Sandy River & Rangeley Lakes Railroad operates a 2-foot narrow gauge railroad and museum in Phillips.

Sandy River railroad “wants its money back and has asked the Superior Court to step in and award fair and equitable damages,” according to attorney Ronald Cullenberg.

Maine Narrow Gauge Railroad C0. & Museum in Portland claims Sandy River railroad was negligent in its maintenance of a steam engine.

The Sandy River railroad was looking for a steam engine locomotive for its Phillips museum and entered into an equipment lease agreement in 2008 with Maine Narrow Gauge Railroad.

The latter owns a Monson Engine No. 3. In March 2008 it was in poor condition and was slated to be cut in half to be used as a museum display. It was moved to Phillips to prevent its destruction, according to a lawsuit filed by the Phillips organization in Franklin County Superior Court.

The first part of the agreement was that the Sandy River railroad would act as general contractor to restore Engine No. 3, subcontracting part of the work but using unpaid volunteers for much of the work. Under the terms of the agreement, the Phillips museum would fund $35,000 of the restoration costs, according to the suit.

The second part was a lease agreement stipulating that after the restoration, Sandy River railroad would have the right to operate Engine No. 3 in Phillips for specific times during the summer and fall of each year for 15 years without paying further rent.

At the time of the agreement, the parties anticipated necessary repairs as only requiring the replacement of boiler tubes and other miscellaneous work. But as repairs were made, it was discovered more restoration work was needed including restoration of the firebox, according to the lawsuit.

After work was complete, Maine Narrow Gauge provided the Phillips organization with an operating agreement for steam locomotive No. 3, effective June 1, 2016.

Sandy River railroad performed the initial work and the additional work at a total cost of $144,000, not including the value of volunteer labor. The work was done with Maine Narrow Gauge’s knowledge, oversight and consent, according to the lawsuit.

The parties never signed any further amendment to the mutual agreement as to which entity would be liable for the overrun costs nor was there any agreement as to what would happen to the $144,000 investment of Sandy River if the agreement was terminated early.

The final repairs were completed by the Portland entity in the fall of 2015 and it used Engine No. 3 for the Polar Express in Portland that year. Sandy River operated the engine during the summer and fall seasons of 2016 and 2017 on a limited basis and special weekends, according to the lawsuit.

After the 2017 fall season in Phillips, a state boiler inspector found some boiler tubes were showing signs of deterioration. The lawsuit claims the Portland organization operated the engine over the 2017 winter. The next spring, a single boiler tube was failing. The engineer for both organizations plugged the tube and put the engine back in service.

In May 2018, Maine Narrow Gauge, through its attorney David Goldman of the firm Norman, Hanson & DeTroy in Portland, sent a letter terminating the lease.

“Unfortunately, Sandy River was, at best negligent in its maintenance of the engine, leading to significant damage that Maine Narrow Gauge Railway has been forced to repair,” Goldman wrote. “Under the terms of the parties’ agreement, Sandy River’s inability to properly care for the engine gave Maine Narrow Gauge Railway the right to take immediate possession of the engine and terminate the agreement.”

According to Cullenberg, the main issue of contention seems to be the maintenance of the steam engine, “although we suspect the underlying issue may well be that MNG just wanted out of the 15-year lease to SRRL because it wants the engine back to run on its own tracks in Portland where it has a lucrative and popular train schedule.”