Railroad Rights-Of-Wayin the Chain of Title

Railroad Rights-of-Wayin the Chain of Title

Dulcie M. Brand

MSPS 61st Annual Meeting

February 2013

Introduction

Recent events illustrate that title to railroad land may be as important as ever. Re-use of railroad rights-of-way has occurred in various waysin recent years, including: recreational trails; light rail corridors; commuter rail, such as the North Star line from Big Lake to Minneapolis operating upon existing Burlington Northern Santa Fe railroad tracks; and reestablishing railroad tracks on rights-of-way which had fallen into disuse for such current needs as hauling “frac” sand in Western Wisconsin and Southeastern Minnesota. These various uses may require a close look at what interests the railroad company held.

1. How do Railroads Acquire their Interests?

Railroad companies have multiple ways to acquire interests in lands used for rights-of-way. The main methods for acquisition are federal or state government grants, condemnation and purchase. Other possibilities include license or prescription.

1. Federal Congressional Grants. In order to aid the construction of transcontinental railway lines, between 1852 and 1871the Federal government granted to railroads a right-of-way across large tracts of public lands for the location of the tracks. The grants were special acts of Congress that acted as conveyances. By 1872, the railroads had lost the good will of the government and those grants were construed to be easements and did not include the vast amounts of lands as the earlier grants. Title under these grants passed at the time of the grant. Evidence of the conveyance wasoften shown of record by recording Lists of Lands after the railroads completed maps that were approved by the Federal Land Office. The Federal government also granted lands to the state and the state then issued patents or deeds to the railroad companies.
2. Deed. Deeds to the railroads are in various forms and use a wide variety of language in both the granting clause and in the habendum clause. They have been construed to be easements, fee simple absolute title and limited fee title. What interest was conveyed depends on the intent of the parties.
3. Eminent domain. Minnesota and other states have given railroad companies the power of eminent domain for acquiring rights-of-way. Minn. Stat. sec. 222.27. Original acts in 1857 granted this power and subsequent amendments maintained that power. What interest was acquired was determined inChambers v. Great Northern Power Co. et al, 110 NW 1128 (Minn. 1907). The court found that an “easement was granted for so long a time as the land should be occupied and used for the purpose of operating a railroad.” And further stated, “It therefore becomes immaterial whether the title amounted to a mere easement, or a qualified or terminable fee. Whatever the nature of the title, it would terminate whenever the company failed to perform the very function which it was created to perform. . .”

1. What Interest did the Railroad Acquire?

Railroad deeds in a chain of title are likely to be dated and recorded in the late 1800’s or early 1900’s. The language in the deeds may create easements, absolute fee title or a limited fee title in the form of a fee simple determinable (a fee simple which is subject to a limitation.)

A fee simple determinable is established by using words “until”, “so long as” or “during” in the conveyance. Such a determinable fee is a limited fee interest which reverts back to the grantor upon the occurrence of a specified event.When “until”, “so long as” or “during” is used in a deed to a railroad company, the nature of the interest conveyed has been construed differently in different jurisdictions. Some courts have found such transfers to be a transfer of a fee title while others have found them to be easements.

An easement is distinguished from a fee title in that an easement is merely an interest allowing one party the right to use land of another for a particular purpose. Farnes v. Lane, 281 Minn. 222, 224, 161 N.W.2d 297, 299 (1968). Usually, if a deed contains a “right” it is construed to convey an easement. Conversely, when a deed conveys a strip, piece, parcel or tract of land, it is construed to convey a fee interest.Courts have commonly held that deeds which establish spur tracks are grants of easements particularly where the grant of the spur track is to serve the needs of the grantor.

When determining the intent of the parties in executing a deed, the entire instrument must be considered, construing all of its provisions together. A review of one particular clause or provision by itself is not sufficient.

Use of the phrase “right-of-way” in railroad conveyances has created confusion due to its twofold meaning. Sometimes “right of way” is used to describe a right belonging to a party, that is, a right of passage over a tract. It is also used to describe the tract or strip of land itself.

If the deed conveys a fee simple title, it passes an unrestricted title to the property. A limited fee title would pass a fee title subject to a limitation relating to the use of the property. When such use ends, the title would revert to the grantor unless the right of reverter is barred by the 40 year law (the Marketable Title Act) in which case the limited fee title would ripen into a fee simple absolute.

If an easement is conveyed, it may be extinguished by abandonment. Abandonment of an easement is determined by evidence of the intention to abandon not by mere non user. Failure to use an easement even for extended periods of time does not necessarily extinguish it. Non-use must be accompanied by affirmative and unequivocal acts indicating intent to abandon that are inconsistent with continued existence of the easement.

The Minnesota Supreme Court has found that easements for railroad rights-of-way were originally acquired and held to serve a public purpose and thus are transferable even if the contemplated future use does not include trains, such as recreational trails. Washington Wildlife Pres., Inc. v. State, 329 NW2d 543 (Minn. 1983).

Conveying an Easement

1. Chicago Great W. Ry. Co. v. Zahner, 145 Minn. 312, 177 NW 350 (1920). The Minnesota Supreme Court interpreted a deed conveying an interest to the plaintiff railroad company:

“its successors and assigns forever . . . to have and to hold . . . such portions of lots three and four being deemed necessary and to be used for a track contemplated and to be laid by said [railroad company] on said land for commercial purposes.” Id at 314, 177 NW at 350.

The Zahner Court ruled that the deed created an easement.

1. Norton v. Duluth Transfer Ry. Co., 129 Minn. 126, 151 NW 907 (1915).The deed in Norton contained simply a description of strips of land and the following limiting language:

“To have and to hold . . . for and so long as a right of way for tracks and railroad way for its railroad cars, locomotives, and trains and for proper appendages to such tracks and railway and for any other use consistent with or embraced in the purposes and general nature of the business of said grantee, as expressed in its articles of incorporation.” Id at 130, 151 NW at 908.

Aside from the names of the parties and the description of the land, the above quotation includes all of the provisions of the conveyance. The court, emphasizing the use of the words “shall be used as a right of way”, construed the deed to convey an easement for railroad purposes rather than a determinable fee, the latter of which would be the more common construction for a deed containing the phrase “so long as.” There was no other language in the deed to indicate that the grantors understood the difference between conveying a fee interest and conveying an easement.

Other examples of railroad deed language recorded Hennepin County

1. Book 33 of Deeds, Page 356 (1872). Minneapolis & St. Louis Railway Company (Grantee)

“Grant, Bargain, Sell, Release and Quit Claim to party of second part, its successors and assigns Forever the hereinafter specified interest in all the following pieced or parcel of land . . . The right to maintain and operate the Railroad of said second party along, through and over Second Street . . . where the said Railroad is located in from of Lot 4 of Block 17 . . . hereby intending to release unto the said party of the second part all right or claim for damage to said Lot or the buildings thereon situated . . . which may arise or has arisen by reason of the construction or operation of said Railroad through and over said street in front of said Lot 4.”

1. Book 38 of Deeds, Page 444 (1873). Minneapolis & St. Louis Railway Company (Grantee)

“have sold, remised, released and quit claimed . . . the following tracts, pieces or parcels of lands . . . within 15 feet on each side of the centerline of the railway track of said railway company as the same is now located, constructed and operated upon and in front . . . “

1. Book 64 of Deeds, Page 417 (1872). Minneapolis & St. Louis Railway Company (Grantee)

“Grant, Bargain, Sell, Release and Quit Claim . . . The right to maintain and operate the Railroad . . . along, through and over Second Street. . . “ [same damage language as in Book 33, above]

1. Book 103 of Deeds, Page 262 (1881). Minneapolis & St. Louis Railway Company (Grantee)

“Grant, Bargain, Sell and Convey . . . pieces or parcel of land”

1. Book 240 of Deeds, Page 313 (1887). Minneapolis & St. Louis Railway Company (Grantee)

“It is especially intended in this deed to convey all the right title and interest of said party of the first part acquired and held under and by virtue of 3 certain certificates of state assignment . . .”

1. Book 435 of Deeds, Page 113 (1883). Chicago, St. Paul, Minneapolis and Omaha Railway Company (Grantee)

“. . . hereby remise, release and forever quit claim . . .”

Practice Tip: Conveyances to railroads which do not contain limiting or conditional language such “until” or “so long as” or a “right to use” may look like conveyances of a fee simple but contain language relating to adjoining land retained by the railroad’s grantor which may indicate the interest is an easement. For example, the language in Book 33 of Deeds, Page 356 above contains “the right to maintain and operate the railroad . . .” This looks to be an easement.

Practice Tip: In Book 38 of Deeds, Page 444, the words “have sold, remised, released and quit claimed . . . the following tracts, pieces or parcels of lands . . .” make this look like a conveyance of a fee. However, both of these documents established rights for railroad tracks in a dedicated public street with “hold harmless” language releasing the railroad form damage to the adjoining lots retained by the grantor. These documents probably both convey easements.

Practice Tip: Do not place weight on the use of the word “forever” in the conveyance. In Book 33 of Deeds, Page 356, it’s the language describing the interest which follows the word forever which matters.

Abandonment of Easements

An easement may be extinguished by common law abandonment. Abandonment of an easement is determined by evidence of intention to abandon. Mere non-user is not enough. Non-user must be accompanied by affirmative and unequivocal acts indicating intent to abandon that are inconsistent with continued use of the easement. A permanent intent to abandon the easement must be established by clear evidence. In determining whether a railroad easement has been abandoned the court must consider the heightened public interest in maintaining public use of the right-of-way.

In the Hess case, there is a discussion of the railroad discontinuing rail service after receiving a certificate of abandonment from the Interstate Commerce Commission (ICC). However, the certificate of abandonment doesn’t necessarily constitute evidence of abandonment of the real estate interest because, in the Hess case, the ICC found that “portions of the right-of-way are suitable for other public purposes.” The ICC noted that a “public use” did not include keeping the track and materials for future rail freight use.

Abandonment of easements under the Marketable Title Act is the issue decided by the Minnesota Supreme Court in Hersh Properties, LLC v. McDonald’s Corp., 588 NW2d 728 (Minn. 1999). The Court held that while the MTA applies to easements and other instruments which are over 40 years old and an easement may be barred under the MTA if no notice is recorded within 40 years after the easement is recorded, there is a difference between abstract and Torrens land.

The Hersh Court held that if the easement is on Torrens land, the source of title is not the easement document itself, but the Certificate of Title issued to the current owner of the burdened parcel. Therefore, if the railroad right of way is an easement and is located on Torrens land, the MTA cannot be used to prove abandonment if the Certificate of Title was issued less than 40 years before the examination of title.

Conveying Fee Simple Determinable

State v. Hess, 684 NW2d 414 (Minn. 2004)

An 1898 deed to the Brainerd and Northern Minnesota Railway Company states that the grantors:

“hereby grant, bargain, sell and convey unto the said company, its successors and assigns, a strip, belt or piece of land, one hundred feet wide, extending across the following lands in Cass and Hubbard Counties, State of Minnesota, described as follows . . .”

After the legal description of the land conveyed and language conveying the right to erect snow fences up to 150 feet from the centerline of the railway, the deed states that the grantors:

“hereby release all damages and claims thereto all ____ lands, by reason of or occasioned by the location, construction or operation of a railway over and upon the premises hereby conveyed. And the said Harriet G. Walker and ____ hereby ____ their rights of dower in the tracts thereby conveyed.

Provided that this Grant or Conveyance shall continue in force [,so] long as the said strips of land shall be used for Railway purposes; but to cease and terminate if the railway is removed from the said strips.”

The district court concluded that the 1898 deed conveyed a fee simple determinable. The Court of Appeals reversed, concluding that the deed conveyed an easement. The Supreme Court reversed the Court of Appeals finding that the deed created a fee simple determinable.

Marketable Title Act

In the Hess case, the 1898 deed contained a clause as follows

“Provided that this Grant or Conveyance shall continue in force [,so] long as the said strips of land shall be used for Railway purposes; but to cease and terminate if the railway is removed from the said strips.”

This is the language which led the Supreme Court to conclude that said deed created a fee simple determinable. The Court went on to conclude that the right of reverter triggered by the limitation clause which is more than 40 years old is barred by the Marketable Title Act (MTA) (the Forty Year Law), Minn. Stat. sec. 541.023, and since no notice of claim to the contrary was filed within 40 years after the 1898 deed was recorded, the Forty Year Law converted the fee simple determinable into a fee simple.

The Court’s opinion states the adoption of the MTA is important for two reasons. First, …”the difference between an easement and a fee simple determinable “[is] material to the issue before us because, … an interest in fee simple determinable may be subject to the Act’s conclusive presumption of abandonment. Second, public policy reasons behind the Marketable Title Act, such as finality of conveyances and enforcing settled expectations should be considered . . . for analyzing the intent of the parties in a conveyance of land for right of way purposes in a deed.”

1. Why Does it Matter Now And What Should You Do?

Re-use of railroad rights-of-way has occurred in various waysin recent years. What interest the railroad has will affect the project. Rights-of-way in the chain of title will also affect projects that are not intending to use the land as a right-of-way. So what should you do?

Trails. Recreational trails have been promoted by both state and federal legislation. Using railroad rights-of-way makes acquisition of the necessary tracts of land simpler and faster than assembling the entire strip from various landowners.Be very careful in the examination of title. Look at the deed, including all of its provisions, not just the granting clause and the habendum clause. Are there other clauses that are evidence of the intent of the grantors? What other deeds exist in the chain of title and what do they convey?

Stadium Development. Land assembled in Minneapolis for Target Field for the Twins included railroad lands. This had to be addressed in the land registration action because Union Pacific Railway filed an answer. Often the basis of the railway answer is unclear but settlement may be the most efficient resolution.

Commuter Rail and Station Development. Commuter rail, such as the North Star line from Big Lake to Minneapolis operates upon existing BNSF railroad tracks. The Metropolitan Council negotiated a lease with BNSF Railway Company. A memorandum of that lease appears in the property records. The City of Anoka acquired lands adjacent to the track for the train station. Practice Tip:Beware of the disclaimers in deeds from the railroad company. Ownership and contamination are issues to examine closely.

Freight. Reestablishing railroad tracks on rights-of-way which had fallen into disuse for such current needs as hauling “frac” sand in Western Wisconsin and Southeastern Minnesota. Has the railroad abandoned its interest in the rights-of-way?