Chicago Coating Company, LLC v. United States
Opinion
In this "rails-to-trails" case, Chicago Coating Company and Ignacio and Benjamin Martinez (collectively "Appellants") seek just compensation for an alleged Fifth Amendment taking of their reversionary interest in land within a dormant rail corridor. When faced with cross motions for summary judgment, the United States Court of Federal Claims ("the trial court") determined that the deeds between Appellants' predecessors-in-interest and the original railroad conveyed the property to the railroad in fee simple. Appellants, however, contend that the deeds conveyed only an easement, which terminated when the land was no longer used for railroad purposes. Thus, the Government's proposal to allow the corridor to be converted into a recreational trail allegedly constituted a taking of their reversionary interest in the easement. We disagree, and affirm the decision of the trial court.
BACKGROUND
Congress granted the United States Surface and Transportation Board ("STB")
1
regulatory authority over rail carriers who intend to discontinue or abandon any part of their railroad line.
But in 1983, Congress enacted Amendments to the National Trails System Act of 1968, which created an alternative process to abandonment, called "railbanking."
In order to railbank a corridor, the railroad must first initiate abandonment proceedings before the STB.
Following the enactment of the amended Trails Act, property owners who believed they had a reversionary interest in property lying in dormant rail corridors began claiming that railbanking constituted a taking of their property. In
Preseault I
, the Supreme Court recognized that the process of railbanking could constitute a taking,
This case involves two segments of land that are part of a rail corridor in Cook County, Illinois, now operated by Burlington Northern Santa Fe Railway ("BNSF"). On December 21, 2012, BNSF initiated proceedings before the STB to abandon the corridor. On January 29, 2013, the Chicago Department of Transportation filed a petition with the STB indicating its interest in negotiating a railbanking and interim trail use agreement for the corridor. When BNSF did not object, the STB issued an NITU on April 9, 2013. The STB gave BNSF until April 9, 2014, to negotiate an agreement, after which the corridor would be abandoned. However, after numerous extensions, BNSF has neither reached a railbanking agreement nor abandoned the corridor.
*1168 The opportunity for negotiation continues. Decision of the U.S. Surface Transp. Bd., Docket No. AB-6-428-X (Mar. 6, 2018) (extending the STB's decision and NITU until August 28, 2018).
On July 18, 2014, Appellants filed a takings claim in the trial court, alleging that they are the fee owners of certain parcels of land within the corridor and that the STB's issuance of the NITU constituted a Fifth Amendment taking of their interest in that land. 4 As evidence of ownership, Appellant Chicago Coating Company, as the successor-in-interest, provided a deed from Daniel and Harriet Jones, dated April 22, 1878 ("the Jones Deed"). The deed states, in part:
The Grantors ... for and in consideration of Ten Dollars in hand paid, convey and quit claim to [the Grantees] all interest in the following described Real Estate to wit: The right of way for rail road purposes over and across a strip of land fifty (50) feet in width being twenty five (25) feet on each side of the centre line of the track of the railroad known as the "Chicago and Southern Railroad" as the same is now located and built through over and across [the described land] ....
...
But this grant is upon the express condition [that the Grantee] shall cause such premises to be used by some regularly incorporated Railroad Company [as part of a railway operation] and whenever a breach of any or either of these conditions shall appear ... [the Grantor] shall have the right to reenter said premises and to own, use, occupy and enjoy the same as if the grant first above mentioned had never been made. And the said Grantor hereby expressly waive[s] and release[s] any and all rights under and by virtue of any and all laws of said State of Illinois in relation to the exemption of homestead.
Appellants Ignacio and Benjamin Martinez, as the successors-in-interest, provided a deed from John and Marjory Edward Wilkins, dated April 1, 1875 ("the Wilkins Deed"). The deed states, in part:
[The Grantor] in consideration of the construction of a railroad across the premises hereinafter described and of a permanent railroad station ... [the Grantor] hath granted sold and conveyed and by these presents do grant bargain sell convey and warrant to the [Grantee], that certain strip or parcel of land situate in the city of Chicago in the County of Cook and state of Illinois to wit: a strip of land running forty feet in width and running diagonally across [the land] so long as said party of the [Grantee] shall use the said strip of land for the purpose of a railroad, and shall maintain and use a station at the point of intersecting of Kedzie Avenue and Swift streets and no longer.
...
It is also understood that if [the Grantee] shall ever abandon or cease to use said strip of land for the purpose of a railroad or omit to carry out any of the agreements or perform any of the conditions here made and to be performed, then and in such case his conveyance shall be null and void, and the [Grantees] hereby agree thereupon to reconvey by a good and sufficient warranty deed *1169 to [the Grantor] the premises above described.
Both the Appellants and the Government filed cross motions for summary judgment, disputing whether each deed conveyed the respective properties in fee simple or granted a mere easement, and whether a taking had occurred.
The trial court concluded that the plain language of each deed conveyed the respective properties in fee simple. The trial court began its analysis of the Jones Deed by noting that it used the statutory form for quitclaim deeds, thereby creating a statutory presumption of a fee simple conveyance.
Chi. Coating Co., LLC v. United States
,
As for the Wilkins Deed, the trial court noted that the deed used the statutory form for warranty deeds, thereby creating the statutory presumption of a fee simple conveyance. Id. at 513. This presumption was validated by the deed's reference to "a strip of land" in both the granting clause and description, without any reference to a "right of way," and the fact that the reversionary interest explicitly requires the land to be re-conveyed back to the Grantor by warranty deed. Id . at 513-14. The trial court dismissed the easement-indicating language-"for the purpose of the railroad"-as a mere description of the parties' motivation, which in no way limited the conveyance. Id . at 514.
The trial court thus concluded that the Government did not commit a compensable taking under the Fifth Amendment when the STB issued the NITU, because Appellants did not possess a cognizable property interest in the land. Id .
We have jurisdiction over this appeal pursuant to
DISCUSSION
We review the trial court's grant of summary judgment
de novo
,
Nw. Title Agency, Inc. v. United States
,
"Whether a taking has occurred is a question of law based on factual underpinnings. We conduct a plenary review of the legal conclusions of the Court of Federal Claims while reviewing its factual conclusions for clear error."
Stearns Co. v. United States
,
I
The Fifth Amendment prohibits the taking of "private property ... for
*1170
public use, without just compensation." U.S. Const. amend. V, cl. 4. In order to prove a compensable taking based on the issuance of a NITU, a claimant must prove that "state law reversionary interests [in the property at issue] are effectively eliminated in connection with a conversion of a railroad right-of-way to trail use."
Caldwell v. United States
,
In
Ellamae Phillips Co. v. United States
, we set forth a three-part test to determine whether a claimant is entitled to compensation in these types of rails-to-trails cases.
Appellants did not contend that the easement had been abandoned prior to the alleged taking in their motion for summary judgment.
Chi. Coating
,
To answer that question, we must apply the law of the state where the property interest arises.
See
Bd. of Regents v. Roth,
A
Turning first to the Jones Deed, the granting clause states: "The Grantors ... convey and quit claim to [the Grantees] all interest in the following described Real Estate to wit ...." The clause utilizes the statutory form for quitclaim deeds,
5
thereby creating a rebuttable presumption of a fee simple conveyance.
See
As evidence that the parties intended to convey a lesser estate, Appellants point to three phrases in the deed's description-(1) "the right of way," (2) "for railroad purposes," and (3) "over and across"-immediately following the granting clause. While these phrases have historically been relied upon to find that a deed conveyed an easement, their use alone is not dispositive.
For instance, in
Tallman
, a deed titled "Right of Way Deed," for purposes of the railroad's "right of way" "across and upon" certain described real estate granted only an easement, even though the deed was in statutory form.
On the other hand, in
Urbaitis v. Commonwealth Edison
, a deed that only once referenced a "right-of-way" in the conditions clause did not overcome the statutory presumption of a fee simple conveyance.
In this case, Appellants argue that the object of the granting clause was the "right of way," which clearly evinces the parties' intent to grant an easement.
See
Jones Deed (conveying and quitclaiming "all interest in the following described
*1172
Real Estate to wit: The right of way ...."). "However, there is no
per se
rule that the mere inclusion of the term 'right-of-way' in any deed to a railroad negates the possibility that title in fee simple was conveyed."
Urbaitis
,
Instead, looking to the entirety of the description, it becomes clear that the phrase "[t]he right of way for rail road purposes over and across a strip of land" is not intended to limit the conveyance of the parcel, but to describe the right of way the existing rail line already possessed. See Jones Deed (describing the dimensions of the parcel "on each side of the centre line of the track of the railroad known as the 'Chicago and Southern Railroad' as the same is now located and built through" the parcel being conveyed).
The Jones Deed may be likened to that of
Sowers
, in which the court was faced with similarly descriptive language. The deed in
Sowers
"convey[ed] and warrant[ed] ... the following described Real Estate, to-wit: Thirty-three (33) feet in width over and across [an area of land] being the right of way, as now occupied by said Railway Company."
While Appellants would have us liken this case to
Magnolia Petroleum
, that case is a relative outlier, and relied heavily upon extrinsic evidence. In that case, the deed was in statutory form and conveyed "the following described real estate, towit [sic]: [a description of the bounds of the grant] to be used for road purpose."
Magnolia
,
While the Government argues that the Jones Deed's condition subsequent-that the Grantor reserves the "right to reenter ... to own, occupy and enjoy the same as if the grant ... had never been made"-evinces a fee simple conveyance, we do not agree that this reversionary interest necessarily weighs in the Government's favor. Such rights of reentry are equally applicable to easements under Illinois law.
See
*1173
Diaz v. Home Fed. Sav. & Loan Ass'n of Elgin
,
Finally, we note that the Jones Deed includes a waiver to the homestead exemptions.
See
Jones Deed ("[The Grantors] expressly waive and release any and all rights under and by virtue of ... the Exemptions of homesteads."). The homestead exemptions arose as a means of protecting one spouse, at the time a wife, from being alienated from her land by the other spouse without her consent.
While certain language from the Jones Deed may weigh slightly in Appellants favor, we conclude that the use of the statutory form and the inclusion of the waiver of the homestead exemption weigh heavily in the Government's favor. Therefore, considering the instrument as a whole,
see
Urbaitis
,
B
Turning to the Wilkins Deed, the granting clause states: "[The Grantors] in consideration of the construction of a railroad across the premises hereinafter described ... do grant bargain sell convey and warrant to the [Grantee], that certain strip or parcel of land ...." The clause utilizes the statutory form for warranty deeds,
6
thereby creating a statutory presumption of a fee simple conveyance.
See
Unlike the deeds in
Tallman
and
McVey
, which both explicitly referred to a "right of way" in the title and throughout and made specific reference to how the
*1174
land would be used, the Wilkins Deed's granting clause is devoid of any easement-indicating language. In fact, it refers to a "strip of land" both in the granting clause and immediately thereafter in the description, making the "strip of land" the unambiguous object of the conveyance.
See
McVey
,
Appellants would have us liken the Wilkins Deed to that in
Magnolia
based on the existence of the phrase "for the purpose of a railroad" in the description.
See
Wilkins Deed (conveying "a strip of land ... so long as said party of the [Grantee] shall use the said strip of land for the purpose of a railroad"). But, as discussed previously,
Magnolia
relied heavily on extrinsic evidence.
Instead, the Wilkins deed may be better likened to that in
Urbaitis
, which used the statutory form for warranty deeds and made "a strip of land" the object of the conveyance.
See
Our position that the Wilkins Deed conveyed the property in fee simple is further supported by the inclusion of the reversionary interest. Where the Jones Deed included a "right to reenter," the Wilkins Deed explicitly requires that the Grantee "reconvey by a good and sufficient warranty deed to [the Grantor] the premises above described." Such a re-conveyance would be entirely unnecessary if the original instrument granted a mere easement. For these reasons, we agree with the trial court that the Wilkins Deed conveyed the parcel of land in fee simple.
CONCLUSION
With both the Jones and Wilkins Deeds conveying title to their respective parcels of land in fee simple, Appellants have failed to allege a cognizable property interest on which they can recover just compensation. For these reasons, the Government did not commit a compensable taking under the Fifth Amendment, and we affirm the final judgment of the trial court.
AFFIRMED
COSTS
No costs.
The STB is an independent adjudicatory agency with broad regulatory authority over railroad rates, service disputes, mergers, and rail abandonment.
References to the
Preseault
line of cases have used a variety of numbering conventions.
Compare
Preseault v. United States
,
The STB will issue a CITU as part of regular abandonment proceedings, and an NITU as part of exemption proceedings.
Our rails-to-trails takings precedent holds that the issuance of an NITU is the only governmental action that operates to prevent abandonment of the corridor and preclude the vesting of state law reversionary interests in the property. The NITU thus triggers an arguable taking, and in instances where no trail use agreement is reached, a temporary taking may have occurred.
See
Ladd v. United States
,
The statutory quitclaim deed reads:
The grantor [here insert grantor's name or names and place of residence], for the consideration of [here insert consideration], convey and quit claim to [here insert grantee's name or names] all interest in the following described real estate [here insert description], situate in the county of ..., in the state of Illinois. Dated this ... day of ..., A.D. 18 ..
The statutory warranty deed reads:
The grantor [here insert name or names and place of residence], for and in consideration of [here insert consideration] in hand paid, conveys and warrants to [here insert the grantee's name or names] the following described real estate [here insert description], situated in the county of ..., in the state of Illinois. Dated this ... day of ..., A.D. 18 ..
Reference
- Full Case Name
- CHICAGO COATING COMPANY, LLC, Ignacio Martinez, Benjamin Martinez, Plaintiffs-Appellants v. UNITED STATES, Defendant-Appellee
- Cited By
- 28 cases
- Status
- Published