Daily Development for
Tuesday, December 10, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

ADVERSE POSSESSION; EMINENT DOMAIN; RAILROADS: Railroad property acquired by private sale and held in fee simple is subject to adverse possession following termination of railroad use, notwithstanding general prohibition against adverse possession of railroad property because it constitutes a "public highway." Gustin v. Scheele, 549 N.W.2d 135 (Neb. 1996).

Plaintiffs brought an action to quiet title to establish a boundary line on property owned by the defendants. Both parties lots previously were separated by a railroad right-of-way. The defendant had purchased the right-of-way property and, after securing a survey, replaced portions of plaintiff's preexisting fence with his own fence along the line he believed to be the proper boundary. Plaintiff claimed that the earlier fences had established an adverse possession title in plaintiff. A portion of the alleged adverse possession period would have occurred at a time when the railroad actually owned the property.

The court noted that prior holdings had established that a railroad right-of-way acquired by condemnation is not subject to alienation by adverse possession as long as a railroad is operated thereon. This did not preclude adverse possession arising, however, when the railroad company has abandoned its use. The prior holdings also failed to address separately the subject of railroad property acquired in fee. The court distinguished railroad property acquired by private sale and held in fee from railroad property acquired by condemnation. In the latter instance, Nebraska law, consistent with that of many other states, is that a railroad can acquire only an easement or right-of-way for the limited use of operating its railroad. The condemnee does not relinquish his or her reversionary interest in the underlying land upon abandonment of the railroad activity.

Where a railroad has acquired land by negotiation in fee simple absolute, however, the railroad company may freely alienate the acquired land or any part of it. Consequently, it can be adversely possessed as well.

The defendants then noted, however, that the state Constitution prohibits adverse possession of railroad property because it is part of the system of public highways. But the court concluded that the constitution applied only to land that the railroad had declared part of its railway system. As the land in dispute had not been used for railway purposes for many years, and had been fenced separately from a nearby railroad line operated by the railroad company, the court concluded that the railroad had not established the strip as part of its system and the property became subject to adverse possession even while still owned by the railroad.

Comment 1: The court's reasoning in several junctures of the opinion indicate that this matter will have to be revisited. Without explicitly stating so, the court apparently reads the state Constitution to characterize property designated by a railroad company as a railroad line "station, depot, sidetracks, et cetera." as being exempt from adverse possession while other property is apparently fair game. Must this designation be by actual useage (as apparently was the case here) or can the designation be made in the records of the railroad company regarding future planning. Here, of course, the railroad company had already disposed of the property in question, so there was no question as to the future value of the land as railway property. But what if it had been listed as a potential spur or sideroad or station location on the plans of the company, and then, following a new planning process, designated as surplus and sold? Would adverse possession had run against the land prior to its being declared surplus, even though it had not actually been placed in use for railway purposes?

The court appears to hold that an easement acquired by a railway, pursuant to a condemnation action, terminates in favor of the condemnee once railroad operations cease. But it cites with approval a case that holds that such property can be the subject of adverse possession after the railroad ceases operations? Wouldn't any such adverse possession actually be against the owner of the fee, rather than the railroad? Does the railroad itself acquire adverse possession title against the fee owner if it maintains physical possession after terminating its railroad use?

Comment 2: There probably are thousands of square miles of property acquired by railroads in the nineteenth and early twentieth century that are no longer in active use for railroad purposes. Based upon the number of cases finding their way to the appellate courts, there does not seem to be much clarity of understanding about what to do about this property. To permit it to revert back to the original owners of the fee is inconsistent with the title in many cases, and will cause title clearing nightmares in others. Generous adverse possession doctrines might be the most practical solution.

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