Daily Development for Friday, May 10, 2002

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

TITLE; RAILROADS: (2 cases) Warranty deeds conveying land from town to railroad's predecessor transferred fee simple absolute where said warranty deeds did not contain reversion clauses or use restrictions, and where reference to "right of way" appeared only on deed jacket.

(1) Schoenberger v. Missouri Pacific Railroad Company, 26 P.3d 701 (Kan. App. 2001).

(2) C & G, Inc. v. Rule, 25 P.3d 76 (Idaho 2001).

The court in Shoenberger, reversing the trial court, held that the railroad deed conveyed held title, and thus the railroad owned mineral rights and was entitled to oil and gas royalties from railroad's lease of land to oil company,

In 1887, an individual conveyed, by warranty deed, nearly an entire quarter section of land to the Memphis & Denver Town Company ("Town"), through which the Town owned all mineral rights in the land described. In 1888, the Town conveyed by warranty deed a 500-foot wide strip of such land and several lots to the predecessor of Union Pacific Land Resources ("UP"). UP's predecessor leased the land to Jason Oil Company ("Jason"), which constructed a well thereon. UP appealed the trial court's judgment that it did not own fee title to the mineral rights it leased to Jason.

Historically, in Kansas, a railroad could acquire an interest in property by eminent domain, by purchase, or by voluntary grant. On its face, the 1887 deed provided that for consideration, the grantor conveyed the described property to "Have and to Hold the Same Together with all and singular the tenements, hereditaments, and appurtenances thereunto belonging or in anywise appertaining forever."

Furthermore, in the 1887 deed, the grantor warranted it was "lawfully seized in [its] own right of an absolute and indefeasible estate." The 1888 deed provided that for consideration, the grantor conveyed the described property "to have and to hold the same together with all and singular the tenements hereditaments and appurtenances thereunto belonging or in anywise appertaining forever." Furthermore, the grantor warranted it was "lawfully seized in its own right of an absolute and indefeasible estate of inheritance in fee simple."

The appeals court noted that the 1887 and 1888 deeds did not contain a reversion clause or any express or implied use restrictions. As a result, the court concluded that the deeds conveyed fee title to UP's predecessor and that UP was entitled to royalties due from the oil and gas lease on those lands.

In C&G , the Idaho case, the court concluded that deeds reciting that grantors did "grant, sell, and convey" their "described piece, parcel of land" to railroad "to have and to hold" conveyed a fee simple interest in the property despite the cover caption stating that the deeds were "Right of Way Deeds."

The Idaho Supreme Court held they could discern no intention other than a fee simple conveyance. The deeds do not limit the use of the parcel nor is there any mention of the "right of way" in the body of the deeds. Also, the term "forever" is used. Thus, in spite of the use of the term right of way on the covers, these documents cannot be deemed to grant an easement. The court notes that it is consistent with other reported decisions. Furthermore, the court notes that its decision conforms with the Idaho fee simple presumption statute.

Comment 1: The editor has had occasion to review deed files relating to railroad right of way acquisition from that period. Many of them do describe a strip of land, often a strip identified as consisting of a certain measurement from the center line of an existing railroad line that was built even before the deeds were drafted. Disputes frequently arise as to whether these transfers constitute a transfer of absolute ownership or just an easement.

The editor has seen others argue that the term "a strip of land" or the fact that the deed cover states on its face that the deed was a "right of way deed" leads to the conclusion that otherwise unlimited grants were intended to be easements. The editor believes the contrary to be true.

There is no question, from the editor's review of these files, that when the parties intended that the grant be limited to an easement, they knew how to say that.

The concept of "right of way," at least when appearing on the cover of the deed, appears to have been simply a description of the purpose of the acquisition, and not a limitation on the nature of the estate granted. Note that the Idaho court emphasizes that the term "right of way" does not appear on the deed's face.

Comment 2: The fact that a deed indicates that property is transferred "permanently" or "in perpetuity" ought not to make that big a difference in the interpretation of whether an easement or fee were intended. Theoretically a right of use can exist permanently as well. Of course, a court may conclude that such language is inconsistent with the notion of a reversion upon abandonment, but, at least literally speaking, such a reversion is possible only after the use conveyed has terminated, and the use of the "permanent" language, if an easement were intended, would apply to the use, not the ownership of rights other than the use. Thus, since the use conveyed is unlimited, it is "permanent," even in an easement grant.

Comment 3: The editor has heard hearsay that Kansas courts in the past have tended to prefer an easement construction because such construction makes it more difficult for farmers adjacent to railroad rights of way to claim adverse possession title by reason of farming activities on the property. Where the property is only an easement, then the farmer, the holder of the servient estate, is making a lawful use of the property and is not making an adverse claim so long as the farming activities do not interfere with the railroad activity, even if on the right of way.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a source that is readily accessible by members of the general public, and should take that fact into account in evaluating confidentiality issues.

ABOUT DIRT:

DIRT is an Internet discussion group for serious real estate professionals. Message volume varies, but commonly runs 5 ‑ 10 messages per workday.

Daily Developments are posted every workday.

To subscribe to Dirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Subscribe Dirt [your name]

To cancel your subscription to Dirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Signoff Dirt

For information on other commands, send the message Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only commercial and general real estate matters but also focuses specifically upon residential real estate matters. Because real estate brokers generally find this service more valuable, it is named "Brokerdirt." But residential specialist attorneys, title insurers, lenders and others interested in the residential market will want to subscribe to this alternative list. If you subscribe to Brokerdirt, it is not necessary also to subscribe to DIRT, as Brokerdirt carries all DIRT traffic in addition to the residential discussions.

To subscribe to Brokerdirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Subscribe Brokerdirt [your name]

To cancel your subscription to Brokerdirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Signoff Brokerdirt

DIRT is a service of the American Bar Association Section on Real Property, Probate & Trust Law and the University of Missouri, Kansas City, School of Law. Daily Developments are copyrighted by Patrick A. Randolph, Jr., Professor of Law, UMKC School of Law, but Professor Randolph grants permission for copying or distribution of Daily Developments for educational purposes, including professional continuing education, provided that no charge is imposed for such distribution and that appropriate credit is given to Professor Randolph, DIRT, and its sponsors.

DIRT has a WebPage at: http://www.umkc.edu/dirt/