Marvin M. Brandt Revocable Trust v. United States

Facts

In 1908, pursuant to the General Railroad Right-of-Way Act of 1875 (43 U.S.C. §§ 934-39) (“1875 Act”), the United States granted a right-of-way from Laramie, Wyoming to Colorado to the Hahn’s Peak and Pacific Railroad Company. In 1976, the United States issued a land patent to the predecessor in interest of Marvin M. Brandt Revocable Trust (“the Trust”) for Tract 37, part of the underlying land through which the railroad right-of-way runs. In 1987, the Wyoming-Colorado Railroad Company, Inc. (“WYCO”) acquired the right-of-way. In 2001, WYCO filed a Notice of Intent to Abandon Rail Service on the right-of-way, and in 2004, completed the abandonment procedure.

In 1922, Congress passed the Abandoned Railroad Right-of-Way Act (43 U.S.C. § 912), which provides that, upon abandonment of a railroad right-of-way, the owner of the land underlying the right-of-way would retain any interest in the right-of-way that the United States would otherwise have retained. In 1988, Congress passed the National Trails System Improvement Act (16 U.S.C. § 1248(c)), which provides that the United States retains all reversionary interests in abandoned railroad right-of-ways.

In July 2006, the United States filed a complaint in the District Court of Wyoming, seeking to quiet title to the WYCO right-of-way, and seeking a declaratory judgment that WYCO’s right-of-way had been abandoned. The Trust counterclaimed, seeking to quiet title to the right-of-way in its favor. In October 2007, the United States moved for summary judgment, and a month later the Trust also moved for summary judgment. In April 2008, the district court granted the United States’ motion for summary judgment and denied the Trust’s motion, ruling that the United States has a reversionary interest in the railroad right-of-way under the Tenth Circuit’s existing precedent, which interprets 16 U.S.C. § 1248(c) as modifying 43 U.S.C § 912 and applying to a right-of-way created under the 1875 Act.

On September 11, 2012, the Court of Appeals for the Tenth Circuit affirmed the district court’s judgment. On October 1, 2013, the United States Supreme Court granted certiorari on the question of whether the United States retains an implied reversionary interest, upon abandonment, in railroad right-of-way created under the General Railroad Right-of-Way Act of 1875 after the government has issued a patent on the underlying lands to a private party.

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Discussion

PUBLIC VERSUS PRIVATE INTERESTS

The United States argues that the rationale for granting railroad rights-of-way supports its claim in retaining a reversionary interest in the right-of-way at issue. The United States contends that the rationale behind granting railroad rights-of-way is to ensure the operation of safe and efficient rail transportation. Accordingly, the United States contends that retaining a reversionary interest allows the government to determine whether a right-of-way ought to continue to be used for railroad or other public purposes, or whether it ought to be transferred to private ownership.

On the other hand, the Cato Institute argues on behalf of the Trust that arbitrary changes in the principles of property law ultimately undermine landowners’ right to be secure in their property. Cato asserts that property rights are a fundamental part of individual rights. In Cato’s view, an essential government function is protecting property rights and securing landowners’ right to be secure in their property.

STABILITY IN PROPERTY OWNERSHIP

The Northwest Legal Foundation (“NLF”) argues on behalf of the Trust that, under the common principles of property law, property is never impliedly conveyed; it is only expressly conveyed. The NLF argues that, because the Trust’s land patent does not contain an expressly reserved reversionary interest, the United States retaining a reversionary interest in the right-of-way is tantamount to a taking by the government. As such, the NLF argues that, without the procedural safeguards of government takings under a doctrine like eminent domain, allowing the United States to retain a reversionary interest, here, undermines the principles of property law and greatly expands the United States’ takings powers.

The United States, however, argues that the legislative history surrounding the 1875 Act shows that Congress intended the United States to retain a reversionary interest in a right-of-way granted under the Act even if the underlying land is granted to a private party. The United States quotes Representative Rockwood Hoar, who stated that even if the United States granted the public land underlying a railroad right-of-way to a private party, the railroad will avoid state regulation because the right-of-way remains the property of the United States. Therefore, the United States argues that the government has historically been viewed as retaining an interest in rights-of-way created by the 1875 Act.

The Pacific Legal Foundation and Center for Constitutional Jurisprudence (“Pacific”) argue on behalf of the Trust that the Tenth Circuit’s decision undermines certainty and stability in property ownership. Pacific argues that allowing the United States to retain a reversionary interest in 1875 Act rights-of-way would cast doubt on millions of acres of land owned by private parties through land patents because the United States never reserved a reversionary interest in those patents.

The United States argues that Congress has repeatedly passed laws recognizing that the United States has a reversionary interest in the rights-of-way. The United States also argues that the Supreme Court has ruled that a land patent does not convey an interest in a right-of-way. As such, the United States argues, owners of land patents underlying 1875 Act rights-of-way, such as the Trust, could have no reasonable expectation of obtaining an interest in those rights-of-way through their land patents.

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Analysis

The case is about Congress’s land grants in the General Railroad Right-of-Way Act of 1875. Currently, there is a circuit split over whether the United States retains an implied reversionary interest, upon abandonment, in a railroad right-of-way created under the 1875 Act after the government has issued a patent on the underlying lands to a private party. Prior cases have addressed a railroad’s ability to mine the area underlying the right-of-way, but not specifically a third party’s ability. The Trust argues that an abandoned railroad right-of-way results in an easement, and that here, when the railroad abandoned the easement the land patent was no longer burdened. The United States argues that the Tenth Circuit correctly held that the United States retains an implied reversionary interest when a railroad right-of-way is abandoned.

DOES THE 1875 ACT GRANT AN EASEMENT?

The Trust argues that an abandoned railroad right-of-way results in an easement. In support of this claim, the Trust cites the Court’s decision in Great Northern Ry. Co. v. United States; the Court’s affirmance of Great Northern in United States v. Union Pacific Railroad Co.; and the Department of Interior’s interpretation of the 1875 Act. Relying on Great Northern, The Trust contends that there should be no question as to whether the 1875 Act granted more than an easement. In Great Northern, the Court found that the plain language of the 1875 Act granted only an easement. If the 1875 Act granted a fee (with reversion), the Trust argues, impending land patents subject to rights-of-way would be inconsistent with the grant of a fee. Furthermore, the Trust asserts, the Court found that the since the 1875 Act’s purpose could be satisfied with an easement rather than a fee, it was unnecessary to construe the Act as granting a fee. Moreover, the Trust argues that in Union Pacific, the Court, by rejecting a limited fee construction, reaffirmed that the 1875 Act granted only an easement. Finally, the Trust relies on the Department of Interior’s interpretation of the 1875 Act as it applies to land patents, which states that a patentee receives a fee simple subject to a railroad’s right-of-way. The Trust contends that this language suggests that a railroad’s rights are limited to that of an easement.

The United States counters that Great Northern is not controlling precedent because it did not address the issue of reverter. Although the United States recognizes that some language in that case supports the Trust’s argument, the United States maintains that Great Northern addressed the rights to the minerals underlying the right-of-way and not the possibility of reverter. Thus, the United States believes that in relation to third parties (not the United States or the railroad company), the possibility of reverter was not foreclosed. Because the railroad company in Great Northern intended to mine the underlying minerals, the United States contends that the Court only decided the issue of the railroad’s rights to the underlying minerals; accordingly, the United States argues that the Court only addressed a land grant similar to an easement, but not strictly a common law easement.

The United States further argues that the legislative history of the 1875 Act suggests that it granted a limited fee. The government points specifically to 43 U.S.C. § 912 and 16 U.S.C. § 1248(c). Under section 912, the United States argues, Congress intended to deal with the disposal of abandoned rights-of-way differently, depending on the land involved. In instances where the land contained valuable minerals underneath, the United States could transfer or reserve title as it saw fit. In the case where the land would have little to no value, the land should be transferred to those who acquired it. Furthermore, under section 912, the United States argues that the abandonment must be declared by a competent court or act of Congress. Therefore, because of the declaration requirement, the United States argues that the reversionary interest rests in the United States, until it affirmatively vests or retains the interest. Moreover, under section 1248(c), the United States points out that all rights-of-way shall remain in the United States upon abandonment or forfeiture, unless a highway has been established within one year.

If the Court concludes that the 1875 Act granted only an easement, as the Trust argues, the Trust further contends that when the land is abandoned, the underlying patented land becomes unburdened and therefore becomes a fee simple. Citing general property law, the Trust surmises that because the underlying land was granted in fee simple subject to an easement, once the easement no longer exists, the land is simply a fee simple. This would result in the Trust regaining full use over the land.

If the Court concludes that the 1875 Act grants a reversionary interest, the Trust may still prevail if the Court concludes that a patent grant nonetheless trumps the reversionary interest.

DOES A LAND PATENT GRANT CONTROL OVER A REVERSIONARY INTEREST?

The Trust argues that if the United States retains a reversionary interest in the right-of-way, the land patent overcomes this interest. Acknowledging that a U.S.-granted land patent is the highest form of title, the Trust argues that the United States cannot retain an interest in the land that is not retained in the patent itself. Since the patent in this case does not specifically reference any reservations, the Trusts believes that even a reversionary interest will not stand.

In response, the United States argues that the Court’s decision in Stalker v. Oregon Short Line Railroad Company indicates that a patent surrounding a right-of-way does not convey title to the right-of-way itself. In the United States’ view, because there was a valid right-of-way on the land, the patent that passed to the Trust could not legally include a valid right-of-way.

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Conclusion

This case addresses a circuit split over whether the United States retains an implied reversionary interest in rights-of-way created under the 1875 Act. The case thus raises concerns about private property interests and the public’s interest in rehabilitating abandoned rail lines. A ruling against the United States may affect the government’s ability to rehabilitate abandoned railroad lines. A decision against the Trust could affect the certainty and stability of private property rights implicated by the 1875 Act. More generally, this case raises a fundamental question that could affect all property owners: whether a grantor of real property impliedly retain an interest in land after it is sold.

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