Chicago Coating Company, LLC v. United States , 131 Fed. Cl. 503 ( 2017 )

In the United States Court of Federal Claims
No. 14-625L
(Filed: April 26, 2017)
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CHICAGO COATING CO., LLC, et.al., *
*
*
Plaintiffs, * Rails-to-Trails Case; National
* Trails System Act, 16 U.S.C. §
v. * 1241 (2006); Illinois Property
* Law; Deed Interpretation;
THE UNITED STATES, * Easement; Fee Simple.
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Defendant. *
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Steven M. Wald with whom were Michael J. Smith, Thomas S. Stewart, and Elizabeth G.
McCulley, Stewart Wald & McCulley, LLC, St. Louis and Kansas City, Missouri, and J.
Robert Sears, Baker Sterchi Cowden & Rice, LLC, St. Louis Missouri, for Plaintiffs.
Edward C. Thomas, with whom were John C. Cruden, Assistant Attorney General, Natural
Resources Section, Environment and Natural Resources Division, U.S. Department of
Justice, Washington, D.C., and Evelyn Kitay, Associate General Counsel, Surface
Transportation Board, Washington, D.C., for Defendant.
OPINION AND ORDER
WHEELER, Judge.
The Plaintiffs in this “rails-to-trails” case seek just compensation for an alleged
Fifth Amendment taking of their reversionary property interests in segments of a dormant
rail corridor under the National Trails System Act. The Plaintiffs argue that their
predecessors-in-interest conveyed only an easement in the rail corridor to the railroad
company and the Government’s contemplated conversion of the rail corridor to recreational
trails amounts to a taking of their property. In response, the Government argues that the
Plaintiffs have no cognizable property interest in the rail corridor because their
predecessors-in-interest conveyed a fee simple to the railroad company. As explained
below, the Court finds that the Plaintiffs’ predecessors-in-interest conveyed the relevant
segments of the rail corridor to the railroad in fee simple. Since the Plaintiffs have no
cognizable property interest in the rail corridor, the Court GRANTS the Government’s
cross-motion for summary judgment and DENIES the Plaintiffs’ motion for partial
summary judgment.
Background
A. History of the Nation’s Railroads and the National Trails System Act
The Interstate Commerce Act of 1887 gives the Surface Transportation Board
(“STB”) exclusive and plenary authority over the construction, operation and abandonment
of the nation’s rail lines. Chicago & Nw. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S.
311, 312 (1981). A railroad company may not cease to provide service on a particular rail
line without first receiving express consent from the STB. Colorado v. United States, 271
U.S. 153, 165 (1926). Historically, a railroad company had two options if it wished to stop
providing rail line service. First, it could apply to the STB for permission to “cease
operating a line for an indefinite period while preserving the rail corridor for possible
reactivation of service in the future.” Preseault v. ICC, 494 U.S. 1, 5 n.3 (1990) (“Preseault
I”). Alternatively, a railroad company could seek permission to permanently terminate
service by initiating abandonment proceedings. If the STB approved the abandonment, the
rail line was removed from the national transportation system and the STB’s jurisdiction
over the underlying land ended. Id.; Hayfield N. R.R. Co., Inc. v. Nw. Transp. Co., 467
U.S. 622, 633 (1984). State law then governed the disposition of the underlying land.
Preseault I, 494 U.S. at 5-6.
Concerned about the loss of property interests in the nation’s rail corridors,
Congress enacted the National Trails System Act Amendments of 1983 to the National
Trails System Act of 1968. 16 U.S.C. § 1241 et seq. (2006) (“Trails Act”). Section 8(d)
of the Trails Act provided an alternative to initiating abandonment proceedings called
“railbanking”. Preseault I, 494 U.S. at 6. Railbanking allows a third party to temporarily
convert the rail line to a recreational trail and “assume full responsibility” for the
management of the right-of-way while preserving the right-of-way for future rail line use.
16 U.S.C. § 1247; Preseault I, 494 U.S. at 6-7. In order for a rail corridor to be railbanked,
a railroad must first initiate the STB’s abandonment process. 49 C.F.R. §§ 1152.29,
1152.50. Then, a party interested in acquiring the corridor for railbanking must request
that the STB issue a Certificate of Interim Trail Use (“CITU”) or a Notice of Interim Trail
Use (“NITU”). 49 C.F.R. § 1152.29(c)-(d). The purpose of the CITU or NITU is to
preserve the STB’s jurisdiction and prevent the application of state reversionary property
law. Caldwell v. United States, 391 F.3d 1226, 1229-30 (Fed. Cir. 2004). If the railroad
is willing to negotiate a railbanking agreement, the STB will issue the CITU or NITU.
Preseault I, 494 U.S. at 7 n.5. If negotiations are successful, the STB suspends
abandonment proceedings and the interested third party establishes recreational trails on
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the rail corridor. The Trail Act states that interim trail use “shall not be treated, for purposes
of any law or rule of law, as an abandonment of the use of such rights-of-way for railroad
purposes.” 16 U.S.C. § 1247(d). If negotiations are unsuccessful, the railroad may
continue to pursue abandonment proceedings before the STB. 49 C.F.R. § 1152.29(d)(1).
The Trails Act’s railbanking provision has created a new category of Fifth
Amendment takings cases before this Court, referred to as “rails-to-trails” cases. See Pls.’
Mot. at 2-4 (listing cases in which plaintiffs seek relief for an uncompensated taking under
the Trails Act). The Preseault cases are the seminal cases establishing the existence of a
takings claim under the Trails Act. Preseault I, 494 U.S. 1; Preseault v. United States, 100
F.3d 1525 (Fed. Cir. 1996) (“Preseault II”). The Preseaults were Vermont property owners
with land adjacent to the Vermont Railway’s railroad easement. The Government issued
a CITU allowing the rail line to be converted to a trail and the Preseaults challenged the
constitutionality of the CITU in federal court. Preseault I, 494 U.S. 2-4. In Preseault I, the
Supreme Court unanimously held that railbanking under the Trails Act gave rise to just
compensation claims under the Fifth Amendment because the Trails Act prevented
property interests from reverting under state law. 494 U.S. at 13. The Preseaults then filed
a takings claim before this Court which was dismissed because the Preseaults “had no
reasonable expectation of obtaining a reversion by operation of state law.” Preseault v.
United States, 27 Fed. Cl. 69, 92 (1992). The Federal Circuit reversed and remanded
holding that the operative question is whether the conversion of the right-of-way to a
recreational trail constituted a taking given the scope of the railroad’s initial easement, not
the expectations of the current landowners. Preseault II, 100 F.3d at 1542-44.
B. Relevant Facts of this Case
On October 26, 1874, the Common Counsel for the City of Chicago issued an
ordinance granting Chicago & Southern Railroad Company permission to operate a rail
corridor. Def.’s Cross-Mot., Ex. 2. After receiving permission from the city, the Chicago
& Southern Railroad Company proceeded to secure rights to the lands needed to construct
rail lines by seeking deeds from the property owners adjacent to the rail corridor (called
“source deeds”). Through various purchases and consolidations, BNSF Railway (“BNSF”)
eventually became the successor-in-interest to Chicago & Southern Railroad Company.
See Def.’s Cross-Mot. at 7-8.
The case involves two segments of the railroad corridor originally operated by
Chicago & Southern Railroad Company, one abutting Plaintiff Chicago Coating Company,
LLC’s (“Chicago Coating”) property and one abutting Plaintiffs Ignacio and Benjamin
Martinez’s (“Martinez brothers”) property, and two source deeds. Pls.’ Mot. at 15-16;
Def.’s Cross-Mot. at 6. The first source deed, dated April 1, 1875, is from Marjory and
John Edward Wilkins to Chicago & Southern Railroad Company (“Wilkins Deed”) and
conveys interest in property known as “Block (13) thirteen”. Def.’s Cross-Mot., Ex. 3 at
2. Block thirteen currently adjoins the Martinez brothers’ property. Pls.’ Mot. at 16. Both
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parties agree that the Wilkins Deed is dispositive of BNSF and the Martinez brothers’
ownership interests in the rail corridor abutting the Martinez’s property. Def.’s Cross-Mot.
at 7; Pls.’ Resp. at 13.1 The second source deed, dated April 22, 1878, is from Daniel and
Harriet Jones to Henry A. Rust (“Jones Deed”). Def.’s Cross-Mot., Ex 4. While Mr. Rust’s
connection to Chicago & Southern Railroad Company is unclear, both parties agree that
the Jones Deed is the correct source deed for the rail corridor adjoining Chicago Coating’s
property. Def.’s Cross-Mot. at 7; Pls.’ Mot. at 15.
On December 21, 2012, BNSF filed a Notice of Exemption with the STB initiating
proceedings to abandon the rail corridor. Pls.’ Mot., Ex. A. On January 29, 2013, the
Chicago Department of Transportation filed a petition with the STB indicating that it was
interested in negotiating a railbanking and interim trail use agreement with BNSF for the
rail corridor. Def.’s Cross-Mot., Ex. 11. Since BNSF did not object, the STB issued a
NITU on April 9, 2013 allowing BNSF to abandon the rail corridor on April 9, 2014 if a
trail use agreement was not reached with the Chicago Department of Transportation by
October 6, 2013. Id., Ex. 12; Pls.’ Ex. C. After the Chicago Department of Transportation
applied for several extensions, the STB extended the negotiation period to September 2,
2017. Def.’s Cross-Mot. at 9; Dkt. No. 41 (April 20, 2017 Status Conference Order). As
of this date, BNSF has not abandoned the rail corridor.
On July 18, 2014, the Plaintiffs filed a complaint in this court (which was later
amended on December 31, 2014) and the case was assigned to Judge Edward Damich. See
Dkt. Nos. 1, 11. On August 26, 2015, the case was transferred to Judge Victor Wolski.
See Dkt. No. 20. Before Judge Wolski, the parties fully briefed and presented oral
argument on cross-motions for summary judgment on liability. See Dkt. Nos. 27-30, 33,
36. On March 31, 2017, the case was transferred to Judge Thomas Wheeler. Dkt. No. 39.
After careful review of all filings in this case (including the transcript of the July 14, 2016
oral argument before Judge Wolski) and a status conference on April 20, 2017, the cross-
motions for summary judgment are ripe for resolution.
Discussion
Summary judgment should be granted when “there is no genuine issue as to any
material fact” and “the movant is entitled to judgment as a matter of law.” RCFC 56(a).
A fact is “material” if it might significantly alter the outcome of the case under the
governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving
party bears the initial burden of showing that there exists no genuine dispute as to any
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment will
1
The Plaintiffs initially argued that a City of Chicago ordinance was dispositive of the railroad’s ownership interest
in block thirteen. See Pls.’ Mot. at 16. However, the Plaintiffs now agree that the Wilkins Deed is the appropriate
document to determine the interests of BNSF and the Martinez brothers in the relevant segment of the rail corridor.
See Pls.’ Resp. at 13.
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not be granted if the “evidence is such that a reasonable [trier of fact] could return a verdict
for the nonmoving party.” Anderson, 477 U.S. at 248. However, when “the record taken
as a whole could not lead a rational trier of fact to find for the nonmoving party, there is
no ‘genuine issue for trial.’” Scott v. Harris, 550 U.S. 372, 380 (2007) (quoting Matsushita
Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
The Fifth Amendment of the U.S. Constitution states that “private property [shall
not] be taken for public use, without just compensation.” U.S. Const. amend. V. In order
to successfully allege a Fifth Amendment taking upon the issuance of a NITU, plaintiffs
must prove that “state law reversionary interests are effectively eliminated in connection
with a conversion of a railroad right-of-way to trail use.” Caldwell, 391 F.3d at 1228 (citing
Preseault II, 100 F.3d at 1543). Following Preseault II, the Federal Circuit developed a
three-part liability test for whether a plaintiff is entitled to compensation in a rails-to-trails
case. First, plaintiffs must show that they have an ownership interest in the segments of
the rail corridor where the railroad company possesses an easement. Ellamae Phillips Co.
v. United States, 564 F.3d 1367, 1373 (Fed. Cir. 2009). If the railroad company owns the
pertinent portion of the rail corridor in fee simple, then the Government has no takings
liability. Preseault II, 100 F.3d at 1533. Second, if the railroad only possesses an easement,
Plaintiffs must show that trail use falls outside the scope of the easement. Ellamae Phillips
Co., 564 F.3d at 1373. Finally, even if trail use is within the scope of the easement,
plaintiffs may still prevail if the rail corridor was abandoned before the STB issued the
CITU or NITU. Id. Only the first two parts of the test are at issue in this case. Pls.’ Mot.
at 1 n.1 (“While Plaintiffs believe the land was abandoned, Plaintiffs have decided to argue
in this motion only that recreational trail use was beyond the scope of the railroad purpose
easements . . . .”).
Given the parties’ agreement that the Jones Deed and the Wilkins Deed are
dispositive of the property interests relevant in this case, determining the property interests
of the parties and the scope of any existing easements is purely a matter of deed
interpretation. See Def.’s Cross-Mot. at 13, 17; Pls.’ Mot. at 19; Pls.’ Resp. at 13.
Therefore, summary judgment is appropriate in this case. RCFC 56(a).
Analysis of Plaintiffs’ Deeds
In order to address the first part of the Ellamae Phillips Co. liability test, the Court
must decide whether the Jones Deed and the Wilkins Deed conveyed BNSF’s predecessor-
in-interest fee simple rights or easements. If BNSF owns the relevant segments of the rail
corridors in fee simple, then the Government cannot have committed a Fifth Amendment
taking of the Plaintiffs’ property by issuing the NITU and the Court need go no further.
Ellamae Phillips Co., 564 F.3d at 1373; Preseault II, 100 F.3d at 1533.
Illinois property law governs the interpretation of the two deeds in this case.
Preseault I, 494 U.S. at 8, 16. Under Illinois law, a deed is construed to give effect to the
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intention of the parties. Keen v. Cleveland, Cincinnati, Chicago & St. Louis Ry. Co., 64
N.E.2d 499, 502 (Ill. 1945); Penn Cent. Corp. v. Commonwealth Edison Co., 512 N.E.2d
118, 119 (Ill. App. Ct. 1987); Sowers v. Illinois Cent. Gulf R.R. Co., 503 N.E.2d 1082,
1084 (Ill. App. Ct. 1987). In order to ascertain the intent of the parties, courts should
consider the document as a whole and give effect to every word of the deed if possible.
Keen, 64 N.E.2d at 502; Tallman v. E. Illinois & Peoria R.R. Co., 41 N.E.2d 537, 539 (Ill.
1942); Sowers, 503 N.E.2d at 1084. Absent ambiguity, the intentions of the parties must
be discerned solely from the language of the deed. Urbaitis v. Commonwealth Edison, 575
N.E.2d 548, 552 (Ill. 1991). The parties agree that the relevant deeds are not ambiguous.
Def.’s Resp. at 2, 9; Pls.’ Resp. at 5-6, 15.
There is no per se rule that a deed containing the term “right-of-way” conveys only
an easement. Urbaitis, 575 N.E.2d at 553 (“[T]here 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.”). While courts should attempt to give effect to the entire document,
the granting clause is often the most informative clause of the deed. Tallman, 41 N.E.2d
at 537; Keen, 64 N.E.2d at 503; Urbaitis, 575 N.E.2d at 552; Sowers, 503 N.E.2d at 1086.
When the term “right-of-way” appears in the granting clause of a deed, Illinois courts have
consistently held that the deed conveyed an easement. Tallman, 41 N.E.2d at 537 (granting
clause “convey[ed] and warrant[ed] . . . as and for its right of way, a strip of land . . . .”);
Branch v. Cent. Trust Co., 151 N.E. 284, 285 (Ill. 1926) (granting clause “conveyed . . . a
railroad right of way . . . .”); Cleveland, Cincinnati & St. Louis Ry. Co. v. Cent. Illinois
Public Serv. Co., 43 N.E.2d 993, 995 (Ill. 1942) (holding that a granting clause stating “we
hereby grant, bargain, sell and release the right of way for said railroad” conveys an
easement). When the term “right-of-way” (or similar language) is not in the granting
clause, Illinois courts have held that the deed conveyed a fee simple interest in the land.
Keen, 64 N.E.2d at 503; Urbaitis, 575 N.E.2d at 552 (The deed did not convey an easement
because [t]he sole references to the term ‘right-of-way’ in the [] deed are found in the
conditions clause . . . .”); Sowers, 503 N.E.2d at 1086 (The term “right-of-way . . . in the
consideration clause cannot be construed to limit the estate conveyed.”); Penn Cent. Corp.,
512 N.E.2d at 120 (holding that the phrase “for the purpose of” did not limit the conveyance
to an easement); see also Barlow v. United States, 123 Fed. Cl. 186, 197 (2015). Thus, in
determining whether a deed containing the phrase “right-of-way” conveys a fee simple or
an easement, the key question is whether “right-of-way” refers to the interest being
conveyed, usually in the granting clause, or merely describes the interest being conveyed.
Keen, 64 N.E.2d at 503; McVey v. Unknown Shareholders of Inland Coal & Washing Co.,
427 N.E.2d 215, 217 (Ill. Ct. App. 1981) (The determinative question is “whether the
granting clause conveys a designated strip or piece of land, or whether it refers to a right
or privilege with respect to the described premises.”).
In addition to these common law rules of deed construction, the Illinois legislature
enacted the Conveyance Act in 1845 which created the rebuttable presumption that deeds
containing the word “convey” transfers property in fee simple. 765 Ill. Comp. Stat. 5/13
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(1872). Under the Conveyance Act, “[e]very estate in lands which shall be granted,
conveyed, or devised . . . shall be deemed a fee simple of inheritance, if a less estate be not
limited by express words, or do not appear to have been granted, conveyed or devised by
construction or operation of law.” Id. (emphasis added). The presumption may be
overcome if the intent to convey a lesser estate is made clear by express words. Id.; Keen,
64 N.E.2d at 502-03; Sowers, N.E.2d at 1085.
A. Chicago Coating does not have a Cognizable Property Interest in the Rail
Corridor Adjacent to its Property because the Jones Deed Conveyed the Rail
Corridor in Fee Simple.
The pertinent language in the Jones Deed is as follows:
The Grantors . . . convey and quit claim . . . all interest in the
following described Real Estate to wit: The right of way for
railroad purposes over and across a strip of land . . . . [T]his
grant is upon the Express condition nevertheless that the paid
party . . . shall cause such premises to be used by [a] Railroad
Company . . . .
Pls.’ Mot., Ex. I; Def.’s Cross-Mot., Ex. 4. The Jones Deed is a statutory quitclaim deed
because it purports to “convey and quit claim” some interest. 765 Ill. Comp. Stat. 5/10.
Thus, there is a presumption that the Jones Deed conveys a fee simple that can be rebutted
by express words indicating an intent to convey an easement. 765 Ill. Comp. Stat. 5/13;
Keen, 64 N.E.2d at 502.
1. The Jones Deed’s Granting Clause Supports the Rebuttable Presumption
that the Deed Conveyed a Fee Simple.
While the parties agree that the granting clause contains only that language which
indicates what interest is being conveyed, they disagree about what the Jones Deed purports
to convey. Pls.’ Mot. at 19; Def.’s Cross-Mot. at 18. The Plaintiffs argue that the Jones
Deed granting clause consists of “convey and quit claim . . . the following described Real
Estate to wit: The right of way . . . .” Pls.’ Mot. Ex. I (emphasis added); see Pls.’ Mot. at
19; Pls.’ Resp. at 2. Under this reading, the object of the conveyance is “the right of way.”
Thus, Plaintiffs argue that under Illinois law a deed which conveys a “right of way” in the
granting clause is limited to an easement. Tallman, 41 N.E.2d at 537; Branch, 151 N.E. at
285; Cleveland, Cincinnati & St. Louis Ry. Co., 43 N.E.2d at 995.
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The Plaintiffs’ reading of the Jones Deed is flawed in that it omits the term “all
interest” from the granting clause.2 See Pls.’ Mot, Ex. I. A proper reading of the granting
clause shows that “all interest” is the object of the conveyance. Under this reading, the
Jones Deed intended to convey “all interest” they currently had in particular Real Estate
described as “[t]he right of way.” Id. “[R]ight of way” merely describes the Real Estate
for which all interest is being conveyed. See McVey, 427 N.E.2d at 217 (The determinative
question when construing a deed is “whether the granting clause conveys a designated strip
or piece of land, or whether it refers to a right or privilege with respect to the described
premises.”). Moreover, according to 765 Ill. Comp. Stat. 5/13, a conveyance is deemed to
be in fee simple unless a “less estate be . . . limited by express words . . . .” The term “all
interest” certainly does not amount to “express words” indicating a lesser estate than a fee
simple.
Plaintiffs contend that conveying all interest in “the following described Real
Estate” allows this Court to limit the Jones Deed to an easement because “real estate” is a
general term that can be used to describe an easement. Pls.’ Mot., Ex. I (emphasis added);
Pls.’ Resp. at 4 (citing Bowman v. People, for Use of Hoxey, 82 Ill. 246, 248 (1876)
(explaining that “all legal and equitable rights and interests is within the definition of real
estate”)). They rely heavily on Magnolia Petroleum Co. v. West in which the Illinois
Supreme Court held that a deed which “convey[ed] and warrant[ed]” to the grantee “the
following described real estate, to wit: [description of land] to be used for road purposes”
conveyed an easement. 30 N.E.2d 24, 25 (Ill. 1940). However, the deed in Magnolia did
not include the phrase “all interest” which made “real estate” the object of the conveyance
and not merely a further description of the object being conveyed. Id. The Court held that
the granting clause “specifies no estate” being conveyed and “to be used for road purposes”
could therefore be “construed as declaratory of the intention.” Id. at 26. Therefore,
Magnolia is distinguishable from the facts present in this case.
When a document conveys “all interest”, Illinois courts have held that it conveys as
much as possible. See e.g., Thornton v. Louch, 130 N.E. 467, 469 (Ill 1921) (interpreting
a conveyance of “all right, title and interest” in “described real estate” as conveying every
interest possessed by the grantor); Glos v. Furman, 45 N.E. 1019, 1021 (Ill. 1897) (stating
that “[g]iving the words used their common and obvious meaning”, conveying all interest
in real estate amounts to conveying the real estate described without limits); In re Blair,
330 B.R. 206, 211 (Bankr. N.D. Ill. 2005) (holding that a statutory quitclaim deed
conveying “‘all interest” conveyed “all the then existing or equitable rights of the grantor’
in the property described”).
Thus, a plain reading of the granting clause strengthens the presumption that the
Jones Deed conveyed a fee simple. See 765 Ill. Comp. Stat. 5/10, 5/13.
2
In fact, in their motion for partial summary judgment, the Plaintiffs represented the “relevant” language in the Jones
Deed to be ‘“convey and quit claim . . . the following described Real Estate to wit: The right of way . . . .”’ completely
omitting “all interest” from the original deed language. See Pls.’ Mot. at 19.
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2. Other Language in the Jones Deed Supports the Rebuttable Presumption
that the Deed Conveyed a Fee Simple Interest.
While the granting clause is perhaps the most relevant part of a deed in determining
the type of conveyance, the Court must consider the document as a whole and examine
whether any language outside of the granting clause demonstrates the intent to convey only
an easement. Tallman, 41 N.E.2d at 539; Keen, 64 N.E.2d at 502; Sowers, 503 N.E.2d at
1084.
First, the Plaintiffs argue that the inclusion of “for railroad purposes” and “over and
across” demonstrates an intent to convey an easement. Magnolia Petroleum Co., 30 N.E.2d
at 26 (holding that “to be used for road purposes” indicated an intent to convey an
easement); Diaz v. Home Fed. Savings & Loan Ass’n, 786 N.E.2d 1033, 1042 (Ill. App.
Ct. 2002) (“An interest that passes ‘over and through’ necessarily passes over and through
something.”). While this language could indicate an intent to convey an easement, it is by
no means dispositive. When “for railroad purposes” or “over and across” are used in the
description of the property, the estate conveyed is not limited to an easement but merely
explains the motivation to execute the deed. See Barlow, 123 Fed. Cl. at 197; Keen, 64
N.E.2d at 503 (stating that the phrase “for the purpose of facilitating the construction” of a
railroad was “merely the expression of the considerations which prompted the grantor to
execute the deed . . . .”); Penn Cent. Corp., 512 N.E.2d at 120 (stating that language
specifying the purpose of a conveyance and describing the conveyance as “over and
through” a tract of land was “merely expressive of the purpose which motivated the grantor
to make the conveyance”); Sowers, 503 N.E.2d at 1086 (stating that “when reference is
made to the purpose of the grant . . . this [does] not limit the estate conveyed to be a mere
easement”).
The language in the Jones Deed is illustratively similar to deeds analyzed in Barlow
by this Court. In Barlow, the deeds stated that the grantor did “convey and quitclaim . . .
for railroad purposes . . . all interests in the following described real estate, to wit: a strip
of land . . . .” 123 Fed. Cl. at 191. In both cases, the deeds conveyed all interest in a
description of real estate. Applying Keen, Sowers, and Penn Cent. Corp., Judge Lydia Kay
Griggsby held that “the words ‘for railroad purposes’ [were] intended to explain the reason
for conveying [the real estate]” and did not limit the conveyance to an easement. Id. at
199. This Court agrees with the reasoning in Barlow and its applicability to this case.
While the Barlow deeds describe the real estate being conveyed as a “strip of land” and the
Jones Deed describes the real estate as “[t]he right of way,” this difference alone is not
reason to diverge from the holding in Barlow.
Second, the Plaintiffs point to language in the Jones Deed that retains the right to
repossess the land if it ceased to be used as a railroad. See Pls.’ Mot., Ex. I (“[T]his grant
is upon the Express condition nevertheless that the paid party . . . shall cause such premises
to be used by [a] Railroad Company . . . .”). Interpreting this language as an automatic
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reversion, the Plaintiffs cite to Illinois case law stating that a deed which includes an
automatic reversion indicates the intent to convey an easement. Dep’t of Pub. Works &
Buildings for & in behalf of People v. Schmauss, 285 N.E.2d 628, 629 (Ill. App. Ct. 1972)
(holding that a deed conveyed an easement when it recited “the said land hereby granted
shall revert to the said party [if] . . . .”). However, the express condition in the Jones Deed
further states that the grantor (or their heirs or assignees) “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.” Pls.’ Mot., Ex. I (emphasis added). Importantly, the
deed in Schmauss did not state that the grantor would have the right to reenter and “own”
the conveyed property.
A plain reading of the express condition as a whole demonstrates that the reversion
is not automatic but requires the grantors to reenter the premises and reassert their right of
ownership (suggesting that the grantors had originally conveyed an ownership right).
Under Illinois law, the express condition is more compatible with a conveyance of a fee
simple interest subject to a condition subsequent. Powell v. Powell, 167 N.E. 802, 803-04
(Ill. 1929) (deed language retaining a right of reentry manifests the “intention to create a
condition subsequent”); Mahrenholz v. County Board of School Trustees of Lawrence
County, 417 N.E.2d 138, 140-42 (Ill. App. Ct. 1981). The railroad breached the express
condition over 100 years ago and there is no record of the grantors or their heirs attempting
to reenter the conveyance. See Def.’s Cross-Mot., Exs. 21-23. The statute of limitations
applicable to the right of reentry has long passed, which means that BNSF now owns the
segment of the rail corridor in fee simple that is no longer subject to any conditions. 765
Ill. Comp. Stat. 5/13-102, 330/5.
Finally, the Jones Deed contains a clause which states that the grantors “expressly
waive and release any and all rights under and by virtue of . . . the Exemptions of
homesteads,” referring to a statute preventing a spouse from conveying land without
express consent from the other spouse. Pls.’ Mot., Ex. I; see Homestead Act 1857, Laws
1857, p. 119; Warner v. Crosby, 89 Ill. 320, 323 (1878). The homestead exemption
protected a spouse, at the time a wife, from being alienated from her land without her
knowledge and consent. Id. at 324. The homestead exemption applies most readily to
conveyances of fees, not easements, because easements do not result in the total alienation
from one’s land. Boyd v. Cudderback, 31 Ill. 113, 118 (1863).
While particular clauses in isolation may seem consistent with the conveyance of
an easement, the document as a whole demonstrates the intention to convey a fee simple
interest. At a minimum, the Plaintiffs have not overcome the statutory presumption that the
Jones Deed conveyed a fee simple according to 765 Ill. Comp. Stat. 5/13. Thus, Chicago
Coating does not have a cognizable property interest in the rail corridor upon which to base
a Fifth Amendment takings claim.
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B. The Martinez Brothers do not have a Cognizable Property interest in the Rail
Corridor Adjacent to their Property because the Wilkins Deed Conveyed the Rail
Corridor in Fee Simple.
The pertinent language in the Wilkins Deed is as follows:
[T]he said first party . . . hath granted, sold and conveyed [and]
warranted to [Chicago & Southern Railroad Company] its
successors and assigns that certain strip or parcel of land . . .
described as follows – to wit: a strip of land . . . . [T]his
conveyance is made upon the condition that said railroad
company will locate a permanent railroad station . . . and will
transport passengers [daily]. . . . [If this condition is not met]
this conveyance shall become null and void, and the [railroad
company] and its successor and assigns hereby agree
thereupon to reconvey by a good and sufficient warranty deed
to [the Wilkins] their heirs and assigns the premises above
described.
Def.’s Cross-Mot., Ex. 3 (emphasis added). The Wilkins Deed is a statutory warranty deed
because it purports to “convey[] and warrant[]” a parcel of land. 765 Ill. Comp. Stat. 5/9.
Thus, like the Jones Deed, there is a presumption that the Wilkins Deed conveyed a fee
simple interest that can be rebutted by express words indicating an intent to convey an
easement. 765 Ill. Comp. Stat. 5/13; Keen, 64 N.E.2d at 502.
Based on the Illinois case law discussed in detail above, the Wilkins Deed conveyed
a fee simple interest subject to a condition subsequent. Unlike the Jones Deed, the Wilkins
Deed explicitly refers to a “strip of land” in both the granting clause and the description of
the interest being conveyed. See Def.’s Cross-Mot., Ex. 3; Penn Cent. Corp., 512 N.E.2d
at 119-20 (“[T]he phrase ‘strip of land’ is clear and unambiguous in purporting to convey
the land itself in fee simple.”). In addition, there is no reference to a right of way in or
near the granting clause. Therefore, if the Jones Deed conveyed a fee simple under Illinois
law, the Wilkins Deed clearly did as well.
The condition that the railroad continue to maintain a railroad station and carry
passengers through the rail corridor, and the corresponding penalty for noncompliance,
further demonstrate the intent to convey a fee simple interest. As stated above, when a
deed contains a penalty for violating an express condition that requires some action to be
taken by the parties, that deed most likely conveys a fee simple subject to a condition
subsequent. Powell, 167 N.E. at 803-04; Mahrenholz, 417 N.E.2d at 142 (The conveyance
of a fee simple subject to a condition subsequent is designed to “compel compliance with
[the] condition by penalty of a forfeiture.”). In this case, the Wilkins Deed mandates that
the railroad company “reconvey by a good and sufficient warranty deed” the strip of land
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back to the Wilkins, or their heirs or assignees. Thus, the Wilkins’ reversionary interest is
not automatic. Moreover, the requirement that the land be given back to the Wilkins using
another warranty deed confirms that the Wilkins initially conveyed the land in fee simple
using a warranty deed. Chicago & Southern Railroad Company violated the express
condition when it never built a railroad station on the land. Def.’s Cross-Mot., Exs. 16-18.
However, the Wilkins and their heirs never acted upon the penalty clause within the seven-
year statute of limitations period. 735 Ill. Comp. Stat. 5/13-102. Therefore, BNSF
currently owns the segment of the rail corridor in fee simple without any conditions.
The Plaintiffs again argue that the use of “for the purpose of the railroad” indicates
the intent to only convey an easement. For the reasons described above, the Court is
unconvinced that the inclusion of this phrase overcomes the statutory presumption that the
Wilkins Deed conveyed a fee simple interest, the express words of the granting clause, and
the absence of “right of way” anywhere in the document. Read in the context of the Wilkins
Deed as a whole, “for the purpose of the railroad” more likely indicated a motivation for
conveying the land to Chicago & Southern Railroad Company, not a limitation on that
conveyance. Barlow, 123 Fed. Cl. at 199; Keen, 64 N.E.2d at 503; Penn Cent. Corp., 512
N.E.2d at 120; Sowers, 503 N.E.2d at 1086.
Conclusion
For the above reasons, the Court finds that neither Chicago Coating nor the Martinez
brothers have a property interest in the relevant segments of the rail corridor in dispute.
Since the Plaintiffs failed to satisfy the first step of the three-part liability test laid out in
Ellamae Phillips Co., the Government cannot be found liable for a Fifth Amendment taking
under the Trails Act. Thus, the Court GRANTS the Government’s cross-motion for
summary judgment and DENIES the Plaintiffs’ motion for partial summary judgment. The
clerk is directed to enter judgment accordingly. No costs.
IT IS SO ORDERED.
s/Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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