HEFTY V. PENN CENTRAL

On June 2, 1997, after nearly 5 years of litigation, the Indiana Supreme Court handed down a decision on a Park County case that began the rails-to-trails dispute in Indiana.

In 1992, Warren Buchanan brought suit against the Penn Central Railroad. He alleged that he was entitled to clear title to former railroad right-of-way that stretched across his property but which had been abandoned. He sued Penn Central and U.S. Railroad Vest Corporation (USRV), for having wrongfully interfered with his property.

At about the same time, other claimants in other parts of the state were bringing similar cases. In an agreement that benefited both the plaintiffs and the defendants in the Park County case, but adversely affected all other owners of former Penn Central right-of-way, the Park County case was converted to a class action and settled. The settlement provided that every other affected landowner in Indiana would have to pay USRV to get clear title to his property. If U.S. Rail Vest was not paid, it would own the property outright. For everyone who paid USRV, Mr. Buchanan would get a portion of the payment. The details were complex, and there were thousands of properties at stake.

Farm Bureau immediately tried to warn as many of the landowners as it could reach and encourage them to opt out of the settlement. (They were automatically bound if they did nothing.) In the course of contacting the landowners, we met Nels Ackarson, the attorney for some of the landowners, who had brought similar suits in Hamilton County.

Mr. Ackarson and Mr. Henry Price, on behalf of their clients, appealed the case to the Indiana Supreme Court. Indiana Farm Bureau joined as amicus. That is, we filed briefs and other legal documents supporting the position of the landowners.

The Indiana Supreme Court, in a unanimous decision, has now overturned the Park County settlement.

The Supreme Court reaffirmed its commitment to the standards set forth in Brown Vs Penn Central, a 1987 case. The question of ownership to real property centers on whether the railroad originally acquired fee simple title (absolute ownership of the parcel of land) or an easement (also known as a right-of-way).

If there is no ambiguity in the deed, the intention of the parties must be determined from the language of the deed alone. But when a railroad prepares the deed, it is responsible for the printed words and so the form is construed in the light most favorable to the grantors. A deed that conveys a "right" generally conveys only an easement. The general rule is that a conveyance to a railroad of a strip, piece, or parcel of land, without additional language as to the use or purpose to which the land is to be put or in other ways limiting the estate conveyed, is to be construed as passing an estate in fee, but reference to a right-of-way in such a conveyance generally leads to its construction as conveying only an easement.

The Court repeated language from a number of earlier cases generally giving the benefit of the doubt to the owner of the original tract. The Court emphasized that it is the public policy in this State to favor the finding of easements as opposed to conveyances in fee simple.

The Supreme Court concluded that the original settlement should be reversed and remanded to the trial court for redetermination of the rights of all owners effected, and not just those who objected.

CONSOLIDATED RAIL V. LEWELLEN

Lawellen brought a class action lawsuit to quiet title in segments of land of an abandoned railway corridor and to recover for slander of title, criminal conversion, and criminal trespass. Their properties were adjacent to the abandoned right-of-way which was abandoned by 1985 but then sold to a rail-trail group in 1994.

The issue was whether old deeds to the railroads conveyed title to the property or only an easement which could be abandoned. The Court held that any use of the term "right-of-way" conveyed only an easement.

The Court also addressed the subject of abandonment. "Although an easement acquired by actual grant was not extinguished by mere nonuse, nonuse plus an act indicating an intent to abandon may have had the effect of extinguishing the easement." Here, the Court said that the tracts were legally abandoned where the Railroad had been granted a certificate of abandonment by the ICC and had removed the tracks even though the Railroad continued to pay the real estate taxes until 1994 and left the bridges, trestles, culverts, and drainage tiles in place.

CALUMET NATIONAL BANK V. AT&T

Conrail abandoned a rail line between Winamac and Crown Point in 1982. In 1984 Conrail licensed AT&T to install and operate a fiber optic cable along the right-of-way. When Calumet Bank became the trustee of a part of the property, it sued Conrail and AT&T for the benefits of the cable license.

The properties at issue in this case were adjacent to the railroad right-of-way. The Court held that the abandonment conveyed title to the middle of the right-of-way to the abutting owner.

It is reasonable to predict that a new settlement will be much more favorable to Indiana farmers and landowners and that the likelihood of another such unreasonable result is now remote.