McKinley v. Waterloo R. Co.

• Decision Date: 22 May 1985
• Docket Number: No. 84-536,84-536
• Citation: 368 N.W.2d 131
• Parties: Donald E. McKINLEY, Ollie M. McKinley, Edward D. McKinley, and Glenda M. McKinley, Appellants, v. WATERLOO RAILROAD COMPANY, a Wholly-Owned Subsidiary of Illinois Central Gulf Railroad Company, Iowa Natural Heritage Foundation, Iowa Rails To Trails, Inc., Linn County Conservation Board, and Old Interurban Trail, Inc., Appellees.
• Court: Iowa Supreme Court

Page 131

368 N.W.2d 131

Donald E. McKINLEY, Ollie M. McKinley, Edward D. McKinley, and Glenda M. McKinley, Appellants, v. WATERLOO RAILROAD COMPANY, a Wholly-Owned Subsidiary of Illinois Central Gulf Railroad Company, Iowa Natural Heritage Foundation, Iowa Rails To Trails, Inc., Linn County Conservation Board, and Old Interurban Trail, Inc., Appellees.

No. 84-536.

Supreme Court of Iowa.

May 22, 1985.

Edward J. Gallagher, Jr., and Robert C. Griffin of Gallagher, Langlas & Gallagher, P.C., Waterloo, for appellants.

David A. Elderkin of Elderkin, Pirnie, Von Lackum & Elderkin, Cedar Rapids, for appellee conservation board.

Richard C. Garberson of Shuttleworth & Ingersoll, Cedar Rapids, for appellees Waterloo Railroad, Heritage Foundation, Rails to Trails, and Old Interurban Trail.

Considered en banc.

UHLENHOPP, Justice.

The issues in this appeal are primarily two-fold: whether land condemned for use as a railway returns to the adjacent farm when the railway ceases to be operated for a given period, and whether land conveyed to a railway by deed with a "reverter" clause returns to the adjacent farm when it ceases to be used for railway purposes.

The Waterloo, Cedar Falls & Northern Railway Company (WCF & N) obtained a one-hundred foot strip of land from Hiawatha to Evansdale, Iowa, by a variety of methods involving condemnations and conveyances. On March 25, 1913, WCF & N acquired a strip through Frank and Kitty Burrell's farm by condemnation. This tract ran diagonally across the southwestern corner of the Burrell farm.

On July 25, 1913, by warranty deed, Henry and Ida Kelty conveyed a strip of land to WCF & N across their farm adjoining the Burrell farm.

The railroad operated for a number of years serving the area. In time, WCF & N sold its assets to the Waterloo Railroad Company, a wholly-owned subsidiary of the Illinois Central Gulf Railroad Company.

In recent years railroads have faced losses and have sought to cut back unprofitable lines. These circumstances led the railroad to seek to abandon its line in question. On March 2, 1976, the railroad filed an application for abandonment with the Interstate Commerce Commission (ICC). On October 13, 1976, an ICC order issued with the finding "that the present and future public convenience and necessity permit abandonment by the Waterloo Railroad Company." An ICC certificate and order of February 7, 1977, authorized abandonment. In addition to permission to abandon, ICC's order stated in pertinent part

that any responsible state agency and/or local government or other interested responsible organizations be given the opportunity, for a period of 120 days from the date of this Certificate and Order to negotiate the purchase of all or any portion of the rail properties of the line to be abandoned for public use at a purchase price on such terms as the parties may agree as just and reasonable....

The 120-day period passed without a sale, and the time period was allegedly extended through June 12, 1978. No sale was consummated by that date. The railroad subsequently took up its ties, track, and other salvagable material. The strip ceased to be used as a railway and to all intents and purposes was abandoned as such by at least the year 1979 and certainly not later than December 31 of that year.

Defendant Iowa Rails to Trails is a corporation formed to take over abandoned rail roadbeds and to convert the scenic ones into hiking and biking paths. It had been in contact with the Waterloo Railroad Company during this period, seeking to purchase the right of way. On December 30, 1981, defendant Old Interurban Trail ultimately purchased the right of way from the railroad for $525,000 in three counties including the present one. It then conveyed the right of way to defendant Linn County Conservation Board, which at the present time claims the strip involved in this litigation.

Plaintiffs Donald E. and Ollie M. McKinley presently hold title to the farmland on both sides of the rail line in question, and claim title to the strip as a result of the foregoing circumstances. Plaintiffs Edward D. and Glenda M. McKinley are purchasing one of the two parcels from Donald and Ollie, formerly the Burrell farm. Donald and Ollie reside on the former Kelty farm.

On October 5, 1981, the McKinleys commenced the instant action to quiet title to the strip. After trial, the trial court quieted title in defendants. Plaintiffs appealed.

I. Condemned land. We will first consider the Burrell condemned strip.

A. Case law is clear that condemnation of land for railroad right of way creates an easement, and once the easement is abandoned the land reverts to the then owner of the servient estate, subject to statutory provisions. Chadek v. Alberhasky, 253 Iowa 32, 111 N.W.2d 297 (1961); Vandewater v. Chicago, R.I. & P. Ry., 170 Iowa 687, 153 N.W. 190 (1915); Hastings v. B. & M. R.R., 38 Iowa 316 (1874). Since the adoption of the Iowa Code of 1873, an Iowa statute has provided in one form or another as follows:

If a railway, or any part thereof, shall not be used or operated for a period of eight years, or if, its construction having been commenced, work on the same has ceased and has not been in good faith resumed for eight years, the right of way, including the roadbed, shall revert to the persons who, at the time of the reversion, are owners of the tract from which such right of way was taken.

Iowa Code § 473.2 (1975). This statute governs railroad rights of way acquired by condemnation, since they constitute easements for right of way. When the condemned strip has not been used or operated as a railway for eight years, it reverts to the then owners of the land out of which it was taken. Turner v. Unknown Claimants, 207 N.W.2d 544, 545 (Iowa 1973); see also SMB Investments v. Iowa-Illinois Gas & Electric Co., 329 N.W.2d 635, 637 (Iowa 1983).

B. Defendants contend that a federal act, the Railroad Revitalization and Regulatory Reform Act of 1976 (the 4-R Act), preempts Iowa section 473.2. Section 10906 of the 4-R Act requires ICC to make a dual determination. It must determine whether abandonment is proper and, if so, whether the railroad's property is suitable for other public use. If the property is so usable, ICC may order the property to be "sold, leased, exchanged, or otherwise disposed of" on conditions directed by ICC, including a prohibition on other disposal by the railroad "for a period of not more than 180 days...."

Defendants contend that by virtue of section 10906 ICC can determine the railroad right of way may be sold to a public agency and can thus preserve the easement free of section 473.2. This contention involves interpretation of section 10906 and also constitutional implications.

As to interpretation, section 10906 unquestionably permits a sale of the strip by the railroad. Such easements are commercial in nature and are thus alienable. 5 Restatement, Property § 491, Comment b (1936). While this is true, the interest of the railroad was acquired when the predecessor to section 473.2 of the Iowa Code was in effect, and is measured by that statute. At all times the railroad's interest has been subject to "reversion" upon nonuse for railroad purposes for a specified period of time. We are unable to find anything in section 10906 of the 4-R Act which purports to transform that interest of the railroad into a greater interest or to permit the railroad, by alienation, to elevate that interest to an easement free of the Iowa abandonment statute. We think section 10906 simply means that ICC can prohibit the railroad for 180 days from disposing for private uses whatever interest the railroad has in the right of way under the property law of the state where the land lies. The United States Supreme Court stated in Hayfield N.R.R. v. Chicago & N.W. Transportation Co., 467 U.S. ----, 104 S.Ct. 2610, 81 L.Ed.2d 527 (1984), "[N]othing in the [4-R Act] expressly refers to federal preemption with respect to the disposition of abandoned rail property." Id. 467 U.S. at ----, 104 S.Ct. at 2617, 81 L.Ed.2d at 536. We hold that the 4-R Act does not preempt Iowa title law.

As to constitutional implications, when the right of way was condemned across the Burrell farm the interest the railroad obtained was subject to reversion under the predecessor to section 473.2, and the Burrells received compensation on that basis. The owners of the farm have never been compensated for an easement for purposes other than railroad uses, subject to reversion on nonuse for railroad purposes. While we do not decide the constitutional problem that defendants' contention raises because of our conclusion on interpretation, we note that a real question exists. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984); Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358 (1980). We hold specifically that section 10906 does not preempt section 473.2 of the Iowa Code.

C. Defendants also contend that the easement was not abandoned; it merely changed from an easement for railroad purposes, a form of public transportation, to other forms of public transportation such as hiking and biking. They rely on State v. Washington Wildlife Preservation, Inc. v. State, 329 N.W.2d 543 (Minn.1983), cert. denied, --- U.S. ----, 103 S.Ct. 3540, 77 L.Ed.2d 1390 (1983). The court was there concerned with fourteen deeds executed in 1884 and 1885. The court sought to determine the nature of the interest conveyed, and concluded that if an easement was conveyed it was not merely for railroad purposes. The court stated:

Use of the right-of-way as a recreational trail is consistent with the purpose for which the easement was originally acquired, public travel, and it imposes no additional burden on the servient estates.

Id. at 545.

Additionally, the court held that the easement was not abandoned since merely a change of transportation mode was involved:

It has...