Case of the Day – Tuesday, October 13, 2015
DRAINING MY HALF OF THE LAKE
The word is that one of President-Elect Trump’s early executive targets will be the controversial “clean water rules” promulgated by the Environmental Protection Agency, and hotly litigated ever since. Reversing the rule – like many that a President Trump will tackle – is doable, but will require some finesse.
The Sixth Circuit United States Court of Appeals has already enjoined the U.S. Environmental Protection Agency from enforcing new “clean water rules” by redefining what constituted “waters of the United States” to essentially include every body of water larger than a Dasani bottle. The Court held, among other things, that the likelihood that the rules were unconstitutional is pretty substantial. The Court of Appeals drily noted that the EPA rules were “facially suspect,” the judicial equivalent of holding one’s nose.
The Court of Appeals decision freezing imposition of the rules has prevented enforcement of the rules, which were expected to reach the Supreme Court. A reversal in course by the new Administration may spare the high court from deciding it, which is good because the court has been short a justice since Nino Scalia died, and thus reluctant to tackle the real tough ones.
The decision got us musing about “waters of the United States,” and the expression’s older cousin, “navigable waters.” That brought to mind Orr v. Mortvedt.
In Orr, our latest installment of neighbors behaving badly, we find a gaggle of adjacent homeowners living around a flooded quarry in Iowa. The owner of the quarry sold off the land in pieces to several buyers; apparently, he may have oversold it a bit.
The Mortvedts made a deal in which they bought land and some real estate under the lake all the way to the west shore. That’s what the sales agreement said. Problem is, the deed delivered to the Mortvedts at closing didn’t exactly agree, and no one read the fine print.
Later, they got into it with the neighbors, who actually did own some of the land the Mortvedts thought they had bought. The neighbors were frosted because the Mortvedts were boating and fishing on parts of the lake over their land. Eventually, this being the land of the free and all, everyone sued everyone else.
The case went all the way to the Supreme Court of Iowa, which held that the Mortvedts couldn’t get their deed reformed to match the sales agreement, because the law didn’t let that happen where an innocent third party was involved. The Orrs — who were the neighbors who would be affected by such a reformed deed — weren’t a party to the original deal. If the Mortvedts got their deed changed to reflect that they owned more property, the Orrs’ deed would necessarily have to be changed to show that they owned less. They weren’t a party to the original deal between the Mortvedts and the sellers, and therefore, it would be unfair to take their land to satisfy the Mortvedts.
As for the widespread boating on the lake, the Supreme Court of Iowa was forced to make a decision of first impression in the state, and adopt the common law rule that for non-navigable water (such as this lake), an owner was restricted to boating and fishing only on the part of the lake which lay over bottom that party owned. This was pretty much an unsatisfactory result — the case discusses at length all of the good reasons for adopting the Scottish rule to the contrary — but as the old legal aphorism goes, “hard cases make bad law.”
Orr v. Mortvedt, 735 N.W.2d 610 (Supreme Court of Iowa 2007). The Twedt family owned a rock quarry and land surrounding it in Hamilton County. There came a time when the mining of the quarry was discontinued, and the excavated area ¬– consisting of about thirty acres – became a lake. The Twedt family sold the land in a series of transactions over a period of years. Each of the transactions resulted in the conveyance of a portion of the lake bed and land surrounding it. Jeffrey and Susan Mortvedt purchased a tract west and north of the lake, including the northern tip of the lake bed, in 1996. Two years later, Stephen and Shirlee Orr bought a parcel situated primarily on the east side of the lake and including that part of the lake bed located between the parts previously purchased by another party, the Sevdes, and the Mortvedts. The Orrs soon conveyed a piece of the property they had acquired, including a part of the lake bed, to Ronald Cameron.
The Mortvedts argued their property extended to the water’s edge on the west side of the lake., but the Orrs claimed a survey filed at the time of the Mortvedts’ purchase establishes that the Orrs own a narrow strip of land on the west side of the lake. The boundary dispute escalated when the Orrs cut down trees and planted other vegetation on the disputed narrow strip of land, as well as from the parties’ inability to agree about their respective rights to use the lake. The Sevdes and the Orrs objected when the Mortvedts used parts of the lake beyond the boundaries of the lake bed owned by the Mortvedts for fishing and boating. The Orrs, the Sevdes, and Cameron sued, seeking a resolution of the boundary dispute and other relief, and the Mortvedts counterclaimed, asking that the plaintiffs be required to restore the lake water level to that which prevailed when the Mortvedts purchased their property in 1996, and that the plaintiffs be held not to have a right to install or maintain a fence in the lake. The Mortvedts also sought reformation of their deed to conform it to the understanding of the parties to the 1996 conveyance that their east property line extends to the lake water’s west edge.
The trial court held the parties were entitled to the exclusive possession, use and enjoyment of the water covering the real estate described in their respective deeds. It also held that each of the parties owned any minerals located on the real estate described in its respective deed, that the Mortvedts were prohibited, absent express written permission, from entering upon or using the water overlaying the properties owned by the Sevdes, the Orrs, and Cameron — who were legally entitled to construct a fence, berm or other structure to mark the boundaries of their properties — and the Sevdes, the Orrs, and Cameron were entitled to drain the water covering, mine minerals from, and restore wetlands upon their properties. The court denied the Mortvedts’ counterclaim. The Mortvedts appealed.
Held: The Mortvedts were not entitled to obtain reformation of the deed, because the remedy of reformation was unavailable under the circumstances of the case.
The Iowa Supreme Court ruled that it only would order reformation of a deed against a party to the deed, a person in privity with such a party, or a person with notice of the relevant facts. Reformation will not be ordered to the prejudice of innocent third persons.
The Orrs were innocent third parties as to the transaction between the Twedt estate and the Mortvedts, and had no knowledge that the Mortvedt transaction was anything other than was recorded in the deed. The Court found that a reasonably prudent person would interpret the survey filed with deed, prepared by a professional surveyor, as an illustration of the boundary legally described in the Mortvedts’ deed and as confirmation that the Mortvedts had not acquired from their grantor the narrow strip of land on the west side of the lake that is the subject of this dispute. Nothing stated or illustrated in the Mortvedts’ recorded deed and survey would cause a prudent subsequent purchaser to further inquire into the deeding parties’ intentions and to consequently discover any discrepancy between those intentions and the legal description in the deed. The holding, of course, meant that Mortvedts had no claim for damages for the Orr’s removal of trees from the narrow strip of land on the west side of the lake.
The Court also held that while the public generally has a right of access to navigable watercourses, the term “navigable watercourses” refers to watercourses “susceptible of use for purposes of commerce” or “possess [ing] a capacity for valuable floatage in the transportation to market of the products of the country through which it runs.”
The Court said that the landlocked body of water in this case had never served as a highway of commerce, and the non-navigable status of the lake dictated that the bed of the lake is owned by the state or by private parties. The non-navigable lake in this case was privately owned by the parties because each of their deeds includes part of the lake bed. And in an issue never decided in Iowa before, the Supreme Court held that the common law rule adopted by most states — that on non-navigable waters, users are limited to the areas of the watercourse which lay on lands they owned, rather than having a right to use the whole watercourse if they owned land underlying any of it.
Ironically, there is little doubt that under the EPA’s rules, the 30-acre quarry sitting in the middle of the Great Plains is among the “waters of the United States.”