Case of the Day – Wednesday, November 29, 2023

WHEN IS FEE SIMPLE NOT SIMPLE?

Nothing light today, boys and girls. We have work ahead of us. Sure, Thanksgiving is a memory (except for all of the leftovers stacked in the refrigerator), but there Christmas season is here, Black Friday and Cyber Monday have come and gone, and as that great educator M.C. Hammer once said, “Yo, sound the bell, school is in, sucker …“

So listen up. When land is conveyed from one party to another without any limitations whatsoever, the conveyance is done in “fee simple absolute,” or just “fee simple” for short. The conveyance usually says that the land is conveyed “unto the said party of the second part and its successors and assigns forever,” or words to that effect.

At the time the railroad came through a part of Idaho (think “Famous Potatoes”) in the late 19th century, a lot of landowners thought they were conveying their land to the railroad in fee simple. But their deeds had not just the magic “fee simple” language, but also a “habendum clause.” A “habendum clause” is a clause in a deed that defines the extent of the interest being granted and any conditions affecting the grant.

In the case of the Idaho deeds, the conveyance language transferred title to the railroad “to have and to hold all and singular the tenements, hereditaments and appurtenances as a perpetual right of Way for said second party’s Rail Way Line unto the said party of the second part and its successors and assigns forever.” Yeah… yadda, yadda, yadda, how lawyers like to natter on and on… None of this gibberish seemed important for a century, during which time the trains puffed up and down the track. But when the rail line was torn up, suddenly the old documents became very interesting.

Under the National Trails System Act, the government can convert an old railroad right-of-way into a recreational trail without the rail line being deemed to be abandoned. That’s what happened in Idaho. But some of the landowners whose properties were transected by the abandoned right-of-way talked to a smart lawyer. She told the owners, “These old documents aren’t deeds; they’re just easements for a railroad.” That was an important distinction: the easements weren’t for the benefit of some granola-munchers, but rather for rolling stock.

The Federal Court of Claims had a tough task ahead of it. The Idaho Federal District Court had already ruled that such deeds were conveyances in fee simple, which meant that the owners who abutted the railroad had no means of reclaiming the land. The problem was that the interpretation of the deeds was a matter of Idaho law, and the Idaho Supreme Court had never reached the precise issue. The Court of Claims carefully parsed other Idaho decisions and decided that, based on its treatment of other cases, the Idaho Supreme Court would rule — if it had been asked to  — that the references in the deeds to the “perpetual right of Way for said second party’s Rail Way Line” limited the purpose of the conveyance, and therefore made the deed a grant of a mere easement, not perpetual ownership.

With two federal courts disagreeing on what Idaho jurists would say if asked, it’s likely that the state courts themselves ultimately will have to resolve the issue by ruling definitively on the question.

Blendu v. United States, 79 Fed.Cl. 500 (2007). Owners of land abutting or traversing an abandoned railroad right-of-way contested the government’s using the right-of-way as a recreational trail pursuant to the National Trails System Act, claiming that the government’s action effected a taking of their property without just compensation in violation of the Fifth Amendment.

The predecessor landowners had deeded land to the railroad about a hundred years before, with deeds that contained language in the granting clauses that convey all estate, right, title and interest in the property to the railroad, but also contained habendum clauses “to have and to hold all and singular the tenements, hereditaments and appurtenances as a perpetual right of Way for said second party’s Rail Way Line unto the said party of the second part and its successors and assigns forever.” Under the Act, the government could convert abandoned railroad rights-of-way to trails without the use constituting an abandonment of the right of way. However, Blendu and the plaintiff property owners argued that under their deeds, they had really just given easements – not a deed in fee simple – and the cessation of rail service did not permit the government to use the easement of a trail. They moved for summary judgment in the U.S. Court of Claims, and the government cross-moved for summary judgment, arguing that the deeds were a conveyance of the property in fee.

Held: Under Idaho law, a deed which contained a granting clause that quitclaimed certain real estate to the railroad and a habendum clause stating that the railroad held the real estate “as a perpetual right of Way for said second party’s Rail Way Line unto the said party of the second part and its successors and assigns forever,” the deed only conveyed an easement and not fee simple title.

The Court said that the use of the term “right of way” in the habendum clause unambiguously reflected an intention to convey an easement, overcoming Idaho’s statutory presumption in favor of a fee simple interest. The Court of Claims concluded the distinction between the granting clause and the habendum clause had not been made by the Supreme Court of Idaho, but the Court of Claims believed that the Idaho Supreme Court cases found the presence of the term “right of way” in any substantive part of the deed to be determinative. The deeds in this case contained the term “right of way” in the habendum clause, thus unambiguously reflecting an intention to convey an easement and overcoming Idaho’s statutory presumption in favor of a fee simple interest.

As further evidence of the conveyance of an easement, the Court said, the deeds contained a designation for use of the right of way for the Railroad’s “railway line.”

The easement was for rails, not trails.

– Tom Root