Summary: Specific language in an agreement can be determinative of the parties’ intent for a covenant to run with the land, when the agreement lacks explicit language.

Williams v. Indiana Rail Rd. Co., 33 N.E.3d 1043 (Ind. App. 2015), reh'g denied.

Go to full opinion.

Facts: Previous property owners (the Stewarts) signed an indenture, or agreement, with a railroad company (Southern) that would permit Southern to build a dam and maintain a pond. The indenture provided that Southern possessed, “the right to construct and maintain at or near the bridge aforesaid a dam which shall be not less than fourteen feet or more than twenty feet in height and of sufficient length to properly and effectually dam the water flowing through the said stream so as to acquire an accumulation of water of a depth of not less than fourteen or more than twenty feet at its deepest point.”

Years later, the Williamses purchased a portion of the property near the pond via a warranty deed that stipulated the deed was subject to any and all easements, agreements, and restrictions of record. Meanwhile, the Indiana Rail Road Company (IRR) acquired the railroad as well as the right of way via a quit claim deed.

When the dam began to fall into a state of disrepair, the Williamses contacted IRR multiple times about the pending damage to their property and IRR’s duty to maintain the pond as a ‘predecessor’ to the original agreement between the Stewarts and Southern. Eventually, the Williamses filed a complaint against IRR asserting that, under the indenture, IRR was responsible for and refused to maintain the dam and pond as specified in the indenture. IRR filed a motion for summary judgment, arguing that: (1) the indenture between the original parties was not a covenant that ran with the land; (2) even if it was, the express terms of the indenture did not impose a duty on IRR to maintain the pond at a specified depth; and (3) even if the indenture so required, the Williamses could not enforce the Indenture against IRR because any alleged breach occurred before the Williamses purchased the property, causing any such covenant to cease running with the land.

The trial court issued an order in which it summarily granted IRR's summary judgment motion. The Williamses appealed.

Holding: Reversed and remanded. The appellate court addressed whether: (1) the indenture was a covenant that ran with the land and, thus, applicable to the parties; (2) the indenture imposed an obligation or duty on IRR to maintain the dam so that the pond depth did not fall below fourteen feet; and (3) any breach of the covenant in the indenture that may have occurred before the Williams purchase did not preclude it from continuing to run with the land.

First, the court determined that the indenture was a covenant that ran with the land. The court found that, in regard to the right to construct the dam, the indenture provided that Southern had the right to construct the dam to “acquire an accumulation of water” (or pond) on the Stewarts’ land. Southern could use that dam and pond for railway purposes. The Stewarts obtained the benefit of an accumulation of water that they too could use. While the indenture did not contain an express statement of intent, it did provide that the railroad agreed to “maintain” the dam and resulting pond. The court determined that the word “maintain” in a covenant signaled that the parties intended a covenant to be a continuing one because such word was one of “projection into the future.” Therefore, based on the specific language used, the court determined that the original parties' intended for the covenant to run with the land.

Second, the court found that the indenture imposed an obligation or duty on IRR to maintain the dam so that the pond did not fall below a certain depth. The parties’ agreement included specific language providing that this accumulation of water would be a specific depth. Therefore, the indenture contained a requirement regarding maintenance of the pond between a certain depth range which IRR was required to adhere to. However, the court made no determination regarding whether IRR complied with the requirement contained in the indenture.

Third, the court found that any breach of the covenant under the indenture which may have occurred before the Williams’ purchase did not preclude it from continuing to run with the land. The court found that a continuing covenant had the potential of being breached on more than one occasion, especially where the breach has been cured. Thus, any breach that may have occurred prior to the Williams’ purchase of the property did not necessarily terminate the covenant or preclude it from running with the land.

Judge Mathias dissented, finding that the language granted the railroad the right to construct and maintain a dam, but not the obligation to do so. Therefore, in his opinion summary judgment was proper.