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Samuel C Johnson 1988 Trust v Bayfield County, Wis, 634 F Supp 2d 956 (WD Wis 2009).

Facts:This case presented two distinct groups of plaintiffs asserting ownership rights to a disputed strip of land in Bayfield County, Wisconsin. For different reasons, these plaintiffs asserted outright ownership of the land. The county and federal government responded that the land was forever owned by the federal government, but as a right-of-way subject to reverter, was used by railroads for almost a century.

The first plaintiffs were the Samuel C. Johnson 1988 Trust and Imogene Johnson (collectively "the Trust"). In 1980, the Trust obtained a quitclaim deed to certain land in a township in Bayfield County, Wisconsin, from the Chicago and North Western Transportation Company (C&NW). This company was the last railroad company to own and use the railroad tracks over a right-of-way on the land in question. The second group of plaintiffs consisted of the Hawksfords and the Johnsons (collectively "the families"). These families purchased land in 1986 and 1992, respectively, through which the disputed right-of-way ran.

In 2006, Bayfield County sought to convert the right-of-way into snowmobile paths, prompting plaintiffs to file suit to quiet title. The federal government filed a disclaimer of interest, and pursuant to that, the district court ruled in favor of plaintiffs for summary judgment on the ground that the federal government's disclaimer eliminated any interest of the county in the right-of-way. The seventh circuit court of appeals vacated this ruling, remanding the case to district court to determine if the United States actually retained a reversionary interest and whether that interest was triggered by the railroad's abandonment of the right-of-way.

Holding:Judgment for county. As a preliminary matter, the court rejected the plaintiffs' assertion that the United States was estopped from claiming any reversionary interest in the right-of-way because it previously took the contrary position of disclaiming its interest. The court ruled that judicial estoppel arises only when a party takes a position contrary to one on which it prevailed in court — in this case, the United States did not "prevail" on its previous contention. Therefore, the court treated the United States' filing as an amicus curiae brief.

The court next analyzed the origin of the right-of-way. The railroad's interest in the disputed right-of-way arose from Congressional actions started in 1852 to grant rights-of-way subject to reverter under the Right of Way Act. Under this Act, railroads could gain rights-of-way if they built railroad infrastructure and complied with other requirements. At issue in this case was a right-of-way on which the "Bayfield Branch" of the rail lines was situated.

Congress also distributed parcels of land under the Land Grant Acts of 1856 and 1864. In 1856, Congress made a checkerboard land grant to Wisconsin, with alternating lots on either side of a right-of-way designated either for sale to the public (even-numbered lots) or for sale to the railroads (odd-numbered lots). In 1863, the United States transferred part of the disputed land (section 21) to the state of Wisconsin, which transferred this and other odd-numbered sections to the railroad in 1874. In 1882, Amos Jefferson purchased property in another part of the disputed land (section 32), which he patented in 1884. The railroad also sought condemnation proceedings to declare a right-of-way through Jefferson's and other land in 1882.

The successor in interest to the railroad that originally used the right-of-way was the C&NW. In 1974, C&NW filed a notice of abandonment of the right-of-way and in 1980 pulled up the tracks. At the time, the County declined to take over the right-of-way or use it for any public purpose. In 1980, C&NW also sold its interest in the right-of-way to the Trust, which kept a small portion of the land and donated the rest to the U.S. Forest Service. Separately, the families purchased land in 1986 and 1992 on land formerly owned by Amos Jefferson that also lay under part of the disputed right-of-way.

Having laid the foundation of the disputed land, the court next turned to the parties' contentions. First, the Trust and the families asserted that the railroad never gained title to a right-of-way over the even-numbered sections of land, because the Right-of-Way Act of 1852 was obscure and rendered ineffective after the passage of the Land Grant Acts. The court was not persuaded by this argument because there was no evidence that the Right-of-Way Act was anything but good law. Furthermore, the facts demonstrated that the railroad complied with the Act's criteria to obtain a right-of-way. Finally, even if the Act was ineffective, the Land Grant Acts impliedly gave the railroad the same right-of-way because to interpret the Acts otherwise would thwart Congress's express intention to promote railroad construction.

The Trust and the families alternatively argued that Amos Jefferson bought fee simple title to the land in 1882 including the railroad's right-of-way. They argued that an alternative interpretation of the facts would deprive Jefferson because otherwise he had no notice as to what exactly he was buying. This interpretation also explained why the railroad entered condemnation proceedings against Jefferson for a right-of-way in 1882. However, the court found that Department of the Interior decisions refuted such a claim by a fee simple holder against rights-of-way created by Congress, and even more telling, Jefferson purchased the land within weeks of the railroad infrastructure being finished. Therefore, Jefferson must have been fully aware of the presence of the railroad right-of-way when he purchased the land without disputing it. The court also held that the railroad's precautionary condemnation proceedings were not dispositive of whether it held a right-of-way by Congressional grant, which the other evidence demonstrated.

Alternatively, the Trust and the families argued that Congress had granted fee simple interest in the odd numbered sections along the right-of-way to the state of Wisconsin, the state later transferred this interest to the railroad, and therefore, the railroad's subsequent deed passed both the land and the right-of-way to the Trust without reverter to the United States. This line of argument was rejected in a previous case, but the court reiterated the reasoning. The United States did not merely retain a right of reverter in land explicitly granted for railroad rights-of-way. Even where the land was granted to the state for further distribution, if the intent of the Congressional grant was railroad expansion, the rights-of-way created over that land also impliedly would revert to the United States if abandoned.

Regarding the even-numbered sections, the Trust and the families argued that Amos Jefferson obtained fee simple interest in the contested land and passed title to the families, including fee simple interest in the right-of-way. The court stated that Congress had no intention that railroad rights-of-way would have different legal effect depending on whether they lay on even- or odd-numbered sections of land. Following the court's previous analysis of the Right of Way and Land Grant Acts, Jefferson never had an interest in the right-of-way — only the railroad did. The United States retained a right of reverter, so Jefferson could not pass the right-of-way with the title to the land.

Next, the Trust and the families argued that the railroad abandoned its right-of-way and the United States had lost its reversionary interest. Formerly, title to rights-of-way that were declared abandoned by a court of competent jurisdiction or Congress might pass to the adjacent landowners under 43 U.S.C. &§ 912. This rule only applies to abandonments made before 1988 because under 16 U.S.C. &§ 1248(c), enacted that year, the United States keeps the title to right-of-way land unless a public highway is established over it within one year.

In this case, neither a pre-1988 Wisconsin court decision nor pre-1988 action by the Interstate Commerce Commission (ICC) functioned to declare abandoned the right-of-way at issue. A Wisconsin decision in 1983 declared part of the Bayfield Branch abandoned, but the court held that decision was only effective on the land at issue there and did not abandon the rest of the Bayfield Branch rights-of-way by implication. Furthermore, although the ICC authorized the railroad's declaration of abandonment in 1978, this did not constitute an "act of Congress" under the statute. The Trust and the families alternatively argued that, because the property was actually abandoned since 1978, the court should retroactively declare the right-of-way abandoned as of 1978. However, the court found that such a reading of the statute violated its plain language and would create ambiguity with land titles in the future.

Finally, the Trust and the families argued that the United States was barred from exercising its reversionary interest by equitable estoppel. The court agreed that these parties made personal expenditures under the assumption that the right-of-way was abandoned, but the court did not agree that the United States had waived any of its rights. The United States made no representation on which the Trust and the families relied, nor did it waive its rights through inaction.

Having weighed the evidence, the court concluded that the railroad obtained a right-of-way in the 1800s, the right-of-way was never officially declared abandoned, and therefore, the United States retained a reversionary interest over the land in question.

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