Allied gas and chemical

IN THE COURT OF APPEALS OF IOWA
No. 1-647 / 00-1800

Filed March 13, 2002

ALLIED GAS AND CHEMICAL

COMPANY, INC.,

Plaintiff-Appellant,

vs.
WORLD FOOD PROCESSING, INC.,

and THE CITY OF OSKALOOSA, IOWA,

Defendants-Appellees.

Appeal from the Iowa District Court for Mahaska County, Richard J. Vogel, Judge.

Plaintiff appeals from a district court ruling granting the defendants’ motion for summary judgment and denying its motion for summary judgment in the plaintiff’s action to quiet title to a railroad right-of-way. REVERSED AND REMANDED.
R. Mathieson Duncan of Duncan, Green, Brown, Langeness & Eckley, P.C., Des Moines, for appellant.

David A. Jarecke of Crosby Guenzel, L.L.P., Lincoln, Nebraska, and William E. Hanigan of Brown, Winick, Graves, Gross, Baskerville & Schoenebaum, Des Moines, for appellee World Food Processing, Inc.

Rustin T. Davenport of De Vries, Price & Davenport, Mason City, for appellee City of Oskaloosa.
Heard by Mahan, P.J., and Miller and Hecht, JJ.

MAHAN, P.J.

Plaintiff Allied Gas and Chemical Company (Allied Gas) appeals from a district court ruling granting the defendants’ motion for summary judgment and denying its motion for summary judgment in the plaintiff’s action to quiet title to a railroad right-of-way. Allied Gas contends the district court erred in granting defendants’ motion for summary judgment because (1) it automatically became the owner of the right-of-way upon abandonment by the railroad, and (2) in the alternative, it is the owner of the right-of-way by operation of Iowa Code section 473.2 (1971). We reverse and remand.

Background Facts and Proceedings. In 1882 Chicago, Burlington & Pacific Company (CB&PC) purchased a railroad right-of-way across the property owned by J.R. Jamison, which is now the plaintiff’s property. In the 1882 right-of-way deed, Jamison conveyed to CB&PC:

a strip of land fifty feet wide through the following land, to wit: the East half of the South East quarter of Section (29) Twp. (75) North, of Range (15) West; and the West half of the South West quarter of Section 28, Twp. 75 Range 15, Mahaska County, Iowa, J.R. Jamison, to have the privilege of working for coal, or tunneling under said Right of Way, provided he does not damage the road-bed. The said strip of land being twenty-five feet on each side of the center of the line of said Railroad, as now located by said Company; to have and to hold said strip of land for all purposes incident or necessary to the construction and operation of a Railroad and Telegraph lines or lines thereon.

The right-of-way was later acquired by the Chicago and North Western Railway Company (C&NW). The right-of-way was once part of a rail line extending from Illinois to Oskaloosa. On June 12, 1970, C&NW filed an application with the Interstate Commerce Commission (I.C.C.) to abandon the line from milepost 399.9 at Keithsburg, Illinois, to milepost 304.5 near Oskaloosa. The I.C.C. granted C&NW’s abandonment request on August 4, 1971, and the abandonment became effective on September 8, 1971.

On March 15, 1972, Allied Gas received a deed to the property north and south of the railroad right-of-way. The deed excepted the right-of-way of C&NW. In 1979 the railroad conveyed and quitclaimed the strip of land to Quad County Grain Company, Inc. (Quad County). Quad County has claimed it used the track in dispute for the movement and placement of railcars including movement to the adjacent World Food Processing’s (World Food) property. Quad County has maintained a track agreement with Union Pacific Railroad Company, a successor in interest to C&NW, to continue to provide service to Quad County’s elevator.

On December 4, 1989, Allied Gas filed a petition for declaratory relief, which requested the district court quiet title to the property that was the subject of the deed by and between C&NW and Quad County. On May 10, 1991, Allied Gas and Quad County entered into a license agreement that permitted Allied Gas to ship on the rail line that traverses the subject right-of-way. On May 15, 1991, Allied Gas dismissed its action against Quad County. In a warranty deed dated November 9, 1999, Quad County conveyed to World Food the railroad right-of-way. The warranty deed was subject to the license agreement signed between Allied Gas and Quad County. On December 4, 1999, World Food provided an easement to the City of Oskaloosa to install an underground water line on the railroad right-of-way.

On January 18, 2000, Allied Gas filed a petition seeking to quiet title to the railroad right-of-way in itself. Allied Gas filed a motion for summary judgment. The City of Oskaloosa and World Food both resisted Allied Gas’s motion. World Food filed a cross motion for summary judgment, which was joined by the City of Oskaloosa. Following a hearing on September 29, 2000, the district court granted the defendants’ motion for summary judgment. The court denied Allied Gas’s motion for summary judgment. Allied Gas appeals.

Standard of Review. The general rules regarding our review of summary judgments are well settled. We recognize a quiet title action is tried in equity without a jury. Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 89 (Iowa Ct. App. 1994). We therefore generally review an action to quiet title de novo. Baratta v. Polk County Health Servs., 588 N.W.2d 107, 109 (Iowa 1999). However, our supreme court has stated “’we cannot find facts de novo in an appeal from summary judgment.’" Id (quoting Moser v. Thorp Sales Corp., 312 N.W.2d 881, 886 (Iowa 1981)). We therefore review the district court's grant of the defendants’ motion for summary judgment and the denial of Allied Gas’s motion for summary judgment for the correction of errors at law. See id.

A district court properly grants summary judgment when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3); Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000); Swartzendruber v. Schimmel, 613 N.W.2d 646, 649 (Iowa 2000). A factual issue is "material" only if "the dispute is over facts that might affect the outcome of the suit, given the applicable law." Fouts ex rel. Jensen v. Mason, 592 N.W.2d 33, 35 (Iowa 1999). The burden is on the party moving for summary judgment to prove the facts are undisputed Phillips v. Covenant Clinic, 625 N.W.2d 714, 717 (Iowa 2001).

In ruling on a summary judgment motion, the court must look at the facts in a light most favorable to the party resisting the motion. Crippen, 618 N.W.2d at 565. The court must also consider on behalf of the nonmoving party every legitimate inference that can be reasonably deduced from the record. Id. An inference is legitimate if it is "rational, reasonable, and otherwise permissible under the governing substantive law." Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 88 (Iowa Ct. App. 1994). On the other hand, an inference is not legitimate if it is "based upon speculation or conjecture." Id. In nonjury cases, summary judgment may be granted if a trial would not enhance the ability of the court to draw inferences or conclusions. Id. at 89. If reasonable minds may differ on the resolution of an issue, a genuine issue of material fact exists. Phillips, 625 N.W.2d at 718; Swartzendruber, 613 N.W.2d at 649.

In this case, both parties filed a motion for summary judgment urging there was no genuine issue of material fact. This court is not obliged to find a lack of factual dispute merely because both parties assert that to be the case. We, however, believe such assertions should weigh heavily in making that determination. See Sorensen v. Nelson, 342 N.W.2d 477, 479 (Iowa 1984). Under the circumstances of this case, we find there is no genuine issue of material fact to any issue in this case.

Reversion of Railroad Right-of-Way. “Through the years, Iowa has adopted different statutes dealing with conflicting rights in abandoned railroad property. We have long recognized it to be the legislature's prerogative to sort through and fix those rights.” Notelzah, Inc. v. Destival, 489 N.W.2d 744, 747 (Iowa 1992). Iowa Code section 327G.77 and its predecessor, section 473.2, both provide for the reversion of an abandoned railroad right of way to an adjacent landowner. See Byker v. Rice, 360 N.W.2d 572, 575 (Iowa Ct. App. 1984). Section 327G.77 applies to reversions based on abandonment after July 1, 1980. Id. Section 473.2 controls reversions based on abandonment before that date. Id. The statutes differ in the elapsed time required to complete a reversion. Id.

Although the parties dispute which statute controls, we think it is clear that the controlling statute is the one in effect at the time of the abandonment. See Notelzah, 489 N.W.2d at 746; Macerich Real Estate Co. v. City of Ames, 433 N.W.2d 726, 727-28 (Iowa 1988). The abandonment at issue in this case was in 1979. Therefore, section 473.2 of the 1979 Iowa Code controls the issue in this case. Section 473.2 provides:

If a railway¹, 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 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 (1979). This statute, however, applies only to easements and land acquired by condemnation. McKinley v. Waterloo R. Co., 368 N.W.2d 131, 138 (Iowa 1985). The statutory reversionary provisions are inapplicable when a railroad has acquired a fee simple in the right-of-way. Notelzah, 489 N.W.2d at 746.

In this case, there is no dispute that the 1882 deed conveyed to the railroad an easement for railroad purposes. Our appellate courts have held in a long line of cases involving deeds with similar language to the 1882 deed that only an easement is conveyed, not an in fee estate, by such deeds. See Id.; Macerich Real Estate, 433 N.W.2d at 727-28; Hawk v. Rice, 325 N.W.2d 97, 99 (Iowa 1982); Byker, 360 N.W.2d at 573. Therefore, all parties concede that the interest in the railroad right-of-way was an easement, not a grant in fee simple.

The dispositive issue in this case is whether a railroad's easement was extinguished pursuant Iowa Code section 473.2 when C&NW abandoned its line under the Interstate Commerce Act. Allied Gas contends the railroad easement was extinguished when the I.C.C. order granting abandonment became effective and title to the right-of-way passed to Allied Gas. Allied Gas misunderstands the I.C.C.’s function. “The I.C.C. is concerned only with whether a line is abandoned for interstate commerce purposes, which indeed this line is.” Burlington N. R.R. Co. & Kmezich, 48 F.3d 1047, 1051 (8th Cir. 1995) (applying Iowa law). The I.C.C. order granting abandonment does not say anything “about whether a line is actually abandoned for all railroad purposes.” Id. Once the I.C.C.’s certificate of abandonment becomes effective, its jurisdiction terminates and state law governs the disposition of the reversionary interests in the easement. Preseault v. I.C.C., 494 U.S. 1, 6-8, 110 S. Ct. 914, 919-20, 108 L. Ed. 2d 1, 10-11 (1990). Therefore, the I.C.C. abandonment is not the triggering event but rather it is the state law that determines the circumstances that trigger the reversion of the railroad right-of-way.

Under our state law, when the right-of-way 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. Iowa Code § 473.2; Turner v. Unknown Claimants, 207 N.W.2d 544, 545 (Iowa 1973). We have previously described the reversionary powers under section 473.2 as follows:

Under section 473.2, reversion does not occur until the passage of the period of eight years from the date upon which the right of way ceased to be operated as a railroad. Until the passage of that time the railroad would have the right to possession of the land embraced by the right of way. During that period, the railroad would have a right to grant its right of possession to anyone it chooses. However, after the passage of the eight- year period neither the railroad, nor any grantee of the railroad who had not operated a railroad on the right of way, would have any further rights in that land.
Byker, 360 N.W.2d at 575 (emphasis added). In addition, reversion is automatic once the conditions of section 473.2 are satisfied. Id.

It is incumbent upon us to apply the standard that "a deed should be construed, if at all possible, to effectuate the intent of the grantor." Davies v. Radford, 433 N.W.2d 704, 705 (Iowa 1988) (quoting In re Estate of Fleck, 261 Iowa 434, 438, 154 N.W.2d 865, 867 (1967)). We glean that intent from the language of the deed. Id. In this case, the 1882 deed conveyed a strip of land to the railroad company, “to have and to hold said strip of land for all purposes incident or necessary to the construction and operation of a Railroad and Telegraph lines or lines thereon.” The grant of the right-of-way was limited to a specific purpose, to permit the construction and operation of a railroad.

The trial court found, and the defendants argue, that the tracks are still in existence and the property is still being used for “railroad purposes.” We acknowledge that some tracks may still exist and be used by a private concern in accordance with a track agreement.² However, that does not change the fact that C&NW, the successor to the original grantee, deeded the right-of-way to a private concern and abandoned it for railroad purposes. The original deed was to a public railroad company for railroad purposes. The defendants do not contend, nor does it appear in the evidence, that there was any intent on the part of the defendants to continue a railroad operation. We therefore find the defendants’ private use of the right-of-way was not intended to be within the meaning of the grant of the right-of-way deed.

The reason for such interpretation was expressed by our supreme court in the following language:

It follows, therefore, as an inevitable conclusion, that when the public use is permanently abandoned, and the public benefit which was the consideration for the transfer of title ceases to be served or promoted, the right and title of the corporation cease therewith. Moreover, lands obtained for right of way are to be distinguished from other lands obtained by the company, in this: the latter, as a rule, are obtained in such shape and form that they may ordinarily be bought, used, and sold for general purposes without imposing any special hardship upon other proprietors or upon the public, while the right of way consists of a narrow strip extending over and across lands devoted to agricultural, residence, and business uses. Much of this strip, when abandoned, is wholly valueless to the company, except as a menace by which the owner of the land thus burdened may be induced or compelled to make terms for the removal of the incumbrance. To say that, when the right of way is abandoned for railway uses, the company may retain it or dispose of it to others for uses of a merely private character, is to affirm a proposition at variance with every well-settled rule of law governing ownership of lands by quasi public corporations, and open the door to the most grave abuses.”
Keokuk County v. Reinier, 227 Iowa 499, 504, 288 N.W. 676, 678-79 (1939) (quoting Watkins v. Iowa Cent. Ry. Co., 123 Iowa 390, 410, 98 N.W. 910, 916 (1904) (Weaver, J., dissenting)) (emphasis added).

We therefore conclude the district court erred in granting defendants’ motion for summary judgment. Neither C&NW nor any grantee of the railroad has used or operated the disputed right-of-way as a railway for eight years since the 1979 conveyance between C&NW and Quad County. As a result, we find the railroad’s easement was extinguished by section 473.2 and the right-of-way reverted to Allied Gas, which owns the land from which the right of way was taken.³ Accordingly, we reverse the district court's rulings on the parties' summary judgment motions. We remand to the district court for entry of summary judgment in favor of Allied Gas.

Estoppel Claim. The defendants claim that Allied Gas is estopped from claiming superior title because of the 1991 licensing agreement entered into between Quad County and Allied Gas.⁴ Specifically, the defendants argue that the licensing agreement acknowledges that Quad County purchased the right-of-way from the railroad and is the owner of the subject property. As such, defendants contend Allied Gas should be estopped from claiming title to the property. We disagree.

Contrary to defendants’ contentions, the licensing agreement does not state that Quad County is the owner of the subject property. Rather, it specifically states that Quad County “purchased a railroad right-of-way formally abandoned on or about March 29, 1971, from Chicago and North Western Railway Co.” The licensing agreement also specifically provides that Allied Gas can terminate the agreement at will by providing thirty-day notice to the defendant. In addition, the defendant by the 1979 deed acquired whatever right the railroad company had. Substantially, this right was that of possession until the adjoining landowners acquired the property under section 473.2 after eight years. Chadek v. Alberhasky, 253 Iowa 32, 37, 111 N.W.2d 297, 300 (1961). Because we conclude above that Allied Gas is the owner of the right-of-way under section 473.2, Allied Gas is not estopped from seeking to quiet title in the dispute land.

REVERSED AND REMANDED.

1 Chapter 473 does not define the term “railway.” However, a related chapter dealing with the regulation of carriers, defines railway as follows:
The terms “railroad” and “railway” as used in this chapter shall include all bridges and ferries used or operated in connection with any railroad, and also all the road in use by any corporation, receiver, trustee, or other person operating a railroad, whether owned or operated under contract, agreement, lease, or otherwise.
Iowa Code § 479.2.

2 The 1979 deed between C&NW and Quad County stated:

[S]aid strip of land being 25 feet in width on each side of the center line of the main track (now removed) of the Chicago Burlington and Pacific Railroad Company (later the Iowa Central Railway Company, the Minneapolis & St. Louis Railway Company, now the Chicago and North Western Transportation Company), as said main track line was originally located and established over and across said Sections 28 and 33.

(Emphasis added.)

3 Allied Gas has owned the land north and south of the adjoining right-of-way since 1972.

4 In the 1999 deed between Quad County and World Food, World Food agreed to be bound by the licensing agreement.