JURIST Guest Columnist Brian T. Hodges of the Pacific Legal Foundation discusses the controversies surrounding Brandt v. US…

The US Supreme Court is set to hear an important property case that could have been torn from the pages of a first year property law casebook. At issue in Marvin M. Brandt Revocable Trust v. United States is ownership of an abandoned railroad right-of-way that bisects the Brandts’ land. The facts of the case can be boiled down to a few essential points. In 1908, the United States granted a “right-of-way” to the Hahn’s Peak and Pacific Railway Company to build and operate a 66-mile railway from Laramie, Wyoming to Colorado. Later, the government sold Marvin and Lulu Brandt an 80-acre tract “subject to those rights for railroad purposes as have been granted to the [railroad company].” Years later, the railroad abandoned the track, and the US sued [PDF] the Brandts, claiming ownership of the right-of-way.

So, who actually owns the land?

Like most good property hypotheticals, the answer is not as readily apparent as it may seem. Indeed, the court’s resolution of this case could either uphold or scrap one of the most fundamental principles underlying our common law system of property ownership: the certainty of title.

The Brandt case finds its roots in the flurry of late nineteenth century policies that drove the westward expansion and settlement—in particular, the General Railroad Right-of-Way Act of 1875, a statute that encouraged expansion of railroads by granting “rights-of-way” to railroad companies to run tracks over public lands. By the 1920s, the nation’s railway system reached its peak of 272,000 miles of track, crisscrossing the nation. Since then, however, the utility of rail transport has declined. By the mid-1980s, the federal government estimated that at least 130,000 miles of track had been abandoned, with an estimated 3,000-4,000 more miles of track being abandoned every year. All across the country, there are thousands of miles of abandoned track running through private lands, like the Brandts’ acreage.

This new reality resulted in competing claims for the land. Homeowners and farmers sought to make use of their property free of the disused railways. But the federal government had different plans for the land; it adopted a “rails-to-trails” program with the goal of converting old tracks into recreational trails. The problem with the government’s plan was that it did not intend to compensate the underlying property owners for the land, contrary to the Fifth Amendment’s command.

Unsurprisingly, the government quickly found itself defending its rails-to-trails program before the US Supreme Court, which held in Preseault v. Interstate Commerce Commission that, although the program itself was a valid exercise of federal commerce power, converting an abandoned right-of-way to a trail could “giv[e] rise to just compensation claims” under the Takings Clause. Following that decision, the federal circuit developed a test for determining when a rails-to-trails conversion will require compensation, and when it will not:

[T]he determinative issues for takings liability are (1) who owns the strip of land involved, specifically, whether the railroad acquired only an easement or obtained a fee simple estate; (2) if the railroad acquired only an easement, were the terms of the easement limited to use for railroad purposes, or did they include future use as a public recreational trail (scope of the easement); and (3) even if the grant of the railroad’s easement was broad enough to encompass a recreational trail, had this easement terminated prior to the alleged taking so that the property owner at the time held a fee simple unencumbered by the easement (abandonment of the easement).

According to federal circuit precedent, all three determinative issues were present and warranted payment of compensation to the Brandts. Federal circuit courts have repeatedly concluded that railroad rights-of-way granted under the 1875 Act are easements. And, under the common law of property, an easement will extinguish upon abandonment and the title will be unencumbered by the right-of-way. If, in that circumstance, the government still wants to convert the abandoned right-of-way into a recreational trail, it must compensate the owner.

Had Brandt followed the normal course for a rails-to-trails case, it would have been an open and shut win for the Brandts. But Brandt is far from ordinary. The federal government devised a plan to circumvent the federal circuit precedents and convert the abandoned right-of-way without compensating the Brandts. Instead of commencing the trail conversion process—which would have landed the case within the jurisdiction of the federal circuit—the government filed a quiet title action in a Wyoming district court. The strategy was to take advantage of a 30-year-old summary judgment decision, State of Idaho v. Oregon Short Line R. Co wherein an Idaho district court found that the federal government held an “implied reversionary interest”—a property interest that does not exist at common law—in rights-of-way conveyed to railroad companies under the General Railroad Right-of-Way Act of 1875. The federal government’s strategy worked. The US Court of Appeals for the Tenth Circuit, in Brandt, adopted the summary judgment decision as law of the circuit—expressly rejecting decisions from the federal circuit—and held that the federal government owned a reversionary interest in the right-of-way, meaning that it could open a public recreational trail on the Brandts’ land without compensating them.

The US Supreme Court granted review of the Tenth Circuit’s decision to settle the split of authority and, specifically, to determine “[w]hether the United States retained an implied reversionary interest in rights-of-way created by the General Railroad Right-of-Way Act of 1875 rights-of-way after the underlying lands were patented into private ownership.” It would be a mistake, however, for practitioners to let the narrow scope of the question presented distract their attention from this case. Brandt has the potential to be a blockbuster because, underlying the seemingly parochial question about railroad rights-of-way, is a much more fundamental issue that could impact every landowner in the nation: whether the grantor of real property can impliedly reserve an interest in land after it is sold.

The common law of property emphatically says, no. But the line of Tenth Circuit cases culminating in Brandt holds that the US government, when conveying property, can change the well-settled rules and definitions of property to best serve the government’s interests—in this case, the interest in not paying just compensation when establishing a public use of private property.

The federal government’s desire to avoid its compensation obligation simply does not warrant such a dramatic and harmful change in our system of property ownership. The very idea that a grantor can silently retain an interest in real property conveyed in fee simple to another person is anathema to property law, which is predicated on “certainty and predictability where land titles are concerned.” Indeed, a decision that allowed a third party to hold an implied interest in land would necessarily mean that landowners cannot rely on the express language of their titles to establish ownership of property, rendering the owners’ interests and expectations therein potentially worthless.

The nation would reap a bitter harvest from Tenth Circuit’s rule. Instead of being safe and assured, any property purchased from the United States would be subject to the fluctuating policies of the government. Any short-term fiscal benefits that judicial recognition of an “implied reversionary interest” would provide to the federal government would not be worth the long-term consequences. And, for that reason alone, the US Supreme Court should resolve Brandt in accordance with the common law rules and definitions of property.

Brian T. Hodges is the Managing Attorney of Pacific Legal Foundation’s Northwest Center. He concentrates his practice on representing property owners, with a focus on Takings and Due Process litigation. He was co-counsel for the petitioner in Koontz v. St. Johns River Water Management District, and participated as an amicus curiae in Arkansas Game & Fish Commission v. United States. Hodges is the author of several articles concerning property rights, including the forthcoming article, Will Arkansas Game & Fish Commission v. United States Provide a Permanent Fix for Temporary Takings?.

Suggested citation: Brian T. Hodges, Brandt v. United States: Should the Common Law of Property be Scrapped?, JURIST – Hotline, Nov. 1, 2013, http://jurist.org/hotline/2013/11/brian-hodges-rail-to-trail.php.