In Avista Corp. v. Wolfe, (— F.3d —, C.A.9 (Mont.), Dec. 11, 2008), the United States Court of Appeals considered whether the Abandoned Railway Right of Way Act (“Act”) permitted a federal district court to declare a railroad right of way abandoned retroactively to the time of its physical abandonment, or required that the right of way could be deemed abandoned only upon the court entering its judgment. The court ruled that the Act states a railroad right of way is considered abandoned, allowing ownership interest in the land to revert to the prior owners, only after one year has passed following a finding by a court or the Congress declaring it abandoned. The Act therefore prohibited the district court from declaring the right of way retroactively abandoned, the court ruled.
In 1864, the Northern Pacific Railroad Company (“Northern Pacific”) obtained a right of way across then federal land along the south bank of the Clark Fork River in Montana and operated a railroad line through it for several decades. In 1921, Arthur Hampton obtained title to land including and around the right of way under the Homestead Act of 1862. In the early 1950s, Washington Water Power (“Washington”), which would later become Avista Corp. (“Avista”), began building a dam to create a reservoir on the river. Accordingly, Hampton’s widow, Fannie Hampton, deeded part of her property, outside the right of way, to Washington to accommodate the new reservoir.
Northern Pacific, meanwhile, was preparing to move its operation to the north bank of the river, and abandon its right of way along the south bank. Northern Pacific and Washington agreed to swap landholdings, with Washington receiving the right of way. Then, to avoid potential legal challenges to this arrangement, in 1958, Northern Pacific issued a quitclaim deed conveying the right of way to Sanders County (“County”) for use as a highway, but allowing Washington to continue to manage it as part of its reservoir operation. The County accepted the deed in 1961, and public use of a road over the former right of way began in the 1970s.
In 2004, the county quitclaimed the remaining land back to the descendants of Arthur and Fannie Hampton, including Dorrien Wolfe (“Hamptons”). The Hamptons then submitted subdivision plans for the property to the county, which the county approved. Upon learning of the Hamptons’ subdivision plans, Avista filed suit in federal district court challenging the county’s reversion of the property to the Hamptons.
The district court ruled that under the terms of the Act, ownership of the land transferred back to the Hamptons in 1959, a year after Northern Pacific abandoned it in 1958, and that the Hamptons were now entitled to all of the right of way except the portion directly under the county road. Avista appealed.
The purpose of the Act is to ensure that abandoned railroad rights of way be made available for use as public highways or for other transportation purposes, before reverting to the owners of the land through which they pass.
The court then reviewed the reversionary language of the Act. Specifically, when the use of a railroad has ceased, either by forfeiture or abandonment, either as decreed by a court or declared by Congress, title to the land reverts to the owner of the land crossed by the right of way, except for lands embraced for a public highway project within one year of the abandonment.
Here, the evidence supported the district court’s finding that Northern Pacific physically abandoned its right of way in 1958, in that it had ceased its use and occupancy of it at that time. Further, the court noted, more than one year elapsed before the county accepted the property for a highway. Therefore, the later existence of the highway did not extinguish the Hamptons’ reversionary interest in the right of way, the court said. However, neither Congress nor a court had ever declared the right of way abandoned, as required by the Act for ownership reversion, until the district court did so in this case. The district court therefore erred when it ruled that the property reverted to the Hamptons in 1959.
The public road had already been established prior to the property reverting to the Hamptons, and its existence immediately divested their interest in that portion of the property under the Act. “In sum, the district court properly issued a declaration of abandonment, but erred applying the declaration retroactive to the date of cessation of use and occupancy of the right of way. The declaration of abandonment became effective upon entry of final judgment by the district court,” the court ruled.
The portion of the ruling declaring the right of way abandoned was affirmed, but the portion making it retroactive was reversed. The matter was remanded to the district court to begin a new one-year period to establish transportation uses for the property before it reverts to the Hamptons.
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