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Court finds railroad’s arguments over dam don’t hold water

March 31, 2015

Because a railroad company failed to prove there are no genuine issues of material fact regarding its defense to a breach of covenant claim against it concerning the maintenance of a dam, the Indiana Court of Appeals reversed summary judgment in its favor and remanded for further proceedings.

Berthal and Patricia Williams brought a lawsuit against the Indiana Rail Road Company in an attempt to enforce an indenture entered into in 1901 between property owners Constantine and Lucy Stewart and John and Sarah Boston and the Southern Indiana Railway Company. According to the indenture, Southern could construct and maintain a dam on its right-of-way that would have a water depth between 14 and 20 feet. The right-of-way ran through or was adjacent to the property owners’ land.

The Williamses purchased property east of and adjacent to the right-of way in 2005; IRR acquired the railroad and right of way in May 2006. Williams sent letters to IRR in 2008 and 2010 informing it that the dam was leaking, which is causing damage to his property. The Williamses sought to enforce the indenture, meaning that IRR would have to also make sure the dam had at least 14 feet of water in it, which at the time of the lawsuit it did not contain. The indenture noted that the pond could be used for fishing, picnics and recreation use by the property owners.

IRR sought summary judgment, arguing the 1901 Indenture between the original parties was not a covenant that ran with the land; 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 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 granted summary judgment to IRR, but entered a general judgment and did not enter any specific findings regarding which of IRR’s arguments it had relied upon.

The crux of the appeal in Berthal O. Williams and Patricia Williams v. The Indiana Rail Road Company, 77A04-1311-CC-580, is whether that indenture imposed an obligation on IRR, as a successor to Southern, to maintain the depth of the pond at a level no less than 14 feet. The Court of Appeals then looked at IRR’s three arguments and determined summary judgment should be reversed.

The judges determined based on the specific language used, the original parties’ intent was for the covenant in the indenture to run with the land. The parties included specific language providing that this accumulation of water would be “of a depth of not less than fourteen or more than twenty feet at its deepest point[.]” Thus, the indenture does contain a requirement regarding maintenance of the pond between a certain depth range, the majority held.

The COA also determined there is a covenant running with the land that has created obligations on the successor parties.

“From the language of the Indenture, we conclude that the covenant for maintaining the dam and the resulting accumulation of water is a perpetual or continuing one–as long as the dam or the covenant is in existence — and does not merely cease to exist upon a failure of one of the parties’ obligations. Thus, there is the potential that it could be breached on various occasions (as long as any breach was first cured),” Judge Rudolph Pyle III wrote.

Judge Paul Mathias dissented, writing the language granted the railroad the right to construct and maintain the dam, but imposed no duty or obligation to do so.
 

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