Opinion ID: 3001558
Heading Depth: 2
Heading Rank: 2

Heading: Effect of Disclaimer of Interest

Text: In reviewing the lower court’s decision on the merits, because this is an appeal from a grant of the Landowners’ 12 No. 07-1348 motion for summary judgment, we review the decision de novo, Jackson v. County of Racine, 474 F.3d 493, 498 (7th Cir. 2007), drawing all facts and reasonable inferences in the light most favorable to the nonmovant, the County. Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citing South v. Ill. EPA, 495 F.3d 747, 751 (7th Cir. 2007)). The facts, however, appear to be uncontested, with the dispute solely involving the legal property interests held by the different parties. Thus, to the extent that the resolution of the Disclaimer’s effect on the County’s interest involves a pure question of law, drawing upon issues of statutory interpretation, this too we review de novo. Zeigler Coal Co. v. Office of Workers’ Comp. Programs, 490 F.3d 609, 613 (7th Cir. 2007) (“We review pure questions of law de novo.”); United States v. Genendo Pharm., N.V., 485 F.3d 958, 962 (7th Cir. 2007) (“a question of statutory interpretation [is] subject to de novo review”). We note at the outset that we are provided with little guidance in addressing the effect of the United States’s Disclaimer of Interest. The statute itself, under which the United States disclaimed its interest, fails to define “disclaimer,” does not address under what circumstances a district court should “confirm” such a disclaimer, and fails to address what effect, if any, such a disclaimer has on a suit other than to divest the federal court of jurisdiction under 28 U.S.C. § 1346(f). See 28 U.S.C. § 2409a(e). Similarly, little help can be found on this matter by turning to our sister circuits or the lower federal courts. Fortunately, our task here is a narrow one. Despite the lack of clarity as to what effect the Disclaimer has on the County’s interest, the parties in this suit do not dispute that the United States properly issued its Disclaimer of Interest, and the County does not directly challenge the No. 07-1348 13 district court’s confirmation of this Disclaimer, nor raise any charge that the United States acted in bad faith. Accordingly, we also find no issue with the United States’s filing, and the district court’s confirmation, of the Disclaimer.5 Furthermore, it is unnecessary for us to deter- 5 We do note, however, that there is some tension in the case law as to whether a district court, prior to confirming the United States’s disclaimer, is to ascertain the validity of the United States’s justification for issuing the disclaimer, or whether confirmation is a mere formality. Compare Donnelly v. United States, 850 F.2d 1313, 1317 (9th Cir. 1988) (discussing how the district court confirmed the disclaimer as “valid” in light of the United States’s proper conveyance of the disputed property in accord with the governing statute), with W. H. Pugh Coal Co. v. United States, 418 F. Supp. 538, 539 (E.D. Wis. 1976) (“confirmation of the disclaimer of the United States is deemed a formality and one which this court should not deny”). There appears to be greater uniformity among the courts, however, in finding that a disclaimer should not be confirmed if the United States is acting in bad faith. See Donnelly, 850 F.2d at 1317 (also noting that the district court found the disclaimer to be made in “good faith”); see also W. H. Pugh Coal Co., 418 F. Supp. at 539 (after confirming disclaimer, stating, “If this were a situation in which the state and federal authorities were attempting to whipsaw the plaintiff and to harrass it so as to avoid a resolution of this dispute, I would be reluctant to grant the dismissal.”). In a case such as this, where the United States has filed a formal Disclaimer of Interest as part of the quiet title suit (as opposed to a claim by the United States, for example, that an alleged prior conveyance of its property served as its disclaimer of interest), we find it unnecessary for the court to examine the validity of the underlying factual and legal basis offered for filing the Disclaimer, although confirmation could (continued...) 14 No. 07-1348 mine what effect the United States’s Disclaimer had on parties aside from the County, since the only issue to determine in this suit is whether the County has superior title to the Landowners by virtue of § 912 and § 1248(c). See United States v. Oregon, 295 U.S. 1, 24-25 (1935) (“A bill to quiet title may not be defeated by showing that the plaintiff’s interest, otherwise sufficient to support the bill, is subject to possibly superior rights in third persons not parties to the suit. It is enough that the interest asserted by the plaintiff in possession of land is superior to that of those who are parties defendant.”) (internal citations omitted). Thus, our focus is truly limited to ascertaining the Disclaimer’s effect on the County’s property interest in the railway lines. In trying to determine whether the Disclaimer served to destroy the County’s property interest, it is first necessary to define “disclaimer.” Given that the statute does not define the term, we turn to the common under- standing of the word, which is that the Disclaimer operates as “[a] renunciation of [the United States’s] legal right or claim” over the railway lines. BLACK’S LAW DICTIONARY 496 (8th ed. 2004); see Bel v. United States, 452 F.2d 683, 693 (5th Cir. 1971), cert. denied, 406 U.S. 919 (1972) (quoting City Nat’l Bank & Trust Co. v. United States, 203 F. Supp. 398, 402 (S.D. Ohio 1962) (defining disclaimer as “the repudiation or renunciation of a claim or power invested in a person for which he formally alleged to be his. The refusal, or rejection of an estate or right offered to a person. The disavowal, denial, or renunciation of an interest, right, or 5 (...continued) be withheld if the United States were found to have acted in bad faith. No. 07-1348 15 property imputed to a person or alleged to be his.”); see BLACK’S LAW DICTIONARY 417 (5th ed. 1979) (defining “disclaimer” in the context of estates as “[t]he act by which a party refuses to accept an estate which has been conveyed to him.”). If the Disclaimer is deemed a “renunciation,” the issue then becomes what it is that is being renounced—that the United States ever held a reversionary interest in the land, or merely the United States’s current reversionary interest in the property. If it is the former, it would mean that § 912 and § 1248(c) were never applicable to the railway lines at issue in the suit. If instead it is the latter, then the question is whether such a disclaimer still renders § 912 and § 1248(c) wholly inapplicable to the railway lines, or whether, under the statutory scheme in § 912 and § 1248(c), the County’s interest is destroyed by the Disclaimer. We turn first to the question of whether the United States’s Disclaimer has the effect of renouncing that the United States ever held a reversionary interest in the land at issue. As the district court observed below, as a general matter, under common law principles for trusts and estates, a disclaimer or renunciation is treated as making an interest ineffective from its inception. See Jewett v. Comm’r, 455 U.S. 305, 323 (1982) (Blackmun, dissenting) (in a trust case, stating, “[a] disclaimer is a refusal to accept property ab initio”); see also RESTATEMENT (FIRST) OF PROPERTY § 231 cmt. d (1936) (in the estates context, describing how, “Normally renunciation is not manifested until a date subsequent to the time when the creating instrument becomes operative. When, however, such renunciation is manifested, the resulting ineffectiveness operates . . . as an ineffectiveness in the inception.”) However, this legal fiction does not alter whether the United States in 16 No. 07-1348 fact retained a reversionary interest in the railway lines at issue in this suit. Even if, as a general matter, the mere filing of a disclaimer of interest cannot alter the underlying history of conveyances and property interests surrounding a given piece of land, the Landowners argue that this Court should defer to the specific legal assertions made by the United States in the Disclaimer filed in this suit. Here, the Disclaimer filed by the United States Attorney’s Office on behalf of the United States did not merely disclaim the United States’s interest in the property, but also included the legal predicate for doing so—namely, that the United States had not retained any reversionary interest or right of reentry to the land ultimately deeded to the Landowners. The Landowners argue that the district court, upon confirming the Disclaimer, should have accepted these assertions at face value, and thus found that because the United States lacked any reversionary interest in the railway lines, § 912 was inapplicable to the property at issue and accordingly the County lacked any interest in the right-of-way. This, however, is not the case. The Department of Justice’s mission “[t]o enforce the law and defend the interests of the United States,” United States Department of Justice, Mission Statement, http://www. usdoj.gov/02organizations/ (last visited on March 10, 2008), and the United States Attorney’s duty to represent the United States in all civil matters, 28 U.S.C. § 547, does not bestow that office with the power to authoritatively determine mixed questions of law and fact, such as whether the United States originally maintained a reversionary interest over the railway lines at issue in this suit. Thus, the district court’s confirmation of the Disclaimer only confirmed the United States’s renunciation of its interest in the property as of the date of the Disclaimer’s No. 07-1348 17 filing—whether the United States ever in fact held a reversionary interest in the railway lines is a matter left to the courts, assuming jurisdiction over the suit still exists.6 See Marbury v. Madison, 5 U.S. 137, 177 (1803) (“It is emphatically the province and duty of the judicial department to say what the law is.”); Alaska v. United States, 662 F. Supp. 455, 457-58 (D. Alaska 1987), affirmed by Alaska v. Ahtna, Inc., 891 F.2d 1401 (9th Cir. 1989) (district court’s confirmation of United States’s disclaimer of interest did not strip the court of jurisdiction to review the Secretary of Interior’s determination of a waterway’s navigability, the sole issue in determining whether property interest originally lay with the United States or with Alaska). Assuming, then, that the United States did in fact retain a reversionary interest in the railway lines at issue in this suit, the remaining question is what legal effect, if any, the Disclaimer now has on the County’s property interest. Here too, separation of powers concerns exist, which in this case prevent the Disclaimer from effectively repealing § 912 and § 1248(c)’s applicability to this land. As has already been discussed, § 912, § 913, and § 1248(c) were passed by Congress pursuant to the United States’s reversionary interest in the railway’s right-of-way. This interest can best be characterized as a “possibility of reverter,” which only vests upon abandonment of the railway line, at which point the interest is still subject to divestment if a public highway is established within one year’s time. See Vieux v. E. Bay Reg’l Park Dist., 906 F.2d 1330, 1337 (9th 6 We note that this is not to say that the United States could not express, as a litigant in this lawsuit, the position it has adopted in the Disclaimer. We only find that the Disclaimer does not bind this Court to adopt those legal conclusions. 18 No. 07-1348 Cir. 1990). Tracking the district court’s reasoning, the Landowners assert that similarly, the County’s interest in the property cannot vest unless three contingencies occur: 1) the United States retains its reversionary interest; 2) the railway line is abandoned; and 3) a public highway is established. Accordingly, assuming abandonment has not yet occurred, the Landowners claim that the United States was free to alter, amend, or release the non-vested property interests it held, as well as those of the County. The Landowners are partially correct in their argument. As the cases cited by the Landowners to support their position reflect, when a legislature disposes of a possibility of reverter in a statute, until that interest vests into an enforceable right, the legislature is free to repeal that reversionary interest or amend the contingencies upon which the interest will vest. Independent School Dist. v. Smith, 181 N.W. 1, 2 (Iowa 1921);7 Commonwealth Transp. Comm’r v. Windsor Indus., 630 S.E.2d 514, 521 (Va. 2006) (“Thus, we are of opinion that until the possibility of having an estate in the property vested into an enforceable right, the contingencies upon which it depended and the 7 The relevant language in Independent School Dist. v. Smith states: As to the parties who might ultimately become entitled to a reversion under the provisions of the statute then existing, no right then vested. The legislature could thereafter have repealed the provision for reversion, without violating the rights of anyone. It could have again enacted different provisions pertaining to reversion, without violating the rights of anyone. In other words, no one then had a vested right in the future operation of the statute. No. 07-1348 19 procedures for exercising the right accrued remained subject to modification by future amendment.”). Thus, as reflected by Congress’s 1988 amendment to § 912 with § 1248(c), Congress was free to modify the disposal of the United States’s reversionary interest for railway lines that had not yet been abandoned according to the terms set forth in § 912. The Landowners fail to recognize, however, that there is a distinction between Congress modifying the disposal of the United States’s reversionary interest and the United States Attorney’s Office trying to do the same. While it is uncontested by the County that the United States Attorney’s Office has been granted the authority to disclaim the United States’s own interest in the property at issue, that does not give the United States Attorney’s Office the authority to also effectively disclaim the County’s statutorily created interest. See Royal Indemnity Co. v. United States, 313 U.S. 289, 294 (1941) (“Subordinate officers of the United States are without [the] power [to release or otherwise dispose of the rights and property of the United States], save only as it has been conferred upon them by Act of Congress or is to be implied from other powers so granted.”) If the United States Attorney’s Office, by filing a Disclaimer of Interest, is “free to foreclose Bayfield County’s future contingent rights” in the right-of-way as the district court maintained, this effectively amounts to the executive branch’s usurpation of Congress’s decision to bestow the County with a future, contingent property interest in the right-of-way, creating separation of powers concerns. The Landowners further argue, however, that common law principles must be applied to the property interests in § 912 and § 1248(c), in which case the Landowners claim that by the very terms of § 912 and § 1248(c), the Disclaimer serves to extinguish the County’s property 20 No. 07-1348 interest. According to the Landowners, the Disclaimer should be treated the same as a “release” of the United States’s possibility of reverter, which, as the Landowners maintain, at common law served to convert what was previously a determinable or qualified fee into a fee simple absolute. 28 AM. JUR. 2D ESTATES § 210 (2007); HERBERT T. TIFFANY & BASIL JONES, 2 TIFFANY REAL PROP. § 314 (1939). While this Court acknowledges that at common law, a “release” of a possibility of reverter generally has this effect, see RESTATEMENT (FIRST) OF PROPERTY § 58 (1936), it is still not altogether clear whether the County’s interest would invariably be extinguished under common law principles. First, the authorities cited by the Landowners do not clearly state whether such a release invariably destroys the executory limitation that would attach to the United States’s estate upon reversion of the right-of-way. See RESTATEMENT (FIRST) OF PROPERTY § 46 cmt. n (1936) (discussing springing executory limitations, and noting that when a deed “contains a limitation in favor of persons not ascertainable until after the end of such prior interests, the conveyor, or his successor in interest retains a reversionary interest which, at the end of the other created interests, becomes a present estate in fee simple subject to an executory limitation of the springing type.”). Furthermore, it is not a given that a “release” is the proper analogy to this Disclaimer under common law principles, or whether a “renunciation” is the better analog. See RESTATEMENT (FIRST) OF PROPERTY §§ 231, 233 (1936) (discussing “renunciation” and its impact on succeeding interests). Fortunately, contrary to the Landowners’ position, this Court is not required to decipher how the County’s property interest and the Disclaimer fit within common law property classifications. As the No. 07-1348 21 Supreme Court stated in an early case involving a congressional land grant to a railroad: It is always to be borne in mind, in construing a congressional grant, that the act by which it is made is a law as well as a conveyance, and that such effect must be given to it as will carry out the intent of Congress. That intent should not be defeated by applying to the grant the rules of the common law, which are properly applicable only to transfers between private parties. Missouri, Kan. and Tex. Ry. v. Kansas Pac. Ry., 97 U.S. 491, 497 (1878); Leo Sheep Co. v. United States, 570 F.2d 881, 885 (10th Cir. 1977) (“In order to determine whether there was an implied reservation of an easement of access, we look solely to the intent of Congress, as such will not be defeated by application of the rules of common law.”) (citing Missouri, Kan. and Tex. Ry., 97 U.S. at 491). This rule, specifically articulated by the Supreme Court with respect to statutorily granted property interests in the railroads, takes precedent over general language by the Supreme Court cited by the Landowners that Congress intends for common law definitions to be applied to terms not otherwise defined in a given statute. See Neder v. United States, 527 U.S. 1, 23 (1999) (“Congress intends to incorporate the well-settled meaning of the common-law terms it uses . . . ‘unless the statute otherwise dictates.’ ”) (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322 (1992)); see also Evans v. United States, 504 U.S. 255, 259-60 (1992). Indeed, courts have specifically stated, in reference to § 912, that “[t]he precise nature of [the United States’s] retained interest need not be shoe-horned into any specific category cognizable under the rules of real property law.” Marshall v. Chicago & Northwestern Transp. Co., 31 22 No. 07-1348 F.3d 1028, 1032 (10th Cir. 1994) (quoting Idaho v. Oregon Short Line R.R. Co., 617 F. Supp. 207, 212 (D. Idaho 1985)). Accordingly, the Landowners’ claim as to what effect the Disclaimer has on the County’s property interest under common law principles is immaterial. Congress, in passing § 912 and § 1248(c), provided that local governments could take claim to properly abandoned railway lines by establishing a public highway within a one-year time period. Congress has the means to further amend, modify, or repeal this property interest, but under the current terms of the statute, Congress’s intent would be frustrated by permitting the Disclaimer to extinguish local governments’ interest in establishing a public highway on these lands. Accordingly, for the reasons discussed, we hold that the United States’s Disclaimer did not serve to extinguish any interest the County holds in the railway line, assuming the United States originally retained a reversionary interest in the right-of-way and formal abandonment, according to the terms in § 912, has not yet occurred.8 In reaching 8 We observe that this holding is entirely consistent with other cases to have addressed the effect of a disclaimer of interest under 28 U.S.C. § 2409a(e). The most closely analogous case is Leisnoi, Inc. v. United States, 313 F.3d 1181 (9th Cir. 2002), in which Leisnoi, an Alaska Native village corporation, sought to quiet title against the United States with respect to land it had obtained from the United States under the Alaska Native Claims Settlement Act. Id. at 1182-83. A third-party, Stratman, who had conducted ranching operations on the land when it was federally owned, moved to intervene, claiming that the lands should be returned to the federal government because Lesnoi did not qualify as a Native Village under the Act. Id. The United States issued a disclaimer of title, which the district (continued...) No. 07-1348 23 this decision, we are mindful of the important policy considerations raised by the parties and the amicus curiae, particularly with respect to the County and Congress’s interest in preserving abandoned railway lines for conversion into trails, as opposed to the Landowners’ interest in not being stripped of land they have deemed their own for over twenty years. These policy concerns, however, are more appropriately addressed with respect to the issue of when the railway lines were abandoned according to the terms of § 912, assuming that the United States did in fact retain a reversionary interest in the property. Given that the district court based its grant of summary judgment and order quieting title in the Landowners’ favor based solely upon what we have found to be an erroneous finding regarding the Disclaimer’s effect on the County’s alleged interest in the right-of-way, we remand for consideration of whether the United States did in fact retain a reversionary interest in the land at issue and, if so, whether the railroad’s right-of-way has been abandoned according to the terms of § 912 and § 1248(c). 8 (...continued) court confirmed, then dismissing Stratman’s motion to intervene as moot. Id. at 1184. The Ninth Circuit affirmed the dismissal of the motion to intervene. Id. at 1184-85. Contrary to the Landowners’ claim that Stratman and the County are similarly situated in both cases, a clear distinction exists. Stratman had no interest in the disputed property—his sole claim was that title should remain with the United States. Id. at 1185. In contrast, the County has a statutorily created interest in establishing a public highway on the railway lines within one year of abandonment according to the terms in § 912. This distinction allows for the difference in outcome between the dismissal in Leisnoi and the continued vitality of the County’s claim at this stage of the proceedings. 24 No. 07-1348