As operators continue to develop the Utica shale in Ohio, they will likely encounter unique title issues that they have not seen before. One of those title issues arises when an instrument, such as a deed, purports to grant land to a railroad company for railroad purposes. In these instances, the question is whether the grantor conveyed a fee simple, a defeasible fee, or a right-of-way or easement to the railroad company. The answer, of course, depends upon the language the parties choose to employ in the instrument, as Ohio courts try to effectuate the parties’ intent when construing contracts. In this regard, the issue may turn on whether the instrument contains words of condition or forfeiture, or alternatively, mere “prefatory language.”
In Little Miami, Inc. v. Wisecup, 13 Ohio App.3d 239, 240, 468 N.E.2d 935 (1st Dist.1984), the Ohio’s First District Court of Appeals construed an 1840 deed that “granted, bargained, sold, aleined [sic], and convey[ed] unto The Little Miami Rail Road Company All and singular the real estate so as above described, To have and to hold the same to The Little Miami Rail Road Company, their successors and assigns forever.” The trial court found that the deed conveyed a fee simple interest to the railroad company and the abutting landowner, who had built a road across the land described in the deed, appealed. On appeal, the abutting landowner argued that the deed only conveyed an easement because it expressly stated that the railroad company was acquiring the property “to construct a Rail Road and for no other purpose.” That is to say, the deed contained “language specifically restricting the use of the property to the construction of a railroad, and there was no further langue granting a fee interest.” The railroad company, on the other hand, argued that the deed conveyed a fee simple interest because the deed did not contain any words of condition or forfeiture. The Court agreed with the railroad company and held that the deed granted a fee simple interest. It found that the granting clause did not contain any words of condition or forfeiture, meaning it purported to convey all of the grantor’s interest in the property. Additionally, it found that the deed did not contain any language expressly providing that the property would revert to the grantor in the event the railroad company failed to use the property as a railroad. Thus, the language in the deed stating that the railroad company was purchasing the realty to construct a railroad and for no other purpose was mere prefatory language, words merely describing the purpose of the acquisition, and not words of condition or forfeiture.
This decision is in accordance with a more recent decision of the Supreme Court of Ohio. In Koprivec v. Rails-to-Trails of Wayne County, 2018-Ohio-465, the Supreme Court of Ohio analyzed an 1882 deed that said the grantors “freely Grant bargain sell and convey [the property] unto the said Akron Branch of the Cleveland and Pittsburgh Rail Road Company and to its assigns forever.” Although there was no limiting language in the granting clause, the deed’s habendum clause provided that the grant was “forever for the purpose of constructing and using thereon a Rail Road . . . .” The Court rejected the adjacent landowners’ argument that the deed created a fee simple determinable, finding that the habendum clause did not contain any language that limits the conveyance or words suggesting termination. Significantly, the Court found that the habendum clause did not condition the railroad company’s right to hold the estate on its use as a railroad. Thus, the above quoted language in the habendum clause was mere prefatory language, which only indicated the purpose of the purchase, and the Court held that the deed conveyed a fee simple to the railroad company.