Berthal O. Williams and Patricia Williams v. The Indiana Rail Road Company

Mar 31 2015, 10:47 am
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
Louis F. Britton John C. Duffey
Charles H. Ray Heather L. Emenhiser
Cox, Zwerner, Gambill, & Stuart & Branigin, LLP
Sullivan, LLP Lafayette, Indiana
Terre Haute, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Berthal O. Williams and March 31, 2015
Patricia Williams, Court of Appeals Cause No.
77A04-1311-CC-580
Appellants-Plaintiffs,
Appeal from the Sullivan Circuit
v. Court
Lower Court Cause No.
77C01-1206-CC-332
The Indiana Rail Road
Company, The Honorable P.J. Pierson, Judge
Appellee-Defendant
Pyle, Judge.
Statement of the Case
[1] This appeal involves an “indenture” or agreement—dating back to 1901—
between property owners and a railroad company. The indenture gave the
railroad company a right to build and maintain a dam and the resulting
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accumulation of water on the landowners’ property at a depth of fourteen to
twenty feet so that the railroad could use it for railroad purposes. More than
100 years later, subsequent property owners—Berthal O. Williams (“Berthal”)
and Patricia Williams (“Patricia”) (collectively “the Williamses”)—attempted
to enforce that indenture with a subsequent railroad—the Indiana Rail Road
Company (“IRR”)—and argued that IRR had breached the indenture. IRR
moved for summary judgment, arguing that: (1) the 1901 indenture between
the original parties was merely a personal obligation and not a covenant that
ran with the land; (2) even if it was, the express terms of the indenture did not
impose a duty on it to maintain the pond at a specified depth; and (3) even if
the indenture so required maintenance of a specific pond depth, the Williamses
could not enforce it 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 summarily granted IRR’s summary judgment
motion.
[2] The Williamses now appeal that order and argue that the trial court erred by
granting summary judgment to IRR because none of IRR’s proposed arguments
support that judgment. Because we conclude that the indenture was a covenant
running with the land, that the terms set forth in the indenture required IRR to
maintain the dam and the water level at a specified depth, and that the
indenture contained a covenant, perpetual in nature, that did not cease upon a
prior breach, we conclude that the trial court prematurely granted summary
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judgment. Accordingly, we reverse the trial court’s judgment and remand for
further proceedings.
[3] We reverse and remand.
Issue
[4] Whether the trial court erred by granting IRR’s motion for summary judgment.
Facts
[5] In 1899, in a handwritten instrument, Lucy and Constantine Stewart (“the
Stewarts”) conveyed a “perpetual” right-of-way over their land in Sullivan
County to Southern Indiana Railway Company (“Southern”) for “railway
purposes.” (App. 38). This right-of-way was granted to Southern and “its
successors and assigns[.]” (App. 38). The instrument conveying the right-of-
way was recorded that same day.
[6] Two years later, in April 1901, the Stewarts, along with another couple,1
entered into an “Indenture” with Southern.2 The Indenture provided:
THIS INDENTURE MADE AND ENTERED INTO this 27th
day of April in, 1901, by and between the Southern Indiana
Railway Company, party of the first part, and Constantine W.
1
The other couple that entered into the Indenture were John W. Boston and Sarah A. Boston (collectively,
“the Bostons”). For simplicity, we will refer to the Stewarts and the Bostons collectively as “the Stewarts”
when discussing the original landowners in this Indenture.
2
An indenture is a “formal written instrument made by two or more parties with different interests,
traditionally having the edges serrated, or indented, in a zigzag fashion to reduce the possibility of forgery
and to distinguish it from a deed poll.” BLACK’S LAW DICTIONARY 887 (10th ed. 2014).
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Stewart and Lucy A. Stewart, husband and wife, and John W.
Boston and Sarah A. Boston, husband and wife, parties of the
second part, WITNESSETH:
That Whereas the said Constantine W. Stewart and wife and
John W. Boston and wife, of the said parties of the second part
are the owners of the following described real estate situate[d] in
the County of Sullivan, State of Indiana, to-wit:
The South East Quarter (1/4) also the North East Quarter (1/4)
of the South East Quarter (1/4) of Section One (1) Township
Nine (9) North of Range Eight (8) West.
And [w]hereas the said party of the first part [Southern] is the
owner of a right of way running through or adjacent to the said
above described lands and whereas the said party of the first part
[Southern] is desirous of erecting and constructing and
maintaining a dam on its said right of way for the purpose of
accumulating a body of water to the end that it may use the same
for railway and other purposes, which said dam it desires to erect
and construct at or near a railroad bridge on its said right of way
through and under which said bridge a stream of water flows and
which said stream passes through the above described lands.
Now, [t]herefore, in consideration of the benefits accruing to said
owners of said lands and in further consideration of the right
which is hereby granted unto said owners of stocking the pond or
accumulation of water occasioned by the erection and
construction of said dam with game fish, the parties of the first
part [Southern] will also assist in stocking [the] pond with fish
and the right of said owners and others, by their consent, to take
fish from said pond, and the further consideration of the right
which is hereby granted to said owners to use said water for farm
or other purposes, and the right to cut and use or dispose of ice
therefrom, and the right to use said accumulation of water for
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boating purposes, the said parties of the second part [the Stewarts
and the Bostons] hereby grants [sic] unto the said party of the
first part [Southern] the right to construct and maintain at or near
the bridge aforesaid a dam which shall be not less than fourteen
feet or more than twenty feet in height and of sufficient length to
properly and effectually dam the water flowing through the said
stream so as to acquire an accumulation of water of a depth of not less
than fourteen or more than twenty feet at its deepest point, and so as to
cause an accumulation of water which may cover whatever
portion of said above described lands as the said dam so
constructed may reasonably cause to be overflowed, except that
the overflow shall not cut off access to a strip of land on the north
east part of said land, and the said owners of said lands hereby
grant unto the said party of the first part [Southern] the right to
maintain the said dam and said accumulation of water on said lands,
with the further right to use the above described lands for public
gatherings and pic-nic purposes, it being understood that the
parties of the second part [the Stewarts and the Bostons] in the
boating, pic-nic and public gathering purposes hereinbefore
granted to them shall have the right of all revenue derived
therefrom. It is understood that the said second party [the
Stewarts and the Bostons] may, at his option, terminate the right
to have pic-nic and public gatherings on said lands.
It is further agreed by the parties hereto that said first part
[Southern] shall construct a wife[3] fence around said pond or
body of water, within ten feet of the water line of said pond, the
fence to be maintained by the first party [Southern].
IN WITNESS WHEREOF, The Southern Indiana Railway
Company has caused in duplicate its corporate name to be
hereunto subscribed by its President, and its corporate seal to be
3
The Indenture uses the term “wife,” but it may have possibly meant “wire.”
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affixed and attested by its secretary, this 27th day of April 1901.
And the parties of the second party [the Stewarts] have hereunto
set their hands and seals this 27th day of April 1901.
(App. 39) (emphases added).4 Thereafter, Southern constructed a dam, Hickory
Dam, on its right-of-way. At some later point, Southern also built a water
tower and pump adjacent to the dam. The Indenture was later recorded in
January 1945.
[7] In November 2005, the Williamses purchased property east of and adjacent to
the railroad’s right-of-way from Alice Jane Schollaert via a warranty deed.5 The
legal descriptions for the two tracts of land conveyed contained references to the
railroad right-of-way as a boundary line for the tracts of land. Additionally, the
warranty deed provides that it is “[s]ubject to any and all easements,
agreements and restrictions of record.” (App. 86).
[8] In May 2006, IRR acquired the railroad, including the right-of-way, through a
quit claim deed and easement agreement with Soo Line Railroad Company
d/b/a Canadian Pacific Railway. After IRR acquired the right-of-way, it did
not use the pond or any water from the pond.
4
We cite to the Indenture that was included in IRR’s designated evidence on summary judgment. This
Indenture was certified by the Sullivan County Recorder as a true and complete copy. We note that the
Indenture attached to the Williamses’ amended complaint was not a certified copy and has some
misspellings, some words missing from it that are contained in the certified copy, and some words inserted
that are not included in the certified copy.
5
The record before us does not reveal when the Stewarts and the Bostons conveyed their land referenced in
the Indenture or how or when Alice Jane Schollaert obtained ownership of the land.
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[9] In August 2008, Berthal sent a letter to IRR to notify it that there was a “large
sink hole” near the dam and railroad that, in Berthal’s opinion, was
“undermining the integrity of [IRR’s] dam and the overlying rail tracks.” (App.
65). In the letter, Berthal opined that the “dangerous condition” of the sink
hole would “eventually result [in] a significant surface, subsidence, possibly the
washout of the dam, and potentially a catastrophic derailment.” (App. 65).
Berthal also referenced the Indenture entered into by IRR’s and Berthal’s
“predecessors” as well as the dam and “resulting lake” that were “created
under” the 1901 Indenture. Berthal stated that this “agreement provides for
certain obligations to maintain the lake” and alleged that these obligations were
now IRR’s obligations. (App. 65). In his letter, Berthal stated that the overflow
water from the dam was “exiting the lake through the sink hole” and that the
sink hole had been there since at least 2004. (App. 65).
[10] Approximately two years later, in June 2010, Berthal sent IRR another letter
regarding the sink hole and his concerns regarding it. Berthal also stated that
“the sink hole is allowing the water level of the lake to fall 1 to 2 feet below an
overflow device installed by Canadian Pacific Railway in 2004” and “to a level
significantly below the level which the Railroad is required to maintain[.]”
(App. 67). Berthal also stated that, pursuant to the Indenture, IRR was required
to “maintain an accumulation of water of a depth of not less than 14 nor more
than 20 feet at its deepest point in the pool of the lake created by the dam.”
(App. 67).
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[11] On June 4, 2012, the Williamses filed a complaint against IRR and then filed an
amended complaint on November 5, 2012. In their amended complaint, the
Williamses—citing to the Indenture entered by their “predecessor-in-interest”
and IRR’s “predecessor-in-interest”— asserted that “[i]n consideration for
permitting Southern to construct the dam and create and use the pond upon the
Real Estate, Southern agreed, among other things, to maintain the dam and
pond once constructed in accordance with the requirements specified in the
Indentured Agreement.” (App. 16). Thus, the Williamses alleged that IRR, as
successor to Southern, was required but had “refuse[d]” to maintain the dam
and the pond as specified in the Indenture between the parties’ predecessors-in-
interest. (App. 17). They sought “an injunction and judgment against [IRR] to
repair the dam and to bring the pond into compliance with the requirements of
the Indentured Agreement[.]” (App. 17). In other words, the Williamses
sought to have the trial court order IRR to maintain the pond on the
Williamses’ property so that it would be at a depth of at least fourteen feet.
Additionally, they sought damages “in an amount sufficient to compensate
[them] for their loss[.]” (App. 17).
[12] Thereafter, IRR filed a motion for summary judgment, arguing that: (1) the
1901 Indenture between the original parties was not a covenant that ran with
the land; (2) 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 (3) even if the
Indenture so required, the Williamses could not enforce the Indenture against
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IRR because any alleged breach occurred before the Williamses purchased the
property, causing any such covenant to cease running with the land.
[13] In its designated evidence, IRR included an affidavit from Jennifer Born
(“Born”), an historian who served as a consultant for IRR to conduct research
about the railroad in Indiana, wrote a book about the history of Indiana
railroads, and assisted IRR in the organization of its historic archives. In her
affidavit, Born explained the history of steam engines and the importance of
railroads being able to use or acquire a water source to power its steam engines.
She explained that in 1901—when the Indenture was entered—railroads
operating in Indiana, including Southern, used locomotives powered by steam.
Born further explained that in order to obtain water sources for their steam
locomotive, railroads frequently entered into agreements with landowners to
obtain water from an existing water source or to create a pool of water from
which they could take water. She attested that the Indenture was “consistent
with the agreements railroads entered into with property owners to provide a
water source for their locomotives.” (App. 60). Finally, she explained that by
the late 1930’s, railroads in Indiana began using diesel engines and that they
had not used steam engines since 1954. She also attested that Southern’s water
tower and pump, which would have been used to “siphon and hold water from
the pond[,]” had not been used since 1954. (App. 61).
[14] IRR also included an affidavit from its vice-president of engineering, Peter Ray
(“Ray”), who attested that IRR had not used the pond or any water from the
pond since it acquired the railroad right-of-way in 2006. Ray also attested that
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the dam was “structurally sound and [was] periodically inspected and
maintained by [IRR] in accordance with the requirements set forth in 49 C.F.R.
Part 213.” (App. 64). Additionally, Ray attested that the “trackage and right-
of-way (the ‘dam’) [were] periodically inspected” by the FRA [Federal Railroad
Administration] for compliance with 49 C.F.R. Part 213 (“Track Safety
Standards)” and that this inspecting agency had “not taken any exceptions to
the maintenance and condition of this trackage and right-of-way.” (App. 64).
[15] Thereafter, the Williamses filed a response to IRR’s summary judgment motion
as well as a cross-motion for summary judgment. As part of its cross-motion,
the Williamses argued that IRR breached the Indenture by refusing to maintain
the dam and by causing the pond’s water level to go below fourteen feet. The
Williamses also argued that the Indenture was a covenant that ran with the
land.
[16] In response to IRR’s summary judgment motion, the Williamses argued that
the Indenture did impose a duty on IRR to maintain the pond at a specified
depth. They also acknowledged that the Indenture referred to a “right” to
maintain the dam and pond but argued that it was in reference to a property
right that was not previously conveyed in the railroad right-of-way. The
Williamses also argued that any breach of the Indenture that occurred before
their purchase of the property did not preclude the covenant imposed in the
Indenture from running with the land because the breach was not a “total”
breach and was, instead, a continuous breach with the damages continuing to
accrue. The Williamses contended that IRR had “no right to cease to maintain
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the dam and pond simply because [it] claim[s] [it] no longer ha[s] a use for the
water from the pond.” (App. 83-84).
[17] As part of their designated evidence, the Williamses included an affidavit from
Berthal, who attested that the “dam [was] in a state of disrepair” and that “the
pond at its deepest point [was] approximately 5 feet deep.” (App. 88). He also
attested that, as he understood the Indenture, “the owner of the railroad right-
of-way that crosses the property [was] require[d] to repair the dam so that the
pond d[id] not drop below 14 feet at its deepest level.” (App. 88). As for
damages, Berthal attested that “[t]he slow draining of the pond has caused
damage to the [Williamses’] property and continues to cause damage” and that
their “property’s value without the pond [was] significantly lower than with the
pond.” (App. 89). They contended that if the pond were to become completely
drained, then there would be a total breach.
[18] When IRR filed its summary judgment reply and response to the Williamses’
cross-motion for summary judgment, it moved to strike, in part, Berthal’s
affidavit.6 IRR also included additional designated evidence in the form of a
supplemental affidavit from Ray. In this affidavit, Ray attested that the pond
on the Williamses’ property was “principally fed by [rain] water runoff” and
“not fed by a natural water course, such as a stream or river[,]” and [a]s a result,
silt (mud) probably ha[d] accumulated on the bottom of the pond over many
6
IRR moved to strike parts of paragraphs five and seven of Berthal’s affidavit.
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years” and was therefore “at least one factor in the water depth of the pond at a
level of less than fourteen feet.” (App. 108).
[19] Subsequently, the Williamses filed their summary judgment reply. They
argued, in relevant part, that the covenant was still enforceable despite a breach
prior to their ownership of the property, arguing that the breach continued and
was not a total breach. The Williamses included a supplemental affidavit from
Berthal, who attested that his “opinion” was that “the value of the property
decreases as the pond level decreases, with the ultimate damage being a
decrease in the property’s value of $200,000 if the pond is to become completely
drained.” (Appellee’s App. 18). The Williamses also filed a motion to strike
Ray’s supplemental affidavit.7 Thereafter, IRR moved to strike, in part,
Berthal’s supplemental affidavit.8
[20] After holding a hearing, the trial court issued an order in which it summarily
granted IRR’s summary judgment motion. The trial court also granted IRR’s
motion to strike, in part, Berthal’s supplemental affidavit and denied the
Williamses’ motion to strike Ray’s supplemental affidavit. The trial court made
no ruling on IRR’s motion to strike, in part, Berthal’s affidavit. On appeal, the
Williamses do not challenge the trial court’s rulings on these motions to strike.
7
The Williamses moved to strike paragraphs six and seven of Ray’s supplemental affidavit.
8
IRR moved to strike paragraphs six through 8 of Berthal’s supplemental affidavit and Exhibit A-3 attached
thereto.
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The Williamses now appeal the trial court’s order granting IRR’s motion for
summary judgment.9
Decision
[21] The Williamses contend that the trial court erred by granting IRR’s motion for
summary judgment.
[22] When reviewing a trial court’s order granting summary judgment, we apply the
same standard as that used in the trial court. Kopczynski v. Barger, 887 N.E.2d
928, 930 (Ind. 2008). Summary judgment is appropriate only where the
designated evidence shows “that there is no genuine issue as to any material
fact and that the moving party is entitled to judgment as a matter of law.” Ind.
Trial Rule 56(C). The moving party “bears the initial burden of making a prima
facie showing that there are no genuine issues of material fact and that it is
entitled to judgment as a matter of law.” Gill v. Evansville Sheet Metal Works, Inc.,
970 N.E.2d 633, 637 (Ind. 2012). If the moving party meets this burden, then
the non-moving party must designate evidence demonstrating a genuine issue of
material fact. Id. “[A]n adverse party may not rest upon the mere allegations
or denials of his pleading, but his response, by affidavits or as otherwise
provided in this rule, must set forth specific facts showing that there is a genuine
issue for trial.” T.R. 56(E). When the defendant is the moving party, the
defendant must show that the undisputed facts negate at least one element of
9
The Williamses do not appeal the trial court’s denial of their cross-motion for summary judgment.
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the plaintiff’s cause of action or that the defendant has a factually unchallenged
affirmative defense that bars the plaintiff’s claim. Dible v. City of Lafayette, 713
N.E.2d 269, 272 (Ind. 1999). “Just as the trial court does, we resolve all
questions and view all evidence in the light most favorable to the non-moving
party, so as to not improperly deny him his day in court.” Alldredge v. Good
Samaritan Home, Inc., 9 N.E.3d 1257, 1259 (Ind. 2014) (internal citations
omitted).
[23] The issue in this summary judgment involves contract interpretation,
specifically the application and meaning of the Indenture that was entered in
1901 between parties—Southern and the Stewarts—who are not parties to this
dispute or appeal. The crux of this appeal 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 fourteen feet. “Summary judgment is especially
appropriate in the context of contract interpretation because the construction of
a written contract is a question of law.” TW Gen. Contracting Servs., Inc. v. First
Farmers Bank & Trust, 904 N.E.2d 1285, 1287–88 (Ind. Ct. App. 2009) (citing
Colonial Penn Ins. Co v. Guzorek, 690 N.E.2d 664, 667 (Ind. 1997)), reh’g denied.
“The ultimate goal of any contract interpretation is to determine the intent of
the parties when they made the agreement.” Citimortgage, Inc. v. Barabas, 975
N.E.2d 805, 813 (Ind. 2012), reh’g denied. To do so, “we begin with the plain
language of the contract, reading it in context and, whenever possible,
construing it so as to render each word, phrase, and term meaningful,
unambiguous, and harmonious with the whole.” Id. A court should construe
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the language of a contract so as not to render any words, phrases, or terms
ineffective or meaningless. Hammerstone v. Ind. Ins. Co., 986 N.E.2d 841, 846
(Ind. Ct. App. 2013).
[24] Here, the Williamses filed their complaint against IRR, arguing that IRR had
breached the Indenture by failing to comply with its obligation—imposed under
the Indenture that had been entered into by Southern and the Stewarts in
1901—to maintain the dam and the pond depth. The Williamses argued that,
as a result of that breach of the Indenture, they were entitled to injunctive relief
and damages.
[25] When IRR filed its motion for summary judgment, it set forth three arguments
as to why it believed the Williamses were not entitled to the relief requested.
The trial court granted summary judgment to IRR by entering a general
judgment and did not enter any specific findings regarding which of IRR’s
arguments it had relied upon to grant the summary judgment motion.
[26] On appeal, the Williamses argue that the trial court’s general judgment granting
IRR’s motion for summary judgment cannot be affirmed because all the
theories argued by IRR do not support a grant of summary judgment in IRR’s
favor. Specifically, the Williamses argue that: (1) the Indenture was a covenant
that ran with the land and, thus, applicable to the parties; (2) the Indenture
imposed an obligation or duty on IRR to maintain the dam so that the pond
depth did not fall below fourteen feet; and (3) any breach of the covenant in the
Indenture that may have occurred before the Williamses’ purchase did not
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preclude it from continuing to run with the land.10 We will review each
argument in turn.
1. Applicability of Indenture – Covenant Running with the Land
[27] The first summary judgment argument set forth by IRR that is now challenged
by the Williamses is whether the Indenture was a covenant running with the
land and, thus, applicable to the parties on appeal.
[28] Neither the Williamses nor IRR were a party to the Indenture. The
“obligations of a contract are ordinarily limited to the parties by whom they are
made, and those who stand in privity with them, either in estate or contract.”
Evansville & S.I. Traction Co. v. Evansville Belt Ry. Co., 44 Ind. App. 155, 162, 87
N.E. 21, 23 (1909). Privity of estate is an exception to the privity of contract
requirement. Columbia Club, Inc. v. Am. Fletcher Realty Corp., 720 N.E.2d 411,
417 (Ind. Ct. App. 1999), trans. denied. A “[p]rivity of estate that can render
parties liable upon contracts not of their own making relate solely to covenants
that run with land, or some interest therein.” Evansville, 87 N.E. at 24. “Thus,
the law of contracts and property may both be implicated in a breach of
contract action, especially when a contract concerns promises in instruments
10
The Williamses also argue that there was a genuine issue of fact regarding whether the dissipation of the
water depth of the pond was caused by IRR’s alleged failure to maintain the dam. IRR made this argument
in response to the Williamses’ breach of contract argument made in its cross-motion for summary judgment.
The Williamses do not appeal the denial of their cross-motion; thus, we will not address this argument.
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relating to real estate, which are known as covenants.” Columbia Club, 720
N.E.2d at 417.
[29] “Generally, covenants are agreements to do, or not to do, a particular act.” Id.
“In modern usage, the term ‘covenant’ generally describes promises relating to
real property that are created in conveyances or other instruments.” Id.
Covenants can be negative, affirmative, or restrictive. Id. at 418. Negative
covenants prohibit one of the parties from doing some act, whereas affirmative
covenants require the covenantor to perform some act. Id. Restrictive
covenants prohibit one of the parties from using the property in a particular
manner. Id. Here, the Indenture involved a requirement that the railroad—
upon exercising its right to build a dam—maintain the dam and the
“accumulation of water” on the landowner’s property. (App. 39). Thus, the
provisions of the Indenture established an affirmative covenant.
“Land use covenants,” such as the one in this case, create rights and duties
between the original promising parties, where one party receives a “benefit”
and the other party carries a “burden.” Columbia Club, 720 N.E.2d at 418.
These covenants may be either “personal” or may “run with the land.” Id. A
personal covenant “is enforceable only by the original parties to an agreement.”
Id. On the other hand, a covenant that runs with the land, also called a “real
covenant,” id., can be enforced “by or against those who have succeeded to an
estate in real property to which the covenant relates.” Keene v. Elkhart Cnty.
Park & Recreation Bd., 740 N.E.2d 893, 896 (Ind. Ct. App. 2000), reh’g denied.
See also BLACK’S LAW DICTIONARY 445 (10th ed. 2014) (defining a covenant
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running with the land as a “covenant intimately and inherently involved with
the land and therefore binding subsequent owners and successor grantees
indefinitely”).
[30] Even in the early twentieth century, our Indiana Supreme Court noted that “[i]t
is not always easy to mark the distinction between those covenants which are
personal and those which run with the land.” Millikan v. Hunter, 180 Ind. 149,
100 N.E. 1041, 1042-43 (1913).
When an instrument conveys an interest or right in land, and at
the same time contains a covenant in which a right attached to
the estate or interest granted is reserved, or when the grantee
covenants that he will do some act on the estate, or interest
granted, which will be beneficial to the grantor, either as respects
his remaining interest in the land, out of which an interest is
granted, or land adjacent thereto, such covenant is one which
may be annexed to and run with the land and bind its owners
successively. When such grant is made, and contains a covenant
so expressed as to show that it was reasonably the intent that it
should be continuing, it will be construed as a covenant running
with the land.
Id. (quoting Conduitt v. Ross, 102 Ind. 166, 26 N.E. 198 (1885)) (internal
quotation marks omitted).
[31] More recently, we have explained that a covenant imposing an affirmative
burden will run with the land if: “(1) the covenantor and covenantee intend it
to run; (2) the covenant touches and concerns the land; and (3) there is privity
of estate between subsequent grantees of the covenantor and covenantee.”
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Columbia Club, 720 N.E.2d at 418 (citing Moseley v. Bishop, 470 N.E.2d 773, 776
(Ind. Ct. App. 1984)).
[32] At the summary judgment level and on appeal, IRR concedes that the covenant
at issue in the Indenture touches and concerns the land and that there is privity
of estate between the relevant parties. Thus, the parties dispute only whether
the original covenanting parties intended the covenant to run with the land.
Therefore, we must determine “whether the covenanting parties objectively
intended the covenant to be enforceable against remote grantees to the land.”
Id.
[33] “The covenanting parties’ intent must be determined from the specific language
used and from the situation of the parties when the covenant was made.” Id. at
419. “[N]o particular language is required to demonstrate an intent to run with
the land.” Id. “Although a statement in the covenant that it is binding on the
covenantor’s heirs and assigns is strong evidence of intent that the covenant
should run with the land, the omission of such language . . . does not
conclusively prove the covenant was not intended to run” with the land.
Moseley, 470 N.E.2d at 776-77.
[34] Here, the Stewarts, in a written instrument, originally conveyed a perpetual
right-of-way easement to Southern for railway purposes. Two years later, again
in a written instrument, they conveyed to Southern the right to build a dam on
that previously granted right-of-way. The Indenture referred to Southern’s
interest in the previously conveyed railroad right-of-way and acknowledged that
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it was the “owner” of the right-of-way. (App. 39). In regard to the right to
construct the dam, the Indenture provided that Southern had the right to
construct the dam so as to “dam the water flowing through the . . . stream” that
ran through the Stewarts’ land and to “acquire an accumulation of water” (or
pond) on their land that Southern could use for railway purposes. Id. In
essence, the Stewarts conveyed Southern an affirmative easement.11 In
exchange for this right to dam the stream and create an accumulation of water
(as well as the right to use the pond for gathering and picnic purposes),
Southern agreed to maintain the dam and the resulting accumulation of water
at a specified depth—a minimum of fourteen feet and a maximum of twenty
feet. In consideration for granting these rights to the railroad, the Stewarts
obtained the benefit of an accumulation of water that it too could use for
farming and various recreational purposes.
[35] While the Indenture does not contain an express statement of intent, it does
provide that the railroad agreed to “maintain” the dam and resulting pond. We
have previously explained that “maintain” means “‘to hold or keep in any
particular state or condition, esp. in a state of efficiency or validity; to support,
sustain, or uphold; to keep up; not to suffer to fail or decline.’” Keene, 740
N.E.2d at 897 (quoting WEBSTER’S NEW INTERNATIONAL DICTIONARY (2nd
ed. 1934)). Additionally, our Indiana Supreme Court explained that the use of
11
An “affirmative easement” is “[a]n easement that forces the servient-estate owner to permit certain actions
by the easement holder, such as discharging water onto the servient estate.” BLACK’S LAW DICTIONARY 622
(10th ed. 2014).
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the word “maintain[]” in a covenant signals that the parties intended a
covenant to be a continuing one because such word was one of “projection into
the future.” Millikan, 100 N.E. at 1042. Furthermore, the language of the
Indenture provides that the railroad “shall” build a fence around the “pond or
body of water” and maintain that fence, which further points to an intent that
the parties intended the covenant to run with the land. (App. 39). See Midland
R. Co. v. Fisher, 125 Ind. 19, 24 N.E. 756, 757 (1890) (concluding that an
agreement to erect and maintain fence was a covenant running with the land);
Stover v. Harlan, 87 Ind. App. 347, 154 N.E. 882, 883 (1927) (holding that an
agreement to erect and maintain fence was a covenant running with the land).
The covenant to maintain the dam and pond depth was part of a conveyance of
the right to build the dam on the railroad right-of-way. Maintaining the
accumulation of water in the pond at a depth of at least fourteen feet directly
concerns the land and the right to build and maintain the dam. It is not merely
a personal covenant concerning something collateral to the land. Based on the
specific language used, we determine that the original parties’ intent was for the
covenant in the Indenture to run with the land. See, e.g., Keene, 740 N.E.2d at
895 (holding that a covenant, which was in a 1924 deed, to “construct and
forever maintain a proper bridge” over a canal and that would “provide safe
and secure crossing over said canal for all farming operations” was a covenant
running with the land); see also Terry Weisheit Rental Properties, LLC v. David
Grace, LLC, 12 N.E.3d 930, 938 (Ind. Ct. App. 2014) (explaining that intent for
a covenant to run with the land can exist even though the deed does not contain
an express statement of intent), reh’g denied.
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[36] Furthermore, the situation of the parties at the time the covenant was made also
leads to a determination that the parties intended the Indenture to run with the
land. IRR’s designated evidence shows that when the Indenture was made in
1901, Southern and other railroads were using steam engines that required a
water source and that these railroads frequently entered into agreements with
landowners in order to obtain a water source for those steam engines.
Additionally, this designated evidence indicates that the water from the pond at
issue was indeed used for the railroad’s steam engines. IRR’s designated
evidence further reveals that the railroad used steam engines (and, thus, the
water in the pond) for more than four decades after the Indenture was entered.
Although railroads now use diesel engines instead of steam engines, the
designated evidence does not reveal that there was knowledge in 1901 that
steam engines were on the way out or that the water would no longer be needed
such that the parties would have intended for the covenant not to run with the
land.
[37] We acknowledge that IRR presented designated evidence indicating that they
have not used the water from the pond for railway purposes since 1954 when
they completely ceased using steam engines. While IRR may not be using the
water accumulated from the dam, there appears to be no dispute that the dam is
still present and that it is required to maintain it. Indeed, IRR’s designated
evidence shows that they continue to inspect and maintain the dam pursuant to
federal regulations. Thus, they appear to acknowledge that this requirement to
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maintain the dam ran with the land because Southern exercised its right to build
the dam.
[38] Because the facts surrounding the Indenture and the language used suggest that
the parties intended the covenant to run with the land, we conclude that the
covenant in the Indenture was one that runs with the land. Thus, if the trial
court granted summary judgment to IRR based on this theory, it would have
been error. See, e.g., Keene, 740 N.E.2d at 899 (holding that remote grantee was
bound by covenant running with the land despite the fact that the remote
grantee did not enjoy the same significant benefit as the original grantee);
Columbia Club, 720 N.E.2d at 420 (noting that given the importance of the
covenant, it was “improbable” that the parties intended it to be purely personal
and not binding on subsequent grantees); Mosely, 470 N.E.2d at 777-79 (holding
that an 1896 agreement regarding installing and “permanently maintain[ing]”
drain tile was held to be a covenant running with the land and imposing an
obligation on a remote grantee to maintain and replace the tile); Pittsburgh,
Cincinnati, Chicago & St. L. Ry. Co. v. Wilson, 34 Ind. App. 324, 72 N.E. 666, 667-
68 (1904) (holding that a railroad, which was subject to a real covenant to make
and maintain a farm crossing over the railroad’s line of track that divided a
landowner’s farm, was obligated to rebuild the crossing for the landowner after
the original crossing was destroyed).
2. Obligation under the Indenture – Requirement to Maintain Pond Depth
[39] We next turn to IRR’s second argument set forth on summary judgment, which
challenged its obligation under the Indenture. IRR argued that even if the
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Indenture did indeed run with the land, it did not impose an obligation or duty
on it to maintain the pond at a depth of at least fourteen feet. The language of
the Indenture provided, in part, that the Stewarts “grant[ed]” Southern “the
right to construct and maintain . . . a dam” and “the right to maintain the said
dam and said accumulation of water” on their land. (App. 39). IRR contended
that the Indenture merely afforded it the “right” to maintain the pond depth
between fourteen and twenty feet but that it did not require it to do so. To
support its argument, IRR relied upon this Court’s opinion in Erwin v. HSBC
Mortgage Srvs., Inc., 983 N.E.2d 174 (Ind. Ct. App. 2013), trans. denied.
[40] On appeal, the Williamses contend that the “intent [wa]s for Southern, and its
successors, to maintain the dam so that the pond d[id] not fall below fourteen
feet in depth.” (Williamses’ Br. 10). They further assert that if the original
parties did not intend for Southern and its successors to have such a duty or
obligation then they would not have included specific language regarding the
minimum and maximum depth of the water that the dam accumulated. They
argue that IRR’s argument would render meaningless the language regarding
the specific depth of the pond. They also assert that when the Indenture makes
reference to the right to construct and maintain a dam, “it is referencing a
property right that was not previously conveyed to Southern in the original
right-of-way.” (Williamses’ Br. 11).
[41] The arguments presented requires us to interpret the Indenture, which is a
question of law. “The primary purpose in the construction of contracts is to
ascertain and give effect to the mutual intentions of the parties.” Hutchinson,
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Shockey, Erley & Co. v. Evansville-Vanderburgh Cnty. Bldg. Auth., 644 N.E.2d 1228,
1231 (Ind. 1994), reh’g denied. “[S]pecific words and phrases cannot be read
exclusive of other contractual provisions.” Columbia Club, 720 N.E.2d at 419.
“We read the language of a real covenant in the ordinary and popular sense,
and not in a technical or legal sense.” Keene, 740 N.E.2d at 897. “We presume
that the parties intended for every part of a deed to have some meaning, and we
favor a construction that reconciles and harmonizes the entire deed.” Id.
[42] As discussed above, the language of the Indenture reveals that when the
Stewarts granted Southern the “right to construct and maintain” the dam, they
also effectively conveyed an affirmative easement, allowing Southern to cause
an “accumulation of water” on their land as a result of Southern’s damming of
the stream. (App. 39). 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[.]” Id. Thus, the Indenture does
contain a requirement regarding maintenance of the pond between a certain
depth range.
[43] Furthermore, we do not find IRR’s reliance on this Court’s opinion in Erwin to
be dispositive. In that case, we distinguished between a duty and a right in the
context of a negligence case. Erwin, 983 N.E.2d at 180-81. After a child
drowned in a pool of a landowner who had abandoned his house when he filed
bankruptcy, the child’s parents filed a negligence claim against various parties,
including the homeowner association (“HOA”) and its management company.
Id. at 176-78. The HOA and management company filed a motion for
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summary judgment, alleging that they owed no duty to the child, and the trial
court granted their motion. Id. at 178.
[44] On appeal, the plaintiff argued that the HOA’s and management company’s
duty to protect the child arose from the HOA’s declaration of covenants
document, which provided that the HOA had a “right” to enforce the
covenants therein. Id. at 180. We disagreed and explained that the document
provided a “general right of enforcement” but did “not impose a duty or
obligation” on the HOA or management company to exercise that right. Id.
[45] We find Erwin to be distinguishable. That case involved the analysis of the
existence of a duty in a negligence case; whereas, this case deals with a breach
of covenant involving real property. Under the language used in the Indenture,
the railroad was granted a right to construct the dam that would result in an
accumulation of water on the landowners’ property. Unlike the right in Erwin,
here, the railroad exercised its right to construct the dam that would result in an
accumulation of water on the landowners’ property. Once it exercised that
right, the language in the Indenture required it to “maintain” the dam and
resulting accumulation of water at the depth range specified by the parties—a
minimum of fourteen feet and a maximum of twenty feet.
[46] Accordingly, we conclude that the Indenture—which we held was a covenant
running with the land—does contain a requirement regarding maintaining the
depth of the pond or accumulation of water on the Williamses’ land. “[O]ne
who takes real property subject to covenants running with land set forth in a
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deed is bound by those covenant as if he were a party to the original
transaction.” Keene, 740 N.E.2d at 899. We, however, make no determination
regarding whether IRR has or has not complied with the requirement contained
in the Indenture. We merely hold that, if the trial court granted summary
judgment to IRR based on the theory that the Indenture contains no
requirement regarding water depth, then it would have been error.
3. Ability to Seek Relief under the Indenture – Continuation of Covenant
[47] Lastly, we address the Williamses challenge to IRR’s third summary judgment
argument, which challenged the Williamses’ ability to seek relief for any breach
of the Indenture.
[48] IRR argued at the summary judgment level, and continues to do so on appeal,
that the letters that it received from Berthal in 2008 and 2010—and then
included as designated evidence—show that any breach of the Indenture
occurred in 2004, which was one year before the Williamses purchased the
property. IRR argued that—even assuming the Indenture was a covenant that
ran with the land and contained a requirement regarding the maintenance of
the pond at a particular depth—the covenant in the Indenture ceased to run
with the land when it was breached prior to the Williamses’ purchase of the
property. In support of its argument, IRR cited to Junction Ry. Co. v. Sayers, 28
Ind. 318 (1867). IRR also cites to the Indiana Law Encyclopedia for the
proposition that “a covenant when broken ceases to run with the land.” 8
INDIANA LAW ENCYCLOPEDIA, Covenants § 9 (2013) (citing Moseley, 470
N.E.2d 773).
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[49] The Williamses argue that if the trial court relied upon IRR’s argument to grant
its summary judgment motion, then the trial court erred. They argue, in part,
that IRR’s reliance on Junction Railway is not controlling because any breach
that may have occurred prior to their purchase was not a “total” breach in
which all the damages accrued to the prior owner. Instead, they contend that
the breach was continuous—as the depth of the pond continues to dissipate—
and they allege that they have suffered damages in the form of the decreased
value of their property. In support of their argument, they cite to Martin v.
Baker, 5 Blackf. 232 (Ind. 1839) and other nineteenth century cases dealing with
the covenant of seisin.12
[50] First, turning to IRR’s reliance on the Indiana Law Encyclopedia (“ILE”), we
find it to be misplaced. The sentence cited by IRR is from the section of the
ILE dealing with the duration of a covenant. The full paragraph from which
the quoted phrase comes provides as follows:
A real covenant generally survives as long as the estate with
which it runs, absent some indication that the original
covenantors intended to limit its duration. Furthermore, a
covenant when broken ceases to run with the land. However,
covenants may be perpetual, and a perpetual maintenance
12
A covenant of seisin is a “covenant, usu. appearing in a warranty deed, stating that the grantor has an
estate, or the right to convey an estate, of the quality and size that the grantor purports to convey.” BLACK’S
LAW DICTIONARY 445 (10th ed. 2014).
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obligation in a real covenant may include the obligation to
rebuild as well as to repair.
8 INDIANA LAW ENCYCLOPEDIA, Covenants § 9 (footnotes omitted). While
this secondary source indicates that a covenant will cease to run with the land
upon a breach, the case upon which it relies does not so hold. See Moseley, 470
N.E.2d at 773-80. Instead, given the nature of the covenant made—to maintain
the dam and accumulating water between fourteen and twenty feet—and the
lack of language regarding a limitation to the covenant, we conclude that it is
more of a continuing or perpetual covenant as long as the dam or the covenant
is still in existence. We have explained that “[a]n agreement in which the time
of performance is not otherwise limited is presumed to continue for a
reasonable time” and that “absent some indication that the original covenantors
intended to limit its duration, a real covenant generally survives as long as the
estate with which it runs.” Moseley, 470 N.E.2d at 779 (citations omitted).
Such a continuing covenant has the potential of being breached on more than
one occasion, especially where the breach has been cured. Thus, any breach
that may have occurred prior to the Williamses’ purchase of the property did
not necessarily terminate the covenant or preclude it from running with the
land. See The Winterton, LLC v. Winterton Investors, LLC, 900 N.E.2d 754, 763
(Ind. Ct. App. 2009) (noting the difference between a breach of contract and
termination of a contract and explaining that generally the parties’ obligations
or duties under a contract end only when a contract is terminated and not with
a breach), trans. denied.
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[51] Furthermore, we conclude that IRR’s reliance on Junction Railway is also
misplaced. In Junction Railway, a railroad and a landowner, Hamilton, entered
into a verbal agreement in 1853 that the railroad could change the course of a
stream of water on Hamilton’s land (which was used to propel two mills) upon
the condition that the railroad would provide a new channel for the redirected
water. Junction Ry. Co., 28 Ind. at 318-19. The agreement called for the railroad
to cut the new channel to a depth that would preserve and maintain the dam in
the mills so as to keep the water therein at a specified level and at a width that
was wide enough to carry off the water from the stream. Id. at 319. The
railroad also agreed to erect and maintain a levee high and strong enough to
protect the mills from water damage. Id. Hamilton subsequently conveyed the
real estate to Sayers in 1855. Id. Thereafter, the land and mills were flooded
and damaged after heavy rains in 1865. Id. at 319-20. Sayers brought suit
against the railroad, claiming that the railroad did not comply with its
agreement with Hamilton because it had cut the channel so narrow that it did
not carry off surplus water and had not built or maintained a levee strong
enough to prevent water from damaging the mills and land. Id. at 320.
[52] On appeal, the railroad challenged the trial court’s overruling of a demurrer to
Sayer’s complaint. When reversing the trial court’s judgment, our Indiana
Supreme Court stated:
It appears by the averments of the complaint, that the agreement
to construct a new channel of proper depth and width, and a
levee of sufficient strength, was broken by the appellant while the
property was still owned by Hamilton, and we do not think that
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the subsequent sale of the property to the appellees transferred to
them any right of action for the violation of the agreement. If the
verbal agreement to make and maintain the channel could be
regarded as a covenant, yet, the breach having occurred before
the purchase by the appellees, they took the land as it was; and if
the easement of the appellant in the land proves an incumbrance
to the estate, the relief, if any, must be found in an action upon
the covenants in the deed conveying the title to them.
In the discussion following the Spencer's case, 1 Smith's Lead.
Cas., 165, it is said: “The current of American authority tends,
with but little exception, toward the position that, on total
breach, a covenant, though annexed to the realty, becomes a
mere personal right, which remains with the covenantee or his
executors, and does not descend with the land to heirs, nor run
with it on any future assignment to third parties. Where the right
of action falls, there it lies.” The demurrer to the complaint
should have been sustained.
Id. (emphasis in original).
[53] We cannot agree with IRR that Junction Railway is dispositive and entitled them
to summary judgment. First and foremost, the agreement involved in that case
was an oral agreement between parties, which does not create a covenant
running with the land. See Bartlett v. State ex rel. Hamilton, 186 Ind. 16, 114 N.E.
692, 693 (1917) (holding that an oral agreement regarding maintenance of a
fence entered between original parties was not a covenant running with the land
that bound subsequent grantee); Hull v. Breedlove, 89 Ind. App. 460, 165 N.E.
328, 328-29 (1929) (explaining that oral agreement was not a covenant running
with the land and not binding on a subsequent purchaser without notice).
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Additionally, the breach in that case was one that occurred as soon as the
channel was built, failing to comply with the specifications of the verbal
agreement.
[54] Here, however, the Indenture or agreement between the parties was set forth in
a written instrument that was recorded and involved a covenant that was tied to
an easement. The covenant to maintain the dam and the pond within a
specified depth range was attached to the affirmative easement allowing the
railroad to cause an accumulation of water on the landowners’ property. Here,
the landowner (the Stewarts) granted a right to the railroad (Southern) to build
a dam on its previously granted perpetual railroad right-of-way easement and
granted an affirmative easement that allowed the railroad to cause the resulting
dammed water to create a pond on the landowner’s property. In consideration
thereof, the railroad agreed to maintain the dam; maintain the pond at a depth
between fourteen and twenty feet; and to build and maintain a fence around the
pond. “It is well settled that . . . a covenant in a deed of conveyance of a right
of way to a railroad company runs with the land, and is available for the
protection of the grantor owning the adjacent land, or his remote grantee,
against the railroad company claiming and occupying under such conveyance,
whether as the immediate grantee, or as a remote grantee or successor.”
Pittsburgh, 72 N.E. at 667. Furthermore, “[a]n agreement in which the time of
performance is not otherwise limited is presumed to continue for a reasonable
time[;] [n]evertheless, absent some indication that the original covenantors
intended to limit its duration, a real covenant generally survives as long as the
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estate with which it runs.” Moseley, 470 N.E.2d at 779. Thus, we conclude that
IRR’s argument—that the covenant ceased running with the land upon a
possible breach prior to the Williamses’ purchase—and its supporting citations
do not hold water.
[55] Instead, we conclude that this Court’s opinion in Keene supports a conclusion
that the covenant contained in the Indenture did not cease altogether upon any
potential breach that may have occurred in 2004.13 In Keene, Interstate Public
Service Company (“IPSCO”) purchased a 100-foot wide strip of land from the
Darrs so that IPSCO could dig a hydraulic canal through the strip. Keene, 740
N.E.2d at 895. The sale of the strip of land caused the Darrs’ land to be divided
into two separate parcels. Id. The 1924 deed between IPSCO and the Darrs
provided that, in consideration for the sale of the strip of land, IPSCO agreed to
“construct and forever maintain a proper bridge over the canal to be
constructed over and above said lands, which bridge shall be one constructed
and maintained as to provide safe and secure crossing over said canal for all
farming operations upon land now owned” by the Darrs. Id. The language of
the deed also specified that the covenant was to run with the land. Id.
Thereafter, IPSCO built the canal and then the bridge over the canal, thus
connecting the Darrs’ property. Id. IPSCO later conveyed the strip of land and
canal to Northern Indiana Public Service Company, who then conveyed it to
13
Because we rely upon this case, we will not address the Williamses’ contention that this issue should be
decided by relying on cases dealing with the covenant of seisin, which is a covenant of title and different from
the covenant at issue.
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the Elkhart County Park and Recreation Board (“the Board”). Id. The Keenes
then acquired the two parcels of land from the Darrs and continued to use them
as farm land. Id.
[56] In 1996, the Keenes filed suit against the Board, arguing that it had failed to
comply with the covenant in the 1924 deed and alleging that the Board had
failed in its obligation to construct and maintain a bridge suitable for farming
purposes. Id. The Keenes requested the trial court to direct the Board to make
the necessary repairs, and the Board argued that the Keenes’ easement and its
obligation to maintain the bridge had been extinguished by a prior action to
quiet title to the canal land, which included the strip dividing the Keenes’ land.
Id. at 896. On interlocutory appeal, in an unpublished memorandum decision,
another panel of this Court held that the quiet title action neither extinguished
the Keenes’ easement nor the Board’s obligations under the 1924 deed. Id.
[57] Thereafter, the Keenes moved for partial summary judgment, arguing that the
deed obligated the Board to maintain the bridge so that it would support
reasonable modern farming operations. Id. The Board, filing its own partial
summary judgment motion, argued that it was only obligated to maintain the
bridge in a manner that would support farming operations as they existed at the
time of the conveyance – thus, in 1924. Id. The trial court agreed with the
Board, “concluding that the bridge was sufficient in the 1920s, when built, and
the original specifications remain the standard for maintenance today.” Id.
(internal quotation marks and citation omitted).
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[58] On interlocutory appeal, the Keenes argued that the bridge, originally built by
IPSCO, was no longer suitable for modern farming operation, and they asserted
the Board was and would be obligated under the original covenant to maintain
(and possibly rebuild) the bridge so that it was suitable for modern farming
operations. Id. at 897. The Board responded that IPCO had discharged its
obligation to build the bridge and the only duty left for the Board was to
maintain the originally built bridge so that it would accommodate farming
operations as they existed at the time of the original deed. Id. The Board also
argued that even if it was required to maintain the bridge in a manner suitable
for current farming operations, the Board would be subjected to a maintenance
obligation that would be too uncertain to be enforceable. Id. Thus, there was
no issue regarding whether the covenant in the 1924 deed ran with the land; the
only issue was the Board’s current and future obligations, as canal land
successor or remote grantee, under the 1924 deed.
[59] We reversed the trial court and held that Board had the obligation to maintain
the bridge in a manner that would accommodate modern farming operations.
Id. at 899-900. We held that the Board was obligated to maintain the bridge,
despite the fact that it had not gained a significant benefit from the ownership of
the canal lands as compared to IPSCO, who used it for its hydroelectric
generation operations. Id. at 899. We also explained that
[c]ovenants should not be interpreted contrary to their underlying
purpose and legal effect simply because the interpretation may
reduce further litigation or provide better protection to one party.
We have previously indicated that the potential expense
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associated with fulfilling one’s obligation under a real covenant
should not affect a party’s obligation to perform . . . The deed
plainly shows that the parties intended that the owner of the
canal lands, currently the Board [as a successor grantee], would
be obligated in perpetuity to furnish a bridge suitable for use in
connection with the farming operations being performed on the
adjacent property.
[60] Id. at 900 (internal citations omitted). As for the Board’s argument that the
maintenance obligation would be too uncertain, we concluded that “the fact
that the parties did not agree upon a fixed schedule of maintenance or decide in
advance the exact specifications of future improvements d[id] not render the
covenant too uncertain to be enforceable.” Id. at 899. We further concluded
that the covenant would “remain sufficiently definite to guide [the parties’]
obligations in the future[,]” thus, implying that the covenant that ran with the
land that was contained in the original deed would continue in the future
despite the Board’s current failure to comply with it. Id.
[61] Here, as in Keene, 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). See Block
v. Ebner, 54 Ind. 544, 547-48 (1876) (explaining that a continuing covenant,
such as a landlord’s covenant to repair, may have successive breaches and that
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it is not a defense to a suit for the breach of a continuing covenant to allege that
there was a former breach of the same covenant). The designated evidence set
forth by IRR—the moving party in this summary judgment action—shows that
the dam is still in existence, that it continues to maintain the dam, and that it is
even reviewed under federal safety guidelines. IRR, as summary judgment
movant, did not designate any evidence that it had abandoned its affirmative
easement that allowed it to cause an accumulation of water on the Williamses’
land. It also did not designate any evidence that it was not aware of its
responsibilities under the Indenture.
[62] IRR’s whole argument is premised upon the assumption that a breach of the
covenant occurred in 2004, prior to the Williamses’ and IRR’s ownership of
their respective property and associated rights. To support this premise, IRR
cites to the two letters that Berthal sent to it in 2008 and 2010, which IRR
included in its designated evidence. IRR asserts that these two letters show that
the depth of the pond had diminished, which they contend means that there
was a breach, at that time, of the covenant to maintain the pond depth.
[63] The Williamses, however, brought this suit based upon IRR’s failure to comply
with the covenant in the Indenture, not any breach that may have occurred
prior to both parties’ relevant property interests. IRR’s last argument amounts
to a defense to the continued applicability of the Indenture and the obligations
contained therein. Therefore, as the moving party in this summary judgment
action, IRR was required to show that it had a factually unchallenged
affirmative defense that bars the plaintiff’s claim. See Dible, 713 N.E.2d at 272.
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IRR, however, did not designate any evidence to show whether or not any such
breach had been cured. If it had been cured (and the water level was then back
to a depth between the required fourteen to twenty feet), then the alleged breach
at issue could be a subsequent breach or failure to comply with the obligations
set forth in the Indenture. This would create a question of fact, making
summary judgment inappropriate.
[64] Summary judgment is proper where the movant has shown, through its
designated evidence, that there is no genuine issue of as to any material fact and
that it is entitled to judgment as a matter of law. Because IRR’s last argument
contains questions of fact, we conclude that summary judgment would not have
been appropriate if based on this argument. Accordingly, we hold that the trial
court prematurely granted summary judgment to IRR, and we reverse the trial
court’s entry of summary judgment in IRR’s favor.
[65] We are mindful that, on summary judgment, we are obligated to construe the
evidence in favor of the non-moving party and resolve all doubts against the
moving party. Dunaway v. Allstate Ins. Co., 813 N.E.2d 376, 384 (Ind. Ct. App.
2004). Even if we believe that the non-moving party will not be successful at
trial, summary judgment should not be granted where material facts conflict or
conflicting inferences are possible. Id.; see also Hughley v. State, 15 N.E.3d 1000,
1003-04 (Ind. 2014) (explaining that “summary judgment is not a summary
trial” and recognizing that summary judgment is “not appropriate merely
because the non-movant appears unlikely to prevail at trial”). Our reversal of
the trial court’s grant of summary judgment should not be construed as an
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opinion on the merits of the Williamses’ case or whether they will be able to
show that the lowered pond depth was caused by IRR’s maintenance of the
dam. Nor do we express any opinion whether the Williamses are entitled to
their requested injunctive relief and damages. However, because IRR has failed
to prove there are no genuine issues of fact regarding its defense to the
Williamses’ breach of covenant claim against it, we reverse the trial court’s
entry of summary judgment and remand for further proceedings.
[66] Reversed and remanded.
Friedlander, J., concurs.
Mathias, J., dissents with separate opinion.
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IN THE
COURT OF APPEALS OF INDIANA
Berthal O. Williams and Case No. 77A04-1311-CC-580
Patricia Williams,
Appellants-Plaintiffs,
v.
The Indiana Rail Road
Company,
Appellee-Defendant.
Mathias, Judge, dissenting.
[67] I respectfully dissent.
[68] I believe that the resolution of this case is to be found in the plain language of
the indenture itself. As the majority recognizes, the indenture grants to the
railroad:
the right to construct and maintain . . . a dam which shall be not less
than fourteen feet or more than twenty feet in height and of
sufficient length to properly and effectually dam the water
flowing through the said stream so as to acquire an accumulation
of water of a depth of not less than fourteen or more than twenty
feet at its deepest point[.]”
Appellant’s App. p. 39 (emphasis added).
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[69] This language grants to the railroad the right to construct and maintain a dam
sufficient to acquire an accumulation of water of a depth not less than fourteen
but not more than twenty feet. It imposes no duty or obligation to do so. We
previously delineated the difference between a right and a duty or obligation in
Erwin v. HSBC Mortgage Services, 983 N.E.2d 174 (Ind. Ct. App. 2013), trans.
denied. Although the majority is correct that Erwin was a negligence case, it
nevertheless dealt with the interpretation of a covenant of a home-owners
association that provided that the association “the right to enforce” the terms of
the covenant. Id. at 180. We held that this did not equate to a duty or obligation
on the part of the association to enforce the terms of the covenant. Id.
[70] The same is true here. The indenture at issue gives the railroad the right to build
and maintain a dam; it imposes no duty or obligation on the railroad to either
build or maintain the dam. Accordingly, I respectfully dissent from the
majority’s conclusion, and I would affirm the order of the trial court granting
summary judgment in favor of the railroad.
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