Appeals from the United States District Court for the Western District of Wisconsin. No. 06-cv-348-bbc-Barbara B. Crabb, Judge.
The opinion of the court was delivered by: Posner, Circuit Judge.
Before POSNER, WOOD, and TINDER, Circuit Judges.
The plaintiffs are landowners in Bayfield County, a rural county at the northern tip of Wisconsin. They brought this suit to quiet title to their property, over which the County claims a right derived from federal law to build snowmobile trails; the plaintiffs contest the County's claim. The district court granted summary judgment in favor of the plaintiffs. We reversed, 520 F.3d 822 (7th Cir. 2008), on grounds unrelated to the present appeal, which is by the plaintiffs from the district court's decision on remand, rendering judgment as a matter of law for the County.
The suit arises in the first instance under state law, and since there is not complete diversity of citizenship the case might seem to lie outside federal jurisdiction. But as we held in our previous opinion, 520 F.3d at 827-28, correctly though perhaps a bit cryptically, because the property was once owned by the federal government and the plaintiffs ultimately base their suit on the terms of the original federal grants, the suit may be said to arise under federal law as well. See, e.g., Hopkins v. Walker, 244 U.S. 486, 489-90 (1917). The County, more-over, could just as well have brought the quiet-title action as the plaintiffs, and in that event the claim would have arisen under federal law because, as we'll see, that's the basis of the County's claim to a right of way. That brings the case-because a suit to quiet title is functionally a form of declaratory-judgment action (see Samuel Bray, "Preventive Adjudication," 77 U. Chi. L. Rev. 1275, 1276 (2010)), the only relief sought being a declaration of rights-within the rule that "in declaratory judgment cases, the well-pleaded complaint rule dictates that jurisdiction is determined by whether federal question jurisdiction would exist over the presumed suit by the declaratory judgment defendant." GNB Battery Technologies, Inc. v. Gould, Inc., 65 F.3d 615, 619 (7th Cir. 1995).
The case also satisfies the jurisdictional standard of Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308, 312-16 (2005), one of those cases in which the Supreme Court seems shy about taking a definite stand. See, e.g., New Hampshire v. Maine, 532 U.S. 742, 749-51 (2001), discussed in Walton v. Bayer Corp., No. 10-3462, 2011 WL 1938428, at *6 (7th Cir. May 23, 2011). Grable tells us to ask: "does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities"? 545 U.S. at 314. The answer in this case is "yes."
With federal jurisdiction secure, we turn to the merits. The material facts are uncontested. In the early days of railroading, the federal government encouraged this immensely promising mode of transportation by a variety of means, including by imposing a checkerboard pattern on large areas of federal public domain, see, e.g., Leo Sheep Co. v. United States, 440 U.S. 668, 672-73 (1979), some of it in Wisconsin. Federal statutes enacted in 1856 and 1864 divided this public domain land in Wisconsin into identical square sections, designated by alternating odd and even numbers, and gave the oddnumbered sections to states to give to railroads in fee simple, while retaining the even-numbered sections for sale by the government. Act of June 3, 1856, ch. 43, 11 Stat. 20; Act of May 5, 1864, ch. 80, 13 Stat. 66.
Railroads needed to be able to run their tracks across even-numbered sections as well as across the odd-numbered ones that they owned, since each oddnumbered one was surrounded by even-numbered ones, just as each square on a black-and-white checkerboard (unless the square is at a side or end of the board) is surrounded by squares of the other color. But the railroads didn't need all the land in either type of section for their tracks. They were expected to use part of the oddnumbered sections (which they owned) for their tracks and rent or sell the rest; the sale and rental proceeds would help not only to finance the construction or ex-tension of their lines but also to pay for the purchase or condemnation of any rights of way that they needed in the even-numbered sections. Owners and renters of land proximate to the tracks, such as farmers and lumbermen, would become part of the railroad's customer base.
The plaintiffs own lots in Bayfield County in sections numbered 21 (odd) and 32 (even). A railroad used to cross these lots, and the County premises its asserted right to build a snowmobile trail where the railroad tracks used to be on the railroad's right of way and on what the County argues is a federal "reversionary interest" in the right of way, an interest it contends was given to the County by a federal statute enacted in 1922.
We begin our analysis with the lot in the even-numbered section. It had been bought by the plaintiffs' remote predecessor from the federal government in fee simple in a series of transactions between 1882 and 1884 (remember that it was the even-numbered lots that the government sold off rather than giving to states to give to railroads). The railroad obtained a right of way over the lot in the form of an easement (a right to use a piece of land for a specified purpose, rather than fee simple), by con- demnation, and the nature of such a right may seem to nix the County's argument. For the railroad's successor abandoned the right of way; and when an ease-ment is abandoned the owner of the fee simple is revested with full rights to the property. But the County argues that, no, a federal statute enacted in 1852, and thus before the checkerboard statutes were enacted, had granted a right of way in federal lands to railroads that were "now [chartered] or that may be chartered within ten years hereafter." Act of Aug. 4, 1852, ch. 80, 10 Stat. 28. The right of way reverted-the argument continues-to the federal government when its use by the railroad ended, and the reversionary interest passed to the County by virtue of the 1922 statute.
The 10-year deadline in the 1852 Act for chartering a railroad that would obtain a federal statutory right of way was extended to fifteen years by the Act of July 15, 1862, ch. 179, 12 Stat. 577. A railroad called the St. Croix and Lake Superior Railroad was chartered in 1854, well within that period, to build a rail line that would have crossed the plaintiffs' lots. But it failed to build anything. In 1871, another railroad, the North Wisconsin Railroad, was chartered to build a rail line on the same route and eventually it (actually a successor, but we can suppress that detail) did so. But because it had been chartered after the 15-year deadline for obtaining a federal right of way expired in 1867, it acquired no rights under the 1852 Act. And as there was no corporate relationship between the St. Croix and North Wisconsin railroads-no asset or stock acquisition that might have made the latter a successor to the former (and no mention of the 1852 Act in the North Wisconsin's charter)-the chartering of the St. Croix could not be deemed the chartering of the North Wisconsin. Cf. Chicago Great Western Ry. v. Minnesota, 216 U.S. 234, 239-40 (1910); Northern Pac. Ry. v. Minnesota ex rel. Duluth, 208 U.S. 583, 587 (1908); Keokuk & Western R.R. v. Missouri, 152 U.S. 301, 304-12 (1894). The North Wisconsin implicitly acknowledged its failure to comply with a condition precedent to obtaining a right of way under the 1852 Act by using condemnation to obtain the rights of way that it needed for its railroad line.
The County argues that only the United States has standing to claim that conditions in a federal land grant have not been met. But the cases on which it relies, such as Schulenberg v. Harriman, 88 U.S. (21 Wall.) 44 (1874), and Van Wyck v. Knevals, 106 U.S. 360 (1882), concern conditions subsequent-conditions specified in the grant that would have entitled the government to rescind it; if the government isn't interested in doing that, no one can butt in. But the question is whether the North Wisconsin Railroad satisfied a condition precedent (namely, becoming chartered by 1867) to obtaining any rights under the 1852 Act. If it didn't-and it didn't-it never acquired a right of way that might have descended to Bayfield County.
In 1875 the last relevant event before the plaintiffs' predecessor perfected his acquisition of the lot in 1884 occurred-Congress authorized the Secretary of the Interior to create railroad rights of way in federal lands.
Act of March 3, 1875, ch. 152, 18 Stat. 482. The lot was still federal land when the Act was passed, but there is no indication that the North Wisconsin Railroad complied with the statutory requirements for obtaining a right of way; instead, as we said, it used condemnation. A 1916 report by the Interstate Commerce Commission on lands owned or used by the North Wisconsin described the right of way that crossed the lot as having been ...