COA reverses for couple, against Noblesville in adverse possession dispute

The Indiana Court of Appeals has reversed in favor of two longtime Noblesville residents who exercised control over an abandoned railroad right of way for decades, finding the residents reasonably believed they were paying taxes on the right of way during a period of adverse possession.

For 46 years, Dennis and Vicki Millikan owned a property in Noblesville whose entire northern boundary was bordered by a Conrail railroad right of way. To the north of the railroad right of way and the Millikan Property is the Park 32 West subdivision, where Lot 5 of the subdivision and the Millikans’ property is divided by the railroad right of way.

A dispute eventually arose between the Millikans and Kace LLC, which purchased Lot 5 in 2011, concerning a portion of the railroad right of way. The Millikans had exercised control over the right of way in 1982 after Contrail abandoned the track, planting grass and trees on the spot and maintaining that landscaping for the next 28 years.

The couple recorded an Affidavit In Support Of Vesting Interest In Abandoned Railroad Right Of Way in 1991, which claimed that the Millikans owned the disputed property in fee simple but that a deed containing a complete description of the railroad right of way was not known to exist. The affidavit was also stamped as “duly entered for taxation,” but no property taxes were ever assessed on the disputed property.

In 2014, Noblesville showed interest in acquiring the old railroad right of way for use as the Midland Trace Trail. Despite knowing of the Millikans’ claim of ownership to the disputed property, the city entered into an agreement with Kace, by which Kace was to transfer title to a portion of the disputed property to Noblesville.

The Millikans in 2018 filed their complaint for title by adverse possession and trespass against the city, then in 2019 filed a motion for summary judgment as to their claim. Following a hearing, the Hamilton Circuit Court denied the Millikans’ motion for summary judgment and granted summary judgment to the city.

Specifically, the trial court held that that the Millikans had satisfied “the common law elements of adverse possession to the Disputed Property” but “failed to prove they have substantially complied with the requirements of [Indiana Code section 32-21-7-1], which requires an adverse claimant to have a reasonable and good faith belief that [they] paid the Special Assessments due during the period of adverse possession.”

In response, the Millikans filed a motion to correct error, arguing that title had irreversibly vested in them many years before any special assessments were assessed against the disputed property. When the trial court denied the motion to correct error, the couple appealed in Dennis Millikan and Vicki Millikan v. City of Noblesville and KACE, LLC, 20A-PL-1061.

The couple argued, among other things, that they had already obtained title to the disputed property before the special assessments were even assessed. They also contended that even if they were required to comply with Indiana Code § 32-21-7-1(a) after the 10-year possessory period ended, they satisfied the statute’s good faith requirement because they recorded the 1991 affidavit claiming ownership of the disputed property, and the recorder’s office marked that affidavit as “duly entered for taxation.”

“Although they were mistaken in their belief that they obtained possession of the Disputed Property pursuant to then Indiana Code section 8-4-35-5, contrary to the trial court’s findings, the Millikans were not paying taxes on one property (the south right of way) and not another (the Disputed Property) during the period of adverse possession. The designated evidence showed that no taxes or assessments were due for the Disputed Property until after the period of adverse possession had passed,” Judge James Kirsch wrote for the Indiana Court of Appeals.

The appellate court ultimately concluded that the Millikans substantially complied with the statutory tax payment requirement because they had a reasonable and good faith belief that they were paying the taxes during the period of adverse possession.

“This is particularly true because there were no taxes or assessments assessed on the Disputed Property for a least 28 years after the Millikans began asserting control and possession of the Disputed Property and for at least 18 years after they filed their 1991 Affidavit,” Kirsch wrote.

“We, thus, find that the trial court erred in granting summary judgment in favor of the City and in denying the Millikans’ motion for summary judgment. We reverse and remand to the trial court to enter summary judgment in favor of the Millikans,” the appellate panel concluded.