After investors build $1 million dam, Wisconsin says it owns lake

PALMYRA, Wis. — Beth Martineau might be rolling in her grave, the one at nearby Oak Knoll Cemetery marked with a stone reading, "I fought the DNR and I won."

In the late 1960s, Martineau lived and worked as an artist on Upper Spring Lake, an idyllic spot created by a 19th-century dam. She defended her privacy with fences, signs, trespass complaints and even gunshots.

In 1970 after the state tried to add the property to the Kettle Moraine State Forest, she ultimately got the Wisconsin Supreme Court to declare that the Conservation Commission —  the predecessor to the Wisconsin Department of Natural Resources — had no power to condemn the lake.

Now the fate of Upper Spring Lake, about 35 miles southwest of Milwaukee, is back in court. The current owners say they relied on the legal conclusions of Martineau's victories when they bought the property out of bankruptcy in 2008 and spent about $1 million rebuilding the dam that creates the lake and protects downstream areas of Scuppernong River.

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“We’d never have made this effort if we didn’t think we owned it," said John Taylor of Glenview, Ill. He and his friend Dave Porter of Chicago, both semi-retired commodities traders from Illinois, created Row Boat LLC to buy the property, which they hoped to use as a nearly private getaway for their families.

But those plans are on hold until the legal boundaries dispute gets settled. Taylor said title insurance is covering most of the legal costs.

After Martineau died in 1993, the property remained in a trust she created and was then sold to another owner who had planned a resort but went bankrupt. That's when Taylor, who owns a farm less than 10 miles away in Rome, Wis., got interested.

During the negotiations to buy the property out of bankruptcy in 2008, heavy rains washed out the dam. Row Boat went through with the deal anyway and then worked closely with the Wisconsin Department of Natural Resources on permitting to rebuild an improved, modern dam.

"If (the DNR) had even just said they were interested, we’d have backed off," Porter said, because they wouldn't have risked such an investment if a clear title was in doubt.

As part of the dam permitting, Row Boat conceded that the creek was navigable, and provided a means for canoers and kayakers to portage past the dam.

“We thought we’d be good neighbors by rebuilding the dam and give boat access that they never had,” Porter said.

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After the dam was completed in 2010, the lake had visitors, Taylor and Porter said. Then, state natural resources officials began informing people that it was part of the forest, and more people began making their way in, including some fishermen in motorized boats.

Some didn't respect the land, the men said. During a recent tour, a black piece of plastic the size of a barrel marred the weedy edge of the pond. The owners say they often had to clean up other trash from around the lake's edge.

So they mounted signs over the entrance from the upper Scuppernong River and at the road entrance to Martineau's old house, which is now boarded up and unoccupied. They read, in part, "WARNING THIS IS NOT DNR PROPERTY. You are entering PRIVATE LANDS. YOU ARE NOT WELCOME HERE." 

Row Boat claims it owns what a judge said in 1972 that Martineau owned: as much land as the water covered when the water at the old dam was 13 feet, 4 inches deep. Because it was somewhat lower in 1972, the judge said Martineau also had a strip of dry land varying from 6 to 50 feet around the water's edge.

Row Boat — and all previous owners going back to the original grist mill owner in the 1850s — only ever owned "flowage rights," or the right to impound water over others' land, according to state natural resources officials.

William O'Connor of Madison, Wis., a lawyer for Row Boat, said more than 65 deeds and other documents have been recorded regarding the land since the 1840s, and some basis for claiming legal ownership on other grounds.

"They're all very complicated questions," he said.

A Wisconsin Department of Natural Resources spokesman would not comment on pending litigation.

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But in an answer to the Row Boat lawsuit and a counterclaim, the state denies it is claiming any rights to land that Row Boat owns. The two to three acres at and below the dam, where the house, studio and crumbling stone mill are located are not in dispute.

It says that Martineau's case was about condemnation, and nothing in the decisions ever settled who exactly had title to which land. Neither she nor the state ever filed a specific action to address that.

The state's position is that all historical deeds are basically correct, and that the only error in the title history came in 2008 when the bankruptcy trustee deeded the property to Row Boat. But none of that mattered to the dam application process anyway, the natural resources officials said.

Taylor and Porter still feel like the state took advantage of their willingness to rebuild the dam and when it was all done, ambushed them with a new claim to lands abutting the lake, where, in theory, the state could build a boat landing and park.

That would have a much greater effect on their potential use of their property than a few kayakers and fishermen occasionally coming into the lake via the creek, Taylor and Porter said.

"We tried to just negotiate a new, clear boundary, but DNR won’t really say what they want," Taylor said.

In its counterclaim, the state contends Row Boat is exceeding the 13-foot-4-inch water level behind the dam, meaning more water is impounded and trespassing on state forest land that surrounds the lake.

Row Boat contends it owns the land by either record title or through adverse possession because of Martineau's "hostile, open and notorious" occupation for an uninterrupted 40 years, which the state never contested.

O'Connor, the Row Boat lawyer, said the dozens of recorded deeds and other instruments in the recorded chain of title have errors.

"We hope to avoid a complicated and esoteric battle over interpreting the deeds, based on longstanding actual possession of the property in question," he said. "You have probably heard the saying, possession is nine-tenths of the law." 

Follow Bruce Vielmetti on Twitter: @ProofHearsay