Newberg v. Chicago, Burlington & Quincy Railroad Company

• Citation: 231 N.W. 766,120 Neb. 171
• Decision Date: 11 July 1930
• Docket Number: 27238
• Parties: OTTO R. NEWBERG, APPELLEE, v. CHICAGO, BURLINGTON & QUINCY RAILROAD COMPANY, APPELLEE: FIRST TRUST COMPANY OF LINCOLN, APPELLANT
• Court: Supreme Court of Nebraska

231 N.W. 766

120 Neb. 171

OTTO R. NEWBERG, APPELLEE, v. CHICAGO, BURLINGTON & QUINCY RAILROAD COMPANY, APPELLEE: FIRST TRUST COMPANY OF LINCOLN, APPELLANT

No. 27238

Supreme Court of Nebraska

July 11, 1930

APPEAL from the district court for Lancaster county: FREDERICK E SHEPHERD, JUDGE. Affirmed.

AFFIRMED.

Syllabus by the Court.

Evidence examined and held to support and justify decree entered by the district court.

Additional Syllabus by Editorial Staff.

Railroad right of way and tracks over lot constitute " incumbrance" as regards right of purchaser.

Appeal from District Court, Lancaster County; Shepherd, Judge.

Action by Otto R. Newberg against the Chicago, Burlington & Quincy Railroad Company, impleaded with the First Trust Company of Lincoln, as executor of the estate of Bartlett L. Paine. From an adverse decree, the defendant Trust Company appeals.

Affirmed.

Burkett, Wilson, Brown & Van Kirk, for appellant.

Jesse L. Root, Sanden, Anderson, Laughlin & Gradwohl and Maxwell V. Beghtol, contra.

Heard before GOSS, C. J., ROSE, GOOD, EBERLY and DAY, JJ., and JAMES and WRIGHT, District Judges.

OPINION

EBERLY, J.

This is an action in equity arising out of the following transaction: At the time of his death, Dr. Bartlett L. Paine was the owner of lot 3, block 104, Lincoln, Nebraska. In his lifetime he granted the Chicago, Burlington & Quincy Railroad Company the right to extend a switch track, known as "Tyler Stub," over and across this lot. The railroad company thereupon constructed this extension and occupied a portion of this lot with their tracks. It appears that no public record was made of this transaction by Dr. Paine. When Dr. Paine died, he left a will, by the terms of which the defendant, the First Trust Company of Lincoln, was named as executor, authorized to sell all property of which the deceased died seised, and empowered and authorized as such executor to make all necessary deeds and conveyances transferring such property without license of any court. Mr. Newberg, the plaintiff, orally bargained for the purchase of this lot with this executor, and pursuant to the bargain an executor's deed was executed and delivered to the grantee. That the grantee accepted this conveyance relying upon the representations of the executor cannot be gainsaid. The following is, in substance, a resume of practically undisputed testimony on this subject: Mr. Newberg testified with reference to the negotiations for the purchase of the lot: "I asked Mr. Easterday (the authorized representative of the First Trust Company) what the size was of the lot, and he said it is 50 by 142. And I said, 'Are you sure?' And he said, 'Well, we will verify that by getting the abstract.' Mr. Easterday called in one of the assistants, or one of the stenographers, and she went to the files and brought out the abstract and we both examined the plat which was on the abstract. Mr. Easterday says: 'It is 50 by 142.' And I said, 'Mr. Easterday, if that is the case, we will buy the lot for $ 5,000.'" I took the lot in reliance "on his statement that the lot was clear, 50 by 142, and no buildings on it or tracks." Thereafter the sum of $ 5,000 was paid by Newberg to the executor in reliance on the oral representations thus made. The executor on its part executed and delivered to the purchaser a deed of conveyance of this lot bearing date 15th day of May, 1923, which was in July, 1923, delivered to and accepted by the plaintiff at the time the second and final payment was made. On April 28, 1927, it was first discovered by Newberg that a portion of the lot was occupied by the railroad tracks. Thereupon, after proper demand, this action was commenced in the district court for Lancaster county against the railroad company and "the First Trust Company of Lincoln, Nebraska, a corporation, and as executor of the estate of Bartlett L. Paine," in which plaintiff tendered a reconveyance of the property and asked for relief in equity; first, that the railroad company be required to remove the incumbrance, that is, the tracks; second, in the alternative, that, if the above relief be denied, the plaintiff be granted rescission, and the purchase price, together with taxes paid by plaintiff, refunded and returned; or, third, for the value of the property taken by the railroad tracks and damages sustained.

After trial the district court found as to the railroad company that its occupancy of a portion of the lot, initiated under the terms of Dr. Paine's letter, before the commencement of this case and before any claim was made upon said company, had developed into "an irrevocable license" to remain and the court thereupon dismissed the action against it. It may be said in passing that, in the present condition of the record, we are inclined to the view that this determination as to the railroad company's rights is not subject to serious challenge. But as between the plaintiff Newberg and the First Trust Company, as executor of the Paine estate, the trial court determined: "The deed to the property in question from Otto R. Newberg to the First Trust Company of Lincoln, Nebraska, as executor of the estate of Bartlett L. Paine, deceased, and now in the files of this court or in the hands of the clerk thereof, be turned over to the defendant the First Trust Company of Lincoln, Nebraska, as executor upon its demand for the same; that in case defendant the First Trust Company of Lincoln, Nebraska, executor, fails to take said deed and to pay to the clerk of this court for the said Otto R. Newberg the sum of $ 5,000 with interest at the rate of 7 per cent. per annum from the 15th day of May, 1923, thereon, * * * and the further sum of $ 429.46 with interest thereon at the rate of 7 per cent. per annum from this date within a period of twenty days from the entry of this decree, the said plaintiff shall have judgment against said First Trust Company of Lincoln, Nebraska, as executor of the estate of Bartlett L. Paine, deceased, for the sum of $ 1,500 with interest at the rate of 7 per cent. per annum from the said 15th day of May, 1923, together with execution for the satisfaction of the same," etc. From this determination the First Trust Company, as executor, has prosecuted an appeal.

It is the contention of the First Trust Company that the statute of limitations affords a complete defense to this action; that the executor was without authority to warrant the title, and any representations made at the time of the sale of the premises could in no manner bind the estate of Bartlett L. Paine; and that the plaintiff was entitled to neither rescission nor damages.

Taking up these questions in inverse order, it may be said the following facts seem, by fair implication at least, to be admitted by the parties. Lot 3 in suit, without the presence of the incumbrance constituted by the railroad tracks, and in the condition represented by the trust company, that is, being free of improvements or tracks, was fairly worth $ 5,000. Relying on the representations made by the executor as to the unincumbered character of the lot, Newberg purchased the same and paid $ 5,000 therefor, which representations of the trust company as to the condition of the lot were in fact untrue. The railroad tracks were at that time on a portion of this lot, and, due to the railroad company's rights in and possession of the premises, their occupancy had then ripened into "an irrevocable license" to remain. The presence of this incumbrance constituted an actual damage to the value of the lot in the sum of $ 1,500, or, in other words, the actual lot sold, because of the presence of the trackage upon it, was worth not more than $ 3,500. It would have been worth $ 5,000 had the representations believed and relied upon been true.

If it be conceded that Dr. Paine's estate is not liable on the covenants of the deed, nor because of the representations of the executor, which plaintiff relied upon at the time of the purchase, it must be admitted that to the extent of $ 1,500 there has been a partial failure of consideration in the transaction here presented, and to this extent the Paine estate has been augmented as a result of what is claimed in its behalf, solely because of lack of scienter, amounts to no more than a mistake on the part of the executor.

This court was early committed to the doctrine: "Whether in an action for damages for false representations it is necessary either to aver or prove the scienter, the authorities do not agree. The better rule, and the one adopted by this court, is that the intent or good faith of the person making false statements is not in issue in such a case." Johnson v. Gulick, 46 Neb. 817, 65 N.W 883. "A purchaser of real estate has a right to believe and rely upon representations made to him by his vendor as to the character, quality, and location of the property, when the facts concerning which the representations are made are unknown to the vendee." Hoock v. Bowman, 42 Neb. 80, 60 N.W. 389. See Farley v. Weiss, 76 Neb. 402, 107 N.W. 561. "Where one has made representations of fact shown to be false upon which the other party has relied to his damage, the intent or good faith of the party making the representations is immaterial in an action by the injured party to recoup his damages, or in an action by the former where the latter pleads the fraud of the plaintiff as a defense." Bauer v. Taylor, 4 Neb. (Unof.) 710. Indeed, the general rule appears to be: "False representations made by a vendor as to his title, though innocently made, upon which his vendee relies to his injury, may constitute such constructive fraud as will entitle the purchaser to a rescission." 5 Thompson, Real Property, 427, 428, sec. 4313. See Baker v. Maxwell, 99 Ala. 558, 14 So. 468; ...