Northwestern Public Service Co. v. Chicago & N. W. Ry. Co.

• Decision Date: 04 September 1969
• Docket Number: Nos. 10547,10563,s. 10547
• Citation: Northwestern Public Service Co. v. Chicago & N. W. Ry. Co., 170 N.W.2d 351, 84 S.D. 271 (S.D. 1969)
• Parties: NORTHWESTERN PUBLIC SERVICE COMPANY, a Corporation, Plaintiff and Appellant, v. CHICAGO AND NORTH WESTERN RAILWAY COMPANY, a Corporation, Defendant and Appellant, and Fred E. Ellwein, Defendant and Respondent.
• Court: South Dakota Supreme Court

Page 351

170 N.W.2d 351

84 S.D. 271

NORTHWESTERN PUBLIC SERVICE COMPANY, a Corporation Plaintiff and Appellant, v. CHICAGO AND NORTH WESTERN RAILWAY COMPANY, a Corporation Defendant and Appellant and Fred E. Ellwein, Defendant and Respondent.

Nos. 10547, 10563.

Supreme Court of South Dakota.

Sept. 4, 1969.

Rehearing Denied Oct. 8, 1969.

William S. Churchill, of Churchill, Sauer, Manolis & Hoyt, Huron, for plaintiff and appellant.

A. D. Sommervold, of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendant and appellant.

Ross H. Oviatt, of Loucks, Oviatt, Bradshaw & Green, Watertown, for defendant and respondent.

HALL, Circuit Judge.

This is a declaratory judgment suit to determine the rights and obligations of the parties under a license agreement given by defendant railway company to plaintiff Northwestern Public Service Company for the construction of a power line along railway property and deeds thereafter given by defendant railway company to defendant Ellwein covering a portion of the railway property included in the license agreement.

The license agreement entered into by defendant railway company and plaintiff, dated January 26, 1959, covered the property later platted as Ellwein's Outlots number 1 and number 2 and the adjoining railway property extending for a considerable distance, as shown by plats made a part thereof. By this agreemnt, defendant railway company licensed plaintiff to construct, maintain and use an electric transmission line upon defendant railway property at Watertown, South Dakota, for an indefinite period, beginning October 19, 1958, and continuing until terminated by the written request of the licensee or the railway company.

Paragraph #8 of the license agreement provides specifically that the railway company or the license shall have the right to revoke the license at any time by giving 30 days written notice, and upon revocation of the license the licensee will, at its own expense, promptly remove its facilities from the railway property. The license provided for payment by the licensee to the railway company of an annual rental of $640.00 in advance. The license further provides that the benefits of the license shall accrue to the railway company, its successors and assigns.

On March 11, 1966, defendant Ellwein submitted an offer to purchase from the defendant railway company property subsequently platted as Ellwein's Outlots number 1 and number 2. A part of this offer to purchase provided:

'Seller shall convey or cause said premises to be conveyed to buyer or his nominee by quit claim deed subject to the exceptions and reservations and in accordance with the other terms and conditions shown on the reverse side hereof.'

On the reverse side of said Offer to Purchase under Section A--Exceptions, there are included Sub-paragraph (8) and Subparagraph (12) which provide as follows:

'(8)--Rights of any Government Agency, public or quasi public utilities to occupy said premises for the use and maintenance of existing conduits, sewers, drains, water mains, gas lines, electric power lines and other utilities, whether or not of record.'

and

'(12) Existing Leases and Licenses.'

The reverse side, or page 2, of this Offer to Purchase, under Section B--Reservations, Sub-paragraph (2) provides as follows:

'(2) A reservation of the right and privlege for the continued maintenance, operation and use of all existing driveways, roads, conduits, sewers, water mains, gas lines, electric power lines, wires and other utilities and easements of any kind whatsoever on said premises, whether or not of record, including the repair, reconstruction and replacement thereof.'

The Offer to Purchase included an addendum providing that the conveyance should be

'Subject to the terms of the License with NWPS Co. for power line crossing sales area.'

By two separate deeds, dated June 13, 1967, defendant railway company conveyed to Fred E. Ellwein, Ellwein's Outlots number 1 and number 2. These two deeds are exactly the same in form, with the single exception of the description of the real property and are quit claim deeds. Each of these deeds contains the following provisions:

'Subject, however, to the terms of the License with Northwestern Public Service Company for the power line crossing the above described real estate.'

and

'Excepting and reserving, however, unto the Grantor, its lessees, licensees, successors and assigns, the right to maintain, operate, use, reconstruct and replace any and all existing conduits, sewer, water mains, gas lines, electric power lines, communication lines, wires and other utilities on said real estate.'

There is no language in any of the instruments, other than that set forth above, which may be construed as an exception or reservation to the railway company of the right to terminate the license or the right to rental payment.

At the time of said Offer to Purchase and at the time of the execution and delivery of said deeds, plaintiff Northwestern Public Service Company had constructed and was maintaining a high-voltage electric transmission line over and across the railway company's property covered by the license; said electric transmission line running over and across said Ellwein's Outlots number 1 and number 2.

Defendant Ellwein, on September 11, 1967, served upon plaintiff a notice of revocation of license, to terminate the license given by defendant railway company to plaintiff as it may have affected Ellwein's Outlots number 1 and number 2.

Following the service of notice of revocation of license upon plaintiff, this action was commenced under the provisions of the Uniform Declaratory Judgment Act, SDCL 1967 Ch. 21--24, (SDC 37.01) seeking judicial determination of the rights of the several parties.

A motion by defendant railway company for summary judgment was denied by the trial court and defendant Ellwein's motion for summary judgment was granted, quieting title in the defendant Ellwein to the property covered in the deeds, and ordering the plaintiff Northwestern Public Service Company to forthwith remove its property from said premises. By separate appeals plaintiff and appellant Northwestern Public Service Company and defendant and appellant Chicago and North Western Railway Company contend that the trial court failed to properly construe the basic documents of the transaction, consisting of the license given by defendant railway company to plaintiff, the offer to purchase presented by defendant Ellwein to defendant railway company and accepted by it, and the deeds given by the defendant railway company to defendant Ellwein.

Appellants contend that the motion by the defendant Ellwein for summary judgment should have been denied and the motion for summary judgment by defendant railway company should have been granted under the terms of the quit claim deeds for the reason that such conveyances expressly recited that the title conveyed was subject to the terms of the license for the existing transmission line, and excepted from the conveyance of title to Ellwein and reserved to the grantor, the defendant railway company, its lessees and licensees, the right to maintain the electric transmission line.

The provision in each of the deeds that the conveyance was 'subject, however, to the terms of the license with Northwestern Public Service Company for the power line crossing the above described real estate,' together with the presence of the power line across the lots conveyed, clearly gave defendant Ellwein knowledge of the power line and the license referred to above.

This court in Renner v. Crisman, 1964, 80 S.D. 532, 127 N.W.2d 717, defined the words 'subject to' as used in a conveyance as being a term of qualification and in the ordinary sense of the words meaning that the conveyance is 'subordinate to,' 'subservient to,' 'limited by,' or 'charged with,' and nothing in the use of these words connotes reservation or retention of property rights.

The words 'excepting' and 'reserving,' as used in the above quoted clause of the deeds, indicate a withholding from the grant of some estate or right in the subject of the grant. Grand Crossing Land & Improvement Company v. City of Mobridge, 1917, 39 S.D. 574, 165 N.W. 988.

Northwestern Public Service Company's right to continue to maintain its transmission line over the lots deeded to Ellwein is challenged by Ellwein on the ground that the exceptions in the conveyances could not vest any title or interest in a stranger. Northwestern Public Service Company, prior to the execution and delivery of the deeds by Chicago & Northwestern Railway Company to defendant Ellwein, had no rights as to the land conveyed except its rights for the electric transmission line provided by the terms of the license agreement. There is no claim by the Northwestern Public Service Company that it acquired any additional rights by such conveyances, and it contends only the continued right to maintain its electric transmission line under the terms of the license agreement.

'An exception of an interest or right already existing in the stranger operates according to its terms as an exception from the grant, although it does not alter or enlarge existing rights or interests in the premises which are outstanding in the stranger at the time of the deed.' 23 Am.Jur.2d, Deeds, § 280, p. 315; 88 A.L.R.2d 1222, Sections 17 and 18; Stetson v. Nelson, 1962, N.D., 118 N.W.2d 685.

When considered in the light of the license agreement, the existing power line and the meaning of the terms under established law of this state, it is clear that the parties' intentions, as shown by the reservations and exceptions in the deeds executed by the defendant railway company, was to reserve from the operation of the deeds and retain in the grantor railway company the right to maintain, operate, use, reconstruct and replace the electric transmission line in existence across the lots conveyed. Defendant railway company retaining this right...