Omega Chemical Co., Inc. v. Rogers

• Decision Date: 02 December 1994
• Docket Number: No. S-93-269,S-93-269
• Citation: 246 Neb. 935,524 N.W.2d 330
• Parties: OMEGA CHEMICAL COMPANY, INC., Appellant, v. Wilma C. ROGERS, Appellee.
• Court: Nebraska Supreme Court

Page 330

524 N.W.2d 330

246 Neb. 935

OMEGA CHEMICAL COMPANY, INC., Appellant, v. Wilma C. ROGERS, Appellee.

No. S-93-269.

Supreme Court of Nebraska.

Dec. 2, 1994.

Syllabus by the Court

1. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such a party the benefit of all reasonable inferences deducible from the evidence.

2. Summary Judgment. Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts, and that the moving party is entitled to judgment as a matter of law.

3. Real Estate: Conveyances. A covenant against encumbrances promises the grantee that no encumbrances, liens, or servitudes exist against the land as of the date of the conveyance.

4. Real Estate: Conveyances: Words and Phrases. An encumbrance, within the meaning of a covenant against encumbrances, is every right to, or interest in, the land, to the diminution in value of the estate, but consistent with the passage of the fee by the conveyance.

5. Deeds: Real Estate: Conveyances: Limitations of Actions. An action for damages for breach of a covenant of warranty contained in a deed conveying land is an action upon a specialty and must be brought within 5 years after the cause of action accrues; this rule applies in actions for damages for breach of a covenant against encumbrances.

6. Conveyances. A covenant against encumbrances is broken when made if an encumbrance exists, and the grantee's right of action against the grantor accrues at once thereon.

7. Title: Conveyances: Limitations of Actions. A covenant against encumbrances is a present engagement that the grantor has an unencumbered title, and is not in the nature of a covenant of indemnity. The statute of limitations, therefore, commences to run at once upon the breach of the covenant.

8. Conveyances: Limitations of Actions. When an encumbrance has been barred by the passage of the statute of limitations, there is no violation of the covenant.

9. Actions: Title: Conveyances. A cause of action on a covenant of warranty or for quiet enjoyment does not accrue in favor of the covenantee until eviction or surrender by reason of a paramount title.

10. Real Estate: Title: Conveyances: Warranty. Covenants of quiet enjoyment and covenants of warranty in conveyances of real property may be breached by an eviction, actual or constructive, by reason of the hostile assertion of a paramount title holder.

11. Title: Warranty: Words and Phrases. A paramount title is one which prevails in an action or is successfully asserted; a covenant of warranty is not violated by the existence of an outstanding, but unfounded, claim upon the property.

12. Evidence: Trial: Rules of the Supreme Court. Admissions that a party has not sought to withdraw or amend conclusively establish the matter admitted.

13. Real Estate: Title: Conveyances: Costs. A grantee that has succeeded in establishing its title against one without a valid claim to the premises may not recover from a grantor the expenses of the lawsuit, because the adverse claim of the third party does not constitute a breach of the covenants by the grantor.

Duane M. Katz, Omaha, for appellant.

James D. Buser, of Gaines, Mullen, Pansing & Hogan, Omaha, for appellee.

HASTINGS, C.J., WHITE, CAPORALE, FAHRNBRUCH, LANPHIER, and WRIGHT, JJ., and BOSLAUGH, J., Retired.

FAHRNBRUCH, Justice.

Omega Chemical Company, Inc. (Omega), appeals a district court's dismissal of its action for damages against Wilma C. Rogers for her failure to defend the title to property Omega had purchased from Rogers and her late husband, Franklin P. Rogers.

We affirm the action of the district court for Douglas County in entering summary judgment in favor of Rogers and in dismissing Omega's claim.

STANDARD OF REVIEW

In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such a party the benefit of all reasonable inferences deducible from the evidence. LaBenz Trucking v. Snyder, 246 Neb. 468, 519 N.W.2d 259 (1994); Barta v. Kindschuh, 246 Neb. 208, 518 N.W.2d 98 (1994). Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts, and that the moving party is entitled to judgment as a matter of law. Id.

FACTS

Giving Omega the benefit of all reasonable inferences deducible from the evidence, we find the facts of this case are as follows:

On September 16, 1985, the Rogerses sold a parcel of land located in Ralston to Omega, a Nebraska corporation. The deed conveying title to Omega and executed by "Franklin P. Rogers and Wilma C. Rogers, husband and wife," states in part:

And the grantor does hereby covenant with the grantee and with the grantee's heirs and assigns that grantor is lawfully seised of said premises; that they are free from encumbrance except easements and protective covenants of record[;] that grantor has good right and lawful authority to convey the same; and that grantor warrants and will defend the title to said premises against the lawful claims of all persons whomsoever.

In 1989, while doing construction, Omega discovered a sewerline, not of record, running across the property in a north-south direction. Upon investigation, Omega believed that a neighboring company, Flexible Foam Products, Inc. (Flexible Foam), had an interest in the sewerline. The neighboring property was owned at least in part by the Eli Zalkin Testamentary Trust (Zalkin Trust).

A representative of Flexible Foam, who was also a trustee of the Zalkin Trust, informed Omega that Flexible Foam was the user of the sewerline, but that the sewerline was owned and operated by the City of Ralston (City). Omega then requested that the City remove the sewerline. The City ultimately informed Omega that the sewerline was a private one which was not owned or maintained by the City, and refused Omega's request.

On June 27, 1991, Omega made a demand that Wilma Rogers defend the title to the property, which Rogers refused to do. On July 3, Omega sued Rogers for damages for the "diminished value of said property by reason of said sewer line." Omega alleged that the sewerline constituted an encumbrance and cloud upon the property, contrary to the warranty provided by "the Franklin P. Rogers [sic]," and that the sewerline damaged and would continue to damage the property if not removed. Omega also filed in the county court for Douglas County an application to file a late claim against the estate of Franklin Rogers, then deceased. Although the record does not reflect the county court's ruling on the application, we assume that the application was overruled, there being no indication in the record presented us that the estate of Franklin Rogers was ever a party to the present lawsuit.

On October 10, Rogers answered, admitting that a demand had been made upon her to defend the title and that she had refused such demand, and generally denying the remaining allegations of Omega's petition. Rogers also affirmatively alleged that Omega's claim for breach of warranty against encumbrances was barred by the applicable statute of limitations; that the sewerline was not within the scope of the warranty against encumbrances; and that she did not, at any time material, have knowledge of the alleged encumbrance.

On October 23, Omega filed an equity action to quiet title naming Flexible Foam, the Zalkin Trust, the City, and others as defendants. The Zalkin Trust then asserted a counterclaim on the basis that it had acquired an easement by prescription. On January 11, Rogers filed a motion for summary judgment in Omega's law action, and on January 21, Omega filed a motion for partial summary judgment. On January 28, 1993, Flexible Foam, the Zalkin Trust, and other related entities filed disclaimers of all right, title, interest, or possession in or to the real property described in Omega's petition to quiet title.

On February 9, 1993, after a hearing in which the court took judicial notice of the quiet title action, the district court entered summary judgment in favor of Rogers and dismissed Omega's law action against Rogers for damages.

In so doing, the court noted that Omega had admitted, in response to a request for admissions by Rogers, that no person or entity had been deemed by any court to have established in any way an easement or other right to construct or maintain the sewerline, that the City had denied any interest in the sewerline, and that no person or entity had any right to construct or maintain the sewerline.

The district court further stated that, "[t]here being no ... claim which might impair the title or right of use of the property by [Omega], the presence of the pipeline ... may constitute a trespass, but does not constitute a breach of warranty against encumbrance as alleged by [Omega]."

Omega timely appealed to the Nebraska Court of Appeals. The case was removed from the Court of Appeals to this court pursuant to our authority to regulate the caseloads of the appellate courts of this state.

ASSIGNMENTS OF ERROR

Omega contends that the district court erred in (1) finding and holding that there was no claim, lien, charge, security interest, easement, right of way, or any other claim which might impair the title or right of use of the property by Omega; (2) failing to find that persons had made claim against the subject property by virtue of the presence of the sewerline and by allegations in a counterclaim in Omega's quiet title action that the sewer...