Walters v. Sporer , 298 Neb. 536 ( 2017 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
WALTERS v. SPORER
Cite as 298 Neb. 536
John D. Walters, appellant, v. Melanie Griffith Sporer
and Jay A. Sporer, Trustees of the R evocable I nter
Vivos Trust of Melanie Griffith dated December 5,
2000, and Douglas M. Lau and Debra L. Lau,
husband and wife, appellees.
___ N.W.2d ___
Filed December 29, 2017. No. S-16-623.
1. Specific Performance: Equity: Appeal and Error. An action for spe-
cific performance sounds in equity, and on appeal, an appellate court
tries factual questions de novo on the record and, as to questions of both
fact and law, is obligated to reach a conclusion independent from the
conclusion reached by the trial court.
2. Deeds. The construction of language in a deed is a question of law.
3. Statutes. Statutory interpretation presents a question of law.
4. Appeal and Error. On a question of law, an appellate court reaches a
conclusion independently of the court below.
5. Summary Judgment. Summary judgment is proper when the pleadings
and evidence admitted at the hearing disclose no genuine issue regard-
ing any material fact or the ultimate inferences that may be drawn from
those facts and that the moving party is entitled to judgment as a matter
of law.
6. Summary Judgment: Appeal and Error. In reviewing a summary
judgment, an appellate court views the evidence in the light most
favorable to the party against whom the judgment is granted and gives
such party the benefit of all reasonable inferences deducible from
the evidence.
7. Property: Options to Buy or Sell: Words and Phrases. Generally,
a right of first refusal, or a preemptive right, is a right to elect to take
specified property at the same price and on the same terms and condi-
tions as those contained in a good faith offer by a third person if the
owner manifests a willingness to accept the offer; essentially a dormant
option, a right of first refusal is merely contingent until the condition
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WALTERS v. SPORER
Cite as 298 Neb. 536
precedent is met, at which point the preemptive right ripens into a
full option.
8. Property: Options to Buy or Sell. While a right of first refusal has no
binding effect before it has ripened, upon doing so, it legally constrains
an owner’s right to sell his property by compelling him to offer it first
to the party who holds the right of first refusal.
9. Options to Buy or Sell: Specific Performance: Proof. A right of first
refusal may be enforced by specific performance where it can be proved
that the condition triggering the right has occurred and the option holder
was ready, able, and willing to buy during the period.
10. Property: Options to Buy or Sell. A right of first refusal is a nonvested
property interest.
11. Property: Conveyances: Words and Phrases. The purpose of a reser-
vation is to reserve to the grantor something new out of that which is
conveyed and which did not exist before as an independent right.
12. ____: ____: ____. A reservation is always something taken back out of
that which is demised; accordingly, a reservation is a regranting of an
interest in the property from the grantee to the grantor.
13. ____: ____: ____. Whether a provision is a reservation or an exception
does not depend upon the use of a particular word, but upon the charac-
ter and effect of the provision itself.
14. Deeds. The grantor of a deed may reserve any nonpossessory inter-
est in the land that he could not have held separate from his owner-
ship interest.
15. Property: Conveyances: Fraud. A reservation is subject to the statute
of frauds.
16. Deeds: Parties. The general rule is that the grantee of a deed accepted
by him is a party to the deed, even though he does not sign it, and that
he is concluded by recitals in the deed and by reservations contained
therein in favor of the grantor.
17. Fraud: Equity. The statute of frauds is based on principles of equity,
in particular, recognition that the purpose of the statute of frauds is to
prevent frauds, not to enable a party to perpetrate a fraud by using the
statute as a sword rather than a shield.
18. Deeds. The acceptance of a deed operates to satisfy the requirement,
under Neb. Rev. Stat. § 36-103 (Reissue 2016), that a contract creating
an interest in land be signed by the party to be charged therewith.
19. Deeds: Fraud. In the absence of fraud, one who fails to read a deed
cannot avoid the effect of accepting it.
20. Appeal and Error. An appellate court will not consider an issue on
appeal that was not presented to or passed upon by the trial court.
21. ____. An appellate court is not obligated to engage in an analysis that is
not necessary to adjudicate the case and controversy before it.
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
WALTERS v. SPORER
Cite as 298 Neb. 536
Appeal from the District Court for Hitchcock County:
David Urbom, Judge. Reversed and remanded for further
proceedings.
George G. Vinton for appellant.
John D. Stalnaker, of Stalnaker, Becker & Buresh, P.C., for
appellees Melanie Griffith Sporer and Jay A. Sporer.
Randy C. Fair, of Dudden & Fair, P.C., L.L.O., for appellees
Douglas M. Lau and Debra L. Lau.
Wright, Miller-Lerman, Cassel, K elch, and Funke, JJ.
Funke, J.
This is an action by appellant John D. Walters (John) to
enforce a right of first refusal set forth in a 1998 warranty deed,
by which he and his then-spouse (the Walterses) conveyed real
property to appellees Douglas M. Lau and Debra L. Lau. The
Laus later sold the property to appellees Jay A. Sporer and
Melanie Griffith Sporer by a warranty deed, in 2013, without
giving John notice of the Sporers’ offer.
The court granted summary judgment for the Laus and the
Sporers against John because it ruled that the language in
the deed did not satisfy the statute of frauds, Neb. Rev. Stat.
§ 36-105 (Reissue 2016), and there was no other written agree-
ment signed by the Laus. We hold that a right of first refusal in
a deed is an enforceable agreement under the statute of frauds
upon the acceptance of the deed. Therefore, we reverse the
judgment and remand the cause for further proceedings con­
sistent with this opinion.
I. BACKGROUND
In 1998, the Laus began looking for a wooded acreage to
establish a home. Eventually, the Laus entered into negotia-
tions with John to purchase approximately 8 acres of land and
for the Walterses to finance the purchase. Subsequently, John
and the Laus met with an attorney, chosen by John, to draft the
sale documents.
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WALTERS v. SPORER
Cite as 298 Neb. 536
John testified that the attorney represented both him and
the Laus because he never spoke with the attorney alone, only
with the Laus. The Laus stated that they agreed to use John’s
attorney because Debra Lau knew him but that the attorney did
not represent them. The attorney testified that John had been a
client of his prior to the transaction, and he stated that he had
no documents indicating that the Laus were his clients or that
he jointly represented those parties.
John stated that he and the Laus met with the attorney three
times: The first time, the attorney gave them general instruc-
tions; the second time, they discussed the terms; and the third
time was the closing.
In addition, John stated that he and the Laus had discussed
and orally agreed to the right of first refusal before meeting
with the attorney and that it was brought up at the second
meeting with the attorney. John testified that he remembered
asking at the meeting if they needed the right of first refusal
in a separate document but that the attorney said it could just
be included in the deed.
John stated that he wanted the right of first refusal for sev-
eral reasons, including the following: He was not trying to sell
the property at that time, but was willing to sell it to the Laus
because they were friends; he could have extended a pivot on
his abutting property to the east to irrigate a portion of the
land; he had an oil well abutting the property; and there was a
road on the land that he used to access his adjacent land. He
testified that he would not have sold the property without the
right of first refusal.
Debra Lau also believed the parties met three times. She
stated she recalled that during the first two meetings, the dis-
cussion included the price per acre, the interest rate for the
deed of trust, how payments would be made, an option for the
Laus to purchase an additional 5.7 acres, and the paperwork
needed for the sale. She admitted that it would be difficult
to remember everything from the meetings, however. She
stated that during closing, she read only the documents that
she signed.
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WALTERS v. SPORER
Cite as 298 Neb. 536
Douglas Lau remembered the Laus’ having met with the
attorney only once before closing. He stated that they told the
attorney everything they wanted at the first meeting. He said
that the Laus had few requests and accepted John’s first offer
for price because they needed the land and were not in a posi-
tion to barter. He testified that he did not remember discussing
a right of first refusal with John. However, he testified that
he would have had no objection to granting John a right of
first refusal.
The Laus both testified that they believed paragraph 11 of
the deed of trust was a right of first refusal and that it was
the exclusive statement on the issue. Paragraph 11 of the deed
of trust effectively contains a “due on sale” clause: “Should
Trustors desire to sell or encumber the subject premises or
any part thereof, they shall forthwith obtain the consent of
Beneficiary to such sale or encumbrance while any sums
remain due on the Note secured by this Trust Deed.” If the
Laus violated this provision, the Walterses had the right to
demand immediate payment of the balance owed and pursue
any remedies provided under the deed.
The Laus both stated that they believed their right of first
refusal obligation ended once the deed of trust was paid. Debra
Lau also stated that this was discussed at the second meeting
with the attorney and that she remembered saying that as long
as they owed John money on the property, it was not an unrea-
sonable request.
The attorney stated that he did meet with the parties and
had discussions with them but that he had no recollection of
the specific contents of any conversations he had with the
Laus, including whether or not he discussed the right of first
refusal with them. He believed that he purposefully included
the right of first refusal in the deed, because it was the only
time he could recall including such a right in a deed. The
attorney also testified that it would have been routine for
him to discuss all of the documents in a real estate transac-
tion with the parties, as well as any nonstandard provisions.
He believed the absence of a separate document for the right
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WALTERS v. SPORER
Cite as 298 Neb. 536
of first refusal was probably a result of the parties’ desire to
save expenses.
On September 15, 1998, the Walterses conveyed the 8-acre
tract of land to the Laus by a joint tenancy warranty deed. At
closing, the parties also executed a promissory note and trust
deed for the Walterses to finance the Laus purchase of the
property; a grant of a right of use, providing the Laus an ease-
ment over other property owned by the Walterses for ingress
and egress; an option contract for a 5.7-acre section of land,
which was surrounded on three sides by the 8-acre section the
Laus had purchased; and other documents related to the trans-
action. John testified that the Laus also granted him an oral
easement to use their driveway to access his adjacent land to
the east.
The warranty deed included a reservation of mineral rights,
as well as, the right of first refusal. In regard to the right of
first refusal, the deed contained the following provision: “No
sale of the above-described premises shall be consummated
without giving at least 30 days written notice of the terms
to Grantor. Grantor shall have the right to buy the lot on the
same terms.”
The day after closing, Debra Lau, at the attorney’s direc-
tion, went to the courthouse to sign the “Form 521” “Real
Estate Transfer Statement.” A Form 521 transfer statement
sets forth information regarding the parties to the transaction,
the type of property transferred, and the consideration paid.1
Nebraska law requires that a deed will not be recorded unless
the transfer statement is signed by the grantee and filed with
the deed.2
Debra Lau testified that she was not sure if the attorney told
her why she needed to sign the transfer statement but that he
might have said it was to get the deed recorded. She also testi-
fied that she did not recall discussing the form at closing.
1
See Neb. Rev. Stat. § 76-214(1) (Reissue 1996).
2
Id.
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WALTERS v. SPORER
Cite as 298 Neb. 536
The attorney sent the Laus and the Walterses letters, dated
3 days after the closing, in which he enclosed all of the docu-
ments involved in the transaction—including copies of the
joint tenancy warranty deed. He could not recall ever hearing
from the Laus again after sending the letters.
Douglas Lau stated that he read the deed when he received
it in the mail a couple of weeks after closing. He stated that
he believed the right of first refusal in the warranty deed was
between the Walterses and had nothing to do with the Laus. He
explained that he believed it was an attempt by John to protect
himself in future divorce proceedings. He testified that this
was his own belief and not based on any representations made
by John.
Debra Lau testified that she remembered receiving the docu-
ments in the mail after closing but did not feel the need to
read any of them because she had just signed them. She stated
that she did not read the deed until she received notice of
this litigation.
In 2003, the Laus exercised their option to purchase the
5.7-acre tract, which John conveyed to them by a joint ten-
ancy warranty deed. In 2007, the Laus finished paying John
on the promissory note, and, upon their request, the Walterses
executed a deed of reconveyance to them.
Around 2013, the Laus decided to sell the approximately
13-acre tract of land with their trailer home. In order to do so,
Debra Lau contacted a real estate agent and showed him the
Laus’ transaction documents for the property, including the
warranty deed.
When the Laus listed their property, they did not inform
the Walterses, but their agent told them that he would men-
tion the listing to John. John testified that the agent told him
that the Laus had listed the property and their trailer home
for $75,000. John told the agent that he was interested in the
land, but not the trailer home. Later, the agent told John that
the Laus might be interested in selling just the property. On
both occasions, John told the agent to keep him informed but
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Cite as 298 Neb. 536
did not mention his right of first refusal. John said he did not
call the Laus about the property listing because they were
not speaking.
The Sporers owned an adjacent acreage west of the Laus’
property, and Douglas Lau called Jay Sporer to see if he
was interested in purchasing the Laus’ property. Douglas Lau
did not mention the Walterses’ right of first refusal. The
Laus entered a purchase agreement with Jay Sporer but nei-
ther the purchase agreement nor the Laus’ affidavit regarding
debts, liens, and adverse claims to the property mentioned the
Walterses’ right of first refusal. In 2013, the Laus conveyed the
property to the Sporers, as trustees of Melanie Griffith’s revo-
cable inter vivos trust, by warranty deed, which was recorded
that year.
In 2014, John’s then-spouse assigned her entire interest in
the right of first refusal to John, which he recorded.
John filed suit in February 2014, alleging that he had
reserved a right of first refusal in the warranty deed. He
claimed that each acre of land conveyed from the Laus to the
Sporers is of equal value; accordingly, because the total price
of the approximately 13 acres was about $27,000, he valued
the 8 acres of land from the 1998 transaction at $16,615.36. He
prayed for an order that (1) required the Sporers to convey the
property to him after he paid them that amount and (2) quieted
title to the property in him.
In their amended answer, the Sporers denied that (1) the
warranty deed reflected the Laus’ agreement with John, (2)
the Laus had agreed to grant the Walterses an indefinite and
unlimited right of first refusal, (3) John had any right of
first refusal, (4) the Laus were required to give John notice
of the 2013 sale to the Sporers, and (5) the 8 acres all had
equal value. They alleged that the right of first refusal, to
the extent it existed, had expired under the terms of the trust
deed. Alternatively, they alleged that there was no meeting of
the minds between the Laus and the Walterses regarding the
alleged right or that a mistake had been made in drafting the
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warranty deed to include this right when the parties had not
agreed to it.
For an affirmative defense, the Sporers alleged that John’s
“[c]omplaint should be barred, in full or in part, due to its fail-
ure to comply with Neb. Rev. Stat. §76-301, et seq., providing
for the reimbursement of an occupant for improvements made
and taxes paid.” Finally, they alleged that John’s complaint was
barred, in whole or in part, by the doctrines of unclean hands,
unjust enrichment, estoppel, waiver, or laches.
In April 2015, the Sporers filed a cross-claim against the
Laus. They sought an order that the Laus had breached the
2013 warranty deed that conveyed the property to the Sporers
and asked for damages, attorney fees, and costs.
In May 2015, the Laus filed an amended answer and coun-
terclaim against John. Their amended answer is nearly identical
to the Sporers’ amended answer, including the Sporers’ allega-
tion regarding Neb. Rev. Stat. § 76-301 (Reissue 2009). In
their counterclaim, the Laus alleged that John had commenced
his action to harass them, because the parties had an ongoing
boundary dispute, and that he had tortuously interfered in their
business relationship with the Sporers. They requested dam-
ages, attorney fees, and costs.
In October 2015, John moved for summary judgment. The
Laus filed a cross-motion for summary judgment against John
and moved for summary judgment on the Sporers’ cross-claim
against them. The Sporers filed a cross motion for summary
judgment against John and opposed the Laus’ motion for sum-
mary judgment on their cross-claim.
At the hearing on these motions, the parties agreed to sub-
mit simultaneous briefs and rebuttal briefs by specified dates.
At the end of the hearing, the Sporers argued that a right of
first refusal is different from reserving mineral rights in a deed
because the grantor has an existing right to the minerals. They
argued that a right of first refusal is a property right that the
buyers must grant to the seller. For that reason, they argued
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that the statute of frauds requires an agreement in writing to
be enforceable.
The court found that the right of first refusal in the warranty
deed was not a reservation of a right because it did not reserve
to John the right to use or enjoy any portion of the property.
Further, it held that the contract in the deed was void, under
§ 36-105, because it was not signed by the Laus. Accordingly,
the court found that because there was no contract, there could
be no breach. The court ruled that the Laus and the Sporers
were entitled to judgment as a matter of law against John
and granted their motions for summary judgment. The court
denied John’s motion for summary judgment.
John then appealed. The Nebraska Court of Appeals dis-
missed the appeal because the district court had not resolved
the Laus’ counterclaim against John or the Sporers’ cross-
claim against the Laus. On remand, John moved the court for
a final order. The court concluded that the Laus’ counterclaim
against John should be dismissed and that the Sporers’ cross-
claim against the Laus was moot because of its summary
judgment. John perfected a timely appeal. We removed the
case to our docket on our own motion pursuant to our author-
ity to regulate the caseloads of the Court of Appeals and
this court.3
II. ASSIGNMENTS OF ERROR
John assigns, restated and reordered, that the court erred in
(1) concluding that the right of first refusal was void under
§ 36-105; (2) failing to conclude that a right of first refusal is
a contract that is not subject to real property statutes of frauds;
(3) holding that the right of first refusal was not a reservation;
(4) considering the statute of frauds defense, because it was
not pled as an affirmative defense; (5) granting the Laus and
the Sporers summary judgment; and (6) denying John’s motion
for summary judgment.
3
See Neb. Rev. Stat. § 24-1106(3) (Reissue 2016).
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III. STANDARD OF REVIEW
[1] An action for specific performance sounds in equity, and
on appeal, an appellate court tries factual questions de novo
on the record and, as to questions of both fact and law, is obli-
gated to reach a conclusion independent from the conclusion
reached by the trial court.4
[2-4] The construction of language in a deed is a question of
law.5 Statutory interpretation presents a question of law.6 On a
question of law, an appellate court reaches a conclusion inde-
pendently of the court below.7
[5,6] Summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose no genuine issue
regarding any material fact or the ultimate inferences that may
be drawn from those facts and that the moving party is entitled
to judgment as a matter of law.8 In reviewing a summary judg-
ment, an appellate court views the evidence in the light most
favorable to the party against whom the judgment is granted
and gives such party the benefit of all reasonable inferences
deducible from the evidence.9
IV. ANALYSIS
1. R ight of First R efusal Between John
and Laus Is Enforceable
(a) Rights of First Refusal
[7,8] Generally, a right of first refusal, or a preemptive
right, “is a right to elect to take specified property at the same
4
O’Connor v. Kearny Junction, 295 Neb. 981, 893 N.W.2d 684 (2017).
5
See Schram Enters. v. L & H Properties, 254 Neb. 717, 578 N.W.2d 865
(1998).
6
In re Estate of Fuchs, 297 Neb. 667, 900 N.W.2d 896 (2017).
7
In re Interest of Becka P. et al., ante p. 98, 902 N.W.2d 697 (2017).
8
Hike v. State, 297 Neb. 212, 899 N.W.2d 614 (2017).
9
Id.
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price and on the same terms and conditions as those contained
in a good faith offer by a third person if the owner manifests a
willingness to accept the offer.”10 Essentially a dormant option,
a right of first refusal is merely contingent until the condition
precedent is met, at which point the preemptive right ripens
into a full option.11 However, a right of first refusal may never
ripen into an option if the grantor disposes of the property in
a way that does not trigger the condition precedent.12 While a
right of first refusal has no binding effect before it has ripened,
upon doing so, it legally constrains an owner’s right to sell his
property by compelling him to offer it first to the party who
holds the right of first refusal.13
An option to purchase real estate, on the other hand, is a
unilateral contract by which the owner of the property agrees
with the holder of the option that he has the right to buy the
property according to the terms and conditions of the option.14
By such an agreement, the owner does not sell the land; nor
does the owner at the time contract to sell.15 The owner does,
however, agree that the person to whom the option is given
shall have the right, at his election or option, to demand the
conveyance in the manner specified.16 Options, however, may
also be subject to a condition precedent which suspends the
10
92 C.J.S. Vendor and Purchaser § 180 at 156-57 (2010), citing Old Port
Cove Holdings v. Condo. Ass’n, 986 So. 2d 1279 (Fla. 2008). See, also,
Jonathan F. Mitchell, Note, Can a Right of First Refusal Be Assigned?, 68
U. Chi. L. Rev. 985 (2001).
11
See 92 C.J.S., supra note 10. See, also, Jones v. Stahr, 16 Neb. Ct. App. 596,
746 N.W.2d 394 (2008).
12
See, e.g., Park Station v. Bosse, 378 Md. 122, 835 A.2d 646 (2003).
13
See Winberg v. Cimfel, 248 Neb. 71, 532 N.W.2d 35 (1995). See, also,
Peters v. Smolian, 49 Misc. 3d 408, 12 N.Y.S.3d 824 (2015); Manufactured
Housing Cmtys. v. State, 142 Wash. 2d 347, 13 P.3d 183 (2000).
14
Winberg, supra note 13.
15
Id.
16
Id.
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holder’s right to elect to demand conveyance until the condi-
tion has been satisfied.17
Options and rights of first refusal are sometimes confused
but there is a clear and classic distinction: The option com-
pels performance within the time limit specified or, if none is
mentioned, then within a reasonable time, whereas the right of
first refusal has no binding effect unless the offeror decides to
sell.18 Nevertheless, in differentiating between rights of first
refusal and options, the word “first” has special significance:
“‘“[T]he limiting word ‘First’ indicates that there is no inten-
tion to create a power of acceptance in the promisee; instead it
indicates that the promisee shall be the first party to be given
such a power.”’”19
[9] A right of first refusal may be enforced by specific per-
formance where it can be proved that the condition triggering
the right has occurred and the option holder was ready, able,
and willing to buy during the period.20
(b) Right of First Refusal Is
Nonvested Property Interest
All of the parties argue that a right of first refusal is a con-
tract right and not an interest in real estate. John directs us to
case law from Nebraska21 and foreign jurisdictions22 to support
17
See Bauermeister v. Waste Mgmt. Co., 280 Neb. 1, 783 N.W.2d 594
(2010). See, also, Restatement (First) of Property § 393, comment f.
(1944).
18
Winberg, supra note 13.
19
Id. at 77, 532 N.W.2d at 39, quoting Landa v. Century 21 Simmons & Co.,
237 Va. 374, 377 S.E.2d 416 (1989).
20
See, Jones, supra note 11; Hongsermeier v. Devall, 16 Neb. Ct. App. 379, 744
N.W.2d 481 (2008).
21
Bauermeister, supra note 17; Schupack v. McDonald’s System, Inc., 200 Neb.
485, 264 N.W.2d 827 (1978); Jones, supra note 11.
22
Peters, supra note 13; Old Nat’l Bank v. Arneson, 54 Wash. App. 717, 776
P.2d 145 (1989).
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his contentions that a right of first refusal creates no interest
in property.
Contrary to John’s assertion, neither Schupack v. McDonald’s
System, Inc.,23 nor Jones v. Stahr24 supports a finding that a
right of first refusal does not create an interest in land.
In Schupack, we held that a right of first refusal to acquire
future restaurant franchises in the Omaha, Nebraska-Council
Bluffs, Iowa, area—granted to the right holder by the restau-
rant corporation—was intended to be personal in nature and
could not be transferred or assigned without the corporation’s
consent, which it had not provided. Whether the right of first
refusal gave the right holder an interest in any future franchises
that would have allowed him to seek a remedy of specific
performance was not at issue in the case, and we made no
statements on the subject.25 Instead, our decision was limited
to whether the right of first refusal concerning franchise rights,
not real property, was assignable.26
In Jones, the Nebraska Court of Appeals considered whether
an offer to purchase property, as required by a right of first
refusal, had been accepted.27 Therese Dorenbach had granted
Daniel F. Stahr and Georgia A. Stahr a subordinate right of
first refusal to purchase her property in a sales agreement
for adjoining property. In accordance with the agreement,
Dorenbach offered the Stahrs the opportunity to purchase her
land on the terms and conditions of a purchase agreement she
had entered with Wesley J. Jones. The Stahrs accepted the
offer but reserved the right to assign the sale contract before
closing. Dorenbach rejected the Stahrs’ acceptance because
23
Schupack, supra note 21.
24
Jones, supra note 11.
25
See Schupack, supra note 21.
26
Id.
27
Jones, supra note 11.
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she considered the reservation of the right to assign the con-
tract to be a material deviation from the offer, constituting a
counteroffer. After the parties initiated litigation, the trial court
ruled in favor of Dorenbach, reasoning that the Stahrs’ accept­
ance was a material deviation from the offer because the right
of first refusal was personal.
The Court of Appeals reversed the judgment and remanded
the cause for entry of specific performance in favor of the
Stahrs. It reasoned that the right of first refusal ripened into
an option contract when Dorenbach accepted Jones’ offer.
Because the Court of Appeals determined that option contracts
are assignable, it held that the Stahrs’ acceptance was not a
material deviation from the offer.
John relies on a portion of dicta in Jones28 in which the
Court of Appeals acknowledged that many courts presume
rights of first refusal to be personal in nature. The appellate
court stated that courts have justified such a presumption on
two bases: either to avoid a conflict with the rule against per-
petuities or because “the holder of a right of first refusal holds
only a general contract right to acquire a later interest in real
estate should the property owner decide to sell.”29
These statements in Jones are neither those relied on by the
Court of Appeals in Jones nor binding on our decision in the
present matter.
In Bauermeister v. Waste Mgmt. Co.,30 the sole issue pre-
sented was whether the common-law rule against perpetui­
ties applied to an option subject to a condition precedent.
There, family members contracted to sell land to a waste
management company to be used as a landfill.31 Under the con-
tract, the company was to pay the sellers a monthly rent and
28
Id.
29
Id. at 602, 746 N.W.2d at 399 (emphasis supplied).
30
Bauermeister, supra note 17.
31
Id.
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royalty.32 The contract also provided that upon the termination
of the purchase agreement, the sellers had the option to repur-
chase the land.33
We held that the common-law rule against perpetuities
should no longer apply to certain commercial transactions,
as a matter of policy.34 In doing so, we explicitly classified
the option contract at issue as a nonvested property inter-
est.35 This classification was relevant because Nebraska’s
Uniform Statutory Rule Against Perpetuities Act36 specifi-
cally excluded “‘[a] nonvested property interest . . . arising
out of a nondonative transfer’” from the rule against perpe-
tuities.37 We reasoned, in part, that because the option would
not have been subject to the rule against perpetuities if it
was made after the enactment of the Uniform Statutory Rule
Against Perpetuities Act, it should also be excluded from the
­common-law rule.38
Similarly, the Court of Appeals has treated a right of first
refusal as a nonvested property interest for applying the
Uniform Statutory Rule Against Perpetuities Act.39
[10] As discussed above, there is little distinction between
a right of first refusal and an option subject to a condition
precedent. Accordingly, we hold that a right of first refusal
is also a nonvested property interest. In doing so, we follow
32
Bauermeister Deaver Ecol. v. Waste Mgmt. Co., 290 Neb. 899, 863
N.W.2d 131 (2015).
33
Bauermeister, supra note 17.
34
Id.
35
Id.
36
Neb. Rev. Stat. §§ 76-2001 through 76-2008 (Reissue 2003).
37
Bauermeister, supra note 17, 280 Neb. at 7, 783 N.W.2d at 598. See
§ 76-2005(1).
38
Bauermeister, supra note 17.
39
Greenhall Investments v. Wiese Dev. Corp., 14 Neb. Ct. App. 155, 706 N.W.2d
552 (2005).
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the majority of courts in the country.40 While John has cited
precedent from foreign jurisdictions holding otherwise, we do
not find their reasoning persuasive or binding.
(c) Right of First Refusal
Was Reserved in Deed
John argues that reserving a right of first refusal in a deed
does not bring the right within the statute of frauds because it
is an interest that is not transferred. The Laus and the Sporers
argue that a right of first refusal is not an “exception” because
it is not a right that a grantor possesses at the time of a con-
veyance and that it is not a “reservation” because, as the court
ruled, it does not create an easement. Additionally, the Laus
and the Sporers argue that a right of first refusal is something
that the grantee would have to regrant to the grantor, which
would bring the creation of a right of first refusal under the real
property statute of frauds.
[11,12] The purpose of a reservation is to reserve to the
grantor something new out of that which is conveyed and
which did not exist before as an independent right.41 A res-
ervation is always something taken back out of that which is
demised.42 Accordingly, a reservation, in its technical sense, is
40
See, e.g., Bortolotti v. Hayden, 449 Mass. 193, 866 N.E.2d 882 (2007); Park
Station v. Bosse, 378 Md. 122, 835 A.2d 646 (2003), citing Ferrero Constr.
v. Dennis Rourke Corp., 311 Md. 560, 536 A.2d 1137 (1988); Barnhart v.
McKinney, 235 Kan. 511, 682 P.2d 112 (1984), citing Henderson v. Bell,
103 Kan. 422, 173 P. 1124 (1918); South Kitsap Family Worship Center v.
Weir, 135 Wash. App. 900, 146 P.3d 935 (2006); In re Estate of Owen, 855
N.E.2d 603 (Ind. App. 2006); Webb v. Reames, 326 S.C. 444, 485 S.E.2d
384 (S.C. App. 1997); Southall v. Humbert, 454 Pa. Super. 360, 685 A.2d
574 (1996). See, also, Restatement (Third) of Property (Servitudes) § 3.3,
comment b. (2000); 61 Am. Jur. 2d Perpetuities, Etc. § 61 (2012).
41
See Elrod v. Heirs, Devisees, etc., 156 Neb. 269, 55 N.W.2d 673 (1952).
See, also, Bauer v. Lancaster Cty. Sch. Dist. 001, 243 Neb. 655, 501
N.W.2d 707 (1993).
42
Elrod, supra note 41.
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a regranting of an interest in the property from the grantee to
the grantor.43 On the other hand, an exception is some existing
part of the estate excluded from the grant and retained by the
grantor as if there had been no conveyance made by him to
the grantee.44
[13] Whether a provision is a reservation or an excep-
tion does not depend upon the use of a particular word,
but upon the character and effect of the provision itself.45
The terms “exception” and “reservation” are frequently used
synonymously, conjunctively, and interchangeably.46 It is
not necessarily conclusive, and many times not even sig-
nificant, whether the word “except” or “reserve” is s­ elected.47
The intent is the primary matter to be considered.48 The
Legislature’s intent to modify and eliminate such common-
law technicalities and exactions was codified in its adoption
of the Uniform Property Act, Neb. Rev. Stat. § 76-101 et seq.
(Reissue 2009).49 Specifically, § 76-106 provides that “[a]n
otherwise effective reservation of property by the conveyor
reserves the interest the conveyor had prior to the conveyance
unless an intent to reserve a different interest is effectively
manifested.”50
In its order, the court relied on a statement in Schaffert v.
Hartman51 to determine that a right of first refusal is not a
valid reservation because it does not create a right to use and
43
Restatement (First) of Property, supra note 17, § 473.
44
Elrod, supra note 41.
45
Id. See, also, 23 Am. Jur. 2d Deeds §§ 265 and 267 (2013).
46
Elrod, supra note 41.
47
See id.
48
Id.
49
Id.
50
See id.
51
Schaffert v. Hartman, 203 Neb. 271, 278 N.W.2d 343 (1979), disapproved
on other grounds, Anderson v. Service Merchandise Co., 240 Neb. 873,
485 N.W.2d 170 (1992).
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enjoy the land. In Schaffert, we stated that “‘a reservation,
while not affecting the title to the thing granted, may reserve
to the grantor the right to the use or enjoyment of a portion
thereof, as an easement, the right to pass over, or the like.’”52
[14] However, as our opinion in Elrod v. Heirs, Devisees,
etc.53 makes clear, reservations may create easements but are
not limited to creating interests permitting the use and enjoy-
ment of the land. Instead, a grantor may reserve any nonpos-
sessory interest in the land that he could not have held sepa-
rate from his ownership interest.54
In the instant case, the deed contained the following provi-
sion: “No sale of the above-described premises shall be con-
summated without giving at least 30 days written notice of the
terms to Grantor. Grantor shall have the right to buy the lot on
the same terms.”
While the provision does not contain the terms “except” or
“reserve,” it shows that John intended to create a right of first
refusal in himself through the conveyance. Accordingly, we
must give such effect to the provision, under § 76-106.
[15] John’s argument that a reservation is not subject to the
statute of frauds confuses the terms “exceptions” and “reser-
vations.” Only an exception is outside of the statute of frauds
by causing an interest to be withheld from the conveyance.
Instead, as a re-granting of an interest in land by the grantee,
a reservation is subject to the statute of frauds, Neb. Rev.
Stat. § 36-103 (Reissue 2016), which provides, in relevant
part, the following language: “No estate or interest in land . . .
shall hereafter be created, granted, assigned, surrendered, or
declared, unless . . . by deed of conveyance in writing, sub-
scribed by the party creating, granting, assigning, surrender-
ing or declaring the same.”
52
Id. at 274, 278 N.W.2d at 346, quoting Eiseley v. Spooner, 23 Neb. 470, 36
N.W. 659 (1888).
53
Elrod, supra note 41.
54
Restatement (First) of Property, supra note 17, § 473.
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Here, the court applied § 36-105 instead of § 36-103.
Section 36-105, in relevant part, states: “Every contract . . . for
the sale of any lands, shall be void unless the contract or some
note or memorandum thereof be in writing and signed by the
party by whom . . . sale is to be made.”
Based on our discussion above, the right of first refusal in
this case does not resemble a contract for the sale of land. The
right of first refusal was only a right to elect to purchase the
property at the same price and on the same terms and condi-
tions as those contained in a good faith offer that the Laus
manifested a willingness to accept. Accordingly, the right of
first refusal in the deed was within § 36-103, not § 36-105.
Nevertheless, both statutes require a signature by the party to
be charged by the writing.
(d) Laus’ Acceptance of Deed Binds
Them to Right of First Refusal
Contained Therein
John argues that the Laus consented to the right of first
refusal by their words, conduct, and acquiescence, which
consent is indicated primarily by their acceptance of the
deed and not seeking reformation for over 16 years. The
Laus and the Sporers argue that the right of first refusal is
not enforceable because they did not sign the deed or receive
consideration for granting the right and never agreed orally to
the right.
[16] “‘The general rule is that the grantee in a deed
accepted by him is a party to the deed, even though he does
not sign it, and that he is concluded by recitals in the deed and
by reservations contained therein in favor of the grantor.’”55
Similarly, Corpus Juris Secundum provides the following on
the effect of a grantee accepting a deed that imposes an obliga-
tion on the grantee:
55
XTO Energy Inc. v. Nikolai, 357 S.W.3d 47, 56 (Tex. App. 2011), quoting
Greene v. White, 137 Tex. 361, 153 S.W.2d 575 (1941).
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Where a deed by which property is conveyed to the
grantee, and which purports to be between the parties,
is accepted by him or her, the fact that it is signed and
sealed by the grantor only will not render it void for
want of mutuality, but it will be construed as the deed
of both parties. Thus, if the deed contains covenants
or restrictions, its delivery to and acceptance by the
grantee is deemed equivalent to the grantee’s signature
so as to the [sic] supply the mutual consent necessary to
form a contract and make the covenants or restrictions
enforceable.56
Other sources have held the same to be true regarding ease-
ments57 and options to repurchase.58 The enforceability of res-
ervations and covenants included in deeds is a widely accepted
and longstanding principle of law.59 Courts have tested this
principle and found it remains valid under both the doctrine
of estoppel by deed60 and doctrine of part performance,61
56
26A C.J.S. Deeds § 65 at 93-94 (2011). Accord, Murphey v. Gray, 84 Ariz.
299, 327 P.2d 751 (1958); Carlson v. Libby, 137 Conn. 362, 77 A.2d 332
(1950); Harris & Gurganus v. Williams, 37 N.C. App. 585, 246 S.E.2d 791
(1978); 20 Am. Jur. 2d Covenants, Etc. §§ 4 and 151 (2015); 9 Richard
R. Powell & Michael Allan Wolf, Powell on Real Property § 60.02 n.16
(2000).
57
See, e.g., Chase v. Nelson, 507 N.E.2d 640 (Ind. App. 1987). See, also,
Evans v. Board of County Com’rs, 97 P.3d 697 (2004), affirmed 123 P.3d
432 (2005).
58
See, e.g., Scutti Enterprises v. Wackerman Guchone, 153 A.D.2d 83,
548 N.Y.S.2d 967 (1989); Mearida v. Murphy, 106 Ill. App. 3d 705, 435
N.E.2d 1352, 62 Ill. Dec. 380 (1982).
59
See The Midland Railway Company v. Fisher, 125 Ind. 19, 24 N.E. 756
(1890). See, also, Employers Indemnity Corp. v. Garrett, 327 Mo. 874, 38
S.W.2d 1049 (1931).
60
XTO Energy Inc., supra note 55, citing Greene, supra note 55; Mearida,
supra note 58; 28 Am. Jur. 2d Estoppel and Waiver §§ 15 and 18 (2011).
61
Scutti Enterprises, supra note 58; Terrell v. Messenger, 428 So. 2d 1241
(La. App. 1983).
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which is codified in Nebraska as Neb. Rev. Stat. § 36-106
(Reissue 2016).
[17] Further, this principle’s utility in protecting a grantor
from having a reservation invalidated under the statute of
frauds is consistent with the policy of the statute of frauds. The
statute of frauds “is based on principles of equity, in particular,
recognition that the purpose of the Statute of Frauds is to pre-
vent frauds, not to enable a party to perpetrate a fraud by using
the statute as a sword rather than a shield.”62
[18] We are persuaded by the great weight of authority that
the acceptance of a deed operates to satisfy the requirement,
under § 36-103, that the contract creating an interest in land be
signed by the party to be charged therewith.
[19] Further, in the absence of fraud, one who fails to read
a contract cannot avoid the effect of signing.63 Because accept-
ing a deed has the legal effect of signing it, this principle
applies with equal force.64 Accordingly, if a deed contains an
unsatisfactory reservation, the grantee may avoid it by refus-
ing acceptance.
Here, the Laus accepted the deed and enjoyed the benefit
of it for 15 years. While they claim to have been unaware of
the right of first refusal in the deed, the Laus’ testimony shows
that they believed that they were granting John a right of first
refusal through the trust deed. Accordingly, their argument that
they did not agree to such a right is more properly character-
ized as not agreeing to the right for an indefinite duration.
Nevertheless, the attorney testified that it would have
been his course of practice to explain the documents in the
62
Scutti Enterprises, supra note 58, 153 A.D.2d at 87, 548 N.Y.S.2d at 970.
See, also, Corcoran v. Leon’s, Inc., 126 Neb. 149, 252 N.W. 819 (1934).
63
Eicher v. Mid America Fin. Invest. Corp., 270 Neb. 370, 702 N.W.2d 792
(2005).
64
See, Hughes v. Pontotoc County, 242 So. 2d 438 (Miss. 1970); Evans,
supra note 57.
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transaction to the parties and highlight the provision in the
deed because it was unique. Further, John testified that it was
discussed and agreed to by the Laus before and during a meet-
ing with the attorney.
Further, it is undisputed that the Laus accepted the deed and
that Debra Lau recorded it. Douglas Lau testified that he read
the deed and that any confusion he had regarding the right of
first refusal was not based on any misrepresentations by John.
While Debra Lau claims she did not read the deed until this
litigation was initiated, she cannot escape the effect of accept-
ing it when she had ample opportunity to read the document.
Accordingly, we find that the Laus in effect signed the deed
and are bound by its terms.
Therefore, we hold that the reservation of the right of first
refusal in the deed satisfied the statute of frauds. Consequently,
the court erred in granting the Laus’ and the Sporers’ motions
for summary judgment against John. To hold otherwise would
be a misapplication of the statute of frauds by inequitably
allowing the Laus to retain the benefit of the deed while escap-
ing a clear statement of intent on its face.
[20] Regarding the argument of the Laus and the Sporers
concerning consideration, the record does not show that they
raised the issue of consideration before the court, and the court
did not rule on the issue in its order. An appellate court will not
consider an issue on appeal that was not presented to or passed
upon by the trial court.65 Therefore, we do not consider this
argument on appeal.
2. R emaining Assignments of
Error and A rguments
[21] Because the right of first refusal was not voidable
under the statute of frauds, we do not consider whether the
statute of frauds defense was properly raised as an affirmative
65
deNourie & Yost Homes v. Frost, 295 Neb. 912, 893 N.W.2d 669 (2017).
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defense. An appellate court is not obligated to engage in an
analysis that is not necessary to adjudicate the case and contro-
versy before it.66
John also claims that the court erred in denying his motion
for summary judgment. Nevertheless, we find that John is
not entitled to summary judgment at this time because mate-
rial issues of fact remain that have not been considered by
the court. As recognized above, an appellate court will not
consider an issue on appeal that was not decided by the
trial court.
V. CONCLUSION
We hold that a right of first refusal may be reserved in a
deed. Further, the acceptance of a deed, absent fraud, satisfies
the requirements of the statute of frauds for any reservations
contained therein. Accordingly, the court erred by finding that
no contract binding the Laus to a right of first refusal existed
and by granting summary judgment for the Laus and the
Sporers, as a matter of law, against John.
R eversed and remanded for
further proceedings.
Heavican, C.J., participating on briefs.
Wright, J., not participating in the decision.
Stacy, J., not participating.
66
Salem Grain Co. v. Consolidated Grain & Barge Co., 297 Neb. 682, 900
N.W.2d 909 (2017).