Leach v. Gunnarson

Brief Fact Summary. In this case, the Plaintiffs’ neighbors have an irrevocable license to use a spring that is on the Plaintiffs’ land. The Plaintiffs’ predecessor in title granted the irrevocable license to the neighbors. The Plaintiffs have sued their predecessors in title, the Defendants, who granted the neighbors the irrevocable license to use the spring by oral agreement when the Defendants owned the property.

Synopsis of Rule of Law. The grantee is entitled to protection by warranty against encumbrances existing at the time of conveyance, even though the grantee, as here, knew about the encumbrance at the time of conveyance.

Facts. In this case, the Plaintiffs’ neighbors have an irrevocable license to use a spring that is on Plaintiffs’ land. The irrevocable license was granted the neighbors by the Plaintiffs’ predecessor in title. The Plaintiffs have sued their predecessors in title, the Defendants, who granted the neighbors the irrevocable license to use the spring by oral agreement when the Defendants owned the property. The Plaintiffs neighbors had built a concrete dam and a 370 gallon storage tank along with a pipe to carry the water from the spring to the neighbors’ property. Plaintiffs bought their 20 acre property from the Defendants in 1975. The conveyance was by warranty deed, which stated that the grantors “covenant to and with the grantees that [the parcel] is free and clear of all encumbrances, and that grantors will warrant and defend the same against all persons who may lawfully claim same.” The trial court, by jury, found for the Defendants based on the trial court’s instruction that if t
he jury found the license to be open, notorious and visible physical encumbrance, then there was no breach of the covenant against encumbrances by the grantor Defendants. The intermediate appellate court affirmed the trial court and the Plaintiffs appealed.

Issue. Does the neighbors’ use of the spring constitute an encumbrance on the Plaintiffs’ title, which the Defendants are obligated to defend against?

Held. Yes. Reversed and remanded.
An encumbrance generally means “any right to or interest in the land, subsisting in a third person, to the diminution of the value of the land, though consistent with the passing of the fee by conveyance.”
The Court found that its prior decisions held that the grantee is entitled to protection by warranty against encumbrances existing at the time of conveyance, even though the grantee, as here, knew about the encumbrance at the time of conveyance.
The Court noted that some jurisdictions have held that a different rule applied to encumbrances that affect the physical condition of the real property and that are open, notorious and visible.
The Court cited its prior decisions which considered encumbrances that were open, notorious, and visible, which causes such encumbrances to be exceptions to the general rule stated in subsection (b) above. The Court found that this case was not of the same type as the prior cases where exceptions were made for known easements for public highways, powerlines, railroads and the like. An irrevocable license to use a spring was not so physically permanent to come within the narrow exception to the rule stated in subsection (b) above.

Discussion. In this case, the facts revealed that the Defendant was the common grantor to both the Plaintiffs and their neighbors and that the neighbors were the Defendants brother-in-law and wife. The Plaintiffs also testified that the Defendants told them that the neighbors would be told to cease using the spring. The precedent in this case, that a grantee is protected against encumbrances even if the grantee knew about the encumbrance, places a greater burden on the grantors of property to either record the encumbrance as an easement or otherwise deal with the encumbrance through contract with the grantees.