Background
In 2015, Jimmy Swanson agreed to convey Knox County property to Kim Swanson. Their side agreement provided that Jimmy would receive half the net proceeds if Kim sold or transferred the property for valuable consideration during his lifetime, subject to terms concerning a flowage easement that never became relevant.
Kim gave the property to her son Scott Swanson and his wife, Pamela, in 2016. Scott and Pamela later sold it, as part of a larger property sale, to Allen and Amy Walton for $350,000. Jimmy sued, seeking half the proceeds. The district court ultimately granted Jimmy summary judgment on breach of contract, conversion, and tortious interference, awarding $175,000 plus interest and costs.
The Court’s Holding
The Nebraska Court of Appeals reversed the summary judgment for Jimmy. The side agreement was not a real covenant running with the land because its requirement to pay Jimmy money after a future sale did not touch and concern the land. It did not affect the land’s quality, value, use, or enjoyment; it was collateral to the land and benefited the original seller rather than the land itself.
That conclusion also defeated the conversion claim, because Jimmy had no immediate right to Scott and Pamela’s sale proceeds, and the tortious-interference claim, because Kim did not breach the agreement by gifting the property to Scott and Pamela. The court expressly left for remand whether Scott and Pamela might otherwise be bound under contract principles, an issue the district court had not decided. It also held that the limitations periods did not begin with the 2016 gift, because it was not a transfer for valuable consideration.
Key Takeaways
- A promise to pay money upon a later sale does not run with land merely because it appears in an agreement related to a conveyance.
- A real covenant must touch and concern the land itself, not simply provide a financial benefit to a prior owner.
- Without an immediate right to sale proceeds or an underlying contract breach, conversion and tortious-interference claims fail on these facts.
Why It Matters
The decision draws a line between personal contractual rights and property obligations that bind successors. Parties seeking to preserve an economic interest after conveying real estate should not assume that a payment provision, even one addressing successors and assigns, will bind later owners as a real covenant.
The court remanded for further proceedings, leaving open whether a different contract-law theory could bind Scott and Pamela.