3's Lounge v. Tierney

3’ s L ounge I nc ., a nebraska corporatIon , appeLLant , v .
F rank e. tIerney and ok k. tIerney ,
husband and wIFe , appeLLees .
741 N.W.2d 687
Filed October 30, 2007. 	No. A-05-1164.
1. Appeal and Error. To be considered by an appellate court, an alleged error must
be both specifically assigned and specifically argued in the brief of the party assert-
ing the error.
2. Actions: Pleadings. The essential character of a cause of action and the remedy
or relief it seeks as shown by the allegations of the complaint determine whether
a particular action is one at law or in equity.
3. Specific Performance: Equity. An action for specific performance sounds
in equity.
4. Quiet Title: Equity. A quiet title action sounds in equity.
5. Declaratory Judgments. An action for declaratory judgment is sui generis;
whether such action is to be treated as one at law or one in equity is to be deter-
mined by the nature of the dispute.
6. Equity: Appeal and Error. On appeal from an equity action, an appellate
court decides factual questions de novo on the record and, as to questions of
both fact and law, is obligated to reach a conclusion independent of the trial
court’s determination.
7. Evidence: Appeal and Error. Where credible evidence is in conflict on mate-
rial issues of fact, an appellate court considers and may give weight to the fact
that the trial court observed the witnesses and accepted one version of the facts
over another.
8. Real Estate: Contracts: Options to Buy or Sell: Consideration: Time. An
option based upon a sufficient consideration for the purchase of real estate during
a definite period cannot be withdrawn before the expiration of that time, but vests
the legal holder thereof with a right to acquire an interest in the land. A subsequent
purchaser who buys with knowledge that the occupant claims to have a contract
for the purchase of the land is bound by the terms of that agreement, whether it is
an option or an executory contract equally binding each party thereto.
9. Property: Notice. Possession of the land is notice to the world of the possessor’s
rights therein and of all possessory interests of which inquiry of the possessor
would elicit knowledge.
10. Property: Leases. A transferee of an interest in leased property is obligated to
perform an express promise contained in the lease if (1) the promise creates a
burden that touches and concerns the transferred interest, (2) the promisor and
promisee intend that the burden is to run with the transferred interest, (3) the
transferee is not relieved of the obligation by the person entitled to enforce it, and
(4) the transfer brings the transferee into privity of estate with the person entitled
to enforce the promise.
11. ____: ____. A transferee of an interest in leased property comes into privity of
estate with the person entitled to enforce a promise if, after the transfer, one holds
directly under the other.
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12. Property: Landlord and Tenant. A promise by the landlord touches and con-
cerns his interest in the leased property to the extent its performance is not related
to other property and affects the use and enjoyment of the leased property by
the tenant.
13. Property: Leases: Intent. The burden of a promise will not run to a transferee if
the original contracting parties manifest an intention that the promise not run with
the land. such intention may be found from the facts and circumstances surround-
ing the execution of the lease as well as from language in the lease itself.
14. Property: Leases: Liability. After a promisor transfers his or her interest in
leased property, the promisor becomes secondarily liable to the person entitled to
the benefit of the promise.
15. Principal and Surety: Releases. The release of a surety does not release the
principal obligor of his or her duty.
16. Waiver: Words and Phrases. Waiver is a voluntary and intentional relinquish-
ment or abandonment of a known existing legal right or such conduct as warrants
an inference of the relinquishment of such right.
17. Waiver: Estoppel. In order to establish a waiver of a legal right, there must be
clear, unequivocal, and decisive action of a party showing such purpose, or acts
amounting to estoppel on his or her part.
18. Specific Performance: Real Estate. real estate is assumed to possess the char-
acteristic of uniqueness, and, therefore, special value, necessary for availability of
specific performance.
19. Specific Performance: Real Estate: Contracts. specific performance should
generally be granted as a matter of course or right regarding a contract for the sale
of real estate where a valid, binding contract exists which is definite and certain
in its terms, mutual in its obligation, free from overreaching fraud and unfairness,
and where the remedy at law is inadequate.
20. Specific Performance: Proof. A party seeking specific performance must show
his or her right to the relief sought, including proof that the party is ready, able,
and willing to perform his or her obligations under the contract.
21. Equity. Where a situation exists which is contrary to the principles of equity and
which can be redressed within the scope of judicial action, a court of equity will
devise a remedy to meet the situation.
22. Judgments: Contracts: Specific Performance. A decree for specific perform-
ance must as nearly as possible order the contract’s performance according to
its terms.
Appeal from the District Court for Douglas County: J russeLL
derr, Judge. reversed and remanded with directions.
Thomas r. Ostdiek, of Fitzgerald, schorr, barmettler &
brennan, P.C., l.l.O., for appellant.
Martin A. Cannon, of Cannon law Office, for appellees.
I rwIn , sIevers, and casseL, Judges.
3’s lOuNge v. TIerNey 	65
Cite as 16 Neb. App. 64

casseL, Judge.
I. INTrODuCTION
3’s lounge Inc. held an option to purchase realty that it
leased from Heb - Ar, Inc. (Heb-Ar). Heb-Ar conveyed a
portion of the leased property to Frank e. Tierney and Ok k.
Tierney. 3’s lounge sued Heb-Ar and the Tierneys to obtain
title to the property conveyed to the Tierneys. Prior to trial,
3’s lounge settled its claims against Heb-Ar and the district
court for Douglas County dismissed Heb-Ar from the lawsuit.
After trial, the district court dismissed the claims against the
Tierneys, finding that the dismissal of Heb-Ar extinguished
3’s lounge’s claims against the Tierneys. We conclude that as
to the property conveyed to the Tierneys, the Tierneys were
primarily liable to 3’s lounge, and that therefore, the release of
Heb-Ar, which was only secondarily liable, did not release the
Tierneys. We reverse, and remand with directions.
II. bACkgrOuND
On August 9, 1994, Club 10 Inc. leased a tract of real prop-
erty (the leased property) from Heb-Ar. richard Walker and
his brother signed the lease as corporate officers of Club 10 and
individually as guarantors of Club 10’s performance. The leased
property is commonly referred to as “8919 North 30th street,
Omaha, Nebraska.” While the legal description is complex, we
need only state that it includes “lot 6, block 13,” in “Florence,
an Addition to the City of Omaha.”
Club 10 initially agreed to lease the leased property for a
2-year term at a rate of $500 per month. The lease agreement
(the lease) granted Club 10 the right to exercise nine separate
and successive 2-year renewals.
The lease also gave Club 10 an irrevocable option to pur-
chase the leased property. The lease specified that Club 10
could exercise its option at any time during its term, including
during any extension or renewal. The lease established that if
Club 10 exercised its option to purchase within 10 years of the
execution of the lease, the purchase price would be $60,000,
with credit given for all rental payments made by Club 10. The
lease provided that all rental payments which became due after
Club 10 provided notice of its intention to exercise the option
would be suspended.
66 	16 NebrAskA APPellATe rePOrTs

Heb-Ar covenanted in the lease that it owned the leased
property and that it “[would] not sell, alienate, assign, pledge,
or otherwise transfer the [leased property] during any portion
of the lease term, including but not limited to any renewals or
extensions thereof.” The lease also contained a provision stating
that the lease and irrevocable option to purchase were personal
to Heb-Ar and Club 10 and “may not be assigned, transferred,
sublet, or otherwise transferred without obtaining the prior writ-
ten consent of each party [to the lease].”
The lease was recorded on september 9, 1994. In October
1995, Walker bought his brother’s shares in Club 10 to become
the sole owner of the corporation. On October 26, Club 10
changed its corporate name to 3’s lounge. The corporation
effected the name change by adopting an amendment to its
articles of incorporation. A file stamp shows that the Nebraska
secretary of state received, filed, and recorded the amendment
on November 3.
On August 22, 1996, Heb-Ar conveyed a portion of the
leased property to the Tierneys, the record title owners of “lot
7, block 13.” The north boundary of lot 7 adjoins the south
boundary of lot 6. According to a survey plat, which recites
dimensions shown on the original plat, lots 6 and 7 are each
66 feet north and south and 132 feet east and west. both lots
border 30th street on the west and an alley on the east. The
south boundary of lot 7 adjoins Fillmore street. The property
conveyed to the Tierneys consisted of the “southerly one third
(1/3) [22 feet] of lot 6, block 13” (the disputed property).
On the same day that Heb-Ar conveyed the disputed prop-
erty to the Tierneys, Heb-Ar and the Tierneys granted one
another reciprocal easements. Heb-Ar granted the Tierneys an
easement over a 10-foot strip of the portion of lot 6 that had a
common boundary with the disputed property, more particularly
described as “[a] parcel [10] feet wide starting [22 feet] North
of the southerly property line of lot 6.” In return, the Tierneys
granted Heb-Ar a 10-foot wide easement along the northern
boundary of the disputed property.
On October 20, 2000, Walker, acting on behalf of 3’s lounge,
sent a letter to the Tierneys and to Heb-Ar notifying them of
3’s lounge’s intention to exercise its option to purchase the
3’s lOuNge v. TIerNey 	67
Cite as 16 Neb. App. 64

leased property, including the disputed property. The Tierneys
refused to recognize 3’s lounge’s right to purchase the disputed
property, giving rise to the instant lawsuit.
On August 29, 2001, 3’s lounge filed a petition seeking a
declaratory judgment against Heb-Ar and the Tierneys. In
3’s lounge’s operative petition, filed at a later date, it alleged
that the Tierneys had refused to recognize its right to purchase
the disputed property and had asserted that their easement inter-
est in a strip of land on lot 6 was superior to 3’s lounge’s inter-
est in the same property. 3’s lounge alleged that the Tierneys
took title to the disputed property subject to its right to purchase
and that the Tierneys’ easement interest was not superior to
3’s lounge’s interest in the property.
3’s lounge set forth multiple causes of action. We describe
only those causes of action that were not resolved by the court
prior to trial. First, 3’s lounge requested that the court enter a
declaratory judgment, declaring 3’s lounge’s right to purchase
the disputed property and determining the portion of the pur-
chase price under the terms of the lease that would be properly
allocable to the Tierneys in compensation for the disputed
property. Next, 3’s lounge alleged that the Tierneys’ refusal to
convey the disputed property to 3’s lounge breached the terms
of the lease. 3’s lounge requested that the court order specific
performance of the terms of the option to purchase. Finally,
3’s lounge requested that the court quiet title to the disputed
property in 3’s lounge if the court determined that declaratory
judgment was not appropriate.
The Tierneys filed an answer denying the material allega-
tions of the petition. The Tierneys asserted several affirmative
defenses, including estoppel, accord and satisfaction, and con-
sent. With regard to consent, the Tierneys alleged that 3’s lounge
had consented to the conveyance of the disputed property and to
the Tierneys’ easement.
On April 27, 2004, in recited consideration of $10, Heb-Ar
conveyed to 3’s lounge all of the leased property except for
the disputed property. 3’s lounge also accepted payment of an
unspecified amount from Heb-Ar as part of the arrangement.
On May 5, 3’s lounge and Heb-Ar filed a joint stipulation and
moved the court for an order dismissing Heb-Ar as a defendant
68 	16 NebrAskA APPellATe rePOrTs

in the action because the parties had reached a settlement agree-
ment. The court dismissed Heb-Ar from the action. Neither
the motion nor the order specified whether the dismissal was
“with prejudice.”
On May 5 and July 7, 2004, the court conducted a bench trial
to resolve 3’s lounge’s remaining claims against the Tierneys.
After the trial, the district court dismissed 3’s lounge’s peti-
tion. The court entered a lengthy decree, finding in favor of
3’s lounge on many issues before ultimately determining that
by settling its claims against Heb-Ar, 3’s lounge extinguished
any claims it had against the Tierneys.
The court stated, “The only claim of [3’s lounge] to the dis-
puted property is through the [l]ease with [Heb-Ar].” The court
acknowledged that under the ruling in Harper v. Runner, 85
Neb. 343, 123 N.W. 313 (1909), both Heb-Ar and the Tierneys
were bound by the option to purchase. However, according to
the court, the relevant question was whether, once 3’s lounge
resolved all of its claims against Heb-Ar, it could continue
its claims against the Tierneys. The court determined that the
Tierneys were subject only to those claims that existed under
the lease between 3’s lounge and Heb-Ar. The court stated,
“It seems axiomatic that when [3’s lounge] settled whatever
claims it may have had against [Heb-Ar] with regard to the
option to purchase, [the Tierneys’] obligation, whatever it may
be, was extinguished.” Put another way, the court reasoned that
the Tierneys had no greater obligation than that which existed
between 3’s lounge and Heb-Ar.
3’s lounge filed a motion for a new trial, alleging that the dis-
trict court erred as a matter of law and fact in concluding that the
dismissal of Heb-Ar from the lawsuit terminated 3’s lounge’s
causes of action against the Tierneys. After a hearing, the district
court overruled 3’s lounge’s motion for a new trial.
3’s lounge timely appeals.
III. AssIgNMeNTs OF errOr
3’s lounge assigns, consolidated and restated, that the dis-
trict court erred in (1) treating its action as one at law rather
than in equity; (2) holding that when it reached a settlement
with Heb-Ar and Heb-Ar was dismissed from the lawsuit,
3’s lOuNge v. TIerNey 	69
Cite as 16 Neb. App. 64

the lease was extinguished and the Tierneys were released from
their obligation to convey the disputed property to 3’s lounge;
(3) finding that its monetary settlement with Heb-Ar was
intended as monetary damages for Heb-Ar’s alleged breach of
contract; (4) failing to find that the monetary settlement between
3’s lounge and Heb-Ar was intended to prorate the option pur-
chase price; (5) finding that the dismissal of Heb-Ar was with
prejudice; (6) allowing an officer of Heb-Ar to testify regard-
ing his proffered reason for entering into a settlement agreement
with 3’s lounge; and (7) overruling its motion for a new trial.
IV. sTANDArD OF reVIeW
3’s lounge alleges that the district court erred in treating its
action against Heb-Ar and the Tierneys as one at law. However,
in its brief, 3’s lounge also states that its petition was pled in
equity and “was treated as an action in equity by the [d]istrict
[c]ourt.” brief for appellant at 17.
[1] To be considered by an appellate court, an alleged error
must be both specifically assigned and specifically argued in
the brief of the party asserting the error. Olivotto v. DeMarco
Bros. Co., 273 Neb. 672, 732 N.W.2d 354 (2007). In view of
3’s lounge’s failure to argue the issue and its concession that
the district court treated the action as one in equity, we do not
consider 3’s lounge’s first assigned error as such.
[2] We do, however, consider whether 3’s lounge’s actions
were at law or in equity in order to determine the correct stan-
dard of review. see Precision Enters. v. Duffack Enters., 14 Neb.
App. 512, 710 N.W.2d 348 (2006). The essential character of a
cause of action and the remedy or relief it seeks as shown by
the allegations of the complaint determine whether a particu-
lar action is one at law or in equity. Dillon Tire, Inc. v. Fifer,
256 Neb. 147, 589 N.W.2d 137 (1999). 3’s lounge requested
a declaratory judgment and that the district court quiet title to
the disputed property in 3’s lounge. It also set forth a breach of
contract claim, but requested specific performance as a remedy.
[3-5] An action for specific performance sounds in equity.
Vande Guchte v. Kort, 13 Neb. App. 875, 703 N.W.2d 611
(2005). A quiet title action sounds in equity. Huffman v. Peterson,
272 Neb. 62, 718 N.W.2d 522 (2006). An action for declaratory
70 	16 NebrAskA APPellATe rePOrTs

judgment is sui generis; whether such action is to be treated as
one at law or one in equity is to be determined by the nature of
the dispute. R & S Investments v. Auto Auctions, 15 Neb. App.
267, 725 N.W.2d 871 (2006).
[6,7] We determine that the nature of the dispute sounds in
equity. 3’s lounge’s goal in the suit is title to the disputed prop-
erty, not monetary damages. On appeal from an equity action,
we decide factual questions de novo on the record and, as to
questions of both fact and law, are obligated to reach a conclu-
sion independent of the trial court’s determination. County of
Sarpy v. City of Gretna, 273 Neb. 92, 727 N.W.2d 690 (2007).
Where credible evidence is in conflict on material issues of fact,
the court considers and may give weight to the fact that the trial
court observed the witnesses and accepted one version of the
facts over another. Precision Enters. v. Duffack Enters., supra.
V. ANAlysIs
1. settLement wIth heb-ar
The district court concluded that when 3’s lounge settled
its claims against Heb-Ar, it also extinguished its claims to
enforce the option to purchase against the Tierneys. 3’s lounge
asserts that this finding by the district court was erroneous.
We agree.
Heb-Ar and 3’s lounge entered into a lease agreement with
an irrevocable option to purchase. because they reached an
express agreement binding both parties, they were in privity of
contract with one another. see Gatchell v. Henderson, 156 Neb.
1, 54 N.W.2d 227 (1952). because they were connected through
privity of contract, after the disputed property was transferred
to the Tierneys Heb-Ar remained bound by 3’s lounge’s
option to purchase the disputed property until 3’s lounge
relieved Heb-Ar of this obligation. see restatement (second)
of Property § 16.1(1)(a) (1977).
In contrast, the Tierneys were not in privity of contract
with 3’s lounge. These parties had no contractual relationship.
However, as we discuss below, the Tierneys came into privity of
estate with 3’s lounge upon their receipt of title to the disputed
property and acquired their title to the disputed property subject
to 3’s lounge’s option to purchase.
3’s lOuNge v. TIerNey 	71
Cite as 16 Neb. App. 64

(a) Nebraska Precedent
[8] In Harper v. Runner, 85 Neb. 343, 346, 123 N.W. 313,
314 (1909), a case that is factually similar to the instant case, the
Nebraska supreme Court held:
An option based upon a sufficient consideration for the
purchase of real estate during a definite period cannot be
withdrawn before the expiration of that time, but vests
the legal holder thereof with a right to acquire an interest
in the land. . . . A subsequent purchaser who buys with
knowledge that the occupant claims to have a contract
for the purchase of the land is bound by the terms of that
agreement, whether it is an option or an executory contract
equally binding each party thereto.
(Citations omitted.)
It follows that if the Tierneys had knowledge of 3’s lounge’s
option to purchase when they took possession of the disputed
property, they became bound by the option. The testimony at trial
demonstrated that the Tierneys had the requisite knowledge.
Frank was asked whether he knew, prior to receiving title to
the disputed property, that 3’s lounge was leasing lot 6. He
responded, “Well, you know, I actually — you want to know
the truth? I thought [Heb-Ar] was leasing it to [Club 10]
because I ran a title search.” He testified that he believed that
Walker’s brother was the tenant in possession of the option
to purchase and that Club 10’s interest in the property was
extinguished. However, he admitted that the sign on the prop-
erty read “3’s [lounge]” and not “Club 10.” He also admitted
that he knew that Walker (not his brother) was the contact for
3’s lounge and that an officer of Heb-Ar had informed him
that Walker was the tenant of lot 6.
[9] Possession of the land is notice to the world of the pos-
sessor’s rights therein and of all possessory interests of which
inquiry of the possessor would elicit knowledge. Grand Island
Hotel Corp. v. Second Island Development Co., 191 Neb. 98,
214 N.W.2d 253 (1974). Had Frank inquired into the status
of 3’s lounge’s interest, he would have easily discovered that
3’s lounge held an option to purchase the disputed property.
Further, the name change from Club 10 to 3’s lounge was prop-
erly recorded in the office of the secretary of state.
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The district court found that Frank most likely knew that
3’s lounge had an option to purchase the disputed property.
The court determined that there was “little or no evidence that
[Frank] did not have actual or at least constructive knowledge
that [3’s lounge] had some interest in the [disputed property].”
We give weight to this finding and conclude that the Tierneys
had knowledge of 3’s lounge’s option to purchase and, there-
fore, pursuant to the holding in Harper v. Runner, supra, were
bound by the option.
(b) restatement
[10] The restatement’s approach to this issue is consistent
with the holding in Harper v. Runner. The restatement (second)
of Property § 16.1 at 116 (1977) states:
(2) A transferee of an interest in leased property is
obligated to perform an express promise contained in the
lease if:
(a) the promise creates a burden that touches and con-
cerns the transferred interest;
(b) the promisor and promisee intend that the burden is
to run with the transferred interest;
(c) the transferee is not relieved of the obligation by the
person entitled to enforce it; and
(d) the transfer brings the transferee into privity of estate
with the person entitled to enforce the promise.
[11] A transferee of an interest in leased property comes into
privity of estate with the person entitled to enforce a promise if,
after the transfer, “one holds directly under the other.” Id., com-
ment e. at 123. If the transferor is the landlord, the transferee
comes into privity of estate with the other party to the lease if
the interest in the reversion that the transferee receives would
place him first in line to succeed the other party to the lease in
the possession of the leased property if the other party’s interest
terminated immediately. Id. After Heb-Ar conveyed the dis-
puted property to the Tierneys, the Tierneys became first in line
to succeed 3’s lounge in possession of the disputed property and
therefore came into privity of estate with 3’s lounge.
[12] The other requirements of § 16.1(2) were also fulfilled.
Heb-Ar’s promise to honor 3’s lounge’s option to purchase
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Cite as 16 Neb. App. 64

created a burden that touched and concerned the disputed prop-
erty. A promise by the landlord touches and concerns his interest
in the leased property to the extent its performance is not related
to other property and affects the use and enjoyment of the leased
property by the tenant. Id., § 16.1, comment b. Heb-Ar’s
promise clearly did not relate to any other property and affected
3’s lounge’s use and enjoyment of the disputed property.
[13] Heb-Ar and 3’s lounge intended that the burden run
with the transferred interest. The burden of a promise will not
run to a transferee if the original contracting parties manifest
an intention that the promise not run with the land. see id.,
comment e. such intention may be found “from the facts and
circumstances surrounding the execution of the lease as well as
from language in the lease itself.” Id. at 122. The lease included
a provision stating that the lease and option to purchase were
personal to 3’s lounge and Heb-Ar. While the right to exercise
the option was personal to 3’s lounge, the burden associated with
that right clearly ran with the land. The lease granted 3’s lounge
the absolute right to purchase the leased property if it exercised
its option in accordance with the terms of the lease. The lease
stated that the option was “irrevocable and cannot be changed or
altered or revoked by [Heb-Ar].” We conclude that the option
was not revoked by the transfer of the property to the Tierneys
and that the burden of the option ran with the property.
Finally, 3’s lounge never relieved the Tierneys of the obliga-
tion created by the option to purchase. The district court held
that when 3’s lounge settled its claims against Heb-Ar, the
Tierneys’ obligations under the lease and option to purchase
were extinguished. The restatement does not support the district
court’s holding. While 3’s lounge released its claims against
Heb-Ar, it did not release the Tierneys—a critical distinction
under the restatement.
(c) release of surety Does Not release Primary Obligor
[14] The restatement recognizes that after a promisor trans-
fers his or her interest in leased property, the promisor becomes
secondarily liable to the person entitled to the benefit of the
promise. see restatement (second) of Property § 16.1, com-
ment e. (1977). The promisor becomes, in effect, a surety. see
74 	16 NebrAskA APPellATe rePOrTs

id. In the instant case, after Heb-Ar transferred the disputed
property to the Tierneys, the Tierneys became primarily liable
to 3’s lounge upon the obligation to convey the disputed prop-
erty and Heb-Ar became, in effect, a surety.
[15] While the release of a principal without the surety’s con-
sent releases the surety, the converse is not true. The release of a
surety does not release the principal obligor of his or her duty.
“Not only may a creditor, if he [or she] so chooses,
release or compound with a surety, but he [or she] may do
so without in any way affecting his [or her] right to hold the
principal to his [or her] ultimate liability. In other words,
not only will such a release have no effect in discharging
the principal, but the latter will not be entitled to credit on
his [or her] obligation for any sum paid by the surety in
consideration of his [or her] release as such surety.”
Coleman v. Beck, 142 Neb. 13, 21, 5 N.W.2d 104, 108 (1942).
In Price v. S. S. Fuller, Inc., 639 P.2d 1003 (Alaska 1982),
the Alaska supreme Court applied a similar rule in a situation
where the liability was established by privity of estate. In that
case, the lessee of a tract of land assigned the lease to another
party, the transferee. The lessor of the property commenced
actions against both the original lessee and the transferee to
recover the leased property and for unpaid rent. before a judg-
ment was rendered, the lessor dismissed all claims against the
original lessee. Judgment was thereafter entered against the
transferee. The transferee appealed, alleging, first, that because
the original lessee remained liable based upon privity of con-
tract for the transferee’s defaults, the release of the lessee acted
as a release of the transferee, and, second, that the rule that the
release of one joint obligor under a contract releases the other
joint obligor should have been applied to the case.
The Alaska supreme Court first held that the lessee and
transferee were not joint obligors. rather, the court held that the
original lessee was, in effect, a surety and was secondarily liable
to the lessor as between the lessee and the transferee. The court
held that this secondary relationship arose from the lessee’s con-
tinuing liability to the lessor under privity of contract while the
transferee was liable through privity of estate. While the court
noted that the release of the principal would normally release
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Cite as 16 Neb. App. 64

the surety, it recognized that “a release of the surety has no
effect upon the principal’s obligation except as a satisfaction.”
Id. at 1009.
While the instant case differs from Price in that the transferor
in the instant case, Heb-Ar, was the landlord, not the tenant as
in Price, the same principles apply to the case before us. The
release of Heb-Ar had no effect upon the Tierneys’ obligation to
3’s lounge. The Tierneys remained obligated to 3’s lounge and
had an obligation to convey the disputed property to 3’s lounge
upon exercise of the option. The district court’s holding to the
contrary is erroneous and is reversed.
(d) Tierneys’ Arguments
We reject the Tierneys’ contrary arguments. The Tierneys
assert the same argument that was made by the transferee in
Price—that they should have been discharged from liability
when Heb-Ar was discharged, because they were joint obli-
gors with Heb-Ar. Of course, the voluntary release of one
joint judgment debtor, or joint obligor, operates as a release of
his or her co-obligor. see Coleman v. Beck, supra. However,
this rule has no application to the case before us. Heb-Ar was
not a joint obligor with the Tierneys. We find no evidence that
Heb-Ar and the Tierneys intended to create a joint obligation.
Instead, after Heb-Ar’s conveyance to the Tierneys, Heb-Ar
remained secondarily liable to 3’s lounge. This argument is
without merit.
[16,17] The Tierneys also allege that 3’s lounge waived
its right to exercise its option to purchase the disputed prop-
erty. Waiver is a voluntary and intentional relinquishment or
abandonment of a known existing legal right or such conduct
as warrants an inference of the relinquishment of such right.
MBH, Inc. v. John Otte Oil & Propane, 15 Neb. App. 341, 727
N.W.2d 238 (2007). In order to establish a waiver of a legal
right, there must be clear, unequivocal, and decisive action of a
party showing such purpose, or acts amounting to estoppel on
his or her part. Id.
3’s lounge had a vested right to purchase the disputed
property. see Winberg v. Cimfel, 248 Neb. 71, 532 N.W.2d
35 (1995). There is no evidence in the record that 3’s lounge
76 	16 NebrAskA APPellATe rePOrTs

waived such right. Walker testified that at no point did he waive
3’s lounge’s right to exercise its option to purchase the disputed
property. Although he waited several years after the transfer of
the disputed property to the Tierneys to exercise 3’s lounge’s
option, that alone does not show a clear, unequivocal, and
decisive action to waive the option. The district court was per-
suaded by Walker’s testimony that he did not act immediately
after Heb-Ar transferred the disputed property to the Tierneys
because he did not believe that the transfer “was worth the paper
it was written on.” We give weight to the district court’s reliance
on this testimony and find that this argument has no merit.
2. approprIate reLIeF
[18,19] because the district court determined that 3’s lounge’s
claims were extinguished, it did not consider the appropriate
relief. real estate is assumed to possess the characteristic of
uniqueness, and, therefore, special value, necessary for avail-
ability of specific performance. Frenzen v. Taylor, 232 Neb. 41,
439 N.W.2d 473 (1989). specific performance should generally
be granted as a matter of course or right regarding a contract
for the sale of real estate where a valid, binding contract exists
which is definite and certain in its terms, mutual in its obliga-
tion, free from overreaching fraud and unfairness, and where
the remedy at law is inadequate. see id. 3’s lounge is entitled
to specific performance of the rights conferred by its option to
purchase the disputed property, including the right to a convey-
ance of the disputed property from the Tierneys.
[20] A party seeking specific performance must show his or
her right to the relief sought, including proof that the party is
ready, able, and willing to perform his or her obligations under
the contract. Langemeier v. Urwiler Oil & Fertilizer, 265 Neb.
827, 660 N.W.2d 487 (2003). Of course, 3’s lounge is required
to perform its obligations under the option—the principal obli-
gation being the payment of the purchase price.
[21] 3’s lounge sought a determination by the district court
of the share of the purchase price owed to the Tierneys.
Heb-Ar and the Tierneys failed to allocate the purchase price
between themselves. Where a situation exists which is contrary
to the principles of equity and which can be redressed within the
3’s lOuNge v. TIerNey 	77
Cite as 16 Neb. App. 64

scope of judicial action, a court of equity will devise a remedy
to meet the situation. Trieweiler v. Sears, 268 Neb. 952, 689
N.W.2d 807 (2004). It therefore falls to the court to equitably
apportion the purchase price.
[22] A decree for specific performance must as nearly as pos-
sible order the contract’s performance according to its terms.
Fritsch v. Hilton Land & Cattle Co., 245 Neb. 469, 513 N.W.2d
534 (1994). The contract in the instant case provided for an
option price of $60,000. 3’s lounge was to receive credit against
the price for its rental payments of $500 per month for 10
years—thus, the credit would precisely equal the purchase price.
As a result of the settlement with Heb-Ar, Heb-Ar refunded
or forgave the seven installments of rent due from January 1 to
August 1, 2004—a total of $3,500. While one might calculate
a variety of allocations based upon the evidence before us,
requiring 3’s lounge to pay the Tierneys the sum of $3,500 as
a condition of the decree of specific performance achieves the
goal of attaining performance of the contract’s terms as closely
as possible by requiring 3’s lounge to pay the full contract
price—no more and no less. Of course, the costs of the action
and compliance with the decree shall be taxed to the Tierneys.
upon remand, the district court shall fashion a decree of specific
performance in conformity with this opinion.
3. remaInIng assIgnments oF error
In view of our disposition of 3’s lounge’s principal conten-
tion on appeal, we need not consider its other assignments of
error. see Kelly v. Kelly, 246 Neb. 55, 516 N.W.2d 612 (1994)
(appellate court not obligated to engage in analysis not needed
to adjudicate case and controversy before it).
VI. CONClusION
We conclude that 3’s lounge’s claims against the Tierneys
were not extinguished when 3’s lounge reached a settlement
agreement with Heb-Ar. As a result of the conveyance of the
disputed property from Heb-Ar to the Tierneys, the Tierneys
were in privity of estate with 3’s lounge and primarily lia-
ble to perform the obligations of the option contract entitling
3’s lounge to purchase the disputed property. 3’s lounge
78 	16 NebrAskA APPellATe rePOrTs

is entitled to a decree of specific performance requiring the
Tierneys to convey the disputed property, subject to 3’s lounge’s
obligation to perform its contractual obligations, including pay-
ment of the balance of the purchase price. We reverse the judg-
ment of the district court and remand the cause to that court
with instructions to fashion a decree of specific performance in
conformity with this opinion.
reversed and remanded wIth dIrectIons .
J ames mckay , appeLLant , v . hershey F ood corp ., appeLLee .
740 N.W.2d 378
Filed October 30, 2007. 	No. A-06-1193.
1. Workers’ Compensation: Appeal and Error. under Neb. rev. stat. § 48-185
(reissue 2004), an appellate court may modify, reverse, or set aside a Workers’
Compensation Court decision only when (1) the compensation court acted without
or in excess of its powers; (2) the judgment, order, or award was procured by
fraud; (3) there is not sufficient competent evidence in the record to warrant the
making of the order, judgment, or award; or (4) the findings of fact by the com-
pensation court do not support the order or award.
2. Workers’ Compensation: Statutes: Appeal and Error. The meaning of a statute
is a question of law, and an appellate court is obligated in workers’ compensation
cases to make its own determinations as to questions of law.
3. Statutes: Appeal and Error. Appellate courts give statutory language its plain and
ordinary meaning and will not resort to interpretation to ascertain the meaning of
statutory words which are plain, direct, and unambiguous.
4. Final Orders. As a general matter, where an order is clearly intended to serve as a
final adjudication of the rights and liabilities of the parties, the silence of the order
on requests for relief not spoken to can be construed as a denial of those requests
under the circumstances.
5. Workers’ Compensation: Proof. To obtain a modification of a workers’ compen-
sation award, an applicant must prove, by a preponderance of evidence, that the
increase or decrease in incapacity was due solely to the injury resulting from the
original accident.
6. ____: ____. An applicant seeking modification of a workers’ compensation award
must prove there exists a material and substantial change for the better or worse in
the condition—a change in circumstances that justifies a modification, distinct and
different from the condition for which the adjudication had previously been made.
7. Summary Judgment. summary judgment is proper when the pleadings and
evidence admitted at the hearing 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.
MckAy v. HersHey FOOD COrP. 	79
Cite as 16 Neb. App. 79