Holoubek v. Romshek

offense then before the court can be enhanced, but only by prior
refusal convictions. But, as said by the county court, there is
no “cross over” under the plain language of the statute because
when sentencing for a DUI conviction, a previous refusal con-
viction is not in the list of convictions that are “prior convic-
tions,” and when sentencing for a refusal conviction, a previous
DUI conviction is not in the list of “prior convictions” which
can be used to enhance the refusal conviction. The State, citing
State v. Flye, supra, argues that the rule of law applicable here is
that we need only give the statutory language of § 60-6,197.02
its plain and ordinary meaning, and when the words of a statute
are plain, direct, and unambiguous, no interpretation is neces-
sary or will be indulged to ascertain meaning. We agree with the
State’s view of the applicable law concerning statutory interpre-
tation. However, our plain reading of the statute is different than
the State’s. We cannot read the statute any differently than did
the county court and the district court, given that Hansen was
before the court for a DUI conviction, and the alleged “prior
conviction” was a refusal conviction—but such is not within
the statutorily listed “prior convictions” for a DUI conviction.
Because the statute is clear, we do not resort to legislative
history. Whether this is the result the Legislature intended is
unknown, but the statute “says what it says.” Accordingly, we
affirm the decision of the lower courts.
A ffirmed .
mArk r. H oloubek And W illoW A. H oloubek AppellAnts ,
v . pAtriciA k. romsHek et Al ., Appellees .
749 N.W.2d 901
Filed May 20, 2008. 	No. A-06-1146.
1. Equity: Appeal and Error. In an appeal of an equitable action, the appellate
court tries factual questions de novo on the record and reaches a conclusion
independent of the findings of the trial court, provided, where credible evidence
is in conflict on a material issue of fact, the appellate court considers and may
give weight to the fact that the trial judge heard and observed the witnesses.
2. Real Estate: Title: Words and Phrases. A clear title means that the land is free
from encumbrances.
HoLoUBek v. roMSHek 	677
Cite as 16 Neb. App. 677
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:15 AM CST

3. ____: ____: ____. A good title is one free from litigation, palpable defects, and
grave doubts, comprising both legal and equitable titles, and fairly deducible
of record.
4. ____: ____: ____. A clear title means a good title, and a good title means a market-
able or merchantable title.
5. Real Estate: Contracts: Conveyances: Title. A contract to convey in fee simple,
clear of all encumbrances, implies a marketable title, and a marketable title is one
of such character as assures to the purchaser the quiet and peaceable enjoyment
of the property and one which is free from encumbrances.
6. Real Estate: Vendor and Vendee: Title. A merchantable title need not be free
from every technical defect, but the test is whether a man of reasonable prudence,
familiar with the facts and the questions of law involved, would, in the ordinary
course of business, accept such a title as one which could be sold to a reason-
able purchaser.
7. Real Estate: Vendor and Vendee: Title: Words and Phrases. The terms “mar-
ketable” and “merchantable” title are practically synonymous, and mean a title in
which there is no doubt involved, either as to matter of law or fact, and a pur-
chaser who contracts for a marketable title will not be required to take it if there
is color of outstanding title and he may encounter the hazards of litigation.
8. Real Estate: Vendor and Vendee: Title. A purchaser of real estate cannot be
made to buy a quiet title lawsuit.
9. Contracts: Rescission. An implied agreement to rescind a contract may be
given effect.
10. Equity: Rescission. In equity, a lawsuit is not on rescission, but, rather, is for
rescission, and thus it is a suit to have the court declare a rescission which is not
accomplished in equity until the court so decrees.
11. ____: ____. When a court of equity grants rescission, its decree wipes out the
instrument and renders it as though it does not exist.
12. Rescission: Words and Phrases. rescission is the equitable relief that the court
grants in the event of a breach of the warranty of marketable title.
13. Rescission: Vendor and Vendee: Claims: Ratification: Estoppel. A purchaser’s
claim for rescission can be defeated by conduct showing acquiescence, ratifica-
tion, or estoppel.
Appeal from the District Court for Butler County: mAry c.
G ilbride, Judge. reversed and remanded with directions.
Stephen D. Mossman, of Mattson, ricketts, Davies, Stewart
& Calkins, for appellants.
James M. egr, of egr & Birkel, P.C., for appellees.
sievers and moore, Judges.
sievers, Judge.
Mark r. Holoubek and Willow A. Holoubek filed a com-
plaint in the district court for Butler County seeking to rescind
678 	16 NeBrASkA APPeLLATe rePorTS

their purchase of real estate from Patricia k. romshek, elsie
Grubaugh, and Dick Grubaugh (collectively Grubaughs). After
the closing of such sale, it came to light that the owners of
the land to the south of the land purchased by the Holoubeks
claimed the southernmost 27 feet of the Holoubeks’ approxi-
mately 6.3-acre rectangular tract purchased from the Grubaughs.
The evidence traces this “problem” to a scrivener’s error in a
deed filed on August 3, 1922. For efficiency, we will refer to
this unusual circumstance as the “problem,” and we will use
27 feet as a convenient generalization although the surveyed
dimensions show that the measurement varies by a matter of a
few feet, plus or minus. The district court denied rescission, and
the Holoubeks have appealed.
FACTUAL BACkGroUND
on December 29, 2004, the Holoubeks agreed to buy, and
the Grubaughs agreed to sell, real estate via a written contract
which described the property as follows:
outlot 2 IN PT W 1⁄2 SW 1⁄4 +/− 4.86 Acres West
Addition, in Butler County, Nebraska.
West Half of the Southwest Quarter (W 1⁄2 SW 1⁄4) of
Section 19, Township 15, North, range 3, east of the 6th
P.M., Butler County, Ne. +/− 1.5 Acres West Addition.
The purchase price was $30,000, and closing was set for
January 17, 2005. We quote portions of the contract which are
crucial to the decision:
8. TITLE INSURANCE: The Seller will order a Title
Insurance Policy with the cost to be paid half by the Seller
and half by the Buyer. The Seller will be given a reason-
able time to correct any defects in the title.
. . . .
11.REPRESENTATION 	BY 	SELLER. 	The 	Seller
makes the following representations and warranties to the
Buyer, all of which survive the closing:
(a) At the time of closing, the Seller will have good and
clear marketable title to the property sold, assigned and
conveyed hereunder, free and clear of all liens, charges,
encumbrances and pledges.
. . . .
HoLoUBek v. roMSHek 	679
Cite as 16 Neb. App. 677

(c) Upon closing, no other persons or entities will have
any interest in the property being conveyed hereunder,
except as provided herein.
. . . .
(h) The legal description accurately and adequately
reflects the property being conveyed.
(i) That the foregoing representations and warranties
are made by the Seller with the knowledge and expecta-
tion that the Buyer is placing reliance thereon.
The money was paid, and the sale was closed without incident.
The Holoubeks intended to subdivide the tract, and after the
closing, for that purpose, they engaged the services of richard
ronkar, who has been the Butler County surveyor for approxi-
mately 25 years. In the course of working with ronkar, the
Holoubeks first became aware of the “problem.”
The “problem” involves the tract lying to the south of the
Grubaugh property purchased by the Holoubeks. The two tracts
are the same length, but the Holoubek tract is wider than
the adjacent tract owned by rick Lord and Debra Sypal. As
explained by ronkar, at least on paper, the Lord-Sypal tract
overlaps approximately 27 feet to the north onto the Holoubek
tract. The fact of such “overlap” was discerned by ronkar, and
he so advised the Holoubeks; the Grubaughs do not dispute this
evidence in any way. The record is clear that it was not until
after the Holoubeks began the platting process of the tract they
had purchased from the Grubaughs that the Grubaughs and
Holoubeks became aware of the “problem.”
According to ronkar’s testimony, he did not advise the
Holoubeks of what he already knew about the “problem” at the
time that the Holoubeks engaged him on January 10, 2005, to
do the preliminary plat for the subdivision. As we understand
the testimony, ronkar, in his work as county surveyor, had pre-
viously become aware of the “problem,” albeit apparently not
how or why it occurred. After being engaged by the Holoubeks,
ronkar undertook an investigation of the records and surveys
to determine the origin of the “problem,” and after he had done
so, he then advised the Holoubeks of the overlap and why it
had occurred. We note that ronkar’s testimony is clearer if
read in conjunction with exhibit 44, his survey and field notes
680 	16 NeBrASkA APPeLLATe rePorTS

filed with the Butler County clerk in the survey record reposi-
tory on September 19, 2005. In any event, the first survey and
plat was recorded on April 10, 1906 (for convenience, we deal
with the widths of the tracts). Thus, as of such date, a 9.66-acre
tract which was 647 feet wide was platted and recorded. on
May 12, 1913, a deed was filed conveying the north 320 feet of
the 9.66-acre tract; this is the tract that ultimately became the
Grubaugh tract that was later sold to the Holoubeks. on March
16, 1915, a deed was filed conveying the south 327 feet of the
9.66-acre tract, and such deed describes that the tract extends
south 327 feet to “‘the north line of a public road.’” Thus, as of
1915, all 647 feet of the original tract is accounted for by these
two conveyances.
Then, a third transaction occurred on September 8, 1919,
when a survey and plat was recorded of “Hall’s Addition” show-
ing 27 feet of “parquet” on the north side of a public street, and
from there, 12 lots 140 feet deep extended to the north—this
represents the southernmost portion of the original tract. These
three transactions constitute a division of the 647-foot-wide
tract we started with, in that the southernmost 167 feet was
platted as residential lots, Hall’s Addition, leaving a tract 160
feet wide lying north thereof (ultimately the Lord-Sypal tract),
and then to the north of that tract, a tract 320 feet wide (the
Grubaugh tract).
We quote extensively from ronkar’s field notes, Nos. 6
through 8 from exhibit 44, which explain the inception of the
“problem,” whereby the land lying to the south of what the
Holoubeks bought from the Grubaughs was expanded from its
actual width of 160 feet to what the title record presently shows
as a tract that is 187 feet wide. Thus, stated simply, on paper,
there is a piece of ground approximately 27 feet by 650 feet, but
in reality, it does not exist. ronkar’s field notes state:
6) 8-3-1922; Deed filed in Deed Bk. 62 p.281, convey-
ing 187′, more or less, lying north of the Hall’s Addition
lots. In my opinion, this deed description contains an
error. I believe the person who wrote this description
properly used the 327′ figure from [field note No. 4, the
March 16, 1915, deed], and then subtracted the 140′ deep
lots, to equal 187′ remaining, when the correct computation
HoLoUBek v. roMSHek 	681
Cite as 16 Neb. App. 677

should have been the 327′ figure, less 27′ Parquet, less the
140′ deep lots, to equal 160′. This deed description begins
320′ south of the south line of the F.e. & M.V. railroad.
7) June 1975; Survey plat by erickson of this subject
property, shows he established monuments on the south
line of this subject property, 187′ north of the north line
of Hall’s Addition. This appears to be a perpetuation of
the previous, erroneous deed description. erickson’s plat
note states that the description “includes all of that real
estate conveyed in deeds recorded in Book 92, pages 555
and 556”. I believe that note is also in error, as said deed
description calls for the 320′, along with a 100′ strip of
abandoned railroad, equaling a total of 420′. erickson’s
plat shows the east line of this subject property as being
only 394.24′ wide, a difference of 25.76′.
8) Nov. 1977; Survey plat by erickson of the parcel
lying south of the subject property, shows said parcel
[Lord-Sypal tract] having a width of 187′, again perpetuat-
ing the previous, erroneous deed description.
ronkar concludes his field notes by stating that “[t]he con-
flict over the strip of land along the south line could not be
resolved by the adjacent owners [the Holoubeks and Lord and
Sypal], and this survey was abandoned, as directed by [Mark]
Holoubek.” ronkar explained that in his opinion, the writer of
the deed in 1922 missed the 27 feet “parquet” of the street,
which was adjacent to the south edge of Hall’s Addition, and
that such error was thereafter perpetuated by 1975 and 1977
surveys, resulting in the Lord-Sypal tract being approximately
27 feet wider (on paper) than it should be. The error has the
effect of adding 27 feet to the north edge of the Lord-Sypal
tract—27 feet which does not exist.
Given our resolution, we need not exquisitely detail the
Holoubeks’ attempts to resolve the “problem.” However, the long
and short of it was that Lord and Sypal rejected the Holoubeks’
offer of 131⁄2 feet of the “problem” strip in settlement of the
“problem.” The Holoubeks abandoned their subdivision plan
and filed this lawsuit for rescission of the contract and deed,
repayment of their $30,000 purchase price, plus some $6,308.10
in expenditures to develop the tract.
682 	16 NeBrASkA APPeLLATe rePorTS

TrIAL CoUrT DeCISIoN
The trial court determined that rescission was not avail-
able in this case, citing the following facts and circumstances:
The agreement did not contain an express rescission clause,
the Holoubeks were the drafters of the agreement and were
familiar with the land, the Holoubeks did not have the property
surveyed until after closing, the Grubaughs were unaware until
after closing of any claim of the landholders to the south, the
Grubaughs never committed any fraud, it is the deed to the
Lord-Sypal property which is in error, and there was no mistake
in the deed given to the Holoubeks. The district court made
three additional findings, which we will delineate and discuss
further in the analysis section of our opinion.
ASSIGNMeNTS oF error
The Holoubeks set forth 11 assignments of error. Summarized
and restated, the assignments of error are that the district court
erred (1) in failing to find that the Grubaughs breached the
agreement by failing to provide a good and clear marketable
property and by failing to ensure that no other person would
claim an interest in the property conveyed; (2) in failing to find
negligent misrepresentation by the Grubaughs that they were
providing good and clear marketable title and that no other
person would claim any interest in the property; (3) in failing
to rescind the agreement and warranty deed for either breach of
the agreement or negligent misrepresentation; (4) in finding that
the boundary dispute did not make the property uninhabitable
for all practical purposes; (5) in finding that the Holoubeks did
not give the Grubaughs a reasonable time to cure the defect;
(6) in finding that the Holoubeks acquiesced in or ratified the
agreement by attempting to settle the issue with Lord and Sypal
and by agreeing to a settlement offer which would give up a
portion of the property; and (7) in failing to award damages,
including interest.
STANDArD oF reVIeW
[1] In an appeal of an equitable action, the appellate court
tries factual questions de novo on the record and reaches
a conclusion independent of the findings of the trial court,
HoLoUBek v. roMSHek 	683
Cite as 16 Neb. App. 677

provided, where credible evidence is in conflict on a material
issue of fact, the appellate court considers and may give
weight to the fact that the trial judge heard and observed the
witnesses. Bauermeister v. McReynolds, 253 Neb. 554, 571
N.W.2d 79 (1997).
ANALYSIS
Introduction.
At the outset, we note that in the pleadings and the Holoubeks’
pretrial statement of issues, the Holoubeks raised issues of neg-
ligent misrepresentation. We also note that the Grubaughs in
their appellees’ brief before this court, under the guise of exam-
ining all of the circumstances surrounding the purchase, seem
to frame the matter in language of fault or blame. For example,
the Grubaughs’ brief states:
[Mark] Holoubek is what people call a “wheeler dealer”
and needed to move things along to make a quick buck.
The record is filled with Mark Holoubek[’]s touting his
background. The problem is Mark Holoubek wanted to be
his own lawyer, his own real estate broker, and his own
developer and cut corners for a quick buck. equity does
not allow someone to benefit from [his] own mistakes
and errors. remember Holoubek did not have the Tract
surveyed until AFTer closing . . . . No experienced devel-
oper and land purchaser goes forward without a survey,
goes forward without knowing the zoning regulations,
goes forward to close until ALL matters are examined
before closing and DoeS provide for those contingencies.
Holoubek did none of these things with the purchase.
Brief for appellees at 11-12.
As pointed out above, in our section entitled “Trial Court
Decision,” the trial court likewise found some of such concepts
advanced by the Grubaughs significant. For example, the “order
of Dismissal Following Trial” notes that the purchase agree-
ment did not contain an express rescission clause and that the
Holoubeks drafted the agreement, were familiar with the land,
and chose not to have it surveyed until after closing. However,
in our view, the initial analytical focus must be on two key pro-
visions of the “Agreement for the Sale of real estate” entered
684 	16 NeBrASkA APPeLLATe rePorTS

into by the parties on December 29, 2004, because the analytical
calculus for the case must reflect that this is essentially a breach
of contract claim. Therefore, our analytical approach to the case
is different from that of the district court.
Marketable Title.
In paragraph 11 of the agreement, the Grubaughs represented
and warranted to the Holoubeks that “(a) [at] the time of clos-
ing, the Seller will have good and clear marketable title to the
property” and that “(c) . . . no other persons or entities will have
any interest in the property being conveyed.” Therefore, these
contractual provisions form the first key point of analysis.
[2-7] The first crucial question is what the term “marketable
title” means. Initially, we note that the case law makes it clear
marketable title and merchantable title are synonymous and
that the terms are sometimes used interchangeably. We quote at
length from the thorough exposition of the concept of market-
able title by the Nebraska Supreme Court in Bliss v. Schlund,
123 Neb. 253, 257-58, 242 N.W. 436, 438 (1932):
“A clear title means that the land is free from [e]ncum-
brances. Roberts v. Bassett, 105 Mass. 409. A good title
is one free from litigation, palpable defects and grave
doubts, comprising both legal and equitable titles, and
fairly deducible of record. Turner v. McDonald, 76 Cal.
177, 9 Am. St. rep. 189, 18 Pac. 262; Reynolds v. Borel,
86 Cal. 538, 25 Pac. 67. A clear title means a good
title (Oakey v. Cook, 41 N. J. eq. 350, 7 Atl. 495), and
a good title means a marketable or merchantable title
(Irving v. Campbell, 121 N. Y. 353, 8 L. r. A. 620, 24
N. e. 821). A contract to convey in fee simple, clear of all
[e]ncumbrances, implies a marketable title (Bell v. Stadler,
31 Idaho, 568, 174 Pac. 129), and a marketable title is one
of such character as assures to the purchaser the quiet and
peaceable enjoyment of the property and one which is free
from [e]ncumbrances (Barnard v. Brown, 112 Mich. 452,
67 Am. St. rep. 432, 70 N. W. 1038).” Ogg v. Herman,
71 Mont. 10.
It has been held that a merchantable title need not be
free from every technical defect, but the test is whether
HoLoUBek v. roMSHek 	685
Cite as 16 Neb. App. 677

a man of reasonable prudence, familiar with the facts
and the questions of law involved, would, in the ordinary
course of business, accept such a title as one which could
be sold to a reasonable purchaser. Cappel v. Potts, 192
Ia. 661.
The terms “marketable” and “merchantable” title are
practically synonymous, and mean a title in which there
is no doubt involved, either as to matter of law or fact,
and a purchaser who contracts for a marketable title will
not be required to take it if there be color of outstanding
title and he may encounter the hazards of litigation. Hess
v. Bowen, 237 Fed. 510; Eaton v. Blackburn, 49 or. 22;
Dalzell v. Crawford, 1 Pars. eq. Cas. (Pa.) 37, 45; Herman
v. Somers, 158 Pa. St. 424, 38 Am. St. rep. 851; Ormsby
v. Graham, 123 Ia. 202.
[8] Bliss v. Schlund, supra, was followed in Northouse v.
Torstenson, 146 Neb. 187, 19 N.W.2d 34 (1945). In Northouse,
the trial court found that the plaintiff had not tendered an
abstract of title reflecting a merchantable title. The Nebraska
Supreme Court affirmed, saying:
It appears to this court that no other judgment is possible
under the law and the facts, for a purchaser cannot be made
to buy a lawsuit in such a case, even if he might win in the
end. A title to real estate, to be good, satisfactory or mar-
ketable, should be free from reasonable doubt, either in law
or in fact. The judgment of the district court is affirmed.
Northouse v. Torstenson, 146 Neb. at 192-93, 19 N.W.2d
at 36-37.
recalling the facts that we have recited in considerable detail
about the approximately 27- by 650-foot strip on the south
edge of the Grubaugh property to which Lord and Sypal make
claim by virtue of their deed, which perpetuates a scrivener’s
error from 1922, we find that no judgment is possible under
the facts of this case, other than to conclude that at the time
of closing, and as well as at trial, remembering the express
proviso of the contract that the warranty of marketable title
survives the closing, the Grubaughs did not have, nor did they
convey to the Holoubeks, marketable title. Quite clearly, unless
the Grubaughs are held to their representation and warranty to
686 	16 NeBrASkA APPeLLATe rePorTS

convey marketable title, the Holoubeks are buying a quiet title
lawsuit to resolve what we have nicknamed the “problem.” And,
as Northouse v. Torstenson, supra, points out, the fact that the
Holoubeks might prevail over Lord and Sypal, a matter upon
which we neither express nor imply any opinion, is simply not
material to the question of whether the Grubaughs had and con-
veyed marketable title. Without rescission, we would be forcing
the Holoubeks to “buy a lawsuit.” There is obviously reason-
able doubt in law and in fact about the title to the Grubaugh
property, and a reasonably prudent purchaser, well informed as
to the facts and their legal consequences as outlined by ronkar,
would not accept such title under the warranty of marketable
title contained in the contract.
Finally, although the evidence is undisputed that at the time
of closing, no one, including Lord and Sypal, was aware of
his or her potential claim to a portion of the Grubaugh tract,
the Grubaughs did warrant that “no other persons . . . will
have any interest in the property being conveyed,” and such
provision also survived the closing. The record indisputably
shows that Lord and Sypal have resisted all attempts, first by
the Holoubeks and then by the Grubaughs, to amicably resolve
the “problem.” Thus, the foregoing quoted provision from
paragraph 11(c) of the purchase agreement has clearly been
breached. In short, at least on the record before us, it is quite
apparent that the Lord-Sypal claim cannot be resolved without
further litigation.
[9-12] We now turn to several of the trial court’s reasons
for denying rescission. The trial court cites, apparently as a cir-
cumstance supporting the denial of rescission, the fact that “[t]he
Purchase Agreement does not contain an express rescission
clause.” However, the law is clear that an implied agreement to
rescind a contract may be given effect. Lustgarten v. Jones, 220
Neb. 585, 371 N.W.2d 668 (1985); Davco Realty Co. v. Picnic
Foods, Inc., 198 Neb. 193, 252 N.W.2d 142 (1977). Clearly, a
warranty of marketable title, meaning that the facts or law do
not put the title in doubt, would be worthless if such did not
carry with it the implied remedy of rescission. In this regard,
it is important that in equity, the lawsuit is not on rescission,
but, rather, is for rescission, and thus it is a suit to have the
HoLoUBek v. roMSHek 	687
Cite as 16 Neb. App. 677

court declare a rescission which is not accomplished in equity
until the court so decrees. See Kracl v. Loseke, 236 Neb. 290,
461 N.W.2d 67 (1990), citing Dan B. Dobbs, Handbook on the
Law of remedies, Principles of restitution § 4.8 (1973). Kracl
v. Loseke, supra, further illuminates the equitable remedy of
rescission, stating that when a court of equity grants rescission,
its decree wipes out the instrument and renders it as though it
does not exist. Accordingly, the fact that the agreement between
the Grubaughs and the Holoubeks did not contain an express
provision for rescission is of no moment, because such remedy
is implied from and inherent in the warranty of marketable title,
and rescission is the equitable relief that the court grants in the
event of a breach of the warranty of marketable title.
We now turn to a specific finding of the trial court which is
apparently a material part of the trial court’s rationale in deny-
ing the Holoubeks relief: “The fact that the neighbors to the
south make a claim to the southern 27 feet of the Tract does
not defeat the object of the parties in making the agreement,
and does not render the Tract bargained for uninhabitable for
all practical purposes.” This proposition, according to the trial
judge’s order, is derived from Eliker v. Chief Indus., 243 Neb.
275, 498 N.W.2d 564 (1993). However, examination of Eliker
reveals that it is a completely different kind of case and that
the doctrine found therein, and relied upon by the trial court
here, is simply inapplicable to the instant case. Eliker involved
an action brought to obtain rescission of a home construc-
tion contract, and the issue presented was whether the home-
owners’ remedy for defects in the home was in damages or
equitable rescission. The contractor argued that damages would
be an adequate remedy, but the Eliker court pointed out that
in instances of failure of consideration, such is not generally
a sufficient ground for equitable cancellation of a contract, but
equitable cancellation, i.e., rescission, may arise from a breach
of contract which is so substantial and fundamental as to defeat
the object of the parties entering into the contract.
The Eliker court said:
Although [the contractor] asserts that the proper rem-
edy for breach of a construction contract is damages rather
than rescission, the existing case law does not preclude
688 	16 NeBrASkA APPeLLATe rePorTS

the application of an equitable remedy where a breach of
the contract is so substantial that it defeats the object of
the parties in entering into the agreement.
243 Neb. at 279, 498 N.W.2d at 567. The court further explained
that a damage remedy contemplates that the contract has been
substantially complied with and will serve substantially as well
as would the structure if completed according to the contract
and completion would not endanger the balance of the struc-
ture. The court, after reciting an extensive list of what would
be needed to complete the house and make the repairs, said
that “it is clear that the structure, as completed, does not serve
the same purpose as it would have if completed according to
the contract” and that “the variations between the house that
the [homeowners] bargained for and the structure as completed
were egregious.” Id. at 281, 498 N.W.2d at 568.
It was in this context that the Eliker court held that “rescis-
sion is the proper remedy where a breach of contract is so sub-
stantial and fundamental as to defeat the object of the parties in
making the agreement, so that it leaves the property bargained
for uninhabitable for all practical purposes.” 243 Neb. at 285,
498 N.W.2d at 570.
Eliker did not involve a claim of a breach of a warranty of
marketable title, but, rather, a breach of contract for the con-
struction of a house, which even the contractor admitted had
a flawed design and substandard workmanship causing it to
effectively split in half. Thus, in Eliker, the choice was between
remedies for an obvious breach of a home construction con-
tract, whereas this action seeks equitable rescission because of
a breach of the warranty of marketable title. As a result, this
rationale for denying rescission expressed by the district court,
citing a clearly distinguishable case, is incorrect.
The district court also reasoned as follows:
even if the existence of the Disputed Area was considered
a “defect” in title, [the Holoubeks] failed to allow [the
Grubaughs] a reasonable time to cure the defect. [The
Grubaughs] acted reasonably in attempting to resolve the
issues when requested by [the Holoubeks] to do so. [The
Holoubeks] brought this suit before a reasonable time had
HoLoUBek v. roMSHek 	689
Cite as 16 Neb. App. 677

elapsed. The “defect” is one which could be cured if a rea-
sonable time were allowed.
The trial court’s opinion reveals that this rationale is derived from
Fritsch v. Hilton Land & Cattle Co., 245 Neb. 469, 513 N.W.2d
534 (1994), as well as our discussion of Fritsch in Snowdon
Farms v. Jones, 8 Neb. App. 445, 595 N.W.2d 270 (1999).
Snowdon Farms v. Jones, supra, is the opposite of the instant
case, because the seller was attempting to use a title defect as
a defense to the buyer’s action for specific performance. We
reversed the district court’s order allowing the seller to rescind,
finding that the district court’s earlier journal entry had cured
the main defect and that given the law’s preference for specific
performance, the buyer’s motion for summary judgment had to
be reconsidered. of considerable note in Snowdon Farms is the
fact that after the contract, and while the seller was purport-
edly attempting to cure the title defect, the land became more
interesting and perhaps more valuable because a third party was
harvesting topsoil from it. In Fritsch v. Hilton Land & Cattle
Co., supra, the seller knew of a mortgage-related defect at the
time of the agreement in 1981, but did nothing about it until
1984. As a result, the Nebraska Supreme Court found that there
was a failure to cure the defect within a reasonable time and that
thus, the seller could no longer insist upon performance by the
buyer. The fact is, in this case, that neither the Holoubeks nor
the Grubaughs were able to make any progress with Lord and
Sypal to resolve the “problem.” Moreover, the obvious remedy is
a quiet title action, but there is no evidence that the Grubaughs
ever instituted such. At oral argument, the Grubaughs’ counsel
asserted that they could not do so, because the Holoubeks had
recorded the deed—implying a lack of standing. We need not
decide whether the Grubaughs would have lacked standing,
despite their contractual obligation, because any number of
solutions to that potential issue would be easily apparent to a
seller intent on fixing the “problem.” And, the evidence is not
convincing that the Grubaughs were seriously intent on resolv-
ing the “problem.” In other words, lack of time to cure was not
the issue.
Accordingly, the two cases relied upon by the district court
are factually distinguishable. Moreover, of significant import is
690 	16 NeBrASkA APPeLLATe rePorTS

the fact that in their answer, the Grubaughs make no assertion
that they were not allowed a reasonable time to cure the defect.
Moreover, the trial court’s decision implies that there was insuf-
ficient time—from awareness of the “problem” to the time of
trial—for a quiet title action involving Lord and Sypal to be
filed, but any such implied conclusion is obviously incorrect.
[13] The final rationale of the district court for denying
rescission is that “[the Holoubeks], in essence, acquiesced in
or ratified the contract by attempting to settle the issue with
the neighbors and by agreeing to make a settlement offer which
would give up a portion of the property.” The trial court’s foun-
dation for this rationale is Kracl v. Loseke, 236 Neb. 290, 461
N.W.2d 67 (1990), a case in which the purchasers (kracls) of
real property sought rescission of the written contract based on
the concealment by the sellers (Losekes) of substantial termite
damage in the residence. The trial court rescinded the contract,
and the Nebraska Supreme Court affirmed. Losekes argued that
the right to rescind was waived by kracls because they made
improvements to the house. The Supreme Court acknowledged
that a purchaser’s claim for rescission can be defeated by con-
duct showing acquiescence, ratification, or estoppel, citing a
Maryland case, Wolin v. Zenith Homes, Inc., 219 Md. 242, 146
A.2d 197 (1959). The court recited four minor repairs made by
kracls totaling $93.88 made after discovery of the termite dam-
age, and the court said that such repairs could hardly be con-
sidered acts which indicated kracls’ intent to ratify the contract
with Losekes or acquiesce in the purchase of the house with the
undisclosed termite damage.
The fact that the Holoubeks attempted to work with Lord and
Sypal to arrive at an accommodation to allow them to proceed
with the planned subdivision is by no means acquiescence to
the notion that if Lord and Sypal tell the Holoubeks to “go fly
a kite,” they, as buyers holding a warranty of marketable title,
are somehow agreeing that they will take on the responsibility
and cost of a quiet title action, which obviously looms if Lord
and Sypal reject the Holoubeks’ offer—as they did. Moreover,
the district court’s rationale is fundamentally at odds with our
public policy favoring compromise of disputes. See Baker v.
Blue Ridge Ins. Co., 215 Neb. 111, 337 N.W.2d 411 (1983).
HoLoUBek v. roMSHek 	691
Cite as 16 Neb. App. 677

CoNCLUSIoN
For the foregoing reasons, we reverse the decision of the dis-
trict court and remand the matter to the district court for entry of
an order rescinding the agreement for sale of real estate between
the parties executed December 29, 2004. Because the purpose
of rescission is to place the parties in status quo, that is, to
return them to their position which existed before the rescinded
contract, see Kracl v. Loseke, supra, the district court shall
consider the Holoubeks’ claims for damages upon the record
previously made.
reversed And remAnded WitH directions .
irWin, Judge, participating on briefs.
J oHn c. clArk , AppellAnt And cross -Appellee , v . les tyrrell ,
director of tHe stAte reAl estAte commission , And
tHe stAte of nebrAskA ex rel . stAte reAl estAte
commission , Appellees And cross -AppellAnts .
750 N.W.2d 364
Filed May 20, 2008. 	No. A-07-231.
1. Administrative Law: Real Estate: Final Orders: Appeal and Error. Final
orders of the State real estate Commission are appealed in accordance with the
Administrative Procedure Act.
2. Administrative Law: Final Orders: Courts: Appeal and Error. In reviewing
final administrative orders under the Administrative Procedure Act, the district
court functions not as a trial court but as an intermediate court of appeals.
3. Administrative Law: Appeal and Error. In an appeal under Neb. rev. Stat.
§ 84-917(5)(a) (Cum. Supp. 2006), the district court conducts a de novo review of
the record of the agency.
4. Administrative Law: Courts: Appeal and Error. In a de novo review by a
district court of the decision of an administrative agency, the level of discipline
imposed by the agency is subject to the district court’s power to affirm, reverse, or
modify the decision of the agency or to remand the case for further proceedings.
5. Administrative Law: Judgments: Appeal and Error. A judgment or final order
rendered by a district court in a judicial review pursuant to the Administrative
Procedure Act may be reversed, vacated, or modified by an appellate court for
errors appearing on the record.
6. ____: ____: ____. When reviewing an order of a district court under the
Administrative Procedure Act for errors appearing on the record, the inquiry is
whether the decision conforms to the law, is supported by competent evidence,
and is not arbitrary, capricious, or unreasonable.
692 	16 NeBrASkA APPeLLATe rePorTS