Court Opinion

ID: 9796201
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:51:50.667425+00
Date Added: 2024-06-11T08:48:03.358116
License: Public Domain

MATTHEWS, Justice,
with whom EASTAUGH, Justice, joins, concurring in part and dissenting in part.
As the superior court acknowledged, the Ramirez/Cosmos gravel lease had "a host of deficiencies" including "a relatively indefinite term" and a "lack of a legal description or any description of the property to be mined." Most importantly, the Ramirez/Cosmos lease lacked any language whatsoever regarding the exclusivity of Cosmos's mining right. Yet the court concludes that the hopelessly deficient Ramirez/Cosmos lease could potentially support a result that would require AAA to pay Totaro royalties on behalf of a now-defunct corporation for the remainder of the useful life of AAA's gravel pit, with AAA never having the right to mine gravel on its property as the owner.1 Because the Ramirez/Cosmos lease cannot possibly sustain such a highly restrictive, multi-decade arrangement, I do not believe a remand is necessary and would simply reverse the superior court's decision holding AAA liable to Totaro. But because I agree with the court that this decision cannot be affirmed as it stands, I agree that if it is not reversed outright, it must be remanded.
I share the court's view that "AAA's potential liability to Totaro turns on whether the Ramirez/Cosmos lease was intended to be an *169exclusive lease.2 The Ramirez/Cosmos lease does not include any provision stating that Cosmos had the exclusive right to mine gravel on the property.3 Totaro's interest in the gravel pit could best be characterized as an overriding royalty interest.4 This interest was enforceable 5 but was tied to the terms of the lease and sublease out of which it was carved.6 When AAA purchased Ramirez's property, it purchased Ramirez's right to mine gravel on the property as owner rather than as a sublessee of Cosmos with an obligation to pay royalties to Totaro.7
The court asserts that "some of [the Ramirez/Cosmos lease's] provisions may make sense only if the lease had been intended to be exclusive" and thus that the lease is "am-
biguous on its face as to exclusivity."8 But the subtle suggestions of exclusivity that the court points to in the lease's word choice,9 such as the reference to Cosmos as the "pit operator," are not sufficient to create ambiguity regarding the existence of such a eru-cially important restriction in a lease that is otherwise completely silent on the matter. And the fact that the lease contemplated that Cosmos would make certain investments in the property in order to extract gravel does not in and of itself create ambiguity regarding exclusivity simply because it casts doubt on the wisdom of Cosmos's entering into a nonexclusive leasing arrangement.10
Ambiguity in a contract does not arise from silence.11 And unambiguous contract *170language is not rendered ambiguous simply because the parties disagree on their intent at the time of contracting, because they advance different interpretations during the course of litigation, or because the clear meaning of the language used would work a hardship on one of the parties.12 By omitting any mention of exclusivity, Ramirez retained a concurrent right to mine the gravel on his property. Indeed, its attorney, McCombs, warned AAA that Ramirez could have "execute[d] a similar, non-exclusive agreement with another party for thle] same property."
The evidence in the record suggests that the uncertainty surrounding the parties' leasing arrangement is precisely what roused AAA to action when Ramirez put the property up for sale. Fuger testified that he was concerned that the Ramirez/Cosmos lease was "real spooky," and "questionable at best." And the evidence leaves no doubt that AAA had ample cause for concern. Recognizing its vulnerability to the whims of a new owner, AAA bought the gravel pit for itself. Just as Ramirez had the right to mine the gravel pit as fee simple owner, uneneum-bered by the lease with Cosmos, so too did AAA enjoy the full panoply of ownership rights after the sale. When AAA secured the right to mine the pit as its owner, its obligation to pay royalties to Totaro as a sublessee ended. AAA might have discussed its plans to exercise a concurrent mining right with its former sublessor Cosmos, but Cosmos no longer existed. Accordingly, I believe the superior court erred in ruling that AAA owes royalties to Totaro under the sublease.
Because I would not require AAA to continue to pay royalties to Totaro, I would not reach the question whether Ramirez should be held liable to AAA for breach of the covenant against encumbrances under the warranty deed by which he sold AAA the property. Nonetheless I agree that if AAA is held liable to Totaro for royalties under the gravel leases, then Ramirez, who sold AAA a warranty deed with no exceptions to title, must be held lable to AAA for breach of warranty. A grantor should not be allowed to avoid the clear obligations of a warranty deed by asserting that the grantee knew or should have known of an encumbrance against title, particularly where, as here, the purchase price for the property does not reflect the encumbrance.
For these reasons, I respectfully dissent from part IV.A.2 of the per curiam opinion.
MATTHEWS, Justice, with whom EASTAUGH, Justice, joins, concurring in part and dissenting in part.
I would affirm the superior court's ruling that AAA remains liable to pay royalties to Totaro and thus disagree with the per curiam opinion that a remand is necessary to determine whether the Ramirez/Cosmos lease was exclusive. I also would affirm the superior court's ruling that the implied covenant against encumbrances inherent in the warranty deed under which Ramirez conveyed title to AAA did not shift to Ramirez AAA's obligation to pay such royalties. I thus disagree with parts IV.A.2 and IV.B of the per curiam opinion, but agree with parts IV.A.1 and V.
EXCLUSIVITY
At the outset of the trial the superior court offered the parties a hypothetical example under which A, the owner, "leases the pit to B, B turns around and leases the pit to C." Under the first lease "B was going to pay A two cents a ton" and under the second lease "C was going to pay B 2-1/2 cents a ton." "C now buys the pit. My question is doesn't C still owe B half a cent a ton?" After some discussion counsel for all three parties *171agreed that C's obligation to pay a royalty to B would not be extinguished by C's acquisition of A's ownership interest so long as the leases were valid and had not expired. In accordance with this example, the court at the end of the trial found that both leases were valid and had not expired and therefore AAA was not relieved of its duty to continue making overriding royalty payments to Tota-ro.
AAA contends, notwithstanding this colloquy, that it no longer owes overriding royalties under the Cosmos/AAA lease because the Ramirez/Cosmos lease was not exclusive and AAA as owner is entitled to exercise Ramirez's retained right to extract gravel directly. I think that this argument lacks merit for three reasons.
1. First, there is no persuasive evidence that the Ramirez/Cosmos lease was not exclusive. AAA in its brief contends that Ramirez "allowed other gravel operators such as Northland [sic] Steel to mine gravel on the property at the same time Cosmos was operating." It also contends that "Ramirez always retained the right to extract gravel on his land directly or through permission granted to other operators."
As authority for the first proposition AAA cites the court's finding that
[flour or five months after signing the agreement with Mr. Ramirez, Mr. Nelson opened negotiations with Mr. Fuger, an employee of Mr. Nelson who was working in the Ramirez pit, and Ken Mearkle, an independent gravel operator working under the business name of Northland [sic] Steel, which in turn was working in the Ramirez pit at the same time as Cosmos.
AAA interprets this as a finding that Mear-kle/Northern Steel was operating in the pit under permission granted by Ramirez rather than permission granted by Nelson. But the court did not so find. Nor would the evidence have justified such a finding, because both Mearkle and Fuger testified that Northern Steel was working in the pit under an arrangement made with Nelson.1
AAA also cites Ramirez's testimony for the proposition that he retained the right to extract gravel. But Ramirez merely testified that he had no discussions with Nelson as to exclusivity. Ramirez also testified that he did not recall an agreement with Mearkle's company for gravel extraction. The colloquy went as follows:
Q: [by Ramirez's counsel] Did you have an agreement with Mr. Mearkle's company for gravel extraction?
A: Not that I recall.
Q: Did Mr. Mearkle pay you royalties, do you recall?
A: Well I didn't remember but I think you said-I believe it was one or three-I don't how many checks he sent, one or two or three, I don't remember.
Q: I'm sorry.
A: I don't recall the checks. I know I think I got some, but I don't recall, you know, how many or .....
Q: Oh, you got checks from Northern
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A: I believe so.
Given that Nelson's subsequent arrangement with AAA was that AAA would pay Ramirez directly, the fact that Ramirez received checks from Northern Steel is not inconsistent with Mearkle and Fuger's testimony that Northern Steel was working at the pit under Nelson's auspices.
As noted in the per curiam opinion, there is a considerable body of evidence that indicates that the lease was intended to be exclusive.2 To reiterate this briefly, Ramirez stated that "In 1984, I advertised in the newspapers for someone to develop my property into gravel pit." (Emphasis added.) And when Nelson responded, again according to Ramirez, "we entered into letter of intent concerning the development of the pit." Ramirez consistently refers to the "pit" in the singular, noting that Cosmos was to manage it and that Ramirez would either help to manage the pit or take a five-cent-per-yard price reduction. Ramirez states *172that Fuger of AAA took over running the pit and "ran the pit" from 1985 through August 1998 when Ramirez sold the pit to AAA. As the per curiam opinion notes, Ramirez's statements imply exclusivity.3
Further, the Ramirez/Cosmos lease contains terms that show that the parties to the lease intended the lease to be exclusive. For example, as the per curiam opinion also notes,
Cosmos is referred to as the "operator" or "pit operator." Cosmos assumed pit-wide responsibilities regarding slope preparation as the pit recedes and undertook the responsibility to dig test holes for the owner's benefit every 1,000 feet. The lease contemplated that Cosmos would build a bridge to get better access to the gravel and would build a large washing and separation plant on the property." [4]
In my view it would be inconsistent with these lease terms to conclude that Ramirez could sell gravel from the pit independent of the lease. Cosmos can hardly have been expected to improve the pit to facilitate its exploitation by other operators.
2. Second, the question is not simply one of nonexelusivity, but whether Ramirez retained the right to permit another large-scale gravel extraction operation. We can assume for purposes of argument that Ramirez retained the right to allow contractors to take occasional loads of gravel from the pit. The exercise of such a right would not necessarily have substantially interfered with the high volume operations contemplated and conducted under the Ramirez/Cosmos lease.5 But large-scale alternative operations-operations comparable to those being conducted under the lease by AAA-clearly would have conflicted with the Ramirez/ Cosmos lease." Again, Cosmos pit-wide duties regarding slope preparation, test holes, and access improvement would not have been undertaken if the pit could be mined by another large operator. -It follows that if Ramirez retained the right to mine or permit mining on an occasional basis free from the Cosmos lease he could transfer that right to a buyer. But he could not transfer a right to conduct large-volume operations, because he did not retain such a right.
Here AAA claims the right to conduct its operations as Ramirez's transferee exactly-in terms of both volume and location in the pit-as it had conducted them as lessee. There is no evidence that AAA's operations in the pit changed on and after August 26-when AAA became the pit owner-from what they were on August 25, 1998, and before-when AAA was Cosmos's lessee. For AAA to prevail on its argument that it is now exercising Ramirez's retained extraction rights, it would have to show not only that the Ramirez/Cosmos lease was not exclusive, but that Ramirez retained the right to permit another gravel operation in the pit comparable in size to, and side by side with, that contemplated and exercised under the auspices of the Ramirez/Cosmos lease. Because no such showing has been or can be made, AAA's argument fails.
3. Third, even if we assume that the Ramirez/Cosmos lease is not exclusive and further assume that it would not preclude Ramirez from entering into another lease with a large-scale operator, AAA could not have made such an arrangement with Ramirez without breaching the Cosmog/AAA lease. The Cosmosy/AAA lease was explicitly exclusive and expressly required AAA to "take all reasonable steps to protect" Cosmos's lease with Ramirez. If AAA had contracted directly with Ramirez to take all its gravel from Ramirez, such a contract rather than protecting the Ramirez/Cosmos lease would have rendered it without value. Because of the exclusive nature of the Cosmogy/AAA lease, Cosmos was precluded from extracting gravel on its own, or permitting another operator to do so. Therefore AAA's hypothesized separate direct arrangement with Ramirez would have left Cosmos without a potential revenue source under its lease with Ramirez. Such an action would not be consistent with AAA's obligation to protect the *173value of Cosmos's interest in the gravel operation.
For these reasons, I would affirm the superior court's rejection of AAA's argument that it freed itself from its obligation to pay royalties under the Cosmogs/AAA lease when it purchased Ramirez's interest in the property.6
THE IMPLIED COVENANT AGAINST ENCUMBRANCES
AAA argues that Ramirez should indemnify AAA for the royalties that AAA owes Totaro because Ramirez conveyed the property to AAA under a warranty deed. AAA notes that a standard warranty deed such as was given here contains an implied covenant against encumbrances, and argues that Tota-ro's overriding royalty right arising from the Cosmog/AAA lease is an encumbrance covered by the implied covenant. AAA contends that its knowledge of the encumbrance should not exclude it from the protection of the covenant. AAA also argues that there is no ground for finding a waiver of its covenant rights.
Today's per curiam opinion largely accepts AAA's arguments. According to the per cu-riam opinion, "(tlhe intention to exclude an encumbrance should be manifested in the deed itself, for a resort to oral or other extraneous evidence would violate settled principles of law in regard to deeds."7 The superior court's decision reflects a less absolute and, in my opinion, more accurate view of the law concerning encumbrances than that accepted by the per curiam opinion.
The superior court initially ruled on the covenant against encumbrances issue on the parties' cross-motions for summary judgment.8 The court ruled at the outset that the Cosmos/Ramires lease was an encumbrance.9 This led to the question "whether a grantee can bring an action for breach of a statutory warranty when it knew or should have known about the encumbrance upon which the action for breach is based." 10 The court recognized the general rule that knowledge of an encumbrance on the part of a purchaser does not bar its claim, but noted two exceptions.11 The first would apply if there were "physical conditions of the land itself which were apparent on inspection and which are found to have been 'within the contemplation of the parties in agreeing on the purchase price'"12 The second would apply if "the grantee knew of the encumbrance and agreed to the conveyance with the encumbrance intact." 13 As authority for the first exception the court relied on Tabet Lumber Co. v. Golightly,14 which in turn was *174based on Powell, The Law of Real Property § 907, at 268.21 (1968).15 The second exception was based on Powell, Powell on Real Property § 81A.06[8] (1999).16
The court identified four material issues which would be relevant to a determination as to whether the exceptions applied. The issues identified by the court were (1) whether the parties knew about the Cosmog/Ra-mirez lease when AAA purchased the property, (2) whether the lease infringed on the title itself, (8) whether the lease involved physical facts concerning the premises,17 and (4) the intent of the parties, in particular whether AAA was willing to purchase the property notwithstanding the encumbrance.18 Focusing in particular on the "issue of the parties' intent" the court held that a trial was needed on AAA's covenant-based claim.19
At the trial the court addressed and resolved the issues that it had identified in its summary judgment ruling. The court made detailed findings of fact and discussed and integrated its findings in its conclusions of law.20
The court began its conclusions of law discussion by referring to its summary judgment ruling. The court reiterated the general rule that a purchaser's knowledge of an encumbrance will not ordinarily suffice to defeat the purchaser's claim under a covenant against encumbrances.21 The court again noted two exceptions under which a claim on a covenant would be defeated, namely, (1) where physical conditions on the land are apparent on inspection and affect the purchase price and (2) where the grantee knows of the encumbrance and the parties act in a manner reflecting a waiver of any claim of breach by the grantee.22 The court then referred to the four material issues that it had identified in its summary judgment ruling: (1) whether the parties knew of the encumbrance; (2) whether the lease infringed on the title itself; (8) whether the lease involved physical facts concerning the property; and (4) whether the parties acted in a manner that reflected an intent by AAA to proceed notwithstanding the encumbrance.23 The court noted that the infringement issue was a legal issue, observing that "the court has found that the lease infringed on title," and proceeded to discuss the other three issues in light of the evidence presented at the trial.24
Concerning knowledge of the lease, the court found that both parties "knew about both the Cosmos/Ramirez lease and the Cos-mog/AAA lease when they negotiated and arrived at the land sale agreement." 25 The court concluded that in light of this knowledge, "neither party could reasonably have relied upon any alleged misrepresentation by the other party." 26
Concerning the physical condition issue, the court concluded that contrary to its summary judgment ruling, "the physical condition" exception applied.27 The court stated:
The evidence at trial indicated that the gravel mining operations were obvious to any casual observer and that it was clear that AAA was conducting the mining operations. It is self-evident that the gravel mine was the principal basis for the purchase price.... The evidence indicated that the operations and lease were tied together in the minds of the parties and *175that any person who inspected the property would have been on notice that someone other than the owner was mining the gravel. The court accordingly concludes that there were physical features on the land which gave notice of the encumbrance and were within the contemplation of the parties when they negotiated the sale.[28]
Concerning the issue of the parties' intent, the court had earlier found that the parties had mutually decided that the sale transaction would be independent of whatever consequences might flow from the Cosmos/AAA lease: "Mr. Fuger and Mr. Ramirez were well aware of the leases at issue and .-.. they decided not to deal with the ramifications of the sale on the Cosmos/AAA lease."29 In line with this finding the court determined that the parties had discussed "whether royalties would have to be paid under the two leases and whether the Cosmog/AAA lease would remain in effect onee the property were sold." 30 The court found that notwithstanding concerns that it would still have to pay royalties to Totaro "AAA decided to purchase the property." 31 The court found that
there is no direct evidence that the legal uncertainties affected the purchase price, the court has no doubt that AAA carefully evaluated the relative costs and benefits of proceeding and decided that it was best to proceed and to run the risk that AAA would be held liable under the Cosmog/AAA lease.[32]
The court also found that
AAA would have purchased the property even if it knew for a fact that it had to keep paying royalties to Ms. Totaro; for AAA had been paying her and Mr. Ramirez royalties for many years, and by purchasing the property AAA would be increasing its future revenue stream since it would no longer have to pay Mr. Ramirez.[33]
In accordance with these findings the court concluded that the second exception also applied: AAA knew of its potential obligation to pay royalties to Totaro and agreed to proceed with the sale knowing that Ramirez had not agreed to assume any responsibility concerning this potential obligation.34
The court's findings are reviewed on appeal under the deferential clearly erroncous standard. They clearly pass muster under this standard for they are all based either on direct evidence or permissible inferences from the evidence.
The real difference between the superior court's position and that of today's per cu-riam opinion appears to be rooted in a conflict of legal precedents. While the two exceptions relied on by the superior court are well supported by case law,35 there are also *176authorities taking the strict view reflected by the per curiam opinion.36
In my opinion the exceptions represent better law. The per curiam opinion explains its strict approach on the ground that title covenants inherent in warranty deeds "provide certainty and predictability in property transactions." 37 But in contemporary transactions title covenants have little to do with certainty and predictability. A quitelaim, or bargain and sale, deed will provide a title that is as certain and predictable as a warranty deed.38 Assurance that a title is good is typically provided by a professional title insurance company based on title insurance that is issued only after the title company makes a careful examination of recorded title documents.39 The covenant against encumbrances inherent in a warranty deed simply reflects a personal contract of indemnity in which the seller agrees to indemnify the buyer against losses the buyer may suffer by reason of defects or encumbrances.40 Most *177buyers pay little attention to the solvency of those from whom they purchase, preferring, understandably, to rely on professional title insurers. Given that title covenants are personal contracts of indemnity, it makes good sense to treat them as such.41 Employing exceptions like those applied by the superior court tends to prevent title covenants from becoming traps for unwary sellers.42 The exceptions are designed to ensure that a seller's indemnity obligation runs only to de-feets and encumbrances that the parties to the transaction would reasonably expect to be covered.
This case is a good example of what can happen in the absence of some such approach. Here the buyer seeks indemnity from the seller for a contractual obligation that the buyer itself has incurred.43 The seller has not participated in the creation of this obligation, but under today's per curiam decision he will be required to pay it.44 The *178obligation is a substantial one and the upshot of this case may be that the seller may be required to pay the whole amount of the sale proceeds to indemnify the buyer for the buyer's contractual obligation. This court should avoid choosing a line of authority that leads to a result that is so obviously contrary to the actual and reasonable expectations of the parties.
For these reasons I dissent from parts IV.A.2 and IV.B of the per curiam opinion.
APPENDIX A-Excerpt from Superior Court's "Order on Motions for Summary Judgment" of June 2, 2003
AAA/Ramires claims
There are two interrelated issues between AAA and Mr. Ramirez. AAA claims that if it is held liable for breach of contract, Mr. Ramirez must reimburse AAA because of his wrongful behavior in giving AAA a warranty that there were no encumbrances on the property, when in fact the property was subject to the potentially valid Cosmos/Ramirez lease. Mr. Ramirez asserts that he is entitled to summary judgment against AAA because AAA knew about that lease and hence has waived any claim it has against him.2 The difficulty with both of these arguments is that there is a dispute as to the intention of the parties regarding whether AAA acceded to the encumbrance, and that dispute precludes summary judgment.
AAA rests its claim against Mr. Ramirez on its allegation that Mr. Ramirez breached the covenant against encumbrances. In particular, AAA asserts that Mr. Ramirez warranted in both the earnest money agreement and the statutory warranty deed that there were no encumbrances upon the property. According to AAA, plaintiff's breach of contract claim is predicated on the Cosmos/Ramirez lease; if that lease is found by the court to be valid, then the lease was an encumbrance upon the property, and hence Mr. Ramirez breached the warranties.
Mr. Ramirez responds that AAA knew about the Cosmos/Ramirez lease and so it has waived any claim of breach of the warranties. AAA does not directly deny that it knew about the lease, but it alleges that its knowledge is irrelevant, because the warranties apply notwithstanding actual or constructive knowledge of an encumbrance.
There are at least two distinct legal issues involved here. The first is whether the Cosmos/Ramirez lease is an "encumbrance" on the property. The parties agree that the lease must be valid in order to be an encumbrance; while neither party believes that the court will find the lease to be valid, they assume the lease's validity for purposes of assessing who would be liable to plaintiff should she prevail on that claim.
Mr. Ramirez suggests that the lease is not an encumbrance because AAA was not and has not been disturbed in its possession of the land due to the fact that Cosmos no longer exists as a corporate entity and so is not seeking to exercise its lease. But aside from the fact that Ms. Totaro has the right to seek to vindicate Cosmos' royalty rights, the case law simply does not support Mr. Ramirez's claim that a lessee must actually be dispossessed in some fashion for a lease to become an encumbrance. The general definition of encumbrance includes "leases" and "any right in a third party which diminishes the value or limits the use of the land granted." Domer v. Sleeper, 533 P.2d 9, 11 n. 5 (Alaska 1975). By granting rights to the gravel in the property, the Cosmos/Ramirez lease clearly both diminishes the value of the land and limits the land's use. More important, the case upon which Mr. Ramirez relies specifically contradicts his analysis:
*179Since the lease is an encumbrance, a covenant against encumbrances is broken immediately upon making the covenant if a lease is then outstanding, although there has been no ouster by the lessee nor interference with the possession and use by the owner.
Chicago, Mobile Devel. Co. v. G.C. Coggin Co., 259 Ala. 152, 66 So.2d 151, 155 (1958).
There accordingly is no question that the Cosmos/Ramirez lease is an encumbrance. This leads to the second legal issue: whether a grantee can bring an action for breach of a statutory warranty when it knew or should have known about the encumbrance upon which the action for breach is based. There is no Alaska case law that addresses this issue, even indirectly. AAA presented a number of out-of-state cases that support its contention that any knowledge it had of the Cosmos/Ramirez lease does not bar its claim of breach of warranty. Mr. Ramirez supported his claim to the contrary in part on Somers v. Leiser, 43 Wash. 2d 66, 259 P.2d 843 (1953), which held that a "free of encumbrances" warranty does not cover easements that are known to the vendee. Somers is of particular relevance since it interpreted the Washington statute upon which the AS 34.15.030(b) is based. See Domer, 5388 P.2d at 11.
Both parties are somewhat correct: AAA cites the general rule, while Mr. Ramirez relies on the principal exception to the rule. As the New Mexico Supreme Court explained in Tabet Lumber Co. v. Golightly, 80 N.M. 442, 457 P.2d 374, 375 (1969):
Encumbrances, however, fall into two categories: (1) those which infringe on the title itself; and (2) those which involve physical facts concerning the premises.... The courts appear to be unanimous in holding that where an encumbrance infringes upon the title itself, a purchaser's knowledge of it does not prevent recovery in an action for breach of covenant, but after stating this general rule, Powell, [Law of Real Property, 268.21 (Recomp.1968)], follows it with an exeeption:
[This statement must be qualified by excepting physical conditions of the land itself which were apparent on inspection and which are found to have been 'within the contemplation of the parties in agreeing on the purchase price.
The more recent edition of Powell's treatise adds a second exception: if "the grantee knew of the encumbrance and agreed to the conveyance with the encumbrance intact," then "in effect, the grantee has waived his or her right to apply the title covenants to that particular encumbrance or interest." Powell, Law of Property, see. 81A.06[8], at 81A-126-27 (1999). Powell notes in this respect that evidence of waiver can include an adjustment of the purchase price or some other aspect of the agreement to reflect the encumbrance. Id.
There are four material factual issues with respect to this analysis. The first is whether the parties knew about the Cosmos/Ramirez lease when AAA purchased the property from Mr. Ramirez While both AAA and Mr. Ramirez presented evidence suggesting that neither of them knew about the lease, it would be exceedingly difficult for a finder of fact to conclude that either party lacked such knowledge. Mr. Ramirez was a party to the lease and signed it himself. As for AAA, its lease with Cosmos stated explicitly that both parties were aware of the Cosmos/Ramirez lease and of the cautionary letter, procured by Mr. Fuger, regarding the validity of that lease. There accordingly is no issue of fact regarding the parties' knowledge of the existence and terms of the Cosmos/Ramirez lease.
The second and third factual issues are whether the lease infringed on the title itself or involved physical facts concerning the premises. As noted above, there is no question that if it is valid, the lease infringed on the title itself, which suggests that AAA can maintain its breach of warranty claim should Ms. Totaro prevail on her breach of contract claim. Mr. Ramirez argues that the lease also involved physical facts concerning the property, because the gravel mining operation was a substantial physical presence on *180the land. The court agrees that the existence of the operation may be relevant evidence of the parties' intent. But the fact that the operation was on the land is not dispositive, for there is no intrinsic tie between the lease and the operation-the lease and operation can and now do operate independently of one another. The lease therefore does not fall within the exception noted in Tabet Lumber.
The final issue concerns the intent of the parties. It appears that while both parties knew of the Cosmos/Ramirez lease, neither thought it was valid. This suggests that the conditions of the sale were not affected by the existence of the lease. But it also suggests that the parties were willing to ignore the lease, from which a finder of fact could infer that AAA was willing to purchase the property notwithstanding the encumbrance. The court has little evidence on either score,3 and the available evidence does not unquestionably support the position of either AAA or Mr. Ramirez. Since the issue of the parties' intent is a material one which is in substantial dispute, the court therefore cannot rule as a matter of law that Mr. Ramirez either should or should not be liable for any breach of contract committed by AAA or Mr. Fuger.
APPENDIX B-Exeerpts from Superior Court's Findings of Fact and Conclusions of Law of February 6, 2004
Findings of Fact
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Plaintiff [Totaro] continued to receive her royalty checks until August 1998. AAA also paid royalties to Mr. Ramirez until that date. The payments stopped when AAA purchased the property from Mr. Ramirez. The circumstances of the sale were as follows. Mr. Ramirez decided some time in July 1998 to sell the entire property. He placed an advertisement in the newspaper offering the property. He also came to the property and asked Mr. Fuger and Mr. Mearkle whether they were interested in purchasing the property. To put some pressure on them to sell, he indicated to them that he had another prospective buyer, even though no one had approached him with a concrete offer.
AAA decided it wanted to purchase the property. According to Mr. Fuger, AAA felt it had no choice but to purchase the property because of the legal deficiencies in the Cosmos/Ramirez lease. In particular, Mr. Fuger believed that that lease was unenforceable, which meant that if someone other than AAA purchased the property, AAA could be foreed to leave, losing its only asset and source of revenue. The court found this testimony credible, given the legal advice Mr. Fuger had received from Mr. McCombs.
AAA and Mr. Ramirez then negotiated the terms of the sale. During these negotiations, Mr. Fuger and Mr. Ramirez discussed the impact of the sale on the Cosmos/Ramirez and Cosmog/AAA leases. Mr. Fuger insisted at trial that he asked Mr. Ramirez if there was a lease on the property and that Mr. Ramirez said no. Mr. Ramirez claimed to have no recollection of that conversation, and he asserted that he thought the Cosmos/Ramirez lease had expired. The court has difficulty with all of this testimony. Mr. Fuger was well aware of the Cosmos/Ramirez lease-indeed, Mr. Fuger relied on what he perceived to be the unenforceability of that lease as the reason he purchased the property. Mr. Ramirez also was well aware of the lease, since he signed it; and he cannot very well have thought it expired since he was continuing to receive royalty payments from it. Mr. Ramirez in particular came across as a very clever and accomplished businessman; the court finds it hard to believe he was not well aware of the precise status of the Cos-mosg/Ramirez lease, and that had he thought *181the lease had expired, he would have made that fact very clear to AAA.
The more likely seenario is that Mr. Fuger and Mr. Ramirez thought at the time that if AAA bought the property, then neither of them would have to worry about the Cosmos/Ramirez lease anymore, and that their testimony at trial was colored by their effort to blame each other for any liability that might be owed to Ms. Totaro. This is supported by the fact that Mr. Fuger and Mr. Ramirez each testified at trial that they agreed that AAA would not have to pay Mr. Ramirez once it purchased the property, that they discussed whether AAA would have to pay Ms. Totaro, and that Mr. Ramirez stated that Mr. Fuger should talk to an attorney about any responsibilities AAA had to Ms. Totaro. This testimony indicates that Mr. Fuger and Mr. Ramirez were well aware of the leases at issue and that they decided not to deal with the ramifications of the sale on the Cosmos/AAA lease.
At the close of the negotiations, AAA proposed a purchase price of $650,000.00 with a down payment of $100,000.00, and Mr. Ramirez accepted. AAA authorized the purchase through a corporate resolution, and an Earnest Money Receipt and Agreement ("Purchase Agreement") was executed by AAA and Mr. Ramirez on August 5, 1998. The Purchase Agreement was provided and prepared by Mr. Ramirez, although it contained a provision recognizing AAA's right to consult an attorney about the agreement. The Purchase Agreement also contained several somewhat inconsistent provisions relating to the possible existence of encumbrances on the land.
On the one hand, the Purchase Agreement stated that Mr. Ramirez was to provide a title insurance policy to AAA, and that if the title insurance policy disclosed any defects or encumbrances, then AAA could renegotiate the purchase price to cover the defects or encumbrances. A title insurance policy was issued, but it listed no defects or encumbrances relating to the Cosmos/Ramirez lease. Accordingly, the purchase price in the Purchase Agreement remained at $650,000.00 and was not renegotiated by Mr. Ramirez and AAA.
The Purchase Agreement further provided that the property would be conveyed free of encumbrances except for those specifically listed, and that any encumbrances not listed in the Purchase Agreement could be discharged at closing out of the purchase money. No encumbrances were listed in the Purchase Agreement, and none were discharged at closing.
On the other hand, the Purchase Agreement provided that "[the undersigned parties acknowledge and agree that the property is sold in an "as is, where is" condition with no warranties implied or expressed by seller except those which appear in writing on the receipt and agreement to purchase dated 86/98...." The Purchase Agreement also stated that the "[plarties hereto agree that these instructions constitute the final agreement between the parties and acknowledge by execution hereof that all contingencies prior to closing of this transaction have been met or waived or otherwise arranged between the parties outside this escrow...." The Purchase Agreement thus appeared both to place the responsibility for revealing encumbrances upon Mr. Ramirez and to require AAA to raise any issues it may have had regarding encumbrances.
On August 26, 1998, Mr. Ramirez executed a Statutory Warranty Deed conveying the Property to AAA. The Statutory Warranty Deed made the conveyance subject to a number of reservations and exceptions, but it did not make any title exception for any rights in the property held by Cosmos, Ms. Totaro, or anyone else by virtue of either the Cosmos/Ramirez or the Cosmog/AAA leases.
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Conclusions of Law
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Allocation of ability between AAA and Mr. Ramirea
AAA argues that Mr. Ramirez should be held liable because he breached the covenant *182against encumbrances. In particular, AAA asserts that Mr. Ramirez warranted in both the earnest money agreement and the statutory warranty deed that there were no encumbrances upon the property. According to AAA, the Cosmos/Ramirez lease was an encumbrance upon the property, and hence Mr. Ramirez breached the warranties. Mr. Ramirez responds that AAA knew about the Cosmog/Ramirez lease and so it has waived any claim of breach of the warranties. AAA replies that any knowledge it had of the lease is irrelevant, because the warranties apply notwithstanding actual or constructive knowledge of an encumbrance.
The court addressed the legal issues underlying defendants' claims in its June 2, 20083 order denying their cross motions for summary judgment on this issue. Based on the undisputed facts set forth in the motions, the court ruled that the Cosmos/Ramirez lease is an "encumbrance" on the property. The facts adduced at trial fully supported this ruling.
The more difficult legal issue is whether a grantee can bring an action for breach of a statutory warranty when it knew or should have known about the encumbrance upon which the action for breach is based. The court ruled in its June 2, 2008 order that a party's knowledge of an encumbrance that infringes on title ordinarily will not defeat that party's claim of a breach of the warranty regarding encumbrances, unless one of two exceptions is shown: 1) where physical conditions on the land were apparent on inspection and affected the purchase price; and 2) where the grantee knew of the encumbrance and the parties acted in a manner that reflected a waiver of any claim of breach by the grantee (such as a modification of the purchase price reflecting the encumbrance). The court found that there were material issues of fact regarding the second exception that precluded granting summary judgment to either party.
The court then identified four material factual issues: whether the parties knew of the encumbrance; whether [the] lease infringed on the title itself; whether the lease involved physical facts concerning the property; and whether the parties acted in a manner that reflected an intent by AAA to proceed notwithstanding the encumbrance. The third issue is a legal issue, and as noted above, the court has found that the lease infringed on title. The court has reevaluated the other three issues in light of the evidence presented at the trial, and will address them in turn.
Knowledge of the lease. Both AAA and Mr. Ramirez continue to claim in their proposed findings of fact and conclusions of law that they were misled by the other party regarding the existence and/or validity of the leases. These positions are not supported by the evidence. Mr. Fuger was quite clear in his testimony that he knew about the Cosmos/Ramirez lease, that he knew that the lease had a number of deficiencies, and that he purchased the property because he was concerned that someone else might buy the property and tell him to leave because the Cosmos/Ramirez lease was not valid. Mr. Fuger obviously knew about the Cog-mos/AAA lease, since he signed it, and he testified that he was concerned throughout the sale negotiations about whether he would still have to pay Ms. Totaro royalties once he purchased the property.
Mr. Fuger asserts that Mr. Ramirez told him that there was no lease on the property and that he relied on that statement. While the court does not believe that Mr. Ramirez made such a straightforward statement, the court would not be surprised if Mr. Ramirez left Mr. Fuger with that impression, for as discussed below, the court finds it hard to believe that Mr. Ramirez said anything without carefully qualifying it. But Mr. Fuger simply could not have been misled by any such statement by Mr. Ramirez, for he knew all about the Cosmos/Ramirez lease, he knew that his lease was contingent on that lease, and so he knew that his company was on the property only by virtue of the lease between Cosmos and Ramirez. He accordingly had no reasonable basis for relying on some claim by Mr. Ramirez that there were no existing leases on the property.
*183Mr. Ramirez claims that he thought that the Cosmos/Ramirez lease had expired and that he had no knowledge of the Cosmos/AAA lease until he was told about it during the negotiations over selling the property. Both claims are very difficult to eredit. Mr. Ramirez presented as a very careful, experienced, and clever businessman who watched everything he said extremely carefully. His testimony consistently contained qualifications and nuanced statements. In addition, Mr. Ramirez received royalties from 1984 through 1998, a period of 14 years; and the bulk of those royalties came from AAA. Under these cireumstances, there simply is no way that Mr. Ramirez could not have been aware that AAA was mining gravel from his property and that it was doing so pursuant to the lease that he had signed with Mr. Nelson.
Mr. Ramirez also had to have known about the deficiencies with the lease he signed. As noted above, he was an experienced businessman and property owner. He participated in negotiations with Mr. Nelson regarding a new lease to cure the deficiencies. The court cannot escape the feeling that Mr. Ramirez felt no incentive to cure those deficiencies because they provided a potential vehicle by which he could have another party mine the gravel if Cosmos and AAA did not work out, and so they maximized his flexibility in deciding how he wanted the property to be mined.
In short, both AAA and Mr. Ramirez knew about both the Cosmos/Ramirez lease and the Cosmog/AAA lease when they negotiated and arrived at the land sale agreement. Given that knowledge, neither party could reasonably have relied upon any alleged misrepresentation by the other party.
Physical conditions. The court found in its June 2, 2003 order that the Cosmos/Ramirez lease did not involve physical facts concerning the property because there was no intrinsic tie between that lease and the gravel mining operations on the property. The evidence at trial indicated that the gravel mining operations were obvious to any casual observer and that it was clear that AAA was conducting the mining operations. It is self-evident that the gravel mine was the principal basis for the purchase price. The issue, then, is whether that physical presence on the land necessarily implicated the Cosmos/Ramirez lease. This is a closer question than the court believed when it issued the June 2, 2003 order. The evidence indicated that the operations and lease were tied together in the minds of the parties and that any person who inspected the property would have been on notice that someone other than the owner was mining the gravel. The court accordingly concludes that there were physical features on the land which gave notice of the encumbrance and were within the contemplation of the parties when they negotiated the sale.
Intent of the parties. Both AAA and Mr. Ramirez were well aware of the potential legal issues revolving around the sale of the property. They discussed whether royalties would have to be paid under the two leases and whether the Cosmos/AAA lease would remain in effect onee the property were sold. But notwithstanding those concerns, AAA decided to purchase the property. While there is no direct evidence that the legal uncertainties affected the purchase price, the court has no doubt that AAA carefully evaluated the relative costs and benefits of proceeding and decided that it was best to proceed and to run the risk that AAA would be held liable under the Cosmog/AAA lease.
The court accepts as credible Mr. Fuger's testimony that he felt he had no choice but to purchase the property. But the court finds that he felt this way because he did not want to lose his gravel mine. The court further finds that this concern was so strong that AAA would have purchased the property even if it knew for a fact that it had to keep paying royalties to Ms. Totaro; for AAA had been paying her and Mr. Ramirez royalties for many years, and by purchasing the property AAA would be increasing its future revenue stream since it would no longer have to pay Mr. Ramirez.
The court also recognizes that Mr. Fuger did not feel fairly treated by Mr. Ramirez *184because Mr. Ramirez was not totally straight with him regarding the status of either the lease or other persons who might have wanted to purchase the property; and Mr. Ramirez did not identify the lease as an encumbrance in any of the legal paperwork. If there were a correlate to the comparative negligence doctrine, the court might well be inclined to place some liability on Mr. Ramirez. But the court is aware of no case law, and AAA cited none, that authorizes a court to share liability in the context of a claim of breach of a warranty against encumbrances.
In sum, while Mr. Ramirez was less than straightforward with AAA, the fact remains that AAA was aware of both the Cosmos/Ramirez lease and the potential liability imposed by the Cosmos/AAA lease, and it decided both to purchase the property and to stop paying royalties to Ms. Totaro. In so doing, it acted in a manner that precludes any liability on Mr. Ramirez's part by virtue of the breach of the Cosmos/AAA lease.

. At 160-63.

. Id. at 160.

. Indeed, J.B. McCombs, the attorney AAA retained to review the Ramirez/Cosmos lease, noted that the lease was problematic because it lacked an exclusivity provision:
One major problem with this Agreement is that it does not state that this is an exclusive agreement with Mr. Ramirez. Under this agreement, there is a very good argument that he could execute a similar, non-exclusive agreement with another party for this same property. That other party could then access the property and mine gravel on a different portion of this same land. The agreement should clearly state that this is an exclusive right to mine gravel from this property.

. See Allen v. Alaska Oil & Gas Conservation Comm'n, 1 P.3d 699, 700 n. 1 (Alaska 2000) ("[AJu overriding royalty interest is 'a percentage of the gross production payable to some person other than the lessor or persons claiming under the lessor.'" (quoting 38 AmJur. 2p Gas and Oil § 215 (1999)).

. As the holder of an overriding royalty interest, she held a "share of ... revenue from production . carved out of a lessee's interest" under the gravel pit lease. Brack's Law Dictionary 1356 (8th ed.2004).

. See 38 AmJur2n Gas and Oil § 217 (1999) ("An overriding royalty interest is subject to the terms of the lease upon which it is founded, so generally, when the lease terminates, either by its own terms or in some other regular manner consistent with good faith, the royalty itself comes to an end."); Brack's Law Dictionary 1356 (8th ed. 2004) ("An overriding-royalty interest ends when the underlying lease terminates."). Arguably, when Cosmos dissolved for a second and final time in 1992 declaring "no assets of the corporation to distribute to shareholders or to be applied toward the corporation's debts and liabilities," the company effectively abandoned the leases. In that case, Totaro may be left with no basis on which to claim any continued interest in the pit. See 38 AmJur2n Gas and Oil § 217; Ridge Oil Co. v. Guinn Invs., Inc., 148 S.W.3d 143, 155 (Tex.2004) (noting that an overriding royalty interest is a nonparticipating interest, which means that the royalty owner is wholly dependent on the lessee to keep the lease alive).

. While there is a general rule that a tenant is estopped from challenging his landlord's title as long as he remains undisturbed in his possession of the property, even if he himself purchases a title to the property that is superior to his landlord's title, this rule only applies where the tenant asserts a title that is "inconsistent with the idea that at the time the tenant took possession, the landlord had the title which was recognized between them." 49 AmJur.2p Landlord and Tenant § 768 (2006); see id. §§ 764, 778 (explaining the general rule). AAA does not assert a title that is inconsistent with Cosmos's title under the Ramirez/Cosmos lease-if Ramirez had always retained the right to mine the property as the owner, AAA's assertion of that right as Ramirez's successor in interest is not inconsistent with Cosmos's title under the Ramirez/Cosmos lease.

. At 160.

, Id. at 161-62, note 16.

. The "extrinsic evidence" of exclusivity that the court points to-indirect inferences from Ramirez's word choice in an affidavit written almost two decades after the lease was drafted-is similarly unpersuasive. Id. at 161-62.

. See 17A AmJur2p Contracts § 331 (2004) ("Ambiguity in a written agreement does not arise from silence, but from what was written so blindly and imperfectly that its meaning is doubtful.").

. See Peterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981) ("Differences of opinion among the parties as to their subjective intent, expressed during the litigation, do not establish an issue of fact regarding the parties' reasonable expectations at the time they entered into the contract, since such self-serving statements are not considered to be probative. Rather, the court must look to express manifestations of each party's understanding of the contract in attempting to give effect to the intent behind the agreement." (footnote omitted)); 17A AmJur2p Contracts §§ 330-331 (2004) (explaining that unambiguous contract language does not become ambiguous because competing interpretations of it are presented during litigation or because implementing it would inflict hardship on a party).

. Mearkle Depo. 41-42, 50-51, 54-55, 144, 166-67 (in the record beginning at 645, vol. II of the record); R. 554 (p. 15), 596 (pp. 168-69).

. See At 161-62 n. 16 and 161-62.

. At 161-62.

4. At 161-62 n. 16.

. The conflict would be even more obvious if the alternative operations took place in the same area of the pit as operations under the Ramirez/Cosmos lease.

. In 1998 when AAA purchased the property from Ramirez, it was concerned that he would sell the property to a third party free from the lease. But the circumstances under which a tenant may breach a lease because of the threat that a paramount title will be asserted are limited. Generally a tenant is precluded from terminating a lease based on a mere assertion of paramount title by a third party; a tenant is justified in attorning to a new owner only if the new owner actually has paramount title that entitles him to oust the tenant from the possession of the leased property. See Resrarement (Seconp) or Property: Lanptorp & Tewant § 4.3 & cmt. b (1977). In the present case, a claim by a third-party purchaser that his title was not subject to the unrecorded lease and sublease would be hard to maintain since purchasers have a duty to inquire of the possessors of the land they buy as to the authority under which they hold. See Methonen v. Stone, 941 P.2d 1248, 1252 (Alaska 1997) ("It is well established that a purchaser will be charged with notice of an interest adverse to his title when he is aware of facts which would lead a reasonably prudent person to a course of investigation which, properly executed, would lead to knowledge of the servitude. The purchaser is considered apprised of those facts obvious from an inspection of the property. Lack of diligence in the prosecution of a required inquiry creates a conclusive presumption of knowledge of those facts which reasonable inquiry would have revealed.") (footnote and citations omitted).

. At 163 n. 25 (quoting Jones v. Grow Inv. & Mortgage Co., 11 Utah 2d 326, 358 P.2d 909, 911 (1961)).

. The full text of Judge Smith's summary judgment ruling on this issue is set out in Appendix A.

. App. A at 178-79.

. Id. at 178-79.

. Id. at 179.

. Id. at 179.

. Id.

. 80 N.M. 442, 457 P.2d 374, 375 (1969).

. App. A at 179.

. Id. at 179.

. The court in this initial ruling indicated that the first exception would not apply because of the lack of an "intrinsic tie between the lease and the [gravel] operation." App. A at 180.

. Id. at 179-80.

. Id.

. The court's findings of fact and conclusions of law with respect to the covenant issue are set out in Appendix B.

. App. B at 181-82.

. Id.

. Id. at 180.

. Id.

. App. B at 182-83.

. Id. at 183.

. Id.

28. Id.

. Id. at 180-81.

. Id. at 183.

. Id.

32. Id.

33. Id. at 183-84.

. See App. B. "During ... negotiations, Mr. Fuger and Mr. Ramirez discussed the impact of the sale on the ... Cosmos/AAA lease[.]" Id. at 180. They ultimately "decided not to deal with the ramifications of the sale on the Cosmos/AAA lease." Id. at 181.

. Regarding obvious physical conditions on the land, see, eg., Marathon Builders, Inc. v. Polinger, 263 Md. 410, 283 A.2d 617, 621 (1971) (easements that are "readily apparent upon an inspection of the property, such as a public road in use upon the land," do not breach the covenant against encumbrances because the parties are deemed to have contracted with knowledge of the encumbrance, and adjusted the price accordingly); Tabet Lumber Co. v. Golightly, 80 N.M. 442, 457 P.2d 374, 375-16 (1969) (covenant against encumbrances does not cover "physical conditions of the land itself which were apparent on inspection and which are found to have been within the contemplation of the parties in agreeing on the purchase price" (quoting 6 Powerr, Tuz Law or Rear Property § 907, at 268.21 (1968)) (internal quotation marks omitted)); McKnight v. Cagle, 76 N.C.App. 59, 331 S.E.2d 707, 712 (1985) (remanding for factual finding on purchaser's knowledge of easement for public highway in claim for breach of warranty against encumbrances, as such an easement constitutes breach only "where the purchaser has no actual or constructive knowledge of the encumbrance at the time of the purchase"); Hawks v. Brindle, 51 N.C.App. 19, 275 S.E.2d 277 (1981) (reversing grant of summary judgment in seller's favor on purchaser's claim that public right-of- way breached warranty against encumbrances, and *176remanding for trial because there was issue of fact as to whether the purchaser had actual knowledge of the encumbrance) ('The parties are taken to have contracted with reference to the existence of a burden of which they were fully aware." (quoting Tise v. Whitaker Harvey Co., 144 N.C. 507, 57 S.E. 210, 212 (1907); Somers v. Leiser, 43 Wash.2d 66, 259 P.2d 843, 844 (1953) (affirming a holding that easement for a graveled public roadway did not breach the covenant against encumbrances because "a provision in a contract to convey real estate 'free of encumbrances' does not refer to granted easements, permanent in character, which are either known to a vendee, or the existence of which he should have known or ascertained had he made a reasonable investigation."); Merch. Corp. v. Marine Nat'l Exch. Bank, 12 Wis.2d 79, 106 N.W.2d 317, 320 (1961) (where purchaser had actual knowledge of third party's "open, notorious, [and] continuous" use of easement prior to purchase, "the purchaser cannot maintain an action for the breach of the covenants of seizin and against [encumbrances]").
Regarding intent of the parties not to cover a particular encumbrance, see, eg., Alumni Ass'n of Univ. of North Dakota v. Hart Agency, Inc., 283 N.W.2d 119, 121-22 (N.D.1979) (covenant against encumbrances not breached by outstanding lease because parties had knowledge of the lease and "contemplated its existence in negotiating the price"); Klarfeld v. Reil, 281 A.D. 715, 117 N.Y.S.2d 785, 786 (N.Y.App.Div.1952) (leases did not violate covenant against encumbrances where circumstances showed that parties intended the purchaser would "take title subject to [the leases]"); Hagelin v. Lehmann, 100 NJ.L. 322, 126 A. 431, 431-32 (1924) (reversing a judgment in favor of purchaser on breach of covenant against encumbrances claim where alleged encumbrance was lease that purchaser had knowledge of, and the contract apportioned rent from the lease).

. See, eg., 3 AmBrican Law or Property § 12.128 (reprint 1974) (A. James Casner ed., 1952) ("Nor, of course, is the covenant broken by the existence of an encumbrance excepted therefrom or assumed by the grantee, even when it appears when this is done by parol agreement. Ordinarily, however, mere knowledge that an encumbrance exists will not amount to an implied exception from the covenant, although this has been held both to be the case and not to be the case in respect to a lease under which the tenant was in possession." (emphasis added) (footnote omitted) (citing case authority)).

. At 164.

. See, eg., United States v. Speidel, 562 F.2d 1129, 1132 (8th Cir.1977) ("'Under Iowa law a quitclaim is as effective to transfer title to realty as any other form of conveyance." (citing Swab v. Appanoose Country Club, 203 N.W.2d 318, 319 (Iowa, 1972))); Rust Land & Lumber Co. v. Wheeler, 189 F. 321, 325 (8th Cir.1911) ([In Arkansas, [a quitclaim deed] is as effectual to convey the estate of a grantor as a deed with full covenants of warranty ...." (citing Bagley v. Fletcher, 44 Ark. 153 (Ark.1884))); Suman Corp. v. Warren, 553 So.2d 1123, 1127 (Miss.1989) (Robertson, J., concurring) ("A quitclaim deed conveys title as effectively as a warranty deed." (citing Owen v. Potts, 149 Miss. 205, 115 So. 336, 338 (1928))); Owen v. Potts, 115 So. at 338 ("A quitclaim deed is as effectual to convey title as one with general warranty." (quoting Chapman v. Sims, 53 Miss. 154 (Miss.1876)) (internal quotation marks omitted) (upholding purchase by quitclaim deed over prior unrecorded purchase by warranty deed)).

. "Where title insurance is used-written by substantial corporations compensated for their risk-there is little occasion for personal warranties." 2 Miron R. Friepman & James CHartes Suita, Frizpman on Contracts amp Convevances or RrEat Property § 8:12, at 8-35 (7th ed.2009). See also 14 R. Powstt Powsrtr on Rear Property § 81A.06[1] (Michael Allan Wolf ed., 2009) (explaining that title insurance is replacing the "system of title covenants" that originated in England in the 17th century, a system that developed because it was then "[the only assurance that could be obtained" as to the validity of title, as "[tlitle records were virtually nonexistent"). Title insurance was provided in the sales transaction between Ramirez and AAA.

. "A covenant of title which warrants that the premises are free from encumbrances is an *177agreement to indemnify the covenantee in the event that he or she suffers any loss to the value of the premises due to the existence of an encumbrance." 14 Powsit on Rear Property, supra note 39, at § 81A.06[2][cJ[i]. See also 3 Amprican Law or Property, supra note 36, at § 12.128 (stating that the covenant against encumbrances "is [a] personal covenant).

. Professor Casner suggests that covenants be construed as contracts:
Often the last paragraph of a deed is devoted to covenants of the grantor. They are not essential to the import of the instrument as a present conveyance. But they are helpful not only for whatever value they have as personal [guarantees] but as effecting a future transfer of any title or interest subsequently acquired by the covenantor. Although their inclusion in the prevailing form of conveyance gives to il the name of warranty deed, they could just as well be embodied in a separate contract. With the exception above noted, [after acquired title,] it is as a contract rather than as a conveyance that they are construed. ...
3 American Law or Property, supra note 36, at § 12.50. See also Taylor v. Holter, 1 Mont. 688 (1872) (''The contract or covenant of warranty raust be construed like any other contract by arriving at the intention of the parties...."); Hampton v. Minton, 785 S.W.2d 854, 859 (Tex.App.1990) ("Regardless of what label is assigned to the vendor's promise to pay holders of superi- or liens, be it a covenant of title or something else, the promise is still part of a contractual agreement and the instrument must be construed according to the rules of contract law.").

. Friedman observes that knowledgeable sellers already shy away from giving warranty deeds: "Traditionally, most deeds have been full covenant and warranty, but there has long been a slow but steady trend against warranties, particularly in the larger cities. Banks and lending institutions almost invariably refuse to give any warranties. A well-advised individual will do the same ...." Friepman, supra note 39, at § 8:12[A] {emphasis added).

. I am referring here to AAA's obligation to pay royalties to Totaro. AAA incurred this obligation in its lease with Cosmos which then assigned its royalty rights to Totaro. Notwithstanding the per curiam opinion's contrary assertion (see 163 n. 23), Totaro's right to receive royalties from AAA is an encumbrance. Powell observes that
a covenant of title which warrants that the premises are free from encumbrances is an agreement to indemnify the covenantee in the event that he or she suffers any loss to the value of the premises due to the existence of an encumbrance. An "encumbrance" is any right or interest existing in a third person which diminishes the value of the estate to the grantee, but which is consistent with the passage of the estate to the grantee.
14 Poweit on Rear Property, supra note 39, at § 81A.06[2](c]Gi] (emphasis added). Under this definition Totaro's right to receive royalties plainly qualifies as an encumbrance. Indeed, under the facts and circumstances of this case, it appears that the only encumbrance that diminishes the value of the property to AAA is Totaro's right to receive royalties.

. Ramirez observes that "it would be a strange twist of events if this Court were to rule that Herman Ramirez is responsible to indemnify AAA for damages arising from a contract to which he was not a party." In my research I have uncovered no authority that suggests that the covenant against encumbrances reaches so far as to protect a grantee from its own contractual obligations. One case in which something close to this was attempted by a party and rejected by the court is Alumni Association of the University of North Dakota v. Hart Agency, Inc., 283 N.W.2d 119 (N.D.1979). In that case, RM. Hart obtained an option to buy property owned by the Alumni Association. The option contained a covenant against encumbrances but the property was leased to a bank of which Hart was president. Hart sought to justify his delay in paying the purchase price after exercising the option on the ground that the lease to the bank was an encumbrance governed by the covenant against encumbrances expressed in the option contract. The trial court held that the lease to the bank was not intended to be governed by the covenant. On appeal, the Supreme Court of North Dakota affirmed, concluding that "[it was not error for the trial court to conclude that title to the Prince Hotel Properties was merchantable and free of liens and encumbrances within the *178contemplation of the parties to the option, even though an outstanding lease had not been cleared." Id. at 122.

. Mr. Ramirez also claims if AAA is entitled to relief against him, the proper remedy is rescission, not damages, because AAA's claim against him rests upon an allegation that Mr. Fuger acted under duress; and since a person acting under duress lacks capacity to contract, the appropriate relief is rescission, not damages. The court will not address this argument because AAA did not raise duress in its third party complaint or motion for summary judgment.

. Mr. Ramirez points to certain "AS IS, WHERE IS" language in the earnest money instructions as evidence of the parties' intent to exclude the Cosmos/Ramirez lease from the warranty covenant. This language is far from unambiguous, for as AAA points out, it could refer to the physical features of the land, not the lease.