Shipman owned 120 acres Town of Bravard, this is the promise
Tinsley W (Plaintiff), W says I’m not bound by the burden of not being able to sue created by the Shipman Bravard suit.
1950 W v. Town of B
Facts: Two easements, the first one is the right of way, no question this is an easement. The second one was called a covenant, an agreement by Shipman his assigns not to object to the use of the 5 acres as a dump. Time passes the character of the neighborhood changes. Shipman sells to lots of other people. What had been 120 acres, now the dump is surrounded by residential houses. Waldrop sues, saying that they are not bound by the promise that Shipman made.
Tomorrow, Waldrop quickly, won’t talk about Wolff, will discuss Holliday vs. Spar, Buffalo academy. For Wednesday, Burger, Kenney, Rhue, Davis, Loeb and Blakely not assigned, read Narsdact in the supplementary materials..
Dan Beyers, “Columbia Turns 25, and Inward,” The Washington Post, Sunday, June 21, 1992, page B1
Chapter 20 (pp. 1018-1059)
Waldrop v. Town of Brevard
Shipman owned 120 acres Town of Bravard, this is the promise
Tinsley W (Plaintiff), W says I’m not bound by the burden of not being able to sue created by the Shipman Bravard suit.
1950 W v. Town of B
Two addenda to the deed, one to permit use of the roads, the second for the heirs assigns not to complain of use of the land as a dump.
Issue: is Waldrop bound by this promise? What are the theories that might bind him?
Covenant: burden is on Waldrop, has to run from Shipman down Tinsley down Waldrop. What is the promise? Waive rights to bring any action on the town. The promise was from Shipman Town of Brevard. Shipman has the burden and the Town has the benefit. In Waldrop v. Brevard, the burden has to run but the benefit doesn’t, breaks rule that P always has the benefit, here D is the benefit of this promise. Benefit doesn’t have to run because the town was the original party. The burden has to run because Waldrop wasn’t an original party.
Horizontal privity: grantor/grantee relationship, necessary for burden to run. Maybe shared interest.
Vertical privity: Waldrop was given the land by a conveyance of the same estate, everyone has a fee simple, doesn’t matter the amount of acres, same as what Tinsley had.
Intent: stated clearly in the deed language, no problem.
Touch and Concern: the promise effects the legal relationship because Shipman is bound not to bring any action against the town for this matter in the future. Could bring an action if the town uses the dump negligently. Not a total waiver of all rights. Just can’t sue the town for odors, fumes, etc. Really touches and concerns the land because Shipman is giving up a very important right, the right to protect your land against the otherwise unreasonable use of a neighbor’s land.
Why is this not enforceable as a covenant?
What are Waldrop’s defenses? The Town is not its predecessor in title, no deed in P chain of title contains or refers to the covenants contained in the defendant’s deed, and there has been such a change in the neighborhood it would be unconscionable and inequitable, and against public policy to enforce the covenants in D’s deed.
The court says the defense of changed conditions only applies to covenants and servitudes, doesn’t apply to easements. This perfectly valid convenant fails because not in deed and change in the neighborhood.
Not in direct chain of title: if Waldrop goes back through all of the deeds in the chain. When you get to Shipman looking for deeds out concerning his land, the deed to the Town was not concerning his piece of land. Not until deed to Tinsley that Waldrop sees his land described. Looking for promises having to do with his land. In NY, Buffalo Academy says the same thing, covenant not to sell gasoline court says this was just a personal promise. But even if it wasn’t a personal promise, it was out of the chain of title. The deed out from the common grantor was not about the Sacred Heart land, so don’t have to look at it. Waldrop only had to look at Shipman’s deeds that was about his land.
Shipman’s failure to bind his assignees by placing the promise in their deeds is a failure of his contractual obligation. There is no record notice because not in deeds about Waldrop’s property. May not be any factual notice either, called inquiry notice. Buffalo Academy talks about appellate divisions earlier case about looking at notice in other deeds, or inquiries, see all buildings set back, courts will say you have inquiry notice to look and see if there are any restrictions that bind your land.
If you are looking for different ways to enforce it, one way is the covenant. Here it fails.
Equitable Servitude: no record notice because not in deed. No inquiry notice/factual notice because the dump just got started.
Easement: the court called this an easement, doesn’t have to be in direct chain of title since it’s a real property interest. All you have to have is for the easement to be duly recorded. The Town duly recorded their deed. The Town of Bravard won, but what is the problem with the easement:
Waldrop could have found this deed, maybe he did but we don’t know
Not going to be a prescriptive easement. If the dump kept going from 1938 – 1950, at some point do all the people around lose their right to sue, could say no because gave permission, but here gave permission in deed, can’t take back.
This is precisely the thing you can’ t have easements for. Novel easements, normally can’t get an easement to not do something like sue, normally has to come in the form of a covenant. The court is deciding do we want to change the way in which NC lawyers do their title searches by calling this a valid covenant? Everytime that somebody buys from a common grantor, you have to look at every deed out from the common grantor to see if it is burden by another deed. Restrict to say anything not in the direct line of title will not bind you. (p. 922-923)
Left with the Town of B not having a dump, it had done all it could do. So the court says lets just call it an easement. What are we going to distort? Lets just call it an easement. Otherwise it would make searching titles too expensive. Minority rule.
Majority rule: yes you have to search the prior titles out, especially if the common grantor is a developer.
Common grantor is Rouse/HRD in Columbia Deeds, enormous record search.
But not a good outcome because you still have to look for easements, why not look for covenants? Only defense is that easements are very limited in what kinds there can be, if not a right of way, negative easements for light and air, apparent from looking at it, don’t have to worry about it too much. (Upham sarcastic)
Holliday v. Sphar
Who is Hampton? He was a farmer with 45 acres to sell in Winchester. Randolph is a developer, knows people are looking for land, offers to buy Hamptons land. Sells for $1,000 per acre. Holliday wants to build a gas station.
Hampton Randolph down lots of others, eventually to Holliday. The promises were between Hampton and Randolph. Randolph asked to have the promises in the deed between he and Hampton so it would be forever be in the chain of title.
Rule: the deed doesn’t say it has to be residential, not enough that the parties intended it to be residential, has to be in the deed.
Buffalo Academy of the Sacred Heart v. Boehm Brothers, Inc.
Most dishonest case.
Intent: shall be covenants running with the land.
Facts: Buffalo convent owes money to the Boehm Brothers, $60,000. They offer land, make a deal that will cover the debt. Depression, land probably not worth $60,000. Boehm brothers want to get out of it, look to the promise that restricts the land.
Similar to Bear Creek slander on the title, same here. Boehm says not a full fsa conveyance, not marketable title so we won’t take the land to settle the debt. They won below but the Sister’s appealed, they won.
Rule: court says introductory comments don’t apply to the second clause since not restated.
Buffalo Academy Issues
Whether there was a promise in any deed that purported to bind the common grantor’s successors? Buffalo Academy is a grantee of the common grantor. The court says there is no promise here to bind further people. Through interpretation of deed language at bottom of 1028, top 1029. Disingenuous, most real estate companies do not run gas stations, concerned about them selling land to someone that will open a gas station, so it should be a covenant that runs with the land.
Think about Columbia, a big opportunity for developers with land and affluent consumers, attractive market. Common grantor goes to sell land to Kendall brothers, want them to pay a premium, will guarantee a monopoly, for that price. There is some question about what range of discretion are you going to allow a homeowner’s association still dominated by a developer to make those kinds of deals.
Even if the promise was intended to bind, is the promise in the chain of title? The court said no, for the same reason that the court in Waldrop said no. That is not a jurisdictional difference, should look for common deeds out in all jurisdictions. Could also happen through equitable servitude, check earlier deeds out from a common grantor.
Chain of title issue: the case ends distinguishing an earlier case which required a broader title search. The court said that had to do with set-back restrictions, can be seen readily so there is another overlay of notice. Clearly relevant to the cases we will discuss today.
Uniform building plan: the court decides that there is a third possible way to bind the Boehm brothers to this restriction. If there was a uniform building plan in this development. The court looks for that and doesn’t find it. Series of reasons, haphazard conveyancing pattern – p. 1028, “many deeds contain no restrictions…clearly not following a fixed plan.” May in fact be the case, but don’t think that a uniform building plan requires uniformity. Different kinds of things going on in different areas, same as Columbia, but still following a plan. Diversity of uses, varieties of set backs don’t detract from a uniform building plan.
If you are not going to require that everything look exactly the same, what do you require to find a uniform building plan? Important because the lack of a uniform building plan may lead a court to not enforce a plan that would otherwise be enforceable.
Universality: all of the lots are included in a plan in some way. And coordinated with the other parts of the plan.
Reciprocity: some sharing of the benefits and burdens throughout the plan. That does not mean that everybody has to have the benefit in the sense that anybody in the development can sue. Who can sue and when is frequently an issue. Concentrating the possibility to sue in the homeowner’s association, developer, does not mean that individuals are totally without recourse. Looks very much like a gov’t.. Private citizens can’t enforce statutes unless there is a private cause of action, but they can act against agencies that don’t enforce. Even if can’t sue directly, still benefited.
Marketable title is a term of art, doesn’t mean you can’t sell it. No matter how encumbered, still have a market price. When you buy land enter into a purchase and sale agreement. The seller says what encumberances are on the title, mortgage, etc. The buyer agrees to pay the price if the encumbrances are as described by the seller. There is then a closing of the contract. Have this time for the buyer to get a mortgage after negotiating the price, also a title search, physical inspection, etc. If she finds a restriction on the use of the land, covenant, equitable servitude, makes it unmarketable.
Berger v. Van Sweringen Co.
Facts: injunction continue restriction on use of land. Van Sweringen sold the property to two D’s, they are also a D. Not sure if the correct way to think of this case is homeowners suing two individual D’s to prevent them from building commercially, because the court approaches it as suing Van Sweringen to prevent abuse of their power. There was a resolution to change the intent of the restriction, it passed in 1961, 2 to 1 to waive restrictions on the land. A new director was appointed, a new vote was taken and the restrictions were reinstated.
The directors were mayors. Big deal because the mayor’s became directors of the homeowner’s association. Seems like a trust but don’t talk about the mayors having a fiduciary duty.
The lower court went with P.
Issue: the first question was who can enforce the covenant. That depends on who has the benefit. D said P did not have the benefit because their land wasn’t in the subdivision. The only people that can sue are those that are in the subdivision. This 80 acres has not been subdivided so no one can sue about it.
Rule: The court looks at the encumberance, runs until 2026. They will then ask the neighbors on either side of the highway if it can continue. The court says those people have the benefit. These people are right across the street, part of a coordinated development and there is a specific item about future continuation of the covenant and who will be questioned.
Issue2: whether the courts below erred in finding that the companies release of restrictions was null and void and violative of their discretion.
Why did they think they could change them? Paragraph 17 gave them the right to change it under certain conditions. Most restrictive covenants have the right to waive, if not, would be like having a constitution that can never be amended. The developer wants the ability to adjust to market conditions. Similar right to waive raised in Kenney.
Why shouldn’t paragraph 17 take care of it? People bought with notice of it, why did the people suing win? Why do the directors of VS want to waive the restriction on these 80 acres? You could argue one of the bad things about the suburb is that you have to drive everywhere to take care of conveniences. So having a mall is not necessarily a bad thing.
Is there anything fishy about this? Has to do with the fact the board of directors is made up of mayors whose coffers will be filled by this mall. Tax enhancement of having a mall in the neighborhood. Need to raise money for schools required by the residents. Shopping mall improves the tax base. Problem that board of directors is mayors. Public actors making decisions in a private context.
Kenney v. Morgan
Facts: purchasers of lots making complaints against the developer. The Morgans are the residents, Kenneys are residents and developers. The Kenneys filed covenants before building. Morgans want the court to find that the covenants were illegal and unenforceable and that the bylaws of the Turnbull Corporation Association are illegal and unenforceable.
Issue: the bylaws say that each building site gets one vote, and can only exercise voting rights when your dues are paid and abiding by covenant.
Rule: court finds that article 3 of the bylaws are invalid. The bylaws say that the voting rights shall be unequal. The developer is saying that he gets one vote for every lot that he or she holds, same for homeowner. Since there are 180 lots, 16 sold plus the Kenneys. Leaves 160 – 16. Not the problem.
The problem is with how building site is defined, conflicts with the covenants. The court says we will interpret that the bylaws have to be consistent with the covenant. The Morgans say not consistent, because interpret it as saying that each homeowner gets a vote. The court brings in contractual canons of interpretation against the drafter, looks at subsequent behavior which was inconsistent with their interpretation of the covenant. The Kenney’s lose on the voting issue. Upham says it’s a red herring. Saying bylaws ok, but didn’t abide by them, didn’t pay dues for others. Can vote on the lot they paid dues for, not the others.
Comparing the bylaws with covenant N. Bylaws have to be consistent with the covenant because the covenant creates the association which abides by the covenants. Can be assured that the bylaws will be consistent with the covenant. Something else must have been going on here. Kenney’s must have done something else.
Main issue of the case: The right to waive. Here Covenant C. An issue central to Van Swerigen. Typical place where you find the issue. Classic homeowner’s assoc case. Right to waive covenant C is challenged by the Morgans. The Morgans would prefer not to have any waiving of any restriction.
Rule: these kinds of judicially approved waivers are not limited to minor changes. What kind of criteria do you want to use when deciding if an amendment or a waiver is permissible?
Consistent with the original intent of the parties, goals of the development
Impossible to complete the original intent.
Fait d’accompli/cost of enforcement is greater than the benefit of enforcement.
Impact on property owners;
Developer: sympathize with the Kenney’s, have all of this property that they want to develop and not be trapped by waste. They want to change it. On the other hand, they are trying to make money by their promise to continue.
Immediate neighbors will be most against the waiver.
Person seeking the waiver; may be the owner
3 and 4 come together with a sense of proportionality in the building plan. Don’t want to overly burden one group of people. In Van Sweringen, the people surrounding the mall will have decreased property values while others will reap the benefit.
What else might you want to know about the waiver clause?
Might want the waiver clause to mention whether it includes minor/major changes, also probably want some form of notice to be mentioned?
What is the voting structure for the homeowner’s association that appoints the committee that does the waiver?
What is the process of getting a waiver?
Do they have to give reasons for the waiver?
Is there an opportunity to rebut it?
Rhue v. Cheyenne Homes, Inc.
Facts: Rhue’s lose because the court determines that the house is just too different from the other houses in the neighborhood.
Issue: mechanism for denial is the architectural control committee. Two officers testify that if they had the opportunity to vote, they would have voted against it on the grounds that it was just too strange. Didn’t have the opportunity to vote because the Rhue’s didn’t submit the plans. They didn’t submit the plans because they knew it would be rejected.
One way to go here is that they knew of the procedures, didn’t abide by them, they lose. Don’t have to get into what the ACC would have done. Analogy to what is called the exhaustion requirement in administrative law. If you are going to complain about the action of an administrative agency you have to first exhaust all of your remedies before you come to court. Didn’t do that here, because it is simpler to just get along with it. Talking about this in a private context.
How are we going to judge exercises of this kind of authority? A reasonable standard. Here look at:
how different from other houses
how much it would depreciate the value of surrounding houses
the intent of the covenant. If the covenant says no Spanish Style homes, uniform architecture, they wouldn’t have tried to bring it in, it didn’t say any of these things. The Rhue’s may also be a commercial entity. They had real reason to think that this would be OK. This house may be in the abstract more valuable.
Is this going to lower property values? Ground norm present in this case which explains it.
In the future if you want to bring in a Spanish Style house, you would get expert testimony that it would increase the value of the house. Whose to say who these architectural control committee are, they could have particular biases in terms of styles.
How do you reconcile this with Davis and Rhue? The assumption in Rhue is that there will be a substantial drop in property values. In Davis the assumed drop is considerably smaller. The Rhue’s knew that the land was restricted. The Davis’s submitted their plans to the committee.
In both Davis and Rhue, the differences between easements and covenants. Easements can be implied but covenants cannot be implied. Easements can be gotten by prescriptions, can’t get covenants that way. Somehow usage is creating a covenant here, some people are creating a covenant that will bind others. Its not being done by contractual agreements. Its all a question of notice. These cases can be easily reconciled. Both parties did everything they had to do, but neither disobeyed any explicit requirements. In Rhue there were no explicit requirement so everything was up for grabs. In Davis, there were explicit requirements and an architectural committee. If you abide by the explicit specific standards the arch cont committee will only use its discretion in a limited way. A question of notice, the person coming to the Cheyanne Homes subdivision would say there are no standards, up to the committee, the best way for me to know the standards is to go look at set backs, orientations, etc. With Davis they read the plans, look at architectural style, as long as I do that I know that what I do will be OK.
Have a ground norm in covenants in the first case, don’t even have that. The second arch comm has more discretion to entertain things other than money.
Davis v. Huey
Monday, Nahrstedt v. Lakeside Village Condominium Association, first two cases in zoning – Euclid, p. 1090, and Fasano on p. 1102, detailed syllabus available on Friday.
Nahrstedt v. Lakeside Village Condominium Association, Inc.
Latest view of enforcement of covenants.
Rule: If there is a covenant in place saying you can’t have pets, unless restriction is wholly arbitrary, violates public policy or outweighs any public benefit, it should stand.
Facts: restriction is found in the deed. The court makes a distinction between restrictions in the deed and those put out by the homeowner’s association. When you buy a property you see a deed and sign onto it. Treating restrictions in the deed with more respect than they do later legislation by a homeowner’s association. People coming in know what they are getting. They may know about the process of the homeowner’s association but they might not know what comes out of it. More of a political association. Might be surprised, but Upham says this is not much of a reason not to enforce the homeowner’s associations rules against them.
She moved in with her three cats, makes her look bad. Flaunting the rules from the very beginning. Before she moved in she had a choice, but once she is already there, may be increased cost to fix.
If she had moved in with her cats with no prohibition, they then passed a rule by voting process. What would her options be? Difficult to argue because she was part of the process. We know that she didn’t read every word in the materials given to her at or before the closing. She may not have made the correct inquiries of her attorney or real estate agent, poor job of explaining things to her. Have to believe this if we believe that she didn’t know that there was a pet restriction. If it was in the declaration the amendatory rules would also be in the declaration, if she lost in the voting process its hard to see how she could find it.
P could argue the burden and benefit as in the dissent. But she argued that in this case.
What are her practical options if she loses in court after the pass the new pet rule? Her options are the same as they are now?
get rid of her cats and stay there.
Stay there and keep paying the fine? Not really because it was coupled with a demand for removal of the cats.
Coase theorem: when two interest conflict the party who will benefit more from having resolution in its favor will buy off the other party. Even if the resolution goes in the other party’s favor. So whether or not there will be cats, can be violated because people will have the right to pay the fine. That will not work here because thinking about purposiveness. Have to think about Posner, says if the Coase theorem is true, then what the legislator should do is give the right to the person who wants it most. Then the person who wanted it would end of with it, distribution of income and so on.
Coase theorem is about individual activity, market transactions, who assigns the rights? Judges or the legislature. That’s why the wheat farmer has to have the right assigned to it. The assignment in N is done by a judge, but is normally done by the legislature.
Here we have a legislature that has already spoken, it chose to implement rules at a very high level. The coase theorem is working at the market level. The developer here operated at a legislature level, they legislated these rules. Now we are at the enforcement stage. Now we have a group that has legislated the norm and it is now appointed to the individual. Coase theorem: N is old, quirky, she says she is willing to pay.
Here, the legislature’s fee assessment was not based on damages, it is set up as purely a penalty. The cost is zero. In the apartment they are odorless they don’t go out. But their behavior is not the reason for damages.
Distinction here is that the rules are different than the coase theorem, which is about compensation, but we are dealing with order. Not a tort rule, more akin to a criminal statute which is in place to affect behavior.
If we could hypothesize that all cats do not cause harm. Private organizations can choose to institute laws that are not based on fact. Can public institutions do this? What does arbitrary mean? If the benefit is not horribly disproportionate to the burden.
rule that has no basis in fact, taste against cats. Does not make it non-arbitrary.
There is an arbitrary distinction between no pets, but still allow birds and fish. But not arbitrary if they are talking about a matter of taste.
Argument of as a developer, part of my job is to appeal to customer’s taste, or they won’t buy it and I won’t make money. Niche taste out there against cats. More like the Spanish Style house (Rhue?).
Can you have a rule that says we like only inauthentic architecture, spanish style houses and mock tudor houses, and nothing else is allowed?
Private residential governments: voluntarily entered into. Includes rules against satellite dishes, trucks. Satellite dish is like the blue lamp, cats. If it is invisible how can it cause any harm to the homeowner’s association. Therefore solely a matter of taste.
Distinction between the behavior and the effects of the behavior. Uniformity and enforcement. Concerned about the effect on others. But we can do that most efficiently and effectively by a blanket rule which not require investigation and enforcement on a case by case basis. Simpler solution if you just don’t like the behavior or people who engage in that behavior.
Additional readings, Loeb 1059 and notes on 1063. Set forth the doctrine in a more systematic way.
What are the possible ways that Nars can talk about not enforcing.
p. 1061, top. Restrictive covenant…without substantial benefit of the covenant. The P’s right to enforce are absolute regardless of the fact that they are not damaged by the breach…
Rules about enforcement of covenants. The first one is absolute enforcement, the remainder are exceptions.
Covenants are always enforceable, indefinitely. In Nars, the people enforcing the covenant are not in anyway harmed by Nars cats. The harm is simply the fact that this exist and the desire by D that it does not exist. That brings in taste. Doesn’t matter if there is a benefit, as long as not against public policy or overreaching in some other way.
You can enforce it as long as there is a benefit to the covenantee. The second rule, disagrees with the dissent view that no damage was shown. If there is still a benefit to the enforcement of the rule you enforce it. Not sure what he would say about Nars. Means the benefit has to be objective, has to be clear, might be a small benefit. Does the benefit always have to come down to money, could it be something else.
Enforceable only when the benefit is not disproportionately smaller than the harm. Cohen in Loeb, to not allow this person to put the third home in. Two rules, residential for 35 years, and only 2 homes per lot forever. After 25 years someone wants to put the third home on. The covenantee, enforcing the covenant, difficult to show th the benefit, because anyone could go out and turn the lot into a Kmart, no longer limited to residences, but the damage to the person that wants to put the third home on is significant. In Nars, the damage to P is substantial. Balancing test, when the harm to Nars is 51 and the burden to the homeowners is 49, you don’t enforce. It has to be proportional. Must be insubstantial benefit.
The enforcement be uniform and regular and consistent, if it is not, if there are other people that have it , then it gets difficult. Equitable estoppel, if the person enforcing the covenant has acted in violation of the covenant has not enforced other violations then there is equitable estoppel. In that is that they are enforcing against N, because she spoke up at the association meeting, retailiation. Hecht note case, 1062. Equitable estoppel, clean hands. Can’t go in when you have done something wrong yourself, not enforced in other instances. If you haven’t enforced dues when people didn’t have money to pay, but now enforce against restrictions, not estopped. Has to be the same rule. Turns homeowner’s assoc into a police force.
Neighborhood change, want to be able to change the restriction. Downs case, notes 1062 – 1063. This court says, OK there has been change, because of it, the benefit of enforcing the covenant against him not higher than the burden on him. This is articulated as neighborhood change. Inequitable to stand in the way of further change. The problem with it is that you are precipitating further change. The reason you have restrictions is the prevent the inevitable change from getting into your parcel.
How does this relate to easements? Different ways to knock down covenants and equitable servitudes. Most don’t apply to easements. If its an easement it exist.
Estoppel, if there was another right of way, or if lot 2 refused to let Mary Cushman go over, and then lot 2 wants to use lot 1, doesn’t have anything to do with whether the easement exist over lot 1.