Negative Easements Hypo: Π Δ ADT AST Proposed new

Negative Easements Hypo: Π Δ ADT AST Proposed new construction Structure with windows facing, and immediately to the west of, AST. Π sues to enjoin the construction by Δ of a building on the AST (alleged servient tenement) on the theory that Π has acquired an easement by prescription for the benefit of the structure on Πs land, the ADT (alleged dominant tenement). Q: What result and why? 1 Donald J. Weidner

Negative Easements In England, traditional negative easements, including easements for light and air, could be acquired by prescription. However, the doctrine of ancient lights has never been adopted in the USA. – American courts have held that negative easements cannot be acquired by prescription. – Consider the analogy to adverse possession: Did the servient owner have a cause of action against the person claiming the easement? Today, there is little pressure to expand concepts of negative easements, because courts will protect the same interests as equitable servitudes. – Nevertheless, there has been expansion in the list of negative easements Conservation easements, for example 2 Donald J. Weidner

Easements versus Covenants An easement is generally thought of as being created by a grant of a right. – A grants to B, his heirs and assigns, an easement to prohibit A from building on A’s land to a height of over 30’. – A Grants a Right Because grants of negative easements especially were limited, landowners turned to promises by the person who would have been the grantor of the easement. These promises were called covenants – A promises, on behalf of A, his heirs, successors and assigns, to refrain from building to a height of over 30’. – A Undertakes a Duty. 3 Donald J. Weidner

Real Covenants versus Equitable Servitudes What might have been viewed as other negative easements were instead enforceable only as 1. Real Covenants also known as “covenants that run with the land at law or as 2. Equitable Servitudes. Each has its own requirements. 4 Donald J. Weidner

Real Covenants Distinction made between the benefit of covenants and the burden of covenants – the test for the running of the burden is traditionally more onerous than the test for the running of the benefit In order for the burden of a covenant to run at law, there must be: 1. An intent of the parties (covenantor and covenantee) that the covenant run; – stated differently, an intent to bind successors 2. The covenant must “touch and concern” the land; and 3. There must be privity of estate for the covenant to run. 5 Donald J. Weidner

Real Covenants (cont’d) There are two basic kinds of privity of estate: – Horizontal privity – between the original covenantor and convenantee; most say that horizontal privity is not required for the benefit to run – Vertical privity – between covenantor and convenantor’s assignees and between the covenantee and the convenatee’s assignees. A real covenant runs with an estate in land (and not with the land itself). – The assignee must receive an estate of the same duration as the estate of the assignor. [Same concept in deciding whether a tenant’s transfer is an assignment or a sublease.] 6 Donald J. Weidner

Hypo: Suppose that B, owner of Blackacre, has promised A, owner of Whiteacre, that Blackacre shall not be used for industrial purposes. B sells Blackacre to C, and A sells Whiteacre to D. C constructs a factory on Blackacre. D sues C for damages. Will the covenant run to C and D? A Promissee; benefit to Whiteacre B promises A “Blackacre shall not be used for industrial purposes”. Privity between original parties (known as “horizontal privity”)? A sells Whiteacre to D Promisor; burden on Blackacre B sells Blackacre to C Privity between promisor and assignee (known as “vertical privity”) Privity between promisee and assignee (known as “vertical privity”) D B May D sue C for damages? 7 C Constructs a factory on Blackacre Donald J. Weidner

Real Covenants (cont’d) Preliminarily, there are 3 basic meanings that might be given to the term privity of estate: 1. A landlord-tenant (continuing, tenurial) relationship; 2. A “successive relationship between a grantor and a grantee” [majority rule] – – In the above example, A and B would be in privity of estate under this definition if B’s promise had been in a deed conveying Blackacre from A to B. Giving privity this meaning prevents enforcement of the covenant against successors only when the covenant was not created in conjunction with the transfer of some other interest in land; 3. Both parties have mutual interests in the same land, apart from the covenants – In the land sought to be burdened. 8 Donald J. Weidner

Real Covenants (cont’d) Problem #1: A and B, neighboring owners, decide they will mutually restrict their lots to single-family residential use. – They sign an agreement wherein each promises on behalf of herself, her heirs and assigns, that her lot will be used for single-family residential use only. – The agreement is recorded under the name of each signer. A Ableacre Mutual Agreement: Lots restricted to single-family residential use only B Bakeracre Sells Bakeracre to C C 9 Donald J. Weidner

Covenants Enforceable at Law: Real Covenants (cont’d) Part A: C builds an apartment house on Bakeracre. – – A sues C for damages. Is there an enforceable real covenant? A cannot recover damages from C if horizontal privity of estate is required for the running of the burden at law. A and B are not: 1. In a landlord-tenant (tenurial) relationship; 2. In the successive relationship of grantor/grantee; or 3. Mutually interested in each other’s land apart from the covenant. 10 Donald J. Weidner

Covenants Enforceable at Law: Real Covenants (cont’d) Is A’s lawyer liable to A for malpractice? Lawyer might have: – Directed A and B to convey their lots to Straw; then – Directed Straw to convey: Lot A back to A by a deed with a promise by the grantee A for the benefit of B’s lot; and Lot B back to B by a deed with a promise by B for the benefit of A’s lot. Privity of estate has been called “a malpractice trap for lawyers.” 11 Donald J. Weidner

Covenants Enforceable at Law: Real Covenants (cont’d) Part B: Suppose that A, rather than C, built the apartment house. – Is C entitled to damages as against A? C can recover damages from A under the 2d Restatement view, because Privity of Estate is not required for the benefit to run. – Some say it is unfair in a reciprocal arrangement such as this for C to succeed to the benefit but not the burden. 12 Donald J. Weidner

Covenants Enforceable at Law: Real Covenants (Cont’d) Given that the requirement of privity for the burden to run is formal (because it can be avoided by the use of a straw), what is its justification? – The authors believe: “The only real justification for [the first Restatement’s requirement of horizontal privity of estate] is that a damages remedy puts all the defendant’s assets and not only the defendant’s investment in the land at risk.” – The Third Restatement repudiates the first Restatement and states that horizontal privity is no longer required for the burden of a covenant to run at law to successors. 13 Donald J. Weidner

Problem #2: In order to preserve A’s view over B’s lot, A and B agree that no building taller than 20 feet will be erected on B’s lot. The agreement is recorded. Could: 1 or 2 A No building taller than 20’ on B’s lot, Bakeracre B Sells Bakeracre 2. B promises, for heirs and assigns, not to build. A gets a right B undertakes a duty 1. B grants to A the right to view over B’s land, specifically saying that A can stop any building over 20 feet. C 14 Erects a 30 foot tall building Donald J. Weidner

Real Covenants (cont’d) Result if A sues C for damages? A. If the restriction is a covenant. The covenant may be held to impose a burden that will not run at law because there was no privity of estate between convenantor and covantee. B. If the restriction is an easement. A negative easement of view does not require privity of estate The juxtaposition is an argument for abolishing the requirement of privity of estate for the burden to run at law – there is no such requirement for an easement, the functional equivalent. 15 Donald J. Weidner

Real Covenants (cont’d) – If a court agrees that this creates a negative easement of view, A can get damages from C for interfering with A’s easement. If a court were to characterize negative rights – whether arising from words of Promise or from words of Grant – as negative easements, the privity requirement for negative covenants would be dispensed with. In the case of affirmative duties imposed upon the servient landowner, a court would probably not characterize the covenant as an easement, – thus the privity requirement would remain an obstacle. 16 Donald J. Weidner

New Restatement Rule on Real Covenants The new (Third) Restatement: – Discards the vertical privity requirement – Instead, draws a distinction between negative covenants and affirmative covenants Negative covenants are treated like easements for succession purposes (they run against any possessory estate) – That is, they run to all subsequent owners and possessors of the burdened and benefited land – Thus, both B, an adverse possessor, and C, a lessee, would be liable on the covenant forbidding nonresidential use Affirmative covenants, requiring the burdened owner to perform an act, are treated differently 17 Donald J. Weidner

Third Restatement Rule on Real Covenants (cont’d) The different treatment for affirmative covenants: – Burdens and benefits of affirmative covenants run to persons who succeed to estates of the same duration as were held by the original parties to the covenants In other words, to people who satisfy the traditional privity of estate requirement – Burdens also run to adverse possessors – Only certain affirmative burdens run to lessees. Lessees must perform only covenants that are more reasonably performed by the lessee rather than by the landlord In our example, lessee C would be liable on the affirmative covenant if cutting trees was more reasonably performed by the lessee than the landlord – Burdens run to life tenants, but the liability for the life tenant’s performance is limited to the value of the life estate The Third Restatement applies the same rules to equitable servitudes 18 Donald J. Weidner

Tulk v. Moxhay Π was the owner in fee of the “vacant piece of ground in Leicester Square, as well as several of the houses forming the square.” Π Square Sold, with covenant, FSA. 40 years after covenant ELMS, with a covenant binding Elms, his heirs and assigns. 1. Keep and Mesne conveyances maintain pleasure ground – paying the costs. 2. Maintain open state 3. Π’s Ts to have “privilege” on paying “rent” Δ Deed to Δ containing no restrictions, but Δ purchased “with notice” Issue: Does burden run? 19 Donald J. Weidner

Tulk v. Moxhay (cont’d) Π still owns several houses in the square. Δ asserts the right to build on the square. Recall text: “Thwarted by the law courts’ refusal to recognize new types of negative easements, landowners turned to the law of contracts.” – in the early 19th Century Note the starting point in Tulk: The contract was enforceable as between grantor and grantee; – the question is whether it should also bind those who purchase from the grantee (promisor). Assumption of the court: the covenant does not run with the land at law (can you recall why not?). – Call it a contract; – Vendee had notice of it; – Vendor paid a lower price because of it. 20 Donald J. Weidner

Requirements for Equitable Servitude The essentials of an equitable servitude (a covenant that runs in equity even though not at law) 1. There must be an intent that the covenant run 2. The covenant must touch or concern (the burdened land) 3. There must be notice to the burdened purchaser Must there be a buyer who paid less because of the covenant? 21 Donald J. Weidner

Equitable Servitudes and Privity of Estate Horizontal privity is not required – Thus eliminating the largest obstacle to covenants running at law Vertical privity – Is not required for the burden to run All subsequent possessor are bound by the servitude, just as they are bound by an easement – However, for a person other than the original covenantee to enforce the benefit, in some jurisdictions, the beneficiary must show that he acquired land from the covenantee, either before or after the covenant was made In this sense, vertical privity may be required for the enforcement of the benefit in equity Analogous to the need to show you are an intended third party beneficiary in contract? 22 Donald J. Weidner

Property Theory of Equitable Servitudes The Dominant Theory is the Property Theory – – Rather than a contract theory Propelled by courts that call an equitable servitude a negative easement Burdens the land itself and not an estate in land – Making it like an easement Facilitates several holdings 1. That, after the original promisor has conveyed the burdened land, the promisor can not be sued on the covenant, either in law or in equity – 2. 3. This is the right result because the original promisor loses control of the land after assigning away the entire interest The original promisee may not enforce restrictions after conveying away the beneficial land. If the government condemns the burdened land, it must pay the benefited owner damages for loss of the servitude Nevertheless, an equitable servitude arises out of contract, and contract doctrines can apply. 23 Donald J. Weidner

Equitable Servitudes versus Real Covenants The traditional difference between real covenants and equitable servitudes [apart from the differences in the requirements to create them] relates to the remedy sought. – The remedy for breach of a real covenant is damages in a suit at law. – The remedy for breach of an equitable servitude is an injunction or enforcement of a lien in a suit in equity. Returning to real covenant Problem # 1: – A can enjoin C from erecting an apartment house. C has record notice of the restriction and hence is bound by an equitable servitude even if not by a real covenant 24 Donald J. Weidner

Sanborn v. McLean Neighbor sues to enjoin McLean from constructing a gasoline filling station on Lot 86. 1892 CGors Own 91 lots fronting on Collingwood Avenue 1892 CGors Convey 10 lots with restriction Residences only 1. The lots retained by CGors are NOT expressly restricted. 2. The deeds out are all recorded. Costing 2,500 20’ setback July 1893 CGors Convey 11 lots same restrictions 25 Donald J. Weidner

Sanborn v. McLean (cont’d) Sept. 1893 CGors Convey Lot 86 PI (Predecessor in Interest of McLean) No restrictions. The deed is recorded Subsequently CGors Conveyed remaining lots, some with, some without, restrictions For 17 years, residences only were built Δ McLean PI (Predecessor convey with partially in Interest) built residence 1910 Testifies that PI told him the lot was not restricted Had an abstract showing the subdivision Abstract presumably also showed title free of restrictions 26 Δ McLean Donald J. Weidner

Sanborn v. McLean (cont’d) Can you identify the precise moment at which the easement arose? – “If the owner of two or more lots, so situated as to bear the relation, sells one with restrictions of benefit to the land retained, the servitude becomes mutual, and, during the period of restraint, the owner of the lot or lots retained can do nothing forbidden to the owner of the lot sold.” That is, there is an implied grant of a negative easement for the benefit of the lots retained – Not for the benefit of the grantor – “For want of a better descriptive term this is styled a reciprocal negative easement.” 27 Donald J. Weidner

Sanborn v. McLean (cont’d) “It is not personal to owners but operative upon use of the land by any owner having actual or constructive notice thereof.” The basic theory is that the court is effecting the intent of the common grantor (“it must start with a common owner”) – to benefit the retained lots – to carry out a “scheme of restrictions” on neighboring lots sold by the common grantor – Note the facts ex post used to prove the intent ex ante “The original plan was repeatedly declared in subsequent sales” 28 Donald J. Weidner

Sanborn v. McLean (cont’d) A majority of courts imply negative restrictions from a general plan. In Sanborn, there was not even an oral promise of the developer to restrict the remaining lands. – “[A] few jurisdictions take the Statute of Frauds more seriously. In California, an equitable servitude must be created by a written instrument identifying the burdened lot; it will not be implied from the existence of restrictions on other lots in a subdivision.” 29 Donald J. Weidner

Sanborn v. McLean (cont’d) If you decide that an easement arose in the first instance, when the first lot was conveyed away, the next issue is whether McLean is a subsequent bona fide purchaser without notice – if he is, he’s not subject to the servitude. – In Michigan, deeds out to other buyers in a subdivision from a common grantor give notice to subsequent purchasers (see Note 1, p. 873). “Hence the first 21 deeds out are in the chain of title of lot 86.” – However, unlike the note case, the retained lots were not expressly subjected to the limitation – Authors: the court might have rested there, holding McLean had constructive record notice, but instead it held McLean had inquiry notice. 30 Donald J. Weidner

Sanborn v. McLean (cont’d) What should McLean have done? 1. Ask the neighbors? Ct. says “no”. – “[H]ad he inquired he would have found of record the reason for the general conformation.” – “Considering the character of use made of all the lots open to a view of Mr. McLean when he purchased, we think he was put thereby to inquiry, beyond asking his grantor whether there were restrictions.” 2. On the record, he would have seen: – Restrictions in 53 of 91 deeds; – No restrictions in 38 of 91 deeds; – That nevertheless showed a plan to restrict all 91 lots (?) » Because they were all subdivided at the same time and shown on the same plat? 31 Donald J. Weidner

Neponsit Property Owners’ Assn. v. Emigrant Industrial Savings Bank Δ purchased land at a judicial sale. The deed to Δ, and each prior deed subsequent to a deed out by Neponsit Realty Company, “purports to convey the property subject to the covenant, condition or charge contained in the original deed.” Δ refuses to pay – the property owners’ association files an action to foreclose a lien on the property. 1911 Neponsit Neponsit Filed a map of a strictly residential community. Sold lots referring to the roads and streets shown on the map 32 Donald J. Weidner

Neponsit (cont’d) 1917 Neponsit Deyers Deed with covenant H,W (Page 875, bottom) Annual charge Maximum 4 per lot Payable to property owners association To be a lien on the land Devoted to roads, paths, sewers and “such other public purposes as may be determined” Run with the land until 1940 Deyers H,W 33 Judicial sale Δ Donald J. Weidner

Neponsit (cont’d) Recall the “age old essentials of a real covenant” 1. There must be intent (between covenantor and covenantee) that the covenant run; 2. The covenant must “touch or concern” the land with which it runs; 3. There must be privity of estate between the party claiming the right to enforce the covenant and the party “who rests under the burden of the covenant.” 34 Donald J. Weidner

Neponsit (cont’d) Recall the essentials of an equitable servitude 1. There must be an intent that the covenant run 2. The covenant must touch or concern (the burdened land) 3. There must be notice to the burdened purchaser Must there be a buyer who paid less because of the covenant? – Sanborn says mutual benefit is sufficient 35 Donald J. Weidner

Neponsit (cont’d) Touch and Concern A covenant to pay a sum of money looks like a personal, affirmative covenant, that should not bind successors. Court: 1. “Touch and concern” is a judicially created test, which we are more free to modify than if it were a statutory test Recall Justice Pariente’s remarks on Supreme Court Day 2. We can abandon our statements that the only covenants that can run are those respecting the use of land. 3. And our statements that affirmative covenants do not run. 36 Donald J. Weidner

Neponsit (cont’d) The touch or concern test is based on effect: – Does the covenant impose, on the one hand, a burden upon an interest in land, which, on the other hand, increases the value of a different interest in the same or related land. Court says the grantee “obtained not only title to particular lots, but an easement or right of common enjoyment with other property owners in roads, beaches and improvements in the same tract.” “The burden of paying the cost should be inseparably attached to the land which enjoys the benefit.” – Sound like Demsetz? 37 Donald J. Weidner

Neponsit (cont’d) Privity of Estate “Though between the grantor and the grantee there was [horizontal] privity of estate”, how is there privity between the Defendant and the Property Owners’ Association? – The Association “has not succeeded to the ownership of any property of the grantor.” – “No right to enforce even a restrictive covenant has been sustained in this state where the plaintiff did not own property which would benefit by such enforcement.” We might expand Tulk to allow an equitable servitude at the instance of one who owns no land, but do not need to decide, because we can say that there is the requisite privity of estate to let this covenant run at law: – The corporate property owners association “has been formed as a convenient instrument by which the property owners may advance their common interests.” – The property owners association is acting as the agent of the property owners. 38 Donald J. Weidner

Neponsit (cont’d) Grand old case the permits a covenant to run with the land: – Even though it is an affirmative covenant to pay a sum of money (subject to a 4.00 per lot per year cap); – Even though the money will not be spent on the land burdened by the covenant (but on roads, paths, parks, beaches); – Even though the money will not be spent on the land of the promisee’s assignee – the property owners’ association – [unless you disregard the corporation and see the property owners behind it]; and – Even though the money may be used “for such other public purposes” and, hence, is arguably quite vague. 39 Donald J. Weidner

The Burden of Affirmative Covenants Courts have been wary of enforcing affirmative covenants against successors: 1. They are reluctant to issue orders to perform a series of acts that require continuing judicial supervision. 2. Enforcing an affirmative covenant may impose a large personal liability on a successor. 3. An affirmative obligation, unlimited in time, resembles a feudal service or perpetual rent. 40 Donald J. Weidner

Restatement, 3d, and Touch and Concern Restatement (Third), Servitudes, discards “touch and concern.” Distinguishes 1. Grounds for refusing to enforce a servitude at its inception – Does it violate public policy? – – – – privacy and sanctity of the home protecting residential housing consumers against sharp practices and unconscionable burdens maintaining stability of neighborhoods protecting investment-backed expectations 2. Grounds for refusing to enforce a servitude because of subsequent events 41 Donald J. Weidner

Hypo: Prior to Caullett Smith and Jones are neighbors. Over the back fence, they each agree to refrain from cutting down the magnolia trees on their lots and they each agree to replace any magnolia trees that are destroyed. They reduce it to writing and record it. May Brown enjoin Smith from violating the covenant? – If Brown is president of the local chapter of the Sierra Club? – If the agreement says it may be enforced by the Sierra Club? 42 Donald J. Weidner

Hypo: Prior to Caullett con’t. Does not Neponsit say it can be enforceable? – Perhaps not: -- Neponsit dealt with the situation in which there was privity of estate between original covenantor/covenantee – Perhaps not: -- Neponsit dealt with a situation in which the entity enforcing the covenant was found to be in privity of estate with the owner of the servient estate. 43 Donald J. Weidner

Hypo: Prior to Caullett con’t. Recall from Neponsit: – [N]o right to enforce even a restrictive covenant has been sustained in this state where the plaintiff did not own property which would benefit by such enforcement [so that some of the elements of an equitable servitude are present]. 44 Donald J. Weidner

Caullett v. Stanley Stillwell & Sons Developer, by Warranty Deed, conveyed a 1acre lot to buyer for 4,000, with the “covenant, agreement and restriction” that – “the grantors reserve the right to build or construct the original dwelling or building on said premise.” – Covenant recites that it is to run with the land. The original buyer is the plaintiff (not a question of runnability). Negotiations over the construction of a dwelling broke down. Buyer sues to quiet title. 45 Donald J. Weidner

Caullett (cont’d) Held: unenforceable for 3 reasons: 1. Too vague incapable of enforcement because it does not specify: – type of structure to be built; – cost of structure to be built; – duration of grantee’s obligation unclear whether it was intended as a right of first refusal unclear of its application if grantees built their own structure with their own hands 46 Donald J. Weidner

Caullett (cont’d) 2. Does not “touch and concern” the land, therefore, neither: – equitable servitude; nor covenant running at law. Why does it not “touch and concern” the land? Not permanent enough? Concerns a “single, personal service” Doesn’t touch or concern the land because there is no restriction on the use of land of any permanence. 3. The benefit is in gross – Even if the covenant were directly restricting the use of land – “[W]hatever the effect of the burden of the covenant, its benefit is clearly personal to the grantor not enhancing or otherwise affecting the use or value of retained lands.” 47 Donald J. Weidner

Caullett (cont’d) Generally, prerequisite [to running at law] is a finding that both burdened and benefited properties exist and were intended to be affected by the contracting parties.” – “Where the burden is placed upon the land, and the benefit to personal to one of the parties and does not extend to his or other lands, the burden is generally held not to run with the land at law. The policy is strong against hindering the alienability of one property where no corresponding enhancement accrues to surrounding lands.” 48 Donald J. Weidner

Caullett (cont’d) So, courts are making a policy judgment: If this is beneficial to neighboring lands, then the burdens on alienability will be supported - enforced. 49 Donald J. Weidner

Shelley v. Kraemer Shelley is a 1948 decision. One of the cases involved comes from Missouri and dealt with an agreement that – was entered into by 30 out of 39 owners of lots fronting both sides of a street in St. Louis – The 30 owners held title to 47 out of the 57 parcels in the district described in the agreement. – The agreement was subsequently recorded. 50 Donald J. Weidner

Shelley v. Kraemer (cont’d) There was an agreement: – to restrict the “use and occupancy” – for a term of 50 years – it shall “be a condition” that “shall attach to the land” – as a “condition precedent to the sale” of same – no part shall be “occupied by any person not of the Caucasian race” – intent “against the occupancy as owners or tenants of any portion of said property for resident or other purposes by people of the Negro or Mongolian Race” 51 Donald J. Weidner

Shelley v. Kraemer (cont’d) “At the time the agreement was signed, five of the parcels in the district were owned by Negroes.” Shelleys are African American grantees who received a warranty deed to the parcel in question. – “The trial court found that [the Shelleys] had no actual knowledge of the restrictive agreement at the time of the purchase.” In 1945, owners of other property subject to the restrictive convenant sued, asking that: – Shelleys “be restrained from taking possession” and – “that judgment be entered divesting title out of [the Shelleys] and revesting title in the immediate grantor or in such other person as the court should direct.” 52 Donald J. Weidner

Shelley v. Kraemer (cont’d) The trial court took the easy way out: it said that the agreement never became effective because it was not intended to be effective until all owners had signed, which had not happened. The Supreme Court of Missouri reversed and “directed the trial court to grant the relief for which [the neighbors] had prayed. That court held the agreement effective and concluded that enforcement violated no rights guaranteed to [Shelleys] by the Federal Constitution.” When the Missouri court rendered its decision, [Shelleys] were occupying the property. – They were ordered off the property. 53 Donald J. Weidner

Shelley v. Kraemer (cont’d) Shelleys claim they are denied their rights under three clauses of the 14A: 1. 2. 3. Equal protection Due process Privileges or immunities Recall the 14th Amendment: Section 1. All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor [shall any state] deny to any person within its jurisdiction the equal protection of the laws. *** Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article. 54 Donald J. Weidner

Shelley v. Kraemer (cont’d) Supreme Court says that, without more, the covenants themselves do not violate the 14A: – “So long as the purposes of those agreements are effectuated by voluntary adherence to their terms, it would appear clear that there has been no action by the state and the provisions of the Amendment have not been violated.” (emphasis added) 55 Donald J. Weidner

Shelley v. Kraemer (cont’d) Neighboring property owners asserting the benefit of the covenant 1. “urge that judicial enforcement of private agreements does not amount to state action; 2. or, in any event, the participation of the state is so attenuated in character as not to amount to state action within the meaning of the Fourteenth Amendment. 3. or, “even if the states may be deemed to have acted in the constitutional sense, their action did not deprive [the Shelleys] of rights guaranteed by the Fourteenth Amendment.” 56 Donald J. Weidner

Shelley v. Kraemer (cont’d) 3 Basic approaches to finding state action: 1. Public function theory 2. State encouragement theory 3. Pervasive government involvement 57 Donald J. Weidner

Shelley v. Kraemer (cont’d) Constitution extends to “state authority in the shape of laws, customs, or judicial or executive proceedings.” Further, judicial action that triggers the 14A is not simply the operation of a proceeding that is procedurally unfair. “[T]he action of state courts in enforcing a substantive common law rule formulated by those courts” may result in a 14A violation, even though there has been compliance “with the most rigorous conceptions of procedural due process.” – Recall Neponsit said: These are our rules, we can change them 58 Donald J. Weidner

Shelley v. Kraemer (cont’d) Court says there are two questions: 1. Was there state action? 2. Was the state action of the prohibited sort? Ct. says it has “no doubt” there is state action “in the full and complete sense of the phrase.” – There were willing buyers and willing sellers here – Without the intervention of the state courts, the purchasers “would have been free to occupy the properties in question without restraint.” A response: According to traditional property doctrine, the “willing seller” was a willing thief willing to sell what he did not own. 59 Donald J. Weidner

Shelley v. Kraemer (cont’d) State “made available to [the neighbors] the full coercive power of government to deny [African Americans] the enjoyment of property rights .” Legislature could not impose these rules – nor can executive – nor can the judicial branch. The 14A is not “ineffective simply because the particular pattern of discrimination, which the state has enforced, was defined initially by the terms of a private agreement.” How were equal protection rights violated? Would covenants against whites have been enforced? 60 Donald J. Weidner

Shelley v. Kraemer (cont’d) Property rights and race: – “Equality in the enjoyment of property rights was regarded by the framers . . . as an essential precondition to the realization of other basic rights and liberties which the amendment was intended to guarantee.” – The Court further cited what is now Sec. 1982: “All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.” – From the Civil Rights Act of 1866 Remember: Buchanan v. Warley (1917) Remember: Jones v. Alfred Mayer (1968) 61 Donald J. Weidner

Shelley v. Kraemer (cont’d) Was there a denial of the equal protection rights of the neighbors? – Was their property “taken?” – Recall, Court said: “The enforcement was pursuant to the common law policy of the states as formulated in earlier decisions.” As to the neighbors’ claim of a denial of their equal protection: – “The Constitution confers upon no individual the right to demand action by the state which results in the denial of the equal protection of the laws to other individuals. And it would appear beyond question that the power of the state to create and enforce property rights must be exercised within the boundaries defined by the Fourteenth Amendment.” 62 Donald J. Weidner

Western Land Co. v. Truskolaski 1941 Subdivider Subdivided, subjecting the lots to covenants that restricted the subdivision to single-family dwellings and further prohibited businesses of any kind. 1972 Subdivider wants to build a shopping center on 3.5 acres of land it still owns. – The parcel borders what has become a major four-lane artery Multiple homeowners sue to enforce the covenant. Subdivider says: the covenants are no longer enforceable because of changed circumstances. 63 Donald J. Weidner

Western Land (cont’d) The area has “markedly changed.” In 1941, the property surrounding the subdivision was used primarily for residential and agricultural purposes, with very little commercial development of any kind. – 30 years later: city’s population has increased from 20,000 to 95,000. there are shopping centers, motels, businesses, right across the street from the subdivision. City has filed resolution of intent to rezone to commercial – But the change has not yet been made 64 Donald J. Weidner

Western Land Co. (cont’d) Even though nearby avenues may become heavily traveled thoroughfares, restrictive covenants are still enforceable if the singlefamily residential character of the neighborhood has not been adversely affected, and the purpose of the restrictions has not been thwarted.” – commercialization has not rendered them unenforceable because they are still “of real and substantial value to those homeowners living within the subdivision.” Value in what sense? 65 Donald J. Weidner

Western Land Co. v. Truskolaski con’t. The covenants would not be enforceable – if “the properties were entirely unsuitable and undesirable for residential use and that they had no suitable economic use except for business or commercial purpose.” “As long as the original purpose can still be accomplished and substantial benefit will inure to the restricted area . . . the covenants stand even though the subject property has a greater value if used for other purposes.” – What is the “substantial benefit” if the restrictions are depressing the value of the property? 66 Donald J. Weidner

Western Land Co. v. Truskolaski con’t. “The burden of showing that the subdivision is not now suitable for residential purposes” is on the person challenging the covenants. Note: “a zoning ordinance cannot override privately-placed restrictions.” Presumably: – The power to override restrictions is not part of the “zoning” power delegated to local government by the state, or – To do so might constitute a “taking” “In order for community violations to constitute an abandonment, they must be so general as to frustrate the original purpose of the agreement.” 67 Donald J. Weidner

Legislative Intervention in Enforcement of Covenants Covenants are preventing land use from becoming as intensive as zoning and planning authorities would permit or encourage. Understandably, legislatures have intervened. Massachusetts statute (p. 919) provides: – No restriction shall be enforced or declared to be enforceable unless the restriction is “of actual and substantial benefit to a person claiming rights of enforcement.” – Even if a restriction is of substantial benefit, it may not be specifically enforced, but only may be enforced by money damages, if any of the following conditions exist: 68 Donald J. Weidner

Legislative “Conditions” Suggesting Damages Is The Only Appropriate Remedy (1) changes in the character of the properties affected or their neighborhood in available construction materials or techniques, in access, services or facilities, in applicable public controls of land use or construction, or in any other conditions or circumstances, which reduce materially the need for the restriction or the likelihood of the restriction accomplishing its original purposes or render it obsolete or inequitable to enforce except by award of money damages, or (2) conduct of persons from time to time entitled to enforce the restriction has rendered it inequitable to enforce except by award of money damages, or (3) in case of a common scheme the land of the person claiming rights of enforcement is for any reason no longer subject to the restriction or the parcel against which rights of enforcement are claimed is not in a group of parcels still subject to the restriction and appropriate for accomplishment of its purpose, or (4) continuation of the restriction on the parcel against which enforcement is claimed or on parcels remaining in a common scheme with it or subject to like restrictions would impede reasonable use of land for purposes for which it is most suitable, and would tend to impair the growth of the neighborhood or municipality in a manner inconsistent with the public interest or to contribute to deterioration of properties of to result in decadent or substandard areas or blighted open areas, or (5) enforcement, except by award of money damages, is for any other reason inequitable or not in the public interest. 69 Donald J. Weidner

Legislative Intervention in Enforcement of Covenants (Cont’d) Judicial reactions to such a statute vary. Massachusetts said no taking, because the statute merely limits the remedy, not the right. But an Indiana court said taking when a statute authorized planning commissions to vacate outmoded plats, including any recorded covenant or restriction applying to the platted acreage. 70 Donald J. Weidner

Rick v. West 1946--A 62 acre parcel was subdivided with a recorded declaration of covenants restricting the use of land to single-family dwellings. 1956 – Rick sold to Catherine West a ½ acre lot on which she built a house. Post 1956 – Rick contracted to sell 45 acres to industrialist – with the sale conditioned on the rezoning of tract from residential to industrial. Town Board – Rezones the parcel to industrial. Ms. West – refuses to release the covenant in her favor: the sale fell through. 71 Donald J. Weidner

Rick v. West (cont’d) 1959 – unable to sell more than a few lots, Rick sells the remaining lots to Π. 1961 – Π contracts to sell 15 acres from the tract to hospital. Ms. West again refuses to release covenants. Π sues Ms. West, declaring the covenants to be unenforceable because of a change of conditions. Ms. West wins: – No evidence of substantial change within the neighborhood. – No change at all within the Π’s tract. Response: the absence of change is the problem. – The subdivision project was a failure and never did sell out. 72 Donald J. Weidner

Rick v. West (cont’d) Cardozo: “Restrictive covenants in respect of land will be enforced by preventative remedies while the violation is still in prospect, unless the attitude of the owner in standing on his covenant is unconscionable or oppressive.” –Is the test satisfied in Rick v. West? Is it a subjective test or an objective test? Further: “Relief [enforcement] is not withheld because the money damage is unsubstantial or even none at all .” 73 Donald J. Weidner

Rick v. West (cont’d) Balancing is rejected by the Rick v. West court: –“It is not a question of balancing equities or equating the advantages of a hospital with the effect it would have on defendant’s property” Compare nuisance law Just as it was by Cardozo: –“[N]o process of balancing the equities can make the plaintiff’s the greater or ever place the two in equipoise.” Court says there is no statutory basis for awarding pecuniary damages when the restriction is not outmoded. 74 Donald J. Weidner

Rick v. West (cont’d) Four Possible Outcomes: 1. Enjoin the Hospital. – Give the Holdout the entitlement. 2. Enjoin the Hospital only if Holdout pays damages to the Hospital (“reverse damages”) – – Give the Holdout the entitlement but make it pay for the damages it causes. See Spur Industries 3. Deny the injunction (permit the breach to continue) – Give the Hospital the entitlement 4. Deny the injunction (permit the breach to continue) only if the Hospital pays damages to the Holdout. – – Give the Hospital the entitlement but make it pay damages. That is, protect the Holdout with a damage remedy. 75 Donald J. Weidner