No. 80-08 

IN THE SURPEME COURT OF THE STATE OF MONTANA 

1980 

DAVID REICHERT and IRENE L. REICHERT, 

Plaintiffs and Appellants, 

-vsWILLIAM WEEDEN, MARINETTE WEEDEN, JAMES HERTZ, 

CONSTANCE HERTZ, PAUL STRAW, et al., 

Defendants and Respondents. 

Appeal from: District Court of the ThirteenthJudiciaB District, 

In and for the County of Yellowstone, The Honorable 

Robert H. Wilson, Judge presidinq. 

Counsel of Record: 

For Appellant: 

Berger, Anderson, Sinclair & Murphy, Billings, Montana 

Donald Molloy argued, Billings, Montana 

For Respondent : 

Crowley, Haughey, Hanson, Toole & Dietrich, 

Billings, Montana 

Jack Ramirez argued, Billings, Montana 

Submitted: September 12, 1980 

$'$"/ j - 'I! Filed: d %: 3 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

This is an appeal from the District Court of the 

Thirteenth Judicial District which upheld the validity of a 

document entitled "Agreement and Land Use Restrictions" and 

granted summary judgment allowing the agreement to be 

enforced by the defendants against the plaintiffs. 

We will address the following issues on this appeal: 

1. Whether a valid and enforceable covenant running 

with the land can be created by written agreement and in the 

absence of a formal "grant" of an estate in land, and 

whether the covenants contained in the written agreement 

between the parties were intended to and do run with the 

land, so that plaintiffs and any subsequent purchasers or 

assignees are obligated to perform those covenants. 

2. Whether the written agreement between the parties 

purporting to be restrictions on land use violates a statute 

which prohibits a contract in restraint of trade. 

Plaintiffs, the Reicherts, own property in Yellowstone 

County upon which they operate a restaurant and bar known as 

the Echo Inn. Plaintiffs acquired this property in 1970 by 

a warranty deed. Defendants are various resident landowners 

in the vicinity of the Echo Inn, although none of them own 

land immediately adjacent thereto. 

In 1969 plaintiffs applied for a liquor license for the 

premises, which was conditionally approved. Defendants 

filed a complaint with the Montana Liquor Control Board in 

1970 protesting the approval of plaintiffs' application. 

The Board denied their request for relief. Defendants then 

appealed to the District Court, and during the pendency of 

the action, the liquor license application was stayed. 
Defendants and other area landowners proceeded 

simultaneously on a second front by filing a petition with 

the Yellowstone County Commissioners for the creation of a 

county planning and zoning district. Such a district was 

created on August 25, 1970, and thereby prohibited use of 

any property within the district--including the Echo 

Inn--for any use other than single family residential. 

Plaintiffs appealed the resolution of the County 

Commissioners creating the zoning district to the District 

Court. 

In settlement of these controversies, the parties 

entered into an agreement on December 28, 1970, pursuant to 

which defendants consented to judgment in the pending 

District Court actions and agreed not to challenge the use 

of the property as a restaurant and bar for a period of ten 

years. This agreement was recorded and provides that the 

plaintiffs' property shall not be used for the sale of beer 

or liquor after January 1, 1981, and that the covenants 

"shall run with the land and bind thejresent owners and 

their heirs and assigns." (Emphasis supplied.) Plaintiffs 

brought this action in 1979 to have the agreement declared 

void and not enforceable. 

The pertinent section of the agreement states: 

"IT IS FURTHER AGREED, that the covenants, 

promises, ....................... and restrictions set forth in this 

- agreement shall run with the land and bind the - present owners, their heirs ----- and assigns; and any 

and allparties claiming - by, through, or under 

them, shall - be taken to agree and covenant with 

each of the parties to this aqreement, his heirs 

and assiqns, to conform to the covenants. 

promises, -and restrictions as to the use of the 

above described real property and the improvements 

thereon. Each of the parties to this agreement, 

his heirs and assigns, shall have the right to sue 

for and obtain an injunction, prohibitive or 

mandatory, to prevent the breach of, or to enforce 
the observance of, the covenants, promises, and 

restrictions set forth above, in addition to the 

ordinary legal action for damages; and the failure 

of any of the parties, his heirs and assigns, to 

enforce this agreement at the time of any 

violation thereof shall not be construed as a 

waiver of the right to do so. The restrictions 

contained herein concerning the use of the above 

described real property and the improvements 

thereon cannot be changed without the unanimous 

written consent of all of the parties to this 

agreement, their heirs and assigns, said consent 

to be duly acknowledged and recorded in the office 

of the Clerk and Recorder of Yellowstone County, 

Montana. The term 'heirs and assigns' as used in 

this agreement shall include the devisees and 

trustees of the parties." (Emphasis added.) 

The agreement's purpose and scope is clear. The 

document's lengthy and detailed nature precludes any 

challenge as to its meaning or the intent of the parties. 

The "Agreement and Land Use Restrictions" voluntarily 

entered into almost ten years ago by the parties, each with 

the advice of counsel, is valid and binding on each of the 

parties and to their successors in interest. The agreement 

was expressly intended to constitute a covenant running with 

the land and to bind the present owners, their heirs and 

assigns. Having been filed as a matter of record in 

Yellowstone County, that agreement is, in fact, a covenant 

running with the plaintiffs' property and created a negative 

easement in favor of defendants. 

The present dispute arises when plaintiffs, owners of 

the servient tenement, contends that a "grant" of an estate 

is a statutory requirement for the creation of a covenant 

running with the land, and since defendants did not grant an 

interest of the land to plaintiffs, the agreement is not 

enforceable. Section 70-17-201, MCA, states: 

"Certain covenants contained in grants of estates 

in real property are appurtenant to such estates 

and pass with them so as to bind the assigns of 

the covenantor and to vest in the assigns of the 
covenantee in the same manner as if they had 

personally entered into them. Such covenants are 

said to run with the land." 

Section 70-17-203(1), MCA, states: 

"Every covenant contained in a grant of an estate 

in real property, which is made for the direct 

benefit of the property or some part of it then in 

existence, runs with the land." 

Plaintiffs insist that no covenant runs with the land 

and will not be binding unless certain words are contained 

in the document. Since those words are not found in this 

document, they maintain that no grant of an estate in real 

property took place, and the covenants do not run with the 

land. We disagree. 

Plaintiffs were aware of their actions, and their 

intent was clear. Not only did they grant away a present 

interest, but also a future interest that will bind their 

heirs and assigns. This interest in the land is the right 

to sell liquor or operate a bar on the land after a 

particular date. Plaintiffs took away from the land that 

interest and conveyed it to defendants by means of a 

written, recorded agreement. They gave away an interest in 

the land by creating a negative easement binding not only 

themselves, but their heirs and assigns. 

Montana recognizes negative easements. Northwestern 

Improvement Co. v. Lowry (1937), 104 Mont. 289, 66 P.2d 792. 

A negative easement created by an agreement, a deed or a 

lease is enforceable against grantees or purchasers of the 

servient tenement. Easements may be created by a contract 

or covenant; such agreements are grants in effect. Montana 

statutes allow for the creation of covenants and easements 

governing the right to transact business on land. Section 

70-17-101(6), MCA. 
Plaintiffs' present claims that the magical words 

"grant or convey" were not used, cannot now be used by them 

to set aside that which the parties intended and later 

entered into. 

"The term 'conveyance' as used [here] . . . embraces every instrument in writing by which any 

estate or interest in real property is created, 

aliened, mortgaged, or encumbered or by which the 

title to real property may be affected . . ." 

Section 70-21-301, MCA. 

This definition of a conveyance of real property is 

sufficiently comprehensive to include the written agreement 

that placed a covenant on the real property which is the 

basis of the present controversy. Kosel v. Stone (1965), 

146 Mont. 218, 404 P.2d 894. A negative easement can be 

created by a grant or agreement, the agreement being 

construed as a grant, and is binding upon purchasers of the 

servient tenement who have actual or constructive notice of 

it. 

In an earlier Montana case, Orchard Homes Ditch Co. v. 

Snavely (1945), 117 Mont. 484, 489, 159 P.2d 521, 523, in 

comparing the similarities of present California law with 

Montana law, this Court quoted favorably from a treatise 

interpreting the California law. 

". . .although the Code of California provides 

that a covenant can not be made to run with the 

land except where such covenant is made in 

connection with and as a part of the conveyance or 

transfer of the land itself, an express agreement 

that such a covenant shall run with and -- bind the 

land is effectual. . ." (Emphasis added.) 

Thus, a negative easement may be created by an 

agreement executed by an owner of the servient tenement, 

just as it may be created through a conveyance or a lease. 

The easement is attached to the land and binds all 

subsequent purchasers who have constructive notice of the 
easement. The written agreement creating the negative 

easement is recorded; all subsequent purchasers have 

constructive notice thereof, and the easement may be 

enforced against them. See Northwestern Improvement Co. v. 

Lowry, supra. 

Finally, plaintiffs contend the "Agreement and Land Use 

Restrictions" at issue restrains plaintiffs from exercising 

a lawful profession and, as such, is void as a violation of 

section 28-2-703, MCA: 

"Any contract by which anyone is restrained from 

exercising a lawful profession, trade, or business 

of any kind, otherwise than is provided for by 

section 28-2-704 or 28-2-705, is to that extent 

void. " 

We do not find any credence in this argument. The 

agreement created a negative easement on a particular piece 

of property. The restrictive covenants run with the land 

and not with plaintiffs. The restrictive covenants' purpose 

is not designed to prevent competition. Their purpose is to 

insure that the area remains as single family residential. 

A recognized restraint of the right to do business does 

exist with the proper creation of a negative easement. 

Northwestern Improvement Co. v. Lowry, supra. The agreement 

is not merely a personal contract between the parties, but 

creates a property interest which is not within the scope of 

the statute. Plaintiffs are not restricted from conducting 

a lawful profession. On the contrary, its purpose is to 

limit a particular conduct on a particular piece of land. 

The agreement between the par ties does not restrict 

plaintiffs' ability to conduct any trade or business and 

does not purport to prevent plaintiffs from engaging in the 

business of selling alcoholic beverages. If plaintiffs wish 
to transfer their license to another location, or apply for 

a new license for another location, they are free to do so. 

The agreement between the parties only states that 

plaintiffs may not use their piece of property in Echo 

Canyon for the operation of a liquor business. 

Affirmed. 

We concur: w 

Chief Justice f-', 

/ Justices 

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