Case Name: SUN OIL COMPANY v. TRENT AUTO WASH, INC.
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1967-06-06
Citations: 379 Mich. 182
Docket Number: Calendar No. 10, Docket No. 51,441
Parties: SUN OIL COMPANY v. TRENT AUTO WASH, INC.
Judges: Kelly, Black, and T. M. Kavanagh, JJ., concurred with Adams, J.
Reporter: Michigan Reports
Volume: 379
Pages: 182–196

Head Matter:
SUN OIL COMPANY v. TRENT AUTO WASH, INC.
Opinion of the Court.
1. Covenants — Equity—Real Property — Restrictions—Enforcement.
Enforcement of a restrictive covenant on the use of land does not depend upon whether the covenant runs with the land, for if an equity is attached to the property by the owner, no one purchasing with notice of that equity can stand in a different situation than the party from whom he purchased.
2. Same — Equitable Servitude — Intention of the Parties.
The sole test for the running of the burden of an equitable servitude on land is the intention of the parties to impose a servitude upon 'the land as distinguished from a personal promise of the present owner.
3. Same — Equitable Servitude — Intention of the Parties.
Whether a restriction on the use of land was intended by the parties to bind their successors must rest upon an inference drawn from the circumstances under which the promise was made in eases where the promise does not by its terms purport to bind successors.
References for Points in Headnotes
[1, 6, 7,12] 20 Am Jur 2d, Covenants, Conditions and Restrictions § 288 et seq.
[2, 3, 4] 20 Am Jur 2d, Covenants, Conditions and Restrictions § 165 et seq. . ,
[5, 6,12] 20 Am Jur 2d, Covenants, Conditions and Restrictions § 207.
[8,10, 11,15,16] 20 Am Jur 2d, Conditions and Restrie- ' tions' § 182. ,, ,
20 Am Jur 2d)'Costs § 87 et seq.
20 Am Jur 2d, Covenants, Conditions and Restrictions § 207 et seq.
20 Am Jur 2d, Covenants, Conditions and Restrictions § 29 et seq.
4. Same — Equitable Servitude — Words of Creation.
Special words such as “and assigns” are not necessary in a deed which creates an equitable servitude on land, since the doetrine of equitable servitude rests upon the theory of a servitude imposed upon the land, which becomes enforceable against all subsequent purchasers of the land charged with notice, aetual or constructive.
5. Same — Equitable Servitude — Intention of the Parties.
Agreement between grantor and grantee, expressed in a deed, that property owned by the grantor lying north of and adjoining the property conveyed in the deed should not be used for, or in connection with, the operation of a gasoline service station or filling station, contained nothing personal to the grantor and clearly referred to the land.
6. Same — Equitable Servitude — Enforcement.
Agreement by grantor in deed that property adjoining granted land should not be used for or in connection with the operation of a gasoline service station or filling station • was not so ambiguous as to be incapable of enforcement against those who took with notice of it; the time during which the agreement is to be enforced not being expressed, a reasonable time for enforcement may be determined by a court in terms of the presumed intent of the parties.
7. Same — Equitable Servitude — Covenant Running With the Land.
Determination that a covenant contained in a deed runs with the land is unnecessary to dispose of a case in which the covenant is enforceable as an equitable servitude on the land against one who took with notiee of it.
8. Same — Criminal Law.
Covenant in a deed to an oil company grantee, by which grantor agreed that adjacent lands owned by the grantor would not be used for or in connection with the operation óf a gasoline service station or filling station, was not violative of a statute making it a criminal offense to make an agreement the objeet or intent of which is to prevent or restrict free competition in the production or sale of any article or commodity (CL 1948, § 750.151).
9. Costs — Remand—Equitable Servitude.
Costs are ordered to abide the final result, where action to restrain defendant from violating alleged covenant with respect to use of property is remanded for purpose of hearing required in applying an equitable servitude.
Dissenting Opinion.
Dethmers, C. J., and Souris and O’Hara, JJ.
10. Covenants — Restrictions—Construction.
Covenants restricting the use of land and preventing its free and unrestricted enjoyment are not favored, and will be strictly construed against the restriction.
11. Same — -Ambiguity.
Uncertainties in an ambiguously worded covenant are resolved in favor of the free use. of property.
IS. Same — Restrictions—Gasoline Sales.
Covenant restricting property to prohibit sale and storage of gasoline and petroleum products on land retained by grantor when she sold 2 of 6 lots to plaintiff grantee held, personal to the grantor not to run with the land.
13.'‘Sáme — Restriction—Notice—Covenant Running With the Land.
Notice to later purchaser of property from a common grantor of restrictive covenant as to use of such property, which had been imposed in favor of previous purchaser of adjoining land from the common grantor and contained in such earlier deed, did not, in suit to enforce such restriction by injunction against its violation, convert the restrictive covenant from one personal to the grantor to a covenant running with the land.
14. Same — Common Grantor — Restriction — Covenant Running With the Land.
Whether grantee’s intended use of premises, retained by common ■ grantor when latter had previously sold adjoining lots to plaintiff with a restriction upon' land then retained by the grantor that it not be used for sale or storage of gasoline and petroleum products was violative of such restriction is not determined where the restrictive covenant is determined not to run with the land.
15. Monopolies — -Restraint of Trade — Rule of Reason.
Restraint of trade is prohibited only when it is unreasonable.
16. Same — Restraint of Trade — Restrictive Covenant — Gasoline Sales.
Restrictive covenant reserved by common grantor on defendant’s .4 lots, 'adjacent to plaintiff’s 2 lots used in connection with . • gasoline station, which prohibited storage and sale of gasoline and •petroleum products on defendant’s premises held, not an unreasonable restraint on trade.
Appeal from Court of Appeals, Division 2; T. G. Kavanagh, P.J., Holbrook and McGregor, JJ., affirming Macomb, Noe (Alton H), J.
Submitted November 10, 1966.
(Calendar No. 10, Docket No. 51,441.)
Decided June 6, 1967.
2 Mich App 389, reversed.
Sun Oil Company, a New Jersey corporation, presented a complaint for injunction against Trent Auto Wash, Inc., a Michigan corporation, to restrain defendant from erecting gasoline storage and dispensing equipment in derogation of an alleged restrictive covenant on defendant’s property. Judgment for plaintiff. Judgment affirmed by Court of Appeals. Defendant appeals.
Reversed and remanded for further hearing.
Robert E. Childs, for plaintiff..
Anthony A. Vermeulen, for defendant.

Opinion:
Adams, J.
On September 28,1962, Clara Williams gave a warranty deed to Sun Oil Company by which she conveyed to that company two lots. Contained in her deed is the following agreement:
"Grantor agrees that property now owned-by grantor lying north of and adjacent to' the" within described premises shall not be used for or in connection with the operation of a gasoline service station or filling station for the sale of gasoline, motor fuel, petroleum products, automotive accessories or automotive services generally." (Emphasis added.)
On February 1, 1964, Clara Williams executed a land contract to defendant, Trent Auto Wash, Inc. It is admitted that the land contract covered 'that property now owned by grantor lying north of and adjacent to" the lots Clara Williams conveyed to Sun Oil Company. The defendant also "admits that it had knowledge of the alleged covenant; that plaintiff's agents informed it that plaintiff would attempt to enforce said covenant, and that defendant intends to construct underground storage tanks and above ground pumps," et cetera.
It is unnecessary to determine whether the above agreement is a covenant running with the land to afford plaintiff the relief it seeks. The agreement relates to the property purchased by Trent Auto Wash and it is equally clear that it was intended for the benefit of the adjacent property of Sun Oil Company. The agreement does not relate to any activities on the part of Clara Williams, but, rather, contemplates a restriction upon the use of property retained by her. Whatever she could not do, chancery may also enjoin those in privity with her and with notice of the restriction from doing.
The principle is stated by the Lord Chancellor in the case of Tulk v. Moxhay (1848), 2 Ph 774 (41 Eng Rep 1143), affirming 11 Beav 571 (50 Eng Rep 937):
"The question does not depend upon whether the covenant runs with the land if there was a mere agreement and no covenant, this court would enforce it against the party purchasing with notice of it; for if an equity is attached to the property by the owner, no one purchasing with notice of that equity can stand in a different situation from the party from whom he purchased."
The principle of Tulk has been widely recognized and followed in numerous cases. In the case of Langenback v. Mays (1950), 207 Ga 156 (60 SE2d 240), the defendants sold to plaintiffs a small tract of land on which several tourist cabins were located, and orally agreed not to nse their remaining land for a tourist camp. The defendants constructed a tourist camp in violation of their contract and, when enjoined from operating it, executed an instrument purporting to he a lease to their daughter for the tourist camp. The daughter operated the business with actual knowledge of the injunction granted against her parents. The supreme court of Georgia's opinion states:
"Equity will enforce a lawful restrictive agreement concerning land against a person who takes with notice of the contract. In such a case, the person violating the agreement, though not a party to it, is a privy in conscience with the maker. 31 Yale Law Jour 127, 131; Francisco v. Smith, 143 NY 488 (38 NE 980); Rosen v. Wolff, 152 Ga 578 (110 SE 877)."
In the case of Thodos v. Shirk (1956), 248 Iowa 172 (79 NW2d 733), plaintiff, owner of certain lots in a subdivision, brought an action in equity asking that defendants be enjoined from using their property as a trailer court in violation of the restrictive covenant in their deed which provided: "No building shall be placed or erected on said premises except for residence purposes." The court in discussing the doctrine of equitable servitudes said (p 179):
"Since the doctrine of equitable servitudes rests upon the theory of a servitude imposed upon the land, enforceable against all subsequent purchasers of the land who are charged with notice actual or constructive, the requirement of the special words such as 'and assigns' is unnecessary in the deed. The sole test for the running of the burden in equity is the intention of the parties to impose a servitude upon the land as distinguished from a personal promise of the present owner."
In Hodge v. Sloan (1887), 107 NY 244 (17 NE 335), a grantee bound bimself by a covenant in his deed to limit the use of land purchased so as not to interfere with the trade or business of the grantor and the property was subsequently sold to defendant without covenant on his part but with notice of the covenant in the deed to his grantor. The court said (p 250):
"There seems no reason why he and his grantee, taking title with notice of the restriction, should not be equally bound. The contract was good between the original parties, and it should in equity at least bind whoever takes title with notice of such covenant. By reason of it the vendor received less for his land, and the plain and expressed intention of the parties would be defeated if the covenant could not be enforced as well against a purchaser with notice, as against the original covenantor. In order to uphold the liability of the successor in title, it is not necessary that the covenant should be one technically attaching to and concerning the land and so running with the title. It is enough that a purchaser has notice of it."
In the case of Coomes v. Aero Theatre and Shopping Center, Inc. (1955), 207 Md 432 (114 A2d 631), the complainant and his grantee intended that land should be restricted to uses not in conflict with the use of complainant's remaining land. The restrictive covenant read:
"Subject also the further restriction that the grantees or their tenants therein will not engage "in any business which shall compete with or be of a similar nature of those businesses conducted and maintained on the property known as the Aero Theatre and Shopping Center, Inc."
Defendants, who took from plaintiff's grantee, had notice of the restriction at time of conveyance. The restriction was held binding on them. The court, said (p 437):
"We reaffirm the doctrine [the doctrine of Tulk] that if the owner of land enters into a covenant, concerning its use, subjecting it to an easement- or personal servitude, and the land is afterwards conveyed to one who has notice of the covenant, the grantee will take the land bound by the covenant and will be compelled in equity to specifically execute it or will be restrained from violating it; and it makes no difference, with respect to this liability in equity, whether or not the covenant is one which runs with the land. Thruston v. Minke, 32 Md 487, 494; Halle v. Newbold, 69 Md 265, 270 (14 A 662); Newbold v. Peabody Heights Co., 70 Md 493 (17 A 372, 3 LRA 579); Peabody Heights Co. of Baltimore City v. Willson, 82 Md 186 (32 A 386, 1077, 36 LRA 393); Clem v. Valentine, 155 Md 19 (141 A 710); Turner v. Brocato, 206 Md 336 (111 A 2d 855); 2 Pomeroy, Equity Jurisprudence (5th ed), § 689.
"'While most courts have accepted the theory that restrictive agreements should be enforced as an easement or servitude, Mr. Tiffany took the view that the more satisfactory theory is that equity regards such an agreement as vesting in the promisee a right to specific enforcement by means of an injunction or otherwise, not only as against the original promisor, but also as against a subsequent holder of the property, if not a purchaser for value without notice. He argued that if the right to equitable relief could not thus be asserted as against a subsequent holder of the property, the result would be that the promisee could be deprived of such right, in practically every case, by a collusive transfer on the part of the. promisor. 3 Tiffany,' Re.al Property (3d Ed), § 861.
' "It is understood, however, that it is not necessary that the expression of intention shall take any particular form. Of course, if the promise purports to bind successors by the use of such words as 'sue cessors' or 'assigns', little question can arise as to the existence of the necessary intention. But as the language employed becomes less plain and precise, the conclusion that the successors were intended to be bound must rest in a correspondingly greater degree upon an inference drawn from the circumstances under which the promise was made. The circumstances of a particular transaction may yield such an inference without the aid of any specific language in the terms of the promise."
For further annotated statements of the equitable doctrine, see Pomeroy's Equity Jurisprudence (5th ed), § 689 and 1295; Tiffany, Real Property (3d ed), § 859; Thompson on Real Property (1962 Replacement), § 3170; 20 Am Jur 2d, Covenants, Conditions, and Restrictions, § 26; 23 ALR2d p 520 et seq.
The agreement between Clara Williams and Sun Oil Company is not so ambiguous as to be incapable of enforcement against those who have taken with notice of it. The commitment is that "that property shall not be used for or in connection with the operation of a gasoline service station." There is nothing personal as to Mrs. Williams in this language. It clearly refers to the land. While the time of the commitment is not expressed, this is no insuperable obstacle. Courts are quite accustomed to making determinations of what is a reasonable time in terms of the presumed intent of the parties. Finally, if the agreement is not enforced by equity, it becomes completely vitiated. Obviously, plaintiff has no adequate remedy at law. If equity cannot grant relief, a covenantor need only convey the land to destroy today the covenant he made yesterday — or, as in Mrs. Williams' case, the covenant made by her a short 16 months before her conveyance to defendant,
Both the trial judge and the Court of Appeals-disposed of this matter by holding that the covenant or agreement of the parties ran with the land, a. determination I do not regard, as necessary for disposition of this case. The chancellor also recog-; nized the equitable doctrine as being applicable if the covenant did not run with the land. I would remand to him for such hearing as may be required to apply that doctrine. Determination of possible-.questions such as a change in circumstances relating to the lands in question may be necessary. Other aspects of the transaction not presently before may bear upon the equities of the parties. This is a traditional equity action which does not lend itself to summary disposition. Upon the conclusion of a full hearing, the chancellor will be in a position to shape a proper decree.
I agree that the covenant does not violate CL 1948, § 750.151 (Stat Ann 1962 Rev § 28.348).
I would remand, with costs to abide final result.
Kelly, Black, and T. M. Kavanagh, JJ., concurred with Adams, J.