Opinion ID: 1828112
Heading Depth: 1
Heading Rank: 2

Heading: title and restrictive covenants

Text: The taxpayers have specified that the court erred in finding that the title of Grand Forks County to the property upon which it is intended to locate the new county shop building cannot be challenged by the taxpayers through this injunctive action for the purpose of showing abuse of discretion; that the trial court erred in finding that restrictive covenants contained in the documents relating to the property prior to the year 1932 were terminated; and that the trial court erred in finding that the use of the property, or a portion thereof, for a county shop building is for a community purpose and is not violative of a restrictive covenant. The commissioners have selected a site for the new county shop building upon a portion of the land which is commonly referred to as the fairground property. Pursuant to entries contained in the abstract of title in evidence it appears that this land was acquired by the Grand Forks Agricultural Society of Grand Forks, North Dakota, through various conveyances from 1903 to 1905. On June 16, 1905, the Grand Forks County Agricultural Society conveyed the land to the North Dakota State Fair Association for Grand Forks. This conveyance was in harmony with a 1905 legislative Act (Ch. 46, S.L.1905) establishing state fairs and locating them at Grand Forks and Fargo, North Dakota. This Act provided that if an organization designated as the North Dakota State Fair Association for Grand Forks shall be organized as a corporation, with paid up capital stock of not less than $20,000, such association shall become entitled to receive certain state appropriations upon conditions set forth in the Act. The Act authorized the North Dakota State Fair Association for Grand Forks to convey title to the land which it might acquire unto the state of North Dakota for the purpose of holding a fair or exhibition, as described therein, biennially during each odd-numbered year. The North Dakota State Fair Association for Grand Forks was formed and obtained title to the land in question and conveyed it to the state of North Dakota on June 16, 1905. The habendum clause of the deed contains a reverter authorized by the Act, which states: Provided however, that should the State of North Dakota cease to appropriate the sum of at least $5,000 in each odd numbered year to be awarded as premiums in consideration of said fairs to be held by the said North Dakota Fair Association for Grand Forks, then the title of said premises shall revert to the North Dakota State Fair Association for Grand Forks. The abstract also indicates that in 1936 the North Dakota State Fair Association for Grand Forks, by a resolution adopted  by the stockholders, changed the clause of reversion to provide as follows: Provided however that should the State of North Dakota cease to appropriate the sum of at least $5,000.00 in each odd numbered year to be awarded as premiums in connection with said Fairs to be held by said North Dakota State Fair Association for Grand Forks, then the title of said premises shall revert to and become the property of County of Grand Forks, North Dakota to be used forever for the purpose of holding Fairs and Exhibitions under the management of the Grand Forks Fair Association and for no other purpose. According to a certificate in evidence from the secretary of state, the state legislature made its last appropriation for the purposes described above in 1931 for use in the years 1931 and 1932. In 1967, by Chapter 401, the state legislature directed the transfer of the land to the county of Grand Forks. Pursuant to this Act, on October 31, 1967, the governor and the secretary of state executed and delivered a quitclaim deed to the property to the county of Grand Forks. On December 3, 1968, an agreement in writing was entered into between the Grand Forks State and County Fair Association (a new, nonprofit fair corporation) and the county of Grand Forks. According to this agreement a large amount of real estate taxes and special assessments had accrued against the fairground property and the parties desire to re-establish the ownership, and management and control of such real property in order to assure the continuation of local fairs and also to provide facilities for sports, musical and other community activities and also to dispose of a part of such property for business use and thus obtain proper tax revenues therefrom   . The agreement further provides that the Grand Forks State and County Fair Association will obtain a deed to a portion of the property and that the county of Grand Forks will obtain a deed to another portion of the property; that Grand Forks State and County Fair Association will sell the property to which it obtained the deed and the net proceeds after the payment of all expenses, taxes, costs of platting and perfection of title will be deposited and used for fair purposes under the joint supervision and direction of both parties to the agreement; that the property obtained by the county of Grand Forks is to be held in trust for the benefit of the first party [Grand Forks State and County Fair Association] and to be used for fair purposes, community activities and other uses which would be in the public's interest, education, recreation and welfare   . The County also agreed to bring an action to quiet the title to this property. Subsequently each of the parties obtained a deed from the North Dakota State Fair Association for Grand Forks (the old corporation), which deeds recite that they were signed by the surviving directors and trustees of the corporation. The deed to Grand Forks County contains a limitation or restriction that the property is conveyed for the use and benefit of the public for fair and community purposes. Thus the county of Grand Forks obtained a quitclaim deed from the state of North Dakota for all of the fairground property and a quitclaim deed from the old fair corporation for that portion it was to receive under the agreement entered into with the Grand Forks State and County Fair Association (the new corporation). It appears that subsequently the Grand Forks State and County Fair Association quieted title to that portion of the property it was to receive under the agreement, sold various parcels thereof, and paid the taxes and special assessments upon all of the property. The fairground property was platted in 1969 as Fairgrounds Subdivision at Grand Forks. In this platting it was divided into five blocks. The property claimed by Grand Forks County consists of 60.25 acres, more or less, and is designated as Block  4. The remaining property, claimed by the Grand Forks State and County Fair Association, consists of Blocks 1, 2 and 3, which contain 6.92 acres, more or less, and Block 5 which contains 0.61 acres, more or less. The platting was authorized by Grand Forks State and County Fair Association and although it was not joined in by the county of Grand Forks the record does not disclose any objection to the platting. Although the record is not entirely clear it appears that that portion of Block 4 intended for use by the County for county highway shop purposes, including the yard area, consists of about twenty per cent of Block 4 and is located in the northwest corner. The record does not show whether a fair has been held on this property in recent years. According to the agreement entered into on December 3, 1968, between Grand Forks State and County Fair Association and the county of Grand Forks, a fair was not conducted upon the land in the years 1966, 1967 and 1968. Whether a fair has been conducted or operated upon this land since then we do not know. The agreement provides, in part:    should such property cease to be used for fair purposes, or for education, recreation and welfare of the public then the title shall escheat or revert and become the absolute property of the second party [Grand Forks County] and treated and considered as property of the taxpayers of the County of Grand Forks. It is clear from the record that the original fair corporation (the North Dakota State Fair Association for Grand Forks) is defunct, having ceased to exist in the year 1945. In view of these facts it appears probable that the restrictive covenants have terminated. While there is some authority that where the duration of a restrictive covenant is not specified, the restrictions are presumed to continue for the whole duration of the estate created, the rule followed generally is that the restrictive covenant will be limited to such time as seems reasonable from the nature of the case. Accordingly, the restrictions will not be construed as extending for a longer period of time than the nature of the circumstances and the purpose of their imposition would indicate as reasonable for the duration of their enforcement without undue and inequitable prejudice to the property rights purchased and acquired by the original grantee and his successors in title, subject to the restrictive covenants. Consistent with the general principle of strict construction of restrictive covenants, where there is substantial and reasonable doubt whether the restriction is perpetual or is of limited duration, the doubt will be construed against the one claiming perpetual restriction. 20 Am.Jur.2d, Covenants, Conditions, Etc., Section 180. It further appears from the record that the commissioners obtained an oral opinion from the state's attorney that the County had free and clear title to Block 4. The commissioners have also purchased title insurance for the property which is subject only to standard exceptions and the limitation and restriction cited above in the deed from the surviving directors of the old fair corporation to the County. The taxpayers do not contend that this is an appropriate proceeding in which to determine or to clear title. Their contention is that the trial court erred in finding that the commissioners did not abuse their discretion in locating the new county shop building upon Block 4 of the fairground property in view of the confused status of the title to the property and the restrictive covenants. They argue that from the record it is abundantly clear that little or no consideration was given to the status of the title to the fairground site, which shows a lack of reasonable business judgment on the part of the commissioners and that this is particularly true in view of the letter from the taxpayers' attorney, dated September 15, 1971, in which he raises these questions  of title. For these reasons they argue that the commissioners are guilty of a flagrant abuse of discretion in proposing to construct the new county shop building upon this land at a great cost to the taxpayers of Grand Forks County. The trial court, after having reviewed the matter, stated that it was of the opinion that the position taken by the commissioners was correct in that the taxpayers in this injunctive proceeding were not in a position to challenge the title and that the commissioners have not abused their discretion by selecting the site upon Block 4 of Fairgrounds Subdivision for the construction of the new county shop building. We conclude that the commissioners have acted in good faith and that the taxpayers have not shown that the title to the land is deficient to the extent that the County will suffer a loss. It will, therefore, be presumed that the commissioners are in a position to clear the alleged clouds to the title in an appropriate quiet title action. Section 11-11-16, N.D.C.C., quoted earlier in this opinion, gives the commissioners the power to acquire sites for county buildings. As long as the commissioners exercise this discretion in good faith, the courts will not interfere. McCann v. Carlson, 26 N.D. 191, 144 N.W. 92 (1913).