Opinion ID: 1665414
Heading Depth: 2
Heading Rank: 1

Heading: Early Cases Involving Implied Restrictive Covenants

Text: We begin by discussing Sanborn v. McLean, 233 Mich. 227, 206 N.W. 496 (1925), which, although not an Alabama case, is credited by some commentators as the original case finding an implied restrictive covenant in a subdivision setting. In Sanborn, a developer sold some lots in a subdivision and included in the deeds the restriction that the lots could be used for only residential purposes. At the time of those conveyances, the developer retained certain other lots in the same subdivision. The developer later sold the retained lots, but the deeds to those lots did not include the restrictive language. Many years later, John McLean and his wife, Christine, purchasers of one of the unrestricted lots, attempted to build a gasoline service station on their lot. The Michigan Supreme Court concluded that the original developer intended to apply the same restrictive covenants to all the lots in the subdivision, including those retained by him and later conveyed by deed that did not include the restrictive language. The Court held that the implied restrictive covenant attached as an equitable burden on each of the lots retained by the developer, whether included as a restriction in the deed or not, and passed to each of the purchasers of those lots as an enforceable servitude. The plaintiffs in Sanborn v. McLean obtained an injunction to prevent the defendants from constructing a gasoline service station on a lot in the subdivision, even though the chain of title to the defendants' lot never expressly referenced or contained the residential restriction. The Sanborn Court stated: This subdivision was planned strictly for residence purposes, except lots fronting Woodward [A]venue and Hamilton [B]oulevard. The 91 lots on Collingwood [A]venue were platted in 1891, designed for and each one sold solely for residence purposes, and residences have been erected upon all of the lots. Is defendants' lot subject to a reciprocal negative easement? 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. For want of a better descriptive term this is styled a reciprocal negative easement. It runs with the land sold by virtue of express fastening and abides with the land retained until loosened by expiration of its period of service or by events working its destruction. It is not personal to owners, but operative upon use of the land by any owner having actual or constructive notice thereof. It is an easement passing its benefits and carrying its obligations to all purchasers of land, subject to its affirmative or negative mandates. It originates for mutual benefit and exists with vigor sufficient to work its ends. It must start with a common owner. Reciprocal negative easements are never retroactive; the very nature of their origin forbids. They arise, if at all, out of a benefit accorded land retained, by restrictions upon neighboring land sold by a common owner. Such a scheme of restriction must start with a common owner; it cannot arise and fasten upon one lot by reason of other lot owners conforming to a general plan. If a reciprocal negative easement attached to defendants' lot, it was fastened thereto while in the hands of the common owner of it and neighboring lots by way of sale of other lots with restrictions beneficial at that time to it. This leads to inquiry as to what lots, if any, were sold with restrictions by the common owner before the sale of defendants' lot. 233 Mich. at 229-30, 206 N.W. at 497. The Sanborn Court also concluded that Mr. McLean was charged with notice of the restrictions because of the apparent residential nature of all the buildings in the subdivision: 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. He had an abstract showing the subdivision and that lot 86 had 97 companions. He could not avoid noticing the strictly uniform residence character given the lots by the expensive dwellings thereon, and the least inquiry would have quickly developed the fact that lot 86 was subjected to a reciprocal negative easement, and he could finish his house, and, like the others, enjoy the benefits of the easement. We do not say Mr. McLean should have asked his neighbors about restrictions, but we do say that with the notice he had from a view of the premises on the street, clearly indicating the residences were built and the lots occupied in strict accordance with a general plan, he was put to inquiry, and, had he inquired, he would have found of record the reason for such general conformation, and the benefits thereof serving the owners of lot 86 and the obligations running with such service and available to adjacent lot owners to prevent a departure from the general plan by an owner of lot 86. 233 Mich. at 232-33, 206 N.W. at 498. In 1928, the Alabama Supreme Court addressed the creation and enforceability of an implied restrictive covenant. In Scheuer v. Britt, 218 Ala. 270, 118 So. 658 (1928), the Court stated: Nor is it necessary that the restrictive covenant running with the land should be incorporated in the defendant's deed to take it out of the influence of the statute of frauds; the servitude may be laid on the property by a separate writing, to which he is not a party, if he is in privity with and claiming under one of the parties thereto, and has notice thereof. Here the servitude was laid on the property by the conveyance made by Brown, Duskin & Heilpern to complainant in pursuance of the general scheme of improvement, affecting not only the lots conveyed to complainant, but unsold lots then held by complainant's grantors, including the lots afterwards sold to the defendant. This doctrine is neither strange nor anomalous, as appears from the numerous authorities collected in the note to 21 A.L.R. pages 1300-1326, and finds a striking analogy in the doctrine, often recognized by the court, that where the owner of land lays it off in lots, blocks, and streets, as a subdivision, and the sale of lots is made in reference thereto, and purchases are made on the faith of the act, this operates as a dedication of the street and gives the several lot owners an easement thereon, and this is so without reference to the statute. On the other hand, it would be strange indeed to hold that one may lay off a subdivision for strictly residential purposes, as a general scheme of improvement, and sell and convey to numerous purchasers on the faith thereof, incorporating in their deeds restrictive covenants as to the use in pursuance of such scheme, that the promoters of the general scheme could destroy the scheme, to the detriment of such purchasers, by selling to others without such restrictions, when they had notice of such general scheme. 218 Ala. at 273-74, 118 So. at 662 (opinion on rehearing) (citations omitted). In Virgin v. Garrett, 233 Ala. 34, 169 So. 711 (1936), the Alabama Supreme Court again addressed implied restrictive covenants, affirming the trial court's order enjoining Jennie Virgin, Ira Virgin, and Pan American Petroleum Corporation from erecting a filling station or a storehouse on property adjacent to the complainant's residence. In that case, the deeds to all of the properties in question contained the restrictive language, but the developer had attempted to subsequently record a written release of those restrictions. This Court stated: `One of the most practical tests, supported by common sense and common business experience, is, whether the restriction imposed by the grantor or proprietor upon the granted premises would naturally operate to enhance the value of his adjacent premises, whether retained by him or conveyed to another. If this be so, it is a strong circumstance to indicate that the restriction was not intended for the mere personal benefit of the grantor, but as a permanent servitude beneficial to the owner of the land, whoever he may be, and appendant to the premises. Parker v. Nightingale, 6 Allen [Mass.] 341, 83 Am. Dec. 632. The reported cases are numerous, and almost infinite in their phases of variety, where tracts of land in cities are sub-divided into lots, and sold to separate purchasers, subject to restrictions as to the kind of occupations which may or may not be carried on upon them, and even as to the nature and dimensions of the buildings to be erected on the premises. The inquiry, in these cases, has generally been, whether the servitudes or restrictions imposed were of such a nature as to operate as an inducement to purchasers; and, if so, the inclination of the courts has been to construe them as appurtenant to the estate, and intended for the protection, rather than personal to the grantor. If appurtenant, it of course follows the land, being assignable with it, and each grantee can enforce it in equity against each other grantee having notice of it.' 233 Ala. at 37-38, 169 So. at 713 (quoting McMahon v. Williams, 79 Ala. 288, 291 (1885)). The Court in Virgin v. Garrett also discussed the issue of notice of an implied restrictive covenant: When appellant purchased, she knew of the restriction on her lot in the deed from Cloverdale Homes, as well as in the other deeds, including that to her. But such knowledge is not of itself sufficient to show notice that the restriction when made by Cloverdale Homes was an appurtenance to lot No. 2. But before she purchased, Cloverdale Homes had executed and recorded a release and quitclaim deed reciting that it had sold and conveyed various lots and parcels containing restrictions as to their use and conveyance, and thereby released and quitclaimed to the respective owners of said lots all claims so reserved. This quitclaim deed being on record from one in the chain of appellant's title, in which it is shown that he had reserved an interest, is such as to convey to appellant notice of its contents when she bought lot No. 1, and it appeared upon her abstract of title. It was therefore both constructive and actual notice to her that this grantor had made conveyances of `various lots and parcels of land' with such restrictions. That was a suggestion to her to investigate and see if the deed to lot No. 2 of the same tract had such a restriction. It was executed on a date next after the date of the deed to lot No. 1. That circumstance, and the knowledge that a filling station or storehouse would seriously affect the value of lot No. 2 for a dwelling house, and the presumption which we have quoted from McMahon v. Williams, [79 Ala. 288 (1885)], all serve to suggest further inquiry from the owner of lot No. 2 to ascertain whether the restriction in the deed to lot No. 1 was an inducement to the purchase of lot No. 2. Had such inquiry been made, she would have been so informed. She is chargeable as though she made it, and received the information. A restriction may be a convenant [sic] or only a condition subsequent for the sole benefit of the grantor, but when it is imposed for the benefit of the owner of other property, it creates an easement for him, irrespective of its terms. McMahon v. Williams, supra. We think, therefore, that appellee is entitled to an enforcement of the restriction against her. 233 Ala. at 38, 169 So. at 713. In the 1962 case of Hall v. Gulledge, 274 Ala. 105, 145 So.2d 794 (1962), the Alabama Supreme Court held that when an owner of a tract of land adopted a general scheme for the improvement of the land, subdivided that land into lots, and conveyed those lots with uniform restrictions, those restrictions created equitable easements in favor of the owners of all the lots. Hall v. Gulledge involved an area of Jefferson County known as the Redmont Park subdivision. At the time of the lawsuit, Hall owned lot 27 in Redmont Park and Pettus owned lot 14 in Redmont Park. [17] The chain of title for lot 27 included a deed from Redmont Land Company, the developer of the subdivision, to M.C. Stewart, dated December 1, 1924, and the chain of title for lot 14 included a deed from Redmont Land Company to E.L. Ford, dated January 7, 1926. Both deeds included restrictive covenants stating that the lot would not be used for any business or trade, that the lot would be used for residential purposes only, that only one dwelling would be constructed on each lot, and that all dwellings on the lots would comply with a 25-foot setback from the side property lines. The restrictions also reserved to the grantor, Redmont Land Company, the right to change or modify the restrictions applicable to the lots. In 1950, Redmont Land Company conveyed lots 25 and 26 as a single parcel to Magic City Development. This deed contained the same or similar restrictions to those contained in Hall's and Pettus's deeds. In 1959, Magic City Development conveyed lot 25 to Robbie A. Strickland and conveyed lot 26 to Evelyn Strickland Gulledge. [18] Both lot 25 and lot 26 were adjacent to Hall's lot 27. When Strickland and Gulledge threatened to violate the restrictions, Hall sought a declaratory judgment to enforce the restrictive covenants. The trial court held that the restrictive covenants were unenforceable against Strickland and Gulledge, and Hall appealed. On appeal, the Alabama Supreme Court reversed and remanded. The Court found that the deed given to Magic City Development by Redmont Land Company imposed restrictive covenants on lots 25 and 26, that those restrictions were for the benefit of Hall against Magic City Development and the subsequent purchasers of its lots, and that the subsequent purchasers had actual or constructive notice of the restrictions. Hall, 274 Ala. at 107, 145 So.2d at 795. In reaching this conclusion, the Court recited at length the law applicable to implied restrictive covenants and discussed earlier cases in which that law had been applied: In Scheuer v. Britt, 218 Ala. 270, 118 So. 658 [(1928)], we quoted with approval the following from 4 Thompson on Real Prop., § 3398: `Where the owner of a tract of land adopts a general scheme for its improvement, dividing it into lots, and conveying these with uniform restrictions as to the purposes for which the lands may be used, such restrictions create equitable easements in favor of the owners of the several lots, which may be enforced in equity by any one of such owners. Such restrictions are not for the benefit of the grantor only, but for the benefit of all purchasers. The owner of each lot has as appurtenant to his lot a right in the nature of an easement upon the other lots, which he may enforce in equity. `Whether such restriction creates a right which inures to the benefit of purchasers is a question of intention, and to create such right it must appear from the terms of the grant, or from the surrounding circumstances, that the grantor intended to create an easement in favor of the purchaser.' We further stated: `In such cases the equitable right to enforce such mutual covenants is rested on the fact that the building scheme forms an inducement to buy, and becomes a part of the consideration. The buyer submits to a burden upon his lot because of the fact that a like burden is imposed on his neighbor's lot, operating to the benefit of both, and carries a mutual burden resting on the seller and the purchasers.' Quoting from the opinion in the same case on a former appeal it was noted: `Where a defined district is platted and publicly offered as a restricted district, the restrictive clauses in the several deeds are construed as mutual covenants, each lot subject to a servitude or easement in favor of all the others, including unsold lots of the grantor in the same plat. Such servitude being appurtenant to and running with the land, any subsequent purchaser of the lot within the plat, with notice of the easement thereon, takes it subject thereto, as between himself and other lot owners. . . . ' See 60 A.L.R. 1128. Again, in Virgin v. Garrett, 233 Ala. 34, 169 So. 711 [(1936)], we stated: `It is apparent that the inquiry involves two questions: (1) Did the restrictions attach as appurtenant to Lot No. 2, and run with it? (2) Did appellant have notice of its existence as such appurtenance when she purchased part of Lot No. 1? `. . . . `The question of law which exists in such cases is whether or not the grantor in the deed containing the restriction agreed expressly or impliedly that the restriction is for the benefit of the owner of the other property in [the] subdivision, whether it had been sold or not. Such a contract may be inferred from the circumstances and terms of the instrument, and need not be expressed either verbally or in writing. The test is said to be the intention of the grantor in creating the restriction. . . . That intention may be proven as is any other fact in the light of legal presumption or precedents.' Hall, 274 Ala. at 109-10, 145 So.2d at 798. Twenty-eight years later, in Swanson v. Green, 572 So.2d 1246 (Ala.1990), the issue of implied restrictive covenants arose again. In Swanson v. Green , Charles and Mary Swanson, along with numerous other landowners in the Rolling Acres subdivision (collectively referred to as the Swansons), sued Charles and Annie Green and W.C. and Shirley Holladay, all of whom owned land in the Rolling Acres subdivision. The Swansons sought to enjoin the Greens and the Holladays from engaging in commercial activity on their property based on a restrictive covenant contained in previous bonds for title issued on all of their property. The evidence presented to the Court indicated that in 1971 the Holladays purchased one lot in the Rolling Acres subdivision through a bond for title. [19] That bond for title included restrictive language providing that [n]o commercial business shall be conducted on the property. 572 So.2d at 1247. The Holladays received a deed to the property in 1973. However, that deed did not include the restrictive language found in the bond for title, and the deed did not reference that restrictive language in any way. Both the bond for title and the deed issued to the Holladays were recorded in the proper probate office. At some point, the Holladays began operating an automobile-repair business on their property. In April 1971, T.S. and Emma Carpenter purchased a lot in the Rolling Acres subdivision through a bond for title. This bond for title contained the same restrictive language found in the Holladays' bond for title. It provided: No commercial business shall be conducted on the property. 572 So.2d at 1247. The Carpenters obtained a deed to the property in 1983; this deed, however, did not mention the restriction on commercial activities. In 1988, the Carpenters sold the property to Charles and Annie Green, conveying the property by a warranty deed, which was silent as to the restriction on commercial activities. The bond for title and the deed given to the Carpenters and the deed given to the Greens were recorded in the appropriate probate office. At some point after they purchased the property, Charles and Annie Green began operating a trucking business on and from their property. The Swansons sued the Holladays and the Greens, seeking to enforce the restrictive language contained in the bonds for title applicable to their property, arguing that those restrictions were as binding on the Holladays and the Greens as if the same language had been included or incorporated into their deeds. [20] However, the trial court disagreed. The Swansons appealed. On appeal, this Court affirmed the judgment of the trial court. This Court recognized that the presence of the restrictive language in the bond for title could not substitute for the absence of the restrictive covenant in the subsequent deed; it stated, [A] deed, as a conveyance of title, is an entirely different instrument from a bond for title. Swanson, 572 So.2d at 1248. The Court continued: The Swansons' argument also ignores the doctrine of merger, which holds that, absent fraud or mistake, when a contract to sell or convey land is consummated by execution and delivery of a deed, that contract becomes `functus officio' and the deed becomes the sole memorial of the parties' agreement. Therefore, a deed, not a bond for title, determines the rights of the parties. Because none of the deeds involved here contains any restrictions regarding commercial activity, the provisions in the bonds for title prohibiting business on the Holladays' property and the Greens' property `merged with' the deeds and are of no effect. Swanson, 572 So.2d at 1248. The Swanson Court continued, however: Notwithstanding the failure of the deeds to restrict the Holladays' and the Greens' use of their property, the Swansons could still succeed if they can prove that there was a common scheme to so restrict commercial activity at the inception of the Rolling Acres subdivision. Generally, a common building scheme may be evidenced by: 1) universal written restrictions in all of the deeds of the subdivision; 2) restrictions in a substantial number of such deeds; 3) the filing of a plat showing the restrictions; 4) actual conditions in the applicable subdivision; or 5) acceptance of the actual conditions by the lot owners. 7 Thompson on Real Property § 3163, p. 124 (1962 repl. vol.). 572 So.2d at 1248. However, the Swanson Court agreed with the trial court that none of these factors supported a finding that a common scheme of development or building existed as to the Rolling Acres subdivision. A year after it decided Swanson, the Court again addressed the issue in Ex parte Frazer, 587 So.2d 330 (Ala.1991). Ex parte Frazer involved a large tract of land conveyed by the Oliver Estate, Inc., to Hoyt Henley and Evan Leary by deed in 1965. The Oliver Estate included in the deed restrictive language that allowed Henley and Leary to subdivide the property into 5-acre lots but expressly prohibited any further subdivision of the land for a period of 15 years. Henley and Leary subdivided the property into lots of five acres each and referred to the subdivision as the Bell Estates subdivision. Henley and Leary filed a plat of the subdivision along with the restrictions applicable to the land. Henley and Leary began selling lots in the subdivision in 1967. None of the deeds given to the purchasers of those lots incorporated the restrictions relating to the size of the lots. None of those deeds contained any restrictions prohibiting resubdivision. Frazer purchased one of the five-acre lots in 1984. At the time of his purchase, the 15-year restriction against further subdivision of the lots had expired. Before his purchase, Frazer searched the probate court records to determine the applicable plat and deed restrictions for his lot; Frazer found no restrictions applicable to his property. Frazer also consulted with an attorney; the attorney performed his own search of the probate court records and provided an opinion concluding that no restrictions applied to the property. Frazer proceeded with the purchase and then attempted to subdivide his five-acre lot into four lots. Frazer submitted a proposal to the planning commission for the City of Montgomery, seeking approval of a plat, in which his five-acre lot would be subdivided into four smaller lots, all in excess of one acre each. Although Frazer's proposal complied with all of the City Planning Commission's zoning ordinances and subdivision regulations, including the minimum lot size, use, square footage of residences, and frontage, the Commission rejected Frazer's proposed plat. Frazer appealed to the circuit court, which upheld the decision of the Commission. Frazer appealed to the Court of Civil Appeals; that court affirmed the judgment of the trial court. Frazer then appealed to this Court. On appeal, the Alabama Supreme Court noted that all the parties had agreed that there were no express restrictions preventing resubdivision of the lots. However, the owners of the other lots in Bell Estates argued that an implied covenant applied to Frazer's property. The owners of the other lots argued that the implied covenant forbade any resubdivision of the property because the common grantors of the land, Henley and Leary, had intended the original restriction against further subdivision to run with the land. The other owners argued that a negative reciprocal easement had attached to all of the lots based on the 15-year covenant included in the deed from the original grantor. This Court disagreed and reversed the judgment of the Court of Civil Appeals. The Court held that Frazer's lot was not encumbered by a reciprocal negative easement prohibiting further resubdivision. The Court stated that an implied covenant will not be found to exist in an instrument when that same instrument contains an express covenant of a different or contradictory nature. The Court added: There is a more compelling reason why the five-acre limitation cannot be upheld by implication. Frazer did not purchase the property from the original developers. The developers purchased the property from the Oliver Estate, and the Oliver Estate deed expressly imposed a restriction on lot size that was to expire after 15 years, which was 1980. The developers did not include this restriction in the restrictions filed with the subdivision plat of the property. Even if they intended the restriction to extend beyond 1980, Frazer had no way of knowing that that was their intent. He bought his property in 1984 from persons other than the developers. A title search revealed that there were no restrictions with regard to further subdivision of the property. In Powell on Real Property, Part IV, § 678 (1988), it is stated: `The mutual intent of the original promisor and promisee governs the duration of covenants as to land use.' Frazer was not an original promisor or promisee. There is in this record no evidence that Frazer had actual or constructive notice of the existence of any restriction with regard to lot size at the time he purchased his property. In order for an implied restrictive covenant to be enforced against a purchaser, the evidence must show that he had knowledge of the restriction at the time he purchased the property. . . . This court has frequently held that where a property owner complies with all applicable ordinances and regulations, he may not be denied a legal use of his land merely because adjoining landowners object to that use. . . . The ownership of land carries with it the right to use the land for any lawful purpose. This does not mean that the city may not legally restrict the use of land. But when it does so, it must clearly apprise landowners of what those restrictions are, and it must adopt standards that can be uniformly applied and that give reasonable notice to the owner of what he must do to comply with those restrictions. . . .  587 So.2d at 332.