Opinion ID: 1117874
Heading Depth: 2
Heading Rank: 1

Heading: Deed-Reformation Claim

Text: The Abernathys' title to and right to use the 15-foot road to access the Abernathy tract are not in dispute. The plats included with the August 1991 filing and the second amendment depicted that road, which was situated between lots 12 and 13, as being outside the boundary of the Smokerise subdivision. The petitioners knew of the existence of the 15-foot road and the intended use of it as the means of access to the Abernathy tract before they purchased their lots. Accordingly, they do not contest the Abernathys' interests in the 15-foot road. The petitioners' claims address exclusively the 45-foot parcel the developer retained when it conveyed lot 13 to the Sideses in October 1991 and then subsequently conveyed to the Abernathys (along with title to the 15-foot road) in May 1993. The petitioners contend that the trial court should have reformed the deeds for those two transactions and transferred title to the 45-foot parcel to the Sideses, because those conveyances violated restrictive covenants 12 and 2(B). The petitioners argue that they have standing to seek that relief because when a developer adopts a general scheme for development and restricts the use of lots in the development, 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. Allen v. Axford, 285 Ala. 251, 259, 231 So.2d 122, 129 (1969). Chronologically, the pivotal transactions concerning the 45-foot parcel were the covenant modification in September 1991, the retention by the developer of the 45-foot parcel when it conveyed lot 13 in October 1991, and the May 1993 conveyance (hereinafter referred to collectively as the key transactions). In denying the deed-reformation claim, the trial court concluded that, during the early 1990s, the petitioners had actual notice of the key transactions and the intended use of the 45-foot parcel as access to the Abernathy tract. [5] The trial court attributed significant weight to evidence indicating that in September 1991 the developer had negotiated with the McLeods and the Sideses  then under contract to buy lots 12 and 13  for the purpose of the developer's acquiring additional property to access contiguous lands. It concluded that the Sideses and the McLeods had received consideration from the developer in connection with its retention of title to the 45-foot parcel. That court also found that certain petitioners had knowledge of, and were bound by actions taken in, the condemnation litigation between the Abernathys and the developer. Based on its findings of actual knowledge, the trial court ruled that the deed-reformation claim was barred by the equitable defenses of laches and estoppel. [6] The petitioners effectively argue that they presented evidence in the trial court that disputed the argument that they had actual knowledge in the 1990s of the key transactions and the intended use of the 45-foot parcel. When the evidence is viewed, as it must be, in the light most favorable to the petitioners, their argument has merit. Notwithstanding, even if there were genuine issues of material fact concerning the extent of the petitioners' actual knowledge, the trial court correctly entered a summary judgment for the respondents for the following reasons. The trial court made the following conclusions of law in its June 12, 2003, order: The legal issues of establishing the rightful owner of the disputed [45-foot] strip of land, the [Abernathys' right of] use of the land, and the original owner's [i.e., the developer's] right to except certain lands from the subdivision are decided in favor of the [respondents]. These legal findings concerning the Abernathys' use and title to the 45-foot parcel were correct because the petitioners had constructive notice that that parcel was to be used as a means of access to contiguous property. The recordation of the covenant modification in September 1991 is instrumental here. The original wording of restrictive covenant 12 prohibited access from any platted lot in the Smokerise subdivision to contiguous lands except as shown on the plat, and except as may, in the future, be granted across lot 6 and lot 12. When the developer recorded the covenant modification, the revised language permitted access across a 45-foot wide parcel of land on the southern end of lot 13. . . . To avoid the clear language in the covenant modification, the petitioners argue that the filing of the modification was not effective. The developer filed that modification after the Sideses and the McLeods contracted to purchase their respective lots, but before the closing of those transactions. Neither the Sideses nor the McLeods executed or approved the covenant modification. Because the Sideses and the McLeods had an equitable interest in their lots when the covenant modification was filed, the petitioners contend that the modification was ineffective absent the consent of the Sideses and the McLeods. [7] Stated differently, the petitioners argue that, based on the authority of Davis v. Williams, 130 Ala. 530, 30 So. 488 (1900), the Sideses' and McLeods' equitable interests could not be diminished without their consent. Neither party has directed us to an Alabama decision that addresses whether a party holding equitable title to realty must consent to a filing concerning that property made by the record owner during the period between the execution of a purchase agreement and the transfer of legal title. The petitioners rely on Loventhal v. Home Insurance Co., 112 Ala. 108, 20 So. 419 (1896), in support of their argument. In that case the plaintiff made a claim under a fire-insurance policy for damage to certain property she had contracted to purchase. This Court held that the plaintiff owned equitable title to that realty, and that that interest prevented the defendant from denying payment on a policy exclusion that excluded damage to property not owned by the insured in fee simple. 112 Ala. at 112, 20 So. at 420-21. Loventhal did not, however, address the issue presented here. In Boyce v. Cassese, 941 So.2d 932 (Ala. 2006), this Court considered a recordation situation involving constructive notice. The plaintiffs in Boyce agreed to purchase land adjacent to a golf course. Only four days before closing, an easement agreement was recorded that granted a golf club operating the adjacent course the right to use the land the plaintiffs were purchasing during golf tournaments. That easement was not recorded when the plaintiffs contracted to buy the land, and they closed on the purchase without actually knowing of its existence. After the plaintiffs learned of the easement, they sued to invalidate the easement agreement, rescind their realty purchase, and recover damages on multiple tort theories. Notwithstanding the plaintiffs' lack of notice of the easement before closing, this Court held that the easement ran with the land and that it was binding on the plaintiffs. The Court also reasoned that the recordation of the easement charged the plaintiffs with constructive notice for purposes of applying statute-of-limitation defenses on the various tort claims: ` Under Ala.Code 1975, § 35-4-90, the proper recordation of an instrument constitutes conclusive notice to all the world of everything that appears from the face of the instrument. Thus, purchasers of real estate are presumed to have examined the title records and knowledge of the contents of those records is imputed [to them]. '  Haines v. Tonning, 579 So.2d 1308, 1310 (Ala.1991) (quoting Christopher v. Shockley, 199 Ala. 681, 682, 75 So. 158, 158 (1917), and Walker v. Wilson, 469 So.2d 580, 582 (Ala.1985)). It is undisputed that the Golf Club recorded the license agreement and the amendment to the license agreement on January 24, 1997, a few days before the Boyces acquired their interest in the property. Because the agreement was recorded at the time the Boyces obtained title to the property, they are charged with notice of the recorded agreement as of that time. This action was filed in April 2002, more than five years after the Boyces obtained title to the property and more than five years after the Boyces are charged with notice of the encumbrance against their property. For this reason, the Boyces' claims of fraudulent misrepresentation and fraudulent suppression against the Casseses are time-barred. 941 So.2d at 943 (emphasis supplied). As in Boyce, the respondents argue that, when the covenant modification was filed in September 1991, the developer owned all the lots in the Smokerise subdivision. Accordingly, they contend that any person who subsequently purchased a lot in the subdivision took title to the lot subject to the terms of that modification. Applying the recordation principles stated in Boyce, we agree with the respondents. We also reject the petitioners' argument that the covenant modification was ineffective under Ala.Code 1975, § 35-2-53. Section 35-2-53 provides, in pertinent part, that [a]ny plat or map . . . may be vacated by the owner . . . of the lands at any time before the sale of any lot therein by a written instrument declaring the same to be vacated, executed, acknowledged and recorded in like manner as conveyances of land. . . . (Emphasis supplied.) It further states that [w]hen lots have been sold, the plat or map may be vacated, in the manner herein provided by all the owners of lots in such plat or map joining in the execution of such writing. (Emphasis supplied.) According to the petitioners, the covenant modification partially vacated the August 1991 filing; neither the McLeods nor the Sideses signed the modification instrument. Because the McLeods and the Sideses held equitable interests in lots 12 and 13 when the covenant modification was filed, the petitioners argue, the recordation of the covenant modification did not satisfy the requirement in § 35-2-53 that all the owners of lots in [the] plat . . . join in the execution of [the modification] writing. This argument fails because it contravenes the ordinary meaning of the words owner and sale in § 35-2-53. Black's Law Dictionary 1137, 1364 (8th ed.2004), defines an owner as [o]ne who has the right to possess, use, and convey something, and a sale as [t]he transfer of property or title for a price. The McLeods and the Sideses could not possess or use lots 12 and 13 when the covenant modification was filed; accordingly, at that time they were not owners of those lots within the ordinary meaning of § 35-2-53. Further, the plain meaning of the word sale in that statute connotes the time at which legal, not equitable, title is transferred by deed for a price. The developer thus had the exclusive right under § 35-2-53 to file the covenant modification in September 1991 because it then owned all the lots in the subdivision. [8] Our conclusion is buttressed by Jefferson County v. Mosley, 284 Ala. 593, 226 So.2d 652 (1969). In that case Dillard delivered a right-of-way deed to the County in 1945. Six years later, Dillard conveyed property to Mosley and delivered a deed to him that, in its description, included the same land Dillard had previously conveyed to the County. The deed transferring the property from Dillard to the County was not recorded until after the Dillard-Mosley transaction. Mosley's deed stated that the title he received from Dillard was subject to unspecified public roads, easements, or rights-of-way. The Mosley Court was confronted with the issue whether Mosley was an innocent purchaser with respect to the County's right-of-way interest or took title subject to that interest. In ruling for the County, this Court stated: It is difficult to understand how Mosley could have read the deed and not have seen the exception clause. Whether he saw it or not, he is presumed to have knowledge of it and the consequences are the same in either case.[Citation omitted.] So far as the record discloses, Mosley made no effort to ascertain whether, in fact, there were any public roads, easements or rights-of-way across the land described in the deed from Dillard to him prior to the present controversy. After the controversy arose, apparently he had no trouble in ascertaining such information, as is evidenced by the map or drawing which is in the record. It seems to us that a reasonably prudent man who obtained a deed containing an exception such as was included in the deed from Dillard to Mosley would have made inquiry from his grantor as to why such an exception was included. If such an inquiry had been made, Mosley would no doubt have been advised of the right-of-way deed executed by Dillard to Jefferson County in 1945. 284 Ala. at 601, 226 So.2d at 658-59. Similar to Mosley, the operative probate record here  the covenant modification  constituted notice to the petitioners that access to contiguous lands could be granted over the 45-foot parcel. Their deed-reformation claim thus fails. In summary, regardless of whether the McLeods and the Sideses consented to the covenant modification, that September 1991 filing was effective and constituted notice to the world that access between platted lots in the subdivision and contiguous land could be granted over the 45-foot parcel. Because that modification was duly recorded before the developer sold any lots in the subdivision, the petitioners  subsequent purchasers of those lots  were charged with constructive notice of its terms as a matter of law. Under these circumstances, the developer did not violate restrictive covenant 12 (as revised in September 1991) when it conveyed access to the Abernathys. Moreover, the developer did not breach covenant 2(B) when it sold lot 13 to the Sideses in 1991 but retained the 45-foot parcel. That restriction stated that lots in the subdivision could be subdivided only if said parcel contains at least 2-1/2 acres with suitable road frontage. Even though the 45-foot parcel contained only a fraction of an acre when it was parced from lot 13, covenant 2(B) was not violated because, notwithstanding its terms, the petitioners had constructive notice before their respective purchases of lots that that parcel subsequently could be used as access to contiguous land. Because the respondents did not violate restrictive covenants 12 or 2(B), the trial court correctly entered a summary judgment for them on the deed-reformation claim.