Opinion ID: 2334067
Heading Depth: 2
Heading Rank: 2

Heading: Reaches 16-17: Fee Simple with Restrictive Covenants

Text: ¶ 30 The Water District's interest in Reaches 16-17 originates with the 1914 Crosgrove Deeds. [10] Under appellants' interpretation of the deeds, they either conveyed only an easement to ULIC or conveyed a fee interest subject to restrictive covenants that limit the property's use to canal purposes only. The Water District asks us to affirm the lower court's interpretation that the deeds conveyed fee interests and the canal purposes covenants were personal and did not run with the land. Examining the text, structure, and context of the Crosgrove Deeds, we conclude that (1) the Deeds conveyed a fee simple interest to ULIC and (2) the Deeds impose restrictive covenants that run with the land.
¶ 31 The District argues that the Crosgrove Deeds conveyed a fee to ULIC because they use the phrase conveys and warrants, which is presumed by statute and common law to convey a fee interest. It also claims that, to rebut this presumption, appellants must present clear and convincing evidence to the contrary. The lower court agreed, stating that the plaintiffs had failed to produce clear and convincing evidence to rebut the presumption of a fee. Appellants argue that the heightened burden of proof was inappropriate, and that Haynes v. Hunt, 96 Utah 348, 85 P.2d 861 (1939), dictates a different resultthat the canal purposes clause limits the estate conveyed to an easement. ¶ 32 We affirm the district court's conclusion that the Crosgrove Deeds conveyed fee interests to ULIC, but reject the clear and convincing evidence standard it applied. The district court invoked Jacobson v. Jacobson, 557 P.2d 156, 158 (Utah 1976), for the proposition that conveyed and warranted language in a deed creates a presumption that the deed transfers a fee simple interest, and that this presumption may be overcome only by clear and convincing evidence. But Jacobson imposed that burden on plaintiffs who asked the court to reform a deed based on extrinsic evidence of the parties' alleged intent to execute a mortgage rather than transfer title. Id. at 157-58. The Jacobson court refused to ignore the deed's language and construe it as an equitable mortgage absent clear and convincing evidence that the deed did not mean what it said. Id. [11] ¶ 33 That is not the situation here. Appellants in this case do not ask us to ignore the Crosgrove Deeds' language and reform the Deeds based on extrinsic evidence of intent. Instead, they rely on the Deeds' language, arguing that the canal purpose clauses are meant to limit the conveyance to an easement. Thus, while we disagree with appellants' interpretation of the Deeds, the law does not require parties to show by clear and convincing evidence that their interpretation of a deed is correct, and the district court was wrong to require such a showing. Instead, courts interpreting a deed should employ all appropriate tools of construction to arrive at the best interpretation of its language. [12] ¶ 34 That said, the legislature has historically imposed a statutory presumption that fee simple title is ... intended to pass by a conveyance of real estate, unless it appears from the conveyances that a lesser estate was intended. UTAH COMP. LAWS 1971 (1907); see UTAH CODE 57-1-3. This presumption is closely connected with the long-held rule that deeds are construed most strongly against the grantor. Wood v. Ashby, 122 Utah 580, 253 P.2d 351, 353 (1952). With this in mind, we read the text and structure of the Crosgrove Deeds to convey fee interests. ¶ 35 The Deeds' granting clauses state that they hereby convey and warrant a described tract of land. Convey and warrant is prototypical language used for transferring a fee simple interest in real estate. [13] This is true at common law and under a Utah realestate statutein effect in 1914 and today which provides an example of a warranty deed using the language hereby conveys and warrants and further provides that a warranty deed ... shall have the effect of a conveyance in fee simple to the grantee. UTAH COMP. LAWS 1981 (1907); see also UTAH CODE 57-1-12(1), (2). ¶ 36 The Deeds' use of prototypical language for conveying a fee simple, the statutory mandate to presume a fee conveyance, and the absence of any contrary right of way language strongly evince a conveyance of a fee simple interest. Nevertheless, appellants argue that the Deeds should be read as conveying mere easements because both contain a clause that states, Said strip of land [is] to be used for canal purposes only. This argument fails, however, in light of the structure of the Deeds and the placement of the canal purposes clauses. ¶ 37 The granting language appears near the beginning of the Crosgrove Deeds, followed by a description of the property, and then by a list of specific agreements governing the use of the property. The canal clause is not part of the granting language or the description of the property. Instead, it appears in the final section, where the Deeds contain additional covenants between the parties. Immediately above the purpose clause, for example, Deed I imposes an affirmative covenant, stating that the grantee agrees to construct and maintain one concrete bridge and two 1 foot galvanized iron flumes, across its canal for the use of the grantor. Deed II contains a similar covenant. The purpose clause's placementin proximity to this covenant, and not in conjunction with the granting languageis significant. If the parties had meant to restrict the conveyance to an easement, they presumably would have placed the purpose provision in a separate habendum clause. [14] Instead, the parties placed the purpose clause next to and beneath an affirmative covenant. In light of this placement, we read the purpose clause to impose a covenant, not to limit the conveyance to an easement. ¶ 38 Appellants insist that Haynes v. Hunt, 96 Utah 348, 85 P.2d 861 (1939), requires a different result. It does not. Haynes construed a deed to convey only an easement because it contained a clause in the property description that limited the property's use to propagation of fish. Id. at 862. That holding, however, hinged on the placement and evident function of the propagation of fish clause: The description of the property for grant of a fee is complete without this clause, and unless the clause is used to limit or qualify the grant it can serve no purpose whatsoever. Id. at 864. Haynes does not help appellants here for two reasons. First, the purpose clauses in the Crosgrove Deeds are not in the property description; they are included with other covenants. Second, unlike the Haynes court, here it cannot be said that the purpose clauses serve no purpose unless they limit or qualify the grant. The Crosgrove Deeds purpose clauses impose covenants on the grantee. In our view, the purpose clauses are not superfluous and their placement makes perfect sense if interpreted as covenants rather than limits on the granting language. We therefore affirm that the Deeds conveyed a fee interest to ULIC.
¶ 39 Appellants further contend that even if the Crosgrove Deeds conveyed fee simple interests to ULIC, the Deeds contain covenants that run with the land, limiting the Water District's use of Reaches 16-17 to canal purposes only. The district court concluded that the canal clauses must be construed as a personal covenant between grantor and grantee, which would not affect or otherwise limit the title and which does not bind successive owners. The Water District asks us to uphold the lower court's conclusion, arguing that the deeds contain no express language indicating that they were intended to bind successive owners. We disagree with the Water District and with the district court, and hold that the Crosgrove Deeds' canal purposes only covenants run with the land.