Court Opinion

ID: 9548416
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:03:05.619574+00
Date Added: 2024-06-11T15:18:54.781112
License: Public Domain

TOBRINER, J.
I dissent.
I cannot subscribe to the majority’s conclusion that a buyer of a subdivision lot, who takes his deed with actual knowledge of a general plan of mutual restrictions applicable to the entire subdivision and who conducts himself for many years in a manner which demonstrates his belief that such restrictions apply to his property, may thereafter violate all such restrictions with impunity simply because the restrictions were *513inadvertently omitted from his individual deed. Contrary to the majority’s suggestion, we need not decree this inequitable result in order to prevent fraud to maintain security in land titles; the veiy antithesis—a ruling that a buyer with actual knowledge of restrictions is thereby bound—ensures fairness and promotes security in land transactions; it implements the intention of both the buyer and the seller. As I shall explain, the majority, can sustain their forced result only by ignoring a host of recent decisions of this court which have abandoned the antiquated rule that “property rights” can be ascertained only within the “four corners of a deed.”
In the present case, defendants offered proof to establish that (1) prior to their purchase of the lot, plaintiffs received copies of the written restrictions, the bylaw of defendant committee and the real estate commissioner’s public report, which stated that the subdivision lots were subject to building restrictions; (2) because of a mistake by the title company, plaintiffs’ deed did not contain the restrictions and was recorded prior to recording of the declaration of restrictions; and (3) despite the mistakes of the title company, plaintiffs conducted themselves in accordance with the restrictions for a number of years, seeking defendant committee’s approval for the construction of a home and the removal of a tree on their lot. Thus the evidence offered by defendants would demonstrate that plaintiffs took their deed with the understanding that the lot was subject to valid restrictions.
The majority’s holding will permit plaintiffs in this case to ignore restrictions designed to preserve natural beauty and property values in a carefully planned residential community. Although the use of all other lots in the community will continue to be restricted, plaintiffs will be free to subdivide their land into any number of small building sites, construct apartments or rent-commercial space, ignore building lines and obstruct views from neighboring lots, raise livestock, and strip the land by removing trees and shrubs.
Common sense and substantive justice dictates that the plaintiffs should not be free to violate such restrictions. At the time of purchase plaintiffs had actual knowledge of those restrictions; the restrictions formed a part of the consideration exchanged by the parties. The restrictions continue to enhance the value of plaintiffs’ individual lot because all other property owners in the subdivision are bound thereby. As I shall explain, the intent of the parties should govern, and the rule of *514Werner v. Graham (1919) 181 Cal. 174 [183 P. 945], which forbids proof of intent by extrinsic evidence should be rejected, as indeed it has been by virtually every other state. (2 American Law of Property (Casner ed. 1952) § 9.29, p. 417.)
The majority holds that recent decisions of this court modifying the parol evidence rule do not affect the validity of the holding in Werner v. Graham, because that decision did not rest primarily on the parol evidence rule. The language of Werner itself compels a different conclusion. As the majority notes, the parol evidence rule excludes extrinsic evidence as to the terms of an agreement, not because the probative value of such evidence is questioned, but because as a matter of substantive law the writing constitutes the complete agreement between the parties. The language of Werner clearly indicates that the decision applied the parol evidence rule; the court stated that “the deeds in this case constitute the final and exclusive memorials of the understandings between the parties. Any understanding not incorporated in them is wholly immaterial....” (At p. 185.)
Although the majority suggests that Werner rests on policies underlying the statute of frauds, the Werner court did not so much as discuss that statute. The issue in Werner turned on whether the parties intended the restrictions contained in a deed to create either an equitable servitude enforceable by other landowners in the subdivision or to constitute merely personal covenants inuring solely to the benefit of the grantor. The court held that the parol evidence rule mandated that intent bf the parties be ascertained from the face of the deed; the decision does not hold, or even imply, that any policy underlying the statute of frauds would be violated if the intended effect of written restrictions were to be proven by extrinsic evidence.
Contrary to Werner v. Graham, most states allow proof intent by extrinsic evidence (7 Thompson on Real Property (1962 Replacement) § 3163, pp. 125-126; 2 American Law of Property (Casner ed. 1952) § 9.29, pp. 416-419); these decisions turn on the interpretation of the policies underlying the parol evidence rule (e.g., Clem v. Valentine (1928) 155 Md. 19 [141 A. 710]; Ridley v. Haiman (1932) 164 Tenn. 239 [47 S.W.2d 750]), not upon the policies of the statute of frauds. Indeed, despite dictum in McBride v. Freeman (1923) 191 Cal. 152 [215 P. 678], suggesting that the statute of frauds supplied the rationale for the Werner decision, subsequent California cases have recognized that exclusion of *515extrinsic evidence in interpretation of deeds emanates from the parol evidence rule, (E.g., Moore v. Ojai Improvement Co. (1957) 152 Cal.App.2d 124 [313 P.2d 47]; Murphv Slough Assn. v. Avila (1972) 27 Cal.App.3d .649 [104 Cal.Rptr. 136].)
Werner v. Graham, then, is based upon the strict parol evidence rule then in effect in California; consequently its holding must be reexamined in light of recent decisions of this court which modify the application of the parol evidence rule. In Masterson v. Sine (1968) 68 Cal.2d 222 [65 Cal.Rptr. 545, 436 P.2d 561], we rejected the principle that parol evidence as to the terms of an agreement is inadmissible simply because the written memorandum appears on its face to be an integration. We recognized that “The crucial issue in determining whether there has been an integration is whether the parties intended their writing to serve as the exclusive embodiment of their agreement,” (at p. 225) and noted that application of the “face of the document” test would “often defeat the true intent of the parties.” (At p. 227.) Accordingly, we held that “Evidence of oral collateral agreements should be excluded only when the fact finder is likely to be misled. The rule must therefore be based on the credibility of the evidence.” (At p. 227.)
Thereafter, in Pacific Gas & E. Co. v. G. W. Thomas Dravage etc. Co. (1968) 69 Cal.2d 33 [69 Cal.Rptr. 561, 442 P.2d 641, 40 A.L.R.3d 1373], this court extended the holding of Masterson v. Sine to cases in which extrinsic evidence was offered which would disturb the “plain meaning” of the document. We stated, “The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (At p. 37.) In Thomas Dravage as in Masterson v. Sine, we emphasized that the actual intent of the parties should govern the interpretation of their agreement.
The modifications of the parol evidence rule announced in Masterson v. Sine and Thomas Drayage apply to the interpretation of deeds as well as contracts. (Civ. Code, § 1066; Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 521-522 [67 Cal.Rptr. 761, 439 P.2d 889]; French v. Brinkman (1963) 60 Cal.2d 547, 552-553 [35 Cal.Rptr. 289, 387 P.2d 1].) In Continental Baking Co. v. Katz, supra, we upheld the admissibility of extrinsic evidence to show that the parties actually intended. an easement expressed in a deed as appurtenant to a small parcel of land to *516be appurtenant to a different, larger parcel not described in the deed. In Murphy Slough Assn. v. Avila, supra, 27 Cal.App.3d at page 654, the court held that extrinsic evidence was admissible to prove that the parties intended and understood a grant deed conveying a fee interest to convey only a right of way.
The reasoning of the court in Murphy illustrates the proper application of our decisions in Masterson v. Sine and Thomas Drayage to the interpretation of deeds. The court noted initially that “grants are to be interpreted in the same way as other contracts and not according to rigid feudal standards.” (At p. 655.) The grant involved was silent as to riparian rights, and the court reasoned that this silence, together with the nominal consideration of $10 paid by the grantee, raised a doubt as to the interest conveyed. The court therefore admitted extrinsic evidence to prove the parties’ actual understanding concerning riparian rights, although the “plain meaning” of the document was to grant a fee simple absolute. In holding that the interest conveyed actually constituted a right of way, the court emphasized that “Subsequent acts of the parties to the transaction which disclose the interpretation given to the conveyance by themselves is strong evidence of the interest conveyed.” (At p. 658.)
The present case presents a situation similar to that encountered by the court in Murphy. Plaintiffs’ deed does not refer to building restrictions; it does not specifically state that the land is free from all such restrictions. The deed does, however, identify the lot conveyed as a particular parcel within a large subdivision known as “Alpine Meadows Estates Subdivision No. 3.” The deed’s silence with respect to restrictions. coupled with its reference to the subdivision, raises a doubt as to whether the lot in question was sold pursuant to a common scheme of restricted development for the entire-subdivision. The language of the deed does not preclude an underlying understanding that the lot was subject to building restrictions. As in Murphy, the acts of the parties in the present case subsequent to the sale of plaintiffs’ lot constitute strong evidence that the restrictions were applicable to the property.
Thus our decision in Masterson v. Sine, supra, and Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., supra, sanction the admission of the evidence offered by defendant committee to establish the intention of the parties that the restrictions governing the use of land in the subdivision bind plaintiffs’ property, even though the deed appears on its face to convey the lot without such restrictions. The requirement of Masterson *517that the proffered evidence be “credible” is met; the restrictions were embodied in a writing which plaintiffs received before they bought their lot. Proof of the terms óf the understanding between the parties will not, therefore, be “dependent upon the uncertain recollection and testimony of interested witnesses.” (McBride v. Freeman, supra, 191 Cal. 152, 160.)
I believe, therefore, that in light of this court’s modification of the parol evidence rule, Werner v. Graham is no longer a correct application of existing law and should be overruled. The question remains, however, whether, as the majority maintains, the policy underlying the statute of frauds provides an independent basis for rejecting the evidence offered by defendants. That policy, as the majority points out, is to prevent fraud and perjury with respect to certain types of transactions by requiring the most reliable evidence available, a written document. In the present case, however, insistence upon a writing signed by both grantor and grantee is not necessary to prevent fraud, and such a requirement should not be invoked to frustrate the intention of the parties.
The courts of this state have frequently recognized situations in which circumstances surrounding a transaction render the production of a writing signed by both parties unnecessary, and accordingly have established a number of exceptions to the application of the statute. As the majority notes, a deed poll containing restrictions binding upon the grantee does not satisfy the requirements of the statute of frauds, since it is not subscribed by the party to be charged. The courts have held, however, that such deeds are enforceable against the grantee. (Grange Co. v. Simmons (1962) 203 Cal.App.2d 567, 573. [21 Cal.Rptr. 757].) In the present case, the grantor gave a written document containing the restrictions to the grantee, and the fact that the document was, like a deed poll, not signed in accordance with the requirements of the statute of frauds should not result in the exclusion of the document as evidence of the parties’ understanding. The courts have further modified the application of the statute of frauds by holding that once the grantor has given one deed creating restrictive covenants binding on subdivision land to a purchaser, subsequent grantees from the same grantor who have actual notice of the restrictions are bound thereby, although no restriction or reference thereto is contained in their individual deeds. (Arrowhead Mut. Service Co. v. Faust (1968) 260 Cal.App.2d 567, 580 [67 Cal.Rptr. 325].) Likewise in the present case, plaintiffs took their deed with actual notice of the restrictions at issue.
*518Moreover, in the area of land transactions, our courts have given effect to oral agreements conveying an interest in land on the basis of the doctrine of part performance. (See Note, Part Performance, Estoppel, and the California Statute of Frauds (1951) 3 Stan. L. Rev. 281.) That doctrine represents a recognition of the inequities which will result if the courts refuse to enforce an agreement partially performed by one of the parties. Such part performance must, however, be clearly a performance of the oral contract and not of some other obligation between the parties. As the court explained in Trout v. Ogilvie (1919) 41 Cal.App. 167, 172 [182 P. 333], “To take a contract out of the operation of the statute of frauds, however, the acts relied upon must be unequivocally referable to the contract.” (See Magee v. Magee (1917) 174 Cal. 276 [162 P. 1023]; Manning v. Franklin (1889) 81 Cal. 205 [22 P. 550].)
In the present case, both parties have performed acts “unequivocally referable” to their understanding that all the lots in the subdivision, including plaintiffs’, were subject to building restrictions. The grantor filed the plat containing the restrictions, and conveyed all subsequent deeds subject to those restrictions. The plaintiffs complied with the restrictions by submitting plans for construction on the lot to defendant committee, and by seeking approval of the committee for the removal of a tree from the lot. The only reasonable explanation for this behavior by plaintiffs is that such actions were taken pursuant to the understanding between plaintiffs and their grantor that the lot was subject to subdivision restrictions. The agreement between plaintiffs and their grantor can, therefore, be enforced despite the policy of the statute of frauds favoring formalized writings; indeed, other states have enforced such agreements. (See Hall v. Solomon (1892) 61 Conn. 476, 483-484 [23 A. 876].)
In summary, I believe that Werner v. Graham should be overruled, and that the evidence offered by defendants should be admitted to establish that plaintiffs took their lot subject to the building restrictions, which continue to bind the rest of the property owners in the subdivision, and that plaintiffs, indeed, conducted themselves in accordance with such restrictions for many years. To hold otherwise would defeat the actual intent of the parties; it would allow plaintiffs to reap the benefits of their neighbors’ restrictions while, as to their own lot, they enjoy complete freedom.
Further, plaintiffs have filed suit against defendant committee for slander of title; the majority’s holding thus could allow plaintiffs to *519collect damages from the committee for its attempt to enforce restrictions which plaintiffs understood to govern their land when they took their deed. The majority’s rigid adherence to the rule of Werner v. Graham as a “rule of property” conflicts with our previous recognition that “our courts no longer feel constricted by feudal forms of conveyancing , . . grants are to be interpreted in the same way as other contracts and not according to rigid feudal standards.” (Willard v. First Church of Christ, Scientist (1972) 7 Cal.3d 473, 476 [102 Cal.Rptr. 739, 498 P.2d 987].)
Accordingly, I would hold that the eviderice offered by defendant committee is admissible to establish the existence of building restrictions binding upon plaintiffs.