Court Opinion

ID: 8891403
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:18:14.658874+00
Date Added: 2024-06-11T17:07:14.287041
License: Public Domain

Judge GREENE
concurring in part and dissenting in part.
The three elements required for a covenant to run at law are that: (1) the original covenanting parties intended the benefits and the burdens of the covenant to pass to the successors in interest of the original covenanting parties; (2) the act covenanted to be done or omitted, touches and concerns the land or estate conveyed; and (3) there is privity of estate between the owner of the burdened property and the party seeking to enforce the covenant. See Raintree Corp. v. Rowe, 38 N.C. App. 664, 669-70, 248 S.E.2d 904, 908 (1978); see also 5 R. Powell, Powell on Real Property § 673[2], 60-46 — 60-82 (1991); Orange & Rockland Utilities v. Philwold Estates, Inc., 418 N.E.2d 1310, 1313-14 (N.Y. 1981). Applying these principles, I agree with the majority that Charles Runyon and Mary Robbins Runyon (Runyons) are not entitled to enforce the covenant. However, contrary to the majority, I believe that Patsy Simpson Williams (Williams) is entitled to enforce the covenant.
*215Williams
Intent: The intent of the covenanting parties must be found in the language of the documents creating the covenant and from other “instruments of record.” Raintree at 669, 248 S.E.2d at 908 (intent of the parties must “be determined from the instruments of record”); see also Powell at § 673[2], 60-58; 20 Am.Jur. 2d, Covenants, Conditions, and Restrictions § 292, 856 (intent “must be ascertained through the language of the writing, construed in connection with the circumstances existing at the time it was executed”).
The covenant itself is unambiguous in declaring that the burden of the restriction runs with the land. Specifically, the covenant provides that the land conveyed is “subject to certain restrictions as to the use thereof, running with said land by whomsoever owned, until removed as herein set out; said restrictions, which are expressly assented to by the parties of the second part . . . .”
On the question of whether the benefit of the covenant passes to the covenantee’s successors, the document is silent. However, where other “instruments of record” reveal that the covenantee retained land contiguous to the conveyed land, and the retained land is manifestly benefited by the covenant, it is presumed that the parties intended for the benefits to pass to the successors of the original covenantee. See Stegall v. Housing, 278 N.C. 95, 102, 178 S.E.2d 824, 829 (1971) (heirs of original covenantee could enforce covenants placed on other land if they “have [not] parted with all interest in any land benefited by the covenant”); Sheets v. Dillon, 221 N.C. 426, 431, 20 S.E.2d 344, 347 (1942) (“grantor or its successor [who] still owns a part of the original tract” entitled to enforce “the restriction limiting the use of the portion sold”); see also 52 Wash. L. Rev., Running Covenants: An Analytical Primer, 861, 896 (1977) (“Courts routinely infer that the benefit attaches to and runs with . . . [the covenantee’s] adjacent land”).
Thus, if A, the owner of a house with a vacant lot adjoining, were to sell the lot to B, securing at the same time from B a promise that he would not build within a certain distance of the line between the lot sold and that upon which the house stands, it would be a reasonable inference that the benefit of the promise was intended to run with the house lot.
*216American Law Institute Restatement of the Law of Property § 544, comment c (1944); see also 2 American Law of Property § 9.29, at 416 (1952) (“the courts have realized the social desirability of . . . [restrictive covenants] and have been extremely liberal in finding from the facts an intent to create a benefit appurtenant”); Powell at § 673[2] at 60-62 (“the retention of adjacent land by a grantor-covenantee” and the “benefiting of retained land as a result of the agreement” are factors “strongly favoring the running of the benefit”).
Here, the instruments of record indicate that the covenantee retained adjacent property which was located directly across the street from the conveyed property. Furthermore, “the retained land is manifestly benefited by the covenant” in that the covenantee has some control over the nature and character of the neighborhood in which the covenantee’s own land is situated. Thus, the parties to the original agreement are presumed to have intended for the covenant to run with the land, and there is no evidence in this record to rebut that presumption.
Touches the Land: This Court has previously noted that it is impossible to establish an absolute rule for determining whether a covenant touches and concerns the land, and that “[t]he question is one for the court to determine in the exercise of its best judgment upon the facts of each case.f ]” Raintree at 670, 248 S.E.2d at 908. In the absence of an absolute rule, the following practical approach is helpful:
Though some decisions seem to show a different tendency there would seem to be no reason for applying the rule of touching and concerning in an overtechnical manner, which is unreal from the standpoint of the parties themselves. Where the parties, as laymen and not as lawyers, would naturally regard the covenant as intimately bound up with the land, aiding the promisee as landowner or hampering the promisor ... [as landowner], the requirement should be held fulfilled.
C. Clark, Covenants and Interests Running With Land, p. 99 (1947).
The present case presents a restriction which provides that the land in question may not be used “for business, manufacturing, commercial or apartment house purposes,” and that “[n]ot more than two residences and such outbuildings as are appurtenant thereto, shall be erected or allowed to remain on said lot.” By *217limiting the use of this land, the covenantee, or promisee, is aided as a landowner. As previously stated, the covenant gives the covenantee some control over the nature and character of the neighborhood in which the covenantee’s own land is situated. The covenantor, or promisor, is simultaneously hampered as a landowner in that his permitted use of the property is limited to residential, and to no more than two residential structures. Thus, the covenant touches and concerns the land.
Privity: There are at least
three kinds of privity of estate that have been mentioned by the courts — mutual privity, requiring that the original parties have had a mutual and continuing interest in the same land; horizontal privity, requiring that the covenant be made in connection with the conveyance of an estate in fee from one of the parties to the other; and vertical privity, requiring only that “the person presently claiming the benefit, or being subjected to the burden, is a successor to the estate of the original person so benefited or burdened.”
Gallagher v. Bell, 516 A.2d 1028, 1037 (Md. App. 1986), cert. denied, 519 A.2d 1283 (1987); see generally Powell at § 673[2][c], 60-65 — 60-76. However, vertical privity, which minimizes the privity requirement, appears consistent with North Carolina law, see Herring v. Wallace Lumber Co., 163 N.C. 481, 79 S.E. 876 (1913) (covenantee entitled to enforce against successor of original covenantor, covenant in timber deed), and with sound public policy. Powell at § 673[2], 60-76 (“the running of covenants generally [can serve] socially useful ends by aiding rather than hindering the alienability of land”). This also appears to be consistent with the modern view. Id. Indeed, “[fjocusing on the precise relationship of the original contracting parties can create artificial results, causing covenants to be regarded as personal . . . when the covenant touches and concerns the land and the parties clearly intended for it to run with the land. The ‘vertical’ privity concept avoids that problem and focuses instead on the devolutional relationships . . . .” Gallagher at 1037; see 41 A.L.R. 3d Covenant in Deed Restricting Material to be Used in Building Construction, 1290, 1295 (where retained property benefited by the covenant “any person into whose hands such property passes may ordinarily enforce the restriction”).
Here, Williams, the person claiming the benefit, and the defendants, the persons being subjected to the burden, are successors *218to the original covenanting parties and therefore meet the privity of estate requirements.
In any event, privity of estate is not required for covenants to run in equity. Powell at § 673[1], 60-44. Covenants that run in equity are generally referred to as “equitable restrictions.” Id. at 60-42. “For covenants to run in equity, courts require that: (1) the covenant ‘touch and concern’ the land; (2) the original covenanting parties intend the covenant to run; and (3) the successor to the burden have ‘notice’ of the covenant.” Id. at 60-44. North Carolina appears to allow enforcement of covenants in equity. See Northfleet v. Cromwell, 70 N.C. 633, 641 (1874) (“the covenant will be enforced in equity against an assignee of the covenantor, with notice . . . ”). Here, there is no question that Warren D. and Claire Paley, as successors to the burden, had record notice of the restrictions.
Therefore, at law and at equity, the dismissal of Williams’ claim was error.
Runyons
The Runyons obtained their property from Mrs. Gaskins in 1954 and there were no restrictive covenants placed in that deed. Furthermore, the Runyons were not named as beneficiaries in the instrument creating the covenants which were placed on the properties conveyed by Mrs. Gaskins to the Brughs nor was the Runyon property and the Brugh property part of a general plan of development. Therefore, there exists no intent, express or inferred, that the Runyons were to benefit from the covenants on the Brugh property. Therefore, the Runyons were not entitled to seek enforcement of the covenant and dismissal of their claim was not error.