Court Opinion

ID: 9677348
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:49:45.862709+00
Date Added: 2024-06-11T12:18:56.312165
License: Public Domain

O’Hara, J.
(dissenting). Two questions are presented by this appeal on our leave granted from the Court of Appeals (2 Mich App 389). The first is whether the restrictive covenant here involved is personal and limited in its application to the grantor who executed it, or whether it is a covenant running with the land and binding upon subsequent purchasers. The second is what is the effect, if any, of the covenant upon a purchaser who takes with notice thereof. The relevant facts are as follows:
Appellant Sun Oil Company bought 3 lots in a desirable location in St. Clair Shores. It built and equipped a filling station upon them and leased out its operation. In the fractional plat there was *192a total of 9 lots. The 6 remaining after Sun’s purchase were owned by a Clara "Williams. They were adjacent to and north of the 3 Sun had previously purchased. Thereafter Sun Oil bought 2 of those lots as a protective measure against the erection of competitive filling stations upon any of the remaining 4. To this end it required that its grantor, Mrs. Williams, include in the warranty deed conveying the 2 lots the following reservation:
“Grantor agrees that property now owned by grantor lying north of and adjacent to the within described premises shall not be used for or in connection with the operation of a gasoline service station or filling station for the sale of gasoline, motor fuel.”
It is stipulated that the remaining lots constitute “the property” which is the subject of this litigation.
Subsequent to this conveyance, appellee Trent purchased the 4 lots on land contract. Prior to the purchase, its attorney examined the reservation affecting the 4 lots and Trent was advised by counsel for Sun that Sun would seek to enforce it.
The case was tried in the circuit court on a stipulated record. No fact questions are involved. The trial judge found the restrictive covenant to be a covenant running with the land and hence binding upon the subsequent purchaser. The court added in its opinion:
“Even if this be considered under defendant’s theory to be a personal covenant, defendant having admittedly taken title with knowledge of its existence, then equity will enforce its observance by enjoining defendant’s violation of said covenant for defendant is ‘privy in conscience with the maker of restrictive agreement.’ ”
*193The Court of Appeals affirmed. Its rationale was that the restriction was not clear and unambiguous. Therefore, that case precedent holding that such restrictions cannot be extended beyond the plain meaning of the words used in them did not control. From this premise the court proceeded to a determination of “the nature of the subject matter, and the apparent purpose in making the agreement,” citing Moore v. Kimball (1959), 291 Mich 455, 461. Thereupon, the court found that purpose “patently is the limitation of competition on this land.” In expanding its opinion, our able intermediate Associates used the following language:
“We acknowledge that our decision is not in accord with the case of Lowe v. Wilson (1952), 194 Tenn 267 (250 SW2d 366) or the authorities cited therein for we are not persuaded that blind adherence to such a technical rule is required by or desirable (in our view) for the jurisprudence of Michigan.” (Emphasis this Court’s.)
In its conelusionary paragraph the court adds:
“Finally we mention that our view is not in accord with that expressed in 5 Bestatement of Property, § 537. We do not share the concern there expressed in the comment (f) on that section (p 3221) anent the social harm involved.”
We are compelled to disagree. First, we do not believe that to hold with appellant we adhere blindly to a technical rule. Bather, we believe we follow wise precedent efficacious as applied to transactions involving the transfer of and limitations upon the use of real property. We might well agree that the apparent purpose of appellee Sun in phrasing the restriction was to limit competition on the lots not owned by it and contiguous to those which it purchased from grantor Williams. Such unilateral in*194tention on its part, however, in our view is not sufficient to establish that such was the intention of the grantor and binding upon subsequent grantees. If Sun intended the restriction to be a covenant running with the land, it was Sun’s obligation to phrase the restriction or to insist upon phrasing that would create no ambiguity at the peril of having any ambiguity resolved in favor of the free use of land. To follow the Court of Appeals, we would do violence to the rule enunciated in Bastendorf v. Arndt, 290 Mich 423, 426 (124 ALR 445):
“Where restrictions are ambiguous, it is axiomatic that uncertainties are resolved in favor of the free use of property. Kelly v. Carpenter, 245 Mich 406; Phillips v. Lawler, 259 Mich 567.”
We .agree with the Court of Appeals that the restrictions “might be read as an undertaking on the part of the covenantor that the property would never be used or it might be read as an undertaking that it would not be used so long as the grantor had title.” (Emphasis added by the Court of Appeals.) To read “never” into the restriction here involved is to resolve the ambiguity against the .free use of property and is to abrogate the salutary rule of Bastendorf to the exact contrary. We follow the established rule.
Next we consider the language of the learned chancellor that even if the covenant be interpreted as a personal covenant, appellant having taken with notice equity will enforce its observance. We have ho quarrel with the statement of principle. We believe, however, it contains an omission that would render its application inequitable rather than equitable. The omission is the answer to the question “notice of what?” It is stipulated that appellee had notice that a restriction had been included in the deed from Mrs. Williams to Sun and made appli*195cable to tbe lots not conveyed which she retained. Even the plenary power of equity cannot decree the effect of notice to be greater than that which the thing noticed creates. A purchaser with notice of the restriction, as was appellee Trent, is as the chancellor held “privy in conscience with the maker of [the] restrictive agreement.” Equity would have no great problem in knowing what the “conscience” of Sun was. It wanted to keep filling stations off 4 lots that it did not buy that were contiguous to 2 lots it did buy, all owned by the same person. We cannot, however, span the wide gap from Sun’s “conscience” to Mrs. Williams’ “conscience” on the language of the deed. In examining the conveyance of the 2 lots from Mrs. Williams to Sun, counsel for Trent had a right to conclude that the restriction was personal to the grantor under well-settled law, and that when the lots passed to Trent the restriction no longer applied. Trent could well have been “privy in conscience” to Mrs. Williams and still be free to use the 4 lots it purchased as it chose. Having held the covenant personal and not binding on appellant Trent, we do not reach or pass upon its contention that if it were valid, the intended use was not in fact violative of the language of the restriction.
Appellant Trent further urges that if the restriction does run with the land and thus is binding upon it, the limitation is in restraint of trade and violative of the applicable State statute.* Strictly *196speaking, for decisional purpose in this Conrt, we need not pass upon it. However, because the Court of Appeals held the restriction binding on Trent, it had to pass upon this issue. It is important to the jurisprudence of onr State and likelihood exists that the question will arise. For this reason we here approve the position of the Court of Appeals and for the reasons assigned.
The judgment of the Court of Appeals affirming the circuit conrt is reversed. The cause should be remanded to the circuit court with directions to vacate its judgment, to dissolve the i permanent injunction, and to enter judgment for defendant-appellant Trent Auto "Wash, Inc. Appellant may tax costs of all courts. ..
Dethmers, C. J., and Souris, J., concurred with O’Hara, J.
'Brennan, J., did not participate in the decision of this case.

 CL 1948, § 750.151 (Stat Ann 1962 Rev § 28.348)_, which reads: “All contracts, agreements, understandings and combinations made, entered into, or knowingly assented to, by and between any parties capable of making a contract or agreement wbieh would be valid at law or in equity, the purpose or object or intent of which shall be to limit, control, or in any manner to restrict or regulate the amount of production or the quantity of any article or commodity to be raised, or produced by mining, manufacture, agriculture or any other branch of business or labor, or to enhance, control or regulate the market price thereof, or in any manner to prevent^ or restrict free competition in the production or sale of any sueh article *196or commodity, shall be illegal and void, and every sueh contract, agreement, understanding and combination shall constitute a criminal conspiracy. And every person who, for himself personally, or as a member, or in the name of a partnership, or as a member, agent or officer of a corporation, or of any association for business purposes of any kind, who shall enter into or knowingly consent to any sueh void and illegal contract, agreement, understanding or combination, shall be deemed a party to sueh conspiracy.
“All parties so offending shall be guilty of a misdemeanor,- punishable by imprisonment in the county jail for not more than 6 months or by a fine of not more than $250. And the prosecution for offenses under this section may be instituted and the trial had in any county where any of the conspirators become parties to sueh conspiracy, or in which any one of the conspirators shall reside: Provided, however, That this section shall in no manner invalidate or affect contracts for what is known and recognized as common law and in equity as contracts for the 'good will of a trade or business’; but all such contracts shall be left to stand upon the same terms and within the same limitations recognized at common law and in equity.”