McLeod v. ClementsAnnotate this Case
H.E. McLeod, Sr. transferred a part of his land to H.E. McLeod, Jr. The parties agreed that McLeod, Jr. would dig a well on his land and give McLeod, Sr. and others living on McLeod, Sr.’s land (specifically Mrs. McLeod, Sr., Michael McLeod, and Appellant R. Jerry McLeod) water from that well free of charge. This agreement was put in writing in 1971 in an indenture. In 1992, McLeod, Jr. deeded the well property to Michael McLeod. Michael and Sally McLeod then sold the well property to Ryan and Melissa Reeves on August 28, 1996. The Reeveses’ deed, which was recorded on September 27, 1996, included a “Special Agreement” in which the Reeveses agreed to provide water to the house occupied by Appellant and Mrs. McLeod, Sr. as long as Appellant and Mrs. McLeod, Sr. occupied the benefitted property and paid the Reeveses a reasonable monthly fee for electricity and well maintenance costs. No mention was made of the 1971 agreement. Sometime later in 1996, Appellant recorded the 1971 agreement. The well property then changed hands a few more times before it was sold to Appellee Stan Clements in 2007. Appellee’s deed said that the property was “conveyed subject to that certain Special Agreement contained in a deed from Michael R. McLeod and Sally J. McLeod to Ryan Reeves and Melissa Reeves.” In his affidavit, Appellee averred that he was not aware of the 1971 water agreement when he purchased the property, but he was aware of the 1996 agreement that required him to provide water to Appellant and Mrs. McLeod, Sr. via the visible pipes on the burdened land. Appellee and Appellant operated under the 1996 agreement, but in 2008, after Appellant stopped paying and Appellee cut off the water supply, Appellant filed a complaint seeking to require Appellee to provide him with water. The trial court then entered several orders that were reversed or vacated on procedural grounds during four trips to the Court of Appeals. On the fifth trip, Appellee moved for summary judgment, asking the court to find that he was not bound by either the 1971 or the 1996 water agreement. In 2012, the trial court granted Appellee summary judgment as to the 1971 agreement and denied him summary judgment as to the 1996 agreement. The Court of Appeals affirmed the partial grant of summary judgment, holding that even assuming the 1971 water agreement was a covenant running with the land, it was not enforceable against Appellee, a bona fide purchaser for value, because it was recorded outside his chain of title and Appellee did not have actual or constructive notice of it. In reaching this decision, the Court of Appeals said, “[i]n the face of the well- developed law [we have] set forth above, we decline to follow Wardlaw v. Southern Railway Co., [. . .] for its statement that covenants running with the land bind subsequent owners thereof ‘with or without notice.’” The Supreme Court granted certiorari in this case to consider whether: (1)the Court of Appeals erred in “declin[ing] to follow "Wardlaw;" and (2) whether "Wardlaw" was wrongly decided. The Supreme Court concluded that the answer to both questions was no: the statement from Wardlaw that the Court of Appeals declined to follow was dicta that did not govern this case, and Wardlaw was correctly decided based on the facts presented in that case.