Craven County v. First-Citizens Bank & Trust Co.

Annotate this Case

75 S.E.2d 620 (1953)

237 N.C. 502

CRAVEN COUNTY v. FIRST-CITIZENS BANK & TRUST CO., Inc.

No. 314.

Supreme Court of North Carolina.

April 15, 1953.

*627 W. B. R. Guion and R. A. Nunn, New Bern, for plaintiff, appellee.

Ward & Tucker, New Bern, for defendant, appellant.

JOHNSON, Justice.

Is the land sought to be conveyed to the defendant, First-Citizens Bank & Trust Company, subject to a restrictive burden under which the Bank may be prevented from using the property for business purposes? This is the question presented by this appeal.

*628 In the outset it is to be noted that the principle upon which these restrictive burdens on the use of lands within a real estate subdivision are enforceable is that they are servitudes imposed on the various lots or parcels for the benefit of the area affected. Such servitudes ordinarily are treated as easements appendent or appurtenant to the various lots or parcels within the restricted area. The existence of two estates in land is required to support an easement of this sort. On the one hand is the estate which bears the burdenthe servient tenement; on the other is the estate which derives the benefitthe dominant tenement. The one owes, whereas the other is owed the obligation. Tiffany, Law of Real Property, Third Edition, Sec. 758; Clark, Covenants and Interests Running with Land, Second Edition, p. 1134; Mordecai's Law Lectures, Second Edition, pp. 469-470.

These servitudes, commonly referred to as negative easements, are usually imposed by restrictive covenants between the developer and the initial purchasers and become seated in the chain of title so that subsequent purchasers are chargeable with notice thereof, Turner v. Glenn, 220 N.C. 620, 18 S.E.2d 197, thus fixing it so each lot in a legal sense owes to all the rest of the lots in the subdivision the burden of observing the covenant, and each of the rest of the lots is invested with the benefits imposed by the burdens. Accordingly, in legal contemplation the servitude imposed on each lot runs to and attaches itself to each of the rest of the lots in the restricted area, thus forming a network of cross-easements or cross-servitudes, the aggregate effect of which is to impose and confer on each lot reciprocal and mutual burdens and benefits appurtenant to the lots, so as to run with the land and follow each lot upon its devolution and transfer. Thompson on Real Property, Permanent Edition (1940), Vol. 7, Sec. 3631; 14 Am.Jur., Covenants, etc., Sections 193 and 194.

Therefore, where land within a given area is developed in accordance with a general plan or uniform scheme of restriction, ordinarily any one purchasing in reliance on such restriction may sue and enforce the restriction against any other lot owner taking with record notice, and this is so regardless of when each purchased; and similarly, a prior taker may sue a latter taker. Johnston v. Garrett, 190 N.C. 835, 130 S.E. 835; Myers Park Homes Co. v. Falls, 184 N.C. 426, 115 S.E. 184; 26 C.J.S., Deeds, § 167; Tiffany, Law of Real Property, Third Edition, Chapters 17 and 18, p. 441 et seq.; Clark, Covenants and Interests Running with Land, Chapter 6, p. 170 et seq.

The right of action rests upon the principle that a negative easement of this sort is a property right amounting to an interest in land. City of Raleigh v. Edwards, 235 N.C. 671, 71 S.E.2d 396; Turner v. Glenn, supra; Davis v. Robinson, 189 N.C. 589, 127 S.E. 697.

Decision here does not require a detailed discussion of the procedural requirements necessary to be followed in order to impose restrictive servitudes on a given area of land. The minimum procedural requirements necessary to impose such burdens have been delineated and fully explained in numerous decisions of this Court, among which are these: East Side Builders v. Brown, 234 N.C. 517, 67 S.E.2d 489; Sedberry v. Parsons, 232 N.C. 707, 62 S.E.2d 88; Higdon v. Jaffa, 231 N.C. 242, 56 S.E.2d 661; Turner v. Glenn, supra; Humphrey v. Beall, 215 N.C. 15, 200 S.E. 918; Davis v. Robinson, supra; Snyder v. Heath, 185 N. C. 362, 117 S.E. 294; Myers Park Homes Co. v. Falls, supra; Stephens Co. v. Myers Park Homes Co., 181 N.C. 335, 107 S.E. 233.

It suffices here to say that our decisions emphasize these factors: (1) that to be effective the restrictive covenant sought to be enforced must be part of a general plan or scheme of development which bears uniformly upon the area affected, Sedberry v. Parsons, supra; Humphrey v. Beall, supra; and (2) that where an entire tract is developed over an extended period of time, and the intent clearly appears, as disclosed by the record chain of title, that the restrictions were imposed by the developer in accordance with a plan of development by separate, distinct divisional units within the larger area, rather than as a single development project, effect will be given to restrictive covenants only as they *629 relate to each such separate unit. Stephens Co. v. Myers Park Homes Co., supra; Myers Park Homes Co. v. Falls, supra; Snyder v. Heath, supra; Higdon v. Jaffa, supra; East Side Builders v. Brown, supra; See also Besch v. Hyman, 221 App.Div. 455, 223 N.Y.S. 231; Russell Realty Co. v. Hall, Tex.Civ.App., 233 S.W. 996.

Further, it is to be noted that we adhere to the rule that these restrictive servitudes being in derogation of the free and unfettered use of land, the covenants imposing them are to be strictly construed in favor of the unrestricted use of property. Davis v. Robinson, supra. See also 14 Am. Jur., Covenants, etc Sec. 212.

It seems to have been assumed below that the main body of the land lying west of Fort Totten Drive and north of Neuse Boulevard is subject to negative easements, imposed pursuant to a general plan or uniform scheme of development, which confer upon the owners of these lots reciprocal rights to prevent the use of any of them for business purposes. Humphrey v. Beall, supra; Sedberry v. Parsons, supra.

Conceding, without deciding, that such is the status of the title to the lots within this area, nevertheless decision here requires that we determine the question whether or not these easements or restrictive servitudes reach across Fort Totten Drive and attach to any part of the 7.3 acre tract. The determination of this question is dependent largely upon whether the developers of this property treated and dealt with the two areas as a single unit and intended the restrictive easements to cover both tracts, or whether the two areas were treated and dealt with as separate, independent units, with intent of the developers and purchasers that the restrictions imposed be limited to the area west of Fort Totten Drive and north of Neuse Boulevard. This intent is to be gathered from the terms of the covenants and related facts appearing in the chain of title. It may not be established by parol. Turner v. Glenn, supra; Davis v. Robinson, supra.

The record here discloses these crucial facts bearing on the question at hand: (1) The original map of the subdivision shows the 7.3 acre Fort Totten tract left as open acreage designated as "Jones and Meadows Land," whereas the large area west of Fort Totten Drive and north of Neuse Boulevard is divided into streets, lots, and so forth. (2) The trust agreement executed 6 November, 1926, by the Bank as trustee stipulates in effect that building restrictions to be directed by Fort Totten, Inc., shall be imposed on the subdivided area west of Fort Totten Drive and north of Neuse Boulevard, whereas the 7.3 acre tract designated "Jones and Meadows Land" is to be conveyed as a whole or in parcels as directed by-Fort Totten, Inc., with no reference being made to restrictions on this area. (3) The printed form contract approved by Fort Totten, Inc., and used in selling the lots expressly recites that the designated restrictions apply "to lots west of Fort Totten Drive." (4) The instrument dated 15 January, 1931, substituting John A. Guion as trustee in place of the defunct bank, reiterates that the lots "west of Fort Totten Drive * * *" shall contain building restrictions, and leaves the area east of the Drive to be sold as acreage, with no mention being made of restrictions. (5) On 27 November, 1937, Judge Frizzelle entered an order approving the proposed contract made by the Receiver of Fort Totten, Inc., with J. W. Ferrell Company for the sale of the remaining lots. This contract, embracing lots in both areas, stipulates that "all lots sold to be subject to building restrictions heretofore provided for the development as contained in the conveyances heretofore made." At the sale conducted pursuant to the contract, "B. O. Jones, Trustee for Craven County," became the purchaser of the entire 7.3 acre area for the price of $2,000, and the report of sale "was approved and confirmed" by Judge Harris, and the record here discloses no reference to restrictions in the order of confirmation.

These and other related facts disclosed by the record impel the conclusion that for restrictive use purposes the large suburban development west of Fort Totten Drive and north of Neuse Boulevard was treated and dealt with by the developers and purchasers of this property as being entirely separate from the 7.3 acre Fort Totten area east of *630 the Drive. The record effectively negatives the suggestion that the parties intended the restrictions imposed on the lots in the larger area to extend to the neighboring 7.3 acre parcel.

We have not overlooked the consent judgment entered 1 December, 1934. This judgment reduced the sale price of the unsold property and authorized the Receiver of Fort Totten, Inc., to sell the remaining lots on both sides of Fort Totten Drive at any time within three years. The judgment provides that the Receiver may not sell the lots in the 7.3 acre area "until protective building restrictions * * * applying to this area are agreed upon by Craven County, Virginia Trust Company and Mrs. Julia B. Jones." As to this, it is suggested by the defendant that presumptively it was the restrictive covenant promulgated by these parties that was placed in the deed by which the Receiver and the Trustee conveyed the entire 7.3 acre tract to B. O. Jones, Trustee for Craven County, and that this deed effectively tied the two areas together as one for restrictive use purposes. The contention presents a close question. However, it may not be sustained in the light of these factors which we think effectively negative the idea of the presumption relied on by the defendant: (1) A contextual examination of the judgment discloses that in reducing the sale price of the various lot units and in giving the Receiver leave to sell within the three-year period the unsold portions of the property at the prices fixed in the judgment for each unit, it was contemplated that the Receiver should sell the lots, including those in the 7.3 acre area, piece by piece (or by the acre in the latter area), at private sales over a period of time; (2) that in the event of such sale in parcels of the 7.3 acre tract, it was left open in respect thereto for the three designated parties, namely: Craven County, Virginia Trust Company, and Mrs. Julia B. Jones, to devise satisfactory restrictions to be imposed on the 7.3 acre area, not for the benefit of the larger area, but as applicable to and for the benefit of the lot units in the 7.3 acre tract. (3) As it turned out, the Receiver was unable to sell any part of the lots in the 7.3 acre Fort Totten tract, and therefore there was no reason for the three designated parties to agree upon or promulgate restrictions to be imposed on the lots in this area, and on the record as presented these parties never met and affirmatively adopted any restrictive covenants to be imposed on these lots. (4) On failure of the Receiver to dispose of the lots by the parcel, Craven County as moving party contacted J. W. Ferrell and arranged for an auction sale of the unsold lots in both areas. A contract with Ferrell ensued. The contract was approved by order of the court dated 27 November, 1937. The contract as approved provides that the lots shall be sold in accordance with restrictive covenants provided in "conveyances heretofore made." The record shows that no restrictions were imposed on the 7.3 acre tract by these prior "conveyances." At the Ferrell auction sale the entire 7.3 acre area was sold in bulk and so conveyed to Jones, Trustee for Craven County. It thus appears that the court order of 27 November, 1937, also signed by Judge Frizzelle, supersedes the prior judgment of 1 December, 1934, with respect to restrictive covenants.

The record as presented sustains the lower court's conclusion that the two tracts stand as separate and distinct development units; and the servitudes imposed within the area west of Fort Totten Drive and north of Neuse Boulevard do not run to or attach themselves upon any part of the 7.3 acre Fort Totten tract.

Next, it is contended by the defendant that the deed by which the 7.3 acre Fort Totten tract was conveyed to B. O. Jones, Trustee for Craven County, imposed on that tract, treating it as a separate unit, a negative easement prohibiting its use for business purposes. It is noted that this deeda mimeographed form similar to those used in conveying lots in the residential district west of Fort Totten Drivecontains the same restrictive covenants appearing in those deeds, including this one: "7. The lots hereby conveyed shall not be used for business purposes."

The contention is without merit. It is settled law that a real covenant imposing a servitude on land is coextensive only with the estate to which it is annexed. 14 Am.Jur., Covenants, etc., Sec. 5. This *631 being so, a real covenant imposing a servitude which runs with land loses its character as such and the servitude is extinguished when all the land affected by the covenant becomes vested in one and the same person. This in legal contemplation works a dissolution of the servient and the dominant tenements. By merger both are swallowed up in the single ownership. Spector v. Traster, 270 Mass. 545, 170 N.E. 567; Stevenson v. Spivey, 132 Va. 115, 110 S.E. 367, 21 A.L.R. 1276; 14 Am.Jur., Covenants, etc., Sections 291 and 293.

Similarly, and under application of these principles, where, as in the instant case, a deed containing a covenant restricting the use of land embraces and conveys all the land affected thereby, such covenant stands only as a personal covenant between the parties. And a personal covenant (as distinguished from a real covenant) by its very nature does not run with the land. Thompson on Real Property, Permanent Edition (1940), Vol. 7, Sec. 3632; 14 Am.Jur., Covenants, etc., Sec. 19 et seq.; 26 C.J.S., Deeds, § 167. See also Taylor v. Lanier, 7 N.C. 98; Blount v. Harvey, 51 N.C. 186; Weisman v. Smith, 59 N.C. 124; Ricks v. Pope, 129 N.C. 52, 39 S.E. 638; Phillips v. Wearn, 226 N.C. 290, 37 S.E.2d 895.

Therefore, the covenants in the deed to Jones, Trustee for Craven County, stipulating that the 7.3 acre Fort Totten tract shall not be used for business purposes, may not be enforced as a real covenant or treated as imposing a negative easement on the land. Los Angeles Terminal Land Co. v. Muir, 136 Cal. 36, 68 P. 308; Mitchell v. Leavitt, 30 Conn. 587; Lowell Inst. for Sav. v. City of Lowell, 153 Mass. 530, 27 N.E. 518; Badger v. Boardman, 16 Gray 559, 82 Mass. 559; Jewell v. Lee, 14 Allen 145, 96 Mass. 145.

Moreover, this covenant is unenforceable even as a personal covenant between the parties to the deed. This because neither of the grantors had the legal authority to make any such covenant. Chadwick, Receiver, derived his authority and power from the judgment of Judge Frizzelle, dated 27 November, 1937, approving the contract with Ferrell for an auction sale of all the unsold lots in both development units. The record indicates that the contract as approved directed that the lots be sold subject to building restrictions "contained in conveyances heretofore made." An examination of the "conveyances heretofore made" discloses that no restrictions were imposed on the 7.3 acre Fort Totten tract. Therefore, the Receiver was without authority to impose burdens on this tract. As to Guion, Trustee, it is apparent from the record that his power derived from the indenture of 15 January, 1931, substituting him as trustee in place of the defunct bank. This instrument, executed by all the beneficial owners of the lands, expressly provides that the lots in the residential development west of Fort Totten Drive and north of Neuse Boulevard shall be conveyed subject to restrictions as to use, whereas it is directed that the 7.3 acre tract east of the Drive be sold as a whole or in parcels, with the clear implication being that this tract is treated as a separate unit to be sold without restrictions as to use. It is obvious, therefore, that since neither Chadwick, Receiver, nor Guion Trustee, had legal authority to limit the use of the property conveyed, the covenant inserted in the deed is a nullity as to both these grantors and may not be enforced by either of them or by anyone claiming through or under them. Southern Real Estate Loan & Trust Co. v. Atlantic Refining Co., 208 N.C. 501, 181 S.E. 633; Johnson v. Futrell Bros. Lumber Co., 225 N.C. 595, 35 S.E.2d 889; 54 Am.Jur., Trusts, Sec. 440.

Nor is there any merit in the defendant's contention that the subsequent conveyances made by Jones, Trustee, and by the city and county activated the restrictive covenant contained in the deed to Jones, Trustee, and imposed its burden on the land as a negative cross-easement when the ownership of the 7.3 acre tract became divided between the city and county. Here the defendant urges in gist that when the ownership became divided between the city and county, such divided ownership activated the covenant, brought into existence reciprocal servient and dominant tenements, and thus imposed the burdens of the covenant upon both parcels of the land.

*632 As to this contention, it is observed that none of the deeds appearing in the chain of title subsequent to the deed to B. O. Jones, Trustee for Craven County, contains any reference to the so-called restrictive covenant which appears in that deed. As we have seen, the deed to Jones, Trustee for Craven County, created no easement and imposed no burden on the land. Therefore, when the land was first conveyed thereafter by deed containing no reference to or mention of the covenant respecting restriction as to use, such noninclusion of the covenant and silence of the parties in respect thereto worked an effective abandonment and disavowal of the provisions of the covenant contained in the deed to Jones, Trustee for Craven County.

The defendant makes the further contention that title to the lot sought to be conveyed to the defendant bank is defective for that when the 7.3 acre Fort Totten tract was partitioned between the city and county, the partition was made without public notice as required by G.S. § 160-59, and that therefore the city's interest in the lot in question has not been released according to the formalities of law. The contention is without merit. This statute requires public notice only in respect to the sale of real estate belonging to a municipality. It has no application to actual partition of land in which a municipality owns an interest. Actual partition between tenants in common involves no sale or disposal of land or any interest therein. It creates no new, different, or additional title or estate in land. It only severs the unity of possession. Wood v. Wilder, 222 N.C. 622, 24 S.E.2d 474; Wallace v. Phillips, 195 N.C. 665, 143 S.E. 244.

Besides, it is only by virtue of facts resting in parol, apparently conceded by the defendant in the facts agreed, that the city ever occupied, if indeed it did, the position of a tenant in common with the county in respect to the parcel of land in controversy. As to this, it is noted that the deed made by Chadwick, Receiver, and Guion, Trustee, to B. O. Jones, Trustee for Craven County, confers on Jones no duty as such trustee. Therefore, on the record title as here presented the deed created a passive (as distinguished from an active) trust, the immediate effect of which, by operation of our Statute of Uses, G.S. § 41-7, was to place in Craven County the whole title to the landthe legal as well as the equitable title. 2 Blackstone, p. 333; Pippin v. Barker, 233 N.C. 61, 62 S.E.2d 520; Fisher v. Fisher, 218 N.C. 42, 9 S.E.2d 493, and cases there cited; Lee v. Oates, 171 N.C. 717, 88 S.E. 889; Springs v. Hopkins, 171 N.C. 486, 88 S.E. 774.

It follows from what we have said that the judgment below is affirmed.