Richart v. Jackson (98-157); 171 Vt. 94; 758 A.2d 319
[Motion for Reargument Denied 18-Jul-2000]
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
Frank and Barbara Richart, Fred and Supreme Court
Nancy Seigler, James & Peggy Sharp,
Mark and Claudia Pfaff, Paul and
Catherine Arthaud, et al.
On Appeal from
v. Chittenden Superior Court
Bryan S. Jackson and Nancy F. Jenkins March Term, 1999
Linda Levitt, J.
Douglas D. Le Brun of Dinse, Knapp & McAndrew, P.C., Burlington, for
Vincent A. Paradis and Daniel P. O'Rourke of Bergeron, Paradis & Fitzpatrick,
Essex Junction, for Defendants-Appellants.
PRESENT: Amestoy, C.J., Dooley, Johnson and Skoglund, JJ., and Jenkins,
Supr.J., Specially Assigned
SKOGLUND, J. Defendants appeal from a summary judgment of the
Chittenden Superior Court enforcing plaintiffs' right to the use and
enjoyment of certain improvements located in a common beach area on
defendants' property, and requiring defendants to pay a share of the
insurance costs for the beach area and improvements. Defendants contend
the court erred in ruling that they were bound by the terms of a
Declaration of Conditions, Restrictions and Uses relating to the beach
area and improvements because: (1) the failure to record the Declaration
prior to the conveyance of their property to a predecessor-in-title
extinguished any easements or covenants as applied to defendants; and (2)
the Declaration was recorded outside defendants' chain of title.
Plaintiffs have cross-appealed, contending the court erred in failing to
enforce a provision in the Declaration requiring defendants to contribute
to the overall maintenance costs of the beach-front improvements. We
affirm in part and reverse in part.
Defendants and plaintiffs own properties located in the Town of
Charlotte. All of the properties in question derive from a common
grantor, J. Graham Goldsmith. In 1986, Goldsmith began to develop the
property by dividing and selling lots. The first eight developed lots
comprised Black Willow Farms Phase I. Because not every lot had beach
access to Lake Champlain, Goldsmith granted to each Phase I lot that was
sold an easement for a right-of-way leading to a common beach area on two
lots he continued to own. Reference to this easement and right-of-way
appeared in every deed of the Phase I lots as they were sold. The deeds
Included herewith in common with others is an easement and right of
way over a ten foot wide pedestrian access trail as the same is shown
on the aforementioned Plan to provide access to the shores of Lake
Champlain, together with the use of a 60' x 60' beach area as shown
on the aforementioned Plan.
Plaintiffs are the owners of five lots in Phase I of the subdivision and
members of the Black Willow Farms Homeowners Association. The use
easements encumber Lots 10 and 11 of what became known as Black Willow
Farms Phase II development.
In March 1987, Goldsmith and the Association executed a Declaration
that subjected the access and beach area to several conditions,
restrictions, and uses and recognized the Association's right to
construct and maintain a ten-by-ten foot storage shed and to use, maintain,
and store a fifty-foot dock. The Declaration also required the owners of
Lots 10 and 11 to each pay one-tenth of the annual budget for maintenance
of the area, including the purchase of general liability and
indemnification insurance. For unexplained reasons, the Declaration was
not recorded until March 17, 1992.
On May 10, 1991, Goldsmith conveyed Lot 11 to Barry J. Mossman,
defendants' predecessor- in-interest. The 1991 warranty deed from
Goldsmith to Mossman stated in part:
The within parcel is subject to and has the benefit of a pedestrian
easement and right of way along the southerly boundary, in common
with others, in the area generally depicted on the Plat as "10 Foot
Wide Right of Way," and in the beach area on the within parcel as
generally shown on the Plat.
Although the warranty deed contained the easement, no mention was made of
the Declaration, and
Mossman did not recall receiving a copy of the Declaration or being aware
of its existence. The Association installed a dock in the beach area in
the summer of 1992. Thereafter, the dock was used by residents to access
boats during the summer, and was stored on land adjacent to the beach area
during the winter. On May 31, 1994, Mossman conveyed Lot 11 by warranty
deed to defendants. The deed contained the same easement language that
was in the Goldsmith-to-Mossman deed, but again did not reference the
A dispute arose between defendants and the Association over the
applicability of provisions in the Declaration, culminating in defendants'
removal of the dock from their property. Plaintiffs thereupon filed a
complaint against defendants, seeking a permanent injunction prohibiting
defendants from interfering with their use and enjoyment of the
right-of-way, beach area, and dock. Defendants filed an answer denying
plaintiff's right to use the dock and storage area, and a counterclaim
seeking to enforce certain provisions of the Declaration against
plaintiffs, including the obligation to obtain general liability insurance
to cover the common beach area and improvements. The parties filed
cross-motions for summary judgment.
The court issued two separate decisions. In the first, it ruled in
favor of plaintiffs' right to use and maintain the shed and dock in the
common beach area. In the second, it ruled that defendants were obligated
to pay one-tenth of the cost of insurance for the common beach area and
structures thereon, but not the costs of construction and maintenance of
the improvements. Plaintiffs' motion for reconsideration was subsequently
denied, and these appeals followed.
In reviewing a grant of summary judgment, we apply the same standard
as the trial court: summary judgment should be granted when, taking all
allegations made by the nonmoving party as true, there are no genuine
issues of material fact and the movant is entitled to judgment as a matter
of law. See Madden v. Omega Optical, Inc., 165 Vt. 306, 309, 683 A.2d 386, 389 (1996).
Defendants contest the court's ruling that their property was subject
to plaintiffs' use and enjoyment of the beach improvements. The court
grounded its decision on several theories. We address only its conclusion
that defendants were on inquiry notice of the improvements, as we find
that ruling to be dispositive. (FN1) Plaintiffs averred in their statement
of undisputed material facts that "[a]t the time the defendants purchased
the Property, a dock existed on the beach easement, and was in regular use
by the owners of Black Willow Farms Phase I, including plaintiffs and their
predecessors-in-title." Defendants' responsive statement disputed only the
representation that the dock was in "regular use" by plaintiffs. Thus the
existence of the dock at the time of defendants' purchase was admitted and
uncontroverted. See V.R.C.P. 56(c)(2); Samplid Enters., Inc. v. First
Vermont Bank, 165 Vt. 22, 25-26, 676 A.2d 774, 776 (1996). Based upon its
finding that "the dock was in use at the time Defendants purchased the
property," the court concluded that "[d]efendants should have been on
inquiry notice" concerning plaintiffs' interest.
The principle of inquiry notice is a venerable one in Vermont. We
have explained the concept as follows:
[T]he courts of equity are vigilant . . . to see that . . . a purchaser
shall not be allowed to take any benefit resulting from any want of
care and watchfulness. If there exist any circumstance of suspicion,
whereby he might be said to be fairly put upon his guard, and he
neglects to follow out the inquiry, he is affected with notice of all
facts, which such inquiry would have brought to his knowledge, and
if he purchases with his eyes shut, he acquires only the title of his
grantor impeded with its attendant equity.
Hart v. Farmers & Mechanics Bank, 33 Vt. 252, 264-65 (1860). This
principle has been continually reaffirmed in Vermont and elsewhere. See,
e.g., Tomasi v. Kelley, 100 Vt. 318, 323, 137 A. 196, 198-99 (1927)
("The circumstances being such as then to put defendant on inquiry, he is
chargeable with notice of all such facts as his inquiry, had it been made,
would have revealed."); In re Ryan, 851 F.2d 502, 507 (1st Cir. 1988)
("Inquiry notice follows from the duty of a purchaser, when he has actual
or constructive notice of facts which would lead a prudent person to
suspect that another person might have an interest in the property, to
conduct a further investigation into the facts."); Methonen v. Stone, 941 P.2d 1248, 1252 (Alaska 1997) ("It is well established that a purchaser
be charged with notice of a interest adverse to his title when he is aware
of facts which would lead a reasonably prudent person to a course of
investigation which, properly executed, would lead to knowledge of the
servitude."); Hall v. Allen, 771 S.W.2d 50, 53 (Mo. 1989) (en banc)
(purchaser of real estate is charged with notice of easement where
existence of servitude is apparent upon ordinary inspection of premises).
The uncontroverted facts supported the court's finding that the dock
was in use at the time of defendants' purchase, and this finding supported
the conclusion that defendants were on inquiry notice of plaintiffs'
interest. See Methonen, 941 P.2d at 1252 (purchaser "is considered
apprised of those facts obvious from an inspection of the property"). A
diligent inquiry, in turn, would have readily revealed the existence of
the Declaration, which was discovered and disclosed in defendants' own
title insurance report. Accordingly, it is immaterial whether, as
defendants claim, the Declaration was technically outside their chain of
title, as defendants were not bona fide purchasers without notice. See
Hemingway v. Shatney, 152 Vt. 600, 602-604, 568 A.2d 394, 396 (1989)
(Vermont is "notice" state and timing of recording affects only rights of
subsequent purchaser "without actual or inquiry notice"); see also Hall,
771 S.W.2d at 53 (although easement was not recorded in defendants' chain
of title, ordinary inspection would have revealed existence of boat dock
and footpath leading to it, and thus defendants may "properly be charged
with notice of a servitude in favor of the plaintiffs").
While not disclaiming knowledge of the dock and shed, defendants
nevertheless argue that plaintiffs' interest in the use of these
improvements was extinguished when defendants purchased their lot from a
predecessor-in-title who had no notice of plaintiffs' interest when he
purchased the property. The argument is premised on a doctrine known as
the "shelter rule," which generally provides that "[o]ne who is not a bona
fide purchaser, but who takes an interest in property from a bona fide
purchaser, may be sheltered in the latter's protective status." Sun Valley
Land & Minerals, Inc. v. Burt, 853 P.2d 607, 613 (Idaho Ct. App. 1993) ;
see also Reiner v. Danial, 259 Cal. Rptr. 570, 574 (Cal. Ct. App. 1989)
(successors in interest to bona fide purchaser entitled to receive same
protection against unrecorded encumbrance; any knowledge by successor
irrelevant). Because defendants' predecessor, Mossman, purchased prior
to the recording of the Declaration, defendants claim that it cannot be
enforced against them.
The premise of the argument is flawed, however, as the record does not
support the conclusion that Mossman lacked notice of plaintiffs' interest.
Although he purchased the property one year before the Declaration was
recorded, the Goldsmith-to-Mossman deed plainly referenced the existing
easement in favor of plaintiffs in the "beach area." While the deed did
not specify the permitted uses of the beach area, the record demonstrates
that a dock and shed for swimming and boating purposes were fully
compatible with the parties' intentions. See Directors of Seasons on
Mount Snow Owners Ass'n v. Seasons Assocs., 166 Vt. 618, 618, 693 A.2d 735,
737 (1997) (mem.) (character of easement depends upon intent of parties).
The deed to Mossman referenced a State land use permit which noted that a
variety of moorings and docks existed along the shoreline of the area; the
Declaration underscored the parties' understanding that a dock and shed
were compatible with the beach easement; and the dock was installed a year
after Mossman's purchase and remained in seasonal use thereafter without
objection. Accordingly, we are not persuaded that Mossman was a bona fide
purchaser without notice of plaintiffs' interest. (FN2)
We hold, therefore, that the court correctly enforced plaintiffs'
right to the use and enjoyment of the beach area and improvements.
In their cross-appeal, plaintiffs challenge the court's separate
ruling that the provisions of the
Declaration requiring defendants to pay one-tenth of the costs of
maintaining and insuring the beach area and improvements constituted
restrictive covenants which were unenforceable because defendants had
succeeded to Mossman's status as a bona fide purchaser without notice.
(FN3) As discussed above, the premise of the court's ruling was flawed, as
Mossman was not a bona fide purchaser without notice. Furthermore, as
noted, a diligent inquiry about the dock would have readily revealed
plaintiffs' interest. Accordingly, we conclude that defendants were on
notice of, and subject to, the terms of the Declaration requiring their
contribution of one-tenth of the annual budget for the beach area and
That portion of the judgment enforcing plaintiffs' right to the use
and enjoyment of the beach area and improvements is affirmed. That
portion of the judgment declining to enforce defendants' obligation under
the Declaration to contribute one-tenth of the annual budget for the beach
area and improvements is reversed; plaintiffs may enforce defendants'
obligation under the Declaration.
FOR THE COURT:
FN1. The court also ruled, without elaboration, that "[b]ecause the
Declaration was recorded before the conveyance to Defendants, the
Defendants are charged with constructive notice of the easements contained
FN2. While it was not a basis of the court's ruling, this conclusion would
equally support a finding that defendants were also on notice of
plaintiffs' interest pursuant to the beach-access easement in their deed.
Although the court briefly noted that it would not "imply a right to
maintain a shed and dock from the language of the deeds,"the court was not
considering the record as a whole, which demonstrated indisputably that
the improvements were within the scope of the beach easement. See Hutner
v. Kellogg, 563 N.E.2d 1338, 1339-40 (Ind. Ct. App. 1990) (finding that
parties intended lakeshore easement to include right to construct and
maintain pier for swimming and boating purposes); Badger v. Hill, 404 A.2d 222, 226 (Me. 1979) (evidence supported conclusion that easement granting
access to river included right to construct and maintain dock); but see
Edwards v. Fugere, 130 Vt. 157, 162-63, 287 A.2d 582, 586-87 (1972)
(evidence did not support conclusion that original grantor's reservation
of right-of-way to lake included use of dock).
FN3. The court nevertheless ordered defendants to contribute one-tenth of
the costs of insurance under an unjust enrichment theory.