Clem v. Valentine

Dtgges, J., delivered the opinion of the Court. Roelcy Ridge is a small village located in Frederick County, Maryland, containing about twenty buildings and one hundred inhabitants. There are two main roads or highways passing through the village, one leading from Emmitsburg southwardly through Rocky Ridge and on to Creagerstown, the other leading eastwardlv from Thurmont through Graeeham and Rocky Ridge to Detour. In 1921 Ellsworth C. Valentine, Dessie M. Valentine and Margaret L. Shorb were the owners of a lot of ground located at the northeast corner formed by the intersection of the two roads mentioned above, containing one acre and twelve perches, more or less, and Ellsworth C. Valentine and Dessie M. Valentine, his wife, were the owners of a lot located at the northwest corner, containing one acre.

For the purposes of this opinion the property on the northeast corner will bo called the Clem lot, and the one on the northwest corner the Thompson lot. The evidence shows that there had been located on each of these properties buildings which were used for mercantile purposes; the Clem lot having been so used for a number of years, and being so used by Ellsworth C. Valentine at the time it was sold to Clem on April 14th, 1921; while the store-house which formerly stood on the Thompson lot was burned some time about 1912 and was not rebuilt or occupied for store purposes until Valentine erected a dwelling house and store upon the property, the construction thereof being completed some time in February, 1921. It is further disclosed that the fair market value of the Clem lot in April, 1921, without any restrictions, was* from $1,500 to $1,800; that on April 14th, 1921, the then owners of the Clem lot sold it to William U. G. Clem for $1,100, ²² the reduced price being on account of a restrictive covenant as to the use of the property, agreed upon between the parties and incorporated in the deed to Clem. This covenant is contained in the habendum clause of the deed and reads as follows: “To have and to hold the above described land and premises unto himself, the said William IT.

G. Clem, his heirs and assigns, subject to the restrictions hereinafter mentioned. And the said grantee does hereby covenant and agree 'that he will not use the property and premises aforesaid for che purpose of conducting therein or thereon a general merchandise store or business and that no building to be erected on said land shall be used otherwise than as a private dwelling house or garage. In the event the said grantee violates the aforesaid covenant, then he shall forfeit all right and title in and to the premises and the said property shall revert to the said grantors, their heirs and assigns. The aforegoing covenant shall apply and bind the grantee, his heirs and assigns.” Just prior to this conveyance Valentine vacated the property sold to1 Clem, and occupied the dwelling-house and storehouse erected by him upon the Thompson lot.

Erom the time he moved into the property on the Thompson lot Valentine or his lessee conducted a general mercantile business thereon until the portion of this lot, upon which the dwelling-house and store was located, was sold to Grace L. Thompson on March 7th, 1927. During the period from April llth, 1921, to March 7th, 1927, the appellant Clem did not attempt to conduct any mercantile business upon the property bought from Valentine, but strictly observed and lived up to the restrictive covenant 'contained in his deed. By deed dated March 7th, 1927, ¡Ellsworth O. Valentine and wife conveyed that portion of the lot located on the northwest corner, on which the dwelling and store house was located, to' Grace L. Thompson, reserving to themselves, however, a portion of said one acre, fronting sixty feet on the Emmitsburg road, and containing a piece of land of that width running the full depth of the one acre lot. Mrs. Thompson purchased her lot ²³ for the purpose of conducting a mercantile business thereon, and, at the time she purchased it, was told by Valentine, or his agent for the sale thereof, that there was a restrictive covenant in Valentine’s deed to Clem which precluded that property from being used for a mercantile business.

Upon her purchase, she continued the mercantile business formerly conducted by Valentine or'his lessee-, and shortly thereafter the appellant rented or leased his property to Robert Valentine, a nephew of Ellsworth C. Valentine, who- proceeded to establish and conduct a mercantile business upon the Clem property. Thereupon the original grantors to Clem, and Grace L. Thompson and her husband, the appellees herein, filed a bill in the Circuit Court for Frederick County praying that the appellant be restrained from conducting1 a general merchandise business on the property purchased from Valentine and others. The bill alleged the facts hereinbefore set forth, and further, that the restrictions in the deed to Clem were placed there by the grantors for the benefit of the remaining property of Valentine and wife, two of the grantors, and were so understood by the appellant, the- property being conveyed to the appellant for a considerably less sum than the market value of the property without any restriction ; that the appellant accepted the same with the full understanding of the purpose of the restriction contained in the deed, and that he was obtaining it for a smaller sum because of the restriction; that the appellant acknowledged the force and effect of the restriction by refraining from conducting any general mercantile business on his property from the date of the delivery of his deed until the breach set out as above, which occurred after the purchase by Mrs. Thompson of the Thompson lot. There was a demurrer filed to the bill of complaint, which was- overruled, with leave to answer.

The appellant then answered, and testimony was taken in open court. Subsequently the chancellor passed an order1 directing that the injunction issue as- prayed in the bill of coinplaint. The case comes here on appeal from this order. The appellant urges a number of objections against the enforcement of the restrictive covenant, among which are, ²⁴ that it is against public policy, in that it creates a monopoly, that it is repugnant to the fee simple estate created, and that it is perpetual in its operation.

We do not deem it necessary to discuss at length these objections, for the reason that we find, upon well settled principles of law, they are without force. There is clearly no monopoly created which the law strikes down as being against public policy, because the restriction only applies to a very small area, and then only restricts the conduct of one particular business therein. It is not repugnant to' the fee simple estate created by the granting clause of the deed, unless the habendum divests the estate granted and substitutes another, which it is apparent the restriction here does not do. Marden v. Leimbach, 115 Md. 206 .

Neither does it create a perpetuity, such as the law condemns, because the restriction can be removed by a release of the parties interested in its enforcement at any time. We have been referred to no authority holding that a restriction, such as here considered, is void as creating' a perpetuity, and we have been unable to' find any. Restrictions upon the use of property granted in fee, without express limitation as to the time for the operation of the restriction, have been universally sustained. We come no*w to what, in our opinion, is the real question to be decided, and that is, can Mrs. Thompson, a subsequent grantee of land retained by Valentine at the time Valentine sold the lot to Olem with the restrictive covenant, enforce the provisions of that covenant against Olem ?

Or, in other words, can one who was not a party to the instrument containing the restrictive covenant, hut who subsequently became the grantee of the covenantee, enforce the restrictive provisions for his benefit ? This question depends upon whether or not the covenant contained in the deed from Valentine to Olem was designed fo:r the purpose of benefiting the land retained by Valentine, or whether it was -a personal covenant inuring solely to the benefit of the grantors in the deed to Clem. If it was a personal covenant, of course, Mrs. Thompson could derive no benefit therefrom, there being m> privity of contract ²⁵ between her and Clem; but if it created an equity inuring to the benefit of the land, or to the person standing in the position of owner of the land, then a court of equity will enforce the restriction in favor of any subsequent grantee of Valentine against Clem, or any assignee of his, having actual or constructive notice of the provisions of the restrictive covenant. Whether a person not a party to a restrictive covenant has a right to enforce it, therefore, depends upon whether the covenant was made for the benefit or advantage of the land retained by the. covenantee, and at the time of the suit owned by the complainant; and this question is determined largely by the intention of the parties in imposing the restriction.

It is incumbent upon the complainant to show that this was the intention of the original grantor. Hays v. St. Paul M. E. Church, 196 Ill. 633 , 63 N. E. 1040 . In order to make this rule applicable, it must appear from the terms of the grant, or from the situation of the parties and the surrounding circumstances, that it was the intention of the grantor, when inserting the restriction, to create a servitude, right, or equity, which would inure to the benefit of the complainant’s land, and equitably should be annexed to it as an appurtenance. Beals v. Case, 138 Mass. 138 ; Hooper v. Loltman (Tex.

Civ. App.), 171 S. W. 270 ; 21 A. L. R. 1281, and cases there cited. It must be borne in mind that the action to enforce agreements imposing restrictions on the use of property, by persons not parties thereto, is equitable, and governed by the rules applicable to that kind of action; and the jurisdiction of courts