Kenney v. Morgan

Menchine, J., delivered the opinion of the Court. George L. Morgan, Jr. and Edwina C. Morgan, his wife, (Morgans) are the owners, by virtue of a deed in fee simple, of a lot and dwelling in a development in Anne Arundel County known as “Turnbull Estates.” Their title was acquired from Thomas T. Kenney and Margaret B. Kenney, his wife, (Kenneys) who reside in that development but are also its developers and the owners of more than 100 unsold, ⁷⁰⁰ unimproved lots within it. The Morgans, acting for themselves and on behalf of 13 of 17 residents of Turnbull Estates, filed a bill for declaratory judgment and injunctive relief against the Kenneys and others in the Circuit Court for Anne Arundel County. Prior to the actual development of Turnbull Estates, the Kenneys had recorded among the land records of Anne Arundel County a declaration of covenants and restrictions to be applicable to all lots within the development.

All subsequent lot sales were made subject to that declaration. The bill sought: (a) to have those covenants and restrictions declared to be illegal and unenforceable; and (b) to have the bylaws of the Turnbull Homes Association, Inc. (a corporation to be formed under provisions of the recorded declaration) declared to be void, with required adoption of new bylaws under voting procedures to be fixed by court decree. Although the bill of complaint attacked the entirety of the covenants and restrictions contained in the recorded declaration, the Morgans limited their evidential attack to only a few of them. As a result, the decree of the trial court dealt with less than all of those covenants and restrictions.

Moreover, the appellants in their brief stated that they did not contest such parts of the decree as related: (a) to covenant M; (b) to an accounting of funds; and (c) to the required transfer of title to certain recreational areas within the development. We shall accordingly limit our review to a consideration of those parts of the decree that dealt with (a) the validity and interpretation of covenants C, J, K, L and N; and (b) the bylaws of the Turnbull Homes Association, Inc. The Covenants We will set forth only those covenants, together with such parts of the recorded document as are essential to their interpretation or reflect upon their intended effect. So edited, the recorded document would read as follows: “THIS DECLARATION, made this 30th day of September in the year Nineteen Hundred and Fifty-nine (1959), by THOMAS T. KENNEY and ⁷⁰¹ MARGARET B. KENNEY, his wife, of the County of Anne Arundel, State of Maryland. “AND WHEREAS, The Developers have subdivided certain portions of said tract of land into residential building sites or lots for sale to the public as such, which said lots are hereinafter more particularly described, SUBJECT, HOWEVER, to certain conditions, restrictions, covenants, reservations, easements, liens and charges, all as hereinafter specifically set forth, which are to run with the land and to be binding alike upon The Developers and all purchasers, their successors, assigns, heirs, executors and administrators; Definition of Terms “ ‘Building Site’ shall mean any lot, or any portion thereof, or any two or more contiguous lots, or a parcel of land of record and in unity of title, upon which a dwelling may be erected in conformance with the Covenants herein. “ ^Association’ shall mean a non-profit, non-stock association or corporation to be organized under the laws of the State of Maryland by the property owners of lots as shown on the Plat aforesaid, or upon any further Plats of Turnbull Estates, in the tract of land hereinbefore mentioned or adjacent thereto, to be known as The Turnbull Homes Association. “ ‘The Turnbull Company’ shall mean a business firm, or a corporation to be organized under the laws of the State of Maryland by The Developers with full corporate powers as set forth in its charter, including specifically the power to develop the tract of land aforementioned, or any extensions thereof, known or to be known as Turnbull Estates, or any portion thereof. ⁷⁰² General Purpose of Conditions “The aforesaid enumerated lots as shown on said Plat of Tart of Section 1, TURNBULL ESTATES’ are subjected to the following Covenants, to insure the best use and the most appropriate development and improvement of each building site thereof; to protect the owners of building sites against such improper use of surrounding building sites as will depreciate the value of their property; to preserve, so far as practicable, the natural beauty of said property and neighborhood, to guard against the erection thereon of poorly designed or proportioned structures, and structures built of improper or unsuitable materials; to obtain harmonious color schemes; to insure the highest and best development of said property; to encourage and secure the erection of attractive homes thereon, with appropriate locations thereof on building sites; to prevent haphazard and inharmonious improvement of building sites; to secure and maintain proper setbacks from streets, and adequate free spaces between structures; and in general to provide for a high type of home ownership in said subdivision and thereby stabilize the investment in homes and secure to the owners thereof the better type of environment for family living. Covenants “B. No building, fence, bulkhead, dock, shore improvements or excavations shall be erected, placed, or made on any building site or on contiguous waters thereto until the building plans, specifications, plot plan showing the type and location of such building or other work have been approved in writing as to material and construction, grade, elevation and conformity and harmony of external design with existing ⁷⁰³ structures in the development, by The Turnbull Company. “C. No building shall be located on any Building Site less than Fifty Feet from the front lot line for all sites covered by these Covenants, nor less than Twenty-five Feet from any side street line.

No building shall be located less than Ten Feet from any side lot line. The Turnbull Company may waive minor violations of these provisions. “J. None of the property subject to this Declaration shall be occupied, leased, demised, rented, conveyed or otherwise alienated, except by way of a Mortgage or Deed of Trust and sale for default thereunder, nor shall the title or possession thereof be transferred, without the consent in writing had and obtained from The Turnbull Company, except that The Turnbull Company may not withhold such consent, if written request has been made to it to permit such occupation, leasing, renting, conveying, or alienation, signed by a majority of the owners of the lots which are subject to this Declaration, and which adjoin or face said lot upon both sides of the street, or streets, and within a distance of five lots from the side lines thereof. “K. In order to facilitate operation of Covenant J above, the owners of property subject to this Declaration covenant for themselves, their heirs and assigns, that in the event at any time they shall desire to lease, rent or sell said property they will appoint The Turnbull Company agent for such purpose. “L. No fence, wall, hedge, or mass planting shall be permitted to extend beyond the minimum building setback line established herein except upon approval as provided in Covenant B above. ⁷⁰⁴ “N. The owner of each Building Site shall be entitled to one membership in The Association and to participate in all of the affairs of the Association in accordance with the By-laws of the Association. Each Building Site, from the date of its purchase from The Developers, shall be subject to the payment of an annual charge of Eighteen ($18.00) Dollars, which shall be payable to the Association on the first day of January of each year and shall be applied as dues for said membership. Said annual charge due the first day of January of each year, if not paid on or before the first day of March of that year, shall bear interest from said last-mentioned date at the rate of six per centum per annum. “0.

These Covenants are to run with the land and shall be binding on all parties and all persons claiming under The Developers until January 1, 1980, at which time said Covenants shall be automatically extended for successive periods of Ten (10) years unless by a two-thirds vote of the then owners of the Building Sites covered by these Covenants it is agreed to change said Covenants in whole or in part. “Q. The Turnbull Company shall have the right to assign to the Association, in whole or in part, its rights, duties, powers and functions under this Declaration.” Covenants J and K Covenant J imposed a restriction upon alienation. The limitation imposed by Covenant K conjunctively was attached to that restriction. Accordingly the two covenants will stand or fall together. The trial court concluded, properly we think, that covenants J and K imposed unlawful restrictions repugnant to the inherent nature and quality of a fee simple estate.

The language of the covenants is ⁷⁰⁵ strikingly similar to those struck down in Real Estate Co. v. Serio, 156 Md. 229 . In Serio it was said at pages 234-35: “The restriction imposed by the deed of the Northwest Real Estate Company upon sales by its grantees and their successors was clearly repugnant to the fee simple title which the deed conveyed. Its object was to deprive the grantees, until 1932, of the unrestrained power of alienation incident to the absolute ownership which the granting clause created. In Clark v. Clark, supra, the attempted restraint was for a period of ten years, and consisted of a requirement for consent by six other devisees, while here it is for a shorter period and the consent of a single but corporate grantor is the condition of a transfer.

But in each instance the intended interference with the normal alienability of the fee simple estate devised or granted is equally apparent. As stated in Tiffany on the Law of Real Property (2nd Ed.) p. 2311, ‘The fact that a restriction upon the right to alienate a vested estate in fee simple is to endure for a limited time only does not, by the weight of authority, render the restriction valid.’ In addition to the cases cited by the author in support of that statement are a number collected in a note to Latimer v. Waddell, 119 N. C. 370 , as reported in 3L. R. A. (N. S.) 668.

In Murray v. Green, 64 Cal. 367 , it was said: ‘It is difficult to conceive of a condition more clearly repugnant to the interest created by the grant of an estate in fee simple than the condition that the grantees shall not alienate the same without the consent of the grantor. With such a condition, if valid, annexed to the grant, it would be neither a fee simple nor any other estate known to the law.’ “In practical effect the reservation in the deed before us would give the grantor company unqualified control for a term of years over the disposition of the property by sale or lease. The recital that the purpose of the restriction is to ⁷⁰⁶ maintain ‘a desirable high class residential section’ and to enable the grantor ‘to pass upon the character desirability and other qualifications of the proposed purchaser or occupant’ was evidently designed to explain rather than to limit the reservation of the power to forbid a transfer of the property by the grantees to any purchaser or lessee who failed to conform, in the opinion of the grantor’s officers, to those indefinite standards. The existence of such a discretionary control would be plainly incompatible with the freedom of alienation which is one of the characteristic incidents of a fee simple title.” Covenants J and K properly were declared to be invalid by the decree of the trial court.

Covenant C This covenant reads as follows: “No building shall be located on any Building Site less than Fifty Feet from the front lot line for all sites covered by these Covenants, nor less than Twenty-five Feet from any side street line. No building shall be located less than Ten Feet from any side lot line. The Turnbull Company may waive minor violations of these provisions.” The decree of the trial court struck down the italicized portion of covenant C. We find no invalidity in the provision. Appellees suggest that the Turnbull Company is a non-existent entity.

The record shows that the Kenneys functioned underMshe firm name of The Turnbull Company. The recorded document plainly authorized them to do so. The right of a developer of property to retain a power to waive restrictions is clearly recognized in this State. In Matthews v. Kernewood, Inc., 184 Md. 297 , it was said at page 307: “One who conveys a part of a tract of land by deed containing restrictive covenants may reserve to ⁷⁰⁷ himself the power to modify or omit these restrictions altogether as was done in the case at bar.” There is not a scintilla of evidence to demonstrate any arbitrary or capricious abuse of the reserved power.

In Jones v. Real Estate Co., 149 Md.