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Scudder v. Watt

98 A.D. 228 Court N.Y. App. Div. English

Delivered by Jenks, J.:

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p. 228
Halstead Scudder and John A. Albertson, as Executors, etc., of Elizabeth Benham, Deceased, Appellants, v. Thomas L. Watt, Respondent.

Headnote

Vendor and purchaser — right to a marketable title — a restrictive covenant constitutes an incumbrance — it need not be shown to impair the value ■—■ what clause relating to the covenant becoming null and void is not made operative by a mortgage on part of the land.
In the absence of a stipulation to the contrary, a purchaser of real estate is presumptively entitled to a marketable title.
The effect of a restrictive covenant affecting real estate is to impose upon the premises a servitude, which, in a legal sense, constitutes an incumbrance that can be enforced by any of the parties to the covenant.
p. 229
A number of owners of real property entered into an agreement restricting the use of the premises, which agreement contained the following provision: “ This agreement between the aforementioned undersigned shall be null and void and not binding upon any of the parties in question, in case any one of the above-mentioned property owners shall refuse to agree to its provisions.”
At the time of the execution of the agreement the property of one of the signers thereof was covered by a mortgage, which mortgage was subsequently foreclosed and the property thus freed from the restrictive agreement.
Held, that the quoted clause of the agreement meant simply that the agreement should be null and void if any of the property owners declined to become a party thereto or should reject it, and that the existence of the mortgage did not constitute a refusal within the meaning of the agreement on the part of the owner of the mortgaged property to execute the agreement;
That the existence of the restrictive agreement, which was found by the court to create a servitude upon the property, justified a proposed purchaser of land affected thereby in rejecting the title notwithstanding the absence of proof that the agreement injuriously affected the value of the property.
Appeal by the plaintiffs, Halstead Scudder and another, as executors, etc., of Elizabeth Benham, deceased, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Nassau on the 15th day of July, 1903, upon the decision of the court, rendered after a trial at the Suffolk Special Term, dismissing the complaint upon the merits.
The restrictive agreement mentioned in the opinion which was executed among others by the plaintiffs’ testatrix, and one of the defendant’s predecessors in title, provided that the parties thereto would “not sell nor permit to be sold spirituous or intoxicating liquors as a beverage upon any land or premises situated at or near Glen Head Depot * * * owned by us severally, or jointly; ” and also that said parties would “ include in any instrument of conveyance * * * of said lands or premises or any part thereof, a covenant and condition that the lands so sold * * * or conveyed by either of us thereby, shall not be used for the manufacture or sale of any spirituous or other intoxicating liquors as a beverage, hereby intending that said covenant and condition shall bind our heirs, personal representatives and assigns.” It was also provided that “ this agreement between the aforementioned undersigned shall be null and void and not binding upon any of the parties in question, in case any one of the above-mentioned property owners shall refuse to agree to its provisions,”
p. 230
At the time said agreement was executed the property of one of the parties to said agreement was subject to a mortgage which was subsequently foreclosed, but the judgment of foreclosure did not mention the restrictive agreement. Said agreement was not mentioned in certain mortgages executed subsequent thereto upon other lands subject to said agreement, which mortgages have also been foreclosed, not was it mentioned in defendant’s chain of title.
Halstead Scudder Edwcurd T. Payne with him on the brief], for the appellants.
Edward M. Perry, for the respondent.

We think that the judgment of the Special Term was right for the reasons given in the opinion of Wilmot M. Smith, J., presiding thereat.[1] We limit our discussion to points first raised before us, or, at least, pressed with new arguments. We think that the provision “ This agreement between the aforementioned undersigned shall be nuIL and void and not binding upon any of the parties in question, in case any one of the above-mentioned property owners shall refuse to agree to its provisions,” means that the agreement shall be null and void if any of the property owners decline to become a party thereto, or reject it on his part; in other words, it shall not be valid and effective unless all execute it. The fact that Downing’s property was then subject to a mortgage did not make his execution of

* The following is the opinion of Smith, J., delivered at Special Term: Smith, J.: In the absence of a stipulation to the contrary a marketable title is always presumed to be offered. There is no evidence in this case that the defendant was aware of the restrictive agreement when he bid upon the property. The effect of the restrictive agreement was to impose upon the premises in question a servitude which was, in a legal sense, an incumbrance which could be enforced by any of the parties to the agreement. (Uihlein v. Matthews, 173 N. Y. 154 .) Plaintiff contends that because one of the parcels of land affected by the agreement was subject at the time of its execution to a mortgage, which was subsequently foreclosed and the property sold, thus freeing the premises sold from the covenant, all the premises embraced in the agreement are relieved from the effect of the covenant. *231 The consideration of the agreement was that each of the parties thereto could impose upon his premises a binding and enforcible covenant.' Until the Downing mortgage was foreclosed the covenant was binding and. enforcible upon all the premises included in the agreement. There was no failure of consideration because of the existence of a prior mortgage which made the agreement void in its inception. The mortgage might have been paid off. The fact that a portion of the property was subsequently freed from the covenant might create a situation which would make it inequitable to thereafter enforce it. Whether under the circumstances the covenant ought to be enforced cannot be determined in this action, especially when others having rights dependent upon the same questions are not parties to the action. In view of the fact that the defendant maybe subjected to a legal contest as to the present validity of the covenant, the issue of which is not free from doubt, the title is not marketable and the defendant should not be compelled to accept it. (Shriver v. Shriver, 86 N. Y. 575 .) The defendant is entitled t.o judgment, with costs.

p. 231
the agreement a refusal in law on his part to execute it. In law and in equity the mortgagor is regarded as the owner of the land. (Thomas Mort. [2d ed.] § 23 ; Trustees of Union College v. Wheeler, 61 N. Y. 88 ,118; 2 Washb. Real Prop. [5th ed.] 169.) The contingency that the mortgagee, in consequence of Downing’s subsequent default, might thereupon defeat Downing’s title did not make Downing one who refused to execute the agreement. Downing was competent to impose the servitude, which was valid in any event as to all persons save his mortgagee and those standing in that mortgagee’s shoes. It is held in Crippen v. Morss ( 49 N. Y. 63 ) that an easement imposed by a tenant in common was valid save as to the other tenants in common. (See, too, Valentine v. Schreiber, 3 App. Div. 235 .)

The learned counsel for the appellants, assuming that the restrictive agreement was in force, further insists that in the absence of proof it cannot be assumed that the agreement injuriously afiects the value of the property, or that the defendant would have bid any less therefor had the agreement been mentioned in the terms of sale, and that, therefore, such omission is not material. He cites and relies upon Riggs v. Pursell ( 66 N. Y. 193 ). The agreement in that case was that the buildings should be placed back from the street so as to afford courtyards. The court say that there was neither proof nor allegation that the agreement diminished the value of the premises, that it was not made to impose a burden but to enhance the value of

p. 232
all the lots upon the street, that the fact that it is in a sense an incumbrance cannot be assumed without proof that it injuriously affected the value of the premises; and, besides, that before the sale the lessee had erected a large and valuable building, leaving the courtyard required by the agreement, which was known to the purchasers when they bid. In this case the court has decided that the “ effect of the restrictive agreement was to impose upon the premises in question a servitude.” Though servitude and easement are often used indiscriminately, the former term generally refers to a burden imposed. (Washb. Ease. [4th ed.] chap. 1, § 1, subd. 4; Fetters v. Humphreys, 18 N. J. Eq. 260 ,262.) In Uihlein, v. Matthews ( 172 N. Y. 154 , 158) a similar restriction was said to impose a servitude. The court had before it the location and character of the property and the nature and effect of the agreement, and it does appear that the property was improved. I think that the court might fairly infer, and that it has decided, that the effect of the agreement was to impose a servitude upon the land. I do not find that any exception was taken to the finding of a servitude. Higgs v. Pursell (supra) was distinguished in Wetmore v. Bruce ( 118 N. Y. 319 , 323). The court also intimates that there is a question whether the doctrine of that case, which arose out of a judicial sale, is applicable in any event to a private sale. In Heller v. Cohen ( 154 N. Y. 299 , 306) the court say : “ To entitle a vendor to specific performance, he must be able to tender a marketable title. A purchaser ought not to be compelled to take property the possession of which he may be obliged to defend by litigation. He should have a title that will enable him to hold his land free from probable claim by another, and one that, if he wishes to sell, would be reasonably free from any doubt which would interfere with its market value. If it may be fairly questioned, specific performance will be refused. (Vought v. Williams, 120 N. Y. 253 , 257; Shriver v. Shriver, 86 N. Y. 575 , 584; Flemings. Burnham, 100 N. Y. 1 .)”

The judgment should be affirmed, with costs.

All concurred.

Judgment affirmed, with costs.

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