Allen v. Minot Amusement Corp., 9990

• Decision Date: 12 November 1981
• Docket Number: No. 9990,9990
• Parties: Earl ALLEN and Nash Finch Company, Plaintiffs and Appellants, v. MINOT AMUSEMENT CORP. and Minot Christian Center, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 698

312 N.W.2d 698

Earl ALLEN and Nash Finch Company, Plaintiffs and Appellants, v. MINOT AMUSEMENT CORP. and Minot Christian Center, Defendants and Appellees.

Civ. No. 9990.

Supreme Court of North Dakota.

Nov. 12, 1981.

Pringle & Herigstad, Minot, for plaintiffs and appellants; argued by Richard P. Olson, Minot.

McGee, Hankla, Backes & Wheeler, Minot, for defendant and appellee Minot Amusement Corp.

Eaton, Van de Streek & Ward, Minot, for defendant and appellee Minot Christian Center; argued by Nevin Van de Streek, Minot.

SAND, Justice.

This is an appeal by the plaintiffs, Earl Allen (Allen), and Nash Finch Company (Nash Finch), from a district court judgment which denied an injunction to restrain the defendants, Minot Christian Center (Minot Christian) and Minot Amusement Corporation (Minot Amusement), from using certain property in the Oak Park Shopping Center in Minot as a church, and which held that the defendants and their patrons had an easement to use the shopping center parking lot for parking.

Allen constructed the Oak Park Shopping Center on subdivided land which he owned in the city of Minot, and on 20 July 1961 he executed a lease agreement with Nash Finch as the major tenant in the shopping center. A "short form lease" was contemporaneously entered into and was recorded in the Register of Deeds office for Ward County, but the principal lease was not recorded. One of the conditions of the principal agreement was that the shopping center would not be used or occupied except for businesses of the "same kind and nature" as those listed and made part of an exhibit and attached to the principal lease between Nash Finch and Allen. ¹ However the exhibit was not attached to the recorded "short form lease," but was incorporated by reference.

On 1 Apr. 1963 Allen wrote to Nash Finch for permission to use part of the shopping center as a motion picture theater. Such a use was not included in the original approved uses. Nash Finch was originally opposed to allowing a motion picture theater in the shopping center. The opposition to the theater was reflected in several letters exchanged between Nash Finch and Allen. However, Nash Finch eventually granted permission to Allen to use the building as a motion picture theater in a letter from the president of Nash Finch to Allen which provided in part as follows:

"This consent is given, of course, with the understanding that it does not in any way operate as a waiver of any of the rights of Nash-Finch Company under its lease with you.

"This consent is further conditioned on your continuing responsibility to furnish Nash-Finch Company the following:

"3. That the use and occupancy conform to the provisions of your said lease with Nash-Finch Company."

The theater was built in 1964 and leased by Allen to Dakota Amusement Company who operated the theater until December 1969.

On 17 Dec. 1969 Allen entered into a contract for deed to sell the Oak Park theater to Minot Amusement. ² The contract for deed between Allen and Minot Amusement specifically referred to the use and occupancy restrictions contained in the principal lease between Allen and Nash Finch. ³ However, Minot Amusement was not furnished with a list of the restrictions. The contract for deed provided an easement from Allen to Minot Amusement for parking of cars for patrons of the motion picture theater. ⁴ The contract for deed also required Minot Amusement to reimburse Allen for their prorated share of the costs of maintaining the parking lot.

The contract for deed was paid in full and a warranty deed was issued by Allen to Minot Amusement on 8 Jan. 1980 which contained the following provision:

"By acceptance of this deed, the grantee (Minot Amusement) herein does covenant that it will not effect or permit any use of the property herein conveyed contrary to the provisions of paragraph 10(a) (see footnote 3) of above referred to contract for deed. This covenant and restriction as to the use that may be made of grantee's premises shall in all things terminate and expire on January 20, 1986."

The warranty deed also contained language similar to the contract for deed concerning the easement for parking and the prorata sharing of expenses for maintaining the parking lot.

In 1980 Minot Amusement vacated Oak Park theater and moved to a new shopping center in Minot where it currently operates five theaters. Minot Amusement sought permission from Nash Finch to sell the theater to Minot Christian for their use as a church. However, Nash Finch refused to give their permission. ⁵ Nevertheless, Minot Amusement and Minot Christian entered into a contract for deed in July 1980 for the sale of the theater. Minot Christian began using the theater as a church and its patrons began using the parking lot to park their cars.

Allen and Nash Finch commenced this action to enforce the use and occupancy restrictions against Minot Amusement and Minot Christian. The plaintiffs also alleged that Minot Amusement failed to pay its prorata share of the parking lot maintenance costs and real estate tax which it was allegedly obligated to do through its contract for deed with Allen. Allen and Nash Finch further requested that the easement for parking by motion picture patrons be terminated for non-use because the building was no longer used as a motion picture theater and because of the failure to pay the prorata cost contribution for maintenance of the parking lot.

The district court issued a memorandum decision in lieu of findings of fact and conclusions of law determined that the restrictive covenant did not run with the theater site because the restrictions were of no conceivable benefit to the theater. See NDCC § 47-04-26; Marra v. Aetna Const. Co., 15 Cal.2d 375, 101 P.2d 490 (1940) (interpreting California statute similar to NDCC § 47-04-26). The district court also determined the use and occupancy restriction was a nullity and had no force and effect because of an abandonment or waiver by Nash Finch, and further held that Minot Christian and its patrons had an easement for parking. The district court also determined that the provision containing the prorata payments for parking lot repairs was valid and enforceable by Allen. Judgment was entered and Allen and Nash Finch appealed.

The first issue raised by Allen and Nash Finch concerns whether or not the acquiescence by Nash Finch to the use of the building as a motion picture theater constituted a modification of the restrictive covenant or a waiver of its objection to the building's use as a church.

Prior to discussing the issue, it is necessary to note that Allen and Nash Finch were seeking injunctive relief. The granting or denying of injunctive relief is equitable in nature and rests in the sound discretion of the trial court. Eakman v. Robb, 237 N.W.2d 423 (N.D.1975). The trial court's ruling will not be reversed on appeal unless there has been an abuse of discretion. Associated General Contractors of North Dakota v. Local No. 580 of Laborers International Union of North America, 278 N.W.2d 393 (N.D.1979).

A landowner may sell his land subject to such reservations or restrictions as he may see fit to impose, provided they are not contrary to public policy. Anderson v. Marshall-Malaise Lumber Co., 66 N.D. 216, 263 N.W. 721 (1935). Although such reservations and restrictions are not favored, they will be given force and effect when clearly established. Anderson v. Marshall-Malaise Lumber Co., supra. The right to enforce a restriction or reservation may be lost by waiver or acquiescence. Meierhenry v. Smith, 208 Neb. 88, 302 N.W.2d 365 (1981); Pool v. Denbeck, 196 Neb. 27, 241 N.W.2d 503 (1976); see generally, 20 Am.Jur.2d Covenants, Conditions, Etc., § 273, page 832. Whether or not there has been such acquiescence or waiver depends upon the facts and circumstances of each particular case. Meierhenry v. Smith, supra; Pool v. Denbeck, supra.

In this instance we believe that the overriding matter to be considered is that the consent to modify the restriction on uses and occupancies allowed by Nash Finch was specifically given "with the understanding that it does not in any way operate as a waiver of any of the rights of Nash Finch" and was further conditioned on the continuing responsibility that the "use and occupancy (of the land) conformed to the provisions of your (Allen's) said lease with Nash Finch." This language manifests a limited modification of the restrictive covenant by Nash Finch, and is not an instance of "many" or "numerous" exceptions of a restrictive covenant, but rather is a limited exception to the restrictive covenant. This language cannot and should not be interpreted beyond the actual consent given.

Minot Christian and Minot Amusement point out that the Nash Finch letter to Allen consenting to a theater in the shopping center was not recorded, and therefore they should not be deemed to have knowledge of the limited consent given by Nash Finch. They assert that based on the use of the land in violation of the recorded restrictions of use and occupancies, the waiver or modification by Nash Finch should be extended to cover the use of the land and building for any use similar to a theater.

The district court found that Minot Christian and Minot Amusement had constructive knowledge of the restrictions on uses and occupancies in the original lease between Allen and Nash Finch. ⁶ NDCC § 1-01-25. We may resort to the memorandum decision as an aid for determining the findings of fact made by the trial court. See, Hegge v. Hegge, 236 N.W.2d 910 (N.D.1975). Based on the record, the finding of constructive knowledge is supported by the evidence and is not "clearly erroneous." NDRCivP Rule 52(a).

Because Minot Christian and Minot Amusement had constructive knowledge of the use restrictions, we believe they also had an obligation to inquire as to the extent and circumstances of the apparent violation of the restrictions. We believe the...