Bill Wolf Petroleum Corp. v. Chock Full of Power Gasoline Corp.

• Decision Date: 13 June 1972
• Citation: 70 Misc.2d 314,333 N.Y.S.2d 472
• Parties: BILL WOLF PETROLEUM CORP. and Estron Oil Corp., Plaintiffs, v. CHOCK FULL OF POWER GASOLINE CORP., et al., Defendants.
• Court: New York Supreme Court

Page 472

333 N.Y.S.2d 472

70 Misc.2d 314

BILL WOLF PETROLEUM CORP. and Estron Oil Corp., Plaintiffs, v. CHOCK FULL OF POWER GASOLINE CORP., et al., Defendants.

Supreme Court, Special Term, Nassau County, Part I.

June 13, 1972.

Joseph Hellenbrand, Brooklyn, for plaintiffs.

Jacob E. Heller, New York City, for defendant Chock Full of Power Gasoline Corp.

Barbiero & Barbiero, Elmont, for defendant Linmont Properties Inc.

MEMORANDUM

BERTRAM HERNETT, Justice.

A filling station owner agrees to purchase all his gasoline products requirements from a single oil company or its distributors. May that agreement, if recorded in the real estate records of the County Clerk, impose itself automatically upon subsequent owners who do not assume it? The question is a novel one in New York.

On February 10, 1965, Linmont Properties Inc. (Linmont) purchased and was deeded a corner lot from Newman, Nager and Wolf (NN &W), who were individual distributors of American Oil Company (Amoco) products, in order to construct and operate a filing station. A 'requirements' agreement between Linmont and NN&W was also executed and duly recorded in the Nassau County Clerk's office on February 15, 1965. It provided that Linmont and subsequent owners, as well as tenants, would agree to purchase all of their requirements for petroleum products through NN&W or their designee. A station was then built, leased and operated under the terms of that requirements contract. In August 1971, Chock Full of Power Gasoline Corp. (Chock Full) purchased the property from Linmont, and entered into possession and operation, without assuming the requirements contract. It refused to comply with the agreement, claiming that Amoco's tank wagon prices were too high.

Plaintiffs, as successors to NN&W's designee for distribution of Amoco products, bring this action to enforce the requirements agreement as a covenant running with the land against Chock Full. Both sides move for summary judgment pursuant to CPLR 3211 and 3212.

Under pertinent paragraphs of the requirements agreement, Linmont and 'any subsequent owner, tenant, subtenant or occupant of said premises . . . covenants and agrees' that they:

(1) '. . . will not, and will not permit anyone else to, store, handle, sell, offer for sale, advertise for sale, use or permit to be used upon the premises, or any part thereof, or adjacent thereto, any gasoline, oil or other petroleum products other than those supplied by (NN&W), its successors, assigns or designees . . .';

(2) '. . . will purchase or acquire from (NN&W, its successors, assigns or designees) all of (Linmont and its successors') requirements of gasoline, oil or other petroleum products which are, or are to be stored, handled, sold, offered for sale, advertised for sale, or used upon the premises or any part thereof, or adjacent thereto';

(3) '. . . will actively conduct or cause to be conducted a gasoline service station on said premises' (4) '. . . will enter into a Dealer's Sales Agreement and Equipment Loan Agreement as required by the American Oil Company'.

The agreement provided for termination after ten years or 'sooner in accordance with any written instrument between the parties'. On October 19, 1965, Sales and Equipment Loan Agreements were executed by Linmont's tenant, Bill's Service Station. Their terms reiterated the requirements provisions at a stated minimum gallonage per delivery, identified the equipment loaned by Amoco, and further expressly permitted termination before the completion of the ten year period, this time, by either party upon at least thirty days notice.

Realty covenants fall into two general categories, 'negative', meaning those which prohibit the owner from doing something on this property, and 'affirmative', by which the owner undertakes to do some positive act. 13 N.Y.Jur. § 12, 1972 Com.Spp. p. 31; City of New York v. Turnpike Development Corp., 36 Misc.2d 704, 233 N.Y.S.2d 887. While the covenant here prohibited Linmont and subsequent takers from buying products other than through Amoco distributors, its thrust was to mandate positive acts: the operation of a filling station, execution of further agreements, and purchase of requirements from Amoco distributors. As such, the agreement plainly falls within the ambit of covenants described as 'affirmative'.

The general rule in New York is that an affirmative covenant does not run with the land and is unenforceable as against subsequent owners who do not assume it. Miller v. Clary, 210 N.Y. 127, 132, 103 N.E. 1114, 1116; Guaranty Trust Co. v. New York and Queens County R. Co., 253 N.Y. 190, 170 N.E. 887; Scott v. McMillan, 76 N.Y. 141; Neponsit Property Owners' Assoc. v. Emigrant Industrial Savings Bank, 278 N.Y. 248, 15 N.E.2d 793. Cf. Nicholson v. 300 Broadway Realty Corp., 7 N.Y.2d 240, 196 N.Y.S.2d 945, 164 N.E.2d 832.

Exceptions to the rule of non-enforceability of affirmative covenants are recognized where (1) the parties intend that the covenant should run with the land; (2) there is a continuous succession of conveyances between the original covenantor and the party now sought to be burdened; And (3) the covenant to a substantial degree 'touches' or affects the essential nature of the land. Miller v. Clary, Supra; Nicholson v. 300 Broadway Realty Corp., Supra, 7 N.Y.2d at 245, 196 N.Y.S.2d at 949, 164 N.E.2d at 835; Lawrence Park Realty Co. v. Crichton, 218 App.Div. 374, 218 N.Y.S. 278; Tarantelli v. Tripp Lake Estates, Inc., 63 Misc.2d 913, 314 N.Y.S.2d 21. Accordingly, covenants to build or repair fences, Moxley v. New Jersey & New York R.R. Co., 143 N.Y. 649, 37 N.E. 824; Concklin v. New York Central & Hudson River R.R. Co., 149 App.Div. 739, 134 N.Y.S. 191; Corwin v. New York & Erie R.R. Co., 13 N.Y. 42; to observe riparian obligations, Adirondack Power & Light Corp. v. City of Little Falls, 148 Misc. 191, 265 N.Y.S. 567, to provide railway crossings, Post v. West Shore R.R. Co., 123 N.Y. 580, 26 N.E. 7, or to make repairs to buildings or fixtures, Greenfarb v. R.S.K. Realty Corp., 256 N.Y. 130, 175 N.E. 649; Clemente Bros., Inc. v. Peterson-Ashton Fuels, Inc., 29 A.D.2d 908, 287 N.Y.S.2d 955; Morehouse v. Woodruff, 218 N.Y. 494, 113 N.E. 512; Nye v. Hoyle, 120 N.Y. 195, 24 N.E. 1, may be imposed upon successive owners.

The mere fact that the covenant was recorded, as here, does not make it run with the land. Morgan Lake Co. v. N.Y., N.H., & H.R.R., 262 N.Y. 234, 238, 186 N.E. 685, 686. While ordinary recordation of outstanding liens or defects in title on real property may give constructive notice to subsequent owners, the imposition of an affirmative covenant as an obligation is not accomplished so easily and can only be found if all three exceptional factors are present.

No magic formula exists to indicate whether a particular affirmative covenant falls within the stated exception. The effect and substance of each covenant must be examined to determine the presence or absence of the necessary factors. Neponsit Property Owners Assoc. v. Emigrant Industrial Savings Bank, Supra; Nicholson v. 300 Broadway Realty Corp., Supra; Tarantelli v. Tripp Lake Estates, Inc., 23 A.D.2d 905, 259 N.Y.S.2d 188; 5 Powell, Real Property (1956) p. 184.

There is no dispute that the original covenantor, Linmont, after six years of owning the property and buying Amoco products, conveyed directly to Chock Full, now sought to be burdened with the covenant. However, it is not clear that, in the first instance, NN&W and Linmont intended to make the covenant 'run with the land' for ten years or any other period. While the language of the agreement encompasses subsequent owners of the property, the requirements contract by its express terms contemplates earlier termination by any written agreement between the original parties, before completion of the ten year period. More to the point, the Equipment Loan and Sales Agreement, subsequently executed and purporting to bind the filling station operator to buy Amoco products for ten years, by its own terms, could be terminated by Either party upon thirty days notice. If the Equipment Loan and Sales Agreement fell, the requirements agreement could not likely endure. On the whole, the intended duration and immutability of the requirements agreement are elusive.

In the final analysis, the covenant is not enforceable since the requisite 'touching' of the land by the sought covenant is not established. Neponsit Property Owners' Assoc. v. Emigrant Industrial Savings Bank, Supra....