Federoff v. Pioneer Title & Trust Co. of Arizona
| Decision Date | 06 December 1990 |
| Docket Number | No. 11612,No. CV-90-0232-PR,11612,CV-90-0232-PR |
| Citation | 803 P.2d 104,166 Ariz. 383 |
| Parties | Robert F. FEDEROFF and Kathryn Federoff, husband and wife; Chris Davis, a single woman; Karen Knierem; Sandra Sylvester; Lorne Graham Wilson and Barbara B. Wilson, husband and wife; Robert Miller; and Marcia Lincoln, Plaintiffs/Appellants/Cross-Appellees, v. PIONEER TITLE & TRUST COMPANY OF ARIZONA, an Arizona corporation, as Trustee under Trust; H & R Associates, a limited partnership; Lowell E. Rothschild and Ann S. Rothschild, husband and wife; George T. Schultz and Linda K. Schultz, husband and wife; Wayne Terpstra and Tamara Terpstra, husband and wife; Larry Duane Casoni and Maryann Casoni, husband and wife; Joseph A. Buono and Angela T. Buono, husband and wife; Sergio Martinez and Irma Y. Martinez, husband and wife; Kerry R. Cox and Patricia Cox, husband and wife; Darryl D. Koeppel and Sandra J. Koeppel, husband and wife; Robert J. Casulli and Sandra J. Casulli, husband and wife; Glenn Griffith and Carol A. Griffith, husband and wife; Stanley Murray and Kathleen Murray, husband and wife; Gregory J. Bennett and Christine A. Bennett, husband and wife; Phillip M. Ramirez and Susan M. Ramirez, husband and wife; Tim Gordon and Jeanette Gordon, husband and wife; Ronald Ying Yee and Karen R. Lee Yee, husband and wife; William C. Stellbrink and Retha Barbara Stellbrink, husband and wife; Ernst Stellbrink and Opal H. Stellbrink, husband and wife; William J. Boxhorn and Linda S. Boxhorn, husband and wife; Marvin Kirk Simmons and Jacquelyn Marie Simmons, husband and wife; William Mooney; John Thomas Glaze and Linda Lee Glaze, husband and wife; Randall B. Terpstra and Pamela K. Terpstra, husband and wife; Florence L. Voight and Deitrich Voight, husband and wife; Jill S. Brooker; Paul J. Greco and Carol L. Greco, husband and wife; Stephen Dunn and Nancy Dunn, husband and wife; First American Savings and Loan; First American Title; First Gibraltar Mortgage; Pima Savings and Loan Association; Western Savings and Loan Association; and Wolfswinkle Group, Inc., an Arizona corpo |
| Court | Arizona Supreme Court |
Robert F. Federoff and others (appellants) petitioned for review of the court of appeals' decision finding eight restrictive covenants unenforceable. We granted review on two issues: (1) whether these restrictive covenants established by the original grantors are enforceable as class three covenants under O'Malley v. Central Methodist Church, 67 Ariz. 245, 194 P.2d 444 (1948); and (2) whether enforcement of the covenants, regardless of their classification under O'Malley, is precluded by Werner v. Graham, 181 Cal. 174, 183 P. 945 (1919), because the failure to incorporate the recorded covenants into the deeds of the subsequent grantees made the covenants personal to the original grantors. We have jurisdiction pursuant to Ariz.Const. art. 6, § 5(3) and A.R.S. § 12-120.24. We granted review pursuant to Ariz.R.Civ.App.P. 23, 17B A.R.S.
In October 1947, two adjoining landowners, Charles Logan and Beulah Kingstrand, entered into and recorded in the Pima County Recorder's Office a document creating certain restrictions, conditions, and reservations on their land. The property consisted of two contiguous pieces totalling 800 acres near what is now Ina and Silverbell roads in Tucson. Logan owned 785 acres and Kingstrand owned fifteen acres. The agreement contained eight paragraphs restricting the use of the property. These restrictions included, among other things, a paragraph restricting residential lots to a minimum size of three acres, a paragraph prohibiting the construction of any commercial, industrial, or professional building, and a paragraph establishing the set-back requirements.
Paragraph nine of the agreement stated:
The above restrictions, reservations, and conditions shall run with the land and continue and remain in force at all times, and against all persons until August 1, 1951, at which time they shall be automatically extended for a period of five years, and thereafter in successive five year periods unless on or before the end of one of such extension periods the owners of all of the property covered by this agreement shall, by written instrument, duly recorded, declare a termination of the same.... (Emphasis added).
Paragraph ten provided a right of reversion upon violation of the agreement, and continued:
[A]s to each tract owner in said property the said provisions, conditions, and covenants shall be a covenant running with the land, and the breach thereof or the continuance of any such breach may be enjoined, abated or remedied by appropriate proceedings by the owner of the reversionary rights or by any such owner of other lots or parcels subject to this agreement but by no other person. (Emphasis added).
In 1950, a corrective amendment to the restriction was recorded in the Pima County Recorder's Office. Logan had sold 4.5 acres to Rex and Alice McBarnes. The McBarneses joined with Logan and Beulah Kingstrand (then Beulah Killoran) to execute an "Amendment to Restrictions Agreement" that slightly altered para graphs four and six, relating to residential lots and buildings.
Between 1978 and 1980, H & R Associates and Lowell Rothschild (appellees) purchased a portion of the acreage covered by the agreement. In 1980, they obtained a rezoning from SR (3.3 acre lots) to CR-1 (one acre lots). In March 1985, the developer, H & R Associates, commenced work on the property to obtain subdivision approval from the Department of Real Estate, which approved a thirty-one lot subdivision in October 1985.
Appellants filed this action in October 1986. They owned land within the area covered by the original Logan-Kingstrand agreement and sought an injunction prohibiting violation of the restrictive covenants. The evidence at trial showed that appellees had notice of the recorded covenants not only by virtue of the constructive notice arising when a document is recorded, but also by express references in the preliminary title report and subdivision report. Neither the general partner of H & R Associates nor Rothschild consulted the recorded covenants. Limited evidence was presented on the chain of title by which appellees obtained their interests, but apparently none of the deeds that conveyed the lands from Logan and Kingstrand or the McBarneses downward to appellees contained any reference to the recorded restrictive covenants.
At the time of trial, H & R Associates had sold twenty-six of the thirty-one lots in the subdivision. Six lot owners had built houses by the time they were served. All but two of the sixteen owners who testified at trial admitted they had reviewed the subdivision report before buying their lots.
At trial, appellees concentrated on the issues of economic feasibility and changed circumstances. On December 4, 1987, the court issued a minute entry, ruling:
The Court finds that enforcement of the covenants would effectively deny economically viable use of the defendants' land. The imposition of numerous governmental regulations on land use since the date of the covenants is a change in conditions which makes use of the defendants' property uneconomical if the covenants are enforced.
But for the foregoing, the Court would find the restrictions to be valid and binding upon the defendants, and that plaintiffs would be entitled to enforce them by injunction.
The court entered judgment, declaring only paragraph four (minimum residential lot sizes) of the restrictions void and unenforceable.
Appellants appealed the ruling that paragraph...
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