Gallagher v. Bell

• Decision Date: 01 September 1986
• Docket Number: No. 193,193
• Citation: 516 A.2d 1028,69 Md.App. 199
• Parties: George R. GALLAGHER, et ux. v. F. Meade BELL, et al. ,
• Court: Court of Special Appeals of Maryland

Page 199

69 Md.App. 199

516 A.2d 1028

George R. GALLAGHER, et ux. v. F. Meade BELL, et al.

No. 193, Sept. Term, 1986.

Court of Special Appeals of Maryland.

Nov. 7, 1986.

Certiorari Denied Jan. 27, 1987.

George R. Gallagher, Dickerson (James A. Sullivan, Rockville, on the brief), for appellants.

Charles Norman Shaffer (Shaffer & Davis, Chtd., on the brief), Rockville, for appellees.

Argued before WILNER, BLOOM and ROSALYN B. BELL, JJ.

WILNER, Judge.

In 1960, appellants George and Judith Gallagher bought a charming Eighteenth Century tenant house situated on about a half acre of land in Montgomery County. It was, unfortunately, in the middle of a larger tract owned by appellees that was intended for eventual development. In 1961, under circumstances we shall shortly describe, the Gallaghers entered into an agreement with appellees in which the Gallaghers promised to dedicate some of their land for public streets to be built adjacent to their property and to pay a pro rata share of the cost of installing those streets and certain utilities. The Gallaghers conveyed their property in 1980, before any streets or utilities were installed. The principal issue before us is whether the Gallaghers have any continuing liability on their promise to pay; that, in turn, depends on whether the promise is to be regarded as a covenant "running with the land" or as a personal promise on their part.

All the land involved in this case--something more than 34 1/2 acres--was once owned by the Sisters of Mercy of the Union in the United States of America, Incorporated (the Sisters). The land lies generally to the north and east of Bradley Boulevard and had access to that road by means of Kendale Road, an 18-foot private road that ran just over a mile from Bradley Boulevard to the Sisters' "Villa Marie" Mansion House. Kendale Road also served the old tenant house on the land.

In 1959, the Sisters sold the Mansion House and some immediately surrounding acreage to the Franciscans, retaining the balance of the tract. In order that the Franciscans not be landlocked, the Sisters included an easement in the deed, giving the Franciscans the right to use Kendale Road from the Mansion House to Bradley Boulevard. Later in 1959, the Sisters sold the remainder of the tract, save only the half-acre parcel on which the tenant house was situate, to appellees F. Meade Bell and David P. Bell. It was understood that the Bells, who are developers, were buying the 34 1/2-acre tract in order to subdivide and develop it, for the contract mentions "the proposed subdivision." The last clause of the contract dealt with the excepted parcel; it provided: "The existing house and lot in Section 4 shall be excluded from this contract. Subsequent purchaser of said lot and house shall agree to dedicate half of street bounding said lot and share pro-rata cost of installing street and utilities by this purchaser of Section 4." ¹

In April, 1960, the Gallaghers purchased the half-acre parcel and tenant house from the Sisters. In the contract, Mr. Gallagher agreed "to dedicate half of streets bounding said lot and shall share pro-rata cost of installing street and utilities by F.M. and D.P. Bell." ² It was further agreed that the contract would be binding on the principals and their respective heirs, successors, and assigns and that its provisions would "survive the execution and delivery of the deed ... and shall not be merged therein."

The purchase price of $15,600 was to be paid in cash. It appears, however, that the Gallaghers, who took title jointly, needed financing, and the Sisters permitted them to settle without full payment. The deed, dated October 4, 1960, made no mention of the contractual covenant to dedicate half of the abutting streets or to share in the cost of installing the streets and utilities. At some point, the Gallaghers arranged for mortgage financing in order to discharge their obligation to the Sisters, but, after reviewing the various documents, the prospective lender raised a concern that, in the absence of some right-of-way agreement permitting the Gallaghers to use Kendale Road, they might be landlocked. Mr. Gallagher, a lawyer and later a judge in the District of Columbia, believed that he had some sort of easement by necessity and that a permissive easement or right-of-way was unnecessary, but the lender apparently had sufficient doubt about the matter to insist on obtaining a specific grant before proceeding to make the loan.

So it was that, on June 16, 1961, the Gallaghers entered into an agreement with the Bells under which:

(1) the Bells granted to the Gallaghers

"a temporary right of way over that portion of the existing private road now known as Kentsdale Drive ³ leading to Bradley Boulevard from [the Gallaghers' property] which crosses the [Bells' property] until such time as said portion of said private road is supplanted by a dedicated and paved road giving access from the [Gallaghers' property] to Aldershot Drive as now dedicated, at which time the right to the use of said portion of said private road by [the Gallaghers] shall terminate" and

(2) "[A]s part of the consideration for this agreement the [Gallaghers] do hereby covenant and agree for themselves, their heirs and assigns, that they will dedicate one-half of the streets bounding on their said property and shall share pro-rata the cost of the installation of said streets and the utilities by [the Bells]."

The circumstances under which this agreement was negotiated and signed were in some dispute. There was some evidence that at least one of the Bells refused to grant the right-of-way without the concomitant promise to dedicate and pay and that, given the position taken by their prospective lender, the Gallaghers really had no choice but to sign the agreement. The agreement was signed, however, and was recorded by the Bells among the county land records.

Years passed without further contact between the parties. The Bells were small developers, building only a few homes a year, and, when they turned to develop the tract purchased from the Sisters, they started in the area of Bradley Boulevard. Their progression toward the area of the Gallagher property was interrupted for several years by a State sewer connection moratorium decreed in the early 1970's. At some point in late December, 1978, or early January, 1979, David Bell took to the Gallaghers a subdivision plat showing two proposed roads abutting their property--White Post Court on the north and Kendale Road on the west. The plat contained on it an "Owners Dedication" dedicating the necessary land for the roads shown on the plat. As with the 1961 agreement, there is some dispute as to how and when Mr. Bell presented the plat, but it is clear that the Gallaghers wrote on it "no objection," signed it, and returned it to Mr. Bell. They almost immediately had second thoughts, however, and, on January 5, 1979, wrote to the Bells withdrawing their "no objection" and signatures. The purported withdrawal notwithstanding, the plat was recorded, thereby carrying out one of the two covenants undertaken by the Gallaghers in their 1961 agreement and permitting the Bells to proceed with their development plans.

Ten months later, in October, 1979, the Gallaghers sold their property to Deborah Camalier. Ms. Camalier, who became aware of the recorded 1961 agreement between the Gallaghers and the Bells, apparently insisted on an indemnity from the Gallaghers. The Gallaghers thereupon signed and delivered to Ms. Camalier this agreement:

"Consonant with the contract of sale of the residence at 9703 Kentsdale Drive, Potomac, Maryland, entered into between George R. and Judith K. Gallagher (sellers) and Deborah Camalier (buyer), on October 22, 1979, sellers agree to indemnify and to save the purchaser harmless against any agreement on file in the courthouse in regard to the expense of the road construction along the property lines of the above residence."

The Bells finally got started on the roads in the area of the Gallagher/Camalier property in 1983. In July of that year, they made demand on Ms. Camalier for some $18,000. When Ms. Camalier refused payment, relying on her indemnity agreement, the Bells made demand on the Gallaghers, and, when they rejected the demand, the Bells filed this lawsuit. It is undisputed that, at the time the suit was filed, the streets for which contribution was sought had not yet been completed.

The Gallaghers defended the action on a number of bases, including that the covenant they made in 1961 was a covenant running with the land and that their liability on it terminated when they conveyed the property to Ms. Camalier in 1980. If there is any continuing liability on the covenant, they argued, it is that either of Ms. Camalier or Mr. and Mrs. Sindelar, to whom Ms. Camalier conveyed the property in December, 1983. Regarding the nature of the covenant to be a factual matter, however, the court submitted the issue to a jury, which returned a verdict for the Bells in the amount of $7,000.

From the judgment entered on that verdict and the court's refusal to grant a judgment n.o.v., the Gallaghers have brought this appeal. Although four issues are stated, three pertain to whether, as a matter of law, their 1961 covenant ran with the land. The Gallaghers contend that the nature of the covenant was an issue of law to be decided by the court, that it should not have been submitted to the jury, and that, on this record, the court should have declared the covenant to run with the land. If it ran with the land, they continue, their liability under it ended when they conveyed the property. The fourth issue challenges the admission into evidence of their 1980 indemnity agreement with Ms. Camalier.

Nature of the Covenant

Covenants made by parties to the conveyance of an interest in land may be regarded as being either personal in nature or as running with the land. The difference, as...