Hawthorne v. Realty Syndicate, Inc.

• Court: North Carolina Supreme Court
• Writing for the Court: EXUM
• Citation: Hawthorne v. Realty Syndicate, Inc., 300 N.C. 660, 268 S.E.2d 494 (N.C. 1980)
• Decision Date: 15 July 1980
• Docket Number: No. 103,103
• Parties: Thomas J. HAWTHORNE et al. v. REALTY SYNDICATE, INC., Marsh Realty Company, and Marsh Foundation, Inc.

Page 494

268 S.E.2d 494

300 N.C. 660

Thomas J. HAWTHORNE et al. v. REALTY SYNDICATE, INC., Marsh Realty Company, and Marsh Foundation, Inc.

No. 103.

Supreme Court of North Carolina.

July 15, 1980.

Ruff, Bond, Cobb, Wade & McNair by Hamlin L. Wade, Charlotte, for plaintiffs-appellees.

Helms, Mulliss & Johnston by Fred B. Helms, Robert B. Cordle and William H. Higgins, Charlotte, for defendants-appellants.

EXUM, Justice.

The basic questions raised by this appeal are: (1) whether the individual lots in Block 7 of the Myers Park Development in Charlotte remain subject to a covenant restricting their use to residential purposes, and (2) if so, whether the plaintiffs in this action may enforce the restriction. We answer both questions in the affirmative.

Plaintiffs instituted this action on 21 August 1972 to enjoin defendants from using Lot 6 in Block 7 of Myers Park for other than residential purposes. Defendant Realty Syndicate had purchased Lot 6 in December 1968 and had leased the house on the lot for office use beginning 1 September 1969. On 11 November 1975, the lot in question was conveyed to defendant Marsh Realty Company. Plaintiffs Thomas Hawthorne and wife are the owners of Lot 5A in Block 7. Plaintiffs Carl Warren and wife own Lot 3 in the same Block. Plaintiffs Jerome Milton and wife own Lot 10 in Block 9. Block 9 is separated from Block 7 by a four-lane road. None of the lots owned by plaintiffs touch the boundaries of defendants' Lot 6.

Plaintiffs contend that defendants' nonresidential use of Lot 6 violates the terms of a restrictive covenant contained in the original deed to the lot, which provides that:

"The property shall be used for residence purposes only and shall be occupied and owned by only people of the white race. . . .

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"The foregoing restrictions and covenants are substantially similar to those contained in deeds to adjoining lot owners and are for the mutual protection of such lot owners."

Substantially similar language is contained in all other deeds resulting from subdivision of Blocks 7 and 9 by the original owners, George Stephens and the Stephens Company. Plaintiffs argue that Blocks 7 and 9 were subdivided as part of one common plan restricting the use of the subdivided lots to residential purposes; that defendants had record notice of such a common plan; and that defendants' present use of Lot 6 in Block 7 for commercial purposes should therefore be enjoined.

Defendants respond that there is no common plan of development applicable to Blocks 7 and 9, and that even if there were, the restrictive covenant is enforceable only at the instance of those property owners whose lots physically adjoin the property subject to this dispute. Defendants contend furthermore that the erection of apartment houses and a branch public library in Block 7 has so fundamentally changed the residential character of the area as to render enforcement of the covenant inequitable. Finally, defendants argue that plaintiffs Thomas Hawthorne and wife have waived whatever rights they had to proceed on the covenant by signing a release and covenant not to sue with regard to the proposed development of a branch bank office on another lot in Block 7.

In his order of 27 April 1978, Judge Smith made the following pertinent findings of fact:

"12. That the deeds conveying all lots in Blocks 7 and 9 contain restrictions that they should be used only for residential purposes and the defendants in this action and other owners and occupants, either directly or through mesne conveyances, hold their lots upon this condition;

"13. That the restrictions in the various deeds differ only slightly with some deeds having ten paragraphs, some eleven, some twelve;

"14. That some of the deeds provide that the restrictions 'are for the protection and general welfare of the community and shall be covenants running with the land'; some of the deeds provide that the restriction shall be a covenant running with the land only; other deeds provide 'that the foregoing restrictions are substantially similar to those contained in deeds to adjoining lot owners and are for the mutual protection of such lot owners';

"15. That the deeds contain the following paragraph: 'The property shall be used for residential purposes only and shall be occupied and owned by only people of the white race';

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"17. That sometime during the period of 1954 the owners of lots in Block 7 acquiesced in the construction of a public library on Lot 10-A of Block 7. . . . Sometime during the period of 1969 and 1970 multi-family apartments . . . were constructed on Lots 8 and 9 of Block 7. . . .

"18. . . . (T)hat plaintiff Thomas Hawthorne and wife . . . executed documents entitled 'Release and Covenant Not to Sue' on the 29th day of October, 1975, allowing the use of Lot 4 Block 7 for a branch office of Mutual Savings and Loan Association. . . ."

Based upon these and other findings, none of which were excepted to by the parties, Judge Smith concluded as a matter of law: (1) The language of the deeds originally conveying the subdivided lots of Blocks 7 and 9 evidenced an intent of the grantors, George Stephens and the Stephens Company, to develop the lots in accordance with a uniform plan to establish "single family residences"; (2) the placement of the apartments and the library in Block 7 constituted fundamental departures from the general plan and thereby destroyed "the purposes of the restrictions"; (3) the 1975 release by the Hawthornes of their right to sue regarding the planned bank office constituted "a waiver of their respective rights"; and (4) Block 9 was separable from Block 7 and was not to be included in the judgment. Judge Smith then denied plaintiffs' prayer for injunctive relief.

The Court of Appeals reversed, 43 N.C.App. 436, 259 S.E.2d 591 (1979). Although it agreed with the trial court's conclusion that Blocks 7 and 9 were subdivided subject to a common plan of residential restriction, the Court of Appeals held that no fundamental or radical changes had occurred in the area such as to preclude enforcement of the restrictive covenant. It also concluded that all plaintiffs had standing to maintain suit on the covenant and were entitled to injunctive relief. We agree with the Court of Appeals' opinion in all respects.

The restriction imposed upon defendants' lot by virtue of the covenant placed in the original deed provides that the land "shall be used for residence purposes only." There is no express language in the deed that the covenant should run with the land. Thus, in the absence of indications that the land was subdivided and first conveyed as part of a general plan by the original grantor to impose uniform restrictions upon all the parcels conveyed, this covenant would stand merely as an obligation personal to and enforceable only by the original grantor. Stegall v. Housing Authority, 278 N.C. 95, 178 S.E.2d 824 (1971); Sheets v. Dillon, 221 N.C. 426, 20 S.E.2d 344 (1942). However, when an owner of a tract of land subdivides it and conveys distinct parcels to separate grantees, imposing common restrictions upon the use of each parcel pursuant to a general plan of development, the restrictions may be enforced by any grantee against any other grantee. Moreover, the right to enforce may be exercised by subsequent grantees against any purchaser who takes land in the tract with notice of the restrictions. A purchaser has such notice whenever the restrictions appear in a deed or in any other instrument in his record chain of title. These principles are well established in the common law of this and many other states. See Sedberry v. Parsons, 232 N.C. 707, 62 S.E.2d 88 (1950); Homes Co. v. Falls, 184 N.C. 426, 115 S.E. 184 (1922); Annotation, 51 A.L.R.3d 556, § 9(c) (1973).

That a subdivision has been developed pursuant to a "general plan" of common restrictions is, of course, a statement of legal conclusion that the grantor intended to impose a common servitude upon all the parcels conveyed for the mutual benefit of all the grantees and their successors. The primary test of the existence of such intent is whether substantially similar restrictions were made to apply to all lots of like character or similarly situated. Sedberry v. Parsons, supra. The record here reveals that the original deed to each and every parcel subdivided from the tracts comprising Blocks 7 and 9 contained the residential restriction at issue. This fact alone provides ample support for the trial court's conclusion that the original grantors, George Stephens and Stephens Company, intended to develop these tracts in Myers Park as residential subdivisions. Cf. Brenizer v. Stephens, 220 N.C. 395, 398, 17 S.E.2d 471, 473 (1941), wherein this Court noted that the territory in Block 7 "is uniformly covered by deeds containing, amongst other covenants, restrictions that the property shall be used only for residential purposes."

Defendants however contend that the residential restrictions can be enforced against them only by those property owners whose lot lines physically "adjoin" in the sense of touch the bounds of defendants' Lot 6. Although it is true that the original deed to Lot 6, and those to several other lots in Block 7, contain language to the effect that the restrictions imposed are for the "mutual protection" of "adjoining lot...