Hi-Lo Oil Co., Inc. v. McCollum

• Decision Date: 13 April 1987
• Docket Number: No. CA86-09-020,HI-LO,CA86-09-020
• Citation: 526 N.E.2d 90,38 Ohio App.3d 12
• Parties: OIL CO., INC., Appellant, v. McCOLLUM, Appellee, et al.
• Court: Ohio Court of Appeals

Page 12

38 Ohio App.3d 12

526 N.E.2d 90

HI-LO OIL CO., INC., Appellant, v. McCOLLUM, Appellee, et al.

No. CA86-09-020.

Court of Appeals of Ohio, Twelfth District, Preble County.

April 13, 1987.

Syllabus by the Court

1. A "restriction," in relation to real estate, is defined as a limitation on the free use of the land.

2. Where a grantor owns two parcels of adjoining land, grants the first parcel to plaintiff's predecessor in interest, and covenants that the use of the second parcel of land will be restricted so as not to allow competition with plaintiff's use of the land, plaintiff can enforce the restriction against the owner of the second parcel, even though the restriction does not purport to bind subsequent assignees and is not contained within the latter's chain of title, provided that the owner of the second parcel takes the land with notice of the restriction.

3. A land restriction can be enforced against one who takes the estate with notice of the restriction, even though the restriction or covenant does not purport to bind subsequent assignees.

Richard E. Pryor, Dayton, for appellant.

Frantz, Hubler, Mawer & Dues Co., L.P.A., and James T. Frantz, Eaton, for appellee.

Pickrel, Schaeffer & Ebeling and Gordon H. Savage, Dayton, for Chicago Title Ins. Co., A. William King and King's Title & Abstract Co.

PER CURIAM.

This cause came on to be heard upon an appeal from the Court of Common Pleas of Preble County.

Plaintiff-appellant, Hi-Lo Oil Co., Inc. ("Hi-Lo"), appeals the decision and judgment entry granted in favor of defendant-appellee, Neil P. McCollum, following a bench trial in the common pleas court.

The pertinent facts of this case, as derived from the record and the trial court's findings of fact, are as follows: Hi-Lo holds title to a one-acre plot of real estate situated on State Route 40 in Preble County, just east of the Ohio-Indiana border, which plot is used for the sale of gasoline and other petroleum products. Hi-Lo's predecessor in title, the Tommy Oil Co. ("Tommy Oil"), originally purchased the property from defendant S.J. Holthouse Farms, Inc. ("Holthouse") in 1969. Holthouse's deed of conveyance to Tommy Oil contained the following language:

"As part consideration herein grantor covenants that it shall restrict its property located between grantee's tract and the tract presently owned by the Sixty-Eight Scarteen Corp. from use for sale of petroleum products by all others except grantee and the Sixty-Eight Scarteen Corp., their successors or assigns."

New Creations, Inc. ("New Creations") purchased the land situated between Hi-Lo's tract and Sixty-Eight Scarteen Corp.'s tract from Holthouse in 1977. In May 1979, New Creations sold a portion of its tract to McCollum. Neither Holthouse's deed to New Creations nor the New Creations deed to McCollum contained any restriction prohibiting the sale of petroleum products on the land in question.

After purchasing the property, McCollum constructed a truck wash and began operations. In March 1980, McCollum contacted George Earley, a Preble County attorney who handled the 1969 Holthouse-Tommy Oil conveyance, and asked whether the language in Holthouse's deed to Tommy Oil prohibited McCollum from selling petroleum products. Earley informed McCollum that the deed from Holthouse to Tommy Oil imposed no restrictions on McCollum's real estate. Within a year, McCollum installed pumps and fuel tanks on the site of his truck wash and began selling diesel fuel.

McCollum's action prompted Hi-Lo to file a complaint on April 15, 1981, in which Hi-Lo sought an injunction against McCollum to prohibit any further petroleum sales and damages from Holthouse for lost profits and diminished petroleum sales resulting from McCollum's sales. ¹

The trial court, in a decision dated November 22, 1985, found that the language used in the Holthouse-Tommy Oil deed either "create[d] a restriction or a promise to restrict." The court concluded that the parties could have used other language of a more forceful nature in order to impose an actual restriction on the land eventually acquired by McCollum. The court went on to note that "[t]he language used represents a covenant to restrict, but is itself not sufficient to create a restriction [and that] [n]o restriction was ever created."

Hi-Lo presents two assignments of error in its appeal, both of which essentially claim that the trial court erred as a matter of law in granting judgment to McCollum and ruling that there was no restriction on McCollum's land.

The parties' positions are clear with respect to the issues raised herein. Hi-Lo asserts that the language contained in the Holthouse deed to Tommy Oil constitutes a covenant or restriction on the land eventually acquired by McCollum. On the other hand, McCollum argues that the language is not, of itself, a restriction but only a promise by Holthouse to impose a restriction in the future.

We do not argue with the basic principle, stated by the trial court and adopted by McCollum, that where language in a deed restriction is "indefinite, doubtful and capable of contradictory interpretations, that construction must be adopted which least restricts the free use of the land. * * * " Houk v. Ross (1973), 34 Ohio St.2d 77, 63 O.O.2d 119, 296 N.E.2d 266, paragraph two of the syllabus. However, the intention of the parties and any proper construction of a covenant or a restriction is to be based upon a reading of the entire deed as a whole. Slife v. Kundtz Properties, Inc. (1974), 40 Ohio App.2d 179, 184, 69 O.O.2d 178, 181, 318 N.E.2d 557, 561.

The trial court interpreted the language in the Holthouse deed as a covenant or promise to restrict, but not as an actual restriction on the land. The trial court concluded that Holthouse promised to take whatever future action was necessary to accomplish the bargained-for restriction, rather than imposing an actual limitation on its remaining real estate. With respect to this interpretation, Holthouse could have inserted a restrictive covenant in the deed when conveying the remaining real estate. Even in that event, the question remains as to whether Holthouse's promise to Tommy Oil to take "future action" would require Holthouse to file injunction suits and restrict the use of the property it had already sold.

It is obvious that when Tommy Oil purchased its tract from Holthouse it wanted a limitation or restriction on the surrounding property's use. A "restriction," in relation to real estate, is defined as " * * * '[a] limitation on the free use of [the] land.' * * * " Tenbusch v. L.K.N. Realty Co. (1958), 107 Ohio App. 133, 137, 78 Ohio Law Abs. 82, 86, 8 O.O.2d 19, 22, 149 N.E.2d 42, 46. Although the deed language less than forcefully expresses a limitation on use, it is obvious that the selected language was nevertheless used within the context of a restriction which both the vendor and...