Hodge v. Sloan

• Decision Date: 28 October 1887
• Citation: 107 N.Y. 244,17 N.E. 335
• Parties: HODGE et al. v. SLOAN.
• Court: New York Court of Appeals Court of Appeals

107 N.Y. 244

17 N.E. 335

HODGE et al.

v.SLOAN.¹

Court of Appeals of New York.

October 28, 1887.

Appeal from general term, supreme court, Third department.

The original action in this case was begun by Edward Null against Richard Sloan to restrain the defendant from selling sand off of a parcel of land sold by plaintiff to the defendant's grantor, John D. Sloan. Judgment was entered for defendant upon an order which affirmed a judgment for defendant dismissing the complaint, entered upon a decision of the court at special term. After appeal to this court, the plaintiff died, and his executor, Augustus M. Hodge, was substituted as appellant. On the 9th day of May, 1868, Edward Null was the owner of certain land containing deposits of sand, the sale of which constituted his whole business. The land included about 40 acres, and upon being applied to by John D. Sloan for a portion of the land, about half an acre, he refused to sell, because by selling he would injure his business. Afterwards, upon Sloan's agreeing not to sell any sand off of the land, the plaintiff sold to him the portion of the land he wished. A contract of sale was made which contained such agreement, and, in fulfillment of the contract, a warranty deed was given from plaintiff to Sloan containing a covenant by the grantee ‘not to sell any sand off of said premises.’ The deed was received and duly recorded, and possession taken. Afterwards, Sloan conveyed to his son, the defendant, Richard Sloan, by deed containing no reference to the covenant in the deed from plaintiff; but defendant, at the time of taking the land, had full knowledge of the existence of the covenant. Against the protest of plaintiff, he opened a sand-pit, and proceeded to sell the sand therefrom. The court held that the covenant was void as against public policy, being in restraint of trade, and the complaint was dismissed.

The invalidity of a contract cannot be taken advantage of by one party before restoration, by him, to the other party, of the consideration paid. Warren v. Jones, 51 Me. 146; 1 Benj. Sales, (Corbin, 4th Amer. Ed.) § 521, note; Hunt v. Turner, 9 Tex. 385. The defendant, with actual knowledge of the covenant in the deed to his grantor, holds no better position than the grantor himself. Trustees v. Lynch, 70 N. Y. 441, 449. The covenant does not require such restraint of trade as the law condemns. Match Co. v. Roeber, 35 Hun, 421; Hubbard v. Miller, 27 Mich. 15, 19;Rousillon v. Rousillon, 14 Ch. Div. 351; Machine Co. v. Morse, 103 Mass. 73;Leather-Cloth Co. v. Lorsont, L. R. 9 Eq. 345; Trustees v. Lynch, 70 N. Y. 446. Plaintiffs' business, and the surrounding circumstances, must be considered in determining the validity of the covenant. Machine Co. v. Morse, 103 Mass. 76;Ingram v. Stiff, 5 Jur. (N. S.) 947; Match Co. v. Roeber, 35 Hun, 421; Rousillon v. Rousillon, 14 Ch. Div. 351. The covenant runs with the land. Norman v. Wells, 17 Wend. 136;Verplanck v. Wright, 23 Wend. 506;Van Rensselaer v. Railroad Co., 3 Thomp. & C. 625; Brouwer v. Jones, 23 Barb. 160; 1 Washb. Real Prop. 495, 504; 2 Washb. Real Prop. 286, 288. There is no inherent vice in the covenant. Hubbard v. Miller, 27 Mich. 15, 19;Van Rensselaer v. Railroad Co., supra; Trustees v. Lynch, 70 N. Y. 446;Post v. Weil, 8 Hun, 418.

The alleged covenant is not consistent with the intention of the grant. Hathaway v. Payne, 34 N. Y. 116;Hill v. Priestly, 52 N. Y. 635;Craig v. Wells, 11 N. Y. 322. The covenant, if it is a covenant, does not run with the land, or bind any one but the covenantor. Brewer v. Marshall, 19 N. J. Eq. 545;Norcross v. James, 2 N. E. Rep. 946. As between vendor and vendee, covenants running with the land are not favored in law. 1 Broom & H. Comm. 731; Keppell v. Bailey, 2 Mylne & K. 517; Norman v. Wells, 17 Wend. 153, 154. In this case, equity will not charge the conscience of the defendant to observe the covenant of his grantor. Brewer v. Marshall, 19 N. J. Eq. 545;Case v. Haight, 3 Wend. 635. The alleged covenant is in restraint of trade, against public policy, and inherently void. Chappel v. Brockway, 21 Wend. 158;Dunlop v. Gregory, 10 N. Y. 244;Weller v. Hersee, 10 Hun, 433; Bank v. King, 44 N. Y. 87;Curtis v. Gokey, 68 N. Y. 300;Ross v. Sadgbeer, 21 Wend. 166;Fisher v. Bush, 35 Hun, 645; Maier v. Homan, 4 Daly, 168; Lawrence v. Kidder, 10 Barb. 641;Arnot v. Coal Co., 68 N. Y. 558;Nobles v. Bates, 7 Cow. 307;Van Marter v. Babcock, 23 Barb. 633;Smith v. Smith, 4 Wend. 470;Noah v. Webb, 1 Edw. Ch. 604;Sander v. Hoffman, 64 N. Y. 248;Mott v. Mott, 11 Barb. 127;Brewer v. Marshall, 19 N. J. Eq. 538.

ANDREWS and EARL, JJ., dissenting.

D. S. Morrel, for appellants.

H. L. Huston, for respondent.

DANFORTH, J.

The conclusion of the trial court is against our ideas of natural justice; for it takes from one party an advantage which he refused to sell, and secures to the other, without price, a privilege which his grantor was unable to buy. Nor do we find that this denial of private right is required by any rule of public policy. Assuming, with the respondent, that the covenant is in restraint of trade, it is still valid if it imposes no restriction upon one party which is not beneficial to the other, and was induced by a consideration which made it reasonable for the parties to enter into it; or, in other words, if it was a proper and useful contract, or such as could not be disregarded without injury to a fair contractor. This is the doctrine of Chappel v. Brockway, 21 Wend. 157 and Ross v. Sadgbeer, Id. 166, derived by a learned court from the leading case of Mitchel v. Reynolds, 1 P. Wms. 181, and an examination of subsequent decisions. It is also so amplified and discussed in a case just decided by this court (Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. Rep. 419, opinion by ANDREWS, J) as to make any elaboration of the general rule quite superfluous. The subject of the contract at the bottom of this controversy was a piece of land which Sloan wanted to buy, and which the plaintiff was willing to sell, provided it should not be made an instrument for the destruction of his means of livelihood, or detrimental to his business. The principle which favors freedom of trade requires that every man shall be at liberty to work for himself, and shall not deprive himself or the state of the benefit of his industry by any contract that he enters into. The same principle must justify a party in witholding from market the tools or instruments or means by which he gains the support of his family, or if, as in the case before us, the instrument or means are susceptible of several uses, one of which will work mischief to himself by the loss or impairment of his livelihood, there is no reason of public policy which requires him, upon a sale of the instrument, to consent to that use, or prohibits him from binding his vendee against it. We see nothing unreasonable in the restriction which the grantee imposed upon himself. He was not a dealer in sand. He wanted to buy the land on the best terms and in the most advantageous way; and, in order to do this, it was necessary that he should preclude himself from so using it as that, by its means, he should enter into competition with the vendor. I cannot find that such a covenant contravenes any rule of public policy, nor that it is incapable of being enforced in a court of equity. It stands upon a good consideration, and is not larger than is necessary for the protection of the covenantee in the enjoyment of his business.

But the question presented is, upon the conceded facts, really one of individual right, with which the question of public policy has little if anything to do. Parties competent to contract have contracted, the one to sell a portion of his land, but only upon such conditions as will protect himself in the prosecution of business carried on upon the residue, the other agreeing to buy for a consideration affected by that condition, and enabled to do so only by acceding to it, and he therefore binds himself by contract to limit the use of the land purchased in a particular manner. There seems no reason why he and his grantee, taking title with notice of the restriction, should not be equally bound. The contract was good between the original parties, and it should, in equity at least, bind whoever takes title with notice of such covenant. By reason of it, the vendor received less for his land; and the plain and expressed intention of the parties would be defeated if the covenant could not be enforced as well against a purchaser with notice as against the original covenantor. In order to uphold the liability of the successor in title, it is not necessary that the covenant should be one technically attaching to and concerning the land, and so running with the title. It is enough that a purchaser has notice of it; the question in equity being, as is said in Tulk v. Moxhay, 11 Beav. 571, 2 Phil. Ch. 774, not whether the covenant ran with the land, but whether a party shall be permitted to use the land inconsistently with the contract entered into by his vendor, and with notice of which he purchased. This principle was applied in Tallmadge v. Bank, 2l N. Y. 105, where the equity in regard to the manner of improvement and occupation of certain land grew out of a parol contract made by the owner with the purchaser, and was held binding upon a subsequent purchaser with notice, although his legal title was absolute and unrestricted. In Trustees v. Lynch, 70 N. Y. 440, the action was brought to restrain the carrying on of business on certain premises in the city of New York of which the defendant was owner, upon the ground that the premises were subject to a covenant reserving the property exclusively for dwelling-houses. The court below held, among other things, that the covenant did not run with the land, and that the restriction against carrying on any business on the premises was liable to conflict with the public welfare, and...