McCurdy v. Standard Realty Corp.

• Decision Date: 29 October 1943
• Citation: 175 S.W.2d 28,295 Ky. 587
• Parties: McCURDY v. STANDARD REALTY CORPORATION et al.
• Court: Kentucky Court of Appeals

175 S.W.2d 28

295 Ky. 587

McCURDY v. STANDARD REALTY CORPORATION et al.

Court of Appeals of Kentucky

October 29, 1943

Appeal from Circuit Court, Chancery Branch, Second Division Jefferson County; Gilbert Burnett, Judge.

Suit between Standard Realty Corporation, Shawnee Improvement Company and Westover Development Company, involving issue as to specific performance of a contract for sale of realty wherein Helen McCurdy sought to file an intervening petition. From a judgment dismissing the intervening petition, the intervener appeals.

Affirmed.

Richard Priest Dietzman, of Louisville, for appellant.

Dodd and Dodd, Thomas A. Ballantine, and B. L. Shamburger, all of Louisville, for appellees.

STANLEY Commissioner.

The case involves an implied restrictive agreement concerning the use of real property, or, as it has been called a reciprocal negative easement. It is a covenant which equity raises and fastens upon the title of a lot or lots carved out of a tract that will prevent their use in a manner detrimental to the enjoyment and value of neighboring lots sold with express restrictions in their conveyance. The question is brought to us by an appeal from a judgment sustaining a demurrer to and dismissing an intervening petition. The primary case was a suit for specific performance of a contract of sale between two of the appellees and is not of importance here except that the intervening petitioner prayed that the relief she sought be included in the judgment.

The Westover Development Company acquired title to a tract on both sides of Western Parkway in Louisville for the purpose of subdividing the whole of it into residential lots. In 1927 or 1928, it platted the portion of the tract lying north of Greenwood Avenue and named it Westover Park. In this record it is called Section No. 1. It is alleged that the company adopted a general plan for the development of the entire acreage, with a series of restrictions, one of which was that none of the tract should be sold to persons of African descent. These restrictions were incorporated in an agreement or document relating exclusively to Section No. 1, recorded in the office of the clerk of the Jefferson County Court. It is further alleged that it was the company's intention to incorporate similar restrictions into the conveyance of all the acreage and that it "announced its intentions generally and to the public at large by recording" the agreement, and "further by announcements made in connection with auction sales of the lots included in said subdivision." At that time the remainder of the tract on the south side of Greenwood Avenue was not subdivided. The petitioner, Mrs. Helen McCurdy, now appellant, purchased one of the lots in Section No. 1 at the original sale with the understanding and upon the belief that the rest of the tract would be developed and sold in the same way and in keeping with the covenants and restrictions contained in the deed to the lot which she purchased, and in conformity with the recorded covenants and repeated public announcements made by the Westover Development Company. In reliance upon those statements, she bought the lot and spent money in erecting a residence and otherwise improving it. Many others did the same thing under those conditions. All of the property in Section No. 1 is owned and occupied by white people.

The Company later subdivided the remainder of the tract and called it "Westover Park, Section No. 2." These lots were offered at auction on July 11, 1939, with public announcements that they were to be restricted against ownership and occupancy by negroes. It seems that the sales were ineffective or never made. Thereafter a contract was entered into by which the Westover Development Company sold all of Section No. 2 to the Standard Realty Corporation which had been organized by negroes for the purpose of acquiring the tract and selling the lots for residences of colored persons. The Shawnee Improvement Company, created by neighboring white people, also obtained a contract from Westover Development Company to buy the same property. The original suit involved these two contracts. The court adjudged specific performance of that made with the Standard Realty Corporation.

It is alleged in the intervening petition that this purchasing corporation "knew or should have known" that the Development Company had consistently and repeatedly announced that Section No. 2 constituted a part of the general plan of development of the entire acreage of West over Park and that its ownership was restricted as described. It is further alleged that notwithstanding these things the Standard Realty Corporation was asserting that it had obtained the property free and clear of restrictions. It is pleaded that this contention was contrary to the publication and generally known plan of development originally adopted by the Westover Development Company, and in reliance upon which the plaintiff had purchased and improved her lot; that should this Section No. 2 be sold without the restrictions, in addition to violating the plan adopted and the representations made, it would materially impair the value of the property of the plaintiffs and others similarly situated. Appropriate relief was prayed, but the court adjudged that the Standard Realty Corporation acquired title without any restriction.

Stemming from the failure or inadequacy of common-law principles, which were developed in a spirit of hostility to restraints on real property, the public zoning of private land and the attachment of equitable or implied servitudes have been developed in the last half century or so in order to meet problems arising from industrial and commercial operations and other detrimental conditions, sometimes only social or aesthetic, in residential sections of cities. Among them is the possibility of creating restrictions in favor of the land of third persons. This development has been called "an equitable appendix to the common law as to servitudes." "The Progress of the Law, Equitable Servitudes." 33 Harvard Law Review, 813, op.cit. 814; "Fifty Years of American Equity," 50 idem, 171, op.cit. 215; Note, "A New Phase in the Development of Affirmative Equitable Servitudes,"51 idem, 320. The history and interpretation of this subject, with various illustrative or concrete cases, are given in those articles. The servitude may be affirmative or negative. Among the applications are equitable easements or servitudes to city lots by reason of "building schemes" and of sales made from plats or plans laying out streets or showing restrictions and rights, or other circumstances which reasonably lead purchasers to believe that they existed.

It sometimes occurs that a case decided years before a legal view or concept was definitely or generally accepted, or the law pertaining to the subject matter had become crystallized or classified, will be found which recognized the principle. Sometimes such a case but foreshadows the establishment of a doctrine by gradual processes. The principle of equitable servitude was recognized and applied by this court in January, 1848, in the case of Rowan's Executors v Town of Portland, 47 Ky. 232, 8 B. Mon., 232. In 1812, General William Lytle laid off the town of Portland adjacent to the Ohio River below the town of Louisville. The plat was duly recorded. A public sale was had of some of the lots in 1814. A second sale, following advertisements and public representations, was had in 1817. Prior to this second sale General Lytle had caused a second plat of the town to be recorded which showed some additions as well as alterations. The second plat did not show the cross streets extending down to the river's edge beyond Water Street as in the first plat, or Front Street, the name given the corresponding street on the new plat. The space between these streets and the river was left entirely open without division or discrimination by which the use or purpose or proprietorship of one part might be distinguished from that of any other. Subsequent sales were made by this new plat. This was regarded by the court as a written and recorded representation of the town, its divisions, streets, commons and public grounds, and it was held to have entered into and formed a part of every contract for the sale of a lot. It was further held that every purchaser of a lot according to the plan acquired as an irrevocable appurtenance an interest in the advantages and privileges pertaining to the public places disclosed thereon, particularly in the space between the streets and the river, even though it was a private development and not a public...