McKinnon v. Benedict

• Decision Date: 09 April 1968
• Parties: Roderick W. McKINNON, Jr., et al., Respondents, v. Roy A. BENEDICT, Jr., et al., Appellants.
• Court: Wisconsin Supreme Court

Page 665

157 N.W.2d 665

38 Wis.2d 607

Roderick W. McKINNON, Jr., et al., Respondents, v. Roy A. BENEDICT, Jr., et al., Appellants.

Supreme Court of Wisconsin.

April 9, 1968.

Konnak & Constantine, Racine, for appellants.

O'Melia & Kaye, Rhinelander, for respondents.

HEFFERNAN, Justice.

Are the restrictions contained in the letter agreement of

August 31, 1960, enforceable in equity

The judgment provided not only that the Benedicts be restrained from using the property as a site for a trailer park or campsite, but it also provided that the premises were to be used for no other purpose than as an American Plan summer resort until 1985. The judgment not only makes these restrictions applicable to the Benedicts but also provides, that these restrictions 'be fully enforcible against any subsequent purchasers of said land, until August 31, 1985.' Even the respondents do not contend that this portion of the judgment is valid, for they acknowledge in their brief that this is a simple contract action between the original parties and concede that the case does not involve the enforcement of the covenants against any subsequent grantees of the Benedicts. We, therefore, may dispose of that portion of the judgment that would bind all subsequent purchasers as being in error and, to that extent, even though we were to find that the agreement was otherwise enforceable, in equity we would be obliged to reverse.

The question posed, then, is whether the agreement was enforceable against the Benedicts. No action at law has been commenced for damages by virtue of the breach of the restrictions; and, in fact, the plaintiffs in their complaint claim that they have no adequate remedy at law. We are thus not confronted with the question of damages that may result from the breach of this contract and confine ourselves solely to the right of the plaintiffs to invoke the equitable remedy of specific performance, in this case the enjoining of the defendants from the breach of the contract.

28 Am.Jur., Injunctions, sec. 35, pages 528, 529, points out that:

'Courts of equity exercise discretionary power in the granting or withholding of their extraordinary remedies, and this is particularly true in a case where injunctive relief is sought * * *. The relief is not given as a matter of course for any and every act done or threatened to the person or property of another; its granting rests in the sound discretion of the court to be exercised in accordance with well-settled equitable principles and in the light of all the facts and circumstances in the case * * *.'

In Maitland v. Twin City Aviation Corp. (1949), 254 Wis. 541, 549, 37 N.W.2d 74, 78, we stated that an injunction 'should not be granted where the inconveniences and hardships caused outweigh the benefits.' It is frequently stated that an injunction will not be granted where to do so shocks the 'conscience' of the court. These rules are equally applicable whether the right which the plaintiff seeks to enforce arises out of a conveyance, a use of property (nuisance) which would be detrimental to the plaintiff's interests, or whether it arises out of a simple contract.

Restatement, 2 Contracts, sec. 367, page 665, 'Effect of Unfairness, Hardship, Mistake and Inequitable Conduct,' cites three bases for a court of equity refusing specific performance of a contract. They are:

'(a) the consideration for it is grossly inadequate or its terms are otherwise unfair, or

'(b) its enforcement will cause unreasonable or disproportionate hardship or loss to the defendant or to third persons, or

'(c) it was induced by some sharp practice, misrepresentation, or mistake.'

The Wisconsin Annotations to the Restatement of Contracts, prepared under the supervision of Professor William Herbert Page, points out at page 244:

'The Wisconsin cases are in accord with the Restatement.

'Specific performance will not be decreed where the contract is unfair or unreasonable or is not founded on an adequate consideration. (Citing cases)'

These, of course, are ancient principles of equity and date back at least to Smith v. Wood (1860), 12 Wis. 425 (*382) The court in Mulligan v. Albertz (1899), 103 Wis. 140, 143, 144, 78 N.W. 1093, 1094, summarized policies of the Wisconsin court in this regard, and we consider these principles applicable to this case:

'An action for the specific performance of a contract is an application to the sound discretion of the court. It does not come as a matter of course. The jurisdiction to compel it is not compulsory. 'A court of equity must be satisfied that the claim for a deed is fair and just and reasonable, and the contract equal in all its parts, and founded on an adequate consideration, before it will interpose with this extraordinary assistance.' (Citing cases)'

The Mulligan Case also quoted with approval at page 144, 78 N.W. at page 1095 the statement in Pomeroy, Cont., sec. 38:

'The contract must be certain, unambiguous, mutual, and upon a valuable consideration; it must be perfectly fair in all its parts; free from and misrepresentation or misapprehension, fraud or mistake, imposition or surprise; not an unconscionable or hard bargain; and its performance not oppressive upon the defendant.'

In Hay v. Lewis (1876), 39 Wis. 364, 369, we pointed out that, even though there be a legal right on the part of the complainant, that enforcement by injunction may be denied if the court of equity is not satisfied that to grant specific performance would be fair, just, and reasonable, and founded on an adequate consideration. This court stated therein, quoting from Seymour v. Delancey, 6 Johns. Ch. 222:

"If there be any well founded objection on any of these grounds, the practice of the court is to leave the party to his remedy at law for a compensation in damages."

Restatement, 5 Property, sec. 528, p. 3188, points out that a promise to use certain land in a particular way for the benefit of the beneficiary of that promise may entitle the beneficiary either to remedies giving him damages for the breach of the promise or injunctive relief forbidding the breach. The comments to this section, subsec. (f), point out that the mere fact that the plaintiff may have no remedy at law does not ipso facto entitle him to enforce a contractual right by injunction.

'A judgment for damages merely shifts to the defendant a harm equal to that which the plaintiff has suffered. This is not true in the case of the issuance of an injunction. The harm to the defendant which may follow the granting of an injunction against him may be entirely disproportionate to the benefit resulting to the plaintiff.'

Bouchard v. Zetley (1928) 196 Wis. 635, 220 N.W. 209, and Gimbel Brothers v. Milwaukee Boston Store (1915), 161 Wis. 489, 154 N.W. 998, stand for the proposition that equity will not enforce an agreement which would impose an unreasonable hardship on the defendant in order to enforce a bare legal or nonbeneficial right on the plaintiff.

Coupled with the general equitable principle that contracts that are oppressive will not be enforced in equity is the principle of public policy that restrictions on the use of land 'are not favored in the law' (Mueller v. Schier (1926), 189 Wis. 70, 82, 205 N.W. 912, 916), and that restrictions and prohibitions as to the use of real estate should be resolved, if a doubt exists, in favor of the free use of the property. Stein v. Endres Home Builders, Inc. (1938), 228 Wis. 620, 629, 280 N.W. 316.

Huntley v. Stanchfield (1921), 174 Wis. 565, 570, 183 N.W. 984, 986, stands for the proposition that, where a covenant prohibited the use of a former lodging house as a hotel, the restriction must be reasonable and stated that:

'On this point the inquiry is: Is the restriction a reasonable one under all the facts and circumstances of the transaction in the light of 'situation, business, and objects of the parties,' and was the restriction--'for a just and honest purpose, for the protection of the legitimate interests of the party in whose favor it is imposed, reasonable as between them * * *."

The facts in this case must be examined in light of these accepted principles of equity.

The bargain between the McKinnons and the Benedicts has proved to be a harsh one indeed. If the terms of the agreement of August 31, 1960, are to be enforced literally, the Benedicts have for a period of twenty-five years stripped themselves of the right to make an optimum and lawful use of their property. The agreement provides that no improvements can be constructed closer to the McKinnon Property than those buildings and improvements that were in existence in 1960. This limits any possible expansion to the precise lakeshore area occupied by the buildings of Bent's Camp on that date. While the restriction does not apply to the area beyond the road to the west of county trunk B, that area is at the farthest point of the property from the lake and is the least desirable for any resort or camp purposes. McKinnon by this agreement sought the maintenance of the exact status quo for a period of twenty-five years. Even though additional cottages of the type presently existing were desired, they could not under this agreement have been erected except in the narrowly defined area.

There was clear testimony that Benedict found difficulty in meeting his land-contract obligations, and his efforts to construct a campsite and trailer camp were motivated by the desire to put the resort on a more stable financial basis. While it is understandable that McKinnon may object to the erection of a trailer park and a campsite on adjacent property, nevertheless, they are legal and proper uses, assuming that they conform with the ordinances and statutes and do not constitute a nuisance; and any contract that seeks to prohibit them on a neighbor's property must be supported by consideration that has some relationship to the detriment to be sustained by the property owner whose uses are thus curtailed.

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