Noremac Inc v. Ctr. Hill Court Inc

• Decision Date: 14 March 1935
• Citation: 178 S.E. 877
• Parties: NOREMAC, Inc. v. CENTRE HILL COURT, Inc.
• Court: Virginia Supreme Court

178 S.E. 877

NOREMAC, Inc.

v.CENTRE HILL COURT, Inc.

Supreme Court of Appeals of Virginia.

March 14, 1935.

Error to Hustings Court of City of Petersburg.

Suit by the Centre Hill Court, Inc., against Noremac, Inc. To review an adverse judgment, defendant brings error.

Affirmed in part, reversed in part, and remanded, with instructions.

Argued before CAMPBELL, C. J., and HOLT, EPES, HUDGINS, GREGORY, and BROWNING, JJ.

Willis W. Bohannan, of Petersburg, for plaintiff in error.

White & Temple, of Petersburg, for defendant in error.

BROWNING, Justice.

This is a lien creditors' suit. Its purpose is the subjection of certain lots belonging to the appellant to the payment of liens alleged to be binding upon the lots by reason of assessments against them under the terms of the deed and agreement to which a former owner of the lots in controversy and other lots, and therefore a predecessor in title to the appellant, and the appellee, were parties.

The lots are a portion of a block containing originally thirty lots, but which was subsequently reduced to tweny-nine, which constituted a subdivision of the city of Petersburg, known as Centre Hill subdivision. With the deed creating this subdivision was recorded a plat showing the lots by number and the parks, driveways, walkways, streets, and alleys, projected thereon; there was also a plat recorded with the deed with which we are here concerned, showing the above situation, with respect to the reduced number of lots. The deed and agreement first referred to, dated October 15, 1912, through which the title to the twenty-nine lots passed, contained these provisions:

"As a further consideration for the conveyance to it by the said Centre Hill Court, Inc., of the property above described as being conveyed to it, and as a further consideration for the acceptance by the said Centre Hill Court, Inc., of the obligation to maintain, hold, pay taxes on; and keep in repair the said walkways, driveways, alleys and park areas, shown on the said plat, the said Centre Hill Building Corporation, as the owner of lots numbered two(2) to twenty-nine(29), inclusive, and the said American Bank and Trust Company, Inc., as the owner of Lot No. One(l), on the said plat, hereby agree and covenant that each and all of the said lots shall be subject to such annual charges as may be necessary for paying the taxes on the property vested in Centre Hill Court, Inc., and for keeping up the driveways, walkways, streets, alleys and park areas, shown on the said plat"

"Each lot shall be subject to such annual charges as may be necessary for paying thetaxes on the property of Centre Hill Court, Inc., and for keeping up the driveways, walkways, streets, and parks, as shown, but the annual charge on each lot shall not exceed in any case $50.00, per year, and shall be fixed by said Centre Hill Court, Inc."

There were intermediate deeds and trust deeds forming a part of the chain of title to the lots which contained apt and appropriate references to the covenant in the deed and agreement of October 15, 1912, which were intended to be in accordance with the provision in that deed: "And that the conveyances of each and every of said lots numbered one(l) to twenty-nine(29), inclusive, will contain a covenant running with the land that the owner of said lot will promptly pay said annual charge to said Centre Hill Court, Inc., as the same becomes due and payable; which annual charge shall be considered as a part of the purchase price of each of the said lots and shall be fixed annually by said Centre Hill Court, Inc., but which annual charge on each of said lots shall not exceed fifty dollars ($50.00), per year, without the consent of each and all of the owners of said lots."

The Centre Hill Court, Inc., is a corporation created and existing under the laws of the state of Virginia, with its principal office in the city of Petersburg, without capital stock, and not for the purpose of profit. Its purposes, as set forth in its certificate of incorporation, are as follows:

"To perpetually hold, maintain, improve and beautify, without profit to itself, such parks, streets, walkways, driveways and alleys, as shall be established or laid out by Centre Hill Corporation, a corporation under the laws of the State of Virginia, or by any other person upon the Centre Hill property, for the perpetual use in common for all purposes for which a public street or park may be used, of each and all of the owners of any lot or portion of the said Centre Hill property as the same shall be divided into lots as appurtenant to said lots."

The management and control of the corporation, the appellee, is vested in the lot owners who are members of the corporation by virtue of such ownership.

The by-laws provided that a quorum at any meeting shall consist of the members representing a majority of the lots, numbered from 1 to 30, inclusive, on the plat; such representation being either in person or by proxy.

Later the number of lots was reduced to twenty-nine, and we think that the spirit of the provision and its intendment is effected by regarding a majority of the members representing the actual number of lots within the terms of the deed of October 15, 1912, as a quorum. Therefore a meeting of members representing fifteen lots would be legally constituted so far as a quorum is concerned.

The appellant by deed of January 8, 1932, became the owner of lots numbered 2, 3, 4, and 5 of the said subdivision. Its predecessor in title, which owned the lots during the years 1925 to 1928, inclusive, was the Bollingbrook Construction Corporation, which was assessed in the sum of $25 per year for each of the lots, making the total assessment for the four years $400, which was subject to a credit of $50 paid by the Bollingbrook Corporation. This left a balance due and unpaid of $350. This the appellant declined to pay, and the suit to compel payment followed.

The contention of the appellee is that the covenant in the deed and agreement of October 15, 1912, constituted an equitable lien or charge against the lots with which all subsequent holders were affected with notice. It will be noted that by the terms of the covenant the amount of the annual charge on each lot was to be fixed by the Centre Hill Court, Inc., but which was limited in any case to the sum of $50 per year on each lot as the maximum.

The validity of the assessments involved is challenged by the appellant on the grounds that the corporate action creating them does not comply with the requirements of the law obtaining in such matters.

The appellant also denies that the covenant effects an equitable lien with notice to it.

The lower court held against the contentions of the appellant, and decreed the existence of an equitable lien in the case in favor of the appellee, and the validity of the assessments against the lots, except as to the assessments for the year 1925, which it said was invalid because the meeting of the corporation, at which it was made, was not properly held.

The first consideration with which we are concerned is whether the covenant, which we have referred to, operated to effect an equitable lien upon the lots in question.

In (3d Ed.) vol. 1, p. 24, § 27, it is said, in part:

"An equitable lien arises either from a

written contract which shows an intention to charge some particular property with a debt or obligation, or is' declared by a court ofequity out of general considerations of right and justice as applied to the relations of the parties and the circumstances of their dealings. Equitable liens by contract of the parties are as various as are the contracts which parties may make."

This author, in § 28 of the same volume, quotes from Pomeroy's Equity Jurisprudence, § 1234, where it is said:

"It follows, therefore, that in a large class of executory contracts, express and implied, which the law regards as creating no property right, nor interest analogous to property, but only a mere personal right and obligation, equity recognizes, in addition to the personal obligation, a peculiar right over the thing concerning which the contract deals, which it calls a 'lien, ' and which, though not property, is analogous to property, and by means of which the plaintiff is enabled to follow the identical thing, and to enforce the defendant's obligation by a remedy which operates directly upon that thing. The theory of equitable liens has its ultimate foundation, therefore, in contracts, express or implied, which either deal with, or in some manner relate to, specific property, such as a tract of land, " etc.

Mr. Jones, in elaborating the subject, says in substance that it must appear by the agreement that the parties intended to create a charge upon the property, that the property intended to be charged must be designated, and that it must be capable of identification, with a reasonable degree of certainty. The covenant involved in the present case meets these requisites. Their existence cannot be doubted.

In Jones on Liens, vol. 1, § 35, is found the following:

"An equitable lien is created by an agreement between several persons that the cost of certain improvements shall be a lien on their respective estates, though these are not immediately connected with the improvements."

The author supports the text by citing the case of Clarke v. Southwick, Fed. Cas. No. 2, 863, 1 Curt. 297, in which it was said: "Whenever the owner of real property agrees, in writing, for a valuable consideration, that a lien for a debt or duty shall exist on that property, in the view of a court of equity, it does exist."

In Collyer v. Fallon, 1 Turn. & Russ. 469, the principle is laid down: "Contract, with respect to a given matter, binds the prop erty, as between the parties to the contract, and all claiming under them, with notice."

In Legard v. Hodges, 1 Ves. Jr. 477, Lord Loughborough said: "I take the maxim to be universal, that wherever persons agree concerning any particular subject, in a...