Runyon v. Paley

• Decision Date: 08 May 1992
• Docket Number: No. 306A91,306A91
• Citation: 331 N.C. 293,416 S.E.2d 177
• Court: North Carolina Supreme Court
• Parties: Charles RUNYON, Mary Robbins Runyon, and Patsy Simpson Williams v. Warren D. PALEY, Claire Paley, and Midgett Realty, Inc., d/b/a Midgett Realty.

Page 177

416 S.E.2d 177

331 N.C. 293

Charles RUNYON, Mary Robbins Runyon, and Patsy Simpson Williams v. Warren D. PALEY, Claire Paley, and Midgett Realty, Inc. d/b/a Midgett Realty.

No. 306A91.

Supreme Court of North Carolina.

May 8, 1992.

On plaintiff Williams' appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 103 N.C.App. 208, 405 S.E.2d 216 (1991), affirming an order of dismissal entered by Small, J., at the 7 May 1990 session of Superior Court, Hyde County. On 4 September 1991, we allowed the petition for discretionary review as to additional issues filed by plaintiffs Runyon. Heard in the Supreme Court 12 March 1992.

Parker, Poe, Adams & Bernstein by Charles C. Meeker and John J. Butler, Raleigh, for plaintiffs-appellants.

Young, Moore, Henderson & Alvis, P.A. by John N. Fountain, Henry S. Manning, Jr., and R. Christopher Dillon, Raleigh, for defendants-appellees.

MEYER, Justice.

This case involves a suit to enjoin defendants from constructing condominium units on their property adjacent to the Pamlico Sound on Ocracoke Island. Plaintiffs maintain that defendants' property is subject to restrictive covenants that prohibit the construction of condominiums. The sole question presented for our review is whether plaintiffs are entitled to enforce the restrictive covenants.

On 17 May 1937, Ruth Bragg Gaskins acquired a four-acre tract of land located in the Village of Ocracoke bounded on the west by the Pamlico Sound and on the east by Silver Lake. By various deeds, Mrs. Gaskins conveyed out several lots, which were later developed for residential use.

One and one-half acres of the sound-front property, part of which is at issue here, were conveyed by Mrs. Gaskins and her husband to plaintiffs Runyon on 1 May 1954. On 6 January 1960, the Runyons reconveyed the one and one-half acre tract, together with a second tract consisting of one-eighth of an acre, to Mrs. Gaskins. By separate deeds dated 8 January 1960, Mrs. Gaskins, then widowed, conveyed to the Runyons a lake-front lot and a fifteen-foot-wide strip of land that runs to the shore of Pamlico Sound from the roadway separating the lake-front and sound-front lots. This fifteen-foot strip was part of the one and one-half acre parcel that the Runyons had reconveyed to Mrs. Gaskins.

The next day, 9 January 1960, Mrs. Gaskins conveyed the remainder of the one and one-half acre parcel to Doward H. Brugh and his wife, Jacquelyn O. Brugh. Included in the deed of conveyance from Mrs. Gaskins to the Brughs was the following:

BUT this land is being conveyed subject to certain restrictions as to the use thereof, running with said land by whomsoever owned, until removed as herein set out; said restrictions, which are expressly assented to by [the Brughs], in accepting this deed, are as follows:

(1) Said lot shall be used for residential purposes and not for business, manufacturing, commercial or apartment house purposes; provided, however, this restriction shall not apply to churches or to the office of a professional man which is located in his residence, and

(2) Not more than two residences and such outbuildings as are appurtenant thereto, shall be erected or allowed to remain on said lot. This restriction shall be in full force and effect until such time as adjacent or nearby properties are turned to commercial use, in which case the restrictions herein set out will no longer apply. The word "nearby" shall, for all intents and purposes, be construed to mean within 450 feet thereof.

TO HAVE AND TO HOLD the aforesaid tract or parcel of land and all privileges and appurtenances thereunto belonging or in anywise thereunto appertaining, unto them, the [Brughs], as tenants by the entirety, their heirs and assigns, to their only use and behoof in fee simple absolute forever, [b]ut subject always to the restrictions as to use as hereinabove set out.

Prior to the conveyance of this land to the Brughs, Mrs. Gaskins had constructed a residential dwelling in which she lived on lake-front property across the road from the property conveyed to the Brughs. Mrs. Gaskins retained this land and continued to live on this property until her death in August 1961. Plaintiff Williams, Mrs. Gaskins' daughter, has since acquired the property retained by Mrs. Gaskins.

By mesne conveyances, defendant Warren D. Paley acquired the property conveyed by Mrs. Gaskins to the Brughs. Thereafter, defendant Warren Paley and his wife, defendant Claire Paley, entered into a partnership with defendant Midgett Realty and began constructing condominium units on the property.

Plaintiffs brought this suit, seeking to enjoin defendants from using the property in a manner that is inconsistent with the restrictive covenants included in the deed from Mrs. Gaskins to the Brughs. In their complaint, plaintiffs alleged that the restrictive covenants were placed on the property "for the benefit of [Mrs. Gaskins'] property and neighboring property owners, specifically including and intending to benefit the Runyons." Plaintiffs further alleged that the "restrictive covenants have not been removed and are enforceable by plaintiffs."

Defendants moved to dismiss the lawsuit, and plaintiffs thereafter moved for summary judgment. Following a hearing on both motions, the trial court granted defendants' motion to dismiss for failure to state a claim upon which relief could be granted and, pursuant to Rule 54(b), rendered a final judgment after having determined that there was no just reason for delay in any appeal of the matter. The Court of Appeals affirmed the trial court, concluding that the restrictive covenants were personal to Mrs. Gaskins and became unenforceable at her death. Judge Greene dissented in part, concluding that the dismissal of plaintiff Williams' claim was erroneous.

At the outset, we note that at the hearing on plaintiffs' and defendants' motions, the trial court allowed plaintiffs to present evidence of matters outside the pleadings. Because it is not clear whether the trial court excluded this evidence in ruling on defendants' motion to dismiss, the trial court's order must be treated on appeal as a partial summary judgment for defendants. ¹ N.C.R.Civ.P. 12(b)(6).

Having considered the evidence presented to the trial court, we conclude that plaintiff Williams presented sufficient evidence to show that the covenants at issue here are real covenants enforceable by her as an owner of property retained by Mrs. Gaskins, the covenantee. Accordingly, we reverse that part of the Court of Appeals' decision that affirmed the trial court's dismissal of plaintiff Williams' claim. However, we agree with the Court of Appeals that the covenants are not enforceable by the Runyons, and we therefore affirm that part of the Court of Appeals' decision that concerns the dismissal of the Runyons' claim.

It is well established that an owner of land in fee has a right to sell his land subject to any restrictions he may see fit to impose, provided that the restrictions are not contrary to public policy. Sheets v. Dillon, 221 N.C. 426, 431, 20 S.E.2d 344, 347 (1942). Such restrictions are often included as covenants in the deed conveying the property and may be classified as either personal covenants or real covenants that are said to run with the land. See 5 Richard R. Powell, Powell on Real Property p 673 (1991) [hereinafter Powell on Real Property ]. The significant distinction between these types of covenants is that a personal covenant creates a personal obligation or right enforceable at law only between the original covenanting parties, 5 Powell on Real Property p 673, at 60-41, whereas a real covenant creates a servitude upon the land subject to the covenant ("the servient estate") for the benefit of another parcel of land ("the dominant estate"), Cummings v. Dosam, Inc., 273 N.C. 28, 32, 159 S.E.2d 513, 517 (1968). As such, a real covenant may be enforced at law or in equity by the owner of the dominant estate against the owner of the servient estate, whether the owners are the original covenanting parties or successors in interest.

I. Real Covenants at Law

A restrictive covenant is a real covenant that runs with the land of the dominant and servient estates only if (1) the subject of the covenant touches and concerns the land, (2) there is privity of estate between the party enforcing the covenant and the party against whom the covenant is being enforced, and (3) the original covenanting parties intended the benefits and the burdens of the covenant to run with the land. Raintree Corp. v. Rowe, 38 N.C.App. 664, 669, 248 S.E.2d 904, 908 (1978); 5 Powell on Real Property p 673, at 60-43; 3 Herbert Thorndike Tiffany, The Law of Real Property §§ 848-854 (Basil Jones ed., 3d ed. 1939) [hereinafter Tiffany Real Property ].

A. Touch and Concern

As noted by several courts and commentators, the touch and concern requirement is not capable of being reduced to an absolute test or precise definition. See Neponsit Property Owners Ass'n v. Emigrant Indus. Sav. Bank, 278 N.Y. 248, 256-58, 15 N.E.2d 793, 795-96, reh'g denied, 278 N.Y. 704, 16 N.E.2d 852 (1938); Charles E. Clark, Real Covenants and Other Interests Which "Run With Land" 96 (2d ed. 1947) [hereinafter Clark, Real Covenants ]. Focusing on the nature of the burdens and benefits created by a covenant, the court must exercise its best judgment to determine whether the covenant is related to the covenanting parties' ownership interests in their land. Clark, Real Covenants 97.

For a covenant to touch and concern the land, it is not necessary that the covenant have a physical effect on the land. Flying Diamond Oil Corp. v. Newton Sheep Co., 776 P.2d 618, 624 (Utah 1989). It is sufficient that the covenant have some economic impact on the parties' ownership rights by, for example, enhancing the value of the dominant estate and decreasing the value of the servient estate. 7 George W. Thompson,...