Shell Oil Co. v. Henry Ouellette & Sons Co.

• Decision Date: 13 June 1967
• Citation: 352 Mass. 725,227 N.E.2d 509
• Parties: , 25 A.L.R.3d 888 SHELL OIL COMPANY et al. v. HENRY OUELLETTE & SONS CO., Inc., et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 509

227 N.E.2d 509

352 Mass. 725, 25 A.L.R.3d 888

SHELL OIL COMPANY et al. v. HENRY OUELLETTE & SONS CO., Inc., et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 6, 1967.

Decided June 13, 1967.

Bernard Helman, Boston (Terry E. Wilson, New York City, with him) for plaintiffs.

Joseph P. Rooney, Boston (Richard M. Reilly, Boston, with him) for defendant Socony Mobil Oil Co., Inc.

Edward F. Cregg, Andover, for defendant Henry Ouellette & Sons Co., Inc.

Before WILKINS, C.J., and SPALDING, WHITTEMORE, CUTTER and REARDON, JJ.

CUTTER, Justice.

The principal plaintiff (Shell) seeks to enforce a restriction in a 1962 deed from Henry Ouellette & Sons Co., Inc. (Ouellette) to Gordon F. Bloom and others (the trustees) which purports to restrict the uses to which Ouellette and its successors in title may put its remaining land adjacent to the land so conveyed. Stafac Inc. (Stafac), present owner of part of the land conveyed to the trustees by Ouellette in 1962, was allowed to intervene. Socony Mobil Oil Company (Mobil), the holder of an option to purchase a part of Ouellette's remaining land, is also named as a defendant.

The case was heard in the Superior Court upon the pleadings and a statement of agreed facts amounting to a case stated. The trial judge ruled that the alleged restriction in the 1962 deed 'was personal, did not create a covenant running with the land, and does not inure to the benefit of remote or successive grantees.' See Norcross v. James, 140 Mass. 188, 2 N.E. 946; Shade v. M. O'Keefe, Inc., 260 Mass 180, 156 N.E. 867. He then reported the case for our decision. ¹

Ouellette owned about 100 acres of land in Methuen. By the 1962 deed, Ouelette conveyed about twenty acres of this land to the trustees. The deed contained the provision set out in the margin. ²

By recorded deed dated April 30, 1963, the trustees conveyed to Shell a part of the land acquired by them under the 1962 deed. ³ On March 30, 1964, Shell conveyed to Stafac the land which it had received from the trustees. Stafac leased the premises back to Shell.

Shell then with 'knowledge of and taking into consideration the language in * * * the (1962) deed from Ouellette to the (t)rustees * * * at a cost * * * of more than $100,000, constructed an automobile service station.' This was completed on November 1, 1964, and has been in operation since that date.

On February 8, 1965, Ouellette granted to Mobil an option to buy part of Ouellette's remaining land for the construction of a gasoline service station. Mobil has received from the town of Methuen a license for the storage and sale of gasoline products. Shell on March 23, 1965, wrote to Mobil inviting its attention to the 1962 restrictions (fn. 2) and claiming the benefit for Shell of that restriction as preventing the establishment of a competing service station on Ouellette's land subject to the Mobil option.

The question is thus presented whether the benefit of the 1962 restrictions (fn. 2) accrues to Shell as lessee of a transferee from the trustees of a portion of the land conveyed to them by that 1962 deed. Shell now attempts to enforce the restriction and to impose its burden upon Ouellette, the original grantor, and upon Mobil, a proposed transferee from Ouellette (with notice of the restriction) of a part of the land now subject to the 1962 restriction.

1. The defendants contend that this case is controlled by Norcross v. James, 140 Mass. 188, 2 N.E. 946, in which in 1885, Mr. Justice Holmes spoke for this court. One Kibbe had conveyed to one Flynt a quarry of six acres in Longmeadow bounded by other land of Kibbe. The deed contained a covenant by Kibbe, 'I * * * for myself, my heirs, executors, and administrators, covenant with * * * Flynt, his heirs and assigns * * * that I will not open or work, or allow any person or persons to open or work, any quarry or quarries on my farm or premises in * * * Long Meadow.' Norcross and another acquired Flynt's quarry. James and another became the owners of Kibbe's surrounding land and began to quarry stone on that land. Norcross sought to enjoin this activity. The bill was dismissed.

The question of current importance in the Norcross opinion (pp. 191--192, 2 N.E. pp. 948--949), is whether, if it be assumed 'that the covenant (against opening a quarry on Kibbe's remaining farm) was valid as a contract between the parties, it is of a kind which the law permits to be attached to land in such a sense as to restrict the use of one parcel in all hands for the benefit of whoever may hold the other.' The opinion goes on to say, '(E)quity will no more enforce every restriction that can be devised than the common law will recognize as creating an easement every grant purporting to limit the use of land in favor of other land. The principle of policy applied to affirmative covenants, applies also to negative ones. They must 'touch or concern,' or 'extend to the support of the thing' conveyed. * * * They must be 'for the benefit of the estate.' * * * Or, as it is said more broadly, new and unusual incidents cannot be attached to land by way either of benefit or of burden. * * * (This) covenant * * * falls outside the limits of this rule, even in the narrower form.' ⁴ The opinion thus holds principally (1) that a restriction of the use of land for the competitive benefit of adjacent land does not directly concern the use of the dominant parcel and operate to its advantage; and (2) that the benefit of the restriction will not so pass by a deed of the dominant parcel to a successor in title of the original grantee of the dominant parcel as to permit that grantee, even in equity, to enforce the restriction at least against a successor in title of the owner of the servient parcel who imposed the original restriction.

Norcross v. James was followed in Shade v. M. O'Keefe, Inc., 260 Mass. 180, 183, 156 N.E. 867, 868 (holding that the 'implied promise of * * * (a) grantee not to carry on a grocery business' on the granted premises 'does not make the use * * * of the land more convenient' but 'simply tends to increase' the value of the dominant land 'by excluding a competition'). The doctrine has been the subject of substantial adverse comment by authorities, some of which are mentioned in Boston & Maine R.R. v. Construction Mach. Corp., 346 Mass. 513, 519, fn. 4, 194 N.E.2d 395. See Clark, Real Covenants and Other Interests Which 'Run with Land' (2d ed.) pp. 105, 113--115, 128--131, 170--172, 206--207, 252--253; Walsh, Conditional Estates and Covenants Running with the Land, 14 N.Y.U.L.Q.Rev. 163, 170--172; Walsh, Covenants Running with the Land, 21 N.Y.U.L.Q.Rev. 28, 46--50. ⁵ These authorities (and the decisions therein cited) indicate that, outside of Massachusetts, there is strong disinclination to be bound (a) by technical rules for the creation and enforcement of the type of equitable serviturde discussed in Tulk v. Moxhay, 2 Phil.Ch. 774, 777--779 (see e.g. Neponsit Property Owners' Assn. Inc. v. Emigrant Ind. Sav. Bank, 278 N.Y. 248, 255--262, 15 N.E.2d 793, 118 A.L.R. 973; see also 165 Broadway Bldg. Inc. v. City Investing Co., 120 F.2d 813, 815--820 (2d Cir.)); and (b) by any such narrow view of what constitutes a covenant or restriction 'touching' the land as that laid down in Norcross v. James. Certainly, no such restrictive view has been adopted with respect to leasehold estates even in Massachusetts. See Sheff v. Candy Box Inc., 274 Mass. 402, 406--407, 174 N.E. 466.

There is much to be said for the position advanced by one of the amici curiae ⁶ that it is not 'unreasonable to approve covenants * * * which protect * * * (business) investments--very large in most instances--against competition close by,' where the protection will be very limited geographically and will not constitute, in the particular circumstances, an unreasonable restraint of trade. If we were without precedent, we might (in 1967 conditions) reach a conclusion different from that of our predecessors upon the facts which appeared in Norcross v. James, and in Shade v. M. O'Keefe, Inc. We recognize that there may be substantial reasons for permitting those, having privity of estate with a covenantee of a reasonable covenant restricting competition, to enforce such a covenant in equity against a person having (a) actual or constructive notice of the covenant, and (b) privity of estate with the covenantor.

It is...