Orange & Rockland Utilities v. Philwold Estates, 52 N.Y.2d 253

Court of Appeals of New York

1981

Chapter

26

Title

Defenses to Enforcement of Covenants

Page

520

Topic

Covenant for hydroelectric restriction and extinguishment.  How about my hunting rights?

Quick Notes

A landowner's deed to a grantor contained a restrictive covenant that limited the land's use to a hydroelectric plant. The landowner retained a portion of the land and a right of way onto the grantor's land for hunting and fishing. The grantor conveyed his land to the grantee, a utility company. The court held that the covenant ran with the land because the terms of the original conveyance indicated that that was the original parties' intent. The court noted that the original deed applied to the grantor and his assigns, and that the landowner retained his right of way, indicating an intent that the grantor's property remain unspoiled. The covenant touched and concerned the land, as it affected its value. Because of the city's condemnation, the land was useless to the grantee. Extinguishment did not affect the value of the promisee's hunting and fishing rights. Equity, therefore justified extinguishment of the restriction, N.Y. Real Prop. Acts Law 1951. The promisee retained his right of way. Because the promisee failed to offer proof of present or future damages due to the extinguishment, he could not have brought any future claims for damages.

Court Holding

o         Wechsler failed to establish damages and is barred from seeking damages in the future for injury to his real property.

o         Proper to deny present damages.

o         Error to reserve future damages.

Book Name

Fundamentals of Modern Property Law: Rabin; Kwall, Kwall.  ISBN:  978-1-59941-053-1.

Issue

o         Whether extinguishing the covenant terminates the easement reserved for hunting and fishing? No

Procedure

Appellant

o         The Appellate Division of the Supreme Court in the Third Judicial Department (New York) affirmed

Supreme

o         The court affirmed the appellate court's order, as modified. The court modified the order to bar the promisee from bringing a future claim for damages

Facts

Discussion

Reasoning

Rules

Pl Orange & Rockland Utilities

Df Philwold Estates

Description

Original Owner (Bradford)

o         William Bradford originally owned land on both sides of the Neversink River.

Sold East Bank (Sold to Crane)

o         Bradford sold East Bank to Alfred Crane.

o         Bradford retain exclusive hunting and fishing rights over the East Bank.

Bradford -> Crane -> Orange -> Clove Develop

West Bank (Sold Part of the West Bank to Crane with Deed Restriction)

o         Bradford told part of the West Bank to Crane.

The Deed Restriction (Hydroelectric Plant, Reverse Hunting/Fishing Rights)

o         Restricting its use by Crane, his heirs, executors and assigns to the erection of hydroelectric and generating plants, but reserved to himself exclusive hunting and fishing rights over that part of the west bank land conveyed.

Crane convey to Orange and Rockland Utilities

o         In 1927, Crane conveyed the restricted property, subject to the covenant, to Rockland Light and Power Company, now known as Orange and Rockland Utilities, Inc.

Clove Development Corporation now Holds title

o         That company and Clove Development Corporation, its wholly owned subsidiary which now holds title to the west bank property originally deeded to Crane, are the plaintiffs.

Remaining West Bank

o         Bradford continued to own the remaining west bank.

o         Bradford died in 1934.

Remaining West Bank (Bradford Successors Conveyed Philwold Estates)

o         Philwold had a partnership with Wechsler.

Wechsler takes 2,325 acres

o         Wechsler withdrew from partnership and took 2,325 acres.

o         The hunting and fishing rights also went with the land.

Pl (Orange Utilities) Seeks Judgment

o         Plaintiffs' complaint seeks judgment declaring that the restrictive covenant was personal to Bradford and, therefore, is not enforceable by the successors to Bradford's other real property.

o         Or in the alternative that the restrictive covenant be extinguished pursuant to section 1951 of the Real Property Actions and Proceedings Law.

Special Term Court

o         Special Term dismissed the action, without reaching the merits, holding it barred by limitations and rejecting plaintiffs' argument that the statute was tolled because plaintiffs had possession and undisputed title to the property.

Court - Covenant ran with the land

o         The court held that the covenant ran with the land.

o         The covenant was therefore enforceable by defendant,

Court - covenant currently serves no purpose

o         BUT, concluded that it should be extinguished because it found, for reasons hereafter detailed, that the covenant currently serves no purpose and renders plaintiffs' land valueless.

Appellant Court - defendant had failed to prove any damage

o         Concluding that defendant had failed to prove any damage resulting from the extinguishment of the easement, the Appellate Division awarded no damages, but provided that defendant could seek damages for any injury to his land which might occur in the future as a result of the extinguishment of the restrictive covenant.

Court Holding (Agreements)

1.       We agree that the action is not barred by limitations or laches,

2.       We agree that the benefit as well as the burden of the covenant runs with the land,

3.       We agree that the Appellate Division properly concluded that the covenant should be extinguished pursuant to section 1951 of the Real Property Actions and Proceedings Law, and

4.       We agree that defendant's proof did not entitle him to damages for extinguishment of the covenant.

Court Holding (Disagree)

o         We disagree, however, with the Appellate Division's reservation to defendant of the right to seek future damages as a result of the extinguishment of the covenant and conclude that, the hunting and fishing easement not being involved in this action, the only right that defendant Wechsler retains is to enforce such easement rights as he has should there be a future interference with his reasonable enjoyment of the easement.

Section III

Subdivision 2 of section 1951 of the Real Property Actions and Proceedings Law

o         Authorizes a court in any action seeking relief against a restrictive covenant or a declaration with respect to its enforceability to cause its extinguishment "if the court shall find that the restriction is of no actual and substantial benefit to the persons seeking its enforcement or seeking a declaration or determination of its enforceability, either because

o   the purpose of the restriction has already been accomplished or,

o   by reason of changed conditions or other cause,

o   its purpose is not capable of accomplishment, or

o   for any other reason"

o         But requires payment to the party who would otherwise be entitled to enforcement of the covenant of such damages as he will sustain from its extinguishment.

Pl (Orange Utility)

o         Plaintiffs point out that in 1940 while the servient parcel was held by Rockland Light and Power Company, the City of New York condemned all of Rockland's riparian rights in the Neversink River.

o   Riparian Right - The rights, which belong to landowners through whose property a natural watercourse runs, to the benefit of such stream for all purposes to which it can be applied

o         The plaintiffs no longer have the right to use the servient parcel for hydroelectric purposes, and that as presently restricted, the land can be used for nothing else.

Defendant Wechsler argues - it enhances his hunting and fishing rights

o         The statute empowers a court to extinguish a restrictive covenant only when it no longer has value to the person who seeks to enforce it.

o         The restrictive covenant has value to him because it enhances his hunting and fishing rights and keeps the property near to his unspoiled.

Court 1958 Report of Law Revision Commission

o         That report makes clear that restrictive covenants were intended to be subjected to the doctrine of relative hardship.

o         We agree that the restriction in issue was properly extinguished.

Court Enforcement Factors

o         If the covenant is enforced there is no use whatsoever to which the restricted land can be put by plaintiffs, for the restriction limits them to one single use and that use is, by reason of the city's condemnation, impossible.

o         Plaintiffs would thus be required to maintain the land in such manner as to avoid liability for injury to the users of it under the hunting and fishing easement and pay taxes on it but could make no other use of it.

o         Bearing in mind that, as the Law Revision Report suggests, such drastic limitation may well be void as against public policy and that both the background of the statute and its wording ("by reason of changed conditions or other cause, its purpose is not capable of accomplishment, or for any other reason" [emphasis supplied]) we have no hesitancy in concluding that the impossibility of constructing a hydroelectric plant (the building of which, though not required by the express  wording of the conveyance to Crane, was practically compelled by the restriction imposed and was clearly in the contemplation of the parties to the grant creating the restriction) was sufficient to trigger the power of extinguishment, if on balance that appeared to be the equitable course.

Nor do we find any error of law in the Appellate Division's conclusion that on balance the restriction should be extinguished.

Court Was their not actual and substantial benefit

o         The issue is not whether Wechsler obtains any benefit from the existence of the restriction but whether in a balancing of equities it can be said to be, in the wording of the statute, "of no actual and substantial benefit" (emphasis supplied).

Defendant Wechsler argues

o         The value of both his remaining land and his hunting and fishing easement are enhanced if plaintiffs' property is kept in unspoiled condition.

Count Opinion, no substantial benefit measured

o         As to the land, Wechsler presented general opinion evidence indicating that its value would be enhanced, but nothing from which the importance or substantiality of that benefit could be measured, nor any dollars and cents proof by which it could be quantified.

o         Measured against the burden to plaintiffs of maintaining land of which no use can be made, we cannot say that the Appellate Division erred in concluding that enhancement in value of the remaining land was not substantial.

o         Wechsler has not been affected in any way the law should recognize.

o         Wechsler retains right of reasonable enjoyment of the easement.

Court Holding

o         Wechsler failed to establish damages and is barred from seeking damages in the future for injury to his real property.

o         Proper to deny present damages.

o         Error to reserve future damages.

Rules

Class Notes