Opinion
01-12-1906
ISLAND HEIGHTS ASS'N v. ISLAND HEIGHTS WATER POWER, GAS & SEWER CO.
E. B. Learning, for complainant. H. H. Van Voorhees and Norman Grey, for defendant.
Suit by the Island Heights Association against the Island Heights Water Power, Gas & Sewer Company. Demurrer to bill sustained.
E. B. Learning, for complainant. H. H. Van Voorhees and Norman Grey, for defendant.
STEVENSON, V. C. The demurrer will be sustained.
1. The covenant which the complainant invokes to sustain its bill provides that the grantee, his heirs and assigns, should not "at any time hereafter without the written consent" of the complainant, the grantor, "and their successors," use or occupy the land conveyed, or suffer or permit the same to be occupied, "as a boarding house, store, or for any mercantile or mechanical trade or purpose whatsoever, or for any other purpose except as a residence or summer resort." The case differs in what seems to be a very important respect from the class to which De Gray v. Monmouth Beach Co. (1892) 50 N. J. Eq. 329, 24 Atl. 388, belongs. Whether the large number of different purchasers, who have acquired portions of the tract, which the complainant laid out, by deeds containing this covenant, acquire a right to have the covenant enforced for their benefit to the same extent that such right would exist if the restrictive covenant were not by its terms made subject to discharge by the written consent of the covenantee, is a question which has not been raised in this case, and need not be considered. There are no grantees before the court except the defendant. The original covenantee is the sole complainant, and although the bill endeavors to show that the complainant is moving in part, at least, at the instance of "various of the property owners on said tract," the interest of these other property owners in the enforcement of the covenant—the injury, if there be any, to these other property owners caused by the alleged violation of the covenant by the defendant—is not disclosed. Inasmuch as we are dealing in this case with the right of the complainant on its own behalf to enforce this covenant, perhaps the peculiar feature of the covenant above mentioned, which may distinguish the case from those which have been cited on the argument, may be disregarded. All the purchasers of lots on this tract took their property, not, as in the other reported cases, under the protection of an apparently perpetual covenant restricting the use of each lot for the benefit of all, but protected in that way only so long as the grantor and its successors should see fit to hold the restriction in force. It has not been insisted, however, on behalf of the defendant, that the reserved power of the complainant at any time to discharge lot owners from this restrictive covenant makes the covenant purely a personal one, and therefore, without any consideration of that question, I shall apply to the decision of this case the principles which have been laid down in the reported cases, where the restrictive covenant has been absolute and not expressly made inapplicable whenever the covenantee sees fit to give a written consent to the doing of what without that consent would be a breach of the covenant. Whether the covenantee in a case like this holds the covenant in trust for all the lot owners, and must exercise his power to give written consents in good faith, impartially, and with the greatest good to the greatest number of lot owners constantly in view, is another question, which has not been and need not be considered. It may be noted that in another part of this covenant restrictions are imposed perpetual in form and not subject to discharge by the written consent of the covenantee.
2. The bill charges that the defendant erected its works "with a preconceived determination * * * to violate said covenant and in defiance" of the complainant'srights, and with the further determination "to erect the same at the risk of subsequently being compelled to comply with the terms of said covenants." Notwithstanding this allegation, an argument of considerable force has been submitted on behalf of the defendants to sustain the proposition that the actual conduct of the defendant alleged in the bill is not violative of the terms of the covenant. No doubt the defendant, having established its works on its property with full knowledge of this covenant, must be deemed to have intended the natural consequences of its acts. If what the defendant has knowingly and intentionally done constitutes a violation of the covenant, it follows that the defendant must be held to have determined and intended so to violate the covenant according to the allegations of the bill. I do not mean, however, to construe the covenant in its relation to the conduct of the defendant complained of in the bill, and therein alleged to be violative of such covenant, further than to point out that there appears to be some room for argument in defense of the charge that the covenant in fact has been violated. In such cases, where there is room for doubt, I think far greater effect may be given to the complainant's laches than in cases where it is perfectly clear that the defendant, with or without the aid of counsel, could not in good faith have supposed that his proposed operations were not within the prohibition of the covenant which he or his grantor had made in relation to his land.
3. The defendant erected its waterworks "in the winter of 1901 or spring of 1902" on lots which had originally been purchased by deeds containing the restrictive covenant, and proceeded to engage in the business of supplying the inhabitants of the Island Heights summer resort with water. The inference from the allegations of the bill is that the defendant, for over three years prior to the commencement of this suit, maintained its plant upon the lots in question, and carried on the business continuously of supplying this summer resort with water through pipes in the streets leading from their standpipe to the houses of the inhabitants of the place. The bill denies that the complainant has ever given its written consent to the erection of these waterworks, and denies that it has waived the covenant or in any way acquiesced in or assented to the maintenance of said works. The only allegation in the bill, however, which in any way explains the delay of the complainant in bringing this suit while it stood by and permitted the defendant to construct its plant and prosecute its business of supplying water to this community of summer residents, is as follows: "When it was proposed to erect the storage tank, water tower, or standpipe in lots 31 and 32, block 25, William T. McKaig, then secretary of the Island Heights Association, learning of said contemplated action by Charles Beck (promoter of said company, then being and still remaining its president and chief stockholder), did remonstrate with the said Charles Beck, and protested against said location upon the lots aforesaid as obnoxious to the surrounding community and detrimental to the value of properties in that vicinity, and suggested other locations equally desirable for the purpose and free from the objections thereto." It does not appear with distinctness that the protest of Mr. McKaig was made in his official capacity on behalf of the Island Heights Association, or that such protest was based upon the assertion of any right on behalf of the association under this covenant. The gist of the protest seems to be that the establishment of the waterworks upon the lots selected for them would be injurious to property and property owners in the immediate vicinity, and the suggestion which accompanied the protest might perhaps be deemed to carry the implication that the waterworks would be permitted upon other lots of the association, notwithstanding the restrictive covenant. If, however, upon general demurrer a construction is to be placed upon the bill more advantageous to the complainant, it still remains true that it does not appear that Mr. McKaig had any authority from the corporation of which the bill alleges he was secretary to make this protest on its behalf, or that the corporation ever ratified or learned of this protest until immediately before the commencement of this suit. The secretary of this water company certainly had no power ex officio to make such a protest. For all that appears the president of the corporation may have taken an entirely different view of the operations in which the defendant proposed to engage. It is true the defendant had full notice of this restriction, but it also knew that the entire force of it at any time might be removed by the consent of the land company. The land company was thus absolute master of the situation and deliberately elected to do nothing, to wait for more than three years while the defendant was necessarily expending large sums of money and apparently establishing a valuable public improvement.
In determining the effect of the complainant's laches, the beneficial effect of the covenant should be borne in mind. It has been held in cases of this kind, but where the covenant was on its face apparently intended to be perpetual, that the grantor holds the covenant, not only for his own benefit, but also as trustee for all the purchasers of lots and their grantees. Peck v. Matthews, L. R. 3 Eq. 518 (1867); Trout v. Lucas, 54 N. J. Eq. 361, 368, 35 Atl. 153 (1896). After all, or even a portion, of the lots, have passed from the original owner, the projector of the scheme, he (the covenantee) may have no interest whatever in the enforcement of the covenant, and its whole binding operation practically may be among the grantees of the covenantee and their successors in title. Ifthe covenant in this case is held by the complainant in trust, such trust, as we have seen, is coupled with a discretionary power to discharge grantees from the operation thereof. The bill alleges that in a few cases lots had been wholly released from this covenant, where "for the benefit of the public" the complainant deemed such release expedient. The bill does not show that any lot owners whose property can possibly be affected injuriously by the maintenance of the defendant's waterworks make any objection to their continuance. The action of the lot owners who have petitioned the complainant to compel the defendant to remove its waterworks, the location of whose lots in relation to the waterworks is not set forth, may have been dictated by an arbitrary or malicious desire to injure the defendant. For all that appears the property of these objecting parties may be so remote from the waterworks that they are in no way affected by them. On the other hand, it appears distinctly that certain of the lot owners occupying their property as residences are receiving water from the defendant's works. The relief which the complainant prays for necessarily involves the cutting off of this public water supply, and it is fair to presume from all the allegations of the bill that such a result would be a very great injury to many of these lot owners, in whose interest to a large extent this covenant was inserted in the original conveyances, and in whose interest, also, provision was made practically for a release from the covenant where "the benefit of the public" called for such release. If this covenant is held in trust by the original covenantee, it would be quite unsafe to permit him to enforce it against the defendant in this case by a mandatory injunction. However, I am not dealing with any question of nonjoinder of necessary parties, but merely pointing out that the complainant in this case must, I think, be limited strictly to the enforcement of its own rights which it holds on its own behalf. Whether, in case this covenant must be deemed to be held by the complainant not only for its own benefit but also in trust for the lot owners, these lot owners, or any of them, after this long delay, can enforce the covenant against the defendant by a mandatory injunction, or in case the waterworks are a great benefit to them and not injurious to any of them, they can practically compel the complainant to consent to their continuance, are questions suggested in this case which need not be considered. Confining the scope of this inquiry to the grievance which the complainant sets forth on its own behalf, it is important to note that the bill alleges that "a large percentage of lots comprising" the tract laid out by the complainant has been conveyed by the complainant to various parties, and that at present "more than 95 per cent of the said tract of land is held by persons under deeds of conveyance made by the complainant containing the covenant." It does not appear that the complainant, who remains the owner of less than one-twentieth of the tract, now holds a single lot which is injuriously affected by the maintenance and operation of the defendant's works. The complainant may not be able to recover at law more than nominal damages.
The complainant, by its long delay, has indicated that it has no personal interest in the enforcement of the covenant. There is nothing to show that there are any other lot owners whose property is injuriously affected by the waterworks, or, assuming that there are such lot owners, that any one of them desires specifically to enforce the covenant or is now in a position to procure from a court of equity a decree for such specific performance. But, however this may be—assuming that this covenant is enforceable in equity at the instance of the lot owners other than the covenantee—the grievance of such lot owners cannot be redressed upon this bill. They are not before the court. The rule in cases of this kind is that the complainant, the party beneficially interested in the enforcement of the restrictive covenant, must come promptly into court if he is to have the aid of an injunction. Trout v. Lucas, supra. The complainant cannot repose upon any notice which he may give or the defendant otherwise may have received of the existence of the restriction. Ocean City Association v. Hadley, 62 N. J. Eq. 322, 338, 50 Atl. 78 (1901); Roper v. Williams, Turn. & R. 18 (1822).
Under the circumstances of this case, with no complaining party before the court who is shown to have a beneficial interest in enforcing this covenant against the defendant, and in view of the peculiar nature and function of the covenant itself, the laches of this complainant, the original covenantee, is a bar to the drastic remedy prayed for in its bill. The complainant should be left to prosecute its remedy at law. Whether, apart from the objection of laches, the bill presents a case for an injunction, is a question which need not be determined.