Opinion
10-02-1912
SCHMIDT v. PALISADE SUPPLY CO. et al.
H. V. M. Dennis, Jr., of New Brunswick, for complainant. Carrick & Wortendyke, of Jersey City, for defendants.
Action by Emil Schmidt against the Palisade Supply Company and others. Decree for complainant.
H. V. M. Dennis, Jr., of New Brunswick, for complainant.
Carrick & Wortendyke, of Jersey City, for defendants.
GARRISON, V. C. This is a bill filed to obtain an injunction to remove certain structures which, it is alleged, are in violation of restrictions.
The Hudson River Realty Company is a corporation formed for the purpose of exploiting a land improvement scheme in the borough of Ft Lee in the county of Bergen. It named the proposed settlement "Palisade," and advertised extensively in the newspapers, subway, and elevated railway cars, and by a booklet attractively printed and handsomely illustrated. Among other inducements held out to purchasers was the following, on page 21 of the booklet: "We insure to the residents of Palisade throughout its entire area of more than a square mile, immunity against saloons, manufacturing establishments, and everything else detrimental to a highly organized community. Building plots range in street frontage from two hundred to fifty feet, none less, and, besides restrictions establishing building cost and uniform building lines, we embody in each deed of sale of a plot of ground a stipulation that the exterior plan of a dwelling to be erected shall first receive the approval of our Company. This is in furtherance of our aim to make Palisade the first suburb, architecturally, extant. On the other hand, the nature of our assurance is such that an investor may buy building plots with confidence and safety."
In the book there is a plan or diagram of the situation of the property advertised by the reading matter contained therein substantially as follows:
The lines running through the property in the above diagram indicate a trolley road, and for purposes of their own, which will be more fully alluded to hereafter, the Hudson River Realty Company in September, 1905, incorporated a company and called it the Central Land Company, to which it conveyed all that portion of the above tract south of the railroad tracks. It is quite obvious that the purpose of incorporating this company, all of whose stock was owned by the Hudson River Realty Company (it being the creature of and entirely subject to the parent company), was to enable the owners to sell their different qualities of land in the names of different companies. The higher land, to the north of the tracks, was to be sold at larger prices and under more severe restrictions concerning the character of buildings, etc., than was the less valuable land south of the tracks. Maps were filed, one by the Hudson River Realty Company comprising all of the land north of the tracks, and its deeds referred thereto; and the other of which maps, that of the Central Land Company, delineated all the land south of the tracks, and deeds were made with reference thereto. On each of these maps there were building lots of various sizes delineated, and streets.
We are not concerned immediately with any of the land north of the tracks, nor with any of that remaining in the name of the Hudson River Realty Company or shown on its map. The land now vested in the complainant was in the lower tract—that sold in the name of the Central Land Company— as is also the land now owned by the Columbia Real Estate Company, the defendant, whom it is immediately sought to enjoin concerning the alleged violation of restrictions. The land owned by the last-named corporation lies at the extreme northeastern portion of that delineated on the map of the Central Land Company aforesaid, being lots 1, 2, and 3, in block 1, as shown on said map.The greatest embarrassment which is met with in this suit arises out of the facts next to be stated.
When the Hudson River Realty Company on the 9th of September 1905, conveyed to the Central Land Company the land south of the railroad tracks as above mentioned, it included in the conveyance a description which would take in lots 1, 2, and 3, in block 1, and the map which was prepared for the Central Land Company before it was incorporated, and was filed before this deed was made, delineates, as part of the land of the Central Land Company, lots 1, 2, and 3, in block 1. As a matter of fact, the Hudson River Realty Company did not own at that time the lots just mentioned, and did not acquire them until November 16, 1905, upon which date they immediately conveyed them to the Central Land Company, and on the next day the Central Land Company conveyed to the predecessors in title of the defendant, the Columbia Real Estate Company. The embarrassment, it will be seen, therefore, arises out of the fact that at the time that the predecessor in title of the complainant obtained its deed from the Central Land Company on the 2d day of November, 1905, the Central Land Company did not own the land which the defendants the Columbia Real Estate Company now own, and that when the Central Land Company on the 9th of September, 1905, acquired the land south of the tracks from the Hudson River Realty Company, the Hudson River Realty Company did not then own the land now owned by the defendant the Columbia Real Estate Company.
The deed of the 9th of September from the Hudson River Realty Company to the Central Land Company contained the following covenants:
"This conveyance is made subject to the following conditions, restrictions and covenants which said second part hereby covenants for itself successors and assigns, shall constitute conditions and covenants running with the land: (1) That no more than one residence or dwelling house shall be erected on each of said lots as shown on said map. No such dwelling house shall be less than 25 feet from the front line of the lot on which it is built and no such dwelling house erected on Columbia avenue or Palisade avenue shall cost less than $4,000, and no such dwelling house on Anderson avenue and Cumbermede road shall cost less than $3,500, and no such dwelling house erected on Edgewood land and Washington avenue shall cost less than $3,000. (2) That the premises hereby conveyed or any lot or parcel thereof shall under no circumstances be used for the purpose of carrying on the manufacture or sale of any kind of intoxicating liquors excepting the sale of liquors in packages sold by grocers or druggists." The deed to the predecessor in title of the complainant, which deed, as before stated was dated November 2, 1905, contained covenants and restrictions as to cost of houses and things that could be done thereon, etc., which are not material in this suit. The deed of November 16, 1905, from the Hudson River Realty Company to the Central Land Company for lots 1, 2, and 3, in block 1 (the land subsequently owned by the defendant the Columbia Real Estate Company), contained the following covenants and restrictions: "This conveyance is made subject to the following restrictions: The manufacture of merchandise and all kinds of liquors is prohibited. No bar shall be permitted on the premises hereby conveyed for the sale of wines, liquors, beers, etc., but the sale of wines, liquors, beers, etc., not to be drunk on said premises is not prohibited; no frame building shall be erected on the premises hereby conveyed that shall be nearer than seventy-five (75) feet to either Columbia or Palisade avenues, and no building so erected shall be less than two stories high. The party of the second part (the Central Land Company) hereby agrees that the foregoing restrictions and covenants shall run with the land and be binding upon said party of the second part, its successors and assigns forever." The deed dated November 17, 1905, from the Central Land Company to Charles Lange and others, the predecessors in title of the defendant the Columbia Real Estate Company, contained the following covenants "This conveyance is made subject to the following restrictions: The manufacture of merchandise and all kinds of liquors is prohibited. No bar shall be permitted on the premises hereby conveyed for the sale of wines, liquors, beers, etc., but the sale of wines, liquors, beers, etc., not to be drunk on said premises is not prohibited. No frame building shall be erected on the premises; hereby conveyed that shall be nearer than 75 feet to either Columbia or Palisade avenues, and no building so erected shall be less than two stories high. The party of the second part hereby agrees that the foregoing restrictions and covenants shall run with the land and shall be binding upon said parties of the second part its successors and assigns."
The violation with which we are immediately concerned, and the only one which we need now consider, is the maintenance upon the lands of the defendant corporation (the Columbia Real Estate Company)—that is, on lots 1, 2, and 3 in block 1—of frame buildings nearer to the street than 75 feet and less than two stories high. The defendant the Columbia Real Estate Company makes only one defense which I think it necessary to consider, and that is that the complainant is not entitled in equity to enforce the covenant in question against it, the defendant; and the reason urged for this position is, as above outlined, that at the time that the complainant's predecessor in title obtainedtitle from the Central land Company, and at the time that the Central Land Company obtained title from the Hudson River Realty Company, neither the Hudson River Realty Company nor the Central Land Company had title to lots 1, 2, and 3, in block 1, to which they subsequently acquired title, and which the Central Land Company subsequently conveyed to the defendant's predecessor in title. For the purpose of reaching a proper solution of this question and testing this defense, and before attempting to deal directly with the covenants, it is necessary to ascertain the facts proven in the suit at bar and the principles of law applicable to the subject-matter.
The proofs demonstrate with entire clearness that the whole project at the place in question was the project of those who formed and owned the stock of the Hudson River Realty Company, and that the Central Land Company was a mere creature of the Hudson River Realty Company, who owned all of its stock and directed and controlled all its acts. Although technically contracts and deeds for the lands south of the railroad tracks and in the tract the title to which was vested in the name of the Central Land Company were made in the name of the Central Land Company, the money, when paid, went to the Hudson River Realty Company, whose selling agents and officers carried on the negotiations for the sale of the lots; and there can be no dissent after a consideration of the evidence from the conclusion above stated that for the purposes of this case the Hudson River Realty Company and the Central Land Company were one and the same thing. Equally, I think, it can be stated without successful contradiction or substantial dissent that the Hudson River Realty Company, embracing its subsidiary the Central Land Company, projected a general building scheme and promulgated it to the world by extensive advertising and by personal communication with all those who sought to buy their lots. In the booklet which they put out the diagram embraces all of the land in question, including that which the Hudson River Realty Company subsequently conveyed to the Central Land Company and sold through the last-named company, and including the very land on which the violations now complained of exist. In the map which was prepared before the conveyance was made from the Hudson River Realty Company to the Central Land Company, and which was filed, and according to which the lots were sold, the land in question was included. Although, as above pointed out, at that time neither the Hudson River Realty Company nor the Central Land Company had title to these specific lots 1, 2, and 3, in block 1. Part of this general building scheme unquestionably was that all of the land reserved for residential purposes should be strictly restricted thereto, and even the character and cost of the buildings was to be regulated, and that on the portion of the land where businesses could be carried on restrictions with respect thereto were to be incorporated, and frame buildings were to be prohibited, buildings of less than two stories were to be prohibited, and the distance from the building line was to be regulated.
There is no question, as I understand the facts and the law, that the defendant the Columbia Real Estate Company is at this time maintaining on the land in question structures which admittedly violate the restrictions or covenants contained in the deed of the defendant corporation, and that, if a person admittedly entitled to complain thereof were the complainant, the defendant is without defense.
This, then, brings us to the actual question involved, and the only real defense necessary to be considered. The law relating to building schemes, and the enforceability among purchasers from a common grantor of restrictive covenants, has been dealt with in so many cases and under so many different conditions of fact that the only satisfactory consideration of the subject as a whole can be had by referring to the extensive treatment received in two recent notes where all the cases are gathered and considered. Judd v. Robinson, 41 Colo. 222, 92 Pac. 724, 124 Am. St. Rep. 128, 14 Ann. Cas. 1918 et seq; Korn v. Campbell, 37 L. R. A. (N. S.) 12, at page 27, note. Since, in my view, the facts in this case clearly prove a general building scheme such as would entitle the purchasers inter sese to enforce the respective covenants contained in the deeds of each, it is not necessary to indulge in extensive citations from the mass of authority contained in the above references. Neither the industry of counsel nor my own research have resulted in finding any case which deals with the precise question we are called upon to decide. In the case of Elliston v. Reacher [1908] 2 Ch. 374, affirmed [1908] 2 Ch. 665, the court lays down the following rule as to the enforcement of restrictive covenants by purchasers inter sese: "It must be proved (1) that both the plaintiffs and defendants derive title under a common vendor; (2) that previously to selling the lands to which the plaintiffs and defendants are, respectively, entitled the vendor laid out his estate or a defined portion thereof (including the lands purchased by the plaintiffs and defendants, respectively) for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development; (3) that these restrictions were intended by the common vendor to be and were for the benefit of other land retained by the vendor; and (4) that both the plaintiffs and defendants, or their predecessors in title, purchased their lots from the commonvendor upon the footing that the restrictions subject to which the purchases were made were to inure for the benefit of the other lots included in the general scheme, whether or not they were also to inure for the benefit of other lands retained by the vendors. If these four points be established, I think that the plaintiffs would in equity be entitled to enforce the restrictive covenants entered into by the defendants or their predecessors with the common vendor, irrespective of the dates of the respective purchases." In our own leading case of De Gray v. Monmouth Beach Clubhouse Co., 50 N. J. Eq. 329, 24 Atl. 388, affirmed 67 N. J. Eq. 731, 63 Atl. 1118, the principle is stated thus: "Where there is a general scheme or plan, adopted and made public by the owner of a tract, for the development and improvement of the property, by which it is divided into streets, avenues, and lots, and contemplating a restriction as to the uses to which buildings or lots may be put, to be secured by a covenant embodying the restriction, to be inserted in each deed to a purchaser; and it appears, by writings or by the circumstances, that such covenants are intended for the benefit of all the lands, and that each purchaser is to be subject to and to have the benefit thereof, and the covenants are actually inserted in all deeds for lots sold in pursuance of the plan, one purchaser and his assigns may enforce the covenant against any other purchaser and his assigns, if he has bought with knowledge of the scheme, and the covenant has been part of the subject-matter of his purchase." And in the same case the court said: "The equity would seem to spring from the presumption that each purchaser has paid an enhanced price for his property, relying on the general plan, by which all the property is to be subjected to the restricted use, being carried out, and that, while he is bound by and observes the covenant, it would be inequitable to him to allow any other owner of land, subject to the same restrictions, to violate it." The Chief Justice, writing the opinion in the case of Elliston v. Reacher, supra, concludes with the statement that the underlying principle of the rule of relief is "that, where the four points I have mentioned are established, the community of interest imports in equity the reciprocity of obligation which is, in fact, contemplated by each at the time of his own purchase." Applying this reasoning to the novel situation with which we are confronted, I reach the conclusion that the covenants in the respective deeds of the complainants and defendants are mutually and reciprocally actionable by each as against the other.
The lands owned by the defendants were included from the beginning by the Hudson River Realty Company in its projected scheme. In their first publication their diagram shows that all the lands in question were to be similarly treated. The map which was filed contained the very lands in question. The deed by which the predecessors in title of the defendants purchased from the Central Land Company refers to this map as does the deed of the complainant. I take it, therefore, that it is clearly proven that from the beginning it was the intention of the parties that all of the lands in question should be within the restricted area, and should be subject to the restrictions. Under these circumstances, there can be no doubt, as I view it, that, as against the Central Land Company or the Hudson River Realty Company, a purchaser of any lot could have required them (that is, either of these two corporations), when they acquired the title, to treat the land to which this title related in a similar manner to all the other lands embraced in the project; and when, in consonance with that equitable necessity, the corporations conveyed the land (which eventually reached the defendants) subject to restrictions, I think the equitable right to enforce those restrictions became vested in every purchaser from the common grantor. In my view, it is immaterial when the common grantor acquires the title to any of the specific pieces of land in a general scheme, provided that at the inception of the scheme all the land involved in the controversy was contemplated and covered by the scheme, and notice is brought home to the different purchasers. If this is not held to be the law, it seems to me that gross injustice is thereby occasioned; whereas no inequity or injustice is visited upon any one by the maintenance of this principle. The defendants here had full notice of the existence of a building scheme which embraced the lands they were purchasing. Their deed contained the restriction with reference to a map. The map contained their land and the land of the complainant, together with a great deal of other land. The advertising, the booklet the communications from the agents, and the personal knowledge of the purchaser all informed him of the existence of a general scheme embracing his land and that of the complainant. If, therefore, an owner of land projects a building scheme and includes in his project land to which he has not yet acquired title, and his scheme clearly defines the land including the land which he does not yet own, I think it proper to hold that when he acquires the land to which he did not have the title originally, and conveys it with restrictions, the purchasers of such subsequently acquired land will be answerable to the purchasers of the other land (that originally owned by the common grantor), provided there was a general building scheme of which they had notice, and the restrictions upon them are clearly defined. Since all of these elements are present in this case, I conclude that the complainant is entitled in equity to proceed against the defendantsfor the enforcement of the restrictions contained in the defendant's deeds, and that an injunction to prevent their violation and to cause the removal of anything which does violate the restrictions should go.
The effectiveness of notice has been recently dealt with by Vice Chancellor Emery in Howland v. Andrus, 83 Atl. 982 (Ct. of Chancery, 1912).