Eagle Enterprises v. Gross

New York Court of Appeals · Property

PropertyReal Covenantsreal covenantsaffirmative covenantsrun with the landtouch and concernprivity of estateintent

Facts

In 1951, Orchard Hill Realties conveyed subdivision property to the Baums by deed providing that the grantor would supply water for domestic use from May 1 to October 1 each year and that the grantees would accept the water and pay $35 annually. The deed also stated that its covenants would run with the land, but later deeds in respondent's chain of title, including respondent's deed, did not contain the water covenant, and respondent's deed had no subject-to clause. Respondent, a successor to the Baums, built his own well for what had become a year-round dwelling and refused to accept or pay for appellant's offered water. Appellant, successor to the original grantor, sued to recover the fee even though respondent did not use appellant's water.

Issue

Whether a deed covenant requiring the grantee to accept and pay for a seasonal water supply from the grantor's well is enforceable against subsequent grantees as a covenant that runs with the land. More specifically, the question is whether this affirmative covenant touches and concerns the land sufficiently to bind respondent.

Rule

An affirmative covenant in a deed binds subsequent grantees only if three requirements are met: the original parties intended the covenant to run with the land, privity of estate exists between the party claiming the benefit and the party bearing the burden, and the covenant touches and concerns the land. A recital that the covenant shall run with the land is not enough by itself. Whether a covenant touches and concerns the land depends on whether, in purpose and effect, it substantially alters the legal rights flowing from ownership of the land and connected with the land.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a lakeside subdivision near Albany, Pine Hollow Development sold a lot to Nora Kim by deed requiring Nora and her successors to buy bottled drinking water each year from Pine Hollow Utility for a fixed annual fee. The deed said the covenant would run with the land, but years later Nora's successor, Malik Turner, installed a private filtration system and refused to buy the bottled water.

Can Pine Hollow Utility most likely enforce the annual purchase covenant against Malik as a real covenant running with the land?

Explanation. An affirmative covenant runs only if there is intent, privity of estate, and touch and concern. The majority held that an express recital is not enough by itself, and that a promise resembling a personal contract to buy a utility service does not touch and concern the land unless it substantially alters legal rights connected with ownership. Here, the bottled-water obligation looks like a purchase contract, especially since Malik can supply his own needs independently. That makes enforcement unlikely. (Derived from Eagle Enterprises v. Gross (n.d.).)