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SONOMA DEV'T, INC. v. MILLER, et al.


SONOMA DEVELOPMENT, INC.

v.

MILLER, et al.


June 11, 1999

Record No. 982098

SONOMA DEVELOPMENT, INC.

v.

GIRARD C. MILLER, ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA

John E. Kloch, Judge

Present: All the Justices

OPINION BY JUSTICE CYNTHIA D. KINSER


In a decree dated July 29, 1998, the circuit court upheld the
validity of a "Declaration of Restriction" and ordered
Sonoma Development, Inc. (Sonoma), to remove all improvements
that were within three feet of the north wall of a residence
owned by Girard C. Miller and Lynn E. Miller (the Millers). In
granting the Millers’ motion for summary judgment, the
circuit court stated that "there was a valid declaration of
restriction on the property recorded, that there was privity
between the original parties, that it was the intent and, in
fact, actually said in the restriction itself that it was to run
with the land. And certainly, it does touch and concern the
land."

This appeal concerns the circuit court’s finding that
horizontal privity existed between the original covenanting
parties. Because the "Declaration of Restriction" was
part of a transaction that included a transfer of an interest in
the land to be benefited by the restrictive covenant, we will
affirm the judgment of the circuit court.

Prior to the incident that prompted the present litigation,
Alfred E. Schaer and Mary Schaer (the Schaers) owned two adjacent
lots, numbered Lot 38 and Lot 39, in the area commonly known as
"Old Town" in the City of Alexandria. Facing the lots
from the street on which they are situated, Lot 38 lies to the
left of Lot 39. The lots are long and narrow, and share a common
sideline that runs from the front to the back of the lots.

When the Schaers owned both lots, a three-story, brick house
was situated on Lot 38, but Lot 39 was vacant. The north wall of
the house on Lot 38 physically encroaches upon the southern
boundary line of Lot 39 by 0.1 foot at the northeast corner of
the dwelling and by 0.2 foot at the northwest corner of the
dwelling.

In 1995, the Millers entered into a real estate contract with
the Schaers for the purchase of Lot 38. Because the Millers were
concerned about future development on Lot 39, the contract
included a provision requiring the Schaers to provide a deed
restriction on Lot 39 prohibiting the use of a common wall with
Lot 38 and requiring a sufficient easement to facilitate
maintenance of the portion of the dwelling that encroaches on Lot
39. On June 30, 1995, in furtherance of their obligations under
the contract, the Schaers executed a "Declaration of
Restriction" requiring "[t]hat no improvement of any
kind be constructed upon Lot 39 within three (3) feet of the
north wall of the existing dwelling on Lot 38." Although the
Schaers were designated as the "Grantor" in the
declaration, the document did not name any entity or individual
as the "Grantee."

On the same day, the Schaers executed a "Declaration of
Easement" in which they granted an easement on Lot 39
"for the benefit of lot 38 to permit the house to remain in
its present position . . . and to permit ingress and
egress unto lot 39 as reasonably necessary to repair and maintain
the northern wall of the house." Like the "Declaration
of Restriction," the "Declaration of Easement"
named the Schaers as the "Grantors" but did not specify
anyone as the "Grantee." The "Declaration of
Easement" did, however, state that the Schaers had agreed to
sell Lot 38 to the Millers. In addition, both documents were
recorded in the clerk’s office of the circuit court.

Also on June 30, 1995, the Schaers executed a deed conveying
Lot 38 to the Millers. The deed states that the "conveyance
is made subject to recorded conditions, restrictions and
easements affecting the property hereby conveyed."

In February 1997, Sonoma purchased Lot 39 from the Schaers.
The deed from the Schaers to Sonoma, dated February 21, 1997,
specifies that the conveyance is "subject to easements,
restrictive covenants, restrictions and rights-of-way of
record."[1]

In the spring of 1997, Sonoma contracted with Mitchell, Horn
& Associates, Inc., for the construction of a house on Lot
39. The Millers commenced this action because the house that was
constructed on Lot 39 violates the three-foot setback requirement
contained in the "Declaration of Restriction."
According to a plat of Lot 39, the dwelling on that lot is
situated between 2.5 and 2.6 feet away from the north wall of the
house on Lot 38.

In Virginia, we recognize two types of restrictive covenants:
"the common law doctrine of covenants running with the land
and restrictive covenants in equity known as equitable easements
and equitable servitudes." Sloan v. Johnson, 254 Va.
271, 274-75, 491 S.E.2d 725, 727 (1997); accord Mid-State
Equip. Co., Inc. v. Bell
, 217 Va. 133, 140, 225 S.E.2d 877,
884 (1976). In the present case, the Millers acknowledge that the
"Declaration of Restriction" does not fall within the
second category of restrictive covenants. Thus, the issue is
whether that document creates a valid common law restrictive
covenant that runs with the land, frequently referred to as a
"real covenant."[2]

To enforce a real covenant in Virginia, a party must prove the
following elements: (1) privity between the original parties to
the covenant (horizontal privity);[3] (2) privity between the
original parties and their successors in interest (vertical
privity); (3) an intent by the original covenanting parties that
the benefits and burdens of the covenant will run with the land;
(4) that the covenant "touches and concerns" the land;
and (5) the covenant must be in writing. Sloan, 254 Va. at
276, 491 S.E.2d at 728. Sonoma contends that the element of
horizontal privity is absent in this case. It argues that
horizontal privity did not exist between the original covenanting
parties, the Schaers and the Millers, because only the Schaers
were named as a party in the "Declaration of
Restriction." In other words, Sonoma posits that horizontal
privity must be demonstrated within the four corners of a single
document.

In two of this Court’s recent cases upon which Sonoma
relies, we did, indeed, include horizontal privity as one of the
elements of a covenant running with the land. Waynesboro
Village, L.L.C. v. BMC Properties
, 255 Va. 75, 81, 496 S.E.2d
64, 68 (1998); Sloan, 254 Va. at 276, 491 S.E.2d at 728.
However, because the real covenants at issue in those cases were
contained in deeds between named grantors and grantees, we did
not focus on the essential components of horizontal privity. Waynesboro
Village
, 255 Va. at 78, 496 S.E.2d at 66; Sloan, 254
Va. at 277, 491 S.E.2d at 728-29. Thus, in Waynsboro Village
and Sloan, we did not resolve the issue that is currently
before us.

With regard to the precise issue presented in this appeal, we
conclude that horizontal privity did exist between the Schaers
and the Millers. We are not willing to say that, in every
situation, only one document can be examined in order to
determine if horizontal privity existed between the original
covenanting parties. See Cook v. Tide Water Associated
Oil Co.
, 281 S.W.2d 415, 419 (Mo. Ct. App. 1955) (upholding
restrictive covenant that was entered into prior to deed); Leighton
v. Leonard
, 589 P.2d 279, 281 (Wash. Ct. App. 1978)
(upholding restrictive covenant created in agreement after deed
conveying real estate was executed).

In order to establish horizontal privity, the party seeking to
enforce the real covenant must prove that "the original
covenanting parties [made] their covenant in connection with the
conveyance of an estate in land from one of the parties to the
other." Runyon v. Paley, 416 S.E.2d 177, 184 (N.C.
1992); accord 7 Thompson On Real Property
Sect. 61.04(a)(2). The Restatement of Property
? 534(a) (1944), provides that horizontal privity is
satisfied when "the transaction of which the promise is a
part includes a transfer of an interest either in the land
benefited by or in the land burdened by the performance of the
promise." [4] In other words, the covenant
must be part of a transaction that also includes the transfer of
an interest in land that is either benefited or burdened by the
covenant. Johnson v. Myers, 172 S.E.2d 421, 423 (Ga.
1970); Moseley, 470 N.E.2d at 778; Runyon, 416
S.E.2d at 184-85; Bremmeyer Excavating, Inc. v. McKenna,
721 P.2d 567, 569 (Wash. Ct. App. 1986).

The term "transaction" is defined as "an act or
agreement, or several acts or agreements having some connection
with each other, in which more than one person is concerned, and
by which the legal relations of such persons between themselves
are altered." Black’s Law Dictionary 1496 (6th
ed. 1990); cf. Virginia Housing Dev. Auth. v. Fox Run
Ltd. Partnership
, 255 Va. 356, 364-65, 497 S.E.2d 747, 752
(1998) (quoting Richmond Postal Credit Union v. Booker,
170 Va. 129, 134, 195 S.E. 663, 665 (1938)) ("‘[N]otes
and contemporaneous written agreements executed as part of the
same transaction will be construed together as forming one
contract.’"). In the context of the present case, we
find that the transaction of which the covenant was a part
commenced with the real estate contract between the Schaers and
the Millers, and culminated with the deed conveying Lot 38 to the
Millers. The "Declaration of Restriction" fulfilled the
Schaers’ contractual obligation to establish a restriction
on Lot 39, which lot was being retained by the Schaers at that
time, and was executed in conjunction with the deed to the
Millers. Thus, it was part of a transaction that included the
transfer of an interest in the land benefited by the real
covenant.[5]

Sonoma also assigns error to the circuit court’s award of
injunctive relief without receiving evidence with regard to an
appropriate remedy in equity. Sonoma contends that the facts
necessary to determine the remedy remained in dispute and that
summary judgment was, therefore, not warranted. We find no merit
in this argument.

Sonoma does not dispute that it had notice of the
"Declaration of Restriction." Indeed, it was in
Sonoma’s chain of title and was specifically excluded from
coverage in its title insurance policy.

If parties, for valuable consideration, with their
eyes open, contract that a particular thing shall not be
done, all that a court of equity has to do is to say by
way of injunction that which the parties have already
said by way of covenant–that the thing shall not be
done; and in such case the injunction does nothing more
than give the sanction of the process of the court to
that which already is the contract between the parties.
It is not, then, a question of convenience or
inconvenience, or of the amount of damage or injury. It
is the specific performance, by the court, of that
negative bargain which the parties have made, with their
eyes open, between themselves.

Spilling v. Hutcheson, 111 Va. 179, 182, 68 S.E. 250,
251 (1910). We further stated in Lindsay v. James, 188 Va.
646, 661, 51 S.E.2d 326, 333 (1949), that "[r]elief by way
of a mandatory injunction will not be denied merely because the
loss caused will be disproportionate to the benefits accruing to
the opposing party where it appears that the obstruction or the
violation of a right was made with full knowledge and
understanding of the consequences which result." See also
Marks v. Wingfield, 229 Va. 573, 577, 331 S.E.2d 463, 465
(1985) (remanding to trial court for entry of injunction to
enforce restrictive covenant).

Thus, we find no reason why the circuit court needed to hear
additional evidence on this issue. An injunction was the
appropriate remedy to enforce the terms of the "Declaration
of Restriction."

For the reasons stated, we will affirm the judgment of the
circuit court.

Affirmed.

 

FOOTNOTES:

[1]First
American Title Insurance Company issued a title insurance policy
to Sonoma on February 26, 1997. The policy lists the
"Restrictive Covenants" and "Declaration of
Easement" as items that are excluded from coverage under the
policy.

[2]
Covenants affecting the use of land that run to the benefit or
burden of remote successors in interest to the land came to be
called "real covenants." 9 Richard R. Powell and
Patrick J. Rohan, Powell on Real Property
Sect. 60.01[2] (1999).

[3] A
number of jurisdictions have abolished the requirement of
horizontal privity. 7 Thompson on Real Property
Sect. 61.04(a)(3) (David A. Thomas ed., 1994); 9 Powell
on Real Property
Sect. 60.11[3]. The Restatement
(Third) of Property: Servitudes
Sect. 2.4 (Tentative
Draft No. 1, 1989), states that horizontal privity between the
parties is not required to create a servitude. See Moseley v.
Bishop
, 470 N.E.2d 773, 778 n. 1 (Ind. Ct. App. 1984) for a
discussion regarding the status of the horizontal privity
requirement.

[4]
The Restatement’s comment on clause (a) states that
"[a] transfer of an interest in land as a part of a
transaction in which a promise respecting the use of land is made
is sufficient to create the relationship essential to the running
of the burden of the promise."

[5] Sonoma does not dispute the
validity of the "Declaration of Easement" even though
the Schaers were the only parties named in that document. Yet, it
is part of the same transaction as the "Declaration of
Restriction."

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