416 S.E.2d 177 (N.C. 1992)
On 17 May 1937, Ruth Bragg Gaskins acquired a four-acre tract of land located in the Village of Ocracoke bounded on the west by the Pamlico Sound and on the east by Silver Lake.1 By deeds executed over time, Mrs. Gaskins conveyed out several lots, which were later developed for residential use.2
One and one-half acres of the sound-front property, part of which is at issue here, were conveyed by Mrs. Gaskins and her husband to plaintiffs Runyon on 1 May 1954.3 On 6 January 1960, the Runyons reconveyed the one and one-half acre tract, together with a second tract consisting of one-eighth of an acre, to Mrs. Gaskins.4 By separate deeds dated 8 January 1960, Mrs. Gaskins, then widowed, conveyed to the Runyons a lake-front lot and a fifteen-foot-wide strip of land that runs to the shore of Pamlico Sound from the roadway separating the lake-front and sound-front lots.5
The next day, 9 January 1960, Mrs. Gaskins conveyed the remainder of the one and one-half acre parcel to Doward H. Brugh and his wife, Jacquelyn O. Brugh.6 Included in the deed of conveyance from Mrs. Gaskins to the Brughs were restrictive covenants providing that the lot shall be used for residential purposes and not for business, manufacturing, commercial or apartment house purposes.7 Not more than two residences and such outbuildings as are appurtenant thereto shall be erected or allowed to remain on said lot.8
Prior to the conveyance of this land to the Brughs, Mrs. Gaskins had constructed a residential dwelling in which she lived on lakefront property across the road from the property conveyed to the Brughs.9 Mrs. Gaskins retained this land and continued to live on this property until her death in August 1961.10 Plaintiff Williams, Mrs. Gaskins’ daughter, has since acquired the property retained by Mrs. Gaskins.11
By mesne conveyances, defendant Warren D. Paley acquired the property conveyed by Mrs. Gaskins to the Brughs.12 Thereafter, defendant Warren Paley and his wife, defendant Claire Paley, entered into a partnership with defendant Midgett Realty and began constructing condominium units on the property.13
Plaintiffs brought this suit, seeking to enjoin defendants from using the property in a manner that is inconsistent with the restrictive covenants included in the deed from Mrs. Gaskins to the Brughs.14 Defendants moved to dismiss the lawsuit, and plaintiffs thereafter moved for summary judgment.15 Following a hearing on both motions, the trial court granted defendants’ motion to dismiss for failure to state a claim upon which relief could be granted.16 The Court of Appeals affirmed the trial court.17
Whether plaintiff Williams is entitled to enforce the restrictive covenants?18
A restrictive covenant is a real covenant that runs with the land of the dominant and servient estates only if three requirements are met.19 The subject of the covenant must touch and concern the land.20 There must be privity of estate between the party enforcing the covenant and the party against whom the covenant is being enforced.21 The original covenanting parties must have intended the benefits and the burdens of the covenant to run with the land.22 An owner of land in fee has a right to sell his land subject to any restrictions he may see fit to impose, provided that the restrictions are not contrary to public policy.23
Yes. The facts establish that on 9 January 1960 Mrs. Gaskins conveyed the remainder of the one and one-half acre parcel to the Brughs. The conveyance was subject to the residential use restrictions and the limit of no more than two residences.
Plaintiff Williams succeeded to the fee simple interest in the lakefront property retained by Mrs. Gaskins across the road, satisfying vertical privity with the covenantee.24 Horizontal privity exists because the covenants were created in connection with the conveyance of an estate in fee from Mrs. Gaskins to the Brughs.25
The building and use restrictions touch and concern both the servient estate now owned by the Paleys and the dominant estate now owned by Williams because they affect the value and permissible uses of the closely situated properties in the formerly secluded four-acre tract.26 The deed language stating that the restrictions run with the land by whomsoever owned until removed as set out and that the property is subject always to the restrictions, together with Mrs. Gaskins having retained and resided on adjacent land, demonstrates the parties' intent that the benefit attach to the retained property rather than remain personal to Mrs. Gaskins.27 Because all three requirements are met, the covenants are real covenants enforceable at law by Williams against the Paleys as successors to the Brughs.28
Plaintiff Williams is entitled to enforce the restrictive covenants as real covenants running with the land.29
Whether plaintiffs Runyon are entitled to enforce the restrictive covenants?30
To enforce a restrictive covenant as a real covenant at law, the party must show vertical privity by succeeding to an estate held by the covenantee at the time the covenant was created.31 To enforce as an equitable servitude, the party must show that the original covenanting parties intended the covenant to benefit the person seeking enforcement either personally or as owner of land in which that party holds a present interest. This may be shown by succession to benefitted property retained by the covenantee or by an express statement of intent.
No. The Runyons reconveyed the one and one-half acre tract to Mrs. Gaskins on 6 January 1960.32 They acquired only a lake-front lot and fifteen-foot strip the following day, before the covenants were created on 9 January 1960.33 Therefore they hold no interest succeeded from Mrs. Gaskins and lack vertical privity.34
The deed contains no mention of the Runyons or their property as intended beneficiaries.35 The Runyons did not acquire their property as part of any common scheme of residential development.36 The only evidence offered is an affidavit containing parol statements that are inadmissible to prove intent.
Even under equitable servitude analysis the absence of any recorded instrument suggesting an intent to benefit the Runyons means defendants had no notice that the covenants were intended to inure to the Runyons' benefit.37 Consequently the Runyons may enforce neither at law nor in equity.38
Plaintiffs Runyon are not entitled to enforce the restrictive covenants.39