Property II Spring 2005 Exam - Krishnan

 

Question 1:  Recommended Time, 1 hour

 

 Assume the following facts: 

 

In January 1880, the U.S. government conveys Parcel P to Abe.  Parcel P is located entirely within Springfield County, although the parcel’s eastern border lies alongside the Springfield County and Capital County line.

 

In February 1880, Abe conveys Parcel P to neighboring Capital County by general warranty deed.  Capital County officials immediately record the deed at the Capital County Recorder’s Office.  However it is not until the year 2000 that Capital County records this deed at the Springfield County Recorder’s Office.  (Note, Capital County never takes actual possession of Parcel P.)

 

In March of 1880, Abe conveys Parcel P to Jasper by quitclaim deed.  Jasper knows of the Abe to Capital County conveyance.  Jasper records in Springfield but the deed is misplaced and it is never found nor ever re-recorded again.     

Twenty years later in April of 1900, Jasper conveys Parcel P to Monty by a new, separate quitclaim deed that Jasper draws up; Monty does not record.  (Monty does not know of the Abe to Capital County conveyance.)  Monty remains in possession of the land until 1990 – yes, Monty seems to live forever – when he conveys to Homer by quitclaim deed.  Homer pays $50,000 for Parcel P, immediately records in Springfield, and then takes possession.  (Homer does not know of the Abe to Capital County conveyance.) 

 

Shortly after Capital County records its deed in Springfield, it learns that Homer is in possession of Parcel P.

 

In a suit between Capital County and Homer, who should prevail?  Why?  Please make the case for both sides in your answer.  (Assume that the state in which both Capital County and Springfield County are located is a race-notice jurisdiction.)

 

In your answer, only discuss the principles we covered during the second semester of property.  (Do not, for example, discuss issues relating to adverse possession.)   

 

Answer Key – Question 1

 

I.         Race Notice Jurisdiction - Definition

           A.        Compared to Notice

           B.         Compared to Race

  

II.         Wild Deed – Definition

 A.                 Is there one here?

1.         Who is prior purchaser?

            a.         does the Feb 1880 conveyance from Abe to Capital qualify? – but no recordation till 2000? –

            b.         does the Abe to Jasper qualify?  There is prior recordation, but no evidence of it – how does this matter?

            c.         also need to discuss the manner in which this deed was recorded – tract v. index (and define)

            B.                 Important case that is relevant here is Board of Minneapolis – remember how court there defined who was prior and who was subsequent purchaser

-this needs to be discussed fully

  

C.                 This then would trigger a traditional wild deed analysis v. a Zimmer analysis

            D.                 If Capital City is considered a prior purchaser, then how can it win?

 

1.                  if this jurisdiction follows Zimmer, which says that person with unrecorded link in the subsequent purchaser’s chain (here that would be Homer) will not prevail

2.                  if this jurisdiction adheres to more traditional common law rule, where Zimmer is not followed, then perhaps Homer would win

 

E.                  But do we, policy-wise, really want someone in Jasper’s chain to prevail.  After all:

1.                  Jasper never bothered re-recording

2.                  Monty took from someone who seemingly did not record

3.                  Homer took from someone who seemingly did not record

4.                  Plus, Jasper KNEW of the first transaction – have to ask, what type of notice did he have:

a.                   Actual? - Define

b.                  Inquiry? - Define

c.                   Record? – Define

  

III.       What about the Capital’s defective recording – it was done in the ‘wrong’ place –

is this a patent or latent defect – although nothing may have been wrong with the deed itself, the location of the need is what needs to be considered –

 A.                 Did it impart notice? – see Messersmith

 

1.                  what is the rule – patent defect does not impart notice

2.                  latent defect can –

 

 IV.       Then there is the Example 10 on p. 703 debate that is raised here – we mentioned in class that I wanted you to focus on this point --

         A.                 it is the Morse v. Curtis  / v. Woods v. Garnett issue

1.                  the point here is, what impact does Jasper’s knowing of the Abe to Capital deed have on this problem

a.         arguably – none, because even though the scenario seems quite similar to example 10, there is one important difference:  that here Capital records AFTER Homer – why does this matter

  

V.        Also, what type of issue is raised by Capital taking a general warranty deed, while the people on the other side of the chain have taken a quitclaim deed

            A.                 Need, first, to define and distinguish between the two deeds

B.                 What type of guarantees does a party who holds a general warranty deed have over a party who only holds a quitclaim?

C.        Are there other deeds that are relevant here?

            D.        Present v. Future Cov – how does that play in to the analysis

  

VI.       Then need to ask, who is more on inquiry notice between Homer and Capital County – doesn’t Homer really have a good argument here, that not only were there no affirmative indications that someone owned the lot he purchased, but that even doing a title search, he wouldn’t be liable because Jasper’s deed never could be found

 

A.                 although this does lead to the following question, which is if Homer did hire a title insurer, would it be liable for failing to find out about the missing deed – or is it too immune from liability

 B.         Some courts follow the idea that if you take a quitclaim, you are on inquiry notice – what is the rationale?  Why do some courts not follow this?

 

VII.      Does the shelter rule apply – typically, we think of Shelter in notice jurisdictions – plus who could Homer seek shelter under?  Perhaps Monty- but is Monty a BFP?  But not under Jasper, especially if Jasper is not a BFP

  

VIII.     Other issues to consider and discuss

            A.        Role of Marketable Title – root of title

B.         Privileges BFP’s get – was the 50K from Homer, by the way, valuable consideration?

            C.        Role of the Double-Deeder

            D.        Type of index used – grantor-grantee v. tract

            E.         What role does estoppel by deed play here?

            F.         Role First in Time plays

G.        Duly recorded v. literally recorded (i.e., with respect to CC and its mis-recordation)

 

IX.       Best way to figure out Homer’s position is to look at everyone in his chain and figure out their position vis-à-vis Capital City

             A.        So between Jasper and CC --

                         i.          arguments in favor of Jasper, i.e. CC recorded in wrong county

ii.          arguments in favor of CC – Jasper not a BFP, never-re-recorded

             B.                 Between Monty and CC –

i.          need to consider that Monty is BFP, but still he takes quitclaim, so is this BFP argument weak (because he arguably could be on inquiry notice)

                         --as an aside – is there a claim that Monty could have against Jasper – what?

 --what about CC v. Abe for double-deeding, especially since CC has general warranty deed

             C.        Between Homer and CC – see above for all the issues and rules discussed

                         -(as an aside, does Homer have claim against either Monty or Jasper, assuming the latter is alive still?)

 

Question 2:  Recommended Time, 1 hour

 

 

Assume the following facts:

 

Shellbyville Heights is a subdivision that was created in 1980.  In that year, the developer, Ned, filed a set of restrictions in the county recorder’s office.  The restrictions Ned filed included the following statements:

 

1.         All restrictions herein shall run with the land and shall be binding for ten years.

2.         At the end of the ten year period, the restrictions shall be extended for another ten years, unless a majority of the residents decide to change the restrictions in whole or in part.

3.         The specific restrictions of Shellbyville Heights shall be that:

            a.         All lots must remain single-family residential dwellings; and that

            b.         There are to be no noxious fumes produced from any of the lots

 

At the time Ned filed the restrictions, there were twenty lots in the subdivision.  Fifteen lots were already developed, residentially.  Five remained barren.  In 1990 the first ten year period lapsed, but then because no one in the subdivision took any action, the restrictions automatically renewed until 2000.  In 2000 the restrictions ended.            

 

By 2003, the composition of the subdivision remained the same as it was in 1980.  (Fifteen were residentially developed lots; five were barren lots.)  In 2003, three separate residential lot owners presented to the county recorder’s office a document which said that a: “Majority of homeowners in Shellbyville Heights has agreed to reinstate the restrictions originally filed in 1980.  However, the homeowners agree that the restrictions should last in perpetuity.”

 

The clerk at the office subsequently files and records the statement given to him by the three lot owners.  In 2005, Sanjay purchases the five remaining barren lots from Ned.  The deed from Ned to Sanjay says that Sanjay takes the lots “subject to all restrictions of record and specifically subject to the original 1980 restrictions.”

 

Sanjay immediately begins to build a small chemical plant on all five adjoining lots which emits odorous fumes.  The three homeowners who filed the 2003 document bring suit to enjoin Sanjay from continuing with his project.

 

Please address all legal issues that could arise in a suit between Sanjay and the three homeowners.  Rely only on material we covered this semester, and please do not discuss easements.

 

Question II Answer Key:

 

 

I.          Neighborhood Restriction Case – in the vain of Sanborn v. McLean

     A.                 Issue here of enforcement of restrictions by neighbors – under what theories might the neighbors proceed?

 

i.                     Enforcement of a covenant made by the common owner to earlier grantee -- ??? – would this work? – the principle of the “fastening of the covenant”

ii.                   Third Party Beneficiary – would need to discuss only that which we covered in class

iii.                  IRS (Implies Reciprocal Servitude)

                                                                           i.      In a majority of jurisdictions, it is held that when a grantee of land covenants to the common owner that the land just granted will be restricted in some manner, there is at the same time implied a reciprocal restriction upon the common grantor’s retained land in favor of the parcel just granted

                                                                         ii.      Thus, there is created an IRS burdening the retained land and running with it to bind subsequent purchasers with notice

 

-question need to ask is whether S’s lots part of subdivision – clearly seems so

 

-there is the significance here of the common plan:

 

1.                  in some jurisdictions it is held that no burden will be imposed against a later grantee based upon an implied reciprocal covenant unless there is a common plan.  Without a common plan, only express covenants of the later grantee will be enforced

2.                  Sanborn v. McLean comes into play here

 

 -in this case:  was S on notice?

 

1.                  Inquiry notice – should he have inquired or reasonably assumed that he was buying a lot within a subdivision

2.                  was he on record notice – after all, restrictions were recorded

3.                  what about fact that neighbors were using property for residential purposes

4.                  what about expiration of covenants – and attempt to re-issue by just 3 rather than majority

a.       this is key – was there a majority?

b.      From facts of case, no – this benefits S

5.                  counter argument -- there was a common plan that her lot was a part of – thus lot should be restricted

 

-Arguments S might make?

     1.                  argument could be made that restrictions expired, end of story

attempt to reinstate restrictions done too late and with only 3 people, thus when Sanjay takes, his property does not contain restriction

2.                  moreover, Sanjay takes only a small number of lots – S might argue that it was not integrated into subdivision, thus no burden attached.

3.                  he could argue that he relied on Ned’s word and the deed he issued?  Good faith reliance?

4.                  was there really a common plan – draw on argument McLean makes in Sanborn case – especially since it doesn’t seem that neighbors really cared about keeping the restrictions, until S purchases his lots

 

 Would need to analyze whether the requirements have been met for the burden to run to S’s lot:

     1.                  Enforceability of Covenant

     2.                  Intent – no specific affirmative evidence needed

     3.                  HP – not required

     4.                  VP – not required

     5.                  T & C – yes; majority of jurisdictions also hold that benefit must touch and concern land as well – Bigelow v. other test, need to be discussed / how does Clark and Restatement come into play here also

     6.                  Notice – equity will not impose burden of a cov upon a successor to the promisor unless the successor took with notice

             a.       can be actual or constructive

             b.      constructive – may either be record or inquiry (see above)

     7.        has successor given value

 

  Then second part of the question would deal with nuisance doctrine:

             Nuisance – note, this was taken directly from Prof. Pannier’s answer sheet, which I recommended repeatedly for you to look at  (recall I said that he and I gave the same exam from spring 2001, and this answer sheet is the one we shared and applies here to this question.)

 

         [1]        Liability

[a]        Law

{1}      Threshold-level test

{2}      Restatement test

{a}       Liability if gravity of harm outweighs utility of actor’s conduct

{b}      Factors re gravity of harm

                                                                                                                     i.                        (1)               Extent and character of harm

                                                                                                                   ii.                        (2)               Social value of plaintiff’s use

                                                                                                                  iii.                        (3)               Suitability to locality

                                                                                                                 iv.                        (4)               Burden on plaintiff of avoiding harm

{c}       Factors re utility of actor’s conduct

(1)               (1)               Social value

(2)               (2)               Suitability to locality

(3)               (3)               Impracticality of actor preventing harm

[b]        Application

{1}      Under threshold-level test

{2}      Under Restatement test

{a}       Gravity of harm

(1)               (1)               Extent and character of harm

(2)               (2)               Social value of plaintiff’s use

(3)               (3)               Suitability to locality

(4)               (4)               Burden on plaintiff of avoiding harm

{b}      Utility of actor’s conduct

C.                 (1)               Social value

D.                 (2)               Suitability to locality

E.                  (3)               Impracticality of actor preventing harm

 

[2]        Remedies

[a]        Law

{1}      Automatic injunction rule

{2}      Balancing of equities approach {If injury to plaintiff is slight in comparison to injury caused to defendant and public by enjoining the nuisance, inj. relief is ordinarily denied.}