Property Class Notes 4/20/04


El Di, Inc. v. Town of Bethany Beach


What did El Di own at the beginning of the suit?  El Di has a fee simple determinable!  There’s a reversion in the restriction!  Is there any “for so long as” type language?  There’s an automatic reversion, so we would classify their property interest as a fee simple determinable.  So what happens to the possibility of reverter?  If it’s a fee simple determinable, the original grantor (the Bethany Beach Improvement Company) should automatically get the property back.  The court doesn’t even mention the possibility of reverter!  They just skip over it!  When you’re talking about equitable servitudes, the courts tend to not enforce forfeitures.  It is said that “equity abhors a forfeiture”.  The court is more likely to use an injunction.


Some conditions had changed.  But were these changes enough to relieve them of the condition to not serve alcoholic beverages?  Many of the lots in the original development were unrestricted.  There was widespread tolerance of the practice of “brown-bagging”.  You could BYOB.  So should the covenant be declared unenforceable?  What’s the standard for terminating a servitude on the basis of changed conditions?  “A court will not enforce a restrictive covenant where a fundamental change has occurred in the intended character of the neighborhood that renders the benefits underlying imposition of the restrictions incapable of enjoyment.”  Was the benefit that the Christian Missionary Society sought to obtain from these covenants no longer capable of enjoyment?  What was the goal of the people who imposed the restrictions?  They were trying to create a small family community.  They may also have been part of the temperance movement.  But Bethany Beach has really changed: it attracts thousands of tourists every summer.


Braunstein suggests that when deciding this case, you need to consider exactly what the benefit was.  If the benefit is that fewer people will drink alcohol, then maybe you need to consider the incremental benefit of each individual place where you can’t drink.  Another issue is that El Di bought the property with the restriction and they knew that restriction existed.  You can argue that El Di have freedom of contract, chose to buy the lot subject to the restriction, and thus they should be bound by it.  On the other hand, we have an overarching principle that we want to increase the alienability (or, more to the point, productivity) of land.  Thus, when a restriction on land is making it less productive, we ought to get rid of it.


So what is no longer enforced?  Are all the restrictions dead, or just the “no sale of alcohol” restriction?  The court confines their decision to this particular area.  Some of the restrictions were relaxed, but not the other restrictions.  What is the significance of the fact that the area was zoned for commercial purposes?  If the city comes in and rezones an area, that doesn’t wipe out restrictions.  Zoning is hierarchical.  The “best use of all” is single family residences, and then it “goes down” from that.  All uses are permitted that are “above” the category that you’re talking about.  So in a commercially zoned lot, you can have commercial, multi-family, and single family use.  Zoning establishes a floor, and as long as you’re above that floor, the restrictive covenants are okay.  In this case, the town council has declared as public policy that this area is not a residential area anymore, but rather a commercial area.


Say you have some land divided into a bunch of lots.  Let’s say it fronts on a small two-lane road in the country.  The city gradually comes to this area, and the subdivision finds itself part of a major city.  The rural lane becomes a busy, four-lane commercial street with shopping malls and things like that.  There are changed conditions.  This is now a commercial neighborhood.  So the lot owners say that they ought to be entitled to use their property for commercial purposes to, contrary to existing restrictive covenants.  The problem here is that there’s going to be a domino effect.  If the first line of lots goes commercial, then the next line of lots will go commercial, then the next, then the next.  Isn’t this what’s going to happen with Bethany Beach?  If one place can sell alcohol, then it won’t be long until all the businesses can sell alcohol.


Take High Street for example.  If you turn into Clintonville, it becomes all residential.  Typically, cases like the hypothetical above lose on the domino effect argument.  Just because a few homes can’t enjoy peace and quiet doesn’t mean that none of them should be able to.  Braunstein says that this case stands for the proposition that you need not show that nobody can realize the benefit of the restriction.  You only need to show that there’s at least one group that can’t realize the benefit.


Private nuisance


What is a nuisance?  It’s an invasion of property that isn’t a trespass.  It’s a “nontrespass invasion of the property rights of another”.  But why do we draw a distinction between trespass and nuisance?  What is the distinction between the two?  There are some annoyances that a landowner is expected to tolerate.  But there are no trespasses that you’re expected to suffer.  But you have to just deal with traffic and noisy neighbors as long as they’re not unreasonable.  To get to the level of nuisance, it must be more annoying than merely somewhat annoying.  But trespass is a violation per se.  The laws with respect to nuisance deal with two neighbor’s correlative rights.  When there’s a complaint, which neighbor is liable for injuring the other?  It’s frequently, perhaps almost always, both neighbors that are causing the harm.  One may insist on cleanliness while the other insists on having a dog kennel that they never clean.  It’s like the Odd Couple!  If they were both slobs, it would be fine, and if they were both neat, it would be fine, and if they weren’t both there, it would also be fine.


This is a place where contracts and torts come together in property law.  Nuisance is a tort, but it’s also a lot like a servitude.  Nuisance says that I have the right to restrict what you can do on your own land.  That’s the same as what a negative servitude does.  When you have a covenant, you accomplish that restriction by contract.  When there’s no contract, but the use of your land is unreasonable, the restriction can be imposed in tort.


The rule of nuisance is that you can’t use your land so as to unreasonably harm your neighbor.  But that doesn’t really tell you anything.  It’s at best circular and maybe just doesn’t mean anything at all.  It’s always a problem between two people, so it has to do with two competing uses being made of the land.


Back to Class Notes