Summary of Orange And Rockland Utilities v. Philwold Estates, Ct of App NY  [1981]

Defenses to Enforcement of Covenants

Relevant Facts: In 1923 Bradford owned land on both sides of the River and he sold the east bank to Crane retaining hunting and fishing rights over it.  He also sold the west bank for construction of a hydroelectric plant, but reserved the same rights for himself.  1927 Crane conveyed the property to Rockland.  Bradford continue to hold his portion of the land on the west bank and his E until his death in 1934.  His property was conveyed to Philwold of which Wechsler had an interest.   In 1968 Wechsler was given 2,000+ acres and the hunting and fishing rights. The City of NY later extinguished the covenant to construct a hydroelectric plant by statute.

Legal Issue(s): Whether the Df had the reserved right to seek future damages as a result of the extinguishment of the covenant to construct hydroelectric plant?

Court’s Holding:  No – Easement was not extinguished.

Procedure:  Sup Ct held that the record owner’s action was barred by the statute of limitations, and the owners appealed.  App Div – awarded damages to Df E owner; Modified Ct App

Law or Rule(s): A ct may cause a restrictive covenant to become extinguished if the restriction is of no actual or substantial benefit to the persons seeking its enforcement or seeking a declaration, either b/c the purpose has been accomplished, or under circumstances its purpose is not capable of accomplishment, or for any reason.  The party otherwise entitled to enforcement is required to be paid.

Court Rationale: The statute’s hx makes clear that restrictive covenants were intended to be subject to the doctrine of relative hardship.  Owners of parcels burdened with outmoded restrictions are provided with an economical and efficient means of getting rid of R/C.  When they purport to prohibit virtually any use they would be void for being repugnant against the estate granted, contrary to public policy, or unreasonable.  Pl would be required to maintain the land in a manner to avoid liability for injury to users of it under the hunting and fishing E, and pay taxes, but make no use of the land.  The impossibility of constructing a hydroelectric plant was sufficient to trigger the power of extinguishment.

Wechseler’s hunting and fishing rights have not been affected and he retains those rights.  He and his successors will be entitled, should there be an interference w/ the reasonable enjoyment of the E, to take legal action to enjoin or obtain damages for the interference, or both.

Df was afforded an opportunity to offer proof of damages for extinguishment of the covenant, but failed to do so in quantifiable terms.   Having failed, Df is barred from seeking damages in the future for injury to his property.  Df continues to hold the E and if there is any interference with the E rights, Df is entitled to damages.

Plaintiff’s Argument: The city of NY condemned all riparian rights to use as a hydroelectric plant and therefor the covenants are extinguished.

Defendant’s Argument: A covenant may be extinguished only when it no longer has value to the person who seeks to enforce it.  Here the covenant has value to the holder.