Summary of Franklin v. Spadafora, S. Ct. Mass [1983]

Covenants

Relevant Facts: The trustees voted to amend the by-laws of the trust to restrict to two the number of condominium units which could be owned by any one person or entity.  The amendment was recorded.  Its adoption was enacted pursuant to applicable by-law and w/ written consent of owners holding 80.45% of the beneficial interest in the trust.  Pl, Franklin owned 6 units at the time of the amendment.  He thereafter executed an additional purchase and sale agreement w/ Pl Clarke.  As required, Pl Clarke, informed the trustees who notified him that the sale was in violation of the amendment.  After the action was filed Pl Clarke sold the unit to Pl Franklin.

Legal Issue(s): Whether a trust by-law limiting the number of units which may be owned by one person or entity to two, represents an unreasonable restraint on alienation or denies Pls equal protection/due process under the law?

Court’s Holding: No, and No.

Procedure: Trial ct declared amendment valid, voided Clarke-Franklin Deed.  Affirmed.

Law or Rule(s): To determine whether a restraint is reasonable : 1) The one imposing the restraint has some interest in land he is seeking to protect by enforcement of the restraint; 2) The restraint is limited in duration; 3) The enforcement of the restraint accomplishes a worthwhile purpose; 4) The type of conveyances prohibited are ones not likely to be employed by the one being restrained; 5) The number of persons to whom alienation is prohibited is small.

Court Rationale: The trustees possess an interest in the land.  The issue of duration was not addressed by Pl, and is treated as being waived.  However, the amendment is not be its terms limited in duration, but may be amended by the trustees at any time w/ written consent of over 51%.  This arrangement is a reasonable adjustment to the demands of condominium management and the restraint is not unreasonable in duration.  The by-law amendment and its declared purpose are proper.  Those who live in condos must be willing to give up a certain degree of personal choice in order to promote the welfare of the majority of the owners. There for the objective is not against public policy and serves a worthwhile purpose.  The conveyance prohibited is not any sale of a unit, but ONLY the sale of a unit to a person who already owns two. The amendment applies to all owners and not just to Pl Clarke.  The amendment allows alienation to all persons except those who already own two units.  This number of persons is relatively small when compared to the number of persons to whom Clarke could properly sell their unit. The rights of property owners are not absolute, they may be subject to reasonable regulation to promote the general welfare.  The Pls decisions to purchase units were done voluntarily, and any restrictions are essentially self-imposed. The amendment serves a legitimate purpose.

Plaintiff’s Argument: The by-laws belie the purpose of the amendment, by allowing a person who owns two units to lease either or both of them. The amendment is unreasonable b/c it has been applied against Pl Franklin in an arbitrary and discriminatory manner. The amendment has denied the Pl equal protection and DP by effectively denying the right to own property or dispose of it as they see fit.

Defendant’s Argument: The amendment was duly enacted w/ written consent of over 51% of those who hold a beneficial interest; and the restraint is reasonable w/i a condominium development.