St. Louis Union Trust Co. v. Foster

Claekson, J. The defendant’s first question involved is as follows: “Is the whole of a boundary of land, containing five hundred acres, subject to restrictions previously imposed upon a small portion thereof, containing approximately thirteen acres, by reason of the fact that the five-hundred-aere boundary is conveyed ‘subject to all the conditions, restrictions, and stipulations’ contained in the agreement creating the restrictions upon the thirteen-acre tract?” We think not. The language in the agreed statement of facts as to certain of the restrictions in the deed is as follows : “Subject, however, to the following *342 restrictions, conditions, and stipulations, that is to say: All the restrictions, conditions, and stipulations contained in a certain agreement between E. W. Grove and W. B. Meacham and wife, recorded in the office of the register of deeds for Buncombe County, ETorth Carolina, in Book ETo. 224, page 147; and also subject to the following restrictions: And the said party of the second part, for itself, its successors and assigns, doth covenant to and with the said parties of the first part, their heirs, executors, administrators, and assigns, as follows: (1) That they will not erect, license, or suffer to be erected or maintained on the above described land, or any part thereof, any house or building to be used as a sanitarium or hospital, or at any time permit or suffer to be used any house or building erected thereon for any such purpose, and will not, during the term of twenty-one (21) years from the date hereof (1 April, 1926) lease, sell, or convey said land, or any part thereof, or any building thereon, to a ETegro or person of any degree of ETegro blood, or any person of bad character; (2) that the foregoing covenants shall be covenants running with the land., and shall be kept by the said party of the second part, its successors and assigns.” This language is clear. When the entire 500-acre tract was sold there was a restricted agreement on the 13 acres between Grove and Meacham. This restriction in no way applied to the land sold, and could not be extended or enlarged beyond the particular area described in the Grove-Meacham agreement. The land sold was subject to this restriction in the 13 acres, in the same manner as if a deed were made subject to an existing lien, deed of trust, or mortgage on a portion of the property that was conveyed. The Grove-Meacham agreement is in no way operative on the Foster lot — the locus in quo which is in controversy. The Grove-Meacham restriction is separate and distinct. It will be noted that in defendant’s contract for the purchase of the "locus in quo” from the plaintiffs, the above restrictions as to sanitarium or hospital and sale to ETegroes, etc., are agreed to be restrictions in the conveyance to him. See Pepper v. Development Co., ante, 166. The defendant’s second question involved is as follows: “Where approximately one-eighth of a five-hundred-acre boundary is subdivided and developed into residential lots, and about one-half of such lots are sold under uniform restrictions adopted pursuant to a general plan or scheme of development for the subdivided area, and thereafter the unsold lots and the undeveloped portion of the boundary is foreclosed under a preexisting deed of trust and reconveyed to the estate of the owner of the original boundary, what effect, if any, do such restrictions have upon the land so reconveyed?” We cannot 'see, under the facts and circumstances of the case, that the restrictions have any effect on the land reconveyed on foreclosure. *343 1. On 1 April, 1926, Grove conveyed to Eloralina Realty Corporation, deed duly recorded, the tract of 500 acres with the restrictions above set forth to certain unimproved land, afterwards known as “Kimberly Heights.” Included in the deed was the area belonging to Grove described in the agreement between Grove and Meacham and the deed made subject to same. 2. On 1 April, 1926, the Eloralina Realty Corporation made a deed in trust to Commerce Union Trust Company to secure the purchase money, which was duly recorded. 3. On 1 July, 1926, the Eloralina Realty Corporation made a deed to Arthur M. Griffing, which was duly recorded, subject to the deed of trust before mentioned. Griffing, shortly after the conveyance to him, caused a portion of Kimberly Heights to be platted into 162 lots and offered them for sale with certain restrictions. In 1927, there having been a default under the terms of the deed in trust from Eloralina Realty Corporation to Commerce Union Trust Company, trustee, the said trustee foreclosed the same, and deeded the property, excepting those portions previously released by it to lot purchasers from the said Griffing, and Griffing’s Kimberly Heights, Inc. By virtue of a refinancing agreement with the plaintiffs herein, who were the holders of the unpaid notes of the said Eloralina Realty Corporation, the payment of the bid of Griffing’s Kimberly Heights, Incorporated, made in the aforesaid foreclosure sale, was deferred, evidenced by promissory notes and secured by a first lien purchase money deed of trust embracing the property conveyed by said Commerce Union Trust Company, trustee, executed by Griffing’s Kimberly Heights, Incorporated, to Commerce Union Trust Company, as trustee, dated 21 May, 1927, and duly recorded. Between 21 May, 1927, and 31 October, 1931, Griffing’s Kimberly Heights, Incorporated, conveyed to purchasers ninety-three (93) lots in the platted area, of which number sixty-four (64) were released by the trustee from the lien of the deed of trust above set forth. In October, 1931, default having been made under the terms of deed of trust from Griffing’s Kimberly Heights, Incorporated, to Commerce Union Trust Company, trustee, foreclosure was had and the property described in the same, excepting such portions as had theretofore been released by the trustee, was duly conveyed by the trustee to the plaintiffs herein, by deed dated 31 October, 1931, and duly recorded. The said deed provides, with respect to restrictions, the following: Subject to all conditions and restrictions referred to and contained in deed of E. W. Grove and wife, A. G. Grove, to Eloralina Realty Corporation, bearing date 1 April, 1926. By virtue of the foreclosure and deed before mentioned, the plaintiffs became the owners of the entire unplatted area of said “Kimberly *344 Heights” (including the “Poster lot”), with the exception of the before mentioned two tracts previously released by the trustees; plaintiffs thereby also became the owners of eighty-six (86) lots within the platted area, the release of which had not been had or provided for. At the present time two tracts of 1 acre each, outside the platted area, are owned by purchasers under the title of Griffing’s Kimberly Heights, Incorporated. Seventy-six (76) lots within the platted area are now owned by purchasers under the title of Griffing and Griffing’s Kimberly Heights, Incorporated; of these lots, twenty-six (26) have been improved by residences erected at various times since April, 1926, under the design of the Griffing and Griffing’s Kimberly Heights, Incorporated, restrictions. Eifteen (15) residences front on Griffing Boulevard, six (6) on Lynwood Road; four (4) on Blackwood Road; and one on Charlotte Street Extension. Since the foreclosure sale and conveyance to the plaintiffs, referred to, the plaintiffs have made no improvements of either the unplatted area or of the lots conveyed to them by the trustee; nor have they formed or devised any common or general scheme of development for the same, or any part thereof. All the conveyances are subject to the restrictions set forth in the Grove-Meacham agreement, and also in the restrictions heretofore mentioned in deed from Grove to Ploralina Realty Corporation. We do not see how the restrictions imposed by Griffing or Griffing’s Kimberly Heights, Inc., in deeds to their purchasers can bind or affect the title of the plaintiffs acquired under foreclosure of the purchase money deeds of trust made prior thereto. In Jones on Mortgages, Yol. 3 (8th Ed.), p. 623, it is said: “Title acquired by foreclosure relates back to the date of the mortgage, so as to cut off intervening equities and rights.” In Wiltsie on Mortgage Poreelosure, Yol. 2 (4th Ed.), pp. 1030-31, we find: “The title of the purchaser at a sale under a decree of foreclosure relates back to the date of the delivery of the mortgage, as against all intervening purchasers and encumbrancers who were made parties to the action, or who became interested in the premises pendente lite. All encumbrances and liens, and all conditions, reservations, and restrictions which the mortgagor may have imposed upon the property subsequently to the execution of the mortgage will be extinguished.” In Leak v. Armfield, 187 N. C., 625 (628), it is said: “If subsequent judgment creditors or litigants over the equity of redemption could ‘tie up’ a first mortgage and affect its terms, it would seriously impair a legal contract.” The 500 acres owned by Grove and which he sold did not provide a general scheme or plan of development. It would have been folly for Grove to have had a general scheme or plan, as only a small portion of *345 tbe land was fit for residential development. In tbe 500-acre tract there was a small area tbat could be used for residential purposes on wbicb modern conveniences, sewer, water, etc., could be put, and on tbe balance of tbe land to bave sucb conveniences, it would be at a prohibitive cost. Tbe 500- acres deeded were unimproved, heavily wooded, and almost all inaccessible to vehicular traffic, mountainous, and very little of tbe area fitted for residential purposes. It is a matter of common knowledge tbat large tracts of land are purchased and tbe development is gradual in blocks and otherwise. ¥e think it was never tbe intention of Grove tbat tbe restrictions and conditions in tbe Grove-Meacham agreement block would extend to tbe balance of tbe land. Tbe defendant in bis brief says : “Tbe questions raised by this appeal are largely ones of fact, tbe law applicable to sucb facts being well settled.” On tbe agreed facts, we think tbe court below was correct in its bolding. For tbe reasons given, tbe judgment of tbe court below is Affirmed.