RILEY v. Harvey N. Black, Jr., and Ernest Wertheim, Defendants and Appellants. (1975)

Bear Creek Planning Committee and certain members thereof, defendants in this action (referred to collectively herein as ‘committee’), appeal from a judgment for plaintiffs after trial to the court without a jury. The controversy arises out of an effort by defendants to enforce certain building restrictions alleged to control construction of improvements on plaintiffs' property.

Central to the disposition of this appeal is the question whether or not plaintiffs' property is burdened by an equitable servitude for the benefit of other lots in the tract of which plaintiffs' property is a part.

On February 26, 1964, Alpine Slopes Development Company (hereinafter ‘grantor’), a limited partnership, by grant deed conveyed Lot 101 in Alpine Meadows Estates Subdivision No. 3, located in Placer County, to Ernest H. and Jewel Riley, husband and wife.¹ The deed, recorded March 13, 1964, contains no restrictions upon the use of the plaintiffs' property nor is there any reference therein to any instrument purporting to impose restrictions upon Lot 101. In fact, at the time of the conveyance there was no document of record purporting to restrict the use of Lot 101.

On November 25, 1964, exactly nine months after the conveyance to plaintiffs, the grantor caused to be recorded with the Placer County Recorder a document entitled ‘Declaration of Covenants, Conditions, Restrictions and Reservations on Lots 72 through 116 of Alpine Meadows Estates Unit No. 3’ (referred to hereinafter as ‘declaration’). The declaration was executed by an agent of the grantor and by him acknowledged on November 20, 1964. Preliminarily the declaration recites that grantor is the owner and subdivider of Lots 72 through 116 inclusive (which are particularly described therein by reference to a recorded map); that ‘it [grantor] has established and does hereby establish a general plan for the improvement and development of said property and does hereby establish restrictions, easements, conditions, covenants and reservations upon and subject to which all of the aforementioned lots and parcels of said real property shall be improved and sold or conveyed by it as such owner, each and all of which is or are for the benefit of the [grantor] and the owner of any part or parcel of said property or interest therein and shall apply to and bind the respective successors in interest of the owner or owners thereof and are, and each thereof is, imposed upon said property as a servitude in favor of each subsequent declarant and of each and every parcel of land therein as a dominant tenement or tenements . . ..’ There follow twenty-six numbered paragraphs in which restrictions, covenants and conditions common to subdivision developments of the type here involved are spelled out which are to remain in full force and effect until January 1, 1983.

It is the plaintiffs' alleged violation of the provisions of paragraph 6 of the declaration that precipitated the instant controversy. Insofar as relevant, paragraph 6 provides: ‘No dwelling, garage, building, fence, wall, retaining wall or other structure or excavation therefor shall be moved onto, commenced, erected or maintained on said lots, nor shall any addition to, change, or alteration therein, be made until the plans and specifications for same have been submitted to the Bear Creek Planning Committee and the approval of said Committee has been secured, . . .'²

At a time not established by the record, the plaintiffs constructed a snow tunnel on their lot. In reaction thereto, on January 12, 1972, the committee recorded a ‘Notice of Violation of Covenants, Conditions and Restrictions.’ Referring specifically to Lot 101 and the declaration recorded November 25, 1964, the notice recited the ‘probable violation’ of the provisions of the declaration in that ‘A covered walkway has been constructed on said lot 101 without prior compliance with Paragraph 6 of the above described recorded restrictions.’

Thereafter plaintiffs filed their complaint to quiet title and for damages for slander of title and defendant cross-complained for declaratory relief. The resulting judgment quieted plaintiffs' title to Lot 101 against all claims of defendants and found for plaintiffs and against defendant on the latter's cross-complaint for declaratory relief.³

Inasmuch as there is no privity of contract between defendants and plaintiffs, the defendant's right to enforce use restrictions against plaintiffs depends upon whether or not the restrictions sought to be enforced are comprehended within mutually enforceable equitable servitudes for the benefit of the tract. (Trahms v. Starrett (1973) 34 Cal.App.3d 766, 772, 110 Cal.Rptr. 239; Ross v. Harootunian (1967) 257 Cal.App.2d 292, 295, 64 Cal.Rptr. 537; see Girard v. Miller (1963) 214 Cal.App.2d 266, 278–279, 29 Cal.Rptr. 359, dissenting opinion of Files, J.) The issue thus framed, defendant's claim founders upon the rule announced in Werner v. Graham (1919) 181 Cal. 174, at pages 183–184, 183 P. 945, at page 949: ‘It is undoubted that, when the owner of a subdivided tract conveys the various parcels in the tract by deeds containing appropriate language imposing restrictions on each parcel as part of a general plan of restrictions common to all the parcels and designed for their mutual benefit, mutual equitable servitudes are thereby created in favor of each parcel as against all the others. The agreement between the grantor and each grantee in such a case as expressed in the instruments between them is both that the parcel conveyed shall be subject to restrictions in accordance with the plan for the benefit of all the other parcels, and also that all other parcels shall be subject to such restrictions for its benefit. In such a case the mutual servitudes spring into existence as between the first parcel conveyed and the balance of the parcels at the time of the first conveyance. As each conveyance follows, the burden and the benefit of the mutual restrictions imposed by preceding conveyances as between the particular parcel conveyed and those previously conveyed pass as an incident of the ownership of the parcel, and similar restrictions are created by the conveyance as between the lot conveyed and the lots still retained by the original owner. . . . [¶] [H]ere there is no language in the instruments between the parties—that is—the deeds, which refers to a common plan of restrictions, or which expresses or in any way indicates any agreement between grantor and grantee that the lot conveyed is taken subject to any such plan. . . . [¶] The intent of the common grantor—the original owner—is clear enough. He had a general plan of restrictions in mind. But it is not his intent that governs. It is the joint intent of himself and his grantees, and as between him and each of his grantees the instrument or instruments between them—in this case the deed—constitute the final and exclusive memorial of such intent. It is also apparent that each deed must be construed as of the time it is given. It cannot be construed as of a later date, and, in particular, its construction and effect cannot be varied because of deeds which the grantor may subsequently give to other parties. . . . Whatever rights were created by the deed were created and vested [when it was given], and the fact that it later appears that [the grantor] was pursuing a general plan common to all the lots in the tract cannot vary those rights. The same is true of each deed as it was given. Nor does it make any difference that, as claimed by the defendants, [the grantor] gave each grantee to understand, and each grantee did understand, that the restrictions were exacted as part of a general scheme. Such understanding was not incorporated in the deeds, and, as we have said, the deeds in this case constitute the final and exclusive memorials of the understandings between the parties. Any understanding not incorporated in them is wholly immaterial in the absence of a reformation. [Citations.] This whole discussion may in fact be summed up in the simple statement that, if the parties desire to create mutual rights in real property of the character of those claimed here, they must say so, and must say it in the only place where it can be given legal effect, namely, in the written instruments exchanged between them which constitute the final expression of their understanding.’ (See also Murry v. Lovell (1955) 132 Cal.App.2d 30, 281 P.2d 316.)

From the recordation of the first deed which effectively imposes restrictions on the land conveyed and that retained by the common grantor, the restrictions are binding upon all subsequent grantees of parcels so affected who take with notice thereof notwithstanding that similar clauses have been omitted from their deeds. (Werner v. Graham, supra, 181 Cal. at p. 183–184, 183 P. 945; Martin v. Holm (1925) 197 Cal. 733, 746–748, 242 P. 718; Girard v. Miller, supra, 214 Cal.App.2d at pp. 275–276, 29 Cal.Rptr. 359; Seaton v. Clifford (1972) 24 Cal.App.3d 46, 50, 100 Cal.Rptr. 779; Trahms v. Starrett, supra, 34 Cal.App.3d at p. 771, 110 Cal.Rptr. 239.) Neither proof nor contention is made that plaintiffs are grantees subsequent to the recordation of such a deed with notice thereof and, quite apart from the rule of Werner v. Graham, it is manifest that acknowledgement and recordation of a declaration of restrictions by the grantor after the conveyance to plaintiffs cannot affect property in which the grantor no longer has any interest.

To surmount the obstacle erected by the rule of Werner v. Graham, defendants postulate an analysis of the pertinent law dependent upon the following premises: parol evidence is admissible to explain the terms of a deed to the same extent as with contracts generally; the rule of Werner v. Graham is a function of and predicated upon the parol evidence rule; the modification of the parol evidence rule accomplished by Masterson v. Sine (1968) 68 Cal.2d 222, 65 Cal.Rptr. 545, 436 P.2d 561 therefore operated in effect to overrule Werner v. Graham sub silentio. Accordingly, defendants conclude, extrinsic evidence is admissible to establish the mutual intention of the parties to the conveyance to plaintiffs that it be subject to restrictions identical to those contained in the declaration recorded subsequently by the grantor and specifically in paragraph 6 thereof.

In furtherance of this theory, defendants at trial offered extrinsic evidence of the understanding of the plaintiffs and their grantor. The evidence was received provisionally, subject to the trial court's later ruling on plaintiffs' continuing objection thereto and motion to strike based both on the parol evidence rule and the principle (stated in Werner v. Graham, supra, 181 Cal. at p. 185, 183 P. 945) that the evidence was irrelevant as the deed is conclusive of the parties intention with respect to mutually restrictive covenants. In summary, the challenged evidence tended to prove that the grantor intended to convey and plaintiffs intended to purchase a parcel which both parties assumed to be governed by building restrictions; that prior to purchase plaintiffs' attention had been directed to the existence of the assumed restrictions and for the first several years of their occupancy of the lot, they conducted themselves in compliance with what they understood to be binding controls upon the use of the property. The trial court, regarding Werner v. Graham as controlling, granted plaintiffs' motion to strike all extrinsic evidence of the intention of the parties. Defendants assign the ruling as reversible error.

We have no quarrel with the initial premise upon which defendants' theory of the case is predicated, i. e., the admissibility of parol evidence where otherwise proper to explain the terms of a deed. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 521–523, 67 Cal.Rptr. 761, 439 P.2d 889; Masterson v. Sine, supra, 68 Cal.2d 222, 65 Cal.Rptr. 545, 436 P.2d 561; Civ.Code, § 1066.) However, we cannot agree with the second postulate of defendants' theory, i. e., that the parol evidence rule supplies the exclusive rational underlying the doctrine of Werner v. Graham.

The parol evidence rule operates to bar extrinsic evidence which contradicts the terms of a written contract. (1 Witkin, Summary of Cal.Law (8th ed. 1973) Contracts, § 204.) It ‘is not a rule of evidence but is one of substantive law. It does not exclude evidence for any of the reasons ordinarily requiring exclusion, based on the probative value of such evidence or the policy of its admission. The rule as applied to contracts is simply that as a matter of substantive law, a certain act, the act of embodying the complete terms of an agreement in a writing (the ‘integration’), becomes the contract of the parties. The point then is, not how the agreement is to be proved, because as a matter of law the writing is the agreement. Extrinsic evidence is excluded because it cannot serve to prove what the agreement was, this being determined as a matter of law to be the writing itself.' (Emphasis in original.) (Estates of Gaines (1940) 15 Cal.2d 255, 264–265, 100 P.2d 1055, 1060; see Tahoe National Bank v. Phillips (1971) 4 Cal.3d 11, 22–23, 92 Cal.Rptr. 704, 480 P.2d 320.)

In contrast to the rationale of the rule barring parol evidence, the ‘Purpose of the statute of frauds is to prevent fraud and perjury with respect to certain agreements by requiring for enforcement the more reliable evidence of some writing signed by the party to be charged . . ..’ (Sousa v. First California Co. (1950) 101 Cal.App.2d 533, 542, 225 P.2d 955, 961.) Thus the statute of frauds excludes proof of certain types of agreements which are not sufficiently evidenced by a writing. (1 Witkin, Summary of Cal.Law, supra, § 204.) Every material term of an agreement within the statute of frauds must be reduced to writing. No essential element of a writing so required can be supplied by parol evidence. (Ellis v. Klaff (1950) 96 Cal.App.2d 471, 476, 216 P.2d 15; Wikin, Cal.Evidence (2d ed. 1966) § 716.) Among the types of agreement to which the statute of frauds applies are contracts for the sale of real property of an interest therein (Civ.Code, § 1624, subd. 4; Code Civ.Proc. § 1971) and agreements which by their terms are not to be performed within a year. (Civ.Code, § 1624, subd. 1; see Long v. Cramer Meat & Packing Co. (1909) 155 Cal. 402, 101 P. 297.)⁴

In Masterson v. Sine, supra, 68 Cal.2d 222, 65 Cal.Rptr. 545, 436 P.2d 561, the Supreme Court abandoned the rule that evidence of oral agreements collateral to an agreement in writing must be excluded where the instrument on its face appears to be an integration. Rather, the court held that credible extrinsic evidence of a collateral oral agreement is admissible if, considering the circumstances of the parties, the agreement is one which “might naturally be made as a separate agreement.” (P. 228, 65 Cal.Rptr. p. 548, 436 P.2d p. 564.) Defendants contend that under the rule announced in Masterson, the extrinsic evidence which was stricken by the court was credible evidence admissible to show the collateral oral understanding of plaintiffs and their grantor that Lot 101 be subject to the restrictions which defendants seek here to enforce.

Despite the omission of the Werner court to articulate the theoretical basis of its decision, it has been subsequently associated at times with the parol evidence rule. (See, e. g., Moore v. Ojai Improvement Co. (1957) 152 Cal.App.2d 124, 128, 313 P.2d 47.) But in McBride v. Freeman (1923) 191 Cal. 152, 215 P. 678, the Court, speaking of the Werner rule observed that ‘Any other rule would make important questions of the title to real estate largely dependent upon the uncertain recollection and testimony of interested witnesses. The rule of the Werner Case is supported by every consideration of sound public policy which has led to the enactment and enforcement of statutes of frauds in every English-speaking commonwealth.’ (P. 160, 215 P. p. 682.) (See also Triangle Ranch, Inc. v. Union Oil Co. (1955) 135 Cal.App.2d 428, 438–439, 287 P.2d 537; 5 A.L.R.2d 1316, 1343–1344.)

In Wing v. Forest Lawn Cemetery Assn. (1940) 15 Cal.2d 472, 101 P.2d 1099, the Court, referring to the policy underlying the Werner rule, quoted with approval Professor Burby (10 So.Cal.L.Rev. 281, 289, note 21) who observed that ‘There should be some written evidence, either in the form of a plat of [sic] otherwise, delineating or pointing out the extent of the property affected by the restrictions. . . . As a matter of policy, the understanding of the parties should be definite and clear, and should not be left to mere conjecture.’ (Emphasis added.) (15 Cal.2d at p. 480, 101 P.2d at p. 1103.

The proposition that the rule of Werner v. Grahom springs from the same policy considerations as underlie the statute of frauds is further bolstered by Southern Cal. Edison Co. v. Bourgerie (1973) 9 Cal.3d 169, 107 Cal.Rptr. 76, 507 P.2d 964. In that case the Supreme Court held that a building restriction in a deed constitutes property, thus entitling the owner of the dominant tenement to compensation for damage caused by construction of an improvement in violation of the restriction by a condemnor exercising the power of eminent domain over the servient tenement. In so deciding the Supreme Court abandoned the rule of longstanding, first announced in Friesen v. City of Glendale (1930) 209 Cal. 524, 288 P. 1080, that a building restriction gave rise not to a right in the land itself but to a mere contractual right cognizable in equity between the contracting parties or their successors with notice.

We recognize that a deed poll such as used here and commonly throughout California does not satisfy the requirement of the statute of frauds that the written memorandum be subscribed by the party to be charged. (Civ.Code, § 1624; 1 Witkin, Summary of Cal.Law, supra, § 210.)⁵ Notwithstanding the lack of complete congruity of common conveyancing practice in the creation of so-called negative easements to the requirements of the statute of frauds, we are of the view that the doctrine of Werner v. Graham, though undoubtedly a function in part of the parol evidence rule, is not exclusively so; that independently therefrom it derives vitality from the policies underlying and implemented by the statute of frauds; that as a consequence, it remains a viable ‘rule of property’ (Girard v. Miller, supra, 214 Cal.App.2d at p. 275, 29 Cal.Rptr. 359) unimpaired and unaffected by subsequent modifications of the parol evidence rule.

Moreover, there is a practical consideration favoring the rule of Werner v. Graham. The grantee of property subject to mutually enforceable restrictions takes not just a servient tenement but, as owner of a dominant tenement, acquires a property interest in all other lots similarly burdened for the benefit of his property. That fact significantly affects the expectations of the parties and inevitably enters into the exchange of consideration between grantor and grantee. Even though the grantor omits to include the mutual restrictions in deeds to parcels thereafter severed from the servient tenement, those who take such property with notice, actual or constructive, of the restrictions are bound thereby. (Arrowhead Mut. Service Co. v. Faust (1968) 260 Cal.App.2d 567, 580, 67 Cal.Rptr. 325.) Thus, the recording statutes operate to protect the expectations of the grantee and secure to him the full benefit of the exchange for which he bargained. (Wayt v. Patee (1928) 205 Cal. 46, 49, 269 P. 660; Doo v. Packwood (1968) 265 Cal.App.2d 752, 758–759, 71 Cal.Rptr. 477; Barbieri v. Ongaro (1962) 208 Cal.App.2d 753, 757, 25 Cal.Rptr. 471.) Where, however, mutually enforceable equitable servitudes are sought to be created outside the recording statutes, the vindication of the expectations of the original grantee, and for that matter succeeding grantees, is hostage not only to the good faith of the grantor but, even assuming good faith, to the vagaries of proof by extrinsic evidence of actual notice on the part of grantees who thereafter take a part of the servient tenement either from the common grantor or as successors in interest to his grantees. The uncertainty thus introduced into subdivision development would in many cases circumvent any plan for the orderly and harmonious development of such properties and result in a crazy-quilt pattern of uses frustrating the bargained-for expectations of lot owners in the tract.

The trial court correctly struck extrinsic evidence of the intention of plaintiffs and their grantor.

The judgment is affirmed.

FOOTNOTES

1.  By this deed plaintiffs took an undivided one-half interest in Lot 101 as joint tenants. The remaining one-half interest was by the same instrument conveyed to Frederick LaTour and Margaret LaTour, husband and wife. Prior to this dispute the LaTour interest was sold to the Rileys.

2.  The record shows only that the Bear Creek Planning Committee is an unincorporated association, in existence at least since 1962, and purporting to exercise architectural control over structures erected in the tract containing plaintiffs' lot. Otherwise, considering that the committee claims control over the erection, placement or alteration of any building in the tract area, the record is remarkably silent concerning the origin, organization, operation and, of primary importance, source of jurisdiction of the committee. (Cf. Russell v. Palos Verdes Properties (1963) 218 Cal.App.2d 754, 32 Cal.Rptr. 488, wherein a nonprofit homeowners' association which itself owned none of the land involved was by contract with the grantor given authority for the benefit of the property owners to enforce restrictions similar to those involved herein; see also 51 A.L.R.3d 556, 587.)

3.  By stipulation the cause of action for slander of title was severed and continued for trial. It is not involved in this appeal.

4.  In the Long case, the predecessors in interest of plaintiffs and defendant entered into a parol agreement before they acquired certain lands as tenants in common. The agreement, of indefinite duration, provided that the lands were not to be used to herd or graze sheep. Defendant was the grantee of the covenantor and took with notice of the restriction. Plaintiffs' attempt to enforce the restriction against defendant was rebuffed by the court because the agreement, not to be performed within a year, rested wholly in parol and thus ‘did violence to the statute of frauds, . . .’ (P. 406, 101 P. p. 298.)

5.  However, the acceptance by the grantee of a deed poll containing a covenant to be performed by him binds him to performance thereof. (Grange Co. v. Simmons (1962) 203 Cal.App.2d 567, 573, 21 Cal.Rptr. 757.)

PUGLIA, Presiding Justice.

JANES and EVANS, JJ., concur.