One of the most interesting aspects of Shelley v. Kramer is that, as a matter of common law property rules, the racially restrictive covenant should not have been enforced–totally apart from the 14th Amendment. Only 30 out of the 39 owner son Labadie Ave. in St. Louis agreed to the racially restrictive covenant. Under traditional common law rules, this would be insufficient to bind properties that did not partake due to a lack of horizontal and vertical privity.

Even if the agreement was construed as an equitable servitude, it still would not be enforceable as an equitable servitude for two reasons. First, there was no notice.  The house that Shelley purchased did not have the covenant recorded in the deed. Courts are able to impute constructive notice in limited cases. For example, in a subdivision where every single parcel has a one-family house, a court could find that a buyer should be on notice that he cannot build an apartment building in that area. However, that wouldn’t apply to Shelley, as there is no way she should have been on notice that there was a racially-restrictive covenant on the block. And to rebut a point a student always raises, the block was not entirely white–at the time, 5 of the parcels were owned by African Americans.

Second, a requirement of equitable servitudes is that the condition must “touch and concern” the land. This phrase was always nebulously defined, but even at its broadest, there is no way that the race of the person living in the house could relate to the land use. (Although at the time, the neighbors could have argued that having an African-American resident would diminish property values, which was recognized by the courts as touching and concerning the land).

More generally, this sort of covenant would have been viewed as an unlawful restraint on alienation, and would have also been unenforceable under common law rules.

This was the general theme of the first question of my Property II exam, where I tried to tease out these principles. You can download the exam and the A+ paper to play along at home.

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Instructions: The year is 1920. You are a law clerk for the Chief Justice of the Supreme Court of Missouri. You are asked to prepare a memorandum of no more 1,000 words addressing five questions concerning an important property dispute involving Abe, Bob, Cam, Dave, Oliver, and Tim. Missouri applies all common law property rules as articulated in the Restatement (First) of Property, and the legislature has adopted a notice recording statute.

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Maple Street has historically been an upper-class residential block in St. Louis, Missouri. There are 50 homes on the cul-de-sac (a dead-end street). All of the lots on Maple street have a one-family house that is two or three stories tall. On 6/31/1915, thirty-five of the fifty lot owners on the block agree to form a homeowner’s association. The homeowner’s association agreement has three covenants:

1. Covenant #1: All lot owners on Maple Street covenant to maintain one-family residential houses that are no smaller than two stories and no taller than four stories.
2. Covenant #2: All lot owners on Maple Street covenant to pay to the Homeowner’s Association an annual fee of $1 for every 100 sq. ft. of land they own. This money will be used to pay for maintenance and landscaping of common areas.
3. Covenant #3: All lot owners on Maple Street covenant to only sell their properties to persons of the Caucasian race.

These covenants were recorded by each of the the thirty-five lot owners who agreed to join the homeowner’s association. However, they were neither signed nor recorded by the other fifteen lot owners on Maple Street. Notably, among the fifteen who refused to join were several African-American families.

Abe has lived on Lots 1 and 2 on Maple Street—which are right next to each other—since 1913. Abe refused to join the homeowner’s association in 1915, and did not record covenants for either lot.

Bob tells Abe that he wants to purchase Lot 2, and build a six-story tower for bird-watching. Bob admits that the tower will cast a shadow over Lot 1, and block a lot of sun light. Bob offers to pay for a covenant that will allow him to block the sun light over Lot 1. Abe agrees to the covenant. On 1/1/1916, Abe sells to Bob Lot 2 with the covenant on the deed. Bob is not Caucasian. Bob did not record the deed.

On 2/1/1916, Bob leases Lot 2 to Cam for one year. Over the following month, with Bob’s permission, Cam proceeds to construct the six-story tower.

On 3/10/1916, Dave expressed an interest in acquiring Lot 1 from Abe. Dave conducts a title search at the records office and finds the following chain of title:

Grantee Index

Grantee	Grantor	Property	Description	Date of Deed	Date Recorded
Tim	Oliver	Lot 1	General warranty deed in fee simple	1/1/1900	2/15/1916
Abe	Sam	Lot 2	Quitclaim deed in fee simple	1/1/1914	1/15/1916
Abe	Oliver	Lot 1	Quitclaim deed in fee simple	1/1/1913	1/12/1916

 

Grantor Index

Grantor	Grantee	Property	Description	Date of Deed	Date Recorded
Oliver	Abe	Lot 1	Quitclaim deed in fee simple	1/1/1913	1/12/1916
Sam	Abe	Lot 2	Quitclaim deed in fee simple	1/1/1914	1/15/1916
Oliver	Tim	Lot 1	General warranty deed in fee simple	1/1/1900	2/15/1916

 

On 3/1/1916, Abe sells Lot 1 to Dave in fee simple with a general warranty deed. Dave promptly records his deed. Then the litigation begins.

 

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In a memorandum of no more than 1,000 words, please address how the Missouri Supreme Court should resolve the following five issues.

1. A member of the Homeowner’s Association files suit against Bob, seeking to set aside the sale of Lot 2, because he is in violation of Covenant #3. Who should prevail? Please remember that since the year is 1920, the doctrine of “Separate but Equal” announced in Plessy v. Ferguson is still good law. There are no federal constitutional problems with the judicial enforcement of Covenant #3—this question must be resolved as a matter of property law.
2. A member of the Homeowner’s Association files suit against Bob, claiming that he is in violation of Covenant #1 for having a six-story tower. Alternatively, the member argues that Bob should have been on notice that a six-story tower would be prohibited. Who should prevail?
3. The Homeowner’s Association files suit against Bob, who refuses to pay the annual fee, for violating Covenant #2. The Homeowner’s Association concedes that the covenant cannot be enforced as written, but argues that this promise should be construed as an equitable servitude, and enforced by the courts. Who should prevail?
4. Dave sues Cam for a nuisance, because the tower from Lot 1 casts a shadow on Lot 2. Who should prevail?
5. Tim sues Dave, seeking to quiet title, and determine the true owner of Lot 1. Who should prevail?