Scott v. Metcalf Charitable Trust

Supreme Court of Montana, 2015 MT 265, No. DA 14-0798, September 8, 2015: Conservation restrictions created outside Montana conservation easement statute enforceable.

The basic issue in this case was whether in Montana an easement in gross (here, a restriction for the benefit of a person, rather than benefitting a piece of land (a “dominant estate”) that binds another particular person but “running with the land”) remained enforceable even after the affected land (the “servient estate”) changed hands and the benefit of the easement was transferred to a new entity. The answer was yes, based on specifics of Montana law.

Donna Metcalf (Metcalf) — the predecessor in title to the Lee and Donna Metcalf Charitable Trust (Trust) — transferred a 40-acre parcel of land to Richard Thieltges (Thieltges) by warranty deed. The deed, granted in consideration of $1 “and other valuable consideration” included imposition of a set of “covenants, restrictions, conditions and charges” (the Metcalf Restrictions). The deed also stated, “These restrictions and covenants are to run with the land and shall be binding upon [Thieltges], his successors, heirs or assigns.” Thieltges later conveyed the land to the Scotts by warranty deed. It was undisputed that the Scotts had actual knowledge of the Metcalf Restrictions.

The Scotts then asked a court to invalidate the Metcalf Restrictions and allow them to subdivide the property.  The trial court concluded that the Metcalf Restrictions were enforceable by the Trust against the Scotts and any other of Thieltges’s successors with actual notice of them. It refused to invalidate the restrictions. The Scotts appealed. The Montana Supreme Court answered four questions.

1. Were the Metcalf Restrictions enforceable against the Scotts by the Trust?

The court first concluded that as a matter of law under § 70-17-102, Montana Code Annotated (MCA) the Metcalf Restrictions are an easement in gross, “a nonpossessory interest in land that benefits the holder of the easement personally,” without a “dominant estate,” i.e., specific land that benefits from the easement.

The court noted that generally, and not exclusively in Montana, “for an easement to be enforceable against parties that were not the original parties to the easement, the burden of the easement must pass to the original easement grantor’s successors in interest and the benefit of the easement must pass to the original easement grantee’s successors in interest,” citing Restatement (Third) of Property: Servitudes §§ 4.4, 4.7 (2000); 4 Richard R. Powell, Powell on Real Property § 34.17, at 34-167 to -176, (Michael Allan Wolf ed., 2015); 7 Thompson on Real Property, §§ 60.02(a), 60.07(a), at 460-61, 548-49 (David A. Thomas ed., 2d ed. 2006).  The court held that both the benefit and burden in this case passed to the original parties’ successors in interest.

As to the burden, the court said that under § 70-20-308, MCA, “transfer of real property passes all easements attached thereto,” so an easement remains attached to a servient estate despite transfer of that estate (with exceptions regarding intent of original parties and knowledge of the successor to the servient estate, which the court said did not apply here).

As to the benefit of the restrictions, since no one contested that the Trust is Metcalf’s successor in interest, the court concluded that the benefit also passed when it was transferred from Metcalf to the Trust. Citing Montana precedent that when there was “no language in the warranty deed limiting the grant[ee]‘s right to freely alienate and apportion the easement” (emphasis added by PLD), the court held that because there was no language in the Metcalf deed limiting the grantee’s or grantor’s right to alienate the easement, “the easement in gross comprising the Metcalf Restrictions was freely transferrable. It was, therefore devisable to the Trust. The easement in gross was not rendered unenforceable by its transfer or by Metcalf’s death.” The court took note that this holding “is at odds with the laws of many other jurisdictions. Most jurisdictions in the United States strictly limit the transfer of easements in gross. See Powell on Real Property §§ 34.02[2][d], 34.16, at 34-19 to -20, 34-163 to -167; Thompson on Real Property, § 60.07(c), 552-55.”

Since both the burden and benefit of the restrictions passed in this case the court concludes that the Metcalf Restrictions were enforceable by the Trust against the Scotts.

2. Were the Metcalf Restrictions enforceable as anything other than a conservation easement?

If the Metcalf Restrictions were deemed to be a conservation easement under Title 76, Chapter 6, MCA, they might not be enforceable if the statutory requirements for creating a conservation easement were not complied with. The court held that creating a servitude for a conservation purpose is expressly allowed under § 70-17-102, MCA (i.e., the statute allowing creation of an easement in gross) and that § 76-6-105(2), MCA (the conservation easement enabling statute) states that Title 76, Chapter 6, MCA, governing conservation easements, “may not be construed to imply that any easement, covenant, condition, or restriction that does not have the benefit of this chapter is not enforceable based on any provisions of this chapter.” Accordingly, the Metcalf Restrictions were enforceable as something other than a conservation easement.

3. Were the Metcalf Restrictions a nonvested property interest that was void as violations of § 72-2-1002, MCA, Montana’s version of the rule against perpetuities?

The court noted that the rule against perpetuities in the statute does not apply to a “nonvested property interest . . . arising out of a nondonative transfer.” The consideration recited in the easement deed meant that the Metcalf conveyance was “nondonative.”

4.  Were the Metcalf Restrictions void for vagueness?

The court said the meaning of the Metcalf Restrictions was not at issue here, and to decide the question would require a ruling “without the benefit of actual facts or a concrete controversy.”  Accordingly, the court would not invalidate the Restrictions on the grounds of vagueness.

The court therefore affirmed the trial court’s decision to grant summary judgment in favor of the Trust’s enforcement of the Metcalf Restrictions.

Decision available at https://filenet.mt.gov/getContent?vsId={F0F9AE4F-0000-C610-A352-48A19493B105}&impersonate=true&objectType=document&objectStoreName=PROD%20OBJECT%20STORE, or go to https://searchcourts.mt.gov/ and search by case name or docket number DA 14-0798.

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