NO. 93-331
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
ROBERT SCHERPENSEEL and SHIRLEY
SCHERPENSEEL, husband and wife;
ROBERT EICKERT and THERESA EICKERT,
husband and wife,
Plaintiffs and Appellants,
-v-
DUANE BITNEY and BETTY BITNEY, DEC 2 2 1993
D
husband and wife; EDGAR GRANRUD and
HELEN GRANRUD, husband and wife;
and FLATHEAD COUNTY, MONTANA, a
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CLERK OF S U P R C ' ~ ?C Q ~ J R ~
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political subdivision of the State STATE OF I:IOIUT,~NA
of Montana, by and through its Board
of County commissioners,
Defendants and Respondents.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael H. Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Patrick M. Springer, Kalispell, Montana
For Respondents:
M. Dean Jellison, Murphy, Robinson, Heckathorn &
Phillips, Kalispell, Montana (Bitneys), James C.
Bartlett, Hash, O'Brien & Bartlett, Kalispell,
Montana (Granruds), Dennis J. Hester, Deputy
Flathead County Attorney, Kalispell, Montana
Submitted on Briefs: November 10, 1993
Decided: December 22, 1993
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
Plaintiffs/Appellants appeal an order of the Eleventh Judicial
District Court, Flathead County, granting summary judgment to the
defendants and denying plaintiffs' motion to alter or amend that
judgment. We reverse.
The issues on appeal are as follows:
1. Does the Covenant to Dedicate, entered into by the
defendants in 1975, run with the land?
2. Does the eight-year statute of limitations bar the
plaintiffs' cause of action?
3. Did the District Court err in granting summary judgment
in favor of the defendants?
In 1975, the defendants Edgar and Helen Granrud and Duane and
Betty Bitney (the defendants) owned certain real property in
Flathead County known as Stillwater Terrace, Unit 2 (Unit 2). The
defendants applied for summary review of their subdivision
application on February 18, 1975, and a summary review report was
subsequently prepared. On May 19, 1975, the defendants entered
into a "Covenant to Dedicate" with Flathead County and its Board of
County Commissioners. This document provided, in pertinent part:
. . . in consideration of the Board of County
Commissioners of Flathead County, Montana, approving the
covenantors map or plat of Stillwater Terrace, Unit 2 .
. . the Covenantors agree in the future to donate as a
County Road [portions of Lots 8 and 9 1 . Covenantors
agree to donate the beforementioned Easterly 60 feet of
Lots 8 and 9 of Stillwater Terrace, Unit 2, 233.54 feet
in length in the future if the Covenantee will agree to
approve the Stillwater Terrace, Unit 2 map for recording.
The Covenantors further agree for the consideration
before stated that any future conveyance of Lots 8 or 9
of Stillwater Terrace, Unit 2, Flathead County, Montana,
will be subject to the terms of this Agreement, and the
Covenantors further agree that they will improve the
Easterly 60 feet of Lots 8 and 9 of Stillwater Terrace,
Unit 2 said 60 foot section being 233.54 feet in length,
and that such improvements on the portions of Lots 8 and
9 will comply with the standards for County Roads. ...
The same day, the Board of County Commissioners accepted the plat
for Unit 2 subject to the "restrictive covenants to dedicate."
Thereafter, on June 12, 1975, the plaintiff Shirley
Scherpenseel purchased Lot 9 of Unit 2 from the Granrud defendants.
Although not in the record, it is alleged that, on July 28, 1975,
the plaintiffs Robert and Theresa Eickert purchased Lot 8 in Unit
2 from the Granrud defendants, and the defendants have not denied
this allegation.
On July 31, 1990, the plaintiffs made a formal demand to the
defendants requesting that they perform in accordance with the
Covenant to Dedicate. On July 8, 1991, the plaintiffs filed a
complaint against the defendants, alleging that they had an
obligation to construct a road abutting the plaintiffs' property to
county specifications. The plaintiffs also sued Flathead County,
requesting that, after the road was constructed, the county be
required to accept and maintain that road as a county road.
On October 9, 1991, the plaintiffs filed a Motion for
Determination of Plaintiffs1 Standing to Seek Declaratory Relief.
On December 10, 1991, the District Court issued an order finding
that the plaintiffs had standing to pursue the action. Thereafter,
on September 30, 1992, the Bitney defendants filed a Motion for
Summary Judgment. Although the other defendants did not file
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similar summary judgment motions, the Bitneysr motion was
apparently considered to be inclusive of all defendants. On March
15, 1993, the District Court granted summary judgment in favor of
all the defendants on the basis that the plaintiffs' action was
time-barred by the statute of limitations. On March 26, 1993, the
plaintiffs filed a Motion to Alter or Amend Order Granting Summary
Judgment, which was denied by the District Court on April 26, 1993.
From the March 15, 1993 and April 26, 1993, orders, the plaintiffs
appeal.
Our standard in reviewing a grant of summary judgment is the
same as that initially utilized by the district court. McCracken
v. City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894.
Summary judgment is proper when there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a
matter of law. Rule 56(c), M.R.Civ.P.
I - COVENANT RUNNING WITH THE LAND
The plaintiffs contend that the Covenant to Dedicate runs with
the land, thus benefitting their property and binding the
defendants to make the agreed-upon road improvements. We agree.
It is undisputed that, in 1975, when the subdivision plat and
Covenant to Dedicate at issue here were accepted by the Board of
County Commissioners and were respectively filed and recorded in
Flathead County, the subdivision and plat were subject to the
requirements of the Montana Subdivision and Platting Act (the Act),
9 9 11-3859, et seq., RCM, 1947, as amended, (now §§ 76-3-101, et
seq. , MCA) .
The purposes of the Act were set forth at 5 11-3860, RCM,
1947, as amended, (now 5 76-3-102, MCA), as follows:
It is the purpose of this act to promote the public
health, safety, and general welfare by regulating the
subdivision of land; to prevent overcrowding of land; to
lessen congestion in the streets and highways: to provide
for adeuuate light, air, water supply, sewage disposal,
parks and recreation areas, inqress and earess, and other
public requirements; to require development in harmony
with the natural environment; to require that whenever
necessary, the appropriate approval of subdivisions be
contingent upon a written finding of public interest by
the governing body; and to reauire uniform monumentation
of land subdivisions and transferrinq interests in real
propertv bv reference to plat or certificate of survey.
(emphasis added)
With minor amendments not at issue here, those purposes have
remained in the Act to the present.
Under the statutory definition in place in 1975, a subdivision
was a division of land which created one or more parcels containing
less than twenty acres. Section 11-3861(12) , RCM, 1947, as
amended. That remained true at all times pertinent to this
litigation. See g 76-3-103(15), MCA.
In this case, the warranty deed from the Granruds to Shirley
Scherpenseel described the real property as follows:'
Lot 9 of Stillwater Terrace - Unit 2, as shown on the
plat or map thereof on file and of record in the office
of the Clerk and Recorder of Flathead County, Montana.
The plat referred to in this real property description is the one
accepted by the Board of County Commissioners on May 19, 1975 and
' We note that the record in this case has not been
extensively developed; for example, the Eickerts are named
plaintiffs, but their deed of conveyance is not in the record.
However, this opinion applies to them with equal weight, assuming
that their deed contains the same or similar language as the deed
from the Granruds to Shirley Scherpenseel.
subsequently filed. The plat was accepted after the Covenant to
Dedicate was executed by the defendants and "in consideration of
the Board of County Commissioners of Flathead County, Montana,
approving the covenantors map or plat of Stillwater Terrace, Unit
Section 11-3870(3), RCM, 1947, as amended, (now 5 76-3-304,
MCA) provided in 1975, and still provides that:
The recording of any plat made in compliance with the
provisions of this act [now referred to as chapter] shall
serve to establish the identity of all lands shown on and
being a part of such plat. Where lands are conveyed by
reference to a plat, the plat itself or any copy of the
plat properly certified by the county clerk and recorder
as being a true copy thereof, shall be regarded as
incorporated into the instrument of conveyance and shall
be received in evidence in all courts of this state.
Section 11-3869, RCM, 1947, as amended, (now 5 76-3-306, MCA) ,
provided in 1975, and still provides, that:
All covenants shall be considered to run with the land,
whether marked or noted on the subdivision plat or
contained in a separate instrument recorded with the
plat.
In this case, the Covenant to Dedicate was a separate instrument
which was recorded with the Clerk and Recorder. Although not in
the record, the plaintiffs also contend that the Covenant to
Dedicate is noted on the recorded plat, and the defendants have not
denied this contention. This contention is supported by the Board
of County Commissioners1 minutes, dated May 19, 1975, which state
that the plat of Unit 2 was accepted "with restrictive covenants to
dedicate."
Accordingly, we hold that, under the above-cited provisions of
the Act, the Covenant to Dedicate at issue here clearly was and is
one running with the land for the benefit of the plaintiffs and
binding upon the defendants and, further, that the covenant was
incorporated in plaintiffs' deed of conveyance by operation of law.
Ruling to the contrary, the District Court relied solely on
the case of Majers v. Shining Mountains (1986), 219 Mont. 366, 711
P.2d 1375, in granting summary judgment to the defendants.
However, Maiers is not on point. In that case, the defendant
subdivided a 7,000 acre ranch. In order to sell the lots, the
defendant prepared and filed subdivision plat maps. These plats
were filed prior to the effective date of the Montana Subdivision
and Platting Act and were not subject to its provisions. The
plaintiffs purchased lots within the subdivision and allegedly were
told by the defendant's personnel that roads would be constructed
and maintained by the defendant and that a dam would be constructed
across a creek to form a lake suitable for fishing and other
recreational pursuits. When the plaintiffs requested that the
defendant construct the roads, the defendant refused. The
plaintiffs then filed an action alleging an implied covenant based
on the verbal representations allegedly made by the defendant's
personnel. Maiers, 711 P.2d at 1376. We held that the plats
themselves did not give rise to a promise to construct roads, and
we remanded for a determination of what verbal representations were
made when the defendant sold the lots to the plaintiffs. Maiers,
711 P.2d at 1378. We also held that the appropriate statute of
limitations on an implied covenant arising from the use of written
documents was eight years, the limitation for actions based on a
written contract. Maiers, 711 P.2d at 1378-79.
We disagree with the District Court's conclusion that Maiers
is "very similar" to the case at hand. First, the subdivision and
plat at issue in Maiers were not subject to the Montana Subdivision
and Platting Act, as are the subdivision, plat and covenant at
issue in the present case. Second, Maiers dealt with oral
representations giving rise to an implied covenant. In the case at
hand, an express, written covenant was executed and recorded.
Therefore, we conclude that Maiers is not sufficiently similar to
the instant case so as to warrant reliance thereon.
In passing, we note that the Board of County Commissioners'
minutes refer to the covenant at issue as a "restrictivew covenant.
A restrictive covenant is defined as a "[p]rovision in a deed
limiting the use of the property and prohibiting certain uses."
Black's Law Dictionary 1182 (5th ed. 1979). On the other hand, an
affirmative covenant is defined as a covenant "in which the party
binds himself to the existence of a present state of facts as
represented or to the future performance of some act." Black's Law
Dictionary 327 (5th ed. 1979). We conclude that, in actuality, the
covenant at issue here is an affirmative covenant, instead of a
restrictive covenant, notwithstanding the reference in the Board of
County Commissioners1 minutes.
I1 - STATUTE OF LIMITATIONS
Plaintiffs filed their action in 1991, some sixteen years
after purchasing their properties from the Granruds, but within
eleven months of demanding, in writing, that the Bitneys and
Granruds perform in accordance with the Covenant to Dedicate. The
District Court ruled that plaintiffs1 cause of action was time-
barred by the eight-year statute of limitations provided for in §
27-2-202, MCA. The plaintiffs contend that their action is not
time-barred by the statute of limitations. We agree with the
plaintiffs.
Section 27-2-202, MCA, provides that an action upon any
obligation founded upon an instrument in writing must be commenced
within eight years. We have previously held that a deed
constitutes a contract founded upon a written instrument for
purpose of invoking the eight-year statute of limitations
applicable to written contracts. Neils v. Deist (1979), 180 Mont.
542, 545-46, 591 P.2d 652, 654-55. Similarly, we have applied the
eight-year statute of limitations to cases involving covenants.
See, for example, Maiers, 711 P.2d at 1378-79; U.V. Industries,
Inc. v. Danielson (1979), 184 Mont. 203, 228, 602 P.2d 571, 586
(action to enforce an implied covenant in an oil and gas lease).
Accordingly, the eight-year statute of limitations is applicable
here to an action to enforce an affirmative, written covenant
running with the land incorporated by operation of law in
plaintiffs' deed of conveyance.
However, while the eight-year statute of limitations is the
appropriate statute, we must, nevertheless, determine when the
eight-year limitations period began to run in this case.
The plaintiffs contend that the statute of limitations did not
begin to run until they made a demand for performance. The
defendants argue that the eight-year limitations period began to
run on May 19, 1975, the day the Covenant to Dedicate was signed.
This is an issue of first impression in Montana. What little
case law there is from other jurisdictions is annotated at 17 ALR
2d 1251. Those cases, however, in addition to being relatively
old, are not factually analogous to the instant case, nor do such
authorities consider the statute of limitations question in the
context of the requirements of a land use law such as the Act.
As a point of departure, however, we note that other courts
have generally taken one of three different approaches in
determining when a statute of limitations begins to run on an
action to enforce an affirmative, written covenant running with the
land. One approach holds that the statute of limitations does not
begin to run until an actual demand for performance is made. A
second approach modifies the first by requiring, through
application of the doctrine of laches to old, stale or untimely
claims, that the demand be made within a reasonable period of time.
A third approach dispenses with the necessity for a demand by
taking the position that there is a continuing breach so that a new
cause of action arises from day to day.
Taking into consideration the facts of this case, our State's
comprehensive scheme of land use laws and regulations, and
Montanans' unique inalienable right to a clean and healthy
environment embodied in Article 11, Section 3 , of our Constitution,
we conclude that the first approach above-mentioned best
effectuates the purposes and public policy of the Act, while,
coincidentally, providing a definite and easily determinable time
frame within which actions must be commenced to enforce
affirmative, written covenants running with the land.
As in this case, developers of real property often enter
into affirmative, written covenants and agreements as a part of the
subdivision process in order to obtain the approval of the
governing body to file a subdivision plat. In many cases, roads
and other improvements required by the local government, by
applicable laws or rules and/or by the developer's covenants and
agreements are not made immediately, but, rather, are constructed
over a period of time as parcels or units of the subdivision are
sold.
When developers fail to timely construct roads and
improvements agreed upon or otherwise required, innocent purchasers
of the property, and in some instances the local government and its
taxpayers, are left to shoulder the burden and expense involved in
constructing and financing the roads and improvements that were
properly the responsibility of the developers.
Worse, the purposes of the Act, as set forth at length in 5
76-3-102, MCA, are frustrated to the ultimate detriment of the
public, the environment and the orderly, safe and harmonious
development of Montana's lands. Simply put, public policy, as
expressed in the Act, demands that real estate developers be
strictly held to their covenants and agreements, and that they not
be allowed to gain the advantage of their failure to perform by the
fortuitous passage of time.
Accordingly, we hold that the eight-year statute of
limitations in which to commence an action to enforce an
affirmative, written covenant running with the land does not begin
to run until the date on which an actual demand for performance is
made.
In this case, the plaintiffs demanded performance in writing
on July 31, 1990, and filed a formal complaint on July 8, 1991.
Based on the rule, set forth above, that the eight-year statute of
limitations did not begin to run until the demand for performance
was made, we hold that the plaintiffs' complaint, filed on July 8,
1991, was not time-barred by the eight-year statute of limitations
of 5 27-2-202, MCA.
I11 - SUMMARY JUDGMENT
The plaintiffs contend that the District Court erred in
granting summary judgment to the defendants. We agree.
Summary judgment is proper when there is no genuine issue as
to any material fact and the moving party is entitled to judgment
as a matter of law. Rule 56(c), M.R.Civ.P. In this case, the
defendants acknowledged that there was no genuine issue of material
fact when they moved for summary judgment. However, we cannot
agree that the defendants are entitled to judgment as a matter of
law. Clearly, they are not.
As we held above, the Covenant to Dedicate is an affirmative,
written covenant running with the land and, as such, is meant to
benefit plaintiffs' property. Therefore, there is an obligation on
the defendants to perform pursuant to the terms of their covenant.
In addition, the plaintiffsJ action is not time-barred by t h e
applicable eight-year statute of limitations. Therefore, we hold
defendants.
Reversed and remanded for f u r t h e r proceedings consistent with
this opinion.