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8 Real Prop Prob TR J144
8 Real Prop Prob TR J144
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SURVEY OF REAL PROPERTY LAW*
I. Adverse Possession ......... 147 XV. Landlord and Tenant ...... 175
II. Air Space ................. 147 XVI. Mines and Minerals ........ 184
III. Airports .................. 148 XVII. Mortgages and Liens ....... 185
IV. Brokers ................... 148 XVIII. Oil and Gas ............... 198
V. Condominiums and Coopera- XIX. Open Space and Conserva-
tives ................... 150 tion ................... 198
VI. Conveyancing and Titles ... 152
VII. Covenants ................ 157
VIII. Easements ................ 157 XXI. Public Housing and Urban
IX. Ecology and Environmental Renewal ............... 206
Control ................ 159 XXIL Public Lands .............. 208
X. Eminent Domain .......... 169 XXIII. Survey of the Law ......... 209
XI. Estates in Land ........... 173 XXIV. Taxation ................ 210
XII. Fixtures - U.C.C .......... 174 XXV. Torts and Nuisance ........ 215
XIII. Future Interests ........... 174 XXVI. Usury .................... 217
XIV. Housing Code ............. 174 XXVII. Vendor and Purchaser ..... 219
This report covers the 29 phases of real property law outlined above to
the extent that material on the subjects was available to the committee.
Subsection A of each category is devoted to Current Literature, Section B
to Significant Decisionst and Subsection C to Legislation.
The material in this report clearly indicates that the field of landlord
and tenant continues to generate attacks on basic propositions that have
controlled for centuries the landlord-tenant relationship. One in particular
is the ancient right of the landlord, embodied in statutes, to destrain prop-
erty of the tenant on the leased premises and retain it or sell it under a
so-called distress sale without a hearing or notice of any kind to the tenant.
The Georgia Supreme Court, in Blocker v. Blackburn, abolished that state's
destraint statute as in violation of the due process clause of the Fourteenth
Amendment because the statute authorized the officer to seize the tenant's
property without notice. The court found that this procedure was analogous
to the seizure of a debtor's wages without notice, a method of collection
held unconstitutional by the United States Supreme Court.
The cases continue to evidence a growing awareness that forceable
entry and detainer statutes of and by themselves are grossly unfair to tenants
because they deprive the tenant of a right to interpose as a defense the
breach by the landlord of a covenant regarding the physical condition of the
premises. The 4-3 decision of the Illinois Supreme Court in Jack Springs,
Inc. v. Little, held, among other things, that in a statutory action by the
landlord seeking possession for nonpayment of rent, the tenant could inter-
pose as an affirmative defense the alleged breach by the landlord of an
implied covenant of habitability as well as an express covenant to repair.
This case is also noteworthy in that it held (1) that the section of the Illinois
forceable entry-detainer statute which required the tenant to furnish a bond
as a prerequisite to an appeal was unconstitutional, and (2) that an implied
*Report of Committee on Real Property Law, Literature and Research.
tIn some instances the significance is spelled out in italicized comments following the
digest of the decision.
Spring 1973] SURVEY OF REAL PROPERTY LAW 145
invited to use it for designated purposes ... We do say that the Fifth and
Fourteenth Amendment rights of private property owners, as well as the
First Amendment rights of all citizens, must be respected and protected.
The framers of the Constitution certainly did not think these fundamental
rights of a free society are incompatible with each other. There may be
situations where accommodations between them, and the drawing of lines
to nssure due protection of both, are not easy, but on the facts presented in
thi'; case, the answer is clear."
The 1972 report of this committee pointed out the frequent challenges
made on the established mortgage lending practice of including in mortgage
instruments an acceleration or "due-on-sale" clause which gives a lender the
right to declare the balance due and payable and to institute foreclosure
proceedings on the accelerated debt if the mortgagor sells the property. The
cases there commented upon upheld the validity of such clauses. However, in
Baltimore Life Insurance Co. v. Harn, noted herein under Mortgages and
Liens, the court held that a clause which automatically accelerates the debt
upon a sale of the secured property is not valid. The acceleration must be
based on reasonable grounds that show that the mortgagee's security will be
jeopardized by the sale. To uphold the validity of such a clause, per se,
would result in a restraint on alienation. This case was followed by the
Arkansas case of Tucker v. Pulaski Federal Savings & Loan Association.
This court followed the reasoning of the Arizona court in the Baltimore
Life Insurance Company case noted above and ruled that such clauses were
not valid unless the acceleration is predicated on "grounds that are reason-
able on their face."
Another important case in this area is the California case of LaSala v.
American Savings and Loan Association, which involved a mortgage deed
that contained clauses covering acceleration on encumbrance as well as
acceleration on sale. Ths court ruled that there was a valid legal distinction
between these two clauses. The acceleration upon encumbrance clause per-
mitting acceleration and foreclosure, for no other reason than that the
mortgagor placed a second mortgage on the property and with no reasonable
affect on the mortgage security, would amount to an unlawful restraint on
alienation and thus be void. But this court reasoned that enforcement of
an acceleration-on-sale clause, with similar results to the mortgagor, is not
unreasonable if for no other reason than that a change in the identity of the
obligor increases the risk that the security will be allowed to run down or
even be destroyed.
Of interest to conveyancers is the rapidity with which the California
legislature moved into this area by enacting Ch. 698, Laws 1972, providing
that a mortgage or deed of trust of a single family owner-occupied dwelling
may not be declared in default nor the debt accelerated solely by reason of
the mortgagor's further encumbering the property with a junior mortgage or
junior deed of trust. Waiver of this provision is void as contrary to public
policy. The Act specifically provides that it shall not be deemed to limit or
restrict the scope of the LaSala case.
The Arkansas court in the Tucker case discussed above followed other
jurisdictions in holding that the mortgagee was under no duty to account to
Spring 1973] ADVERSE POSSESSION - AIR SPACE
the mortgagor for earnings and profits realized from the funds escrowed for
payment of taxes and insurance. The court followed the decision in Sears
v. First Federal Savings and Loan Association, 275 N.E.2d 300 (Ill. 1971,
cert. denied, S. Ct. Jan. 1972). This Illinois case is the first known decision
above the trial court level to rule squarely on this issue.
Of importance to those interested in ecology and environmental control
is the Supreme Court 4-3 decision in Sierra Club v. Morton, discussed herein
under Ecology and Environmental Control. The Court refused to abolish
the rule that requires that a party seeking injunctive relief against action of
a federal agency must allege in his complaint that he personally would be
injured or adversely affected by the proposed action.
I. ADVERSE POSSESSION
A. Current Literature
Williams, Title by Adverse Possession in Indiana, 6 VAL. U. L. REv. 26
(1971). The author analyzes the policy reasons for the existence of such a
principle as adverse possession. He believes that as long as there is no
scheme of registration of title to land in Indiana, the principle or institu-
tion of adverse possession will remain an asset.
B. Significant Decisions
Trustees of Brodfording Church v. Western Maryland Ry., 277 A.2d
276 (Md. 1971).
This was an ejection action to determine title to land which had been
conveyed to the railway but from which the track had been subsequently
removed. The lower court granted the motion for summary judgment
against the claimant church on the basis that it had not established title by
adverse possession.
HELD: Remanded for trial. The purchasers of the land could not tack
whatever rights their vendor might have had to the right of way by adverse
possession to their own possession in the absence of color of title, which they
did not have since the vendor's deed to them excluded the right of way.
However, if the facts were to disclose that the vendor acquired title to the
right of way by adverse possession he did not lose it by the conveyance to the
purchasers or by removing himself from the property and he could have
alienated the title which he acquired by his will to the devisee church.
totally independent source over which defendant had no control could not
be the basis for enjoining the legal use and enjoyment of its property.
This appears to be a case of first impression in holding that a structure
which interferes with television reception of neighboring properties does
not constitute a nuisance, but it is consistent with earlier cases in regard to
interference with radio signals and light and air.
Wiloughby Hills v. Corrigan, 20 Ohio St.2d 39, 278 N.E.2d 658 (1972).
Municipality claimed that Airport Zoning Board located in adjoining
county violated "Home Rule" provisions of Ohio Constitution. Property
owners in the area also claimed unconstitutional taking of property by
regulations.
HELD: Reasonable regulations adopted represent constitutional enact-
ment of the exercise of the police power of Ohio and do not violate the
"Home Rule" provisions of the Ohio Constitution. The exercise of the
police power is not an unconstitutional taking of private property for a
public use without compensation.
III. AIRPORTS
A. Current Literature
Fadem and Berger, A Noisy Airport is a Damned Nuisance," 3 Sw. U. L.
Rxv. 39 (1971). Discusses the legal techniques for combating airport noise,
relying primarily upon California's statutory and case authorities.
C. Legislation
Missouri
H.B. 1341: Creates the Missouri-St. Louis Metropolitan Airport Au-
thority, which has, among other enumerated powers, the authority to create
an airport zoning committee with power to adopt appropriate zoning
regulations.
IV. BROKERS
A. Current Literature
Herzfeld, Quo Vadis, Broker? What's Your Role?, 2 REAL ESTATE REV.
No. 2, at 24 (1972). In light of growing government scrutiny of real estate
activities, the time has come for a better understanding of how the real
estate broker functions and how he is paid for his efforts.
Rogers, Compensation of the Georgia Real Estate Broker, 6 GA. L. REV.
375 (1972). Real estate brokers serve an important function in the commer-
cial world by bringing buyers and sellers together. The broker's compensa-
tion for this service is usually predetermined by an agreement known as a
"listing" between the broker and his client. In this article, the author exam-
ines various types of these listings in light of the practical significance under
the Georgia law. The author points out that the majority of problems have
arisen because either the parties never have an understanding as to the terms
of the employment at all, or their understanding was not clearly expressed.
B. Significant Decisions
Spring 1973] BROKERS
Adams & Leonard, Realtors v. Wheeler, 493 P.2d 436 (Okla. 1972).
Plaintiff entered into a contract denominated as a "Property Manage-
ment Agreement" with defendant who owned a parcel of real estate. The
agreement contained this proviso: "The agent shall have the sole exclusive
right to sell and offer for sale, the property covered herein, if the property
is sold or offered for sale during the terms of this agreement." Defendant sold
the property himself while the agreement was in force and effect. The trial
court found in favor of defendant on the grounds that (1) the agreement
between plaintiff and defendant did not constitute a listing of the real
estate for sale, but was merely a contract that an exclusive real estate listing
would be made at some future date, upon the happening of some future
contingency; and (2) since plaintiff did not allege the performance of any
services upon which a quantum meruit recovery could be had, plaintiff
sustained no recoverable damages by reason of the alleged breach of the
contract.
HELD: There is no reason why a valid and enforceable "exclusive
right to sell" contract could not be incorporated in a property management
agreement, if the "exclusive right to sell" contractual provision is complete
concerning their rights and obligations if the property is offered for sale or
sold. However, if the "exclusive right to sell" provisions are incomplete and
unenforceable, an action for damages will not lie for breach of the unen-
forceable contract.
CongregationBeth Sholom v. David Gottlieb Co., 471 S.W.2d 673 (Mo.
App. 1971). Congregation Beth Sholom listed property with Green Realty
Co. which showed the property to the pastor of Christ Temple Church for
a price of $750,000. This was in 1964. In 1967 a member of the Beth Sholom
who was also a broker tried to get the same pastor to buy the property for
$350,000 but he still felt that the price was too high and that his organiza-
tion could not finance such a deal. Then in 1968, another member of the
church who was also a broker and heard about the property approached
Beth Sholom's director of real estate and was able to get a new price of
$250,000. When he approached the pastor he showed interest in the prop-
erty and after negotiations a price of $175,000 was finally agreed upon.
Subsequently all parties appeared in court claiming the commission.
HELD: Since there never was an exclusive contract to sell, the sole
question at issue was who among the various brokers was the procuring
case. The court ruled for Gibson the last broker, because the purchaser had
shown a complete lack of interest in the property at the prices of $750,000
and $350,000. It was only when the price of $250,000 was secured by Gibson,
the third broker, that the buyer was at all interested and began negotia-
tions. These facts laid the foundation for application of the rule "where
the broker creates in the minds of the parties a willingness to do business
with each other, the broker is said to have procured the result as though he
actually participated in each incident of the transaction."
Stone v. Reinhard, 183 S.E.2d 601 (Ga. App. 1971).
The owner of land granted a broker an exclusive right of sale for a
period of 15 years, which agreement set the price at $2,000 per acre or
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
C. Legislation
Kentucky
KRS 324: Amended to add additional qualifications to attain a broker's
license.
New York
Ch. 454: Amends Title C of the Administrative Code of the City of New
York which makes "block busting" an unlawful real estate practice.
A. Current Literature
Clurman, Are Condominium Units, Securities?, 2 REAL ESTATE REv.,
No. 1, at 18 (1972). An analysis of the factors involved in determining
whether condominium offerings should be subject to federal and state
securities regulation.
Johnson, Condominium Titles, 51 TITLE NEWS, No. 10, at 8 (1972). A
discussion of the Idaho condominium law.
Spring 1973] CONDOMINIUMS AND COOPERATIVES
B. Significant Decisions
Gable v. Silver, 258 So.2d 11 (Fla. Ct. App., 1972).
Action by purchaser of a condominium unit against the sellers for
damages and costs of repairs of a defective air-conditioning system in the
condominium.
HELD: Implied warranties of fitness and merchantability extend to the
purchasers of new condominium homes from builders-sellers.
Case extends implied warranties to the sale of real property in Florida.
152 REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
C. Legislation
Illinois
S.B. 644, 645 and 646: Provide for creation of lien on condominium
unit where owner fails to pay pro rata share of common expenses.
H.B. 3779: Requires a disclosure by developer to furnish initial pur-
chasers with certain information including a copy of the declaration, bylaws,
operating budget, including estimated monthly charges for maintenance,
management and recreational facilities and floor plan of apartment.
Massachusetts
Ch. 183A: Adds §20 which enables cities and towns to buy or sell con-
dominiums and to acquire land for the construction of the same.
Michigan
P.A. 120: Summary proceedings to recover possession of real estate;
enlarged definition of premises to include condominium property, coopera-
tive apartments, air rights and mobile trailer homes.
VI. CONVEYANCING AND TITLES
A. Current Literature
Baker, Recent Developments in the Law of Land in England, 13
W. & M. L. REv. 304 (1972). In this article, the author reports on the devel-
opments in the law governing restrictive covenants, town and country
planning, betterment, compulsory acquisition, such as eminent domain,
protection of tenants and matrimonial home.
Hirdak, Registration of Land Titles Act: The Ohio Torrens Law, 20
CLEVE. ST. L. REv. 617 (1971). General discussion of Ohio Torrens Law.
Laymond, The Residence Requirement - Indirect Restraint on Alien-
ation?, 17 S. D. L. REv. 327 (1972). The author discusses Cast v. National
Bank of Commerce Trust & Savings Ass'n, 196 Neb. 385, 183 N.W.2d 485
(1971), with a view to determining the validity of name changes and resi-
dence requirements as employed in grants and devises. Emphasis is placed
upon the criteria by which courts characterize such provisions as arbitrary,
capricious and violative of public policy.
Payne, The Alabama Law Institute's Land Title Act Project, 24 ALA.
L. REV. 175 and 647 (1972). Discussion of a draft act to provide for a self-
indexing system of land records, and probable effect of court's passage upon
title searches, conveyancing, and title insurance practices in Alabama.
Peters, Toward a Compatible Land Identifier, 51 Trr NEws, No. 8
at 4 (1972). A discussion of the CLIPPP Conference - the name standing
for Compatible Land Identifiers - The Problems, Prospects and Payoffs.
Redniss, Parsons and Bromfield, A Very Thin Line, 51 TITLE NEWS,
No. 12, at 12 (1972). A discussion of the problems involved in attempting
to survey or fix the boundary of property when one of the calls is "along a
stream" and when the middle of a stream channel is defined as being "one-
half the distance between the banks of this stream on nontidal river under
average conditions."
Spring 1973] CONVEYANCING AND TITLES
B. Significant Decisions
DiCristofarov. Beaudry, 293 A.2d 301 (R.I. 1972).
A testatrix left all her property to two sons, one of whom was the
executor of her estate. The record before the court failed to disclose a
determination whether the devises were specific or general. Under a statute
authorizing a sale for a prompt and efficient settlement, but which required
written consent of specific devisees, the devisee who was executor conveyed
to the other devisee.
HELD: Despite this joinder of the two devisees the statute requiring
consent in writing was not complied with and a new trial would be needed
to determine whether the devises were specific or general.
Decision indicates a strict interpretation under circumstances where
many title attorneys might have felt the devisees estopped to complain.
of the Code which provides that no court of equity or law shall on and after
June 1, 1966 entertain any proceedings to set aside or modify any title to
any interest obtained in a tax sale made prior to January 1, 1944. The lower
court held that, in spite of the broad language of this statute, an attack
based either on fraud or lack of jurisdiction was still permissible. On the
basis of the plaintiff's claim that the court lacked jurisdiction to sell because
the taxes had been paid the court found in favor of the plaintiff.
HELD: Reversed. The plaintiff did not meet the burden of proof
necessary to show that the tax sale was void for lack of jurisdiction, since
he did not prove that the taxes were paid. The appellate court left in doubt
the issue whether this statute was an absolute bar to any subsequent title
proceedings when it ruled that whenever the legislature has given an order
of ratification of the degree of permanence expressed in section 99A, the
strictest proof is necessary in order to impeach it.
Marshall v. Hollywood Inc., 224 So.2d 743, afJ'd, 236 So.2d 114 (Fla.
1970).
A stranger to the corporation executed a deed in 1924 as president of
the corporation whereby the property was purported to be conveyed to him-
self and others. This action involves a suit by the estate of a deceased
stockholder of the corporation to establish an interest in this property.
HELD: The claim was barred by the expiration of time under the
Marketable Record Title Act although the corporation's deed initiating the
chain of title under which the record owners hold was a forged or wild deed.
A subsequent deed served as a root of title since it purported to transfer the
title.
Southern Title Guaranty Co. v. Pendergast,478 S.W.2d 806 (Tex. Civ.
App. 1972).
A 22-acre tract of land was purchased in 1964 for $10,233 and the
purchasers secured a title insurance policy insuring them against the "actual
monetary loss" which they would suffer should their title to the land prove
defective. Subsequently, when the insureds contracted to sell this land for
$25,000, the sale fell through because of a title defect. The issue presented
to the court was the method of determining what the insureds were entitled
to be paid under the policy.
HELD: The "actual monetary loss" suffered by the insureds was the
amount by which the purchase price they paid in 1964, i.e., $10,233, exceed-
ed the 1964 market value of the 90 per cent interest which they had obtained
(the defect in title being that a third party owned a 10 per cent interest).
If the 90 per cent interest were worth the $10,233 which they paid for it
then they would have suffered no monetary loss and the title company
would owe them nothing. However, if the 90 per cent interest were worth
less than what they paid for it then they would be entitled to receive the
difference between these two factors. As regards the insureds' claim that
they had lost $14,767, the difference between what they had paid for
the land ($10,233) and the $25,000 they could have resold it for had there
been no title defect, the court held that a title insurance policy will permit
an insured to recover loss of profit from a resale only when the title com-
Spring 1973] CONVEYANCING AND TITLES
pany clearly understands that it is protecting the insureds against that par-
ticular loss and thus fixes its premium accordingly. There is nothing in
this case to show that the parties had contemplated that protection when
the insureds purchased their property.
Union Camp Corp. v. Youmans, 227 Ga. 686, 182 S.E.2d 468 (1971).
A mother, as guardian for her six-year old daughter, petitioned the
superior court for permission to grant a 66-year lease and an option to
purchase the land to a paper company. The petition showed that losses
were being incurred in managing the estate, that a deteriorating timber
crop was located thereon, it was difficult to find tenant farmers to grow
crops and difficult to manage the farm so as to meet the cost of maintenance.
It was proposed to invest and reinvest the proceeds of the lease and sale for
the benefit of the ward. The court found the application in the best interests
of the minor ward and entered a judgment authorizing said lease and option
to purchase with the paper company. Upon reaching her majority the ward
brought a complaint in equity against the guardian and lessee paper com-
pany to set aside the judgment of the court on the principal claim that the
order of the court was void and contrary to public policy and because no
right existed for the court to authorize an option to purchase in connection
with the lease.
HELD: There is no law to the effect that an owner of land or a court
having jurisdiction of a minor's property may not authorize a lease or an
option to purchase his land or land of a ward of the court upon legal
application to the court. The option to purchase was a condition of the
lease, without which the lease could not have been negotiated, in which
event the ward would in all probability have lost her land and the very
material benefits she could have received if the lease and option to purchase
had become a reality. The Georgia Code provides that courts shall have
concurrent jurisdiction in law and in equity in cases involving the property
of wards and sales of their property. Since the court had this equity juris-
diction its action is not limited by any narrow powers, but it is empowered
to stretch forth its arm in whatever direction its aid and protection may be
needed.
C. Legislation
Alabama
Act 170: Abolishes retroactively the need for reciting consideration in
conveyances.
Act 171: Forbids the recordation of any instrument except a will which
transfers an interest in land with reference to an unrecorded plat, unless
such plat is attached.
Act 172: Prohibits the recordation of deeds unless the marital status of
grantors is stated.
Kansas
Ch. 161: Amends 1971 Supp. 38-101. Period of minority for male and
female extends to age 18 only.
156 REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
Ch. 213: Repeals 1971 Supp. 58-2270 which sets out wording that
would constitute a conveyance to two or more persons as joint tenants.
Kentucky
KRS 271A: Validates conveyances of real property to or by a corpora-
tion when the corporation does not have the capacity or power to do such
act, and provides a method for the setting aside of such conveyances.
Maine
Ch. 598: Grants adult rights to persons 18 years of age, the former
requirement being 20 years of age.
Massachusetts
Ch. 155 and 156B: Grant good title to a good faith purchaser of corpo
rate real estate, if the deed is signed by the corporate president or vice
president and the treasurer or an authorized assistant treasurer (all parties
may be the same person), despite any corporate provision to the contrary.
New Jersey
Ch. 81: Grants all persons 18 years of age or older basic rights formerly
applicable to persons 21 years of age, but does not change age under
Uniform Gifts to Minors Act.
Ohio
Am. S.B. 75: Enacts 1715.411 to provide when officers of a charitable or
religious association have sold or mortgaged real estate without obtaining
court authority and the deed or mortgage has been of record five years
without legal action to set aside the same, such transaction is validated.
Oklahoma
Ch. 221: Reduces age of majority for males to 18 years.
Pennsylvania
Acts 140-141 and 151: Reduces age of persons who may legally make
wills, contracts and conveyances from 21 to 18.
Virginia
Code 1-13.42: Reduces age of majority to 18 years for purposes of all
laws, unless an exception is specifically provided.
Washington
Ch. 108, 3: Provides that either spouse, acting alone, may manage and
control community property with the like power of disposition as the acting
spouse has over his or her separate property, except that neither spouse
shall sell, convey or encumber the property without the other spouse joining
in the execution of the instrument. Also neither spouse shall purchase or
contract to purchase community property without the other joining.
Spring 1973] COVENANTS - EASEMENTS
VII. COVENANTS
B. Significant Decisions
Burgess v. Putnam, 464 S.W.2d 698 (Tex. Civ. App. 1971).
A developer subdivided his land and told every purchaser of his plan
to develop the property for one-family homes. Each purchaser at that time
paid increased prices and received deeds which imposed restrictions includ-
ing the prohibition against the erection of mobile or trailer homes. After
selling the original group of lots the seller was unable to sell any lots for
several years. Finally the developer began to permit buyers of unsold lots
to use the sites for trailer homes. None of these deeds given to such buyers
contained any restrictive covenants and there were no restrictions on record
in the county clerk's office affecting the entire development. Suit was brought
by some of the original homeowners to restrain the developer from selling
lots without imposing the restrictive covenant.
HELD: The representation made by the developer to the original
buyers of the first group of lots sold that the entire subdivision would be
developed for one-family homes and the consequent payment by these buyers
of an increased price for their land brought into existence an equitable
right on their part to compel the developer similarly to restrict the use of
any remaining lots in the development. This conclusion followed even
though each contract of sale had contained a clause to the effect that all
representations, covenants and agreements between the parties are expressed
in the written agreement and no other shall be recognized between them
unless reduced in writing and attached hereto and approved by the sellers.
The court said in spite of this contract or agreement oral testimony was
admissible to establish the claims of the homeowners. The legal effect of the
representations made by the developer to the original purchasers is the same
as if there were direct fraud. The same public policy that in general
sanctions the avoidance of a promise obtained by deceit strikes down all
attempts to circumvent that policy by means of contractual devices.
Western Land Co. v. Truskolaski, 492 P.2d 624 (Nev. 1972).
Homeowner in a subdivision sought to enjoin construction of a shop-
ping center therein as a violation of covenants restricting the subdivision to
single-family dwellings. The arguments against were a change in the neigh-
borhood and a willingness of the local planning agency to rezone to permit
commercial use.
HELD: Granting of injunction affirmed. A zoning ordinance cannot
override privately placed restrictions.
Initial case in this jurisdiction.
VIII. EASEMENTS
A. Current Literature
Berger, Nice Guys Finish Last - At Least They Lose Their Property:
Gion v. City of Santa Cruz, 8 CALIF. W. L. REv. 75 (1972). This article dis-
cusses the Gion case, 2 Cal.3d 29, 84 Cal. Rptr. 162, 465 P.2d 50 (1970),
which the author concludes to be a policymaking decision by the court
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
intended to open up public access to and use of private beaches but which
he finds has had an opposite effect causing landowners to protect their
property by increasingly closing off access and use. The case held that where
the public for five years has used a private beach or private access to a
beach under the belief it had a right to do so, the use is presumed to be
adverse to the owner and that the public acquired at least an easement for
recreational purposes. The author argues that the decision is contrary to
existing case law and statutes and a taking of private property without just
compensation.
Shavelson, Gion.v. City of Santa Cruz - Where Do We Go From Here?,
47 CALIF. S. B. J. 415 (1972). The decision in the Gion case has evoked a
flurry of articles in California periodicals, whose titles and content reflect
everything from sober analysis to righteous indignation. The author feels
that it is necessary to avoid fields already plowed, and, therefore, limits this
article to the following: (1) what the legislature has already done as a result
of the Gion decision; (2) what further legislative steps are under considera-
tion and (3) absent legislative abrogation, how will the Gion doctrine be
applied in future cases.
B. Significant Decisions
Edwards v. Fugere, 130 Vt. 157, 287 A.2d 583 (1972).
The owner of certain adjoining lands conveyed away that part of them
which abutted on a lake. He reserved a right of way across them from the
lake to his other lands. He later conveyed the other lands, together with a
right of way to the lake and also with a right to maintain a boat dock and
landing. It was contended by the grantee that the general terms of the
reservation permitted an unlimited reasonable use, and that under the cir-
cumstances a boat dock and landing were reasonable.
HELD: Full reasonable use of the right of way did not embrace the
maintenance of a boat dock and landing, which materially increased the
burden on the servient estate.
McAndrews v. Spencer, 447 Pa. 268 (1972).
Two adjoining property owners who obtained their properties from a
common grantor by deeds referring to a 40-foot private road as a boundary
between their properties got into a dispute as to their respective rights to
the road. One of the owners, A, used a portion of the area as a driveway and
voluntarily beautified the remainder of the area. The other owner, B, began
to develop his lands commercially and to use the unopened road, destroying
the shrubs and landscaping. A then purchased the acreage originally desig-
nated as the proposed 40-foot road and obstructed the road by placing a
wire cable across its width and length and posting a sign marked "private
property" thereon. B filed a complaint in equity seeking a decree granting
B the right to an easement over the area.
HELD: An easement in favor of B was created by implication when the
description in B's deed referred to a driveway as a boundary which driveway
was neither a highway nor dedicated to public use.
Spring 1973] ECOLOGY AND ENVIRONMENTAL CONTROL
mental level they may best be exercised. The article focuses on the range of
methods that might be adopted to control growth, encourage population
dispersal and preserve open space.
Lander, Symposium on Connecticut Conservation and Environmental
Quality Law, 46 CONN. B. J. 376 (1972). A symposium of articles including
Lowenthal, Prometheus, Meet the Power Facility Evaluation Council, John-
son, The Environmental Protection Act of 1971 and Trubek, Will the
Connecticut Administrative Procedure Act Frustrate Environmental Pro-
tection?
Large, Is Anybody Listening? The Problem of Access in Environmental
Litigation, 1972 Wis. L. REV. 62. A pessimistic discussion of hurdles
environmentalists face in opposing projects they deem injurious to the
environment.
Laughran, The Law and the Corporate Polluter: Flexibility and
Adoption in the Developing Law of the Environment, 23 MERCER L. REV.
571 (1972). The first section of this article deals with the nature of environ-
mental problems - particularly "pollution" - in the economic, cultural
and political contexts, and the author suggests how it is that the legal
system comes to be concerned with these problems. The second section of
the article focuses specifically on the problem of the corporate polluter and
some of the ways in which the legal system has approached and attempted to
deal with that problem. While the article focuses on the corporate polluter,
nevertheless, the author claims that it is in no way intended to imply that
corporations are solely responsible for environmental degradation, or to
single them out as "villains." He does suggest, however, that stationary
source pollution is a major problem, primarily attributable to corpora-
tions. The third and final section considers two "new," and as yet untested,
legal theories which might be brought to bear on the corporate pollution
problem.
Lefkowitz, Jamaica Bay: An Urban Marshland in Transition, 1 FORD-
HAM URBAN L. J. 1 (1972). The waters of Jamaica Bay are polluted and its
future is clouded. Yet it stands as a breeding ground for water fowl, fish
and shellfish, a way-station for migratory birds, a microcosm of urban
environmental problems. It is surrounded by the runways of Kennedy Air-
port and the apartment house complexes of Rockaway. Yet it survives as a
unique vestige of unspoiled coastal wetland in the midst of urban sprawl,
brings into sharp focus a wide range of urban problems and a wide variety
of proposed solutions. This article examines these environmental problems
as they affect the lives of the hundreds of thousands of people who live
adjacent to the bay, and the extraordinary opportunities for recreation and
enjoyment for which the bay, freed of sewage, air pollution and aircraft
noise, could be employed.
Lessinger, The Citizen and Environmental Protection in Florida, 46
FLA. B. J. 583 (1972). Florida has joined a handful of states in permitting
the average citizen the means of bringing suit on environmental actions
without the necessity of establishing standing to bring the action. This
article is a discussion of this law from the standpoint of the lawyer handling
such a case.
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
The purpose of this article is to consider what the author terms "in broad
brush" the various aspects of the so-called "marine revolution." A basic
understanding of the development of the principles of law emerging here
and similarly determining the limits of containment - together with an
appreciation of the concomitant advances in technology - will go toward
providing structural insight into the "revolution" and hopefully defuse its
negative force as well.
Stone, Should Trees Having Standing? - Toward Legal Rights for
Natural Objects, 45 S.CAL. L. REV. 450 (1972). The author argues that the
environment should be 'personified' by conferring upon it certain legal
rights to be exercisable through a guardian in its own right, and not merely
as an incidental beneficiary of policies that benefit man primarily.
Tarlock, Tippy and Francis, Environmental Regulation of Power Plant
Siting: Existing and Proposed Institutions, 45 S. CAL. L. REv. 502 (1972).
Pointing out that the nation's electrical energy requirements are expected
to increase by 250 per cent over present levels by 1990, the authors analyze
the legal methods for compelling regulatory agencies to consider and assess
the environmental impact of this future power source development.
Teclaff, International Law and the Protection of the Oceans from
Pollution, 40 FORDHAM L. REv. 529 (1972). Because marine pollution has
only recently been recognized for what it is - a problem of global dimension
and extreme complexity - international law has not yet evolved specific
rules for dealing with it. While international law does not ignore marine
pollution, this fact means that prohibition of pollution must be sought in
the general rules pertaining to the use of the sea. While these rules are
necessarily vague and can be made workable only by interpreting them as
almost totally permitting or totally forbidding pollution, the author's
position is that once it is accepted that the duty not to pollute the high
seas exist in international law, transgression of this duty must invoke the
responsibility of states and private enterprise.
Teclaff and Teclaff, Saving the Land-Water Edge from Recreation, for
Recreation, 14 ARIz. L. REv. 39 (1972). The authors examine the problems
that arise in protecting the delicate and unique environmental relationship
that exists in narrow areas where the land meets the water. Proposals for
allocating use of different edge zones for different purposes compatible with
the ecology and conducive to recreational uses are offered.
Verleger, The Ninth Amendment and the "Decent Environment" - A
Right or a Choice, 47 L. A. B. BULL. 101 (1972). The author describes some
of the practical limitations on accomplishing the objective of a "decent
environment" including the difficult choice between priorities and the possi-
bility of adverse consequences from even the most prudent choice.
A Symposium, Administrative Law and the Environment: National
Fuels Policy, 47 IND. L. J. (1972). Hickel, Preface, at 603; Fuchs, Intro-
duction: Administrative Agencies and the Energy Problem, at 606; Caldwell,
A National Policy for Energy, at 624; Ruckelsshaus, The Citizen and the
Environmental Regulatory Process, at 636; Tarlock, Balancing Environ-
mental Considerationsand Energy Demands: A Comment on Calvert Cliffs'
CoordinatingCommittee, Inc. v. AEC, at 645.
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
B. Significant Decisions
Crane v. Brintnall, 29 Ohio Misc. 75, 278 N.E.2d 703 (1972).
Landowners sued county commissioners for damages to their property
for failure and neglect in maintaining and operating a sewage treatment
plant which permitted sewage to be discharged into a natural watercourse
flowing onto landowners' premises, thereby depriving them of the use and
enjoyment of their property, which included a private lake. Landowners
claimed such encroachment was a taking of private property for a public
use, entitling them to compensation.
HELD: The discharge of effluent by a sewage treatment plant into a
natural watercourse that drains into a private lake is a taking of private
property for public use without compensation to the extent that such dis-
charge deprives the owners of that absolute right of use and disposition of
their property.
Court found that, based upon the doctrine of appropriation by en-
croachment, the county government, as the administrativearm of the state,
is not immune from liability for damages caused by its pollution of streams
and rivers to the detriment of the subservient landowners.
Friends of Mammoth v. Board of Supervisors, 8 Cal. 3d 1 (1972).
Construction of a high-rise apartment building was begun in the Sierra
Nevada Mountains in an area where only single-family cabins had pre-
Spring 1973] ECOLOGY AND ENVIRONMENTAL CONTROL
viously been constructed. No impact studies had been made prior to its
approval by the various bodies. In an action to halt construction of the
building because no such impact had been made,
HELD: California's environmental protection laws required that the
state, county and city agencies had to report on the environmental impact
of any construction project that might have significant impact on the sur-
rounding area and release the report to the public before the agency could
approve of the same. Any private citizen can sue and stop any "significant"
construction that does not have an impact study.
Previously the California environmental protection requirements have
required impact studies prior to the approval of such public works as high-
ways. This decision is the first time that these environmental protection
requirements have been applied to private construction. Presumably, it
applies to all major construction in this state which is deemed to have a
"significant" impact on the surrounding area.
Harbor Farms, Inc. v. Nassau County Planning Comm., 40 App. Div.
2d 517, 334 N.Y.S.2d 412 (1972).
A developer purchased a tract of marshland on the south shore of Long
Island which was the last single undeveloped tract in that area. The general
area had seen thousands of homes built over the last decade. When the
developer submitted his subdivision plan to the county authorities, it was
rejected for the reason that the county had previously decided to stop any
kind of development whatsoever, not only because of the danger of
polluting a nearby channel, but also because the county desired to maintain
what was left undeveloped in a wilderness setting.
HELD: The refusal of the commission to approve of the subdivision
amounted to an unconstitutional confiscation of the developer's property
under the guise of ecological regulation. The court, therefore, ordered
approval of the subdivision plan, subject, however, to any reasonable restric-
tions the commission might seek to impose in order to protect the environ-
ment.
Illinois v. City of Milwaukee, 406 U.S. 91 (1972).
Illinois sought to have the Supreme Court prohibit the dumping of
raw sewage into Lake Michigan by four Wisconsin cities and two sewerage
commissions, contending that they were instrumentalities of Wisconsin and,
therefore, this was a suit against Wisconsin that could not be brought in
any other forum.
HELD: The Supreme Court's policy is that its original jurisdiction
should be invoked sparingly. Wisconsin could be joined as a defendant, but
it was not mandatory that it be so joined. Since political subdivisions are
citizens of their respective states for purposes of diversity of citizenship, a
political subdivision in one state can bring a diversity action against a
political subdivision of another state. Since the Wisconsin cities and agen-
cies named in the suit could be sued by Illinois in a federal district court,
original jurisdiction was not mandatory.
Lake Corners Ass'n v. McMullen, 406 U.S. 498 (1972).
The Michigan Watercraft Pollution Control Act of 1970 prohibits the
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
discharge of human waste in the waters of the state and requires the installa-
tion in ships sailing on those waters of either marine toilets that will retain
all sewage for disposal and approved on-shore treatment facilities or an
incinerating device that will reduce to ash all sewage produced on water-
craft. The Lake Carriers Association, whose members operate cargo vessels
on the Great Lakes, challenged the Michigan law on the ground that it
placed an undue burden on interstate and foreign commerce, interfered with
uniform maritime law and denied them due process and equal protection
and was unconstitutionally vague. In addition, they contended that the
statute conflicts with or is pre-empted by the Federal Water Pollution Act as
amended by the Water Quality Improvement Act of 1970. A three-judge
federal district court refused to enjoin enforcement of the Michigan Pollu-
tion Control Act on the grounds that there was no justiciable controversy
and that the plaintiffs were seeking an advisory opinion.
HELD: There was a justiciable controversy - the carriers were under
an obligation to install sewage storage devices promptly. The Court said
"in this circumstance compliance is coerced by the threat of enforcement,
and the controversy is both immediate and real." The Court agreed, how-
ever, that the district court properly abstained from deciding the merits but
not for the reason given by that court. The paradigm case for abstention
arises when the challenged state statute is susceptible to a "construction by
the state courts that would avoid or modify the (federal) constitutional
question" and "that is precisely the circumstance here."
New Jersey Sports and Exposition Auth. v. McCrane, 292 A.2d 545
(N.J.1972).
Action for a judicial declaration of the constitutionality of the New
Jersey Sports and Exposition Authority Law. This act was adopted to bring
about the construction, operation and maintenance of a sports complex on
a site of 750 acres. The act further granted permission to the authority to
acquire for the state some tide flowed meadowland for purposes connected
with the construction. It was alleged that this was a violation of the public
trust doctrine imposing certain limitations on the alienation of such land.
Another question was whether the statute requires a consultation with the
Meadowlands Commission and the Department of Environmental Pro-
tection and with respect to the ecological factors constituting the environ-
ment of the Hackensack Meadowlands to the end that the delicate environ-
mental balance of Hackensack Meadowlands may be maintained and
preserved.
HELD: The act is constitutional. However, an obligation has been
imposed upon the Authority to present its proposal for site location to the
Meadowlands Commission under the Department of Environmental Pro-
tection to determine the delicate environmental balance. Such presentation
should be made after public notice of the time and place, and a full record
made.
This case requires a public hearing on ecological factors on land
devoted to a public purpose giving all public bodies and persons an oppor-
tunity to present their views.
Spring 1973] ECOLOGY AND ENVIRONMENTAL CONTROL
C. Legislation
Indiana
P.L. 100: Creates a state environmental management board to formu-
late policies and implement programs for comprehensive environmental
development and control.
Kentucky
Ch. 224: Ratifies the Interstate Environmental Compact.
Maine
Ch. 570: Establishes specific ambient air quality standards within an
air quality region.
Massachusetts
G.L. 214.510A: Provides that any ten persons may sue in equity for a
restraining order against any "person" who has damaged the environment
by violating a state statute. The definition of persons who may be so
restrained or who may sue has been expanded to include state administra-
tive agencies, corporations, trusts, cities, or "any other legal entity."
Missouri
S. B. 382: Prohibits the erection or maintenance of outdoor adver-
tising within 660 feet of the nearest edge of the right-of-way and visible
from the main traveled way of any interstate highway except directional
and official signs pertaining to natural wonders, scenic and historical attrac-
tions authorized by law. State Highway Commission has power under
eminent domain to remove existing outdoor advertising not permitted
under this Act.
168 REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
S.B. 387: Prohibits the dumping or depositing of solid wastes onto the
ground or into the waters of Missouri; regulates the construction of solid
waste processing facilities by requiring a permit from the State Division of
Health.
S.B. 424: Sets up a Clean Water Commission composed of six members
representing the general interest of the public, having an interest in and
knowledge of conservation and the effects of water contaminants, to develop
comprehensive programs for the prevention, control and abatement of new
or existing water pollution.
S.B. 457: Provides penalty up to $500 for depositing any dead animal
or other filth into any well, spring, brook, river or stream.
H.B. 1184: Provides for a seven-man Air Conservation Commission,
with members representing agricultural, industrial and labor interests,
respectively, to regulate the use of equipment known to be a source of air
contamination with power to enforce such regulations.
New Jersey
Ch. 44: Amends basic water pollution law and requires an administra-
tive hearing after order to cease pollution.
Ch. 49: Provides for state aid and technical assistance to local environ-
mental agencies.
Pennsylvania
Act 20: Authorizes the Department of Environmental Resources to
make administrative agreements for cooperation and coordination of efforts
to control air pollution with state and local authorities of other states.
Act 21: Amends the Fish Law of 1949 by eliminating clause that
allowed the commission or court to find that every reasonable and practi-
cable means has been used to abate and prevent the pollution of waters by
the escape of deleterious substances.
Act 39: Establishes the procedure for environmental improvement
compacts of all municipalities, including home rule municipalities.
Act 171: Amends the Industrial Development Authority Law to include
financing for commercial development, pollution control facilities and
certain facilities for tourism and recreational facilities.
Act 193: Amends the Land and Water Conservation and Reclamation
Act by decreasing the amount of money available for air pollution from
burning coal refuse banks and increasing the funds available for the preven-
tion of surface subsidence above abandoned mine operations.
Virginia
Code 15.1-486: Expands what the governing body of any county or
municipality may by ordinance regulate, restrict or permit so as to include
sedimentation and soil erosion from nonagricultural lands.
Code 56-46.1: Provides that the State Corporation Commission shall
consider environmental factors, including impact on scenic assets, in approv-
ing the construction of electric utility facilities as well as the construction
of electric transmission lines of 200 kilovolts or more.
Spring 1973] ECOLOGY AND ENVIRONMENTAL CONTROL - EMINENT DOMAIN 169
Code 58-16.3: Provides that the governing body of any county, city or
town may by ordinance exempt or partially exempt from local taxation
certified pollution control equipment and facilities.
X. EMINENT DOMAIN
A. Current Literature
Barry, Market Value Enhancement By Public Projects,47 L.A.B. BULL.
49 (1971). The article discusses increased land values in condemnation as a
result of needed utilities, freeways, freeway access or public recreational
facilities being added to an improvement project.
Calvania, Eminent Domain and the Environment, 56 CORNELL L. REV.
651 (1971). In instances where environmental needs are a determinative
factor in condemnation proceedings, the burden of proof should rest with
the condemnor to justify to the courts the acquisition of land by eminent
domain.
Foerster, A Look at Condemnation Attorneys' Fees, 46 FLA. B. J. 130
(1972). A continuing issue in Florida involves payment by the condemning
authority of the reasonable fees incurred by the owner when his property
is acquired. This article discusses this problem and divides the discussion
into two questions. The first question involves whether or not the term "full
compensation" includes such fees and the second question is the method by
which such fees are determined.
Gore, Valuation of Property in Condemnation Proceedings,60 ILL. B. J.
870 (1972). The measure of compensation under Illinois law is the "fair
cash market value" of the land, at the time of the petition for condemna-
tion, at its highest and best use. Buildings are not separately valued. Dam-
ages to the remainder in partial takings depend on an obvious physical
relationship between the two. The impact of the Internal Revenue Code
on gains is also discussed.
Happy, Damnum Absque Injuria - When Private Poperty May Be
Damaged Without Compensation in Missouri, 30 Mo. L. REV. 453 (1971). A
discussion of compensation for taking land by eminent domain.
Landau, Urban Concentration and Land Exactions for Recreational
Use: Some ConstitutionalProblems in Mandatory Dedication Ordinances in
Iowa, 22 DRAKE L. REV. 71 (1972). Discusses the law's response to increas-
ingly perceived social needs and desire for recreational land use, first from
constitutional approach (re police power, taxing power, etc.), from stand-
point of due process requirement (as to condemnation, acquisition, etc.), and
from equal protection rights (of developers, owners, residents). Impact of
the Model Land Development Code and other ordinances representative of
midwestern state and local control measures is also examined.
Mencher, Condemnation Enters the Twentieth Century - An Alert to
the D. C. Bar, 38 D.C. B. J. 48 (1971). This article is intended to alert D.C.
attorneys to the "Uniform Relocation Assistance and Real Property Acquisi-
tions Act of 1970" which gives a more "just compensation" for condemna-
tion than mere "fair market value" standards.
Sax, Takings, Private Property and Public Rights, 81 YALE L. J. 149
170 REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
B. Significant Decisions
Klopping v. City of Whittier, 8 Cal. 3d 39 (1972).
HELD: The city was liable for damages resulting from an announce-
ment of an intent to condemn the plaintiff's property if the city acted
improperly either by unreasonably delaying the condemnation action or by
other unreasonable conduct prior to condemnation.
Marposon v. State, 287 N.E.2d 857 (Ind. 1972).
State condemned portion of landowner's land for highway purposes.
Landowner attempted to introduce testimony that he had not received any
offers to purchase the residue of his estate subsequent to having learned of
the effect of the condemnation, thus trying to prove that the land had no
market value.
HELD: Absence of offers evidences nothing.
Case of first impression limiting type of evidence permissible in eminent
domain cases.
Russell v. Town of Canton, 282 N.E.2d 420 (Mass. 1972).
Town meeting warrant article stated, "To see if the town will vote to
authorize the Board of Selectmen to... take by eminent domain 20 acres,
more or less." The town meeting voted that the article be adopted and
appropriated a sum for acquiring by eminent domain approximately 18
acres. The selectmen voted to take only 15.25 acres of the tract which
actually measured 16.75 acres and did not take the balance because it was
unsuitable to the municipal purposes which prompted the taking.
HELD: The board's taking was authorized by the vote and was valid.
There was no requirement to take the entire parcel owned by the landowner.
Short v. Commonwealth, 5 Commonwealth Court 91 (Pa. 1972).
The Department of Highways condemned a strip of owners' lots vary-
ing from 15 feet to 25 feet in width in order to widen the paved cartway of
a state highway on which the lots abutted. No substantial change of grade
was made. The highway plans approved by the governor did not show any
lines marked on them as required for slopes. The owners contended that in
addition to being compensated for the land taken they should have been
compensated for such additional land as might in the future be necessary
Spring 1973] EMINENT DOMAIN
for support and protection if the Commonwealth later further widened the
highway and failed to provide support and protection for their property by
constructing a wall.
HELD: The property owners were not entitled to damages for some
possible future injury to or interference with their property.
Sets forth criteriafor awardingdamages in eminent domain proceedings.
State ex rel. Brower v. Columbus, 24 Ohio St. 2d 7, 271 N.E.2d 860
(1971).
Action in mandamus to compel the City of Columbus to institute
appropriate proceedings to determine compensation due for property rights
allegedly taken as a result of frequent and low-level flights of aircraft in
connection with the operation of the Columbus International Airport. The
city denied liability on the theory that it only has a maintenance authority
in connection with the airport operation and has no right to control flight
operations since the control of flight operations is in the United States
through the Federal Aviation Administration.
HELD: For plaintiff on the basis of Griggs v. Allegheney, 369 U.S. 84
(1962). It was argued that even though there was a "taking" someone other
than the municipality was the taker - either the airlines or the CAA acting
as an authorized representative of the United States. Since the municipality
was the promoter, owner and lessor of the airport, it was in these circum-
stances the one who took the air easement in the constitutional sense. The
federal government takes nothing; it is the local authority which decides to
build an airport vel non and where it is to be located. Writ of mandamus
granted.
State v. Lanigan, 280 N.E.2d 809 (Ind. 1972).
State paid landowner for right to build a limited access fence for the
construction of Highway 1-65. Highway 52 intersected Highway 1-65 at a
point on landowner's land. A no access fence was also constructed on High-
way 52 depriving landowner of direct access from his property to Highway
52. Landowner filed inverse condemnation action. He asked that no
evidence be submitted to the jury which would show any benefits that land-
owner received enhancing the value of his property as a result of the con-
struction of Highway 1-65.
HELD: Taking of landowner's access to Highway 52 is a separate
taking from that granted in the right-of-way for Highway 1-65. Fact that
land may be enhanced by another taking is irrelevant to any other taking.
Verzani v. Department of Roads, 188 Neb. 162, 195 N.W.2d 762 (1972).
Proceeding to assess damages for the taking of a portion of a tract of
land, with consequential damage to the remainder of the tract.
HELD: The tract to be considered in the assessment of consequential
damages to the remainder must be land held in the same ownership con-
tiguous to the land taken and devoted to the same use. No damages can be
assessed for improper design or construction unless the same are specially
pleaded.
Summarizes rules relating to damage under eminent domain proceed-
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
authority from condemning land in urban renewal areas for the purpose
of resale, where the owner desires to develop the same and sign a contract
with such housing authority to abide by the urban renewal plan, in any
development thereof.
Virginia
Code 25-235 through 25-254: Enacts the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1972. This Act sets forth
procedures for assisting those persons who must relocate due to the acquisi-
tion of their property by a state agency for use in projects or programs in
which federal or state funds are used.
C. Legislation
New York
Ch. 586: Adds 9-1.3(3)(e) to Estates, Powers and Trusts Law, to prevent
the rule against perpetuities from invalidating a disposition because of the
possibility of a subsequently adopted child.
XIV. HOUSING CODE
C. Legislation
Spring 1973] HOUSING CODE - LANDLORD AND TENANT
California
Ch. 4000: Amend Government Code 1054 to treat notices and orders
relating to building and housing code violations as public records.
Pennsylvania
Act 69: Establishes uniform standards for design and construction of
mobile homes and the installation of plumbing, heating and electrical
systems in mobile homes.
Act 70: Regulates the sale of fabricated residential housing for assem-
bly and installation on building site.
B. Significant Decisions
Baker v. Snyder, 494 P.2d 1238 (Okla. 1972).
During the course of administration of the estate of a deceased person,
one of three lessees of a movie theatre building, the lessor filed a creditor's
claim for all of the unoccupied and unearned rent provided in his lease
and the lessor further objected to distribution of the assets of the decedent
to the deceased lessee's heirs. Question presented was whether a lessor of a
long term lease of business property is entitled upon the death of co-lessees
to have property of the deceased held up and not distributed to his heirs so
that property will be available to satisfy any breach of the lease agreement
which might result in loss to the lessor. Surviving co-lessees of decedent had
continued paying rental called for in the agreement and the lease was in no
way in default upon either the death of the deceased co-lessee or at any time
subsequent thereto.
HELD: Claim not due, or any contingent or disputed claim against
the estate as mentioned in 58 O.S. 1971 §596, does not include not due,
unearned and unoccupied rent provided for in a lease agreement.
Case of first impression.
Farrell covenanted to keep the premises in good repair during the term
and, when the term was up, to surrender them "well and sufficiently re-
paired, painted and in good order and condition." The city made extensive
repairs on the pier over a period of two years - enough so that Farrell was
able to take possession when its term began. After that the city refused to do
any more work and as a result much of the pier had not been repaired.
Farrell thereupon refused to keep the pier repaired and in good order until
such time as the city finished the job of rebuilding the pier. This situation
continued until the end of the term. As a result, when Farrell surrendered
the premises he did so without painting them or making any of the repairs
called for in its covenant. The city thereupon sued Farrell for damages.
HELD: Farrell's covenant to repair arising during the term was depen-
dent on performance by the city of its covenant to rebuild. Since the city
had not fully performed its covenant to rebuild, there was no corresponding
obligation on Farrell to make repairs and keep in good condition. While
the rule is that covenants in a lease are usually independent, the rule does
not apply to a tenant's covenant to make repairs when the landlord has
covenanted to first restore the damaged premises. The scope and nature of
the tenant's covenant in this case is that he is to repair defects which arise
after the restoration by the city is complete. Since the city never did com-
pletely restore the pier, there never was any duty on Farrell to make repairs.
57 E. 54th Realty Corp. v. Gay Nineties Realty Corp., 335 N.Y.S.2d 872
(Sup. Ct. 1972). A 15-year lease provided that the landlord could termin-
ate, on three days' notice by mail which would be deemed to be given when
mailed, on the tenant's non-payment of rent. During the initial six-year
period of this lease the tenant was frequently late in payment of rent
without any protest from the landlord. After the landlord gave the required
notice terminating the lease because of a nonpayment of rent the tenant
refused to quit possession and the landlord brought this hold-over petition.
HELD: The landlord had not acted in good faith. Good faith dealing
between landlords and tenants is essential and even though the tenant is
deemed to have been in default, the tenant should be relieved of default
if the landlord was not harmed or prejudiced thereby. The law abhors
forfeiture of leases. The provision for termination was so lacking in equity
in due process as to be ineffective as a predicate for termination. A modem-
day lease is to be considered as much a service contract as a rental contract
of space for a stated period. As a service contract, the lease requires mutual
obligations between the parties and should be construed as other contracts.
Since all the landlord lost by the delay in payment of rent by the tenant was
the amount of interest it would have realized on the rent payment, termin-
ation of a 15-year lease with nine more years to go before its expiration day
verges on the unconscionable.
shall not be fenced or obstructed . . . . and shall be kept open for use
without expense of any nature to the tenant .... " On November 4, 1969,
the shopping center developer and owner entered a lease with defendant
for the construction of a "kiosk" for the sale and processing of photographic
film. The kiosk was placed on an area designated and used for parking.
Plaintiff claims that such construction violates its rights as set forth in its
1961 lease.
HELD: Lessor-developer was enjoined from obstructing the parking
area in violation of the terms of the original lease.
Court adopts a "strict construction" view; the construction of the kiosk
could have been considered de minimis.
Hunter v. Cook, 274 N.E.2d 550 (Ind.1971).
Landlord rented house to tenant. Tenant advised landlord that a
faucet handle in the bath tub was defective. Landlord did not agree to
fix the faucet handle or to maintain the premises or to make any repairs.
Tenant struck his hand on the faucet handle which shattered and severely
cut his and. Tenant sued for damage based upon negligence of the land-
lord for not repairing the defective handle.
HELD: Tenant cannot recover for personal injuries from an injury or
damage to property caused by the defective condition of the leased premises
unless the landlord either agreed to make repairs or was negligent in making
repairs.
Indiana maintains traditionalattitude in regard to landlord's responsi-
bility for negligence.
Inganamort v. Borough of Fort Lee, 120 N.J. Super. 286, 293 A.2d
720 (1972).
Suit to test the constitutionality of a municipal ordinance establishing
rent leveling system to curtail the practice of rent gouging.
HELD: None of the ordinances is invalid. There is no presently com-
prehensive state plan for rent leveling in New Jersey and there is no clear
intent upon the state's part to preempt the field and preclude local activity;
said ordinances do not contravene the supremacy clause of Article VI of the
United States Constitution; and local governments, in the face of the
crisis in housing, have broad powers in the interest of protecting the public
health, safety and general welfare to control and regulate the rental of
available houses in those respects that are local in nature and which do not
infringe on state or federal authority.
This case of first impression, a trial court determination, has been the
basis of a number of local rent leveling ordinances.
Jack Springs, Inc. v. Little, 50 Ill. 2d 351; 280 N.E.2d 208 (1972).
In an action seeking to recover possession of demised premises for
nonpayment of rent, the tenants defended on the grounds that (1) the state's
forceable entry and detainer statute was unconstitutional because it requires
the furnishing of a bond as a prerequisite to appeal by tenants, and (2)
landlord breached both an express and implied covenant to repair. The
trial court awarded the landlord possession on the grounds that the coven-
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
ants to repair on the part of the landlord, whether express or implied, were
not a defense to nonpayment of rent.
HELD: Reversed. (1) The section of the forceable entry and detainer
statute requiring the tenant to furnish an appeal bond was unconstitutional
because the legislature, having created the right of appeal, may not so
condition the exercise of that right as to discriminate against tenants who
are unable to furnish any appeal bond. (2) An implied covenant of inhabita-
bility is to be inferred in both oral and written contracts of leasing in
multi-unit dwellings. The implied contract is performed by a substantial
compliance with pertinent provisions of a municipality's building code.
(3) Affirmative defenses alleging breach of the implied covenant as well as
an express covenant of a landlord relating to repair are defenses to the
issue whether or not the tenant is indebted to the landlord for rent and
thus a defense to summary eviction.
Johnston v. Harris, 198 N.W.2d 409 (Mich. 1972).
An aged tenant in a Detroit apartment house was returning home after
dark. As he reached for the doorknob of the front door to his apartment
building, the door was suddenly jerked open and he was struck and robbed
by an intruder who had been lurking in the poorly lighted and unlocked
vestibule. The apartment house was located in a high-crime area. Action
was taken against the landlord for negligence.
HELD: In a high-crime area, the failure to provide lighting and locks
creates a condition conducive to criminal assault on tenants; such assaults
are foreseeable by the landlord; and as a result he is under the duty
to guard his tenants against them or suffer the risk of paying damages
when they are assaulted for lack of protection. A landlord of an apartment
building in a high-crime area is guilty of negligence when he fails to
provide adequate lighting and front door locks. One injured by another's
negligence can recover if the negligence is the proximate cause of the injury.
It need not be the immediate cause. The absence of lighting and locks was
the proximate cause of the assault in question because the landlord should
have realized that it involved an unreasonable risk to his tenants from the
criminals which he knew or should have known were present in the neigh-
borhood.
Kopke v. AAA Warehouse Corp., 494 P.2d 1307 (Colo. App. 1972).
Snow had fallen on Friday and Saturday and, because of icy conditions,
plaintiff, 70 years old, did not come to his office until the next Tuesday.
During that period of time, alternate thawing and freezing occurred. Plain-
tiff had rented an office and parking space from defendant landlord. The
landlord had made no effort to clear the lot of the earlier snow or resulting
ice. Plaintiff slipped and fell on ice in the parking lot and sued to recover
damages for personal injury. Defendant was granted a directed verdict at
the conclusion of plaintiff's case.
HELD: In the absence of statute or agreement, the landlord is under
a duty to tenants to exercise reasonable care to keep common passageways
approaches and parking faciilties within his control in reasonably safe
condition.
Spring 1973] LANDLORD AND TENANT
tenant only to possession and make no provision for damages. Tenant has
a right not to have peaceable possession interfered with except by lawful
process and violation of such right gives rise to a common law cause of
action in tort.
This decision holds that a landlord has no right to regain possession by
self-help from a holding over tenant delinquent in rent even though posses-
sion may be gained peacefully; he must resort to available procedures under
statutes. Also, a tenant who is wrongfully ousted by a landlord has an action
in tort for injury to the right of peaceable possession and damages are not
restricted to restoration of possession.
Markese v. Cooper, 70 Misc.2d 478, 333 N.Y.S.2d 63 (Co. Ct. 1972).
The landlord of a residential unit ignored the repeated complaints
from a tenant about vermin, lack of heat due to a faulty furnace, peeling
lead paint in the apartment, leaking from pipes, rotted windows and
dilapidated front steps. Subsequently the building bureau cited the landlord
for code violations. When the tenant's lease expired the tenant refused
to leave her apartment claiming that she could not be evicted in this
particular instance because the landlord was evicting her in order to get
revenge. This claim was found as a fact by the court.
HELD: A landlord should not be permitted to frighten tenants into
silence and thereby circumvent the law designed to insure decent housing
by the threat of evicting any tenant who reported housing violations. To
prevent this circumvention, the defense of retaliatory eviction must be
available in any proceeding to oust a tenant even though the lease has
expired and his legal right to possession has ended. However, in that situa-
tion the tenant may remain only until the landlord has complied with the
housing law's requirements as to conditions of the premises. Once such
compliance is had, then the landlord may bring a second proceeding to evict
the hold-over tenant and even though the landlord may still be motivated
by a desire for vengeance or revenge this second eviction proceeding may
proceed to a judgment. However, in such a situation the court in the evic-
tion proceedings should give the tenant a long period of time in which to
find other suitable housing and should consider the awarding of actual and
punitive damages to the tenant because of this unlawful motive.
Matteucci's Super Save Drug v. Hustav Corp., 491 P.2d 706 (Mont.
1971).
A lease of premises in a shopping center to a druggist provided that no
other premises within the center would be rented to another druggist. At
that time the premises next to the drug store were leased to a grocery.
Subsquently the grocery needed more room than was available within the
shopping center. Thereupon the lessor offered, and the grocer accepted,
larger premises adjacent to but outside the shopping center. As a part of
this expanded business in its new location, the grocery sold drugs.
HELD: The restrictive covenant restricts the lessor only within the
geographic area defined in the covenant. While the second location was
leased to the grocery with the right to sell drugs, the lessor had no evil
intent toward the druggist within the shopping center. The lessor was
Spring 1973] LANDLORD AND TENANT
A. Current Literature
Hodson, Salt Water is a Mineral, 50 TEX. L. REv 448 (1972). Ownership
of a natural resource of increasing importance in oil-producing states.
Mayfield, Bonus, Delay Rental, and Minimum Royalty - Treatment
and Distinctionsfor Tax Purposes, 7 LAND & WATER L. REV. 343 (1972). An
Spring 1973] MINES AND MINERALS - MORTGAGES AND LIENS 185
B. Significant Decisions
Kerr-McGee Corp. v. Bokum Corp., 453 F.2d 1067 (10th Cir. 1972).
A mineral lease gave the lessee the right to "own and dispose of all
uranium-bearing ores or uranium-bearing materials and bi-products." When
the lease was first made the lessee processed the ore and sold yellow cake.
Beginning in 1968, however, a market for raw ore developed when utility
companies began to use nuclear energy. Royalties on the sale of raw ore
exceeded those on the sale of yellow cake produced from the same ore. The
lessor demanded that the raw ore be sold without processing it into yellow
cake. This demand was rejected and resulted in this lawsuit.
HELD: While normally there is an implied covenant by the lessee of a
mineral lease to market the ore which he mines at the highest price obtain-
able so that the lessor will realize the maximum royalties, no such covenant
can be implied in the instant case because the lease expressly gave the lessee
the right to "own and dispose of all uranium-bearing ores or uranium-
bearing materials and bi-products."
C. Legislation
New York
Ch. 180: Adds Town Law 130 (15-a) and (23) permitting any town in
the state to adopt ordinance (i) to fill excavated lands which are deemed
hazardous to the public safety, after due notice and hearing, with the cost
to be assessed against the property, and (ii) to regulate the operation of sand
and gravel pits, stone quarries, stripping of top soil and other excavations.
Pennsylvania
Act 17: Amends the Public School Code by requiring that any school
district, planning to construct a school building in an area certified to be
subject to mine subsidence, obtain an evaluation of the substrata from the
Department of Environmental Resources.
Act 147: Extends the Bituminous Coal Open Pit Mining Conservation
Act to surface mining of anthracite coal and all other materials.
Tennessee
Ch. 547: Repeals 58-1522 through 58-1539. Sets up new and compre-
hensive regulations of surface mining and reclamation of lands affected by
such operations.
mortgage lenders in New Haven, Conn. and Los Angeles, Cal. with some
suggested remedies for the ills of the mortgage and housing markets.
Bonanno, Due on Sale and Prepayment Clauses in Real Estate Financ-
ing in California in Times of FluctuatingInterest Rates - Legal Issues and
Alternatives, 6 U. SAN FEANcisCO L. REv. 267 (1972). The author examines
the due-on-sale and prepayment clauses as found in California law and
practice. He then turns to several alternatives like the variable interest
rate, the short-term loan with option to renew and a fixed interest long-
term loan. He concludes that there is no one alternative that is completely
satisfactory to both lender and debtor.
Burstein, There's Truth-in-Lending,But Is There Right in Rescission?,
2 REAL ESTATE REv. No. 2, at 83. A definitive analysis of the most contro-
versial part of the federal Truth-in-Lending Act, the right to rescind certain
real estate transactions.
Clonte, Avoidance of Civil Penalties Imposed by Truth-in-Lending, 89
BANKING L. J. 848 (1972). The author is disturbed that lower court decisions
dealing with civil liabilities under the Truth-in-Lending Act frequently
discuss the failures of creditors to meet the requirements of Regulation Z,
with alleged civil liability resulting therefrom. The author claims that such
improper considerations on the part of the court have to be the result of
insufficient preparation and analysis by attorneys representing the creditors
in question. Attorneys defending such actions should narrow their attention
to the provisions found in section 130 of the federal Truth-in-Lending Act.
Regulation Z has little to do with civil liability under the Act.
Garwood, Truth-in-Lending - A Current Analysis of Developments,
37 LEGAL BULL. 187 (1972). Cases involving truth-in-lending are before the
Supreme Court. A legal service published its 800th letter from the Federal
Reserve Board staff explaining Regulation Z which implements the Act,
and many other judicial proceedings in the lower courts, all of which
activity suggests that truth-in-lending is not yet ready to fade into the
recesses of routine, and that the process of matching the federal disclosure
requirement to the complex and changing pattern of consumer credit has
not yet been completed. With this in mind the author believes it is an
opportune time to examine the developments in the Federal Reserve Board's
Regulation Z, as well as some of the truth-in-lending litigation.
Gunning, The Wrap-Around Mortgage . . . Friend or U.F.O.?, 2 REAL
ESTATE Rv. No. 2, at 35 (1972). The wrap-around mortgage, secondary
financing at its most sophisticated, combines financial allure and legal snares.
Harth, Piggy-Back Mortgage Financing, 38 LEGAL BULL. 1 (1972). A
piggy-back loan is a joint loan made by two lenders using a single mort-
gage and, generally, two notes. The two separate notes are given to different
lenders though both notes are secured by the same mortgage lien and
pursuant to an agreement between the two lenders the senior lender is
given first priority. Piggy-back, along with such terms as participation,
secondary mortgage market, piece-of-the-action, sales-and-lease-back and
wraparound, signals the gradual emergence of a sophisticated era in
secured lending techniques, a development which has been under way for
several years now. The author believes that piggy-back lending may prove
Spring 1973] MORTGAGES AND LIENS
B. Significant Decisions
Avco Delta FinancialCorp. v. Town of Whitefield, 295 A.2d 921 (Me.
1972).
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
does not raise a legal issue in an arm's length transaction. The obligations
of contracts must still be enforced.
Hampton v. Gulf Federal Savings & Loan Ass'n, 249 So.2d 829 (Ala.
1971).
Plaintiffs obtained a mortgage loan from a lending institution on
March 15, 1964. In accordance with the provisions of the mortgage, the
mortgagors obtained fire and extended coverage insurance on the prop-
erty, paid the first year's premium thereon and delivered the original of the
policy to the mortgagee, retaining a copy for themselves. The insurance
policy contained the usual provision protecting the interest of the mort-
gagee. The mortgage provisions provided that in addition to making the
monthly payments of principal and interest the mortgagors were required
to make monthly payments in an amount sufficient to pay the annual
charges for insurance and taxes when due. Plaintiffs continued to make
their monthly mortgage payments including the estimated amount into the
tax and insurance escrow during the years 1965 and 1966. Payment of the
second and third annual premiums were made by the mortgagee in March
of those years from the funds which it had received from the mortgagors
and in response to bills and statements from the insurance company
requesting such payments. However, the policy of insurance expired accord-
ing to its terms on March 12, 1967, and it was not renewed either by the
mortgagee or the mortgagors. On April 14, 1967, the mortgagor's home,
which was not insured, was totally destroyed by fire. In an action against
the lender seeking to recover damages for its failure to renew the insurance
policy and to make payments thereon the complaint had a count on con-
tract and a second was based on tort which alleged that the defendant was
under a duty to make the payments for insurance. The trial court granted
defendant's motion for summary judgment.
HELD: Affirmed. The duty to insure the premises was upon the mort-
gagors, not the mortgagee. The rights and duties of the parties were estab-
lished by the contract between them. Any negligence, i.e., a potential
breach of duty, must arise out of a positive duty which the law imposes
because of the existence of the contractual relationship as mortgagor and
mortgagee, or because of the negligent manner in which some fact which
the contract provides for is done. In the absence of any agreements to the
contrary, there is no general duty imposed upon a mortgagee by virtue of
its status as a mortgagee to insure the mortgaged premises. Under the terms
of the mortgage agreement it was the mortgagor who had expressly coven-
anted to keep the improvements on the security property insured against
damage by fire and such other hazards as the mortgagee might require to
be insured against. As regards the monthly insurance escrow payments, the
mortgagee was authorized to pay for such items as charged or billed without
further inquiry. There was no provisions in the instruments from which it
could be reasonably inferred that the mortgagee undertook the duty of
securing insurance or renewing the policy which had expired.
Hayek v. Western Steel Co., 478 S.W.2d 786 (Tex. 1972).
Owner, acting as his own builder through numerous separate original
Spring 1973] MORTGAGES AND LIENS
action for declaratory relief and an injunction against the bank contesting
the validity of the future advance provision. The plaintiffs alleged that the
bank had not directed their attention to the quoted clause or its legal
impact and effects, and that at no time did the plaintiffs undertake or
agree to its terms; that the bank failed to explain its interpretation of the
terms of the deed of trust, but had presented the deed to the plaintiffs as
"a routine matter of business" for their signature; and that the plaintiffs
did not know that the deed of trust included anything more than the
immediate transaction, the securing of the $11,500 loan, and the giving of
the property described in the deed as security. The bank demurred and
refused to grant plaintiffs leave to amend whereupon the plaintiffs appealed.
HELD: If the plaintiff husband alone were involved the demurrer
would be sustained without leave to amend since he had received the
money evidencing the two short term loans. As to the wife, however, the
trust deed contract on a printed form prepared by the bank was of a type
classed as a contract of adhesion. This term refers to a standardized contract
prepared entirely by one party to the transaction for the acceptance of the
other. Such a contract, due to the disparity in bargaining power between
the draftsman and the second party, must be accepted or rejected by the
second party on a "take it or leave it" basis without opportunity for bar-
gaining. As regards the plaintiff's contention that they were not aware of
the presence of the language complained of, the court declined to rule as
a matter of law that the bank had such a duty and stated that if the
particular provision was of a type found in the usual form of trust deed,
then there was no such duty on the bank to explain the language. However,
if the provision in question was an unusual provision and if the bank had
contracted to deliver to the borrowers a trust deed in the "usual" form,
then the wife might have a basis for declaratory relief. It could not be
said as a matter of law that the specific clause is a usual provision although
the court would take judicial notice that some provision for securing future
advances is not unusual in a printed form of trust deed, but not all printed
forms contain such provisions.
Milstein v. Security Nat'l Bank, 27 Cal. App.3d 482 (1972).
This case involved the right of an encumbrancer to the proceeds of a
condemnation action. The trust deed contained a provision obligating the
trustor to restore the damaged building and also provided that the
beneficiary would be entitled to any condemnation award and that it
could release the money so received or apply these funds to the indebted-
ness.
HELD: Under the rule of good faith and fair dealing, the award
should be released to the trustor for purposes of repair regardless of any
decision by the beneficiary to the contrary.
Modern American Mfg. Corp. v. Nelson, 469 S.W.2d 124 (Ark. 1971).
Owners of property entered into a contract with a builder to erect a
new home for them on part of their property. The price of $10,300 was to
be financed by an FHA mortgage. The builder presented many papers in
connection with the transaction which the owners signed without reading.
Spring 1973] MORTGAGES AND LIENS 193
One of them was a deed of the property to the builder. Having recorded
the deed Jones then obtained a certificate of title and presented this along
with a contract signed by the owners to a lender. He obtained a construc-
tion loan mortgage and after some of the money was advanced the builder
went bankrupt. Thereupon the lender foreclosed and the owners counter-
claimed against the bank to cancel the deed and the mortgage.
HELD: Deed and mortgage cancelled. Even though the contract
submitted to the lender designated the owners as purchasers and not as
owners, the lender, as transferee of Jones, stood in no better position than
he did because it was not a bona fide purchaser for value without notice.
Because the owner was in actual possession of the property the lender-
mortgagee was charged with notice of this possession and thus under an
obligation to make a diligent inquiry to learn the nature of the interest of
the owners and why they were in possession of the property while the land
records indicated they had no right. Since the lender never inspected the
property it could not claim to be a bona fide purchaser for value.
Oklahoma Hardware Co. v. Townsend, 494 P.2d 326 (Okla. 1972).
B&B Home Builders, Inc. owned a building lot and entered into an
executory contract with Townsend to build a house on the lot according
to certain plans and specification and to convey the improved premises to
the Townsends free and clear of all encumbrances. Pursuant to an agree-
ment with B&B, plaintiff in error's assignor furnished materials for the
construction of the building. The lien statement was filed but written
notice of the lien was not served upon the Townsends. The trial court
found that the Townsends, the purchasers of the property, were the
"owners" within the lien law; that the materialman failed to give written
notice to the "owners" as required by statute; and that the property was
not subject to the materialman's lien. The materialman appealed.
HELD: When an owner of a building lot (an executory vendor)
contracts with another (an executory vendee) to build a house on the lot
according to certain plans and specifications and to convey the improved
premises to the executory vendee, a materialman, who furnishes materials to
the executory vendor for the construction of the improvements prior to the
time the executory vendee obtains record title to the premises, comes within
the purview of the statute. Under the above circumstances, the executory
vendor is the "owner" of the premises within the meaning of the statute,
and it is not necessary to serve written notice of the lien upon the executory
vendee, even though the materialman may have furnished some of the
materials for the construction of the improvements and may have filed his
lien after the executory vendee obtained record title.
Pietrov. Leonett, 30 Ohio St. 2d 178, 283 N.E.2d 172 (1972).
Husband and wife executed a joint and several promissory note secured
by a mortgage upon property owned as joint tenants by husband and wife.
Wife on her husband's death became the sole owner as the surviving co-
tenant, sold the property, paid off the promissory note and sought contribu-
tion from her husband's estate for one-half of the balance due upon the
note. Wife's position was that "when two persons share a common burden
194 REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
as joint debtors and one is compelled to pay more than his share he is
entitled to contribution from his co-obligor and the right of contribution
flows from the debt which is evidenced by the note and not from the
mortgage lien which is security for the debt." Executor of the husband's
estate stated that the execution of the joint and several notes should not
be controlling since the surviving spouse is now the sole owner of the
property which was the security for the debt.
HELD: A surviving spouse, who owned real property with her hus-
band as a joint tenant with the right of survivorship, is entitled to receive
contribution from her husband's estate.
Sher v. South Shore Nat'l Bank, 274 N.E.2d 792 (Mass. 1971).
A first mortgagee brought a foreclosure proceeding, and gave to a
second mortgagee the required statutory notice which notice did not require
informing him of the date of the foreclosure sale. The property was
appraised at $52,500 and it was sold at public sale for $35,500. The second
mortgagee had written to the foreclosing mortgagee asking to be notified
of "any problems whatsoever in connection with the first mortgage." There-
upon the second mortgagee sued the first mortgagee for negligence and bad
faith in the conduct of the foreclosure sale.
HELD: In the absence of a special agreement, the first mortgagee was
not obligated to do anything further than to give the notice required by
statute. This he did. It was up to the second mortgagee to protect himself
by appearing at the foreclosure sale and bidding. The mere fact that the
property was sold for only two-thirds of its appraised value does not itself
establish bad faith or lack of due diligence on the part of the first mort-
gagee. Furthermore, the first mortgagee never assumed any obligation to
notify the junior mortgagee of the date of sale.
Tahoe Nat'l Bank v. Phillips, 92 Cal. Rptr. 704 (1971).
The plaintiff bank agreed to lend $34,000 to the defendant who,
together with three co-venturers, needed further capital to embark upon an
apartment development. In return for an additional loan the tenant gave
plaintiff a promissory note together with an assignment of rents and an
agreement not to sell or encumber the realty described therein. The real
property described in the assignment was not the venturer's apartment
development but his unencumbered residence. Plaintiff recorded the assign-
ment and thereafter the defendant recorded a declaration of homestead on
the property. The defendant did not convey or encumber the property.
Upon default in the payment of that loan, plaintiff brought suit and among
other things asked that the assignment be construed as an equitable mort-
gage and that the court decree its foreclosure.
HELD: The assignment was not an equitable mortgage. Plaintiff bank,
which occupied the more powerful bargaining position and deliberately
chose to use a standardized form providing for the assignment of rents and
a covenant against conveyances, cannot be permitted to transform this
assignment into a mortgage contrary to the reasonable expectation of its
borrower. As to the purpose and the terms of the assignment, it is the type
of agreement commonly used with unsecured loans, it contains no words of
Spring 1973] MORTGAGES AND LIENS
in the property, even though one or less than all may be delinquent tax-
payers. The party or parties who are not delinquent will share in the
proceeds of sale depending upon the particular interest they may have.
The Second Circuit follows the ruling of United States v. Trilling,
328 F.2d 699 (7th Cir. 1964); United States v. Washington, 402 F.2d 3 (4th
Cir. 1968); and United States v. Overmay, 424 F.2d 1142 (9th Cir. 1970).
These four circuits are in conflict with the decision of the 5th Circuit in
Folsom v. United States, 306 F.2d 361 (5th Cir. 1962).
Wait Lumber Co., Inc. v. Masid Bros. Inc., 189 Neb. 10 (1972).
Action to foreclose mechanic's lien against fee owner of the property.
The lien had been created under contract between him and a tenant of
the property. The tenant, after creation of the indebtedness and the lien,
abandoned the property, whereupon the landlord retook possession.
HELD: The lien was a valid lien upon the fee title to the property
for the reason that the landlord had merged the tenant's estate into the fee
estate when he retook possession and accepted the surrender.
Clarifies Nebraska law on the rights of mechanics' liens claimants as
against a landlord.
White Lakes Shopping Center Inc. v. Jefferson Standard Life Ins. Co.,
490 P.2d 609 (Kan. 1971).
A life insurance company issued a commitment for a permanent mort-
gage loan of $3.5 million conditioned upon the completion of the pro-
posed shopping center. The builder was required to make an advance
payment of $77,000, which was to be refunded promptly on the closing of
the loan, but "if the loan is not closed, then the $77,000 deposited is to be
retained by Jefferson as liquidated damages." As the work progressed the
builder requested the mortgagee to increase the amount of the commitment
which it did on two separate occasions, finally raising the loan to $3.85
million. When the mortgagor made a third request for an increase to $4.25
million it was denied. The mortgagor then secured a loan for that amount
from another lender. It thereupon sued the mortgagee for the $77,000
claiming (I) that the money should not be retained because it was in the
nature of a penalty and (2) the mortgagee had violated its own agreement
to provide full and adequate financing.
HELD: Advance payments, which are to be forfeited in the event of a
breach by the borrower under a loan commitment, are properly to be
regarded as liquidated damages if (1) the amount is within the customary
percentage required for similar loans and is reasonable in view of the
probable and presumptive loss to the lender in the case of breach; and
(2) the amount of the actual damage in case of breach could not be easily
and readily determinable. These two facts were found in this case. The
mortgagor could not use parol evidence in order to vary the terms of the
written commitment to prove its claim that the mortgagee had promised
to loan an amount sufficient to meet its ultimate financial needs.
Young v. Tri-City Remodeling, 335 N.Y.S.2d 308 (City Ct. 1972).
A homeowner contracted for a new roof and signed an agreement to
Spring 1973] MORTGAGES AND LIENS
pay for the same in a number of installments. It appeared what the roofer
would have charged the homeowner if he had paid in cash or over install-
ments. The promise to pay was secured by a note and mortgage on the
house. Before any work was done the homeowner attempted to cancel the
contract because the roofer had not complied with the requirements of the
truth-in-lending act.
HELD: The mortgagor could not cancel because truth-in-lending did
not cover the transaction. The fact that a homeowner is to pay for improve-
ments in more than four installments does not of and by itself prove the
existence of a finance charge. Therefore, in the absence of evidence of a
finance charge, the truth-in-lending act does not apply.
This court relied upon Mourning v. Family Publication Service, Inc.,
449 F.2d 335 (5th Cir. 1971) which invalidated the four installment rule
found in Reg. Z, §226.6(k) as being in conflict with §103(f) of the Truth-in-
Lending Act itself. Certiorariwas granted in the Mourning case on March
20, 1972 and thus the case was before the Supreme Court at the time of
this report.
C. Legislation
A labama
Act 2052: Abolishes the defense of holder in due course status with
respect to a consumer credit sale or consumer lease by the Alabama
U.C.C.C. Not applicable to FHA insured or VA guaranteed mortgages.
California
Ch. 508: Amends Government Code 27321.5 to prohibit recordation
of a deed of trust or mortgage unless it contains provisions affording the
trustor/mortgagor notice by mail of any default or intended foreclosure sale.
Ch. 698: Amends Civil Code 2949 to prohibit the acceleration of any
installment note secured by a deed of trust or mortgage on a single-family,
owner-occupied dwelling by virtue of any junior encumbering of the
property. States that this provision is not intended to restrict the rule of
LaSala v. American Savings & Loan Association, 5 Cal. 3d 864 (1971)
dealing with such "due on encumbrance" clauses (reported supra).
Kentucky
KRS: 426.525: Permits a mortgagee after default to take possession of
the property abandoned for the purpose of preserving and maintaining the
same, harvesting crops, or letting the same and adding any reasonable
expenses to the mortgage indebtedness.
Massachusetts
Ch. 183: Adds section 59 requiring that no penalty or late charge be
collected against any mortgagor/occupant of any dwelling house of not
more than four units, if payment is made within 15 days of the due date
with a maximum charge of 3 per cent of the principal and interest due.
New York
Ch. 421: Prohibits a mortgagee who accelerates a mortgage on an
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
tion ordinances and statutes. All these laws have been enacted ostensibly
to stem their disappearance. Most of these ordinances deal quite adequately
with the historic-aesthetic side of preservation by defining proper criteria
and administrative procedures for identifying and designating individual
landmarks or historic societies. The author feels that few, if any address
the economic consequences of preservation realistically or equitably. The
tenor of his article is the development of ideas and methods for the
"preservation" of these landmarks and not just their creation.
the Michigan cases and determine the proofs and findings necessary to
justify the grant of each type of variance under present Michigan law, to
state the questions as yet undecided, and to venture a prophecy as to the
possible result when the question is squarely presented to the Michigan
Supreme Court.
Garner, Introduction to English Planning Law, 24 OKLA. L. REV. 457
(1971). The purpose of the article is to discuss the British scheme of land
use planning and its three principal concepts: (1) a development plan
prepared for each local planning authority's area; (2) a strict system of
development control reinforced by detailed controls over special topics;
and (3) very wide powers of compulsory purchase or "eminent domain,"
permitting some measure of positive planning.
Johnson, Exclusionary Zoning, Damage Actions Under the Civil Rights
Act, 1971 L. AND Soc. ORDER 538. An examination of the best means for
using the Civil Rights Act of 1964 to gain redress for damages incurred
through the use of exclusionary zoning.
Karlin, Horton and Polster, Zoning: Monopoly Effects and Judicial
Abdication, 4 Sw. L. REv. 1 (1972). Discusses the purpose and effects of
zoning upon property rights. Both good and bad effects are examined as
well as the necessity of zoning laws.
Krasnowiecki, Zoning Litigation and the New Pennsylvania Proce-
dures, 120 U. PA. L. REv. 1029 (1972). This article offers an analysis of the
new procedural provisions of the 1968 Pennsylvania enabling law govern-
ing zoning and planning and also the problems that arose under prior
practice to which the provisions are addressed. A comparison of the major
differences that have existed between the Pennsylvania procedures and
those prevailing in other states serves to illustrate the unique nature
of the Pennsylvania approach as well as the purpose which lies behind the
new provisions.
Kusler, Open Space Zoning: Valid Regulation or Invalid Taking, 57
MINN. L. REv. 1 (1972). An increasing awareness of environmental prob-
lems and dwindling supplies of open land have resulted in the adoption
of land use regulations to preserve open space for a variety of broad public
objectives. These regulations include flood plain zoning, wetland and
conservation zoning, lake, shore and coastal protection districts, agriculture
and forestry zones, and scenic preservation zones. The aim of all these is
either to prevent or severely restrict structural development. Since this is
a developing area in the field of constitutional law, there are no clearcut
judicial tests to assist one in determining whether a particular regulation
validly controls or invalidly "takes" private property. This article is de-
signed to clarify factors considered by courts in determining whether par-
ticular open space regulations "take" property. It is based upon a detailed
examination of cases contesting the constitutionality of open space and
other land use controls. The article should assist planners, lawyers and
others in drafting constitutionally sound regulations and deciding when
compensation should be paid to achieve particular planning objectives.
Ledbetter, Subdivision Control in South Carolina, 24 S. C. L. REv. 155
(1972). Article emphasizes the importance of effective land use control in
Spring 1973] PLANNING AND ZONING
rural areas, which are rapidly urbanizing. Also points out that South
Carolina Comprehensive Planning Act grants basic authority needed by
local governmental units to control physical development of their com-
munities.
Lowell, Land Use and Operational Controls in the Planned Develop-
ment, 9 SAN DIEGO L. REV. 28 (1971). A discussion of the current status
of the planned development with focus on historical developments of land
use controls, operation of homeowners associations and legal considerations
in establishing effective and viable covenants, conditions and restrictions.
Lundberg, County Zoning in Montana: A New Look at an Old Prac-
tice, 33 MONT. L. REV. 63 (1972). This article makes an inquiry into county
planning and zoning as it is permitted in the state of Montana.
Perry, The Local "General Plan" in California, 9 SAN DIEGO L. REV. 1
(1971). A discussion of the local general plan in use in California which is
a guideline to municipal zoning, subdivision and capital land improve-
ments. This is a survey of the past use as well as thoughts on its future use.
Podell and Podell, "Beauty" Zoning Is Unfair to Property Owners, 2
REAL ESTATE REv. No. 2, at 92 (1972). Aesthetic and ecological zoning runs
counter to our tradition of property rights and personal freedom.
Sternlieb, Burchell 8 Hughes, Planned Unit Development: Environ-
mental Suboptimization, 1 ENv. AFFAIRS 694 (1972). The role of planned
unit development as a means of land use control is discussed as the best
system available for controlling local subcommittees by grouping residen-
tial, commercial and industrial components.
Sussna, Apartment Building Trends, 44 PENN. B. Q. 101 (1972). The
author believes that apartment building developers have, with good cause,
learned to dread suburban land use control. Too often has the major tool
of American land use control, zoning, been used by suburban municipalities
either to exclude or frustrate multi-family housing. The purposes of this
article are to ascertain the quantitative trends, to focus on some apartment
zoning cases and to offer some suggestions concerning the breaking of cur-
rent bottlenecks.
Sussna, Building Codes and Housing, 36 Ky. B. J. 63 (1972). A discus-
sion of the various ways of clearing up the confusion presently existing in
building codes. The author emphasizes the important innovations which
can be made in this area together with resultant cost decreases.
Sussna, Remedying Premature Subdivisions, 17 N.Y.L.F. 1050 (1972).
This article discusses in detail the problem of the premature subdivision
lacking such amenities as drinking water supply or sewage disposal, and
proposes a comprehensive study which would contribute to the evolution
of a solution.
Woodroof, Land Use Control Policies and Population Distribution in
America, 23 HASTINGS L. J. 1427 (1972). The author demonstrates the
extent to which our present maldistribution of population is a collateral
product of our laws and discusses the importance of zoning - a direct
method of regulating population distribution - in terms of its effects on
the quality of population concentrations, evaluating planned unit develop-
ments and federal new towns legislation.
202 REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
(1972). Discusses the work of the Cook County Housing Court in dealing
with problems created by abandonment of inner city apartment buildings
by owners and lienholders unwilling to incur expenditures to maintain
or repair. Suggests a number of ways in which these problems should be
tackled at ground level.
Nachbraur, Empty Houses: Abandoned Residential Buildings in the
Inner City, 17 HOWARD L. J. 3 (1971). This article reports an investigation
into the factors which are causing owners to abandon residential units in
the inner city. Its research into causes is to lay a foundation for making
recommendations toward a partial solution to the housing shortage through
preservation of the inner city housing stock. The problem of what to do
with empty houses and how to halt the processes which remove sound
structures from the market is a relatively new one for city officials. Because
there is a paucity of empirical research on the problem, the initial step
in the research for this article was to undertake a study of a 21-block area
of Washington, D. C. The results of this study are reported along with
information relating to other cities. The author believes that the problems
which lead to abandonment are interrelated and only a comprehensive
plan directed at each and all of the causes can succeed in halting this
spread of abandonment.
Symposium, The Lawyer in Housing and Urban Development:
Edited Proceedings of the National Seminar, 4 URBAN LAW. 223 (1972).
Coverage includes: The 701 Program, A Rewarding Role for Lawyers in
Low and Moderate Income Housing, The National Housing Partnership:
A Description.
California's Low-Income Housing Referendum: Equal Protection and
the Problem of Economic Discrimination,8 COLUM. J. L. &cSOC. PROB. 135
(1972). An examination of California's referendum requirements and a
discussion of how the Equal Protection Clause could be used to bar certain
kinds of economic discrimination.
B. Significant Decisions
Lindauer v. Oklahoma City Urban Renewal Auth., 496 P.2d 1174
(Okla. 1972).
In a condemnation proceeding commenced by the Oklahoma City
Urban Renewal Authority, Lindauer challenged the authority's right to
condemn property on the grounds that the law violated the equal protec-
tion clause of the Fourteenth Amendment to the United States Constitution,
the trial court held the act constitutional.
HELD: Affirmed.
Case of first impression as to constitutionality of Oklahoma Urban
Redevelopment Law.
C. Legislation
Illinois
Ch. 67 : Provides for reimbursement expenses to any persons dis-
placed from home or business as a result of a federally financed project
under Title I of Housing Act 1949.
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
Iowa
H.F. 1257: Gives a municipality the power to acquire or dispose of by
purchase, construction or lease, or otherwise to deal in air rights and
facilities or easements to lateral or vertical support of land or structures
of any kind.
Missouri
S.B. 586: Amends 99.320 and 99.420 by providing that a land clearance
project, urban renewal project and a land clearance for redevelopment
authority shall have the power to develop, construct, reconstruct, rehabili-
tate, repair or improve residences, houses, buildings, structures and other
facilities within the area.
B. Significant Decisions
Borough of Neptune City v. Borough of Avon-by-the-Sea, 61 N.J. 296,
294 A.2d 47 (1972).
This is an action to challenge an ordinance of the Borough of Avon-
by-the-Sea setting a fee for persons using the public beaches where the
ocean front municipality charges nonresidents higher fees than residents.
HELD: An ocean front municipality may not absolutely exclude
nonresidents from the use of its dedicated beach. The ancient principal of
English law is that land covered by tidal waters belongs to the sovereign
but for the common use of all the people, and such lands passed to the
respective states as a result of the American Revolution. In the latter half
of the 20th century the public rights in tidal lands are not limited to the
ancient prerogatives of navigation and fishing, but extend as well to
recreational uses. The public trust doctrine should be molded and extended
to meet changing conditions. A municipality may validly charge a reason-
able fee for the use of its beaches, but it may not dscriminate in any
respect between residents and nonresidents. Municipalities may consider
legitimate costs in the operation and maintenance of the beach front in
assessing their fees and they may properly regulate and limit on a first come
first served basis the number of persons allowed on the beach at any one
time.
Spring 19731 PUBLIC LANDS - SURVEY OF THE LAW
This case may upset the private character of many of the beaches along
the Atlantic Ocean opening all to residents and nonresidents alike. A
dissent (two Justices) did not think the common right as persuasive as the
majority of opinion and could see no merit in the contention that inequality
between fees renders illegal the fees imposed upon the nonresidents.
C. Legislation
Illinois
Ch. 24: Empowers a municipality to annex any contiguous 60 acres
of land or less located in unincorporated territory where land is wholly
bounded by one or more municipalities and a forest preserve district.
Iowa
H.F. 574: Provides that cities may assess the cost of public improve-
ments extending through or abutting on lands owned by the state and
provides for assessments against state lands for institutional roads.
Virginia
Code 7.1-21: Amends statute in which lands and buildings are ceded to
the United States with concurrent jurisdiction by adding parks, parkways
or other recreational areas.
XXIV. TAxATioN
A. Current Literature
Alexander, Real Estate Syndication and the Effect of the Tax Reform
Act of 1969, 25 U. MiAMI L. REv. 197 (1971). A discussion of the legal
problems of a typical real estate syndication. Special considerations given to
the effects of the Tax Reform Act of 1969.
Deutschman and Creamer, FHA Syndications Under the Microscope,
2 REAL ESTATE REV. No. 3, at 5 (1972). Public and private tax-shelter
syndications of FHA projects are examined in a definitive study that
recommends standards in crucial areas.
Epstein, The Application of the Crane Doctrine to Limited Partner-
ships, 45 S. CAL. L. REv. 100 (1972). The author discusses the general
doctrine of Crane v. Commissioner, 331 U.S. 1 (1946), setting forth certain
rules for computing the cost of property acquired with borrowed funds,
as specifically applied to limited partnerships involved in real estate invest-
ments, and argues the inconsistency therewith of the position taken by the
Commissioner in applying Treasury Regulations §1.752-1(e) and Revenue
Ruling 69-233.
Feder, How Real Estate Is Faring Under the Federal Income Tax, 2
REAL ESTATE REv. No. 1, at 44, The Revenue Act of 1971 and legal
decisions of particular interest to real estate professionals are surveyed.
Gurko, Federal Income Taxes and the Urban Sprawl, 48 DENVER L. J.
329 (1972). The author urges amendments to the Internal Revenue Code
which would "avoid favoring the developer of open land as opposed to other
forms of economic activity."
Hagman, Property Tax Reform: Speculations on the Impact of the
Serrano Equalization Principle, 1 REAL ESTATE L. J. 115 (1972). In Serrano
v. Priest, 487 P.2d 1241 (Cal. 1971), the California Supreme Court held that
the California school finance system violated the equal protection clause of
the 14th Amendment of the United States Constitution. The author believes
that, regardless of what the Supreme Court of the United States may rule
on such cases, the so-called "Serrano Principle" will be widely applied in
school financing in America and that merely shifting to other taxes reflective
of local wealth will not satisfy the principle.
Hayes, Iowa Tax Law and Procedure - 1971, 21 DRAKE L. REv. 282
(1972). Reviews 1971 legislative efforts in Iowa (prompted largely by financ-
ing of several public school systems) to prescribe a ceiling for increases in
school costs, concurrent with increasing income tax rates; to generate other
sources of increased state revenues from income taxes, inheritance taxes,
property and commodity taxes, including special types of assessments and
tariffs on utilities, services, etc.
Kroncke & Crettanberg, Depreciating Residential Property Under New
Tax Rules, 2 REAL ESTATE REv. No. 2, at 49 (1972). The dollar consequences
of differing depredation methods for new and old residential property can
be precisely measured, but the social consequences cannot.
Lane, Final Regulations on Depreciation and Rehabilitation of Resi-
dential Property Clarify Many Areas, 37 J. TAXATION 18 (1972). An analysis
Spring 1973] TAXATION
of the final regulations on the Tax Reform Act of 1969 relating to tax-
sheltering of rental property qualifying for accelerated depreciation and
the five-year write-off for rehabilitation expenditures.
Long, Tax Shelter in Real Estate Partnership: An Analysis of Tax
Hazards That Still Exist, 36 J. TAXATION 312 (1972). A commentary on the
formation of a partnership-maximizing its deductions, special allocations,
dispositions of partnership interests and other forms of ownership.
Malkin, Who Gets What in a Tax-Shelter Syndicate, 2 REAL ESTATE
REv. No. 3, at 26 (1972). A packager explains why section 236 (and other
type syndications) are a perfect marriage between developers and investors.
Millett, Taxation of Real Estate Investment Trusts, 17 S.D. L. Rv. 291
(1972). The article discusses a real estate investment trust as comprehended
by section 856 of the Internal Revenue Code. The statutory requirements
and the specific tests which must be met are discussed.
Oppenheimer, REITS Seeking Equity Kickers Travel a Perilous Sea, 1
REAL ESTATE REV. No. 4, at 31 (1972). The use by REITs of equity partici-
pations could be a dynamic combination, but complex tax rules make this
not a game for novices.
Ridenour, Philip and Patricia, Serrano v. Priest: Wealth and Kansas
School Finance, 20 KAN. L. REV. 213 (1972). The authors believe that a few
cases, perhaps only Brown v. Board of Education, have portended greater
impact on public schools than Serrano. Central to the court's decision is
the disparity of wealth between school districts, and it is upon this single
concept, wealth, that the entire decision rests. This article discusses the
court's definition of wealth and applies that definition and the court's
holding to the school finance situation presently existing in Kansas.
Smith, Tax-Sheltered Investments: Oil and Gas v. Real Estate, 56 MAss.
L. Q. 399 (1971). In this comprehensive article, the author discusses the
relative tax and investment merits of the two most popular types of tax
shelters. He then provides some guidelines as to how a potential investor,
aided by competent professional assistance, can choose between good and
bad investments of each type.
Sommer, A Summary of Current Real Estate Tax Assessment Protest
and Judicial Review in New York State, 44 N.Y.S. B. J. 475 (1972). This
article brings the reader up to date on the tax review procedure in New
York State.
Walker, A Land Tax Isn't the Way to More Rational Land Use, 2
REAL ESTATE REv. No. 1, at 100 (1972). Examination of the investment process
in real estate shows up the facilities in tax and land value for social benefits.
Weinstein, Advantages of Separating Land Ownership from Building
Ownership, 1 REAL ESTATE L. J. 175 (1972). The author points out that
currently real estate is one of the most popular and sought after of the tax-
sheltered investments. One of the ways to achieve this benefit is to exclude
the land from the acquired property, since land is not a depreciable asset.
Then, all of the cash investment is used to acquire a depreciable asset
- the building. But the author believes that this procedure has a real dis-
advantage - it places the ownership of the asset most likely to increase in
value, the land, in the hands of someone else. While this result may be
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
good from the point of view of taxes, he does not believe it is good from
the point of view of estate building, which should be the real aim of all
investment, including tax shelters. The article points out the ways in
which careful planning and structuring can achieve a happy combination
of tax savings and estate building.
Weinstein, DangerSigns for Tax Shelters in Real Estate, 1 REAL ESTATE
L. J. 81 (1972). In recent months, both public and private real estate tax
shelters have received serious blows, and the author believes that we can
expect to see some adjustments in the standard format so that real estate
deals will continue to be viable vehicles for investment and tax saving.
Wharton, Application of Federal and State Securities Regulation to
Real Estate Transaction, 12 S.T. L. J. 237 (1971). A growing area of concern
for real estate lawyers.
White, An Equitable Real Estate Tax Policy for Private Recreational
Facilities,44 N.Y.S. B. J. 93 (1972). This article demonstrates the need for
real estate taxing procedures in reducing acreage values to an affordable
level by accepting the present land use rather than some vague alternate use
as the basis for the assessed value of country clubs which add scenic beauty
to urbanized areas and thus enhance the value of adjacent real estate.
Student Symposium on Kentucky Property Tax, 60 Ky. L. J. 75-156
(1971-72). Muskie, Preface, p. 75; Nader, Introduction, p. 77; Stephenson,
Property Assessment Remedies for the Kentucky Taxpayer, p. 84; Stevens,
Property Tax Revenue Assessment Levels and Taxing Rates: The Kentucky
Rollback Law, p. 105; Turner, Property Tax Assessment Administration in
Kentucky, p. 141; Stephenson & Stephenson, Public Schools: Serrano v.
Priest - A Challenge to Kentucky, p. 156; Markham, The Property Tax -
A Withering Vine, p. 174.
B. Significant Decisions
Children's Development Center, Inc. v. Olson, 288 N.E.2d 388 (Ill.
1972).
This was an action by a religious corporation to restrain collection of
real estate taxes assessed against part of a convent owned by the corporation
and leased to a not-for-profit corporation at an annual rental in excess of
$9,000 and used to provide programs for educationally handicapped chil-
dren. Illinois law exempts from taxation all property used exclusively for
religious purposes or used exclusively for school and religious purposes,
and/or for orphanages and not leased or otherwise used with a view to profit.
HELD: The test in determining tax exemption of property is whether
or not it is used primarily for tax exempt purposes. Where property is
leased for a profit but is used primarily to serve a tax exempt purpose such
as the school purposes here, the property is exempt from taxation under
the statute.
The leasing of real estate for a profit by a tax-exempt corporation
does not necessarily destroy its tax exempt status.
Diffenderfer v. Central Baptist Church, 404 U.S. 412 (1972).
This was an action for a declaratory judgment to the effect that Florida
statutes violated the First Amendment to the extent that they authorized a
Spring 1973] TAXATION
New York
Ch. 689: Adds Real Property Tax Law 467-b permitting the partial
abatement of real estate taxes on apartment houses occupied by tenants
62 years of age or older who are not recipients of welfare.
Ch. 771: Amends Real Property Tax Law 467 to increase from $5,000
to $6,000 the income limitation under which senior citizens shall be entitled
to real estate tax.
Tennessee
Ch. 407: Provides that when a mobile home tax is assessed separate
from the land it is not a lien on the land.
Virginia
Code 58-16.2: Provides for a service charge to be levied by local govern-
ments upon the owners of all real estate exempted from state and local
taxes, except certain land owned by churches or religious bodies. The
charge is assessed for the purpose of furnishing police and fire protection
and for the collection and disposal of refuse.
B. Significant Decisions
Joe Adams & Son v. McCann Construction Co., 475 S.W.2d 721 (Tex.
1971).
General contractor built wooden forms above ground. Subcontractor's
employees poured concrete into the forms, which collapsed, dumping them.
They sued contractor and recovered on findings that collapse was proxi-
mately caused by contractor's negligence in constructing the forms. Con-
tractor sought indemnity against subcontractor under subcontractor's agree-
ment to indemnify for injuries sustained "through or on account of any
act or in connection with" subcontractor's work.
HELD: Summary judgment for subcontractor. To protect indemnitee
against his own negligence, language must be clear. This general language
will not do it, particularly where indemnitee's negligence was sole cause,
and indemnitor had no connection with it.
Great Lakes Motorcycle Dealers Ass'n, Inc. v. City of Detroit, 196 N.W.
2d 787 (Mich. App. 1972).
HELD: Motorcycles cannot be constitutionally barred as a class from
traveling certain blocks of Detroit's streets under an ordinance aimed at
excising their noise and speed from selected areas through a blanket
prohibition applied to specified street sections. No sufficient connection
existed between the statutory purpose of quiet safe streets and the statutory
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
C. Legislation
New York
Ch. 106: Amends General Obligations Law 9-103(1(a) to include
bicycle riding among the various activities such as hunting, hiking, horse-
back riding and snowmobiling with respect to which a landowner owes no
duty to keep the premises safe nor to give warning as to hazardous con-
ditions.
XXVI. USURY
A. Current Literature
Podell, The Application of Usury Laws to Modern Real Estate Trans-
actions, 1 REAL ESTATE L. J. 136 (1972). An exploration of the usury
ramifications of modem real estate investment devices, which considers
(1) the general characteristic of usury laws; (2) the interaction of those
laws with several categories of real estate investment devices; and (3) the
effects of a possible determination that moneys received are usurious. There
are discussed the following phases of usury laws: (I) the corporate exemp-
tion; (2) the basic elements of usury; (3) participation schemes based on
income or proceeds, sale or lease-back or in financing benefits.
B. Significant Decisions
American Timber and Trading Co. v. FirstNat'l Bank, 334 F.Supp. 888
(D. Ore. 1971).
A usury class action suit was instituted by the borrower against a
national bank which had used a 360-day year for computation of interest
on a loan. The plaintiff charged that the bank violated the usury prohibi-
tion under the National Banking Act which prevents charging a higher
rate of interest than is allowed under the laws of the state where the
national bank does business. In determining whether it was proper for the
bank to compute interest on the basis of a 360-day year, the district court
was unable to find any Oregon state court case which had determined the
question.
HELD: Because the bank's method of computation of interest pro-
duced in a single calendar year more interest than would be allowable by
applying the maximum legal rate to a calendar year of 365 days, the method
used violated the Oregon usury statute. To ascertain whether the com-
putation of interest on an annual basis could be equated to a 360-day year,
the phrase "per annum" as used in this statute is to be interpretetd to mean
"by the year." The ordinary person assumes this to mean that there are
365 days in a year. Hence, using a 360-day year, the bank charged a usurious
rate of interest when it charged the maximum percentage rate allowed under
the Oregon statute.
Crocker v. Brandt, 292 A.2d 541 (Vt. 1972).
A contract of sale of real property and the purchase money mortgage
given at the time of the consummation of the sale both provided for pay-
REAL PROPERTY, PROBATE AND TRUST JOURNAL [Vol. 8:144
Virginia
Code 6.1-327: Expands statute that disallows certain entities such as
corporations and partnerships from using usury defenses so as to include
limited partnerships and joint ventures organized for the purpose of hold-
ing, developing and managing real estate for profit.
Code 6.1-328: Loans insured or guaranteed by the Secretary of Hous-
ing and Urban Development or his designees or made pursuant to the
requirements of the Federal Home Loan Mortgage Corporation are added
to the statute which disallows usury defense on a loan insured by various
federal governmental agencies.
The chairman acknowledges the substantial contribution made by JOHN C. HARRIS, JR.
of Florence, Ala., LEE WILLLIAMSON of Jackson, Miss., and JOHN C. SMITH of LaMirada,
Cal., law students, as well as JAMES J. BROWN of Lexington, Ky., R. A. HILLHOUSE of Phoenix,
Ariz., THOMAS R. JAMES of Memphis, Tenn. and CHARLES R. OFSTREICHER of Portland, Me.,
practicing attorneys, non-committee members, who did the work of certain committee mem-
bers who were unable to carry out their assignments.
As a member of the section you will not only receive the Public
Contract Law Journal and the quarterly Public Contract Newsletter,
two of the most significant publications in the field, but you will
also have an opportunity to assist in the continuing process of
development and improvement of the law by participation in one
or more of over 25 committees.