Savings, Inc. v. City of Blytheville

401 S.W.2d 26, 240 Ark. 558, 1966 Ark. LEXIS 1350
CourtSupreme Court of Arkansas
DecidedApril 4, 1966
Docket5-3803
StatusPublished
Cited by5 cases

This text of 401 S.W.2d 26 (Savings, Inc. v. City of Blytheville) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Savings, Inc. v. City of Blytheville, 401 S.W.2d 26, 240 Ark. 558, 1966 Ark. LEXIS 1350 (Ark. 1966).

Opinion

Carleton Harris, Chief Justice.

Mary E. Hester and C. R. Hester, her husband, were the owners of Lot 4, Block 1, of Wilson’s Second Addition to the City of Blytheville, and also owned Lot 10, Block 1, of Wilson’s Third Addition to the City of Blytheville. Lot 4 is located on the west side of Highway No. 61, and Lot 10 is located on the east side, almost directly across the highway. On October 4, 1952, the Hesters leased the east 80 feet of Lot 4 to Savings, Inc., appellant herein, for a period of five years, with three options for additional terms of five years each. The property was to be used for the operation of a service station by the lessee, and a monthly rental of $200.00 per month was to be paid by appellant. On December 11, 1953, the Hesters, as lessors, and Savings, Inc., as lessee, executed an instrument entitled “Amendment to Lease Contract.” This amendment referred to the original lease agreement, heretofore mentioned, and amended that agreement as follows:

Paragraph 3 was amended to provide that the rent should be $300.00 per month, beginning January 1, 1954; further, an additional rental of 1 cent per gallon should be paid on all gasoline sold in excess of 60,000 gallons per month; if the margin between cost and sale price fell below 4 cents per gallon, then the 1 cent per gallon additional rental should be suspended until the margin returned to at least 4 cents per gallon.

Paragraph 8 was amended to provide that the right of ingress and egress, retained by the Hesters, should be exercised only across the south 22 feet of the property, and appellant and its employees were not to park cars or trucks on that particular 22 feet (except trucks unloading gas).

A new paragraph, No. 9, was added to the original lease

“The Lessors hereby agree that neither of them will engage in the service station business in the City of Blytheville, or within a distance of two miles from the City limits, during the original or any renewal term of this lease. The Lessors further agree that if they should sell the property which they own immediately across the street from the leased property, they will provide in the deed a covenant that the property shall not be used for service station purposes during the original, or any renewal term, of this lease.

“In all other respects, said lease remains in full force and effect as originally written.”

Pursuant to the amendments, the rent was raised to $300.00, and appellant has continued in possession of the property until the present time.

Subsequently, Mr. and Mrs. Hester executed a warranty deed to Hester Mobile Home Manufacturing, Inc., conveying Lot 4 without any reservation or limitation relative to that portion of the property leased to appellant. On December 22, 1960, the corporation executed its warranty deed to the City of Blytheville conveying the same property, and again with no reservation or limitation as to that part of the property leased and occupied by Savings, Inc. The City of Blytheville, immediately upon receiving the deed from the corporation, entered into a lease agreement with Hester Mobile Home Manufacturing, Inc., leasing the property to that corporation for a particular term and for certain rentals, the property to be reconveyed to the corporation at the end of the specified term.

On July 23, 1962, the Hesters conveyed by warranty deed Lot 10 in Block 1, mentioned at the outset of this opinion, to Joe Whisenhunt and wife, the deed however containing no restrictions or limitations, nor any covenant “that the property shall not be used for service station purposes” during the term of the Hester-Savings, Inc., lease. The Whisenhunts deeded the west 125 feet of this property to Curt’s Oil Company, Inc. (no covenant in deed). Thereafter, Curt’s Oil Company erected a gasoline service station and has operated same up until the present time.

Hester Mobile Home Manufacturing, Inc., was adjudged a bankrupt in Federal Court, and that court held the deed (from Hester Mobile Corporation to Blythe-ville) to be an equitable mortgage. 1 Appellee filed a suit against the trustee in bankruptcy to foreclose this mortgage, and Savings, Inc., was made a party to the litigation. Appellant answered, setting up the amendment, asserting that its rent should be reduced from $300.00 to $200.00 per month, because of the Hesters’ violation of Section 9 of the lease in deeding Lot 10 without the covenant that no part of Lot 10 should he used for service station purposes during the term of appellant’s lease of a part of Lot 4. Subsequently, the trustee in bankruptcy executed a quitclaim deed to Lot 4 to the City of Blytheville. On trial of the issues between Saving's, Inc., and the city, the court held:

“The covenant by the Hesters set forth above was a personal covenant with Savings, Inc., and as such is not binding upon the grantees of Mary E. and Charles B. Hester and subsequent grantees of the lot.”

The court found that the City of Blytheville was not subject to the provisions of said lease as to the conditions imposed upon the conveyance of other property owned by the Hesters, and accordingly held that Savings, Inc., was not entitled to a reduction of the monthly rental from $300.00 to $200.00. From the decree so entered, appellant brings this appeal.

We agree with the Chancellor that the covenant by the Hesters was a personal covenant with appellant, and was accordingly not binding upon the grantees of the Hesters or subsequent grantees. The property involved in this litigation is Lot 4—not Lot 10. The fact that this type of covenant is personal was recognized many years ago. The situation here is somewhat similar to that in Hebert v. Dupaty (La.), 7 So. 580. There, Dupaty operated a livery stable in the town of Napoleonville. He sold his horses, harnesses and vehicles to Hebert and Demare, and in the same instrument, leased the premises on which the stable was located for a term of five years, with privilege of renewal. A clause was inserted in the lease wherein Dupaty agreed that he would not keep a public livery stable during the term of the lease within a radius of six miles of Napoleonville. Dupaty then sold to Dugas (another defendant) certain property in the town which included the livery stable that Dupaty had leased to-Hebert and Demare. Dugas sold the property to Phelps. Phelps thereupon erected a livery stable, and operated it directly in front of the stable of Hebert and Demare. Suit was instituted to recover damages, the complaint alleging that Dugas and Phelps had full knowledge and due notice of all the stipulations in the lease ,(and admittedly the defendants did possess such knowledge), and that the obligation of Dupaty to refrain from engaging in the livery stable business extended to the subsequent grantees. Dupaty himself had not broken his covenant to not operate within six miles of the town. In rejecting the complaint, the court said:

“The contention of plaintiffs that Dugas and Phelps, by purchasing from Dupaty, became bound as Dupaty was, not to keep a public livery stable within a radius of six miles of the town of Napoleonville, cannot be maintained. We do not see in what manner any process of reasoning can arrive at the legal responsibility of defendants as contended for by plaintiff.

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Bluebook (online)
401 S.W.2d 26, 240 Ark. 558, 1966 Ark. LEXIS 1350, Counsel Stack Legal Research, https://law.counselstack.com/opinion/savings-inc-v-city-of-blytheville-ark-1966.