Neponsit Property Owners’ Association, Inc., Respondent, v. Emigrant Industrial Savings Bank, Appellant.

decided May 24, 1938.

Argued January 26, 1938;

Walter E. Warner, Jr., William E. Grady, Jr., R. O’Gorman and E. J. O’Gorman for appellant.

Ralph S. Hein for respondent.

The com­plaint fails to allege that plaintiff has title to the roads, paths, parks, beach and sewers nor to any land for the benefit of which the covenant was created. It follows that there is no privity of estate between plaintiff and its assignor; therefore, plaintiff has no foundation upon which to base the action and its complaint should be dismissed, (Graves v. Deterling, 120 N. Y. 447; Kennilwood Owners’ Assn. v. Jaybro R. & D. Co., 156 Misc. Rep. 604; Lawrence Park Realty Co. v. Crichton, 218 App. Div. 374; Riverview Manor Assn. v. Bruckner, 223 N. Y. 526; Miller v. Clary, 210 N. Y. 127; Neponsit Property Owners’ Assn. v. Mayer, 250 App. Div. 738.) The alleged lien based upon the covenant set forth in the complaint is an interest or estate in land which plaintiff seeks to foreclose. Said alleged lien is not created by any writing signed by defendant’s predecessors in title and is, therefore, unenforceable under section 242 of the Beal Property Law (Cons. Laws, ch. 50). (Kennilwood Owners’ Assn. v. Jaybro Realty & Development Co., 156 Misc. Rep. 604.)

Defendant’s motion for judgment on the pleadings was properly denied. (Law­rence Park Realty Co. v. Crichton, 218 App. Div. 374; Neponsit Property Owners’ Assn., Inc., v. Mayer, 250 App. Div. 738; Kennilwood Owners’ Assn. v. Jaybro Realty & Development Co., 156 Misc. Rep. 604; Mygatt v. Coe, 124 N. Y. 212; 142 N. Y. 78; 147 N. Y. 456; 152 N. Y. 457; Korn v. Campbell, 192 N. Y. 490; Trustees of Columbia College v. Lynch, 70 N. Y. 440; Hodge v. Sloan, 107 N. Y. 244; Equitable Life Assur. Soc. v. Brennan, 148 N. Y. 661; Vogeler v. Alwyn Improvement Corp., 247 N. Y. 131; Matter of Public Beach, 269 N. Y. 64.) Plain­tiff’s motion to strike out the seven defenses and one counterclaim contained in the answer was properly granted. (Hoffmann Brewing Co. v. Wuttge, 200 App. Div. 357; 234 N. Y. 469; Weseman v. Wingrove, 85 N. Y. 353; Pollitz v. Wabash R. R. Co., 207 N. Y. 113; New­burger v. Lubell, 257 N. Y. 383; James v. Alderton Dock Yards, 256 N. Y. 298; Bareham v. City of Rochester, 246 N. Y. 140; City of New York v. Maltbie, 248 App. Div. 39.)

Lehman, J.

The plaintiff, as assignee of Neponsit Realty Company, has brought this action to foreclose a lien upon land which the defendant owns. The lien, it is alleged, arises from a covenant, condition or charge contained in a deed of conveyance of the land from Neponsit Realty Company to a predecessor in title of the defendant. The defendant purchased the land at a judicial sale. The referee’s deed to the defendant and every deed in the defendant’s chain of title since the conveyance of the land by Neponsit Realty Company purports to convey the property subject to the covenant, condition or charge contained in the original deed. The answer of the defendant contains, in addition to denials of some of the allegations of the complaint, seven separate affirmative defenses and a counterclaim. The defendant moved for judgment on the pleadings, dismissing the complaint pursuant to rule 112 of the Rules of Civil Practice. The plaintiff moved to dismiss the counter­claim pursuant to rule 109, subdivision 6, and to strike out the affirmative defenses contained in the answer pursuant to rule 103, as well as pursuant to rule 109, subdivision 6, of the Rules of Civil Practice. The motion of the plaintiff was granted and the motion of the defend­ant denied. The Appellate Division unanimously affirmed the order of the Special Term and granted leave to appeal to this court upon certified questions.

Detailed analysis of the allegations contained in the “separate defenses” would serve no useful purpose. In part, they are merely argumentative denials of allegations of the complaint which the court might properly strike out pursuant to rule 103, as “redundant, repetitious [and] unnecessary,” for those allegations of the complaint are put in issue by direct denials in the answer. Upon this appeal the defendant contends that the land which it owns is not subject to any lien or charge which the plain­tiff may enforce. Its arguments are confined to serious questions of law. Some of these questions are properly raised by the defendant’s challenge of the sufficiency of the complaint; other questions are raised by the plaintiff’s challenge of the sufficiency of the separate defenses. The two motions, indeed, involve, in general, the same ques­tions. The form in which the questions are raised is unimportant. On this appeal we may confine our con­sideration to the merits of these questions, and, in our statement of facts, we drew indiscriminately from the allegations of the complaint and the allegations of the answer.

It appears that in January, 1911, Neponsit Realty Company, as owner of a tract of land in Queens county, caused to be filed in the office of the clerk of the county a map of the land. The tract was developed for a strictly residential community, and Neponsit Realty Company conveyed lots in the tract to purchasers, describing such lots by reference to the filed map and to roads and streets shown thereon. In 1917, Neponsit Realty Company conveyed the land now owned by the defendant to Robert Oldner Deyer and his wife by deed which con­tained the covenant upon which the plaintiff’s cause of action is based.

That covenant provides: “And the party of the second part for the party of the second part and the heirs, suc­cessors and assigns of the party of the second part further covenants that the property conveyed by this deed shall be subject to an annual charge in such an amount as will be fixed by the party of the first part, its successors and assigns, not, however exceeding in any year the sum of four ($4.00) Dollars per lot 20 x 100 feet. The assigns of the party of the first part may include a Property Owners’ Association which may hereafter be organized for the purposes referred to in this paragraph, and in case such association is organized the sums in this paragraph provided for shall be payable to such association. The party of the second part for the party of the second part and the heirs, successors and assigns of the party of the second part covenants that they will pay this charge to the party of the first part, its successors and assigns on the first day of May in each and every year, and further covenants that said charge shall on said date in each year become a lien on the land and shall continue to be such lien until fully paid. Such charge shall be payable to the party of the first part or its successors or assigns, and shall be devoted to the maintenance of the roads, paths, parks, beach, sewers and such other public purposes as shall from time to time be determined by the party of the first part, its successors or assigns. And the party of the second part by the acceptance of this deed hereby expressly vests in the party of the first part, its successors and assigns, the right and power to bring all actions against the owner of the premises hereby conveyed or any part thereof for the collection of such charge and to enforce the aforesaid lien therefor.

“These covenants shall run with the land and shall be construed as real covenants running with the land until January 31st, 1940, when they shall cease and determine.” Every subsequent deed of conveyance of the property in the defendant’s chain of title, including the deed from the referee to the defendant, contained, as we have said, a provision that they were made subject to covenants and restrictions of former deeds of record.

There can be no doubt that Neponsit Realty Company intended that the covenant should run with the land and should be enforceable by a property owners association against every owner of property in the residential tract which the realty company was then developing. The language of the covenant admits of no other construction. Regardless of the intention of the parties, a covenant will run with the land and will be enforceable against a subsequent purchaser of the land at the suit of one who claims the benefit of the covenant, only if the covenant complies with certain legal requirements. These require­ments rest upon ancient rules and precedents. The age-­old essentials of a real covenant, aside from the form of the covenant, may be summarily formulated as follows: (1) it must appear that grantor and grantee intended that the covenant should run with the land; (2) it must appear that the covenant is one “touching” or “con­cerning” the land with which it runs; (3) it must appear that there is “privity of estate” between the promisee or party claiming the benefit of the covenant and the right to enforce it, and the promisor or party who rests under the burden of the covenant. (Clark on Covenants and Interests Running with Land, p. 74.) Although the deeds of Neponsit Realty Company conveying lots in the tract it developed “contained a provision to the effect that the covenants ran with the land, such pro­vision in the absence of the other legal requirements is insufficient to accomplish such a purpose.” (Morgan Lake Co. v. N. Y., N. H. & H. R. R. Co., 262 N. Y. 234, 238.) In his opinion in that case, Judge Crane posed but found it unnecessary to decide many of the questions which the court must consider in this case.

The covenant in this case is intended to create a charge or obligation to pay a fixed sum of money to be “devoted to the maintenance of the roads, paths, parks, beach, sewers and such other public purposes as shall from time to time be determined by the party of the first part [the grantor], its successors or assigns.” It is an affirmative covenant to pay money for use in connection with, but not upon, the land which it is said is subject to the burden of the covenant. Does such a covenant “touch” or “concern” the land? These terms are not part of a statutory definition, a limitation placed by the State upon the power of the courts to enforce covenants intended to run with the land by the parties who entered into the covenants. Rather they are words used by courts in England in old cases to describe a limitation which the courts themselves created or to formulate a test which the courts have devised and which the courts voluntarily apply. (Cf. Spencer’s Case, Coke, vol. 3, part 5, p. 16; Mayor of Congleton v. Pattison, 10 East, 316.) In truth the test so formulated is too vague to be of much assistance and judges and academic scholars alike have struggled, not with entire success, to formulate a test at once more satisfactory and more accurate. “It has been found impossible to state any absolute tests to determine what covenants touch and concern land and what do not. The question is one for the court to determine in the exercise of its best judgment upon the facts of each case.” (Clark, op. cit. p. 76.)

Even though that be true, a determination by a court in one case upon particular facts will often serve to point the way to correct decision in other cases upon analogous facts. Such guideposts may not be disre­garded. It has been often said that a covenant to pay a sum of money is a personal affirmative covenant which usually does not concern or touch the land. Such state­ments are based upon English decisions which hold in effect that only covenants, which compel the covenanter to submit to some restriction on the use of his property, touch or concern the land, and that the burden of a covenant which requires the covenanter to do an affirma­tive act, even on his own land, for the benefit of the owner of a “dominant” estate, does not run with his land. (Miller v. Clary, 210 N. Y. 127.) In that case the court pointed out that in many jurisdictions of this country the narrow English rule has been criticized and a more liberal and flexible rule has been substituted. In this State the courts have not gone so far. We have not abandoned the historic distinction drawn by the English courts. So this court has recently said: “Subject to a few exceptions not important at this time, there is now in this State a settled rule of law that a covenant to do an affirmative act, as distinguished from a covenant merely negative in effect, does not run with the land so as to charge the burden of performance on a subsequent grantee [citing cases]. This is so though the burden of such a covenant is laid upon the very parcel which is the subject-matter of the conveyance.” (Guaranty Trust Co. v. N. Y. & Queens County Ry. Co., 253 N. Y. 190, 204, opinion by Cardozo, Ch. J.)

Both in that case and in the case of Miller v. Clary (supra) the court pointed out that there were some excep­tions or limitations in the application of the general rule. Some promises to pay money have been enforced, as covenants running with the land, against subsequent holders of the land who took with notice of the covenant. (Cf. Greenfarb v. R. S. K. Realty Corp., 256 N. Y. 130; Morgan Lake Co. v. N. Y., N. H. & H. R. R. Co., supra.) It may be difficult to classify these exceptions or to formu­late a test of whether a particular covenant to pay money or to perform some other act falls within the general rule that ordinarily an affirmative covenant is a personal and not a real covenant, or falls outside the limitations placed upon the general rule. At least it must “touch” or “concern” the land in a substantial degree, and though it may be inexpedient and perhaps impossible to formulate a rigid test or definition which will be entirely satisfactory or which can be applied mechanically in all cases, we should at least be able to state the problem and find a reasonable method of approach to it. It has been sug­gested that a covenant which runs with the land must affect the legal relations—the advantages and the burdens—of the parties to the covenant, as owners of particular parcels of land and not merely as members of the com­munity in general, such as taxpayers or owners of other land. (Clark, op. cit. p. 76. Cf. Professor Bigelow’s article on The Contents of Covenants in Leases, 12 Mich. L. Rev. 639; 30 Law Quarterly Review, 319.) That method of approach has the merit of realism. The test is based on the effect of the covenant rather than on technical distinctions. Does the covenant impose, on the one hand, a burden upon an interest in land, which on the other hand increases the value of a different interest in the same or related land?

Even though we accept that approach and test, it still remains true that whether a particular covenant is suf­ficiently connected with the use of land to run with the land, must be in many cases a question of degree. A promise to pay for something to be done in connection with the promisor’s land does not differ essentially from a promise by the promisor to do the thing himself, and both promises constitute, in a substantial sense, a restriction upon the owner’s right to use the land, and a burden upon the legal interest of the owner. On the other hand, a covenant to perform or pay for the performance of an affirmative act disconnected with the use of the land cannot ordinarily touch or concern the land in any sub­stantial degree. Thus, unless we exalt technical form over substance, the distinction between covenants which run with land and covenants which are personal, must depend upon the effect of the covenant on the legal rights which otherwise would flow from ownership of land and which are connected with the land. The problem then is: Does the covenant in purpose and effect substantially alter these rights?

The opinion in Morgan Lake Co. v. N. Y., N. H. & H. R. R. Co. (supra) foreshadowed a classification based upon substance rather than upon form. It was not the first case, however, in which this court has based its decision on the substantial effect of a covenant upon legal relations of the parties as owners of land. Perhaps the most illuminating illustration of such an approach to the problem may be drawn from the “party wall” cases in this State which are reviewed in the opinion of the court in Sebald v. Mulholland (155 N. Y. 455). The court there pointed out that in cases, cited in the opinion, where by covenant between owners of adjoining parcels of land, “a designated party was authorized to build a party wall, the other agreeing to pay a portion of its value when it should be used by him,” the court was constrained to hold that “the agreement was a present one, the party who was to build and the one who was to pay were expressly designated, and the covenant to pay was clearly a personal one” (p. 464). At the same time, the court also pointed out that such covenants must be distinguished from the covenants (passed upon by the court in the earlier case of Mott v. Oppenheimer, 135 N. Y. 312), “by which the parties conferred, each upon the other, the authority to erect such [party] wall, and dedicated to that use a portion of each of their lots, with an agreement that if either should build the other might have the right to use it by paying his share of the expense” (p. 463). In such a case, it was said by the court, “It was not and could not then be known who would build, or who was to pay when the wall was used. The agreement was wholly prospective, and its purpose was to impose upon the land of each, and not upon either personally, the burden of a future party wall, and to secure to the land and, thus, to its subsequent owners, a corresponding right to the use of the wall by paying one-half of its value * * *. In that case the character of the agreement, its obvious purpose, its prospective provisions, and the situation of the lands when the agreement was made, all concurred in showing an intent that its covenants should run with the land, and clearly justified the court in so holding” (pp. 463-4).

Looking at the problem presented in this case from the same point of view and stressing the intent and substantial effect of the covenant rather than its form, it seems clear that the covenant may properly be said to touch and concern the land of the defendant and its burden should run with the land. True, it calls for payment of a sum of money to be expended for “public purposes” upon land other than the land conveyed by Neponsit Realty Company to plaintiff’s predecessor in title. By that conveyance the grantee, however, obtained not only title to particular lots, but an easement or right of common enjoyment with other property owners in roads, beaches, public parks or spaces and improvements in the same tract. For full enjoyment in common by the defendant and other property owners of these easements or rights, the roads and public places must be maintained. In order that the burden of maintaining public improve­ments should rest upon the land benefited by the improve­ments, the grantor exacted from the grantee of the land with its appurtenant easement or right of enjoyment a covenant that the burden of paying the cost should be inseparably attached to the land which enjoys the benefit. It is plain that any distinction or definition which would exclude such a covenant from the classification of cove­nants which “touch” or “concern” the land would be based on form and not on substance.

Another difficulty remains. Though between the grantor and the grantee there was privity of estate, the covenant provides that its benefit shall run to the assigns of the grantor who “may include a Property Owners’ Associa­tion which may hereafter be organized for the purposes referred to in this paragraph.” The plaintiff has been organized to receive the sums payable by the property owners and to expend them for the benefit of such owners. Various definitions have been formulated of “privity of estate” in connection with covenants that run with the land, but none of such definitions seems to cover the relationship between the plaintiff and the defendant in this case. The plaintiff has not succeeded to the owner­ship of any property of the grantor. It does not appear that it ever had title to the streets or public places upon which charges which are payable to it must be expended. It does not appear that it owns any other property in the residential tract to which any easement or right of enjoyment in such property is appurtenant. It is created solely to act as the assignee of the benefit of the covenant, and it has no interest of its own in the enforce­ment of the covenant.

The arguments that under such circumstances the plaintiff has no right of action to enforce a covenant running with the land are all based upon a distinction between the corporate property owners association and the property owners for whose benefit the association has been formed. If that distinction may be ignored, then the basis of the arguments is destroyed. How far privity of estate in technical form is necessary to enforce in equity a restrictive covenant upon the use of land, pre­sents an interesting question. Enforcement of such covenants rests upon equitable principles (Tulk v. Moxhay, 2 Phillips, 774; Trustees of Columbia College v. Lynch, 70 N. Y. 440; Korn v. Campbell, 192 N. Y. 490), and at times, at least, the violation “of the restrictive covenant may be restrained at the suit of one who owns property, or for whose benefit the restriction was estab­lished, irrespective of whether there were privity either of estate or of contract between the parties, or whether an action at law were maintainable.” (Cheseboro v. Moers, 233 N. Y. 75, 80.) The covenant in this case does not fall exactly within any classification of “restrictive” cove­nants, which have been enforced in this State (Cf. Korn v. Campbell, 192 N. Y. 490), and no right to enforce even a restrictive covenant has been sustained in this State where the plaintiff did not own property which would benefit by such enforcement so that some of the elements of an equitable servitude are present. In some juris­dictions it has been held that no action may be main­tained without such elements. (But cf. Van Sant v. Rose, 260 Ill. 401.) We do not attempt to decide now how far the rule of Trustees of Columbia College v. Lynch (supra) will be carried, or to formulate a definite rule as to when, or even whether, covenants in a deed will be enforced, upon equitable principles, against subsequent purchasers with notice, at the suit of a party without privity of contract or estate. (Cf. “Equitable Rights and Liabilities of Strangers to a Contract,” by Harlan F. Stone, 18 Columbia Law Review, 291.) There is no need to resort to such a rule if the courts may look behind the corporate form of the plaintiff.

The corporate plaintiff has been formed as a convenient instrument by which the property owners may advance their common interests. We do not ignore the corporate form when we recognize that the Neponsit Property Owners Association, Inc., is acting as the agent or repre­sentative of the Neponsit property owners. As we have said in another case: when Neponsit Property Owners Association, Inc., “was formed, the property owners were expected to, and have looked to that organization as the medium through which enjoyment of their common right might be preserved equally for all.” (Matter of City of New York [Public Beach], 269 N. Y. 64, 75.) Under the conditions thus presented we said: “it may be difficult, or even impossible, to classify into recognized categories the nature of the interest of the membership corporation and its members in the land. The corporate entity cannot be disregarded, nor can the separate interests of the members of the corporation” (p. 73). Only blind adherence to an ancient formula devised to meet entirely different conditions could constrain the court to hold that a corporation formed as a medium for the enjoyment of com­mon rights of property owners owns no property which would benefit by enforcement of common rights and has no cause of action in equity to enforce the covenant upon which such common rights depend. Every reason which in other circumstances may justify the ancient formula may be urged in support of the conclusion that the formula should not be applied in this case. In substance if not in form the covenant is a restrictive covenant which touches and concerns the defendant’s land, and in substance, if not in form, there is privity of estate between the plaintiff and the defendant.

We have considered the other contentions of the defendant and especially the defense that the alleged lien based upon the covenant set forth in the complaint constitutes an interest in land and is unenforceable under the provisions of sections 242 and 259 of the Real Prop­erty Law (Cons. Laws, ch. 50). We find the defense insufficient.

The order should be affirmed, with costs, and the certified questions answered in the affirmative. (See 278 N. Y. 704.)

Crane, Ch. J., O’Brien, Loughran, Finch and Rippey, JJ., concur; Hubbs, J., taking no part.

Order affirmed, etc.

          Messrs. George L. Vaughn and Herman Willer, both of St. Louis, Mo., for petitioners Shelley.

          Messrs. Thurgood Marshall, of New York City, Loren Miller, for petitioners McGhee.

          Mr. Gerald L. Seegers, of St. Louis, Mo., for respondents Kraemer.

          Messrs. Henry Gilligan and James A. Crooks, both of Washington, D.C. for respondents Sipes and others.

          Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for the United States, as amicus curiae, by special leave of Court.

           Mr. Chief Justice VINSON delivered the opinion of the Court.

          These cases present for our consideration questions relating to the validity of court enforcement of private agreements, generally described as restrictive covenants, which have as their purpose the exclusion of persons of designated race or color from the ownership or occupancy of real property. Basic constitutional issues of obvious importance have been raised.

          The first of these cases comes to this Court on certiorari to the Supreme Court of Missouri. On February 16, 1911, thirty out of a total of thirty-nine owners of property fronting both sides of Labadie Avenue between Taylor Avenue and Cora Avenue in the city of St. Louis, signed an agreement, which was subsequently recorded, providing in part:

          "* * * the said property is hereby restricted to the use and occupancy for the term of Fifty (50) years from this date, so that it shall be a condition all the time and whether recited and referred to as (sic) not in subsequent conveyances and shall attach to the land, as a condition precedent to the sale of the same, that hereafter no part of said property or any portion thereof shall be, for said term of Fifty-years, occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property for said period of time against the occupancy as owners or tenants of any portion of said property for resident or other purpose by people of the Negro or Mongolian Race."

          The entire district described in the agreement included fifty-seven parcels of land. The thirty owners who signed the agreement held title to forty-seven parcels, including the particular parcel involved in this case. At the time the agreement was signed, five of the parcels in the district were owned by Negroes. One of those had been occupied by Negro families since 1882, nearly thirty years before the restrictive agreement was executed. The trial court found that owners of seven out of nine homes on the south side of Labadie Avenue, within the restricted district and "in the immediate vicinity" of the premises in question, had failed to sign the restrictive agreement in 1911. At the time this action was brought, four of the premises were occupied by Negroes, and had been so occupied for periods ranging from twenty-three to sixty-three years. A fifth parcel had been occupied by Negroes until a year before this suit was instituted.

          On August 11, 1945, pursuant to a contract of sale, petitioners Shelley, who are Negroes, for valuable consideration received from one Fitzgerald a warranty deed to the parcel in question.¹ The trial court found that petitioners had no actual knowledge of the restrictive agreement at the time of the purchase.

          On October 9, 1945, respondents, as owners of other property subject to the terms of the restrictive covenant, brought suit in Circuit Court of the city of St. Louis praying that petitioners Shelley be restrained from taking possession of the property and that judgment be entered divesting title out of petitioners Shelley and revesting title in the immediate grantor or in such other person as the court should direct. The trial court denied the requested relief on the ground that the restrictive agreement, upon which respondents based their action, had never become final and complete because it was the intention of the parties to that agreement that it was not to become effective until signed by all property owners in the district, and signatures of all the owners had never been obtained.

          The Supreme Court of Missouri sitting en banc reversed and directed the trial court to grant the relief for which respondents had prayed. That court held the agreement effective and concluded that enforcement of its provisions violated no rights guaranteed to petitioners by the Federal Constitution.² At the time the court rendered its decision, petitioners were occupying the property in question.

          The second of the cases under consideration comes to this Court from the Supreme Court of Michigan. The circumstances presented do not differ materially from the Missouri case. In June, 1934, one Ferguson and his wife, who then owned the property located in the city of Detroit which is involved in this case, executed a contract providing in part:

          "This property shall not be used or occupied by any person or persons except those of the Caucasian race.

          "It is further agreed that this restriction shall not be effective unless at least eighty percent of the property fronting on both sides of the street in the block where our land is located is subjected to this or a similar restriction."

          The agreement provided that the restrictions were to remain in effect until January 1, 1960. The contract was subsequently recorded; and similar agreements were executed with respect to eighty percent of the lots in the block in which the property in question is situated.

          By deed dated November 30, 1944, petitioners, who were found by the trial court to be Negroes, acquired title to the property and thereupon entered into its occupancy. On January 30, 1945, respondents, as owners of property subject to the terms of the restrictive agreement, brought suit against petitioners in the Circuit Court of Wayne County. After a hearing, the court entered a decree directing petitioners to move from the property within ninety days. Petitioners were further enjoined and restrained from using or occupying the premises in the future. On appeal, the Supreme Court of Michigan affirmed, deciding adversely to petitioners' contentions that they had been denied rights protected by the Fourteenth Amendment.³

          Petitioners have placed primary reliance on their contentions, first raised in the state courts, that judicial enforcement of the restrictive agreements in these cases has violated rights guaranteed to petitioners by the Fourteenth Amendment of the Federal Constitution and Acts of Congress passed pursuant to that Amendment.⁴ Specifically, petitioners urge that they have been denied the equal protection of the laws, deprived of property without due process of law, and have been denied privileges and immunities of citizens of the United States. We pass to a consideration of those issues.

          Whether the equal protection clause of the Fourteenth Amendment inhibits judicial enforcement by state courts of restrictive covenants based on race or color is a question which this Court has not heretofore been called upon to consider. Only two cases have been decided by this Court which in any way have involved the enforcement of such agreements. The first of these was the case of Corrigan v. Buckley, 1926, 271 U.S. 323, 46 S.Ct. 521, 70 L.Ed. 969. There, suit was brought in the courts of the District of Columbia to enjoin a threatened violation of certain restrictive covenants relating to lands situated in the city of Washington. Relief was granted, and the case was brought here on appeal. It is apparent that that case, which had originated in the federal courts and involved the enforcement of covenants on land located in the District of Columbia, could present no issues under the Fourteenth Amendment; for that Amendment by its terms applies only to the States. Nor was the question of the validity of court enforcement of the restrictive covenants under the Fifth Amendment properly before the Court, as the opinion of this Court specifically recognizes.⁵ The only constitutional issue which the appellants had raised in the lower courts, and hence the only constitutional issue before this Court on appeal, was the validity of the covenant agreements as such. This Court concluded that since the inhibitions of the constitutional provisions invoked apply only to governmental action, as contrasted to action of private individuals, there was no showing that the covenants, which were simply agreements between private property owners, were invalid. Accordingly, the appeal was dismissed for want of a substantial question. Nothing in the opinion of this Court, therefore, may properly be regarded as an adjudication on the merits of the constitutional issues presented by these cases, which raise the question of the validity, not of the private agreements as such, but of the judicial enforcement of those agreements.

          The second of the cases involving racial restrictive covenants was Hansberry v. Lee, 1940, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22, 132 A.L.R. 741. In that case, petitioners, white property owners, were enjoined by the state courts from violating the terms of a restrictive agreement. The state Supreme Court had held petitioners bound by an earlier judicial determination, in litigation in which petitioners were not parties, upholding the validity of the restrictive agreement, although, in fact, the agreement had not been signed by the number of owners necessary to make it effective under state law. This Court reversed the judgment of the state Supreme Court upon the ground that petitioners had been denied due process of law in being held estopped to challenge the validity of the agreement on the theory, accepted by the state court, that the earlier litigation, in which petitioners did not participate, was in the nature of a class suit. In arriving at its result, this Court did not reach the issues presented by the cases now under consideration.

          It is well, at the outset, to scrutinize the terms of the restrictive agreements involved in these cases. In the Missouri case, the covenant declares that no part of the affected property shall be (355 Mo. 814, 198 S.W.2d 681) "occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property * * * against the occupancy as owners or tenants of any portion of said property for resident or other purpose by people of the Negro or Mongolian Race." Not only does the restriction seek to proscribe use and occupancy of the affected properties by members of the excluded class, but as construed by the Missouri courts, the agreement requires that title of any person who uses his property in violation of the restriction shall be divested. The restriction of the covenant in the Michigan case seeks to bar occupancy by persons of the excluded class. It provides that (316 Mich. 614, 25 N.W.2d 642) "This property shall not be used or occupied by any person or persons except those of the Caucasian race."

          It should be observed that these covenants do not seek to proscribe any particular use of the affected properties. Use of the properties for residential occupancy, as such, is not forbidden. The restrictions of these agreements, rather, are directed toward a designated class of persons and seek to determine who may and who may not own or make use of the properties for residential purposes. The excluded class is defined wholly in terms of race or color; "simply that and nothing more."⁶

            It cannot be doubted that among the civil rights intended to be protected from discriminatory state action by the Fourteenth Amendment are the rights to acquire, enjoy, own and dispose of property. Equality in the enjoyment of property rights was regarded by the framers of that Amendment as an essential pre-condition to the realization of other basic civil rights and liberties which the Amendment was intended to guarantee.⁷ Thus, § 1978 of the Revised Statutes, derived from § 1 of the Civil Rights Act of 1866 which was enacted by Congress while the Fourteenth Amendment was also under consideration,⁸ provides:

          "All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property."⁹

          This Court has given specific recognition to the same principle. Buchanan v. Warley, 1917, 245 U.S. 60, 38 S.Ct. 16, 62 L.Ed. 149, L.R.A. 1918C, 210, Ann.Cas. 1918A, 1201.

          It is likewise clear that restrictions on the right of occupancy of the sort sought to be created by the private agreements in these cases could not be squared with the requirements of the Fourteenth Amendment if imposed by state statute or local ordinance. We do not understand respondents to urge the contrary. In the case of Buchanan v. Warley, supa, a unanimous Court declared unconstitutional the provisions of a city ordinance which denied to colored persons the right to occupy houses in blocks in which the greater number of houses were occupied by white persons, and imposed similar restrictions on white persons with respect to blocks in which the greater number of houses were occupied by colored persons. During the course of the opinion in that case, this Court stated: "The Fourteenth Amendment and these statutes enacted in furtherance of its purpose operate to qualify and entitle a colored man to acquire property without state legislation discriminating against him solely because of color."¹⁰

          In Harmon v. Tyler, 1927, 273 U.S. 668, 47 S.Ct. 471, 71 L.Ed. 831, a unanimous court, on the authority of Buchanan v. Warley, supra, declared invalid an ordinance which forbade any Negro to establish a home on any property in a white community or any white person to establish a home in a Negro community, "except on the written consent of a majority of the persons of the opposite race inhabiting such community or portion of the City to be affected."

          The precise question before this Court in both the Buchanan and Harmon cases involved the rights of white sellers to dispose of their properties free from restrictions as to potential purchasers based on considerations of race or color. But that such legislation is also offensive to the rights of those desiring to acquire and occupy property and barred on grounds of race or color, is clear, not only from the language of the opinion in Buchanan v. Warley, supra, but from this Court's disposition of the case of City of Richmond v. Deans, 1930, 281 U.S. 704, 50 S.Ct. 407, 74 L.Ed. 1128. There, a Negro, barred from the occupancy of certain property by the terms of an ordinance similar to that in the Buchanan case, sought injunctive relief in the federal courts to enjoin the enforcement of the ordinance on the grounds that its provisions violated the terms of the Fourteenth Amendment. Such relief was granted, and this Court affirmed, finding the citation of Buchanan v. Warley, supra, and Harmon v. Tyler, supra, sufficient to support its judgment.¹¹

          But the present cases, unlike those just discussed, do not involve action by state legislatures or city councils. Here the particular patterns of discrimination and the areas in which the restrictions are to operate, are determined, in the first instance, by the terms of agreements among private individuals. Participation of the State consists in the enforcement of the restrictions so defined. The crucial issue with which we are here confronted is whether this distinction removes these cases from the operation of the prohibitory provisions of the Fourteenth Amendment.

          Since the decision of this Court in the Civil Rights Cases, 1883, 109 U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835, the principle has become firmly embedded in our constitutional law that the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however discriminatory or wrongful.¹²

          We conclude, therefore, that the restrictive agreements standing alone cannot be regarded as a violation of any rights guaranteed to petitioners by the Fourteenth Amendment. So long as the purposes of those agreements are effectuated by voluntary adherence to their terms, it would appear clear that there has been no action by the State and the provisions of the Amendment have not been violated. Cf. Corrigan v. Buckley, supra.

          But here there was more. These are cases in which the purposes of the agreements were secured only by judicial enforcement by state courts of the restrictive terms of the agreements. The respondents urge that judicial enforcement of private agreements does not amount to state action; or, in any event, the participation of the State is so attenuated in character as not to amount to state action within the meaning of the Fourteenth Amendment. Finally, it is suggested, even if the States in these cases may be deemed to have acted in the constitutional sense, their action did not deprive petitioners of rights guaranteed by the Fourteenth Amendment. We move to a consideration of these matters.

          That the action of state courts and of judicial officers in their official capacities is to be regarded as action of the State within the meaning of the Fourteenth Amendment, is a proposition which has long been established by decisions of this Court. That principle was given expression in the earliest cases involving the construction of the terms of the Fourteenth Amendment. Thus, in Commonwealth of Virginia v. Rives, 1880, 100 U.S. 313, 318, 25 L.Ed. 667, this Court stated: "It is doubtless true that a State may act through different agencies,—either by its legislative, its executive, or its judicial authorities; and the prohibitions of the amendment extend to all action of the State denying equal protection of the laws, whether it be action by one of these agencies or by another." In Ex parte Commonwealth of Virginia, 1880, 100 U.S. 339, 347, 25 L.Ed. 676, the Court observed: "A State acts by its legislative, its executive, or its judicial authorities. It can act in no other way." In the Civil Rights Cases, 1883, 109 U.S. 3, 11, 17, 3 S.Ct. 18, 21, 27 L.Ed. 835, this Court pointed out that the Amendment makes void "state action of every kind" which is inconsistent with the guaranties therein contained, and extends to manifestations of "state authority in the shape of laws, customs, or judicial or executive proceedings." Language to like effect is employed no less than eighteen times during the course of that opinion. ¹³

          Similar expressions, giving specific recognition to the fact that judicial action is to be regarded as action on the State for the purposes of the Fourteenth Amendment, are to be found in numerous cases which have been more recently decided. In Twining v. New Jersey, 1908, 211 U.S. 78, 90, 91, 29 S.Ct. 14, 16, 53 L.Ed. 97, the Court said: "The judicial act of the highest court of the state, in authoritatively construing and enforcing its laws, is the act of the state." In Brinkerhoff-Faris Trust & Savings Co. v. Hill, 1930, 281 U.S. 673, 680, 50 S.Ct. 451, 454, 74 L.Ed. 1107, the Court, through Mr. Justice Brandeis, stated: "The federal guaranty of due process extends to state action through its judicial as well as through its legislative, executive, or administrative branch of government." Further examples of such declarations in the opinions of this Court are not lacking.¹⁴

          One of the earliest applications of the prohibitions contained in the Fourteenth Amendment to action of state judicial officials occurred in cases in which Negroes had been excluded from jury service in criminal prosecutions by reason of their race or color. These cases demonstrate, also, the early recognition by this Court that state action in violation of the Amendment's provisions is equally repugnant to the constitutional commands whether directed by state statute or taken by a judicial official in the absence of statute. Thus, in Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664, this Court declared invalid a state statute restricting jury service to white persons as amounting to a denial of the equal protection of the laws to the colored defendant in that case. In the same volume of the reports, the Court in Ex parte Virginia, supra, held that a similar discrimination imposed by the action of a state judge denied rights protected by the Amendment, despite the fact that the language of the state statute relating to jury service contained no such restrictions.

          The action of state courts in imposing penalties or depriving parties of other substantive rights without providing adequate notice and opportunity to defend, has, of course, long been regarded as a denial of the due process of law guaranteed by the Fourteenth Amendment. Brinkerhoff-Faris Trust & Savings Co. v. Hill, supra. Cf. Pennoyer v. Neff, 1878, 95 U.S. 714, 24 L.Ed. 565.¹⁵

          In numerous cases, this Court has reversed criminal convictions in state courts for failure of those courts to provide the essential ingredients of a fair hearing. Thus it has been held that convictions obtained in state courts under the domination of a mob are void. Moore v. Dempsey, 1923, 261 U.S. 86, 43 S.Ct. 265, 67 L.Ed. 543. And see Frank v. Mangum, 1915, 237 U.S. 309, 35 S.Ct. 582, 59 L.Ed. 969. Convictions obtained by coerced confessions,¹⁶ by the use of perjured testimony known by the prosecution to be such,¹⁷ or without the effective assistance of counsel,¹⁸ have also been held to be exertions of state authority in conflict with the fundamental rights protected by the Fourteenth Amendment.

          But the examples of state judicial action which have been held by this Court to violate the Amendment's commands are not restricted to situations in which the judicial proceedings were found in some manner to be procedurally unfair. It has been recognized that the action of state courts in enforcing a substantive common-law rule formulated by those courts, may result in the denial of rights guaranteed by the Fourteenth Amendment, even though the judicial proceedings in such cases may have been in complete accord with the most rigorous conceptions of procedural due process.¹⁹ Thus, in American Federation of Labor v. Swing, 1941, 312 U.S. 321, 61 S.Ct. 568, 85 L.Ed. 855, enforcement by state courts of the common-law policy of the State, which resulted in the restraining of peaceful picketing, was held to be state action of the sort prohibited by the Amendment's guaranties of freedom of discussion. ²⁰ In Cantwell v. Connecticut, 1940, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352, a conviction in a state court of the common-law crime of breach of the peace was, under the circumstances of the case, found to be a violation of the Amendment's commands relating to freedom of religion. In Bridges v. California, 1941, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346, enforcement of the state's common-law rule relating to contempts by publication was held to be state action inconsistent with the prohibitions of the Fourteenth Amendment.²¹ And cf. Chicago, B. & Q.R. Co. v. Chicago, 1897, 166 U.S. 226, 17 S.Ct. 581, 41 L.Ed. 979.

          The short of the matter is that from the time of the adoption of the Fourteenth Amendment until the present, it has been the consistent ruling of this Court that the action of the States to which the Amendment has reference, includes action of state courts and state judicial officials. Although, in construing the terms of the Fourteenth Amendment, differences have from time to time been expressed as to whether particular types of state action may be said to offend the Amendment's prohibitory provisions, it has never been suggested that state court action is immunized from the operation of those provisions simply because the act is that of the judicial branch of the state government.

          Against this background of judicial construction, extending over a period of some three-quarters of a century, we are called upon to consider whether enforcement by state courts of the restrictive agreements in these cases may be deemed to be the acts of those States; and, if so, whether that action has denied these petitioners the equal protection of the laws which the Amendment was intended to insure.

          We have no doubt that there has been state action in these cases in the full and complete sense of the phrase. The undisputed facts disclose that petitioners were willing purchasers of properties upon which they desired to establish homes. The owners of the properties were willing sellers; and contracts of sale were accordingly consummated. It is clear that but for the active intervention of the state courts, supported by the full panoply of state power, petitioners would have been free to occupy the properties in question without restraint.

          These are not cases, as has been suggested, in which the States have merely abstained from action, leaving private individuals free to impose such discriminations as they see fit. Rather, these are cases in which the States have made available to such individuals the full coercive power of government to deny to petitioners, on the grounds of race or color, the enjoyment of property rights in premises which petitioners are willing and financially able to acquire and which the grantors are willing to sell. The difference between judicial enforcement and nonenforcement of the restrictive covenants is the difference to petitioners between being denied rights of property available to other members of the community and being accorded full enjoyment of those rights on an equal footing.

          The enforcement of the restrictive agreements by the state courts in these cases was directed pursuant to the common-law policy of the States as formulated by those courts in earlier decisions.²² In the Missouri case, enforcement of the covenant was directed in the first instance by the highest court of the State after the trial court had determined the agreement to be invalid for want of the requisite number of signatures. In the Michigan case, the order of enforcement by the trial court was affirmed by the highest state court.²³ The judicial action in each case bears the clear and unmistakable imprimatur of the State. We have noted that previous decisions of this Court have established the proposition that judicial action is not immunized from the operation of the Fourteenth Amendment simply because it is taken pursuant to the state's common-law policy.²⁴ Nor is the Amendment ineffective simply because the particular pattern of discrimination, which the State has enforced, was defined initially by the terms of a private agreement. State action, as that phrase is understood for the purposes of the Fourteenth Amendment, refers to exertions of state power in all forms. And when the effect of that action is to deny rights subject to the protection of the Fourteenth Amendment, it is the obligation of this Court to enforce the constitutional commands.

          We hold that in granting judicial enforcement of the restrictive agreements in these cases, the States have denied petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand. We have noted that freedom from discrimination by the States in the enjoyment of property rights was among the basic objectives sought to be effectuated by the framers of the Fourteenth Amendment. That such discrimination has occurred in these cases is clear. Because of the race or color of these petitioners they have been denied rights of ownership or occupancy enjoyed as a matter of course by other citizens of different race or color.²⁵ The Fourteenth Amendment declares "that all persons, whether colored or white, shall stand equal before the laws of the States, and, in regard to the colored race, for whose protection the amendment was primarily designed, that no discrimination shall be made against them by law because of their color."²⁶ Strauder v. West Virginia, supra, 100 U.S. at 307, 25 L.Ed. 664. Only recently this Court has had occasion to declare that a state law which denied equal enjoyment of property rights to a designated class of citizens of specified race and ancestry, was not a legitimate exercise of the state's police power but violated the guaranty of the equal protection of the laws. Oyama v. California, 1948, 332 U.S. 633, 68 S.Ct. 269. Nor may the discriminations imposed by the state courts in these cases be justified as proper exertions of state police power.²⁷ Cf. Buchanan v. Warley, supra.

          Respondents urge, however, that since the state courts stand ready to enforce restrictive covenants excluding white persons from the ownership or occupancy of property covered by such agreements, enforcement of covenants excluding colored persons may not be deemed a denial of equal protection of the laws to the colored persons who are thereby affected.²⁸ This contention does not bear scrutiny. The parties have directed our attention to no case in which a court, state or federal, has been called upon to enforce a covenant excluding members of the white majority from ownership or occupancy of real property on grounds of race or color. But there are more fundamental considerations. The rights created by the first section of the Fourteenth Amendment are, by its terms, guaranteed to the individual. The rights established are personal rights.²⁹ It is, therefore, no answer to these petitioners to say that the courts may also be induced to deny white persons rights of ownership and occupancy on grounds of race or color. Equal protection of the laws is not achieved through indiscriminate imposition of inequalities.

          Nor do we find merit in the suggestion that property owners who are parties to these agreements are denied equal protection of the laws if denied access to the courts to enforce the terms of restrictive covenants and to assert property rights which the state courts have held to be created by such agreements. The Constitution confers upon no individual the right to demand action by the State which results in the denial of equal protection of the laws to other individuals. And it would appear beyond question that the power of the State to create and enforce property interests must be exercised within the boundaries defined by the Fourteenth Amendment. Cf. Marsh v. Alabama, 1946, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265.

          The problem of defining the scope of the restrictions which the Federal Constitution imposes upon exertions of power by the States has given rise to many of the most persistent and fundamental issues which this Court has been called upon to consider. That problem was foremost in the minds of the framers of the Constitution, and since that early day, has arisen in a multitude of forms. The task of determining whether the action of a State offends constitutional provisions is one which may not be undertaken lightly. Where, however, it is clear that the action of the State violates the terms of the fundamental charter, it is the obligation of this Court so to declare.

          The historical context in which the Fourteenth Amendment became a part of the Constitution should not be forgotten. Whatever else the framers sought to achieve, it is clear that the matter of primary concern was the establishment of equality in the enjoyment of basic civil and political rights and the preservation of those rights from discriminatory action on the part of the States based on considerations of race or color. Seventy-five years ago this Court announced that the provisions of the Amendment are to be construed with this fundamental purpose in mind.³⁰ Upon full consideration, we have concluded that in these cases the States have acted to deny petitioners the equal protection of the laws guaranteed by the Fourteenth Amendment. Having so decided, we find it unnecessary to consider whether petitioners have also been deprived of property without due process of law or denied privileges and immunities of citizens of the United States.

          For the reasons stated, the judgment of the Supreme Court of Missouri and the judgment of the Supreme Court of Michigan must be reversed.

          Reversed.

          Mr. Justice REED, Mr. Justice JACKSON, and Mr. Justice RUTLEDGE took no part in the consideration or decision of these cases.

^{1 The trial court found that title to the property which petitioners Shelley sought to purchase was held by one Bishop, a real estate dealer, who placed the property in the name of Josephine Fitzgerald. Bishop, who acted as agent for petitioners in the purchase, concealed the fact of his ownership.}

² Kraemer v. Shelley, 1946, 355 Mo. 814, 198 S.W.2d 679.

³ Sipes v. McGhee, 1947, 316 Mich 614, 25 N.W.2d 638.

⁴ The first section of the Fourteenth Amendment provides: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

⁵ Corrigan v. Buckley, 1926, 271 U.S. 323, 330, 331, 46 S.Ct. 521, 523, 524, 70 L.Ed. 969.

⁶ Buchanan v. Warley, 1917, 245 U.S. 60, 73, 38 S.Ct. 16, 18, 62 L.Ed. 149, L.R.A. 1918C, 210, Ann.Cas. 1918A, 1201.

^7. Slaughter-House Cases, 1873, 16 Wall. 36, 70, 81, 21 L.Ed. 394. See Flack, The Adoption of the Fourteenth Amendment.

⁸ In Oyama v. California, 1948, 332 U.S. 633, 640, 68 S.Ct. 269, 272, the section of the Civil Rights Act herein considered is described as the federal statute, "enacted before the Fourteenth Amendment but vindicated by it." The Civil Rights Act of 1866 was reenacted in § 18 of the Act of May 31, 1870, subsequent to the adoption of the Fourteenth Amendment. 16 Stat. 144.

⁹ 14 Stat. 27, 8 U.S.C. § 42, 8 U.S.C.A. § 42.

¹⁰ Buchanan v. Warley, 1917, 245 U.S. 60, 79, 38 S.Ct. 16, 62 L.Ed. 149, L.R.A. 1918C, 210, Ann.Cas. 1918A, 1201.

¹¹ Courts of Georgia, Maryland, North Carolina, Oklahoma, Texas, and Virginia have also declared similar statutes invalid discussed, do not involve action by state Amendment. Glover v. Atlanta, 1918, 148 Ga. 285, 96 S.E. 562; Jackson v. State, 1918, 132 Md. 311, 103 A. 910; Clinard v. Winston-Salem, 1940, 217 N.C. 119, 6 S.E.2d 867, 126 A.L.R. 634; Allen v. Oklahoma City, 1936, 175 Okl. 421, 52 P.2d 1054; Liberty Annex Corp. v. Dallas, Tex.Civ.App. 1927, 289 S.W. 1067; Irvine v. Clifton Forge, 1918, 124 Va. 781, 97 S.E. 310.

¹² And see United States v. Harris, 1883, 106 U.S. 629, 1 S.Ct. 601, 27 L.Ed. 290; United States v. Cruikshank, 1876, 92 U.S. 542, 23 L.Ed. 588.

¹³ Among the phrases appearing in the opinion are the following: "the operation of state laws, and the action of state officers, executive or judicial"; "state laws and state proceedings"; "state law * * * or some state action through its officers or agents"; "state laws and acts done under state authority"; "state laws or state action of some kind"; "such laws as the states may adopt or enforce"; "such acts and proceedings as the states may commit or take"; "state legislation or action"; "state law or state authority."

¹⁴ Neal v. Delaware, 1881, 103 U.S. 370, 397, 26 L.Ed. 567; Scott v. McNeal, 1894, 154 U.S. 34, 45, 14 S.Ct. 1108, 1112, 38 L.Ed. 896; Chicago , B. & Q.R. Co. v. Chicago, 1897, 166 U.S. 226, 233—235, 17 S.Ct. 581, 583, 584, 41 L.Ed. 979; Hovey v. Elliott, 1897, 167 U.S. 409, 417, 418, 17 S.Ct. 841, 844, 42 L.Ed. 215; Carter v. Texas, 1900, 177 U.S. 442, 447, 20 S.Ct. 687, 689, 44 L.Ed. 839; Martin v. Texas, 1906, 200 U.S. 316, 319, 26 S.Ct. 338, 50 L.Ed. 497; Raymond v. Chicago Union Traction Co., 1907, 207 U.S. 20, 35, 36, 28 S.Ct. 7, 12, 52 L.Ed. 78, 12 Ann.Cas. 757; Home Telephone and Telegraph Co. v. Los Angeles, 1913, 227 U.S. 278, 286, 287, 33 S.Ct. 312, 314, 57 L.Ed. 510; Prudential Ins. Co. v. Cheek, 1922, 259 U.S. 530, 548, 42 S.Ct. 516, 524, 66 L.Ed. 1044, 27 A.L.R. 27; American Ry. Exp. Co. v. Kentucky, 1927, 273 U.S. 269, 274, 47 S.Ct. 353, 355, 71 L.Ed. 639; Mooney v. Holohan, 1935, 294 U.S. 103, 112, 113, 55 S.Ct. 340, 341, 342, 79 L.Ed. 791, 98 A.L.R. 406; Hansberry v. Lee, 1940, 311 U.S. 32, 41, 61 S.Ct. 115, 117, 85 L.Ed. 22, 132 A.L.R. 741.

¹⁵ And see Standard Oil Co. v. Missouri, 1912, 224 U.S. 270, 281, 282, 32 S.Ct. 406, 409, 56 L.Ed. 760, Ann.Cas. 1913D, 936; Hansberry v. Lee, 1940, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22, 132 A.L.R. 741.

¹⁶ Brown v. Mississippi, 1936, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682; Chambers v. Florida, 1940, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; Ashcraft v. Tennessee, 1944, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192; Lee v. Mississippi, 1948, 332 U.S. 742, 68 S.Ct. 300.

¹⁷ See Mooney v. Holohan, 1935, 294 U.S. 103, 55 S.Ct. 340, 79 L.Ed. 791, 98 A.L.R. 406; Pyle v. Kansas, 1942, 317 U.S. 213, 63 S.Ct. 177, 87 L.Ed. 214.

¹⁸ Powell v. Alabama, 1932, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527; Williams v. Kaiser, 1945, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; Tomkins v. Missouri, 1945, 323 U.S. 485, 65 S.Ct. 370, 89 L.Ed. 407; DeMeerleer v. Michigan, 1947 329 U.S. 663, 67 S.Ct. 596.

¹⁹ In applying the rule of Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 144 A.L.R. 1487, it is clear that the common-law rules enunciated by state courts in judicial opinions are to be regarded as a part of the law of the State.

²⁰ And see Bakery Drivers Local v. Wohl, 1942, 315 U.S. 769, 62 S.Ct. 816, 86 L.Ed. 1178; Cafeteria Employees Union v. Angelos, 1943, 320 U.S. 293, 64 S.Ct. 126, 88 L.Ed. 58.

²¹ And see Pennekamp v. Florida, 1946, 328 U.S. 331, 66 S.Ct. 1029, 90 L.Ed. 1295; Craig v. Harney, 1947, 331 U.S. 367, 67 S.Ct. 1249.

²² See Swain v. Maxwell, 1946, 355 Mo. 448, 196 S.W.2d 780; Koehler v. Rowland, 1918, 275 Mo. 573, 205 S.W. 217, 9 A.L.R. 107. See also Parmalee v. Morris, 1922, 218 Mich. 625, 188 N.W. 330, 38 A.L.R. 1180. Cf. Porter v. Barrett, 1925, 233 Mich. 373, 206 N.W. 532, 42 A.L.R. 1267.

²³ Cf. Home Telephone and Telegraph Co. v. Los Angeles, 1913, 227 U.S. 278, 33 S.Ct. 312, 57 L.Ed. 510; Raymond v. Chicago Union Traction Co., 1907, 207 U.S. 20, 28 S.Ct. 7, 52 L.Ed. 78, 12 Ann.Cas. 757.

²⁴ Bridges v. California, 1941, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346; American Federation of Labor v. Swing, 1941, 312 U.S. 321, 61 S.Ct. 568, 85 L.Ed. 855.

²⁵ See Yick Wo v. Hopkins, 1886, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220; Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664; Truax v. Raich, 1915, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283.

²⁶ Restrictive agreements of the sort involved in these case have been used to exclude other than Negroes from the ownership or occupancy of real property. We are informed that such agreements have been directed against Indians, Jews, Chinese, Japanese, Mexicans, Hawaiians, Puerto Ricans, and Filipinos, among others.

²⁷ See Bridges v. California, 1941, 314 U.S. 252, 261, 62 S.Ct. 190, 193, 86 L.Ed. 192, 159 A.L.R. 1346; Cantwell v. Connecticut, 1940, 310 U.S. 296, 307, 308, 60 S.Ct. 900, 905, 84 L.Ed. 1213, 128 A.L.R. 1352.

²⁸ It should be observed that the restrictions relating to residential occupancy contained in ordinances involved in the Buchanan, Harmon and Deans cases, cited supra, and declared by this Court to be inconsistent with the requirements of the Fourteenth Amendment, applied equally to white persons and Negroes.

²⁹ McCabe v. Atchison, Topeka & Santa Fe R. Co., 1914, 235 U.S. 151, 161—162, 35 S.Ct. 69, 71, 59 L.Ed. 169; Missouri ex rel. Gaines v. Canada, 1938, 305 U.S. 337, 59 S.Ct. 232, 83 L.Ed. 208; Oyama v. California, 1948, 332 U.S. 633, 68 S.Ct. 269.

³⁰ Slaughter-House Cases, 1873, 16 Wall 36, 81, 21 L.Ed. 394; Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664. See Flack, The Adoption of the Fourteenth Amendment.

Supreme Court of Delaware.

EL DI, INC., a Delaware corporation, Defendant Below, Appellant, v. The TOWN OF BETHANY BEACH, et al., Plaintiffs Below, Appellees.

Decided: April 24, 1984.

Submitted: Oct. 31, 1983.

Before HERRMANN, C.J., HORSEY, MOORE and CHRISTIE, JJ., and STIFTEL, President Judge, constituting the Court en banc.

James D. Griffin (argued), of Griffin & Hackett, P.A., Georgetown, for defendant below-appellant.

Robert L. Halbrook (argued), of Wilson, Halbrook & Bayard, Georgetown, James B. Tyler, III, Georgetown, Nicholas H. Rodri­guez, of Schmittinger & Rodriguez, Dover, for plaintiffs below-appellees.

HERRMANN, Chief Justice

for the ma­jority:

This is an appeal from a permanent in­junction granted by the Court of Chancery upon the petition of the plaintiffs, The Town of Bethany Beach, et al., prohibiting the defendant, El Di, Inc. (“El Di”) from selling alcoholic beverages at Holiday House, a restaurant in Bethany Beach owned and operated by El Di.

I.

The pertinent facts are as follows:

El Di purchased the Holiday House in 1969. In December 1981, El Di filed an application with the State Alcoholic Bever­age Control Commission (the “Commis­sion”) for a license to sell alcoholic bever­ages at the Holiday House. On April 15, 1982, finding “public need and conve­nience,” the Commission granted the Holi­day House an on-premises license. The sale of alcoholic beverages at Holiday House began within 10 days of the Com­mission’s approval. Plaintiffs subsequent­ly filed suit to permanently enjoin the sale of alcoholic beverages under the license.

On appeal it is undisputed that the chain of title for the Holiday House lot included restrictive covenants prohibiting both the sale of alcoholic beverages on the property and nonresidential construction.* The same restriction was placed on property in Bethany Beach as early as 1900 and 1901 when the area was first under develop­ment.

As originally conceived, Bethany Beach was to be a quiet beach community. The site was selected at the end of the nine­teenth-century by the Christian Missionary Society of Washington, D.C. In 1900, the Bethany Beach Improvement Company (“BBIC”) was formed. The BBIC pur­chased lands, laid out a development and began selling lots. To insure the quiet character of the community, the BBIC placed restrictive covenants on many plots, prohibiting the sale of alcohol and restrict­ing construction to residential cottages. Of the original 180 acre development, how­ever, approximately 1/3 was unrestricted.

The Town of Bethany Beach was official­ly incorporated in 1909. The municipal lim­its consisted of 750 acres including the original BBIC land (hereafter the original or “old-Town”), but expanded far beyond the 180 acre BBIC development. The ex­panded acreage of the newly incorporated Town, combined with the unrestricted plots in the original Town, left only 15 percent of the new Town subject to the restrictive covenants.

Despite the restriction prohibiting com­mercial building (“no other than a dwelling or cottage shall be erected...”), commer­cial development began in the 1920’s on property subject to the covenants. This development included numerous inns, res­taurants, drug stores, a bank, motels, a town hall, shops selling various items in­cluding food, clothing, gifts and novelties and other commercial businesses. Of the 34 commercial buildings presently within the Town limits, 29 are located in the old-­Town originally developed by BBIC. To­day, Bethany Beach has a permanent popu­lation of some 330 residents. In the sum­mer months the population increases to ap­proximately 10,000 people within the corpo­rate limits and to some 48,000 people within a 4 mile radius. In 1952, the Town enacted a zoning ordinance which established a cen­tral commercial district designated C-l lo­cated in the old-Town section. Holiday House is located in this district.

Since El Di purchased Holiday House in 1969, patrons have been permitted to carry their own alcoholic beverages with them into the restaurant to consume with their meals. This “brown-bagging” practice oc­curred at Holiday House prior to El Di’s ownership and at other restaurants in the Town. El Di applied for a license to sell liquor at Holiday House in response to the increased number of customers who were engaging in “brown-bagging” and in the belief that the license would permit restau­rant management to control excessive use of alcohol and use by minors. Prior to the time El Di sought a license, alcoholic bever­ages had been and continue to be readily available for sale at nearby licensed estab­lishments including: one restaurant 1/2 mile outside the Town limits, 3 restaurants with­in a 4 mile radius of the Town, and a package store some 200-300 yards from the Holiday House.

The Trial Court granted a stay pending the outcome of this appeal.

II.

In granting plaintiffs’ motion for a per­manent injunction, the Court of Chancery rejected defendant’s argument that changed conditions in Bethany Beach ren­dered the restrictive covenants unreason­able and therefore unenforceable. Citing Restatement of Property, § 564; Wel­shire, Inc. v. Harbison, Del.Supr., 91 A.2d 404 (1952); and Cruciano v. Ceccarone, Del.Ch., 133 A.2d 911 (1957). The Chan­cery Court found that although the evi­dence showed a considerable growth since 1900 in both population and the number of buildings in Bethany Beach, “the basic na­ture of Bethany Beach as a quiet, family oriented resort has not changed.” The Court also found that there had been devel­opment of commercial activity since 1900, but that this “activity is limited to a small area of Bethany Beach and consists mainly of activities for the convenience and pa­tronage of the residents of Bethany Beach.”

The Trial Court also rejected defendant’s contention that plaintiffs’ acquiescence and abandonment rendered the covenants unen­forceable. In this connection, the Court concluded that the practice of “brown-bag­ging” was not a sale of alcoholic beverages and that, therefore, any failure to enforce the restriction as against the practice did not constitute abandonment or waiver of the restriction.

III.

We find that the Trial Court erred in holding that the change of conditions was insufficient to negate the restrictive cove­nant.

A court will not enforce a restric­tive covenant where a fundamental change has occurred in the intended character of the neighborhood that renders the benefits underlying imposition of the restrictions in­capable of enjoyment. Welshire v. Harbi­son, Del.Supr., 91 A.2d 404 (1952); 1.77 Acres of Land v. State, Del.Supr., 241 A.2d 513 (1968); Williams v. Tsiarkezos, Del.­Ch., 272 A.2d 722 (1970). Review of all the facts and circumstances convinces us that the change, since 1901, in the character of that area of the old-Town section now zoned C-l is so substantial as to justify modification of the deed restriction. We need not determine a change in character of the entire restricted area in order to assess the continued applicability of the covenant to a portion thereof. See Noyes v. McDonnell, Okl.Supr., 398 P.2d 838 (1965); Palmer v. Circle Amusement Co., Ct.App.N.J., 130 N.J.Eq. 356, 22 A.2d 241 (1941).

It is uncontradicted that one of the pur­poses underlying the covenant prohibiting the sale of intoxicating liquors was to main­tain a quiet, residential atmosphere in the restricted area. Each of the additional cov­enants reinforces this objective, including the covenant restricting construction to residential dwellings. The covenants read as a whole evince an intention on the part of the grantor to maintain the residential, seaside character of the community.

But time has not left Bethany Beach the same community its grantors envisioned in 1901. The Town has changed from a church-affiliated residential community to a summer resort visited annually by thou­sands of tourists. Nowhere is the result­ant change in character more evident than in the C-l section of the old-Town. Plain­tiffs argue that this is a relative change only and that there is sufficient evidence to support the Trial Court’s findings that the residential character of the community has been maintained and that the covenants continue to benefit the other lot owners. We cannot agree.

In 1909, the 180 acre restricted old-Town section became part of a 750 acre incorpo­rated municipality. Even prior to the Town’s incorporation, the BBIC deeded out lots free of the restrictive covenants. Af­ter incorporation and partly due to the un­restricted lots deeded out by the BBIC, 85 percent of the land area within the Town was not subject to the restrictions. Signifi­cantly, nonresidential uses quickly ap­peared in the restricted area and today the old-Town section contains almost all of the commercial businesses within the entire Town. Contrast Whitaker v. Holmes, Ariz.Supr., 74 Ariz. 30, 243 P.2d 462 (1952) (original grantors specifically provided for continued vitality of the covenants in the event a Town was later established). Moreover, these commercial uses have gone unchallenged for 82 years. Contrast Humphreys v. Ibach, N.J.Supr., 110 N.J.Eq. 647, 160 A. 531 (1932).

The change in conditions is also re­flected in the Town’s decision in 1952 to zone restricted property, including the lot on which the Holiday House is located, specifically for commercial use. Although a change in zoning is not dispositive as against a private covenant, it is additional evidence of changed community conditions. Bard v. Rose, Cal.Dist.Ct.App., 203 Cal.­App.2d 232, 21 Cal.Rptr. 382, 384 (1962). See Owens v. Camfield, Ark.Ct.App., 1 Ark.App. 295, 614 S.W.2d 698 (1981).

Time has relaxed not only the strict­ly residential character of the area, but the pattern of alcohol use and consumption as well. The practice of “brown-bagging” has continued unchallenged for at least twenty years at commercial establishments located on restricted property in the Town. On appeal, plaintiffs rely on the Trial Court finding that the “brown-bagging” practice is irrelevant as evidence of waiver inas­much as the practice does not involve the sale of intoxicating liquors prohibited by the covenant. We find the “brown-bag­ging” practice evidence of a significant change in conditions in the community since its inception at the turn of the centu­ry. Such consumption of alcohol in public places is now generally tolerated by own­ers of similarly restricted lots. The license issued to the Holiday House establishment permits the El Di management to better control the availability and consumption of intoxicating liquors on its premises. In view of both the ready availability of alco­holic beverages in the area surrounding the Holiday House and the long-tolerated and increasing use of “brown-bagging,” en­forcement of the restrictive covenant at this time would only serve to subvert the public interest in the control of the avail­ability and consumption of alcoholic li­quors.

Plaintiffs contend that the covenant pro­hibiting the sale of intoxicating liquors is separate from the other covenants. In the plaintiffs’ view, the alcohol sale restriction serves a purpose distinct from the prohibi­tion of nonresidential uses. Plaintiffs ar­gue, therefore, that despite evidence of commercial uses, the alcohol sale restric­tion provides a substantial benefit to the other lot owners. We find the cases on which plaintiff relies distinguishable:

In Jameson v. Brown, 109 F.2d 830 (D.C.­Cir.1939), all of the lots were similarly re­stricted and there was no evidence of waiv­er or abandonment of the covenant prohib­iting the sale of spiritous liquors. The court found evidence of one isolated viola­tion—in contrast to the long-tolerated prac­tice of “brown-bagging” in Bethany Beach. Compare Alamogordo Improvement Co. v. Prendergast, N.M.Supr., 45 N.M. 40, 109 P.2d 254 (1940). In Brookside Communi­ty, Inc. v. Williams, Del.Ch., 290 A.2d 678, aff'd, 306 A.2d 711 (1972), the general rule in Delaware is stated as to the effect of a waiver of a separable covenant. The case is distinguishable because here we consider waiver in conjunction with our assessment of the change of conditions in the communi­ty. No such change was alleged or ad­dressed in Williams. In Benner v. Tacony Athletic Ass’n, Pa.Supr., 328 Pa. 577, 196 A. 390 (1938), it was found that commercial encroachments were few and that residen­tial properties still closely surrounded the commercial lots. In Bethany Beach com­mercial uses have not simply crept in, but have been given official sanction through the 1952 Zoning Ordinance.

It is further argued that the commercial uses are restricted to a small area within the old-Town section. But significantly, the section in which Holiday House is locat­ed is entirely commercial. The business uses, the availability of alcohol in close proximity to this section, and the repeated use of “brown-bagging” in the C-l district render the originally intended benefits of the covenants unattainable in what has be­come an area detached in character from the strictly residential surroundings to the west.

In view of the change in conditions in the C-l district of Bethany Beach, we find it unreasonable and inequitable now to enforce the restrictive covenant. To permit unlimited “brown-bagging” but to prohibit licensed sales of alcoholic liquor, under the circumstances of this case, is inconsistent with any reasonable application of the re­striction and contrary to public policy.

We emphasize that our judgment is con­fined to the area of the old-Town section zoned C-l. The restrictions in the neigh­boring residential area are unaffected by the conclusion we reach herein.

Reversed.

*

The restrictive covenant stated:

"This covenant is made expressly subject to and upon the following conditions: viz; That no intoxicating liquors shall ever be sold on the said lot, that no other than dwelling or cottage shall be erected thereon and but one to each lot, which must be of full size according to the said plan, excepting, however, suitable and necessary out or back building, which may be erected on the rear of said lot, and no building or buildings shall be erected thereon within ten feet of the front building line of said lot and, if said lot be a corner lot within ten feet of the building line of the side street on which it abuts, and that all buildings erected or to be erected on said lot shall be kept neatly painted; a breach of which said conditions, or any of them, shall cause said lot to revert to and become again the property of the grantor, his heirs and assigns; and upon such breach of said conditions or restrictions, the same may be restrained or enjoined in equi­ty by the grantor, his heirs or assigns, or by any co-lot owner in said plan or other party injured by such breach.”

CHRISTIE, Justice,

with whom MOORE, Justice, joins, dissenting:

I respectfully disagree with the majority.

I think the evidence supports the conclu­sion of the Chancellor, as finder of fact, that the basic nature of the community of Bethany Beach has not changed in such a way as to invalidate those restrictions which have continued to protect this com­munity through the years as it has grown. Although some of the restrictions have been ignored and a portion of the communi­ty is now used for limited commercial pur­poses, the evidence shows that Bethany Beach remains a quiet, family-oriented re­sort where no liquor is sold. I think the conditions of the community are still con­sistent with the enforcement of a restric­tive covenant forbidding the sale of intoxi­cating beverages.

In my opinion, the toleration of the prac­tice of “brown bagging” does not consti­tute the abandonment of a longstanding restriction against the sale of alcoholic bev­erages. The restriction against sales has, in fact, remained intact for more than eighty years and any violations thereof have been short-lived. The fact that alco­holic beverages may be purchased right outside the town is not inconsistent with my view that the quiet-town atmosphere in this small area has not broken down, and that it can and should be preserved. Those who choose to buy land subject to the re­strictions should be required to continue to abide by the restrictions.

I think the only real beneficiaries of the failure of the courts to enforce the restric­tions would be those who plan to benefit commercially.

I also question the propriety of the is­suance of a liquor license for the sale of liquor on property which is subject to a specific restrictive covenant against such sales.

I think that restrictive covenants play a vital part in the preservation of neighbor­hood schemes all over the State, and that a much more complete breakdown of the neighborhood scheme should be required before a court declares that a restriction has become unenforceable.

I would affirm the Chancellor.