Easements and the 'Stranger to the Deed' Rule

In Cerniglia v. Church of the Holy Name of Mary, decided on April 20, the Second Department confronted an argument about the scope of New York's “stranger to the deed” rule. That rule, whose origins date back at least to the 19th century, holds that a deed to land may not create an interest in the deeded land in favor of a person not party to the deed. Although the Second Department held that the rule did not apply in Cerniglia, the court's opinion raises a more basic question: Why not abandon the rule altogether?

The New York Rule

Although the origins of the stranger to the deed rule are unclear, the Court of Appeals cited the rule as far back as 1854, and applied it to bar a claim that a deed had created a covenant in favor of a person not party to the deed. Craig v. Wells, 11 NY 315. In 1915, that court applied the rule to bar a son from claiming an easement reserved in his favor by his mother when the mother transferred the burdened land to a third party. Tuscarora Club of Millbrook v. Brown, 215 NY 543. In neither case did the court explain why a grantor should not be able to create an easement in favor of a third party. Perhaps the rule made some sense before the advent of recording acts, because permitting a grantor to create interests in strangers might make it difficult for subsequent purchasers to locate the “strangers” who held interests in their land. But once deeds became a matter of public record, a purchaser would face no significant difficulty in locating the holder of an appurtenant easement, whether or not the party was a “stranger” to the deed creating the purported easement. Nevertheless, as recently as 1987, the Court of Appeals reaffirmed the traditional rule. Estate of Thompson v. Wade, 69 NY2d 570.

In Estate of Thompson, the court conceded that the traditional rule “may, at times, frustrate a grantor's intent,” and noted that a number of states had abandoned the rule. Moreover, the court offered no rationale for the rule. But the court gave two reasons for reaffirming the rule. First, the court cited the overriding consideration of public policy favoring certainty of title in real property. Second, the court noted that the rule can “readily be avoided by the direct conveyance of an easement of record from the grantor to the third party.” Both reasons, however, lack force.

The rule promotes certainty only by instructing parties that they can safely ignore language in properly recorded deeds ' language that creates easement interests in third parties. But if the language can be found in an ordinary title search, why does a rule giving the language no effect create more certainty than a rule informing purchasers that deeds mean what they say? As to the ease with which a grantor can avoid the rule, the court is absolutely right that grantors counseled by careful and knowledgeable lawyers can and will achieve their objectives despite the rule, but what happens when a lawyer makes a mistake? Should the client's wishes be frustrated because his lawyer did not understand a counterintuitive legal rule? Cerniglia illustrates how easy it would be for the rule, if applied broadly, to frustrate the intent of the parties, for no apparent reason.

The Cerniglia Case

In Cerniglia, Senior conveyed ' or thought he had conveyed ' both the burdened land and the benefited land to MacMurtrie. Unbeknown to both parties, however, the property description in the 1918 deed omitted the benefitted land. In 1965, MacMurtie's children, who had inherited the land from him upon his death in 1958, conveyed the burdened parcel subject to a 50-foot-wide right of way for the benefit of the children, their heirs, and assigns. According to the stranger to the deed rule, this easement could not inure to the benefit of the benefitted land if the MacMurtrie children did not own that land; the owner would be a “stranger to the deed.” Subsequently, the MacMurtrie children brought a quiet title action in which Supreme Court determined that MacMurtrie and his children had acquired title to the benefitted land by adverse possession, and the MacMurtries then conveyed the benefitted parcel to the church, which now intends to build a driveway along the right of way. The owners of the burdened land sought to enjoin use of the right of way, contending that the easement was void under the stranger to the deed rule.

The Second Department held the stranger to the deed rule inapplicable because at the time the children executed the 1965 deed, they had acquired title to the benefitted land by adverse possession; they were not, therefore, strangers to the deed. But suppose MacMurtrie himself had conveyed the burdened land, in 1925, reserving a right of way. Assume further that he had not yet discovered the mistake in his deed and had not yet acquired title to the benefitted land by adverse possession. If, upon discovering the mistake, he had approached Senior, his seller, to obtain a new deed, and if Senior had obliged, the stranger to the deed rule would have left MacMurtrie owning the benefitted land, but with no way to salvage the easement other than to buy it from the purchaser of the burdened land ' who had already paid a price reflecting his understanding that the land was subject to the easement.

An Exception to the Rule

Although Estate of Thompson refused to abandon the stranger to the deed rule, the court did not acknowledge the tension between the rule and the court's own treatment of restrictive covenants. Long before deciding Estate of Thompson, the court had held that when a grantor imposes a restrictive covenant for the benefit of a neighbor, the neighbor may enforce the covenant as a third-party beneficiary. Vogeler v. Alwyn Improvement Corp., 247 NY 131. That is, the stranger to the deed rule apparently does not apply to restrictive covenants. Yet in Estate of Thompson, the court never mentioned Vogeler ' despite the fact that more than 100 years earlier, in Craig v. Wells, supra, the court itself had suggested that a rule permitting enforcement of covenants in favor of a stranger would not be “in harmony” with a rule prohibiting creation of other interests in favor of strangers! Since Estate of Thompson, at least one Appellate Division has concluded that Vogeler remains good law, and that a grantor can create a restrictive covenant enforceable by a third party. See Nature Conservancy v. Congel, 253 AD2d 248.

Conclusion

Fortunately, in Cerniglia, the Appellate Division found a sound a basis for avoiding the stranger to the deed rule. But for those cases that don't present such a basis, it is time to abandon the rule.

Stewart E. Sterk, Mack Professor of Law at Benjamin N. Cardozo School
of Law, is Editor-in-Chief of this newsletter.

In Cerniglia v. Church of the Holy Name of Mary, decided on April 20, the Second Department confronted an argument about the scope of New York's “stranger to the deed” rule. That rule, whose origins date back at least to the 19th century, holds that a deed to land may not create an interest in the deeded land in favor of a person not party to the deed. Although the Second Department held that the rule did not apply in Cerniglia, the court's opinion raises a more basic question: Why not abandon the rule altogether?

The New York Rule

Although the origins of the stranger to the deed rule are unclear, the Court of Appeals cited the rule as far back as 1854, and applied it to bar a claim that a deed had created a covenant in favor of a person not party to the deed. Craig v. Wells , 11 NY 315. In 1915, that court applied the rule to bar a son from claiming an easement reserved in his favor by his mother when the mother transferred the burdened land to a third party. Tuscarora Club of Millbrook v. Brown , 215 NY 543. In neither case did the court explain why a grantor should not be able to create an easement in favor of a third party. Perhaps the rule made some sense before the advent of recording acts, because permitting a grantor to create interests in strangers might make it difficult for subsequent purchasers to locate the “strangers” who held interests in their land. But once deeds became a matter of public record, a purchaser would face no significant difficulty in locating the holder of an appurtenant easement, whether or not the party was a “stranger” to the deed creating the purported easement. Nevertheless, as recently as 1987, the Court of Appeals reaffirmed the traditional rule. E state of Thompson v. Wade , 69 NY2d 570.

In Estate of Thompson, the court conceded that the traditional rule “may, at times, frustrate a grantor's intent,” and noted that a number of states had abandoned the rule. Moreover, the court offered no rationale for the rule. But the court gave two reasons for reaffirming the rule. First, the court cited the overriding consideration of public policy favoring certainty of title in real property. Second, the court noted that the rule can “readily be avoided by the direct conveyance of an easement of record from the grantor to the third party.” Both reasons, however, lack force.

The rule promotes certainty only by instructing parties that they can safely ignore language in properly recorded deeds ' language that creates easement interests in third parties. But if the language can be found in an ordinary title search, why does a rule giving the language no effect create more certainty than a rule informing purchasers that deeds mean what they say? As to the ease with which a grantor can avoid the rule, the court is absolutely right that grantors counseled by careful and knowledgeable lawyers can and will achieve their objectives despite the rule, but what happens when a lawyer makes a mistake? Should the client's wishes be frustrated because his lawyer did not understand a counterintuitive legal rule? Cerniglia illustrates how easy it would be for the rule, if applied broadly, to frustrate the intent of the parties, for no apparent reason.

The Cerniglia Case

In Cerniglia, Senior conveyed ' or thought he had conveyed ' both the burdened land and the benefited land to MacMurtrie. Unbeknown to both parties, however, the property description in the 1918 deed omitted the benefitted land. In 1965, MacMurtie's children, who had inherited the land from him upon his death in 1958, conveyed the burdened parcel subject to a 50-foot-wide right of way for the benefit of the children, their heirs, and assigns. According to the stranger to the deed rule, this easement could not inure to the benefit of the benefitted land if the MacMurtrie children did not own that land; the owner would be a “stranger to the deed.” Subsequently, the MacMurtrie children brought a quiet title action in which Supreme Court determined that MacMurtrie and his children had acquired title to the benefitted land by adverse possession, and the MacMurtries then conveyed the benefitted parcel to the church, which now intends to build a driveway along the right of way. The owners of the burdened land sought to enjoin use of the right of way, contending that the easement was void under the stranger to the deed rule.

The Second Department held the stranger to the deed rule inapplicable because at the time the children executed the 1965 deed, they had acquired title to the benefitted land by adverse possession; they were not, therefore, strangers to the deed. But suppose MacMurtrie himself had conveyed the burdened land, in 1925, reserving a right of way. Assume further that he had not yet discovered the mistake in his deed and had not yet acquired title to the benefitted land by adverse possession. If, upon discovering the mistake, he had approached Senior, his seller, to obtain a new deed, and if Senior had obliged, the stranger to the deed rule would have left MacMurtrie owning the benefitted land, but with no way to salvage the easement other than to buy it from the purchaser of the burdened land ' who had already paid a price reflecting his understanding that the land was subject to the easement.

An Exception to the Rule

Although Estate of Thompson refused to abandon the stranger to the deed rule, the court did not acknowledge the tension between the rule and the court's own treatment of restrictive covenants. Long before deciding Estate of Thompson, the court had held that when a grantor imposes a restrictive covenant for the benefit of a neighbor, the neighbor may enforce the covenant as a third-party beneficiary. Vogeler v. Alwyn Improvement Corp. , 247 NY 131. That is, the stranger to the deed rule apparently does not apply to restrictive covenants. Yet in Estate of Thompson, the court never mentioned Vogeler ' despite the fact that more than 100 years earlier, in Craig v. Wells, supra, the court itself had suggested that a rule permitting enforcement of covenants in favor of a stranger would not be “in harmony” with a rule prohibiting creation of other interests in favor of strangers! Since Estate of Thompson, at least one Appellate Division has concluded that Vogeler remains good law, and that a grantor can create a restrictive covenant enforceable by a third party. See Nature Conservancy v. Congel , 253 AD2d 248.

Conclusion

Fortunately, in Cerniglia, the Appellate Division found a sound a basis for avoiding the stranger to the deed rule. But for those cases that don't present such a basis, it is time to abandon the rule.

Stewart E. Sterk, Mack Professor of Law at Benjamin N. Cardozo School
of Law, is Editor-in-Chief of this newsletter.