Reservation of interest for a third party to a conveyance when honouring the intentions of the vendor was at one point impossible, however in this matter the court broke with tradition for the sake of modernity and allowed the claim to stand.
In 1972, litigation commenced when a somewhat unconventional conveyance was initiated by parties not entirely privy to its completion. This began when the part owners of conjoined plots decided to sell their property along with the adjoining vacant plot, despite having title only to their home, while the second plot was itself used by a local church adjacent to the site for parking purposes under express permission by the landowner.
At the point of sale, the vendor approached the landowner and explained that a joint sale was under offer, and that with her permission, the two parties would stand to profit at the price suggested. Having considered the opportunity, the owner requested that an easement be inserted into the deeds for the second plot, after which the sale went through as hoped.
Unfortunately for one reason or another, the purchaser and now respondent was unaware that the easement existed, and so now sought quiet title to the plot, whereupon the district court upheld the claim on grounds that under common law, a grantor cannot reserve interest to a stranger to a title, and therefore the easement was unlawful and void, as was also expressed in ‘The Law of Real Property’ (1939) and ‘Reservations in Favor of Strangers’ (1953) both of which stated how while a reservation allowed a grantor’s whole interest to pass to a grantee, it reverted a newly created interest in the grantor, but not to a theoretical third party to the disposition.
Presented in the Supreme Court of California, the appellant Church argued that under art.5 s.1085(a) of the California Civil Code, interest to a disposition of property was assignable to persons not named in the deed, however the Court held that as the appellants were a corporation and not individual entities, the statute could not reasonably apply.
Instead, the Court referred to both Townsend v. Cable and Garza v. Grayson, within which the Supreme Courts of Kentucky and Oregon had abandoned the existing common law rule in favour of following the wishes of the grantor, a position subsequently adopted by the Court as a show of indifference to the now outdated and restrictive approach to property conveyance.
It was then argued by the respondents that the easement was invalid as the property insurers had not relied upon it when drafting their policies, however there was no evidence to support such a claim and so the Court held that a balance must be struck between the want of policy and the equitable nature of the claim, which on this occasion fell in favour of the needs of the grantor, despite the limitations of the statute presented. It was thus for this reason that the Court upheld the appeal and reversed the previous judgment.