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But even if use of the property violates the restrictive covenant, that covenant cannot be equitably enforced because to do so would contravene a long-standing public policy favoring the establishment of residences for the mentally disabled.
Beginning in 1945, as the Long Island estate of Eversley Childs was divided into residential parcels, each deed within the tract (called Crane Neck Farm) included an identical covenant restricting buildings to "single family dwellings." Respondent agencies, implementing a long-standing State policy to deinstitutionalize retarded persons and place them in community settings, in 1980 leased property within Crane Neck to house and care for eight severely retarded adults. Appellants, Crane Neck property owners, contending that this use violates the restrictive covenant, seek a judgment enforcing the covenant and enjoining continuation of the lease. Special Term granted Crane Neck property owners partial summary judgment, concluding that the State facility was not a single-family dwelling and therefore violated the covenant, yet finding that there were fact issues as to whether the restrictions of the covenant had been waived by past violations and whether the character of the neighborhood had so changed as to render the covenant unenforceable in equity. The Appellate Division reversed and dismissed the complaint, determining that the facility could be considered a single-family dwelling consistent within the restrictive covenant, and that in any event the covenant could not be enforced to prevent the residence as a matter of public policy.
Should the use of the leased premises be enjoined by equitable enforcement of the restrictive covenant in the lessors' deed?
The court affirmed the reversal of partial summary judgment for the Crane Neck property owners and granted summary judgment for the defendant holding that while N.Y. Mental Hyg. Law §41.34 (f) declares such facilities to be a family unit, it would not apply to a restrictive covenant. However, the court further held that the public policy considerations behind the statute were such that enforcement of the covenant would be a violation of public policy, and the policy was paramount to concerns that the establishment of the facility would be in violation of U.S. Const. art. I §10. The state could impair a contract to further an important public purpose, and the measures taken that impaired the contract were reasonable and appropriate to effectuate that purpose.