Orange & Rockland Utils. v. Philwold Estates - 52 N.Y.2d 253, 437 N.Y.S.2d 291, 418 N.E.2d 1310 (1981)

Rule:

N.Y. Real Prop. Acts. Law § 1951(2) authorizes a supreme court in any action seeking relief against a restrictive covenant or a declaration with respect to its enforceability to cause its extinguishment if the supreme court shall find that the restriction is of no actual and substantial benefit to the persons seeking its enforcement or seeking a declaration or determination of its enforceability, either because the purpose of the restriction is already accomplished or, by reason of changed conditions or other cause, its purpose is not capable of accomplishment, or for any other reason but requires payment to the party who would otherwise be entitled to enforcement of the covenant of such damages as he will sustain from its extinguishment.

Facts:

A landowner's deed to a grantor contained a restrictive covenant that limited the land's use to a hydroelectric plant. The landowner retained a portion of the land and a right of way onto the grantor's land for hunting and fishing. The grantor conveyed his land to the grantee, a utility company. The grantee brought an action against defendant promisee, seeking to extinguish a deed's restrictive covenant effectively rendering the grantee's land useless. The supreme court dismissed the claim. The Appellate Division of the Supreme Court in the Third Judicial Department (New York) affirmed. The grantee appealed.

Issue:

Under the circumstances, should the restrictive covenant be extinguished? 

Answer:

Yes.

Conclusion:

The court held that the restrictive covenant in plaintiffs' predecessor's deed limiting use of its land to erection of a hydroelectric plant ran with the land as to both benefit and burden. Because that covenant rendered the land wholly useless under present circumstances, plaintiffs were however, entitled to judgment extinguishing the covenant pursuant to section 1951 of the Real Property Actions and Proceedings Law. Damage to the dominant land not having been shown, the judgment of extinguishment properly awarded defendant no damages.