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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Keppell v Bailey  EWHC Ch J77 (29 January 1834)
Cite as:  EWHC Ch J77, 39 ER 1042, (1834) 2 My & K 517
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(1834) 2 My & K 517; 39 ER 1042
In the year 1792 an Act of Parliament (32 G. 3, c. 102) was passed, whereby certain persons therein named were incorporated under the name of the Company of Proprietors of the Monmouthshire Canal Navigation, and were empowered to make several navigable canals, railways, waggonways, and roads, within the district, and in the manner, and subject to the regulations and conditions therein particularly stated and described; and the company were authorised to charge for the conveyance of different kinds of minerals, goods, and merchandise, respectively, along the line of their canals and railways, sums not exceeding a certain scale of tolls specified in the Act. According to that scale it was provided that for all ironstone, iron ore, coal, charcoal, lime, and for all tiles, bricks, limestone, flagstones, and other stone conveyed. upon the said canals or railways, a sum not exceeding 2 ½ d per ton per mile should be charged; and for all hay, straw, and corn in the straw, and for all materials used in repairing the roads, or for manure, a sum not exceeding 1 ½ d. per ton per mile; and for all other articles not before specified, a sum not exceeding 5d. per ton. per mile.
The Act also contained a provision, in the 108th section, whereby, as soon as the company of proprietors were enabled, out of their clear profits, to make a dividend of £10 per cent. among the shareholders upon the capital contributed, certain commissioners were empowered to reduce the rates chargeable for the conveyance of minerals and goods along the company's canals and railways, according to their discretion.
By the 128th section of the Act (commonly known by the name of the eight-mile clause), it was enacted that, if the owners of any lands containing mines, minerals, or quarries, or the proprietors, lessees, or occupiers of any iron furnaces lying within the distance of eight miles from any part of the said canals or railways, should find it necessary that any railways or roads should be made over the lands of any other persons for the purpose of conveying the produce of their mines or quarries to, the canals or railways of the company, and if the company should refuse to make any such railway or road for the space of three months after an application had been made to them, in writing, for that purpose, at a general meeting of the proprietors then and as often as such case might happen, the persons who had made such application might, at their own expense, after the expiration of the three months, without the consent of the owners of the lands, make such railways or roads, tendering satisfaction for the damage which might be thereby occasioned to the lands, such damage to be ascertained in the manner therein mentioned; and all such railways or roads, when completed, were to be open to the public for the conveyance of any minerals and goods, on payment to the persons at whose expense the railways or roads had been made, and their heirs or assigns, of such tolls, rates, or duties as should, for the time being, be payable to the Monmouthshire Canal Navigation Company for the conveyance of such minerals and goods upon the railways to be made by them.
The canal company was further empowered by the 129th section of the Act, in cases where persons might thereafter be desirous to have a railway or waggonway constructed for their use, communicating with the main line of the company's canals and railways, to enter into an agreement with such persons, and at their request to construct railways and waggonways accordingly, and to take and demand for the conveyance of ironstone, iron ore, lime, limestone, and other goods and merchandize thereupon, such tolls as should be mutually agreed upon, not exceeding the rate of 5d. per ton per mile.
In the year 1795, the proprietors or lessees of three several furnaces and ironworks, viz., William Barrow and Matthew Monkhouse, of the Sorwy or Sirhowy Furnace, Edward Kendall and Jonathan Kendall, of the Beaufort Ironworks, and James Harford and Jeremiah Homfray, of the Ebbw Vale Ironworks, in conjunction with a number of other persons, formed themselves into a joint stock company, for the construction of a railroad called the Trevil Railroad, under the powers given by the 128th section of the Monmouthshire Canal Act. The railroad was accordingly constructed, and the legal estate in it was vested, by a demise for a term of 2000 years, in certain trustees, upon trust for the several shareholders in the railway company, in the proportions to which these had respectively contributed towards the expense of the undertaking.
A body of rules and regulations was, at the same time, framed for the government, of the shareholders of the railroad as a company; and by an indenture, dated the: 16th of August 1795, which was executed by the proprietors of the aforesaid furnaces and ironworks, and by the other subscribers, and in which all these regulations were embodied, it was witnessed that each of the parties thereto, for himself, his heirs, executors, administrators, and assigns, covenanted with the others of them, and their and his executors, administrators, and assigns, mutually and reciprocally, that they, or their respective executors, administrators, or assigns, would remain co-partners and proprietors of the Trevil Railroad, and the profits to be divided therefrom, during the continuance of the demise which they had obtained, subject to the conditions and. regulations therein specified. The indenture went on to declare that the railroad and the profits thereof should be divided into fifty-five shares, which should be vestedi in the parties thereto and their respective executors, administrators, and assigns, for their respective use and benefit, in proportion to the sums of money subscribed by them respectively; and it then specified the number and particulars of the shares allotted to the several subscribers, of which shares the five respectively numbered from 7 to 11 inclusive were stated to belong to Edward Kendall and Jonathan Kendall, their executors, administrators, and assigns, as joint-tenants.
The indenture proceeded to recite, that the proprietors of the iron furnaces, parties thereto, necessarily made use of great quantities of limestone in their furnaces, which for a long time past they had procured from a quarry called the Trevil Quarry, and carried to their furnaces at a great expense, for the more convenient carriage of which the Trevil Railroad was chiefly intended, and that it was in consideration of the quantity of limestone which would be carried upon the said railroad for the use of the furnaces, and of the quantity of ironstone which would also be carried upon the railroad, that the other parties became subscribers to the undertaking; and that at the time of the subscription, it was understood that the said proprietors of the furnaces would respectively. enter into an engagement to procure all the limestone which they might want from the said Trevil Quarry and convey it along the said Trevil Railroad, and also pay to the proprietors of the railroad a toll of 5d. per ton per mile for all such limestone, as well as for all ironstone, and for all other goods, except stone for building, which was to pay a toll of 1 ½ d. per ton per mile; and that it was also understood that the said proprietors of the furnaces should respectively engage to carry upon such part of the railroad as should lie between their mines and their furnaces, all such ironstone as they should have occasion to convey to their respective furnaces; and thereupon, as regarded Edward Kendall and Jonathan Kendall, who were the proprietors of the furnace called the Beaufort Ironworks, it was witnessed that they, the said Edward Kendall and Jonathan Kendall, in consideration of all and singular the premises, did thereby, for themselves, their heirs, executors, administrators, and assigns, jointly and severally covenant and agree with all the other parties thereto, and their executors, administrators, and assigns, that they the said Jonathan Kendall and Edward Kendall, their executors, administrators, or assigns, should from time to time, and at all times thereafter whilst they or any of them should be proprietors or lessees or occupiers of the said furnace and works, called the Beaufort Ironworks, procure all the limestone which should be wanted for the use of the said ironworks, or for any new furnace and works thereafter to be erected by them, near the same, from the quarry called Trevil Quarry, and should cause all such limestone to be carried from the said quarry to the said ironworks along or upon the Trevil Railroad, and should also cause all the ironstone or mine which they should have occasion to convey from their mine works to their furnace called the Beaufort Ironworks, or to such new furnace, to be carried along such part of the railroad as should lie between such mine works and the furnaces; and also should pay, or cause to be paid to the collectors to be appointed by the proprietors of the railroad for the time being to receive the tolls for the conveyance of goods thereon, a toll of 5d. per ton per mile, for all limestone, ironstone, or mine, goods, wares, merchandises, and commodities whatever, except stone for building, and a toll of 1 ½ d. per ton per mile for all stone for building, belonging to them the said Edward Kendall and Jonathan Kendall, their executors, administrators, or assigns, or any of them, which should be carried or conveyed upon the railroad, or any part thereof, and so in proportion for any greater or less quantity than a ton. The indenture also contained covenants on the part of Messrs. Barrow & Monkhouse, and Messrs. Harford & Humfray, with reference to their respective ironworks, similar in point of form to the covenant entered into by the Kendalls.
Edward Kendall and Jonathan Kendall held the Beaufort Ironworks by a lease for a long term of years from the Duke of Beaufort. The Trevil Quarry was also the property of the Duke of Beaufort, who was in the habit of permitting such of the neighbouring ironmasters as held their works under demises from himself, and among the rest the Kendalls, to procure from it an unlimited supply of the limestone required for the use of their respective furnaces.
The Trevil Railroad was completed soon after the date of the before-stated -indenture, and subject to changes occasioned by the deaths of shareholders, sales of shares, and other contingencies, continued to be carried on and managed in pursuance -of the regulations set forth in that indenture.
Edward Kendall died in the year 1807, and Jonathan Kendall in the year 1812. In consequence of the decease of the Kendalls, the deaths of succeeding, partners, and other circumstances, changes from time to time took place in the proprietorship of the Beaufort Ironworks, between the years 1795 and 1821. In the last-mentioned year the works became the partnership property of Edward Kendall, the son of Edward Kendall, deceased, William Henry West, and William Hibbs Bevan, who in January 1833 contracted with Joseph Bailey and Crawshay Bailey, to sell to them all their interest in the  Beaufort Ironworks for the residue of the term of years forwhich the works were demised, giving them full notice of the liabilities to which they were subject under the indenture of August 1795. Messrs. Bailey paid part of the purchase-money in pursuance of this contract, and entered into possession of the premises at Lady-day 1833, before any conveyance or assignment was executed; and shortly afterwards they commenced the formation of a new railroad from the Beaufort Ironworks to certain other lime quarries, situate to the eastward of the Trevil Quarry.
The present bill was filed by the shareholders of the Trevil Railroad, and it prayed an injunction to restrain Messrs. Bailey and their agents from using this new railroad, or any other railroad, except the Trevil Railroad, agreeably to the stipulations contained in the indenture of August 1795. An ex parte injunction having been accordingly obtained in the month of August last, a motion was now made, upon affidavits, that the injunction might be dissolved.
Mr. Pepys, Mr. Jacob, and Mr. Humphry, for the motion.
Sir E. Sugden, Mr. Knight, and Mr. Lynch, in support of the injunction.
The case was very elaborately argued on both sides. The principal points raised and contested in the course of the argument, and the authorities referred to as bearing upon them respectively, were the following: First, whether the word "assigns" used in the covenant of the Kendalls applied to the assigns of the Beaufort Ironworks, or only to their assigns of the railroad shares. Secondly, whether the Plaintiff's remedy, if any, was not more properly by an action at law for damages, or by a simple bill in equity for an account, without insisting upon a compulsory performance of the covenant (Flint v. Brandon, 8 Ves., 159; Barret v. Blagrace, 5 Ves., 555). Thirdly, whether the contract, either as it stood originally, or as it had subsequently, from the change of circumstances become, was not of so unfair and oppressive a character that it would not be be equitable to enforce it by injunction (Smith v. Fromont, 2 Swan., 330; Collins v. Plumb, 16 Ves., 454; The Duke of Bedford v. The Trustees of the British Museum, 2 My. & K., 552). Fourthly, whether the contract was not ineffectual, if not at law, at all events in equity, upon grounds of public policy, and by reason of its operating injuriously in restraint of trade (Mitchel v. Reynolds, 1 P. Wms., 181; Young v. Timmins, 1 Crom. & Jer., 331;. Cruttwell v. Lye, 17 Ves., 335; Jones v. Edney, 3 Camp., 285; Cooper v. Twibill,. 3 Camp., 286, n.; Holcombe v. Hewson, 2 Camp., 391; Doe v. Reid, 10 B. & Cress., 849; Morris v. Colman, 18 Ves., 437; Williams v. Williams, 2 Swan., 253). Fifthly, whether covenants like the one in question, inasmuch as they created upon the property a burthen which tended to a perpetuity, and placed land in a great measure extra commercium, were deserving of encouragement or assistance in this Court: Third Report of the Real Property Commissioners (p. 54). Sixthly, whether the provision, securing to the shareholders in the railroad a toll of 5d. a ton per mile upon the minerals conveyed, being double the toll permitted to be charged upon the railways belonging to the canal company, was not a violation of the letter and spirit of the Canal Act and a fraud upon the Legislature, the canal company, and the public, and therefore not to be enforced by injunction. Seventhly, whether the covenant entered into by the Kendalls did or did not run with the land, so that an action could be maintained upon it against their assigns (Spencer's case, 5 Rep., 16 a.; Anonymous, Godb., 120; S. C. Moore, 243; Bally v. Wells, 3 Serjt. Wils., 25; Mayor of Congleton v. Pattison, 10 East, 130; Collins v. Plumb, 16 Ves., 454; Canham v. Rust, 8 Taunt., 227; Hartley v. Pehall, 1 Peake's N. P. C., 131; The Duke of Bedford v. The Trustees of the British Museum, 2 My. & K., 552; the Cases an Brewers' Leases, already cited; Vycyan v. Arthur, 1 B. and Cress., 410; Uxbridge v. Staveland, 1 Ves., sen., 56;. Case of the Manchester Mills, 1 Dougl., 222, n.; Holmes v. Buckley, P. Ch., 39; Brewer v. Hill, 2 Anst., 413.; Jourdain v. Wilson, 4 B. & Ald., 266; Vernon v. Smith, 5 B. & Ald., 1; Samson v. Easterby, 9 B. & Cress., 505; S. C. (in error) 6 Bing., 644; Barclay v. Raine, 1 S. & S., 449). Eighthly, whether, assuming the covenant to be inoperative at law as against assigns, it might not still be held effectual here, on the ground that the notice which, prior to their purchase, the Defendants had received of the existence and nature of the covenant, imposed an obligation which bound them in conscience, and which a Court of Equity would not suffer them to violate (Case of the Steyne at Brighton, unreported; Furnical v. Crewe, 3 Atk., 83; Treatise of Equity, B. I. ch. 5, s. 4; City of London v. Richmond, P. Ch., 156; S. C. 2 Vern., 421; and on appeal, 1 Bro. P. C., 516, Toml. ed.; Collins v. Plumb, 16 Ves., 454; Third Report of the Real Property Commissioners; Barclay v. Raine, 1 S. & S., 449).
Jan. 29. THE LORD CHANCELLOR [Brougham]. This case was argued with much learning on both sides, and was presented to the Court in every view that could be taken of the various points raised. Into the whole of the matters discussed at the bar it will not be necessary to enter. But I shall advert to some of them beyond -those upon which the decision turns, on account of their intrinsic importance.
I am not greatly struck, notwithstanding the ability with which it was pressed, with the argument against the covenant in question derived from its supposed repugnance to the rules respecting perpetuity. I do not at all doubt that the enjoyment of property may be tied up and an illegal perpetuity created by annexing conditions to grants, or by executing covenants, whereby whoever happens to be in possession shall be restrained from using that which is the subject of the grant or covenant in all but a certain prescribed way, provided always that the restraint so constituted is not reserved in favour of some other party, who may release it at his pleasure; and, therefore, all such conditions and covenants are void if they go beyond the period allowed by law. But if the party for whom the condition is made, or the party covenantee has the entire power of dealing with his interest in the subject matter, it is an obvious mistake to treat this as an instance of perpetuity or of any tendency towards perpetuity. Indeed the property, the subject-matter of consideration here, is not the estate fettered by the condition or covenant, but the benefit reserved by the condition, or secured by the covenant; and upon that there is, by the hypothesis, no restraint at all; and, certainly, to take another view, though one of the parties interested, the owner of the property subject to the covenant or condition, may be fast, the other is loose; and so quoad both taken together, that is, quoad all interested, the property is free. Thus admitting that the owners of an estate could no more be restrained perpetually from cultivating it by supplies derived from any but one market, or from selling its produce at any but that market, than they could be restrained from selling the estate, and admitting that the one would be as much a breach of the rule against perpetuity as the other, it would be no such violation, nor would it in any way defraud that rule if the owner of the estate were restrained from buying and selling at any market save that belonging to a certain party entitled by grant or by covenant to the privilege, and which he might, at his pleasure, vary or extinguish.
Upon other grounds, such a restraint may be objectionable and void in law, as well as bad in policy; but certainly not upon the doctrine of perpetuity, by which it is no more struck at than a right of way or other easement which the owners of one estate may enjoy over the close of another. Such easement continues to be enjoyed by the owner of the one estate, whoever he may be, over the other estate, into whose hands soever it may come. So of a rent issuing out of an estate, and which may nearly absorb its profits, no one ever deemed this objectionable on the ground of perpetuity. The easement and the rent are the [property in question, and they are free. The party entitled to the tenements is interested in the tenements subject to the easement or yielding the rent; the other party has the incorporeal hereditaments connected with the corporeal hereditament of the lands; and the circumstances, of the land being subject to his rights, while he is unfettered in the enjoyment and the disposal of those rights, does not either constitute or tend to a perpetuity. I am, therefore, clearly of opinion that the covenant to take the lime at the Trevil works, And carry the iron by the Trevil railway, is not bad on the ground of its tending to a perpetuity or constituting a shift, whereby the rules of law on that head may be evaded.
There appears, at first, to be more weight in the objection which was also urged that covenants of this description are in restraint of trade. The covenant here is not contended to be in general restraint of trade, which would, beyond all doubt, make it void in whatever way the purpose was effected-whether by promise or bond, with or without consideration. The restraint is only partial; and then the law will support it if, to use the words of Parker C. J., in his elaborate judgment in Mitchel v. Reynolds (1 P. Wms., 181), "in the opinion of the Court, whose office it is to determine upon the circumstances, it appears to be a just and honest contract." In that case, the covenantor restrained himself from exercising his trade of a baker for five years, in the premises demised to him for that term by the same instrument; and the Court, dwelt on the period of the restriction being co-extensive with the term as proof of adequate consideration.
But though the Court is to judge, generally speaking, whether or not the consideration be adequate, the Court plainly has no very delicate scales for weighing the adequacy and comparing it with the restraint. That the covenantors, in the present case, derived considerable benefit from their bargain cannot be doubted. The contract enabled them, as well as the other parties, to obtain the advantage of the railway, which, but for this arrangement, would probably never have been constructed. The public, moreover, obtained the like benefit; and although, in the course of time and the progress of improvement, that advantage has ceased, and it is said that great, detriment arises, both to the three ironworks and to the community, from the continuance of the restriction, it is plainly as incorrect as it is unjust in such a case to judge by the event, and to measure the consideration for originally submitting to the restraint, by the benefit now derived from the works then erected, making the adequacy of that consideration depend upon all that has happened in altered circumstances; or, in other words, allowing a party who, with his eyes open, made a bargain for his own benefit, and which was really beneficial at the time, to escape by shewing that it has eventually become less advantageous than he expected, or, even actually detrimental. No ease can be found where such a rule has been applied, or where any standard has been resorted to for trying the consideration, except the circumstances inherent in the contract itself, independent of accidents and events.
The want of mutuality is, indeed, urged against this covenant; it is said that though one party is bound to use the railway, the other is not bound to maintain it; and this is likened to the case of Young v. Timmins (1 Crom. & Jerv., 331) in the Exchequer, and Smith v. Fromont (2 Swan., 330) in this Court. I think there is some ground for this argument, though, upon the whole, it would not be decisive against the covenant, if the covenant could stand in other respects; for, besides that an undertaking to keep the railway in repair may be implied upon the construction of the whole, it seems sufficient to say that if the covenant were otherwise binding, the covenantors or their assignees might have their remedy, if not upon such implied covenant, certainly by being released from their own obligation as soon as the railway failed them.
The utmost, therefore, that can be said upon this branch of the case is that such contracts deserve no particular favour. They are at all times somewhat improvident with respect to the individuals, and the public interest is, upon the whole, more likely to lose than to gain by them. The policy of the law is against them, the "proof is thrown upon those who support them, and claim under them; and that proof should, with everything belonging to the case that rests on them, be narrowly watched.
Bearing this in mind, I now come to an objection of a very serious nature, and "which appears to me of itself sufficient to dispose of the present application for the interposition of the Court by way of injunction.
The Trevil Railroad was made under the powers given by the Monmouthshire 'Canal Act, for the formation of that canal, and the cuts belonging to it, and of railways and stone roads communicating from them to the several adjacent ironworks in the counties of Monmouth and Brecon.
By the 91st section of that Act, the company are limited to certain rates of toll on the railways, as well as on the cuts. The rate charged on limestone, iron, etc., is not to exceed 21d. per ton per mile; and by the 128th section, if any persons are minded to make a railway within the distance of eight miles, they are to give the company notice, and if the latter refuse or neglect for a given time, they may themselves undertake it; but no greater rate is to be paid on that railway than the 2 ½ d. which the company are authorised to charge. By the 129th section, however, persons may agree with the company and induce them to undertake such railways on payment of tolls, not exceeding 5d. per ton per mile.
Two objects are here manifestly in the contemplation of the Legislature, and form the governing policy of this important part of the Act. First, a preference is given to the company, who, rather than any private individuals, are to make the railway; and it is only on their refusal or declining that any other parties are to be at liberty to undertake it. And, secondly, the public, that is, the proprietors of adjoining closes, are not to be subject to the strong powers of the Act (powers which it has in common with all such Acts, but which are always to be most strictly pursued), unless there is the reasonable certainty that there will be a considerable, traffic on the road-a traffic sufficient to maintain it at the limited rate of charge.
Now the agreement of 1795 violates both these provisions by the covenant among the parties to pay 5d. per ton. It deprives the company of its prior right to make the road subject to the higher rate of charge, and it deprives the neighbouring owners of the security intended to be given them that their property should not be invaded unless a traffic of a certain amount was to be expected. All Courts have, for obvious reasons, at all times construed such provisions most strictly. Whatever is required to be done as condition precedent to exercising the extraordinary right of making roads over private property has always been exacted to the letter, and the party omitting been held a trespasser. Here the ground cannot perhaps be said to have been taken by the railroad company until they had performed the things, previously ordered to be done; but the Act of Parliament having given a general security against the encroachment unless a certain state of things existed, that provision has been evaded by an arrangement among the parties wholly contrary to the plain intention of the Legislature, and in fraud, if not in defiance of it (see Lord Eldon's observations in the case of Blakemore v. The Glamorganshire Canal Navigation, 1 Mylne & Keen, pp. 162-4).
Although I consider this as being a sufficient ground for dissolving the injunction, it is far from being the only ground; and I shall now add that, upon the best consideration which I can give to the nature of the covenant, it appears to me very clearly that the covenant does not run with the land, and therefore is not binding upon the assignees of the Kendalls. This is the opinion which I have entertained from the moment I saw it, and which further reflection has only served to confirm.
Between the estates of the occupiers of the three ironworks, and the estates or the persons of their associates in the railway speculation with whom they covenant, there is no privity, no connection whatever of which the law can take notice. There is no relation at all in point of fact, any more, than in point of law. The Kendalls, for instance, upon whose covenant the present Plaintiffs rely, contending that it binds the Defendants as purchasers of the Beaufort Ironworks, did not stand in any such relation to the other shareholders, as from its nature could enure to affect the property sold by them. There was no unity of title in the estates of the contracting parties; the ironworks and the lime-pits or railway did not come to them severally from the same owner; they were not held by them severally under the same landlord; but what is of more importance, inasmuch as it is by no means clear that even the kinds of privity I have mentioned would suffice, the parties did not stand in the relation of lessor and lessee towards each other; and there is, therefore, no reversionary interest now in the covenantees to which the right claimed against the assignees of the covenantors may be annexed; and those assignees are called upon to perform the covenant solely in respect of the estate which they have purchased, and, in respect of persons who, except under that covenant, have no connection whatever with the estate. It is the case of mere strangers; it is a covenant by the owner of a messuage and land with the owner of a neighbouring limework and railroad, that he and his executors and assigns will always use that limework and railroad, for making iron at, and carrying it from, such messuage.
Whether the word "assigns" in this covenant, used as it is in a very peculiar manner several times in the deed, means assigns of the works, or only of the railway shares, has been made a question; and if it were necessary to decide it I incline much to the latter construction, which, if adopted, would render it unnecessary to pursue, the argument further. But I think this admits of sufficient doubt to make it more advisable that the decision should not turn upon it.
Assuming then for the present that the Kendalls covenanted for their assigns. of the Beaufort Works, could they, by such a covenant with parties who had no relation whatever to those works except that of having a lime quarry, and a railway in the neighbourhood, bind all persons who should become owners of those works, either by purchase or descent, at all times to buy their lime at the quarry and carry their iron on the railway? Or could they do more, if the covenant should not be kept, than give the covenantees a right of action against themselves and recourse against their heirs and executors as far as these received assets?
Consider the question first upon principle. There are certain known incidents to property and its enjoyment; among others, certain burthens wherewith it may be affected, or rights which may be created and enjoyed over it by parties other than the owner; all which incidents are recognised by the law. In respect of possession, the property may be in one, while the reversion is in another; in respect of interest, the life estate in one, the remainder in tail in a second, and the fee in reversion in a third. So in respect of enjoyment; one may have the possession and the fee-simple, and another may have a rent issuing out of it, or the tithes of its produce, or an easement, as a right of way upon it, or of common over it. And such last incorporeal heraditament may be annexed to an estate which is wholly unconnected with the estate affected by the easement, although both estates were originally united in the same owner, and one of them was afterwards granted by him with the benefit, while the other was left subject to the burthen. All these kinds of property, however, all these holdings, are well known to the law and familiarly dealt with by its principles. But it must not therefore be supposed that incidents of' a novel kind can be devised and attached to property at the fancy or caprice of any owner. It is clearly inconvenient both to the science of the law and to the public weal that such a latitude should be given. There can be no harm in allowing the fullest latitude to men in binding themselves and their representatives, that is, their assets real and personal, to answer in damages for breach of their obligations. This tends to no mischief, and is a reasonable liberty to bestow; but great detriment would arise and much confusion of rights if parties were allowed to invent new modes of holding and enjoying real property, and to impress upon their lands and tenements a peculiar character, which should follow them into all hands, however remote. Every close, every messuage, might thus be held in a several fashion; and it would hardly be possible to know what rights the acquisition of any parcel conferred, or what obligations it imposed. The right of way or of common is of a public as well as of a simple nature, and no one who sees the premises can be ignorant of what all the vicinage knows. But if one man may bind his messuage and land to take lime from a particular kiln, another may bind his to take coals from a certain pit, while a third may load his property with further obligations to employ one blacksmith's forge, or the members of one corporate body, in various operations upon the premises, besides many other restraints as infinite in variety as the imagination can conceive; for there can be no reason whatever in support of the covenant in question, which would not extend to every covenant that can be devised.
The difference is obviously very great between such a case as this and the case of covenants in a lease, whereby the demised premises are affected with certain rights in favour of the lessor. The lessor or his assignees continue in the reversion while the term lasts. The estate is not out of them, although the possession is in the lessee or his assigns. It is not at all inconsistent with the nature of property that certain things should be reserved to the reversioners all the while the term continues; it is only something taken out of the demise, some exception to the temporary surrender of the enjoyment; it is only that they retain, more or less partially, the use of what was wholly used by them before the demise, and what will again be wholly used by them when that demise is at an end. Yet even in this case, the law does not leave the reversioner the absolute licence to invent covenants which shall affect the lands in the hands of those who take by assignment of the term. The covenant must be of such a nature as to "inhere in the land," to use the language of some of the cases; or "it must concern the demised premises and the mode of occupying them," as it is down in others; "it must be quodammodo annexed and appurtenant to them," as one authority has it; or, as another says, "it must both concern the thing demised, and tend to support it and support the reversioner's estate." Within such limits restraints upon the land demised may be imposed, which shall follow into the hands of persons who are strangers to the contract of lease, and who only become privy to the lessor through the estate which they take by assignment in the demised premises. But this is no more than saying that, within such limits, the owner of the land may retain to himself and his assignees of the reversion a certain controul over, or use of, the property which remains in himself, or which he has conveyed to those assignees; and that he may so retain it, into whose hands soever, as lessee, the temporary possession may have come. Even he, the continuing owner, is confined within certain limits by the view which the law takes of the nature of property; and if beyond those limits he were to imagine a stipulation, the covenant in which he should embody it would not run with the land, but only bind the lessee personally and his representatives.
It only requires a little attention to the cases to satisfy us, first, that even where the privity of lessor and lessee exists, there are bounds so narrow to the province of real covenants as would make the one in question lie on the extreme verge of it, if it did not fall without it; secondly, that there can be no doubt of such a covenant being one personal, collateral, or in gross, where there does not exist that, or some other privity of estate, which, according to one or two of the authorities only, and which I venture to doubt, has been held to render real covenants which would otherwise have been personal; and, thirdly, that those covenants which have been held real, excepting, indeed, such as relate to title, would have been deemed collateral had there been no privity in respect of reversion or other unity of title. As all these propositions are proved or illustrated by most of the cases, there would be no convenience in arranging them under these heads; it would only lead to repetition; and therefore, having stated the propositions as the doctrine which may be extracted from them, applicable to this case especially, indeed, but embracing the subject at large, it will be better to take the authorities in succession.
Spencer's case (5 Rep., 16 a.) was an action by a lessor against the assignee of the lessee, upon a covenant by the lessee for himself, his executors and administrators, that he, his executors, administrators, or assigns, would build a wall on the premises. demised. So, at least, is the statement of the case, and so it has always been taken, particularly in the excellent abstract of the resolutions given in Bally v. Wells (3 Serj. Wils., 25; Wilm., 344), although the second resolution is somewhat ambiguously worded. The rule there laid down is that the assignee, being named, shall be bound by the covenant to build on the land demised, because he is to take the benefit of it; but that he shall not be bound where the covenant is to build on land of the lessor not parcel of the demise. It is hardly necessary to inquire whether this resolution would have supported such a covenant as the present, had that occurred in a lease, and the action had been brought on the reversion against the assigns of the lessee; but assuredly the obligation to carry off the produce of "a farm or mine by a particular way and on certain terms must be allowed to have "a very different species of annexation to the land from the covenant to build upon it. Such a covenant can with difficulty be said to be annexed to and inherent in the thing demised, and certainly is not in support of it.
Laurence Pakcenham's case (Y. B. 42 Edw. 3, fo. 3), referred to by Lord Coke, was an action by the feoffee of a manor against a prior and convent, upon a covenant with the feoffor to sing in a chapel, parcel of the manor. It appears from the report that it had been a chantry time out of mind; it is not stated whether the convent was on the manor or had lands by grant from the lord: but it is admitted both there, and in another case (Horne's case, Y. B., 2 Hen. 4, fo. 6 b.), that the covenant would not have run with the land had it been to sing in a chapel not belonging to the covenantee. Upon the former of these cases it may be observed that the covenant was by a corporation, and consequently no question arose as to its binding the assignee of the covenantor, but only whether it ran with the land in favour of the covenantee's assignee. There the Chief Justice, in the course of the argument, throws out a remark with respect to the Plaintiff being, though a feoffee, yet of the blood of the covenantee, his grandson and one who might be his heir. But laying these things aside, could it, now be maintained that a covenant by the purchaser of a messuage within a manor to exercise any trade then beneficial to the lord or his tenant, as continually to keep school, or continually to have a blacksmith's or other shop, could be sued upon by a purchaser of the manor nay more, that such covenant would run with the land, though made, as in Pakenham's case, by a party or corporation not a purchaser of the messuage? nay, as must be contended, in order to make that case applicable here, that the lord or his vendee of the manor could sue any one who might at any distance of time become, by purchase from the covenantor, owner of the messuage, for not exercising therein the stipulated trade? In a word, will the law recognise the devoting a house to this or that trade, and impressing upon it, into whose hands soever it may come, the obligation to carry on the trade for the benefit of the manor or of the other property of the party covenantee, to whom the house originally belonged? The law cannot do so without sanctioning the creation of a new species of tenure by means of such covenants.
Uxbridge v. Staveland (1 Ves., sen., 56) arose upon a covenant in a lease; but the opinion of Lord Hardwicke is merely an obiter dictum, the covenant on which he decided being held not to run with the land. It is not only obiter, but the opinion is faintly stated: "Had it been covenanted," said his Lordship, "to grind all the corn they should spend ground, it might relate to the premises, and, running with the land, bind the assignees." But he afterwards added that, setting all this aside, and supposing the assigns to be bound, they were not there shewn to be assigns. Even, therefore, in the case of such a covenant as he supposes occurring in a lease, and upon a question with the reversioner, this is but a slight authority.
I shall mention Vyvyan v. Arthur (1 B. & Cress., 410) next, because it relates to a similar covenant, and must, I think, be allowed to go further than any other case of the kind. That was an action of covenant, by the devisee of the lessor, against the personal representative of the lessee, upon a lease containing, in the reddendum, a reservation of suit to the lessor's mill, by grinding there all the corn grown upon the land demised, which mill the lessor had devised to the Plaintiff along with the reversion of the land demised. The Court decided that the action lay, upon the ground that both the mill and the reversion were in the ownership of the assignee of the covenantee. Mr. Justice Bayley expressly says that his judgment is founded entirely upon this unity of title; and Mr. Justice Holroyd adopts nearly the same view regarding the thing to be done as a rent service to the lessor by the tenant. It is difficult to reconcile this decision with Spencer's case, and the others, which hold that the thing to be done must be on the demised premises; and it is equally difficult to avoid a suspicion that the peculiar nature of the thing in question-grinding at a mill of the lessor-had some influence upon the Court in supporting the covenant as real. The familiar idea of a lord's mill, and of the mill service due from the soke, not unnaturally mixes itself with the consideration of such cases, and leads one to forget, for the moment, the origin of that service in the feudal relation of the lord of the mill and the manor and the tenants of the manor. Accordingly, the Court speaks of "rent service," and says that this was in the nature of such a render. Perhaps cases might be put, in which a covenant to the lessee would not have been so certainly held real. Suppose it had been to carry all the cattle or poultry raised on the farm to market where the lessor had pickage and stallage, or to purchase all cloth used upon it at the lessor's shop. It is not necessary, for supporting the view I take of the case at bar, to determine whether, in a lease, such covenants would have been collateral; but it would probably have been found more difficult to hold them real, as being in the nature of rent service, than where the obligation referred to grinding at the landlord's mill.
Sampson v. Easterby (9 B. & Cress., 505; S. C. (in Error) 6 Bing., 644) went upon the assumption that the lessor had a right to erect buildings on the waste, and that, when erected, they became his. The Court, therefore, held the lessee's covenant (or rather implied covenant, for there was none per directum,) to build on the waste, as running with the mineral demised, because such building was wholly connected with the mines, and tended to their support, the building he was bound to raise being a smelting house.
In Tatem v. Chaplin (2 H. Black, 133), a covenant to reside in the demised premises during the term was held to bind the assignees, though not named, on the authority of the first and sixth resolutions in Spencer's case, being, it was said, quodammodo annexed and appurtenant to the thing demised, and plainly tending to support it. Suppose there had been no demise and no privity by the reversion, could a covenant to reside in a given messuage bind assignees of a purchaser, and be sued upon by the seller of the messuage? In other words, can a man, by a covenant with a seller of a house, bind all who may ever live in that house after he shall have sold it, and his vendees sold it over and over again, to reside constantly in it? The question answers itself; but it also marks the distinction between such cases and the one at bar.
The like observation arises upon Jourdain v. Wilson (4 B. & Ald., 266), which was a covenant to supply the house demised with water at a given rate; and upon Vernon v. Smith (5 B. & Ald., 1), where an Act of Parliament had, as it were, connected the covenant to insure with the reversion, by directing the money received from the office to be bestowed on the demised premises; and upon Bally v. Wells (3 Serj. Wils., 25), which was on a covenant by the lessee of tithes not to let the farmers of the Parish have any of their tithes without leave of the lessor, who was the parson, the Court held this to be a covenant to compel whoever had the perception of tithe to take in kind, for the purpose of excluding circumstances that might be made the ground of setting up moduses; they considered such a covenant as only prescribing a mode of managing or occupying the thing demised, likened it to an obligation to spend the muck on the land, and regarded it as clearly tending to support the estate; but they added what is very material for our present purpose " Here is a reversion in the lessor and a privity between him and the assignee."
In the same spirit, Lord Kenyon, when delivering the judgment of the Court on the much-contested and well-considered case of Webb v. Russell (3 T. IR., 393), distinctly said, "It is not sufficient that a covenant is concerning the land, but, in order to make it run with the land, there must be a privity of estate between the covenanting parties." Whether he would have held the privity to be sufficient, which existed in Vyvyan v. Arthur, by the unity of title in the lessor's assignee to the premises demised, and to the mill where the thing was to be done, it is not necessary here to inquire. At least, it may be said that there was, in that case, the privity of the reversion.
Nor is it, perhaps, very easy to reconcile the principle of the latter case with The Mayor of Congleton v. Pattison (10 East, 130), where the thing to be done was upon the demised premises, although the interest to which that thing related was not immediately and directly in the lessors. But it is of more importance to observe that the present question cannot be determined in favour of the covenant binding the assignee, if that case of The Mayor of Congleton v. Pattison is law, which never has been doubted.
This will appear still more plainly on reference to Collinson v. Lettsom (6 Taunt., 224), decided in the Common Pleas upon the authority of that case. The covenant there was by the lessor owner of lands near the premises demised, for himself, his heirs and assigns, to give the lessee, his executors, administrators, or assigns, the pre-emption of that neighbouring land not demised. The lessor sold both the one parcel and the other, and it was held no breach of the covenant; in the course of the argument, the counsel for the Plaintiff abandoned the ground that the covenant ran with the premises demised, admitting, upon the authority of The Mayor of Congleton v. Pattison, that it was collateral – a proposition to which the Court assented. So, if the case had been reversed, and the lessee had covenanted to give pre-emption of other land to the lessor, it follows that the assignee of the lessee, though also owner of that other land, would not have been bound by the covenant.
In deciding Bally v. Wells, the Court appears to have felt the force of Pinfrey's case (Godb., 120; Moore, 243); and they avoided it, by shewing that the covenant supported the thing demised, and concerned the mode of occupying it. It is plain, from the manner in which the Chief Justice alludes to that case, that he would have found it much more difficult to evade its force had he been deciding, as the Court was called upon to decide in Vyvyan v. Arthur, that a covenant to do something, on the premises not demised, with the produce of the demised premises bound the assignee of the lessee, or could be sued upon by the devisee of the lessor.
I have said nothing of the case of The British Museum (The Duke of Bedford v. The Trustees of the British Museum, 2 My. & K., 552), because the point analogous to the present was not there determined. Having been furnished with the notes of what passed upon the appeal motion in that case, I find that Lord Eldon carefully guarded against being supposed to give any opinion on the question whether the covenant ran with the land. The decision turned upon another view of the case, which prevented the question from going to a Court of law, as the Vice-Chancellor had directed; but I have reason to believe that, upon the question whether the covenant ran with the land, the opinion of, at least, some of the common law judges was in the negative.
It is unnecessary to go into the discussion of the covenant in brewers' leases, to take beer only at the lessor's brewery. I am not aware of any decision having ever authorised the position, that such a covenant binds the assigns of the lessee. Lord Kenyon, having occasion to mention the subject at Nisi Prius in Hartley v. Pehall (1 Peake N. P. C., 131), said it was a question of some nicety, but he was not called upon to decide it. In Doe v. Reid (10 B. & Cress., 849), the learned Judges, as far as they handle the question, seem to think that such covenants do not run with the land. Lord Tenterden apparently guards himself against being supposed to hold that they do; and Mr. Justice Bayley, upon the question, whether the covenant did or did not run with the land, expressly says, "I think it would be very difficult to shew that The Mayor of Congleton v. Pattison does not govern this case." As the law at present stands, I have no hesitation in saying that whoever would make sure of the benefit of such a covenant must provide against assignment without licence, which may enable him to renew the covenant with the assignee of the lease.
A careful examination of the authorities, then, confirms the view which I set out with taking of the subject, upon principle; and shews that there would be considerable difficulty in holding such a covenant as the one in question to run with the land, even if there existed between the original parties to it, the covenantor and covenantee, that privity which the enuring right of reversion creates between the lessor or his assigns and the assigns of the lessee; that the cases, taken altogether and sifted, are adverse to such a covenant being real and inherent, even in that case of privity; but that, where no such privity can be pretended to exist, as in the present instance, the covenant is plainly collateral, and binds not the assignees.
If such would be its construction at law, does the notice which the purchaser had of its existence alter the case in this Court, upon an application for an injunction I or would it, upon the application of a co-relative and co-extensive nature, for a specific performance? Certainly not. The knowledge by an assignee of an estate, that his assignor had assumed to bind others than the law authorises him to affect by his contracts – had attempted to create a real burthen upon property, which is inconsistent with the nature of that property, and unknown to the principles of the law, cannot bind such assignee by affecting his conscience. If it did, then the illegality would be of no consequence; and however wild the attempt might be to create new kinds of holding and new species of estate, and however repugnant such devices might be to the rules of law, they would prove perfectly successful in the result, because equity would enable their authors to prevail; nay, not only to compass their object, but to obtain a great deal more than they could at law, were their contrivances ever so accordant with strict legal principle. This Court would be occupied in compelling persons by way of injunction and decree to perform covenants which the law repudiated, and for the breach of which no damages could ever be recovered.
A case like this bears no analogy to the ordinary case of a purchase with notice of a prior agreement by the vendor to sell the premises to another. Such a purchaser has done an unconscientious act, or at least made himself accessory to the unconscientious act of his vendor in selling another man's property, and therefore his bargain cannot protect him against the prior claim: but that of which he there had notice was the legal and valid act of the vendor; whereas that of which the assignees here had notice, was their assignor's covenant affecting to bind the land, on which, by law, it could not operate. Observe how this would apply to all assignments of leaseholds. Every assignee of a lease has notice of the lessor's covenants; consequently no covenant, how absurd soever, could be made by a lessee, that would not of necessity run with the land in equity, into whose hands soever the land might come; and all the decisions that have been made by the Courts with respect to such covenants being collateral or in gross, would be of no avail, because, though no damages could be recovered for the breach of them, yet the performance of them could be enforced against every assignee of the term, as a party necessarily fixed with notice. So a person who had conveyed land, and subjected it to covenants in the hands of his vendee, could at once make sure of those burthens following it into the hands of all holders to whom it might pass, by taking the precaution of notifying the covenants in some effectual though easy manner, as by publication in some place near the premises, where the purchaser must needs observe the announcement. This Court will never interfere, by way of injunction, or in any other more direct manner, to enforce such covenants, when satisfied that they could receive no support or countenance at law.
It is clear, therefore, that the case for this injunction fails upon these grounds, either of which is sufficient to support the decision: first, that the agreement was in violation of the provisions and policy of the local Act; and, secondly, that the covenant on which the relief is claimed is not binding on the assignees. The injunction must, therefore, be dissolved.
March 12, 18. Subsequently to the making of the order by which the injunction was dissolved, an application was made to the Vice-Chancellor, on behalf of Richard S. Harford, John Harford, and William W. Davis, three of the shareholders in the Trevil Railroad Company, who were named as co-plaintiffs in the suit, that their names might be struck out of the bill as Plaintiffs, with costs to be paid by the other Plaintiffs or their solicitors. His Honour having refused the application, the motion was now renewed, by way of appeal, before the Lord Chancellor.
From the affidavits filed upon the motion, it appeared that, at the general yearly meeting of the shareholders held in May 1833, the subject of protecting the interests of the Railroad Company against the threatened encroachments of Messrs. Bailey came under consideration, and the probable necessity of resorting to legal measures for that purpose was a good deal discussed; but neither on that occasion, nor afterwards, was the institution of any such measures actually authorised; and a proposal then made that a committee should be appointed, with power to take legal proceedings against persons infringing the rights of the Company, was abandoned, after having been opposed by a person who was present as the agent and proxy of Messrs. Harford and Davis, and who expressly protested that, before any such proceedings should be determined on, a special meeting ought to be called. It further appeared that Messrs. Harford and Davis had a similar interest with Messrs. Bailey in refusing to comply with the covenants contained in the deed of 1795, and that this interest was well known to the persons present at the general meeting.
Mr. Pepys, Mr. Knight, and Mr. Jacob supported the motion.
Sir E. Sugden and Mr. Lynch opposed it.
THE LORD CHANCELLOR said that, inasmuch as the Plaintiffs stood in the relation of partners to each other, less evidence certainly would suffice to fix the parties making the application with having retained the solicitors, or with having authorised the commencement of the suit, than would have been required had they been strangers. The general presumption, however, which would arise in the ordinary case of partners, and would render slighter evidence sufficient, was here repelled by the circumstance that, with reference to the subject-matter of the suit, Messrs. Harford and Davis stood in a peculiar situation, which rendered it in the highest degree unlikely that they should desire the success of these proceedings; for, besides their interest as holders of shares in the railroad, they had works of their own, which gave them the same interest with the Defendants in resisting the Company's claims. That no general authority existed in one partner to bind his co-partners by retaining an attorney, or commencing a suit or an action was clear. It had not been maintained that there was any case against the three individuals now moving, unless the circumstances should be deemed sufficient to prove a special authority; and it would be strange indeed if a Chancery suit, or an action at law, were held to form part of the ordinary course of the partnership business (with respect to which alone partners could bind each other by their acts), when, unless in the particular and excepted case of proceedings in bankruptcy, and that only by deference to long-established usage (Ex parte Mlitchell, 14 Yes., 597), one partner was unable to bind another by executing a power of attorney, or by a submission of disputed claims to arbitration. The judgment below had not been rested upon any such grounds; nor did any case in any Court, certainly not Holkirk v. Holkirk (4 Mad., 50), give the least countenance to so extraordinary a doctrine. But His Honour, regarding the peculiar circumstances in this case, had thought there was enough to shew an authority given by Messrs. Harford and Davis. In that conclusion his Lordship could not concur; for, after a careful and attentive review of all the facts of the case, no doubt remained on his mind that the names of these three persons were used without due authority-indeed, contrary to their known desire-by those who were well assured that, had they asked for any such authority, it would certainly have been refused, and who, for that reason, abstained from making the request. Such proceedings were to be regarded with much displeasure. They were extremely improper towards the individuals, and they were highly unbecoming towards the Court. Cases might be put, in which, by such unauthorised and unjustifiable conduct, both the parties whose names were used, and the Court, whose process was abused, might find themselves placed in a situation of considerable embarrassment, and from which, according to any known course of procedure, it would be extremely difficult satisfactorily to escape. The order of the Vice-Chancellor must, therefore, be discharged; and an order made, according to the terms of the motion, for striking out the names of Messrs. Harford and Mr. Davis as Plaintiffs in the suit.