| A RULE IS A RULE EXCEPT ... |
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| Wednesday, 04 October 2006 | |
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Many of the rules relating to the ownership and conveyance of real estate appear to be clear and easily applied to hypothetical situations. However, in the real world those rules are subject to the desire of the courts to resolve disputes involving those rules in a fair and equitable manner. An example is the Wisconsin Court of Appeals’ decision in Nettesheim, et al. vs. S.G. New Products, Inc., No. 2005AP287-FT. The plaintiffs were owners of lots in a fourteen lot residential subdivision (“Rice Creek”). Access to the Rice Creek lots was by a private road, and the deed to each lot owner included an undivided 1/14th interest as tenants in common in the road. The general rules regarding tenancies in common ownership include the right of each tenant in common to possess and use the property, and the right to sell its interest in the commonly held property (the road) outright or to sell fractional interests in its tenancy in common interest. The defendant in this case sought to take advantage of a literal application of those rules. The defendant was the developer of a nine lot subdivision adjacent to Rice Creek. To provide access to lots in its subdivision, the defendant bought one lot in Rice Creek which included that lot’s fractional interest in the private road. The defendant then constructed a road over its Rice Creek lot to connect a road in its subdivision to the Rice Creek private road. Each purchaser of a lot in the defendant’s subdivision would receive a 1/9th interest in the Rice Creek lot on which the defendant had built a road and a 1/9th interest in the defendant’s 1/14th interest in the Rice Creek road. The plaintiffs objected to this action by the defendant, and they argued that the additional traffic over their Rice Creek road would “irreparably injure …[their] peace of mind and their residential seclusion.” They also claimed that the value of their properties would be adversely affected. In response, the defendant asserted its right to deal with its tenancy in common interest in the Rice Creek road as it saw fit under the rules referred to above. Both the trial court and the Court of Appeals were not persuaded by the defendant’s arguments. Citing an 1878 Wisconsin Supreme Court decision, the Court of Appeals pointed out a limitation on the rights claimed by the defendant: “… Wisconsin law recognizes that because a tenancy in common involves shared interest in a common title, it creates a community of interest among a group of owners that would make it inequitable to permit one of them to do anything to the prejudice of the others.” However, the Court noted that the defendant’s interest in Rice Creek was different than that of the other lot owners, and the essential “commonality of interest” was lacking. The Court of Appeals then went on to conclude that the defendant “could not convey so many fractional interests in the [Rice Creek road] that it overburdened the common estate.” The plaintiffs won. One may wonder if use of the Rice Creek road by the owners of the defendant’s nine additional lots would have, in fact, “overburdened” the road and caused the significant damages the plaintiffs claimed. However, because this case was decided on a motion for summary judgment, the only evidence before the court was in affidavits filed by the plaintiffs in support of their claims. The defendant did not provide any affidavits or other evidence to rebut the plaintiffs’ claims of damage. As a result, the defendant could not challenge the plaintiffs’ claims of damage and the court’s decision based upon those claims. Had the defendant filed its own affidavits showing that the increased traffic would be minimal and would not affect property values, it might have prevailed; or at least it would have been able to have a full trial of that issue. Although this case dealt with residential subdivisions, the principles involved would also be applicable to commercial or industrial properties. Courts generally do not like to permit a party to take an inequitable advantage over another by asserting a strict application of hard and fast rules. The concept of “equity” is usually available to prevent injustice. |