Todd v. Krolick
96 A.D.2d 695, 466 N.Y.S.2d 788, 1983 N.Y. App. Div. LEXIS 19251 (1983)
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Rule of Law:
An agreement granting a right to install and maintain equipment on a property, which does not convey exclusive possession and control over a specific, definite space, creates a revocable license, not an easement or lease. This license is extinguished upon the conveyance of the property and does not bind a subsequent purchaser who has not expressly assumed the agreement.
Facts:
- On August 10, 1979, the plaintiff, a laundry machine operator, entered into a 10-year written agreement with Monarch Associates, the owner of an apartment complex.
- The agreement gave the plaintiff the sole and exclusive right to install and operate laundry machines in the complex and stated it was binding on the parties' 'heirs, successors and assigns'.
- In 1980, Monarch Associates transferred the property to Marine Midland Bank in lieu of foreclosure.
- In February 1981, Marine Midland Bank conveyed the property to the defendants.
- During purchase negotiations, the bank advised the defendants that there was no existing agreement concerning the laundry machines on the premises.
- After purchasing the property, the defendants requested that the plaintiff remove its machines.
Procedural Posture:
- Plaintiff commenced an action in the Supreme Court at Special Term, Schenectady County, seeking a permanent injunction to prevent the removal of its laundry machines.
- Plaintiff moved for a preliminary injunction by order to show cause.
- Defendants opposed the plaintiff's motion and cross-moved to dismiss the complaint.
- The Special Term court granted the plaintiff's motion for a preliminary injunction and denied the defendants' cross-motion to dismiss.
- Defendants appealed the Special Term's order to this court.
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Issue:
Does an agreement granting a company the exclusive right to install and maintain laundry machines in an apartment complex for a set term create an interest in the land, such as an easement, that is binding on a subsequent purchaser of the property?
Opinions:
Majority - Per Curiam (Mahoney, P. J., Sweeney, Kane and Casey, JJ., concur)
No. The agreement did not create an interest in the land but rather a revocable license that was extinguished upon the sale of the property. The court reasoned that the agreement was not a lease or an easement because it did not grant the plaintiff exclusive possession and control of any definite, specific space within the apartment complex. An easement implies an interest in the land itself, whereas a license is merely a personal privilege to perform acts on the land without possessing any interest therein. Because the agreement was a license, it was personal to the original contracting party (Monarch Associates) and was automatically revoked when the property was conveyed. The defendants, as subsequent purchasers, are not bound by the terms of the license merely because they had knowledge of it, as they did not expressly assume the obligations of the contract.
Dissenting - Levine, J.
Yes. The agreement created an interest in the land, enforceable against a successor with notice, in the nature of either an easement in gross or a covenant running with the land. The dissent argued that the agreement granted more than a mere privilege; it conferred an exclusive right to commercial exploitation and occupancy of space, along with the right to use the building's utilities. These characteristics are hallmarks of an easement in gross, and precedent shows that the failure to specify the exact location of the machines is not fatal to the creation of an easement. Alternatively, the agreement met all the requirements of a covenant running with the land: the parties intended it to bind successors, there was privity of estate, and the covenant 'touched and concerned' the land by restricting the owner's use and enjoyment of the property. Therefore, the agreement should be enforceable against the defendants.
Analysis:
This decision reinforces the traditional, strict distinction between a license and an easement in real property law. It establishes that for an agreement to create an enforceable interest in land that binds subsequent purchasers, it must grant rights to a specific, identifiable area, not just a general privilege to operate on the property. The ruling provides clarity for property purchasers, protecting them from being bound by prior service contracts they did not expressly assume. However, it creates a challenge for service providers, who must now draft agreements that more clearly grant an interest in a specific portion of real property if they want their contracts to survive a sale of that property.
