Case of the Day – Tuesday, August 28, 2018

GETTING HIT BY A BUS

Many times during our seemingly long, long, long career practicing law, we would run into clients who resisted putting their agreements and understandings into writing. “But,” Ray might sputter, “Tom and I have been partners for years. We don’t need anything in writing. We know each other and trust each other.”

Of course they trust each other. After all, partners always conduct the affairs of the enterprise with “not honesty alone, but the punctilio of an honor the most sensitive…,” as Judge Cardozo once put it. Don’t they?

Still, knowing that partners or contractors or even buyers and sellers seldom complete a relationship or transaction with the same good feelings they had going into them did us little good. It was like telling a bride and groom about to walk down the aisle that in 10 years she would devolve into a screaming shrew and he would sit around in his underwear drinking beer, belching and watching televised bowling. So what if it’s as likely as the sun rising tomorrow? No one wants to hear it.

Thus, we would never argue to Tom that Ray was a bum, or tell Ray that Tom liked to use the partnership till to play the ponies. Instead, we would always nod knowingly and say, “Of course you two honest chaps don’t need a written agreement. But what it you walk out the door and Tom here gets hit by a bus? Suddenly, he’s dead and you’re in business with Tom’s wife, or kids, or executor, or even some distant cousin you’ve never met. And none of them knows the deal, and none of them is likely to be the upstanding guy Tom is.”

That usually worked. Tom and Ray would  sign a detailed agreement, and when the falling out came in a couple years (as it inevitably did), the business divorce was much easier for everyone.

In today’s case, neighbors bought adjoining properties subject to a bare-bones easement signed by the prior neighboring owners. The previous people knew the deal, and probably had each other over for cookouts. But when the new neighbors proved to be considerably cooler to each other, the imprecision of the easement was decidedly unhelpful.

Kersey v. Babich, 780 N.W.2d 248 (Ct. App. Iowa, 2010). The Kerseys and Leslie Babich owned adjacent properties. Les’s lot had a driveway serving the front of his home. A second driveway located on the Kerseys’ lot provided access to the garages of both property owners. Both landowners purchased their properties subject to a “Drive and Landscaping Easement” agreed to by the previous owners.

According the easement, Les Babich had the right to use the western 30 feet of the Kerseys’ lot, which he was responsible for maintaining. The easement was intended for “a residential driveway to serve the garage” located on Leslie’s property. Les normally allowed friends, relatives, and home maintenance workers to use the second driveway, but he did nothing to trim vegetation along the western driveway.

The Kerseys sued him, seeking a declaratory judgment. They argued that third-party use of the driveway should be restricted, Les should be required to maintain the whole easement, and he should be liable for injury to a tree along the driveway.

The district court found that Les, his family, friends and agents had the right to use the driveway. It also found that Les was required to maintain a tree canopy over the driveway at a height and width of 10 feet. Finally, the trial court found he was liable for repairs to the driveway.

The Kerseys and Leslie were unhappy, and both parties appealed.

Held: The Court of Appeals agreed with the trial court. The overarching goal of contract interpretation is to determine the intent of the parties at the time they entered into the contract. Words and conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties can be ascertained, it is given great weight.

The court’s interpretation in this case was consistent with the evidence showing Les’s expansive use of the second driveway for more than a decade, as well as with the absence of limiting language in the easement. While the Kerseys argued that the term “garage” limited Les’s use to garage ingress and egress, the easement did characterize the driveway as “residential,” a term that suggested a more expansive use. The appellate court thus agreed with the trial court’s interpretation of the purpose of the easement.

Both parties argued that the 10-foot width allowed by custom for the easement (the document setting out which was itself silent on the driveway dimensions) should be changed. The Kerseys claimed that the dimensions should be reduced to a width that would allow Les to fit his vehicles into his garage. Les wanted more, arguing that the easement should be 12 feet wide by 14 feet high. Ruling that a grantee of an unspecified easement “is ordinarily entitled to a way of such width as is sufficient to afford reasonable ingress and egress,” the Court agreed with the trial judge that there was “scant” evidence that residential use of a driveway would require a width in excess of 10 feet.

Finally, Les argued that the Kerseys should not have been awarded damages for his tree trimming and tree removal. The appellate court reasoned that the easement required Les to landscape the easement area on an ongoing basis. He failed to do so, compelling the Kerseys to do the job. Thus, they were entitled to damages for Leslie’s failure to have done so.

– Tom Root

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