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Daily Development for Friday, May 15, 2003
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
dirt@umkc.edu
EASEMENTS; TERMINATION; MERGER:
Mortgage exception
to the merger doctrine
protects mortgagee's interest in easement
notwithstanding extinguishment of the easement by the merger
doctrine.
Cowan v. Carnevale, 752 N.Y.S.2d 737 (A.D. 3 Dept.
2002).
Defendants, as tenants in common together with a third
party, had been
owners of a certain
property subject to an easement held by the adjacent
property owner to maintain and repair electric meters
located on the
premises. Defendants
purchased the adjacent property and financed that
purchase with a purchase money mortgage to a
mortgagee. Later, the
third party
who was a tenant in common with the defendants conveyed
his interest in the property to the defendants,
causing unity of title in the
2
properties, which would ordinarily extinguish the existing
easement.
The court ruled, however, that under the mortgage
exception to the
merger doctrine, the
mortgagee was entitled to the benefits of the
easement upon purchase of the second property at auction
following
foreclosure
proceedings.
Comment 1: Normally we say that merger tracks the
interest of the party
in whom the
interests are merged. But here there are at least two
reasons
why the mortgagor's interest
should not be merged to destroy the
easement, even if the mortgagor so desires.
First, at the time that the adjacent property passed
under the lien of the
mortgage, the
easement was appurtenant to it, and consequently the
mortgage lien attached to the appurtenance.
Thus, when the mortgagor
later acquired
the servient parcel, there was not a complete merger of
interests. The mortgagor still held and
interest in the dominant parcel
and in
the easement benefitting it.
Second, if someone was to argue that New York is a
lien theory state,
and that the interest
of the mortgagee pre-foreclosure does not rise to
such a stature as to be characterized as an interest
in land sufficient to
survive the merger
of the fee estates, and if that someone was lucky
enough to be right (the editor guesses the argument
is wrong), there's
still an argument
based upon warranties. The mortgagor made a title
warranty to the mortgagee that included a covenant of
further assurances.
As a consequence of
this warranty, the "best interests of the party in
whom the interests are joined" rationale should be
subordinated to the
interests of the
mortgagor.
Comment 2: The mortgage exception is
particularly apt here because the
mortgagor had deliberately altered the tenancy in common of the
servient
property specifically to merge
away the easement, and for no other
apparent purpose.
Two cotenants had owned the servient parcel as
cotenants with a third
party.
Thereafter, these two cotenants, now married, acquired
the
adjacent dominant parcel as tenants
by the entirety. After that, the third
cotenant in the servient parcel conveyed to his other two
cotenants. At
that time, the
cotenants owned the servient parcel as tenants in common
and the dominant parcel as tenants by the
entirety. Then they defaulted
on
the purchase money mortgage on the dominant parcel. The
mortgagee, father of one of the cotenants,
foreclosed. During
foreclosure, the
cotenants transferred the dominant parcel to themselves
as tenants in common, stating in the deed that the
purpose of the
conveyance was to merge
away the easement. The trial court bought
their argument that the merger worked, and it was necessary here
for the
appeals court to get involved to
protect the mortgage.
Note that the court stated that no merger occurred
when the same parties
owned one parcel as
tenants in common and the other as tenants by the
entireties. Everyone assumed that a second
transfer, placing both titles in
the
identical form of ownership, was necessary in any event to
trigger
merger. Hmmmmm. Is
that right?
Readers are encouraged to respond to or criticize this
posting.
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