Opinion:Grand Crest Owners Assoc. v. Stites, 2022 OK CIV APP 16
Subject matter:Property Law
Date Decided:August 6, 2020
Trial Court:District Court of Mayes County
Route to this Court:Appeal of the district court’s September 18, 2018 Order granting motions for partial summary judgment; the order was certified by the District Court under 12 O.S. § 994(A).
Facts:Grand Crest acquired the property involved in this dispute on June 2, 1954. Grand Crest recorded the dedication and plat with the Mayes County Clerk on December 21, 1954. The bylaws of the corporation were not recorded until 1991. The bylaws provided that owners of property in the subdivision would be shareholders of the corporation. The stock certificate provided to purchasers gave entitlement to all the privileges of a member of the corporation which were subject to the bylaws. The Stites acquired lots 18 and 19 in 1998 and 2002, respectively. O’Connor acquired an interest in lot 20 on March 17, 2014. Each was given stock in the corporation pursuant to the bylaws, paid membership dues and assessments, and attended meetings of the corporation.

In 2012, South Shore at Grand Lake, LLC began to develop real property immediately north of the Grand Crest Subdivision and the Stites and O’Connor supported the development. A dispute arose and precipitated this lawsuit.
Standard of Review:The de novo standard controls an appellate court’s review of a district court order granting summary judgment. Carmichael v. Beller, 1996 OK, ¶ 2. This involves plenary, independent, and non-deferential examination of the trial court’s rulings of law. Neil Acquisition, L.L.C. v. Wingrod Invest. Corp., 1997 OK 125, n. 1.
Analysis:Stites and O’Connor argued that the restrictions of the bylaws had been conveyed away by Grand Crest before it recorded the bylaws in 1991; therefore, the bylaws could not retroactively place those 1954 restrictions on their interest in the property. The Court first rejected this argument on the grounds that the original 1954 organizational meeting of the corporation had adopted the bylaws by a writing and signed by the proper corporate officials, which satisfied 15 O.S. Supp. 2013 § 136 and 16 O.S. 2011 § 4. The bylaws had already been properly recorded, and they were registered in 1994 with a minimal and immaterial change. The Court determined that the bylaws clearly entitled the Grand Crest to collect dues and to enforce the building and transfer of ownership restrictions. Thus the interest in the lots conveyed to the original owners remained with the properties subject to the bylaws.

All three lots were acquired by the original owners from Grand Crest via general warranty deeds. Appellees argued that the deeds conveyed a fee simple and of inheritance limited by express words, which the “limiting words” in the warranty deed only mentioned utility easement. So, they were entitled to quiet title to the property against any interest, covenant, or restriction contained in the bylaws. The Court rejected the argument because this was an equitable proceeding. The Court relied on Southwest Petroleum Co. v. Logan, 1937 OK 473, ¶ 14, by pointing to its reasoning that an agreement restricting use of land imposed by a common grantor, under a plan for the mutual benefit of all grantees may be enforced on future purchasers who rely on the plan or take with notice of the restrictions. The Stites and O’Connor were aware of the restrictions because they were outlined in the stock certificates that they received when they purchased the plots from Grand Crest shareholders. Oklahoma case law holds that when a grantor seeks to enforce restrictions upon subsequent grantees, the question is solely one of notice. Id. ¶ 16. Notice may be actual or constructive, and the Court found that the original owners had notice of the bylaws. In order to purchase the property, the original owners received stock certificates explaining the bylaws. An essential part of the consideration for the sale of these lots was the purchasers’–Stites and O’Connor’s– agreement to be bound by the Grand Crest bylaws. The bylaws constituted a binding contract between the corporation and its members and it did not have to appear in the chain of title.

Thus, when the owners previous to the Stites and O’Connor gave them the warranty deed, the owners could only convey the estate they owned, which was the lots subject to restrictive covenants. The Stites and O’Connor received the benefits of the contract by receiving better access to their properties as well as other benefits. They pointed to no law that allows those who benefited from a contractual relationship to reject the contract after receipt of the benefits. 16 O. S. 2011 § 11. The Court reversed the district court’s decision granting the Stites and O’Connor quiet title to the lots and granted Grand Crest’s motion for partial summary judgment, but due to a lack of facts, could not determine the extent of Grand Crest’s relief and remanded to the district court to make such a determination based upon the decision.
Outcome:Reversed and Remanded with Instructions.
Vote:3-0. Barnes, P.J., Thornbrugh, J. (sitting by designation), and Fischer, J. (author) concur.
Other: N/A