Buffalo Academy of the Sacred Heart v. Boehm Bros.
New York Court of Appeals
180 N.E. 553 (N.Y. 1932)
Buffalo Academy (plaintiff) agreed to convey certain subdivided lots to Boehm Brothers (defendant) to satisfy a debt, with a clause requiring a $60,000 cash payment instead if title proved unmarketable; Boehm Brothers refused the deed, claiming the lots were burdened by a uniform residential building plan and by a restriction preventing gasoline-station use found in deeds to other lots from the same original grantor (including deeds to Kendall Refining Company, which did not state the restriction would run with the land). Buffalo Academy had no actual knowledge of any such building plan or gasoline-station restriction when it purchased the land; the intermediate appellate court found no uniform building plan but still found title unmarketable due to the gasoline-station restriction, awarding Boehm Brothers $60,000, and Buffalo Academy appealed.
Whether a purchaser of a lot subdivided from a larger tract holds marketable title despite restrictive covenants appearing in prior recorded deeds to other lots from the same original grantor, when the purchaser had no actual notice of those covenants and they do not appear in the purchaser's own chain of title.