Keppell v Bailey, [1834] EWHC Ch J77

The Facts #

The Beaufort Ironworks entered into an agreement with the shareholders of the Trevil Railway, which was constructed to transport limestone from Trevil Quarry to the Ironworks for use in their furnaces. The covenant stipulated that Beaufort would continue to source all of its limestone from Trevil Quarry, thus providing the initial financial incentive to build the railway. In the course of his decision, Lord Chancellor Brougham described the terms of the covenant thus:

The said Edward Kendall and Jonathan Kendall, in consideration of all and singular the premises, did thereby, for themselves, their heirs, executors, administrators, and assigns, jointly and severally covenant and agree with all the other parties thereto, and their executors, administrators, and assigns, that they the said Jonathan Kendall and Edward Kendall, their executors, administrators, or assigns, should from time to time, and at all times thereafter whilst they or any of them should be proprietors or lessees or occupiers of the said furnace and works, called the Beaufort Ironworks, procure all the limestone which should be wanted for the use of the said ironworks, or for any new furnace and works thereafter to be erected by them, near the same, from the quarry called Trevil Quarry, and should cause all such limestone to be carried from the said quarry to the said ironworks along or upon the Trevil Railroad.

Over time, the Beaufort Ironworks passed to different owners, who then engaged in the construction of a new railway that would allow them access to limestone from a different quarry.

The plaintiff shareholders of the Trevill Railroad brought an action against the defendants–the new owners of the Beaufort Ironworks–requesting an injunction to stop construction of the new railway on the basis that this activity violated the terms of the covenant.

Lord Chancellor Brougham – #

[…]

Between the estates of the occupiers of the three ironworks, and the estates or the persons of their associates in the railway speculation with whom they covenant, there is no privity, no connection whatever of which the law can take notice. There is no relation at all in point of fact, any more, than in point of law. The Kendalls, for instance, upon whose covenant the present Plaintiffs rely, contending that it binds the Defendants as purchasers of the Beaufort Ironworks, did not stand in any such relation to the other shareholders, as from its nature could enure to affect the property sold by them.

[…]

Assuming then for the present that the Kendalls covenanted for their assigns of the Beaufort Works, could they, by such a covenant with parties who had no relation whatever to those works except that of having a lime quarry, and a railway in the neighbourhood, bind all persons who should become owners of those works, either by purchase or descent, at all times to buy their lime at the quarry and carry their iron on the railway? Or could they do more, if the covenant should not be kept, than give the covenantees a right of action against themselves and recourse against their heirs and executors as far as these received assets?

Consider the question first upon principle. There are certain known incidents to property and its enjoyment; among others, certain burthens wherewith it may be affected, or rights which may be created and enjoyed over it by parties other than the owner; all which incidents are recognised by the law. In respect of possession, the property may be in one, while the reversion is in another; in respect of interest, the life estate in one, the remainder in tail in a second, and the fee in reversion in a third. So in respect of enjoyment; one may have the possession and the fee-simple, and another may have a rent issuing out of it, or the tithes of its produce, or an easement, as a right of way upon it, or of common over it. And such last incorporeal heraditament may be annexed to an estate which is wholly unconnected with the estate affected by the easement, although both estates were originally united in the same owner, and one of them was afterwards granted by him with the benefit, while the other was left subject to the burthen. All these kinds of property, however, all these holdings, are well known to the law and familiarly dealt with by its principles. But it must not therefore be supposed that incidents of’ a novel kind can be devised and attached to property at the fancy or caprice of any owner. It is clearly inconvenient both to the science of the law and to the public weal that such a latitude should be given. There can be no harm in allowing the fullest latitude to men in binding themselves and their representatives, that is, their assets real and personal, to answer in damages for breach of their obligations. This tends to no mischief, and is a reasonable liberty to bestow; but great detriment would arise and much confusion of rights if parties were allowed to invent new modes of holding and enjoying real property, and to impress upon their lands and tenements a peculiar character, which should follow them into all hands, however remote. Every close, every messuage, might thus be held in a several fashion; and it would hardly be possible to know what rights the acquisition of any parcel conferred, or what obligations it imposed. The right of way or of common is of a public as well as of a simple nature, and no one who sees the premises can be ignorant of what all the vicinage knows. But if one man may bind his messuage and land to take lime from a particular kiln, another may bind his to take coals from a certain pit, while a third may load his property with further obligations to employ one blacksmith’s forge, or the members of one corporate body, in various operations upon the premises, besides many other restraints as infinite in variety as the imagination can conceive; for there can be no reason whatever in support of the covenant in question, which would not extend to every covenant that can be devised.

[…]

Action dismissed.