McKinnon v. Benedict

Brief Fact Summary. Plaintiff Roderick McKinnon and Defendants Mr. and Mrs. Roy Benedict entered into an agreement providing that Plaintiff would help getting a resort business of Defendants off the ground, said help includes a $5,000 loan, and in return, Defendants promised to cut no trees between Defendant’s camp and Plaintiff’s property and make no improvements closer to Plaintiff’s property than the present buildings. When the resort business did not prosper, Defendants decided to add a trailer park and tent camp, and Plaintiff sued to enjoin construction.

Synopsis of Rule of Law. Oppressive contracts will not be enforced in equity, and restrictions on the use of land are not favored in the law.

Facts. Defendants sought to buy a resort known as Bent’s Camp. The resort consisted of a lodge and some cabins situated on about 80 acres that were enclosed by a lake and Plaintiff’s property. Plaintiff promised help in getting business for the resort and in some other minor respects. Plaintiff also made a loan of $5,000 to Defendants. Defendants used this borrowed money to make a down payment on the purchase of the camp. In return, Defendants promised Plaintiff that they would cut no trees between the camp and his property and make no improvements closer to his property than the present buildings. These restrictions were to last 25 years. When the resort business did not become prosperous, Defendants opted to add a trailer park and tent camp. Plaintiff sued to enjoin construction, citing the restrictive covenants.

Issue. Did the trial court properly enjoin Defendants’ construction on their own property?

Held. No. Equity will not enforce an oppressive contract, and restrictions on the use of land are not favored in the law. Any doubt as to the use of real estate should be resolved in favor of the free use of property. In the present case, Plaintiff paid grossly inadequate consideration in exchange for the restrictive covenants on Defendants’ land. Plaintiff gave an interest-free loan, but the total interest foregone by Plaintiff was about $145.00. Further, Plaintiff did very little to generate business as he promised.

Discussion. While unconscionable and oppressive contracts may be enforceable at law, the extraordinary equitable remedies of the court cannot be invoked to enforce such contracts.