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UNITED STATES v. O'CONNELL

April 9, 1973

UNITED STATES of America, Plaintiff,
v.
John V. O'CONNELL and Jopat Realty Corp., Defendants


Duffy, District Judge.


The opinion of the court was delivered by: DUFFY

Duffy, District Judge.

The question presented by this case is whether the United States of America, as fee owner of a housing project in Peekskill, New York, has obtained an easement by use or by implication over two parcels of land, one of which is a private road immediately contiguous to a parking lot owned by the project.

 By order of this Court dated March 5, 1973, the Government's motion for a preliminary injunction was consolidated, pursuant to Rule 65 of the Federal Rules of Civil Procedure, with the trial of the case. At the beginning of the trial, certain facts were stipulated by the parties and that stipulation of fact, including the metes and bounds descriptions of the various parcels, is adopted by this Court as part of this opinion.

 For ease of description, parcel A refers to those parcels which were covered by the lien of the mortgage insured by the F.H.A., and includes the land upon which the apartment is built, as well as the parking lot right across the public street. Parcel B is the area immediately adjoining the parking lot and is approximately 150' x 60' in size. Parcel C is a private roadway which abuts the west side of the land upon which the apartment project is built. All three parcels of land involved in this action are located in the City of Peekskill, County of Westchester, State of New York.

 Prior to 1959, parcels A, B and C were all owned by the defendant O'Connell or by his wholly owned corporation Jopat Realty Corp. In or about January 1959, O'Connell approached the F.H.A. in order to obtain insurance for a mortgage with which to build an apartment complex on parcel A. A letter of commitment, dated April 25, 1959, was issued by the F.H.A. covering the proposed apartment project.

 After the letter of commitment was issued, and pursuant to the requirements of the F.H.A., the individual defendant, O'Connell, caused the formation of a separate corporation called Patricia Gardens, Inc., which was to be the sponsor of the project. Jopat Realty Corp. deeded the parcel on which the apartments were to be constructed to Patricia Gardens, Inc., and shares were issued with the common stock going to O'Connell and all of the preferred stock to the Federal Housing Administration. Apparently, certain difficulties were encountered in the construction of the project but it was completed by August 28, 1962, with certificates of occupancy being issued for all of the buildings and the mortgage endorsed for insurance by the F.H.A.

 During the construction period, the parking lot portion of parcel A was added to the mortgaged land under a Spreader Agreement between the mortgagor, Patricia Gardens, Inc., and the mortgagee, The County Trust Company of White Plains, New York. After the final endorsement by the F.H.A. in 1962, the mortgage and mortgage note were assigned by The County Trust Company to the Comptroller of the State of New York. The mortgage note came into default during the period 1963-1965, and in 1965, the mortgage and note were assigned to the F.H.A. pursuant to the mortgage insurance agreement. The F.H.A. foreclosed the mortgage and the Secretary of Housing and Urban Development received parcel A at a foreclosure sale on July 1, 1968.

 Since before the construction of the project up to the present time, the City of Peekskill has had in effect an ordinance which requires that apartment buildings provide one and one-half off-street parking spaces for each dwelling unit in the development. This project contains 100 units and supposedly Patricia Gardens, Inc., the sponsor thereof, should have provided 150 parking spaces. In fact, however, even with the Spreader Agreement referred to above, the "Final Rental Schedule and Information on Rental Property" filed with the F.H.A. on August 23, 1962, by Patricia Gardens, Inc. shows that the project had only 76 parking spaces. Apparently the sponsor had no difficulty with the Peekskill officials because parking was permitted on the private road adjacent to the apartment complex, which is referred to herein as parcel C, and also in the area adjacent to the parking lot, which is referred to herein as parcel B.

 After the foreclosure sale, tenants of Patricia Gardens continued to park on both parcels B and C. In November 1972, after unsuccessful attempts to sell to the F.H.A. both parcels B and C, the defendant O'Connell caused steel posts to be put along the edge of parcel B, thereby effectively foreclosing its use as a parking lot. Defendant O'Connell has also threatened to block the private road, which is known as parcel C.

 The Government now brings this action to enjoin O'Connell from taking any steps which would inhibit the use of parcels B and C by the tenants of Patricia Gardens and for a declaratory judgment permitting the continued use by these tenants of these parking places because of an implied easement.

 It is clear that the law of the State of New York is applicable. For an implied easement to be created under that law, the following elements must be present:

 
1) The relevant parcels of land must have once been in unitary ownership;
 
2) A use must have been established in which one part or parcel of the land was ...

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