Chapter 36 WASTE

• Jurisdiction: North Carolina

36 WASTE

A. Definition

Waste¹ is an ancient common-law action² recognized in North Carolina³ and codified by statute.⁴ It is a tort action,⁵ although it is also shaped by contract law and is often treated as a topic in the law of property.⁶ The ultimate goal of the action — to prevent "permanent damage to the property to the detriment of the future interest holder" — has remained in place through centuries of court decisions.⁷

Waste is usually the primary action, but has been brought as a counterclaim.⁸ The North Carolina Supreme Court has said that an action for waste may be brought before expiration of the term.⁹

B. Elements

Waste is the:

(1) Misuse or destruction of property,
(2) By one lawfully in possession thereof,
(3) To the prejudice of the estate or interest of another.¹⁰

In the context of a lessor-lessee situation, one court has said: "[W]aste has been defined as an implied obligation in every lease on the part of the lessee to use reasonable diligence to treat the premises in such a manner that no injury is done to the property."¹¹ In a case in which the defendant was a life tenant, the North Carolina Supreme Court defined waste as "a spoil or destruction, done or permitted with respect to lands, houses, gardens, trees or other corporeal hereditaments, by the tenant thereof, to the prejudice of him in reversion or remainder or, in other words, to the lasting injury of the inheritance."¹²

C. Elements Defined

1. Misuse or Destruction of Property

The North Carolina Supreme Court has said that waste in the "traditional" sense means destruction, impairment or injury to the property.¹³ Waste is of two¹⁴ types: permissive and voluntary.¹⁵ The former is "merely permitted" and "consists in the neglect or omission to do what will prevent injury to the estate or freehold, as, for example, to suffer a house to become decayed for want of proper repair,"¹⁶ or even failure to pay taxes or mortgage interest.¹⁷ It is measured by a rule of prudence. That is, permissive waste is the failure to exercise ordinary care, the care a prudent husbandman would exercise under the circumstances, if owner of the fee, to protect the estate.¹⁸ Voluntary waste is "active or positive, and consists in some act of destruction or devastation."¹⁹ For example, an allegation that a tenant intentionally caused the premises to be burned was sufficient to state a claim for waste.²⁰

2. Defendant is Lawfully in Possession of the Property

The general rule is that the defendant must be in lawful possession to be subject to an action for waste.²¹ At common law, waste was an injury done or permitted by a tenant of an estate less than fee.²² A party without any possessory estate cannot commit waste.²³ However, possession may be actual or constructive.²⁴ Thus, by statute, if a "tenant for life or years grants his estate to another, and still continues in the possession of the lands, tenements, or hereditaments, an action lies against the said tenant for life or years."²⁵ And, a reversioner is required to bring any action of waste against the tenant for life, even though it was committed by a stranger.²⁶

Although a tenant may be liable for waste, there is a statute providing that "[a] tenant for life, or years, or for a less term, shall not be liable for damage occurring on the demised premises accidentally, and notwithstanding reasonable diligence on his part, unless he so contract."²⁷ The North Carolina Supreme Court noted that prior to the statute, a lessee "was liable in an action for waste for damage to or destruction of buildings on land covered by the lease, even if the damage or destruction was the result of an accident or of the act of a stranger."²⁸

3. Prejudice to Estate or Interest of Another²⁹

By statute, an heir may bring an "action for waste committed on lands, tenements, or hereditaments of his own inheritance, as well in the time of his ancestor as in his own."³⁰ At common law, waste was any permanent injury done or permitted by the tenant of an estate less than fee to an inheritance.³¹ A remainder interest was, therefore, protected from waste.³² Thus, in one early case, a life tenant was limited in the amount of timber³³ she could remove from the land without committing waste.³⁴ The common law prohibited one tenant from bringing an action for waste against another tenant; however, the North Carolina legislature long ago decided that if "a joint tenant or a tenant in common commits waste, an action lies against him at the instance of his cotenant or joint tenant."³⁵ There is authority in other jurisdictions for mortgagees or vendors in a land sales contract to bring an action for waste.³⁶ In North Carolina, however, it appears that the interest of a judgment creditor cannot be protected by an action for waste.³⁷

The third element is also stated as injury to the estate or diminution in its value;³⁸ in other words, injury or damages. Thus, making improvements to property in itself, ordinarily will not constitute waste.³⁹ For example, in De Torre v. Shell Oil Co.,⁴⁰ the appellee leased property from the appellant. As permitted by the lease, the appellee constructed a gasoline service station on the property. Subsequently, it assigned its lease rights to a third party, which removed the existing structures and built new buildings on the property. The court found no action for waste existed. It noted that the buildings that were destroyed were not existing at the beginning of the lease term, but were built after the appellee took possession of the vacant lot and later removed, as permitted by the lease.⁴¹ The appellant's interest in the value of the premises as originally rented was not, said the court, shown to be permanently injured by returning the property to its original condition. In fact, the court observed, the appellee improved the property and the court could not see how that improvement permanently injured the appellant's interest in the premises. However, a tenant evidently cannot commit an act of waste and then recoup or set off against it the costs or profits from repairs or improvements made at another time.⁴²

D. Defenses

Virtually all of the actions for waste reported in North Carolina are decided on either procedural grounds or failure to state a cause of action. Therefore, defenses are rarely discussed. Accord and satisfaction⁴³ or consent⁴⁴ have been broached as viable defenses, while purchase of a life estate by a remainderman/plaintiff⁴⁵ or good faith⁴⁶ are said not to be defenses. Additionally, death of a party does not abate the action.⁴⁷

McCarver v. Blythe⁴⁸ discussed the statute of limitations defense. The court said the applicable statute of limitations for permissive waste is three years.⁴⁹ It added that a remainderman's action accrues from the date of the first act or omission of the life tenant, and that a plaintiff's action begins to accrue on discovery of the damage.⁵⁰

Where the plaintiff has a remainder interest, standing has served as a limited defense, since the courts hold that until a remainder interest vests, the plaintiff cannot recover damages, but may only obtain an injunction to prevent future waste.⁵¹

E. Remedies⁵²

A statute provides that "[w]rongs, remediable by the old action of waste, are subjects of action as other wrongs; and the judgment may be for damages, forfeiture of the estate of the party offending, and eviction from the premises."⁵³ Nonetheless, injunctive relief is traditionally available⁵⁴ and, indeed, courts have long said that since it cannot be known whether a contingent remainderman will in fact suffer damage or waste before a contingency occurs, he or she may not maintain an action at law against a tenant in possession to recover damages for waste, but has as a sole remedy and injunction to prevent a person in possession from committing future waste.⁵⁵

Treble damages may, by statute,⁵⁶ be awarded. Whether single or treble damages are to be awarded is left to the sound discretion of the judge who tries the action.⁵⁷ The judge may also decide that the plaintiff should recover the place wasted if the damages are not paid on or before a day named in the judgment.⁵⁸ North Carolina courts do not appear to have discussed whether punitive damages are available in an action for waste,⁵⁹ but it should be noted that the law requires a claimant to elect, prior to judgment, between punitive damages and any other remedy under any other statute that provides for multiple damages.⁶⁰

The North Carolina decisions concerning the action for waste do not address receivership. Receivership is an equitable remedy applied on equitable principles⁶¹to protect property during the course of litigation,⁶² that has been codified by statute, including one providing for appointment of a receiver before judgment in cases concerning possession of property.⁶³ It pertains when an apparent right to property is established, that property is the subject of the action and is in the possession of an adverse party. A receiver may then be appointed if the property or its rents and profits are in danger of being lost or materially injured or impaired. One early North Carolina case suggests that the statute would apply to prevent waste.⁶⁴ However, receivership is considered a harsh remedy to be granted only if there is no other safe or expedient remedy.⁶⁵ On the other hand, the power to make an appointment is inherent in a court of equity⁶⁶ and is not limited by the statutory provisions.⁶⁷

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Notes:

^[1] In North Carolina, waste is addressed by statute. See N.C.G.S. §§ 1-533, et seq. There are, however, a number of other statutes that mention waste. These statutes include the following: (1) N.C.G.S. § 1-292 provides that if a judgment that directs delivery of possession of real property is appealed, execution is not stayed unless a bond is executed by the appellant providing that during possession of that property, he or she will not commit, or allow to be committed, any waste. (2) N.C.G.S. § 1-341 concerns...