Tull v. Doctors Building, Inc.

120 S.E.2d 817 (1961) 255 N.C. 23

R. Read TULL and wife, Julia P. Tull et al., Plaintiffs,
v.
DOCTORS BUILDING, INC. et al., Defendants.

No. 252.

Supreme Court of North Carolina.

June 16, 1961.

McCleneghan, Miller & Creasy, by F. A. McCleneghan and Dockery, Ruff, Perry, Bond & Cobb, by James O. Cobb, Charlotte, for plaintiffs, appellants.

Bell, Bradley, Gebhardt, DeLaney & Millette, by Ernest S. DeLaney, Jr., Charlotte, for defendants, appellees.

PARKER, Justice.

All the defendants, who were not parties to the judgment by default final, filed a joint answer, except W. S. Taylor and wife, Ambler M. Taylor, and George N. Harrill, single. There is nothing in the record to show these three defendants were served with process.

There are no exceptions to the judge's findings of fact, which would indicate there is no dispute as to the facts. The judgment states oral evidence was introduced, but none of it is in the record. We have copied verbatim from the record filed in this Court the findings of fact. A close reading of these findings of fact would seem to indicate there are some minor typographical errors.

Plaintiffs have three assignments of error. Their first assignment of error is to the judge's conclusions of law 1, 2, and 4, and to that part of conclusion of law 3 following the words "does not constitute a major change."

In respect to conclusion of law 1. Finding of fact 8 is: "The Stephens Company by a restriction between itself and Dr. A. R. Black and wife, Consuello G. Caldwell Black, restricted all of the numbered lots facing Kings Drive on plaintiffs' Exhibit 1 so that they could be used for `residential purposes only.' Said restriction agreement was dated February 17, 1940, and was recorded in Book 997 at Page 275 of the Mecklenburg Public Registry; that a copy of said restriction agreement is attached hereto." The restriction agreement provides The Stephens Company "will hold all of said lots which remain unsold subject to said restrictions." This agreement further provides: "It is understood and agreed that the property shown upon said map as `Reserved Unrestricted' may be held and conveyed by The Stephens Company free of any restrictions or subject to such restrictions as it may desire to impose upon the same." Finding of fact 9 is: "The Stephens Company restricted the remainder of the numbered lots shown on plaintiffs' Exhibit 1 by instruments filed in Book 1446," etc., "`for residential purposes only.'" The findings of fact show that the areas shown on the map marked plaintiffs' Exhibit 1 marked "Reserved Unrestricted" were never restricted for residential use, and are now used for business and professional purposes on a large scale. Finding of fact 15 is: "The Stephens Company restricted the numbered lots on plaintiffs' Exhibit 1 for `residential purposes only' as a subdivision comprised of said lots only and in pursuance of a general plan of development or improvement." It is to be noted The Stephens Company did not reserve the right to change the residential restrictions within the subdivision composed of numbered lots, and did not reserve any of these lots in this subdivision free from such restrictions. Finding of fact 17 is: "No structures of any type have been erected on any numbered lots in the subdivision, except single family residences and duplexes." Finding of fact 16 is: "Substantially all of the lots facing Kings Drive in Blocks J, K, L, M, 18, and Q on plaintiffs' Exhibit 1 have fine, substantial residences on them; that Lots 4 through 8 in Block G are vacant and Lots 11 through 17 in Block P do not contain any structures on them and are used as parking lots as hereinafter set out. The City of Charlotte has opened a street connecting Kings Drive and Blythe Boulevard on a portion of Lot 14."

The findings of fact show many subdivisions of Myers Park by The Stephens Company and many maps. Many of these maps are not in the record. This Court has held "that the subdivisions of Myers Park are each a separate, distinct and integral development, and that Myers Park, consisting originally of 1100 acres was not planned and developed as a unit composed of these subdivisions." Johnston v. Garrett, 190 N.C. 835, 130 S.E. 835, 836; Stephens Co. v. Myers Park Homes Co., 181 N.C. 335, 107 S.E. 233; McLeskey v. Heinlein, 200 N.C. 290, 156 S.E. 489; Higdon v. Jaffa, 231 N.C. 242, 56 S.E.2d 661.

This Court said in Sedberry v. Parsons, 232 N.C. 707, 62 S.E.2d 88, 90:

"These principles are well settled in this jurisdiction. 1. `Where the owner of a tract of land subdivides it and sells distinct parcels thereof to separate grantees, imposing restrictions on its use pursuant to a general plan of development or improvement, such restrictions may be enforced by any grantee against any other grantee, either on the theory that there is a mutuality of covenant and consideration, or on the ground that mutual negative equitable easements are created.' 26 C.J.S, Deeds, § 167; Higdon v. Jaffa, 231 N.C. 242, 243, 56 S.E.2d 661; Brenizer v. Stephens, 220 N.C. 395, 17 S.E.2d 471; Bailey v. Jackson-Campbell Co., 191 N.C. 61, 131 S.E. 567; Myers Park Homes Co. v. Falls, 184 N.C. 426, 115 S.E. 184.

"2. The right to enforce the restrictions in such case is not confined to immediate purchasers from the original grantor. It may be exercised by subsequent owners who acquire lots in the subdivision covered by the general plan through mesne conveyances from such immediate purchasers. Higdon v. Jaffa, supra.

"3. The restrictions limiting the use of land in the subdivision embraced by the general plan can be enforced against a subsequent purchaser who takes title to the land with notice of the restrictions. Higdon v. Jaffa, supra; Davis v. Robinson, 189 N.C. 589, 127 S.E. 697.

"4. A purchaser of land in a subdivision is chargeable in law with notice of restrictions limiting the use of the land adopted as a part of a general plan for the development or improvement of the subdivision if such restrictions are contained in any recorded deed or other instrument in his line of title, even though they do not appear in his immediate deed. Higdon v. Jaffa, supra; Sheets v. Dillon, 221 N.C. 426, 20 S.E.2d 344; Turner v. Glenn, 220 N.C. 620, 18 S.E.2d 197; Bailey v. Jackson-Campbell Co., supra. * * *

"The primary test of the existence of a general plan for the development or improvement of a tract of land divided into a number of lots is whether substantially common restrictions apply to all lots of like character or similarly situated. Phillips v. Wearn, 226 N.C. 290, 37 S.E.2d 895; Humphrey v. Beall, 215 N.C. 15, 200 S.E. 918; 14 Am.Jur., Covenants, Conditions, and Restrictions, section 202; 26 C.J.S., Deeds, § 167."

The unchallenged findings of fact amply support the judge's conclusions of law 1. These findings of fact further clearly show that the areas or tracts of land marked "Reserved Unrestricted" on the map marked plaintiffs' Exhibit 1 are not, and never have been a part of the separate, distinct and integral subdivision of numbered lots shown on this map reserved for residential uses only. The assignment of error to conclusion of law 1 is overruled.

In respect to conclusion of law 2. On this point we are favored with only a meager discussion in plaintiffs' brief. The fact that adjoining or surrounding property outside of the area embraced in the subdivision of numbered lots restricted for residential purposes only shown on the map marked plaintiffs' Exhibit 1 is now used for business and professional purposes on a large scale, does not alter the character of the residential subdivision itself. This Court said in Brenizer v. Stephens, 220 N.C. 395, 17 S.E.2d 471, 473: "It is generally held that the encroachment of business and changes due thereto, in order to undo the force and vitality of the restrictions, must take place within the covenanted area." Citing voluminous authority. See also: Turner v. Glenn, 220 N.C. 620, 18 S.E.2d 197; Vernon v. R. J. Reynolds Realty Co., 226 N.C. 58, 36 S.E.2d 710; Higdon v. Jaffa, supra. The assignment of error to conclusion of law 2 is overruled.

In respect to the assignment of error to part of conclusion of law 3. Neither the plaintiffs, nor Doctors Building, Inc., nor any defendant except to the first part of this conclusion of law which reads: "The use by Doctors Building, Inc., of all of Lots 11, 12, 13, 15, 16, 17 and part of Lot 14 in Block P, as shown on plaintiffs' Exhibit 1, for parking purposes in conjunction with operation of its office building, is a violation of the restrictive covenants requiring residential use of these lots."

In Forstmann v. Joray Holding Co., 244 N.Y. 22, 154 N.E. 652, 654, the Court said: "Doubtless the letter of such restriction has been violated by the defendants. But not every violation of a restrictive agreement entitles an aggrieved party to equitable relief. Each case depends on its own circumstances."

The Court said in Rombauer v. Compton Heights Christian Church, 328 Mo. 1, 40 S.W.2d 545, 553: "No hard and fast rule can be laid down as to when changed conditions have defeated the purpose of restrictions, but it can be safely asserted the changes must be so radical as practically to destroy the essential objects and purposes of the agreement."

See also 14 Am.Jur., Covenants, Conditions and Restrictions, Sections 305, 306, 307; 26 C.J.S. Deeds § 171; Thompson on Real Property, Permanent Edition, Vol. 7, Section 3651.

On the subject of changed conditions as affecting the enforcement of restrictive covenants, the cases are legion. Many of them are discussed or cited in Notes in 54 A.L.R. 812, 85 A.L.R. 985, 103 A.L.R. 734, 4 A.L. R.2d 1111. The cases, of course, deal with different facts, and it seems it is not possible to reconcile many of the holdings on substantially similar facts. A full discussion of the subject is likewise to be found in Booker v. Old Dominion Land Co., 188 Va. 143, 49 S.E.2d 314, and in Pitts v. Brown, 215 S.C. 122, 54 S.E.2d 538.

The Court said in Holling v. Margiotta, 231 S.C. 676, 100 S.E.2d 397, 400: "We find no error in the conclusion of the lower court that the defendants failed to make out their defenses of laches, estoppel and waiver on the part of the plaintiffs. The free parking on the unoccupied portion of Lot No. 2 bycustomers while shopping in the nearby stores is not an objectionable commercial use of the lot. Utilization of the first floor of the garage apartment as a storage place for the adjacent grocery was an insubstantial commercial use. These very limited uses for nonresidential purposes were not objected to by plaintiffs or the other residents of the subdivision but should not, in equity be held to have estopped them from asserting their right against the subsequent substantial violation by defendants."

Finding of fact 37 is to the effect, that though none of the owners of other lots in the subdivision made formal objection to the use by Doctors Building, Inc. of all of Lots 11, 12, 13, 15, 16, 17 and part of Lot 14 in Block P as shown on plaintiffs' Exhibit 1 for parking purposes in conjunction with the operation of its office building, defendants refused to allow the use of Lots 16 and 17 in Block P for a proposed addition to the Doctors Building in 1955, and such proposed addition was placed in the rear of its building outside the subdivision.

We are of the opinion, and so hold, that the unchallenged findings of fact do not show that the use of Lots 11, 12, 13, 15, 16, 17 and part of Lot 14 in Block P of this subdivision is such a radical or fundamental change or substantial subversion as practically to destroy the essential objects and purposes of the restriction agreement, as to warrant the removal of the residential restrictions, thereby destroying this residential subdivision with many fine, well kept homes. It would be inequitable to hold otherwise. The assignment of error to the challenged part of conclusion of law 3 is overruled.

For the reasons set forth above plaintiffs' assignment of error to conclusion of law 4 is overruled.

In respect to the assignment of error to conclusion of law 5.

Finding of fact 17 is: "No structures of any type have been erected on any numbered lots in the subdivision, except single family residences and duplexes." Finding of fact 16 in part is: "The City of Charlotte has opened a street connecting Kings Drive and Blythe Boulevard on a portion of Lot 14." This Court said in Callaham v. Arenson, 239 N.C. 619, 80 S.E.2d 619, 624: "And ordinarily the opening and maintenance of a street or a right of way for the better enjoyment of residential property as such does not violate a covenant restricting the property to residential purposes." Starmount Co. v. Greensboro Memorial Park, 233 N.C. 613, 65 S.E.2d 134, 25 A.L.R. 2d 898, cited and relied on by plaintiffs is factually distinguishable. In respect to the zoning of this subdivision by the city of Charlotte. "A valid restriction on the use of real property is neither nullified nor superseded by the adoption or enactment of a zoning ordinance, nor is the validity of the covenant thereby affected." 26 C.J.S. Deeds § 171, p. 1181.

Business uses not permissible in this residential subdivision have gradually approached it on land outside this subdivision and not a part of it. The border lots in Block G and Lots 15, 16 and 17 in Block P as shown on the map marked plaintiffs' Exhibit 1 first feel the pressure. If equity should permit these border lots to deviate from the residential restriction, the problem arises anew with respect to the lots next inside those relieved from conforming. Thus, in time, the restrictions throughout the tract will become nugatory through a gradual infiltration of the spreading change.

"Contractual relations do not disappear as circumstances change. So equity cannot balance the relative advantages and disadvantages of a covenant and grant relief against its restrictions merely because it has become burdensome. It is bound to give effect to the contract unless changed conditions within the covenanted area, acquiesced in by the owners to such an extent as to constitute a waiver or abandonment, is made to appear. * * * Those who purchase property subject to restrictive covenants must assume the burdens as well as enjoy the benefits, for equity does not grant relief against a bad bargain voluntarily made and unbreached." Vernon v. R. J. Reynolds Realty Co., supra [226 N.C. 58, 36 S.E.2d 712]. As set forth above, these changes within the covenanted area "must be so radical as practically to destroy the essential objects and purposes of the agreement." Rombauer v. Compton Heights Christian Church, supra. As parties bind themselves so must the courts leave them bound.

Cooper v. Kovan, 1957, 349 Mich. 520, 84 N.W.2d 859, 864, was a proceeding by residential property owners to enjoin construction of commercial buildings in a subdivision. The circuit court judge held that restrictive covenants on the subdivision were valid, but ordered a compromise permitting erection of buildings under specified conditions, and both parties appealed. The Court held that the restrictive agreements were valid, and there was no justification for compromise of restrictions so as to permit construction of buildings. The Court said in reference to whether the circuit judge sitting in equity had power to effect such a compromise in the face of and at the expense of existing and valid residential restrictions, "we are unable to find that this power lies in judicial hands."

Restrictive covenants are contractual in nature, and create a species of incorporeal property right. Sheets v. Dillon, 221 N.C. 426, 20 S.E.2d 344. "But it is not the way of equity to override the law or to invalidate contracts or to destroy property rights." Vernon v. R. J. Reynolds Realty Co., supra.

To release all the lots in Block G and Lots 15, 16, and 17 in Block P in direct violation of the valid residential restrictions here would undoubtedly substantially affect the value of every home in this subdivision. It is clear in our minds that residential restrictions generally constitute a property right of distinct worth, certainly to those who desire to keep their homes for residential use. A careful consideration of all the findings of fact shows no invalidation by the answering defendants of the residential restrictions by laches or waiver or acquiescence or estoppel, so as to warrant the removal of the restrictions. Starkey v. Gardner, 194 N.C. 74, 138 S.E. 408, 54 A.L.R. 806. It is not necessary for us to approve or disapprove of the judge's opinion that all of the lots in Block G and Lots 15, 16, and 17 in Block P should be released from the restrictions requiring residential use, but we do concur in his opinion as to the law set forth in conclusion of law 5. The assignment of error as to conclusion of law 5 is overruled.

The assignment of error to the signing of the judgment is overruled, for the reason that the unchallenged findings of fact, support the conclusions of law, and both support the judgment, with this exception: the judge erred in retaining the case for further proceedings as may appear necessary from time to time, and the judgment is ordered to be modified by striking this out.

Plaintiffs' last assignment of error to the denial by the judge to sign a judgment as prayed for in the unverified motion of Dewitt D. Phillips, Jr., one of the plaintiffs, is overruled. Plaintiffs' complaint seeks no such relief.

It is to be noted that not a single defendant has excepted to any part of the judgment or appealed.

The judgment below is

Modified and affirmed.