Brendonwood Common v. Franklin

• Decision Date: 13 May 1980
• Docket Number: No. 2-278A60,2-278A60
• Parties: BRENDONWOOD COMMON, Appellant (Plaintiff Below), v. William E. FRANKLIN, Evelyn S. Franklin, Wolford T. Gradison, Graham's Furniture, Inc., Fred W. Kohlmeyer, Betty Kohlmeyer, Donald C. McCallum, Beverly McCallum, John Prendergast, Jean Prendergast, Mrs. Virginia Reibel, Mrs. Mildred M. Spaan, Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 1136

403 N.E.2d 1136

BRENDONWOOD COMMON, Appellant (Plaintiff Below), v. William E. FRANKLIN, Evelyn S. Franklin, Wolford T Gradison, Graham's Furniture, Inc., Fred W. Kohlmeyer, Betty Kohlmeyer, Donald C. McCallum, Beverly McCallum, John Prendergast, Jean Prendergast, Mrs. Virginia Reibel, Mrs Mildred M. Spaan, Appellees (Defendants Below).

No. 2-278A60.

Court of Appeals of Indiana, Fourth District.

May 13, 1980.

Daniel E. Johnson, Baker & Daniels, Indianapolis, for appellant.

Ronald W. Polston, Indianapolis, for appellees.

YOUNG, Judge.

Brendonwood Common, a not-for-profit corporation, began this action to collect delinquent assessments from several of its members, each of whom owns one or more Brendonwood lots fronting on 56th Street (Brendonwood's southern boundary). These members resisted collection and sought declaratory relief that the covenants requiring all lot owners in Brendonwood to maintain memberships in Brendonwood Common and to pay its assessments had become unenforceable as to their lots. Thus this case combines Brendonwood Common's efforts to collect delinquent assessments from seven of its members with a challenge by those seven members to the underlying validity of Brendonwood's assessment system.

On September 12, 1975, Brendonwood Common, sued ten of its members to collect delinquent assessments levied by the corporation upon them as their share of its expenses in managing and maintaining the Brendonwood neighborhood. Its complaint sought as to each member the principal amount of the delinquent assessment, plus a reasonable attorney's fee, and foreclosure and order of sale of the members' Brendonwood properties because the delinquent assessments were liens upon their properties. The members raised an affirmative defense that Brendonwood's covenants requiring them to maintain memberships in the corporation and to pay its assessments on an acreage basis "are no longer in force and effect due to the fact that there has been such substantial and radical changes to the neighborhood surrounding Defendants' property, that enforcement of the restrictions would be unequitable (sic) to Defendants and all other property owners similarly situated." Thereafter, the members filed a cross-petition for declaratory judgment urging the trial court to "do equity" between them and the corporation by finding that the acreage assessment technique charged them too much in relation to the benefits that they received from it. The members amended their answer and cross-petition in order to expand their request that the trial court relieve them of the covenants and acreage assessment technique as to their lots and urged, as well, that they had since withdrawn from the Brendonwood Common. By reply Brendonwood Common denied the members' pertinent factual allegations. The parties stipulated the great bulk of the evidence and limited their evidence at trial to the single issue of whether Brendonwood Common's services had changed sufficiently to make the acreage assessment technique unenforceable as to the members.

From a judgment declaring the covenants no longer enforceable as to these members, Brendonwood Common appeals contending that:

(A) The trial court erred in concluding that changed conditions had rendered unenforceable as to the members' lots a set of covenants requiring all lot owners to maintain memberships in Brendonwood Common, pay assessments made on an acreage basis to meet its expenses in maintaining the common areas;

(B) The trial court erred in concluding that the members had effectively withdrawn as members of Brendonwood Common;

(C) The trial court erred in failing to order the sale of the members' properties in Brendonwood when it found delinquent assessment liens to be enforceable against their respective tracts;

(D) The trial court erred in failing to award Brendonwood Common interest and a reasonable attorney's fee.

A 350-acre parcel of real estate located on the south bank of Fall Creek in the Fall Creek Valley was platted as Brendonwood, "a self-regulated residential zone," on August 22, 1917. The addition consisted of 110 lots, various private roadways, paths and the like and one public road.

Brendonwood's covenants were put of record in a September 13, 1917, deed from Montgomery and Helen Lewis to Charles Lewis. That deed required Charles Lewis to organize Brendonwood Common as a corporation, to convey the common properties of Brendonwood (exclusive of its 110 lots) to the corporation, to provide for 110 memberships in the corporation with each membership appurtenant to one of the 110 lots and transferable only to successive purchasers of each lot, and to cause the corporation's articles and bylaws to provide for a system of rules and regulations permitting the assessment and collection of charges against each owner for the maintenance, care, and protection of the common areas. By provision in the deed, the covenants were to run with the land and bind Charles Lewis himself, his heirs, and his assigns. ¹

Charles Lewis thereafter organized the corporation (Brendonwood Common), conveyed the common properties to it, and recorded the corporation's articles. As recorded, the articles stated that the corporation was to provide in its bylaws for the maintenance of Brendonwood and that maintenance charges should be levied against each lot owner and become enforceable against their properties as liens. Contemporaneously, the corporation adopted bylaws that have not since been amended. As found by the trial court, those bylaws require the assessment of maintenance, development, and improvement charges to lot owners on an acreage basis and provides for the collection of such charges by their foreclosure as liens. In addition, the bylaws provide that the costs of some services should be assessed and collected on a per lot basis. ²

Charles Lewis subsequently conveyed the 110 lots. Eight of these were conveyed to members' predecessors in title, and each such conveyance made explicit reference to the deed from Montgomery and Helen Lewis to Charles Lewis and stated that the grantee, by acceptance of the deed, took the lot subject to the covenants, conditions, and agreements set forth in the Lewis' deed. Moreover, each member had notice of the Lewis deed either in the abstract of title furnished at the time of such member's purchase or as an exception in that member's title insurance policy.

In 1974 Brendonwood Common's board decided that proper maintenance of its roadway system necessitated an application of slurry seal and that the cost of the application should be spread among its members by the acreage assessment technique provided by the maintenance provisions in the bylaws. The cost of the application was approximately $31,000.00. None of these members have paid this special roadway assessment, and some have also refused to pay Brendonwood Common's other regular assessments. Following the filing of this lawsuit, the members submitted written resignations of their interests in Brendonwood Common.

A.

The trial court determined that Brendonwood's covenants were binding and enforceable but abrogated future enforcement of the covenants upon member's lots. In order to accomplish an abrogation, there must be a "change of conditions" in the restricted area "so radical in nature as to defeat the original purpose of the restrictive covenants." Bob Layne Contractor, Inc. v. Buennagel, (1973) 158 Ind.App. 43, 301 N.E.2d 671, 678. See also Highland v. Williams, (1975) 166 Ind.App. 492, 336 N.E.2d 846; Sorrentino v. Cunningham, (1942) 111 Ind.App. 212, 39 N.E.2d 473; Bachman v. Colpaert Realty Corp., (1935) 101 Ind.App. 306, 194 N.E. 783. In Sorrentino v. Cunningham, supra, for example, the defendant argued that a restrictive covenant prohibiting the sale of liquor in Irvington, a community on Indianapolis' east side, should no longer be enforced because of changes in conditions. Specifically, the defendant argued that much of the neighborhood on East Washington Street had developed into a commercial center, that several taverns operated from premises adjacent to the restricted area, that the area had been annexed into Indianapolis since the restrictions were imposed, and that the imposition of the restrictions would depreciate his property by $12,000 in value. Nevertheless, the court enforced the restriction against liquor because it was for the benefit of all lot owners in the area, and other lot owners were still in a position to benefit from it. 39 N.E.2d at 478. Similarly, in Bob Layne Contractor, Inc. v. Buennagel, supra, the court held that the construction of a superhighway along one edge of a restricted residential area was not a sufficient change of condition to abrogate restrictions against commercial development in favor of lots abutting the highway. In Sorrentino and Bob Layne, the courts upheld the restrictions because the benefits of the plan could still be realized by the property owners in the restricted area. See 2 American Law of Property § 9.39 (A. Casner ed. 1952). In concluding that the location and size of defendants' lots coupled with the increased burden of road maintenance relative to other costs justified the abrogation of restrictions, the trial court erred.

The changes found to be of such a nature as to abrogate the covenants are that the City of Indianapolis has expanded to include this as a part of the metropolitan area, the roads are now a hard surface instead of dirt and gravel, and the vicinal reservation has been turned over to a private county club whose membership does not include all members of the corporation. Also the costs of maintenance have increased. ³ The change in conditions is not so radical as to defeat the original purpose of the covenants. ⁴ The trial court erred in abrogating the restrictions upon the members' lots.

Despite the trial court's judgment abrogating future enforcement of the covenants, appellee also argues on appeal that...