Candlelight Hills Civic Ass'n, Inc. v. Goodwin, B14-88-512-CV

• Decision Date: 15 December 1988
• Docket Number: No. B14-88-512-CV,B14-88-512-CV
• Citation: 763 S.W.2d 474
• Parties: CANDLELIGHT HILLS CIVIC ASSOCIATION, INC., Appellant, v. Gerald L. GOODWIN, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 474

763 S.W.2d 474

CANDLELIGHT HILLS CIVIC ASSOCIATION, INC., Appellant, v. Gerald L. GOODWIN, Appellee.

No. B14-88-512-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Dec. 15, 1988.

Rehearing Denied Jan. 12, 1989.

Michael T. Gainer, Houston, for appellant.

Andrea N. Moore, Houston, for appellee.

Before PAUL PRESSLER, DRAUGHN and ELLIS, JJ.

OPINION

DRAUGHN, Justice.

Appellant Candlelight Hills Civic Association, Inc., a subdivision homeowners association, appeals the trial court's declaratory judgment which narrowly construed the subdivision's restrictive covenants. The lower court ruled that the restrictive covenants under which appellant collects a maintenance fund were unambiguous. In this regard, it excluded parol evidence which was offered to prove the intent allegedly expressed in the covenants. The court then found that the language of the restrictive covenants did not permit use of the maintenance fund to acquire real property. It also ruled that the homeowners' votes in each subsection within Candlelight Hills could not be pooled with votes from other subsections to determine the percentage of votes necessary to increase or expend the maintenance fund.

We find that the restrictive covenants are unambiguous and, when liberally construed pursuant to § 202.003, Tex.Prop.Code Ann. (Vernon Supp.1988), manifest the intent to allow acquisition of real property with the maintenance fund. We affirm the lower court's decision regarding the nonpooling of the subsection's votes and the inadmissibility of parol evidence, but reverse its decision disallowing the use of maintenance funds to acquire real property.

This appeal presents several issues concerning restrictive covenants and a procedural issue concerning the lower court's declaratory judgment. Appellant raises these issues in four points of error: (1) whether parol evidence was admissible to show the grantor's intent concerning the deed restrictions; (2) whether the restrictive covenants allow maintenance funds to be expended to acquire real property; (3) whether the homeowners' votes could be pooled; and (4) whether the declaratory judgment was procedurally proper.

Appellant, the subdivision homeowner's association of Candlelight Hills, was organized as a Texas non-profit corporation and is successor to the civic association created by the subdivision's restrictive covenants. Appellant's membership is composed of all lot owners and residents of the Candlelight Hills subdivision. Candlelight Hills is itself divided into six subsections with identical restrictive covenants between the subsections, save for a differing percentage vote required to alter the maintenance fees assessed. The restrictive covenants allow the assessment of maintenance fees which are collected from each homeowner and pooled to create a maintenance fund. The maintenance fund is administered by appellant pursuant to the Restrictions, Covenants, Conditions and Maintenance Charges found in each deed and pursuant to appellant's articles of incorporation, its bylaws, and the Texas Non-Profit Corporation Act. The purposes and intent of the maintenance fund are at the center of the present controversy.

Appellant sought to employ the maintenance fund to acquire a recreational facility for use by the Candlelight Hills subdivision by assuming the indebtedness of the owner. The appellant sought to acquire and maintain this recreational facility through an increase in the annual assessment of maintenance fees, provided a sufficient number of lot owners and residents voted for the proposed acquisition. Appellee Gerald L. Goodwin, a Candlelight Hills resident, filed suit to prevent appellant's acquisition of the recreational facility. At trial, he maintained that the maintenance fund could not be used to acquire real property under the evident intent of the restrictive covenants. He also challenged appellant's actions in pooling the votes of different subsections within Candlelight Hills to tabulate the requisite percentage of votes for approval of an increase in the maintenance assessment.

In response to appellee's suit, the trial court ruled that the restrictive covenants were unambiguous and did not intend the use of maintenance fees to acquire real property. It excluded deposition testimony of the developer of Candlelight Hills regarding his alleged intent as expressed in the restrictive covenants. It also ruled that the restrictive covenants did not permit the pooling of votes between the different subsections. From that judgment, appellant brings this appeal on four points of error.

Our determination of appellant's points of error are contingent upon a more fundamental finding as to whether the restrictive covenants are ambiguous. We have long held that the issue of whether an instrument is ambiguous is a question of law. Chambers v. Huggins, 709 S.W.2d 219, 221 (Tex.App.--Houston [14th Dist.] 1986, no writ). We find that the lower court correctly ruled that the restrictive covenants are unambiguous.

Appellant asserts that the deposition of T.D. Gardner, the developer of Candlelight Hills, was admissible to show the alleged intent of the restrictive covenants. The admissibility of parol evidence hinges upon the ambiguity of the restrictive covenants. The court is not looking for the subjective intent of the developer; instead, it is the objective intent, the intent expressed or apparent in the writing which is sought. Cherokee Water Company v. Forderhause, 641 S.W.2d 522, 525 (Tex.1982). We find the trial court properly excluded the developer's deposition, as this was parol evidence regarding his subjective intent. Since the deed is not ambiguous on its face, extrinsic evidence is not admissible. Sun Oil v. Madeley, 626 S.W.2d 726, 731-32 (Tex.1981). Therefore, the developer's deposition was not admissible to alter the expressed intent. Point of error number two is overruled.

Once determined unambiguous, the entire instrument in which the restrictive covenants are found is construed as a matter of law and not one of fact. We note that rules of construction require that: 1) a deed will be enforced as written, even if it does not express original intent; 2) where there is no ambiguity, the entire instrument is reviewed to discern the intent of the party; 3) deeds are construed to confer the greatest estate to the grantee; 4) all promises and agreements are presumed to have been merged fully into and expressed by the written document; and 5) an unambiguous written document will be enforced as written and cannot be varied or contradicted by parol testimony, unless clearly alleged and proven that it was procured by fraud, mistake, or accident. Chambers, 709 S.W.2d at 222.

Additional rules of construction have been added to the Property Code by the Texas Legislature, effective June 1987, which apply to "all restrictive covenants regardless of the date on which they were created." § 202.002, Tex.Prop.Code Ann. (Vernon Supp.1988). A restrictive covenant must now be liberally construed to give effect to its purposes and intent. § 202.003, Tex.Prop.Code Ann. (Vernon Supp.1988). The covenant should not be hedged about with strict construction, but given a liberal construction to carry out its evident purpose. With the preceding rules of construction in mind, we must look to the entire document and the necessary references within the document's language to discern its purposes and intent.

The Restrictions, Covenants, Conditions and Maintenance Charges, that is, the

restrictive covenants, contain a paragraph which establishes the general purposes for which the maintenance fund may be employed. The general purposes of the maintenance fund are enumerated in paragraph 4:6 of appellee's deed as follows:

The total fund accumulated from this annual maintenance charge, in so far as the same may be sufficient, may be applied towards the payment of maintenance expenses incurred for any or all of the following purposes: Lighting, improving and maintaining streets, parks, parkways, bridle paths and esplanades; subsidizing bus service; collecting and disposing of garbage, ashes, rubbish and the like; caring for vacant lots; payment of legal and all other expenses incurred in connection with the collection, enforcement and administration of the "MAINTENANCE FUND" and the enforcement of all covenants and restrictions for the Subdivision; employing private policemen and watchmen; doing any other thing necessary or desirable in the opinion of the Trustees of the Association to keep the property in the Subdivision neat and in good order, or which they consider of general benefit to the owners or occupants of the Subdivision. It is understood that the judgment of the Trustees of the Association in the expenditure of said funds shall be final and conclusive so long as such judgment is exercised in good faith. (emphasis added).

Paragraph 4:6 of the restrictive covenants explicitly states that the maintenance fund be expended for that which the association trustees consider of general benefit to the owners or occupants of the subdivision. Construed liberally, this language permits the use of the maintenance fund to purchase real property if such purchase will be of general benefit to the owners and occupants of the subdivision. The term "maintenance expenses" does not, standing alone, fatally limit the use of the maintenance fund; first, because the term is modified by the enumerated purposes of Paragraph 4:6, which include doing any thing of general benefit to the owners or occupants of the subdivision; and second, because it is modified by any express provisions and any necessary references found in other provisions of the restrictive covenants.

Appellee asserts that the list of purposes under paragraph 4:6 is inclusive, as well as illustrative of the type of permissible purposes for the fund. However, appellee's construction is too narrow. For example, the maintenance fund can be...