Cunningham v. Hiles, 3-977A234

• Decision Date: 24 October 1979
• Docket Number: No. 3-977A234,3-977A234
• Parties: James D. CUNNINGHAM, Fred M. Lutgen, Jr. and Ross Haller, Appellants (Plaintiffs), v. Doug HILES, Al Gomez, Jr., Arthur C. and Sarah Clouser, Town of Schererville Plan Commission and Town of Schererville, Indiana, a municipal corporation, Appellees (Defendants).
• Court: Indiana Appellate Court

Page 851

395 N.E.2d 851

182 Ind.App. 511

James D. CUNNINGHAM, Fred M. Lutgen, Jr. and Ross Haller, Appellants (Plaintiffs), v. Doug HILES, Al Gomez, Jr., Arthur C. and Sarah Clouser, Town

of Schererville Plan Commission and Town of

Schererville, Indiana, a municipal

corporation, Appellees (Defendants).

No. 3-977A234.

Court of Appeals of Indiana, Third District.

Oct. 24, 1979.

William J. Muha, Daniel G. Hoebeke, Highland, for appellants.

Gilbert F. Blackmun, and Leonard M. Holajter, Friedrich, Bomberger, Tweedle and Blackmun, Highland, Kenneth D. Reed, Abrahamson, Reed and Tanasijevich, Hammond, for appellees.

STATON, Judge.

James D. Cunningham, Fred M. Lutgen, Jr., and Ross Haller, whom we shall hereinafter refer to as "Homeowners", resided in Lincoln Knolls Estates, a subdivision ¹ of Schererville, Indiana. They filed an action against the various named defendants in an attempt to preclude the possibility that the wholly residential character of their subdivision would be compromised by the establishment of a commercial enterprise. Since the inception of Lincoln Knolls Estates in 1953, a covenant has restricted the development of lots to residential use.

In July of 1976, the Schererville Plan Commission voted to recommend to the Schererville Board of Trustees that the zoning classification of a particular tract within Lincoln Knolls Estates be changed from residential to commercial usage. The recommendation was subsequently adopted by the Board of Trustees. Homeowners challenged the propriety of that re-classification in the trial court on the basis that the Plan Commission had violated due process and equal protection guarantees of Homeowners.

A related but legally distinct claim provided the basis for Homeowners' suit against individual defendants Doug Hiles, Al Gomez, Jr., and Arthur and Sarah Clouser. In April of 1976, the Clousers, who own various tracts of land in Lincoln Knolls Estates, entered into a contract with Doug Hiles for the sale of one of their lots within the subdivision. The sale was made conditional upon whether the zoning classification of the property would be changed from residential to commercial use. Following the Trustees' zoning re-classification of the property in July of 1976, Hiles employed Al Gomez, Jr. as general contractor to direct the construction of a music store on the purchased lot in Lincoln Knolls Estates. Homeowners filed suit against the Clousers, Hiles, and Gomez to permanently enjoin the construction of the proposed music store on the basis that the use of land in Lincoln Knolls Estate was restricted by covenant to residential purposes.

Homeowners' related claims against the various defendants were tried without the intervention of a jury. Following the presentation of evidence and arguments of counsel, the trial court entered judgment for both the named individual defendants and the Town of Schererville and its Plan Commission. Homeowners here appeal from those decisions, and raises the following issue for our review:

(1) Whether the evidence supports the conclusion of the trial court that the restrictive covenant limiting the use of land within the subdivision to residential purposes was not enforceable?

We reverse the trial court's determination that the restrictive covenant was unenforceable. ²

Homeowners contend that the evidence was insufficient to support the trial court's conclusion that the covenant restricting the use of the subject tract to residential purposes was unenforceable. At the outset, we note that individual defendants Hiles, Gomez, and the Clousers maintain that Homeowners have waived their right to raise this question on appeal because the issue was not raised in Homeowners' motion to correct errors.

While the presentation of issues in Homeowners' motion to correct errors is not a model of organization, we feel the allegations of error asserted therein satisfied the purpose of Ind.Rules of Procedure, Trial Rule 59. The purpose of TR. 59 is to apprise the trial court of a party's allegations of error in order to enable the trial court to rectify the error. Johnson v. State (1975), Ind.App., 338 N.E.2d 680, 682. Homeowners' motion to correct errors explicitly tendered the following related allegations:

(1) Whether the trial court applied the proper standard by which to evaluate whether the evidence justified a finding that the restrictive covenant was unenforceable?

(2) Whether the individual defendants had presented evidence sufficient to satisfy their burden of proof to show that the restrictive covenant was not enforceable?

In order to adjudicate these allegations, the court was necessarily required to determine whether the evidence was sufficient to support its decision that the restrictive covenant was not enforceable. The motion to correct errors alleged that the court had applied an incorrect standard of review in evaluating the evidence to determine whether the covenant was enforceable, that the defendants had the burden of proof to show that the correct standard was satisfied, and that the defendants had not carried this burden. The issue as framed on appeal represents nothing more than an amalgamation of these contentions. Consequently, we find that Homeowners have not waived their right to challenge the sufficiency of the evidence on appeal. We turn our attention to the substance of Homeowners' claim, consistent with the long-standing appellate preference to decide issues on their merits. West v. Indiana Insurance Co. (1969), 253 Ind. 1, 11, 247 N.E.2d 90, 97.

In the context of property law, the term "restrictive covenant" describes a contract between a grantor and grantee which restricts the grantee's use and occupancy of land. Bob Layne Contractor, Inc. v. Buennagel (1973), 158 Ind.App. 43, 53, 301 N.E.2d 671, 678. Generally, the purpose behind restrictive covenants is to maintain or enhance the value of lands adjacent to one another by controlling the nature and use of surrounding lands. Id. Here, since 1953 the restrictive covenant had been a part of contracts for the sale of tracts within Lincoln Knolls Estates and had restricted the use of lots within the subdivision to residential purposes. The covenant has served to maintain the residential character of life in Lincoln Knolls Estates and to preserve the value of the lots and homes in the residential market. Homeowners have invoked the restrictive covenant to block the proposed construction of a commercial use, a music store.

Although restrictive covenants are not favored by the law, the contractual nature of the restrictions contained in such covenants has compelled courts to enforce them in equity so long as the restrictions are unambiguous and do not violate public policy. Id. Public policy demands that restrictive covenants be invalidated when the changes are so radical in nature that the original purpose of the covenant has been defeated. Id. Our determination here thus hinges on whether changes within Lincoln Knolls Estates and the area surrounding it subsequent to 1953 are so radical in nature that the purpose of the covenant to maintain the residential character of the subdivision is no longer feasible.

The evidence regarding changes Within Lincoln Knolls Estates since 1953 includes the following. In 1974, Western and Southern Insurance Company constructed an office building which protrudes approximately 112.50 feet into the subdivision at its northeast corner. Employees of Southern and Western must momentarily use a subdivision street at the northeast corner of Lincoln Knolls Estates in order to reach the parking lot for that building. Our search of the record reveals that the only other change since 1953 for our consideration here is the zoning reclassification which was granted Southern and Western Insurance Company in 1973 for the then-proposed construction of the office building.

According to the Town of Schererville's "Zoning Ordinance No. 490," which established comprehensive zoning regulations for the town and delineated procedures...