Davis v. Huey

Decision Date22 July 1981
Docket NumberNo. C-27,C-27
Citation620 S.W.2d 561
PartiesTom H. DAVIS and Hattie Davis, Petitioners, v. Robert M. HUEY and Mary Paige Huey, et al., Respondents.
CourtTexas Supreme Court

Byrd, Davis & Eixenberg, Mike Davis, Austin, for petitioners.

Richard Crozier and Douglass D. Hearne, Eskew, Muir & Bednar, Doran Edkew, Austin, for respondents.

WALLACE, Justice.

Petitioners Tom H. Davis and Hattie Davis, husband and wife, appealed from a permanent injunction entered by the District Court ordering them to remove a portion of their residence built in a residential subdivision without approval of the developer pursuant to restrictive covenants of record. The Court of Civil Appeals affirmed the trial court judgment. 608 S.W.2d 944. We reverse the judgment of the Court of Civil Appeals and render judgment that Respondents, Robert M. and Mary Paige Huey, take nothing.

This is the second time this controversy has appeared before this Court. In 1977, the Hueys filed suit against the Davises alleging violation of restrictive covenants and seeking a temporary injunction to halt construction of their house and ordering the removal of the structure. The trial court denied the application for injunctive relief. The court of civil appeals reversed the judgment of the trial court on the grounds that there was no evidence that the developer had acted in an unreasonable and arbitrary manner in refusing to approve the construction plans for the Davises' house. Huey v. Davis, 556 S.W.2d 860 (Tex.Civ.App. Austin 1977), reversed, 571 S.W.2d 859 (Tex.1978). This Court reversed the judgment of the court of civil appeals on the grounds that the lower court exceeded the scope of appellate review of a temporary injunction and improperly granted premature review of the merits of the case. Davis v. Huey, 571 S.W.2d 859 (Tex.1978).

Northwest Hills, Section 7, a residential subdivision in Austin, Texas, was developed by the Austin Corporation. In 1965, prior to the sale of any lots in the subdivision, the Austin Corporation filed in the Deed Records of Travis County certain restrictive covenants applicable to the subdivision. These covenants are contained in ten paragraphs, numbers 7 and 8 being the ones primarily at issue in this cause. Paragraph 7 establishes the setback, front-line, side-line and rear-line limits of the lot in question. Paragraph 7 provides:

7. Set-Back, Front Line, Side Line and Rear Line

No structure shall be located or erected on any lot nearer to the front plot line than twenty-five (25) feet, nor nearer than five (5) feet to any side plot line except that the total combined setback from both sides shall in no event be less than fifteen (15) feet, nor nearer than fifteen (15) feet to the rear plot line.

Paragraph 8 provides that prior to the commencement of construction on a lot, the lot owner is required to submit the construction plans to the developer or an architectural committee for approval. Paragraph 8 provides:

8. Architectural Control and Building Plans

For the purpose of insuring the development of the subdivision as a residential area of high standards, the Developers, or in the alternative an Architectural committee appointed at intervals of not more than five years by the then owners of a majority of the lots in Northwest Hills Section Seven Addition, reserve the right to regulate and control the buildings or structures or other improvements placed on each lot. No building, wall or other structure shall be placed upon such lot until the plan therefor and the plot plan have been approved in writing by the Developers. Refusal of approval of plans and specifications by the Developers, or by the said Architectural Committee, may be based on any ground, including purely aesthetic grounds, which in the sole and uncontrolled discretion of the Developers or Architectural Committee shall seem sufficient. No alterations in the exterior appearance of any building of structure shall be made without like approval. No house or other structure shall remain unfinished for more than two years after the same has been commenced. 1

The Davises' lot adjoins the Huey lot on the canyon rim in an area located within Section 7 of Northwest Hills. The Davises purchased their lot in May, 1976. The record is not precise on this point, but the Hueys apparently purchased their lot in late 1973 or early 1974. The Davises originally proposed to build a house on their lot to be situated twenty-five feet from the rear plot line. It is undisputed that the proposed placement of the house complied with the set-back restrictions in Paragraph 7. However, the developer, Austin Corporation, acting through David B. Barrow, Jr., refused to approve the Davises' plans on the basis that the proposed placement of the house on the lot was inconsistent with the general plan of the subdivision. In refusing approval, Barrow relied on the general authority of Paragraph 8 to refuse approval of a plan "on any ground, including purely aesthetic grounds, which in the sole and uncontrolled discretion" of the developer shall seem sufficient. After negotiations between the parties regarding placement of the house proved fruitless, the Davises began construction despite the lack of approval of their plans. Thereafter, the Hueys instituted proceedings, in which Barrow and Austin Corporation, intervened seeking to halt construction on the grounds that the disapproval of the plans was a reasonable, good faith exercise of the authority granted by Paragraph 8; that the completion of the house would reduce the value of the surrounding property because of its size and placement; and, the proposed construction would block the views of the Hueys and other neighbors.

The trial court rendered judgment 2 permanently enjoining the Davises from further construction on their lot until the plans had been approved by the Austin Corporation and ordering them to remove a part of the house already constructed. The court of civil appeals affirmed holding inter alia that a covenant requiring written approval of building plans by the developer prior to any placement of any structure on a lot in a subdivision was valid and enforceable when exercised reasonably and pursuant to a general plan or scheme; that evidence supported the findings that there was a general plan or scheme created by the developer; and, that the developer acted reasonably in disapproving Davises' plans. 608 S.W.2d 944.

On appeal to this Court, the Davises primarily attack the validity of the developer's exercise of approval authority pursuant to Paragraph 8, contending that the lower courts failed to properly construe the restrictive covenants. The Davises bring additional points complaining of the lower courts' rulings on evidentiary questions, equity matters, the reshuffling of the jury panel, motions for mistrial, a motion for continuance, the taxing of costs, and the application of the doctrine of the "law of the case." However, in light of our holding that the Davises' lot was not burdened by the restriction sought to be imposed, it is unnecessary to consider these points.

It has been stated that housing today is ordinarily developed by subdividers, who, through the use of restrictive covenants, guarantee to the homeowner that his house will be protected against adjacent construction which will impair its value, and that a general plan of construction will be followed. Rhue v. Cheyenne Homes, Inc., 168 Colo. 6, 449 P.2d 361, 362 (1969). Restrictions enhance the value of the subdivision property and form an inducement for purchasers to buy lots within the subdivision. Finley v. Carr, 273 S.W.2d 439, 443 (Tex.Civ.App. Waco 1954, writ ref'd). A covenant requiring submission of plans and prior approval before construction is one method by which guarantees of value and of adherence to a general scheme of development can be accomplished and maintained. Rhue v. Cheyenne Homes, Inc., supra.

In Baker v. Henderson, 137 Tex. 266, 153 S.W.2d 465 (1941), the court set out fundamental rules regarding the application of restrictive covenants in conveyances:

Restrictive clauses in instruments concerning real estate must be construed strictly, favoring the grantee and against the grantor, and all doubt should be resolved in favor of the free and unrestrictive use of the premises.

Being in derogation of the fee conveyed by the deed, if there be any ambiguity in the terms of the restrictions, or substantial doubt of its meaning, the ambiguity and doubt should be resolved in favor of the free use of the land. Settegast v. Foley Bros. Dry Goods Co., 114 Tex. 452, 270 S.W. 1014; Ragland v. Overton, Tex.Civ.App., 44 S.W.2d 768, 771; Holliday v. Sphar, 262 Ky. 45, 89 S.W.2d 327; Thompson on Real Property, sec. 3361; 18 C.J., p. 387, and authorities under notes 19 and 20; 26 C.J.S. Deeds § 163. In Ragland v. Overton, supra (44 S.W.2d 771), the court quotes from Thompson on Real Property as follows: "In this country real estate is an article of commerce. The uses to which it should be devoted are constantly changing as the business of the country increases, and as its new wants are developed. Hence, it is contrary to the well-recognized business policy of the country to tie up real estate where the fee is conveyed with restrictions and prohibitions as to its use; and, hence, in the construction of deeds containing restrictions and prohibitions as to the use of the property by a grantee, all doubts should, as a general rule, be resolved in favor of a free use of property and against restrictions."

Id. 153 S.W.2d at 471; accord, McDonald v. Painter, 441 S.W.2d 179, 183 (Tex.1969); Southampton Civic Club v. Couch, 159 Tex. 464, 322 S.W.2d 516, 518 (1958); Settegast v. Foley Bros. Dry Goods Co., 114 Tex. 452, 270 S.W. 1014, 1016 (1925).

Although covenants restricting the free use of property are not favored, when restrictions are confined to a lawful purpose and are within reasonable...

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