Harksen v. Peska

• Decision Date: 01 July 1998
• Docket Number: No. 20092,20092
• Parties: Laurie Jean Bryant HARKSEN, as Administrator of the Estate of John C. Harksen, a/k/a J.C. Harksen, Deceased, Plaintiff, v. Gene PESKA, Defendant and Appellant. and Warren Carter Johnson, Janet Johnson, Steven M. Johnson, Dave R. Johnson, Robert A. Warder, Jo Anna C. Warder, Robert A. Warder, Trustee, and Robert A. Warder, individually, Defendants and Appellees, and Everett P. Howe, Susan M. Kelts, T. Ashworth and E. Ashworth, Ruth Martens Lamont, Gordon O. Gavin and Donna J. Gavin, Scott L. McCaskell and Sharla R. McCaskell, Judith Goudy, Betty Peska, Defendants.
• Court: South Dakota Supreme Court

Page 170

581 N.W.2d 170

1998 SD 70

Laurie Jean Bryant HARKSEN, as Administrator of the Estate of John C. Harksen, a/k/a J.C. Harksen, Deceased, Plaintiff, v. Gene PESKA, Defendant and Appellant and Warren Carter Johnson, Janet Johnson, Steven M. Johnson Dave R. Johnson, Robert A. Warder, Jo Anna C Warder, Robert A. Warder, Trustee, and Robert A. Warder individually, Defendants and Appellees, and Everett P. Howe, Susan M. Kelts, T. Ashworth and E. Ashworth, Ruth Martens Lamont, Gordon O. Gavin and Donna J. Gavin, Scott L. McCaskell and Sharla R. McCaskell, Judith Goudy, Betty Peska, Defendants.

No. 20092.

Supreme Court of South Dakota.

Argued Jan. 14, 1998.

Decided July 1, 1998.

Gregory A. Eiesland and Michael C. Loos of Quinn, Eiesland, Day & Barker, Rapid City, for defendant and appellant.

Steven M. Johnson of Johnson, Heidepriem, Miner & Marlow, Sioux Falls, for defendants and appellees Johnsons.

Robert A. Warder, Warder Law Office, Hill City, for defendants and appellees Warders.

MILLER, Chief Justice.

¶1 Gene Peska purchased a tract of land in the Black Hills of South Dakota and built a "cabin" ¹ thereon. A neighboring property owner, John Harksen, later brought suit to enforce restrictive covenants that limited the number of buildings that could be built on the land. In a bifurcated trial, the trial court determined that the restrictive covenants were not ambiguous, and that a mandatory injunction for the removal of the cabin should issue. Peska appeals. We affirm in part and reverse and remand in part.

FACTS

¶2 On April 30, 1969, John C. Farrar and Ray J. Aldrich purchased 210 acres of scenic land in the Black Hills. Title was taken in their names, but it was understood that actual ownership of the land would be held by an informal partnership known as The Slate Creek Club. ² Each member of The Slate Creek Club was to receive one lot for their participation.

¶3 On November 13, 1973, Farrar and Aldrich filed a Declaration of Protective and Restrictive Covenants in the Pennington County Register of Deeds' Office. The Declaration consisted of two prefatory paragraphs of recitals of ownership and intent and purpose of the owners, ³ followed by seventeen specific covenants. Three of these covenants are applicable to this controversy, and provide:

(1) Restrictive covenants herein contained shall continue in force for a period of fifty (50) years from the date hereof and are applicable to any deed recorded after the date of these covenants.

(2) No more residences may be built on any parcel of property conveyed to a grantee after the date of these covenants than is specified in the deed to the first grantee.

* * * * * *

(11) There shall be no subdivision of any tract conveyed to a grantee and recorded after the date of these covenants except where residences in excess of one are permitted on the deed.

¶4 On January 22, 1974, Harksen and his wife Cynthia ⁴ purchased ten acres of the 210-acre tract from Farrar and Aldrich. Cynthia later quitclaimed her interest to Harksen.

¶5 A short time after Harksen purchased his ten-acre tract, Farrar and Aldrich executed and delivered a warranty deed for a twenty-seven and one-half acre site to Aldrich and his wife Lucille. Aldrichs had previously erected a residence on their site, and the deed to them did not contain a provision allowing for an additional residence.

¶6 In 1987, Aldrichs sold their land to Peggy Buckwheat. The deed to her stated: "Not more than one (1) additional residence shall be constructed upon the premises above-described for a term of fifty (50) years after the date hereof." Buckwheat sold twenty acres of the tract to Judith Goudy in May of 1990, and the remaining seven and one-half acres to Gene and Betty Peska in August, 1992. ⁵

¶7 Peska had purchased the property with the intention of building a summer residence thereon. He received a letter on July 8, 1993, from Robert A. Warder, a member of the Slate Creek Club, who was also acting as Harksen's attorney at that time. The letter specifically advised Peska that "if there is any attempt to construct or build on this property in violation of the covenants on this property, Mr. Harksen ... will enforce the covenants by all legal or equitable means including, but not limited to injuctative [sic] relief." Peska did not contact an attorney after receiving the letter, but did seek assurances from Buckwheat and the realtor who sold him the property that he could build a residence. Peska received a county building permit on August 19, 1993, and commenced construction thereafter.

¶8 Peska was served with the summons and complaint in this action on September 22, 1993. Despite the pending lawsuit, Peska continued construction on the summer home, finally finishing three months later in mid-December of 1993. He valued the cabin at $130,000. ⁶

¶9 The trial court bifurcated the proceedings, first having a trial as to whether the restrictive covenants were violated, followed by a second trial to ascertain the appropriate remedy. The trial court held the covenants were unambiguous and that they applied to any deed issued after November, 1973, when the covenants went into effect. It thus determined that the "deed to the first grantee" was the one from Aldrich and Farrar to Aldrich and his wife. The court then held covenant number 11 prohibited the further subdivision of Aldrichs' land, and covenant number 2 prohibited building any more residences on the land. Thus, under the court's ruling, Peska's seven and one-half acre tract and his cabin on that tract were in violation of the covenants.

¶10 After the separate hearing on the issue of remedies, the trial court issued a mandatory injunction requiring the removal of Peska's cabin. Peska appeals, and raises the following issues:

1. Whether the trial court erred in determining the restrictive covenants were unambiguous.

2. Whether the trial court erred in issuing a mandatory injunction ordering Peska to physically remove his cabin.

STANDARD OF REVIEW

¶11 On appeal we read a covenant as we would a contract, that is, without any presumption that the trial court was correct. Spring Brook Acres Water Users Ass'n, Inc. v. George, 505 N.W.2d 778, 780 (S.D.1993) (citing Baker v. Wilburn, 456 N.W.2d 304, 306 (S.D.1990)). Whether a contract is ambiguous is a question of law. Id. (citations omitted). Questions of law are reviewed de novo. Roth v. Roth, 1997 SD 75, p 7, 565 N.W.2d 782, 784.

¶12 As to the second issue, our review of a trial court's granting an injunction is: "(1) Were any of the facts found by the trial court clearly erroneous? and (2)[i]f not, taking the facts as true, did the court abuse its discretion in granting the injunction?" Maryhouse, Inc. v. Hamilton, 473 N.W.2d 472, 474 (S.D.1991).

DECISION

¶13 1. Whether the trial court erred in determining the restrictive covenants were unambiguous.

¶14 Peska argues that the restrictive covenants were ambiguous. Specifically, he takes issue with the language of covenant number 2, which provides:

No more residences may be built on any parcel of property conveyed to a grantee after the date of these covenants than is specified in the deed to the first grantee.

Peska claims the term "first grantee" is ambiguous. We do not agree.

¶15 "A contract is ambiguous when application of rules of interpretation leave a genuine uncertainty as to which of two or more meanings is correct." Spring Brook Acres, 505 N.W.2d at 780. A contract is not ambiguous merely because two parties do not agree as to its proper construction. Ducheneaux v. Miller, 488 N.W.2d 902, 909 (S.D.1992). Under the Plain Meaning Rule, if a term "appears to be plain and unambiguous on its face, its meaning must be determined from the four corners of the instrument without resort to extrinsic evidence of any nature." Spring Brook Acres, 505 N.W.2d at 780 n. 2 (citation and internal quotations omitted).

¶16 The question in this case is whether the meaning of the phrase "first grantee" can be determined from looking at the whole document itself. Peska offers several possible interpretations of who the "first grantee" could be. First, he argues that the first grantee could be Aldrich and Farrar as they first took title for the partnership. Next, he claims that, since the covenants apply to all 210 acres, the first grantee could be any person who was the first to receive a tract of land from Aldrich and Farrar. Peska argues that person's deed would then control all others. Next, he maintains that the first grantee could have been the first person to take after the covenants were filed and, likewise, this person's deed would control all others. Finally, he claims that, since the covenants do not refer to partners, the first grantee could mean the first "non-partner" to receive a deed.

¶17 While Peska has suggested several examples of possible "first grantees," that fact alone is not sufficient to create an ambiguity. Ducheneaux, 488 N.W.2d at 909. A plain reading of the covenants indicates that the "first grantee" is the person or persons who first received a deed after the covenants were filed. Covenant number 1 specifically states the covenants are applicable to any deed recorded after the date of the covenants. Therefore, Peska's assertions that the "first grantee" could be limited to one person are unfounded. Also, the specific language of covenant number 2 states that the critical time is "after the date of these covenants."

¶18 Peska's argument that, because the partnership is not mentioned in the covenants, the covenants do not apply until after a deed to a non-partner has been executed also fails. He states that no provision in South Dakota law prevents the partners from excluding themselves from the covenants. This may be true, but the partners did not exclude themselves. The very fact that the partners are not mentioned in the covenants indicates that the covenants were meant to apply to the partners, too. We will not...