Hrisomalos v. Smith

• Decision Date: 19 October 1992
• Docket Number: No. 53A05-9201-CV-7,53A05-9201-CV-7
• Citation: 600 N.E.2d 1363
• Court: Indiana Appellate Court
• Parties: Frank N. HRISOMALOS, Athena R. Hrisomalos, Dennis L. Friesel, Donna M. Friesel, John M. Findley and Marjorie E. Findley, Appellants-Intervenors, v. Marc S. SMITH, Beth A. Smith and Minnette D. Deiss, Appellees-Petitioners.

Page 1363

600 N.E.2d 1363

Frank N. HRISOMALOS, Athena R. Hrisomalos, Dennis L Friesel, Donna M. Friesel, John M. Findley and Marjorie E. Findley, Appellants-Intervenors, v. Marc S. SMITH, Beth A. Smith and Minnette D. Deiss Appellees-Petitioners.

No. 53A05-9201-CV-7.

Court of Appeals of Indiana Fifth District.

Oct. 19, 1992.

Geoffrey M. Grodner, Mallor Grodner & Bohrer, Bloomington, for appellants-intervenors.

Frank A. Barnhart, Barnhart Sturgeon & Spencer, Bloomington, for appellees-petitioners.

SHARPNACK, Chief Judge.

On January 2, 1991, Marc and Beth Smith, who wished to purchase lots Nos. 7 and 8 located on the southern edge of Bloomington's Hillsdale First Addition ("Hillsdale") in order to operate a dentist's office, filed a complaint for declaratory judgment asking that a restrictive covenant benefiting the Hillsdale subdivision be declared invalid with respect to lots Nos. 7 and 8. Minnette Deiss, the owner of the lots, later joined in the Smiths' petition. (Petitioners will be referred to collectively as "Smiths") Frank N. Hrisomalos, Athena R. Hrisomalos, Dennis L. Friesel, Donna M. Friesel, John M. Findley and Marjorie E. Findley ("Intervenors") intervened pursuant to Ind. Trial Rule 24(A) to oppose the Smiths' complaint for declaratory judgment. Intervenors now appeal the trial court's order declaring the covenant that restricted to residential use property within the subdivision to be unenforceable with regard to lots Nos. 7 and 8. We reverse.

Intervenors raise three issues for review which we consolidate and restate as:

1. Whether the trial court's findings supported its conclusion that the restrictive covenant in question was invalid due to radical changes within and surrounding the subdivision.

2. Whether the trial court's findings supported a conclusion that Intervenors were barred from enforcing the restrictive covenant under the doctrine of acquiescence.

Hillsdale consists of ninety-six lots and was platted in March of 1946. The plat contained the following restrictive covenant:

"BUILDINGS: Only one single family dwelling house including necessary accessory buildings may be erected on each lot in this addition. No building or part thereof erected in this addition shall be used for business or manufacturing of any kind...."

(Record, p. 177.) Intervenors all own lots within the subdivision. Since 1946, there has been extensive commercialization in the area surrounding Hillsdale, and East Third Street, which borders Hillsdale to the south, has had a substantial increase in motor traffic. Within the neighborhood itself, there have been two significant developments not in conformity with the covenant. In 1953, the First Church of Christ Scientist ("Church") bought land within Hillsdale and began to operate a church on the property. The then owners of lots within Hillsdale unanimously consented to the conveyance and use of the property. In 1985, Dr. Norman Houze purchased property on the southern edge of Hillsdale and opened a chiropractic office which he operated continuously through the time of the hearing. Neither Intervenors nor any other lot owners acted to oppose such use of Dr. Houze's land.

The court granted the Smith's complaint and entered special findings. The court's findings of fact include the following relevant passages:

"Since 1953, the area surrounding the Addition has changed dramatically. Gone are the farms and lazy meadows within which the Addition lay in idyllic bliss. Come instead is the hustle and bustle of commercialized progress, as the city of Bloomington has grown....

Although there has been considerable commercialization outside the addition, residents within the Addition have steadfastly maintained their residential way of life. Within the addition neighbors still gather, and children still play, all in keeping with the residential mandate imposed by the covenant...."

(Record, p. 85.)

The court followed its findings with a lengthy discussion of applicable law, and concluded that a restrictive covenant will not be invalidated unless a radical change has occurred such that the original purpose of the covenant has been defeated. Following its discussion regarding radical change, the court stated the following:

"There has been a dramatic and compelling change within the Addition, for a chiropractic office has been allowed to remain since 1985 without protest or action on the part of the other property owners. Intervenors have acquiesced in the violation of the restrictive covenant for Hillsdale Addition....

A covenant is a contract, and only those bound by the contract may enforce it. Landowners who seek the enforcement of restrictive covenants must do so immediately and consistently.... A court in equity cannot overlook their acquiescence. The rule as stated in Wischmeyer v. Finch [citation omitted], is that "... injunctive relief will be denied where complainant has been guilty of laches, waiver, or acquiescence." While this present case does not involve injunctive relief, this court's declaratory relief shall follow the same rule, for should this court dismiss this case as unripe, the same parties would certainly appear before it again, with only their titles changed from Petitioner to Respondent, and from Intervenor to Petitioner.

Thus, this court concludes that the presence of the chiropractor's office within the Addition adjacent to or in close proximity to the Intervenor's Lots, and the heavy commercialization outside the Addition are of such weight as to preclude enforcement of the restrictive covenant with regard to Lots 7 and 8...."

(Record, p. 92.)

When we review a trial court's judgment based upon findings of fact and conclusions of law, we will reverse only if the findings and conclusions are clearly erroneous. A judgment is clearly erroneous when it is unsupported by the findings and conclusions. Findings of fact are clearly erroneous if the record fails to disclose any facts in evidence or any reasonable inferences from the evidence in support of the findings. Donavan v. Ivy Knoll Apts. Partnership (1989), Ind.App., 537 N.E.2d 47, 50. We will not reweigh the evidence and we will affirm the trial court unless the evidence, when viewed in a light most favorable to the judgment, points uncontrovertibly to an opposite conclusion. Id. at 50-51.

In property law, the term "restrictive covenant" describes a contract between a grantor and grantee which restricts the grantee's use of land. Generally, the purpose behind restrictive covenants is to maintain or enhance the value of adjacent lands by controlling the nature and use of surrounding properties. Cunningham v. Hiles (1979), 182 Ind.App. 511, 515, 395 N.E.2d 851, 854, order modified on reh'g, 402 N.E.2d 17. Although the law does not favor restrictive covenants, the contractual nature of the restrictions has led courts to enforce them in equity as long as the restrictions are unambiguous and do not violate public policy. Id. However, public policy requires the invalidation of restrictive covenants when there have been changes in the character of the subject land that are "so radical as practically to destroy the essential objects and purposes of the agreement." Cunningham, 182 Ind.App. at 516, 395 N.E.2d at 855 quoting Bachman v. Colpaert Realty Corp. (1935), 101 Ind.App. 306, 319-320, 194 N.E. 783, 789. ¹ Numerous personal defenses to actions in equity seeking to enforce restrictive covenants also exist. Such defenses include the familiar equitable defenses of clean hands, laches and estoppel as well as the defense of acquiescence. 2 American Law of Property Sec. 9.39; Wischmeyer v. Finch (1952), 231 Ind. 282, 291, 107 N.E.2d 661, 665.

Intervenors contend that the trial court erroneously applied the personal equitable defense of acquiescence and that, even if the trial court's judgment is instead read to invalidate the covenant due to radically changed circumstances, its own findings do not support such a conclusion. Although the trial court's findings and conclusions could be read to apply either or both theories, we agree with Intervenors that the findings of fact do not support the trial court's judgment based upon either theory.

We first explore the question of whether radical change has occurred. When dealing with restrictive covenants covering the use of lands within a subdivision, there are two types of changes to consider: changes within the covered area and changes in the immediately surrounding area. While the latter changes should be considered, less weight should be attached to them than to changes within the subdivision. Cunningham, 182 Ind.App. at 517, 395 N.E.2d at 855. In either case, however, we must focus upon whether the changes have adversely affected the purpose of the covenant:

"The party against whom enforcement of the covenant is sought bears the burden of showing that enforcement of the covenant would violate public policy (citation omitted). This burden is not satisfied merely by proving that particular changes have occurred; rather, it also requires the party to show how the changes have adversely affected the purpose of the covenant."

Id. 182 Ind.App. at 518 at n. 3, 395 N.E.2d at 855 at n. 3 (emphasis added).

In Cunningham, homeowners in a residential subdivision sought to enjoin defendants from constructing a music store in the neighborhood. The trial court found that the restrictive covenant was unenforceable and denied the homeowners injunctive relief. In reversing the trial court, the court of appeals found that only two major changes had occurred in and around the neighborhood: 1) the construction of an office building, which protruded into one corner of the subdivision, had led to increased traffic within one corner of the subdivision, and 2) urban development had resulted in a dramatic increase in the amount of traffic on the border of the neighborhood. Id. The court concluded that neither change was so radical in nature as to defeat the...