St. Luke's House, Inc. v. DiGiulian

• Decision Date: 08 April 1975
• Docket Number: No. 79,79
• Citation: 336 A.2d 781,274 Md. 317
• Parties: ST. LUKE'S HOUSE, INC. v. Rita E. DiGIULIAN.
• Court: Maryland Court of Appeals

Page 317

274 Md. 317

336 A.2d 781

ST. LUKE'S HOUSE, INC. v. Rita E. DiGIULIAN.

No. 79.

Court of Appeals of Maryland.

April 8, 1975.

William A. Volkman, Jr., Bethesda, for appellant.

David M. Davenport, Arlington, Va. (Roman, Davenport & Davenport, Arlington, Va., and Kenneth E. Conklin and Conklin & Noble, Rockville, on the brief), for appellee.

Argued before MURPHY, C. J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.

O'DONNELL, Judge.

The appellant, St. Luke's House, Inc. (St. Luke's), aggrieved at the entry of a judgment in the amount of $1,850 in favor of the appellee, Rita E. DiGiulian (on her counter-claim), for breach of a written lease, following a nonjury trial in the Circuit Court for Montgomery County (John J. Mitchell, J.), urges us to reverse.

In January 1971 Mrs. DiGiulian purchased the property known as 3910 East-West Highway located in Section 4 of the Town of Chevy Chase, intending to use it as a residence for herself and her family. After the completion of extensive remodeling and restoration the idea of occupying it as a residence was abandoned and a 'For Rent By Owner' sign was posted on the property. Mrs. Audrey M. Henrickson, ¹ a licensed realtor with the Routh Robbins Real Estate Company induced Mrs. DiGiulian to give her a listing on the property, stating that she had a South American Diplomat as a prospective tenant. When that tenancy did not materialize Mrs. Henrickson, a member of the Board of Directors of St. Luke's and, together with the president of the Board, a member of its Site Procurement Committee, succeeded in having a lease executed between St. Luke's and Mrs. DiGiulian. St. Luke's, a private, nonprofit organization, operating 'halfway houses' designed to provide a transitional step for those recuperating from mental illnesses who had been released from institutional care and were being returned to community life, had been searching for a home like the DiGiulian premises for use as such a 'halfway house.'

The lease, on a standard form of the Routh Robbins Real Estate Company, was in pertinent parts prepared by Mrs. Henrickson in collaboration with Frank H. Dearden, Jr., president of St. Luke's Board and also a professor at the University of Maryland School of Social Work and Community Planning. The lease, for a two-year term, effective July 1, 1971, was for a total rental of $19,200 'payable in monthly installments of $800.' Standard printed clauses therein provided that it 'contains the entire agreement between the parties hereto and shall not be changed or modified in any manner except by an instrument in writing executed by the parties hereto'; and that the tenant 'will not use and will not permit the property or any part thereof to be used for any . . . unlawful purpose.' Provision was also made in the lease for the payment of a commission of $400 to Mrs. Henrickson.

[336 A.2d 783] Paragraph 3 of the lease, as modified by an addendum, provided as follows:

'Tenant will use said property as a residence for five (5) persons and for no other purpose or additional number of persons whatever, subject to modifications noted in Addendum Clause #1.

Addendum #1-It is understood and agreed that Tenant intends to apply for and to obtain a permit and/or variance and license to operate a boarding house from the proper Montgomery County or Chevy Chase authorities which would allow Tenant to have up to nine residents and two employees living on the premises. Should the Tenant be unable to secure the necessary permits by April 1, 1972, then Tenant may give Landlord thirty (30) days' notice of intent to vacate. If such notice is not forthcoming by July 1, 1972, then this provision will be deemed waived. . . .'

Another addendum provided that the tenant in each quarter would deposit with an escrow agent a sum equal to one-quarter's rent ($2,400) for disbursement to the landlord. ²

Two restrictions on the use of the property were the catalysts which gave rise to the litigation; one, the Montgomery County zoning ordinance which restricted occupancy in a single family dwelling, in an R-60 zone, to not more than five unrelated adults, but subject under the zoning ordinance to 'a special exception'; ³ the other, a restriction contained in a covenant running with the land under a deed dated 1910 from the Chevy Chase Land Company of Montgomery County, Maryland, to which Mrs. DiGiulian's property-and the other lots in Section 4-was subject, and which provided that 'all houses upon the premises hereby conveyed shall be built and used for residence purposes exclusively . . . and that no trade, business, manufacture or sales, or nuisance of any kind, shall be carried on or permitted upon said premises.' The restrictions in the deed further provided that any house erected upon the land 'shall be designed for the occupancy of a single family' and that any violation of such convenants and agreements might be enjoined by the Chevy Chase Land Company, including those who derive title from said company.

Prior to August 16, 1971 it appears that there had been extensive newspaper publicity concerning the nature of the occupancy of the premises by St. Luke's; there had been several meetings between the Board of Directors of St. Luke's and the 'Council' of Section 4 of Chevy Chase, as well as a 'citizens' meeting,' as a result of all of which the neighbors, residents in Section 4, had given notice of their intention to seek injunctive relief against the operation of the 'halfway house.' Although furniture had been moved into the premises in early July, it had not yet become occupied when, on August 16th, the Board authorized its attorney to file the necessary petition for special exemption under the zoning law, as contemplated in Addendum #1.

Before the petition could be filed the Circuit Court for Montgomery County (Shure, J.), following a bill of complaint filed by 13 neighbors and the Town Council of Chevy Chase, on August 17th, pursuant to Maryland Rule BB72, issued an ex parte injunction restraining both the appellant and appellee 'from operating a Halfway House on the leased premises known as 3910 East-West Highway.'

Counsel for the Board upon ascertaining that the restrictive covenant appeared to be identical to that applied by this Court in Chevy Chase Village v. Jaggers, 261 Md. 309, 275 A.2d 167 (1971), wrote an opinion for the Board in which he concluded that the filing of a petition for special exception, even if allowed, would not grant relief from the restriction in the deed and that St. Luke's could not successfully defend its position against the restriction. He advised St. Luke's 'to immediately seek another location,' to remove all equipment from the premises and to treat the lease as null and void.

Although St. Luke's filed an answer in the injunction proceedings in which it disclaimed knowledge of the existence of the 'covenants' in the deed, and contended, inter alia, that its use of the premises would constitute a use under the zoning ordinance by a 'family,' it did not otherwise contest the injunction granted, but vacated the premises. When the injunction proceedings came on for hearing on September 24, 1971, the complainants' motion for dismissal on the grounds of mootness was granted since St. Luke's had discontinued the use of the premises and they had been re-leased.

When St. Luke's abandoned the building Mrs. Henrickson still acting as the agent for Mrs. DiGiulian, secured another tenant for a lease commencing September 15, 1971 and ending April 30, 1972, at a monthly rental of $500.

St. Luke's sued Mrs. DiGiulian when she refused to refund $1,600 of the deposited rent; under her counter-claim she was awarded damages computed at $800 per month for the period July 1 to September 15, 1971 ($2,000), plus $300 per month from September 15, 1971 to April 15, 1972, and $150 for the period April 15 to April 30, 1972 (totalling $4,250), less credit for the $2,400 deposit.

In urging a reversal St. Luke's contends (a) that the trial court erroneously excluded parol evidence which, if admitted, would have established 'mutual mistake' as to the restrictive covenant; (b) that the restrictive covenant, running with the land, created a 'frustration of use' and/or an 'impossibility of performance' which granted the lessee the right to rescind the lease and (c) that the lease was breached by the appellee since she leased the premises for a purpose not allowed by the restrictive covenant and she failed in her duty, upon the institution of the injunction proceedings, to defend the tenant's 'implied warranty of quiet enjoyment.' ⁴

At the trial counsel for St. Luke's, upon direct examination of Dearden, asked: 'What was the purpose of that lease to be in terms of St. Luke's House?' Appellee's objection, on the ground that 'the lease will speak for itself,' was sustained, counsel conceding, however, '(t)heir understanding or attempts to negotiate will be something else.' Notwithstanding the sustaining of the objection to that question, Dearden did testify, without objection, that there had been extensive discussions with Mrs. DiGiulian concerning the purpose for which her house would be used, that she was informed that it was to be 'used as a halfway house for people recovering from mental illness,' and that she did not indicate any constraint upon such use other than under the zoning laws.

Mrs. Henrickson similarly testified, without objection, that she had explained to the appellee the purpose for which the house was needed. Although an objection was sustained to a question addressed to her as to whether she was given any indication 'that the purpose which you had discussed with Mrs. DiGiulian could not come to pass as a result of any restriction,' she testified, without objection, that Mrs. DiGiulian had not indicated to her any 'restriction' other than zoning upon the use of the property.

The attorney who was commissioned to prepare the petition for...