United Properties, Inc. v. Walsmith, 2-64868

• Decision Date: 25 August 1981
• Docket Number: No. 2-64868,2-64868
• Citation: 312 N.W.2d 66
• Parties: UNITED PROPERTIES, INC., First Central Service Corporation, and The Albright Development Corporation, Plaintiffs-Appellees, v. Donald WALSMITH, Jr., and Beverly Walsmith, Defendants-Appellants, Donald Cunningham, et al., Intervenors-Appellees.
• Court: Iowa Court of Appeals

Page 66

312 N.W.2d 66

UNITED PROPERTIES, INC., First Central Service Corporation, and The Albright Development Corporation, Plaintiffs-Appellees, v. Donald WALSMITH, Jr., and Beverly Walsmith, Defendants-Appellants Donald Cunningham, et al., Intervenors-Appellees.

No. 2-64868.

Court of Appeals of Iowa.

Aug. 25, 1981.

Roger J. Kuhle of Myers, Knox & Hart, Des Moines, for defendants-appellants.

Charles Coppola of Coppola, Coppola & Clark, Des Moines, for plaintiffs-appellees.

Dale Spencer, Des Moines, for intervenors-appellees.

Heard by OXBERGER, C. J., and DONIELSON, SNELL, CARTER and JOHNSON, JJ.

JOHNSON, Judge.

Defendants appeal from trial court's judgment granting a mandatory injunction against them which required them to remove a fence on their property and to restore the premises to the condition existing prior to erection of the fence. Defendants assert 1) that the balance of equities in this case made it improper for trial court to issue a mandatory injunction, 2) that trial court erred in ruling defendants had not pled estoppel as an affirmative defense and in finding no apparent authority vested in the alleged agent upon whom the defendants argue they relied, 3) that trial court erred in sustaining plaintiffs' objections to interrogatories propounded by defendants, and 4) that trial court erred in admitting hearsay evidence over defendants' objections. We affirm.

Northland Mortgage Company and Albright Development Company (two Iowa corporations) entered into a joint venture to develop land known as Echo Valley Estates. Northland was the financial partner and Albright developed the lots. On December 28, 1973, Northland and another corporation, United Properties, Inc. (UPI), executed and recorded an instrument entitled "Declarations of Residential Covenants." This instrument named Northland and UPI as the owners of Echo Valley Estates and contained certain declarations including the restrictive covenants which are at issue in this case. The pertinent parts of the declaration provide:

WHEREAS, Declarants are the owners of certain real property known as ECHO VALLEY ESTATES, located in the County of Warren, in the State of Iowa, part of which is more particularly described as: Lots 1 through 77, inclusive, except Lot 42, ECHO VALLEY ESTATES, platted of record in Warren County, Iowa.

WHEREAS, Declarants are desirous of protecting the value and desirability of the whole of ECHO VALLEY ESTATES including the real property described above.

NOW, THEREFORE, Declarants hereby declare that all of the properties described above, namely consecutive numbered Lots 1 through 77, inclusive, except Lot 42, shall be held, sold and conveyed subject to the following restrictions, covenants, and conditions, which are for the purpose of protecting the value and desirability of, and which shall run with, the real property and be binding on all parties having any right, title or interest in the described properties or any part thereof, their heirs, successors and assigns, and shall inure to the benefit of each owner thereof ...

14. ARCHITECTURAL CONTROL. No building or structure, nor any addition or alteration thereof, shall be constructed, altered, or maintained on any portion of any building plot unless and until detailed plans, specifications, proposals, and site plans (hereinafter collectively referred to as "plans") shall have been filed in writing with and have been approved in writing by Northland Mortgage Company.

These submitted plans shall contain details of design, color scheme, elevation, side grade, fencing and location and dimensions of structures, walks, and driveways, and shall also state the type construction and materials to be used in construction.

Failure of Northland Mortgage Company to disapprove plans within thirty (30) days after submission of said plans shall be deemed to be approval thereof.

Northland Mortgage Company shall transfer its approval authority under paragraph 14 to United Properties, Inc., when all of the lots are sold and a dwelling completed on each building plot.

20. FENCES. No fences, walls, or enclosures of any type or nature whatsoever shall be constructed, erected or placed upon any of the lots restricted, hereby without the written consent of Northland Mortgage Company pursuant to Paragraph 14 hereof. No fences, walls or enclosures may be erected on any side or rear lot line which abutts the golf course.

On September 5, 1975, Northland executed and recorded an assignment of architectural control to First Central Service Corporation. Apparently, in addition to the assignment of architectural control, Northland conveyed all the lots in Echo Valley Estates to First Central. Subsequently, on July 7, 1978, First Central, having conveyed each and every lot in Echo Valley Estates to Albright, assigned all architectural control to Albright. Neither the dates of conveyance of the land nor the dates of recordation of the deeds are revealed in the record. It appears, however, that those events transpired prior to defendants' purchase of Lot 2 in November, 1977, since the recitation the July 7, 1978 assignment states that "all " the lots had been conveyed to Albright. (emphasis added).

Subsequent to moving into the home on December 1, 1977, defendants decided to build a fence on their property and, in the spring of 1978, contacted neighbors to ask whether they had any objections to defendants' plan. Defendants learned for the first time, from those neighbors, that there were building restrictions in existence, and that approval was required to construct fences. They contacted Mr. and Mrs. Dave Albright, who lived in the development, because Dave was the sole shareholder of Albright Development Corporation. They made inquiries regarding the architectural control and were told that since the development was almost complete, Mr. Albright had no authority. The Albrights referred the defendants to Echo Valley Country Club to see Ms. Reggie Cunningham, a club employee.

The Club was owned by UPI and Ms. Cunningham worked directly for UPI's president, Ed Coppola. She advised him on day-to-day club functions and received other communications on behalf of UPI, thereafter forwarding them to Mr. Coppola. Ms. Cunningham told Mrs. Walsmith that she believed Mr. Coppola did not allow any fences on the property; but after Mrs. Walsmith informed Ms. Cunningham that she had been told by neighbors that an architectural control committee had the power to approve or disapprove fences, Ms. Cunningham said she would check with Mr. Coppola and send a copy of the covenants to defendants. After some delay, Mr. Walsmith picked up a copy of the covenants in person.

On April 6, 1978, Mrs. Walsmith wrote to Northland, informing the corporation of her intent to erect a fence around her backyard. ¹ On April 14, 1978, she contracted for the fencing job with Montgomery Ward & Co. Having heard nothing from Northland within thirty days after submission of her application to fence, she assumed she had approval, as provided in the covenants, and thereafter started construction.

On the morning the fence crew commenced work, Mrs. Walsmith received a phone call from Mrs. David Albright asking if she was aware she could not build the fence. Reggie Cunningham visited Mrs. Walsmith in person and told her she represented Mr. Coppola and that Mrs. Walsmith was to cease and desist building the fence. Don Cunningham, a resident who also had built eight houses in Echo Valley, visited Mrs. Walsmith and told her the regulation prohibited her from building the fence. Believing she had complied with the covenants, Mrs. Walsmith allowed the work crew to complete construction of the fence.

UPI, First Central, and Albright Corporations thereafter filed this action seeking a mandatory injunction for removal of the fence and restoration of the premises to the original condition. Ninety-three lot owners in Echo Valley Estates subsequently joined as intervenors. Trial court rendered judgment in favor of the plaintiffs and issued the injunction. This appeal followed.

I. Scope of Review. Since this is an action in equity, our review is de novo. Although this scope contemplates review of the entire case, such review is confined to those propositions relied on by each party for reversal or affirmance; errors or propositions not assigned will not be considered on appeal. Rector v. Alcorn, 241 N.W.2d 196, 200 (Iowa 1976).

II. Nature of Restrictive Covenants. Before determining whether trial court properly issued the injunction, we must first discuss the nature of restrictive covenants. The law reflects a two-fold nature. Such covenants are promises respecting the use of the land which, on the one hand, create proprietary interests ² and, on the other hand, create contractual rights. Compiano v. Kuntz, 226 N.W.2d 245, 248 (Iowa 1975); Thodos v. Shirk, 248 Iowa 172, 179, 79 N.W.2d 733, 737 (Iowa 1956). Historically, there has been no unanimity of opinion among the jurisdictions as to whether equity is enforcing the promise as a contract or as an incorporated property interest. Id. While our earlier cases have gone both ways (id.; see also Burgess v. Magarian, 214 Iowa 694, 243 N.W. 356 (1932); Johnson v. Robertson, 156 Iowa 64, 135 N.W. 585 (1912)), the court, in Thodos, finally expressed its preference for the theory which treats such covenants as creating equitable property interests in the burdened lands as an appurtenance to the benefited lands. 248 Iowa at 179, 79 N.W.2d at 737. However, the contractual nature of the rights created cannot be ignored. In fact, the supreme court, when finding the contractual nature of restrictive covenants dispositive of an issue before it, has confined its discussion to the contractual ramifications of an instrument in question and has refused to ponder the proprietary nature of the covenants. Compiano, 226 N.W.2d at 249. We believe that the instant case can be resolved by examining the contractual...