No. 80-290
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981
HOWARD PORTER et al.,
Plaintiff and Respondent,
vs.
K & S PARTNERSHIP, a Montana
partnership, and BRAD PEMBERTON,
JACK REHBERG et al.,
Defendants and Appellants.
Appeal from: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone.
Honorable Diane Barz, Judge presiding.
Counsel of Record:
For Appellants:
Crowley, Haughey, Hanson, Toole & Dietrich, Billings,
Montana
L. Randall Bishop argued, Billings, Montana
For Respondent:
Anderson, Edwards and Molloy, Billings, Montana
A. Clifford Edwards argued, Billings, Montana
Submitted: February 17, 1981
~ecided: April 30, 1981
~iled:APR 3 0 19${
Y 4
' Clerk
Mr. J u s t i c e F r e d J. Weber d e l i v e r e d t h e O p i n i o n o f t h e C o u r t .
he d e f e n d a n t s a r e K & S P a r t n e r s h i p and t h e named
members of t h e p a r t n e r s h i p . Collectively they a r e r e f e r r e d
to as K & S. K & S a p p e a l s from t h e f i n d i n g s , c o n c l u s i o n s
and o r d e r o f t h e T h i r t e e n t h J u d i c i a l D i s t r i c t C o u r t of
Y e l l o w s t o n e County e n j o i n i n g K & S from u s i n g t h e b u i l d i n g
h e r e involved f o r any purpose o t h e r than a s a single-family
dwelling. Howard P o r t e r , i n h i s own b e h a l f and i n b e h a l f o f
o t h e r owners of p r o p e r t y i n t h e Grandview S u b d i v i s i o n o f
B i l l i n g s , i s t h e p l a i n t i f f and i s h e r e i n r e f e r r e d t o a s
Porter. F o l l o w i n g a h e a r i n g on P o r t e r ' s m o t i o n f o r p r e l i m i n a r y
i n j u n c t i o n , and a f t e r b r i e f s were s u b m i t t e d by b o t h p a r t i e s ,
t h e D i s t r i c t C o u r t h e l d t h a t t h e o p e r a t i o n of t h e p r o p e r t y
a s a n a p a r t m e n t t r i p l e x by K & S v i o l a t e s c e r t a i n r e s t r i c t i v e
c o v e n a n t s t o which t h e p r o p e r t y i s s u b j e c t , and t h a t P o r t e r
i s n o t b a r r e d from e n f o r c i n g t h e r e s t r i c t i v e c o v e n a n t s by
t h e d o c t r i n e s of l a c h e s , e s t o p p e l , waiver o r acquiescence.
Furthermore, t h e c o u r t h e l d t h a t e n f o r c e m e n t of t h e r e s t r i c -
t i v e c o v e n a n t s w i l l n o t u n c o n s t i t u t i o n a l l y deny e q u a l pro-
t e c t i o n of t h e laws t o K & S or the K & S t e n a n t s under t h e
F o u r t e e n t h Amendment t o t h e U . S . C o n s t i t u t i o n . The p r e l i m i n a r y
i n j u n c t i o n a l l o w s K & S t h e o p p o r t u n i t y t o show c a u s e a t a
l a t e r d a t e why t h e i n j u n c t i o n s h o u l d n o t b e made p e r m a n e n t .
The p r e l i m i n a r y i n j u n c t i o n h a s been s t a y e d p e n d i n g t h i s
appeal.
T h e i s s u e s a s d i s c u s s e d by K & S a r e a s f o l l o w s :
1. Did t h e D i s t r i c t C o u r t err by c o n c l u d i n g t h a t any
a c t i o n t o e n f o r c e t h e r e s t r i c t i v e c o v e n a n t s i s n o t b a r r e d by
d o c t r i n e s of l a c h e s , e s t o p p e l , w a i v e r o r a c q u i e s c e n c e ?
2. Did t h e D i s t r i c t C o u r t err i n c o n c l u d i n g t h a t en-
f o r c e m e n t of t h e r e s t r i c t i v e c o v e n a n t s w i l l n o t deny e q u a l
p r o t e c t i o n of t h e law t o K & S o r i t s t e n a n t s ?
3. id t h e D i s t r i c t C o u r t e r r i n g r a n t i n g t o P o r t e r
the preliminary injunction?
4. id t h e D i s t r i c t C o u r t e r r i n r e f u s i n g t o a d m i t
c e r t a i n evidence?
W hold t h a t t h e D i s t r i c t Court e r r e d i n g r a n t i n g t h e
e
preliminary injunction. T h i s answers t h e t h i r d i s s u e and
d i s p o s e s of t h i s a p p e a l . W do n o t c o n s i d e r i s s u e s number
e
one and two b e c a u s e t h e y a r e n o t p r o p e r l y b e f o r e t h i s C o u r t
on t h e m e r i t s . A d i s c u s s i o n of t h e d e f e n s e s on t h e p a r t of
K & S would be p r e m a t u r e pending f i n a l d e t e r m i n a t i o n a t t h e
t r i a l court level. W e do d i s c u s s t h e e v i d e n c e q u e s t i o n s of
i s s u e number f o u r .
P o r t e r and t h e o t h e r s whom he r e p r e s e n t s a r e p r o p e r t y
owners i n and r e s i d e n t s of Grandview S u b d i v i s i o n i n B i l l i n g s .
The o r i g i n a l owner o f t h e p l a t t e d l o t s i n t h a t s u b d i v i s i o n ,
i n 1931, e x e c u t e d and r e c o r d e d a " D e c l a r a t i o n of R e s t r i c t i o n s
A f f e c t i n g Grandview S u b d i v i s i o n a t B i l l i n g s , Montana".
I n 1980 K & S p u r c h a s e d a n o l d e r house i n t h e s u b d i v i s i o n
f o r t h e a d m i t t e d p u r p o s e of o p e r a t i n g t h e house a s a n a p a r t -
ment t r i p l e x . The p u r c h a s e r s a r e alumni of Kappa sigma
f r a t e r n i t y , and r e n t p r i m a r i l y t o members of t h a t f r a t e r n i t y
a t E a s t e r n Montana C o l l e g e . P o r t e r and t h e homeowners he
r e p r e s e n t s s e e k a n i n j u n c t i o n and damages based upon t h e i r
c l a i m t h a t such u s e v i o l a t e s t h e r e s t r i c t i o n s p l a c e d on most
s u b d i v i s i o n p r o p e r t y i n 1931.
The ~ e c l a r a t i o nof ~ e s t r i c t i o n si s comprehensive and i s
e x p r e s s l y made " f o r t h e u s e and b e n e f i t of t h e p r e s e n t
owners and f o r i t s f u t u r e g r a n t e e s " . The r e s t r i c t i o n s c o v e r
s u c h t h i n g s a s number and k i n d of b u i l d i n g s which c a n be
c o n s t r u c t e d , minimum c o s t s of r e s i d e n c e s , w i d t h of f r o n t and
s i d e y a r d s , f e n c e h e i g h t s , and window and p o r c h p r o j e c t i o n s .
The f o l l o w i n g p o r t i o n s of such D e c l a r a t i o n of R e s t r i c t i o n s
a r e pertinent:
"PERSONS BOUND BY THESE RESTRICTIONS
" A l l persons ... who now own o r s h a l l h e r e a f t e r
a c q u i r e any i n t e r e s t i n any of t h e l o t s i n Grandview
Subdivision . . . s h a l l be t a k e n and h e l d t o a g r e e
and c o v e n a n t w i t h t h e owner of t h e l o t s shown on
s a i d p l a t and w i t h h i s h e i r s and a s s i g n s t o conform
t o and o b s e r v e t h e f o l l o w i n g c o v e n a n t s , r e s t r i c t i o n s
and s t i p u l a t i o n s a s t o t h e u s e t h e r e o f . . .
"USE O LAND
F
" S e c t i o n 1. None of s a i d l o t s may be improved, used
o r occupied f o r o t h e r than p r i v a t e residence pur-
p o s e s and no f l a t o r a p a r t m e n t house, though i n t e n d e d
f o r r e s i d e n c e p u r p o s e , may be e r e c t e d t h e r e o n . Any
r e s i d e n c e e r e c t e d o r m a i n t a i n e d t h e r e o n s h a l l be
d e s i g n e d f o r occupancy by a s i n g l e f a m i l y .
" S e c t i o n 9. DEFINITIONS
"Family--One o r more p e r s o n s l i v i n g , s l e e p i n g and
u s u a l , - y . c o o k i n g and e a t i n g on t h e p r e m i s e s , a s a
s i n g l e housekeeping u n i t .
" S e c t i o n 12. R I G H T TO ENFORCE
". . . IT]he owner o r owners of any of t h e above l a n d
s h a l l have t h e r i g h t t o s u e f o r and o b t a i n a n i n -
j u n c t i o n , p r o h i b i t i v e o r mandatory, t o p r e v e n t t h e
b r e a c h o f , o r t o e n f o r c e t h e o b s e r v a t i o n s of t h e
r e s t r i c t i o n s above s e t f o r t h , i n a d d i t i o n t o
o r d i n a r y l e g a l a c t i o n f o r damages, and t h e f a i l u r e
of ... t h e owner . . . of any ... lot . . . to
enforce the r e s t r i c t i o n s herein set f o r t h , a t t h e
t i m e of i t s v i o l a t i o n , s h a l l i n no e v e n t be deemed
t o be a waiver of t h e r i g h t t o do s o t h e r e a f t e r . .
."
P o r t e r f i l e d a v e r i f i e d c o m p l a i n t and a p p l i c a t i o n f o r
p r e l i m i n a r y i n j u n c t i o n on March 1 4 , 1980. K & S filed its
answer on A p r i l 7 , 1980. The answer d e n i e s any v i o l a t i o n of
t h e r e s t r i c t i v e c o v e n a n t s , and i n t e r p o s e s d e f e n s e s sounding
i n e q u a l p r o t e c t i o n , waiver and a c q u i e s c e n c e , l a c h e s and
e s t o p p e l . Hearing on t h e a p p l i c a t i o n f o r p r e l i m i n a r y i n j u n c -
t i o n was h e l d on A p r i l 1 5 , 1980.
The e v i d e n c e shows t h a t a M r s . Froney, t h e p r e v i o u s
owner, who s o l d t h e house t o K & S, had r e n t e d o u t rooms o r
a p a r t m e n t s c o n t i n u o u s l y o v e r a p e r i o d o f 40 y e a r s . About
1940 M r s . F r o n e y began r e n t i n g h e r b a s e m e n t t o f i v e o r s i x
f e m a l e s t u d e n t s a t t h e r e q u e s t of E a s t e r n Montana C o l l e g e .
I n 1952 M r s . F r o n e y remodeled h e r a t t i c and r e n t e d i t o u t a s
an apartment with a separate entrance. Mrs. Froney continued
r e n t i n g o u t b o t h t h e basement and a t t i c t o d i f f e r e n t p e r s o n s
and f a m i l y u n i t s u n t i l 1980, when s h e so1.d t h e h o u s e t o K &
S , h a v i n g a d v e r t i s e d and r e p r e s e n t e d i t a s a t r i p l e x u n i t .
P o r t e r a d m i t s knowing o f M r s . F r o n e y ' s p r a c t i c e of r e n t i n g
o u t rooms. I n substance, P o r t e r s t a t e d they allowed t h i s
b e c a u s e t h e y knew h e r , knew s h e l i v e d o n t h e p r e m i s e s , and
knew t h a t s h e would r u n a q u i e t p l a c e . A l s o P o r t e r and t h e
o t h e r s b e l i e v e d t h a t s h e b a d l y needed t h e money. K & S
t e s t i f i e d t h a t t h e p u r c h a s e of t h e h o u s e was made b e l i e v i n g
it t o be a l e g a l t r i p l e x . Brad Pemberton, who a c t e d f o r K &
S, s t a t e d t h a t h e had no knowledge o f t h e r e s t r i c t i v e c o v e n a n t s
p r i o r t o p u r c h a s e and would n o t h a v e b o u g h t t h e u n i t if h e
had known o f them.
Other testimony a t t h e hearing i n d i c a t e s t h a t s e v e r a l
o t h e r r e s t r i c t i o n s have n o t been e n f o r c e d f o r many y e a r s . A
f r a t e r n i t y member l i v i n g i n t h e t r i p l e x s t a t e d t h a t h e had
c o u n t e d numerous f e n c e s which were i n v i o l a t i o n o f f e n c e
height restrictions. G e n e r a l a l l e g a t i o n s of a p a r t m e n t s i n
o t h e r h o u s e s w e r e a l s o made. K & S attempted t o introduce a
p e t i t i o n s i g n e d by o t h e r r e s i d e n t s of t h e s u b d i v i s i o n which
s t a t e s t h a t t h o s e r e s i d e n t s have no o b j e c t i o n t o t h e t r i p l e x ,
b u t t h e p e t i t i o n was e x c l u d e d by t h e t r i a l c o u r t a s n o t
relevant. Finally, K & S submitted evidence t o prove t h a t ,
due t o development i n t h e surrounding a r e a over t h e y e a r s ,
t h e c h a r a c t e r o f t h e s u b d i v i s i o n h a s changed s o g r e a t l y t h a t
e n f o r c e m e n t of t h e r e s t r i c t i o n s now would b e i n e q u i t a b l e .
The D i s t r i c t C o u r t s p e c i f i c a l l y found t h a t t h e u s e of
t h e house by K & S a s a t r i p l e x i s a v i o l a t i o n of t h e r e s t r i c -
tions; that K & S had n o t i c e of t h e r e s t r i c t i o n s a t t h e t i m e
i t purchased t h e house; t h a t t h e p r e v i o u s u s e of t h e house
by M r s . Froney was m a t e r i a l l y d i f f e r e n t from t h e p r e s e n t
u s e , and t h a t P o r t e r i s n o t b a r r e d by e s t o p p e l , l a c h e s o r
w a i v e r from e n f o r c i n g t h e r e s t r i c t i o n s . In addition, the
D i s t r i c t C o u r t found t h a t enf orcement of t h e r e s t r i c t i o n s
a g a i n s t K & S i s n o t a d e n i a l of e q u a l p r o t e c t i o n ; and, t h a t
e v i d e n c e of change and development i n t h e s u b d i v i s i o n and i n
s u r r o u n d i n g a r e a s o f f e r e d by K & S t o show change i n t h e
c h a r a c t e r of t h e s u b d i v i s i o n such t h a t e n f o r c e m e n t of t h e
r e s t r i c t i v e c o v e n a n t s now would be i n e q u i t a b l e , was n o t
relevant t o the action.
A t t h e o u t s e t , we n o t e t h a t t h i s a p p e a l does n o t i n v o l v e
a judgment r e n d e r e d a f t e r t r i a l on t h e m e r i t s . I t involves a
p r e l i m i n a r y i n j u n c t i o n g r a n t e d a f t e r a h e a r i n g , w i t h such i n -
j u n c t i o n t o remain i n e f f e c t o n l y u n t i l t h e d e t e r m i n a t i o n on
t h e merits a f t e r the f i n a l hearing. Preliminary injunctions
a r e governed by T i t l e 27, Ch. 1 9 , P a r t s 2 , 3 and 4 . Specifi-
c a l l y , s e c t i o n 27-19-201, MCA, p r o v i d e s when p r e l i m i n a r y
i n j u n c t i o n s may be g r a n t e d :
"When p r e l i m i n a r y i n j u n c t i o n may- g r a n t e d . An
- be
i n j u n c t i o n o r d e r may b e g r a n t e d i n t h e f o l l o w i n g
cases:
" (1) when i t s h a l l a p p e a r t h a t t h e a p p l i c a n t i s
e n t i t l e d t o t h e r e l i e f demanded and such r e l i e f o r
any p a r t t h e r e o f c o n s i s t s i n r e s t r a i n i n g t h e
commission o r c o n t i n u a n c e of t h e a c t complained o f ,
e i t h e r f o r a limited period o r perpetually;
" ( 2 ) when i t s h a l l a p p e a r t h a t t h e commission o r
c o n t i n u a n c e of some a c t d u r i n g t h e l i t i g a t i o n would
produce a g r e a t o r i r r e p a r a b l e i n j u r y t o t h e a p p l i -
cant . . ." (Emphasis a d d e d . )
The p r e l i m i n a r y i n j u n c t i o n s t a t u t e s have been c o n s t r u e d
and a p p l i e d by t h i s C o u r t many t i m e s . The s t a t u t e s were
amended by t h e 1979 Montana l e g i s l a t u r e , b u t t h e c h a n g e s a r e
procedural i n nature. The s t a t u t e s now r e q u i r e a h e a r i n g o n
t h e a p p l i c a t i o n i n a l l c a s e s , w h e r e a s p r i o r t o 1979 a p r e -
l i m i n a r y i n j u n c t i o n c o u l d h a v e been g r a n t e d on t h e p l e a d i n g s
a l o n e under c e r t a i n circumstances. S e e Ch. 399, Laws o f
Montana ( 1 9 7 9 ) .
The a l l o w a n c e o f a p r e l i m i n a r y i n j u n c t i o n i s v e s t e d i n
t h e sound l e g a l d i s c r e t i o n o f t h e D i s t r i c t C o u r t , w i t h t h e
e x e r c i s e o f which t h e Supreme C o u r t w i l l n o t i n t e r f e r e
e x c e p t i n i n s t a n c e s of m a n i f e s t abuse. Atkinson v. Roosevelt
County ( 1 9 2 3 ) , 66 Mont. 4 1 1 , 421, 214 P. 74, 76-77; Parsons
v. Mussigbrod ( 1 9 2 1 ) , 59 Mont. 336, 340, 196 P. 528, 529.
An a p p l i c a n t f o r a p r e l i m i n a r y i n j u n c t i o n m u s t e s t a b l i s h a
p r i m a f a c i e c a s e , o r show t h a t i t i s a t l e a s t d o u b t f u l
whether o r n o t he w i l l s u f f e r i r r e p a r a b l e i n j u r y b e f o r e h i s
r i g h t s can be f u l l y l i t i g a t e d . I f e i t h e r showing i s made,
then c o u r t s a r e i n c l i n e d t o i s s u e t h e preliminary injunction
t o p r e s e r v e t h e s t a t u s quo p e n d i n g t r i a l . R e a Bros. Sheep
Co. v . Rudi ( 1 9 1 2 ) , 46 Mont. 1 4 9 , 1 6 0 , 127 P . 85, 8 7 .
" S t a t u s quo" h a s been d e f i n e d as f o l l o w s :
" I . . . t h e l a s t a c t u a l , peaceable, noncontested
c o n d i t i o n which p r e c e d e d t h e p e n d i n g c o n t r o v e r s y
... I I1
S t a t e v . S u t t o n ( 1 9 4 6 ) , 2 Wash.2d 523, 98
P.2d 680, 684; S t a t e v. Oldham ( 1 9 7 8 ) , 283 O r . 511,
584 P.2d 741, 743. S e e a l s o 40 Words a n d P h r a s e s ,
" S t a t u s Quo".
The l a s t p e a c e a b l e , n o n c o n t e s t e d c o n d i t i o n h e r e c o n s i s t e d
o f M r s . F r o n e y ' s p r a c t i c e of r e n t i n g o u t t h e s e c o n d s t o r y
a p a r t m e n t a n d basement a p a r t m e n t a s w e l l a s l i v i n g on t h e
main f l o o r h e r s e l f . The e s t a b l i s h e d s t a t u s quo t h e n , would
b e t h a t of a t h r e e - f a m i l y u n i t , a s d e f i n e d by t h e r e s t r i c t i o n s .
The o r d e r o f t h e D i s t r i c t C o u r t h a s t h e e f f e c t o f a l t e r i n g
t h e s t a t u s quo by r e q u i r i n g t h a t t h e u s a g e b e l i m i t e d t o
occupancy by a s i n g l e f a m i l y . The e f f e c t of t h i s i n j u n c t i o n
i s t o s u b s t a n t i a l l y r e d u c e t h e r e n t a l from t h e d w e l l i n g
b e c a u s e i t c o u l d no l o n g e r be r e n t e d a s a t h r e e - f a m i l y u n i t .
The D i s t r i c t C o u r t d i d n o t f i n d t h a t P o r t e r m i g h t
s u f f e r injury i f the preliminary injunction did not issue.
The D i s t r i c t C o u r t a p p a r e n t l y proceeded under s e c t i o n 27-19-
201 ( I ) , MCA, which p r o v i d e s f o r t h e g r a n t i n g of a p r e l i m i n a r y
i n j u n c t i o n when i t a p p e a r s t h a t t h e a p p l i c a n t i s e n t i t l e d t o
t h e r e l i e f demanded and such r e l i e f c o n s i s t s i n r e s t r a i n i n g
t h e commission of a n a c t . Although no f i n d i n g of i n j u r y o r
damage i s r e q u i r e d f o r a p r e l i m i n a r y i n j u n c t i o n under t h a t
p a r a g r a p h , i t i s t h e c o u r t ' s d u t y t o minimize t h e i n j u r y o r
damage t o a l l p a r t i e s t o t h e c o n t r o v e r s y . As stated i n
A t k i n s o n , 6 6 Mont. 423, 2 1 4 P. 77:
". . . t h e l i m i t of t h e endeavor of t h i s c o u r t upon
t h i s a p p e a l w i l l be t o s o p r o t e c t t h e r i g h t s of a l l
p a r t i e s t o t h i s s u i t , t h a t , whatever may be t h e u1.-
t i m a t e d e c i s i o n of t h e s e i s s u e s , t h e i n j u r y - -c h
t o ea
may- reduced - - minimum."
- be to the (Emphasis added.)
The p o t e n t i a l l o s s o f r e n t a l income by K & S i s a s i g n i f i c a n t
f a c t o r t o be c o n s i d e r e d .
I n r e b u t t a l of P o r t e r ' s prima f a c i e showing t h a t t h e
r e s t r i c t i v e covenants a r e being v i o l a t e d , K & S submitted
e v i d e n c e t e n d i n g t o show t h e f o l l o w i n g : (a) long-standing
a c q u i e s c e n c e by t h e neighborhood i n v i o l a t i o n s of t h e r e s t r i c -
t i v e c o v e n a n t s by M r s . Froney, t h e p r i o r owner and r e n t e r of
t h e three-family u n i t , ( b ) v i o l a t i o n s of o t h e r r e s t r i c t i v e
covenants throughout t h e subdivision, ( c ) p r e s e n t usage by K
& S t h a t i s s u b s t a n t i a l l y s i m i l a r t o t h a t of M r s . Froney, i n
t h a t both rented t h e property a s a three-family u n i t . We
f i n d such e v i d e n c e d o e s r e b u t t h e prima f a c i e showing made
by P o r t e r t h a t t h e r e s t r i c t i o n s a r e b e i n g v i o l a t e d .
Having concluded t h a t P o r t e r ' s prima f a c i e c a s e was re-
butted, t h a t t h e s t a t u s quo would n o t be p r e s e r v e d , and t h a t
t h e i n j u r y t o a l l would n o t be minimized, w e h o l d t h a t
i s s u a n c e of t h e p r e l i m i n a r y i n j u n c t i o n was a m a n i f e s t a b u s e
of d i s c r e t i o n . The i n j u n c t i o n i s d i s s o l v e d , and t h e c a s e
remanded t o t h e D i s t r i c t C o u r t f o r t r i a l on t h e merits.
W p o i n t o u t t h a t we e x p r e s s no o p i n i o n a s t o t h e u l t i m a t e
e
m e r i t s of t h e a c t i o n . " I t i s n o t t h e p r o v i n c e of t h e d i s t r i c t
c o u r t , nor of [ t h e Supreme C o u r t ] , t o d e t e r m i n e f i n a l l y
m a t t e r s t h a t may a r i s e upon a t r i a l on t h e m e r i t s . " A t k i n s o n ,
66 Mont. 425, 2 1 4 P. 78; B l i n n v. H u t t e r i s c h e Soc. of Wolf
Creek ( 1 9 2 0 ) , 58 Mont. 542, 554-555, 194 P . 140, 143. I n
g r a n t i n g temporary r e l i e f by i n j u n c t i o n , c o u r t s of e q u i t y
s h o u l d i n no manner a n t i c i p a t e t h e u l t i m a t e d e t e r m i n a t i o n of
t h e q u e s t i o n s of r i g h t i n v o l v e d . Rather, t h e c o u r t should
d e c i d e merely whether a s u f f i c i e n t c a s e h a s been made o u t t o
w a r r a n t t h e p r e s e r v a t i o n of t h e p r o p e r t y o r r i g h t s - s t a t u s
in
quo u n t i l t r i a l , without expressing a f i n a l opinion a s t o
such r i g h t s . An a p p l i c a n t need n o t make o u t such a c a s e a s
would e n t i t l e him t o f i n a l judgment on t h e m e r i t s . Atkinson,
66 Mont. 4 2 2 , 4 2 4 , 2 1 4 P. 77, 78; -- -
Rea Bros. Sheep Co., 46
Mont. 160, 127 P. 87. By t h e same t o k e n , a n a p p l i c a n t who
c o u l d show t h a t h e i s e n t i t l e d t o f i n a l judgment on t h e
m e r i t s s t i l l m i g h t n o t be e n t i t l e d t o a p r e l i m i n a r y i n j u n c t i o n .
A s s t a t e d i n t h e above-cited c a s e s , t h e l i m i t e d f u n c t i o n of
a p r e l i m i n a r y i n j u n c t i o n i s t o p r e s e r v e t h e s t a t u s quo and
t o minimize t h e harm t o a l l p a r t i e s pending f u l l t r i a l . If
a preliminary i n j u n c t i o n w i l l n o t accomplish those purposes,
then it should n o t i s s u e . F i n d i n g s and c o n c l u s i o n s d i r e c t e d
toward t h e r e s o l u t i o n of t h e u l t i m a t e i s s u e s a r e p r o p e r l y
r e s e r v e d f o r f i n a l t r i a l on t h e m e r i t s .
A p p e l l a n t s r a i s e a p p r o p r i a t e q u e s t i o n s of e v i d e n c e . In
f i n d i n g of f a c t no. 1 8 , t h e D i s t r i c t C o u r t found t h a t e v i -
dence a s t o changes i n t h e c h a r a c t e r of t h e s u b d i v i s i o n
c a u s e d by developments i n n e i g h b o r i n g l a n d was n o t r e l e v a n t
t o t h e q u e s t i o n whether t h e r e s t r i c t i o n s on t h e t r i p l e x a r e
being v i o l a t e d . The a u t h o r i t i e s a g r e e , however, t h a t where
t h e r e s t r i c t e d a r e a h a s changed s o r a d i c a l l y o v e r t h e y e a r s
such t h a t t h e p u r p o s e and i n t e n t of t h e r e s t r i c t i o n s a r e
t o t a l l y defeated, then e q u i t y cannot enforce t h e r e s t r i c -
tions. The change must be s o r a d i c a l and permanent a s t o
n e u t r a l i z e t h e b e n e f i t s of t h e r e s t r i c t i o n s . 7 Thompson on
Real P r o p e r t y Ch. 48, 53174 (pages 211-216); 5 Powell on
Real P r o p e r t y , Ch. 60, 5684; 20 Am.Jur.2d Covenants, Condi-
tions -Restrictions,
and SS281, 282.
A t t h e t r i a l on t h e m e r i t s , t h e D i s t r i c t Court should
c o n s i d e r t h e e f f e c t on t h e s u b d i v i s i o n of changes i n s i d e and
outside the specific r e s t r i c t e d area. Widespread r e n t i n g of
a p a r t m e n t s a s a l l e g e d , c o n g e s t e d s t r e e t s and i n c r e a s e d
t r a f f i c , and development of nearby i n s t i t u t i o n s l i k e S t .
V i n c e n t ' s H o s p i t a l and E a s t e r n Montana C o l l e g e , a l l c o u l d
have t h e e f f e c t of d e f e a t i n g t h e p u r p o s e s of t h e r e s t r i c -
tions. The above-ci t e d a u t h o r i t i e s do s t a t e , however, t h a t
g r e a t e r w e i g h t s h o u l d be g i v e n t o changes i n s i d e t h e boundary
of t h e r e s t r i c t e d a r e a t h a n t o changes i n n e i g h b o r i n g a r e a s .
The D i s t r i c t C o u r t g r a n t e d P o r t e r ' s motion i n l i m i n e t o
e x c l u d e a p e t i t i o n o f f e r e d by K & S , and s i g n e d by o t h e r
r e s i d e n t s of t h e s u b d i v i s i o n , s t a t i n g t h a t t h e r e s i d e n t s
have no o b j e c t i o n t o o p e r a t i o n of t h e t r i p l e x . The ~ i s t r i c t
Court excluded t h e p e t i t i o n a s n o t r e l e v a n t . Appellant
c l a i m s e r r o r , and a s k s t h a t t h i s C o u r t d e c l a r e t h e p e t i t i o n
admissible.
" R e l e v a n t e v i d e n c e i s e v i d e n c e h a v i n g any tendency t o
make t h e e x i s t e n c e of any f a c t t h a t i s of consequence t o t h e
determination of the action more probable or less probable
. . ." Rule 401, Mont.R.Evid. This standard allows wide
admissibility. Commission Comment to Rule 401; Rule 402.
The petition appears admissible on the question whether the
character of the neighborhood has changed so radically as to
render enforcement of the restrictions inequitable, and
should be considered at trial on the merits.
We remand the case to the District Court for trial con-
sistent with this opinion to determine if a permanent in-
. -
junction should be granted.
,/ A,.-
L
, 6 stice
We concur:
#'
Chief stic ice
Justices
Mr. Justice John C. Sheehy dissenting:
The reasons given to dissolve the preliminary injunction
by the majority will be inexplicable to the District Court,
as indeed they are to me.
There is no showing in the majority opinion that the
plaintiff here failed to establish a prima facie right to
preliminary injunctive relief, Troglia v. Bartoletti (1969),
152 Mont. 365, 451 P.2d 106; nor that the District Court in
issuing the preliminary injunction made an erroneous conclusion
of law, Ring v. Spina (2d Cir. 1945), 148 F.2d 647. Instead,
the majority dissolves the injunction on an incorrect perception
of the "status quo involved" and something that is defined
as "a duty to minimize the damages or injury to all parties"
which I determine to be a reference to irreparable harm or
damages. The opinion constitutes a step-out in the field
of injunctive law, a step which I refuse to take.
In this dissent, I will argue that: (1) the District
Court was required by law to make its findings here; (2) the
issues on which the District Court made findings and con-
clusions were issues raised by the appellant in opposition
to the preliminary injunction; (3) a fullblown trial of
those issues occurred before the District Court; (4) the
preliminary injunction was properly issued by the court; ( 5 )
the majority opinion misconstrued the "status quo" requirement
for preliminary injunctions; and, (6) the "irreparable harm"
is presumed in cases of this sort.
I. The District Court had a duty to make findings of
fact here.
The duty of the District Court to make findings upon
the fact issues presented in the hearing on the motion for a
preliminary injunction is clear. Rule 52(a), M.R.Civ.P.
provides :
". .
. in granting or refusing interlocutory
injunctions the court shall similarly
set forth the findings of fact and conclusions
of law which constitute the grounds of its
action. "
It is an established rule of law that the findings of
fact are to receive such a construction as will uphold
rather than defeat the judgment thereon. Ballenger v.
Tillman (1958), 133 Mont. 369, 324 P.2d 1045.
11. & 111. The a ~ ~ e l l a n t s
raised the issues that the
district judge decided.
The findings of fact and conclusions of law required to
be made by the District Court in matters tried without a
jury are the foundation for the decision of the court. The
findings must be ultimate facts, which are essential to
determine the conclusions upon which the court rests its
decision. Marriage of Barron (1978), - Mont . , 580
P.2d 936, 36 St.Rep. 891. The findings, of course, must
relate to the material issues of fact, and the conclusions,
based upon the findings, must dispose of the legal issues
raised in the matter before the court.
The majority opinion objects to the District Court
reaching a "final opinion" on the merits of the principal
case. However, the majority opinion ignores this record
in which the District Court entered findings and conclusions
which affirmatively found: that the present use of the
triplex is materially different from past use; that the
plaintiff's action is not barred by the doctrines of waiver,
estoppel or laches; and that the homeowners did not discriminate
against a certain class of residents so as to create a
problem of equal protection.
Those same issues were raised by the defendants at the
motion for the preliminary injunction hearing. They insisted
to the district judge that those same issues were a bar to
the issuance of the preliminary injunction.
K & S Partnership entered into a contract for deed with
Leona S. Froney on January 2, 1980, for the purchase by the
partnership of Lot 1, Block 4, Grandview Subdivision. Brad
Pemberton, a member of Kappa Sigma Fraternity, is the only
partner at present. Pemberton, with loans from other Kappa
Sigma members in Billings and with Fraternity Building
Corporation assets of some $2,000 or $3,000 funded the down-
payment. Although Pemberton appears to deny that the purpose
of the purchase was to provide a chapter house for the Kappa
Sigma unit at Eastern Montana College of education, at the
time of the trial, there were eight male students living in
the residence on the purchased premises, seven members of
Kappa Sigma, and one transfer student associated with Sigma
Nu.
K & S took possession of the premises on January 2,
1980; plaintiffs filed their verified complaint on March 14,
1980.
The district judge found, and the evidence sustains
her, that Leona Froney began renting portions of her house
in 1940, but that in all the period of time until she sold
the house, Leona Froney exclusively lived on the ground
floor of the home. It was Leona Froney's practice to have
only one renter in the basement apartment and one in the
upstairs apartment and that she had extremely strict rules
with respect to the conduct of the renters. Leona Froney
testified that the rental money she received was necessary
to sustain her and her daughter, whom she was educating.
The court found that these facts were known by the neighbors,
but that the "technical violations" of the restrictions were
overlooked because of their concern for Leona Froney's
welfare.
With the advent of K & S Partnership, the use of the
premises changed to this extent: there were eight people
living on the premises, none related to each other and no
owner on the premises. The tenant on the main floor, a
member of Kappa Sigma Fraternity, was the "property manager"
who was in charge, and who was paid $25 for his services by
K & S Partnership.
In simple terms, Leona Froney was not operating a
fraternity house; K & S Partnership was. The operation of a
fraternity house is not the renting of a "three-family unit"
which is the purported status-quo upon which the majority
depends.
The principal partner testified that he would not have
purchased the house if it could not have been used as it is
now being used, yet he knew of the restrictions because they
were in the title insurance policy he procured at the time
of purchase, and he had been informed by a lawyer that his
proposed usage of the house would pass muster under the
restrictions. Leona Froney testified:
"Q. They didn't try to conceal the fact
that they intended to use it as a fraternity
house at all, did they? A. No, they had
said that they had already found lawyers
that said it was okay."
Leona Froney was referring to a conversation that
occurred during the negotiations for the purchase of the
house.
It was the foregoing new use of the dwelling house that
the district judge found "violates the restrictions" and
should be enjoined. There can be no cavil that K & S
Partnership's use of the dwelling violates that section of
the restrictions which states that the buildings in the
subdivision shall be "one family dwellings--a detached
building, designed for, or occupied exclusively for one
family." It should be clear that a dwelling house used as a
fraternity house violates a single-family dwelling restriction
as a matter of law. The District Court was not erroneous in
this finding and this Court should not set that finding aside
under Rule 52 (a), M.R.Civ.P.
The verified complaint of the neighbors in Clanton
Heights Association was filed on March 14, 1980. On the same
day, the plaintiff moved for a preliminary injunction, and
gave notice to the partnership that a hearing on the motion
for a preliminary injunction would be heard before the court
on April 14, 1980. The defendants filed their answer to the
verified complaint on April 7, 1980. They raised as affirm-
ative defenses: (1) an unconstitutional denial of equal
protection of the laws and due process; (2) waiver on the
part of the plaintiff to Leona Froney's use of the premises,
through a long-standing acquiescence with knowledge; (3)
estoppel by virtue of long-standing acquiescence with
knowledge; and, (4) laches. The defendants raised those
same objections in a brief filed with the District Court on
the date of the hearing, and in the conclusion of the brief,
asked the court to deny the plaintiffs their requested
relief (which at that time was an application for preliminary
injunction) and to dismiss the complaint. After the hearing,
the defendants submitted proposed findings of fact and
conclusions of law to the district judge. In their proposed
conclusions, they asked the court to conclude that the
restrictions had to be construed strictly (Proposal 4) that
the long acquiescence of the plaintiff in using the premises
for other than private one-family residences constituted
abandonment and laches (Proposal 5 ) , that plaintiff's course
of acquiescence misled K & S Partnership to expend large
sums of money to purchase the property and plaintiff should
be estopped (Proposal 6), and that enforcement of the
restriction would constitute a denial of the tenant's right
of equal protection and privacy guaranteed by federal and
state constitutions (Proposal 10).
In their brief submitted with their proposed findings
and conclusions, the contention was made that "plaintiff is
barred either by estoppel or laches or both, from enforcing
the deed restriction in question. . ."
It is clear that the issues raised by - defendants,
- the
are precisely the issues upon which the District Court made
findings and conclusions in granting the injunction. The
District Court had no other course but to rule on them
because if these defenses to the issuance of a preliminary
injunction were well-grounded, plaintiff is not entitled to
a preliminary injunction.
The majority opinion dissolves the preliminary in-
junction issued by the court upon the ground that ultimate
resolution of the issues should await final trial on the
merits. The District Court entered specific findings and
conclusions in which it affirmatively found that the present
use of the triplex is so materially different from past
use that the action is not barred by the doctrines of
waiver, estoppel, or laches; and that the landowners did not
discriminate against a certain class of residents, so
that the claim of denial of equal protection is unfounded."
Those were precisely the issues that were presented by the
appellants to the district judge at the time of the hearing
on the preliminary injunction and on which the district
judge had a duty to make a determination both as to fact and
as to law, to determine the propriety of issuing the preliminary
injunction.
The District Court did not preclude the matter when it
issued its preliminary injunction in this case. The district
judge contemplated a further hearing on the matter by
providing "the defendant appear before the court at a date
and time to be set at the convenience of court and counsel
to show cause why, if any there be, said injunction should
not be made permanent."
I cannot envision a case where "an applicant who could
show that he is entitled to final judgment on the merits still
might not be entitled to a preliminary injunction," unless it
may be this case. Such a result will always require an
illogical decision.
The majority opinion takes too narrow a view of the
power of the District Court in these matters. The District
Court has power to issue a preliminary injunction upon a
prima facie case being established by the person seeking the
injunction. A prima facie case is clearly established here.
That the District Court has made decisions which may eventually
be the ultimate conclusions in the case is not a valid
reason for dissolving the preliminary injunction. It should
rather strengthen the need for the preliminary injunction.
It is said by the Idaho court (by way of dictum) in Farm
Service, Inc. v. United States Steel Corp. (19661, 9 0 Id.
"The rule against granting a preliminary
injunction which will have the effect of
giving to the party seeking the injunction
all the relief sought in the action, does
not preclude the granting of such an injunction
in a proper case. Rather, it is to be understood
as requiring the moving party in such case to
show a clear right to the relief sought . .
."
The Idaho court has enunciated the rule that ought to
apply in this Court. If the plaintiffs here have established
a clear right to a preliminary injunction, which they have,
the preliminary injunction should not be dissolved upon the
ground that the District Court had made ultimate conclusions
on defenses raised by the other parties. Otherwise, we make
a mockery of the rule that the allowance of a preliminary
injunction is vested in the sound legal discretion of the
District Court, with the exercise of which the Supreme Court
will not interfere except in cases of manifest abuse.
IV. The preliminary injunction was properly issued by
the District Court.
What we have said foregoing about the applicable law
and facts in this case, and the issues raised by the parties
at the time of the preliminary injunction hearing established
beyond doubt that plaintiff has shown a prima facie basis
for the preliminary injunction, and it should not be dissolved
by us.
V. The majority misconstrues the "status quo" requirement
for injunction.
Another reason given by the majority is that the District
Court did not preserve the "status quo" in granting the
preliminary injunction. The only status quo that the injunction
should preserve, if necessary, is the use Leona Froney
placed on the real property.
". . . The status quo to be maintained, however,
is not necessarily the state of affairs that
exists at the time the suit was filed. In fact, if
it were, then few injunctions would be enforceable
pending appeal since the vast majority of suits
seeking injunctions are filed after the defendant
has started to do the disputed acts. Further,
if the status quo were limited to the state of
affairs at the time of filing, a wrongdoer would
be permitted to continue engaging in the disputed
conduct until the case was finally resolved, as
long as the wrongdoer began to act before the
plaintiff filed suit. For this reason, the
status quo to be preserved should be the last
undisputed state of affairs that existed before
the events that gave rise to the pending controversy
occurred. This is the rule for granting preliminary
injunctions, which are granted even before there has
been a trial on the merits. . ."State ex rel.
McKinley Automotive v. Oldham (1978), 283 Or.
511, 584 P.2d 741, 743.
The majority opinion has not followed the proper rule
for preserving the status quo.
VI. Direct evidence of irre~arableharm is unnecessarv
in this type of case.
In an action relating to violations of restrictions
which run with the land, it is not necessary that there be
direct evidence of damages to the pleading parties. Irreparable
harm is presumed. An injunction to enforce a covenant or
restriction may issue even absent a showing of the amount of
damages caused by the breach. Sandstrom v. Larsen (1978),
59 Haw. 491, 583 P.2d 971, no showing is necessary that the
violation has changed the character of the neighborhood.
Carter v. Conroy (1976), 25 Ariz. App. 434, 544 P.2d 258.
The preliminary injunction, on a prima facie showing, should
be granted regardless of relative damage. Gladstone v.
Gregory (1979), 95 Nev. 474, 596 P.2d 491. The injunction
can issue in the absence of proven damages, Jinkins v. City
of Jal (1963), 73 N.M. 173, 386 P.2d 599.
Of course, if irreparable harm is shown in the evidence,
then the burden of the plaintiff to make a prima facie case
is lessened, because then the court balances the hardships
between the parties. (A. J. Industries, Inc. v. Alaska
Public Service Com'n (Alaska 1970), 470 P.2d 537, modified
on other grounds, 483 P.2d 198.)
In addition to the foregoing diversities with the
majority opinion, I also disagree with the decision making
the petition signed by other residents of the subdivision
admissible in evidence. In my opinion, the petition is not
relevant to any issue before the District Court.
The restrictions are binding upon any owner until a
majority of all the owners holding fee simple title to the
lots in the addition (excluding certain lots) release the
same to all land in the subdivision by an executed and
acknowledged instrument in writing.
The petition which is offered recites, "we, the under-
signed residents of Grandview Subdivision, have no objection
to the continued use of the premises at 202 Locust as a
residence for the members of Kappa Sigma Fraternity."
There is no foundation to show that the "residents" are
owners in fee simple of the property involved, nor is it
clear from the language of the petition that the signers
understood that they were waiving the restrictions which
exist with respect to those properties. Fortunately for all
of us, legal rights are not decided by majority vote, even
if the petition consisted of the majority of owners which it
it apparently does not.
In that situation, I feel it has no relevance and
should not be admitted.
For the reasons foregoing, I would preserve the in-
junction in force and remand for a final decision by the
District Court. The only difference between my position and
that of the majority is that the preliminary injunction is
dissolved under the majority opinion, and I would keep it in
force. Under both situations, there will be a trial to
determine the permanent result here.
My purpose in filing this dissent is to assure the
members of the Bar that this Court is not unanimous in the
narrow construction of the injunctive powers of the District
Court.
Justice