No. 87-91
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
TOWN & COUNTRY ESTATES ASSOCIATION,
Plaintiff and Respondent,
-vs-
KEN SLATER and ALICE D. SLATER,
Defendants and Appellants.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable G. Todd Baugh, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Pedersen & Conrad; Carol Hardy Conrad, Billings,
Montana
For Respondent :
Gary Beiswanger, Billings, Montana
Submitted on Briefs: May 14, 1987
Decided: July 2 8 1 1987
Filed: 'JUL 2 8 1987
Mr. Chief Justice J. A. Turnage delivered the Opinion of the
Court.
Defendants Ken and Alice Slater appeal a November 5,
1986 permanent injunction by the Thirteenth Judicial District
Court, Yellowstone County. The injunction prevented the
Slaters from building a house in Town & Country Estates until
a Design Review Committee approves the Slaters' building
plans and specifications. We reverse and vacate the
injunction.
The Slaters present three issues for our review:
1. Did the District Court err in finding that a re-
strictive covenant which allows a Design Review Committee
(DRC) to disapprove house plans and prevent construction is
enforceable, when the disapproval is based upon "harmony of
external design?"
2. Did the District Court err in finding that the
covenant had not been abandoned, although none of the plans
for previously-constructed houses had been approved by the
DRC?
3. Did substantial credible evidence support the
District Court's findings that the DRC acted reasonably, in
good faith, and not arbitrarily or capriciously?
Town & Country Estates Association (TCE) is a subdivi-
sion in Billings, Montana. TCE contains sixteen
single-family houses, one duplex, and several vacant lots.
The deeds to the TCE lots incorporate by reference a "Decla-
ration of Covenants, Conditions and Restrictions," which was
publicly recorded on December 20, 1973.
The Declaration, in Article V, grants architectural
control to the DRC and outlines relevant aesthetic factors.
No residential ... structure . . .
shall be made... upon the Properties
.. . until plans and specifications
showing the nature, kind, shape, height,
materials, colors and location of the
same shall have been submitted to and
approved in writing as to harmony of
external design, location and relation
to surrounding structures and topogra-
phy, the construction, colors, and the
materials to be used in the construction
have been approved in writing by a
Design Review Committee consisting of
five members appointed by the Board of
Directors of Town & Country Estates
Association. [Emphasis added.]
Article V does not place a minimum value on TCE houses,
which vary in size, shape, color, building materials, and
architectural style. However, the TCE houses all have a
minimum of 2,400 square feet and shake roofs.
Prior to 1986, all TCE houses had either been built or
approved by the developer of the subdivision. In early 1986,
the Slaters expressed an interest in a TCE lot. They were
aware of the prior approval restriction of Article V. In
April of 1986, they learned that the developer had left the
area, and that a five-member DRC was being formed to review
Slatersl house plan. The plan was the first to be reviewed
by the newly-formed DRC. Slaters1 proposed house had a shake
roof, wood siding, and 2,600 square feet of living space.
On May 1, 1986, Slaters bought the TCE lot before
receiving approval of their house plan. On May 19, 1986,
Slaters received a letter from DRC rejecting Slaters1 plan
because the house did not "conform to the general tone of the
area." The letter also stated, "We would suggest that the
price of the lot commands a residence more near the size of
houses in the surrounding area. As you know, the neighbor-
hood consists of $200,000 plus homes, and this is the kind of
conformity that you should look to." Without approval,
Slaters began house construction on August 5, 1986.
On August 6, 1986, TCE obtained a temporary restraining
order prohibiting the Slaters from building, alleging that
Slaters' house violated the minimum size restrictions con-
tained in the Declaration. Based on the court's order,
Slaters resubmitted their plans to DRC. On August 26, 1986,
the DRC again rejected the plan and stated, "we find that the
structure is not in harmony - external design to surrounding
of
structures and topography as specified in [the Declaration]."
(Emphasis added.) On November 5, 1986, the District Court
granted a permanent injunction against Slaters, until they
complied with the TCE Declaration.
Issue 1
Did the District Court err in finding that a restric-
tive covenant which allows a Design Review Committee to
disapprove house plans and prevent construction is enforce-
able, when the disapproval is based upon "harmony of external
design?"
The District Court based its permanent injunction on
the fact that the Slaters had not complied with Article V.
The court held that the restrictive covenant was enforceable,
and that the committee's review was performed in good faith
and not unreasonable.
Slaters contend that a prior approval covenant is not
enforceable if it contains no specific objective standards.
Slaters argue that the term "harmony of external design" is
too vague and ambiguous to be enforceable. Slaters further
argue that their house has major features found in existing
TCE houses, and therefore their house would not differ in
aesthetic merit from the other houses.
TCE contends that Article V is enforceable, even with-
out express standards of application, because the DRC acted
reasonably and in good faith. TCE admits that other TCE
houses share some of the same physical characteristics and
materials of the Slater house, but argues that Slaters'
design is not as attractive and harmonious as the existing
houses.
Our review of this issue is guided by Higdem v. Whitham
(1975), 167 Mont. 201, 208-209, 536 P.2d 1185, 1189, where we
held:
The overriding policy of individual
expression in free and reasonable land
use dictates that restrictions should
not be extended by implication or en-
larged by construction.
Article V establishes several restrictive factors upon which
the DRC must predicate its approval. We will closely review
any enlargement of restrictions which conflict with reason-
able land use, and which hinder substantive due process. As
we held in State v. District Ct. (1980), 187 Mont. 126, 130,
609 P.2d 245, 248, "Moreover, restrictive covenants are to be
strictly construed; ambiguities therein are to be construed
to allow free use of the property." However, the free use of
the property must be balanced against the rights of the other
purchasers in the subdivision.
Each purchaser in a restricted subdivision is both
subjected to the burden and entitled to the benefit of a
restrictive covenant. Generally, these covenants are valid
if they tend to maintain or enhance the character of a par-
ticular residential subdivision. However, such covenants are
enforceable only when used in connection with some general
plan or scheme. The approval of plans by an architectural
control committee is one method which helps maintain the
value and general plan of subdivision construction.
We recognize that aesthetic considerations have a place
in prior approval covenants, and that there are no absolute
standards to guide a committee's judgment and taste.
Aesthetic terms must be sufficiently flexible to cover a
variety of house designs. The term "harmony of external
design" is not ambiguous per se. However, a restrictive
covenant which fails to define the standard of approval is
too vague to be enforceable.
The record reveals that every TCE house had a unique
external design, in a cacophony of styles. The houses ranged
from single and split-level to bi-level, the roofs from
gable-end and hip to mansard, and the siding from stucco and
wood to stone. The styles were a hybrid mix of traditional,
Tudor, ranch, and contemporary. The only common design
characteristics were a 2400 square foot minimum size and a
shake roof. When questioned at the show cause hearing on
August 29, 1986, DRC was unable to state any design standard
for TCE.
If the subdivision itself lacks consonance, the Slat-
erst plan cannot lack harmony. In the context of TCE and
Slaters' plan, the term "harmony of external design" lacks
the mutuality of obligation central to the purpose of a
restrictive covenant. In view of the wide variety of de-
signs, no one seemed burdened by the covenant except the
Slaters.
Slaters' plan was not discordant with others in the
subdivision. The proposed house would be split-level contem-
porary, 2600 square feet, with a gable-end shake roof and
wood siding. The single most distinguishing feature of the
Slaters' house was its cost, which was not an express factor
under Article V. The proposed house would be worth approxi-
mately $135,000. The other TCE houses appraised above
$200,000. As revealed in its initial rejection letter, DRC
seems more concerned with harmony of appraisal than harmony
of design. However, DRC's review of external design was
limited to the factors set forth in Article V, and to
observable characteristics of all other houses in the
subdivision.
The approval or disapproval of plans by the DRC must be
based upon an objective design standard. Without a quantifi-
able standard to guide them, the decision of DRC is unen-
forceable. The record shows neither a uniform standard of
design, nor a general plan regarding "harmony of external
design" in the subdivision. We hold that the Slaters' house
fell well within the broad architectural spectrum of TCE
houses. Applied to the TCE subdivision and Slaters' plan, we
hold that Article V lacks sufficient objectivity, and is
vague to a degree that denies substantive due process to the
Slaters.
We therefore vacate the injunction based on this issue,
and need not proceed to appellants' issues of notice and good
faith.
We concur: M