Cowling v. Colligan

Brief Fact Summary. Property owners sought an injunction to prevent Defendant from using a lot under restrictive covenant for business purposes, even though Defendant’s lot is immediately adjacent to business lots which are unrestricted and the character of the neighborhood has changed since the restrictions were formed.

Synopsis of Rule of Law. When a neighborhood is restricted to residential use only, the non-complaint of property owners when churches are built on restricted lots will be considered to not constitute a waiver or abandonment of the restriction, and businesses will still be excluded.

Facts. This suit is a class action brought by a class of property owners in a neighborhood, restricted by covenant to residential purposes only, to enjoin Defendant from using one of the lots on the edge of the neighborhood for business purposes. The subdivision consists of 49 tracts ranging in size between 4 to 7.81 acres, and has churches on four of the lots with several other tracts sold to church bodies contemplating building churches. Defendant’s lot, which is in the subdivision, has no improvements on it except a small easily removable building for the storage of pipe. The property adjoining Defendant’s lot (which is tract 2) is outside the subdivision and unrestricted. The facts provide that a road that went through the neighborhood was a quiet country road at the time the restrictions were written, but is now a major road. The reasonable market value of Defendant’s lot restricted was found to be $10,000 per acre, and was worth $35,00 to $43,000 per acre unrestricted. The lowe
r court found that the restrictive covenant was valid and enforceable and not waived, but that the conditions surrounding Defendant’s lot made it inequitable to enforce the restrictions against Defendant, and thus, no injunction was issued. The Plaintiffs appealed.

Issue. Was the lower court correct in removing Defendant’s lot from the restrictions of the covenant?

Held. The judgment of the trial court is affirmed, but must be amended and the case remanded with instructions to issue an injunction restraining Defendant from using the lot for any business purposes.
The court of equity (lower court) must be guided by certain rules of law in these cases. The lower court may refuse to enforce a restrictive covenant that limits the use to residential purposes when the lot owners have acquiesced in substantial violations of the restrictions, which constitute an abandonment or waiver of the right.
The lower court may also refuse to enforce a restrictive covenant because there has been such a change in conditions in the restricted area or surrounding it that it is no longer possible to secure to a substantial degree the benefits sought under the covenant.
The lower court herein found that the restrictive covenant had not been waived or abandoned. The violations by the churches of the covenant are so trivial a breach that the failure of the lot owners to complain does not operate as a waiver of their right to enforce the covenant against a business or commercial use.
The lower court may not refuse to enforce the restrictive covenant solely on the basis that there has been a change in conditions which has rendered the lot of Defendant unsuitable for residential purposes and that it would be therefore inequitable to enforce the restrictions. The equities of the Defendant are only one side of the case, the harm to the remaining lot owners must be considered.

Discussion. The court did not treat a church as a business venture, and thus it could not find the restriction against ventures waived, abandoned, or even that a change of circumstances occurred.