Rhue v. Cheyenne Homes, Inc

Brief Fact Summary. Cheyenne Homes, Inc. (Plaintiff) obtained an injunction against Rhue (Defendant), who was attempting to move a thirty-year-old Spanish style house into a neighborhood, which required any plans for new buildings to be submitted to an architectural control committee for approval.

Synopsis of Rule of Law. When the restrictive covenant of a subdivision required committee approval for plans prior to building, such an arrangement will be upheld, provided that the committee does not unreasonably withhold its consent or refuses plans in an arbitrary and capricious manner.

Facts. The protective covenant at issue contained the requirement that no building shall be placed on any lot without the consent of the architectural control committee, after review of the plans of any proposed building. The stated purpose of the covenant was to protect the property values in the community. Plaintiffs succeeded in obtaining an injunction at the lower court level. The Defendants appealed.

Issue. Should the Defendant be enjoined from placing the house on the lot without the consent of the planning committee (who testified that they would not approve)?

Held. Yes. Judgment affirmed.
As long as the intention of the covenant is clear, they have been upheld against the contention that they lacked specific restrictions providing a framework within which the architectural committee must act. In this case, the intention was to protect property values and the Defendants claimed that the covenant lacked any guidance regarding plans, which would meet the committee’s approval.
Even though the covenant is enforceable, there is a corollary to the holding, which is that the consent of the committee may be withheld only when such refusal is made in good faith and not in an arbitrary and capricious manner.
In this case two out of the three committee members testified that they would deny the placement of Defendant’s house on the grounds that the thirty-year-old Spanish style house would not fit in the neighborhood, and that the placement of the house would negatively impact property values. The other homes were less than two-years-old.
The court found that the committee refusal was made in good faith and was clearly intended to protect the property values of the community. The court found that the policy of restrictive covenants is encouraged judicially as a method to maintain continuity and higher property values in a neighborhood.

Discussion. The modern tendency is to enforce restrictive covenants as a method of maintaining property values in neighborhoods and maintaining neighborhood aesthetics.