Stowe v. Burke

122 S.E.2d 374 (1961)

255 N.C. 527

Grover C. STOWE, Jr., and wife, Caroline M. Stowe, v. Harry W. BURKE and Greentree Corporation.

No. 250.

Supreme Court of North Carolina.

November 1, 1961.

*377 Fleming, Robinson & Bradshaw, Charlotte, for plaintiffs appellees.

Bell, Bradley, Gebhardt, DeLaney & Millette, Charlotte, for defendants appellants.

WINBORNE, Chief Justice.

The court below, in ordering that defendants be enjoined as specified in the judgment, concluded as a matter of law that the work done on the proposed apartment project and liabilities incurred by defendant Greentree Corporation with respect thereto was not done and were not incurred in good faith, and that defendant Greentree Corporation has no vested right to construct the proposed apartment project on the Brickell property. Defendants except to these conclusions of law, thereby raising the following questions: (1) Do the facts as found by the court support the conclusion of law that defendant corporation did not act in good faith, and (2) if defendant corporation did not act in good faith, was the court correct *378 in concluding that it has no vested right to construct the proposed project? Both questions must be answered in the affirmative.

(1) The record indicates that on 5 April, 1961, the Charlotte-Mecklenburg Planning Commission presented to the Charlotte City Council a proposed zoning ordinance for the entire city of Charlotte and its perimeter area. Under this ordinance, the area in which the Brickell property is situated is classified as Residence-15, the most restrictive residential classification under the ordinance, and one permitting basically only single-family dwellings with duplexes on corners.

The court below found as a fact that at least as early as 6 April, 1961, the defendant Burke was aware of the existence of the proposed ordinance and the effect that it would have upon the Brickell property. Thereafter, with full notice, two public hearings were held concerning the proposed ordinance, and neither the defendants nor anyone else raised any objection to the ordinance.

The record indicates that as early as August, 1960, defendant Burke was aware of plaintiffs' objection to the building of apartment houses on the Brickell property, and that defendant Burke repeatedly asserted to plaintiffs and other residents of the neighborhood that he knew nothing of a proposed apartment project, and that he would do all that he could to maintain the exclusive and restricted character of the subdivision.

The record also indicates that when, on 7 July, 1961, defendant corporation finally received building permits to proceed with the proposed construction on the Brickell property, there was pending before the Planning Commission a petition to change the classification of the area in question from Rural to Residence-1. Hearings had been set, and notice had been sent to defendant corporation.

The record further discloses that between 7 July, 1961, and 17 July, 1961, the date on which Ordinance 36-Z was adopted, defendants incurred expenditures totaling $55,974 for foundation work on the proposed apartment buildings.

Thus it appears that when the permits were finally issued, defendant Burke was fully aware of a community of opposition to the project and of pending legislation which, if adopted, would prevent defendants from proceeding with the project. It also appears, however, that in spite of such notice, defendants moved forward with construction at an extraordinary pace in an attempt, as admitted by defendants' counsel in brief filed in Supreme Court, to establish a right to continue the project before the area in question could be rezoned.

On these facts, it appears that the court below was justified in concluding that defendants did not act in good faith in doing the work on the project and in incurring expenditures with respect thereto.

(2) The second question raised on this appeal is this: If the defendants did not act in good faith in incurring the aforementioned expenditures, was the court below correct in concluding that defendant corporation has no vested right to construct the proposed project on the Brickell property?

Section 23-43 of Article II of the Charlotte Zoning Ordinance provides in pertinent part as follows: "No building or structure shall be erected or altered which does not comply with the building and area regulations of this article for the district wherein located, nor shall any building or premises be used for any purposes other than a use permitted by this article in the district wherein located, except as permitted in Section 23-36 of this article."

Section 23-36 provides: "The lawful use of any building or land existing at the *379 time of the adoption of this article may be continued, but not enlarged or extended, although the use of such building or land does not conform to the regulations of the district in which such use is maintained. An existing non-conforming use of a building or premises may be changed to another non-conforming use of the same or higher classification, but may not at any time be changed to a use of a lower classification."

Defendants contend that under the above section of the zoning ordinance, they should be allowed to continue construction of the apartment project as a non-conforming use. In this connection defendants cite the following: "* * * structures in the course of construction at the time of the enactment or effective date of a zoning law are generally exempted from restrictions or prohibitions thereof. This result has been reached, even in the absence of an express exemption of buildings in the course of construction, where the zoning law provides that no building `shall be erected' for the prohibited purpose. Indeed, there is authority to the effect that an owner of real estate who is proceeding with construction or alterations at a time when he has a right to do so acquires a vested right to proceed therewith which may not be taken away by subsequent zoning legislation * * *." 58 Am.Jur. Zoning Sec. 149.

This statement, however, does not distinguish between cases wherein the "structure in the course of construction" were begun in good faith and without notice of an impending zoning change, and those in which as here, the construction was begun with full knowledge of an impending zoning change and the expenses were incurred in an attempt to establish a right to continue before the impending change should become effective.

From a perusal of the cases in North Carolina, it appears that there is no direct authority for the proposition that to establish a vested right to continue construction in such a case as this, the defendants must have acted in good faith in proceeding to incur expenditures in reliance upon a valid building permit. However, an indication that such a rule would be proper is found in In re Appeal of Rose Builders' Supply Co., 202 N.C. 496, 163 S.E. 462, 463. This case involved a zoning ordinance of the city of Goldsboro and a determination of when "construction * * shall have been started" within the meaning of the ordinance. Brogden, J., speaking for the Court, stated: "So, in the present case, if the plaintiffs, in good faith, and in pursuance of a permit granted from the city of Goldsboro, had placed filling station equipment and supplies upon the premises with the intention of operating such station in full conformity with authority previously granted, then it cannot be said, as a matter of law, that construction had not started before the expiration of the time limit."

Furthermore, cases in other jurisdictions which have dealt with similar or related problems indicate that the rule requiring reliance in good faith upon a valid building permit would apply to such a case as this. In Winn v. Lamoy Realty Corp., 100 N.H. 280, 124 A.2d 211, 212, the New Hampshire Court states: "It appears upon analysis of their facts that a majority of these cases allow relief to the landowner only when he has incurred substantial expenditures or legal obligations relying in good faith upon the permit."

In Pelham View Apts. v. Switzer, 130 Misc. 545, 224 N.Y.S. 56, the New York Court stated: "Where a permit to build a building has been acted upon, and where the owner has, as in this instance, proceeded to incur obligations, and, in good faith, to erect the building, such rights are then vested property rights, protected by the federal and state Constitutions. * * * This case must be distinguished from the many other cases where permits were not obtained in good faith, but merely in anticipation of an amendment to the zoning law."

*380 In Glenel Realty Corp. v. Worthington, 4 A.D.2d 702, 164 N.Y.S.2d 635, 638, the New York Court stated: "It is well settled that one who, in reliance upon a permit validly issued by a municipality, in good faith makes substantial improvements and incurs substantial expense in order to make his land suitable for a specific purpose or use, acquires a vested right to such use, even though, by reason of such subsequent changes in the zoning ordinance such use has become a prohibited or nonconforming use. (Riverdale Community Planning Ass'n v. Crinnion, Sup., 133 N.Y.S.2d 706, affirmed 285 App.Div. 1047, 141 N.Y.S.2d 510, appeal dismissed 1 N.Y.2d 689, 150 N.Y.S.2d 616; Herskovits v. Irwin, 299 Pa. 155, 149 A. 195; City of Buffalo v. Chadeayne, 134 N.Y. 163, 165-166, 31 N.E. 443, 444; People ex rel. Ortenberg v. Bales, 224 App.Div. 87, 229 N.Y.S. 550, affirmed 250 N.Y. 598, 166 N.E. 339; Caponi v. Walsh, 228 App.Div. 86, 89, 238 N.Y.S. 438, 441; Pelham View Apts. v. Switzer, 130 Misc. 545, 224 N.Y.S. 56)."

In Graham Corp. v. Board of Zoning Appeals, 140 Conn. 1, 97 A.2d 564, 566, the plaintiff builder acquired property in an area subject to a zoning classification permitting the erection of multi-family dwellings but requiring a special authorization to construct any dwelling to house more than eight families. On 27 October, 1951, after several technical delays, a permit to build a 195-unit dwelling was issued to plaintiff, and the land was excavated, and concrete footings were poured. On 29 October, adjoining landowners appealed the issuing of the permit, and the action of the building inspector in issuing the permit was upheld on 14 November, 1951. On 7 November, however, the town planning commission had amended the zoning regulations, effective 14 November, and, as amended, the regulations prohibited the construction of structures to house more than forty families in the area in question.

In concluding that the plaintiff had not acquired a vested right to continue construction, the Connecticut Supreme Court stated:

"In other words, the case under consideration does not present a situation where the plaintiff was unaware of any hostility to its program on the part of the nearby residents of the town. Everything, of course, points unmistakably to the contrary. When, then, the foundation permit was issued under date of October 27, the plaintiff doubtless expected, in view of its past experience, that the opposition would seek a review of the inspector's action. Such, indeed, proved to be the fact when the adjacent landowners, upon learning of the issuance of the permit, took an appeal to the board on October 29th, thereby staying all further construction activities on the plaintiff's part. General Statutes, Cum.Sup.1951, § 159b. "The record does not establish just what work had been done prior to October 27th but anything which the plaintiff accomplished on Saturday and Sunday, October 27th and 28th, in excavating on the land with the use of power shovels and in pouring concrete footings did not bring the building to the point where it was `substantially in course of construction', as mentioned in the rule. Nor does the hurried incurring of expenditures on the two days mentioned commend itself to any equitable consideration. The difficulty in which the plaintiff finds itself on this matter of expense was one of its own deliberate choice."

Thus, since the court below found facts sufficient to justify its conclusion that defendant Greentree Corporation did not act in good faith in proceeding to incur the aforementioned expenditures, we concur with the conclusion of the court that defendant *381 corporation has no vested right to construct the proposed apartment project on the Brickell property.

Hence, the judgment of the court below is

Affirmed.

BOBBITT, J., concurs in result.

HIGGINS, J., dissents.