Creed v. Clogston

Creed v. Clogston (2002-426); 176 Vt. 436; 852 A.2d 577

2004 VT 34

[Filed 16-Apr-2004]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 2004 VT 34

                                No. 2002-426

  James and Judith Creed, et al.	         Supreme Court

                                                 On Appeal from
       v.	                                 Rutland Superior Court


  Francis and Debra Clogston	                 November Term, 2003


  William D. Cohen, J.

  Allan R. Keyes of Ryan Smith & Carbine, Ltd., Rutland, for
    Plaintiffs-Appellees.

  Alison J. Bell of Langrock Sperry & Wool, LLP, Burlington, and Timothy L.
    Taylor of Meub Associates, Inc., Rutland, for Defendants-Appellants.

  Andrew W. MacLean, Christopher K. Rice, and Philip H. White of Wilson &
    White, P.C., Montpelier, for Amici Curiae Vermont Bankers Association and
    Vermont Mortgage Bankers Association.


  PRESENT:  Amestoy, C.J., Johnson and Skoglund, JJ., and Crawford, Supr. J.
            and Gibson, J. (Ret.),  Specially Assigned

        
       ¶  1.  AMESTOY, C.J.   In this appeal, we consider whether a
  restrictive covenant prohibiting the installation of "mobile homes, campers
  or trailers" for residential purposes prevents defendants Francis and Debra
  Clogston from placing a "manufactured home" on their lot.  The trial court
  found that the mobile home covenant in defendants' deed reflected an intent
  to exclude all non-site-built homes from defendants' neighborhood.  The
  court explained that, regardless of the name given to defendants' home, it
  was a "mobile home" within the meaning of the restrictive covenant because
  it fell within the type of housing that the covenant sought to preclude. 
  The court therefore granted permanent injunctive relief to plaintiffs, and
  ordered defendants to remove their home.  On appeal, defendants argue that
  the trial court erred in ascertaining the intent of the parties to their
  deed.  We agree, and reverse and remand for additional findings. 


       ¶  2.  The material facts are largely undisputed.  In March 2002,
  defendants purchased an undeveloped lot from Wales Realty Incorporated. 
  Their deed contains the following covenants: 

    1. The use of this lot shall be restricted to one single-family
       dwelling.  

    2. This lot and dwelling shall be used and maintained for
       residential purposes only. 
       
    3. This lot shall not be subdivided.  

    4. No mobile homes, campers or trailers shall be installed for
       residential purposes, even on a part-time basis.  

    5. This lot shall not be used commercially or for business
       purposes.  

    6. No dwelling shall be constructed unless the cost above the
       foundation exceeds $60,000. 

  Mr. Clogston testified at trial that he discussed these covenants with a
  Wales Realty representative, John Bloomer, Jr., and informed Mr. Bloomer
  that he intended to place a manufactured home on the lot.  Mr. Bloomer
  executed the deed.

       ¶  3.  Defendants' lot is located within a twenty-lot subdivision
  covering eleven acres.  The original eleven-acre parcel was conveyed by
  Theodore and Charlotte Nicolet to Remo Segalla, Livio Segalla, and Leon
  Arrigo in 1963.  The deed required, among other things, that the
  above-foundation cost of a dwelling equal or exceed $15,000 at the present
  purchasing price of the United States dollar.  The deed did not contain a
  prohibition against mobile homes.  
   
       ¶  4.  The twenty-lot subdivision was created in 1968 by the
  recording of a plat in the Rutland land records.  At the time of
  subdivision's creation, there was no declaration of covenants nor any other
  express scheme of development restricting the eleven-acre parcel.  Between
  1965 and 1969, nine lots were conveyed, and three additional deeds were
  granted correcting the boundaries of some of those lots.  These twelve
  deeds contained the Nicolet covenants but they did not contain any
  additional covenants.

       ¶  5.  In 1969, the Segallas conveyed the remainder of the original
  eleven-acre parcel to Wales Realty.  Wales Realty did not adopt a
  declaration of covenants, nor any other express scheme restricting the
  development of the remaining parcel.  Instead, over a twenty-year period,
  between 1982 and 2002, Wales Realty conveyed eleven lots by eleven separate
  deeds.  Wales Realty incorporated the Nicolet covenants by reference in
  these deeds, and imposed new covenants.  All of the deeds conveyed by Wales
  Realty contain the same covenants found in defendants' deed, although some
  require an above-foundation cost of $50,000 rather than $60,000.  The deeds
  provide that the enforcement of the covenants is the "responsibility,
  privilege, and right" of the owners of any lots that are subject to the
  covenants. 

       ¶  6.  In April 2002, defendants purchased a 1600-square-foot
  single-level manufactured home from Moore's Auto.  The home was delivered
  in two pieces on wheels that were temporarily attached to permanent
  I-beams.  The two halves of the home were placed on and affixed to a
  concrete slab foundation, and were joined in the middle through a bolting
  system.  Water, sewage, and electricity hookups were established.  Workers
  placed siding on both ends of the home, finished the roof, hung doors and
  electrical fixtures, and finished the walls and floors.  This process took
  approximately 150 hours to complete, and defendants were able to move in
  within approximately one week after their home was delivered. 
        
       ¶  7.  Plaintiffs James and Judith Creed, Karen Harrison, Arlie Welch,
  Ray and Laura Wilburn, Jean O'Rourke, John and Jody LaFaso, Anthony and
  Lise Chioffi, and Diane Byrne reside in defendants' neighborhood and with
  the exception of Harrison, Welch, and the Wilburns, (FN1) their deeds
  contain the restrictive covenant prohibiting the installation of mobile
  homes.   In April 2002, plaintiffs filed a complaint against defendants
  seeking injunctive relief, arguing that defendants' home violated the
  mobile home covenant.

       ¶  8.  After a trial, the court granted permanent injunctive relief to
  plaintiffs.  The court concluded that the mobile home covenant in
  defendants' deed was intended to prohibit non-site-built homes from
  defendants' neighborhood.  In reaching its conclusion, the court began its
  analysis by considering the relationship between the terms "mobile home"
  and "manufactured home" under state and federal law.  The court found that,
  although the term "manufactured home" had replaced the term "mobile home"
  under federal law in 1980, the Vermont legislature had not amended its
  statutes accordingly.  Thus, the court reasoned, because the Vermont
  legislature had not adopted the term, the drafter's failure to use it in
  the deed was not dispositive of an intent to exclude such homes,
  particularly because the term was "relatively new" in 1982.   
   
       ¶  9.  Examining the deed as a whole, the court found it significant
  that the deed required that no dwelling be "constructed" unless its
  above-foundation cost exceeded $60,000.  Relying on a dictionary definition
  of the term "construct," the court found that the use of the term reflected
  the drafter's intent that "any home placed on the defendants' land be
  site-built, that is, . . . constructed on site."  The court found that
  defendants' home had not been "constructed" on their property, but instead
  had been constructed in a factory and then brought to the site.  

       ¶  10.  Taking this provision together with the covenant prohibiting
  mobile homes, the court concluded that it was evident that the drafters of
  the covenant intended to create a neighborhood that contained only
  site-built homes.  To implement this intent, the court refused to give the
  term "mobile home" a static definition.  Instead, the court considered
  defendants' home a "mobile home" within the meaning of the restrictive
  covenant because it fell within the type of housing that the covenant
  sought to preclude.  Based on its conclusion, the court granted permanent
  injunctive relief to plaintiffs, and ordered defendants to remove their
  home within six months.  Defendants appealed, and pursuant to their
  request, the trial court stayed its order pending the resolution of this
  appeal.  

       ¶  11.  On appeal, defendants assert that the trial court erred in
  concluding that their manufactured home violated the terms of the
  restrictive covenant in their deed.  Specifically, they argue that: (1) the
  court erred as a matter of law in concluding that the terms of the mobile
  home covenant were ambiguous; (2) alternatively, if the covenant is
  ambiguous, the court erred as a matter of law by ignoring the
  uncontroverted and direct evidence of the parties' intent at the time the
  deed was executed; and (3) the court's finding that the mobile home
  covenant was intended to prohibit manufactured homes was clearly erroneous.  
   
       ¶  12.  We first address defendants' assertion that the trial court
  erred in finding the mobile home covenant ambiguous.  According to
  defendants, the covenant is unambiguous because it plainly prohibits only
  those homes that are "moveable and transitory in nature," not those that
  are permanent and immovable.  In support of this argument, defendants point
  to the use of the words "mobile" and "part-time basis" in the deed, as well
  as the grouping of the term "mobile home" with other dwellings that are
  "mobile" in nature.  Defendants assert that the uncontroverted evidence
  shows that their home is "of a fixed and permanent nature," and no more
  movable than any "stick-built" home.  Thus, they maintain that their home
  is not prohibited by the plain language of the mobile home covenant. 

       ¶  13.   When the meaning of a restriction in a deed is clear and
  unambiguous, "there is no room for construction and the instrument must be
  given effect according to its terms."  Aiken v. Clark, 117 Vt. 391, 393, 92 A.2d 620, 621 (1952).  The trial court must determine, as a matter of law,
  whether an ambiguity exists.  Isbrandtsen v. N. Branch Corp., 150 Vt. 575,
  577, 556 A.2d 81, 83 (1988).  In making this determination, the court may
  consider the circumstances surrounding the making of an agreement.  Id. at
  579, 556 A.2d  at 84.  An ambiguity exists when "a writing in and of itself
  supports a different interpretation from that which appears when it is read
  in light of the surrounding circumstances, and both interpretations are
  reasonable."  Id.; see also Trs. of Net Realty Holding Trust v. AVCO Fin.
  Servs. of Barre, Inc., 144 Vt. 243, 248, 476 A.2d 530, 533 (1984) ("A
  provision in a contract is ambiguous only to the extent that reasonable
  people could differ as to its interpretation.").  Although the trial court
  did not specifically state that it found the mobile home covenant
  ambiguous, its reliance on extrinsic evidence to interpret the deed implies
  that it reached such a conclusion.  The question of whether an ambiguity
  exists is a question of law, which we review de novo.  Kipp v. Chips
  Estate, 169 Vt. 102, 107, 732 A.2d 127, 131 (1999).  
   
       ¶  14.  The term "mobile home" is not defined, and we conclude that
  it is subject to more than one reasonable interpretation.  Defendants
  asserted that the use of the term "mobile home" in conjunction with
  "campers or trailers" was intended to restrict the use of obviously movable
  vehicles.  Plaintiffs argued that the term "mobile home" included those
  homes labeled as "manufactured homes" under federal law.  Plaintiffs also
  asserted that, regardless of its name under federal law, defendants' home
  was a "mobile home" under Vermont law, and moreover, was a movable vehicle
  of the type intended to be restricted by the covenant.  Because we cannot
  determine, as a matter of law, what the parties intended to prohibit under
  the mobile home covenant, we conclude that the covenant is ambiguous. 

       ¶  15.  Assuming that the covenant is ambiguous, defendants next argue
  that the trial court erred in concluding that the mobile home covenant was
  intended to prohibit their manufactured home.  Defendants assert that the
  court erred as a matter of law by focusing its inquiry on 1982, when Wales
  Realty first included the mobile home covenant in one of its deeds, rather
  than the parties' intent in 2002, when the deed was conveyed.  According to
  defendants, the "uncontroverted and direct evidence" shows that the parties
  intended to allow defendants to place a manufactured home on their lot.  

       ¶  16.  Defendants further argue that, because the court failed to
  focus on the parties' intent in 2002, its finding that the mobile home
  covenant was intended to prohibit manufactured homes is clearly erroneous. 
  In support of this assertion, defendants argue that the drafter's failure
  to specifically include manufactured homes within the terms of the
  restrictive covenant is evidence of the drafter's  intent not to encompass
  such homes.  This is particularly true, according to defendants, in light
  of the dramatic changes in the housing industry between 1982 and 2002, and
  the developments in state and federal law reflecting these changes. 
  Defendants also assert that the emerging trend in cases in other
  jurisdictions is to treat manufactured homes as distinct from mobile homes
  when interpreting the intent of restrictive covenants prohibiting the
  latter.  Defendants acknowledge that these cases are highly fact-specific
  and thus of limited precedential value.
   
       ¶  17.  In construing a deed, the court must "give effect to the
  intention of the parties if it can be gathered from the language used when
  interpreted in connection with, and in reference to, the subject matter and
  purpose sought to be accomplished at the time the instrument was executed." 
  McDonough v. W.W. Snow Const. Co., 131 Vt. 436, 441, 306 A.2d 119, 122
  (1973); see also Kipp, 169 Vt. at 105, 732 A.2d  at 129 (same); Welch v.
  Barrows, 125 Vt. 500, 504, 218 A.2d 698, 702  (1966) ("The intention of the
  parties, not the language used is the dominating factor, and the
  circumstances existing at the time of the execution of the deed, the
  situation of the parties and the subject matter are to be considered."). 
  The court may employ rules of construction as subordinate aids to discover
  the parties' intent.  Latchis v. John, 117 Vt. 110, 112, 85 A.2d 575, 576
  (1952).  We have stated that "[w]hen doubt arises as to the extent of
  restrictive covenants, the rule applied is that 'restrictions will not be
  extended by implication to include anything not clearly expressed, and
  doubts must be resolved in favor of the free use of land.'"  Fassler v.
  Okemo Mountain, Inc., 148 Vt. 538, 542, 536 A.2d 930, 932 (1987) (quoting
  Latchis, 117 Vt. at 113, 85 A.2d at 577). 

       ¶  18.  Because the mobile home covenant in defendants' deed is
  ambiguous, the question of what the parties intended to prohibit is a
  question of fact to be determined on all the evidence.  Kipp, 169 Vt. at
  107, 732 A.2d  at 131.  We review the trial court's findings of fact under
  the clearly erroneous standard.  Thus, we will uphold the court's factual
  findings unless, taking the evidence in the light most favorable to the
  prevailing party, and excluding the effect of modifying evidence, there is
  no reasonable or credible evidence to support them.  V.R.C.P. 52(a); N.A.S.
  Holdings, Inc. v. Pafundi, 169 Vt. 437, 438, 736 A.2d 780, 783 (1999). 
   
       ¶  19.  In this case, the trial court found that the intent of the
  mobile home covenant was to create a neighborhood that contained only
  site-built, single-family homes.  The court considered defendants' home to
  be a "mobile home" because it fit within the type of housing that the
  covenant sought to preclude.  As discussed below, this finding was clearly
  erroneous.  There was no declaration of covenants imposed before any lots
  within defendants' subdivision were sold, nor was a subsequent servitude
  created by existing property owners.  Thus, the record does not support the
  trial court's finding that the covenant imposed a neighborhood-wide
  restriction.  In the absence of any evidence of a common development
  scheme, the dispositive inquiry is what the parties to defendants' deed
  intended to prohibit at the time the deed was conveyed in March 2002.  The
  trial court did not address this question, but instead focused its analysis
  on statutory definitions of the term "mobile home" and on Wales Realty's
  intent in 1982 when Wales Realty first included the mobile home covenant in
  one of its deeds.  Because the trial court focused its inquiry on the wrong
  factual context, it did not make the findings necessary to resolve the
  dispositive question of what the parties to defendants' deed intended to
  prohibit under the mobile home covenant. 

       ¶  20.  First, the record does not support the trial court's
  determination that the term "mobile home" could not be given a static
  meaning because the covenant was aimed at precluding a certain type of
  housing from existing in defendants' neighborhood.  There is no general
  plan governing the development of defendants' neighborhood.  A
  "general-plan development" is a "real-estate development or neighborhood in
  which individually owned lots or units are burdened by a servitude imposed
  to effectuate a plan of land-use controls for the benefit of the property
  owners in a development or neighborhood."  Restatement (Third) of Property
  - Servitudes § 1.7 (2000).  General-plan developments "are generally
  created by developers who impose the servitudes before any lots or units
  are sold, but they may also be created by agreement among existing property
  owners."  Id.
   
       ¶  21.  In this case, there was no declaration of covenants imposed
  before any lots within defendants' neighborhood were sold, nor was a
  subsequent servitude created by existing property owners.  Instead, the
  record shows that, within defendants' subdivision, different covenants were
  imposed by different grantors at different times.  Some deeds prohibit
  mobile homes, while others do not.  Although Wales Realty included the
  mobile home covenant in all of the deeds that it conveyed, it was not
  obligated to do so.  It was free to amend the terms of the mobile home
  covenant, just as it amended the covenant that required that the
  above-foundation cost of a dwelling equal or exceed $15,000.  There is no
  evidence in the record to support the trial court's finding that the
  covenant was designed to exclude a certain type of housing from defendants'
  neighborhood, and this finding is therefore clearly erroneous. 

       ¶  22.  Absent a common development scheme, the dispositive inquiry is
  whether defendants' home is a "mobile home" as that phrase was intended by
  the parties to the deed "at the time the instrument was executed." 
  McDonough, 131 Vt. at 441, 306 A.2d  at 122.  Although plaintiffs argue on
  appeal that the mobile home covenant in defendants' deed has become a
  "neighborhood covenant" due to "numerous overlapping transactions over the
  course of twenty years," the trial court made no such finding.  The trial
  court focused its analysis on 1982, when Wales Realty first included the
  mobile home covenants in one of its deeds.  The court found that the
  drafter's failure to incorporate the term "manufactured home" in the
  restrictive covenant was not dispositive of an intent to exclude such
  homes, particularly because "the term manufactured home was relatively new
  in the history of this type of housing in 1982 when the covenant was
  drafted."  However, in the absence of any evidence that the parties
  intended to encompass such homes in March 2002, when the deed was conveyed,
  the court erred in extending the deed's restriction by implication to
  include such homes. See Fassler, 148 Vt. at 542, 536 A.2d  at 932.  
   
       ¶  23.  The changes that have occurred in the manufactured housing
  industry within the past twenty years make the court's reliance on Wales
  Realty's intent as of 1982 particularly irrelevant to the disposition of
  this case.  Indeed, the trial court noted in its opinion that "the quality
  and appearance of many modern mobile homes can and does exceed the quality
  and appearance of many site-built homes."  In the absence of any findings
  as to what the parties to defendants' deed intended in March 2002 when the
  deed was conveyed, we must reverse and remand this case to the trial court
  for additional findings.  See Secretary v. Irish, 169 Vt. 407, 419, 738 A.2d 571, 580 (1999) (where trial court failed to make finding essential to
  its conclusion, matter was reversed and remanded for additional findings).

       Reversed and remanded.  



                                       FOR THE COURT:
        


                                       __________________________________
                                       Chief Justice


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                                  Footnotes


FN1.  We do not address defendants' assertion that the trial court erred in
  concluding that these parties have standing to enforce the mobile home
  covenant because the remaining parties have standing.