Holaday v. Fraker

Terry HOLADAY and Sandra HOLADAY v. Roberta
FRAKER, et al.

95-909                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 19, 1996
          Substituted opinion delivered March 18, 1996


[NOTE TO PRINTER: THIS OPINION REPLACES THE OPINION DELIVERED ON
FEBRUARY 19, 1996; PLEASE INSERT IT AT 323 ARK. 522; THE SAME
HEADNOTES SHOULD BE PLACED ABOVE THE SUBSTITUTED OPINION; DO NOT
PRINT THIS NOTE.]MARCH 18, 1996.  ADD TO ADV. REP. AFTER PCs * #2
SUBSTITUTRED OPINION * SAME PAGINATION AS ORIGINAL 
REPLACES 323 ARK. 522 (FEB. 19, '96)









TERRY HOLADAY AND SANDRA
HOLADAY,
                    APPELLANTS,

V.

ROBERTA FRAKER, ET AL.,
                    APPELLEES,







95-909



APPEAL FROM THE BENTON COUNTY
CHANCERY COURT,
NO. E-94-1600-2,
HON. DONALD R. HUFFMAN, JUDGE,
SUBSTITUTED OPINION.



AFFIRMED.


                   JUSTICE ANDREE LAYTON ROAF

     This appeal arises from a chancellor's order finding that
appellants had violated a restrictive covenant which prohibited use
of their property for other than residential purposes, and
requiring that appellants remove a shop building they constructed
on the property.  Appellants assert the chancellor erred in 1)
interpreting the restrictive covenant to apply to the building
erected by appellants and; 2) granting injunctive relief which
required that appellants remove the building.  We find no error and
affirm.
     Appellants Terry and Sandra Holaday purchased a lot with a
house and two car garage in the Willow Oak Place subdivision in
Rogers, Arkansas.  A protective covenant and a bill of assurances
encumbered the lot, and provided that "all lots in Willow Oak Place
subdivision shall be used exclusively for residential purposes." 
The bill of assurances, which was adopted by all homeowners in the
subdivision in 1988, also stated that "no structure of a temporary
character, trailer, basement, tent shack, barn, or other
outbuilding shall be used on any lot at any time as a residence
either temporarily or permanently. "  The warranty deed to the
property in question also contained the requirement that "all lots
in FRAKER SUB-DIVISION #1 shall be used exclusively for residential
purposes."  The warranty deed further provided that "no dwelling
shall be erected . . . in said subdivision other than a detached,
single family dwelling, not to exceed two and one-half stories in
height and a one, two or three car garage."  This subdivision was
initially created by appellee Roberta Fraker.  Appellants purchased
the lot in question by warranty in 1989, and were fully aware of
the protective covenant and bill of assurances.
     In April, 1993, appellants constructed a blue metal shop
building approximately thirty (30) feet by fifty (50) feet with
fourteen (14) foot high walls on the property.  Appellants claim to
have gotten permission from appellee Fraker before building the
shop.  On September 19, 1994, appellee Fraker filed a complaint in
chancery court alleging that appellants had violated the bill of
assurances and protective covenants of the subdivision.  Fraker
subsequently filed an amended complaint adding other appellees, who
also are residents of the Willow Oak Subdivision, further alleging
that appellants undertook to perform commercial automobile repairs
in the outbuilding and also boat repairs, both for compensation.
     Appellants filed a counterclaim against appellee Fraker
alleging appellants had contacted Fraker to seek assurances that
the proposed outbuilding would not violate the bill of assurances
and protective covenants.  Appellants alleged that during their
conversation with Fraker the appellants disclosed to Fraker the
type, size and location of the shop building, and that appellee
Fraker represented to appellants that this type of building would
not be in violation of the restrictive covenants.  Appellants
further made estoppel, false representation, and negligence
arguments for recovery against Fraker.  The lower court dismissed
appellants' action against Fraker pursuant to Rule 12(b)(6) of the
Arkansas Rules of Civil Procedure.
     The appellees' cause of action was tried on May 3, 1995.  The
Chancellor found that appellants had violated the restrictive
covenant by erecting a building of the size suitable for commercial
purposes.  The court further ordered appellants to remove the
building from their property within six months.  An order for stay
of judgment was granted to allow appellants to appeal the lower
court's decision.        
     Appellants first argue that they have not violated any of the
restrictions contained in the covenant, bill of assurances, or
warranty deed.  Although we try chancery cases de novo on the
record, we do not reverse a finding of fact by the chancellor
unless it is clearly erroneous. Welchman v. Norman, 311 Ark. 52,
841 S.W.2d 614 (1992).  Deference is given to the superior position
of the chancellor to judge the credibility of witnesses. Riddick v.
Streett, 313 Ark. 706, 858 S.W.2d 62 (1993).  In order to overturn
the chancellor's ruling, the appellants must demonstrate that the
trial court abused its discretion by making a judgment call that
was arbitrary or groundless. Ingram v. Wirt, 314 Ark. 553, 864 S.W.2d 237 (1993).  We cannot say that the trial court's
determination was completely erroneous in this instance.
     Appellants correctly state that courts do not favor
restrictions upon the use of land, and if there is a restriction on
the land, it must be clearly apparent. McGuire v. Bell, 297 Ark.
282, 761 S.W.2d 904 (1988).  Appellants rely heavily on Casebeer v.
Beacon Realty, 248 Ark. 22, 449 S.W.2d 701 (1970), for the
proposition that restrictive covenants are to be strictly construed
against limitations upon the free use of property, and all doubts
resolved in favor of the unfettered use of the land.  Appellants
assert that any doubts are to be construed strictly against those
seeking to enforce them and liberally in favor of freedom in the
use of land. Casebeer at 25.       
     However, in later cases, we have stated that the general rule
governing the interpretation, application and enforcement of
restrictive covenants is that the intention of the parties as shown
by the covenant governs. McGuire at 289.  The rule of strict
construction limited by the basic doctrine of taking the plain
meaning of language employed. Hays v. Watson, 250 Ark. 589, 466 S.W.2d 272 (1971).  In Hays, we recognized the doctrine of strict
construction stating ". . . . where there is uncertainty in the
language by which a grantor in a deed attempts to restrict the use
of realty, freedom from restraint should be decreed; . . . when the
language of the restrictive covenant is clear and unambiguous the
parties will be confined to the meaning of the language employed;
and it is improper to inquire into the surrounding circumstances or
the objects and purposes of the restriction for aid in its
construction."  However, we further stated ". . . but such strict
rules of construction shall not be applied in such a way as to
defeat the plain and obvious purpose of the restriction." Hays.
     Moreover, we stated in McGuire that where no general plan of
development exists, restrictive covenants in either a bill of
assurance or a deed conveying the land are not enforceable. McGuire
at 290.  The test of whether such a plan exists is whether
substantial common restrictions apply to all lots of similar
character or similarly situated. Id.  Here, of course, a general
plan or scheme of development exists because all homeowners in the
subdivision adopted the bill of assurances and restrictive covenant
in 1988.  Further, appellants were fully aware of the provisions
contained in their warranty deed and restrictive covenant when they
purchased the lot.  One taking title to land with notice that it is
subject to an agreement restricting its use will not, in equity and
good conscience, be permitted to violate its terms. Harbour v.
Northwest Land Co., 284 Ark. 286, 681 S.W.2d 384 (1984).
     Appellants' warranty deed and bill of assurances clearly state
that all lots shall be used exclusively for residential purposes. 
However, appellants contend that since the bill of assurances
states that no dwelling shall be erected on any lot other than a
single-family dwelling with no more than a three car garage and
also no outbuilding shall be used on any lot at any time as a
residence, the restrictive covenants do not specifically exclude
their blue metal shop building because it is not a dwelling, nor is
it used as a residence.  We agree that appellants' building is not
a dwelling, the definition being a place to live in, The American
Heritage Dictionary, 431 (2d ed. 1976), nor is the building being
used as a residence.  However, the trial court's determination was
based on whether appellants' lot was being used exclusively for
residential purposes.
     The trial court specifically found that appellants violated
the covenant by placing on their lot a bright blue metal shop
building suited for commercial purposes.  Appellant Terry Holaday
admitted to bringing automobiles and boats of others to the shop
building, and repairing them for compensation.  Appellees testified
that appellant regularly brought cars to the shop to fix and that
the appearance of the shop building caused the value of their
property to decrease.  
     The Arkansas Court of Appeals stated in Briarwood Apartments
v. Lieblong, 12 Ark. App. 94, 671 S.W.2d 207 (1984):
          There is no ambiguity in the expression `No
          lot shall be used for other than residential
          purposes.'  Any additional use must be
          reasonably incidental to residential uses and
          such an inconsequential breach of the covenant
          as to be in substantial harmony with the
          purposes of the parties in making the
          covenants, and without substantial injury to
          the neighborhood.

Citing Thompson v. Squibb, 183 So. 2d 30 (Fla. D.C. App.2d 1966). 
     In this instance, the lower court made a determination that
appellants' building constituted a violation of the provision that
all lots be utilized exclusively for residential purposes.  The
chancellor's determination will not be reversed by this court
unless it is clearly erroneous, Constant v. Hodges, 292 Ark. 439,
730 S.W.2d 892 (1987).  Although there is ambiguity in the language
of the covenant, the plain and obvious purpose of the restriction
is clear, that the lots be used exclusively for residential
purposes.  From our review of the evidence, we cannot say that the
lower court's determination clearly erroneous.
     Appellants also contend that the trial court clearly abused
its discretion to grant injunctive relief by ordering appellants to
remove the shop building because the court concluded the building
was suited for commercial purposes.  Appellants suggest that a more
equitable and appropriate remedy would be to restrict their use of
the structure.  We do not reach appellant's second point on appeal
because it does not appear to have been presented to the trial
court.  We have consistently held that we will not consider an
issue for the first time on appeal. Hercules Inc. v. Pledger, 319
Ark. 702, 894 S.W.2d 576 (1995).
     Affirmed.
     Newbern, J., dissents.   
     
     *ADVREP10A*


                                      95-909
                                      Opinion delivered: 2-19-96
TERRY HOLADAY and SANDRA
HOLADAY

               Appellants

          v.

ROBERTA FRAKER, et al.,

               Appellees                Dissenting Opinion




                     David Newbern, Justice.

     The majority opinion points out correctly that the bill of
assurances and the warranty deed prohibited commercial use of the
Holadays' lot and use of any outbuilding as a residence.  The
presence of the metal building violated neither provision.
     The Holadays argue the injunction should have been limited to
prohibiting commercial activity on their lot.  The majority opinion
answers the point by saying it was not raised to the Chancellor
and, therefore, it will not be considered.  
     The following are excerpts from the Holadays' abstract of the
Chancellor's ruling from the bench:

     In this case it is a question of fact of whether the blue
     metal shop building is a commercial building or nothing more
     than an oversized garage.  But maybe I could say that is a
     question of fact whether or not it violates the covenants.  I
     guess if we argued that the building is ok if you do not use
     [it] for anything except to tinker with and you do not ever
     use [it] for anybody's benefit or sell your services.  That
     would be the hardest question I would have to answer.
                               ***
     Let's say that the Defendant [the Holadays] is going to use
     the building for his own private use.  So, everybody in the
     neighborhood is entitled to one of those.  The next thing you
     know somebody sells one of those lots with that building up
     there and the guy brings in the lawnmowers.  He can advertise
     in the paper because signs are prohibited on the property and
     pretty soon you have folks coming in with their lawnmowers.

     The question whether the injunction should be limited to
prohibition of commercial activity was before the Chancellor.  His
apparent conclusion was that a building which could be used for
commercial purposes would necessarily be so used.  Nothing in the
evidence presented compels that conclusion; nor am I able to say it
is demanded by logic.
     While a chancellor has broad power to fashion a decree that is
reasonable in the circumstances, the effect of a decree should be
limited to the minimum necessary to solve the problem at hand.  It
must be limited to action which is "justified by the proof."  See
Lotz v. Cromer, 317 Ark. 250, 878 S.W.2d 367 (1994); Chambers v.
Manning, 315 Ark. 369, 868 S.W.2d 64 (1993); Keith v. Barrow-Hicks
Extensions of Water Improvement Dist. No. 85, 275 Ark. 28, 626 S.W.2d 951 (1982). 
     I respectfully dissent.