Quinn Homes, Inc. v. Bay City Improvement Ass'n

Morton, J., delivered the opinion of the Court. This is an appeal from a declaratory judgment entered in the Circuit Court for Queen Anne’s County (Carter, J.) which affirmed the enforcement by the Bay City Improvement Association, Inc., appellee, of a certain restrictive covenant imposed on property owned by Quinn Homes, Inc., appellant. Appellant contends that the lower court’s construction of the covenant was erroneous. The covenant in question is one of several imposed by The Bridgeside Company, the original developer, in 1952 on a 404 acre parcel of land of which the subject property is a part.

The covenants were properly recorded and their validity is unquestioned. They provided for the planned development of a residential community by, among other things, imposing use restrictions on the residential lots and establishing a property owner’s association (appellee) to administer and enforce the covenants. One of the covenants, G-l, stated: "Except as hereinbefore recited [i.e., except for the possible establishment of a retail commercial area at a certain location], all lots in said Community shall be for residential use only and not for purposes of any trade or business whatsoever.” Appellant wants to build a "speculative home” on its lot which, upon completion, will be offered for sale to the general public. It has on at least two prior occasions constructed houses on other lots subject to covenants, but then it had specific contract-purchasers for the homes.

Now it has no such contract-purchaser in advance. The covenants require that all construction plans be approved by appellee in advance and appellant, accordingly, submitted its plans to appellee. But appellee refused to approve them unless appellant signed an "Application for ⁴⁸¹ approval of plans” (Application). Among other things the Application provides that the applicant agrees that "[t]he proposed building ... is to be erected for the sole use and occupancy of the applicant as a residence and is not being built and will not be used as a sample or speculative home.” Since this is precisely appellant’s purpose, it refused to sign.

Appellant thereupon sought a declaratory judgment in the court below that would allow it to construct the house. Appellant contended that the warranties contained in the Application were not required by the covenants. But the court below found that the aforementioned covenant G-l did proscribe the use of any lot for building and selling speculative houses, relying upon Chesapeake Estates v. Foster, 265 Md. 120 (1972), and that appellee’s refusal to approve