Hundley v. Gorewitz

United States Court of Appeals for the District of Columbia · 1942 · Property

PropertyRestrictive CovenantsEquitable Enforcementrestrictive covenantracial covenantinjunctionequitychanged neighborhood conditions

Facts

In 1910, six contiguous houses were built on Thirteenth Street in Washington, D.C., and five of the six deeds contained a covenant forbidding rental, lease, sale, transfer, or conveyance to any Negro or colored person, backed by a $2,000 penalty lien. Appellants, who are Negroes, bought and occupied No. 2530 in 1941, while appellees owned neighboring restricted houses at Nos. 2528 and 2534. The only unrestricted house in the six-house row, No. 2526, immediately adjoining one appellee's house, was already owned and occupied by Negroes, and another nearby house across the street was purchased by a Negro while the suit was pending. The evidence showed a definite surrounding trend of Negro ownership and occupancy and that property values in the block and nearby were greater for colored occupancy than for white occupancy.

Issue

Although such restrictive covenants were generally valid and enforceable in equity in this jurisdiction, should a court of equity refuse injunctive enforcement here because neighborhood conditions had changed so much that the covenant's purpose had been defeated and enforcement would impose hardship and depress property values?

Rule

A restrictive covenant of this type may be valid and generally enforceable by injunction, and the presence of a penalty provision does not by itself bar equitable relief. But equity will refuse to enforce the covenant when changed conditions in the neighborhood have so altered the character, environment, or uses of the property that the covenant's purpose cannot be carried out, enforcement would substantially lessen property value, or injunctive relief would impose hardship rather than confer benefit. Whenever the purpose of the restriction has been frustrated and enforcement would depreciate rather than enhance the value of the property, a court of equity ought not to interfere.

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In Baltimore, a 1915 deed for one of eight rowhouses on Linden Avenue contains a covenant barring transfer or occupancy by members of a specified group and provides for a $5,000 lien if violated. Only four of the eight houses on the row are subject to the covenant, one unrestricted adjoining house has long been occupied contrary to the covenant's purpose, and recent sales data show the restricted houses are worth more if sold to buyers the covenant excludes.

If neighboring owners seek an injunction to oust the current owner who falls within the excluded class, how should a court of equity most likely rule?

Explanation. The majority opinion treats such covenants as generally valid and potentially enforceable in equity, and it also states that a penalty or lien provision does not itself bar injunctive relief. But equity should refuse an injunction when neighborhood conditions have so changed that the covenant's purpose can no longer be carried out, and enforcement would impose hardship or substantially lessen property value. Here, partial coverage, an adjoining unrestricted use inconsistent with the covenant's aim, and evidence that enforcement would reduce value all point to denial of equitable relief. (Derived from Hundley v. Gorewitz (n.d.).)