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Smart Summary

Factual and Procedural Background

J.G. Bennett operated a restaurant and dance hall called Inn Logola near Louisville. Consolidated Realty Company developed an adjacent subdivision (Wellington) and sold Bennett three adjoining lots (lots 1–3). The deed to those lots contained the covenant: "No trade or business whatever shall be permitted or maintained on this property. This is not to include doctors or dentists who may maintain an office in their residence." Bennett used the rear of the lots as a free parking area for patrons of Inn Logola, often accommodating many cars and extending his effective parking beyond his original lot. Consolidated Realty Company sued in Jefferson Circuit Court (Chancery Branch, First Division) to enjoin Bennett from using lots 1–3 as parking or for any purpose incidental to operation of the roadhouse. After proof and final hearing, the circuit court granted the injunction. Bennett appealed. The Court of Appeals of Kentucky, Commissioner Hobson, affirmed.

Legal Issues Presented

  1. Whether Bennett's use of lots 1–3 as a parking area for patrons of Inn Logola constituted a "trade or business" prohibited by the deed covenant.
  2. Whether parol or extrinsic evidence (alleged agreement with the seller's agent permitting continued parking use) was admissible to vary or contradict the unambiguous written covenant.

Arguments of the Parties

Appellant's Arguments

  • Bennett contended he was already using lot 1 as a parking place when he purchased it and that the seller's agent agreed he could continue that use; he purchased the lot for that purpose and the agent sold it to him for that purpose.
  • Bennett relied also on the company's prior allowance of a signboard on one of its lots as a purportedly comparable accommodation.

Appellee's Arguments

  • The company (and its agent) denied any agreement to permit continued parking use; the company argued the covenant forbade trade or business uses such as parking for a roadhouse.
  • The company showed the signboard allowance was a limited, temporary accommodation under contract and had been removed before trial, and that the covenant did not apply to appellee's own property use.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Marshall v. Dean, 4 J. J. Marsh. 583 Application of rule that unambiguous written instruments are construed according to plain meaning and extrinsic evidence is inadmissible to vary them. Cited as authority supporting exclusion of parol evidence and enforcement of the covenant's plain meaning.
Spurrier's Heirs v. Parker, 16 B. Mon. 274 Same rule regarding construction of unambiguous written instruments and inadmissibility of extrinsic evidence. Cited as supporting authority for enforcing deed restriction according to its plain terms.
Helton v. Asher, 135 Ky. 751, 123 S.W. 285 Rule that where contract language is plain and unambiguous, extrinsic evidence as to its meaning is not admissible. Relied upon in holding the covenant must be enforced according to its plain meaning without admitting contrary parol evidence.
Conrad v. Smith, 203 Ky. 171, 261 S.W. 1103 Application of the same principle limiting admissibility of dehors-the-instrument evidence when language is unambiguous. Used to support exclusion of alleged contemporaneous agreements contradicting the written covenant.
National Bank v. Minary, 221 Ky. 798, 299 S.W. 985 Authority for construing unambiguous contractual language by its strict, plain meaning and disallowing parol variations. Cited to affirm enforcement of the deed restriction against Bennett's use.

Court's Reasoning and Analysis

The court found Bennett's use of the lots to park patrons' automobiles was plainly a business use and an essential incident to operating Inn Logola; without such parking the roadhouse could not be successfully operated under the circumstances. The deed covenant prohibiting "trade or business" was expressed in ordinary, unambiguous language and was intended to protect the subdivision for residential purposes. The court applied the well-established rule that when a written instrument's language is plain and unambiguous, extrinsic evidence is inadmissible to contradict or vary it. Because there was no pleading or proof of fraud or mutual mistake, the alleged oral agreement with the seller's agent could not be admitted to vary the written covenant. The court also found the company's prior, temporary permission for a signboard was limited and not a waiver applicable to Bennett's conduct. On these bases the circuit court's injunction was upheld.

Holding and Implications

Affirmed. The Court of Appeals affirmed the circuit court's injunction prohibiting Bennett from using lots 1–3 as a parking space for patrons of Inn Logola or for any purpose incidental to the roadhouse.

Implications: The direct effect is that Bennett remains enjoined from the challenged use of the property under the deed covenant. The opinion enforces the principle that unambiguous deed covenants barring trade or business uses are to be given their plain meaning and will not be varied by alleged oral agreements in the absence of fraud or mistake; the opinion does not announce a broader novel precedent beyond applying established rules cited.

Bennett v. Consolidated Realty Company.

OPINION OF THE COURT BY COMMISSIONER HOBSON

Affirming.

Some years ago J.G. Bennett opened a restaurant and dance hall known as Inn Logola about one mile east of the city limits of Louisville. After this the Consolidated Realty Company purchased a tract of land adjacent to his property, and opened a subdivision known as Wellington, cutting it up into lots. Bennett purchased from the company lot 1 and from its vendees lots 2 and 3. These three lots lay adjoining, and were separated from Bennett's property by an alley. Inn Logola was much attended by people coming in cars, and, even before Bennett purchased lot 1, his patrons were using for parking purposes this ground when necessary. His original lot contained only space enough for 10 or 12 cars. After Bennett acquired lots 1, 2 and 3, he covered the rear of the lots with cinders, and his patrons used it for parking purposes; often as many as 100 cars were there. He had dances in the evening, and these lasted sometimes until 2 or 3 o'clock in the morning. Bennett charged nothing for the parking. He did no business on these lots, except to allow them to be used by his patrons. The only charges he made were for what was received in the house. The deed to him for the lots contained this clause:

"No trade or business whatever shall be permitted or maintained on this property. This is not to include doctors or dentists who may maintain an office in their residence."

The company brought this suit against Bennett to enjoin him from using lots 1, 2 and 3 as a parking space for the automobiles of patrons of Inn Logola or for any other purpose incidental to or associated with the operation of the roadhouse. The issues were made up, proof was taken, and on final hearing the circuit court granted the injunction as prayed. Bennett appeals.

The use of the lots by Bennett's patrons was plainly a use for business purposes. It was necessary to have a parking place for these automobiles. The parking place was an incident to the roadhouse, without which the roadhouse could not have been successfully operated under the circumstances. Bennett was carrying on the business of operating the roadhouse; and, in providing parking places for his patrons, he was simply; performing an incident of that business. While such provisions in deeds are not construed to create restrictions beyond the fair and natural meaning of the words used, read in the light of the circumstances under which they were used, they will be enforced according to their fair and natural meaning, in the absence of fraud or mutual mistake. To hold that no trade or business was permitted on these lots would be to refuse to enforce the provision according to the plain meaning of the common words of everyday speech in which it is expressed; for such a use as Bennett was making of the property would be especially objectionable in a residential section, and the restriction was inserted to protect the subdivision for residential purposes.

Bennett insists that he was using lot 1 as a parking place when he bought it from appellee, and that, when he bought it, it was agreed between him and the agent of appellee, from whom he bought, that he might continue to so use it; that he bought it for this purpose; and that the agent sold it to him for his purpose. But the agent denies all this, and there is no pleading or proof that anything was left out of the written contract by fraud or mistake. The rule on the subject is thus well stated in 10 R. C. L.:

"When the language employed in a contract has an ordinary meaning, or if the meaning is plain and unambiguous when read in connection with other provisions of the contract, extrinsic evidence as to its meaning is not admissible." Section 258, p. 1063.
"It is a general rule that where the words of any written instrument are free from ambiguity in themselves, and where external circumstances do not create any doubts or difficulty as to the proper application of those words to claimants under the instrument, or the subject matter to which the instrument relates, such instrument is always to be construed according to the strict, plain, common meaning of the words themselves, and that in such case evidence dehors the instrument, for the purpose of explaining it according to any surmised or alleged intention of the parties to the instrument, is utterly inadmissible. In short, the words of an instrument, unambiguous in themselves, cannot be controlled by proof that the parties used them with a definite and limited meaning, for the purpose of that particular instrument. Section 265, p. 1070.

These rules have often been applied by this court. Marshall v. Dean, 4 J. J. Marsh. 583; Spurrier's Heirs v. Parker, 16 B. Mon. 274; Helton v. Asher, 135 Ky. 751, 123 S.W. 285; Conrad v. Smith, 203 Ky. 171, 261 S.W. 1103; National Bank v. Minary, 221 Ky. 798, 299 S.W. 985.

The statute requires such contracts to be in writing, signed by the party charged. The purpose of the statute is to provide against the uncertainty of contradictory parol evidence in such cases. The language of the contract here is unambiguous. It is expressed in ordinary words. There is no latent ambiguity. The purpose of the statute would be entirely defeated, if in such cases evidence were allowed contradicting or varying the plain meaning of the contract on its face when read in the light of all the circumstances surrounding the parties when it was made.

Bennett also relies on the fact that the company allowed another to maintain a signboard on one of its lots, but the proof shows that this was done under a contract for a limited time simply as an accommodation, and that the signboard was removed before this case was tried. The covenant has no application to appellee in the use of its property. On the whole case, no reason appears for disturbing the judgment of the circuit court.

Judgment affirmed.

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BENNETT v. CONSOLIDATED REALTY COMPANY
(Dec 11, 1928)