No. 87-91 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

TOWN & COUNTRY ESTATES ASSOCIATION, 

Plaintiff and Respondent, 

-vsKEN SLATER and ALICE D. SLATER, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable G. Todd Baugh, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Pedersen & Conrad; Carol Hardy Conrad, Billings, 

Montana 

For Respondent : 

Gary Beiswanger, Billings, Montana 

Submitted on Briefs: May 14, 1987 

Decided: July 281 1987 

Filed: 'JUL 2 8 1987 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the 

Court. 

Defendants Ken and Alice Slater appeal a November 5, 

1986 permanent injunction by the Thirteenth Judicial District 

Court, Yellowstone County. The injunction prevented the 

Slaters from building a house in Town & Country Estates until 

a Design Review Committee approves the Slaters' building 

plans and specifications. We reverse and vacate the 

injunction. 

The Slaters present three issues for our review: 

1. Did the District Court err in finding that a restrictive covenant which allows a Design Review Committee 

(DRC) to disapprove house plans and prevent construction is 

enforceable, when the disapproval is based upon "harmony of 

external design?" 

2. Did the District Court err in finding that the 

covenant had not been abandoned, although none of the plans 

for previously-constructed houses had been approved by the 

DRC? 

3. Did substantial credible evidence support the 

District Court's findings that the DRC acted reasonably, in 

good faith, and not arbitrarily or capriciously? 

Town & Country Estates Association (TCE) is a subdivision in Billings, Montana. TCE contains sixteen 

single-family houses, one duplex, and several vacant lots. 

The deeds to the TCE lots incorporate by reference a "Declaration of Covenants, Conditions and Restrictions," which was 

publicly recorded on December 20, 1973. 

The Declaration, in Article V, grants architectural 

control to the DRC and outlines relevant aesthetic factors. 

No residential . . . structure . . . shall be made . . . upon the Properties . . . until plans and specifications 
showing the nature, kind, shape, height, 

materials, colors and location of the 

same shall have been submitted to and 

approved in writing as to harmony of 

external design, location and relation 

to surrounding structures and topography, the construction, colors, and the 

materials to be used in the construction 

have been approved in writing by a 

Design Review Committee consisting of 

five members appointed by the Board of 

Directors of Town & Country Estates 

Association. [Emphasis added.] 

Article V does not place a minimum value on TCE houses, 

which vary in size, shape, color, building materials, and 

architectural style. However, the TCE houses all have a 

minimum of 2,400 square feet and shake roofs. 

Prior to 1986, all TCE houses had either been built or 

approved by the developer of the subdivision. In early 1986, 

the Slaters expressed an interest in a TCE lot. They were 

aware of the prior approval restriction of Article V. In 

April of 1986, they learned that the developer had left the 

area, and that a five-member DRC was being formed to review 

Slatersl house plan. The plan was the first to be reviewed 

by the newly-formed DRC. Slaters1 proposed house had a shake 

roof, wood siding, and 2,600 square feet of living space. 

On May 1, 1986, Slaters bought the TCE lot before 

receiving approval of their house plan. On May 19, 1986, 

Slaters received a letter from DRC rejecting Slaters1 plan 

because the house did not "conform to the general tone of the 

area." The letter also stated, "We would suggest that the 

price of the lot commands a residence more near the size of 

houses in the surrounding area. As you know, the neighborhood consists of $200,000 plus homes, and this is the kind of 

conformity that you should look to." Without approval, 

Slaters began house construction on August 5, 1986. 
On August 6, 1986, TCE obtained a temporary restraining 

order prohibiting the Slaters from building, alleging that 

Slaters' house violated the minimum size restrictions contained in the Declaration. Based on the court's order, 

Slaters resubmitted their plans to DRC. On August 26, 1986, 

the DRC again rejected the plan and stated, "we find that the 

structure is not in harmony - of external design to surrounding 

structures and topography as specified in [the Declaration]." 

(Emphasis added.) On November 5, 1986, the District Court 

granted a permanent injunction against Slaters, until they 

complied with the TCE Declaration. 

Issue 1 

Did the District Court err in finding that a restrictive covenant which allows a Design Review Committee to 

disapprove house plans and prevent construction is enforceable, when the disapproval is based upon "harmony of external 

design?" 

The District Court based its permanent injunction on 

the fact that the Slaters had not complied with Article V. 

The court held that the restrictive covenant was enforceable, 

and that the committee's review was performed in good faith 

and not unreasonable. 

Slaters contend that a prior approval covenant is not 

enforceable if it contains no specific objective standards. 

Slaters argue that the term "harmony of external design" is 

too vague and ambiguous to be enforceable. Slaters further 

argue that their house has major features found in existing 

TCE houses, and therefore their house would not differ in 

aesthetic merit from the other houses. 

TCE contends that Article V is enforceable, even without express standards of application, because the DRC acted 

reasonably and in good faith. TCE admits that other TCE 
houses share some of the same physical characteristics and 

materials of the Slater house, but argues that Slaters' 

design is not as attractive and harmonious as the existing 

houses. 

Our review of this issue is guided by Higdem v. Whitham 

(1975), 167 Mont. 201, 208-209, 536 P.2d 1185, 1189, where we 

held: 

The overriding policy of individual 

expression in free and reasonable land 

use dictates that restrictions should 

not be extended by implication or enlarged by construction. 

Article V establishes several restrictive factors upon which 

the DRC must predicate its approval. We will closely review 

any enlargement of restrictions which conflict with reasonable land use, and which hinder substantive due process. As 

we held in State v. District Ct. (1980), 187 Mont. 126, 130, 

609 P.2d 245, 248, "Moreover, restrictive covenants are to be 

strictly construed; ambiguities therein are to be construed 

to allow free use of the property." However, the free use of 

the property must be balanced against the rights of the other 

purchasers in the subdivision. 

Each purchaser in a restricted subdivision is both 

subjected to the burden and entitled to the benefit of a 

restrictive covenant. Generally, these covenants are valid 

if they tend to maintain or enhance the character of a particular residential subdivision. However, such covenants are 

enforceable only when used in connection with some general 

plan or scheme. The approval of plans by an architectural 

control committee is one method which helps maintain the 

value and general plan of subdivision construction. 

We recognize that aesthetic considerations have a place 

in prior approval covenants, and that there are no absolute 

standards to guide a committee's judgment and taste. 
Aesthetic terms must be sufficiently flexible to cover a 

variety of house designs. The term "harmony of external 

design" is not ambiguous per se. However, a restrictive 

covenant which fails to define the standard of approval is 

too vague to be enforceable. 

The record reveals that every TCE house had a unique 

external design, in a cacophony of styles. The houses ranged 

from single and split-level to bi-level, the roofs from 

gable-end and hip to mansard, and the siding from stucco and 

wood to stone. The styles were a hybrid mix of traditional, 

Tudor, ranch, and contemporary. The only common design 

characteristics were a 2400 square foot minimum size and a 

shake roof. When questioned at the show cause hearing on 

August 29, 1986, DRC was unable to state any design standard 

for TCE. 

If the subdivision itself lacks consonance, the Slaterst plan cannot lack harmony. In the context of TCE and 

Slaters' plan, the term "harmony of external design" lacks 

the mutuality of obligation central to the purpose of a 

restrictive covenant. In view of the wide variety of designs, no one seemed burdened by the covenant except the 

Slaters. 

Slaters' plan was not discordant with others in the 

subdivision. The proposed house would be split-level contemporary, 2600 square feet, with a gable-end shake roof and 

wood siding. The single most distinguishing feature of the 

Slaters' house was its cost, which was not an express factor 

under Article V. The proposed house would be worth approximately $135,000. The other TCE houses appraised above 

$200,000. As revealed in its initial rejection letter, DRC 

seems more concerned with harmony of appraisal than harmony 

of design. However, DRC's review of external design was 

limited to the factors set forth in Article V, and to 
observable characteristics of all other houses in the 

subdivision. 

The approval or disapproval of plans by the DRC must be 

based upon an objective design standard. Without a quantifiable standard to guide them, the decision of DRC is unenforceable. The record shows neither a uniform standard of 

design, nor a general plan regarding "harmony of external 

design" in the subdivision. We hold that the Slaters' house 

fell well within the broad architectural spectrum of TCE 

houses. Applied to the TCE subdivision and Slaters' plan, we 

hold that Article V lacks sufficient objectivity, and is 

vague to a degree that denies substantive due process to the 

Slaters. 

We therefore vacate the injunction based on this issue, 

and need not proceed to appellants' issues of notice and good 

faith. 

We concur: M