Mid-State Equipment Co. v. Bell

delivered the opinion of the court.

We consider in this appeal the equitable doctrine of implied restrictive covenants and its bearing upon the rights of property owners in a residential subdivision. Specifically, the inquiry is whether a restriction for residential use applies to a parcel which appellant Mid-State Equipment Company, Inc., the defendant below, is using for commercial purposes.

The property in controversy, containing about 1.5 acres, is a rectangular parcel of land comprised of two xtriangular~shaped lots located at the intersection of Waterlick Road and State Route No. 835 (Jefferson Manor Drive) in Campbell County. These lots are designated “James D. & Mary R. Eubank” and “R. N. Clemmons” on the attached sketch, which is a composite of portions of three plat exhibits.

In September 1973 plaintiffs-appellees, property owners in Jefferson Manor, a residential subdivision in Campbell County, filed a bill of complaint seeking to enjoin Mid-State, a corporation engaged in an equipment rental and sale business, from violating certain restrictions, which plaintiffs contended constituted implied reciprocal negative easements or equitable servitudes applicable to Mid-State’s property.* The plaintiffs sought an order restraining Mid-State from utilizing the property in question “for any other than residential purposes.”

The cause was referred to a commissioner in chancery who filed his report in July 1974 based upon evidentiary hearings which had been held during the preceding March and April, upon certain stipulations of the parties, and upon the commissioner’s examination of “the records in the clerk’s office of the Circuit Court of Campbell County.” The commissioner found that: (1) a business or commercial establishment was being operated on the real estate in question; (2) *136the restrictive covenants in issue were “not expressly or directly applicable to” Mid-State’s property; and (3) the property was subject to “implied negative restrictive covenants to the effect that only residential use is to be made of [it]”, and operation of Mid-State’s business on the property violated these restrictive covenants.

*135