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N.h. Engle & Sons, Inc. v. Laurich

SEPTEMBER 10, 1968.




Appeal from the Circuit Court of Lake County, Nineteenth Judicial Circuit; the Hon. CARL A. SWANSON, Judge, presiding. Affirmed.


This cause was instituted as an action to enforce certain restrictive covenants in a deed which provided that the property involved shall be "used, improved and occupied for residence purposes only." Plaintiff, N.H. Engle & Sons, Inc., a corporation, was the grantor-developer, Martin Hood and Victorine Hood were neighbors who owned a home in the area and The First National Bank of Lake Forest was the Trustee of the property under a Land Trust. Defendant Jindrich Laurich is a physician and Blaza Laurich is his wife. Following a trial before the judge without intervention of a jury, a permanent injunction was decreed in the trial court restraining defendant Jindrich Laurich from maintaining a medical office in his home.

A number of years ago, one Edna Siebel laid out 23 lots along Sand Lake and named it Lindenhurst Estates Subdivision. In 1953, N.H. Engle & Sons, Inc. purchased the subdivision together with approximately 550 acres surrounding the subdivision (the purchase being made in the form of a land trust with First National Bank of Lake Forest as Trustee). This deed to the Engle company contained no restrictions. The bulk of the acreage was zoned for farming or for residences. Shortly after the purchase by the Engle company, an attempt was made to have the tract rezoned to allow the development of some businesses. This effort was unsuccessful, and the denial of such proposed zoning change was affirmed in the Supreme Court of this State (First Nat. Bank of Lake Forest v. County of Lake, 7 Ill.2d 213, 130 N.E.2d 267).

Following such denial of zoning change, the Village of Lindenhurst was then incorporated with N.H. Engle as the main landowner in such village. Portions of the village were thereafter zoned for business, and businesses were developed on such property. Sixteen of the 23 lots in Lindenhurst Subdivision were outside the village limits, including the particular lot in question in the instant case. The Engle company subdivided and conveyed a number of lots in the 550-acre tract. Many of the lots were sold for residences and contained a restriction that they could be used for residence purposes only. The properties sold for businesses did not contain any such restrictions. All the lots sold in Lindenhurst Subdivision contained restrictions which specifically provided that the real estate could be used for "residence purposes only." It prohibited alteration or construction on said real estate of other than one single-family residence building designed and built for occupancy by a single family. Plans and specifications for such buildings and material and construction thereof were required to be submitted to and approved by grantor before construction could be undertaken. A street called Grand Avenue physically separates Lindenhurst Estates Subdivision (containing 23 lots) from the other property purchased by the Engle company, and such lots in the subdivision were described as premium lots in the area, since the lots fronted on Sand Lake.

In 1960, the defendant, Dr. Laurich sought to set up a practice of his own in a new community which had no doctors. He met Morton Engle, a principal in the plaintiff's firm, and inquired if a doctor's office was available in a certain shopping plaza then being constructed by Engle on the north side of Grand Avenue in the Village of Lindenhurst. Engle rented him an apartment in a four-apartment building which was zoned for business and he told the doctor he could have a temporary office in the building. A lease was undertaken between the Engle company and Dr. Laurich for one of the apartments in the farmhouse-apartment building. The doctor resided in and engaged in his medical practice from the apartment in that building, on an understanding which Engle described as a "temporary expedient." In March of 1961, Dr. Laurich purchased Lot 5 of Lindenhurst Subdivision from the Engle company under a contract. The doctor testified that Engle advised him that the defendant-doctor could put a house on the lot and include his office in the house. Engle denied ever saying anything of this nature, but instead stated that he reminded the doctor of the restrictions which appeared in the contract and later in the deed to the doctor. In conjunction with the delivery of the deed, a covering letter was addressed to the Lauriches which contained the following language:

"Your attention is particularly directed to the restrictions contained in the deed. These restrictions are part of a general subdivision plan and must be strictly complied with.

"We are informed that Dr. Laurich intends to erect a building upon these premises which he will use and occupy as, and in which he will maintain and operate his permanent and principal doctor's office for the regular practice of medicine. Such use and occupation thereof would constitute a violation of the restrictions.

"The acceptance by you of the deed forwarded with this letter constitutes the representation to us and to the Grantor Trustee that you will strictly comply with said restriction. Violation by you of the restriction will compel us to institute proceedings for an injunction to restrain such use and occupation. . . ."

After the doctor had purchased the lot and prior to the time he commenced construction of his home with a built-in office, Engle and its representatives tried to persuade the doctor to take space for an office in a professional building being constructed by the Engle company. The doctor refused and the doctor and the Engle were thereafter not on friendly terms.

The doctor then caused plans to be prepared for his home which included several rooms designated for his medical practice such as an x-ray room. When the contractor informed him that it was unlikely that Engle would approve such a plan, the doctor changed his plans to show the medical area as a "family room." The plans were presented and approved and were thereafter changed before construction to provide partitions for the medical rooms. The home was completed with the medical facilities and with a parking lot for eight automobiles. The doctor thereafter began his medical practice in this home and had as many as 14 cars at one time parked outside his home. The Engle company and the bank as grantors, and the Hoods as homeowners in the Lindenhurst Subdivision, thereafter brought suit to enjoin the defendant Dr. Laurich from carrying on his medical practice in his home.

There was testimony by a representative of Engle that the medical practice was detrimental to the surrounding area as it would reduce property values and destroy the image of the property. A real estate dealer also testified as to the negative effect of the medical practice on the surrounding area from a value standpoint and there was contrary evidence that the medical office was a benefit to the area. It was shown in the record that the Hoods could not see the doctor's home from the house owned by Hoods because of shrubbery and other houses. It was also shown in the record that the defendant's home was 1,200 feet from the Engle real estate office, 1,500 feet from the village hall, and 2,000 feet from the nursing home. The village hall and nursing home were on land zoned for business and the deeds to such property contained no restrictive covenant as to use. It was also shown that the real estate office was a temporary occupancy until the lots in the area were sold. A real estate appraiser testified that the general area in and around Lindenhurst was "residential with commercial use and occupancy and residences." There was also testimony that the shopping center, professional building, new church and a civic center addition to the village hall were the only changes of a business character in the area around Lindenhurst since 1961, when Engle sold Lot 5 to defendant doctor.

On appeal in this Court, defendant contends (1) that the practice of medicine in a home owned and occupied by a physician and his family does not violate covenants limiting the use of property for residential purposes only; (2) that the restrictions in the deed received by defendant were released by implication and abandoned or waived in the circumstances disclosed by the record; (3) that the grantor bank and the Engle company and the Hoods as owners of a lot were not entitled to enforce the restrictive covenants and to obtain equitable relief in support thereof; and (4) that the findings of the Chancellor were against the manifest weight of the evidence.

Restrictions contained in the deed limiting the use of the property for residential purposes have been held to be valid and enforceable under the laws of the State of Illinois (Housing Authority of Gallatin County v. Church of God, 401 Ill. 100, 81 N.E.2d 500). In the case just cited, where a restriction read "to be used for residential purposes and not otherwise," the court determined that the construction of the church building was prohibited by such provision. It was pointed out in that case that an owner of real estate has a right to convey it subject to any condition or restriction which he deems fit to impose, provided the conditions or restrictions are not against public policy and do not materially impair the beneficial enjoyment of the estate. With respect to the particular problem which confronted the trial court and which is now before this Court, no Illinois case has been directed to our attention nor have we discovered any precedent in this State which specifically determines the question of whether the use by a physician for his medical practice of a portion of his home is violative of a restrictive covenant as to the use of property "for residence purposes only." The parties to this cause have cited cases from other jurisdictions some of which have emphasized the distinction between a professional and a commercial enterprise (Briggs v. Hendricks (Tex), 197 S.W.2d 511 (1946)). In determining the issue before the court, however, we do not believe that such distinction is appropriate or valid. The cases which have emphasized the physical effect on the surrounding area and which do not base the determination on whether a business-type enterprise is being carried on within the home seem to be more consistent with the type of covenant which we have under consideration. The mere physical appearance of the outside of the home should not, however, be the sole criterion for allowing or denying an occupation or a profession from being carried on within the residence. We feel that the activity conducted within the home is the fundamental factor to be considered in making a determination as to whether there is a violation of the restrictive covenant.

A persuasive case from New York, Stewart v. Barber, 182 Misc. 91, 43 NYS2d 560, at page 563, summarizes a rule which has been adopted in ...

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