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Fox Lake H. Prop. O. Ass'n v. Fox L.h.

FEBRUARY 26, 1970.

FOX LAKE HILLS PROPERTY OWNERS ASSOCIATION, PLAINTIFF-APPELLEE,

v.

FOX LAKE HILLS, INC., DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Lake County, Nineteenth Judicial Circuit, the Hon. PHILIP W. YAGER, Judge, presiding. Affirmed.

MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT.

Rehearing denied and supplemental opinion March 31, 1970.

This appeal by Fox Lake Hills, Inc., a subdivider, challenges the order of the trial court which declared in favor of Fox Lake Hills Property Owners Association that the subdivider was, alternatively, not empowered to amend subdivision restrictions and covenants under claimed reserved powers, or, if empowered, was estopped from exercising its power to amend.

The defendant subdivider in 1954 opened up "Fox Lake Hills" which was in parts separated by about one mile. One portion of the subdivision is called the "Chesney Area," another the "Busse Area." There were essentially similar covenants, conditions, restrictions and easements in both areas, and each area was subject to the following provision:

"`(16) Every purchaser of a lot within the subdivision by the payment of the purchase price and acceptance of a deed therefore, agrees for himself, his heirs and assigns to become a member of the Fox Lake Hills Property Owners Association, a not for profit corporation. Every purchaser of a lot within the subdivision by the payment of the purchase price and acceptance of a deed therefor further agrees for himself, his heirs and assigns, to pay to the Fox Lake Hills Property Owners Association the assessments levied by said Association for the purpose and purposes for which it is organized, not to exceed $5.00 per annum for each unimproved lot and $10.00 per annum for each improved lot, said assessments to be payable to the treasurer of said Association at its office. In the event of default in payment of aforesaid assessment every such purchaser further agrees, authorizes and empowers the said Association, its officers, successors and assigns, to assert a lien against his or her lot and to file on behalf of said Association a Notice of Lien with the Office of the Recorder of Deeds of Lake County, Illinois, for the amount of said lien, which lien shall be and remain at all times inferior, junior and subordinate to the lien of any indebtedness secured by mortgage or trust deed.'"

Additionally, in the Chesney Area covenants and conditions, the following appeared: *fn1

"`(20) Fox Lake Hills, its successors and assigns, shall have the right from time to time hereafter to alter, change, modify, revoke or delete, in whole or in part, any or all of the restrictions, covenants and conditions above set forth and contained in the Declaration of Restrictions filed of record in the Recorder's Office, Lake County, Illinois, without the approval or consent of any property owner or owners or who may hereafter become owners of property in said subdivision.'"

The reservation of power in the subdivider was in the general recorded covenants and also repeated in hundreds of separate contracts of sale between the subdivider and individual lot purchasers.

At a meeting of lot owners on October 14th, 1956, an attorney for the subdivider explained the differences between the restrictions in the Chesney and Busse contracts and led the discussion about the forming of a Property Owners Association. There was extensive discussion that there could be one or two associations. At a subsequent meeting, in 1957, the lot owners decided in favor of one association with weighted voting. *fn2

On December 1st, 1959, the subdivider conveyed the parks and beaches in both areas to the plaintiff Association.

Subsequently the Chesney area owners became dissatisfied with the single association, claiming that their dues were not being equitably used to maintain the parks and beaches in the Chesney area. In the latter part of 1962, the Chesney lot owners approached the subdivider and asked for a change in the Chesney restrictions so that they could have their own association. On the virtually unanimous petition of the lot owners in the Chesney area, the subdivider granted the request and exercised its reserved right under paragraph 20 above by amending the restriction contained in paragraph 16 above to release the Chesney owners from their future obligation to pay dues to the plaintiff Association. The recorded document accomplishing this was held void by the order below. *fn3

The complaint prayed that the subdivider's change of restrictions be declared ineffective and that the defendant corporation pay the dues to the plaintiff on the Chesney area lots. The order appealed from held the reserved power of amendment exercised under paragraph 20 was invalid and the defendant estopped from using it.

The defendant argues that the relief granted was improper because neither the record owners of the Chesney lots nor the Chesney Shores Property Owners Association were made parties, and that their interests made them necessary parties; that the order was inequitable in that it worked a hardship on the Chesney owners with no benefit to others; that the right to revoke or delete any and all restrictions without the consent of the individual lot owners was properly reserved by the subdivider, and should have been held enforceable against the plaintiff Association suing as a third-party beneficiary. The ...


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