"The issue is, what is chicken?" is the opening line in this opinion quoting Frigaliment Importing Co. v. B. N. S. Int'l Sales Corp., 190 F. Supp. 116, 117 (S.D.N.Y 1960), "a case studied by most law students when learning about principles of interpreting contract provisions. This present appeal involves the fate of four chickens and whether their presence in a residential planned community violates the private restrictive covenants governing that community."
The parties to this action are next-door neighbors in a planned community. The defendants keep four hens in a coop in their backyard and the plaintiffs brought the action to enjoin them from keeping the hens alleging a violation of the subdivision's restrictive covenants prohibiting the keeping of "poultry". The defendants admitted to keeping the chickens but denied that they violated the covenants. The trial court granted summary judgment for the plaintiffs concluding that the chickens violated the covenants as a matter of law, and enjoined the defendants from keeping them at their home. The subdivision subsequently recorded an amendment to the covenants permitting homeowners to keep up to five hens for non-commercial use. The defendants then sought relief from the injunction relying on the amendment. The trial court concluded that the amendment was not valid and denied the motion.
The trial court's order granting summary judgment was based on its interpretation that owning chickens violated Sleepy Hollow's covenants that were recorded in 1998 (hereinafter the "1998 covenant"). The trial court did not address the question of whether their presence otherwise constituted a nuisance, so this issue was not ruled upon by the appellate panel. The defendants argued to the appellate court that the trial court erred in granting the plaintiffs' motion for summary judgment and denying their subsequent motion based on the new subsequently recorded amendment to the covenant.
The original covenant at issue provides as follows:
No animals, livestock or poultry of any kind shall be raised, bred or kept on the building site, except that dogs, cats or other household pets may be kept, provided that they are not bred or maintained for any commercial purpose.
The trial court concluded that the presence of the hens in Defendants' backyard violated this covenant which prohibited the keeping of "poultry" because the first clause states that no "poultry of any kind" is allowed. The Court of Appeals noted that the trial court did not consider whether the fowl fell under the "household pets" language in the second clause.
The Court of Appeals was consistent in relying upon traditional contract principals of interpretation of restrictive covenants, citing Armstrong v. Ledges Homeowners Ass'n, 360 N.C. 547, (2006); J.T. Hobby & Sons v. Family Homes Inc., 302 N.C. 64, (1981); and Southeastern Jurisdictional Admin. Council, Inc. v. Emerson, 363 N.C. 590, (2009):
We are "to give effect to the original intent of the parties[.]" But if there is ambiguity in the language, the covenant is to be "strictly construed in favor of the free use of land[.]" (citation omitted) (emphasis in original). This "rule of strict construction is grounded in sound considerations of public policy: It is in the best interests of society that the free and unrestricted use and enjoyment of land be encouraged to its fullest extent." (citation omitted) However, as parties have the freedom to agree on restrictions in their neighborhood, the canon favoring the free use of land "should not be applied in such a way as to defeat the plain and obvious purposes of a restriction." (citation omitted).
The Court of Appeals in applying these principles of construction concluded that the keeping of poultry is clearly forbidden by the covenant's first clause, as chickens are "poultry." The Court then proceeded further to determine whether the covenant's second clause could reasonably be construed to allow poultry if kept as "household pets" and concluded that it does:
While the first clause forbids the keeping of any 'animals,' the second clause clearly allows the keeping of animals, so long as they are 'household pets' and otherwise not used for a commercial purpose. In the same way, where the first clause forbids the keeping of 'poultry,' the second clause could be reasonably read to allow poultry - which, we note, are animals - kept as 'household pets' and otherwise not kept for any commercial purpose.
The opinion notes that is case is similar to Steiner v. Windrow Estates Home Owners Ass'n, 213 N.C. App. 454, (2011) where the Court of Appeals determined that two Nigerian Dwarf goats would be permitted by a "household pet" exception to a restrictive covenant providing that "[n]o animals, livestock or poultry of any kind shall be raised, bred or kept on any lot except that horses, dogs, cats or other [household] pets may be kept provided they are not kept, bred, or maintained for any commercial purposes[.]" That panel of the Court of Appeals held that this allowed "virtually any animal which may be treated as a 'household pet' to be kept on the homeowner's property..." and that the term "household pets" could include pets kept outdoors in the yard.
Deciding that the keeping of hens is not per se forbidden by the 1998 covenant, the Court none the less opined that the defendants were not entitled to summary judgment as there remains a disputed issue as to whether they indeed keep their hens "as household pets and not otherwise for any commercial purpose."
In early 2020, an amendment to subdivision's covenants was recorded allowing lot owners to keep up to five (5) hens. Based on this amendment, the defendants sought relief from the 2019 injunction under Rule 60(b)(5) of the North Carolina Rules of Civil Procedure contained in the 2019 summary judgment. Contending that as to the injunction "it is no longer equitable that the judgment should have prospective application." The trial court concluded that the 2020 covenant was not valid because it had not been "properly executed..." and denied relief. The Court of Appeals affirmed on this issue after an analysis that concluded that the written agreement to amend required spousal signature that were absent. The opinion recognized that spousal joinder is not required for an amendment by a vote at an open meeting with proper notice. The Court's analysis will be of interest to HOA counsel seeking to effectively document covenant amendments and to trial counsel seeking to contest the validity of such amendments. This opinion will also be useful for counsel seeking to advise property owners on covenant restrictions affecting animals that are not considered by most to be "pets".