El Di, Inc. v. Bethany Beach

477 A.2d 1066 (Del. 1984)

 

RULE:

A court will not enforce a restrictive covenant where a fundamental change has occurred in the intended character of the neighborhood that renders the benefits underlying imposition of the restrictions incapable of enjoyment.

FACTS:

The corporation was granted a license to sell alcohol, by the State Alcoholic Beverage Control Commission, at a restaurant owned and operated by the corporation, on the finding of public need and convenience. The corporation herein appealed a permanent injunction granted on application by the town enjoining the sale of alcoholic beverages under the license on the basis of the undisputed chain of title for the restaurant that included a restrictive covenant prohibiting such sales.

ISSUE:

Is the prohibition of sale of alcohol under a restrictive covenant enforceable against a restaurant in a town that previously was a tourist center?

ANSWER:

No.

CONCLUSION:

The court reversed the grant of the permanent injunction finding that the trial court erred in holding that the change of conditions was insufficient to negate the restrictive covenant. Since 1901, the character of that area of the old-town section now zoned C-1 was so substantial as to justify modification of the deed restriction. The business uses, the availability of alcohol in close proximity to this section of town, and the repeated use of "brown-bagging" in the C-1 district rendered the originally intended benefits of the covenants unattainable in what had become an area detached in character from the strictly residential surroundings to the west and made enforcement of the covenant unreasonable.

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