Filed. As Amended February 12 1988.: February 10, 1988.
CONSOLIDATED APPEALS FROM THE DEARBORN COUNTY COURT, The Honorable Jack A. Tandy, Judge, Cause No. SC504-82 and others.
Neal, J., concurs, Conover, J., Sullivan, J., concurs in result
Defendants-Appellants Robert and Linda Rasp (Rasps) appeal the Dearborn County Court's judgment of $660.83 and court costs in favor of Hidden Valley Lake, Inc. (HVL Developer) representing unpaid sewer and water "availability" fees and late charges owing to HVL Developer. Because of identical fact situations, six other cases have been consolidated in this appeal.
Because we reverse we find it necessary only to address three issues raised by Appellants:
1. whether availability fees are void as against public policy,
2. whether a covenant providing for the payment of water and sewer availability fees by lot owners in a subdivision who do not connect to such utilities is a covenant which binds them and runs with the land, and
3. whether they, as covenantees, must pay such availability fees to the covenantor, the original developer of the subdivision who installed the water and sewer lines so as to make them available to the subdivision's lots, where the developer has transferred all his right, title and interest in and to those lines and their accoutrements to two public utility corporations wholly-owned by developer.
The Rasps are owners of two lots in Hidden Valley Lake subdivision located in Dearborn County. The Rasps' deed recited a covenant HVL Developer had spread of record in 1972 wherein the grantees promised to pay to HVL Developer, "its successors or assigns," yearly fees of $60 and $36 respectively for water and sewer service availability. The covenant also provided for a $395 fee to install a sewer service connection and a $195 charge to install a water service connection at the grantees' lot line. The Rasps have not connected to the water and sewer lines available to their lots.
HVL Services, Inc. and HVL Utilities, Inc. are the public utilities which furnish sewer and water service to the subdivision. Both are wholly-owned subsidiaries of HVL Developer and subject to regulation by the Public Service Commission of Indiana. HVL Developer, however, is not a public utility. Although the water and sewer lines were initially installed by HVL Developer, at some unspecified time it transferred the sewer and water lines to its successors, the two utility companies.
Both utilities operate at a loss, but HVL Developer voluntarily makes up any deficits the utilities suffer out of the "availability" funds it collects from non-connected lot owners under the covenant at issue. However, it is under no statutory or contractual compulsion to so act.
The paragraph providing for payment of "availability" fees reads in pertinent part:
9. Grantee for himself, his heirs, executors, or assigns, agrees that as a consideration of sale, and as a condition precedent to the installation of water and sewer mains adjacent to the lots as herein described, which said mains are to be located by Hidden Valley Lake, Inc., its successors, or assigns, that the Grantee(s) jointly and severally promise to pay to the Grantors or its assigns a minimum of $5.00 per month water and $3.00 per month sewer, payable annually in advance, so long as water and/or sewer service is available. Payment thereof for the year or part thereof shall be due on the first day of the month immediately following the availability of water and/or sewer service to Grantee, his heirs, executors, or assigns, whether or not an actual water and/or sewer service connection is then in existence to said Grantee, his heirs, executors, or assigns, for the period beginning with said month and ending on March 31st subsequent thereto, and thereafter due and payable in the amount of $60.00 for water service in advance on the first day of April of each year, and $36.00 per year sewer service. The foregoing charges are for the availability of water and/or sewer service and is not a contribution in aid of construction. The Grantor, its successors or assigns, upon receiving ...