Lauderbaugh v. Williams

Mildred and Dayton Lauderbaugh (plaintiffs) owned land in Pennsylvania that included Lake Watawga. The Lauderbaughs divided the lakefront into lots in 1940 and began selling the lots in 1949 to individuals, including Williams and others (defendants). In 1951 the Lauderbaughs and these prior purchasers of the lakefront lots entered into an agreement that restrained the Lauderbaughs from selling any additional lakefront lots in the future to anyone except members of the Lake Watawga Association. Control over who could become a member of the association rested entirely with the current members of the association. The association bylaws provided no standards for required admission to the association, and membership could be denied to prospective members by current members for any reason or no admitted reason whatsoever. In 1959, after her husband’s death, Mrs. Lauderbaugh sold a lakefront lot to Asher Seip, Jr., who had not been approved by or admitted as a member to the association. The association objected to the sale. Mrs. Lauderbaugh brought an action to quiet title over her land by having the agreement declared void. The association brought an action in equity seeking to overturn the deed to Mr. Seip as a violation of the agreement and to enjoin Mrs. Lauderbaugh from selling any additional lakefront lots to anyone except an approved association member in the future. The trial court upheld the validity of the agreement but only for property on the western shore of the lake, enjoined Mrs. Lauderbaugh from selling any property on that shore except in accordance with the agreement in the future, and set aside the deed to Mr. Seip. Both parties appealed.