## Facts

- Mildred B. Lauderbaugh owned land including Lake Watawga and subdivided and sold lakeshore lots beginning in 1949; purchasers built substantial homes.
- In June 1951, Lauderbaughs and existing lot purchasers executed a written agreement conditioning future sales of lakeshore property on the buyer’s membership in the Lake Watawga Association, formed to control shoreline development.
- The Association’s bylaws gave existing members broad control over admissions, including the power of three members to block an applicant, without defined admission standards.
- After her husband died, Mrs. Lauderbaugh sought to sell additional lots and in 1958 filed an action to quiet title alleging the 1951 agreement clouded title by unreasonably restricting conveyances.
- On December 3, 1959, she conveyed a western-shore lakefront lot to Asher Seip, Jr. (and a partner) without Seip being admitted to the Association.
- In 1960, Mervyn M. Williams and other lot owners filed an equity action seeking to set aside the Seip deed and to enjoin Mrs. Lauderbaugh from selling western-shore lots except to persons approved for Association membership.
- The actions were tried together; the trial court upheld the agreement, limited it to the western shore, set aside the Seip deed, and enjoined future western-shore conveyances except in accordance with the agreement and Association bylaws.
- Both sides appealed.

## Issues

1. Whether an agreement conditioning sales of lakeshore property on the purchaser’s acceptance into a private association with uncontrolled admission discretion is an unreasonable restraint on alienation and void as against public policy.
2. If enforceable, whether the agreement applies only to the western shore or more broadly.

## Decision

- The Supreme Court of Pennsylvania held the 1951 agreement imposed an unreasonable restraint on alienation and was void.
- The trial court’s decrees enforcing the agreement, setting aside the Seip deed, and enjoining future conveyances based on Association membership were reversed to the extent grounded on the agreement.
- The geographic-scope dispute became immaterial because the underlying restraint was unenforceable.

## Legal Principles

- Restraints on alienation are disfavored and are enforceable only if reasonable in purpose and operation.
- A sale condition that effectively gives a private association standardless, discretionary power to admit or exclude buyers operates as an impermissible restraint by placing control of disposition in third parties.
- An open-ended or potentially perpetual restriction, combined with arbitrary veto power, strongly supports invalidation as against public policy.
- When the restraining agreement is void, it cannot support equitable relief such as cancellation of a deed or an injunction limiting future conveyances.

## Conclusion

The court invalidated a development-control agreement that conditioned land sales on membership in a private association where admission could be denied arbitrarily and without time limitation, holding the arrangement an unreasonable restraint on alienation that could not justify canceling a completed conveyance or restricting future transfers.


Lauderbaugh v. Williams, 186 A.2d 39 (Pa. 1962)