When Potomac-based developer Carl M. Freeman first proposed building a high-rise condominium development on the strip of oceanfront just south of the quiet town of Bethany Beach, Del., in the late 1960s, Bethany went to court to stop it.

The town's suit was unsuccessful and costly. So when Freeman's development company proposed last spring to build another large section of the Sea Colony development on a 99-acre parcel, again just south of Bethany but inland this time, the town of Bethany decided against going to court.

Ironically, however, the residents of the original Sea Colony development have picked up where the Bethany citizens have lost heart. Five of the residents, on their own and representing five of the nine condominium associations at the Sea Colony high-rises, have filed a suit against Sussex County for approving a massive rezoning for Freeman to develop Sea Colony West.

The residents claim that the 800-town-house development Freeman has proposed would lower their property values, crowd their beach and congest the roads. The Sussex County Council and all its individual members, the Sussex County Planning and Zoning Commission and its members and Sea Colony Inc. are named as defendants in the suit. Sea Colony Inc. is a Freeman subsidiary registered in Delaware that is doing the Sea Colony West development.

The Sussex County Council rezoned Freeman's land from moderate (or single-family home) density to high residential density last November, a rezoning that the Sea Colony residents claim was "arbitrary, capricious, unreasonable and . . . , therefore, illegal."

Although Freeman representatives have told the county the company plans to build only 800 town houses at Sea Colony West, the rezoning would allow as many as 1,800 units on the site. Commitments made by the Freeman company to keep the development to 800 units would not be binding on another developer if Freeman decided to sell the parcel to some other development company. Before the rezoning, only 360 single-family detached houses could have been built on the site.

The project, as described by Freeman Co. Vice President Michael F. Lynn at a public hearing last year, would be a series of villages or groups of houses clustered around lakes. The development would have bike trails, tennis courts and several swimming pools, as well as open space and 10 acres of ponds.

Lynn said that there would be sufficient recreational facilities at the development and that he did not believe the development would have any impact on the already crowded beaches in the area.

Residents of the Sea Colony high-rises have questioned that, however, saying they believe the residents of the new development will add to the crowding on the beach and create parking problems in the restricted parking areas in front of the high-rises.

"People aren't traveling 300 miles to use a pool," Sea Colony resident Sidney Goldman said at the hearing. "They come for the ocean."

Philip W. Boesch, president of the Phase III Sea Colony association and one of the plaintiffs in the suit against the county, said that residents from the Sea Colony Tennis Community, across Route 1 from the high-rise development, already regularly try to park in the private parking lots of the high-rises. He said that the high-rise condo associations have been forced to increase spending for security and additional lifeguards as the beaches have gotten more crowded.

The town of Bethany Beach and several of the citizens organizations in the area have testified at public hearings that they are opposed to the high-density rezoning, but none of the other groups has taken its case to the courts.

Over the past 10 years, the Sussex County Court of Chancery has overturned five Sussex County rezoning decisions, all on the basis that the council failed to leave a record explaining the reasons behind its decision.

The most recent reversal came in January, when the court overturned a 1983 county council decision to rezone residential land in the Cape Windsor area to general commercial. The suit was brought by two nearby residents against the county, developer James E. Tate and his development company, Great Eastern Inc.

In most of its zoning cases, the county council has defended itself by saying that the action conforms to the comprehensive plan and "promotes the health, safety, morals, convenience, order, prosperity and welfare of the present and future inhabitants of Sussex County."

Chancery Court Vice Chancellor Carolyn Berger said in the Cape Windsor case, however, that that statement "is not a finding of fact and provides the court no guidance in attempting to review the council's decision."

In a similar 1978 decision, the court said that it was "not right" that taxpayers could only find out what the council's reasoning was by bringing legal action.

The Sea Colony residents are trying to stop Freeman's Sea Colony West development on the same grounds, and are being represented by the same attorney who handled the Windsor Cape case.

"The action of the council was taken with virtual total disregard of the . . . designated statutory purposes and relevant factors which are required to be given due consideration," the suit states.

"The record of the proceedings . . . contains insufficient information and evidence, or no information and evidence whatsoever" that the council considered statutory requirements such as the provision of the comprehensive plan, the character of the property and adjoining properties, the suitability of land uses, conservation of property values, and the impact on water and sewer systems, traffic and the environment, the suit says.

The plaintiffs have asked the court to issue a permanent injunction that would block the county and Freeman Associates "from taking any further action whatsoever in the implementation or furtherance of the subject property rezoning ordinance," including restricting Freeman from re-applying to the county for a new rezoning if the court overturns the county's original rezoning.

"We're concerned about the density, the traffic, the beach congestion, the possible water problems, and that's why we're fighting this rezoning," said Robert A. Medbery, one of the plaintiffs. "Our ultimate goal is to work something out with Freeman, not to litigate. Unfortunately, in today's society filing a lawsuit is one way to show that you're serious."

Medbery said that while only five of the Sea Colony associations are listed as plaintiffs, "there isn't anybody at Sea Colony who isn't opposed to the higher-density zoning" of the Sea Colony West development. Medbery said that meetings had been scheduled to try to work out a compromise with Freeman.

Sussex County attorney A. Dean Betts declined to discuss the case and would not say if the county was planning to participate in discussions between the plaintiffs and the developer. The Freeman company could not be reached for comment.