Carter Country Club, Inc. v. Carter Cmty. Bldg. Ass'n

174 N.H. 686

273 A.3d 915

CARTER COUNTRY CLUB, INC.

v.CARTER COMMUNITY BUILDING ASSOCIATION

No. 2020-0370

Supreme Court of New Hampshire.

Argued: May 27, 2021

Opinion Issued: December 28, 2021

Gallagher, Callahan & Gartrell, P.C., of Concord (Samantha D. Elliott and Matthew V. Burrows on the brief, and Samantha D. Elliott orally), for the plaintiff.

Orr & Reno, P.A., of Concord (Jeremy D. Eggleton on the brief and orally), for the defendant.

Gordon J. MacDonald, attorney general (Thomas J. Donovan, director of charitable trusts), filed no brief.

HOURAN, J.,

retired superior court justice, specially assigned under RSA 490:3. The defendant, Carter Community Building Association, appeals orders of the Superior Court (MacLeod, J.) granting summary judgment to the plaintiff, Carter Country Club, Inc., on the plaintiff's petition to quiet title to a parcel of property in Lebanon. The defendant also appeals the denial of its motion to amend its counterclaim to add a claim for declaratory relief. We affirm in part, vacate in part, and remand.

I. Facts

The following relevant facts are supported by the record or are otherwise undisputed by the parties. In July 1986, Carter Country Club, Inc. (CCCI), an entity unrelated to the plaintiff, conveyed the property at issue to the Trustee of the Farnum Hill Trust by deed (Farnum Hill deed). The Farnum Hill deed contained a provision concerning the maintenance and operation of a nine hole golf course on the premises, as follows:

The above described premises shall be SUBJECT, HOWEVER, to the following RESERVATION, CONDITIONS, AND RESTRICTION which shall run with the land and be binding upon the Grantee, and his successors and assigns:

At all times, in perpetuity, a nine hole golf course shall be maintained and operated on the premises .... The location of the property set aside for and containing the golf course shall be referred to as the "golf course area".

....

If at any time the above requirements for maintenance and operation of a nine hole golf course are not met for a period of one year, the title to the golf course area ... shall, at the option of the Grantor or its successors or assigns, revert to Grantor, or its successors or assigns.

This restriction and the right of reversion shall be binding upon and shall inure to the benefit of, Grantor and Grantee and their respective heirs, executors, administrators, successors and assigns as a covenant that shall run with the land, in perpetuity.

In December 1986, CCCI conveyed by deed (December deed) the rights it reserved in the Farnum Hill deed to the defendant, a local non-profit organization. The December deed purported to convey: "All and the same right, interest and title, in and to the reversionary interest retained by the Grantor in the [Farnum Hill deed]." The December deed also recited the entirety of the above-quoted golf-course restriction as set forth in the Farnum Hill deed. Shortly thereafter, CCCI dissolved.

In November 1989, the property was conveyed to a private corporation. In September 1990, the corporation brought an action to quiet title, naming as defendants CCCI's shareholders and "[a]ll other unknown persons who may claim or have any interest, right or estate in or to" the property. The defendant moved to intervene. In September 1991, the Superior Court (Perkins, J.) issued an order declaring that the corporation's title was "free and clear of all rights or interests" of CCCI's shareholders and ordering that any issues pertaining to the defendant's motion to intervene would be addressed in further proceedings. In February 1994, the corporation and the defendant entered a stipulation and docket markings stating that the court's September 1991 order "shall remain in full force and effect" as to CCCI's shareholders, but "[a]s to all other matters, judgment shall be entered for neither party, without prejudice." Thus, the litigation settled without resolving the issue before us — whether the defendant had an interest in the property.

At some point thereafter, the plaintiff took title to the property. In August 2018, the plaintiff brought an action to quiet title, naming the defendant as a party and claiming that the conveyance of CCCI's future interest in the property to the defendant was void. The plaintiff's theory was that the Farnum Hill deed created a right of reentry retained by CCCI, which, the plaintiff contended, was not freely transferable. The plaintiff also argued that the defendant's interest in the property, if any, violated the rule against perpetuities and was an unreasonable restraint on alienation. The defendant counterclaimed, seeking a declaration that it had an enforceable future interest in the property.

The parties filed cross-motions for summary judgment. The defendant also filed a motion to amend its counterclaim, seeking to add an alternative declaration of its right to enforce the golf-course restriction as a restrictive covenant. Following a hearing on the parties’ motions, the Superior Court (MacLeod, J.) issued an order granting, in part, the plaintiff's summary judgment motion and declaring that the plaintiff held title to the property in fee simple subject to a condition subsequent. Relying solely upon the language of the Farnum Hill deed, the trial court concluded that the interest held by CCCI was a right of reentry that, under both the common law and the Restatement (First) of Property, was not freely transferable. See Restatement (First) of Property §§ 160, 161(c) at 574, 578 (1936). The court further determined that because CCCI's right of reentry was not transferable to the defendant, CCCI's interest in the property remained vested in CCCI, meaning that the plaintiff held title to the property in fee simple subject to a condition subsequent. The court also denied the defendant's motion to amend, reasoning that because the conveyance from CCCI to the defendant was void, the defendant's proposed amendment failed to state a claim upon which relief could be granted.

The plaintiff then filed a motion for clarification, noting that it sought to quiet title only as against the defendant and did not ask the court to decide whether CCCI retained an interest in the property. The court denied the motion, but ordered the plaintiff to identify any other parties "who have or may have some estate or interest in" the property. (Quotation omitted.) The plaintiff filed a response, asserting, in relevant part, that no other parties had an interest in the property because the September 1991 order, coupled with the February 1994 stipulation and docket markings, quieted title to the property as against CCCI and its shareholders. Thus, the plaintiff asked the court to reconsider its ruling that the plaintiff's title was subject to a condition subsequent. The court agreed with the plaintiff and granted the motion, concluding that the plaintiff held title in fee simple absolute. The court denied the defendant's motion for reconsideration, and this appeal followed.

II. Analysis

The defendant first challenges the trial court's ruling that the Farnum Hill deed created an inalienable right of reentry that was retained by CCCI, thereby rendering the conveyance of CCCI's future interest in the property to the defendant void. According to the defendant, under the Farnum Hill deed, CCCI retained a possibility of reverter, rather than a right of reentry, which CCCI was free to transfer to the defendant. The plaintiff, on the other hand, counters that the trial court correctly interpreted the language of the Farnum Hill deed as creating an inalienable right of reentry that was not freely transferable to the defendant.

In reviewing a trial court's rulings on cross-motions for summary judgment, we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party. Boyle v. City of Portsmouth, 172 N.H. 781, 785, 235 A.3d 985 (2020). If our review of the evidence discloses no genuine issue of material fact, and if the moving party is entitled to judgment as a matter of law, we will affirm the grant of summary judgment. Id. We review the trial court's application of the law to the facts de novo. Id.

Resolving the defendant's appeal also requires that we interpret the meaning of the Farnum Hill deed's language. The interpretation of a deed is a question of law, which we review de novo. White v. Auger, 171 N.H. 660, 663, 201 A.3d 670 (2019). When interpreting a deed, we give it the meaning intended by the parties at the time they wrote it, taking into account the surrounding circumstances at that time. Id. If the language of the deed is clear and unambiguous, we will interpret the intended meaning from the deed itself without resorting to extrinsic evidence. Id. at 663-64, 201 A.3d 670. If, however, the language of the deed is ambiguous, extrinsic evidence of the parties’ intentions and the circumstances surrounding the conveyance may be considered to clarify its terms. Id. at 664, 201 A.3d 670. The language of a deed is ambiguous if the parties could reasonably disagree as to its meaning. Arell v. Palmer, 173 N.H. 641, 645, 247 A.3d 376 (2020).

When interpreting the language of a deed, we consider the deed as a whole. See White, 171 N.H. at 664, 201 A.3d 670. We generally disfavor interpreting deed conditions in a manner that would cause a forfeiture of the property upon breach of such conditions. Id. However, we adhere to the guiding principle that the intent of the parties should be effectuated whenever possible. Id. We also remain mindful that formalistic requirements in real estate conveyancing have largely given way to effectuating the manifest intent of the parties, absent contrary public policy or statute. Id.

We begin by summarizing the distinction between rights of reentry and possibilities of reverter.¹ A right of reentry is an interest created and retained by a grantor with its conveyance of property that is subject to a condition subsequent. Restatement (First) of...