Southport Congregational Church—United Church of Christ v. Hadley

• Decision Date: 05 January 2016
• Docket Number: No. 19398.,19398.
• Citation: Southport Congregational Church—United Church of Christ v. Hadley, 320 Conn. 103, 128 A.3d 478 (Conn. 2016)
• Court: Connecticut Supreme Court
• Parties: SOUTHPORT CONGREGATIONAL CHURCH—UNITED CHURCH OF CHRIST v. Betty Ann HADLEY, Coexecutor (Estate of Albert L. Hadley), et al.

320 Conn. 103

128 A.3d 478

SOUTHPORT CONGREGATIONAL CHURCH—UNITED CHURCH OF CHRIST

v.Betty Ann HADLEY, Coexecutor (Estate of Albert L. Hadley), et al.

No. 19398.

Supreme Court of Connecticut.

Argued Oct. 15, 2015.

Decided Jan. 5, 2016.

Daniel J. Krisch, with whom was Jeffrey F. Gostyla, Hartford, for the appellant (intervening defendant Cheekwood Botanical Garden and Museum of Art).

John A. Farnsworth, New Haven, for the appellee (plaintiff).

ROGERS, C.J., and PALMER, ZARELLA, EVELEIGH, McDONALD, ESPINOSA and ROBINSON, Js.

ROBINSON, J.

The principal issue in this certified appeal is whether title to real property passed to a buyer at the signing of a contract of sale under the doctrine of equitable conversion, when the seller died prior to the fulfillment or expiration of a mortgage contingency clause in the contract. The decedent in the present case, Albert L. Hadley, entered into a contract for the sale of a certain parcel of real property to Evelyn Winn. Before entering into the contract, the decedent had specifically devised the property to the plaintiff, Southport Congregational Church—United Church of Christ (church), in his will. The defendant Cheekwood Botanical Garden and Museum of Art (Cheekwood) claims entitlement to the proceeds from the sale of the property to Winn by the coexecutors of the decedent's estate, the defendants Betty Ann Hadley and Lee Snow, as a result of a charitable pledge made by the decedent prior to his death.¹ Cheekwood appeals, upon our grant of its petition for certification,² from the judgment of the Appellate Court reversing a judgment of the trial court, which had held that title to the property passed to Winn under the doctrine of equitable conversion at the signing of the contract. Southport Congregational Church–United Church of Christ v. Hadley, 152 Conn.App. 282, 298–300, 98 A.3d 99 (2014). On appeal, Cheekwood claims that the Appellate Court improperly concluded that equitable conversion did not apply because the contract was fully enforceable against the decedent at signing and could be terminated only by Winn within a specified period if she could not obtain financing. We agree and, accordingly, reverse in part the judgment of the Appellate Court.³

The record reveals the following facts and procedural history. On September 22, 2010, the decedent executed a will specifically devising the property, which is located at 504 Pequot Avenue in Southport, to the church. One and one-half years later, on March 21, 2012, the decedent contracted to sell the property to Winn. The sales contract, which was the standard form real estate contract provided by the Fairfield County Bar Association,⁴ contained a mortgage contingency clause stating: "This [a]greement is contingent upon BUYER obtaining a written commitment for a loan.... [If] BUYER is unable to obtain a written commitment for such a loan ... and if BUYER so notifies SELLER or SELLER'S attorney, in writing, at or before 5:00 p.m., on April 16, 2012, then this [a]greement shall be null and void.... If SELLER or SELLER's attorney does not receive such written notice ... this [a]greement shall remain in full force and effect." The decedent waived specific performance as a remedy under the contract and agreed to retain Winn's down payment as liquidated damages in the event of Winn's default.⁵ By letter to Cheekwood's president dated March 6, 2012, the decedent pledged to donate the proceeds from the sale to Cheekwood.⁶ The decedent died on March 30, 2012, nine days after signing the contract and before Winn had obtained financing or the mortgage contingency period had expired.

The decedent's will was admitted to probate in New York Surrogate's Court on May 10, 2012.⁷ The coexecutors applied for ancillary jurisdiction and authorization to sell the property pursuant to General Statutes § 45a–325⁸ in the Probate Court for the district of Fairfield. Cheekwood filed a claim to the proceeds from the sale. The Probate Court granted the coexecutors' application for ancillary jurisdiction and for authorization to sell the property.⁹

The church appealed from the decision of the Probate Court to the trial court, claiming that, because it was the specific devisee of the property under the decedent's will, the coexecutors could not sell the property without its consent pursuant to General Statutes § 45a–428 (b).¹⁰ The coexecutors responded to the probate appeal with an answer, special defense, and counterclaim seeking authorization to sell the property. The court granted Cheekwood's motion to intervene. During the pendency of this appeal, the Probate Court amended its decree to require the coexecutors to obtain the church's consent before selling the property. The church subsequently withdrew its probate appeal in light of this amendment. The coexecutors' counterclaim, however, remained pending.

The coexecutors then filed a second action in the trial court, in which they filed a separate application seeking authorization to sell the property pursuant to § 45a–325. Cheekwood again intervened and submitted a memorandum of law in support of the coexecutors' application, contending that § 45a–428 did not apply because the decedent's interest in the property terminated at the signing of the contract under the doctrine of equitable conversion, leaving him with only an interest in the expected proceeds from the sale at the time of his death. In response, the church asserted that equitable conversion did not apply because of the unfulfilled and unexpired mortgage contingency clause, and thus, the decedent retained his interest in the property at the execution of the contract, which passed to the church. See Zanoni v. Lynch, 79 Conn.App. 309, 320, 830 A.2d 304 ("title to real estate vests immediately ... in a deceased's ... devisees upon the admission of a will to probate" [internal quotation marks omitted] ), cert. denied, 266 Conn. 929, 837 A.2d 804 (2003). After an evidentiary hearing, the trial court granted the coexecutors' application for authorization to sell the property. The court then denied the church's motion to reargue, and the church appealed from that judgment to the Appellate Court under Docket No. AC 35289

With this appeal pending, Cheekwood moved for summary judgment on the coexecutors' counterclaim in the probate appeal. Cheekwood contended that the relief sought was identical to that which had already been granted by the trial court and, thus, judgment should be rendered in favor of the coexecutors. The church opposed the motion, claiming, inter alia, that the counterclaim had been rendered moot by the granting of the coexecutors' separate application for authorization to sell the property in the second action. The trial court rejected these arguments and granted Cheekwood's motion for summary judgment. The trial court denied the church's motion to reargue, and the church appealed from that judgment to the Appellate Court under Docket No. AC 36395.

The Appellate Court resolved the church's appeals together, because the central issue in both appeals—whether title passed to the buyer at the signing of the contract of sale via equitable conversion—was identical. Southport Congregational Church–United Church of Christ v. Hadley, supra, 152 Conn.App. at 291–92, 98 A.3d 99. The church argued that equitable conversion did not apply because the unfulfilled and unexpired mortgage contingency clause prevented title from passing to Winn at the signing of the contract. Id., at 296–97, 98 A.3d 99. The coexecutors and Cheekwood maintained in response that equitable conversion occurred because the contract was specifically enforceable against the seller at the time of its execution. Id., at 297, 98 A.3d 99. The Appellate Court agreed with the church that equitable conversion did not apply because of the unfulfilled and unexpired mortgage contingency clause. Id. The Appellate Court ultimately rendered judgment reversing the trial court's judgments, and remanded the cases to the trial court with direction to deny the coexecutors' separate application to sell the property, and to dismiss their counterclaim in the probate appeal seeking the same relief as moot. Id., at 300, 98 A.3d 99. This certified appeal followed.¹¹

On appeal, Cheekwood contends that the mortgage contingency clause did not preclude the equitable conversion of title because the parties intended for the contract to be fully enforceable at signing, subject only to the possible termination within a specified period by Winn if she could not obtain financing. In response, the church argues that the clause was an unsatisfied condition precedent to the contract and, thus, the contract was not yet enforceable and title could not have passed to Winn. We agree with Cheekwood that the mortgage contingency clause did not preclude the application of equitable conversion, and that equitable title passed to Winn at the execution of the contract.

We begin by setting forth our standard of review. "The determination of whether an equitable doctrine applies in a particular case is a question of law subject to plenary review." Walpole Woodworkers, Inc. v. Manning, 307 Conn. 582, 588, 57 A.3d 730 (2012). We similarly review the intent of the parties to an unambiguous contract de novo. See, e.g., FCM Group, Inc. v. Miller, 300 Conn. 774, 811, 17 A.3d 40 (2011).

"[E]quitable conversion is a settled principle under which a contract for the sale of land vests equitable title in the [buyer]." (Internal quotation marks omitted.) Salce v. Wolczek, 314 Conn. 675, 687, 104 A.3d 694 (2014). "Under the doctrine of equitable conversion ... the purchaser of land under an executory contract is regarded as the owner, subject to the vendor's lien for the unpaid purchase price, and the vendor holds the legal title in trust for the purchaser.... The vendor's interest thereafter in equity is in the unpaid purchase price, and is treated as personalty ... while the purchaser's interest is in the land and is treated as realty."...