Barclay v. Deveau

• Decision Date: 27 January 1981
• Citation: 11 Mass.App.Ct. 236,415 N.E.2d 239
• Parties: Beverly Anne BARCLAY, trustee, v. William DEVEAU et al. 1
• Court: Appeals Court of Massachusetts

Page 239

415 N.E.2d 239

11 Mass.App.Ct. 236

Beverly Anne BARCLAY, trustee, v. William DEVEAU et al. ¹

Appeals Court of Massachusetts, Suffolk.

Argued May 15, 1980.

Decided Jan. 27, 1981.

Wade M. Welch, Boston (Regina L. Quinlan, Boston, with him), for defendants.

Peter B. Farrow, Boston (M. Frederick Pritzker, Boston, with him), for plaintiff.

Before BROWN, GREANEY and PERRETTA, JJ.

BROWN, Judge.

In this dispute as to who constitutes the legitimate members of the board of trustees of the Vendome Condominium Trust, the unit owners' organization (see G.L. c. 183A, §§ 1 & 10) ² of the Vendome Condominium, we are asked to decide whether a provision of the declaration of trust which permits the developer, who retains ownership of only a small percentage of the condominium units, to appoint two of the three members of the board of trustees and the owners of the majority of units to appoint but one trustee is permissible under G.L. c. 183A, § 10. Chapter 183A, § 10, provides:

(a ) Each unit owner shall have the same percentage interest in the corporation, trust or unincorporated association provided for in the master deed for the management and regulation of the condominium as his proportionate interest in the common areas and facilities. Such interest shall not be separated from ownership in the unit to which it appertains and shall be deemed conveyed or encumbered with the unit even though such interest is not expressly mentioned or described in the conveyance or other instrument.

A District Court judge, sitting by designation in the Superior Court, ruled that the trust provision was enforceable for a "reasonable period of time" and enjoined the defendant trustees, who had been selected by the unit owners to replace the developer's appointees, from exercising any powers as trustees. We reverse.

The following facts are taken from the judge's findings, supplemented by the record.

The Vendome, which is the first mixed use (i. e., residential and commercial) condominium in greater Boston, was owned and created by the Franchi Development Trust, of which Pasquale Franchi is the sole beneficiary. After the Franchi Development Trust defaulted on a loan with the Commonwealth Capital Investment Corporation, the name of the trust was changed to Vendome Development Trust ("development trust"), the former trustee resigned, and a new trustee designated by the mortgagee was appointed to manage the condominium and market the unsold units. That trustee (the plaintiff in this case) then appointed two of the three members of the board of trustees of the unit owners' organization (who were also designated by the mortgagee). She acted pursuant to section 3.1.3 of the declaration of trust of the unit owners' organization, which provides that until the development trust owns fewer than twelve units, it has the right to appoint two trustees to the board of the condominium trust and that during that period the total number of trustees will be limited to three.

The dispute with the unit owners over control of the board of trustees of the unit owners' organization arose after a thirty-eight percent increase in common area charges was approved in late 1977. At a special meeting in May, 1978, the unit owners voted, by approximately a sixty percent majority, to remove the two appointed trustees, expand the board to seven, and appoint five new trustees (the defendants in this case). ³ Section 3.3 of the declaration of trust permits the unit owners to remove a trustee by a vote of the owners of fifty-one percent of the beneficial interest; however, it subordinates that right to the right of the development trust to retain the trustees of its choice until fewer than twelve units remain unsold. ⁴

The plaintiff, as trustee of the development trust, then brought this action to enjoin the newly elected trustees from assuming any duties of that office, claiming that her appointees are the legitimate trustees by virtue of sections 3.1.3 and 3.3 of the declaration of trust. The unit owners contend that these provisions are invalid under G.L. c. 183A, § 10(a ). ⁵ At the time of the trial twenty-three units (all commercial) of a total of 137 units remained unsold. ⁶

The judge ruled that the disputed provisions did not violate G.L. c. 183A, § 10(a ), enjoined the defendants from exercising power as trustees, and entered final judgment for the plaintiff. He also ruled that the condominium was still in its marketing phase and that because no time limit was placed on the power granted to the development trust by section 3.1.3, "the power, even if valid, will only be enforced for a reasonable period of time."

The plaintiff contends that the declaration of trust of the unit owners' organization meets the requirement of G.L. c. 183A, § 10(a ), that each unit owner have "the same percentage interest" in the unit owners' organization "as his proportionate interest in the common areas and facilities" by providing in Section 4.1 that each unit owner shall have the same beneficial interest in the trust as his/her proportionate interest in the common areas and facilities, and that the statute does not require that unit owners also have the same percentage interest in voting as their percentage interest in the common areas.

However, in our opinion the language of the statute itself requires that the unit owners have a proportionate voice in the management of the unit owners' organization, since it provides that "(e)ach unit owner shall have the same percentage interest in the corporation, trust or unincorporated association ... for the management and regulation of the condominium as his proportionate interest in the common areas and facilities" (emphasis added). The plaintiff's interpretation would require us both to ignore the italicized language and to read the limiting word "beneficial" into the statute. ⁷ Moreover, a reading of the statute as a whole (see Universal Mach. Co. v. Alcoholic Beverages Control Commn., 301 Mass. 40, 44, 16 N.E.2d 53 (1938); 2A Sands, Sutherland Statutory Construction §§ 47.02 & 47.06 (4th ed. 1973)) leaves no doubt that the Legislature intended that the unit owners have a proportionate interest in the management of the organization and not simply a "beneficial" or ownership interest with no voice in management. First, c. 183A, § 1 (inserted by St. 1963, c. 493, § 1), defines the organization of unit owners as "the corporation, trust or association owned by the unit owners and used by them to manage and regulate the condominium" (emphases added). In addition, c. 183A, § 8 (inserted by St. 1963, c. 493, § 1), provides that "(t) he master deed ... shall contain the following particulars: ... (i ) The name of the corporation, trust or association which has been formed and through which the unit owners will manage and regulate the condominium ..." (emphasis added).

Further, the plaintiff's interpretation would require us to ignore traditional assumptions as to the very definition and concept of a condominium. See, e. g., Berger, Condominium: Shelter on a Statutory Foundation, 63 Colum.L. Rev. 989 (1963), which states, at 994, "(T)he condominium relinquishes none of the ownership benefits afforded by stock cooperatives voice in its management, permanence of tenure, avoidance of profit to the landlord, and tax savings," and further, at 1004-1005, the declaration "includes ... a statement in fractions of each owner's share of rights and duties with respect to the common premises. This fraction fixes permanently the unit owner's pro rata burden of the common expenses and his share in any profit or distribution of capital. It is also the measure of his voice in the management " (emphasis added). Berger adds the comment, at 1006, that "(e)ven if the management of the condominium were turned over to an independent body, the owners would want to reserve the power to countermand its decisions and, if necessary, its control."

Further confirmation that this interpretation that § 10 requires that unit owners have a proportionate voting interest in the unit owners' organization is correct is provided by c. 183A, § 21(a ) (inserted by St. 1972, c. 709, § 3) (see 1A Sands, Sutherland Statutory Construction § 22.34 (4th ed. 1972) (provisions of an amendatory act are to be read together with the provisions of the original act)), which provides that if a condominium does not contain any unit designed for occupancy by only one family or household, or if the total floor area of those units designed for occupancy by one family or household does not exceed ten percent of the total floor area of all units in the condominium, the by-laws may contain, "notwithstanding any provisions of this chapter(,) ... (5) (p)rovisions giving a particular unit owner or owners voting rights with respect to election of directors, trustees or members of the managing board less than, or in excess of, the voting rights which such owner or owners would otherwise have had." Certainly the assumption of this provision is that the owners are entitled to a certain voting rights interest under other provisions of this chapter; were this not the case, such an amendment would not have been necessary. ⁸

To hold, as the plaintiff urges, that § 10 requires only that unit owners have a beneficial and not a voting interest in the unit owners' organization would be contrary to both the language of the statute and the concept of a condominium. The untenability of this interpretation is illustrated by the fact that it would permit a unit owners' organization set up in the form of a corporation to be organized so as to give the unit owners only nonvoting stock in the corporation which clearly would be contrary to the concept of the statute.

In sum, we must conclude that the provision in question here, which gives the development trust, which may own only a small percentage of the units, ⁹ the right to appoint two of three trustees and the unit owners, who own the...