Green v. Greenbelt Homes, Inc.

• Decision Date: 17 October 1963
• Docket Number: No. 49,49
• Citation: 194 A.2d 273,232 Md. 496
• Parties: Carolyn E. F. GREEN v. GREENBELT HOMES, INC.
• Court: Maryland Court of Appeals

Page 496

232 Md. 496

194 A.2d 273

Carolyn E. F. GREEN v. GREENBELT HOMES, INC.

No. 49.

Court of Appeals of Maryland.

Oct. 17, 1963.

Emmett H. Nanna, Jr., and Nanna & Grant, Hyattsville, for appellant.

Jerrold V. Powers and Sasscer, Clagett & Powers, Upper Marlboro, for appellee.

Before BRUNE, C. J., and HENDERSON, PRESCOTT, HORNEY and MARBURY, JJ.

HORNEY, Judge.

In an action for declaratory relief, the Circuit Court for Prince George's County, ordered and decreed that the mutual ownership contract between Greenbelt Homes, Inc., a cooperative housing development, and Carolyn E. F. Green, a member of the corporation, had been lawfully terminated. The member appealed, claiming that the terms of the contract permitting termination were legally inconsistent with the nature of the estate she acquired under the contract.

In pertinent part, ¹ the mutual ownership contract provided that '2. Sale and Purchase of Perpetual Use: Subject to all the provisions of this Contract and for the Purchase Price hereinafter set forth, the Corporation hereby agrees to sell to the Member, and the Member hereby agrees to purchase from the Corporation, a right of Perpetual use and enjoyment * * * of the following dwelling unit and the lot on which situated, the boundaries of which shall be determined by the Corporation, located at the Greenbelt Housing Project, Greenbelt, Maryland * * *:

6 B Plateau Place Unit #2639 Type G2M

Balance due on this contract is $1,727.41 in 232 monthly payments with four percent interest on the unpaid balance. This makes a total interest and amortization payment due each month of $10.71. This payment is quite apart from necessary payments of taxes and operating expenses.

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'13. Termination of Contract by Corporation for Default or for Cause: In the event of default by the Member * * * of any payments or charges required under this Contract, or violation of any of the provisions hereof, the Corporation may terminate this contract upon ten (10) days written notice to the Member. The Corporation may terminate this Contract upon thirty (30) days written notice if its board of directions subject to and in accordance with provisions of the ByLaws of the Corporation, shall determine that the Member, for sufficient cause is undesirable as a resident in Greenbelt because of objectionable conduct on the part of the Member or of a person living in his dwelling unit. To violate or disregard the rules and regulations provided for in paragraph 7(b) hereof, after due warning, shall be deemed to be objectionable conduct.'

The member had occupied the premises for about two years, when, as a result of complaints by other occupants of the housing development, and after a hearing thereon at her request, the board of directors of the corporation duly notified her of the termination of the mutual ownership contract, and at the same time advised her of the right to appeal the decision of the board to the membership of the corporation.

In the notice of termination, the member was informed that the board of directors had found, on the basis of evidence presented at the hearing, that she had 'persistently and grossly' violated the contract in that an adult man who was not related by blood or marriage was living with her; that she had failed to provide sanitary care for the pets she maintained on the premises; that as a result of her failure to maintain adequate housekeeping standards she had created offensive odors and had infested her home and the homes of others with vermin; and that she had permitted her teen-age daughter to give noisy, unchaperoned parties during the day and at night which disturbed the peace and quiet of the neighborhood.

The member having appealed pursuant to the by-laws, a membership meeting of the corporation was held to consider the matter. At the meeting, after hearing and discussing the charges, the action of the board of directors in terminating the contract was approved and ratified by a majority vote of the membership.

The corporation promptly notified the member of the result of the appeal and requested her to vacate the premises forthwith. At the same time she was advised that she could sell her 'perpetual use right' on the open market, or if she preferred, the corporation was ready to offer her $1750 for it. But the member refused to vacate, and this action followed. The proceedings were submitted to the lower court on bill and answer and the exhibits filed therewith.

Since the parties concede that no factual questions are involved, and further concede that the corporation followed the prescribed procedures in terminating the mutual ownership contract, the only question confronting the court is whether the provisions of the contract relating to termination were valid. It is the contention of the member that the financial terms and the wording of the contract--to the effect that the corporation agreed to 'sell' and the member agreed to 'purchase' the right of 'perpetual use and enjoyment' of the dwelling unit and the lot on which it was situated--was sufficient indicia of ownership to classify her as an owner of real property ² rather than a holder of a leasehold interest. She bases her claim primarily on the decision in Tudor Arms Apts. v. Shaffer, 191 Md. 342, 62 A.2d 346 (1948), involving a proprietary lease which was substantially the same as the mutual ownership contract in this case. That case, however, instead of supporting the appellant's contention that she was an owner and not a lessee, clearly indicates that in a case such as this--where the issue concerns the right of a member to occupy a dwelling unit after proof of her misconduct--the member of the cooperative corporation would be held to be a lessee rather than an owner. It is true that in Tudor Arms, where this Court was construing the effect of a rent control act, it was held that a purchaser-lessee of a cooperative apartment unit was an owner within the meaning of the Federal Housing and Rent Act of 1947 and came within the exception to that act which permitted a landlord or owner to maintain a possessory action against a tenant who refused to yield possession of an apartment. Nevertheless, it is important to note that this Court in referring to the co-operative plan stated (62 A.2d at p. 348) that 'the essence of the transaction is that in exchange for a capital investment, a prospective purchaser will obtain a right, under the proprietary lease, to occupy a particular unit for an indefinite period, during good behavior.' (Emphasis added.) It is also true that many courts, in considering the purposes of rent control acts and other statutes, have found it justifiable to disregard the corporate entity and to hold that members or shareholders of a cooperative apartment or housing project were the owners. See ...