Group v. Bd. Of Selectmen Of Dennis & Another.
| Decision Date | 16 September 2010 |
| Docket Number | SJC-10642. |
| Parties | FANEUIL INVESTORS GROUP, Limited Partnership v. BOARD OF SELECTMEN OF DENNIS & another. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Dana Alan Curhan for the plaintiff.
Jonathan M. Silverstein for board of selectmen of Dennis.
John R. Costello & Kathleen Fowler, for Dennis Housing Authority, submitted a brief.
Joel A. Stein, for Real Estate Bar Association for Massachusetts, Inc., & another, amici curiae, submitted a brief.
Real Property, Reverter, Conveyance, Mortgage, Deed. Mortgage, Real estate. Deed, Condition. Municipal Corporations, Town meeting.
CIVIL ACTION commenced in the Land Court Department on April 24, 2008.
A motion for lis pendens and a motion to dismiss were heard by Keith C. Long, J.
After review by the Appeals Court, the Supreme Judicial Court granted leave to obtain further appellate review.
Present: Marshall, C.J., Ireland, Spina, Cordy, Botsford, & Gants, JJ.
This case concerns a parcel of land (land) owned by the town of Dennis (town). The board of selectmen (board) deeded the land to the Dennis Housing Authority (authority) so that affordable housing could be constructed. The deed contained a reverter clause that prohibited a conveyance or transfer of the land without the consent of the board. The authority secured a mortgage on the land without the board's consent; the town invoked the reverter clause and revested title to itself. The plaintiff, Faneuil Investors Group, Limited Partnership, the assignee of the authority's mortgage, filed a complaint and a motion for lis pendens in the Land Court, challenging the town's action. A Land Court judge held that the granting of a mortgage was a conveyance of title under Massachusetts law and that the town properly invoked the deed's reverter clause. The judge also held that the board had the authority to include the reverter clause in the deed. Although he dismissed the board's special motion to dismiss the plaintiff's complaint, G.L. c. 184, § 15 (c), 2 he treated the motion as if it were brought under Mass. R. Civ. P. 12(b)(6), 365 Mass. 754 (1974), dismissed the plaintiff's claims, and ordered all references to the plaintiff's mortgage and other interests be struck from the town's certificate of title. He also denied the plaintiff's motion for a lis pendens. The plaintiff appealed and the Appeals Court affirmed the decision of the Land Court judge. Faneuil Investors Group, Ltd. Partnership v. Selectmen of Dennis, 75 Mass.App.Ct. 260 (2009) (Faneuil Investors). We granted the plaintiff's application for further appellate review. Because we conclude that the judge did not err, and agree with the judge that the plaintiff does not have a valid mortgage on the land, we affirm the decision of the Land Court.
Facts.
We summarize the essential undisputed facts as found by the Land Court judge.
The town acquired the land by eminent domain in August, 2001, pursuant to a unanimous town meeting vote which, in relevant part, authorized the board to:
In February, 2002, the board conveyed the land to the authority for nominal consideration of one dollar. The deed contained, in relevant part, the following condition subsequent:
The deed was signed by the members of the board. The chairperson of the authority also signed it, agreeing: "It is intended that the conditions as stated in this deed remain in perpetuity and this deed and the terms and conditions as stated herein are accepted and agreed to as perpetual conditions by the [authority]...."
On March 2, 2002, after the land had been deeded to the authority, but before the title had been registered, the authority executed a $400,000 mortgage with Citizens Bank (bank). The authority did not obtain the board's consent for the mortgage, which apparently was for construction. The judge found that the bank closed "with knowledge of [the] limitations on the [a]uthority's fee interest in the property." 3 The deed was filed with the Barnstable Land Court registry on March 7, 2002, and noted on the certificate of title's encumbrance sheet as "restrictions," which referenced the bank's mortgage, collateral assignment and other rights, and financing statement. The authority received a certificate of title on that date.
In addition, a town meeting vote in 2006 gave the board discretion to "release the right of reverter contained in that certain deed [to the authority]... on terms deemed in the best interest of the town, and to accept as consideration for such release a grant of a perpetual affordable housing restriction... for the purpose of ensuring the retention of housing for occupancy by low and moderate income persons and families."
As is apparent from subsequent events, the board chose not to exercise its discretion. In July, 2007, the bank assigned all its interests to the plaintiff, which was noted on the certificate of title.
Pursuant to the terms of the deed prohibiting conveying or transferring the land, in February, 2008, the board gave the authority the requisite thirty-day notice of its intent to reenter and revest the land because of the mortgage. The authority did not "cure" by obtaining the written consent of the town for the mortgage. The town reentered and revested title. On March 5, 2008, the authority deeded the property back to the town, which received a certificate of title naming the town owner in fee simple, unencumbered by the plaintiff's mortgage. 4
By its complaint seeking a declaratory judgment, the plaintiff asked the Land Court to establish the current validity and priority of its mortgage. It asked specifically that the court declare that the board exceeded its authority in creating the condition subsequent; that the condition subsequent in the deed as set forth above be deleted; that the town's exercise of the right of reverter was invalid; that the town's title to the land was null and void; and that title would vest, unencumbered, in the authority.
In his written memorandum of decision, the judge concluded that, under Massachusetts law, a mortgage is He concluded that the bank could only assign the rights it had to the plaintiff and, pursuant to the terms of the deed, the plaintiff has no interest in the land. He also concluded that, under G.L. c. 40, § 3, the board did not exceed its authority in placing the reverter provision in the deed.
Discussion.
The plaintiff first argues that the mortgage should not have been treated as a transfer of title for purposes of triggering the deed's reverter clause. 5 There was no error.
We begin by noting that there are Restatement (Third) of Property (Mortgages) § 4.1 comment a (1997). It is not disputed that Massachusetts is a title theory state.
The plaintiff also does not contest that our case law defines a mortgage as a transfer of title. See Murphy v. Charlestown Sav. Bank, 380 Mass. 738, 747 (1980), quoting Perry v. Miller, 330 Mass. 261, 263 (1953) (). Rather, it argues that courts in other jurisdictions that follow the title theory have "specifically declined to treat mortgages as conveyances for the purpose of triggering reverter provisions." It further argues that the language of the reverter clause was unclear.
As the Appeals Court stated, although our case law has placed some limitations on a mortgagee's right to title, it also has made clear that a mortgage is a conveyance of title. See Faneuil Investors, supra at 265, citing Vee Jay Realty Trust Co. v. DiCroce, 360 Mass. 751, 753 (1972) (); Negron v. Gordon, 373 Mass. 199, 204 (1977) (); and Maglione v. BancBoston Mtge. Corp., 29 Mass.App.Ct. 88, 90 (1990) (...
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