Hollywyle Ass'n, Inc. v. Hollister

• Decision Date: 07 March 1973
• Citation: 324 A.2d 247,164 Conn. 389
• Court: Connecticut Supreme Court
• Parties: HOLLYWYLE ASSOCIATION, INC. v. Elsie F. HOLLISTER et al.

Page 247

324 A.2d 247

164 Conn. 389

HOLLYWYLE ASSOCIATION, INC. v. Elsie F. HOLLISTER et al.

Supreme Court of Connecticut.

March 7, 1973.

Robert N. Talarico, Danbury, for appellant (named defendant).

Lloyd Cutsumpas, Danbury, with whom, on the brief, was Francis J. Collins, Danbury, for appellants (defendant Coxeter et

William W. Sullivan, Danbury, for appellee (plaintiff).

Before HOUSE, C.J., and SHAPIRO, LOISELLE, MacDONALD and BOGDANSKI, JJ.

SHAPIRO, Associate Justice.

The plaintiff, a domestic nonstock corporation, instituted this suit for equitable relief, seeking in injunction to restrain the defendants George W. Coxeter and David A. Werner from using or interfering with the roads of Hollywyle Park in the town of New Fairfield. In addition, it sought an order declaring void a conveyance by which the defendants claimed a right of way across the plaintiff's roads. The referee, acting as the court, found the issues for the plaintiff and rendered the decrees requested. The defendants have appealed.

The unchallenged finding reveals the following facts: The named defendant, Elsie F. Hollister, is the former owner and developer of a tract known as Hollywyle Park, located in the town of New Fairfield. After subdividing the property, she retained ownership of several lots in that tract and sold the remaining lots to individuals, some of whom subsequently formed the plaintiff corporation. In April, 1953, she conveyed title to the roads of Hollywyle Park to the plaintiff in settlement of a lawsuit which had been brought against her by some of the residents of the tract. This conveyance, a quitclaim deed, provided that the plaintiff would assume ownership and maintenance of the roads; it contained no reservation of rights to the grantor, Elsie F. Hollister, for the purpose of access to a contiguous parcel which she owned.

At the time the roads of Hollywyle Park were conveyed to the plaintiff, the named defendant's adjacent land was inaccessible except by passing through Hollywyle Park, Section 1. On one side the land is bounded by a lake, on another side by Hollywyle Park, Section 1, and on the two other sides by property owners not involved in this suit. ¹ A road in the land connects with roads of Hollywyle Park, Section 1, to reach a public highway.

There is no indication that the plaintiff raised any objection to the named defendant's use of the roads of Hollywyle Park to gain access to the otherwise landlocked parcel so long as she retained ownership thereof. By virtue of an agreement recorded in 1930, reciting certain covenants, easements, restrictions and reservations inuring to the benefit of and binding on all owners of lots, title to any land in Hollywyle Park, Section 1, which forms part of any street or road was made subject to a permanent easement, running with the land, for the use thereof for highway purposes by all other owners of plots. Thus, inasmuch as the named defendant continues to own lots in Hollywyle Park, Section 1, no question has arisen in this appeal respecting her right to use, in relation to those lots, the roads which she conveyed to the plaintiff in 1953.

On April 29, 1966, the named defendant conveyed to the defendants Coxeter and Werner her contiguous land together with a right of way through the roads of Hollywyle Park. The grantees' attorney, who had searched the title to the premises, had discovered the 1953 deed by which the roads of Hollywyle Park were conveyed to the plaintiff. He, therefore, requested that the named defendant obtain, prior to the time of closing, an instrument reconveying road rights to herself, to be passed on in turn to the grantees. On February 21, 1966, the name defendant procured the instrument from her niece, Muriel Hollister, who was secretary of Hollywyle Association, Inc. This instrument purported to convey the right to the named defendant, her heirs and assigns, to pass and repass over the roads of Hollywyle Park for the purpose of gaining access to the contiguous parcel of land. It was signed by Muriel Hollister in her capacity as secretary of the plaintiff corporation and contained in the acknowledgment provision a recital that she was duly authorized. The instrument was recorded on May 31, 1966, together with the named defendant's conveyance to Coxeter and Werner. Although the instrument was executed by the plaintiff's secretary, Muriel Hollister was not in fact authorized to execute any type of real estate conveyance. None of the corporate bylaws empowered the secretary to execute such an instrument, and no meeting of the plaintiff corporation had been called so to authorize her. The deed bore neither the corporate seal nor a recital that the board of directors had empowered her so to act.

On these findings, the court concluded that the purported conveyance, dated February 21, 1966, of the right of way over the plaintiff's roads worked a fraud and an inequity on the plaintiff and that it should be declared void. It further concluded that the defendants Coxeter and Werner were neither bona fide purchasers nor in a position to rely on the purported conveyance, because they knew prior to purchasing that the named defendant had quitclaimed the roads of Hollywyle Park to the plaintiff without reservation. In view of the fact that the instrument evidencing a right of way over the plaintiff's roads was procured at their behest, the court found them derelict in failing to require actual proof that Muriel Hollister, the plaintiff's secretary, had authority to make the conveyance.

I

The defendants press essentially two claims on appeal. The first claim which we consider raises the contention that the defendants Coxeter and Werner took title free and clear of the plaintiff's claim that the deed to the named defendant was not authorized. They make no suggestion that the purported deed giving the named defendant a right of way was ratified by the plaintiff, nor is there any claim that the plaintiff should be barred from disclaiming the deed on the ground of estoppel. The defendants do not challenge the finding that Muriel Hollister, acting as the plaintiff's secretary, had no actual authority to convey an interest in the plaintiff's real estate. They argue, however, that unless a subsequent purchaser can rely on a deed signed by the secretary of a corporation, that purchaser will face an insurmountable burden; he will no longer be entitled to trust the system of recordation of land titles but must at his peril investigate any corporate deed appearing in the chain of title.

The specter thus created by the defendants vanishes in light of a distinction which we cannot overlook. Here, there is no question of reliance placed on the land records by one who is a stranger to a spurious conveyance. From an examination of the land records the defendants Coxeter and Werner were apprised that the named defendant, their prospective grantor, had quitclaimed her interest in the roads of Hollywyle Park. They insisted that she reacquire a right of way by deed or other instrument in order that she might reconvey road rights to them. Finally, the purported deed from the plaintiff was recorded contemporaneously with the conveyance of the contiguous parcel, so that it did not appear in the land records until after the defendants Coxeter and Werner had purchased their parcel from the named defendant. Whatever equities may accrue to an innocent purchaser who relies on the recordation of deeds cannot avail the defendants Coxeter and Werner. Rather than induce mistaken reliance, the land records alerted them to the risks of purchase. Compare, for example, Interstate Iron & Steel Co. v. East Chicago, 187 Ind. 506, 509, 118 N.E. 958.

Apart from equitable considerations, the defendants contend that the deed should nevertheless be accorded validity for the reason that the plaintiff's secretary was clothed with apparent authority. ² The issue of apparent authority is one of fact to be determined on two criteria: first, on the conduct of the principal in holding out his agent as having sufficient authority to include the action in question; and second, on the reasonable belief of a party acting in good faith. Cohen v. Holloways', Inc., 158 Conn. 395, 407-408, 260 A.2d 573; Nowak v. Capitol Motors, Inc., 158 Conn. 65, 69, 255 A.2d 845; see also Baptist v. Shanen, 145 Conn. 605, 608, 145 A.2d 592; Cross, Corporation Law in Connecticut, pp. 280-86 (1972). In Washington Cedar & Fir Products Co. v. Elliott, 91 Conn. 350, 353, 100 A. 29, 30, the rule is explained as follows: 'Whether or not a principal is bound by the acts of his agent, when dealing with a third person who does not know the extent of his authority, depends, not so much on the actual authority given or intended to be given by the principal, as upon the question: what did such third person, dealing with the agent, believe and have a right to believe as to the agent's authority, from the acts of the principal? . . .. The apparent authority of the agent which thus binds the principal, beyond that actually conferred, must always be deduced from authorized acts of the agent, and from surrounding facts with a knowledge of which the principal is chargeable, and not from the acts of the agent himself in excess of his authority and of which the principal had no notice.' The question before the trier, therefore, was whether the plaintiff had, by it conduct, interpreted in light of the surrounding circumstances known to it, caused the mistaken belief that Muriel Hollister had the requisite authority to convey a right of way over its roads or whether the plaintiff knowingly permitted its agent to engender that belief. See Lewis v. Michigan Millers Mutual Ins. Co., 154 Conn. 660, 665, 228 A.2d 803; Quint v. O'Connell, 89 Conn. 353, 357, 94 A. 288.

In the case before the court, however, the defendants offered no evidence as to any conduct on the part of the plaintiff corporation, either for the purpose of...