Prelaz v. Town of Canton , 235 N.C. App. 147 ( 2014 )

NO. COA14-225
NORTH CAROLINA COURT OF APPEALS
Filed: 15 July 2014
JOHN C. PRELAZ and DEBORAH A.
PRELAZ,
Plaintiffs,
v. Haywood County
No. 11 CVS 587
TOWN OF CANTON, a North Carolina
Municipal Corporation,
Defendant.
Appeal by plaintiffs and cross-appeal by defendant from
judgment entered 16 May 2013 by Judge W. David Lee in Haywood
County Superior Court. Heard in the Court of Appeals 3 June
2014.
Roberts & Stevens, P.A., by Mark C. Kurdys and Ann-Patton
Hornthal for plaintiffs-appellants.
McGuire Wood & Bissette, P.A., by Sabrina Presnell Rockoff,
and Frank G. Queen and Burton C. Smith, Jr. for defendant
cross-appellant and defendant-appellee.
ELMORE, Judge.
John C. Prelaz and Deborah A. Prelaz (“plaintiffs”)
commenced this action against the Town of Canton (“the Town”) in
Haywood County Superior Court. Plaintiffs prayed the trial
court for a declaration of title recognizing them as the
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rightful title holders of certain real property and to enter an
order for the recovery of rents. This real property consists of
approximately 110 acres and is known as Camp Hope (“the Camp
Hope property” or “the property.”). A trial began in the matter
on 6 May 2013. At trial, plaintiffs argued that title to the
property reverted to them when the Town violated an express
condition of a governing deed. The Town argued that the
language in the deed upon which plaintiffs relied was precatory.
The trial court, finding that the language was not precatory,
submitted to the jury the question of whether the Town violated
an express condition by allowing a third party to operate a
summer camp on the Camp Hope property primarily for the benefit
of residents of areas and states other than Canton, Haywood, and
adjoining counties. Unanimously ruling in the Town’s favor, the
jury answered “no.” On 16 May 2013, the trial court entered an
order declaring that the Town retained fee simple determinable
title to the Camp Hope property. Plaintiffs now appeal, inter
alia, the trial court’s denial of their (1) motion for a
directed verdict, (2) motion for judgment notwithstanding the
verdict, and (3) motion for a new trial. In its cross-appeal,
the Town appeals the trial court’s denial of its motion for a
directed verdict. After careful consideration, we conclude that
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the trial court erred when it denied the Town’s motion for a
directed verdict. Accordingly, we reverse the trial court’s 16
May 2013 order and remand this matter to the trial court for
entry of a judgment in favor of defendant on directed verdict.
I. Background
The relevant facts of this case are largely undisputed and
are as follows: By deed dated 4 May 1992 (“the Deed”), Champion
International Corporation (“Champion” or “grantor”), as party of
the first part, conveyed title to the Camp Hope property to
Donald W. Randolph, Carl M. Gillis, and R. Cecil Roberts,
Trustees of the Robertson Memorial Young Men’s Christian
Association (“YMCA”), as party of the second part, and to the
Town, a municipal corporation, as party of the third part. The
Deed is recorded in Book 426 at Page 771 in the Office of
Register of Deeds in Haywood County.
Specifically, the Deed conveyed to the YMCA a fee simple
determinable estate in the property so long as the property was
used in accordance with certain enumerated express terms and
conditions set forth in the Deed. The Deed conveyed to the Town
a reversionary interest in the Camp Hope property which would,
by operation of law and without re-entry or suit, cause title of
the property to revert to the Town should the YMCA violate any
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of the express terms and conditions. Should the Town take title
to the property, the Deed also required that the Town abide by
certain enumerated express terms and conditions or risk
forfeiting title. If the Town violated the express conditions
contained in the Deed, Champion provided that title to the Camp
Hope property would, by operation of law and without re-entry or
suit, revert to Champion, or its successor corporation, as party
of the first part. The YMCA subsequently forfeited its title to
the Camp Hope property, and the Town took title to it on 25 July
1996. The Town has held title to the property as party in the
third part since that time.
In March 2006, plaintiffs purchased a tract of land
adjacent to the Camp Hope property. Soon thereafter, in April
2006, International Paper Company, successor by merger to
Champion, assigned and conveyed its reversionary interest in the
Camp Hope property to plaintiffs by assignment and Quitclaim
Deed recorded in Book 667 at Page 179 in the Haywood County
Register of Deeds. Plaintiffs have held a reversionary interest
in the property as party in the first part since that time.
In April 2005, the Town negotiated a five-year lease
agreement with Wellspring Adventure Camp, LLC (“Wellspring”) for
the operation of a weight loss and fitness summer camp to be
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located on the Camp Hope property. Wellspring is a for-profit
limited liability company that operates weight loss camps
throughout the United States and Europe. On 11 April 2006, the
Canton Board of Aldermen approved a two-year extension of the
lease agreement. Pursuant to the lease terms, Wellspring has
primary use and control of the property from 15 May through 15
September each year for the duration of the lease term.
Wellspring is responsible for maintaining the property and
paying a $700.00 monthly rental fee to the Town. In addition,
the lease requires that Wellspring not violate any of the
enumerated conditions set forth in the Deed. Evidence at trial
tended to show that Wellspring campers reside throughout the
United States and may select the camp location of their
choosing. Approximately 978 campers participated in the
Wellspring summer camp at the Camp Hope property during the
summers of 2005-2011. Of these, only 20 or so campers resided
permanently in Haywood or adjoining counties.
A clause in the Deed provides: “the Town will not operate
on the property a summer camp primarily for the benefit of
residents of other areas and states.” Because so few campers
resided permanently in the local community, plaintiffs filed
suit against the Town based on an alleged violation of this
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clause, which plaintiffs argued was an express condition. At
trial, the Town took the position that the clause was merely
precatory. Alternatively, the Town argued that it did not
violate this express condition (assuming it was one) because the
operation of the Wellspring camp did, in fact, primarily benefit
local residents, not residents from other areas and states. The
Town presented the following evidence in support of its
position: (1) the Town has received over $450,000 in capital
improvements to the Camp Hope property as a result of its lease
with Wellspring; (2) the local economy has been boosted because
Wellspring contracts with local exterminators, electricians,
plumbers, and external vendors to maintain the grounds; (3)
Wellspring operates family workshops that bring $200,000
annually to local businesses; (4) Wellspring recommends Canton
and Haywood County hotels and restaurants to the campers’
families; and (5) the Wellspring lease allows local residents to
use the Camp Hope property from 15 September to 15 May each
year.
To reflect the jury’s determination that the Town did not
violate the condition requiring that it not allow a summer camp
that primarily benefited residents from other areas and states
to operate on the Camp Hope property, the trial court entered an
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order declaring that the Town retained fee simple determinable
title to the property. Both parties now appeal.
II. Analysis
The Town raises one issue on cross-appeal—that the trial
court erred in denying its motion for a directed verdict because
the clause relied upon by plaintiffs in the Deed is precatory as
a matter of law. We agree with the Town on this issue.
Therefore, we need not address plaintiffs’ issues on appeal.
Initially we note that, although the jury ruled in favor of
the Town, that favorable outcome does not prohibit the Town from
raising this issue on appeal. See Finkel v. Finkel, 162 N.C.
App. 344, 349, 590 S.E.2d 472, 475 (2004) (holding that
generally “the party who prevails at trial may appeal where the
judgment is less favorable than that party thinks is just”).
“The standard of review of directed verdict is whether the
evidence, taken in the light most favorable to the non-moving
party, is sufficient as a matter of law to be submitted to the
jury.” Davis v. Dennis Lilly Co., 330 N.C. 314, 322-23, 411
S.E.2d 133, 138 (1991) (citing Kelly v. Int’l Harvester Co., 278
N.C. 153, 179 S.E.2d 396 (1971)).
The Deed specifically grants:
To the party of the third part a fee simple
determinable estate in the lands hereinafter
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described (known as the Camp Hope property)
which fee simple determinable estate shall
automatically arise at such time as the
parties of the second part, [the YMCA],
shall violate any of the conditions imposed
upon the parties of the second part as
hereinafter enumerated. The fee simple
determinable estate hereby granted to the
party of the third part, once it has come
into being, shall last so long as the said
lands (and buildings that may be erected
thereon) are used by the Town of Canton in
accordance with the express conditions
hereinafter enumerated, and no longer.
[Emphasis added].
The Deed also describes the Town’s interest as follows:
Once its estate has arisen by operation of
law . . . The Town of Canton, shall have
and hold the above described land and
premises [the Camp Hope property], together
with all the privileges and appurtenances
thereunto belonging, or in anywise thereunto
appertaining, so long as the lands are used
for the purposes hereinafter set out and in
accordance with the conditions hereinafter
set out and no longer, and when the party of
the third part ceases to use said property
for said purposes or when the party of the
third part shall violate any of the
conditions placed upon the party of the
third part; the title to said lands and
premises shall, without re-entry or suit,
automatically revert to the party of the
first part, Champion International
Corporation, or its successor corporation.
[Emphasis added].
The Town of Canton will hold title to the
Camp Hope property hereinafter described and
will use the same for the benefit of the
same persons and groups of persons who have
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historically used the facilities of the YMCA
in the Town of Canton and the Camp Hope
property. This shall include citizens of
the Town of Canton and citizens of Haywood
County and adjoining counties but should not
preclude the use of the property by persons
from other areas, but the Town will not
operate on the property a summer camp
primarily for the benefit of residents of
other areas and states. The Town will use
its best efforts to see that the users of
the facilities are those who have
historically used the same. [Emphasis
added].
As to the express conditions imposed on the YMCA, the Deed
sets forth fourteen numbered paragraphs preceded by the
sentence: “The conditions hereby placed upon the party of the
second part . . . are as follows[.]” As to the conditions
imposed on the Town, the Deed sets forth seventeen numbered
paragraphs preceded by the sentence: “The conditions hereby
placed upon the party of the third part, The Town of Canton, are
as follows[.]” The express conditions placed on the Town
include:
1. The property will be used for active
recreational purposes.
2. The Town of Canton will keep the
property free of trash and debris, clearing
underbrush and will keep grassed areas mowed
and in good condition.
3. The Town of Canton will maintain all
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structures existing at the time of this
conveyance in good condition, ordinary wear
and tear excepted. It will keep up the
walls, roof, interior and exterior of the
dining hall and all residence buildings and
all water and sewer lines and septic
facilities. If any structures must be
removed because of age and ordinary wear and
tear they will be cleared away and not
allowed to remain in place.
4. The Town of Canton will use the
property for active recreational purposes
such as camping for scout troops, organized
camping programs for other organizations,
picnicking, social and political gatherings,
games such as shuffleboard, baseball,
softball, tennis, football, hiking, etc. but
will not permit the land to be used solely
in a passive manner such as reverting to its
nature state with the sole recreational use
being hiking.
5. No general timbering operations will be
allowed other than the cutting of diseased
or dead timber and the ordinary thinning of
new growth.
6. All camp fires will be carefully
contained and built only in designated
areas, such as on concrete pads or outdoor
grills.
7. No firearms will be allowed within the
area and no hunting or trapping of any kind
will be allowed except the hunting or
trapping of dangerous animals or snakes by
proper governmental agencies.
8. The Town of Canton may build further
recreational building, cabins, gyms, etc.,
but must maintain any such buildings so
built.
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9. The Town of Canton will permit no
illegal activity to take place on the
property.
10. The Town of Canton will permit no
garbage or waste disposal on the property
and will permit no hazardous substances to
be brought on to the property or stored
thereon.
11. The Town of Canton will carry liability
insurance on the property in amounts it
deems appropriate.
12. No permanent or semi-permanent hookups
for mobile homes or recreational vehicles
will be allowed on the property. Any such
hookups in existence at the time that the
Town of Canton’s estate in the property
arises will be removed from the property at
the sole cost and expense of the Town of
Canton. No mobile homes will be allowed on
the property and recreational vehicles will
be allowed only when such vehicles have
their own source of power, water and sewer
and then only for two weeks (or a lesser
period). Recreational vehicles will be
allowed on the property only in conjunction
with other types of camping such as when a
scout troop uses the area, the scout masters
may bring a self-contained recreational
vehicles on the property.
13. In the operation of the Camp Hope
facilities by the Town of Canton, it may
charges fees sufficient to enable the Town
of Canton to recover the ordinary costs of
the maintenance and operation of the Camp
Hope facilities but will not charge fees in
excess of those fees which would ordinarily
recoup the expense of the maintenance and
operating costs of the facilities. The Town
of Canton will not operate Camp Hope as a
profit making venture.
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14. No building located on the property at
such time as the Town of Canton’s Estate may
arise or no building erected thereafter
will be occupied by any person or group of
persons as a permanent residence except that
one structure may be occupied by a caretaker
of the property and his immediate family.
15. The Town of Canton will actively
maintain the property at all times and will
actively operate a program on the property
(at least in warmer months) at all times.
16. Should The Town of Canton violate one
or more of conditions number 1 through 14
and such violation is not remedied and
continues for a period of 90 days after
Champion International Corporation has given
to the Town of Canton written notice of the
violation, the continued violation of any
one of conditions 1 through 14 for 90 days
after such written notice will cause an
automatic reverter of the title from Town of
Canton to the party of the first part,
Champion International Corporation.
17. Should the Town of Canton fail to
actively maintain the property or actively
operate a program on the property as such
obligation is placed on the Town by
condition number 15, and such failure to
maintain or actively operate a program on
the property shall continue for a period of
one (1) year, the title to the property will
also automatically revert from the Town of
Canton to the party of the first part,
Champion International Corporation.
On appeal, plaintiffs do not allege that the Town violated
any of these seventeen conditions. Instead, it is plaintiffs’
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position that the clause in the Deed, “but the Town will not
operate on the property a summer camp primarily for the benefit
of residents of other areas and states[,]” constitutes an
express condition, which, if violated, triggers plaintiffs’
reversionary interest. Further, given that the Town (allegedly)
violated this condition, plaintiffs contend that the trial court
erred in denying their motion for a directed verdict and their
motion for judgment notwithstanding the verdict. Alternatively,
it is the Town’s position that the clause is precatory and,
therefore, merely advisory. Thus, any violation could not by
operation of law trigger plaintiffs’ reversionary interest.
Again, we agree with the Town.
“In construing a conveyance executed after January 1, 1968, in
which there are inconsistent clauses, the courts shall determine
the effect of the instrument on the basis of the intent of the
parties as it appears from all of the provisions of the
instrument.” N.C. Gen. Stat. § 39-1.1 (2013). “[T]he meaning
of [a deed’s] terms is a question of law, not of fact.” Elliott
v. Cox, 100 N.C. App. 536, 538, 397 S.E.2d 319, 320 (1990).
Even “[a]mbiguous deeds traditionally have been construed by the
courts according to rules of construction, rather than by having
juries determine factual questions of intent.” Robinson v.
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King, 68 N.C. App. 86, 89, 314 S.E.2d 768, 771 (1984).
Therefore, the question of whether the language contained in a
Deed is precatory is to be decided by the Courts as a matter of
law.
“A grantor can impose conditions and can make the title
conveyed dependent upon [a grantee’s] performance. But if [the
grantor] does not make any condition, but simply expresses the
motive which induces him to execute the deed, the legal effect
of the granting words cannot be controlled by the language
indicating the grantor’s motive.” Ange v. Ange, 235 N.C. 506,
508, 71 S.E.2d 19, 20-21 (1952) (internal quotations and
citations omitted). It is well established that “[t]he law does
not favor a construction of the language in a deed which will
constitute a condition subsequent unless the intention of the
parties to create such a restriction upon the title is clearly
manifested.” Washington City Board of Education v. Edgerton,
244 N.C. 576, 578, 94 S.E.2d 661, 664, (1956) (emphasis added).
For a reversionary interest to be recognized, the deed must
“contain express and unambiguous language of reversion or
termination upon condition broken.” Station Associates, Inc. v.
Dare Cnty., 350 N.C. 367, 370, 513 S.E.2d 789, 792 (1999). “[A]
mere expression of the purpose for which the property is to be
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used without provision for forfeiture or re[-]entry is
insufficient to create an estate on condition[.]” Id. at 373,
513 S.E.2d 793.
Applying this law to the Deed in the present case, we note
that the document does, in fact, contain language of reversion
or termination. However, the reversionary language is in
reference to the seventeen enumerated conditions, not the clause
on which plaintiffs rely. The Deed provides, should the Town
cease “to use said property for said purposes” or “violate any
of the conditions placed upon [the Town],” title to the property
“shall, without re-entry or suit, automatically revert to . . .
Champion . . . or its successor corporation.” At the outset of
the Deed, the grantor specified that both the YMCA and the Town
could maintain title only if each used the property in
accordance with the “express conditions hereinafter enumerated
and no longer.” “Enumerate” means “to count off or designate
one by one; to list.” BLACK’S LAW DICTIONARY 574 (8th ed. 1999).
AS cited above, the Deed enumerates seventeen conditions placed
upon the Town, none of which reference the clause at issue.
Taken as a whole, it is apparent that the grantor intended to
trigger reverter only if one of the enumerated conditions was
broken. Further, condition #4 serves as a restraint on use,
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providing that the Town must use the property for recreational
purposes. Arguably, if the grantor intended to further restrain
the Town’s use of the property by prohibiting it from operating
a summer camp that primarily benefited residents of other
states, it would have done so in an enumerated paragraph.
However, the paragraph in which the clause is written is
un-numbered and devoid of any express and unambiguous language
of reversion upon condition broken. In fact, in their brief,
plaintiffs do not direct us to any reversionary language in
direct reference to this clause. Thus, nowhere in the paragraph
or in the Deed itself is it “clearly manifested” that title to
the property is to revert to Champion, or its successor, upon
the Town’s violation of the clause. See Edgerton, supra.Moreover, the clause is followed by a sentence in which the
grantor asks that the Town use its “best efforts” to ensure
“that the users of the facilities are those who have
historically used the same.” The inclusion of such subjective
language in this paragraph is additional evidence that the
grantor did not envision this paragraph or the clause therein to
inflict a rigid restriction upon the title or to create a
condition subsequent. Instead, we hold that this clause is
precatory. Champion merely sought to express an intended
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purpose for which the property was (hopefully) not to be used.
See Ange, 235 N.C. at 509, 71 S.E.2d at 21 (holding that a
conveyance of land containing the clause “for church purposes
only,” did not create a condition subsequent because, without
reservation of power of termination or right of re-entry for
condition broken, the clause merely expressed the motive and
purpose which prompted the conveyance); see also Nelson v.
Bennett, 204 N.C. App. 467, 472, 694 S.E.2d 771, 775 (2010)
(concluding that the portion of a will providing that “[t]he
house is not to be used for a business or Bed and Breakfast and
is not to be leased out by [Ms.] Frejlach” was precatory because
it was unaccompanied by express and unambiguous language of
reversion or termination upon condition broken).
III. Conclusion
In sum, the trial court erred in denying the Town’s motion
for a directed verdict at the close of plaintiffs’ evidence and
again at the close of all evidence. As a matter of law, the
language relied upon by plaintiffs is precatory and could not
trigger plaintiffs’ reversionary interest in the Camp Hope
property. We remand this matter to the trial court for entry of
a judgment in favor of defendant on directed verdict.
Reversed and remanded.
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Judges McGEE and McCullough concur.