Carter Country Club, Inc. v. Carter Community Building Association

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Grafton
No. 2020-0370
CARTER COUNTRY CLUB, INC.
v.
CARTER COMMUNITY BUILDING ASSOCIATION
Argued: May 27, 2021
Opinion Issued: December 28, 2021
Gallagher, Callahan & Gartrell, P.C., of Concord (Samantha D. Elliott and
Matthew V. Burrows on the brief, and Samantha D. Elliott orally), for the
plaintiff.
Orr & Reno, P.A., of Concord (Jeremy D. Eggleton on the brief and orally),
for the defendant.
Gordon J. MacDonald, attorney general (Thomas J. Donovan, director of
charitable trusts), filed no brief.
HOURAN, J., retired superior court justice, specially assigned under RSA
490:3. The defendant, Carter Community Building Association, appeals orders
of the Superior Court (MacLeod, J.) granting summary judgment to the
plaintiff, Carter Country Club, Inc., on the plaintiff’s petition to quiet title to a
parcel of property in Lebanon. The defendant also appeals the denial of its
motion to amend its counterclaim to add a claim for declaratory relief. We
affirm in part, vacate in part, and remand.
I. Facts
The following relevant facts are supported by the record or are otherwise
undisputed by the parties. In July 1986, Carter Country Club, Inc. (CCCI), an
entity unrelated to the plaintiff, conveyed the property at issue to the Trustee of
the Farnum Hill Trust by deed (Farnum Hill deed). The Farnum Hill deed
contained a provision concerning the maintenance and operation of a nine hole
golf course on the premises, as follows:
The above described premises shall be SUBJECT,
HOWEVER, to the following RESERVATION, CONDITIONS, AND
RESTRICTION which shall run with the land and be binding upon
the Grantee, and his successors and assigns:
At all times, in perpetuity, a nine hole golf course shall be
maintained and operated on the premises . . . . The location of the
property set aside for and containing the golf course shall be
referred to as the “golf course area”.
....
If at any time the above requirements for maintenance and
operation of a nine hole golf course are not met for a period of one
year, the title to the golf course area . . . shall, at the option of the
Grantor or its successors or assigns, revert to Grantor, or its
successors or assigns.
This restriction and the right of reversion shall be binding
upon and shall inure to the benefit of, Grantor and Grantee and
their respective heirs, executors, administrators, successors and
assigns as a covenant that shall run with the land, in perpetuity.
In December 1986, CCCI conveyed by deed (December deed) the rights it
reserved in the Farnum Hill deed to the defendant, a local non-profit
organization. The December deed purported to convey: “All and the same right,
interest and title, in and to the reversionary interest retained by the Grantor in
the [Farnum Hill deed].” The December deed also recited the entirety of the
above-quoted golf-course restriction as set forth in the Farnum Hill deed.
Shortly thereafter, CCCI dissolved.
2
In November 1989, the property was conveyed to a private corporation.
In September 1990, the corporation brought an action to quiet title, naming as
defendants CCCI’s shareholders and “[a]ll other unknown persons who may
claim or have any interest, right or estate in or to” the property. The defendant
moved to intervene. In September 1991, the Superior Court (Perkins, J.)
issued an order declaring that the corporation’s title was “free and clear of all
rights or interests” of CCCI’s shareholders and ordering that any issues
pertaining to the defendant’s motion to intervene would be addressed in further
proceedings. In February 1994, the corporation and the defendant entered a
stipulation and docket markings stating that the court’s September 1991 order
“shall remain in full force and effect” as to CCCI’s shareholders, but “[a]s to all
other matters, judgment shall be entered for neither party, without prejudice.”
Thus, the litigation settled without resolving the issue before us — whether the
defendant had an interest in the property.
At some point thereafter, the plaintiff took title to the property. In
August 2018, the plaintiff brought an action to quiet title, naming the
defendant as a party and claiming that the conveyance of CCCI’s future
interest in the property to the defendant was void. The plaintiff’s theory was
that the Farnum Hill deed created a right of reentry retained by CCCI, which,
the plaintiff contended, was not freely transferable. The plaintiff also argued
that the defendant’s interest in the property, if any, violated the rule against
perpetuities and was an unreasonable restraint on alienation. The defendant
counterclaimed, seeking a declaration that it had an enforceable future interest
in the property.
The parties filed cross-motions for summary judgment. The defendant
also filed a motion to amend its counterclaim, seeking to add an alternative
declaration of its right to enforce the golf-course restriction as a restrictive
covenant. Following a hearing on the parties’ motions, the Superior Court
(MacLeod, J.) issued an order granting, in part, the plaintiff’s summary
judgment motion and declaring that the plaintiff held title to the property in fee
simple subject to a condition subsequent. Relying solely upon the language of
the Farnum Hill deed, the trial court concluded that the interest held by CCCI
was a right of reentry that, under both the common law and the Restatement
(First) of Property, was not freely transferable. See Restatement (First) of
Property §§ 160, 161(c) at 574, 578 (1936). The court further determined that
because CCCI’s right of reentry was not transferable to the defendant, CCCI’s
interest in the property remained vested in CCCI, meaning that the plaintiff
held title to the property in fee simple subject to a condition subsequent. The
court also denied the defendant’s motion to amend, reasoning that because the
conveyance from CCCI to the defendant was void, the defendant’s proposed
amendment failed to state a claim upon which relief could be granted.
The plaintiff then filed a motion for clarification, noting that it sought to
quiet title only as against the defendant and did not ask the court to decide
3
whether CCCI retained an interest in the property. The court denied the
motion, but ordered the plaintiff to identify any other parties “who have or may
have some estate or interest in” the property. (Quotation omitted.) The
plaintiff filed a response, asserting, in relevant part, that no other parties had
an interest in the property because the September 1991 order, coupled with
the February 1994 stipulation and docket markings, quieted title to the
property as against CCCI and its shareholders. Thus, the plaintiff asked the
court to reconsider its ruling that the plaintiff’s title was subject to a condition
subsequent. The court agreed with the plaintiff and granted the motion,
concluding that the plaintiff held title in fee simple absolute. The court denied
the defendant’s motion for reconsideration, and this appeal followed.
II. Analysis
The defendant first challenges the trial court’s ruling that the Farnum
Hill deed created an inalienable right of reentry that was retained by CCCI,
thereby rendering the conveyance of CCCI’s future interest in the property to
the defendant void. According to the defendant, under the Farnum Hill deed,
CCCI retained a possibility of reverter, rather than a right of reentry, which
CCCI was free to transfer to the defendant. The plaintiff, on the other hand,
counters that the trial court correctly interpreted the language of the Farnum
Hill deed as creating an inalienable right of reentry that was not freely
transferable to the defendant.
In reviewing a trial court’s rulings on cross-motions for summary
judgment, we consider the evidence in the light most favorable to each party in
its capacity as the nonmoving party. Boyle v. City of Portsmouth, 172 N.H.
781, 785 (2020). If our review of the evidence discloses no genuine issue of
material fact, and if the moving party is entitled to judgment as a matter of law,
we will affirm the grant of summary judgment. Id. We review the trial court’s
application of the law to the facts de novo. Id.Resolving the defendant’s appeal also requires that we interpret the
meaning of the Farnum Hill deed’s language. The interpretation of a deed is a
question of law, which we review de novo. White v. Auger, 171 N.H. 660, 663
(2019). When interpreting a deed, we give it the meaning intended by the
parties at the time they wrote it, taking into account the surrounding
circumstances at that time. Id. If the language of the deed is clear and
unambiguous, we will interpret the intended meaning from the deed itself
without resorting to extrinsic evidence. Id. at 663-64. If, however, the
language of the deed is ambiguous, extrinsic evidence of the parties’ intentions
and the circumstances surrounding the conveyance may be considered to
clarify its terms. Id. at 664. The language of a deed is ambiguous if the parties
could reasonably disagree as to its meaning. Arell v. Palmer, 173 N.H. 641,
645 (2020).
4
When interpreting the language of a deed, we consider the deed as a
whole. See White, 171 N.H. at 664. We generally disfavor interpreting deed
conditions in a manner that would cause a forfeiture of the property upon
breach of such conditions. Id. However, we adhere to the guiding principle
that the intent of the parties should be effectuated whenever possible. Id. We
also remain mindful that formalistic requirements in real estate conveyancing
have largely given way to effectuating the manifest intent of the parties, absent
contrary public policy or statute. Id.
We begin by summarizing the distinction between rights of reentry and
possibilities of reverter.1 A right of reentry is an interest created and retained
by a grantor with its conveyance of property that is subject to a condition
subsequent. Restatement (First) of Property § 155, at 532-33; see Red Hill
Outing Club v. Hammond, 143 N.H. 284, 287 (1998) (“A fee simple subject to
condition subsequent is a conveyance of land in which the grantor expressly
retains the right of re-entry upon breach of a stated condition, the exercise of
which results in a forfeiture of estate for the grantee.”). A possibility of
reverter, by contrast, is “a future interest retained by a grantor after conveying
a fee simple determinable, so that the grantee’s estate terminates automatically
and reverts to the grantor if the terminating event ever occurs.” Black’s Law
Dictionary 1284 (9th ed. 2009); see id. at 692 (defining “fee simple
determinable” as “[a]n estate that will automatically end and revert to the
grantor if some specified event occurs”). The primary distinction between
rights of reentry and possibilities of reverter “is that in the former the estate in
fee does not terminate until entry by the person having the right, while in the
latter the estate reverts at once upon the occurrence of the event by which it is
limited.” Lyford v. Laconia, 75 N.H. 220, 225 (1909); see 28 Am. Jur. 2d
Estates § 189, at 243 (2011) (“An automatic reversion in the grantor . . .
differentiates a possibility of reverter from a [right of reentry].”).
Another distinction between possibilities of reverter and rights of reentry is
that, under the Restatement (First) of Property, possibilities of reverter are
transferable inter vivos, while rights of reentry are not. Restatement (First) of
Property §§ 159-61, at 570-74. Although we have observed, in dicta, that “it is at
least doubtful whether a right of entry before breach is transferable by will or
deed,” Ashuelot National Bank v. Keene, 74 N.H. 148, 151 (1907), we have not
yet had occasion to adopt the approach set forth in the Restatement (First) of
Property. However, because neither party disputes that the approach set forth in
1
We note at the outset of our analysis that the parties do not ask us to consider the potential
applicability of the Restatement (Third) of Property: Wills and Other Donative Transfers § 25.2
cmt. d at 457-58 (2011) and its analysis of reversions and remainders, which to a large extent
would do away with distinctions between rights of reentry and possibilities of reverter.
Accordingly, this case does not present us with an opportunity to consider whether or to what
extent we should adopt the approach set forth in the Restatement (Third) of Property: Wills and
Other Donative Transfers § 25.2 cmt. d at 457-58.
5
the Restatement (First) of Property applies in this case, we need not decide that
issue here. Therefore, we will assume, for the purposes of this appeal, that
possibilities of reverter are transferable inter vivos and rights of reentry are not.
Accordingly, to determine whether CCCI’s future interest in the property
was transferable to the defendant, we must decide whether the Farnum Hill
deed created a right of reentry or a possibility of reverter. The defendant
argues that the word “revert” and the term “right of reversion” in the Farnum
Hill deed demonstrate that the original parties intended to create a possibility
of reverter. The defendant also points to the use of “successors” and “assigns”
in the deed as evidence of the original parties’ intent to confer an interest that
CCCI could freely transfer to the defendant. The defendant argues in the
alternative that, even if the language of the Farnum Hill deed is ambiguous,
extrinsic evidence confirms the original parties’ intent to create a freely
transferable possibility of reverter. The plaintiff counters that the Farnum Hill
deed unambiguously created a right of reentry because the phrase “at the
option of” in the deed indicates that the parties did not intend for title to
transfer automatically upon breach of the golf-course restriction.2
The defendant argues that the Farnum Hill Deed must be read to reserve
a possibility of reverter because it “makes no mention of a ‘power of
termination’ or ‘right of reentry,’” but, rather, “unambiguously names the
interest reserved to the grantor as a ‘right of reversion.’” We are not persuaded.
Although we agree that the deed does not contain the terms “power of
termination” or “right of reentry,” “[n]o form of expression . . . is essential to
create a condition.” Chapin and Wife v. School District, 35 N.H. 445, 450
(1857). Nevertheless, the language used “is of importance in arriving at the
manifest intention of the parties which is the determinative factor.” North
Hampton School District v. Society, 97 N.H. 219, 220 (1951).
“The words ‘so long as,’ . . . ‘while’, ‘until’ and ‘during’ are the usual and
apt words to create a limited estate such as a determinable fee . . . .” Id. at
220-21. Such “words of limitation . . . show[] that an estate upon limitation
was intended to be conveyed.” Chapin and Wife, 35 N.H. at 450. In other
words, they indicate the parties’ intent that the estate is to terminate
automatically upon the happening of the stated condition. See id. (noting that
the deeds in question contained nothing “showing that an estate upon
limitation was intended to be conveyed,” but actually showed “the reverse”
where “[t]he conveyances were to the grantees and their successors ‘forever’”).
2The plaintiff also asserts that the defendant “waived any issue concerning an alleged
ambiguity in the deeds or the need to consider” extrinsic evidence of the parties’ intent.
Because we conclude that the deed is unambiguous, we need not address the plaintiff’s waiver
argument.
6
The Farnum Hill Deed contains none of the usual words of limitation, nor
anything else indicating an intent that the grantee’s estate should terminate
automatically if the restrictions regarding operation of a golf course were not
met. Rather, the deed contains the following language: “SUBJECT, HOWEVER,
to the following RESERVATION, CONDITIONS, AND RESTRICTION.” Such
language is consistent with the creation of a condition subsequent. See id.
(“The usual words of a condition subsequent are, ‘so that,’ ‘provided,’ ‘if it shall
happen,’ or ‘upon condition.’”); see also Cummings v. United States, 409 F.
Supp. 1064, 1068 (M.D.N.C. 1976) (examining deed that “conveys land ‘on
express condition that’ and ‘on condition that’ certain events occur or do not
occur and contains what was intended to have been a reverter clause” and
concluding that “[t]his language is more indicative of a fee simple subject to a
condition subsequent than it is of a fee simple determinable”).
The defendant nevertheless contends that the terms “revert” and “right of
reversion” signify a determinable fee and corresponding possibility of reverter.
It argues that “[t]he language ‘if at any time . . . shall revert’ conveys a
defeasible interest, not a right of reentry.” Because this argument ignores
language in the deed compelling a contrary conclusion, we need not decide
whether the quoted language can, without more, constitute a possiblity of
reverter. Compare Pfeffer v. Lebanon Land Dev. Corp., 360 N.E.2d 1115, 1120
(Ill. App. Ct. 1977) (concluding that phrase “‘will revert’ [in deed] necessarily
implie[d] the existence of a right of re-entry or power of termination” even
though the “same language is also consistent with the creation of a
determinable fee” because the defeasance provision contained no language of
limitation); Unknown Heirs of Devou v. City of Covington, 815 S.W.2d 406,
409, 411, 413 (Ky. Ct. App. 1991) (examining deed stating that, should the
grantee fail or refuse to perform the stated conditions, “the land . . . shall
revert back, at their option” to two named grantors, and concluding that “the
document as a whole provides for a right of re-entry upon condition broken
rather than a possibility of reverter”), with Walton v. City of Red Bluff, 3 Cal.
Rptr. 2d 275, 279, 281 (Ct. App. 1991) (concluding that language in a deed,
which included the word “revert,” evidenced intent to create a possibility of
reverter); Oxy USA, Inc. v. Red Wing Oil, LLC, 360 P.3d 457, 462 (Kan. Ct. App.
2015) (“The right of reversion or the possibility of reverter is a vested future
interest known as a fee simple determinable.”); Ditmore v. Michalik, 625
N.W.2d 462, 468 (Mich. Ct. App. 2001) (noting that “the deed provided for an
automatic reversion in the event of a violation, and hence a right of reversion”);
Webster’s Third New International Dictionary 1943 (unabridged ed. 2002)
(defining the term “reverter” as “a possibility of reversion of an estate in land”).
In addition, the defendant’s quotation of the deed in support of this
argument omits crucial language. The deed provides, in relevant part: “If at
any time the above requirements . . . are not met for a period of one year, the
title to the golf course area . . . shall, at the option of the Grantor or its
successors or assigns, revert to Grantor, or its successors or assigns.” The
7
phrase “at the option of Grantor or its successors or assigns” negates any
conclusion that the deeding parties intended the fee to cease automatically
upon the happening of the specified event. See Lyford, 75 N.H. at 225 (noting
that an estate in fee subject to a condition subsequent “does not terminate
until entry by the person having the right“). To the contrary, the deed’s
language indicates that the original deeding parties intended that the grantor
— CCCI or one of its successors or assigns — would have to take some
affirmative action to enforce the golf course restriction before the grantee’s
estate would terminate.
The Farnum Hill Deed cannot be interpreted as conveying a determinable
fee and reserving a possibility of reverter without ignoring the phrase “at the
option of Grantor or its successors or assigns.” When interpreting a deed, we
must give it the construction “as will, if possible, give effect to all its
provisions.” Id. at 222. Interpreting the deed as conveying a fee simple subject
to a condition subsequent gives “full effect . . . to all the language of the deed.”
Id. at 223.
The defendant nevertheless argues that if the deed’s language does not
“clearly create[] a transferable ‘right of reversion’ or possibility of reverter,” then
“it is ambiguous, and the substantial, compelling extrinsic evidence of the
parties’ intentions show that the parties intended to create a transferrable
reversionary interest.” “The language of a contract, including a deed, is
ambiguous if the parties to the contract could reasonably disagree as to the
meaning of the language.” Arell, 173 N.H. at 645. The defendant argues that if
the phrase “at the option of the Grantor or its successors and assigns” is
construed to indicate a right of reentry, it conflicts with other language in the
deed because “the interest in question cannot be both a [right of reentry] and a
right of reversion.” But the terms “revert” and “reversion” can be read
consistently with a right of reentry. We are not persuaded that the deed is
ambiguous because it gives the “right of reversion” to “the Grantor and its
heirs, successors and assigns.” We agree that the plain language of the deed
contemplated that the right of reentry reserved in the grantor would be
assignable and transferrable. That a transfer or assignment may be ineffective
does not create ambiguity. See Anna H. Cardone Revocable Trust v. Cardone,
160 N.H. 521, 531 (2010) (explaining that “confusion, or legal impossibility,
[does not] create ambiguity” in the deed).
We reiterate that “ambiguity exists only when the parties could
reasonably disagree as to a clause’s meaning,” id. (quotation and brackets
omitted), and the defendant has failed to raise a reasonable disagreement as to
the deed’s language. Considering the deed as a whole, and giving effect to all of
its terms, including the phrase “at the option of the Grantor or its successors
or assigns,” we conclude that it clearly and unambiguously expresses the
intent of the parties to convey a fee simple subject to a condition subsequent,
with CCCI retaining a right of reentry. See Arell, 173 N.H. at 645 (“If the
8
language of the deed is clear and unambiguous, we interpret the intended
meaning from the deed itself, considering it as a whole, without resorting to
extrinsic evidence.”). Even if some language in the deed is imprecise, or even
“unfortunate,” it neither detracts from that expressed intent nor creates an
ambiguity. See Anna H. Cardone Revocable Trust, 160 N.H. at 533 (concluding
that, “[w]hile use of the term ‘revert’ [in a deed clause] was unfortunate, it was
by no means a fatal choice of words,” nor did it create ambiguity, as the
language of the clause could not “be reasonably read to mean anything but
that title to the condominium should transfer to” a party other than the grantor
if the grantee violates the terms of the deed). Accordingly, we conclude that the
trial court did not err by ruling that the interest at issue is a right of reentry.
The defendant next contends that even if the interest retained by CCCI is
a right of reentry, or “power of termination,” it was nevertheless transferrable.
The defendant first argues that the interest was “properly conveyed” by the
December deed because “it was conveyed together with a future interest
reserved in the grantor, in the form of a restrictive covenant, burdening the
property in perpetuity for the express benefit of the grantor.” The defendant
relies on sections 161 and 154 of the Restatement (First) of Property. Section
161 provides, in relevant part:
The owner of a power of termination in land has a
power, by conveyance inter vivos, to transfer his interest
...
(c) when the power of termination supplements a
reversionary interest also had in the same land by the
owner of such power, and the owner of such
reversionary interest and power makes an otherwise
effective conveyance of both such interests, or of the
corresponding parts of such interests.
Restatement (First) of Property § 161, at 578. Section 154, in turn,
defines a “reversionary interest” as “any future interest left in a
transferor or his successor in interest.” Restatement (First) of Property §
154, at 525 (1936). The defendant asserts that these provisions apply
here to validate the transfer of a right of reentry because “[t]he property
rights reserved to [CCCI], and transferred to [the defendant], contained a
future interest, a perpetual covenant inuring to the benefit of the
grantor.”
We need not decide whether to adopt the foregoing Restatement
provisions as they are inapplicable. Contrary to the defendant’s assertion, a
restrictive covenant or servitude is a present, not future, interest. See In re
County Treasurer, 869 N.E.2d 1065, 1087 (Ill. App. Ct. 2007). Accordingly, the
9
“future interest left in a transferor or his successor in interest” exception in
section 161(c) of the Restatement (First) of Property, by its terms, does not
apply. Moreover, unlike the Restatement’s illustration of this exception, in
which the grantor conveyed the property for a term of years and reserved the
right to re-enter if the grantee failed to pay the rent due, see Restatement
(First) of Property § 161(c) cmt. d at 582, here, CCCI conveyed the entire fee
simple estate. See Ashuelot National Bank, 74 N.H. at 151. Therefore,
because the exception set forth in section 161(c) does not apply here, the right
of reentry that CCCI retained in the property was not transferable to the
defendant.
The defendant also contends that “RSA 477:3-b clearly contemplates that
a right of re-entry or power of termination is a transferable property interest.”
We disagree. RSA 477:3-b imposes certain limitations on the creation and
retention of possibilities of reverter, rights of reentry, and executory interests.
See RSA 477:3-b (2013). It provides, in part, that “[u]nless the original grantor
or grantee of the interest was, or the present owner of the interest is, a public
or charitable organization, any existing possibility of reverter, right of re-entry,
or executory interest in real property shall become void unless renewal
declarations are filed in the appropriate registry of deeds as hereinafter
provided.” RSA 477:3-b, III(a). The defendant argues:
The plain language of RSA 477:3-b very clearly implies that a right
of re-entry may be held by either “the original grantor or grantee of
the interest” or by “the present owner of the interest.” If [the
plaintiff] were correct about the law, then the “present owner”
could not own a “right of reentry” and the language of this statute
to that effect would be superfluous.
(Citation omitted.) Because RSA 477:3-b, III(a) applies to other interests in
addition to rights of reentry, including possibilities of reverter, which we
assume, for purposes of this opinion, to be transferrable inter vivos, reference
to “the present owner of the interest” is not superfluous as the defendant
suggests.
The defendant also argues that the trial court erred by ruling that the
1991 order and subsequent docket markings in the previous quiet title
proceeding “had the retroactive effect of quieting title to the ‘right of reversion’
in [the plaintiff] following the trial court’s 2020 Decree.” It contends that these
orders do not have preclusive effect because CCCI’s shareholders did not have
“a full and fair opportunity to litigate” the matter in the prior quiet title action
because, at that time, “all the parties and the court [viewed the so-called ‘right
of reversion’] to have vested with” the defendant.
Nonetheless, as the plaintiff observes, RSA 477:3-b, II-III would have
invalidated any interest remaining in the shareholders of CCCI as of December
10
31, 2008. See RSA 477:3-b, II-III. CCCI was a private corporation, not a
charitable organization. See RSA 477:3-b, II(a). There is no evidence that
CCCI or its shareholders filed renewal declarations for any such interest they
retained in the property. See RSA 477:3-b, III. Therefore, we need not decide
whether the 1991 order and docket markings conclusively determined the
shareholders’ interests because any such interests would be invalid. See RSA
477:3-b, II-III. Accordingly, we conclude that the trial court properly ruled that
the plaintiff holds title to the property in fee simple absolute.
The defendant next challenges the denial of its motion to amend its
counterclaim to add a claim for declaratory relief. In support of its motion to
amend, the defendant argued that, regardless of the nature of the future
interest retained by CCCI, the Farnum Hill deed created an independently
enforceable restrictive covenant that required maintenance and operation of a
golf course on the property. Accordingly, the defendant’s proposed amendment
restated the factual allegations set forth in its counterclaim, but requested the
trial court to declare that: (1) the defendant is the beneficiary of the golf-course
restriction; (2) the plaintiff remains bound by the restriction; and (3) the
defendant has standing to enforce the restriction as a covenant. The plaintiff
did not file an objection to the amendment, noting that it was “within the
court’s discretion to allow it.” The plaintiff argued, however, that the
amendment was “futile” because CCCI’s shareholders never authorized the
transfer of CCCI’s right to enforce the golf-course restriction as a covenant.
The trial court denied the defendant’s motion, reasoning that “[t]he defendant’s
proposed amendment appears to be premised on the validity of the December
deed.” Thus, it concluded that because “the December deed is void, the
defendant’s proposed amendment fails to state a claim upon which relief may
be granted.”
A trial court may permit a substantive amendment to pleadings “in any
stage of the proceedings, upon such terms as the court shall deem just and
reasonable, when it shall appear to the court that it is necessary for the
prevention of injustice.” RSA 514:9 (2007). Accordingly, liberal amendment of
pleadings is permitted unless the amendment would surprise the opposing
party, introduce an entirely new cause of action, or call for substantially
different evidence. Sanguedolce v. Wolfe, 164 N.H. 644, 647-48 (2013).
Whether to allow an amendment rests in the sound discretion of the trial court,
and we will not disturb the trial court’s decision absent an unsustainable
exercise of discretion. Id. at 648.
On appeal, the defendant argues that the trial court erred by concluding
that “its decision concerning the non-transferability of” CCCI’s future interest
“disposed of all the issues.” In so arguing, the defendant renews its argument
that the Farnum Hill deed created an independently enforceable restrictive
covenant, separate and apart from the future interest retained by CCCI. Thus,
the defendant maintains that, even if CCCI’s future interest was not freely
11
transferable to the defendant, CCCI validly conveyed its right to enforce the
restrictive covenant to the defendant via the December deed. According to the
defendant, the trial court “mistakenly assumed” that because the Farnum Hill
deed created an inalienable right of reentry that was retained by CCCI, the
December deed was void in its entirety, meaning that CCCI could not have
validly transferred its right to enforce the restrictive covenant to the defendant.
We agree with the defendant that the original parties to the Farnum Hill
deed intended to create an independently enforceable restrictive covenant,
separate and apart from the future interest the original deeding parties
intended to convey to CCCI. The Farnum Hill deed states that the golf-course
restriction “shall inure to the benefit of, Grantor and Grantee and their
respective . . . successors and assigns as a covenant that shall run with the
land, in perpetuity.” “A covenant, as used in the context regarding the use of
property, is an agreement by one person, the covenantor, to do or refrain from
doing something enforceable by another person, the covenantee.” Lynch v.
Town of Pelham, 167 N.H. 14, 20-21 (2014) (quotation omitted)). One method
of enforcing a restrictive covenant is to create a future interest in the grantor.
See id. at 18 (noting that the deed at issue “did not specify a means of
enforcing the restrictive covenants, such as a right of re-entry or reverter”).
However, covenants are also enforceable “by any appropriate remedy or
combination of remedies, which may include declaratory judgment,
compensatory damages, punitive damages, nominal damages, injunctions,
restitution, and imposition of liens.” Restatement (Third) of Property:
Servitudes § 8.3, at 492 (2000).
Although the parties dispute whether the deed created a right of reentry
or a possibility of reverter, there is no dispute that the deeding parties intended
to enforce the golf-course restriction by leaving reserved rights to CCCI.
However, there is no suggestion in the Farnum Hill deed that the parties
intended to make the enforceability of the golf-course restriction contingent
upon the validity of those reserved rights. To the contrary, the phrase “in
perpetuity,” which appears twice in the golf-course restriction set forth in the
Farnum Hill deed, suggests that the parties intended the golf-course restriction
to remain enforceable irrespective of whether CCCI or its successors or assigns
continued to hold a right of reentry or possibility of reverter in the property.
The Farnum Hill deed also makes clear that the parties intended the covenant
to “inure to the benefit of” CCCI’s “successors and assigns,” which, by virtue of
the December deed, includes the defendant. Although the deed does not
expressly identify any enforcement mechanisms, other than the right of reentry
that we have determined was retained by CCCI, it does not, by its terms,
preclude CCCI’s successors or assigns from seeking other appropriate remedies
in the event of a breach. We therefore conclude that, notwithstanding that
CCCI had an inalienable right of reentry, the defendant may have the right to
enforce the golf-course restriction as a restrictive covenant.
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The plaintiff argues that, even if the Farnum Hill deed created an
independently enforceable restrictive covenant, CCCI failed to convey its right
to enforce the covenant to the defendant. To support this argument, the
plaintiff relies, in part, upon the language of a corporate resolution authorizing
CCCI to convey its future interest to the defendant. That resolution, the
plaintiff asserts, referenced only the “right of reversion” and “said reversionary
interest” and made no mention of a covenant.
We are not persuaded by the plaintiff’s argument. Notwithstanding the
limited language of the corporate resolution, the December deed describes
CCCI’s conveyance to the defendant as including “[a]ll and the same right,
interest and title, in and to the reversionary interest retained by the Grantor in
the [July] deed.” Thus, the December deed makes clear that CCCI intended to
convey its entire interest in the property to the defendant, including its right to
enforce the golf-course restriction as a restrictive covenant. Although, as the
plaintiff also points out, the December deed does not expressly reference a
restrictive covenant, it does incorporate the entirety of the golf-course
restriction as set forth in the Farnum Hill deed, including the statement
“RESERVATION, CONDITIONS, and RESTRICTION” and the language expressly
stating the parties’ intent to create “a covenant that shall run with the land, in
perpetuity.” Accordingly, because the December deed is clear and
unambiguous, we need not consider the language of the corporate resolution to
discern the parties’ intent at the time of the conveyance. See White, 171 N.H.
at 663-64 (“If the language of the deed is clear and unambiguous, we will
interpret the intended meaning from the deed itself without resort to extrinsic
evidence.” (quotation omitted)).
In light of our construction of the language of the Farnum Hill and
December deeds, we conclude that the trial court based its denial of the
defendant’s motion to amend upon a faulty legal premise: that the defendant’s
ability to enforce the golf-course restriction is wholly contingent upon whether
CCCI’s right of reentry was transferable. As explained above, the language of
the Farnum Hill deed indicates that the original parties intended the golf-
course restriction to be enforceable as a restrictive covenant regardless of
whether CCCI or its successors or assigns retained a right of reentry or
possibility of reverter in the property. Thus, the issue of whether CCCI validly
conveyed its right of reentry to the defendant via the December deed has no
bearing on the defendant’s right to enforce the golf-course restriction as a
restrictive covenant. See Early v. Mimedx Group, Inc., 768 S.E.2d 823, 827
(Ga. Ct. App. 2015) (“It is well settled that the intent of the parties determines
whether a contract is severable such that the remaining contract provisions
will survive even if one or more provisions of the contract are void.”); see also
Technical Aid Corp. v. Allen, 134 N.H. 1, 17-19 (1991) (concluding that
unenforceable provisions in an employment contract were severable from the
remainder of the contract “[d]espite the lack of an explicit severability
provision”). We therefore conclude that the trial court erred by premising its
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conclusion that the December deed was void upon its finding that CCCI’s
interest was an inalienable right of reentry and by denying the defendant’s
motion to amend on that basis.
Although we disagree with the trial court’s rationale for denying the
defendant’s proposed amendment, we express no opinion as to whether the
defendant has a legitimate interest in enforcing the golf-course restriction, and,
thus, standing to bring an enforcement action against the plaintiff. See Lynch,
167 N.H. at 25 (concluding that “an entity that holds the benefit of a covenant
in gross can enforce it if it can establish a legitimate interest in enforcement”).
The parties’ arguments with respect to that issue are better suited for
resolution in the trial court, and because the trial court did not have occasion
to consider those arguments in the first instance, we decline to do so. Nor do
we express any opinion as to whether the defendant’s proposed amendment
was “necessary for the prevention of injustice,” RSA 514:9 — a matter best left
to the sound discretion of the trial court. See Sanguedolce, 164 N.H. at 648.
Accordingly, we vacate the denial of the defendant’s motion to amend and
remand to the trial court for additional proceedings.
Any issues that the defendant raised in its notice of appeal, but did not
brief, are deemed waived. See Town of Londonderry, 168 N.H. at 379.
Affirmed in part; vacated in part;
and remanded.
HICKS, HANTZ MARCONI, and DONOVAN, JJ., concurred; BROWN, J.,
retired superior court justice, specially assigned under RSA 490:3, concurred.
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