Paul Smith's Coll. of Arts & Scis. v. Roman Catholic Diocese of Ogdensburg - 2020 NY Slip Op 05012, 186 A.D.3d 1817, 130 N.Y.S.3d 547 (App. Div. 3rd Dept.)

Rule:

With a fee simple real property interest on limitation subject to a possibility of reverter, the grantor retains a right to regain the fee upon the happening of an event; the grantor regains it automatically. Conversely, with fees taken subject to a condition subsequent with a right of reentry, a grantee's failure to perform the condition subsequent does not divest the interest from the grantee, but rather requires the grantor to act upon the breach by re-entering the property.

Facts:

In 1896, the president of the Paul Smith's Hotel Company executed a deed by which the hotel company transferred the property to the Bishop of Ogdensburg in trust for a Catholic congregation within the defendant-respondent Roman Catholic Diocese of Ogdensburg. The deed stated that the property was to be used as and for church purposes only and in case the said premises shall be devoted to any other use than for church purposes, this conveyance shall be void and the parties of the first part shall have the right to re-enter and take possession of said premises and every part thereof. Shortly thereafter, a church was erected on the property. The last surviving son of the company president, Phelps Smith, directed in his will the creation of the plaintiff Paul Smith's College of Arts and Sciences as an entity and the transfer of the hotel company's assets to the plaintiff. The parties stipulated that this transfer included a deed later recorded in 1963, which transferred to the plaintiff, as pertinent here, "rights of way, easements, reversionary rights, and rights of reentry" held by the hotel company. In 2015, the Bishop of Ogdensburg issued a decree that relegated the property to profane but not sordid use and directed the removal of sacred objects. Plaintiff placed no-trespassing signs on the property and commenced this RPAPL Article 15 action seeking a determination that it owned the subject property in fee simple. Defendant filed an answer and counterclaimed that it owned the property in fee simple. Upon the parties' joint stipulation of facts, the defendant moved for summary judgment dismissing the complaint and seeking judgment upon its counterclaim, and the plaintiff cross-moved for summary judgment in its favor. The Supreme Court found that the hotel company had conveyed to the defendant a fee simple subject to a condition subsequent and had reserved a right of reentry, but that right of reentry had been extinguished by the attempted transfer in the 1963 deed. Thus, the court granted the defendant's motion in its entirety and denied the plaintiff's cross-motion, dismissing the plaintiff's complaint and holding that defendant was the lawful owner of the property. Plaintiff then appealed.

Issue:

Did the plaintiff retain a possibility of reverter as a result of the provision in the 1896 deed limiting the defendant's use of the property?

Answer:

Yes.

Conclusion:

The court reversed the order, on the law, with costs, the respondent church's motion was denied, and the plaintiff successor's cross-motion was granted. The court held that it was an error to grant summary judgment to the respondent and dismiss the plaintiff’s complaint because the deed from the original grantor to the respondent church included a possibility of reverter in the event that the property ceased to be used as a church, and the parties had stipulated that the church had been relegated to profane but not sordid use and no longer was being used as a church, thus violating the deed limitation and reverting the property to the grantor's successor in fee simple. Also, the court held that the plaintiff was not required to destroy the church at its own expense to avoid unjust enrichment because the structure was a fixture that passed with the property since it was not stated otherwise in the deed.