The defendants in this action, Ingrid Lowery and John J. Gummerus, are trustees and equal beneficiaries of Hill/Gummerus Farm Nominee Trust (Trust). The Trust owns the property located on Valley and Birch Streets in Pembroke, Massachusetts (Property) which is in dispute in this litigation brought by the Town of Pembroke. The Town seeks judgment which will require the defendants, in exchange for payment by the Town, to transfer it title to the Property. The land at issue in this case had been classified as agricultural land under G.L. c. 61A. On April 9, 2004, Lowery entered into a Purchase and Sale agreement (Agreement) with the trustee of Double J. Realty Trust. The Town set out to exercise its statutory first right of refusal option under G.L. c. 61A, § 14. The Town acted to assume the position of the buyer under Agreement with defendant Lowery. The Town and the trustees of the Trust did not consummate the transfer of title to the Property, for reasons the parties dispute in this litigation. On July 25, 2005, the Town filed a verified complaint. Among other relief, the Town seeks judgment declaring that the Town, pursuant to G.L. c. 61A, §14, is entitled to purchase the Property, at the same price and on the same terms set forth in the Agreement. the Trust to specifically perform the Agreement.
Plaintiff filed an amended complaint August 15, 2005. There followed the answers of John Gummerus and Ingrid Lowery on September 12, 2005.
Plaintiff had moved on July 25, 2005 for a temporary restraining order, which the court (Piper, J.) denied. Plaintiff also filed a motion for preliminary injunction on July 25, 2005, requesting access to the Property, contending that access was available to the Town pursuant to the Agreement to which the Town had succeeded as buyer. The Town sought access to prepare a survey of the Property, and to conduct an appraisal of the Propertys value. The court granted this motion in part and denied in part, establishing in its order limited and conditioned rights of access for the Towns benefit. A month later, on August 25, 2005, the Plaintiff filed an emergency motion to modify the preliminary injunction. The court made further interim orders allowing additional limited access.
The court scheduled a case management conference which was held on October 12, 2005.
The parties filed cross motions for summary judgment. After hearing, the court issued an order on June 13, 2006 denying the cross-motions for summary judgment, concluding that material facts existed which required the taking of evidence to resolve. The parties submitted their initial joint pre-trial memorandum on October 24, 2006. The parties submitted an updated joint pre-trial memorandum on December 8, 2006 and appeared in court for a pre-trial conference December 15, 2006.
Trial took place in Boston on April 11, 2007. Court reporter Karen Smith was sworn to transcribe the evidence. Two witnesses testified, Edwin J. Thorne, the Town Administrator of Pembroke, and John J. Gummerus. Twenty-nine exhibits were introduced into evidence, most by agreement of the parties, and all as reflected in the transcript.
Defendants Lowery and Gummerus separately filed motions for required findings in their favor, which were argued and denied by the court from the bench. After trial and the receipt of the transcript, the parties were given the opportunity to file legal memoranda.
On all of the testimony, exhibits, stipulations, and other evidence properly introduced at trial or otherwise before me, and the reasonable inferences I draw therefrom, and taking into account the pleadings, and the memoranda and argument of the parties, I find the following facts and rule as follows:
John J. Gummerus and Ingrid Lowery are, as co-trustees of the Trust, record owners of the Property in question, and each individual has a 50% beneficial interest in the Trust which holds title to the Property (as described in the deeds recorded with the Plymouth County Registry of Deeds in Book 16928, Page 119 and Book 1760, page 596. The Property is shown as lots #2-5 on Plan F4, and as lots 5, 6, 8, 9, and 12 on Plan F5, of the Pembroke Assessors Maps). This land has been taxed under the provisions of G.L. c. 61A, §14 from Fiscal Year1999 to Fiscal Year 2005, inclusive.
Gummerus is Lowerys nephew. On November 6, 2003, Gummerus entered into an option agreement (the Option) with Lowery; the Option gave Lowery the right to purchase Gummerus beneficial interest trust for $462,500.00. The Option provides that it must be exercised by Lowery by December 31, 2005, and only after the giving of 15 days prior written notice. The Option stated, in part: At any time during the Option Period, you may purchase all of my beneficial interest in the Trust, being 50% of the ownership of the Trust, for a purchase price of $462,500.00. You may exercise the option at any time during the Option Period, provided that you shall give at least fifteen (15) days written notice.
April 9, 2005, Lowery, as seller, entered into the Agreement with John Bradley, trustee Double J Realty Trust, as buyer, for the purchase and sale, at a price of $925,000.00, of the beneficial interests under the Trust which, by the two trustee defendants, is the record owner of the Property. Bradley made the initial $50,000 deposit to Lowery as seller. According to the terms of the Agreement, closing was to take place prior to December 31, 2005, and with at least 30 days written notice from the buyer to the seller. The Agreement provided that the seller undertook to execute and deliver at the closing all documents necessary to effectuate the resignation of John J. Gummerus and Ingrid Lowery as Trustees of the Trust and the appointment by the beneficiary of the Trust and all other documents deemed reasonably necessary to convey the beneficial interest in accordance with the terms and conditions of this Agreement In addition, under the Agreement, seller shall use reasonable efforts to remove any defects in title, or to deliver possession as provided herein . [I]n no event shall the Seller be required to expend more than $10,000 to give title or to make conveyance, or to deliver possession of the premises
On October 28, 2004, notice of intended conversion of the agricultural status of the Property was hand-delivered to the Towns Board of Selectmen, Board of Assessors, Planning Board, and Conservation Commission by Attorney David Lane on behalf of Ingrid Lowery. Also enclosed with the notice was a proposed declination of the Towns right of first refusal, which Mr. Lane invited be signed to indicate the Towns lack of interest in exercising its statutory right. The notice did not contain an address where notice might be sent if the Town instead chose to exercise its Chapter 61A option. On February 14, 2005, the Town recorded notice of its exercise of the option rights with the Plymouth County Registry of Deeds. On February 25, 2005, the Town sent, through facsimile and by certified mail, a copy of the notice of its exercise of its right and option under the statute to Lowery and Gummerus. These counterparts of the notice were directed to Attorney Lane. This notice advised that at a duly called meeting of the Board of Selectmen of the Town of Pembroke held on February 14, 2005, it was voted to exercise the option of the Town to purchase said Premises in accordance with the G.L. c. 61A §14, contingent upon a favorable vote appropriating the funds for the acquisition of the Premises at the next duly called Special or Annual Town Meeting.
On May 31, 2005, the Town sent the $50,000.00 deposit (the amount of the deposit required by the Agreement) to Attorney John R. Souza (who is counsel to Lowery). This check was never negotiated by the defendants, and since has been returned to the Town. The Town scheduled a closing pursuant to the Agreement for December 28, 2005. The defendants did not attend on this date. One week prior to the scheduled closing, the Town sent a letter to counsel for Defendant Lowery listing three issues related to the closing. In this letter the Town, by its lawyers, raised three separate problems with the title to the Property which were said to require correction and attention before the Town would close: (1) an allegedly undischarged mortgage from the year 1948; (2) a bankruptcy filed in 1985 by someone named John Hill; and (3) an assertion that Julie P. Gummerus, the ex-wife of Mr. Gummerus has an interest in the subject property by virtue of papers filed relative to [the] divorce. The Town advised that it required several documents, including a release, to be signed by Julie Gummerus. The Town also made the sale proceeds check which it brought to closing payable to Julie Gummerus in addition to the two trustees and beneficial owners of the Trust, Lowery and Mr. Gummerus. The defendants, who were advised of the Towns insistence on the documents its counsel drafted for Julie Gummerus signature being signed as a condition of closing, and who were also advised that she had been added as a third payee on the sale proceeds check, wrote to the Towns lawyers that conducting the closing with these conditions still adhered to by the Town would be a fools errand, and that, in light of that, they would not attend.
1. Does Failure to Give Notice of Intended Conversion to the Town by Certified Mail Preclude the Town from Exercising its Statutory Right to Purchase the Property?
Under G.L. c. 61A, § 14, land which is valued, assessed and taxed on the basis of its agricultural... use... shall not be sold or converted to residential... use while so valued, assessed and taxed unless the... town in which such land is located has been notified of intent to sell for or convert to such other use.... G.L. c. 61A § 14. (Quotations from and references to G.L. c. 61A are, unless otherwise indicated, to the version in effect at the time relevant to this litigation, and not to the amended version which took effect March 22, 2007, see St. 2006, c. 394, §31). Section 14 affords a town [f]or a period of one hundred twenty days subsequent to such notification... in the case of an intended sale, a first refusal option to meet a bona fide offer to purchase said land. The statute provides that such notice of intent [of sale or conversion] shall be sent by the landowner via certified mail to the board of selectmen of a town, to its board of assessors and to its planning board and conservation commission, if any....
Lowery claims that the notice of intent delivered to the Town of Pembroke did not meet the requirements of this statute, and that the notice which was given was invalid, meaning that the Town never acquired any option under c. 61A to purchase the Property. Attorney David Lane delivered the notice of intended conversion to the Town by hand, rather that by the statutorily required means of certified mail. This notice also failed to include an address to which a notice of exercise of the option might be sent on behalf of the Town. Due to these deficiencies of the notice that Attorney Lane delivered to the Town, defendants claim that the Towns option to purchase never ripened.
Defendants refer the court to Billerica v. Card, 66 Mass. App. Ct. 664 (2006), in which the court held that failure to send notice by certified mail rendered the notice invalid. An owner of agriculturally-classified land, Card contended that notice he sent to the town was valid, despite having been delivered by hand rather than certified mail. Card advanced this argument to show that the town had allowed the 120-day window for exercise of its statutory option to lapse. This position did not prevail. Cards failure to use certified mail kept the time for exercise by the municipality from commencing, and so it could seasonably exercise its option right the following year.
In contrast with the facts in Card, it is the defendants in the case now before me who claim that the notice sent to the Town was invalid, and thus could not have triggered a right of acceptance by the Town. It is not clear, given the different factual setting in Card, that its holding on this point applies directly to the case at bar. I find as a fact that the notice to the Town in this case, although hand-delivered, was successful in reaching its target and in affording actual notice to the Town of the intended sale or conversion of the Trustees land out of agricultural use. The notice, though not sent by certified mail, told the tale it was intended (and needed) to tell, and in fact solicited a waiver of the Towns right to purchase, indicating that the notice was intended, absent such a waiver, to trigger the Towns right. The Town certainly acted in response to this notice by proceeding to exercise its right to buy the Property.
While the Town would have been able, had it failed to exercise in time, to argue, as did the municipality in Card, that the Town was entitled to notice by the statutory means, certified mail, and was not under any deadline to exercise it until it received its notice that way, the position of the parties are aligned differently in the case at bar. In this case, the notice, though hand-delivered, reached the Town and provoked its response in exercising its purchase right. Defendants should not be able, on these facts, to gain an advantage from their own disregard of the notice requirements of the statute, simply because it will free them from the obligations of the statute. They clearly intended the notice to be effective, the Town treated it as such, and the defendants should not be able to avoid the statutory right of refusal in such a case. I note that the amendments to this statute which became effective in 2007 allow hand delivery as an approved alternative. From this I derive the conclusion that the legislature sees no difficulty with this method of service as being adequate to serve the function of effectively giving this type of notice. In an instance where the Town accepts that the notice was sufficient, and acted upon it as if it were, the prior version of this statute does not render the notice ineffective.
2. Did the Town of Pembroke Exercise Its Option to Purchase the Property within the Statutory 120-Day Period and In the Manner Required by the Statute?
G.L. c. 61A, § 14 allows for a 120-day period in which a municipality may invoke its right of first refusal to purchase. The initial notice of intended conversion was served upon the Town on October 28, 2004, marking the start date of the 120-day option period. Section 14 provides: Such option may be exercised only by written notice... mailed to the landowner by certified mail at such address as may be specified in his notice of intention and recorded with the registry of deeds, within the option period. The Town recorded its notice of exercise of the option with the Plymouth County Registry of Deeds on February 14, 2005. The Town then on February 25, 2005, the last of the 120 days, sent notice of the exercise to Lowery and Gummerus, by both facsimile transmission and by certified mail, via Attorney David Lane. The statute requires registry recording of the municipalitys written notice of exercise within 120 days. This was done. Section 14 also requires sending the notice of exercise by certified mail within the same 120 days. This also was done. It is not significant that the certified mail was addressed to Attorney Lane. He had provided the triggering notice of intent, and it lacked any other address to which the municipal exercise notice was to be sent.
Despite the fact that the Town gave its notice of exercise of its c. 61A option within the prescribed time, Gummerus claims that the exercise by the Town was not valid under the statute. The Town stated in its notice that the exercise of the option was contingent upon a favorable vote appropriating funds for the acquisition of the Premises at the next duly called Special or Annual Town Meeting. Defendant claims that such an exercise, resting on a contingency for appropriation, is not a valid exercise of the option because it is not fully binding on the Town in an unconditional way.
The question presented on this point is a close one, which the parties have not been able to illuminate for the court by citation to any controlling appellate precedent. There are, however, on this issue decisions of the trial courts, including from the Land Court, and I am persuaded, after consideration of the arguments on both sides, that I will follow the position taken by other justices of this court.
The Agreement with the original buyer, upon which the Towns right to purchase depends, did not afford him a contingency for financing or for raising the funds to be used to buy the Property. The original private buyer gave himself no out if, even for the best of reasons, he could not obtain a mortgage loan or otherwise come up with the purchase price. Yet, in exercising its option to purchase, the Town inserted its own contingency, which purported to free the Town from liability if, prior to the time of closing, the funds necessary to complete the acquisition were not voted for that purpose by the Town Meeting.
There can be no doubt about the Towns admirable circumspection in adding this protective provision to its notice of exercise of the option. If the required Town Meeting vote of appropriation was not secured, for any number of reasonsfiscal, political, or otherwisethe Town, without a contingency on that score, would be in the difficult position of having agreed to buy land it had insufficient funds to acquire. The legal issue is whether or not the Town, in establishing this contingency for itself, strayed too far outside the terms of the deal between the private buyer and the defendants, into which the Town was stepping, and thus did not effectively exercise its statutory right to purchase.
In this case, the evidence shows that, despite the Towns caution, the need for appropriation of municipal funds was lessened by the genuine prospect of state funding for a significant part of the purchase price. The evidence also is uncontroverted that, at the time set for performance, the Town actually did have all the money it needed to buy the Trustees landa check was cut in the correct amount, even though it was not delivered due to the dispute the parties had on other issues, discussed elsewhere in this decision.
On the other hand, the Trustees have objected, with some support in the governing statute, to the unilateral insertion by the Town of the funding contingency into the municipal notice of exercise of the right to purchase. The Towns statutory right was to assume the agreement that the owner of the chapter 61A land had entered into with the original private buyer. There is no indication, however, that the Legislature intended that a municipalitys first refusal option to purchase would encompass the right to purchase such land on different terms and conditions than set forth in the bona fide offer. Franklin v. Wyllie, 443 Mass. 187 , 195 (2005).
Nothing suggests that the Agreement was, in not embodying a financing contingency to protect the private buyer, less than bona fide. Nothing in the evidence shows that the defendants and their original buyer had some unwritten understanding that this buyer would be excused from performance if he could not amass the funds he needed to purchase the Property. The defendants argue that the Town was under an obligation to evaluate the risks of the Agreement before deciding that the Town wanted to be committed to its terms. The defendants say that the risk of lack of appropriation, and the consequent loss of the purchase to the landowner, was a new, material and adverse conditionone not part of the Agreement as it was struck with the private buyer. Defendants argue that this was a new term to which it was unfair to subject the Trustees, because, if the contingency had been invoked by the Town, the Trustees might well have lost their deal with the original buyer, and have had no recourse against the Town.
In considering the positions of the parties on this issue, I am guided by the reality that the statute involved here is one serving an important public purpose, that remedial statutes such as G.L. c. 61A are to be liberally construed to effectuate their goals, and that section 14 ordinarily... must be interpreted in a manner which will not frustrate or impair a towns right of first refusal. Franklin v. Wyllie, supra, 443 Mass. at 196. I also take into account that there is a comprehensive body of municipal law which limits the ability of a town to act--where to do so would require expenditure of local funds--without taking the requisite steps to secure a lawful appropriation of those funds. The cases considering this question--of whether or not a town may make its exercise of its purchase right contingent on securing appropriation votes--have placed heavy emphasis on the existence and importance of this related body of municipal law. These decisions of the trial courts conclude that chapter 61A (and similar statutory schemes) were intended by the legislature to work in harmony with the laws that limit and control a municipalitys ability to act and be bound without first having secured proper appropriation.
In Meachen v. Hayden, 6 LCR 235 (1998), Justice Lombardi considered the same question I now face:
...[P]laintiffs insist that the purported exercise by the town was invalid because it was contingent upon votes at town meeting and at a town election. ... In the view of the plaintiffs, the town had to act decisively and definitively in order to validly exercise the first refusal option. Id., at 237-238.
The Meachen court rejected this argument, noting that
Although the ... notice contained language plaintiffs insist made the exercise of the option contingent and thus ineffective, I disagree. Irrespective of whether the town referenced future town meeting and town election votes, those actions were required under municipal law once the selectmen exercised the first refusal option. Under G.L. c. 44, §31, selectmen in a town have no authority to incur a liability in excess of appropriations. It was a legal requirement for the town meeting to appropriate the necessary funds to meet the terms of the ... notice, once completed.... Similarly, G.L. c. 59, §21C, requires, when necessary, voter approval to assess taxes in excess of statutory limits. There is nothing in G.L. c. 61A which exempts a city or town from complying with other relevant statutes. Id., at 238.
Later Land Court cases have followed this view. See, eg., Douglas v. Renaud, Misc. Case No. 264961, Order Denying in Part and Granting in Part Summary Judgment (June 4, 2001)(Lombardi, J.), and Brimfield v. Caron, Misc. Case No. 331899, Preliminary Injunction (February 28, 2007)(Long, J.).
I am persuaded by the logic of these cases and follow them on this point. I conclude that the legislature certainly could have enacted chapter 61A in a way which overrode the parallel provisions of municipal law that apply generally to actions by cities and towns, and which make those actions subject to securing proper votes of appropriation. Chapter 61A as in effect at the relevant time in the case now before me did not include any such override. One who takes advantage of the benefits of the reduced taxation of agricultural land must accept that with those benefits come the extra burden of complying with a municipalitys exercise of its right to purchase, created under the same chapter of the general laws. An owner of agriculturally assessed land should be cognizant of the legal and fiscal requirements that govern how a municipality must go about raising the funds necessary to complete the purchase. Although the result is that the Town might have had a contingency which the private buyer did not have available to it under the Agreement, that did not make the Towns exercise of its purchase right ineffective. In this case, there was no attempt by the Town to take advantage of its subject to appropriation contingency, and all funds needed to make the purchase were, I find, obtained by the Town and available to it at the time set for closing.
I conclude that the exercise of the Towns statutory right to purchase was proper, notwithstanding the Towns the inclusion of the appropriation contingency.
3. Did the Town of Pembroke Fail to Perform Under the Agreement?
I next need to decide whether, given the actions of the Town and the defendants leading up to the established date for closing, one or the other of the parties failed to perform in a manner which constituted a material breach of the terms of the Agreement. on this point, reviewing the pertinent evidence, and deciding whether or not there was a breach of the Agreement.
After submitting its notice of exercise of the statutory right of first refusal , the Town, acting by its counsel, sent a letter to the defendants in advance of the upcoming closing. The letter indicated that the Towns title examination had uncovered three issues, which the Town, through its lawyers, required be resolved prior to consummation of the sale and the payment of the purchase price. Defendants urge me to decide that the Towns insistence on these points was improper and in violation of the Agreementthat defendants, as sellers under the Agreement, had no contractual responsibility to address any of the problems with the title identified by the Towns lawyers, and that the Towns insistence that the defendants do so constituted a breach by the Town of the terms of the Agreement. Said more simply, the defendants contend that the record title to the Property met the standard established by the Agreement, and that the Town should have paid the purchase price without regard to the title issues raised by Town counsel.
The Agreement required the seller(s) to deliver good clear record and marketable title. A good and clear record title free from all encumbrances means a title which on the record itself can be again sold as free from obvious defects, and substantial doubts. Lee v. Dattilo, 26 Mass. App. Ct. 185 , 188 (1988), quoting from OMeara v. Gleason, 246 Mass. 136 , 138 (1923). The question whether a sellers title is good and clear is one of fact; if a buyer sues to show that, because of title defects, he or she need not have purchased, the burden rests on the buyer to prove that the sellers title was not good beyond a reasonable doubt and that defendant did not have a marketable title. See Cleval v. Sullivan, 258 Mass. 348 , 351 (1927). Marketable title does not mean perfect title but, rather, title free from reasonable doubt; in other words, from doubt that would cause a prudent person to hesitate before investing his money. Mucci v. Brockton Bocce Club, Inc., 19 Mass. App. Ct. 155 , 159 (1985).
The Agreement further provides that the seller shall not, in any event be required to expend more than $10,000.00 to give title or to make conveyance, or to deliver possession of the premises, all as herein stipulated, or make the premises conform with the provisions hereof. According to the Agreement, as entered into with the original private buyer, the seller(s) would have the option to fix all defects in the title which made it fail to meet the standard established for title in the Agreement, or, alternatively, spend no more than the $10,000 limit to remedy those defects.
The Town claimed that at the time of closing, the title to the Property failed to meet the standard called for in the Agreement because of the following issues:
i. 1948 Mortgage
The Town discovered in the back title to the Property an undischarged mortgage dated March 22, 1948. This mortgage, recorded in the Plymouth Registry of Deeds in Book 1992, Page 255, was given by former Property owners John Hill and Ida S. Hill to Cranberry Credit Corporation to secure payment of amounts due under a note, in the original principal amount of $20,000, payable within one year.
An undischarged mortgage is a title defect that may well prevent a seller from delivering good and clear record and marketable title. See Hastings v. Gay, 55 Mass. App. 157, 161 (2002). However, the provisions of G.L. c. 260 § 33, as it was in effect at the time of the closing set by the Agreement, makes the mortgage at issue unenforceable against the title. The statute provides, with certain exceptions not here relevant, that fifty years after the recording of a mortgage [n]o power of sale in [such a] .. mortgage of real estate shall be exercised and no entry shall be made nor possession taken nor proceeding begun for foreclosure of any such mortgage.... The mortgage pointed to by the Town as one of its asserted defects in the Propertys record title had been recorded in 1948, well more than fifty years earlier, and secured a one-year note. The obvious purpose and effect of the statute is to clear titles of old and obsolete mortgages, without the need of obtaining a discharge. There was no way that the title to the Property which the Town would have acquired would have been affected in any real way by the 1948 mortgage, given the breadth of the curative statute that applied to it. The Town was without right when its lawyers sought a discharge of the 1948 mortgage, and treated the title to the Property as defective under the Agreement in the absence of a discharge.
ii. John Hill Bankruptcy
In their letter to the defendants, the Town also raised an issue concerning a bankruptcy filed in 1985 by John Hill in the Bankruptcy Court in Worcester. Defendants make the argument that unless the Town can show that John Hill was part of the chain of title to the Premises, this declaration of bankruptcy would not be a defect in the title to the Property. The defendants position on this is meritorious, especially given the relatively common surname of the bankrupt, and the length of time since the bankruptcy filing. The Town submitted no further evidence on this issue during trial. I find, on all the evidence, that this bankruptcy filing did not constitute a basis for the Town to have treated the title to the Property as defective.
iii. Gummerus Divorce
The last title issue that the Town presented to the defendants has to do with Gummerus divorce from his wife July P. Gummerus. Counsel for the Town expressed to the defendants considerable concern about the judgment of divorce nisi which entered in the Plymouth Division of the Probate and Family Court Department July 8, 2003 (and became absolute October 7, 2003). The judgment incorporated the separation agreement between the parties, which, in pertinent respects, was to survive as an independent contract. The divorce agreement made extensive reference to the Property, and laid out the then pending plans of its owners, including Gummerus, to sell the land to a third party. The divorce agreement anticipated a possible sale at a price of $925,000. The divorce agreement contemplated cooperation in the efficient and successful completion of the sale of the various parcels that constitute the so called bog property [the Property]... The divorce agreement goes on to provide that [F]rom the gross proceeds of any sale expenses related to the sale will first be paid, then the net proceeds from the sale will be divided one half to the Husbands aunt and one half to the Husband. ... Additionally, from the Husbands net share less any set aside for capital gains, the Wife will be entitled to receive one-third of the net after tax share with the remaining two thirds to the Husband outright free of further claim of the Wife.
On the strength of these Probate Court divorce documents, the Towns counsel treated the Propertys title as not meeting the standard set in the Agreement. The Town requested that, as a condition to closing and the payment of the purchase price due under the Agreement, Julie P. Gummerus, the divorced spouse of defendant Gummerus, sign a variety of documents, including a release of rights she might have in the Property or to the proceeds of its sale, a mechanics lien affidavit, a settlement statement, and certain IRS reporting certifications and forms. The Town prepared and proposed to deliver, in satisfaction of its obligation under the Agreement, a check for the purchase price which was payable not only to the defendants, but also to Julie Gummerus. The check the Town had ready at the time of closing included Julie Gummerus as a payee.
Other than the fact that the divorce judgment, and the divorce separation agreement which it referenced, called upon defendant Gummerus to turn over a portion of the net proceeds of the eventual sale of the Property to his former wife Julie, there was no other evidence at trial that showed in any way that this obligation was one which burdened the title to the Property and constituted a lien upon, or other defect in, the title the defendants were able to convey to the Town under the Agreement. The Town has not referred the court to any statute or other authoritative law which supports the conclusion that the undisputed obligation by Gummerus to pay his ex-wife a share of the net proceeds from the sale of the Property would give her a right to proceed against the Property, standing in the hands of the Town, were it to have closed the transaction under the Agreement and delivered the purchase price to Gummerus and Lowery only.
There was not here any order or judgment of the Probate Court that attached or explicitly placed a lien upon Gummerus interest in the Property, to insure the payment obligation he undertook to his ex-wife at the time of their divorce. Neither did she receive a mortgage of the Property securing that payment. The better view is that what Julie Gummerus had, by virtue of the divorce separation agreement, was a personal obligation by her former husband to make the payments to her when the closing of the sale of the Property took place, a personal obligation then incorporated by reference in the courts judgment. Julie Gummerus remedies were against her ex-husband personally on this score, and she could have sued him on their contract, or sought an adjudication of contempt from the Probate Court, if he did not pay her what she was due if and when he received his share of the purchase price. This is particularly so given that the payment due to Julie Gummerus is based on net proceeds, with adjustments to made for closing costs, payment of capital gains and other taxes, and other amounts. Under these circumstances, the Town was not correct in taking the position that its title to the Property would be subject to rights of Julie Gummerus in the event that, after closing, her former husband did not pay her her agreed share of the sale proceeds.
In light of this, the Town was wrong to have requested Julie Gummerus, who never was a record owner of the Property at any relevant time, and who never had been a party to the Agreement, to sign various documents, including an instrument of release, as a condition of turning over the purchase price. These were conditions which, given the acceptable nature of the record title to the Property under the standard set in the Agreement, the Town could not have required. The same also is true of the insistence by the Town on making its purchase price check payable to Julie Gummerus. The defendants were right to have considered this position by the Town as contrary to the terms of the Agreement under which the parties then were operating. The Town never timely tendered payment, or came prepared to make payment, of the purchase price in the form required under the Agreement, because the Town never presented funds in any form other than the check which made payment to someone who was not an owner of the Property and was not a party to the Agreement.
It certainly is true that the position the Town, through its attorneys, took on these title issues in the period leading up to the closing show care and caution on the part of the Town and its lawyers. There are many title matters that conveyancers identify as of concern, and, in their careful nature, strive to put to rest. This effort to attend to matters raised by a title examination is a worthy one. There is no doubt that these concerns about the title were ones which, in an amicable transaction between agreeable and willing buyers and sellers, would ordinarily have been addressed fully, meticulously, and cooperatively by counsel for all involved. The case now before me, however, involves, for somewhat obvious reasons, sellers who were not enthusiastic about being required to go forward with the sale of their land to the Town. In such a case, the task of representing a buyer becomes much more difficult. The decision about whether to accept or reject a title, or to insist on conditions to closing that address title concerns, cannot be made based on what might be the most admirable conveyancing practice. The decision needs to be made strictly according to what the legal obligations of the seller to deliver title are, under the governing agreements and the law. This is a case where the Towns position challenging the Propertys title, and insistence on the signature of a non-party on various documents (and the payment of the sale proceeds to her) went beyond what the Town was entitled to insist upon under the Agreement. The Towns actions were not in accordance with the Agreement, and amounted to a material failure to perform under it.
To the extent that the Town argues that the title issues it raised prior to closing were not presented to defendants and their counsel in a hard and fast way, and that the Town was willing to relent on these issues and close in any event, the evidence does not support that defense. None of the lawyers involved in the closing transaction testified at trial. Particularly with respect to the divorce-related issues, the evidence does not convince me that the Town, which made out its payment check with Julie Gummerus as one of the three payees, communicated in a meaningful way to the defendants, prior to the time set for closing, that the Town was ready, willing, and able to go ahead and purchase under the Agreement in the manner it requiredwithout any conditions attached to title issues the Town previously had advanced.
4. The Effect of the Option and the Structure of the Agreement as a Sale of Beneficial Interests in the Trust.
Given the conclusion I have reached, that the Town materially breached the Agreement, it is unnecessary for me to dwell on an alternative contention by the defendantsthat given the manner in which the original transaction was structured, as a sale of beneficial interest in the Trust, based on the Option Gummerus gave Lowery to acquire his beneficial interest, the Town lacks the ability to obtain specific performance.
Gummerus makes the argument that he is not a full party to the purchase and sale agreement and it cannot, therefore, be enforced against him. Gummerus signed the Agreement in his capacity as Trustee of Hill/Gummerus Farm Nominee Trust, in a limited way, signifying his assent only to the provisions of paragraphs #9 and #21. What Bradley, the original buyer, was to buy was not real propertytitle to the Property--but rather the entire beneficial interest underlying the Trust. To accomplish this end, it was necessary for Lowery to exercise in timely fashion the Option Gummerus had given her to acquire his beneficial interest in the Trust. The evidence was the Lowery never acted to exercise the Option she held on Gummerus beneficial interest in the Trust. These facts, Gummerus argues, make it impossible for the Town to obtain specific performance.
That question I need not decide, given that the Towns material breach of the Agreement keeps it, in any event, from obtaining enforcement of the Agreement. Suffice it to say that the entire structure of the transaction laid out by the Option and the Agreement suggests that it may have been put together that way, at least in substantial part, as a way to sidestep the municipal right to purchase under chapter 61A which Lowery and her nephew knew they would face. If the Town had not breached the Agreement, I would have addressed this defense by concluding that, rather than frustrate the public interest in municipal exercise of the right of purchase under section fourteen, the court could remedially order the enforcement of the Agreement by requiring Gummerus to transfer his interest in the Trust to Lowery, then to be simultaneously transferred to the Town in exchange for the purchase price. The breach by the Town, however, makes this question unnecessary to address further.
I find and rule that the Town failed in a material way to deliver the performance required of the buyer under the Agreement, and so breached the Agreement materially. I further find and rule that the defendants did not breach the Agreement. Accordingly, the Town is not entitled to specific performance of the Agreement, and the defendants are under no obligation to convey the Property, or any interest in it, to the Town.
Gordon H. Piper
Dated: July 15, 2008.