Paul Smith's Hotel Co. v. Roman Catholic Diocese of Ogdensburg

Appellate Division of the Supreme Court of New York, Third Department · 2020 · Property

Propertyfuture interestsfee simple determinablepossibility of revertercondition subsequentright of reentrychurch purposes onlyvoid

Facts

In 1896, the Paul Smith's Hotel Company conveyed property to the Bishop of Ogdensburg in trust for a Catholic congregation, with a deed stating the property was to be used "[a]s and for [c]hurch purposes only" and that if devoted to any other use, the conveyance would be "void" and the grantor would have the right to re-enter and take possession. A church was built on the property, and later the Hotel Company's relevant assets, including reversionary rights and rights of reentry, were transferred to plaintiff by a deed recorded in 1963. In 2015, the Bishop issued a decree relegating the church property to profane but not sordid use and sacred objects were removed. Plaintiff then sued to establish that title had reverted to it.

Issue

Did the 1896 deed create a fee on limitation with a possibility of reverter, or a fee simple subject to a condition subsequent with a right of reentry? If it created a possibility of reverter, did defendant's 2015 decree end church use and cause the property to revert automatically to plaintiff?

Rule

When a deed, read as a whole, provides that property is to be used only for a stated purpose and that the conveyance shall be void if used otherwise, the deed creates a fee on limitation and leaves the grantor with a possibility of reverter that operates automatically upon breach. A possibility of reverter is freely alienable, unlike a common-law right of reentry, and fixtures pass with the property unless the deed provides otherwise.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In 1910, Nora Benton conveyed land in Albany to Elm Parish Trustees by deed stating that the parcel was granted "for library purposes only," and that if it was ever used for any other purpose, "this conveyance shall be void," and Nora "shall have the right to re-enter and take possession." A century later, the trustees converted the building into a wedding venue.

Under the majority's approach, what interest did Nora retain, and what is the effect of the conversion?

Explanation. Reading the deed as a whole, language that the land is for a stated purpose only and that the conveyance shall be "void" if used otherwise creates a fee on limitation with a possibility of reverter. The additional statement that the grantor shall have the right to re-enter does not convert the estate into a condition subsequent. Because a possibility of reverter operates automatically upon breach, title reverted when the property was converted to a nonlibrary use.