Horse Pond Fish & Game Club, Inc. v. Cormier
581 A.2d 478, 133 N.H. 648, 1990 N.H. LEXIS 108 (1990)
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Rule of Law:
An entity's status as a charitable organization is a material fact that must be determined before a court can rule on the validity of a restraint on the alienation of its property, because restraints that would be unreasonable for a non-charitable entity may be valid for a charity.
Facts:
- In 1954, the Horse Pond Fish & Game Club, Inc. (the Club) acquired title to a parcel of land in Nashua, New Hampshire.
- On December 9, 1958, the Club executed a conveyance to two members who immediately deeded the property back to the Club with a new restriction.
- The deed restriction prohibited the alienation of the property unless 100% of the Club's members voted in favor at a special meeting or the Club was officially dissolved.
- In 1987, the Club registered with the state as a charitable corporation.
- The area surrounding the property became increasingly residential, making it less suitable for the Club's fishing and hunting activities.
- In July 1988, the Club proposed a land swap, but member William A. Cormier, who owned adjacent land, was the sole member to vote against the transaction.
- Cormier's single dissenting vote was sufficient to block the land swap under the terms of the deed restriction.
Procedural Posture:
- Horse Pond Fish & Game Club, Inc. filed a bill in equity in the Superior Court against its member, William A. Cormier.
- The plaintiff sought a declaration that a restriction in its property deed was void as an unreasonable restraint on alienation.
- The plaintiff moved for summary judgment.
- The defendant, Cormier, objected, arguing that if the plaintiff is a charity, the rules against restraints on alienation are inapplicable.
- The Superior Court granted the plaintiff's motion for summary judgment, finding the restraint unreasonable.
- The Superior Court did not rule on a pending motion to join the director of charitable trusts as a necessary party before granting summary judgment.
- The defendant's motion to set aside the summary judgment order was denied by the Superior Court.
- The defendant, Cormier, appealed the Superior Court's decision to the New Hampshire Supreme Court.
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Issue:
Is an entity's status as a charitable corporation a material issue of fact that must be resolved before a court can grant summary judgment on the question of whether a restraint on the alienation of its property is unreasonable?
Opinions:
Majority - Batchelder, J.
Yes. An entity's status as a charitable corporation is a material issue of fact that must be resolved before a court can rule on the validity of a restraint against alienation. The general rule holds that restraints on alienation are invalid if they are unreasonable. However, this rule of 'reasonable restraints' generally does not apply to property held by a charitable trust or charitable corporation. The law permits donors to make gifts to charities perpetual in duration, and as a corollary, allows them to impose conditions against alienation to effectuate that primary purpose. Therefore, the Club's charitable status is a material fact because it determines which legal standard applies to the restraint. The trial court erred by granting summary judgment and finding the restraint unreasonable without first resolving the factual dispute over the Club's charitable status. The case must be remanded to determine if the Club is a charitable entity.
Analysis:
This decision reinforces the significant distinction in property law between charitable and non-charitable entities regarding the validity of restraints on alienation. It clarifies that a court's first step must be to determine the property owner's status, as this dictates the applicable legal framework. The ruling serves as a procedural safeguard, preventing lower courts from granting summary judgment when a key fact that alters the governing legal principle—in this case, charitable status—remains in dispute. This precedent protects the intent behind charitable gifts and ensures that property dedicated to a charitable purpose is not freely alienated without proper judicial consideration under the appropriate legal standard.
