Opinion
16-P-814
06-13-2017
Anwar N. FAISAL, trustee, v. HISTORIC BOSTON, INCORPORATED.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
At the center of this case is a roughly three-acre tract of land (the property) in the Allston section of Boston on which there is a historic church. Plaintiff Anwar N. Faisal is the trustee of the real estate trust that currently holds title to the property. At the time Faisal purchased the property, the deeds to its two parcels were subject to a recorded historic preservation restriction that defendant Historic Boston, Incorporated (Historic Boston), had acquired from one of Faisal's predecessors in title, the Allston Congregational Church (ACC). According to the documents of record, the ACC had granted that historic preservation restriction to Historic Boston prior to the ACC selling the underlying fee to a different church, the World Revival Church—Assembly of God (also one of Faisal's predecessors in title). Having purchased the property subject to that facially valid restriction of record, Faisal brought this action seeking to invalidate it. According to him, the ACC president, William Krohn, lacked authority to execute the preservation restriction on behalf of the ACC. On a motion for summary judgment, a Superior Court judge ruled in Faisal's favor. We vacate the judgment and order additional relief.
The property was already subject to a different historic preservation restriction held by the Massachusetts Historical Commission. That restriction is not at issue in this appeal.
Given how the summary judgment process unfolded, the dispute before us is one of law, not of fact. In its "statement of undisputed material facts" submitted pursuant to rule 9A(b)(5)(i) of the Rules of the Superior Court (2016), Historic Boston specifically averred that:
"ACC's President, William Krohn ..., and Treasurer, Maureen Nistal ... were granted the authority by the Board of ACC to sign for and bind the ACC in both its transfer of the church and parsonage to the [World Revival Church—Assembly of God], as well as in granting the Historic Preservation Easement to Historic Boston, Inc."
To support that averment, Historic Boston referenced an exhibit that included the ACC clerk's certificate that documented the ACC board's vote authorizing the execution of the restriction. Because Faisal did not—through the process set forth in rule 9A(b)(5)(ii)—controvert the averment that the ACC board specifically granted to its president the authority to execute the Historic Boston restriction, that averment is deemed admitted by operation of law. See Rule 9A(b)(5)(ii) of the Rules of the Superior Court (2016) ("For purposes of summary judgment, the moving party's statement of a material fact shall be deemed to have been admitted unless controverted as set forth in this paragraph").
Regardless of whether Faisal may have had grounds to challenge the averment (for example, the fact that the ACC clerk's certificate on which it relied was unsigned), he did not move to strike the certificate or seek to controvert in any other way the averment based on it.
Although Faisal cannot contest that the ACC board granted Krohn the authority to execute the restriction as a matter of fact, we discern nothing in rule 9A that operates to bar Faisal from arguing that such authority was insufficient as a matter of law. We therefore turn to that issue.
The judge concluded that, as a matter of law, the ACC board could not delegate such authority to a single officer. For this proposition, he relied on Boston Athletic Assn. v. International Marathons, Inc., 392 Mass. 356, 366-367 (1984) (invalidating contract that would have transformed how Boston Marathon was operated); and Bisceglia v. Bernadine Sisters of the Third Order of St. Francis of Mass., Inc., 29 Mass. App. Ct. 959, 960-961 (1990) (invalidating purchase and sale agreement for sale of property owned by religious order, where agreement was executed by treasurer of order without board resolution authorizing sale). For the reasons that follow, these cases are inapposite.
As the judge correctly observed, because the restriction was executed by only one of the ACC's corporate officers, Historic Boston cannot rely on the safe harbor provided by G. L. c. 156B, § 115. That statute provides certain protection to those who acquire property interests from a corporate entity against claims that the individuals who executed the transaction on behalf of the entity lacked sufficient authority to do so. Specifically, the statute establishes that the entity will be bound to a transaction with "the purchaser or other person relying in good faith" if the relevant instrument was executed by two specified officers of the corporation. G. L. c. 156B, § 115, as appearing in St. 1972, c. 103, § 2. See Dolan v. Airpark, Inc. (No. 1), 24 Mass. App. Ct. 714, 715-716 (1987). Historic Boston concedes that this statute is inapplicable here. Of course, it does not follow that real estate transactions signed by only one corporate officer therefore automatically are invalid as being without authority. The fact that a ship has not reached safe harbor when a storm hits does not, without more, mean that it will be lost at sea.
In the trial court proceedings, Historic Boston appeared to concede that the sale of property owned by a charitable entity requires signatures from more than one corporate officer. As Faisal points out, the execution of a historic preservation restriction amounts to the granting of a property interest. Based on this, Faisal argues that Historic Boston in effect conceded that two signatures were necessary here, and that it is now bound by that concession regardless of whether the concession was warranted. Although some of Historic Boston's trial court arguments (made by former counsel) could have been more artfully presented, its arguments on appeal are not waived or subject to estoppel. Historic Boston has consistently maintained that Krohn had all the authority he needed to bind the ACC to the restriction in dispute.
The cases of Boston Athletic Assn. and Bisceglia share three key points in common. First, in each case, the charitable entity was seeking to disavow a transaction that one of its officers had executed, purportedly on its behalf. Second, the officer in question who had sought to bind the entity was relying on his or her general powers, not on a specific grant of authority to enter into the transaction in question. Third, that transaction, if enforced, would have transformed how the entity operated. The holding in each case that the officer lacked the necessary authority to bind the charitable entity must be seen in this context.
The matter before us bears little resemblance to either case. Here, the person seeking to challenge the authority of the ACC president is a subsequent purchaser of the property affected by the agreement. Faisal seeks to raise that challenge even though he had record notice of the restriction when he purchased the property and, at that point, had no apparent reason to question its validity.
Because Faisal seeks to invoke a common-law rule designed to protect others, there is at least some question about his standing to do so. Because the issue of Faisal's standing makes no difference to the outcome of this appeal, and because this case does not, in our view, present the proper context in which to resolve the question, we have decided to pass over that question and to proceed to the merits. See Mostyn v. Department of Envtl. Protection, 83 Mass. App. Ct. 788, 792 & n.12 (2013), citing Boston Gas Co. v. Department of Pub. Util., 368 Mass. 780, 805 (1975).
To be sure, the ACC did undergo a transformative change: it discontinued its use of the Allston site, sold the property, and moved to the Brighton section of Boston. However, the propriety of its doing so has never been in dispute and, in any event, the sale of its property was specifically authorized by a vote of the ACC board, and that transaction was executed by two corporate officers. Rather, the specific action in dispute is a limited one: the execution of a second historic preservation restriction to restrict further the use of property that the ACC already had agreed to sell (subject to both restrictions). That action hardly poses the type of existential threat at issue in Boston Athletic Assn. and Bisceglia.
More importantly, the ACC board itself expressly endorsed placing its property under a second historic preservation restriction and specifically authorized its president to negotiate and to execute one. Put differently, from all that appears before us, Krohn acted exactly as the ACC wanted him to act and consistent with its mission. This is not at all a case where the officer of the charitable entity was attempting to exercise independent "control of the very essence of the [entity's] corporate existence." Boston Athletic Assn., 392 Mass. at 366. The judge erred in concluding that the absence of a second signature invalidated the Historic Boston restriction.
While it remains true that "[t]he power of an officer of a charitable corporation to bind the corporation is narrowly construed in Massachusetts," Bisceglia, 29 Mass. App. Ct. at 960-961, citing Boston Athletic Assn., 392 Mass. at 366, nothing in that interpretive principle substantively limits a charitable entity's power to provide its officers—or for that matter others—with express authority to take particular actions.
All that remains is the disposition of this appeal, which involves two cases consolidated below. Our holding resolves the second action (Faisal vs. Historic Boston, Incorporated, Sup. Ct., No. SUCV2013-00673). Therefore, to the extent the judgment dismissed the second case, it is vacated and we remand for entry of judgment in Historic Boston's favor. However, the initial action (Faisal vs. Historic Boston Incorporated, Sup. Ct., No. SUCV2012-02741) did not challenge the validity of the historic preservation restriction, but instead sought to raise alleged improprieties regarding Historic Boston's administration of that restriction. We cannot discern from the current record whether the controversy underlying the first action remains live, and the parties were unable to shed light on that issue at oral argument. Accordingly, to the extent the judgment dismissed the first case, it is vacated, and we remand that case for a determination of whether it remains live and, if so, for resolution on the merits.
The judge's comment that "the two actions are identical" is not accurate.
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So ordered.
Vacated and remanded.