Faisal v. Historic Boston Inc.

Mass. Appeals Court, No. 16-P-814, June 13, 2017: Signature by one authorized corporate officer sufficient for restriction grant.

A church granted a historic preservation easement (called a “preservation restriction” in Massachusetts) and then sold the church property. The easement was signed for the church only by its president, who had been authorized to do so by a church corporate vote. A later owner of the property challenged the easement’s enforceability.  Mass. GL c. 156B, sec. 115, says that if a conveyance instrument by a corporation is signed by a certain combination of two corporate officers , the conveyance is binding on the corporation in favor of a purchaser or other person relying in good faith on that instrument. At trial, the judge found that precedents led to the conclusion that the statute created requirements for enforceability when it came to charitable corporations, not merely a safe harbor. The appeals court disagreed.

The court’s analysis of the precedents cited by the trial judge was that those cases turned on three key points which did not apply to this case: (1) it was the charitable entity, not the grantee, seeking to disavow the transaction; (2) the corporate officer who signed the document was relying on his or her general powers, not on a specific grant of authority to enter into the transaction in question; and (3) the transaction, if enforced, would have “transformed” how the entity operated. The appeals court said the trial judge was wrong to apply those precedents to the facts in this case.

The court wrote: “More importantly, the [church, grantor of the preservation easement] board itself expressly endorsed placing its property under a … historic preservation restriction and specifically authorized its president to negotiate and to execute one. Put differently, from all that appears before us, [the ACC president] acted exactly as the [church] 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.’ [citation omitted] The judge erred in concluding that the absence of a second signature invalidated the Historic Boston restriction.”

The courts also wrote in a footnote, “…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.”

(The appellate Memorandum and Order was “primarily directed to the parties” and “may be cited for its persuasive value but… not as binding precedent.”)

The decision can be found at http://www.mass.gov/courts/docs/sjc/reporter-of-decisions/new-opinions/16p0814.pdf.

(Disclosure: the writer has represented Historic Boston Inc. but not in connection with the easement in question.)

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