Court Opinion

ID: 3186185
Source: CourtListenerOpinion
Date Created: 2016-03-16 23:47:03.534473+00
Date Added: 2024-06-11T12:19:11.022575
License: Public Domain

In the Supreme Court of Georgia

                                                      Decided: March 7, 2016

         S15A1684. ATLANTA DEVELOPMENT AUTHORITY, d/b/a
      INVEST ATLANTA v. CLARK ATLANTA UNIVERSITY, INC.

         HINES, Presiding Justice.

         This Court granted defendant Atlanta Development Authority d/b/a Invest

Atlanta (“Invest Atlanta”) an interlocutory appeal of the superior court’s denial

of its motion to dismiss plaintiff Clark Atlanta University, Inc.’s (“CAU”)

complaint for declaratory judgment, which sought a declaration regarding

CAU’s rights to three adjoining parcels of real property in southwest Atlanta

(collectively the “Property”) that it donated to Morris Brown College (“MBC”)

in 1940.1 For the reasons which follow, we affirm the judgment of the superior

court.

             On February 10, 1940, for the nominal consideration of $1.00, CAU

         1
        As stated in the complaint for declaratory judgment, in 1988, Atlanta University and Clark
College consolidated to form Clark Atlanta University, and Clark Atlanta University is the
successor-in-interest to Atlanta University, the entity that donated the Property to Morris Brown
College in 1940. For the purpose of this appeal, “CAU” is used to refer to both Clark Atlanta
University and Atlanta University.
executed a deed (“Deed”) for the Property, which was composed of three

adjoining parcels totaling approximately 13 acres, to MBC. At the time the

Property was donated, MBC was experiencing financial difficulties and was at

risk of losing its campus. The one-page Deed conveyed all three parcels, which

will hereinafter be referred to as Parcel 1, Parcel 2, and Parcel 3, and was

structured, as follows.

            The sole granting clause (“Granting Clause”) appears at the top of

the Deed and states, in relevant part:

  WITNESSETH: That the said party of the first part, for and in
  consideration of the sum of One Dollar, and for the purposes herein set
  forth, in hand paid at and before the sealing and delivery of these presents,
  the receipt whereof is hereby acknowledged, has granted, bargained, sold
  and conveyed and by those presents does grant, bargain, sell and convey
  unto the said party of the second part . . . .

Next is the legal description of Parcel 1, and after it is the statement:

  The above property is conveyed subject to the use by [a named individual]
  of house and property now occupied by him, so long as he shall remain in
  the employ of [CAU].

Following this are the legal descriptions of Parcels 2 and 3. At the conclusion

of the three legal descriptions is the use restriction (“Restriction”):

  The above property is conveyed subject to the condition that [MBC] shall
  use the same for educational purposes, to wit: Undergraduate work in the

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  fields of the Arts and Sciences, except that nothing in this clause is to be
  construed as prohibiting [MBC] from offering graduate course in Theology,
  if it chooses to do so.

The next sentence provides (“Reverter ”):

  If at any time the said [MBC] shall cease to use said property for the particular
  educational purposes above set forth, the title to said property shall revert to
  and become vested in the Grantor or its successors.

The Deed concludes (“Habendum Clause”):

  TO HAVE AND TO HOLD the said bargained premises, together with all
  and singular the rights, members and appurtenances thereof, to the same
  being, belonging or in any wise appertaining to the only proper use, benefit
  and behoof of it, the said party of the second part, IN FEE SIMPLE.

          In August 2012, MBC filed for Chapter 11 bankruptcy relief (the

“Bankruptcy”) in an attempt to prevent the foreclosure and sale at auction of its

campus. As a result of the Bankruptcy, in May 2014, MBC requested that the

bankruptcy court approve the sale of a large portion of its campus, including the

Property, to Invest Atlanta. In June 2014, the bankruptcy court held a hearing

in the matter at which it noted that it was “clear that [MBC] can only sell

whatever interest in [the] property it has” and that it was “not making any

findings regarding the extent of [MBC’s] interest in the reversionary property.”

The court further stated, “[a]ll that is being authorized is that [MBC] can sell

                                        3
whatever interest it has.” On June 23, 2014, the bankruptcy court issued an

order authorizing and approving the sale of the Property to Invest Atlanta; the

order expressly provided that Invest Atlanta was “accepting the title subject to

any alleged and recorded interest held by CAU.” On September 5, 2014, CAU

filed the present complaint for declaratory judgment, seeking, inter alia, a

declaration and judgment that the Deed transferred the Property in the form of

a fee simple determinable estate or a fee simple estate subject to a limitation,

that CAU therefore had a valid automatic reversionary interest in the Property,

and that such reversionary interest was triggered when MBC stopped using the

Property for educational purposes and sold it to Invest Atlanta; alternatively,

CAU asked for a declaration and judgment that with respect to any portions of

the Property that were then being used for educational purposes by MBC, if at

any time MBC ceased to so use such portions of the Property, title to such

property would immediately and automatically revert to CAU. On October 7,

2014, Invest Atlanta moved to dismiss the complaint, challenging, inter alia, the

validity, scope, and application of the Restriction and the Reverter.

      On February 20, 2015, the superior court entered the order now at issue,

denying Invest Atlanta’s motion to dismiss. In so doing, the superior court

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determined that the Restriction is valid as falling within the “charitable

purposes” exemption to the general rule against restraints on alienation, that the

Restriction applies to all three parcels of the Property, that MBC’s sale of the

Property to Invest Atlanta did not constitute a “use” for educational purposes,

and that the Deed conveyed a fee simple determinable estate, i.e., a fee simple

estate subject to the limitation of the Restriction and the Reverter.2

                       I. Standard of Review

               It is inappropriate to grant a motion to dismiss for failure to state a

claim unless the allegations of the complaint at issue demonstrate to a certainty

that the plaintiff would not be entitled to any relief under any set of facts which

could be proved in support thereof. City of Atlanta v. Mitcham, 296 Ga. 576,

577 (1) (769 SE2d 320) (2015). The appellate court is to review the denial of

a motion to dismiss de novo, and in so doing, construe the pleadings in a light

most favorable to the plaintiff, with any doubts resolved in the plaintiff's favor.

Bd. of Regents of Univ. Sys. of Georgia v. Brooks, 324 Ga. App. 15, 15-16 (749

SE2d 23) (2013).

       2
        The superior court rejected Invest Atlanta’s contention that the Reverter Clause was merely
a covenant running with the land, and therefore, subject to the 20-year time limit set forth in OCGA
§ 44-5-60 (b).

                                                 5
                        II. Validity of Restriction and Reverter

                The threshold substantive question in regard to the Deed is the

validity of the Restriction and the Reverter. And, it is plain that they are valid

and enforceable. As the superior court noted in its ruling, in general the type

of forfeiture as in this case is invalid as an impermissible restraint on alienation;

however, Georgia recognizes an exception to the general rule in the situation in

which real property is transferred to a charitable group for charitable purposes.

First Rebecca Baptist Church, Inc. v. Atl. Cotton Mills, 263 Ga. 688, 689 (3)

(440 SE2d 159) (1993). The reasoning is that inasmuch as a donor may make

a gift for charitable purposes which is perpetual in duration, as a corollary of

this right and in order to effectuate the primary purpose of the gift, the donor

may impose a condition that the gifted property is not to be alienated, but is to

continue in the hands of the donee in perpetuity. Id. Public policy favors giving

the donor's distinct charitable interest greater weight than general prohibitions

against the remoteness of vesting and restrictions on alienation. Id.

                Here, there is little question that by the Deed, donor CAU intended

to gift the Property to what it deemed a charitable organization,3 MBC, and did

      3
          This Court makes no finding regarding MBC’s legal status as a charitable organization.

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so in order to accomplish educational purposes, which are proper matters of

charity. See Moore v. Wells, 212 Ga. 446, 451 (93 SE2d 731) (1956).

                  III. Scope of Restriction and Reverter

      The next question is the scope and applicability of the Restriction, and

thus, of the Reverter. The superior court determined that the Restriction applies

to all three parcels, and so it does.       The construction of a deed which is

unambiguous is to be handled like any other contract, that is, it is a matter for

determination by the court, and its meaning and effect are questions of law for

the court. Turk v. Jeffreys-McElrath Mfg. Co., 207 Ga. 73, 75 (2) (60 SE2d 166)

(1950). The construction of a contract involves three steps: first, the court must

determine whether the language therein is clear and unambiguous, and if it is,

the contract is to be enforced according to its clear terms; the contract alone is

looked to for its meaning; next, if the contract is ambiguous in some respect, the

court must apply the rules of contract construction to resolve the ambiguity; and

finally, if the ambiguity remains after applying the rules of construction, the

issue of what the ambiguous language means and what the parties intended must

be resolved by the trier of fact. City of Baldwin v. Woodard & Curran, 293 Ga.

19, 30 (3) (743 SE2d 381) (2013).

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          As the superior court noted, the Deed is not ambiguous as to the

application of the Restriction and the Reverter to all three parcels of the

Property. The physical layout of the brief one-page Deed itself, which conveys

the three parcels simultaneously supports this conclusion. So too does the fact

that the parcels are conveyed pursuant to and as part of a single charitable gift.

The legal descriptions also make plain that the parcels adjoin each other so as

to comprise a continuous tract of land. Other clear language used in the Deed

likewise compels the conclusion that the Restriction and the Reverter are to

apply equally to Parcels 1, 2, and 3. The words in a deed, like in other contracts,

carry their ordinary meanings. Lafarge Bldg. Materials, Inc. v. Thompson, 295

Ga. 637, 640 (2) (763 SE2d 444) (2014). And, so they should in this case.

      Such clear language begins with the sole Granting Clause, which plainly

applies to the Property in toto, and states that the conveyance is “for the

purposes herein set forth”; the only purpose set forth is that the Property be used

for specified aspects of education, i.e., the Restriction on use. The Restriction

itself expressly states that it applies to the “above property”; the Restriction does

not distinguish among the three parcels in any way, or use any terminology

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suggesting a parsing of the Property. And, it could easily have done so.4

       As to the conditional language following the legal description of Parcel

1, it does not insulate the tract from the Restriction and the Reverter or alter the

nature of the ultimate estate in the Property which is conveyed by the Deed. The

language constitutes nothing more than an easement in gross in favor of the

named individual. An easement in gross is a mere personal right in the land of

another, and inasmuch as it is an interest in land, the Deed properly contains its

express grant; this would include language sufficient to designate with

reasonable certainty the land over which the easement extends. Dyer v. Dyer,

275 Ga. 339, 340-341 (1) (566 SE2d 665) (2002).                       It does not alter the

applicability of the Restriction and the Reverter. Nor does the easement in gross

for the purpose of the residence of the named employee on Parcel 1 of the

Property conflict in any way with the expressed intent that the Property be used

for educational purposes. The fact that a structure on the real estate of a college

campus serves, at least for a time, as a residence for a college employee fosters

rather than defeats such a purpose, and is in keeping with the reality of

       4
        As CAU suggests in its brief, “above” could have been slightly modified such as “some of
the above,” “immediately above,” “adjacent to,” etc.

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dormitory and other student and faculty residence facilities on many college

campuses.

       As for the use of the word “premises” instead of the word “property” in

the Deed’s Habendum Clause, this in no manner alters, much less diminishes,

the plain meaning and scope of “property” as used in the Restriction and the

Reverter. The term “premises” is merely customary and boilerplate language in

a Habendum Clause. See 2 Daniel F. Hinkel, Pindar's Ga. Real Estate Law &

Procedure § 19:29 (7th ed., updated April 2015) (explaining that such language

actually serves no useful purpose and could be omitted entirely). And, in deeds,

the terms “premises” and “property” may be used interchangeably to refer to the

same real estate. See, e.g., Statham v. Kelly, 276 Ga. 877 (584 SE2d 246)

(2003) (“As a part of the consideration for this transfer it is expressly stipulated

that should the grantees herein ever fail to use the premises described herein for

their personal residence the property shall revert to the grantor and any interest

held by the grantees herein shall be terminated.” (Emphasis supplied and

emphasis omitted.)) This Court has long acknowledged that the words may be

synonymous in regard to a use restriction and reversionary interest. See Wills

                                        10
v. Pierce, 208 Ga. 417 (67 SE2d 239) (1951).

     Even if the Deed was found to be ambiguous in regard to the reach of the

Restriction and the Reverter, the same construction results. In construing a

deed, the paramount consideration and overriding goal is to ascertain and give

effect to the intent of the parties. Second Refuge Church of Our Lord Jesus

Christ, Inc. v. Lollar, 282 Ga. 721, 724-725 (2) (653 SE2d 462) (2007); Moore

v. Wells, 212 Ga. 446, 449 (1) (93 SE2d 731) (1956). And, in general, the

parties’ intent is to be determined from the deed's text alone, and extrinsic

evidence will be used to interpret the deed only when its text is so ambiguous

that its meaning cannot be determined through application of the ordinary rules

of textual construction. Second Refuge Church of Our Lord Jesus Christ, Inc.

v. Lollar, supra at 724-725 (2). Furthermore, the deed must be examined in its

entirety in order to determine the parties’ intent and to be given a construction

which is consistent with reason and common sense. Woodbery v. Atlas Realty

Co., 148 Ga. 712 (98 SE 472) (1919). Each provision of the Deed is to be

given effect and interpreted so as to harmonize with the others. Horwitz v. Weil,

275 Ga. 467 (569 SE2d 515) (2002). So too, the circumstances and purpose of

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the Deed must be given due weight.

Id. at 468.

      Application of these rules of construction compels the conclusion that the

Restriction and the Reverter are intended to apply to all three parcels. As has

been detailed, the structure and language of the Deed reflects the parties’ clear

intent that the Property, in toto, comprise a donation to MBC of a unified tract

of land for the one and only purpose expressed in the Deed, i.e., for the

particular aspects of education set forth therein.5

                             IV. Estate Conveyed

           The Restriction and the Reverter create a limitation upon the estate

conveyed by the Deed, that is, that the estate is vested in the grantee, MBC, so

long as the Property is used for the specified educational purposes; this

limitation on the conveyed estate creates a defeasible fee or, more precisely, a

fee simple determinable estate. Flaum v. Middlebury, 246 Ga. 682 (272 SE2d

       5
         Although not necessary to the present analysis in the context of the motion to dismiss, there
is evidence of record, albeit outside the four corners of the Deed, which suggests that the parties
considered the Restriction and the Reverter to apply to the Property as a whole. In general, the
parties construction of a contract, as shown by their acts and conduct, is entitled to much weight and
may, in some circumstances, be conclusive. Head v. Scanlin, 258 Ga. 212, 213 (1) (367 SE2d 546)
(1988).

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695) (1980). Indeed, the hallmark of a fee simple determinable estate is that it

provides for automatic reversion of the estate upon the occurrence of the

limitation. Id. And, that is precisely the situation in this case.

                         V. Reverter

       The remaining question is whether MBC’s sale of the Property to Invest

Atlanta constitutes “use” of the Property for the purpose of the application of

the Reverter. Certainly, there is authority for the proposition that a grantee’s

use of real property for a specified purpose may be inconsistent with or

repugnant to the grantee’s conveyance of such property to another. See

Statham v. Kelly, 276 Ga. 877(584 SE2d 246) (2003); Wills v. Pierce, 208 Ga.

417 (67 SE2d 239) (1951). However, as is the case in both Statham v. Kelly

and Wills v. Pierce, this conflict arises in the circumstance in which the real

property is to be used by the grantee as the grantee’s home or residence. Thus,

the sale of the real estate is, on its face, incompatible with the specified

residential use in regard to the attempted reversionary interest. However, this

is not the situation in the case at hand.

      To begin with, the Restriction and the Reverter are legally enforceable.

                                        13
See Division II, supra. Second, the express “use” for the donated Property is

that of “educational purposes” as specified in the Deed. Certainly, as a general

proposition, real property may be “used” for educational purposes in many

ways, which might in another context include being sold to raise money for

educational purposes. But, the very specific language of the Restriction and the

Reverter militate against such a broad construction of use. As noted, the

Restriction provides not only that the Property be used for “educational

purposes” but then lists the fields of study which qualify as such “educational

purposes.” What is more, the Reverter is triggered when grantee MBC itself

ceases to use the Property “for the particular educational purposes above set

forth” in the Deed. Thus, even if MBC’s utilization of the proceeds from the

sale of the Property could qualify as its “use” of the Property generally for

educational purposes, this does not address the particularity of educational

purpose set forth in the Deed. Moreover, once the Property is alienated, MBC

loses control over it for any purpose, and as to the sale proceeds, their use and

eventual exhaustion would be pragmatically impossible to monitor in regard to

any question of application of the Restriction and the Reverter. Consequently,

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in the present circumstances, sale of the Property to Invest Atlanta does not

qualify as MBC’s “use” of the Property as contemplated in the Deed.

                        VI. Conclusion

     The Deed transferred the property from CAU to MBC in the form of a fee

simple determinable estate. Therefore, CAU has a valid reversionary interest in

the Property, which was triggered when MBC sold the Property to Invest

Atlanta. Accordingly, the judgment of the superior court is properly affirmed.

        Judgment affirmed. All the Justices concur, except Benham, J., not

participating.

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