Opinion
No. CV-08-5017380
July 31, 2009
MEMORANDUM OF DECISION RE MOTION FOR DETERMINATION OF PRIORITIES (#116)
This foreclosure action was instituted by Complaint dated January 17, 2008 and involves a piece of property owned by defendant Alexandria Estates, LLC ("Alexandria") located in North Haven, Connecticut. The issue before the court is the relative priority of the mortgage being foreclosed and the interest, if any, held by John Neubig, a former owner of the property. To this end, John Neubig filed a Motion for Determination of Priorities dated September 8, 2008. Plaintiff filed a Memorandum in support of its claim of priority dated November 7, 2008 and John Neubig filed a Memorandum in support of his claim dated March 3, 2009. The parties presented oral argument before the court on May 11, 2009 and each filed a post-hearing brief dated May 28, 2009.
While problems of proof abound in this matter, the record reveals the following: On or before November 7, 2002, defendant John Neubig sold a parcel of land located at the junction of North Hill Road and Half Mile Road in North Haven, Connecticut ("the property") to defendant Alexandria. It was the intention of Alexandria to subdivide the parcel into building lots for single-family homes. As part of the aforementioned transaction, Alexandria executed an undated one-page agreement with a property description attached thereto as "Schedule A" ("the agreement") wherein it promised to "pay Thirty-Five Thousand Dollars ($35,000.00) to the Grantor, John Neubig his heirs or assigns ("Neubig") for each lot approved by the Town of North Haven in excess of one." The agreement was recorded in the Town of North Haven land records on November 7, 2002. Alexandria made some payments to John Neubig pursuant to the agreement, but a number of lots remain undeveloped.
There are more complicated aspects to the transaction and other documents related to the transaction that were subsequently recorded on the land records, but they do not play a role in the court's determination of this dispute.
On or about June 15, 2007, Alexandria executed a promissory note and granted a mortgage on the property to plaintiff. Alexandria subsequently defaulted on the note and plaintiff brought this action to foreclose its mortgage. John Neubig argues that Alexandria's agreement to pay him $35,000.00 for each lot developed runs with the land and essentially serves as a mortgage on the property with priority over plaintiff's mortgage. Plaintiff, on the other hand, maintains that Alexandria's agreement to pay John Neubig is personal in nature, binding only on Alexandria, and that John Neubig possesses no legal interest in the property.
The presence or absence of "words of inheritance" in an agreement are frequently determinative of the question of whether it runs with the land and "must control unless a contrary intent appears when the words are read in the light of related provisions of the instrument and the surrounding circumstances." Brown v. Connecticut Light and Power Co., 145 Conn. 290, 298 (1958) citing Taylor v. Dennehy, 136 Conn. 398, 402 (1950). In the agreement at issue, words of inheritance, specifically the term "heirs and assigns," are used, but their use is not determinative on the issue of whether the agreement runs with the land because the reference is to John Neubig's heirs and assigns rather than Alexandria's.
As a result, the court must look to the intention of the parties in order to determine controls whether the agreement was intended to run with the land. Carlson v. Libbey, 137 Conn. 362, 367 (1950). Plaintiff cites a number of cases from other jurisdictions for the proposition that an agreement to pay money cannot run with the land, most prominently the case of Caulk v. Orange County, 661 So.2d 932 (Fla.App. 5 Dist. 1995). While the Caulk opinion does contain this proposition as dicta, the court's holding is actually based on its interpretation of the agreement between the parties. See, J.H. Williams Oil Co. v. Harvey, 872 So.2d 287, 289 (Fla.App. 2 Dist. 2004).
John Neubig presents several affidavits in support of his claim which purport to be statements of participants regarding the intent of the parties at the time the Agreement was executed. Plaintiff properly objects to the court's consideration of these affidavits and, as a result, they play no role in the court's decision.
It is abundantly clear from reviewing the agreement at issue in this case that it was designed to be recorded on the land records and that it was the intention of the parties that it be so recorded. It contains a reference to the attached property description, referred to as "Schedule A." There is no evidence whatsoever to support the contrary conclusion that this is one of those unfortunate situations where one party unilaterally elects to record an agreement on the land records that bears little to no relation to a piece of real property in an effort to cloud title and gain a tactical advantage.
Editor's Note: Schedule A has not been reproduced herein.
The determinative question before the court is this: If the parties did not intend the agreement at issue to run with the land, why did they execute a document clearly designed to be recorded on the land records? Unfortunately for plaintiff, the record does not reveal a satisfactory answer.
Conclusion
The agreement at issue runs with the land and, as a result, John Neubig's interest in the property has priority over plaintiff's mortgage.