Red Hill Outing Club v. Hammond

Brief Fact Summary.

Plaintiff sought declaratory judgment against Defendants after Defendants filed a notice of reentry pursuant to a condition in the deed from Defendants to Plaintiff, which stated that Defendants could reenter and take possession of the land, if for two consecutive years, Plaintiff did not maintain the property as a ski slope and make it available to Moultonboro residents as a ski slope. The trial court ruled in favor of Plaintiff. Defendants appealed.

Synopsis of Rule of Law.

Conditions subsequent in deeds are strictly construed, and extrinsic evidence of the intent of the parties is not considered.

Facts.

In 1956, the Hammonds (Defendants) purchased land in Moultonboro, New Hampshire. They developed the land for use as a ski slope, and were involved in forming Red Hill Outing Club (Plaintiff), which was devoted to operating the ski slope. Plaintiff leased the slope from 1969 through 1979. It operated a rope tow and provided free ski lessons for its members and residents of the town. In 1979, Defendants conveyed the land to Plaintiff for nominal consideration. The deed contained the condition that Defendants could reenter and take possession of the land if, for two consecutive years, Plaintiff did not maintain the property as a ski slope and make it available to Moultonboro residents as a ski slope. Plaintiff stopped providing free ski lessons after 1989, and did not operate the rope tow for the winters of 1992-93 and 1993-94. The ski slope was completely closed during the second winter. Defendants filed a notice of reentry in October 1994, on the ground that Plaintiff had breached the condition by failing to operate skiing facilities for two consecutive years. Plaintiff then sought a declaratory judgment against Defendants. The trial court held that the condition subsequent in the deed should be strictly construed. Therefore, the trial court held, the only condition was that Plaintiff “maintain and make available the premises . . . as a ski slope.” Accordingly, Plaintiff had not breached during the winter of 1992-93, and the closure during the winter of 1993-94 was not long enough to give Defendants a right of reentry. The trial court held that Plaintiff retained title to the property. Defendants then appealed.

Issue.

Whether a court should consider extrinsic evidence in determining whether a condition subsequent has been met.

Held.

No. The trial court’s ruling is affirmed. Conditions subsequent in deeds are strictly construed, and extrinsic evidence of the intent of the parties is not considered.

Discussion.

Generally, deeds are interpreted in light of the parties’ intent at the time the property was conveyed, and all extrinsic evidence of the surrounding circumstances is considered. This rule, taken from contract law, has largely replaced the old rule of strict construction. But conditions subsequent are an exception. Conditions subsequent are disfavored because they cause forfeitures of land, which can have drastic consequences that exceed the magnitude of the breach. Conditions subsequent also reduce the marketability and development of land, which harms the public. Therefore, courts in this state, like courts in many other states, will continue to apply strict construction to conditions subsequent. A condition subsequent is satisfied as long as it is substantially complied with, and forfeiture is appropriate only where there is conduct evidencing an intent to disregard the condition. Here, Plaintiff substantially complied with the condition that it make the land available as a ski slope. The fact that it did not operate a tow rope is not dispositive of whether it met the condition because the deed says nothing about operating a tow rope. Evidence of Plaintiff’s failure to operate the land as a ski slope after 1994 is likewise irrelevant. When Defendants filed the notice of reentry in 1994, they took legal possession of the land from Plaintiff and relieved it of its responsibilities to maintain a ski slope. Any acts or omissions by Plaintiff after October 1994 are irrelevant to any breach already alleged.