Cathedral of Incarnation in Diocese of Long Island v. Garden City Company

Brief Fact Summary. A church could no longer support lands deeded to them and attempted to sell them pursuant to a bankruptcy proceeding.

Synopsis of Rule of Law. The right of reentry cannot be assigned and will be void if an attempt to assign is made. Further, when a restriction in a deed becomes a burden and a financial drain on a landowner, the restriction will not be enforced.

Facts. The heirs of a woman sold to the Cathedral of the Incarnation in the Diocese of Long Island, Inc. (Plaintiff) real property. The deed restricted Plaintiff’s right to convey the property and stated that the premises were not to be used for anything other than religious or educational purposes. Garden City Company (Defendants) received an interest in the remaining property of the heirs. Plaintiff eventually filed for bankruptcy and entered into contracts to sell the land deeded to them by the heirs. Defendant claims that restrictions in Plaintiff’s deed created either a condition subsequent or a conditional limitation, so Defendant could enter the property and assert ownership. Judgment for Plaintiffs.

Issue. When a grantor creates a right of reentry, is that right void if the grantor tries to assign that right?

Held. Yes. Judgment affirmed.
Absent any language in the deed providing for the automatic termination of Plaintiff’s estate if the land were no longer used for church purposes, the deed creates a right of reentry, not a possibility of reverter. The right of reentry is not assignable or devisable.
Any right of reentry would be rendered void by any attempt by the heirs to assign that right to Defendants.
As to the restrictions in the deed, the inquiry is whether the existence of the restriction substantially impeded the owner of the property in the furtherance of the purpose for which the land is held. The bankruptcy proceedings show that continued ownership of the properties is a burden and a financial drain on resources that could otherwise be used to provide programs and services to the community.

Discussion. This decision promotes the free alienability of land because the land is being put to its most beneficial use by being sold when the current owner can no longer maintain it.