Horse Pond Fish & Game Club, Inc. v Cormier

Brief Fact Summary. A club had a deed which contained a restraint against alienation.

Synopsis of Rule of Law. Restraints on alienation are void only if they are unreasonable.

Facts. Horse Pond Fish & Game Club (Plaintiff) obtained title to land by deed, free of restrictions. Plaintiff deeded the property to two of its members, who conveyed it back to Plaintiff the same day, with restrictions against alienation written in the deed. The restrictions stated that there would not be alienation of the land unless 100% of the members approved or the club dissolved. Plaintiff registered with the charitable trust division of the attorney general’s office as a charitable corporation. Plaintiff attempted to enter into a land swap with a neighboring club, but William Cormier (Defendant), a member of Plaintiff, voted against the plan, so the deal could not go through. Plaintiff sought a declaration that the deed restriction was void as an unreasonable restraint against alienation.

Issue. Are all restraints against alienation invalid?

Held. No. Judgment reversed and remanded.
The validity of a restraint against alienation depends upon its reasonableness in regards to the interests of the parties. Thus, a restraint against alienation will only be void if it is unreasonable.
The rule of reasonable restraints does not apply in the case of a gift to a charitable corporation. An express provision or condition against alienation contained in a gift made to a charitable corporation may be a valid restraint.
A sale of land owned by a charitable entity may be permitted if an equity court determines that due to unforeseen circumstances, the sale is necessary and would be in the best interests of the charity.
The lower court must determine whether Plaintiff is a charity before deciding if the restraint is invalid.

Discussion. Restraints on alienation are allowed when the holder of the property interest is a charity. Otherwise, the restraint must be reasonable in order to be valid.