Opinion
14-P-1940
11-19-2015
NANCY BAKER & another v. SYDNEY ROGERS, JR., & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
This is an interlocutory appeal under G. L. c. 231, § 118, second par., from a Superior Court judge's denial of motions for two preliminary injunctions filed by the plaintiffs, Nancy Baker (Nancy) and Peter Baker (Peter) (collectively, plaintiffs).
The case involves an ongoing dispute between the plaintiffs and the defendants, trustees of the Harriet G. Rogers Family Real Estate Trust (Trust). The Trust property includes a house (property), located in Westport. The Trust was created in 2000 to maintain the property for the benefit of Harriet G. Rogers's descendants, "as a shared family asset." The trustees are Harriet G. Rogers's four children -- Sydney Rogers, Jr., Gretchen Colby, Harriet Linskey, and Nancy. The beneficiaries are the just-named four children of Harriet G. Rogers and eight grandchildren.
The Trust document includes a schedule of beneficiaries, in which the children of Harriet G. Rogers each hold an 8.68 percent beneficial interest in the Trust and the grandchildren each hold an 8.16 percent interest.
The Trust owns a 91.84 percent interest in the property. One of the grandchildren, the plaintiff Peter, owns an 8.16 percent interest as a tenant in common. Peter was a beneficiary of the Trust before he turned twenty-one, at which point he converted his 8.16 percent beneficial trust interest into an outright ownership interest as a tenancy in common under art. Sixth (a) of the Trust document.
Article Sixth (a), under which Peter converted his Trust interest into a tenancy in common, states in pertinent part as follows:
"Any beneficiary who is under the age of twenty-one (21) at the time he/she becomes a beneficiary, so that his/her beneficial interest is held in a custodial arrangement under the Uniform Transfers to Minors Act, shall, upon attaining the age of twenty-one (21), have the right to withdraw from the trust property the value of which is then equal to said beneficiary's percentage of beneficial interest held in said custodial account and in the event of the exercise of such right of withdrawal by an age 21 beneficiary, an equivalent interest in the trust real estate shall be deeded to him/her in satisfaction of said withdrawal right outright and free of trust as a tenant in common with this Trust . . . ."
Reduced to their essentials, the two preliminary injunctions requested by Nancy and Peter may be summarized as follows. Nancy's preliminary injunction motion requested the right to withdraw her beneficial interest in the Trust, by way of gift, and convert it into an outright ownership interest to be held as a tenancy in common under art. Sixth (b) of the Trust document. Peter's preliminary injunction motion requested that an order issue directing the defendants to obtain his consent before renting the property to third parties.
The defendants contend that Nancy's proposed use of art. Sixth (b) to withdraw from the Trust is improper because art. Sixth (b) "was intended to be a limited provision that allows gifts to other family members in future generations and not to be used by the original beneficiaries of the trust to cross gift amongst themselves and then withdraw from the trust for the purpose of defeating the trust." But that is not what art. Sixth (b) says, and we reject this contention. Moreover, allowing beneficiaries of the Trust to withdraw from the Trust and hold their interests as tenants in common is a result that is not only anticipated but created by the terms of the Trust document. See art. Sixth (a). Similarly, allowing the issue of Harriet G. Rogers to hold their interests as tenants in common does not hinder the Trust's purpose -- i.e., holding the property as a shared family asset -- and does not make the ownership interests in the property any less "illiquid."
Although the plaintiffs' preliminary injunction motions sought a wide variety of relief, counsel at oral argument confirmed that they were only pursuing appellate review of the consent to rent issue and whether Nancy can withdraw from the Trust under art. Sixth (b).
The judge denied both injunction motions and issued an order stating: "Having reviewed the submissions of the parties the court is unable at this stage of the proceedings to determine that plaintiffs have a likelihood of success on the merits nor has there been a sufficient showing of a likelihood of irreparable harm."
Discussion. To prevail on a motion for a preliminary injunction, a party must demonstrate that "success is likely on the merits; irreparable harm will result from denial of the injunction; and the risk of irreparable harm to the moving party outweighs any similar risk of harm to the opposing party." Doe v. Superintendent of Schs. of Weston, 461 Mass. 159, 164 (2011). If a ruling on injunctive relief is based solely on documentary evidence "we may draw our own conclusions from the record." Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733, 741 (2008), quoting from Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 616 (1980). We view the Trust document in this case as documentary evidence from which we may draw legal conclusions. Similarly, property rights in a tenancy in common present questions of law. Hence, we address the issues presented by both injunction motions.
1. Nancy's request for conversion of her beneficial Trust interest to a tenancy in common property interest. Nancy cites art. Sixth (b) of the Trust as authorizing a trustee or beneficiary to withdraw her beneficial interest from the Trust by gifting the interest to another beneficiary. Article Sixth (b) states as follows:
"Each beneficiary hereunder may transfer by way of gift any part or all of his/her beneficial interest in this trust to any one or more of the issue of Harriet G. Rogers then living . . . . Each time a transfer of beneficial interest is made as aforesaid, the trustees shall notify the transferee of his/her right to withdraw trust principal equal in value to the percentage of beneficial interest so transferred . . . and said transferee may exercise his/her right of withdrawal within forty-five (45) days of the date
upon which notice of such right of withdrawal is sent . . . . If a gift transferee exercises his/her right of withdrawal as aforesaid, then to the extent it is necessary to convey a percentage interest in the real property held in trust hereunder to said beneficiary outright, free of trust, said withdrawing beneficiary shall take title to the same as tenant in common with this trust." (Emphasis added.)We read the plain language appearing in art. Sixth (b) of the Trust document as granting any beneficiary the power to gift his or her share to any one or more of the issue of Harriet G. Rogers, and convert his or her interest in the Trust into an outright ownership interest to be held as a tenant in common. Nancy's request meets these conditions. There is no limiting language in art. Sixth (b) of the Trust document restricting this type of gifting between beneficiaries, and art. Sixth (b) does not grant the defendants discretion to block such a gift and withdrawal request.
Specifically, the defendants' contention that the buyout provision of art. Third of the Trust document is the only method by which a beneficiary in Nancy's position can withdraw from the Trust is unpersuasive and does not recognize the gifting procedure under art. Sixth (b). The buyout procedure in art. Third requires the beneficiary to calculate the buyout value using the following formula: "The value of the entire property determined as aforesaid times .80 (to reflect a 20 [percent] discount for minority interest) times the percentage of beneficial interest held by the selling beneficiary as reflected on the then Schedule of Beneficial Interest of [the Trust]." Unquestionably, the buyout procedure dictates how a trustee or beneficiary can "sell" his or her interest to the Trust, but that does not negate the separate transfer, withdrawal, and conversion to a tenancy in common under the gifting provision of art. Sixth (b).
Accordingly, based on the terms of the Trust document, we conclude that Nancy and other beneficiaries are permitted to gift their beneficial interests to each other and convert those interests into ownership interests held as tenants in common, and thereby withdraw from the Trust under art. Sixth (b).
2. Peter's consent to rent claim. In order to determine whether Peter -- who as previously noted is already a tenant in common -- can demand consent from the defendants before the defendants rent the property, we review property law concerning tenancies in common. The Trust document established a rental procedure by which beneficiaries would rent the property for select time periods, payment being based on the duration of the stay and desirability of the time period. The rental fees were to be determined by the trustees. If the beneficiaries were either unwilling or unable to rent the property for the designated time periods the trustees would then rent the property to outside parties. The aggregate rental income was used to pay for the property taxes, insurance, and general maintenance of the property. Ultimately, as discussed below, we discern no principle of tenancy in common property law that would entitle Peter to demand consent prior to rental of the property by the defendants.
In a tenancy in common, each tenant in common "has an equal right of entry, occupation and enjoyment, the possession of one being presumed to be the possession of all." Hershman-Tcherepnin v. Tcherepnin, 452 Mass. 77, 90 (2008) (Tcherepnin), quoting from Muskeget Island Club v. Prior, 228 Mass. 95, 96 (1917) (Muskeget). Each cotenant can use the property as if he or she were the sole owner, so long as his or her use does not preclude other cotenants from enjoying their right to possess the property. See Muskeget, 228 Mass. at 96-97; Brady v. Gloucester City Council, 59 Mass. App. Ct. 691, 695 (2003). See also Alperin, Summary of Basic Law § 15.30 (4th ed. 2009).
With respect to leasing of such property, a cotenant's interest in the shared property "is alienable, and may be transferred without the consent of the co-tenants by deed, lease, mortgage, will, or intestate succession" (emphasis added). Tcherepnin, 452 Mass. at 90 n.21 (citation omitted). See Rising v. Stannard, 17 Mass. 282, 284 (1821) ("[E]ach joint tenant, or tenant in common, has a right to occupy any part of the common property, and may assign such possessory right to a stranger). "[I]f one co-tenant should lease his share in the common property, the lessee on entry would have the same rights in relation to the other co-tenant, as the lessor had before the demise" -- i.e., a cotenant's lessee stands in the same position as the cotenant-lessor. Keay v. Goodwin, 16 Mass. 1, 3 (1819). See King v. Dickerman, 11 Gray 480, 481 (1858) ("By virtue of his lease of one undivided tenth from the other tenant in common of the estate, he was in legal effect co-tenant of the plaintiff. He had a right to be in possession of his share of every part of the estate").
Thus, Peter and the Trust can each lease their undivided cotenancy interest in the property. However, the law of tenancy in common does not extend so far as to require that one cotenant obtain another cotenant's consent before leasing that cotenant's undivided interest in the commonly held property. Rather, the restriction is that cotenants cannot convey or lease more than their ownership interest or otherwise oust their cotenant.
For purposes of leasing an undivided interest in a home, the difference between leasing an undivided interest in the home and leasing the entire home may be a distinction without a practical difference because the lessee would be able to occupy the entire home. Compare 20 Am. Jur. 2d Cotenancy & Joint Ownership § 99 (2015) ("Leases of entire property") with 20 Am. Jur. 2d Cotenancy & Joint Ownership § 100 (2015) ("Leases of cotenant's undivided interest").
Conclusion. To be sure, the application of the Trust document's provisions concerning beneficiary withdrawal and transfers to a tenancy in common reflect the inherent difficulties in holding undivided interests in a home when family relationships deteriorate. When, as here, there are divided family interests and tenancies in common, a complaint for partition is a looming prospect, unless the parties resolve their differences. But that is not before us. Rather we address only the two issues presented by the preliminary injunction motions.
As previously discussed, given that Peter's claim lacks legal basis and has no likelihood of success, the denial of his preliminary injunction was correct. As to Nancy's transferability/gift claim, we conclude that her request for conversion to a tenancy in common falls within and is authorized by art. Sixth (b). Accordingly, a preliminary injunction is to enter stating that Nancy and other beneficiaries of the Trust are entitled to transfer and withdraw their beneficial interests in the Trust. The parties are to take all necessary actions to complete such transfer and withdrawal of beneficial interests in an expeditious manner in accordance with the provisions of art. Sixth (b) of the Trust document.
Given the complexity of this matter, we suggest that the same judge retain control of the case in order to oversee the implementation of the terms of the preliminary injunction.
So much of the order denying Peter's motion for a preliminary injunction is affirmed. So much of the order denying Nancy's motion for a preliminary injunction is vacated, and the matter is remanded for the entry of a preliminary injunction in accordance with this memorandum and order.
So ordered.
By the Court (Berry, Grainger & Sullivan, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk
Entered: November 19, 2015.