Galkin v. Town of Chester

Galkin v. Town of Chester  (97-026); 168 Vt. 82; 716 A.2d 25

[Filed 12-Jun-1998]



       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                            No. 97-026


Irwin Galkin                                 Supreme Court

                                             On Appeal from
    v.                                       Windsor Superior Court

Town of Chester                              December Term, 1997


Shireen Avis Fisher, J.

       Spencer R. Knapp and Molly K. Lebowitz of Dinse, Erdmann, Knapp &
  McAndrew, P.C., Burlington, for Plaintiff-Appellant.

       Thomas S. Durkin of Kramer & Durkin, P.C., Brattleboro, for
  Defendant-Appellee.


PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.


       JOHNSON, J.   Galkin appeals from an order of the Windsor Superior
  Court granting summary judgment in favor of the Town of Chester.  He argues
  that the trial court erroneously determined that (1) his interest in glebe
  lands located in Chester is a leasehold and not a fee, (2) the leasehold
  does not include the right to mine talc deposits on the subject property,
  and (3) Chester is entitled to an award of its attorney's fees.  We affirm
  the judgment, except for the award of attorney's fees to Chester, which we
  reverse.

       Until shortly before this lawsuit, the parties believed the subject
  property was held in fee simple by Chester as public or "glebe" lands, and
  that Galkin was the lessee.  Galkin brought this suit challenging that
  assumption so that he could sell or lease the mineral rights to the
  property to a third party.

       Galkin's chain of title in the subject property dates back to 1947
  when the Town of Chester leased the land to one Edward Holt under a durable
  lease, which provided that the lessee would pay annual rent in return for a
  tenancy that was to last "as long as wood grows and water

 

  runs."  The lease also provided that "Edward E. Holt does further agree to
  use said property in good and husband-like manner."

       Holt quitclaimed his interest in the property to Proctor Reels, Inc.,
  from whom Galkin's business, the 251 Corporation, acquired title at a
  judicial foreclosure sale in 1960.  Galkin then transferred title from the
  corporation to himself by warranty deed in 1969.  He later conveyed the
  property to the Cypress Mining Corporation in early 1984.  Later the same
  year, Cypress Mining Corporation entered into an option agreement with the
  Town of Chester.  The agreement acknowledged that Chester owned the rights
  to any mineral deposits, and, in exchange for $25,000, Cypress received the
  exclusive right to purchase Chester's rights for the sum of $350,000. 
  After Cypress declined to exercise its option, it conveyed the property
  back to Galkin.

                                     I.

       Galkin first contends that the trial court erroneously determined that
  Chester, rather than he, holds title to the subject land in fee simple. 
  His claim turns on an analysis of historical events relating to the Chester
  Town charter.

       Chester's first charter (Wentworth I) was issued in 1754 by New
  Hampshire's colonial Governor, Benning Wentworth, and it named the Town
  "New Flamstead."  New Hampshire's colonial government later rescinded this
  charter, but Governor Wentworth issued a second, virtually identical
  charter (Wentworth II) in 1761.  Both of the Wentworth charters reserved
  "glebe and school" lands to be used for educational and religious purposes.

       New York's colonial government disputed New Hampshire's claim to the
  land that now comprises the State of Vermont, and New York issued its own
  land grants and charters (called "patents") covering these lands.  In 1766,
  New York issued a land grant patent for the lands already controlled by the
  Wentworth II charter.  The New York land grant renamed the area Chester and
  was issued to individuals who were largely different from those listed
  under Wentworth II.  Unlike both Wentworth charters, the New York patent
  for Chester did not

 

  reserve public lands to be used for educational or religious purposes.

       In 1779, Thomas Chandler, a proprietor under both the Wentworth II and
  the New York patent, filed a petition with the Vermont General Assembly
  seeking to resolve the apparent conflict between Wentworth II and the New
  York patent.  The petition requested that "the Original Proprietors [of the
  town] or those that purchased of them ought to hold their Lands by Virtue
  of the New Hampshire Grants, without any Reguard [sic] to the New York
  Patent."  1 Journals and Proceedings of the Vermont General Assembly,
  reprinted in 3 State Papers of Vermont, at 61-62 (1924).  The petition also
  requested that the town be renamed Chester.  In response to the petition,
  the Vermont General Assembly passed a resolution stating "[o]n Petition of
  Thomas Chandler . . . Resolved that the township formerly granted by the
  Governor of New Hampshire by the name of New Flamstead as described in said
  petition be and is hereby established by the name of Chester."  Petitions
  for Grants of Lands, 1778-1911, reprinted in 5 State Papers of Vermont, at
  61 (Mary Greene Nye ed.) (1939).

       Galkin claims that Chester is governed by the New York patent rather
  than Wentworth II and because the New York patent does not preserve lands
  for public uses, that Chester does not actually own any lease lands.  He
  therefore concludes that Chester does not hold title to either the property
  or the minerals at issue.  Although as a durable lessee of Chester's fee,
  this conclusion would seem to defeat his interest in the property, Galkin
  contends that he holds title to the property in fee simple by virtue of the
  Marketable Record Title Act, 27 V.S.A. §§ 601-610.  We disagree with both
  of these assertions.

       In support of his claim, Galkin argues that New York required the
  surrender of New Hampshire grants prior to issuing New York patents.  Thus,
  after the issuance of the New York patent, Wentworth II was no longer
  Chester's governing charter because it had been surrendered to New York. 
  Moreover, Galkin disputes the trial court's finding that the General
  Assembly's resolution responding to the Chandler Petition bypassed the New
  York patent and ratified Wentworth II.  He argues that there is an inherent
  contradiction in the General Assembly's

 

  resolution responding to the petition; the "township formerly granted by
  the Governor of New Hampshire" is significantly different from the land "as
  described in said petition."  The former consisted of 23,000 acres with
  reserved public lands, while the latter contained 31,700 acres and did not
  reserve public lands.

       Galkin contends that given the "petitioners' self-serving
  motivations," the petitioners sought the ratification of the New York
  patent, and not Wentworth II, because the New York patent provided for more
  acreage and did not provide for the reservation of public lands.  He
  further contends that we should assume the General Assembly was responsive
  to the petitioners' request.  Under this reading, Galkin argues, the
  reference in the resolution to the "township formerly granted by the
  Governor of New Hampshire by the name of New Flamstead" is simply meant to
  refer back to the way in which the Chandler Petition erroneously called the
  lands it described.  The resolution, he contends, actually established the
  Town of Chester by granting the lands "as described in said petition,"
  which are the lands granted under the New York patent.  Galkin therefore
  concludes that the Assembly resolution did not ratify Wentworth II, and the
  New York patent remains in effect.

       The trial court concluded that the General Assembly's response to the
  Petition demonstrates its intent that Wentworth II be Chester's governing
  charter.  We agree.  The Chandler Petition asked that their land holdings
  be ratified "by Virtue of the New Hampshire Grants without any Reguard
  [sic] to the New York Patent."  In response, the General Assembly passed a
  resolution providing that the "township formerly granted by the Governor of
  New Hampshire by the name of New Flamstead as described in said petition .
  . . is hereby established."  In light of the fact that the petition
  expressly requests that the Assembly ratify the New Hampshire Grant, we
  conclude that had the Assembly intended to ratify the New York patent
  instead, it would have said so.  Yet the Assembly omitted any reference to
  the New York patent.

       Galkin next claims that, in any event, the New York patent was
  ratified by a 1790

 

  agreement between New York and Vermont.  The 1790 agreement provided that
  in return for Vermont's payment of $30,000 to New York, "all New York
  grants, other than those confirming Wentworth grants, were extinguished." 
  W.T. Bogart, The Vermont Lease Lands, at 45 (1950). Galkin argues that the
  New York patent for Chester confirmed Wentworth II, and the patent was
  therefore ratified by the Vermont Legislature as of 1790.  We disagree.

       Even assuming arguendo that the New York patent confirmed Wentworth II
  for purposes of the 1790 agreement, we conclude the General Assembly's
  approval of the Chandler Petition in 1779 demonstrated the Assembly's
  intent that Wentworth II be the operative charter.  Absent more compelling
  evidence to the contrary, we decline to hold that the 1790 agreement was
  intended by the Legislature, some eleven years later, to essentially
  reverse the General Assembly resolution approving the Chandler Petition,
  and to reinstate the New York patent.

       Moreover, from the exhibits introduced at trial we note that the
  historical records of the Town consistently indicate the existence of glebe
  and school lands, and that the Town has regularly leased the subject
  property for more than one hundred and fifty years.  In light of this long
  history and absent other evidence of the Legislature's intent, we hold that
  whatever legal significance the New York patent might have enjoyed prior to
  the General Assembly's resolution ended in 1779 with Wentworth II remaining
  in effect as the governing charter.  Cf. Town of Readsboro v. Town of
  Woodford, 76 Vt. 376, 378, 57 A. 962, 963 (1904) ("When a municipal
  corporation has assumed under color of authority, and exercised for a
  considerable time with the consent of the state, the powers and privileges
  of such corporations, a private party in private litigation cannot question
  the legality of its existence.").  The parties concede that all glebe and
  school lots are held in fee by the townships in which they are located, and
  that the subject property is located within the glebe and school lots
  designated in Wentworth II.  Consequently, we conclude that Chester owns
  the subject property in fee and that Galkin's interest is limited to that
  of a durable leasehold.

       Having determined that Chester owns the fee in the subject property,
  we reject Galkin's

 

  claim that he owns it under the Marketable Record Title Act, 27 V.S.A. §§
  601-610.  As the trial court concluded, Galkin does not and has never held
  record title to the fee in the property and, consequently, he does not
  state a claim under the Marketable Record Title Act.  See id. § 601 (to
  assert claim party must hold unbroken chain of title of record to the
  interest for forty years).

                                     II.

       Galkin next argues that even if Chester owns the fee in the property,
  the town is precluded from claiming mineral rights because he owns the
  rights by virtue of his durable lease. Galkin first asserts that 24 V.S.A.
  § 2403 precludes town selectmen from reserving royalties for minerals
  extracted from public lands.

       When interpreting a statute, we look first to its plain meaning; "[i]f
  the meaning is plain, we will enforce it according to its terms."  State v.
  Ashley, 161 Vt. 65, 67, 632 A.2d 1368, 1370 (1993).  "We will read
  operative sections of a statutory scheme in context and the entire scheme
  in pari materia."  Id.

       The current statute authorizing towns to lease public lands provides
  that "[t]he selectmen may lease such lands . . . reserving rents for the
  same."  24 V.S.A. § 2403 (emphasis added). A predecessor statute granted
  such lands to the towns for the "sole purpose[] of appropriating the rents
  and profits of such lands" for the support of religious worship.  Act of
  Oct. 30, 1794, reprinted in Laws of Vermont of a Public and Permanent
  Nature: Coming Down to, and Including, the Year 1824, ch. XXV at 194
  [hereinafter 1824 Compilation] (emphasis added). Galkin argues that the
  omission of the word "profits" indicates a legislative intent to disallow
  the reservation of profits from public lands and limit towns' income from
  such lands to annual rent.

       A review of the statutes from the late eighteenth and early nineteenth
  century reveals, however, that the Legislature did not use uniform language
  to describe what type of income the towns were authorized to collect.  See,
  e.g., Act of Nov. 5, 1805, reprinted in 1824

 

  Compilation, supra, ch. XXV at 198. (The selectmen may lease such lands
  "reserving an annual rent therefor.") (emphasis added); Act of Nov. 3,
  1798, reprinted in 1824 Compilation, supra, ch. XXV at 196 ("avails of such
  lands") (emphasis added); Act of Oct. 30, 1794, reprinted in 1824
  Compilation, supra, ch. XXV at 194 ("rents and profits") (emphasis added). 
  One amendment to a statute governing public lands changed the way that "the
  monies arising from the rents of the land described in the [prior] act"
  were distributed.  Act of Nov. 11, 1818, reprinted in 1824 Compilation,
  supra, ch. XXV at 198 (emphasis added).  The prior statute provided,
  however, that it was the selectmen's duty to "collect the rents and profits
  of such lands."  Act of Oct. 30, 1794, reprinted in 1824 Compilation,
  supra, ch. XXV at 193 (emphasis added).  We, therefore, conclude that the
  use or omission of the word "profits" lacks legal significance, because 24
  V.S.A. § 2403 and its predecessors granting the towns the authority to
  reserve "rent" were intended by the Legislature to include the authority to
  reserve profits as well.

       We find further support for this conclusion when we consider § 2403 in
  light of related statutory sections.  Section 2402 provides that town
  selectmen "may commence, prosecute or defend, in the name of the town, any
  action necessary to recover . . . damages for injuries done to [public]
  lands."  Section 2406 permits towns to convey the fee in public lands
  provided that certain conditions are fulfilled.  Considering that the
  selectmen are empowered to recover damages for "injuries" to the land, and
  even to convey the town's interest in the property, we conclude that § 2403
  should not be interpreted as restricting the town's interest in public
  lands to the mere collection of rent.

       Galkin next argues that unless the lessor under a durable lease
  explicitly reserves mineral rights, the right to extract minerals from the
  property is included in the scope of the lease and therefore belongs to the
  lessee.  As a corollary, he argues that lessors who have not reserved
  mineral rights are precluded from recovering damages for their extraction
  in an action for waste.

       Galkin does not dispute that the fee owner of real property also owns
  the rights to the

 

  minerals therein.  See, e.g., 2 B. Jones, Tiffany on Real Property, § 587,
  at 507 (3d ed. 1939 & Supp. 1997).  Instead, he asserts that a lessor of a
  durable leasehold conveys its interest in the mineral rights of the durable
  leasehold property to the lessee for the duration of the leasehold, citing
  Spaulding v. Fletcher, 124 Vt. 318, 205 A.2d 556 (1964).

       Spaulding involved a glebe lot leased by the selectmen of Plymouth to
  a tenant in 1819 under a durable lease which provided for annual rent and
  included a right of re-entry if the rent was overdue.  The primary issue in
  the case concerned which of two conflicting leases would be given effect. 
  The Court decided that a lease of mineral rights from the town to the
  plaintiff was ineffective because the town was no longer in possession of
  the rights.  See id. at 323-24, 205 A.2d  at 559-60.  The decision does not,
  however, address whether the mineral rights were transferred as an implicit
  term of the durable lease or whether the lease expressly provided for the
  transfer of mineral rights.  Accordingly, we find Galkin's reliance on
  Spaulding misplaced.

       Nor are we persuaded by the trial court's reliance on Jones v. Vermont
  Asbestos Corp., 108 Vt. 79, 182 A. 291 (1936).  The trial court cited the
  Jones decision as holding that a "durable lease tenant has only possessory
  interest in `surface of the soil' absent grant of ownership by lessor." 
  The Jones case, however, concerned a challenge to a statutory amendment
  that, for the first time, permitted towns to convey their fee simple
  interest in public lands.  The Court was also charged with determining the
  rights of the parties and the State of Vermont to certain glebe land in the
  Town of Belvidere.  The State had a potential claim to mineral rights in
  the glebe land through a statute providing that all mines or quarries
  discovered on public land belonged to the State.  See id. at 103, 182 A.  at
  302.  The Court concluded, however, that once the town conveyed the glebe
  land to a private entity in fee simple, the State would no longer have an
  interest in the minerals because the land would no longer be public land. 
  See id. at 103-04, 182 A.  at 303.  The Court reasoned that after the
  conveyance, the private entity "as the possessor of the surface of the soil
  will be deemed to be in possession of whatever lies underneath the
  surface."  Id. at 104, 182 A.  at 303.  Jones does not resolve the

 

  question presented by the instant case.

       Because our precedents do not adequately address the question, we look
  to the law of real property and the nature of the leasehold interest.  This
  Court has long held that a durable lease creates a leasehold and not a fee. 
  See University of Vt. v. Ward, 104 Vt. 239, 263, 158 A. 773, 783 (1932). 
  The relationship between parties to a durable lease is that of landlord and
  tenant.  See id.  Unless the governing instrument provides otherwise, it is
  well-settled law that the landlord retains title to mineral rights in the
  leasehold property.  See 2 Tiffany, supra, § 633, at 634-35.  A tenant is
  not entitled to extract minerals from the leasehold property; to do so
  constitutes voluntary waste for which the tenant is answerable.  See id.;
  accord United States v. Bostwick, 94 U.S. 53, 68 (1876).

       Nevertheless, Galkin argues that we should adopt the opposite view,
  that a durable lease conveys mineral rights even when it is silent as to
  such rights.  In support of his argument, he contends that the possibility
  of a durable lessor's reversionary interest vesting in possession is so
  remote that the law of waste should not afford a remedy to the holder of
  such a tenuous interest.  See 8 R. Powell & J. Rohan, Powell on Real
  Property,  639, at 56-12 (1995) ("[T]o the extent that the possessory
  interest lacks the certainty of ending, as in the case of common-law
  estates in fee-tail, or of modern estates in fee simple defeasible, the
  regulatory force of the law of waste decreases.").  What Galkin essentially
  argues is that a durable leasehold is in fact a fee simple determinable,
  and not a leasehold at all.  We have already rejected that claim.  See
  Ward, 104 Vt. at 263, 158 A.  at 783.

       We see no reason to treat durable leaseholds differently from the more
  traditional landlord-tenant relationships, nor has Galkin provided us with
  one.  We note in this respect that if Chester intended to convey a fee
  interest, it could have done so.(FN1)  Instead, Chester's conveyance to Holt,
  through which Galkin's title is derived, expressly stated that it was a
  lease. In addition, the instrument expressly provided that the lessee
  agrees to use the property in "good and husband-like manner."  We conclude
  that such a covenant indicates the parties' intention to establish a
  traditional landlord-tenant relationship.  See Sheldon Slate Prods. Co. v.
  Kurjiaka, 124 Vt. 261, 268, 204 A.2d 99, 104 (1964) (deed should be
  construed to give effect to the intention of the parties).  Accordingly,
  the trial court properly decided that Galkin is barred from mining or
  selling the mineral rights in the subject property without authorization
  from Chester.

                                    III.

       Galkin's final claim is that the lower court erred in awarding
  attorney's fees to the Town of Chester.  Vermont adheres to the American
  Rule with respect to the award of attorney's fees. Robes v. Town of
  Hartford, 161 Vt. 187, 198, 636 A.2d 342, 349 (1993).  The American Rule
  ordinarily prohibits an award of attorney's fees absent a specific
  statutory provision or an agreement of the parties.  Converse v. Town of
  Charleston, 158 Vt. 166, 169, 605 A.2d 535, 537 (1992).  There is no
  statutory provision or agreement of the parties authorizing the trial court
  to award attorney's fees.  We therefore reverse the trial court's award to
  Chester of its "legal costs and expenses" to the extent that it includes an
  award of attorney's fees.

       Affirmed, except the award of attorney's fees to Chester is reversed.


                              FOR THE COURT:



                              _______________________________________
                              Associate Justice






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                                  Footnotes


FN1.  Before 1937, town selectmen were precluded from conveying public
  lands in fee.  See Trustees of Caledonia County Grammar Sch. v. Kent, 86
  Vt. 151, 156, 84 A. 26, 28 (1912). In 1935 the Legislature enacted a
  statute permitting the Town of Belvidere to convey certain public lands. 
  See 1935, No. 239, § 1; see also Jones v. Vermont Asbestos Corp., 108 Vt.
  79, 102, 182 A. 291, 302 (1936) (upholding statute).  In 1937 the statute
  was amended to remove the prohibition altogether.  See 1937, No. 56 § 1. 
  The lease from Chester to Holt was executed in 1947.