Annual Survey of Massachusetts Law

Volume 1977 Article 12

1-1-1977 Chapter 9: Property and Conveyancing William Schwartz

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Recommended Citation Schwartz, William (2012) "Chapter 9: Property and Conveyancing," Annual Survey of Massachusetts aL w: Vol. 1977, Article 12. Schwartz: Chapter 9: Property and Conveyancing

Chapter 9 Property and Conveyancing

WILLIAM SCHWARTZ*

§9.1. Landlord and Tenant-Breach of Covenant of Quiet EnjOy­ ment Resulting From Acts of Tenants. To what exteri.t is a landlord responsible to one tenant for the activities of other tenant$? More specif­ ically, can a breach of the landlord's covenant of quiet enjoyment arise from annoyances and disturbances created by tenants? This was the subject of the Court's opinion in Blackett v. Olanoff. 1 Blackett involved actions brought by a landlord against two residen­ tial tenants to recover rent and other charges due und(lr a lease. 2 The tenants in their answers alleged that they had been deprived of' the possession and enjoyment of the leased premises by, the landlord's breach of his implied covenant of quiet enjoyment. 3 After a trial in the Boston Housing Court, findings favorable to the tenant-defendants were made by that court; and the landlord appealed. 4 On ~ppeal, the Su­ preme Judicial Court affirmed the housing court's deci$ion. 5 At trial, the evidence presented revealed that the tenant-defendants had occupied adjacent fourth floor apartments in the landlord's apart­ ment house since 1967. • The landlord also owned a one~-story building which was located approximately 22 feet from that side o£ the apartment house on which the tenants' apartments were located. 7 In 1971, the

* WILLIAM SCHWARTZ is a Professor of Law at Boston University School of Law. He is the author of FUTURE INTERESTS & ESTATE PLANNING (1965) and a coauthor of MASSACHUSETTS PLEADING & PRACTICE: FoRMs & CoMMENTARY (1974). He is also of counsel to the law firm of Swartz and Swartz, Boston. §9.1. 1 1977 Mass. Adv. Sh. 60, 358 N.E.2d 817. z Plaintifrs Appeal at 1-8, 10-13 Blackett v. Olanoff, 1977 Mass. Adv. Sh. 60, 358 N.E.2d 817 [hereinafter cited as Plaintifrs Appeal]. The case actually involved several landlords, but since the actions were consolidated, the landlords will b, referred to collec­ tively as the landlord. Blackett, 1977 MaBB. Adv. Sh. at 60, 358 N.Ei.2d at 818. 1 Plaintifrs Appeal, supra note 2, at 9, 14. ' • 1977 MaBB. Adv. Sh. at 60-61, 358 N.E.2d at 818. 1 Id. at 61, 358 N.E.2d at 818. • Brief of Appellant at 2, Blackett v. Olanoff, 1977 Mass. Adv. Sh. 60,358 N.E.2d 817, citing Trial Record at 12, 14, 57, 58 [hereinafter cited as Brief of Appellant]. 7 Brief of Appellant, supra note 6, at 2, citing Trial Record at 15. Published by Digital Commons @ Boston College Law School, 2012 1 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.1 PROPERTY AND CONVEYANCING 161

landlord leased the one-story building to a commercial tenant for a term of 3 years commencing February 1, 1971.8 The commercial lease pro­ vided that the premises were to be used "only for a cocktaillounge"u and "that all entertainment . . . will be such that . . . same cannot be heard outside the building and will not disturb residents of [the apart­ ment house] .... [No] customers will be served between the hours of 1 a.m. and 9 a.m. and no customers will remain ... after 1:30 a.m." 111 At the· trial, further evidence was presented that the cocktail lounge had amplified music (electrical musical instruments and singing, at times) which began at 9:30 p.m. and continued until 1:30 a.m. or 2:00 a.m. The music was audible through the granite walls of the tenants' apartment building and was described variously as "unbelievably loud, incessant, raucous and penetrating." The noise disturbed conversation and prevented sleep. In addition, there was evidence of noise from lounge patrons' yelling and fighting.U The housing court found that the tenants were '"very substantially deprived' of quiet enjoyment of their leased premises 'for a substantial time'."12 The court also found that, even though the landlord had not created the conditions intentionally, the landlord '"had it within [hisj control to correct the conditions which . . . amounted to a constructive eviction of each [tenant]'."13 The trial judge also found that the land­ lord promised each tenant that he would remedy the situation, that the landlord made an unsuccessful attempt to do so, and that each tenant vacated the premises within a reasonable time. 14 In an opinion by Justice Wilkins, the Supreme Judicial Court af­ firmed the housing court's finding of constructive eviction. The Court held that where "the disturbing condition was the natural and probable consequence" of the landlord's permitting the non-residential tenant to continue its activities, and where the landlord had control over that tenant's activities, the landlord was not entitled to collect rent from the residential tenants who had been deprived of the quiet enjoyment of their premises. 15 The Court acknowledged that its conclusion was con­ trary to the general rule that a landlord is not liable when one tenant causes annoyance to another .11 The Court noted that the instant case was distinguishable from the situation where one residential tenant an-

• Brief of Appellant, supra note 6, at 2-3, citing Defs. Exh. C. • Brief of Appellant, supra note 6, at 3, citing Tr. 106, Defs. Exh. C para. IV(q). 10 Brief of Appellee at 3-4, Blackett v. Olanoff, 1977 Mass. Adv. Sh. 60, 358 N .E.2d 817, citing Trial Record at 105-06 (emphasis deleted). 11 1977 Mass. Adv. Sh. at 61 n.3, 358 N.E.2d at 818 n.3. 12 Id. at 60, 358 N.E.2d at 818 (emphasis in original). 13 Id. at 60-61, 358 N.E.2d at 818. " Id. at 61, 358 N.E.2d at 818. 15 ld. at 64, 358 N.E.2d at 820. 11 Id. at 63 & n.4, 358 N .E.2d at 819 & n.4. http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 2 Schwartz: Chapter 9: Property and Conveyancing

162 1977 ANNUAL SURVEY QF MASSACHUSE'M'S LAW §9.1 noys another, in which case the landlord traditionally has not been held responsible for breach of the covenant of quiet enjoyment. 17 In Blackett, the natural and probable consequence of the landlorQ.'s lease of the commercial property was annoyance to the residential tenants. This fact, coupled with the landlord's retention of control ov•r the activities of the commercial tenant, excepted this case from the general rule. 18 In the course of its opinion, the Court clarified some ot the uncertain­ ties existent in this area of the law. Formerly, a distinction had been suggested in the Court's treatment of a landlord's misfeasance and non­ feasance, the landlord being liable only for actual misf~asance." Even if this nonfeasance-misfeasance distinction previously had any viability, its demise was clearly forecast by the Court's decision in Pridgen v. Boston Housing Authority. 2' In Blackett, the Court declined to "perpetuate that distinction where the landlord creates .a situation and has the right to control the objectionable conditions. " 21 Some of the prior opinions indicated that the landlord must have performed some act with the intent to deprive the ten~t of the enjoy­ ment and occupation of the premises. zz The Court rejec~d the necessity of a showing of an intent to evict as a sine qua non fqr breach of the covenant of quiet enjoyment. Instead, the Court concuded that "the landlord's conduct, and not his intentions, is controlling."23 The factual circumstances of Blackett give rise to several questions concerning both the nature of a tenant's remedy for a disturbance by another tenant and the scope of the Court's holding that a landlord may be liable for a tenant's conduct. Initially, it should be noted that Blackett arose as a suit by the landlord to collect rent withheld by the residential tenants. A question accordingly arises, whether in the cir­ cumstances of this case, remedies other than rent withholding were available to the tenants. Despite the history of disturbances emanating from the commercial tenant's premises, each residential tenant entered into a new lease for his apartment for a term beginning September 1, 1972. z• Although execution of the leases was preceded by a negotiation period, 21 the problem of disturbances from the cocktail lounge was not

17 /d. at 63, 358 N .E.2d at 819. 11 /d. at 63-64, 358 N.E.2d at 819-20. " E.g., Lumiansky v. Tessier, 213 Mass.182, 185, 99 N.E. 1051, 1052 (1912). Thus,'one commentator had concluded that the landlord "is not liable for mere non-feasance, where he has not convenanted to do the acts in question." HALL, MASSACHUSETTS LAw or LAND­ LORD AND TENANT 92 (4th ed. 1949) (footnote omitted). • 364 Mass. 696, 709-12, 308 N.E.2d 467, 475-77 (1974). 11 1977 Mass. Adv. Sh. at 64, 358 N.E.2d at 820. 11 E.g., Katz v. Duffy, 261 Mass. 149, 152, 158 N.E. 264, 265 (1927). 11 1977 Mass. Adv. Sh. at 62, 358 N.E.2d at 819. · u Brief of Appellant, supra note 6, at 5, citii'IIJ Trial Record at 35, 66. • Brief of Appellant, supra note 6, at 5, citii'IIJ Trial Record at 42~ 68. Published by Digital Commons @ Boston College Law School, 2012 3 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.1 PROPERTY AND CONVEYANCING 163

raised by the tenants and was not dealt with in the new leases. 28 The tenants, if they had had sufficient bargaining power, could have at­ tempted to have language inserted in their leases specifically broaden­ ing the landlord's obligations with respect to the commercial tenant's premises.27 Moreover, one of the tenants was an attorney and not an ordinary layman. 28 The Court did not deal at length, however, with these aspects of the case. Alternatively, the residential tenants might have maintained an inde­ pendent action against the commercial tenant on a theory of nuisance. zv However, a tenant's ability to commence a nuisance action should not vitiate the tenant's right to withhold rent upon the landlord's breach of the covenant of quiet enjoyment. A tenant should not be required to maintain or gain his quiet enjoyment of the leased premises by the commencement of legal proceedings. Finally, a consideration of alternative remedies raises the question of whether the residential tenants might have sued the landlord for breach of the implied warranty of habitability recognized in Boston Housing Authority v. Hemingway. 18 The Court's opinion does not suggest how the implied warranty of habitability would relate to the covenant of quiet enjoyment in the Blackett situation. The question thus remains whether, even if the covenant of quiet enjoyment had not been breached, the annoyances and disturbances emanating from the com­ mercial lessee's premises would have reached the level of a breach of the implied warranty of habitability. It could, of course, be argued that the warranty is limited to matters affecting physical safety and health and that it does not extend to noise pollution. Although it is difficult to justify a distinction being drawn between the two types of injuries, such a differential could be drawn on the basis that noise pollution may not have been a subject of regulation under a local housing code. 31

11 Brief of Appellant, supra note 6, at 5, citi"ll Trial Record at 42, 68. 17 See E. ScHWARTZ, LEAsE DRAmNG IN MASSACHUSETTS 222-23 (1961). 11 Brief of Appellant, supra note 6, at 3, citi"ll Trial Record at 12. 11 See, e.g., Maim v. Dubrey, 325 Mass. 63, 64, 88 N.E.2d 900, 901 (1949), Davis v. Sawyer, 133 Mass. 289, 290 (1882). See also Ingraham v. Dunnell, 46 Mass. (5 Met.) 118 (1842) (landlord may not maintain a bill in equity to enjoin nuisance without joining tenant as co-plaintiff). • 363 Mass. 184, 199, 293 N.E.2d 831, 843 (1973). 11 In Hemingway the Court recognized an implied warranty of habitability in a case involving violations of the state sanitary code. 363 Mass. at 185 & n.2, 199, 293 N .E.2d at 835 & n.2, 843. The Court further noted that the sanitary code's minimum standards of fitness were threshold requirements, violation of which would be "compelling evidence" that the premises were not habitable. Id. at 200 n.16, 293 N.E.2d at 844 n.16. However, the Court specifically observed that "uninhabitability" was not limited to breaches of the sanitary code: There may be instances where conditions not covered by the Code regulations render the apartment uninhabitable . . . . [A] fact situation, which could have http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 4 Schwartz: Chapter 9: Property and Conveyancing

164 1977 ANNUAL SURVEY OF MASSACHUSETTS LAW §9.2 Because the residential leases preceded the commercial lease and the landlord retained control over the use of the premises under the com­ mercial lease, the precise scope of the holding in Blackett is difficult to ascertain. The opinion leaves unclear whether the lanalord would be deemed to have breached the covenant of quiet enjoyment if the com­ merciallease preceded the leases to the other tenants. In such circum­ stances, the landlord would still have had power to control the commer­ cial tenant's activities, but the justifiable expectations of the later resi­ dential tenants as to quiet enjoyment would have been correspondingly reduced. Finally, it is unclear from Blackett whether the presence only of a condition which was the natural and probable consequence of the land­ lord's entering into a lease would render the landlord liable to other tenants for breach of the covenant of quiet enjoyment if he did not additionally retain control over the tenant's activities under the lease. Policy considerations support broadening the scope of liability to in­ clude situations in which the landlord has not retained .control. In par­ ticular, if the potential threat to existing tenants from the future activi­ ties of a new tenant is apparent at the time the lease with the new tenant is entered into, Blackett, if limited to cases of continued landlord con­ trol, may discourage landlords from negotiating for lease terms which give them the right to control the activities of the new tenant. If both "a natural and probable consequence" and control over the tenant's activities must be shown before the landlord is deemed to have breached the covenant of quiet enjoyment, this could induce the landlord to re­ frain from having such a control clause inserted in the lease. On the other hand, the landlord's over-all self-interest in establishing, main­ taining, and controlling the climate and atmosphere of all of the leased premises may cause him still to insist upon the inclusion of such a clause in the lease. §9.2. Sale of Real Estate-Deceit-Accrual of Cause of Action. In Friedman v. Jablonski, 1 the Supreme Judicial Court considered whether a claim for deceit in the sale of real estate accrues for the purposes of the statute of limitations at the time the misrepresentation was made, at the time of conveyance, or only when the allegedly de­ frauded plaintiff knew or reasonably should have known of the misrepre­ sentation.2 ·

demonstrated a constructive eviction, would now be sufficient prpof of a material breach of the warranty of habitability, regardless of whether a sanitary code viola­ tion existed or not. Id., 293 N.E.2d at 844 n.16.

§9.2. 1 1976 Mass. Adv. Sh. 2778, 358 N.E.2d 994. • ld. at 2779-80, 358 N.E.2d at 996. Published by Digital Commons @ Boston College Law School, 2012 5 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.2 PROPERTY AND CONVEYANCING 165 In Friedman the plaintiffs ("purchasers") had purchased real estate from the Jablonskis ("sellers") on January 12, 1972. Another defendant, McCann, had acted as a broker on the sellers' behalf. During the period prior to conveyance of the property, October 1971, to January 12, 1972, the sellers and broker had made oral and written representations that there was a 600-foot artesian well on the property and that a right-of­ way existed over the paved driveway of an adjacent owner, which pro­ vided access to the sellers' property.3 In December 1972, the plaintiffs first discovered that there was no well on their property and that the water pipes which served them drew from a well on land adjacent to their property. At that time, they also learned that they did not have the right-of-way represented to them by the defendants. The adjacent owner informed the plaintiffs that " 'she intended to forbid' " their further use of her well and driveway! The plaintiffs instituted suit in superior court for deceit in the sale of real estate on November 27, 1974. The complaint characterized the sellers' and broker's statements and representations about the well and the right-of-way as "'deliberate, false, and fraudulent,' knowingly made, and relied [upon] to their detriment by the plaintiffs."5 The parties agreed that the relevant statute of limitations provided that an action of tort of this nature had to be commenced "within two years next after the cause of action accrues."• The principal issue before the court was the time at which the cause of action accrued. The defendants argued that the cause of action accrued at the time the alleged misrepresen­ tations were made, or, alternatively, on the date the premises were conveyed. On the other hand, the plaintiffs contended that the "cause of action did not accrue until they knew or reasonably should have known of the misrepresentations."7 The superior court granted the de­ fendants' motion to dismiss under Rule 12(b) of the Massachusetts Rules of Civil Procedure on the grounds that the action was barred by the statute of limitations.8 On appeal, the Supreme Judicial Court reversed. The Court accepted the plaintiffs' argument and adopted the rule "that a cause of action for deceit in the sale of real estate accrues when a buyer learns of the misrepresentation or when the buyer reasonably should have learned of the misrepresentation."8 Applying this standard, the Court held that the plaintiffs' claim concerning the right of way was barred by the

• Id. at 2778-79, 358 N.E.2d at 996. • Id. at 2779, 358 N.E.2d at 996. ' Id. at 2778, 2779, 358 N.E.2d at 994, 996. • G.L. c. 260, §2A, added by Acts of 1948, c. 274, §2. 7 1976 Mass. Adv. Sh. at 2779-80, 358 N.E.2d at 996. 8 /d. at 2778 & n.2, 358 N.E.2d at 996 & n.2. • ld. at 2781, 358 N.E.2d at 997. http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 6 Schwartz: Chapter 9: Property and Conveyancing

166 1977 ANNUAL SURVEY OF MASSACHUSETI'S LAW §9.2 statute of limitations, but that the claim alleging misrepresentations concerning the well was sufficient to withstand the motion to dismiss. 10 The Court held that the allegations as to the right of way were time barred, as a matter of law, since this alleged misrepre~entation ceased to be "inherently unknowable" by the time of sale. A rright of way is a property interest which might appear in the recorded chain of title. If it was not recorded, the plaintiffs could then have inquired further con­ cerning the existence of the right of way. Thus, by the time of sale, the plaintiff could reasonably have known of misrepresentations concerning the right of way .11 It should be noted, however, that the Court by way of dicta specifically negated the inference that an action for deceit does not lie because the plaintiff should have inquired at the registry of deeds. The substantive element of reasonable reliance is not missing, as a matter of law, because the plaintiff could have ascertained the false­ hood by an examination of title in· the registry of deeds. 12 The Court thus drew a bright line between the substantive elements of the cause of action for deceit and the issue of when the cause of action accrues, adopting a more stringent standard with respect to the latter question. The Court reached a different conclusion with respect to the allega­ tions concerning the well. The Court held that the complaint did not show, as a matter of law, that the plaintiffs reasonably could have known the true status of the well by the time the property was conveyed. Furthermore, it was unlikely that the well's location would have been discovered by a title search. In addition, no other facts' about the physi­ cal and other circumstances concerning the well we~ brought to the Court's attention to justify a dismissal of this portion of the complaint as a matter of law. 11 The Court did not, however, reject the possibility that further facts could be adduced at a later stage in the proceedings, such as a motion for summary judgment, which might demonstrate that the plaintiffs reasonably could have known of the true facts about the well at an earlier time so as to be barred from suit by the running of the statute of limitations. The decision in Friedman has its intellectual roots in Hendrickson v. Sears.•• That case raised the question of "when a client's cause of action against an attorney for negligent certification of title to real estate 'accrues'. " 11 The Court held that the cause of action accrues only when the misrepresentation is discovered or when it reasonably should have

11 Id. at 2778-79, 358 N.E.2d at 996. 11 I d. at 2782, 358 N .E.2d at 997. 11 Id. at 2782 n.4, 358 N.E.2d at 997 n.4. 11 Id. at 2783, 358 N .E.2d at 998. 1' 365 Mass. 83, 310 N.E.2d 131 (1974). 11 Id. at 83, 310 N.E.2d at 132.

Published by Digital Commons @ Boston College Law School, 2012 7 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.3 PROPERTY AND CONVEYANCING 167

been discovered, whichever first occurs. 18 At first blush, Hendrickson might easily have been distinguished from the case at bar on the grounds that Hendrickson was based upon the existence of a fiduciary relationship (the attorney-client relationship) between the parties and that, in this case, the parties engaged in an arm's-length transaction. The Court, however, rejected such a narrow reading of Hendrickson and held the rule of Hendrickson to be applica­ ble to any misrepresentation concerning a fact which was "inherently unknowable" by the plaintiffs at the time it was made and at the time of the sale. The Court in Hendrickson did not draw any nice distinctions between the "discovery" rule and the "inherently unknowable" concept. Al­ though the Court, in that case, did state that "[t]he defect is 'inherently unknowable' to the client unless he duplicates the attorney's title search," the Court appeared to treat the "discovery" rule and the "inherently unknowable" concept as being almost synonymous.J7 In Friedman, the Court appears clearly to be erecting two barriers which plaintiffs must overcome to withstand a defense based on the statute of limitations. First of all, the plaintiff must show that the misrepresen­ tation is "inherently unknowable." Normally, the Court will dispose of this issue as a matter of law. In addition, even if the fraud is initially "inherently unknowable," a cause of action will subsequently accrue when plaintiff actually discovers the fraud or it becomes reasonably discoverable. At that point in time, the statute of limitations will start to run. Whether this critical juncture in time has been reached may well present a question of fact in many instances. The Court carefully pointed out that its decision was not grounded on a tolling of the statute of limitations because of a fraudulent conceal­ ment of the cause of action. 18 Although section 12 of chapter 260 of the General Laws provides for a tolling of the limitations period in the event of fraudulent concealment, the Court found that there was no allegation of any positive acts of concealment of the cause of action, and, in the absence of a fiduciary relationship, silence alone cannot constitute fraudulent concealment. §9.3. Real Estate Tax Exemptions-Tenancy by the Entirety. Section 5 of chapter 59 of the General Laws• provides for numerous categories of exemptions from real estate taxation. In De Cenzo v. Board of Assessors of Framingham 2 the Supreme Judicial Court was presented

11 Id. at 63 & n.4, 358 N.E.2d at 819 & n.4. 17 Id. at 90, 310 N.E.2d at 135·36. 18 1976 Mass. Adv. Sh. at 2781 n.3, 358 N.E.2d at 997 n.3.

§9.3 I G.L. c. 59, §5. • 1977 Mass. Adv. Sh. 951, 362 N.E.2d 913. http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 8 Schwartz: Chapter 9: Property and Conveyancing

168 1977 ANNUAL SURVEY OF MASSACHUSETTS LAW §9.3 with the question whether multiple exemptions could be obtained under two separate clauses of the section. 3 In De Cenzo, the taxpayers were the owners, as tenants by the en­ tirety, of a single family home which they occupied as their residence. The wife had received an exemption from property tax, as a blind per­ son, under clause thirty-seven of section 5. Subsequently, the husband sought an exemption, as a veteran, under clause twenty-two of the sec­ tion. The Appellate Tax Board ("board") upheld the denial of hus­ band's application by the Board of Assessors ("assessors")! On appeal, the Supreme Judicial Court reversed the decisions of the board and of the assessors and held that the husband and the wife were each "entitled to receive the exemption for which each qualifie[d]."5 In an opinion by Chief Justice Hennessey, the Court first rejected the argument• that the issue was governed by Sylvester v. Assessors of Braintree. 7 In that case, the Court rejected the notion of the availability of multiple exemptions under a single clause or exemption category. Accordingly, the Court there held that under clause seventeenth of sec­ tion 58 there would be a single exemption of $2,000 (and not a total

3 ld. at 952-53, 362 N.E.2d at 914. • ld. at 951-52, 362 N.E.2d at 914. • ld. at 955-56, 362 N.E.2d at 915-16. • ld. at 952-53, 362 N.E.2d at 914. 7 344 Mass. 263, 182 N.E.2d 120 (1962). • That clause provides for an exemption from real estate tax as follows: Seventeenth, Real estate, to the value of two thousand dollars or the sum of one hundred and seventy-five dollars, whichever would result in an abatement of the greater amount of actual taxes due, of a widow, or of any minor whose father is deceased, occupied by such widow, or minor as her or his domicile, or a person or persons over the age of seventy who has owned and occupied it as a domicile for not less than ten years; provided, that the whole estate, real and personal, of such widow, person or minor does not exceed in value the sum of twenty thousand dollars, exclusive of property otherwise exempt under the twelfth, twentieth and twenty-first clauses of this section and exclusive of the value of the mortgage inter­ est held by persons other than the person or persons to be exempted in such mort­ gaged real estate as may be included in such whole estate. No real estate shall be so exempt which the assessors shall adjuge has been conveyed to such widow, person or minor to evade taxation. A widow, person or minor aggrieved by any such judgment may appeal to the county commissioners or to the appellate tax board within the time and in such manner allowed by section sixty-four or sixty-five, as the case may be. Where the whole estate, real and personal, of such widow, person or minor exceeds in value the sum of eight thousand dollars, exclusive of property otherwise exempt as aforesaid and exclusive of the value of the mortgage interest as aforesaid, this exemption shall be borne by the commonwealth, and the state treasurer shall annually reimburse the city or town for the amount of the tax which otherwise would have been collected. Any exemption under this clause, to the value of two thousand dollars or the sum of one hundred and seventy-five dollars, which­ ever would result in an abatement of the greater amount of actual taxes due may be apportioned among the persons whose title to the real estate was acquired under Published by Digital Commons @ Boston College Law School, 2012 9 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.3 PROPERTY AND CONVEYANCING 169

exemption of $6,000) even though the realty was owned and occupied by three minors as their joint domicile. 8 Although the opinion contains the broad statement, " [w ]e are of opinion that these changes were intended to limit the exemptions to one for the real estate, regardless of how many taxpayers who are co-owners are domiciled there ...," 10 that case did not definitively dispose of the issue whether multiple exemp­ tions could be obtained under two separate clauses. The major problem before the Court in De Cenzo was the language in the preamble to section 5 which reads: "[A]ny person who receives an exemption under the provisions of clause ... Twenty-two ... [orj Thirty-seven ... shall not receive an exemption on the same property under any other provision of this section ...." 11 Accordingly, the issue posed was whether a husband and wife, who own realty as tenants by the entirety, are deemed to be a single "person" within the meaning of the statute.12 The taxpayers had to overcome the argument that the husband and wife, who own realty as tenants by the entirety, are considered as one person. As the Court stated in Bernativicius v. Bernativicius: 13 The nature of a tenancy by the entirety is thoroughly established by our decisions. It is founded on the common law doctrine of the unity of husband and wife as constituting in law but one person. A conveyance to a husband and wife as tenants by the entirety creates one indivisible estate in them both and in the survivor, which neither can destroy by any separate act. Both husband and wife are seised of such an estate per tout et non per my as one person .... Rejecting this unity argument, the Court stated that it could find no legislative intent to so limit the exemption. It noted that the exemption for the blind "is expressly applicable 'whether such property is owned by ... [the blind person] separately or jointly or as a tenant in com- mon ...."' 14 The Court also took note of the current attacks being leveled against the concept of tenancy by the entirety. 15 The presump­ tion that a husband and wife own realty as tenants by the entirety has recently been reversed by the legislature.'' The Court further pointed

the provisions of section three of chapter one hundred and ninety and who qualify for an exemption under this clause. • 344 Mass. at 263-64, 182 N.E.2d at 120-21. 11 Id. at 264, 182 N.E.2d at 121. 11 G.L. c. 59, §5, as amended by Acts of 1970, c. 270, §1. 12 1977 Mass. Adv. Sh. at 953, 362 N.E.2d at 915. 13 259 Mass. 486, 487, 156 N.E. 685, 686 (1927). 14 1977 Mass. Adv. Sh. at 953-54, 362 N.E.2d at 915 (footnote omitted). •• ld. at 954-55, 362 N.E.2d at 915. •• Acts of 1973, c. 210, §1, amending G.L. c. 184, §7. http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 10 Schwartz: Chapter 9: Property and Conveyancing

170 1977 ANNUAL SURVEY OP MASSACHUSETI'S LAW §9.4

out that a special commission appointed to study the impact of the Equal Rights Amendment to Article I of the Declaration of Rights of the Massachusetts Constitution recommended that tenancies by the en­ tirety be abolished completely because of their discriminatory impact on women. 17 Accordingly, the Court concluded that the legislature did not intend the form of ownership to bar otherwise eligible spouses each from receiving his or her property tax exemption}• §9.4. Deeds: Land Abutting a Way. Section 58 of chapter 183 of the General Laws provides: Every instrument passing title to real estate abutting a way, whether public or private, watercourse, wall, fence, or other monu­ ment, shall be construed to include any fee interest df the grantor in such way, watercourse or monument, unless (a) the grantor retains other real estate abutting such way, watercourse and mon­ ument, in which case, (i) if the retained real estate is on the same side, the division line between the land granted and the land re­ tained shall be continued into such way, watercourse or monument as far as the grantor owns, or (ii) if the retained real estate is on the other side of such way, watercourse or monument between the division lines extended, the title conveyed shall be to the center line of such way, watercourse or monument as far as the grantor owns, or (b) the instrument evidences a different intent by an express exception or reservation and not alone by bounding by a side line.• Section 58 thus provides "an authoritative rule of construction" for instruments which pass title to property which abuts a way. 2 In Emery v. Crowley 8 the Supreme Judicial Court was.required for the fmt time to construe this provision. That case arose out of a petition by property owners ("Emery") to register title to three parcels of real estate. The claims were contested by the defendant Crowley who owned property which surrounded one of Emery's parcels. The facts of the case are somewhat involved. Parcel 2, the property in dispute, was a "paper street."4 All of the land currently owned by Emery and Crowley was formerly owned by Emery's father, Emery Sr.

17 1977 M888. Adv. Sh. at 955 n.5, 362 N.E.2d at 915 n.5. 11 For a further discussion of DeCenzo, see Hall, State and Local Taxation, supra §8.4, at nn. 12·14.

§9.4. 1 G.L. c. 183,§58, added by Acts of 1971, c. 684, §1 and as amended by Acts of 1973, c. 185, fl. 1 Emery v. Crowley, 1976 M888. Adv. Sh. 2786, 2789, 359 N.E. 2d 1256, 1259. 1 1976 M888. Adv. Sh. 2786, 2786, 359 N.E.2d 1256, 1258 (1976). 1 ld. at 2786, 359 N.E.2d at 1258. Published by Digital Commons @ Boston College Law School, 2012 11 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.4 PROPERTY AND CONVEYANCING 171 In 1947 Emery Sr. conveyed two parcels in fee to one Bowmar. Emery Sr. retained the right to build a street on the conveyed property, how­ ever, and Bowmar in return was to have a right of way over Parcel 2, if the street were built. No street was built, and in 1969 Crowley acquired the property. 5 Between 1949 and 1953 Emery Sr. conveyed land abutting Parcel 2 to one Turkis. This conveyance made no ref~rence to Parcel2 as a street, describing it as "'other land of the grantor."' Crowley also acquired this property in 1969. 8 In the proceeding to register title Crowley asserted inter alia that the effect of section 58 was to give him fee ownership of Parcel 2,7 Particu­ larly, Crowley contended that the surrounded property was a "way" on which Crowley's property "abutted" within the meaning of the section. Crowley appealed from a determination by the land court that the dis­ puted parcel belonged to Emery in fee. 8 In an opinion by Chief Justice Hennessey the Court affirmed the decision of the land court and held that the property was not subject to the operation of section 58. • In its decision the Court clarified the meaning of the terms "way" and "abutting" which appear in the statute. The Court held that Parcel 2 was not a "way" within the scope of the statute in the instruments which conveyed property from Emery Sr. to Tukis. The descriptions in the various deeds and plans incorporated in the deeds clearly delineated Parcel 2 as belonging to the grantor or his spouse. This led the Court to conclude that the parties "obviously in­ tended and understood" that title to the parcel was retained by the grantor. Since the original grantee acquired no interest in Emery's par­ cel, Crowley received no such interest as a subsequent grantee. 10 The Court further concluded that the portion of Crowley's property which he obtained from Bowmar, and which did refer to Parcel 2 as a contemplated street, nevertheless did not abut the disputed property within the meaning of the statute. 11 Crowley's property touched upon Emery's land only at the end of the disputed property.'2 From the statu-

• Id. at 2787-88, 359 N.E.2d at 1258. • ld., 359 N.E.2d at 1258. 1 Id., 359 N.E.2d at 1258. Crowley also asserted that he had various granted and implied easements over Emery's property, and that Emery no longer was entitled to a right of way over property owned by Crowley. ld. at 2788, 359 N.E.2d at 1258. ' Id., 359 N.E.2d at 1258. The land court also ruled that the parcel was subject only to very limited rights of way, and that Emery retained his right of way over Crowley's property. Id. at 2788-89, 359 N.E.2d at 1258. ' Id. at 2789, 359 N.E.2d at 1258-59. 10 Id. at 2790-91, 359 N.E.2d at 1259. 11 Id. at 2791, 359 N.E.2d at 1259. 12 Id. at 2787, 359 N.E.2d at 1258. http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 12 Schwartz: Chapter 9: Property and Conveyancing

172 1977 ANNUAL SURVEY OF MASSACHUSETI'S LAW §9.4

tory silence with respect to land at the end of a way 13 the Court con­ cluded that such property "does not 'abut' the way in the traditional or statutory sense of the word. Indeed, logically the landowner at the end of a way cannot acquire any fee interest in the way without encroaching on the property rights, if any, of the abutting side owners." 14 Accord­ ingly, the Court concluded that the statute was inapplicable to the instant case in which the disputed property was not a "way" and which, in any event, did not "abut" the surrounding property. The Court never reached the question of whether the parcel was ex­ cluded from the reach of the statutes because a road had never been constructed over the parcel.15 It was conceded that the parcel was "unimproved and impassable."11 At best, the deeds referred to the par­ cel as a "contemplated street."17 It was forcefully argued that: a construction of the statute to include a contemplated way would introduce serious uncertainty into the record title to land. If, under the new statute, persons examining title records must take into account off-record facts (whether the grantor contemplated a way) to determine the extent of territory included in a parcel conveyed, the statute will not serve the evident purpose of making the effect of deeds less uncertain. 18 In its first decision construing section 58 the Court did not clarify one confusing aspect of the statute. The statute is inapplicable to pre-1972 deeds "to the extent that any person or his predecessor in title has changed his position as a result of a decision of a court of competent jurisdiction."•• Because it disposed of the case on other grounds the Court did not indicate whether this phrase refers to a "judicial preced­ ent or to a specific decision in an action in which one of the parties was the person who changed his position or that person's predecessor in title."20 It was argued that the latter interpretation would raise "grave

13 The statute does refer to land "on the same side" of the way and land "on the other side of such way." G.L. c. 185, §58. " 1976 Mass. Adv. Sh. at 2791-92, 354 N.E.2d at 1260. The Court also affirmed the decision of the land court concerning the rights of way which both Crowley's and Emery's properties were subject to. ld. at 2792-93, 359 N.E.2d at 1260. " Appendix to Brieffor the Respondent-Appellant at 28, Emery v. Crowley, 1976 Mass. Adv. Sh. 2786, 359 N.E.2d 1256. 11 Brief for the Respondent-Appellant at 11, Emery v. Crowley, 1976 Mass. Adv. Sh. 2786, 359 N.E.2d 1256 [hereinafter cited as Brief for Respondentj. 17 Brief for Respondent, supra note 16, at 10. 18 Brief of Massachusetts Conveyances Association, Amicus Curiae, Emery v. Crowley, 1976 Mass. Adv. Sh. 2786, 359 N.E.2d 1256 [hereinafter referred to as Brief of Amicus Curiae). 11 Acts of 1971, c. 684, §2. 21 See Brief of Amicus Curiae, supra note 18, at 4. Published by Digital Commons @ Boston College Law School, 2012 13 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.5 PROPERTY AND CONVEYANCING 173 doubts" as to its constitutionality and would be unwise since attorneys could not advise clients to rely on settled legal authority as in the past. Instead, attorneys would be required to foresee the possibility of changes in the law and might have to advise their clients to obtain a "declaratory judgment to guard against such a change."21 §9.5. The Generation Skipping Tax-Is There a Need For The Rule Against Perpetuities? Prior to the Tax Reform Act of 1976, 1 it might have been possible to defer the future imposition of an estate tax for a considerable period of time, despite the transfer of possession and enjoyment of the property through a number of generations. Thus, if 0 transferred property to A for life, then to B for life, then to C for life, then to D for life and then toE for life, the property would not have been subjected to estate taxation on the death of each of the life tenants since none of the life tenants owned an interest in the property which was transmissible, at his death, by will or intestacy.2 The major legal obsta­ cle to the utilization of this scheme would have been the Rule against Perpetuities which would invalidate a future life estate which might possibly vest beyond the period of the rule.3 The Tax Reform Act of 1976 substantially changed this area of the law. It introduced a new concept and a new tax-the generation skip­ ping tax.' The House Report explains the reasons for this tax as follows:" Your committee recognizes that there are many legitimate non­ tax purposes for establishing trusts. However, it also believes that the tax laws should be neutral and that there should be no tax advantage available in setting up trusts. Consequently, the com­ mittee bill provides generally that property passing from one gen­ eration to successive generations in trust form is to be treated, for estate tax purposes, substantially the same as property which is transferred outright from one generation to a successive genera­ tion. A generation-skipping trust essentially provides for benefits to be split between two or more generations which are younger than the generation of the grantor of the trust.' "The tax is to be substantially equivalent

21 Id. at 5.

§9.5. 1 Tax Reform Act of 1976, Pub. L. No. 94-455, 90 Stat. 1520. 2 See I.R.C. § 2033. 3 See W. ScHWARTZ, FuTURE INTERESTS AND EsTATE PLANNING, Ch. 6 (Supp. 1977) [hereinafter cited as ScHWARTZ]. • See I.R.C. § 2601 added by the Tax Reform Act of 1976, Pub. L. No. 94-455, 90 Stat. 1520, 1879. • H.R. REP. No. 1380, 94th Cong., 2d Sees. 47 (1976), reprinted in [1976] U.S. CoDE CoNo. & An. NEws 3356, 3401. • Id., U.S. CoDE CoNo. & An. NEws at 3401. http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 14 Schwartz: Chapter 9: Property and Conveyancing

174 1977 ANNUAL SURVEY OF MASSACHUSETTS LAW §9.5 to the estate tax which would have been imposed if the property had been actually transferred outright to each successive generation."7 The existence of this new tax should cause us to reconsider the neces­ sity and desirability of a Rule against Perpetuities. This question must be considered within the perspective of the reality that a violation of the rule can be easily avoided by draftsmanship. Thus, the use of a "standard savings" clause, to which 4ll prior limita­ tions are subject, insulates the instrument from a violation ofthe rule.H Such a clause essentially provides: "No one shall be permitted to take an interest or share in any disposition unless his interest vest within 21 years after the deaths of A, B, C, D, E, F, G, H, I, J (ten healthy babies alive at the date the perpetuities period commences to run)." Or the clause may require all trusts to terminate and distribution to be made within the perpetuities period.' If the generation skipping tax will oper­ ate so as to reduce sharply the perpetuation of wealth through successive generations in any event, is it fair to punish the beneficiaries who are the innocent victims of sloppy draftsmanship? The issue must also be considered within the framework of a judicial and legislative trend away from the Rule against Perpetuities. Thus, the modem judicial tendency is to take the presence of the rule into account in construing an instrument and to adopt a construction which avoids a violation of the rule. 10 The legislature, for its part, has adopted a ''wait and see" statute which permits the court to take a "second look," as of the death of a life tenant to see what actually happened between the creation of the interests and the termination of the life estate.ll This type of statute eliminates some of the extreme applications of the com­ mon law rule. 12 In addition, the legislature has enacted a limited cy-pres statute,l3 Under this statute, an interest, which would otherwise be in­ valid (despite a "second look") because it is contingent upon a person attaining or failing to attain an age in excess of 21, will be validated by a reduction of the age contingency to 21. 14 If so many teeth have been taken out of the rule by these changes, one should seriously question whether the remaining objectives, if any, of the rule can be served by the generation-skipping tax. One possible policy justification for the rule is that it prevents an

7 Id., U.S. CooE CoNG. & AD. NEws at 3401. ' ScHWARTZ, supra·note 3, at § 6.32 . • ld. 10 ld. at §6.22. 11 See G.L. c. 184A, §1. 12 See ScHWARTZ, supra note 3, at §6.34. 13 G.L. c. 184A, §2. "Id.

Published by Digital Commons @ Boston College Law School, 2012 15 Annual Survey of Massachusetts Law, Vol. 1977 [2012], Art. 12

§9.5 PROPERTY AND CONVEYANCING 175 undue concentration of wealth in family dynasties.•• Whether the generation-skipping tax will effectively redistribute wealth in society so as to displace this need for the rule remains to be seen.t6 The harshness of the tax is mitigated by credits and deductions 17 and the $250,000 exclusion from generation-skipping transfers (per each "deemed trans­ feror~>) for gifts to the grandchildren of the grantor.t8 In addition, many transfers which appear, at first blush, to be generation-skipping trans­ fers, are not (after closer scrutiny) subject to the tax. For example, assume that a grantor transfers property to his wife for life and then to his great-grandchildren outright. Since the grantor's wife is assigned to the same generation as the grantor, •• the trust would not be a generation-skipping trust. A generation-skipping trust has "younger generation beneficiaries [younger than the grantor's generationj who are assigned to more than one generation."20 In this case, there is only one younger generation that is represented in the trust. Such loopholes may prevent the generation-skipping tax from redistributing wealth to a significant extent. Furthermore, the prevention of an undue concentration of wealth is not the sole justification for the Rule against Perpetuities. It has been suggested that the rule is designed to prevent the control of property by the "dead hand" of the past.21 The generation-skipping tax may not effectively prevent control from the grave in a number of situations. For example, a gift to the grantor's children for their lives, remainder (out­ right) to such of the grantor's grandchildren as attain the age of 60, may not be subjected to a generation-skipping tax because of the $250,000 exclusion for gifts to grandchildren. On the other hand, such a gift could be validated by an application of a second-look or cy-pres statute. Fur­ thermore, many of the gifts which involve the attempted imposition of outmoded values upon future generations involve the creation of possi-

•• See Leach, Perpetuities in Perceptive: Ending the Rule's Reign of Terror, 65 HARV. L. REv. 721, 727 (1952). 11 The House Report estimated that the generation-skipping provisions would have no revenue effect for 20 years. It was estimated that when the provisions became fully effec­ tive, after approximately 50 years, they would result in a revenue gain of $100 million dollars per year. H.R. REP. No. 1380, 94th Cong., 2d Sess. 8, Table 1 Fn. 1 (1976), reprinted in U.S. CoDE CoNG. & Ao. NEWS at 3362. 17 See I.R.C. §2602(c), added by the Tax Reform Act of 1976, Pub. L. No. 94-455, 90 Stat. 1879. " I.R.C. § 2613(b)(6), added by the Tax Reform Act of 1976, Pub. L. No. 94-455, 90 Stat. 1882. 11 I.R.C. §2611(c), added by the Tax Reform Act of 1976, Pub. L. No. 94-455, 90 Stat. 1882. zo See I.R.C. §2611(b), added by the Tax Reform Act of 1976, Pub. L. No. 94-455, 90 Stat. 1882. 21 See SIMES, PuBLIC PoLICY AND THE DEAD HAND Ch. III, at 59-63 (1955). http://lawdigitalcommons.bc.edu/asml/vol1977/iss1/12 16 Schwartz: Chapter 9: Property and Conveyancing

176 1977 ANNUAL SURVEY OF MASSACHUSETIS LAW §9.5 bilities of reverter and rights of entry. The legislature has already sub­ jected such interests to a 30 year duration. 22 It has also been suggested that the rule increases the marketability of property by eliminating uncertain future interests. 23 This rationale has limited vitality with respect to a trust since a highly discretionary power of sale can be conferred upon the trustee. To the extent that it has any force, one must consider whether the generation-skipping tax will encourage more outright transfers in lieu of a series of successive life estates. Despite the tax, many transferors will still be tempted to create a series of successive life estates for purely non-tax reasons (such as lack of faith in the beneficiary's capacity to manage the property or a desire to provide benefits for successive generations). In addition, it should be noted that, in any event, an outright transfer may result in the imposi­ tion of an estate tax on the death of the transferee in lieu of a generation­ skipping tax if he had been limited to a life estate. Thus, the transferor may not be effectively dissuaded (from a tax perspective) from creating a series of successive life estates. A resolution of the issue will necessitate an examination of the empiri­ cal data derived from examining the tax in operation. Until such data are accumulated and evaluated, it is to be hoped that this type of dialogue will be continued and broadened.

2• See G.L. c. 184A, §3. 23 See REsTATEMENT OF PRoPERTY Vol. IV, Introductory Notes, at 2130 (1944).

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