Summary
holding that a property conveyance from one religious corporation to another was "invalid" where the transferor argued that it did not obtain court approval under § 12
Summary of this case from Mosdos Chofetz Chaim, Inc. v. RBS Citizens, N.A.Opinion
Argued June 8, 1981
Decided July 7, 1981
Appeal from the Appellate Division of the Supreme Court in the Second Judicial Department, ABRAHAM J. MULTER, Referee.
Stephen A. Humsjo for appellant.
Dwight B. Demeritt, Jr., and Paul V. Nunes for respondent.
MEMORANDUM.
The order of the Appellate Division should be affirmed.
Until and unless both leave of the court and appropriate denominational authorization have been obtained as required by section 12 of the Religious Corporations Law, such a corporation may not sell any of its real property. While under that statute it cannot make a valid conveyance without judicial sanction, it is established that it may enter into a contract to sell conditioned upon obtaining court approval. Moreover, in an action for specific performance, a court of equity "has ample power to inquire into the fairness of the contract and as to its advantage or disadvantage to the religious corporation, and to approve the proposed conveyance and direct it to be made where, upon all the facts, no valid reason appears for refusing such relief" (Muck v Hitchcock, 149 App. Div. 323, 328-329, revd on other grounds 212 N.Y. 283; Sun Assets Corp. v English Evangelical Lutheran Church, 19 Misc.2d 187, 192 [MARTUSCELLO, J.]; accord Bounding Home Corp. v Chapin Home for Aged Infirm, 19 Misc.2d 653, 654 [MARGETT, J.]; Congregation Beth Elohim v Central Presbyt. Cong., 10 Abb Prac [NS] 484, 489; Bowen v Trustees of Irish Presbyt. Cong. in City of N.Y., 6 Bosw 245; but see Wilson v Ebenezer Baptist Church, 17 Misc.2d 607 ).
In the present case, the Appellate Division's factual finding that the contemplated sale would not promote the purposes of the respondent religious corporation or the interests of the members of its congregation is supported by the weight of the evidence (Electrolux Corp. v Val-Worth, Inc., 6 N.Y.2d 556, 563). Under the circumstances, we cannot say that judicial consent was not properly withheld (Wyatt v Benson, 4 Abb Prac 182, 189). It follows that the purported agreement would be invalid and did not entitle the plaintiff to either specific performance or monetary damages (Associate Presbyt. Cong. of Hebron v Hanna, 113 App. Div. 12, 14; Sun Assets v English Evangelical Lutheran Church, 19 Misc.2d 187, 192, supra).
True, in most cases it would be preferable for the approval to have been sought in an independent proceeding instituted pursuant to section 511 of the Not-For-Profit Corporation Law, a matter, however, of no moment here since approval was not granted. For the same reason, it is now unnecessary for us to consider the propriety of a grant of permission in a proceeding such as the present one in which all the requirements of section 511 would have been met.
Finally, it having been determined that judicial approval was properly refused, it becomes unnecessary for us to pass on whether, absent the requirement for such consent, the agreement between the parties would have constituted an enforceable contract.
I concur in the result, said accord being reached on the narrow ground that section 12 of the Religious Corporations Law confers no power upon the courts to consider approval of the transaction at issue.
By statute, a religious corporation may not "sell * * * any of its real property without applying for and obtaining leave of court" (Religious Corporations Law, § 12, subd 1). Since a sale occurs when a contract of sale is made (e.g., Fries v Merck, 167 N.Y. 445, 449-451; Madison Ave. Baptist Church v Baptist Church in Oliver St., 46 N.Y. 131, 139-141), court approval is required before the contract becomes binding. As an exception to this rule the statute permits the court to confirm a conveyance after the sale has been made and the conveyance "executed and delivered" (Religious Corporations Law, § 12, subd 9 [emphasis added]). Here, prior approval of the sale had not been obtained and no conveyance has been executed and delivered. Thus, the courts have no statutory power to approve or disapprove the transaction.
Moreover, approval of the sale pursuant to subdivision 1 of section 12 may only be obtained by petition of the religious corporation itself (see Not-For-Profit Corporation Law, § 511; Wilson v Ebenezer Baptist Church, 17 Misc.2d 607, 609-610), except that the grantee may seek to "confirm" once the conveyance has been executed and delivered (Religious Corporations Law, § 12, subd 9). An obvious purpose of this statutory scheme is to prevent a forced conveyance of the religious corporation's real property at the behest of the vendee (see Wilson v Ebenezer Baptist Church, supra). Inasmuch as the religious corporation here has not sought leave to sell its property, but rather this action was initiated by the vendee, the court may not even consider approval or disapproval of the sale.
For these reasons, the alleged contract between the parties could have no legal effect. On this view of the case, it is unnecessary to consider whether, under the general principles of contract law, the parties actually entered into a contract of sale.
Accordingly, the order of the Appellate Division should be affirmed.
Judges JASEN, JONES, WACHTLER and FUCHSBERG concur; Chief Judge COOKE concurs in result in a concurring opinion in which Judges GABRIELLI and MEYER concur.
Order affirmed, with costs, in a memorandum.