Town of Groton, et al. v. Mardie Lane Homes, LLC, et al.

The sole issue in this appeal1 is
whether a mortgage is a conveyance under General
Statutes § 8-26c. In this declaratory judgment action,
the defendant East Haven Builders Supply, Inc.,2
appeals from the grant of summary judgment rendered
in favor of the plaintiffs, the town of Groton (town)
and RLI Insurance Company (RLI). On appeal, the
defendant, which holds a mortgage interest on a number
of the subdivision lots, contends that the trial court
improperly concluded that the granting of a mortgage
interest in subdivision property did not constitute a
conveyance pursuant to § 8-26c.3 We affirm the judgment
of the trial court.

The record reveals the following undisputed relevant
facts and procedure. On October 27, 1998, the named
defendant, Mardie Lane Homes, LLC (Mardie Lane
Homes), received conditional approval from the town
planning commission (commission) for construction of
a subdivision on its property. Subdivision plans proposed
the construction of public improvements including
the construction of roads, recreation areas and lot
monumentation. As a condition of its approval, the town
required Mardie Lane Homes to post a performance
bond with surety to ensure that the proposed public
improvements would be completed. Mardie Lane
Homes, as principal, and RLI, as surety, issued the bond
to the town as the obligee.4

Section 8-26c5 sets a five year deadline starting from
the date of the approval of a subdivision plan, for the
subdivider to complete all work in connection with the
subdivision. The failure to complete the improvements
within the five year time frame results in ‘‘automatic
expiration of the approval of such plan provided the
commission shall file on the land records of the town
in which such subdivision is located notice of such
expiration and shall state such expiration on the subdivision
plan on file in the office of the town clerk of such
town . . . .'' General Statutes § 8-26c (c). If, during the
five year period, ‘‘lots have been conveyed,'' the town
‘‘shall call the bond . . . to the extent necessary to
complete the bonded improvements and utilities
required to serve those lots. . . .'' General Statutes § 8-
26c (c).

After the approval of the subdivision plan, a number
of parties, including the defendant, obtained various
types of interests in subdivision lots, including mortgage
interests.6 By October 27, 2003, five years after the
approval of the subdivision plan, the proposed public
improvements had not been completed. During its
November 10, 2003 meeting, the commission determined
that the approval of the subdivision plan had
expired and recorded a formal notice of subdivision
expiration on the town land records. Several of the
parties that had acquired interests in subdivision lots
after the plan approval demanded that the town call
the performance bond to construct the proposed public
improvements pursuant to § 8-26c (c). The parties
claimed that, because the various transfers of interest
in subdivision lots constituted conveyances under § 8-
26c, the town was required to call the bond.

In response to the demands that the town call the
bond, the town and RLI filed this action against all
persons having interests in subdivision lots, seeking a
declaratory judgment that the town had no obligation
under § 8-26c to call the performance bond as a result
of the various transfers of interest in subdivision lots.

The defendant filed a counterclaim, seeking orders
directing the town to rescind its notice of expiration
of the subdivision, and to call the bond.7 The plaintiffs
moved for summary judgment, arguing that, because
none of the transfers of interest constituted conveyances
under § 8-26c, the town had no obligation to call
the bond. The defendant filed a cross motion for summary
judgment, arguing that, because all the subdivision
lots had been conveyed for purposes of § 8-26c, through
foreclosure actions, mortgages or mechanic's liens, the
town was required by statute to call the bond. The
trial court rendered summary judgment in favor of the
plaintiffs on the complaint and on the defendant's counterclaim,
concluding that mortgages were not conveyances
under § 8-26c. This appeal followed.

The parties do not dispute that the defendant
acquired a mortgage interest in various of the subdivision
lots. The question is whether the transaction
through which the defendant acquired that mortgage
interest constituted a conveyance under § 8-26c, triggering
the town's duty under the statute to call the
performance bond. The defendant claims that the trial
court improperly construed the term conveyance in § 8-
26c to exclude the transfer of a mortgage interest.8 The
defendant relies on the broader, common understanding
of the term conveyance to include various transfers
of interest in land, including transfers of mortgage interests.

The plaintiffs contend that the court properly interpreted
the term conveyance to apply solely to the
conveyance of lots, and not the conveyance of an interest
in lots, such as a mortgage interest. We agree with
the plaintiffs.

Because the question of whether a mortgage is a
conveyance under § 8-26c is one of statutory interpretation,
our review is plenary. ‘‘The process of statutory
interpretation involves the determination of the meaning
of the statutory language as applied to the facts of
the case, including the question of whether the language
does so apply. . . .

‘‘When construing a statute, [o]ur fundamental objective
is to ascertain and give effect to the apparent intent
of the legislature. . . . In other words, we seek to
determine, in a reasoned manner, the meaning of the
statutory language as applied to the facts of [the] case,
including the question of whether the language actually
does apply. . . . In seeking to determine that meaning,
General Statutes § l-2z directs us first to consider the
text of the statute itself and its relationship to other
statutes. If, after examining such text and considering
such relationship, the meaning of such text is plain and
unambiguous and does not yield absurd or unworkable
results, extratextual evidence of the meaning of the
statute shall not be considered. . . . The test to determine
ambiguity is whether the statute, when read in
context, is susceptible to more than one reasonable
interpretation.'' (Citation omitted; internal quotation
marks omitted.) Felician Sisters of St. Francis of Connecticut,
Inc. v. Historic District Commission, 284
Conn. 838, 847, 937 A.2d 39 (2008).

We begin with the language of the statute. The provision
at issue provides in relevant part that, ‘‘[i]f lots
have been conveyed during such five-year period or any
extension thereof, the municipality shall call the bond
or other surety on said subdivision to the extent necessary
to complete the bonded improvements and utilities
required to serve those lots. . . .'' (Emphasis added.)

General Statutes § 8-26c (c). The statute does not refer
to conveyances generally. It specifically contemplates
the conveyance of lots. This conclusion is reinforced
by two additional references to lots in subsection (c).

First, if the subdivision expires because of the passing
of the five year period without the public improvements,
‘‘no additional lots in the subdivision shall be conveyed
by the subdivider or his successor in interest . . .
except with approval by the commission of a new application
for subdivision of the subject land. . . .'' General
Statutes § 8-26c (c). Second, the conveyance of lots
prior to the expiration of the five year period triggers
the town's duty to call the bond to the extent necessary
to complete the improvements ‘‘required to serve those
lots. . . .'' General Statutes § 8-26c (c). The only logical
reading of these three references to lots in subsection
(c) is that the term conveyance as used in this subsection
refers specifically to the conveyance of lots. Two
of the references draw a direct and express connection
by referring explicitly to conveying lots. The third reference,
establishing that the limit of the town's duty is
to call the bond to the extent necessary to complete the
improvements ‘‘required to serve those lots''; General
Statutes § 8-26c (c); indicates that it is the need to serve
the lots that gives rise to the town's duty to call the
bond. This link between the town's duty and the service
requirements of the subdivision lots supports the conclusion
that the town's duty is triggered only by the
conveyance of those lots.

Our next task is to determine what it means to say
that a subdivider has conveyed a lot. Because neither
‘‘conveyance'' nor ‘‘lot'' is defined in the statute, in construing
those terms, we look to their ‘‘commonly
approved usage . . . .'' General Statutes § 1-1 (a). ‘‘If
a statute or regulation does not sufficiently define a
term, it is appropriate to look to the common understanding
of the term as expressed in a dictionary.''
(Internal quotation marks omitted.) Southern New
England Telephone Co. v. Cashman, 283 Conn. 644,
656, 931 A.2d 142 (2007). ‘‘Lot'' is defined as ‘‘one of
several parcels into which property is divided. Any portion,
piece, division or parcel of land. . . . A lot is
commonly one of several other contiguous parcels of
land making up a block. . . .'' (Citations omitted.)
Black's Law Dictionary (6th Ed. 1990). Put simply, a
lot is a parcel of land. A conveyance, ‘‘[i]n its most
common usage [is a] transfer of title to land from one
person, or class of persons, to another by deed. [The]
[t]erm may also include assignment, lease, mortgage or
encumbrance of land. . . .'' Id. A conveyance of a lot,
therefore, is the transfer of title to a parcel of land from
one person or class of persons, to another by deed.

Although a person may convey many different types
of interests in land to another, including assignments,
leases, mortgages or other encumbrances, when someone
conveys a lot, the interest conveyed is ownership
of a parcel of land.9

Wefind unpersuasive the defendant's reliance on general
definitions of the term ‘‘conveyance.'' Statutory
terms cannot be taken out of context, but must be
understood within ‘‘the statutory scheme of which they
are a part.'' Broadnax v. New Haven, 284 Conn. 237,
245, 932 A.2d 1063 (2007). Although the term ‘‘conveyance''
may include the transfer of a mortgage interest
in different contexts; see, e.g., D.H.R. Construction Co.
v. Donnelly, 180 Conn. 430, 433, 429 A.2d 908 (1980)
(considering meaning of term ‘‘conveyance'' in specific
context of Uniform Fraudulent Conveyance Act); that
broad meaning is not consistent with the plain and
unambiguous language of § 8-26c.

We are similarly unpersuaded by the defendant's reliance
on the fact that ‘‘Connecticut follows the title
theory of mortgages, which provides that on the execution
of a mortgage on real property, the mortgagee holds
legal title and the mortgagor holds equitable title to the
property.'' (Internal quotation marks omitted.) Mortgage
Electronic Registration Systems, Inc. v. White,
278 Conn. 219, 231, 896 A.2d 797 (2006). Although a
mortgagee holds legal title to the property, we have
stated that ‘‘the law is well settled that, except as
between the immediate parties, the mortgagor before
foreclosure is the owner of the property . . . while the
interest of the mortgagee is mere personal estate
. . . .'' (Citations omitted; internal quotation marks
omitted.) Red Rooster Construction Co. v. River Associates,
Inc., 224 Conn. 563, 569–70, 620 A.2d 118 (1993).

We have recognized that the title theory of mortgages
is ‘‘a series of legal fictions [that serves] as a convenient
means of defining the various estates to which conveyances
may give rise. . . . Despite our title theory of
mortgages, [i]n substance and effect . . . and except
for a very limited purpose, the mortgage is regarded as
mere security . . . and the mortgagor is for most purposes
regarded as the sole owner of the land . . . .

The mortgagee has title and ownership enough to make
his security available, but for substantially all other
purposes he is not regarded as owner, but the mortgagor
is so regarded, always subject of course to the mortgage.''
(Citations omitted; internal quotation marks
omitted.) Id., 569. Although the mortgagee gains legal
title to the property, the mortgagor remains its true
owner. The series of legal fictions of which the title
theory is comprised cannot turn the transfer of a mortgage
interest into the conveyance of a lot.

* * *

http://www.jud.ct.gov/external/supapp/Cases/AROcr/CR286/286CR57.pdf

The judgment is affirmed.

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