Real Property Law

U.S. Dist. Ct., E.D.N.Y.

(Gleeson, J.)

In an action for trespass and nuisance by a bulkhead maintained by a neighboring owner, both parties sought summary judgment. The court granted each motion in part, holding that plaintiff owned some of the underwater land on which the bulkhead is situated, but that the neighboring owner owned the structures on the property and retained riparian rights.

Defendant Hess owns real property adjacent to the Henry Street Basin in Brooklyn and uses the property as an oil terminal. Hess maintains a bulkhead on the property, and the bulkhead apparently encroaches on adjacent underwater land claimed by plaintiff Gowanus Industrial Park (GIP). The encroachment ranges from one inch to six feet. GIP brought this action for trespass, nuisance, and declaratory relief. Hess counterclaimed, challenging GIP's title to the disputed land, and raising claims of adverse possession, prescription, and riparian rights.

The underwater lands GIP now claims were appropriated by New York state in 1912 pursuant to a statute that prohibited the state from alienating the land. In 1944, however, the state concluded that the lands were no longer necessary as part of the barge canal system, and the legislature authorized transfer to the Port Authority, subject to restrictions that prohibited sale to any entity other than the state. Nevertheless, in 1997, the Port Authority purported to transfer the lands to GIP. After a court invalidated the transfer (at Hess's behest), the Port Authority transferred the land to the state in 2004, and the state, by letters patent, transferred the land to GIP in 2004 to cure the defect in the 1997 transfer. In this action, Hess challenged the validity of the letters patent, arguing that the statutory authority cited in the letters patent ' section 50 of the Public Lands Law ' authorized sale only of abandoned canal lands, and only to occupants of that land. Hess contended that the disputed land did not constitute abandoned canal lands, and that GIP was not
an occupant. The court rejected the challenge, holding that because Hess's claim was not based on the strength of its own title to the disputed land, it had no standing to attack the letters patent unless they were void on their face. Here, the court found no facial invalidity. Even if the commissioner who issued the letters erroneously determined that the lands had been abandoned canal lands, that determination was within the commissioner's authority.

The court then rejected Hess's adverse possession and prescription claims, holding that because Hess's use of the area was a valid exercise of its riparian rights, Hess's use was not inconsistent with GIP's title, and therefore was not hostile. The court did, however, conclude that Hess's maintenance of the bulkhead was within its riparian rights, because the bulkhead was necessary to facilitate Hess's commercial use of its waterfront property ' in particular, to ensure that its oil tanks would not collapse into the water. The court also rejected GIP's argument that Hess lost riparian rights when it filled in some of the underwater land adjacent to its own parcel, effectively landlocking its own land and forfeiting riparian rights. The court held that Hess enjoyed the same riparian rights that it held before engaging in fill operations.

COMMENT

When a third party who is not claiming title to a piece of land challenges a state's conveyance of that land by letters patent, courts presume the validity of the state's conveyance. The claimant can overcome the presumption only by demonstrating that the letters patent are facially invalid. To show facial invalidity, a third party non-claimant must establish that the officer who executed the patent did not have authority to make the grant. Thus, in Saunders v. New York Cent. & H.R.R. Co., 144 N.Y. 75, plaintiffs, who were neighbors of railroad defendant, challenged the state's conveyance of under water lands. Although plaintiffs claimed title to the land under a theory of accretion, the court quickly dismissed their accretion claim on the merits. Once plaintiff's accretion claim was dismissed, plaintiffs became non-claimants, and the court applied the presumption that the state's conveyance was valid. The court held that because the commissioner had authority to make grants of land to railroads, plaintiffs could not prove facial invalidity, and therefore could not overcome the presumption.

Due to the absence of New York cases, the Gowanus decision relied upon United States Supreme Court cases and out of state cases in deciding when letters patent are facially invalid. So long as the government official has power to convey the disputed land to someone, a conveyance she makes is not facially invalid, even if the official takes a mistaken view of the law governing her right to convey. For example, in Smelting Co. v. Kemp., 104 U.S. 636, defendants argued that a patent could not be issued under a certain act of Congress because the commissioner purported to convey land that measured more than 160 acres ' the maximum the act authorized the commissioner to convey to any one party. The Supreme Court disagreed and held that even though the patent at issue was for more than the statute allowed, the patent was still valid because the commissioner had general authority to convey the land at issue. Similarly, in Gowanus, even where the commissioner erroneously concluded that the lands at issue were abandoned within the meaning of the statute at issue, the determination was within the commissioner's authority and the patent therefore valid.

By contrast, where a challenger establishes that the legislative body has withheld all authority to convey the land to anyone, the challenger has overcome the presumption of validity. For example, in Whitehall v. Victorio Land & Cattle Co., 18 N.M. 520, the Supreme Court of New Mexico held that the land department's acceptance of plaintiff's entry on a tract of land was without jurisdiction and void because an act of Congress explicitly reserved the tract of land, meaning there was no authority to convey the land at all.

Assignee's Failure to Close Constitutes Material Breach

Bank of America v. Petit

NYLJ 11/8/11, p. 33, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In a foreclosure action, mortgagee bank appealed from Supreme Court's grant of a motion by successful bidder's assignee to remove provisions from the terms of sale. The Appellate Division reversed, holding that assignee's failure to close by the closing date precluded a subsequent motion to remove the contested provisions.

Mortgagee bank obtained a judgment of foreclosure and sale. The sale was held on March 19, 2010, and the successful bidder agreed in the terms of sale that the closing would be held by April 19, 2010, and that time was of the essence. The bidder also agreed in the terms of sale that he would be subject to certain additional provision not included in the judgment of foreclosure and sale. The bidder then assigned the bid to assignee Block. The closing did not take place by April 19, and the parties to the bid did not agree to extend the time for closing. Mortgagee then scheduled a new foreclosure sale for June 25, 2010. Assignee Block moved to stay the new sale and to remove the contested provisions from the terms of sale on the ground that they varied from the judgment of foreclosure and sale. The assignee argued that the contested provisions made it impossible to obtain title insurance. Supreme Court granted assignee's motion and removed the contested provisions from the terms of sale. Mortgagee bank appealed.

In reversing, the Appellate Division held that when time is of the essence, failure to close on the date specified constitutes a material breach. Because assignee breached by not closing on the date specified, assignee materially breached the contract and was not entitled to removal of the contested provisions.

Resolution of Dispute on Ownership of Underwater Land

Gowanus Industrial Park, Inc. v. Hess Corp.

NYLJ 10/31/11

U.S. Dist. Ct., E.D.N.Y.

(Gleeson, J.)

In an action for trespass and nuisance by a bulkhead maintained by a neighboring owner, both parties sought summary judgment. The court granted each motion in part, holding that plaintiff owned some of the underwater land on which the bulkhead is situated, but that the neighboring owner owned the structures on the property and retained riparian rights.

Defendant Hess owns real property adjacent to the Henry Street Basin in Brooklyn and uses the property as an oil terminal. Hess maintains a bulkhead on the property, and the bulkhead apparently encroaches on adjacent underwater land claimed by plaintiff Gowanus Industrial Park (GIP). The encroachment ranges from one inch to six feet. GIP brought this action for trespass, nuisance, and declaratory relief. Hess counterclaimed, challenging GIP's title to the disputed land, and raising claims of adverse possession, prescription, and riparian rights.

The underwater lands GIP now claims were appropriated by New York state in 1912 pursuant to a statute that prohibited the state from alienating the land. In 1944, however, the state concluded that the lands were no longer necessary as part of the barge canal system, and the legislature authorized transfer to the Port Authority, subject to restrictions that prohibited sale to any entity other than the state. Nevertheless, in 1997, the Port Authority purported to transfer the lands to GIP. After a court invalidated the transfer (at Hess's behest), the Port Authority transferred the land to the state in 2004, and the state, by letters patent, transferred the land to GIP in 2004 to cure the defect in the 1997 transfer. In this action, Hess challenged the validity of the letters patent, arguing that the statutory authority cited in the letters patent ' section 50 of the Public Lands Law ' authorized sale only of abandoned canal lands, and only to occupants of that land. Hess contended that the disputed land did not constitute abandoned canal lands, and that GIP was not
an occupant. The court rejected the challenge, holding that because Hess's claim was not based on the strength of its own title to the disputed land, it had no standing to attack the letters patent unless they were void on their face. Here, the court found no facial invalidity. Even if the commissioner who issued the letters erroneously determined that the lands had been abandoned canal lands, that determination was within the commissioner's authority.

The court then rejected Hess's adverse possession and prescription claims, holding that because Hess's use of the area was a valid exercise of its riparian rights, Hess's use was not inconsistent with GIP's title, and therefore was not hostile. The court did, however, conclude that Hess's maintenance of the bulkhead was within its riparian rights, because the bulkhead was necessary to facilitate Hess's commercial use of its waterfront property ' in particular, to ensure that its oil tanks would not collapse into the water. The court also rejected GIP's argument that Hess lost riparian rights when it filled in some of the underwater land adjacent to its own parcel, effectively landlocking its own land and forfeiting riparian rights. The court held that Hess enjoyed the same riparian rights that it held before engaging in fill operations.

COMMENT

When a third party who is not claiming title to a piece of land challenges a state's conveyance of that land by letters patent, courts presume the validity of the state's conveyance. The claimant can overcome the presumption only by demonstrating that the letters patent are facially invalid. To show facial invalidity, a third party non-claimant must establish that the officer who executed the patent did not have authority to make the grant. Thus, in Saunders v. New York Cent. & H.R.R. Co., 144 N.Y. 75, plaintiffs, who were neighbors of railroad defendant, challenged the state's conveyance of under water lands. Although plaintiffs claimed title to the land under a theory of accretion, the court quickly dismissed their accretion claim on the merits. Once plaintiff's accretion claim was dismissed, plaintiffs became non-claimants, and the court applied the presumption that the state's conveyance was valid. The court held that because the commissioner had authority to make grants of land to railroads, plaintiffs could not prove facial invalidity, and therefore could not overcome the presumption.

Due to the absence of New York cases, the Gowanus decision relied upon United States Supreme Court cases and out of state cases in deciding when letters patent are facially invalid. So long as the government official has power to convey the disputed land to someone, a conveyance she makes is not facially invalid, even if the official takes a mistaken view of the law governing her right to convey. For example, in Smelting Co. v. Kemp., 104 U.S. 636, defendants argued that a patent could not be issued under a certain act of Congress because the commissioner purported to convey land that measured more than 160 acres ' the maximum the act authorized the commissioner to convey to any one party. The Supreme Court disagreed and held that even though the patent at issue was for more than the statute allowed, the patent was still valid because the commissioner had general authority to convey the land at issue. Similarly, in Gowanus, even where the commissioner erroneously concluded that the lands at issue were abandoned within the meaning of the statute at issue, the determination was within the commissioner's authority and the patent therefore valid.

By contrast, where a challenger establishes that the legislative body has withheld all authority to convey the land to anyone, the challenger has overcome the presumption of validity. For example, in Whitehall v. Victorio Land & Cattle Co., 18 N.M. 520, the Supreme Court of New Mexico held that the land department's acceptance of plaintiff's entry on a tract of land was without jurisdiction and void because an act of Congress explicitly reserved the tract of land, meaning there was no authority to convey the land at all.

Assignee's Failure to Close Constitutes Material Breach

Bank of America v. Petit

NYLJ 11/8/11, p. 33, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In a foreclosure action, mortgagee bank appealed from Supreme Court's grant of a motion by successful bidder's assignee to remove provisions from the terms of sale. The Appellate Division reversed, holding that assignee's failure to close by the closing date precluded a subsequent motion to remove the contested provisions.

Mortgagee bank obtained a judgment of foreclosure and sale. The sale was held on March 19, 2010, and the successful bidder agreed in the terms of sale that the closing would be held by April 19, 2010, and that time was of the essence. The bidder also agreed in the terms of sale that he would be subject to certain additional provision not included in the judgment of foreclosure and sale. The bidder then assigned the bid to assignee Block. The closing did not take place by April 19, and the parties to the bid did not agree to extend the time for closing. Mortgagee then scheduled a new foreclosure sale for June 25, 2010. Assignee Block moved to stay the new sale and to remove the contested provisions from the terms of sale on the ground that they varied from the judgment of foreclosure and sale. The assignee argued that the contested provisions made it impossible to obtain title insurance. Supreme Court granted assignee's motion and removed the contested provisions from the terms of sale. Mortgagee bank appealed.

In reversing, the Appellate Division held that when time is of the essence, failure to close on the date specified constitutes a material breach. Because assignee breached by not closing on the date specified, assignee materially breached the contract and was not entitled to removal of the contested provisions.