Stitzel v. State

MEREDITH, J. In this appeal from a judgment of the Circuit Court for Washington County, we review an agricultural land preservation easement that was granted pursuant to Maryland Code (1973, 1999 Repl.Vol.), Agriculture Article (“AG”), §§ 2-501, et seq. We shall affirm the circuit court’s conclusion that the landowner who had subjected 264 acres of his property to a preservation easement was prohibited from conveying, without the prior approval of the Maryland Agricultural Land Preservation Foundation (“MALPF” or “the Foundation”), a portion of the land that was encumbered by the preservation easement. I. Paul and Helen Stitzel (collectively referred to as “Stitzel” or “appellant”), own farmland located in Washington County. In 1999, Stitzel entered into an Agricultural Land Preserva ⁴⁴⁶ tion District Agreement (“the District Agreement”) with the Foundation, one of the appellees.

Under the District Agreement, entered into pursuant to AG § 2-509(b), Stitzel agreed to keep approximately 264 acres of real property in agricultural use for a minimum of five years. The Foundation recognized the 264 acres of land as an Agricultural Preservation District. 1 By Deed of Easement (“the Easement”) dated January 8, 2002, Stitzel granted to the Foundation an agricultural preservation easement that, in essence, obligated Stitzel and his successors in interest to use the 264 acres of land “solely for agricultural use in accordance with the provisions of the Agriculture Article, Title 2, Subtitle 5.” Among the covenants contained in the Easement was an agreement by Stitzel as follows: “The land subject to this Deed of Easement may not be subdivided for any purpose including subdivision, off conveyance and the movement of boundary lines unless written approval first has been obtained from the [Foundation].” To compensate Stitzel for subjecting the 264 acres of land to the Easement, the Foundation paid him $570,230.03. In 2005, Stitzel purported to sell a 15.91 acre lot (“Lot 14”) that was part of the land encumbered by the Easement to Donald and Virginia Bowers (collectively “Bowers”), appellees and cross-appellants, for $370,000.00. Due to an unfortunate series of errors, Stitzel did not take any action to apprise Bowers of the agricultural preservation restrictions; nor did Stitzel seek the Foundation’s approval of the proposed sale and conveyance of Lot 14.

The Easement was not discovered by Bowers’s title search because the Foundation’s title company had erroneously recorded the Easement in Frederick County. Nor did Bowers’s title company bring to Bowers’s attention the District Agreement that had been recorded in Washington County in 1999. ⁴⁴⁷ After Bowers took possession of Lot 14 and began to explore subdivision of the parcel, the Foundation learned of the 2005 conveyance. The State of Maryland, to the use of the Maryland Department of Agriculture, on behalf of the Foundation, filed suit against Stitzel and Bowers in the Circuit Court for Washington County. For simplicity, we will refer to the complainant in the suit as the Foundation.

The Foundation’s complaint, as amended, alleged that Lot 14 was encumbered by the District Agreement and the Easement, and both of those documents included a covenant that the owner would not subdivide the land for any purpose without first obtaining the approval of the Foundation. The Foundation sought a declaratory judgment declaring the rights and liabilities of the parties with respect to the development restrictions upon Lot 14, and declaring the deed from Stitzel to Bowers null and void. Stitzel filed a counter complaint against the Foundation, seeking a declaratory judgment that the Easement did not preclude his conveyance of a lot that had been legally subdivided prior to the time it was encumbered. Bowers, too, filed a counter complaint, and Bowers also filed a cross-claim against Stitzel.

Initially, Bowers sought a declaratory decree that they took Lot 14 free and clear of the agricultural preservation restrictions, but they subsequently sought a declaratory judgment declaring the conveyance of Lot 14 null and void. Bowers’s cross-claim against Stitzel sought monetary compensation upon a number of theories that will be discussed in more detail later in this opinion. 2 II. The parties each moved for summary judgment, and the circuit court ruled in favor of the Foundation and Bowers. The court rejected Stitzel’s contention that he had never ⁴⁴⁸ intended for Lot 14 to be included in the assemblage of property that was subject to the District Agreement and Easement; Stitzel does not challenge that ruling on appeal.

With respect to whether the agreements with the Foundation and the regulations adopted to implement the agricultural land preservation program prohibited the conveyance of a portion of the land covered by the District Agreement and Easement, the circuit court was persuaded that such transfers require the prior approval of the Foundation. The circuit court held that the conveyance of Lot 14 to Bowers violated covenants contained in the District Agreement and the Easement against subdividing the land. In the District Agreement, Stitzel had agreed: [F]or so long as the [District Agreement] remains in effect: (2) The landowner agrees neither to subdivide nor develop the land for residential, commercial or industrial purposes; [and] (3) The landowner agrees not to subdivide the land for any purpose unless the Foundation first has approved the proposed subdivision____ Similarly, in the Easement, Stitzel “covenanted] and agree[d] as follows”: (g) The land subject to this Deed of Easement may not be subdivided for any purpose including subdivision, off conveyance and the movement of boundary lines unless written approval first has been obtained from the [Foundation]. The circuit court noted that, although AG § 2-509(b)(7)(v) provides “[n]othing in this section shall preclude the landowner from selling his property,” the Foundation asserted that that provision is limited by other sections of the subtitle that restrict conveyances of portions of the land within an agricultural preservation district.

With respect to a sale of less than the entire assemblage of property covered by the Easement, the Foundation asserted that the regulations in Code of ⁴⁴⁹ Maryland Regulations Title 15, Subtitle 15, Chapter 01 (“Guidelines for the Maryland Agricultural Land Preservation Program”) control. In AG § 2-504(4), the legislature delegated to the Foundation the power “[t]o adopt ... regulations and procedures necessary to implement the provisions of this subtitle.” CO-MAR 15.15.01.17 H(l) states: “A landowner may not subdivide land subject to restrictions of an agricultural land preservation district or easement without written approval from the Foundation.” The term “subdivision” is defined as follows in COMAR 15.15.01.01-2B(7): “ ‘Subdivision’ means the division of land into two or more parts or parcels.” Pointing to a different definition of “subdivision” in the statute regarding land use — Maryland Code (1957), Article 66B, § 1.00(() — Stitzel argued that the subdivision which created Lot 14 had taken place long before that parcel was subjected to the District Agreement and Easement. Art. 66B, § 1.00 states: (a) In general. — In this article the following words have the meanings indicated, except where the context clearly indicates otherwise. (1) Subdivision. — (1) “Subdivision” means the division of a lot, tract, or parcel of land into two or more lots, plats, sites, or other divisions of land for the immediate or future purposes of selling the land or of building development.

(2) (i) “Subdivision” includes resubdivision. The circuit court concluded that the statutory definition in Art. 66B did not prevail over the definition contained in the regulation that was adopted to implement the Maryland Agricultural Land Preservation Program, i.e., COMAR 15.15.01.01-2B(7). The court concluded: “The definition of ‘subdivision’ found in the regulation adopted by [the Foundation], ... simply contemplates the subtraction of a portion of land within an agricultural district or subject to an easement.” In the view of the circuit court, all of the property that was included within the District Agreement and subject to the ⁴⁵⁰ Easement “should be considered one parcel,” sometimes referred to in the documents as the “subject property” or “the land.” There was also deposition testimony in the record from representatives of the Foundation who expressed the view that, “[rjegardless of how many parcels are under easement, it is treated as one unit under easement.” The court quoted from MTA v. King, 369 Md. 274, 288 , 799 A.2d 1246 (2002), noting “the ‘great deal of deference [that] is owed to an administrative agency’s interpretation of its own regulation,’ ” and concluded: In light of the statutes and regulations governing the Maryland Agricultural Land Preservation Foundation and the language used in the instruments effecting the establishment of the agricultural district and easement over the Stitzels’ land, the sale of Lot 14, being a portion of the 264.13 acres owned by the Stitzels and encumbered by the Easement, constitutes a subdivision and is prohibited. On appeal, Stitzel argues that the circuit court erred in concluding that the conveyance of Lot 14 to Bowers was prohibited by either the express language of the District Agreement, the Easement, or the applicable regulations.

Stitzel asserts: [W]here the Legislature has expressly protected a landowner’s right to sell land included in an agricultural district and has specifically empowered MALPF to restrict only the use of such land, not its alienability, by means of easement acquisitions, it logically follows that a landowner’s right to sell land subject to an agricultural easement is also protected. Stitzel further argues that the term “subdivide,” as used in the covenants in the District Agreement and Easement, should be interpreted in accordance with common parlance, which is more akin to the definition found in Art. 66B, § 1.00(Z). Stitzel also contends that such an interpretation of “subdivide” would be more consistent with the result in Land Preservation v. Claggett, 412 Md. 45 , 985 A.2d 565 (2009). ⁴⁵¹ We conclude that the circuit court properly looked to CO-MAR 15.15.01.01-2B(7) for guidance in interpreting the language in the District Agreement and Easement. The Foundation was empowered by AG § 2-504(4) to adopt such implementing regulations and definitions.

See Fogle v. H & G Restaurant, 337 Md. 441, 453-55 , 654 A.2d 449 (1995); Oyarzo v. Dept. of Health, 187 Md.App. 264, 288-91 , 978 A.2d 804 , cert, denied, 411 Md. 601 , 984 A.2d 245 (2009). The Foundation’s interpretation of the word “subdivide,” as used in the covenants, is certainly consistent with the intent of the Maryland General Assembly to preserve tracts of land that are large enough to accommodate agricultural activities. The policy in favor of agricultural preservation is expressly set forth in AG § 2-501, which states: It is the intent of the Maryland General Assembly to preserve agricultural land and woodland in order to: provide sources of agricultural products within the State for the citizens of the State; control the urban expansion which is consuming the agricultural land and woodland of the State; curb the spread of urban blight and deterioration; and protect agricultural and woodland as open-space land. The Foundation’s interpretation of the restrictive language in the Easement is also consistent with the plain meaning of the phrase “[t]he land subject to this Deed of Easement may not be subdivided for any purpose including ... off conveyance ... unless written approval first has been obtained from the [Foundation].” The Foundation’s construction is the most rational way to interpret the covenant’s reference to “off conveyance.” In view of the evidence in the record that indicated that smaller parcels of land can be less valuable for agricultural uses, we conclude that the circuit court did not err in finding that the sale of Lot 14 to Bowers was a subdivision that required the prior approval of the Foundation.

We recognize that, in the Claggett case, the Court of Appeals commented that an agricultural preservation easement similar to the Easement in this case “does not restrict land ⁴⁵² transfer,” 412 Md. at 64 , 985 A.2d 565 , and “restricted use, not transfers.” Id. at 70 , 985 A.2d 565 . Despite those general comments regarding transfers, however, the Court of Appeals held in Claggett that the specifically contemplated transfer under consideration in that case was not permitted because it was contrary to the Foundation’s goal of preserving an assemblage of land subject to an easement. Consequently, Claggett does not alter our view that the circuit court correctly construed the covenant against subdividing the land embraced by the Easement for off conveyance.

III

The circuit court noted that “[n]either the [agricultural land preservation] statute nor the regulations promulgated pursuant to the statute’s enabling authority [ie., AG § 2-504(4) ] expressly state that any contract or other agreement made in contravention of them is void or unenforceable.” Nevertheless, after applying the analysis this Court outlined in Springlake Corp. v. Symmarron Ltd., 81 Md.App. 694 , 569 A.2d 715 (1990), the circuit court concluded that public policy considerations against enforcement required the court to declare the purported conveyance of Lot 14 null and void. In Springlake, a court-appointed receiver filed suit to collect past due rent and fees the receiver claimed pursuant to a lease that had been entered into at the behest of Jeffrey Levitt, an officer and director of Old Court Savings & Loan Association. The defendants argued that the lease arrangement violated the Maryland regulation prohibiting directors and officers of savings and loan associations from receiving personal benefits from such transactions. Id. at 698 , 569 A.2d 715 (citing “[t]he regulation[ ] formerly codified as Md. Regs.Code tit. 9, § 05.01.43”).

The receiver conceded that the lease arrangement constituted a violation of the regulation, but argued that the violation of the regulation did not make the lease unenforceable. Writing for this Court, Judge Alan M. Wilner noted that several older cases from the Court of Appeals contain language stating that a contract which violates a statute will not be enforced. Judge Wilner explained that ⁴⁵³ such statements were overly simplistic. He wrote, 81 Md. App. at 700 , 569 A.2d 715 : These broad statements, unfortunately, are a bit misleading.

The Court has not, in fact, adopted such a rigid rule that any contract made in violation of any statute is unenforceable. What it has done, although sometimes fleetingly, is to examine the statute at issue and the public policy behind it in an attempt to discern whether the legislature intended for contracts made in violation of the statute to be void or unenforceable. Other Maryland cases have more clearly expressed this notion. We cited several cases to support our conclusion in Spring-lake that, “in determining whether a statutory violation renders a contract unenforceable, the court must examine the statute ‘to find out whether or not the makers of it meant that a contract in contravention of it should be void, or that it was not so to be.’ ” Id. at 701 , 569 A.2d 715 (quoting Lester v. Howard Bank, 33 Md. 558, 564 (1871)) (citing Harris v. Runnels, 53 U.S. (12 How.) 79 , 13 L.Ed. 901 (1851)).

We stated in Springlake, 81 Md.App. at 701-02 , 569 A.2d 715 : Notwithstanding some of the more rigid statements made in intervening cases, that principle, of attempting to ascertain the legislative intent and acting in accordance therewith, remains the law in Maryland. Gannon & Son v. Emerson, 291 Md. 443 , 435 A.2d 449 (1981); Montagna v. Marston, 24 Md.App. 354 , 330 A.2d 502 (1975). We noted, however, id. at 702-03 , 569 A.2d 715 , that the legislative intent with respect to enforceability of a contract that violates a statute or regulation is not always obvious, and in such situations, the courts apply a balancing process: Some statutes or regulations are very clear in