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Gorham Savings v. Baizley
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MAINE SUPREME JUDICIAL COURT				Reporter of Decisions				
Decision:	1998 ME 9
Docket:	Cum-97-62
Submitted 
 on Briefs:	September 19, 1997
Decided:	January 8, 1998

Panel:	WATHEN. C.J., and ROBERTS, CLIFFORD, RUDMAN, and LIPEZ, JJ.



GORHAM SAVINGS BANK

v. 

ROBERT M. BAIZLEY

LIPEZ, J.

	[¶1]  Robert M. Baizley appeals from a judgment entered in the
Superior Court (Cumberland County, Mills, J.) granting Gorham Savings
Bank's motion for a summary judgment in its foreclosure action pursuant to
14 M.R.S.A. §§ 6321-25 (1980 & Supp. 1997).  On appeal Baizley contends
that the court was precluded by 30-A M.R.S.A. § 4406{1} from entering a
judgment of foreclosure and sale because the subject property is within an
unapproved subdivision.   We disagree and affirm the judgment. 
I.
	[¶2]  In 1986 Robert Baizley acquired forty acres of undivided
property in Scarborough.  From 1986 to 1990, without obtaining the
approval of the municipal reviewing authority, Baizley granted five mortgages
on various portions of the property to several lending institutions to secure
loans.   One of these five mortgages, now the subject of this appeal, was
granted in favor of Gorham Savings Bank (the Bank) on a five-acre portion of
the property to secure the indebtedness evidenced by a note in the amount
of $75,000.  
	[¶3]  In May 1996 the Bank notified Baizley that the debt evidenced by
the note was in default and demanded that the default be cured.  After
Baizley failed to timely cure, the Bank commenced a foreclosure action
pursuant to 14 M.R.S.A. § 6321{2} alleging, inter alia, that Baizley was in
default of his obligation under the note and had breached a condition of the
mortgage by failing to pay sums due under the note and by failing to pay real
estate taxes. The Bank moved for a summary judgment, which Baizley
opposed in part on the ground that a judgment of foreclosure would violate
30-A M.R.S.A. § 4406.  The Superior Court granted the Bank's motion for a
summary judgment and entered a judgment of foreclosure and sale.  This
appeal followed.
II.
	[¶4]  Baizley advances the novel argument that the court was
precluded by 30-A M.R.S.A. § 4406 from entering a judgment of foreclosure
and sale because the subject property was part of an unapproved subdivision. 
Specifically, he contends that the property had been subdivided without
municipal approval within the meaning of 30-A M.R.S.A. § 4401 as a result of
the mortgages he granted on various portions of the forty-acre lot from 1986
to 1990 without the approval of the municipal reviewing authority; that
section 4406 prohibits the sale of property in an unapproved subdivision;
and that the court's foreclosure judgment, which orders the sale of the
subject property following the expiration of the period of redemption, is
therefore in violation of section 4406.
	[¶5]  Pursuant to section 4403, all proposed subdivisions must be
reviewed and approved by a municipal reviewing authority.  See 30-A
M.R.S.A. § 4403.  Section 4401 defines a "subdivision" as:

[T]he division of a tract or parcel of land into 3 or more lots
within any 5-year period that begins on or after September 23,
1971.  This definition applies whether the division is
accomplished by sale, lease, development, buildings or
otherwise . . . .
A.  In determining whether a tract or parcel of land
is divided into 3 or more lots, the first dividing of
the tract or parcel is considered to create the first 2
lots and the next dividing of either of these first 2
lots, by whomever accomplished, is considered to
create a 3rd lot, . . . . 
30-A M.R.S.A. § 4401(4).  In this case, Baizley argues that at least three lots
were created during the period from 1986 to 1990 by his granting
mortgages on various portions of the forty-acre property. See Town of
Orrington v. Pease, 660 A.2d 919, 922 (Me. 1995) ("'[W]hen [30-A M.R.S.A.
§ 4401] speaks of a 'division,' it contemplates the splitting off of an interest
in land and the creation, by one of the modes recited [in section 4401] . . .,
of an interest of another.'  By mortgaging a portion of Lot 90, thereby
entitling the bank to foreclose in the event of a default, the [defendants]
effectively divided their interest in that lot.") (quoting Town of Naples v.
Michaud, 444 A.2d 40, 42 (Me. 1982)).  It is undisputed that Baizley did not
obtain the approval of the municipal reviewing authority to mortgage
portions of his property. 
	[¶6]  Proceeding from the premise that the subject property is an
unapproved subdivision, Baizley relies on 30-A M.R.S.A. § 4406 as an
affirmative defense to the foreclosure action.  Section 4406 places the
following restrictions on property that is subdivided without municipal
approval:

No person may sell, lease, develop, build upon or convey for
consideration, or offer or agree to sell, lease, develop, build upon
or convey for consideration any land or dwelling unit in a
subdivision that has not been approved by the municipal
reviewing authority of the municipality where the subdivision is
located . . . . 

Baizley contends that the court's foreclosure judgment, which orders the
sale of the property following the expiration of the period of redemption
pursuant to 14 M.R.S.A. § 6322, is precluded as a matter of law by section
4406.  In reviewing the grant of a motion for a summary judgment, we
examine the evidence in a light most favorable to the nonprevailing party to
determine whether the court committed an error of law.  See Community
Telecommunications Corp. v. State Tax Assessor, 684 A.2d 424, 426 (Me.
1996).   
III.
	[¶7]  Assuming, without deciding, that the subject property is an
unapproved subdivision within the meaning of 30-A M.R.S.A. § 4401(4) as a
result of mortgages which were granted by Baizley on various portions of the
forty-acre property from 1986 to 1990, we reject Baizley's reliance on
section 4406 as an affirmative defense to the Bank's foreclosure action. 
Although the statute which authorizes municipal reviewing authorities to
impose subdivision controls does not expressly articulate the intended
purpose of such control, see 30-A M.R.S.A. §§ 4401-4407, we may infer the
objectives of such regulation from the standards expressed in the statute
and the subjects regulated.  See 4 R. Anderson, American Law of Zoning
§ 25.03 (1986 & Supp. 1996).  The subdivision statute guides community
development and protects and preserves the public's health, safety, and
general welfare by ensuring adequate provision for water, drainage,
transportation, sewage disposal, and other necessities when land is
committed for development.  See 30-A M.R.S.A. § 4403, 4404.  In this case,
preventing a mortgagee from lawfully foreclosing upon a property in an
unapproved subdivision would not further these broad legislative objectives.
	[¶8]  We also infer that a primary purpose of prohibiting the sale of
property in an unapproved subdivision is to prevent a fraud on innocent
purchasers who may be unaware of the impediments to development and
the diminished value of the property.  See 4 R. Anderson, American Law of
Zoning § 25.03.  Such concerns are not implicated here.  The Bank readily
acknowledges that the property may be part of an unapproved subdivision,
and recognizes that as a condition of sale it must obtain the proper
approvals.  The Legislature intended that the innocent purchaser, not the
defaulting mortgagor, be the beneficiary of section 4406's conveyancing
restrictions.  Cf. Minnelusa Co. v. Andrikopoulos, 929 P.2d 1321 (Colo. 1996)
(holding that defendant corporation was not an intended beneficiary of stock
repurchase statute designed to protect creditors and minority stockholders
against corporate mismanagement of assets, and refusing to permit
defendant corporation to use the statute as an affirmative defense to
enforcement of its stock repurchase agreement). 
	[¶9]   We further note that section 4406 expressly confers
enforcement power only upon "the Attorney General, the municipality, or
the planning board of any municipality," not upon private citizens.  30-A
M.R.S.A. § 4406.{3}  The subdivision statute enables these named
governmental actors to regulate the division of property through the State's
enforcement of its police powers, and confers no right upon Baizley to
enforce a violation against himself.  Moreover, to permit a defaulting
mortgagor to use section 4406 as an affirmative defense in these
circumstances would enable the mortgagor to insulate himself or herself
from foreclosure simply by creating an unapproved subdivision.  Such an
anomalous result is an unreasonable application of the subdivision statute,
and circumvents its intended purpose.  Cf. Minnelusa Co., 929 P.2d at 1324. 
The court did not err in granting a summary judgment in favor of the Bank.  
	The entry is:  
				Judgment affirmed.

Attorneys for plaintiff: Jacqueline W. Rider, Esq. Christopher S. Neagle, Esq. Verrill & Dana P O Box 586 Portland, ME 04112-0586 Attorney for defendant: John S. Campbell, Esq. Poulos & Campbell, P.A. P O Box 369 Portland, ME 04112-0369
FOOTNOTES******************************** {1} 30-A M.R.S.A. § 4406 (1996 & 1997 Supp.) provides in pertinent part: No person may sell, lease, develop, build upon or convey for consideration, or offer or agree to sell, lease, develop, build upon or convey for consideration any land or dwelling unit in a subdivision that has not been approved by the municipal reviewing authority of the municipality where the subdivision is located . . . . {2} Maine's judicial mortgage foreclosure procedure, set forth in Title 14, sections 6321- 6325, establishes a unified civil action for foreclosing a mortgagor's equity of redemption. Pursuant to 14 M.R.S.A. § 6321, a mortgagee may commence a civil foreclosure action against a mortgagor by filing in the Superior or District Court a complaint that alleges, inter alia, that the mortgagor has breached a condition of the mortgage. If after hearing the court determines that a breach does exist, section 6322 provides that "a judgment of foreclosure and sale shall issue providing that if the mortgagor, his successors, heirs and assigns do not pay the sum that the court adjudges to be due and payable, with interest within the period of redemption, the mortgagee shall proceed with a sale as provided." {3} 30-A M.R.S.A. § 4406 provides in pertinent part: "The Attorney General, the municipality or the planning board of any municipality may institute proceedings to enjoin a violation of this subchapter."