Daniels v. Elks Club of Hartford and the Human Rights Commission
58 A.3d 925
Vt.2012Background
- Daniels seeks foreclosure on the Club’s real property as creditor with a senior mortgage; junior creditors (VHRC, four women, Watts) oppose.
- Property was mortgaged to Mascoma Savings Bank in 1989; Bank assigned mortgage to Daniels in 2008.
- Club’s corporate status was terminated in 1989 and reinstated in 2008; discrimination litigation occurred in 1998–2006.
- Judgments in the discrimination case and related attorney’s fees attached to the property as junior liens.
- Bank advanced $25,000 in 2006 and later deferrals were made; Bank knew of junior interests; advances raise priority issues.
- Trial court granted summary judgment; on appeal court reverses on some grounds and remands for priority of advances and counterclaims handling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Collateral assignment and foreclosure standing | Daniels retains equitable ownership and foreclose rights; Bank holds legal title | Bank holds legal title due to collateral transfer and forecloses | Plaintiff may foreclose; collateral assignment permits foreclosure; no merger. |
| Merger of legal and equitable title | No merger since plaintiff retained separate ownership interests | Assignment could merge titles | No merger; no intent to merge; title remains appropriate for foreclosing. |
| Priority of Bank’s 2006–2007 advances over junior interests | Advances should have priority unless notice or objection by juniors | Priority depends on written notice/objection under 27 V.S.A. § 410(b)(3)(B) | Remand to assess whether actual notice affected priority under correct standard; may reduce plaintiff’s secured amount. |
| Retroactive personal liability after corporate reinstatement | Reinstatement should restore corporate shield; members not personally liable | Reinstatement may not retroactively shield individuals; depends on expectations | Reinstatement does not categorically shield individuals; liability may attach to members under §5060. |
| Scope of personal liability under 12 V.S.A. § 5060 for unincorporated associations | Members of the Club may be held jointly and severally liable | Liability should hinge on participation/ratification; many members not personally liable | Members may be personally liable if they were members when debts arose; more fact-specific remand on participation. |
Key Cases Cited
- F.R. Patch Mfg. Co. v. Capeless, 79 Vt. 1, 63 A. 938 (1905) (VT 1905) (establishes joint/several liability of members of unincorporated associations under §5060)
- Johnson v. Paine, 84 Vt. 84, 78 A. 732 (1911) (VT 1911) (members’ liability when judgment against association)
- Tarbell & Whitham v. Gifford, 82 Vt. 222, 72 A. 921 (1909) (VT 1909) (liability of members of unincorporated associations)
- Gifford II, 82 Vt. 223, 72 A. 921 (1909) (VT 1909) (extension of Capeless on liability for unincorporated associations)
- McDaniels v. Colvin, 16 Vt. 300 (1844) (VT 1844) (optional/obligatory advance doctrine origin)
- Soon Kwon, 2011 VT 26 (VT 2011) (statutory notice adequacy; actual notice considerations)
- Fletcher v. Ferry, 2007 VT 8, 181 Vt. 294, 917 A.2d 937 (VT 2007) (intent not required for merger in mortgage context (contrast))
- Poritzky v. Wachtel, 27 N.Y.S.2d 316 (Sup. Ct. 1941) (NY 1941) (reinstatement doctrines and personal liability considerations in NY)