Property II
Professor Spitz
Spring 2013
THE FORMS OF OWNERSHIP
A. Intro
B. Divisions by Time
Estates in Land
Present Possessory Interests
1. Fee Simple Absolute
a. Words of Limitation
b. Words of Purchase
2. Life Estate
a. “Pur Autre vie”
3. Defeasible Fees
a. Fee Simple Determinable
b. Fee Simple Subject to Condition Subsequent
c. Fee Simple Subject to Executory Limitation
FUTURE INTERESTS
1. Interests Retained by the Grantor
a. Reversion
i. Follows the natural end of a life estate and in other contexts in which an owner has not disposed of the entire fee (such as leaseholds).
b. Possibility of Reverter
i. This is the interest reserved to the grantor that follows a fee simple determinable. That is, O will automatically get the property back if the limitation built into the fee simple determinable occurs.
c. Right of Entry / Power of Termination
i. Like the possibility of reverter, this is an interest retained by the grantor that follows a defeasible fee, but here the preceding defeasible fee must be a fee simple subject to condition subsequent.
2. Interests Created in a Grantee
a. Remainder
i. Like the reversion, the remainder follows a life estate, never a fee simple, but unlike the reversion the remainder is in a party other than the grantor.
b. Executory Interest
i. This is a future interest in a transferee (not retained by the grantor), but, unlike the remainder following a life estate which becomes possessory upon the natural end of the preceding interest (death), the executor interest is an interest in a transferee (not retained by the grantor) that divests or cuts short a previous interest.
VESTING
– An interest vests in possession when the interest becomes a present possessory one.
– But an interest can vest in interest before it vests in possession. Vesting in interest means that various types of uncertainty about the interest have been resolved.
1. Conservation of Estates
Williams v. Estate of Williams
(1993)
FACTS
1. Will executed July 18, 1933. Probated: Nov. 24, 1944.
2. Testator died on Nov. 17, 1944, left will behind, owned farm at the time of his death.
3. Survived by 9 children, including 3 daughters named in will.
4. Defendant, Etta Tallent, is the only survivor of the three children named in the will.
5 Ethel Williams has maintained possession of the farm since the death of testator, jointly with Ida and Mallie Williams (until their deaths).
6. (Will, page 564)
7. Complaint: Interest received by Ethel Williams = life estate under will OR a life estate under will and a “remainder interest” by intestate succession.
-Trial Ct. = fee simple. Ct. of Appeals affirmed.
RULES
-The function of a suit to construe a will is to ascertain and effect the intention of the testator.
-Another rule of construction is that when a controlling or predominate purpose of the testator is expressed, it is the duty of the court to effectuate that purpose, and to construe all subsidiary clauses so as to bring them into subordination to such purpose. The language of a single sentence is not to control as against the evident purpose and intent shown by the whole will.
-Here the predominate intention of testator is clear. (565)
-The intention of the testator is not an absolute gift to all or either of the daughters.
-Upon the death or marriage of the named daughters, the testator’s purpose as to them would have been accomplished and the testator’s heirs would inherit the property by intestate succession.
-A will shall convey all the real estate belonging to the testator or in which he had any interest at his decease, unless a contrary intention appear by its words in context.
APPLICATION
-The testator recognized that his other heirs would acquire some interest in the property upon his death.
-The testator did not intend for the named daughters to have an absolute estate in the farm.
-The estate left to the daughters was less than a fee simple.
HOLDING
1. Upon the death of the testator, each named daughter held a life estate, defeasible or determinable upon her marriage.
2. Each daughter also had an executory interest in each of the other two daughters’ 1/3rd interest, which would vest in her possession if the other life tenant should die or marry while she remained unmarried.
3. The heirs-at-law of the testator held a reversion in fee simple, subject to the determinable life estates and the executory interests in the named daughters, which reversion would vest in possession, at the latest, upon the death of the survivor of the named daughters.
City of Klamath Falls v. Bell
(1971)
Brief Fact Summary. In 1925 a corporation gift deeded land to the City of Klamath Falls “as long as” the city used the land for a library, and thereafter unto Fred Schallock and Floyd Daggett, their heirs and assigns. The city closed the library in 1969 when the books were moved to another library.
Synopsis of Rule of Law. Even though the gift over of the property to the heirs and assigns is void under the rule against perpetuities, there is a possibility of reverter to the grantor which, under Oregon law, cannot be gifted over, and is thus retained in the grantor.
Facts. In 1925 a corporation gift deeded land to the City of Klamath Falls “as long as” the city used the land for a library, and thereafter unto Fred Schallock and Floyd Daggett, their heirs and assigns. The city closed the library in 1969 when the books were moved to another library. Thereafter, the city sued to quiet title in fee as to the land. The Defendants were all of the heirs of Schallock and Daggett. The grantor corporation, Daggett-Schallock Investment Company had been dissolved and the assets (including any interest in the property) were transferred to Fred Schallock and Floyd Daggett. Thereafter, all of the remaining heirs transferred their interest, if any, in the property to Defendant Marijane Flitcraft. The trial court found for the city based on its finding that the gift over to Fred Schallock and Floyd Daggett was void under the rule against perpetuities. The Defendants appealed.
Issue. Did a possibility of reverter remain in the grantor corporation under the deed, which by law in Oregon cannot be alienated, and would therefore remain in the corporation or its successors and heirs of successors?
Held. Yes. Reversed.
The language of the deed passed to the city a fee simple determinable in the land. That is true due to the use of the “magic words” of “as long as.” The Court found that the breach of the condition causes the fee simple to terminate automatically.
The language of the deed which called for the gift over in case of breach of the condition of use to be made to Fred Schallock or Floyd Daggett or their heirs and assigns was an attempt to convey an executory interest. The Court found that only an executory interest can follow a grant in fee simple. The rule against perpetuities applies to executory interests. “No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.” [citing Gr
the general use and enjoyment of his estate as he received it.
The tenant has not right to exercise an act of ownership.
He is entitled to use the building and plot reasonably for his own convenience and profit. To demolish that building and erect upon the land another building would be the exercise of ownership and dominion.
Financially, the remaindermen may be unwise in not consenting to the proposed change.
With motives and purposes, this court is not concerned.
(May be that the remaindermen owned property nearby and did not want an apartment building abutting their land.)
It is not waste for the tenant to erect a new edifice upon the demised premises, provided it can be done without destroying or materially injuring the building.
He has no right to make improvements which will materially and permanently change the nature of the property so as to render it impossible for him to restore the same premises at the expiration of the term.
In Melms v. Pabst Brewing Co., demolition was allowed; however, the facts of that case are distinguishable from the facts here.
The property there became valueless for the purpose of a residence property due to the growth and development of the city.
Also, the demolisher thought he was the owner in fee simple of the property.
NOTES:
– It has been generally recognized that any act of the Life tenant which does permanent injury to the inheritance is waste
– P.555 – Winship v. Pitts – opinion on “what constitutes waste?”
– Agate v. Lowenbein, Farrant v. Thompson – defines the extent of a lessee’s rights. “By a lease, the use, not dominion of the property demised, is conferred. If a tenant exercises an act of ownership, he is no longer protected by his tenancy.” Kidd v. Dennison
– P.556 – Melms v. Pabst Brewing Co.
– P.559 – Categories of Waste
o Affirmative waste – a type of misfeasance. It occurs when the life tenant undertakes some affirmative act on the property that is unreasonable and causes “excess” damage to the reversionary or remainder interest. The actions that constitute affirmative waste are often defined in terms of what is regarded as “normal” use of the property.
o One rule of thumb, the “open mines” doctrine, provided that any extraction of minerals was waste unless mining was already occurring on the land at the beginning of the life estate.
o Permissive waste – type of nonfeasance. It occurs when the life tenant fails to take some action with regard to the property and the failure to act is unreasonable and causes excess damage to the reversion or remainder. Again, rough conceptions of normal behavior serve to define the baseline against which liability is to be determined.
o Ameliorative waste – a type of affirmative act by the life tenant that significantly changes the property, but results in an increase, rather than a diminution, in its market value.
