Case Title: Williams v. Watt

Citation: 

Docket Number: 5799

State: wyoming

Court: Wyoming Supreme Court

Date: 1983-08-12T00:00:00Z

Document:
Williams v. Watt1983 WY 82668 P.2d 620Case Number: 5799Case Number: 5799Decided: 08/12/1983Supreme Court of Wyoming
MAURICE 
WILLIAMS, APPELLANT (PLAINTIFF),

 
 
v.

 
 

JOSEPH 
H. WATT AND NELLIE ARLENE WATT, TRUSTEES FOR THE JOSEPH H. WATT TRUST, DATED 
DECEMBER 30, 1972; AND TIM WATT, THE ROBERT E. WATT TRUST, TIM WATT AND VANCE 
WATT AS CO-TRUSTEES, AND TIM WATT AND VANCE WATT AS TRUSTEES OF THE ROBERT E. 
WATT TRUST, APPELLEES (DEFENDANTS). No. 5799

 
 

Appeal 
from the District Court, Weston County, Paul T. Liamos, Jr., J.

 
 

S. 
Thomas Throne, Sheridan, for 
appellant.

 
 

Henry 
A. Burgess of Burgess & Davis, Sheridan, for appellees.

 
 

Before 
ROONEY, C.J., and RAPER,* THOMAS, ROSE and BROWN,** JJ.

 
 

* 
Retired June 13, 1983, but continued to participate in the decision of the court 
in this case pursuant to order of the court entered June 13, 1983.

 
 

** 
BROWN, J., did not participate in 
the decision.

 
 

ROSE, 
Justice.

 
 

[¶1.]     In this appeal we are 
asked to examine the effect of deed and contract language in order to resolve an 
ownership-of-minerals issue.

 
 

FACTS

 
 

[¶2.]     On April 10, 1940 the 
Federal Land Bank of Omaha, Nebraska entered into a contract for deed with 
appellant Maurice Williams, pursuant to which it agreed to transfer ranch land 
titles to him upon payment of the purchase price. On December 28, 1954, the Land 
Bank delivered its warranty deed containing the following language.

 
 

"* 
* * [E]xcepting and reserving an undivided one-half interest in all oil, gas, 
and mineral rights in and under the balance of the land for a period of 20 years 
from the 10th day of April, 1940, and as long thereafter as oil, gas, or other 
minerals continue to be produced therefrom or said property is being so 
developed or operated".1

 
 

[¶3.]     On October 27, 1949 Mr. 
Williams executed a contract for warranty deed with appellee Joseph H. Watt, 
undertaking to convey and, by deed dated December 7, 1956, did convey an 
undivided two-thirds interest to Joseph H. Watt and an undivided one-third 
interest to Robert E. Watt in certain of the lands which had been included in 
the Land Bank transaction. The contract and deed contained this 
provision:

 
 

"Excepting 
and reserving to the first party [Williams], his heirs, successors and assigns, 
all of the oil, gas and mineral rights running with said lands and to which he 
is entitled under the present ownership of said lands, and which have not been 
reserved to the United States or heretofore have been reserved or conveyed by 
previous owners and as may show of record * * *."

 
 

[¶4.]     As can be seen, this 
exception was effected before the base term of the 20-year-or-production 
condition in the first deed had expired.

 
 

[¶5.]     The only minerals or 
interest in mineral rights with which this appeal has any concern whatsoever 
have to do with those which the Land Bank excepted from its grant. It is certain 
rights which pertain to these minerals that Williams asserts he withheld from 
his subsequent transfer of real property to the Watts. It is conceded that the 
half of the minerals which were not excepted by the Land Bank were excepted from 
the deed from Williams to Watts and the Watts make no claim to these 
minerals.

 
 

[¶6.]     On April 10, 1960, (20 
years from the date of the agreement between the Land Bank and Williams) there 
had been no production of oil, gas or other minerals from the lands and 
therefore the Federal Land Bank exception no longer burdened the controversial 
mineral interest. The trial court held that the disputed half of the minerals 
became the property of the Watts in fee simple absolute when the contingency 
expired.

 
 

[¶7.]     We will reverse, 
holding that by expressly excepting from the Williams-Watt contract for deed and 
deed,

 
 

"all 
of the oil, gas and mineral rights * * to which he is entitled under the present 
ownership of said lands, and which have not been * * * heretofore * * * reserved 
or conveyed by previous owners * * *",

 
 

the 
parties intended to and did withhold from the grant to the Watts a vested 
remainder. This remainder was owned by Williams at all times following the Land 
Bank-Williams transaction until the minerals themselves were automatically 
transferred to him upon the expiration of the 20-year contingency, no other oil, 
gas or other minerals then having been produced. When the condition contemplated 
by the 20-years-or-production provision in the Land Bank contract for deed and 
deed expired, the minerals became the property of Williams in fee simple by 
operation of law and thus did not either remain with the Land Bank by reason of 
any rule against perpetuity proscriptions,2 nor did they follow the land to its 
ownership in the Watts. 

 
 

ISSUE

 
 

[¶8.]     The appellant Williams 
describes the issue for our resolve as follows:

 
 

"Did 
the District Court err in holding that the Appellees-Watts were the owners of 
50% of the mineral rights in the subject real property despite the facts that: 
(1) Both Appellant-(Seller) Williams and Appellees-(Buyer) testified that it was 
their intent at the time of the sale of this property for all minerals to be 
reserved to Appellant; (2) the deed on its face reserves all of the minerals to 
Appellant Williams."

 
 

The 
Court's Identification of the Relevant Questions

 
 

[¶9.]     We view the essential 
questions for consideration to be these: When Williams agreed to sell and did 
sell the land to the Watts in 1949 with delivery of deed in 1956, and, given the 
fact that the Land Bank's exception of one-half of the minerals was not to 
terminate until 1960 or until oil, gas or other minerals ceased to be produced, 
what was the nature and what were the characteristics of the mineral interest or 
estate that the Federal Land Bank had excepted from its grant to Williams? What 
present and/or future interest or interests in these minerals did Williams 
possess after the conveyance from the Land Bank but prior to the expiration of 
the condition - if any? If, following the Land Bank's exception from its grant, 
Williams was then possessed, or at some later time was to be possessed, of some 
sort of mineral interest or estate which he attempted to withhold when he 
conveyed the land to the Watts, was this such an interest as he then possessed 
and could lawfully withhold? Finally, did the minerals which were excepted by 
the Land Bank from its conveyance to Williams ultimately pass to the Watts upon 
the expiration of the term contemplated by the 20-year-or-production exception - 
as the trial court held - or did they remain the property of the Land Bank for 
the reason that the conveyance was void as being in violation of the rule 
against perpetuities, supra n. 2 - or did the minerals then become the property 
of Williams in fee simple by reason of the purported exception language which is 
contained in the deed to the Watts?

 
 

Introduction

 
 

[¶10.]  By way of introduction to the decisional 
aspects of this opinion, it is appropriate to make this observation: All 
participating justices are secure in their interpretation of the Williams-Watt 
contract to the effect that it was the intent of these parties that Williams 
would come into ownership of the remaining disputed minerals when the condition 
contained in the Land Bank-Williams contract and deed no longer encumbered them. 
We consider the overriding obligation of this court to be to give effect to this 
intention of the parties - if that is possible. In fulfilling this obligation, 
the majority and the concurring justice reach the same result, but, in traveling 
through the complicated maze of future-interest concepts, we disagree about the 
labeling of the interest held by Williams as we all undertake to give effect to 
the intention of the parties. The majority of the justices hold that, 
contemporaneous with the execution of the Land Bank contract for deed and deed 
to Williams, Mr. Williams was possessed of a vested remainder. Justice Thomas, 
on the other hand, would identify Williams' interest as an executory 
interest.

 
 

[¶11.]  The majority take issue with the 
executory-interest theory for the reason that the Wyoming statute (n. 2, supra) 
which adopts the rule against perpetuities would be violated under this concept. 
Justice Thomas objects to the majority position because he finds the law to be 
that there can be no remainder after an estate in fee simple determinable,3 which estate we all hold to be the 
interest which the Land Bank possessed in the disputed minerals prior to the 
expiration of the condition.

 
 

[¶12.]  The majority concede the historical 
viability of Justice Thomas' objection, but find the modern law to be to the 
contrary - i.e., that a remainder can, in circumstances such as those which 
confront us here, follow a limited or qualified fee and may be excepted from a 
subsequent grant prior to the expiration of the qualification. On this issue, 
Gray, The Rule Against Perpetuities, 4th Ed., § 114, p. 108, n. 3, says that the 
concept which holds that there can be no remainder following a fee

 
 

"must 
be regarded, under modern conditions at least, as purely artificial * * 
*."

 
 

Thus, 
in more recent times, the rule against the possibility of an estate remaining 
after a fee is thought about as an historical anachronism. Indeed, were it not 
for the perpetuities problem discussed infra, it would not be necessary to 
distinguish between executory interests and remainders.

 
 

[¶13.]  In 28 Am.Jur.2d Estates § 197, 
"Distinctions - generally; from executory interest," p. 341, the text undertakes 
to distinguish remainders and executory interests and comes to this 
conclusion:

 
 

"* 
* * Most of the litigation involving remainders, vested and contingent, and 
executory interests, has been concerned with such questions of construction. 
Once the question of construction is settled, however, the further question of 
the technical designation of the future interest - whether it is a remainder or 
an executory interest and, if a remainder, whether it is vested, vested subject 
to being divested, or contingent - is one of decreasing significance. There is a tendency to disregard the 
historical distinctions between contingent remainders and executory 
interests, and some modern statutes in effect abolish the practical 
distinctions between them. Also, there is 
a rule that a limitation will be construed as creating a remainder rather than 
an executory interest if such can be done consistently with other rules of 
law." (Emphasis added.)

 
 

[¶14.]  Broadly speaking, executory interests or 
limitations are no longer distinguished from remainders but are grouped with 
them as future estates, 28 Am.Jur.2d Estates § 337, pp. 541-544. Justice Cardozo 
said in Doctor v. Hughes, 225 N.Y. 305, 122 N.E. 221, 222 (1919):

 
 

"* 
* * Executory limitations are no longer distinguished from remainders, but are 
grouped with them as future estates (Real Prop.Law, §§ 36, 37; Tilden v. Green, 
130 N.Y. 29, 47, 28 N.E. 880, 14 L.R.A. 33, 27 Am.St.Rep. 487), and deeds, like 
wills, must be so construed as to effectuate the purpose of the grantor (Real 
Property Law, § 240, subd. 3)."

 
 

The 
Land Bank's Estate

 
 

[¶15.]  By reason of its exception, the Bank 
owned a fee simple defeasible estate in one-half of the minerals

 
 

[¶16.]  We have said that:

 
 

"Oil 
and gas, while in situ, are part of the realty; part of the corpus of the land." 
State ex rel. School Dist. No. 1 in 
Weston County v. Snyder, 29 Wyo. 163, 212 P.2d [P.] 758, 762 
(1923).

 
 

See 
Burnell v. Roush, Wyo., 404 P.2d 836 
(1965), and Denver Joint Stock Land Bank 
of Denver v. Dixon, 57 Wyo. 523, 122 P.2d 842, 140 A.L.R. 1270 
(1942).

 
 

[¶17.]  In Denver Joint Stock Land Bank of Denver v. 
Dixon, supra, we affirmed the district court's decision, which held that the 
royalty interest was real and not personal property. See also State ex rel. Cross v. Board of Land 
Commissioners, 50 Wyo. 181, 58 P.2d 423 (1936), and Picard v. Richards, Wyo., 366 P.2d 119 
(1961), where it was held that a conveyance or reservation of a mineral interest 
gave title to oil in place.

 
 

[¶18.]  A landowner has the power to create 
separate interests in oil and gas by grant or exception, they being leasehold, 
mineral and royalty interests.4 It follows that he may create such 
interests for years, for life, or in fee. See 1A Summers Oil and Gas, Ch. 6, 
Landowner's Powers and Liabilities, § 136 - Nature of the Legal Interest in Oil 
and Gas Created by Deed, Exception or Reservation. See also, Goodson v. Smith, 69 Wyo. 439, 243 P.2d 163, reh. denied 244 P.2d 805 (1952). See Krug v. Reissig, Wyo., 488 P.2d 150 
(1971), where we recognized a life estate in the minerals.

 
 

[¶19.]  In a conveyance excepting the minerals 
from the grant, we said in Ohio Oil Co. v. Wyoming Agency, 63 Wyo. 187, 179 P.2d 773, 774-775 (1947):

 
 

"* 
* * It is admitted that a severance of the mineral estate from the surface 
estate was effected by this conveyance. See Tiffany on Real Property (3d ed.) § 
587; Lindley on Mines (3d ed.) §§ 9,812; cases cited in State ex rel. Cross v. Board of Land 
Com'rs, 50 Wyo. 181, 200-203, 58 P.2d 423, 429, 430. 62 P.2d 516. The 
mineral estate, after severance, is often called the `mineral fee' (see Dabney-Johnston Oil Corp. v. Walden, 4 Cal. 2d 637, 650, 52 P.2d 237, 243) * * *."

 
 

[¶20.]  In State ex rel. Cross v. Board of Land 
Commissioners, 58 P.2d  at 430, we referred, with approval, to a case citing 
Thompson on Real Property, where that author said:

 
 

"`"Since 
minerals in place are part of the land, the owner of the fee in the land has the 
absolute right of property in the mines and quarries beneath the surface (citing 
cases), and all the mineral substances, while thus in place, are things of a 
real, and not a personal character (citing cases). As we have seen, that part of 
the land consisting of minerals, or specified minerals, may become the subject 
of separate ownership by grant of the minerals by the owner of the land, or by a 
grant of the land with an exception of the minerals, and in either case an 
estate in fee simple is created in the minerals, as corporeal hereditaments. 
(Citing cases)."' [Barlow v. Security 
Trust & Savings Bank, 197 Cal. 263, 240 P. 19, quoting from 1 Thompson 
on Real Property, § 87.]"

 
 

[¶21.]  In Summers Oil and Gas, supra, the author 
says:

 
 

"Separate 
estates or interests in oil and gas may be created for a definite term of years and as long 
thereafter as oil or gas is produced from the land in paying quantities." 
(Emphasis added.) § 136, supra, p. 282.

 
 

[¶22.]  As has been noted, the Land Bank's 
exception was subject to a contingency for an indefinite term, i.e. 20 years and 
as long thereafter as oil and gas are produced therefrom. Since mineral and 
surface estates may be severed one from the other under the circumstances of 
this case, it follows that the Federal Land Bank's exception severed the 
minerals from the land conveyed to Williams.

 
 

[¶23.]  In his brief and argument, appellant 
Williams reaches the erroneous conclusion that the contingency contained in the 
Land Bank grant to Williams expressed a term for years which was not a freehold 
interest.5 From this faulty term-for-years 
assumption, it is reasoned that, since it was necessary that the fee be held to 
reside in someone, it must be in Williams and therefore he could and did reserve 
it when he executed the warranty deed to the Watts. Even though this court and 
Williams come to the same ultimate result - i.e., that Williams owned an 
exceptable interest which he could and did except - we do not travel the same 
path in order to arrive there.

 
 

[¶24.]  Appellant Williams represents that at the 
time of the Land Bank's deed to him

 
 

"* 
* * 100% of the minerals became vested in Maurice Williams, subject to a twenty 
(20) year term interest in 50% of the minerals held by the Federal Land 
Bank."

 
 

He 
goes on to say:

 
 

"The 
Federal Land Bank reserved an undivided one-half interest in the minerals for a 
period of twenty years. `Every estate which must expire at a period certain and 
prefixed, by whatever words created, is an estate for years.' 2 Blackstone, 
Commentaries on the Common Law, 143, quoted in Ralston Steel Car Company v. Annie M. 
Ralston, [112 Ohio St. 306], 

 
 

147 N.E. 513, 516, 39 ALR. 334, 338 (1925). The interest reserved by the Federal 
Land Bank is an estate for years. An estate for years is not a free-hold 
interest. King v. White, 499 P.2d 585. (Wyo. 1972).

 
 

"Since 
the Federal Land Bank reserved only an estate for years in 50% of the minerals, 
seizen to 100% of the minerals had to be vested in someone at the time of the 
conveyance from the Federal Land Bank to Maurice Williams. Because a term 
interest is not a freehold interest, the minerals could not have been vested in 
the Federal Land Bank. All of the mineral rights were vested in Maurice 
Williams.

 
 

"Maurice 
Williams had a present vested interest in 100% of the minerals, subject to a 
twenty-year estate for years in 50% of the minerals reserved by the Federal Land 
Bank. See Bergin and Haskel, Preface to Estates and Land and Future Interest, p. 
41 (Foundation Press 1966).

 
 

"Maurice 
Williams owned the entire mineral estate. He owned 50% of the minerals in fee 
simple absolute, and 50% of the minerals in fee subject to an estate for years. 
On April 10, 1960, when the term of years held by the Federal Land Bank expired, 
Maurice Williams became owner in fee simple absolute of 100% of the minerals in 
the subject lands."

 
 

[¶25.]  The exception in the Land Bank's grant to 
Williams did not describe an estate for years and, during the life of the 
contingency, a determinable fee interest in the minerals did in fact reside in 
the Land Bank and the fee estate was not held by Williams.

 
 

[¶26.]  The term of the contingency was not 
definite as the appellee contends. Had there been production within the base 
period, the Federal Land Bank's right to save, keep and dispose of its one-half 
of the disputed minerals would have continued for such a period of time as could 
only be considered to be beyond ascertainment when either of the deeds with 
which this appeal is concerned is executed and delivered. The appellant was 
therefore in error in making the assumption that the contingency was for a term 
of years and that for this reason fee 
title to 100% of the minerals was in Williams at all times following the grant 
from the Federal Land Bank.

 
 

[¶27.]  As we have previously noted, this court 
has on other occasions inquired into the status of an oil and gas lease which 
conveys such a mineral interest to its lessee as that which is retained by a 
grantor who excepts minerals from a grant by deed. In Torgeson v. Connelly, Wyo., 348 P.2d 63, 
68-69 (1959), where the court was concerned with an oil and gas operating 
agreement with a primary term of 20 years and

 
 

"`* 
* * so long thereafter as oil and gas and hydrocarbon substances are produced in 
commercial quantities,'"

 
 

the 
agreement undertook to grant the exclusive right to drill in accord with a 
federal lease. The court was of the opinion that

 
 

"* 
* * it in effect conveys a portion of the lease or the rights thereunder and 
constitutes real property."

 
 

We 
held in Torgeson, supra, that leases for a limited term are personalty, while 
leases for an indefinite period are realty. In that same opinion we said, in 
referring to our holding in Denver Joint 
Stock Land Bank of Denver v. Dixon, supra:

 
 

"* 
* * We noted Dutton v. Interstate 
Investment Corporation, Cal.App., [19 Cal. 2d 65], 113 P.2d 492 and Arrington v. United Royalty Co., 188 
Ark. 270, 65 S.W.2d 36, 90 A.L.R. 765, as holding that leases for a limited term 
of years had been held to be personalty * * *" 348 P.2d  at 68,

 
 

but 
that

 
 

"* 
* * [t]he Dutton and Arrington cases both 
held that leases for an indefinite term had been considered to be realty, the 
latter indicating that the term of the lease is indefinite if the contract 
provided `and so long as oil and gas is produced.'" (Emphasis added.) 348 P.2d  at 69.

 
 

[¶28.]  It was said in Arrington v. United Royalty Co., 188 
Ark. 270, 65 S.W.2d 36, 38, 90 A.L.R. 765 (1933):

 
 

"* 
* * It seems, also, that whether the royalty, when severed from the reversion, 
is to be deemed real or personal property, depends upon the duration of the 
lease. If the oil and gas lease is for a term of years expiring at a certain 
time, it is a chattel real, and the severed royalty would be personal property; 
but, where the lease may endure for an 
indeterminate period, it creates an estate in the nature of a qualified fee, and 
the royalty reserved would be an interest in realty.

 
 

"We have held that leases given for a 
definite period in which exploration and discovery of the mineral might be made, 
to continue as long thereafter as oil and gas is produced conveys not merely a 
license but an interest and easement in the land itself. Standard Oil Co. v. Oil 
Well Salvage Co., 170 Ark. 729, 281 S.W. 360; Clark v. Dennis, 172 Ark. 1096, 291 S.W. 807; Henry v. Gulf Refining Co., 176 
Ark. 133, 2 S.W.2d 687; and Henry v. Gulf 
Refining Co., 179 Ark. 138, 15 S.W.2d 979." (Emphasis added.)

 
 

[¶29.]  Accordingly, the exception for 20 years 
and as long thereafter as oil, gas or other minerals continue to be produced 
therefrom constituted a real-property interest in the Land Bank.

 
 

[¶30.]  There is no doubt but that such an 
exception as that contained in the Land Bank's deed is acceptable to real 
property and to mineral and oil and gas law. The estate structured by such an 
exception is a base or determinable fee which is defeasible at the end of the 
base term or - in the event production is attained - when production ceases. The 
Restatement of the Law of Property calls it an "estate in fee simple 
determinable." Restatement of the Law of Property § 44, p. 121.

 
 

"* 
* * [A] `determinable,' `qualified,' or `base' fee is an estate limited to a 
person and his heirs, with a qualification annexed to it providing that such 
estate must determine whenever that qualification is at an end. Because the 
estate may last forever, it is a fee; and because it may end on the happening of 
an event, it is called a `determinable or qualified fee.'" 28 Am.Jur.2d Estates 
§ 22.

 
 

[¶31.]  It was said in United States v. Union Pacific Railroad 
Company, 230 F.2d 690, 694 (1956), rev'd on unrelated grounds:

 
 

"Generally 
the terms `limited', `determinable', `qualified', or `base' fee, as applied to 
the title of real estate, are used synonymously. Because of the possibility that 
it may endure forever, the owner of such an estate, so long as it exists, even 
though title may revert upon the happening of a condition, has the same rights 
as an owner in fee simple and may remove underlying minerals. 19 Am.Jur., 
Estates, Secs. 28, 30, 31; 31 C.J.S., Estates, §§ 9, 10; Restatement of 
Property, Sec. 193, Comment (h); United 
States v. Illinois Central R. Co. [D.C., 89 F. Supp. 17], supra; Frensley v. White, 208 Okla. 209, 254 P.2d 982; Davis v. Skipper, 125 Tex. 
364, 83 S.W.2d 318; Johnson Irrigation 
Co. v. Ivory, 46 Wyo. 221, 24 P.2d 1053; D.C., 126 F. Supp. 646."

 
 

[¶32.]  The existence of an estate in fee simple 
determinable requires the presence of special limitations. Restatement of the 
Law of Property, § 44, p. 121. The term "special limitation" denotes that part 
of the language of a conveyance which causes the created interest automatically 
to expire upon the occurrence of a stated event. Restatement of the Law of 
Property, § 23, p. 55. An estate in fee simple determinable may be created so as 
to be defeasible upon the occurrence of an event which is not certain ever to 
occur. Restatement of the Law of Property, § 44, p. 125.

 
 

[¶33.]  As we have seen, we approved the Arrington v. United Royalty rule in Denver Joint Stock Land Bank of Denver, 
supra, where the Arrington court said:

 
 

"* 
* * [W]here the lease may endure for an indeterminate period it creates an 
estate in the nature of a qualified fee * *." 65 S.W.2d  at 38.

 
 

Chapter 
4 of the Restatement of the Law of Property, pp. 117-118, provides:

 
 

"Introductory 
Note: An estate in fee simple defeasible is defined as an estate in fee simple 
which is subject to a special limitation, a condition subsequent, an executory 
limitation or a combination of these restrictions.

 
 

"The 
estate in fee simple subject to a special limitation is also designated as an 
`estate in fee simple determinable.' It expires in accordance with its terms. It 
ends automatically upon the occurrence of the event stipulated in its 
limitation."

 
 

In 
Baker v. Hugoton Production Company, 
182 Kan. 210, 320 P.2d 772 (1958), the grant of a mineral interest from A to B 
carried the proviso that it was to be held by B for a term of twenty years and 
as long thereafter as oil, gas or either of them, are being produced from said 
land.

 
 

[¶34.]  The court held that the instrument 
grants

 
 

"* 
* * a base or determinable fee in the oil, gas and other minerals in place * *." 
320 P.2d  at 774.

 
 

[¶35.]  In Wilson v. Holm, 164 Kan. 229, 188 P.2d 899, 904 (1948), it was said:

 
 

"* 
* * [I]t should be stated that in this state a deed, conveying oil and gas in 
place for a fixed term of years and so long thereafter as either or both are 
produced in paying quantities, creates a base or determinable fee and that title 
to the estate so created vests immediately upon the execution and delivery of 
such an instrument but remains defeasible in the event of cessation of 
production, [citing a Kansas case]."

 
 

[¶36.]  In the case at bar, the Land Bank's 
exception carried no restriction as to use - only a condition which made it 
subject to the possibility of defeasance. It was, therefore, a determinable 
qualified or base fee.

 
 

Characteristics 
of a Base or Determinable Fee

 
 

"A 
determinable or qualified fee has all the attributes of a fee simple, except 
that it is subject to be defeated by the happening of the condition which is to 
terminate the estate." 28 Am.Jur.2d Estates, Determinable Qualified or Base Fee, 
§ 26, Attributes and incidents - generally: rights of holder, p. 
103.

 
 

[¶37.]  We said in Johnson Irrigation Co. v. Ivory, 46 Wyo. 
221, 24 P.2d 1053, 1058 (1933):

 
 

"We 
may also agree that a grantee who takes a limited or qualified fee,[6] liable to be defeated * * * may, 
while the estate continues, have the same rights and privileges as an owner in 
fee simple."

 
 

[¶38.]  In the Restatement of the Law of Property 
§ 49, p. 170, it is said:

 
 

"The 
privilege of the owner of a possessory estate in fee simple defeasible to use 
the land [minerals in the instant case] is identical with that of an owner of a 
possessory estate in fee simple absolute except that the privilege is limited by 
a duty not to commit waste."

 
 

The 
Restatement goes on to say:

 
 

"Except 
as modified by the terms of the limitation creating an estate in fee simple 
defeasible, the power and the privilege of the owner of such an estate to create 
an interest in the affected land are identical with those of an owner having an 
estate in fee simple absolute therein, but all interests so created are subject 
to the defeasibility which existed as to the estate of the transferor." 
Restatement of the Law of Property § 50, p. 173.

 
 

[¶39.]  We conclude that the Federal Land Bank, 
in excepting one-half of the minerals from the grant to Williams

 
 

"* 
* * for a period of 20 years * * * and as long thereafter as * * * minerals 
continue to be produced * * *"

 
 

was 
possessed of an estate in fee simple in the excepted minerals subject to the 
qualification expressed in the deed. It was during the life of the qualification 
that Williams conveyed the land to the Watts and Williams did not hold fee title 
to the minerals during the life of the contingency. That freehold interest 
resided in the Federal Land Bank, subject to the contingency. 

 
 

Williams' 
Interest - A Vested Remainder

 
 

[¶40.]  After the grant from the Land Bank, 
Williams' interest in the disputed minerals is properly identified as a vested 
remainder.

 
 

I

 
 
Characterization 
of various interests based

 
 

upon 
historical concepts

 
 

[¶41.]  In its deed to Williams, the Land Bank 
excepted:

 
 

"* 
* * an undivided one-half interest in all oil, gas, and mineral rights in and 
under the balance of the land for a period of 20 years * * *, and as long 
thereafter as oil, gas, or other minerals continue to be produced therefrom or 
said property is being so developed or operated * * *."

 
 

As 
has been noted, the interest held by the Land Bank following the grant is 
properly identified as a fee simple determinable. Once it is established that 
the Land Bank withheld a determinable fee in the mineral estate, classical 
concepts of property law (absent statutory rule against perpetuities 
proscriptions), disassociated from the unique characteristics of mineral law, 
would indicate that the interest created in Williams be identified as an 
executory interest. Given historical guidelines, the only other designations for 
Williams' interest are a possibility of reverter and a remainder.

 
 

[¶42.]  It is conceded that Williams' interest 
cannot be labeled a possibility of reverter, because a possibility of reverter 
is such an interest as is retained by the 
transferor, following the conveyance of a fee simple determinable. Simes and 
Smith, The Law of Future Interests, 2d Ed., § 281 (1956); 28 Am.Jur.2d Estates § 
22; Restatement of the Law of Property, § 154(3) (1936). Since the disputed 
interest was transferred to Williams, rather than retained by the Land Bank, it 
cannot properly be designated a possibility of reverter.

 
 

[¶43.]  Under antiquated historical concepts it 
could be - and in Justice Thomas' concurring opinion is - argued that a 
remainder is likewise an inappropriate designation of Williams' interest for the 
reason that a remainder cannot follow a fee. Simes and Smith, supra, § 103; 28 
Am.Jur.2d Estates § 196; Restatement of the Law of Property, § 156(2). The 
justification for this rule is that once the owner of an estate in fee simple 
conveys his estate in fee simple, there is nothing left to constitute a 
remainder. Bergin & Haskill, Preface to Estates in Land and Future Interests 
(1966), p. 72.

 
 

[¶44.]  In Simes and Smith, The Law of Future 
Interests, 2d Ed., § 103, the authors say:

 
 

"The 
second characteristic [of a remainder] is that there can be no remainder after a 
fee simple. This is true even though the fee simple be subject to a special 
limitation. This is explainable only on historical grounds. All fees simple were 
regarded as of the same quantum and infinite duration. Hence it was thought 
that, when the fee simple had been given, no `remnant' could be left to grant or 
devise."

 
 

[¶45.]  Once the possibility of reverter and the 
remainder have been ruled out as appropriate labels for Williams' interest, it 
follows from these traditional principles that Williams should be held - on 
historical grounds - to have possessed an executory interest in the mineral 
estate excepted by the Land Bank. The Restatement of the Law of Property, § 158, 
says:

 
 

"(1) 
An executory interest is any future interest created by an executory limitation 
(defined in § 25).

 
 

"(2) 
Executory interests as defined in Subsection (1) include all future interests, 
other than remainders * * * which can be created in a transferee."

 
 

Section 
25 of the Restatement of the Law of Property provides in part:

 
 

"* 
* * [T]he term `executory limitation' denotes that part of the language of a 
conveyance, by virtue of which

 
 

* 
* * * * *

 
 

"(b) 
an estate in fee simple determinable, * * * concurrently with its expiration, is 
to be succeeded forthwith by another interest in a person other than the 
conveyor or his successor in interest."

 
 

The 
exception by the grantor of a determinable fee and the resulting interest in the 
grantee are discussed in 28 Am.Jur.2d Estates § 37:

 
 

"By 
reservation or exception.

 
 

"While 
a fee simple determinable is created by the grant of the fee simple determinable 
to the grantee, thereby reserving the possibility of reverter to the grantor, 
where an attempt is made to reverse the positions of the grantor and grantee by 
excepting a determinable fee from the grant, the grantor is held to take a 
determinable fee, but the grantee takes a future interest in the nature of a 
springing use, rather than a possibility of reverter, which future estate may, 
unlike a possibility of reverter, be subject to the rule against 
perpetuities."

 
 

[¶46.]  An executory interest, by definition, 
does not vest so long as it remains a future interest. Simes and Smith, supra, § 
221. Consequently, all executory interests are subject to invalidation by the 
rule against perpetuities. Gray, The Rule Against Perpetuities, 4th Ed. (1942), 
§ 317. To say that a rule-against-perpetuities result is contrary to the 
intentions of the parties is of no avail, because the rule against perpetuities 
always operates to frustrate the parties' intentions.

 
 

[¶47.]  Despite the foregoing conclusion that the 
exception by the grantor of a determinable fee may subject the granted executory 
interest to problems with the rule against perpetuities, only a few courts have 
found such interests to be void. Walker 
v. Marcellus & O.L. Ry. Co., 226 N.Y. 347, 123 N.E. 736 (1919); Victory Oil Co. v. Hancock Oil Co., 125 Cal. App. 2d 222, 270 P.2d 604 (1954); 2 Williams and Meyers, Oil and Gas Law 
(1981), § 335, pp. 177-180. Many cases simply assume the validity of these 
interests without any discussion of the rule against perpetuities. 2 Williams 
and Meyers, supra at 180, and cases cited therein. A recent Texas case found 
that in such situations the law implies that the grantor conveyed his entire 
estate to the grantee, who then regranted a determinable fee to his grantor. 
This fictitious regrant resulted in a possibility of reverter in the original 
grantee which was valid under the rule against perpetuities. Bagby v. Bredthauer, Tex.Civ.App., 627 S.W.2d 190 (1981). A number of other courts, while not dealing directly with an 
excepted determinable fee, have held that conveyances in the commercial context 
are exempt from the rule against perpetuities. Camerlo v. Howard Johnson Company, 545 F. Supp. 395 (W.D. Pa. 1982); Forderhause 
v. Cherokee Water Company, Tex.Civ.App., 623 S.W.2d 435 (1981), rev'd on 
other grounds 641 S.W.2d 522, 526 (1982); Producers Oil Company v. Gore, Okla., 
610 P.2d 772 (1980).

 
 

[¶48.]  In view of the fact that the rule against 
perpetuities is embodied in a statute7 and in the Constitution8 in Wyoming, this court is without 
authority to carve out an exception to the constitutional and statutory 
provision or to circumvent the Constitution and statute through the inference of 
a fictitious regrant or by the utilization of any other fictitious device - and 
it is at this juncture that the majority parts company with Justice 
Thomas.

 
 

[¶49.]  In light of Justice Thomas' concurring 
opinion, it is well to pause here and further explore the perpetuities problem. 
It is worth noting that a holding designating Williams' interest as "executory" 
and thus violative of the rule against perpetuities would have the result of 
finding the Land Bank to be possessed of the disputed minerals - a result which 
was not contemplated either by the parties or the Land Bank.

 
 

[¶50.]  Wyoming has adopted the common-law rule 
against perpetuities through § 34-1-139, supra n. 2. This statute implements 
Art. 1, § 30 of the Wyoming Constitution. See n. 8. In any effort to circumvent 
the rule against perpetuities by fiction or otherwise, or to carve out an 
exception to the rule - for any reason - we are first off confronted with 
well-established rules having to do with the necessity to give effect to 
statutory and constitutional provisions.9

 
 

[¶51.]  We said in Yeik v. Department of Revenue and 
Taxation, Wyo., 595 P.2d 965, 968-969 (1979):

 
 

"* 
* * It is the duty of courts to endeavor by every rule of construction available 
to ascertain the meaning of and give full force and effect to the legislative 
product. 1A Sutherland, Statutory Construction, § 21.16 (fn. 2) (1972). The 
legislature will not be presumed to intend futile things. De Herrera v. Herrera, Wyo. 1977, 565 P.2d 479; See West's Digest System, Statutes, Key Number 212.4.",

 
 

and 
in McGuire v. McGuire, Wyo., 608 P.2d 1278, 1285 (1980), we said:

 
 

"It 
is this court's obligation to make sense out of a statute and give full force 
and effect to the legislative product. Yeik v. Department of Revenue and 
Taxation, Wyo. 1979, 595 P.2d 965. In construing statutes, the intention of 
the law-making body must be ascertained from the language of the statute as 
nearly as possible. Wyoming State 
Treasurer v. City of Casper, Wyo. 1976, 551 P.2d 687. We must not give a 
statute a meaning that will nullify its operation if it is susceptible of 
another interpretation."

 
 

With 
respect to the construction, operation and enforcement of constitutional 
provisions, we have said in Zancanelli v. 
Central Coal & Coke Co., 25 Wyo. 511, 173 P. 981, 991 
(1918):

 
 

"The 
general principles governing the construction of statutes apply to the 
construction of Constitutions. * * * And the fundamental purpose in such 
construction is to ascertain the intent of the framers and the people who 
adopted it, and give effect thereto."

 
 

In 
Schaefer v. Thompson, 240 F. Supp. 247, 253 (1964), it was said:

 
 

"* 
* * In construing constitutional provisions, the fundamental purpose is to give 
effect to their purpose and intent. Courts will not ignore the general spirit of 
the instrument."

 
 

[¶52.]  Since the rule against perpetuities is 
applicable to executory interests, and since Wyoming's statute § 34-1-139, 
adopts the rule, the only question - with respect to whether the interest at 
hand should be designated as executory - is whether, under the exception by the 
Land Bank, the interest would offend the statutory rule. In this case, we must 
hold it would. As we have said, one of the characteristics of the executory 
interest is that it does not vest until possession. Under the Land Bank 
contingency language, there is no way to know that the interest in question will 
vest

 
 

"not 
later than twenty-one (21) years after some life in being at the creation of the 
interest * * *" § 34-1-139,

 
 

and 
thus, if identified as executory, the interest is void as being in violation of 
the rule against perpetuities and - in which case - the intentions of the 
parties would be thwarted because fee title to the disputed minerals would 
remain in the Land Bank.

 
 

II

 
 
Characterization 
of the interests created 

 
 
by 
the grant based on the attributes of 

 
 

the 
mineral estate

 
 

[¶53.]  The discussion in Part I of this topic 
focuses exclusively on historical concepts which are applicable to the interests 
created by deed in the Land Bank and Williams. If we were to temper these 
historical concepts by considering the unique attributes of a mineral estate, 
then the interest that Williams held following the Land Bank grant 
authoritatively and logically may be designated as a "vested 
remainder."

 
 

[¶54.]  As we have said, the Land Bank withheld a 
present fee interest in the mineral estate for 20 years and so long thereafter 
as production continues. An analogous example in the surface estate context 
would be a grant of Blackacre from A to B, reserving to A a present fee interest 
in Blackacre so long as no gambling occurs on the premises. A would own a fee 
simple determinable in Blackacre and B would have an executory interest. 
However, B's interest would be void under the rule against perpetuities, with 
the result that A would possess Blackacre in fee simple absolute.

 
 

[¶55.]  The interest in B in the above example is 
typical of the vast majority of executory interests. It is limited upon a 
condition precedent not certain ever to be fulfilled and it follows an estate in 
fee simple not certain to end. Gambling may never occur on Blackacre. Jones, The 
Rule Against Perpetuities as it Affects California Oil and Gas Interests, 7 
U.C.L.A.Law Rev. 261, 265 (1960). In contrast, the event upon which Williams is 
to take the mineral estate is one certain to occur. Production of minerals will 
eventually cease; the only unknown is the time of cessation. When production of 
minerals ceases, the estate in the Land Bank automatically terminates. There is 
no doubt that the Land Bank's estate in the excepted minerals will eventually 
come to an end. See Jones, supra at 265-266.

 
 

Remainder 
Interest

 
 

[¶56.]  Since the mineral estate in Williams 
differs significantly from the typical executory interest in Blackacre, it makes 
sense to call it something other than an executory interest. It is undisputed 
that the interest retained by the Land Bank is of a lesser duration than its 
original estate. The Land Bank excepted an estate which will eventually 
terminate, either because production was halted (for whatever reason) or the 
recoverable minerals were exhausted. Thus, some interest will remain after the 
estate excepted by the Land Bank expires and it is that interest which was 
conveyed to Williams. If Williams' interest satisfies all of the other 
requirements of a remainder, it should be possible, conceptually, to call it a remainder. According to Simes 
and Smith, supra, § 103, the other characteristics of a remainder 
are:

 
 

1. 
The remainder is always created by express limitation or by implication of fact 
and by the same instrument which creates the preceding estate.

 
 

2. 
At the time of its creation, the remainder must be capable of taking effect in 
possession at the expiration of the preceding estate, although it does not 
terminate the preceding estate.

 
 

3. 
The remainder does not normally divest or cut short the preceding possessory 
estate.

 
 

[¶57.]  Williams' interest was created by express 
limitation in the same deed that created the preceding estate in the Land Bank, 
and he stands ready to take possession upon the expiration of the Land Bank's 
estate. In addition, the estate in the Land Bank will terminate naturally upon 
the exhaustion of recoverable minerals or the cessation of mineral production 
for whatever cause. With only a little exercise of property-law imagination, the 
fee simple determinable in the mineral estate may be analogized to the ordinary 
life estate. When the minerals "die" (the passage of 20 years or the cessation 
of production), the present estate in the Land Bank expires and passes 
automatically to Williams. In light of the above discussion, it is therefore 
reasonable and proper to identify an interest in a mineral estate following a 
determinable fee as a remainder without doing impermissible damage to 
traditional common-law concepts.

 
 

Vested 
Versus Contingent

 
 

[¶58.]  If Williams' interest is properly 
identified as a remainder, the next question is: What kind of a remainder did 
Williams possess over and above the interest excepted by the Land 
Bank?

 
 

[¶59.]  As discussed above, the event upon which 
Williams will take is certain to occur. The only unknown is when the event will 
occur. In 28 Am.Jur.2d Estates § 242, p. 396, it is said:

 
 

"The 
broad distinction between vested and contingent remainders is this: In the 
first, there is some person in esse known and ascertained, who, by the will or 
deed creating the estate, is to take and enjoy the estate, and whose right to 
such remainder no contingency can defeat. In the second, it depends upon the 
happening of a contingent event, whether the estate limited as a remainder shall 
ever take effect at all. The event may either never happen, or it may not happen 
until after the particular estate upon which it depended shall have been 
determined, so that the estate in remainder will never take effect."

 
 

A 
remainder is not rendered contingent merely because the time at which the estate 
will become possessory is uncertain. Section 243 of 28 Am.Jur.2d Estates 
provides:

 
 

"There 
is a definite distinction between the uncertainty which makes a remainder 
contingent and the uncertainty of the estate's ever taking effect in possession, 
which is incident to even a vested remainder. In a contingent remainder, the 
right to the estate is uncertain, while in a vested remainder, the time of 
possession and enjoyment being deferred, there is an uncertainty as to whether 
the estate will ever be enjoyed in possession. It is in this respect only that a 
vested remainder is contingent and expectant; for, unlike a contingent 
remainder, it is vested in right, and the remainderman has an immediate right of 
future enjoyment. Although it may be uncertain whether a remainder will ever 
take effect in possession, it will nevertheless be a vested remainder if the 
interest is fixed. It is the uncertainty of the right of enjoyment, and not the 
uncertainty of its actual enjoyment, which renders a remainder contingent and 
distinguishes it from a vested remainder."

 
 

See 
also Jones, supra at 266-267.

 
 

[¶60.]  Bergin and Haskell, Preface to Estates in 
Land and Future Interests, supra at 71, identify two requirements for a vested 
remainder: (1) that there is no condition precedent to the future interest 
becoming a present estate other than the natural expiration of the prior life 
estate [or fee tail] and (2) that it is theoretically possible to identify who 
would get the right to possession if the prior estate should end at any time. 
Since the condition upon which Williams will take a present estate is certain to 
occur, and since the condition is the natural expiration or "demise" of the 
prior mineral estate, then Williams' estate is vested rather than contingent. 
Since Williams' estate was vested at the time of its creation, it is valid under 
the rule against perpetuities.

 
 

Conclusion

 
 

[¶61.]  We of the majority are, by this 
discussion, forced to the observation that we now find ourselves playing games 
with respect to these future-interest brain twisters - games in which only 
real-property professors should be permitted to indulge themselves. Suffice it 
to say, for purposes of disposing of this appeal, that a limitation will be 
construed as creating a remainder rather than an executory interest if such can 
be done consistently with other rules of law. 28 Am.Jur.2d Estates § 197, p. 
341. Certainly this may be accomplished here. If, on the other hand, we were not 
able to come to the conclusion which is reached by the majority in this case, we 
would not be able to give effect to what all justices acknowledge was the intent 
of the parties. This is so because the interest remaining after the determinable 
fee would, if it were designated an executory interest, be in violation of the 
rule against perpetuities and therefore void. This would leave fee title 
absolute in the Land Bank - a result which would defeat the intent of all 
parties.

 
 

[¶62.]  Williams' interest, after the Land Bank 
exception, was a vested remainder which was exceptable from the grant to the 
Watts and when the contingency in the Land Bank deed expired, the minerals 
became his in fee simple absolute.

 
 

[¶63.]  Reversed and remanded for entry of an 
order which will give effect to this opinion.

 
 

FOOTNOTES

 
 

1 
This language was also contained in the 1940 contract for deed between the 
Federal Land Bank and Williams.

 
 

2 
Section 34-1-139, W.S. 1977 adopts the rule against perpetuities and 
provides:

 
 

"No 
interest in real or personal property shall be good unless it must vest not 
later than twenty-one (21) years after some life in being at the creation of the 
interest and any period of gestation involved in the situation to which the 
limitation applies. The lives selected to govern the time of vesting must not be 
so numerous nor so situated that evidence of their deaths is likely to be 
unreasonably difficult to obtain. It is intended by the enactment of this 
statute to make effective in this state the American common-law rule against 
perpetuities."

 
 

3 
Restatement of the Law of Property, § 156.

 
 

4 
1 Williams and Meyers Oil and Gas Law, § 203.1 (1981).

 
 

5 
We have held that a term for years is not a freehold interest. King v. White, Wyo., 499 P.2d 585 
(1972).

 
 

6 
In an exception in a deed, it would be the grantor who possessed the fee simple 
determinable estate.

 
 

7 
See n. 2.

 
 

8 
Article 1, § 30 of the Wyoming Constitution provides:

 
 

"Perpetuities 
and monopolies are contrary to the genius of a free state, and shall not be 
allowed."

 
 

9 
Justice Thomas in his concurring opinion advocates "cutting through the 
intricacies of the common law" by following the suggestion of 2 Williams and 
Meyers Oil and Gas Law, § 335, p. 185 (1981) where it is said:

 
 

"We 
believe, therefore, that the courts should simply exempt interests following 
granted or reserved defeasible term interests from the Rule, on the 
straight-forward basis that they serve social and commercial convenience and do 
not offend the policy of the Rule against Perpetuities."

 
 

Justice 
Thomas says:

 
 

"While 
this approach apparently has not been taken by any other court, it does seem 
that there is a good deal of merit in having the same result in an instance in 
which the determinable fee is created by exception as in the instance in which 
it is created by grant. I am disposed to advocate such an approach as a rational 
and appropriate method of cutting through 
the intricacies of the common law in order to effectuate the intent of the 
parties." (Emphasis added.) 668 P.2d  at 638.

 
 

THOMAS, 
Justice, specially concurring.

 
 

[¶64.]  I concur in the result reached by the 
majority of the court in this case. I must, however, part company from the other 
members of the court with respect to the rationale for this decision. The 
difference between my views and those of the majority is over the most 
appropriate technique to avoid the rule against perpetuities which has been 
adopted by statute in Wyoming. Section 34-1-139, W.S. 1977 (quoted above in the 
majority opinion). All of us are in accord that the application of the rule 
against perpetuities would achieve a frustration of the intent of the parties in 
this instance. That result is intolerable. None of the parties in this case want 
the Federal Land Bank of Omaha, Nebraska, to own the mineral estate which is in 
issue.

 
 

[¶65.]  I cannot accept the recognition of a 
vested remainder interest in Williams following a determinable fee. My position 
is expressed in the following language found in Restatement of Property, § 156, 
p. 535 (1936):

 
 

"* 
* * The word `remainder' does not include a future interest which becomes a 
present interest, if ever, upon the expiration of an estate in fee simple 
determinable, or of an analogous interest in a thing other than land, or of an 
estate in fee simple conditional."

 
 

Citing 
Madison v. Larmon, 170 Ill. 65, 48 N.E. 556 (1897), overruled on another point Harrison v. Weatherby, 180 Ill. 418, 444, 54 N.E. 237 (1899); Outland v. 
Bowen, 115 Ind. 150, 17 N.E. 281 (1888); Sayward v. Sayward, 7 Me. 210 (1831); Church in Brattle Square v. Grant, 69 
Mass. (3 Gray) 142 (1855); Elsea v. 
Smith, 273 Mo. 396, 202 S.W. 1071 (1918); Lyford v. Laconia, 75 N.H. 220, 72 A. 1085 (1909); and Jordan v. Benwood, 
42 W. Va. 312, 26 S.E. 266 (1896), the same proposition is expressed in 28 
Am.Jur.2d Estates § 196, p. 340, in the following language:

 
 

"* 
* * Wherever a grant is of a fee, there cannot be a remainder, although the fee 
may be a qualified or determinable one, because the fee is the whole estate and 
there is nothing left out of which a remainder may be carved."

 
 

See 
also Simes and Smith, The Law of Future Interests, § 228, p. 264 
(1956).

 
 

[¶66.]  I am in complete accord with the part of 
the majority opinion which identifies the interest created by the exception in 
the deed from the Federal Land Bank to Williams as a determinable fee. The 
interest which the Federal Land Bank retained by virtue of the exception in the 
deed is an interest which terminates automatically upon the expiration of 20 
years or the cessation of production of oil, gas or other minerals from the 
property. It is noted in Restatement of Property, § 44, Comment i (1936) that a 
determinable fee can be created "as to be defeasible upon the occurrence of an 
event which is certain to occur some time, if the event is of such a character 
that the time of the occurrence thereof is neither fixed, nor computable nor 
certain to happen within the duration or at the end of any designated life or 
lives." Such an interest was created in this instance in the Federal Land 
Bank.

 
 

[¶67.]  It is my conclusion that the future 
interest in this instance properly is identified as an executory interest. There 
seems to be no question that had the determinable fee been created by grant 
rather than exception it would have been identified as a possibility of 
reverter. 28 Am.Jur.2d Estates § 27, p. 104. As noted in the majority opinion, 
28 Am.Jur.2d Estates, § 37, p. 119, states, however:

 
 

"While 
a fee simple determinable is created by the grant of the fee simple determinable 
to the grantee, thereby reserving the possibility of reverter to the grantor, 
where an attempt is made to reverse the positions of the grantor and grantee by 
excepting a determinable fee from the grant, the grantor is held to take a 
determinable fee, but the grantee takes a future interest in the nature of a 
springing use, rather than a possibility of reverter, which future estate may, 
unlike a possibility of reverter, be subject to the rule against perpetuities. * 
* *" (Footnote omitted.)

 
 

Generally 
executory interests are subject to the rule against perpetuities although it 
does not apply to a possibility of reverter. Walker v. Marcellus & O.L. Ry. 
Company, 226 N.Y. 347, 123 N.E. 736 (1919); 2 Williams and Meyers, Oil and 
Gas Law, § 335 (1981); Simes and Smith, The Law of Future Interests, §§ 1236 and 
1239 (1956).

 
 

[¶68.]  The Legislature of the State of Wyoming 
has adopted the Model Rule Against Perpetuities Act drafted by the Commissioners 
on Uniform State Laws. Session Laws of Wyoming 1949, Ch. 92, §§ 1 and 2; §§ 
34-1-138 and 34-1-139, W.S. 1977. The Model Rule Against Perpetuities Act also 
has been adopted in California (§ 715.2, Cal.Civil Code (West 1982)), and 
Montana (§ 70-1-408, Mont. Code Ann. (1981)). The effect of an adoption of the 
Model Rule Against Perpetuities Act has been described as that of "restoring the 
American common-law rule against perpetuities." VI American Law of Property, § 
25.91, p. 358 (1952); Comment, Statutes Reinstating the Common Law Rule Against 
Perpetuities, 48 Mich.L.Rev. 1158, 1165 (1950); Fraser and Sammis, The 
California Rules Against Restraints on Alienation, Suspension of the Absolute 
Power of Alienation, and Perpetuities, 4 Hastings L.J. 101 (1953). At common law 
the rule against perpetuities was created by judicial decision. Gray, The Rule 
Against Perpetuities, §§ 123 to 200.1 (4th Ed. 1942); VI American Law of 
Property, § 24.4, pp. 14-16 (1952); 5 Powell on Real Property, ¶¶ 759-762 
(1981). In his classic treatise, Gray takes the position that the rule is one 
limiting the time within which future interests can be created, i.e., a rule 
forbidding remoteness of vesting. Gray, supra, § 1-4, pp. 3 and 4; VI American 
Law of Property, § 24.3, p. 13 (1952). Modern commentators have not followed 
Gray's lead as to the rationale of the rule, but have instead taken the position 
that the underlying purpose of the rule is to provide for the free alienation of 
property. 5 Powell on Real Property, ¶¶ 762 and 767(a). The modern view is 
adopted by the Restatement of the Law of Property, § 370, comment i, p. 2150 
(1944):

 
 

"Thus 
the rule against perpetuities promotes alienability by destroying future 
interests which interfere therewith either by eliminating the power of 
alienation for too long a time or by lessening the probability of alienation for 
too long a time, * * *."

 
 

I 
would construe the language of Art. 1, § 30 of the Constitution of the State of 
Wyoming as adopting this modern view.

 
 

[¶69.]  In this case the difficulty with 
subjecting the executory interest of Williams to the rule against perpetuities 
is that there logically flows from that treatment a conclusion that the 
executory interest would be void resulting in a fee simple absolute with respect 
to that mineral interest in the Federal Land Bank of Omaha. The incongruity of 
such a result is manifested by the fact that it would be antithetical to the 
purpose and intent of the deed from the Federal Land Bank to Williams. Certainly 
even the Watts do not want to have this mineral interest owned by the Federal 
Land Bank of Omaha, Nebraska. If, however, the interest of Williams is regarded 
as vested for purposes of transferability and inheritability, and there is 
substantial authority to support such a proposition, then there would not occur 
a violation of the rule against perpetuities. This would be consistent with the 
modern view as to the underlying purpose of the rule against perpetuities 
because alienability would be facilitated, not diminished.

 
 

[¶70.]  The executory interest owned by Williams 
properly may be deemed "vested" if that term is taken to mean that the holder of 
the interest is at all times ascertainable and the preceding estate is certain 
to terminate. In his treatise, Gray notes that there is a dual meaning ascribed 
to the term "vested." Gray, The Rule Against Perpetuities, § 118, pp. 111-113 
(4th Ed. 1942). Gray notes that the secondary meaning of the term "vested" is 
transmissible, but he takes the position that the rule against perpetuities does 
not concern itself with this secondary meaning but instead deals only with 
notions of remoteness of possession. If Gray's position is adopted the executory 
interest in the instant case would not be considered vested because it may not 
become possessory within the period proscribed by the rule against 
perpetuities.

 
 

[¶71.]  More recent commentators take the 
position that executory interests which share many of the same characteristics 
as so-called vested remainders should be considered as "vested" within the 
meaning of the rule against perpetuities. In Simes and Smith, Law of Future 
Interests, § 223, pp. 254-255 (1956), the matter is addressed in the following 
way:

 
 

"It 
should be pointed out that an executory interest limited on an event certain to 
happen is likely to be a much more substantial interest than one which depends 
upon an uncertain event. Thus, in the cases discussed above, an executory 
interest which is certain to come into enjoyment at the death of a designated 
person is closely linked with a vested remainder. It may well be, therefore, 
that they should have the same legal characteristics as their related (but 
differently named) interests. Rules which are adopted relative to the rather 
tenuous interests which depend upon uncertain contingencies may be poorly 
conceived when applied to an interest which bears the same name but is in fact 
of greater substance."

 
 

Other 
commentators support the view of Simes and Smith that the rule against 
perpetuities should not be applied to executory interests in ascertainable 
persons which take effect upon events which are certain to occur. See 
Restatement, Property, § 370, comment h.p. 2146 (1944); VI American Law of 
Property, § 2420 (1952); Lynn, The Modern Rule Against Perpetuities, p. 15 
(1966); 5 Powell on Real Property, ¶ 779[3] (1981). See further Simes and Smith, 
The Law of Future Interests, § 1236 (1956). Powell states the concept in this 
way:

 
 

"Executory 
interests can either operate in defeasance of a prior vested fee or can be 
limited to take effect on a future event uncertain of occurrence. Both types of 
executory interest violate the common-law rule against perpetuities, when the 
event on which the executory interest is limited to arise or to shift is not 
certain to occur within the permissible period. Executory interests limited on 
an event certain to occur, however, require different consideration. Thus, a 
grant `to A twenty-five years from date' involves no contingency except the 
passage of time. Such an executory interest is not usefully regarded as `subject 
to a condition precedent.' It is, therefore, not subject to the common-law rule 
against perpetuities. It causes no inconvenient fettering of alienability 
because of the existence of actuarial techniques for valuing both the preceding 
and the future interest." (Footnotes omitted.) 5 Powell on Real Property, ¶ 
779[3], at pp. 73-6 and 73-7 (1981).

 
 

[¶72.]  It is not correct, as assumed by the 
majority opinion, that recognizing the interest in Williams as an executory 
interest necessarily must lead to its invalidation under the common-law rule 
against perpetuities. The executory interest here is limited upon alternative 
contingencies, the expiration of the 20-year term without production, or the 
cessation of production, only the latter of which is violative of the rule 
against perpetuities. The common law in such cases recognized an exception to 
the rule against perpetuities. This exception is encompassed in the Restatement, 
Property, § 376, p. 2199 (1944), which stated:

 
 

"The 
validity of each separate limitation is determined separately under the rule 
against perpetuities."

 
 

The 
inception of this exception to the rule against perpetuities is found in Longhead v. Phelps, 2 W. Blackstone 704, 
96 English Reports 414 (1770), in which the court refused to consider the effect 
under the rule against perpetuities of alternative contingencies created by will 
which structured a trust because in fact the first alternative did not violate 
the rule against perpetuities and had taken effect. See also VI American Law of 
Property, § 24.54 (1952); Simes and Smith, The Law of Future Interests, § 1257 
(1956); Annot. 64 A.L.R. 1077 (1930); Annot. 98 A.L.R.2d 807 (1964), and the 
cases cited in these annotations. This rule would fit the instant case because 
here also the rule against perpetuities was not violated; the 20-year term had 
passed without production at the time the present action was instituted. 
Essentially this is the rule that is recognized in First Portland National Bank v. 
Rodrique, 157 Me. 277, 172 A.2d 107 (1961), as summarized in Annot. 98 
A.L.R.2d 807, 816 (1964). I would hold in the case before us that since the 
executory interest is limited upon alternative contingencies, one of which 
violates the rule against perpetuities and the other of which does not, the 
invalid provision had no impact upon the validity of the other contingency 
because the event occurred upon which the efficacy of the valid contingency 
depended. There was no mineral production, development, or operation within the 
20-year period, and the rule against perpetuities should not be applied to void 
Williams' interest.

 
 

[¶73.]  Bagby v. Bredthauer, Tex. App., 627 S.W.2d 190 (1981), demonstrates that there are other ways of reaching the same 
result. In that case the Court of Appeals of Texas avoided applying the rule 
against perpetuities by treating an apparent springing executory interest as a 
possibility of reverter, which, as I have noted, is not subject to the rule. 
This was accomplished by a legal fiction of an implied regrant. In effect the 
Texas court held that the grantor had reserved a right to have the defeasible 
fee granted back to its grantee. After invoking the fiction the defeasible fee 
then was regarded as created by grant, not by exception, and the future interest 
became a possibility of reverter. While such a rule is somewhat awkward, it does 
not seem to me to be any more awkward than calling this interest a vested 
remainder, and it does effectuate the intent of the parties.

 
 

[¶74.]  The history in California with respect to 
the application of the rule against perpetuities to executory interests is 
demonstrative of the extent to which that jurisdiction has been willing to go in 
order to avoid the rule against perpetuities. California's statutory rule 
against perpetuities is identical to that contained in our statutes. In 
construing a deed in which a very similar future interest to the one in this 
case was created, the California Appellate Court held the interest to be void 
for violation of the rule against perpetuities. Victory Oil Co. v. Hancock Oil Co., 125 Cal. App. 2d 222, 270 P.2d 604 (1954). The court reasoned that the future 
interest, which was created upon the condition that minerals be discovered on 
the property within five years from the date of grant, was dependent upon the 
dubious, uncertain future event, and therefore was subject to the rule against 
perpetuities. Four years later the Supreme Court of California reached an 
opposite result in Brown v. Terra Bella 
Irrigation District, 51 Cal. 2d 33, 330 P.2d 775 (1958). Brown had obtained a 
quitclaim deed from a common grantor who previously had given a deed to the 
Irrigation District in which the grantor reserved a mineral estate for a period 
of 25 years and so long thereafter as production continued. The deed provided 
that the grantor "hereby grants, bargains, sells and conveys all of said real 
property aforesaid, to the [Irrigation District] together with the tenements, 
hereditaments, and appurtenances thereunto belonging or appertaining, and the 
reversion and reversions, remainder and remainders, rents, issues and profits 
thereof." The Supreme Court of California held that the grantor's interest upon 
the failure of the future interest in the Irrigation District also was 
transferred to it under the language of the deed. This inconsistent result was 
criticized in Simes, Perpetuities in California Since 1951, 18 Hastings L.J. 
247, 264-265 (1967). Finally, in Rousselot v. Spanier, 60 Cal. App. 3d 238, 
131 Cal. Rptr. 438 (1976), the Court of Appeals specifically refused to follow 
the rule of Victory Oil, holding that 
under California law the mineral estate is in the nature of a profit a prendre, 
which is an incorporeal interest not subject to the rule against perpetuities. 
The California approach perhaps presents an extreme in avoiding the application 
of the rule against perpetuities. 

 
 

[¶75.]  In 2 Williams and Meyers, Oil and Gas 
Law, § 335, p. 185 (1981), a more straight-forward approach is advocated. It 
there is said:

 
 

"* 
* * [D]efeasible term interests serve a useful social purpose, whether reserved 
or granted. The term interest, as compared with a perpetual interest, tends to 
remove title complications when the land is no longer productive of oil or gas. 
This simplification of title promotes alienability of land, which is one purpose 
served by the Rule against Perpetuities. We believe, therefore, that the courts 
should simply exempt interests following granted or reserved defeasible term 
interests from the Rule, on the straight-forward basis that they serve social 
and commercial convenience and do not offend the policy of the Rule against 
Perpetuities."

 
 

While 
this approach apparently has not been taken by any other court, it does seem 
that there is a good deal of merit in having the same result in an instance in 
which the determinable fee is created by exception as in the instance in which 
it is created by grant. I am disposed to advocate such an approach as a rational 
and appropriate method of cutting through the intricacies of the common law in 
order to effectuate the intent of the parties. Essentially Williams and Meyers, 
supra, is advocating the application to this situation of the maxim that when 
the reason upon which a rule is justified is not present the rule should not be 
invoked. See Wong v. Digrazia, 35 Cal. Rptr. 241, 60 Cal. 2d 525, 386 P.2d 817 (1963).

 
 

[¶76.]  The discussion in the majority opinion 
ignores those executory interests which are certain to take effect in possession 
or enjoyment in the future, and therefore are not contingent, but which cannot 
be classified as vested in the traditional sense. See Simes and Smith, Law of 
Future Interests, § 223 (1956). The analysis made in the majority opinion 
ignores the substantive rules which have developed with respect to the 
transferability of future interests. The general rule which is recognized in the 
Restatement of Property, § 162 (1936), is that all remainders and executory 
interests are alienable by ordinary conveyance without any condition attached 
based upon whether the interest is vested or contingent. See also Simes and 
Smith, The Law of Future Interests, §§ 1852, 1857 and 1859 (1956). The language 
found in 28 Am.Jur.2d Estates, § 371, p. 578, is peculiarly applicable in this 
situation:

 
 

"Executory 
devises are now generally considered not as bare possibilities, but as certain 
interests and estates, and as such to be assignable, devisable, and 
transmissible to the representatives of the devisee, provided the identity of 
the latter is certain and the object of the devise is fixed. * * *"

 
 

[¶77.]  I am sensitive to a suggestion that this 
approach is judicial legislation because it alters the statutory rule against 
perpetuities adopted by our legislature. At common law the rule against 
perpetuities was judicially created, and even though the language of § 34-1-139, 
W.S. 1977, is quite positive, it seems appropriate to judicially recognize the 
exception to the rule against perpetuities advocated in Williams and Meyers, Oil 
and Gas Law, § 335 (1981). We should remember that the purpose of the statute 
was to adopt the American common-law rule against perpetuities. The legislature 
well may have intended to adopt the American common-law rule with the exception 
engrafted. This certainly would be consistent with the purpose articulated in 
Art. 1, § 30 of the Constitution of the State of Wyoming. Further, this court 
has recognized that in those instances in which the justification for a 
judicially created rule is no longer viable, the court is at liberty to follow 
comparatively recent decisions or to base its decision upon fundamental 
principles underlying the rule of law. McClellan v. Tottenhoff, 666 P.2d 408, 
Wyo. (1983); Choman v. Epperly, Wyo., 
592 P.2d 714 (1979); and Collins v. 
Memorial Hospital of Sheridan County, Wyo., 521 P.2d 1339 (1974). This same 
philosophy should extend to the adoption of exceptions to the statutory rule 
against perpetuities which were recognized prior to the adoption of the statute, 
particularly when the recognition of the exception serves the ultimate purpose 
of the rule promoting the free alienability of property and removing restraints 
otherwise imposed upon alienability.

 
 

[¶78.]  In summary I would dispose of this case 
by recognizing that under the common law the interest created in Williams by 
virtue of the deed from the Federal Land Bank with respect to the determinable 
fee excepted from its grant by the Federal Land Bank is an executory interest, 
not a remainder. I would conclude that the rule against perpetuities should not 
be invoked in such an instance to void the interest created in Williams, and 
upon the termination of the determinable fee the balance of the minerals became 
Williams' property.

 
 

[¶79.]  I have suggested to the court that 
perhaps wisdom would be found in abandoning at this time any reliance upon 
common-law labels with respect to future interests. All of us are satisfied 
that, at the time of his conveyance to the Watts, Williams owned a future 
interest which enjoyed the properties of alienability and inheritability, and 
was not subject to the rule against perpetuities. The result is that he had such 
an interest as could be retained when he made his grant to the Watts, and it is 
clear from the intention of the parties manifest in this record that he did so. 
Perhaps it would suffice to simply address the problem in these terms without 
resort to the historical labels of the common law. We might find that such a 
resolution would be perceived as a benefit to the practicing 
bar.