Case Title: Colby v. Colby

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1991-05-01T00:00:00Z

Document:
ENTRY ORDER

                      SUPREME COURT DOCKET NO. 89-024

                              MAY TERM, 1991


Margaret Colby                    }          APPEALED FROM:
                                  }
                                  }
     v.                           }          Orange Superior Court
                                  }
Phyllis Colby, David Matthews,    }
Kenneth and Anne Rawson, Thomas   }          DOCKET NO. S 29-88 OeC
and Vicki Matthews Eismeir, et al.}

             In the above entitled cause the Clerk will enter:

     Defendant's motion to reargue under V.R.A.P. 40 is denied.  The motion
does not state points of law or fact, overlooked or misapprehended by the
Court, which would affect the result.  We have, however, recalled and
revised the opinion to amend our discussion of the event triggering the
option.







                                   BY THE COURT:



                                   Frederic W. Allen, Chief Justice


                                   Louis P. Peck, Associate Justice


[ ]  Publish                       Ernest W. Gibson III, Associate Justice

[ ]  Do Not Publish
                                   John A. Dooley, Associate Justice


                                   James L. Morse, Associate Justice

-----------------------------------------------------------------------------



NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 89-024


Margaret Colby                               Supreme Court

     v.                                      On Appeal from
                                             Orange Superior Court
Phyllis Colby, David Matthews,
Kenneth and Anne Rawson, Thomas              October Term, 1989
and Vicki Matthews Eismeir, et al.


Linda Levitt, J.

Richard E. Mullaly, West Lebanon, New Hampshire, for plaintiff-appellee

Emily B. Tartter of Paterson & Walke, P.C., Montpelier, for defendants-
            appellants


PRESENT:  Allen, C.J., Peck, Gibson, Dooley and Morse, JJ.

     PECK, J.   This is an appeal from a decree establishing ownership of
certain property in plaintiff Margaret Colby and defendant Phyllis Colby,
descendants of the original grantee, as against the other defendants who are
descendants of the original grantor, and ordering sale of the property and
division of the proceeds between plaintiff Margaret Colby and defendant
Phyllis Colby.  We reverse and remand for further proceedings.
     This case began as an action for partition brought by Margaret Colby,
as plaintiff, against her sister, defendant Phyllis Colby.  The Colbys held
title to the subject property as joint tenants.  Thereafter, it appeared
that David Matthews, the Rawsons, and the Eismeirs, descendants of the orig-
inal grantor, might still have an interest in the Colby property, and they
were subsequently added as parties defendant.  For purposes of this appeal,
however, the last named defendants are appellants, while plaintiff Margaret
Colby and defendant Phyllis Colby are the appellees.
     Grantor Benjamin Matthews owned several hundred acres in Fairlee,
Vermont, including frontage on Lake Fairlee and a large summer residence.
Grantee Clifton Colby was caretaker of Matthews' Fairlee property, and on
October 10, 1963, Matthews conveyed to Colby an unimproved parcel of lake-
front property about forty-six feet deep with about sixty-five feet of lake
frontage.  The deed includes the reservation to grantor, his heirs and
assigns, of:
          the first option to repurchase the within conveyed
          premises in the event that Grantee, his heirs or
          assigns, shall desire to sell the same.

The reservation in the deed provides that the option price

          shall not exceed Five Hundred Dollars ($500) plus the cost,
          less reasonable depreciation, of any improvements made to
          such property, or the amount at which the Grantee, his heirs
          or assigns, are willing to sell to a third party, whichever
          is lower.

On October 11, 1967, grantor conveyed to Clifton Colby another parcel of
land, also sixty-five feet wide but 245 feet deep, across Route 113 from the
first parcel.  The deed contains the same reservation.  There was some
evidence that the first transaction was for consideration of $500, and that
the second was a gift.
     Grantee built a three-bedroom camp on the lakeshore lot, with heat and
running water.  The trial court found that the present value of the camp and
lot together was $90,000, but did not allocate the value between the lot and
the improvements.
     Defendants, other than Phyllis Colby, as the heirs of grantor, continue
to own a substantial amount of property next to the Colby lots.  Plaintiff
Margaret Colby and defendant Phyllis Colby received their interests in the
subject property by conveyances from their mother, who received it by a
decree of distribution upon the original grantee's death.  The trial court
found that they had actual knowledge of the deed restrictions.
     The trial court concluded that the right of first refusal contained in
the deed reservation was an unreasonable restraint on alienation, and hence
invalid.  The heart of the court's rationale was stated as follows:
           The purpose of the clauses was to insure that only
          friends and relatives would occupy the lands once owned
          by B.A. Matthews.  This purpose seems trivial when
          weighed against the larger public interest of allowing
          property to be freely marketable.  Additionally, the
          restraint was of unlimited duration and the person
          originally imposing the restraint, B.A. Matthews,
          presently has no interest in the land surrounding the
          Colby lots.  Under the Restatement, the presence of
          these factors mitigates against a finding of reason-
          ableness and, therefore, the preemption clauses are
          unenforceable.

               This conclusion is further supported by comparing
          the present fair market value of the camp and lot, that
          is $90,000, with its fixed sale price of $500 plus
          improvements under the preemptive clauses.

The court ruled that the lots should be sold in a commercially reasonable
manner, and that the proceeds should be divided between Margaret and Phyllis
after the latter was compensated out of the proceeds for certain expenses.
     In sum, the court considered four factors: (1) the unlimited duration
of the restriction, in violation of the rule against perpetuities; (2) the
low repurchase price; (3) the "public interest of allowing property to be
freely marketable"; and (4) the lack of a present interest in Benjamin
Matthews in the land surrounding the Colby lots.
     The trial court was correct that restraints on alienation are not
favored, and that the reasonableness of a restraint turns on a variety of
factors.  The court's own findings, however, do not support its conclusion
that the restrictions were invalid in this case.  First, 27 V.S.A. { 501 (FN1)
operates to reform documents drafted in violation of the rule against
perpetuities to carry out the grantor's wishes most closely without
violating the rule.  We explained the operation of { 501 in Burgess v. Howe,
134 Vt. 370, 372,