Court Opinion

ID: 5177125
Source: CourtListenerOpinion
Date Created: 2022-01-06 01:06:40.384077+00
Date Added: 2024-06-11T08:26:22.603585
License: Public Domain

Judge ROY
dissenting.
I respectfully dissent.
*509The pivotal issue in this case is whether the trial court has the authority to reform an option to purchase contained in a business or commercial contract under the authority granted by section 15-11-1106(2), C.R.S. 2009. The majority concludes that the statute grants that authority and I cannot agree.
The General Assembly adopted the Colorado Statutory Rule Against Perpetuities Act (the Act) in 1991, and substantially amended it in 2001. Ch. 252, see. 9, §§ 15-11-1101 to -1107, 1991 Colo. Sess. Laws 1445-48; Colo. Sess. Laws 2001, ch. 249, see. 4, §§ 15-11-1102(1), 2001 Colo. Sess. Laws 888. Prior to addressing its applicable provisions, I note that there are two classes of terms used throughout the Act: (1) terms describing the nature of the interests involved; and (2) terms describing the nature of the instruments or entities involved. Two terms dominate the first class; they are: "nonvested property interest" and "power of appointment." Several terms dominate the second class, which are: "trust," "trustee," "fiduciary," "beneficiaries," "distributions," "plan of distribution," "gift," and other similar terms. The Act does not define "nonvested property interest," but the term is defined in the comments to the uniform law from which it is derived. That definition is: "[al nonvested property interest (also called a contingent interest) is a future interest in property that is subject to an unsatisfied condition precedent." 8B U.L.A. 239 (2001). Vested, in this context, means elevated to a possessory interest or the estate owned by the grantor. The use of these terms, without more, and without any term consistent with commercial transactions, would lead one, as it does me, to conclude that the Act's seope is limited to wills, trusts, and similar instruments. In addition, though it is not of great import, the Act is included in Title 15, Article 11, which are the statutes of wills and intestate succession. See People v. Borghesi, 66 P.3d 93 (Colo.2003) (placement in the statutes is frequently done by revisor of statutes).
The common law rule against perpetuities "invalidates interests limited to vest upon events not certain to occur within 21 years of some life in being at the creation of the interest." Rocky Mountain Fuel Co. v. Hef-lin, 148 Colo. 415, 421, 366 P.2d 577, 580 (1961). The statutory rule against perpetuit-ies has been twice formulated. The 1991 formulation applies to interests in trusts and powers of appointment created after May 31, 1991, and, as pertinent here, states: "A non-vested property interest is invalid unless: (A) [when the interest is created, it is certain to vest or terminate no later than twenty-one years after the death of an individual who is then alive; or (B) [the interest either vests or terminates within ninety years after its creation." § 15-11-1102.5(@)(b)(D(A)-(B), C.R.S.2009 (emphasis added). The 2001 statutory formulation applies to interests in trusts and powers of appointment with respect to all or any part of a trust created after May 31, 2001, and states, in pertinent part: "A nonvested property interest is invalid unless it either vests or terminates within one thousand years after its creation." § 15-11-1102.5(1)(a), (b)(ID), C.R.S.2009 (emphasis added). Both formulations exclude commercial transactions because they are limited to interests in trusts and powers of appointment. Further, commercial transactions are expressly exeluded from the statutory rule against perpetuities, with numerous exceptions not pertinent here, by section 15-11-1105(1)(a), C.R.$8.2009, which states: "The statutory rule ... does not apply to invalidate ... [al nonvested property interest or a power of appointment arising out of a nondo-native transfer...." (Emphasis added.)
In my view, the explicit exclusion of nondo-native transactions from the seope of the Act; the use of donative terms throughout the Act, to the exclusion of commercial transaction terms, to describe, and in my view cir-cumseribe, the nature of the instruments and transfers governed by the Act; and, to a considerably lesser extent, the placement of the Act in the probate article of the statutes demonstrate the limited the seope of the Act and it does not authorize the court to reform a commercial instrument. See People v. Tixier, 207 P.3d 844, 847 (Colo.App.2008) ("We read the statute as a whole 'to give "consistent, harmonious and sensible effect to all its parts," ' [presuming] that the legislature intended the entire statute to be effective.... [Further] [wle avoid [statutory] constructions that are at odds with the legislative scheme." *510(quoting Colo. Water Conservation Bd. v. Upper Gunnison River Water Conservancy Dist., 109 P.3d 585, 593 (Colo.2005))).
Despite the explicit and implicit limitations on the seope of the Act, the majority concludes that section 15-11-1106(2), grants courts authority to reform pre-1991 commercial instruments which create invalid future interests because of a violation of the common law rule against perpetuities. That seetion provides:
If a nonvested property interest or a power of appointment was created before May 31, 1991, and is determined in a judicial proceeding, commenced on or after May 31, 1991, to violate this state's rule against perpetuities as that rule existed before May 31, 1991, a court upon the petition of an interested person shall reform the disposition by inserting a savings clause that preserves most closely the transferor's manifested plan of distribution and that brings that plan within the limits of the rule against perpetuities applicable when the nonvested property interest or power of appointment was created.
§ 15-11-1106(2) (emphasis added).
In my view, based on my conclusion that the scope of the Act is limited, I can conceive of no reason why one provision of the Act should have broader application than the Act itself, especially when, as here, that provision is itself self-limiting by requiring that the permitted reformation "preserve most closely the tramsferor's manifested plan of distribution," § 15-11-1106(2) (emphasis added), a phrase closely associated with donative, not commercial, instruments both within and without the Act.
I would reverse the trial court's judgment and remand with directions to enter judgment for ARCO.