Court Opinion

ID: 9793300
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:45:54.045924+00
Date Added: 2024-06-11T08:04:23.401981
License: Public Domain

THOMAS, Justice,
specially concurring.
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.
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).
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.
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 fu*635ture 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).
The Legislature of the State of Wyoming has adopted the Model Rule Against Perpe-tuities Act drafted by the Commissioners on Uniform State Laws. Session Laws of Wyoming 1949, Ch. 92, §§ 1 and 2; §§ 34WL-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 Per-petuities 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, ⅝: * * »
I would construe the language of Art. 1, § 30 of the Constitution of the State of Wyoming as adopting this modern view.
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.
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 Perpetu-ities, § 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 per-*636petuities 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.
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 executo-ry 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 per-petuities 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).
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 perpe-tuities. 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 *637and 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 bther 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 perpe-tuities should not be applied to void Williams’ interest.
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 perpetu-ities by treating an apparent springing ex-ecutory 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.
The history in California with respect to the application of the rule against perpetu-ities 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.
*638In 2 Williams and Meyers, Oil and Gas Law, § 335, p. 185 (1981), a more straightforward approach is advocated. It there is said:
“ * * * [Defeasible 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).
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. * * *
I am sensitive to a suggestion that this approach is judicial legislation because it alters the statutory rule against perpetuiti-es 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 *639removing restraints otherwise imposed upon alienability.
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 perpe-tuities 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.
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.