Court Opinion

ID: 4682739
Source: CourtListenerOpinion
Date Created: 2021-04-30 14:04:09.645704+00
Date Added: 2024-06-11T08:04:10.647572
License: Public Domain

IN THE SUPREME COURT OF IOWA
                               No. 19–1214

            Submitted March 24, 2021—Filed April 30, 2021

IN THE MATTER OF THE ESTATE OF VERA E. CAWIEZELL, Deceased,
PHYLLIS KNOCHE, TERRY BROOKS, and JILL BROOKS,

      Appellants,

vs.

TOM CORONELLI and BETH CORONELLI,

      Appellees.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Muscatine County,

Thomas G. Reidel and Patrick A. McElyea, Judges.

      On further review from the court of appeals, executors challenge a

probate court ruling that a restriction on the transfer of devised property

is a restraint on alienation and void. AFFIRMED.

      McDonald, J., delivered the opinion of the court, in which all justices

joined.

      Gregg Geerdes (argued), Iowa City, for appellants.

      Andrew B. Howie (argued) of Shindler, Anderson, Goplerud & Weese,
P.C., West Des Moines, for appellees.
                                      2

McDONALD, Justice.

      In this appeal, the executors of an estate challenge several rulings

of the district court in probating a will. The court of appeals affirmed the

district court in all respects, and we granted further review. “On further

review, we have the discretion to review any issue raised on appeal.”

Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 255 (Iowa 2012) (quoting State

v. Marin, 788 N.W.2d 833, 836 (Iowa 2010), overruled on other grounds in

Alcala v. Marriott Int’l, Inc., 880 N.W.2d 699 (Iowa 2016)). We choose to

address only the executors’ contention that the district court erred in

holding a twenty-year transfer restriction on devised farmland was an

impermissible restraint on alienation. Our review of that issue is de novo.

See Est. of Hurt v. Hurt, 681 N.W.2d 591, 593 (Iowa 2004). The court of

appeals decision is final as to all other issues.

      Vera Cawiezell died testate in April 2018, and her will was admitted

to probate later that month.      In item 3 of her will, Cawiezell devised

approximately 150 acres of farmland to her friends Tom and Beth Coronelli

subject to certain general restrictions and subject to other provisions in

favor of Terry Brooks, who leased and farmed Cawiezell’s land while

Cawiezell was alive. Item 3 provided:

      I hereby will, devise and bequeath all of my farm real estate
      located . . . in Muscatine County, Iowa, except my homestead
      referred to in Item 2 above, consisting of approximately 150
      acres to my friends, Tom and Beth Coronelli or unto the
      survivor of them, subject to the restriction that they should
      not sell or transfer the property outside their immediate family
      within a period of twenty years after my death. Terry Brooks
      has been leasing the farm from me under a share crop
      agreement and I would request that the Coronelli family
      continue leasing to Terry under favorable terms for his benefit.
      I further give Terry Brooks the first option to purchase the
      farm during the twenty year period following my death and I
      would further request that the terms of sale be favorable for
      Terry Brooks.
                                      3

Item 4 of the will devised all farm equipment and livestock to Brooks and

forgave any money Brooks owed to Cawiezell. The residue and remainder

of the property was awarded to Cawiezell’s friend Phyllis Knoche.

        The will nominated, and the district court appointed, Terry and Jill

(Terry’s spouse) Brooks and Knoche as executors.             In October, the

executors filed an application for court approval of their actions.        The

executors requested the court approve a restriction in the deed to be given

to the Coronellis. The proposed deed restriction provided:

        THIS DEED IS EXECUTED AND DELIVERED UPON THE
        CONDITION THAT IN THE EVENT ALL OR PART OF THE
        HEREIN     DESCRIBED   PROPERTY    IS   SOLD    OR
        TRANSFERRED TO ANYONE OTHER THAN TERRY BROOKS
        OR AN IMMEDIATE FAMILY MEMBER OF TOM AND BETH
        CORONELLI ON OR BEFORE APRIL 17, 2038, THEN THE
        HEREIN DESCRIBED PROPERTY SHALL REVERT TO
        PHYLLIS A. KNOCHE, OR HER HEIRS OR ASSIGNS, AS THE
        RESIDUAL BENEFICIARY OF THE VERA CAWIEZELL
        ESTATE, FREE AND CLEAR OF ANY CLAIMS OF THE
        GRANTEE, CONSISTENT WITH THE TERMS OF THE LAST
        WILL AND TESTAMENT OF VERA CAWIEZELL FILED IN
        MUSCATINE COUNTY IOWA, ESPR011653.

        The Coronellis resisted the application and contended the restriction

placed on the devise of the farmland was a restraint on alienation of the

property and void. The Coronellis requested the district court disallow the
deed restriction. After some additional motion practice and hearings not

relevant here, the district court ultimately held the restriction on the

transfer of the devised farmland was an invalid restraint on alienation and

void.

        The executors challenge that ruling on several grounds. They first

contend the restriction is not a restraint on alienation. If the restriction is
a restraint on alienation, they contend reasonable restraints on alienation

are allowed under Iowa Code section 614.24 and a more recent decision of

this court. Finally, they contend this court should adopt a more flexible
                                     4

approach toward restraints on alienation as set forth in the Restatement

(Third) of Property: Servitudes.

      “[T]he rule against restraints on alienation bars direct restraints on

the alienability of present or future vested interests.” Martin v. Peoples

Mut. Sav. & Loan Ass’n, 319 N.W.2d 220, 226 (Iowa 1982) (en banc). It

has long been the rule of this state that a restraint on alienation whether

by deed or will is unlawful and void. See Crecelius v. Smith, 255 Iowa

1249, 1254, 125 N.W.2d 786, 789 (1964) (“A general restraint on

alienation, whether by deed or will, is undoubtedly void.” (quoting 31

C.J.S. Estates § 8)); Graham v. Johnston, 243 Iowa 112, 117, 49 N.W.2d

540, 543 (1951) (“The imposition of restraints as set forth in the deeds of

grantor conflicts with the previous grants of an absolute interest and we

hold that such are invalid—they might be termed directions, but are of no

binding force and effect.”); Guenther v. Roche, 238 Iowa 1348, 1351, 29

N.W.2d 222, 223 (1947) (“The courts generally will not give effect to a

testamentary provision to the effect that a devisee shall not for a period of

time sell the property devised.”); Sisters of Mercy of Cedar Rapids v.

Lightner, 223 Iowa 1049, 1059, 274 N.W. 86, 92 (1937) (“In this state a

restraint against alienation in a conveyance of a vested estate in fee simple
is void and this is true though the restraint is for a limited or particular

time.”); Dolan v. Newberry, 204 Iowa 443, 446, 215 N.W. 599, 601 (1927)

(stating when a clause of a deed conveys fee simple title, then any

subsequent language “of condition or limitation[] must be disregarded[] as

repugnant thereto”); Davidson v. Auwerda, 192 Iowa 1338, 1340, 186 N.W.

406, 406 (1922) (“The only safe rule . . . is to hold, as I understand the

common law for ages to have been, that a condition or restriction which

would suspend all power of alienation for a single day is inconsistent with
                                      5

the estate granted, unreasonable, and void.” (quoting McCleary v. Ellis, 54

Iowa 311, 315, 6 N.W. 571, 573 (1880))).

      The executors contend this long-standing rule is inapplicable here

because the Coronellis were not bequeathed an absolute fee. Instead,

according to the executors, the Coronellis were bequeathed only a limited

fee that did not include the right for the Coronellis to sell or transfer the

property outside their immediate family for twenty years. Because the

right to sell or transfer outside the family for a period of twenty years was

not included in the “bundle of sticks” devised to the Coronellis, according

to the executors, the restriction does not restrain the Coronellis’ right to

alienate the property.

      The executors’ circular argument is unconvincing. “The purpose of

construing a will is to ascertain the intent of the testator. Authorities agree

that questioned provisions should be considered, not as standing alone,

but as related to all other provisions of the will.” In re Est. of Organ, 240

Iowa 797, 800, 38 N.W.2d 100, 102 (1949).            Here, the testamentary

provision devises and bequeaths all of Cawiezell’s farmland in Muscatine

County, except her homestead, to the Coronellis. There is no indication in

this provision or any other provision that the fee is anything other than a
fee simple. See, e.g., In re Est. of Bigham, 227 Iowa 1023, 1026, 290 N.W.

11, 12 (1940) (holding that testamentary provision bequeathing property

to wife was “an unqualified fee estate”); In re Est. of Hellman, 221 Iowa 552,

555, 266 N.W. 36, 38 (1936) (“The old familiar stock phrases of the

common law, such as ‘in fee simple,’ ‘absolutely,’ ‘to have and to hold

forever,’ do not appear, but words of this character are unnecessary in

conveying the fee-simple title.”). The will’s subsequent restriction on the

fee is an invalid restraint on alienation under our precedents and is void.

See Crecelius, 255 Iowa at 1254, 125 N.W.2d at 789; Graham, 243 Iowa at
                                       6

117, 49 N.W.2d at 543; Guenther, 238 Iowa at 1351, 29 N.W.2d at 223;

Sisters of Mercy, 223 Iowa at 1059, 274 N.W. at 92; McCleary, 54 Iowa at

314–18, 6 N.W. at 572–74.

      Taking a different approach, the executors contend Iowa law allows

for reasonable restraints on alienation of property. The executors first rely

on Iowa Code section 614.24, which they contend allows for restraints on

alienation of property for no more than twenty years.          That provision

provides:

            No action based upon any claim arising or existing by
      reason of the provisions of any deed or conveyance or contract
      or will reserving or providing for any reversion, reverted
      interests or use restrictions in and to the land therein
      described shall be maintained either at law or in equity in any
      court to recover real estate in this state or to recover or
      establish any interest therein or claim thereto, legal or
      equitable, against the holder of the record title to such real
      estate in possession after twenty-one years from the recording
      of such deed of conveyance or contract or after twenty-one
      years from the admission of said will to probate unless the
      claimant shall, personally, or by the claimant’s attorney or
      agent, or if the claimant is a minor or under legal disability,
      by the claimant’s guardian, trustee, or either parent or next
      friend, file a verified claim with the recorder of the county
      wherein said real estate is located within said twenty-one year
      period.

Iowa Code § 614.24(1) (2018).
      We conclude the statute is inapplicable here. This Code provision,

also known as the Stale Uses and Reversions Act (SURA), is intended to

“simplify land transfers in Iowa by shortening the title-search period for”

reversion, reverted interests, and use restrictions. Fjords N., Inc. v. Hahn,

710 N.W.2d 731, 735 (Iowa 2006); see also Compiano v. Kuntz, 226 N.W.2d

245, 248 (Iowa 1975) (en banc) (stating the statute “resulted from efforts

to shorten the title-search period in Iowa”). The statute governs causes of

action to recover or establish interests in real estate against the title holder

in possession. Even then, the statute governs only those causes of action
                                      7

related to reversion, reverted interests, and use restrictions. See Fjords

N., Inc., 710 N.W.2d at 739. None of those interests are implicated in this

case. We reject the executors’ contention that a use restriction is the

equivalent of a transfer restriction. See Iowa Code § 614.24(5) (defining

use restriction); see also Spanish Oaks, Inc. v. Hy-Vee, Inc., 655 N.W.2d

390, 398–99 (Neb. 2003) (distinguishing between use restrictions and

direct restraints on alienation); Helene S. Shapo, George Gleason Bogert &

George Taylor Bogert, The Law of Trusts and Trustees § 220, at 376 (3d ed.

2007) (“A use restraint, that is, a restriction on the use to which property

is to be put, is not considered a restraint against alienation.”).

       In further support of their argument that Iowa law allows for

reasonable restraints on alienation of property, the executors rely on our

recent decision in In re Coe College, 935 N.W.2d 581 (Iowa 2019). In that

case, a mural was donated for charitable purposes to Coe College with an

accompanying letter that stated the college would be the art’s “permanent

home.” Id. at 584. The question was whether the college could sell the

property. See id. We concluded the college could not sell the property.

See id. at 591.    We explained, “In Iowa, ‘[a] donor of property for a

charitable use may impose such conditions as he may choose, including a
restraint on alienation.    This right is an exception to the prohibition

against restraint on alienation.’ ”       Id. at 586 (alteration in original)

(emphasis added) (quoting Sisters of Mercy, 223 Iowa at 1060, 274 N.W. at

92).

       This case does not fall within the charitable-use exception to the

prohibition against restraint on alienation as articulated in Coe College.

“A charitable gift has been defined to be ‘a gift to general public use which

extends to the poor as well as to the rich’ . . . .” Sisters of Mercy, 223 Iowa

at 1059, 274 N.W. at 92 (quoting Chapman v. Newell, 146 Iowa 415, 419,
                                      8

125 N.W. 324, 326 (1910)). In this case, the devise was to the Coronellis

personally and not for charitable purposes.

      Finally, the executors urge this court to adopt sections 3.4 and 3.5

of the Restatement (Third) of Property: Servitudes.        The Restatement

rejects Iowa’s bright-line rule prohibiting restraints on alienation and

instead proposes a reasonableness standard. See Restatement (Third) of

Prop.: Servitudes § 3.4, .5, at 440, 461–62 (Am. L. Inst. 2000). Under the

Restatement standard, determining the “rationality” or “reasonability” of a

restraint on alienation is a fact-intensive inquiry.

      Each case must be thoroughly examined in the light of all the
      circumstances to determine whether the objective sought to
      be accomplished by the restraint is worth attaining at the cost
      of interfering with the freedom of alienation, or to determine
      whether the particular interference with alienability is so
      slight as not to be material.

Id. § 3.4 reporter’s note, at 449.

      We first note this argument was never presented to the district court.

“Our general rule of error preservation is that we will not decide an issue

presented before us on appeal that was not presented to the district court.

In order for error to be preserved, the issue must be both raised and

decided by the district court.” In re Det. of Anderson, 895 N.W.2d 131, 138
(Iowa 2017) (citation omitted). Error is not preserved here.

      Even if error were preserved, we are disinclined to adopt the

Restatement (Third) position on restraints on alienation.         We long ago

rejected case-by-case balancing in favor of a bright-line rule:

      We are entirely satisfied there has never been a time since the
      statute quia emptores when a restriction in a conveyance of a
      vested estate in fee simple, in possession or remainder,
      against selling for a particular period of time, was valid by the
      common law, and we think it would be unwise and injurious
      to admit into the law the principle contended for by the
      defendants’ counsel, that such restrictions should be held
      valid, if imposed only for a reasonable time.
                                      9
             It is safe to say that every estate, depending upon such
      a question, would, by the very fact of such a question existing,
      lose a large share of its market value. Who can say whether
      the time is reasonable, until the question has been settled in
      the court of last resort? And upon what standard of certainty
      can the court decide it? Or, depending, as it must, upon all
      the peculiar facts and circumstances of each particular case,
      is the question to be submitted to a jury? The only safe rule
      of decision is to hold, as I understand the common law for
      ages to have been, that a condition or restriction, which would
      suspend all power of alienation for a single day, is inconsistent
      with the estate granted, unreasonable and void.

McCleary, 54 Iowa at 315, 6 N.W. at 572–73 (quoting Mandlebaum v.

McDonell, 29 Mich. 78, 107 (1874)). We see no reason to abandon our

long-standing rule in favor of the proposed Restatement rule. See Kersten

Co. v. Dep’t of Soc. Servs., 207 N.W.2d 117, 121 (Iowa 1973) (en banc)

(“Stare decisis is a valuable legal doctrine which lends stability to the

law . . . .”). Our rule is clear-cut, stable, and easy-to-apply. See McCleary,

54 Iowa at 315, 6 N.W. at 572–73 (quoting Mandlebaum, 29 Mich. at 107).

These are virtues in the area of real property where certainty of title is of

paramount importance.

      We hold the testamentary provision restricting the beneficiaries from

selling or transferring the devised property outside their immediate family

for a period of twenty years following the testator’s death is a prohibited
restraint on alienation and is void.      For these reasons, we affirm the

decision of the court of appeals and the judgment of the district court.

      AFFIRMED.