Property Class Notes 2/12/04

 

Pigg v. Haley

 

Letís do it!So Edward Haley left a holographic (handwritten) will.A holographic will has to be handwritten and signed.Itís an exception to the general rule that a testator must sign a will, have it notarized and have it signed by witnesses.If the whole thing is in the testatorís handwriting, you have some assurance that itís not a forgery.

 

What interests are created by the will?Eva Haley gets a life estate in all his land.He leaves the residue of his estate that Eva hasnít consumed to Garland Pigg.It looks like Eva has the power to consume or dispose of the real and personal property.Then, whatever is not disposed of goes to Garland when Eva dies.

 

Whatís the agreement that Eva and Garland enter into after Edward dies?Eva gets a life estate and then Garland gets a vested remainder in fee simple absolute.Eva gets all the personal property and Garland gives up all rights to it.

 

Braunstein feels sorry for Eva.He gets the feeling that she was in a panic and was in a big hurry to do everything.He also thinks her lawyers didnít do a very good job.

 

There were 152 acres, and Eva owned half of it anyway even before Edwardís death.The only part in controversy is the half that she didnít own.Weíll talk more about this when we do marital property.The law favored men a lot in the bad old days!

 

What did the lower court find?There was a question of consideration for the agreement.The trial court found that the agreement was unenforceable for lack of consideration.That would mean that you go back and use the will.The reason there is no consideration, according to the trial court, is because Garland didnít give up anything because he didnít really have any rights in the personal property.They reason that because Eva could have consumed or sold off all of Edwardís stuff before she died, there might not have been anything left for Garland, which would make his remainder in the property fictitious.

 

The court in this case talks about the relationship between Pigg and Edward Haley.Why is it relevant?They were distant relatives.But the lawyer for Pigg mustered all the evidence he could find to show a personal relationship between the two.The lawyer wants to make it seem reasonable and natural that Haley would want to provide for Pigg after his death.

 

What if there had been no will?Mrs. Haley would have gotten everything because they had no children.Under the law of most states, the surviving spouse would inherit everything.

 

Who found the will?Mrs. Pigg found it while rooting around her husbandís things.The will was found among his genealogical notes.Was this really intended as a will?Braunstein thinks itís an open question.When you really want something to be your will, you let people know.Maybe this will was just tentative.Maybe at one time he intended it to be final, but instead of tearing it up, he just put it aside.This document was not kept in a place that you would usually expect to store important papers.Mrs. Haleyís lawyer could have made the argument that this document was not intended to be a will at all.

 

The two big issues are: (1) What are the interests created?(2) Were there any interests that Garland gave up that would constitute consideration for the later agreement?

 

What does Eva say?Eva says two things:

 

1.     She had a fee simple absolute.She based her argument on the common law rule, similar to Black v. Black, where when a life estate with absolute power of disposal is given to the first taker, it rises to the level of a fee simple absolute.How would this case have been decided if the court had found that she had a fee simple absolute?If she has a fee simple absolute, Pigg canít have a remainder under the will.If he doesnít have a remainder under the will, then there was no consideration.He had nothing to give up, and thus didnít part with anything of value.

2.     But then thereís a statute that says there actually is a remainder that consists of whatever the life tenant doesnít consume or dispose.She could dispose of everything and there would be nothing left for Pigg.But if she disposes of less than everything, there would be something left that would go to Pigg upon her death.How does she work with the statute to say that she wins anyway?She says that Pigg must prove that there will be something left upon her death, which she probably canít do.

 

Pigg, on the other hand, says that the will created an express life estate in Eva with a remainder in him.He says that he really did give up something in the agreement, and thus it should be enforced.Pigg argued that he had a ďchanceĒ and he gave up that chance.

 

What we have here is a life estate in Eva with the power to dispose and a remainder in fee simple in Pigg.We donít know what the remainder is worth, but itís at least possible that itís worth something.When he gives up the right to personal property, that constitutes consideration for Evaís promise.

 

Courts tend to enforce these agreements because if they can come to an agreement itís usually better than if they have to litigate.Litigation sucks!

 

Itís a confusing case because of the consideration, but itís not that confusing in the future interests sense.Itís clear that thereís a life estate with the remainder to Pigg, but then thereís an absolute power to dispose.There are several different views on the effect of that power, and the court has to sort out which is right and how it applies.

 

Woodrick v. Wood

 

Woodrick is the daughter.She sues her mother and brother.We have a life estate in the mother, Catherine, and then remainders in fee simple absolute in the two children.The issue is whether the owner of the remainder can sue in order to prevent waste.She can!

 

Notice how this is another common pool problem!When more than one person owns a piece of property jointly, it creates the incentive to commit waste.If a life tenant thinks about fixing up the property, the incentive is not so great.If they take care of the property, they have to pay the whole cost, but they may not get the whole benefit.Most of the benefit might go to the owner of the remainder.We have externalities!By taking care of the place, the life tenant confers an external benefit to the owner of the remainder.

 

So the law steps in!When we have this kind of situation, weíll have a rule that says that the life tenant more or less has to take care of the property.This rule is designed to cure these misincentives inherent in the situation.

 

There are two competing definitions of ďwasteĒ.At old time common law, any change at all is waste, even if it improves the property!But Ohio doesnít recognize this rule.In Ohio, itís only waste if it actually lowers the value of the property overall.

 

Thereís permissive waste and voluntary (intentional) waste.If you destroy the place on purpose, thatís voluntary.If you break your duty to keep up the place, thatís permissive waste.

 

The idea of beneficial or ameliorative waste is that if youíre going to make a change to your place and youíre a tenant, you better go bargain with your landlord first before you end up in court.

 

Was there waste in this case?The court lets the barn be destroyed.Tearing the barn down is deemed an improvement.But then why does Wood have to pay damages to the daughter?Braunstein doesnít get why there were damages.If she can tear the barn down because thereís no waste, but then they have to pay damages for waste, what the heck is going on?Itís logically incoherent, though there might be a good reason that the court did what it did.

 

Also, the son owns half the remainder.Why doesnít he get any damages?

 

You must have the law of waste once we separate possession from ownership.A life tenant will have an incentive to commit waste, and thatís why the government needs to step in and regulate.

 

Take a look at the one page future interests thing while youíre studying future interests.

 

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