Property
Class Notes
We’ve
been introduced to these before. Executory
interests are interests that are recognized after the Statute of Uses as legal
interests but they’re not remainders.
An executory
interest is created in a transferee, just like remainders. It is also capable of becoming possessory,
just like remainders. However, executory
interests may have gaps, whereas remainders
can’t. Also, an executory interest can
divest a preceding estate and can follow a vested fee simple, but a remainder can’t.
So
whenever you see a vested fee simple defeasible, the interest that follows it
cannot be a remainder.
There
are two types of executory interests: shifting and springing. But these types have no practical
significance. We distinguish them for
analytical purposes.
Shifting
executory interests shift from one
transferee to another. Here are some
examples:
·
To A for so long as the property is used for school purposes and then
to B and her heirs.
·
To A and her heirs, but if the property is not used for school
purposes, to B and his heirs.
·
To A and her heirs for so long as the property is used as a farm and
then, one day after farming ceases, to B and her heirs.
In
the third example, we have a gap of one day between when A’s estate ends and
when B’s estate becomes possessory.
Springing
executory interests spring from the
grantor to the grantee. An example would
be: “To A when she reaches her 25th birthday.” Let us assume that A is currently 19. Is this an executory interest? Who owns what? The owner would have a fee simple subject to
an executory limitation, and A has a springing executory interest in fee simple
absolute because there’s a gap before A gets the land.
When
it’s being transferred from the
grantor, then it’s springing, and
when it’s being transferred from another grantee, then it’s shifting.
What
happens if there is a gap in ownership?
What happens to possession? Land is
always owned by someone. During the gap, the
owner gets a fee simple subject to executory limitation. The distinction between shifting and
springing is a distinction between from
whom the interest is coming.
Here’s
an example from the book that is wrong (in the book).
“To
A for life, then to B and her heirs, but if B does not survive A, then to O and
his heirs”: B has a vested remainder subject to total divestment. O has a right
of entry (not a reversion)
because you can’t have a reversion following a vested fee simple. So what if B dies? Then O just has a reversion. B’s interest can never become possessory if B
dies.
What
if A and B are both alive? Then O has a right
of entry. What about if A dies and B is
still alive? Then B gets a fee simple
absolute and O has nothing left.
The Statute of Uses
This
thing comes along in 1536 and has the effect of validating future interests
that had not previously been recognized as valid at law. This wasn’t actually
the intended effect, but this is what happened.
“To
T and his heirs for the use of A and his heirs for so long as A is unmarried at
the time of her death and then to B and his heirs”: Before the Statute of Uses,
you wouldn’t allow the future interest in B.
At law, this wouldn’t have been enforced, but in equity, it would have
been recognized.
The
Statute of Uses is passed to increase taxes, among other reasons. “Raising a use” was a tax avoidance scheme
because seisin didn’t pass at death at law.
What
the Statute did was execute the trust. “Execute”
means the same thing here as it does when you talk about “executed” contracts. What the Statute says is that what were
previously equitable interests are now legal interests.
In
the above example, before the Statute of Uses, A had an equitable fee simple
determinable and B had nothing at law, but had an equitable interest. T had the fee simple absolute at law, but his
duties would be enforced at equity. O
had a possibility of reverter at law, but nothing in equity.
So
law and equity were in conflict! The Statute
of Uses brings them into harmony! We
make all the interests legally
enforceable. The mechanism was
complicated because it “indulged in a fiction”: the “feoffee to uses”, or
trustee, acquired a fee simple absolute, but it disappeared as soon as he got it.
Thus, the trust was said to be executed.
So
how do we still have trusts in light of the Statute of Uses? The Statute of Uses executed trusts! This Statute
is part of our common law here! How can
we still have trusts?
Trusts
are valuable! The courts and people with
money didn’t want to see them go. There are
two possibilities that will result in the creation of a valid trust:
·
To T for the use of T1 for the use of…somebody
else. The first trust would execute, but
the second trust would be valid. This is
totally artificial, but it worked. One
you execute once, you don’t execute again, so the second trust gets enforced in
equity.
·
You can establish an “active trust” but not a “dry” or “passive” trust.
Practice problems
How
do we interpret “To A five days hence”? How
can you have a fee simple absolute if it’s going to end in five days or when
somebody graduates from law school or gets married or whatever? It seems inconsistent, and it is. We just grin and bear it. A fee simple absolute is an estate of potentially
infinite duration except as modified
by the Statute of Uses.