Property Class Notes 3/4/04

 

More Rule Against Perpetuities problems

 

“‘To A for life and then to the first child of A to reach her 25th birthday.’  A has one child who is 2”: A gets a life estate, O gets a reversion, and the first child of A to reach her 25th birthday gets a contingent remainder (or is it a springing executory interest?).

 

Let’s apply the Rule Against Perpetuities first: The contingent remainder could easily vest more than 21 years after A’s death.  A’s first child could croak, and then A could have another child and then A could croak.

 

But what if we apply destructibility first?  The thing is, if the child isn’t ready to take upon the death of A (the end of the preceding estate), then the contingent remainder fails.  Thus, the Rule Against Perpetuities would be satisfied because the contingent remainder will easier vest or fail right when A dies.

 

The rule of destructibility of contingent remainder is applied when the estate immediately preceding the contingent remainder terminates.  Then you ask the question: “Are the remaindermen ready to take possession?”  If they are not, then the contingent remainder fails.  If they are, then the remainder vests and becomes a possessory estate.  Notice how this rule is different from the other rules enhancing marketability.

 

North Carolina National Bank v. Norris

 

This is kind of a hard case!  The gift is this: “To W for life, then to named daughters for life, on death of last daughter, to the children of my daughters (i.e. my grandchildren) for life, then to lawful issue of my grandchildren.”

 

Did this gift, as things turned out, violate the Rule Against Perpetuities?  Did the interest in the greatgrandchildren actually vest within a life in being?  Sure!  Thomas Norris was a life in being at the time of Montague’s death.  When he died, the interest would vest in his children (the great-grandchildren).  But that’s not how we apply the common law Rule Against Perpetuities!

 

The gift to the daughters is vested, because this is in a will and when Montague dies, he can’t have any more daughters.  As a bonus, the daughters are specifically named.  Therefore, the hypothetical possibility that Montague could have more children doesn’t matter.

 

What about the gift to the children of his daughters?  This gift would be vested remainder subject to open.  We treat that as contingent for the purposes of the Rule Against Perpetuities.

 

What about the gift to the “lawful issue” of the grandchildren?  This could include great-grandchildren, great-great-grandchildren, and so on.  This one is a contingent remainder in fee simple absolute, because it involves unascertained people.

 

What about the Peace Institute?  They have an alternative contingent remainder in fee simple absolute.  The only way they get it is if there’s no lawful issue of the grandchildren.

 

How do we apply the Rule Against Perpetuities?  Why does the gift violate the Rule with respect to the great-grandchildren?

 

Let’s say the wife dies, then the mother of Thomas dies, then Thomas dies, and Thomas’s children dies.  Let’s say one of the one daughters dies too.  Then let’s say the final daughter has a kid, then dies.  At this point, there is nobody still living who was alive when the will was executed.  So the interest in great-grandchildren is not necessarily going to vest within 21 years of the last daughter’s death!  The kid could live for 25 years before having or not having a kid.  The gift to the great-grandchildren fails!

 

What about this “doctrine of severability”?  How does it work?

 

What if the will had provided “with remainder over to the lawful issue of such grandchild or grandchildren who are living on the date of Thomas’s death”?  That should be fine, because it explicitly makes Thomas the life in being.  The contingent remainder must vest upon Thomas’s death.  Note that you don’t even have to worry about the 21 years!  The recipients of the gift will be ascertained, explicitly, right when Thomas dies.  Note also that this is probably what Montague actually intended.  It was likely that Thomas was going to be his only grandchild given that it was 1927 and his youngest daughter was 38.

 

The Rule Against Perpetuities says, in effect, “you can’t control a world that consists of people who weren’t born when you were alive, except for the first 21 years”.  (This is just my conception of it, it’s not the law.)

 

The Rule Against Perpetuities works better than the other rules because it’s harder to avoid.

 

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