Property Class Notes 3/9/04


More practice problems on the rules furthering marketability


5.          “‘Orville to Arvid for life, then to his widow, and then to his children who survive her.’  Assume that Arvid is 89 and is married to Bella, his wife of 65 years [that’s a long time!], and that they have three children”: First off, purportedly, Arvid has a life estate, his widow has a contingent remainder for life (because it is unascertained just who his widow will be or whether he’ll have one, like if he gets divorced) and then a contingent remainder in fee simple absolute to his children who survive whatever widow he leaves behind (they may or may not be ascertained).  Here we have the “unborn widow” problem at common law.  Let’s say Bella and all the children die, but Arvid remarries, say to Cruella, who wasn’t born at the time of the gift.  Arvid works as the validating life for the gift to Cruella.  Arvid and Cruella (miraculously) have a kid, Donatello.  Then Arvid dies (and thus both his widow and his children are ascertained at his death).  It may be more than 21 years before we know whether Donatello will survive Cruella.  Therefore, strangely enough, the gift to Cruella (or Bella or any other potential widow) will be okay, but the gift to Arvid’s children fails and thus Orville keeps a reversion in fee simple absolute.  Note that the children in being at the time of the gift don’t work as validating lives for anybody, either.  There is no life in being that will make this gift valid.  Note that this gift would succeed if all the recipients of the gift were named.  Actually, all you would need to do is name the widow.  So, in the end, Arvid has a life estate, the children have a contingent remainder in fee simple absolute, and Orville has a reversion.

6.          “Orville to Amanda for life, then to Amanda’s children who survive her”: Purportedly, Amanda gets a life estate, and Amanda’s children get a contingent remainder in fee simple absolute (because they not only might not be unascertained, but also they need to survive her) and Orville will have a reversion.  Now this gift seems okay, because if we use Amanda as the life in being, we will know exact which children have survived her at the time of her death.  I think both gifts are okay.

7.          “Orville to Abby for life, then to her children who reach the age of 30”: Abby purportedly has a life estate, Abby’s children have a contingent remainder in fee simple absolute, and Orville has a reversion in fee simple absolute.  Here we have a problem with the gift to the children.  Abby could have a kid after the date of the gift, then she could croak.  Then it would be, by definition, more than 21 years before we would know whether that child was going to reach the age of 30.  However, if the rule of destructibility is still in effect, the gift would be okay because we would know at the time of Abby’s death whether the remaindermen are ready to take.  The remainder will either vest in Abby’s children if they are 30 already, or else it will be destroyed and go back to Orville by reversion.  So Abby has a life estate, Abby’s children have a contingent remainder in fee simple absolute, and Orville has a reversion in fee simple absolute.

8.          “Orville to Andre for life, then to Andre’s heirs”:  Here’s a classic Rule in Shelley’s Case problem.  Purportedly, Andre gets a life estate, and Andre’s heirs get a contingent remainder in fee simple absolute (because they are unascertained at the date of the gift).  Orville also has a reversion in fee simple absolute, though it may be somewhat of a fiction.  However, under the Rule, if it is still applicable, Andre will simply get a fee simple absolute.  We have (1) one instrument, (2) a freehold estate in the ancestor, (3) a purported contingent remainder in the ancestor’s “heirs”, and (4) the two estates are of the same “quality” (both legal).  There is no Rule Against Perpetuities problem, though, because Andre’s heirs would be ascertained at Andre’s death, even in the absence of the Rule in Shelley’s Case.

9.          “Orville to Alan for life, then to Orville’s heirs”: Here’s the Doctrine of Worthier Title problem [only when this is an inter vivos gift].  Purportedly, there is a life estate in Alan, followed by a contingent remainder in fee simple absolute to Orville’s heirs, and a reversion in Orville (again, mostly fictional, but must be there because he gave away a vested estate of a lesser quantum than what he had).  But under the Doctrine of Worthier Title, the remainder to Orville’s heirs becomes simply a reversion in Orville.  So the gift would be the same as if you simply said: “Orville to Alan for life.”  The contingent remainder in the heirs is wiped out!

10.      “Orville to Alain for life, then to Orville and his heirs”: This kind of seems like a fancy way of saying “Orville to Alain for life”, giving Alain a life estate with a reversion in fee simple absolute that is implicitly suggested by the gift.  I don’t think this runs into the Doctrine of Worthier Title problem.  Instead, I think we just read it as “To Alain for life.”  How is this different from the previous problem?  It says “to Orville and his heirs” and not just “to Orville’s heirs”.

11.      “‘Orville to Alana and her heirs so long as the land is used for charitable purposes.’  Subsequent to this conveyance, Orville conveys his property ‘to Binford and his heirs’”: Initially, and purportedly, Alana has a fee simple determinable and Orville has the possibility of reverter.  Then Orville sells what he has to Binford.  It is quite uncertain whether the possibility of reverter can be sold or not (in other words, whether it’s alienable).  If it can’t be, then things they as they are and no rules are violated.  If it is sold, “the name stays the same” and Binford has the possibility of reverter.  Is the possibility of reverter valid?  Sure, because it’s vested right from the start and forever.  The thing is, if these two conveyances were made in the same gift, then Alana would have had a fee simple determinable, also known as a fee simple subject to an executory limitation, and Binford would have had an executory interest.  However, that executory interest would have been killed by the Rule Against Perpetuities, because that interest could stay contingent way, way, way into the future and far beyond the deaths of both Alana and Binford.  You never know how long the land will be used for charitable purposes!  It could be hundreds of years!


Pretty much all Rule Against Perpetuities problems seem to arise from gifts where the recipients aren’t named.


It was considered dangerous to have alienable possibilities of reverter!  If you could sell the possibility of reverter, then you could pretty much get around the Rule Against Perpetuities.


The Rule Against Perpetuities doesn’t operate on reversionary interests!  This includes reversions, possibilities of reverter, and rights of entry.


There is a special exception for successive charitable uses.  If you do, they are exempt from the Rule Against Perpetuities.  “Contingent or executory interests to charities fall within the rule unless it is a charity on a charity.”


There is some recommended reading.  For example: 51 Harv. L. Rev. 638: Perpetuities in a Nutshell!  There are also 74 Cal. L. Rev. 1867, 78 Harv. L. Rev. 973 and 74 Wash. U. L. Q. 713.


Judicial reform


There’s lot of stuff that goes under this heading, but is it really reform?  Braunstein would just abolish future interests.  One reason that they don’t get abolished is that every generation of law students has gone through the process of learning them and that future law students better do it too because it’s kind of like hazing.


Only Anglo-American law recognizes these future interests!  Continental Europe doesn’t recognize them.  England doesn’t recognize future interests nearly as much as the United States since 1925.


The modern view has been to move in the other direction, keeping these future interests valid for longer periods than these rules would allow.  The rule of destructibility, the Rule in Shelley’s Case, and the Doctrine of Worthier Title have been abolished in most places.


The reform of the Rule Against Perpetuities hasn’t done a whole heck of a lot.  You still need to know the Rule to work with the reform.  For example, the Uniform Statutory Rule Against Perpetuities allows future interests to be valid if they would either vest or terminate within 90 years after its creation.


Then you have “wait and see”.  First you apply the common law Rule.  Then, if an interest might violate the Rule Against Perpetuities, then you must identify why it violates the Rule, and finally identify the events that you’re waiting for.  Then you wait around to see what really happens.  After you sit and wait, if the Rule Against Perpetuities is violated, you try to reform the interest to best carry out the grantor’s intent.


The point is that with all these rules, we’re extending contingent interests, reforming the Rule Against Perpetuities by making it less potent, but we’re doing nothing to make the Rule Against Perpetuities simpler.


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