Arundel Corp. v. Marie

• Decision Date: 09 November 2004
• Docket Number: No. 1,1
• Parties: THE ARUNDEL CORPORATION v. Richard M. MARIE and Olivia Green, Personal Representatives of the Estate of Camille S. Marie, Deceased.
• Court: Maryland Court of Appeals

860 A.2d 886

383 Md. 489

THE ARUNDEL CORPORATION v. Richard M. MARIE and Olivia Green, Personal Representatives of the Estate of Camille S. Marie, Deceased.

No. 1, September Term, 2004.

Court of Appeals of Maryland.

November 9, 2004.

James E. Carbine (James E. Carbine, P.C., on brief), Baltimore, for appellant.

Jeffrey P. Reilly (Jennifer J. Coyne of Miles & Stockbridge, P.C., on brief), Towson, for appellees.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

WILNER, J.

The issues before us are (1) whether a right of first refusal that is clearly void under the traditional common law rule against perpetuities is saved by virtue of the legislative modification of that rule contained in Maryland Code, § 11-103 of the Estates and Trusts Article, and (2) if not, whether we should save it by modifying the traditional common law rule. The Circuit Court for Baltimore County held that the right was not saved under the statute. We agree with that conclusion and shall decline the invitation to modify the common law rule.

BACKGROUND

On July 28, 1960, Camille and Mary Marie conveyed a parcel of land in Baltimore County to the Arundel Corporation. The parcel conveyed was part of a larger tract owned by the Maries. In consideration of one dollar, the deed gave Arundel a right of first refusal as to the part that the Maries retained, identified by a metes and bounds description but commonly known as 3121 Old Court Road. Specifically, the Maries agreed that, whenever they or their heirs, executors, administrators or assigns decided to sell that parcel, they would offer it to Arundel, its successors and assigns, for a price of $2,250 per acre.

On November 22, 2002, Camille Marie, having survived his wife, Mary, died intestate, and their children, Olivia Dulany Green and Richard Mercer Marie, were appointed as personal representatives for the estate. On September 8, 2003, the personal representatives, seeking to sell the property free of the right of first refusal, wrote to Arundel and, advising that, in their view, the right of first refusal was void under the rule against perpetuities, requested that Arundel disclaim its interest in the Marie property. Although there is no indication in the record that the personal representatives were about to enter into an agreement to sell the property to anyone else, they had made clear in the First and Interim Account filed with the Orphan's Court for Baltimore County their intent to sell it and to distribute all of the estate assets as soon as that sale was consummated.

Arundel refused to disclaim its interest, averring that (1) in light of the documented decision by the personal representatives to sell the property, the right of first refusal had vested and was therefore currently enforceable, and (2) even though the right might be void under the common law version of the rule against perpetuities, the common law rule had been "abrogated" by § 11-103 and the vesting of the right was in conformance with the statute. Arundel expressed its intent to exercise its right of first refusal and indicated that it wished to close on its interest in the Marie property within fifteen days.

When the personal representatives rejected Arundel's offer, Arundel filed suit in the Circuit Court for Baltimore County, seeking specific performance. As noted, the court held that the right of first refusal was void under the common law rule and could not be saved under the plain language of the statute, and, on that ground, granted summary judgment for the personal representatives. Arundel appealed, and we granted certiorari on our own initiative while the case was pending in the Court of Special Appeals.

Arundel concedes that the traditional common law rule against perpetuities invalidates the right of first refusal in this case. See Ferrero Constr. v. Dennis Rourke Corp., 311 Md. 560, 536 A.2d 1137 (1988). It argues, however, that (1) the right is enforceable under the "wait and see" provision of the statute, and (2) if it is not, we should modify the common law rule to adopt the kind of "wait and see" approach that would allow the right to be effective and enforceable. That approach, Arundel argues, is the modern trend, evidenced by its adoption, in one form or another, by the National Conference of Commissioners on Uniform State Laws in its proposed Uniform Statutory Rule Against Perpetuities and in the Restatement (Second) of Property: Donative Transfers § 1.4. See, in particular, Comment a. to that section. The personal representatives respond that the "wait and see" provision of § 11-103 does not apply to the situation before us and that the statute effectively precludes us from modifying the common law rule.

DISCUSSION

Although building on more ancient antecedents, the rule against perpetuities developed through a series of six landmark English cases, spanning about a century-and-a-half, beginning with Duke of Norfolk's Case, 3 Ch. Cas. 1, 22 Eng. Rep. 931 (1682) and continuing with Lloyd v. Carew, 1 Eng. Rep. 93 (H.L.1697); Stephens v. Stephens, 26 Eng. Rep. 751 (Ch. 1736); Long v. Blackhall, 101 Eng. Rep. 875 (K.B.1797); Thellusson v. Woodford, 32 Eng. Rep. 1030 (Ch. 1805); and Cadell v. Palmer, 6 Eng. Rep. 956 (H.L.1833). See the comprehensive discussion in 10 Richard R. Powell, Powell on Real Property § 71.02[2] (Michael Allan Wolf ed., 2003). This Court gave explicit recognition and effect to the Rule as early as 1826. See Dallam v. Dallam, 7 H. & J. 220, 236-37 (1826), where the Court regarded the Rule as established by "more than fifty adjudged cases," none of which were cited. See also Newton v. Griffith, 1 H. & G. 111, 115-16 (1827).

Early statements of the Rule were cast in the difficult verbiage common in those days. In Barnum v. Barnum, 26 Md. 119, 171 (1866), for example, the Court described the Rule as follows:

If an estate be so limited as by possibility to extend beyond a life or lives in being at the time of its commencement, and twenty-one years and a fraction of a year (to cover the period of gestation) afterwards, during which time the property would be withdrawn from the market, or the power over the fee suspended, it is a perpetuity and void as against the policy of the law, which will not permit property to be inalienable for a longer period.

Perhaps because the Rule was designed to promote the alienability of property, courts, including this Court, occasionally confused or conflated it with a companion rule, resting on the same public policy, that unreasonable restraints on alienation are also void. In Commonwealth Realty v. Bowers, 261 Md. 285, 297, 274 A.2d 353, 359 (1971), we cautioned against confusing the two principles, noting that, while the rule against unreasonable restraints on alienation was indeed concerned with the duration of limitations on alienation, the rule against perpetuities dealt with the time of vesting of the interest at issue. Earlier, in Fitzpatrick v. Mer.-Safe, Etc., 220 Md. 534, 541, 155 A.2d 702, 705 (1959), we made clear that the Rule "is not a rule that invalidates interests which last too long, but interests which vest too remotely," and, in that regard, recited a more concise version of the Rule: "`[n]o interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.'" (quoting Gray, THE RULE AGAINST PERPETUITIES, § 201 (4th ed.1942)). That articulation of the Rule is the one we have since applied. See, e.g., Park Station v. Bosse, 378 Md. 122, 134-35, 835 A.2d 646, 653-54 (2003); Dorado v. Broadneck, 317 Md. 148, 152-53, 562 A.2d 757, 759 (1989); Ferrero Constr. Co. v. Dennis Rourke Corp., 311 Md. 560, 565, 536 A.2d 1137, 1139 (1988); Commonwealth Realty v. Bowers, 261 Md. 285, 296-97, 274 A.2d 353, 358-59 (1971); Murphy v. Mer.-Safe Dep. Co., 236 Md. 282, 287, 203 A.2d 889, 892 (1964).

By voiding future interests that might vest too remotely, the rule against perpetuities facilitates the alienability of property, helps prevent uncertain title, and encourages owners to make effective use of their property. Ferrero, supra, 311 Md. at 572-73, 536 A.2d at 1143. Historically, the Rule was usually applied to grants or devises made by deed or by will. See, e.g., Perkins v. Iglehart, 183 Md. 520, 39 A.2d 672 (1944); Bowerman v. Taylor, 126 Md. 203, 94 A. 652 (1915); Graham v. Whitridge, 99 Md. 248, 57 A. 609 (1904). In recent years, however, we have extended the Rule to include equitable rights in real property created by contract and enforceable by specific performance. See Dorado, supra, 317 Md. 148, 562 A.2d 757 (contract for sale of land); Ferrero, supra, 311 Md. 560, 536 A.2d 1137 (right of first refusal to purchase an interest in property); Bowers, supra, 261 Md. 285, 274 A.2d 353 (option to purchase land).

In order to determine whether a conveyed interest violates the common law Rule, a court first must construe the language of the conveyance "in precisely the same manner as if there was no rule against perpetuities, and as if the intention expressed by the words may lawfully be carried out." Bowerman v. Taylor, 126 Md. 203, 209, 94 A. 652, 653 (1915). Then, "when, apart from any consideration of the validity of this intention, we have arrived at the true construction of the deed, the rule against perpetuities, which is one of law and not of interpretation, should then be applied to the objects so ascertained." Id. The Rule is applied to determine whether the interest could vest beyond the permissible period, based on the possibility of events, not actual events. In re Estate of Snyder v. Denit, 195 Md. 81, 89, 72 A.2d 757, 760 (1950); Ortman v. Dugan, 130 Md. 121, 124, 100 A. 82, 83 (1917).

Due to the harsh effect of the common law Rule and some of the often absurd fictional possibilities that crept into its construction,¹ both Parliament in England and State legislatures in the United States looked for ways of...