Clark v. Shelton

• Decision Date: 13 September 1978
• Docket Number: No. 15490,15490
• Citation: 584 P.2d 875
• Parties: Thelma H. CLARK, Plaintiff and Appellant, v. Gilbert L. SHELTON, and Sherry G. Shelton, his wife, Todd Eagar, d/b/a Eagar Realty, and Kenneth T. Norton, and Elizabeth Norton, his wife, Defendants and Respondents.
• Court: Utah Supreme Court

Page 875

584 P.2d 875

Thelma H. CLARK, Plaintiff and Appellant, v. Gilbert L. SHELTON, and Sherry G. Shelton, his wife, Todd

Eagar, d/b/a Eagar Realty, and Kenneth T. Norton,

and Elizabeth Norton, his wife,

Defendants and Respondents.

No. 15490.

Supreme Court of Utah.

Sept. 13, 1978.

David K. Smith, Salt Lake City, for plaintiff and appellant.

John B. Anderson and Gary A. Weston, Salt Lake City, for defendants and respondents.

ELLETT, Chief Justice:

Plaintiff Thelma Clark instituted this action for declaratory relief respecting the validity of an agreement between herself and defendants. The trial court denied Clark's motion for summary judgment on her sole claim that the agreement violated the rule against perpetuities.

The facts in this case are undisputed. By agreement dated June 9, 1972, Clark sold to the Sheltons a tract of land in Salt Lake County, and also agreed to give them a "first right of refusal" to purchase an adjoining tract, which included her home. The contract language was as follows:

Grantor agrees, that should she, her heirs, or assigns, elect to sell, at any time, the real property hereinbefore described as tract B, the Grantees herein named shall first be extended the right to purchase said property, together with all buildings apertinent (sic) thereto, for a total purchase price of $27,500.00, it being agreed that Grantees said right of first refusal shall be exercised by Grantees by their completing the purchase of said property on or before thirty days after their receipt of written notice of Grantor's election to sell.

On November 1, 1974, the Sheltons assigned their interest in the contract to the defendants Norton. Plaintiff initiated this action on January 3, 1977, and the Sheltons responded with a motion for summary judgment based on their assignment to Nortons. Upon the granting of the motion, Clark sued Nortons, asking that any interest which Nortons possessed by virtue of the agreement be declared void under the rule against perpetuities. The only issue raised below was that the agreement violated the rule against perpetuities.

The appellant on appeal now claims that a pre-emptive right of first refusal is void if it is a personal right running only to the grantees. No such claim was made in the court below. The only issue was that regarding the rule against perpetuities, and that is the only matter raised on appeal.

The notice of appeal in this case is as follows:

NOTICE IS HEREBY GIVEN to the Plaintiff, THELMA H. CLARK, Plaintiff hereinabove, appeals to the Supreme Court of the State of Utah, from a judgment made and entered by the above court on or about October 18, 1977, by Judge David B. Dee, Third District Court Judge in and for Salt Lake County, State of Utah, wherein Defendant, Kenneth R. Norton and Elizabeth North, were granted judgment under Plaintiff's Motion for Summary Judgment.

This motion was seeking declaratory relief that the contract which had been executed by and between the Plaintiff and the Sheltons, and which had been assigned by the Sheltons to the Nortons, was void ab initio as being violative of the rule against perpetuities, and/or unenforceable by Nortons. The court ruled that Nortons had a valid assignment in the contract which did not violate the rule against perpetuities, and which was an enforceable right.

The matter of the rule against perpetuities is the only matter which we should consider on this appeal. ¹

Clark asserts that the right of first refusal provision of the agreement violates the rule against perpetuities because the interest may not vest within the prescribed period under the rule. The rule is most succinctly stated as follows:

No 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. ²

The agreement states, "Grantor agrees, that should She, her heirs or assigns elect to sell, At any time, . . . the Grantees herein named shall first be extended the right to purchase . . ." (Emphasis supplied.) The question to be answered is, do the words, "the Grantees" mean the Sheltons only, or do they connote "the Grantees and their heirs?" If the words are construed as being limited to the Sheltons, then the pre-emption must be exercised, if at all, within their lives, and the rule against perpetuities does not void the interest. If however, the words include the heirs of the Sheltons, then the pre-emption could possibly be exercised by an heir of the Sheltons, who may not be a life in being, after the designated period in the rule; the interest would thus be void.

Clark argues the intent of the parties must have been to give Sheltons and the heirs of the Sheltons the right to enforce the agreement, since the contract specifically binds the heirs of Clark. Also, the agreement says it applies if Clark or her heirs "at any time" decide to sell. We find the argument unpersuasive. The agreement specifically included the heirs of Clark, but not the heirs of Shelton. The inference is not that the parties intended Sheltons' heirs to be included, but that they intended the pre-emption only to apply to Sheltons, and not their heirs. This is reinforced by the phrase, " . . . the Grantees herein named . . ." In this respect this agreement differs only slightly from the contract in Kamas State Bank v. Bourgeois, ³ which gave a pre-emptive right to two named persons. The Court held the pre-emptive right was limited in duration to the lifetime of the named grantee, and thus did not violate the rule against perpetuities. ⁴ We believe the pre-emption was not intended to extend beyond the lives of the...