Hartnett v. Jones

• Decision Date: 19 June 1981
• Docket Number: No. 5284,5284
• Citation: 629 P.2d 1357
• Parties: Fred HARTNETT, Appellant (Plaintiff), v. James C. JONES; Cleda V. Whitlock and James Lee Whitlock, co-executors of theEstate of Oscar J. Whitlock, deceased, Appellees (Defendants).
• Court: Wyoming Supreme Court

Page 1357

629 P.2d 1357

Fred HARTNETT, Appellant (Plaintiff), v. James C. JONES; Cleda V. Whitlock and James Lee Whitlock, co-executors of theEstate of Oscar J. Whitlock, deceased, Appellees (Defendants).

No. 5284.

Supreme Court of Wyoming.

June 19, 1981.

W. W. Reeves of Vlastos & Reeves, P. C., Casper, for appellant (plaintiff).

E. L. McCrary, Casper, for appellees (defendants).

Before McCLINTOCK, ^* RAPER, ^** THOMAS and ROONEY, JJ.

ROSE, C.J., ^*** participated in the hearing of this case on oral argument but did not participate in the decision of the court as presented in the opinions filed.

THOMAS, Justice.

The question raised in this appeal is whether a preemptive right to purchase included in a contract concerning co-ownership of land which provides that the contract is binding upon "heirs, personal representatives and assigns" is void because it violates the rule against perpetuities. The district court held that it was void, but we will hold that under the circumstances of this case the contract did not violate the rule against perpetuities. Furthermore, it did not constitute an unreasonable restraint upon alienation. We will affirm the judgment of the district court, however, because the appellant waited too long to assert his claim, and under the facts of this record the appellant's claim is barred by the doctrine of laches.

The events leading up to this controversy had their inception prior to August 20, 1959, when Oscar J. Whitlock purchased a tract of land under a contract for deed from William E. Pratt and Gertrude Arlene Pratt, husband and wife. On August 20, 1959, by a handwritten document entitled "Sale and Purchase Agreement," Oscar J. Whitlock agreed to sell and James C. Jones and Fred Hartnett agreed to buy a 40 percent undivided interest in the tract of land that Whitlock was purchasing from the Pratts. That document included among its provisions the following language:

"The buyers shall not sell and assign their right, title and interest in, to and under this contract and to the above described property unless and until he (sic) first offers to sell same to seller and the latter refuses within 15 days to pay the buyers' asking price, whereupon the buyers may then sell to any third party for a price equal to or in excess of that for which they have offered to sell to seller herein; but if they decreased their price they must first offer to sell to seller herein at the decreased price and the seller herein in each such instance shall have 15 days from date of such offer to accept or refuse such offer. Failure, neglect or refusal of the seller herein to either accept or refuse any such offer within said 15 day period shall be treated as a refusal and the buyer shall then be free to sell to any third party at a price equal to or in excess of the last price at which offered to the seller herein."

On May 12, 1960, a document entitled "SUPPLEMENTAL AND AMENDED SALE AND PURCHASE AGREEMENT" was executed by Whitlock, Hartnett and Jones with Whitlock designated as "Seller or First Party" and Jones and Hartnett designated as "Buyers or Second Parties." That document related to the same tract of land and spelled out an intention that it should be platted as an addition to the City of Casper, Natrona County, Wyoming, to be known as Alta Vista Addition. This instrument described the prior course of conduct among the parties, including the earlier contract and some verbal agreements, and noted that it was intended to consolidate and clarify all agreements among the parties relating to the sale, purchase and development of the lands to be included in said addition. That plat was accomplished, filed and approved in 1960. The instrument provided that:

" * * * the cost and expense of such platting, improving and developing to be shared and paid for as due, 60 per cent by the seller and 20 per cent each by the buyers, except for certain items of expense hereinafter mentioned and with reference to which a different ratio of sharing shall apply, and that the net profit from the sale of lands in said addition should be shared and distributed 60 per cent to the seller and 20 per cent each to the buyers. * * * "

At yet another place the agreement provided:

" * * * The net profit received by the parties from the sale of unimproved or improved lands in said addition shall be shared and distributed 60 per cent to First Party and 40 per cent to Second Parties."

At various other places reference is made to the sharing of various expenses or the sharing of income on the same 60 percent for Whitlock, 20 percent for Hartnett, and 20 percent for Jones basis. The last clause of the May 12, 1960, contract is the one which has led to the major issue posited in this case. It reads as follows:

"If any party hereto desires to sell his separate interest in said land and addition, or any part thereof, he shall first offer to sell it to the other parties hereto and if they do not purchase it within thirty days of the date of offer at the seller's asking price, he may sell to any third party for such asking price or higher; however, if he reduces his asking price, then he must first offer it to the other parties hereto at the reduced price and they have thirty days from the date of the reduced offer to purchase; otherwise, seller may sell to any third party at the last reduced price.

"This agreement and all provisions hereof are for the mutual benefit of and binding upon the parties signatory, their respective heirs, personal representatives and assigns."

The subdivision was developed and sold beginning in 1960 up until about 1964. Then a slump in real estate activity in the Casper, Wyoming, vicinity occurred, and no lots were sold until the balance were disposed of by the parties after the institution of this action in 1976. On May 1, 1965, Oscar J. Whitlock and his wife, by warranty deed, conveyed to Mutual Construction Company, a Wyoming corporation, Whitlock's 60 percent interest in 49 of the lots which then remained unsold. This deed was recorded in the office of the county clerk on October 3, 1966. There appears to be no argument between the parties over the fact that the 49 lots potentially were the most valuable of the 145 lots remaining unsold because of the lay of the land in Alta Vista Addition and a draining problem affecting a large number of the remaining lots.

James C. Jones and his wife owned a 50 percent interest in Mutual Construction Company and they succeeded to the interest of Mutual Construction Company in these lots upon the liquidation of Mutual Construction Company in 1968. The district court found as one of its findings of fact:

"By a deed dated May 1, 1965, recorded October, 1966, Whitlock sold a portion of his interest to Mutual Construction Company, in which the Defendant Jones and his wife owned one half the stock. In 1968, Jones purchased the assets of Mutual Construction. Hartnett did not learn of these transfers until 1970, at which time he demanded a one-half share of Whitlock's former interest."

This action was commenced in late December of 1976 by Fred Hartnett seeking judgment against Jones and Whitlock in the amount of money representing "the difference in the value of the lands involved (the 49 lots) between the date of the transfer by Whitlock to Mutual Construction Company and the present time." Oscar Whitlock died after the commencement of this action, and the co-executors of his estate were substituted as parties.

The district judge entered judgment in favor of Jones and the executors of Oscar J. Whitlock's estate. His critical finding of fact is as follows:

"On May 12, 1960, the parties entered into an agreement concerning ownership and development of certain real property, the agreement being entered into evidence as plaintiff's Exhibit 2. Among other things, the agreement provided that if any party desires to sell his separate interests in the land, he shall first offer to sell it to the other parties. It was provided that all portions of the agreement are for the benefit of and binding upon the parties and their heirs, representatives and assigns. The agreement further provided that the parties would share development costs on the basis of sixty percent to Whitlock and twenty percent each to Hartnett and Jones."

The dispositive conclusion of law on this issue reads as follows:

"The preemptive right section of the Contract, upon which this cause of action is based, is contrary to the rule against perpetuities, and therefore cannot serve as the basis for a recovery by the plaintiff, 40 ALR 3rd 920; § 34-1-139, W.S. (1977)."

Hartnett has appealed this judgment. In his brief he describes the issue to be resolved as follows:

"Whether a preemptive right to purchase contained in a contract concerning joint ownership of land, is in violation of the rule against perpetuities, and hence unenforceable, because the contract is not only binding upon the parties to it, but also upon 'their respective heirs, personal representatives and assigns.' "

The appellees have joined issue as to the claim of the appellant, but they also seek to defend the judgment entered by the district court on the grounds that Hartnett's claim is barred by laches; waiver and estoppel; and the ten-year statute of limitations. The appellees also assert that the appellant's claim is barred because the preemptive right violates the rule against restraints on alienation as well as the rule against perpetuities.

Wyoming has by statute adopted the common-law rule against perpetuities. Chapter 92, § 1, S.L. of Wyoming 1949. It now is found in § 34-1-139, W.S.1977, which reads as follows:

"No interest in real or personal property shall be good unless it must vest not later than twenty-one (21) years after some life in being at the creation of the interest and any period of gestation involved in the situation to which the limitation applies. The lives selected to govern the time of vesting must not be so...