Lantis v. Cook

• Decision Date: 14 April 1955
• Docket Number: No. 51,51
• Parties: Daniel R. LANTIS and Opal E. Lantis, Plaintiffs and Appellees, v. Lillie E. COOK and Hattie O. Brower, Indlvidually and as co-executrices of the Estate of Alice M. Fletcher, deceased, Defendants and Appellants.
• Court: Michigan Supreme Court

Page 849

69 N.W.2d 849

342 Mich. 347

Daniel R. LANTIS and Opal E. Lantis, Plaintiffs and Appellees, v. Lillie E. COOK and Hattie O. Brower, Indlvidually and as

co-executrices of the Estate of Alice M. Fletcher,

deceased, Defendants and Appellants.

No. 51.

Supreme Court of Michigan.

April 14, 1955.

MacLean & Seaman, Lansing, for plaintiffs and appellees.

Burney E. Brower, Kleinstiver & Anderson, Jackson, for defendants and appellants.

Before the Entire Bench.

DETHMERS, Justice.

I do not agree that the option is void nor concur in reversal.

1. Application of the common law rule against perpetuities would leave the option intact because it was not exercisable beyond lives in being and 21 years, but was intended to and could be exercised only by and, hence, during the lives of the two optionees or the survivor of them. Furthermore, although it has been applicable to real property in Michigan since the enactment of P.A.1949, No. 38, in cases where deeds creating future estates were executed after the effective date of that act, the rule was superseded in Michigan, as relates to lands, from 1847 to 1949 by the statutory provisions governing suspension of the absolute power of alienation contained in R.S.1846, ch. 62, §§ 14, 15, C.L.1948, §§ 554.14, 554.15, Stat.Ann. §§ 26.14, 26.15, repealed by the 1949 act. Windiate v. Lorman, 236 Mich. 531, 211 N.W. 62; Windiate v. Leland, 246 Mich. 659, 225 N.W. 620; Rodey v. Stotz, 280 Mich. 90, 273 N.W. 404; 2 Simes, Future Interests, § 576, p. 479. The deed containing the option having been delivered by plaintiffs to defendants' decedent and husband in the year 1926, the rule has no application to this case.

2. The mentioned statutory provisions read as follows 'Sec. 14. Every future estate shall be void in its creation, which shall suspended the absolute power of alienation for a longer period than is prescribed in this chapter: Such power of alienation is suspended, when there are no persons in being, by whom an absolute fee in possession can be conveyed.

'Sec. 15. The absolute power of alienation shall not be suspended by any limitation or condition whatever, for a longer period than during the continuance of 2 lives in being at the creation of the estate, except in the single case mentioned in the next section.'

The option was not void under the statute for at least two reasons: First, it did not work a suspension of the absolute power of alienation, as defined in the statute, even for one instant, because at all times there were ascertainable persons in being, who, together, could have conveyed an absolute fee in possession, namely, the optionors and optionees. Windiate v. Lorman, supra; Russell v. Musson, 240 Mich. 631, 216 N.W. 428; Windiate v. Leland, supra; Rodey v. Stotz, supra; so held, under like statutory provisions, in Mineral Land Investment Co. v. Bishop Iron Co., 134 Minn. 412, 159 N.W. 966, L.R.A.1917D, 900. Second, had a suspension resulted under the definition of the statute, the period thereof would not have been longer than during the continuance of two lives in being at the creation of the estate.

3. Was the option void at common law? The distinction must be borne in mind between the statutory provisions against suspension of the absolute power of alienation for longer than two lives in being and the common law rule prohibiting direct restraints on alienation for any period whatsoever, however short. As stated in 2 Simes, Future Interests, § 576, p. 483:

'It is clear that the statutes with respect to the suspension of the absolute power of alienation do not modify the common-law rules prohibiting conditions or provisions directly in restraint of alienation. Such conditions, limitations, or restrictions, when applied to a fee simple estate, are void without regard to the period of time.'

That this is true in Michigan appears from decisions involving future estates created during the period when the statute was in effect in such cases as In re Schilling's Estate, 102 Mich. 612, 61 N.W. 62; Watkins v. Minor, 214 Mich. 380, 183 N.W. 186; Smith v. Smith, 290 Mich. 143, 287 N.W. 411, 124 A.L.R. 215; Braun v. Klug, 335 Mich. 691, 57 N.W.2d 299, 36 A.L.R.2d 1434; Porter v. Barrett, 233 Mich. 373, 206 N.W. 532, 42 A.L.R. 1267; Sloman v. Cutler, 258 Mich. 372, 242 N.W. 735. In these cases the statute was not mentioned and decision was made to rest on the common law rule against direct restraints. Did the option at bar constitute a direct restraint on alienation, void at common law? In this connection Mr. Justice Sharpe quotes 4 Restatement, Property, § 413, which section takes the position that a preemptive option is a restraint, but that it is valid unless a fixed price is specified therein, in which event it is void. Fratcher, Perpetuities and Other Restraints, p. 87. Whatever the common law may be in other jurisdictions, a preemptive option with fixed price is not void in Michigan. The two Windiate cases, supra, involved a preemptive provision giving the optionee, at any time the optionor desired to sell, the first opportunity to purchase, for 'not to exceed one thousand dollars ($1,000)', [236 Mich. 531, 211 N.W. 63] property which another had thereafter agreed to buy from optionor for $8,000. In the first Windiate case the preemptive provision was held to be valid on the ground that it did not violate the statute 'because at all times they were persons in being by whom an absolute fee in possession could have been conveyed'. In the second Windiate case that position was reaffirmed and this Court further held that the preemptive provision was not violative of the common law rule prohibiting a direct restraint on alienation, that it could not be construed to be a restraint of alienation, because the optionor 'could have sold the land the second after he signed the option'. This Court went on to say that though he would have been required to give the optionee the first chance to buy, upon giving her notice, she would either buy or refuse, thereby confirming the optionor's right to sell to any one else, so that, in consequence, 'the alienation of the property was not tied up as a matter of law for a second's time'. In that same vein, concerning preemptive provisions with fixed prices, in 2 Simes, Future Interests, § 462, p. 304, it is said:

'Practical alienability might, in some instances, be restrained by such a contract, but its primary purpose is to enable a particular person to buy, not to prevent any one from selling; and doubtless the owner could alienate his property subject to the option if he wished.'

The Windiate cases are controlling of decision in this State and, accordingly, it must be held that the option here was not a direct restraint on alienation and therefore, that it was valid. See also Livonia Township School District v. Wilson, 339 Mich. 454, 64 N.W.2d 563.

Assuming, as suggested in Fratcher, Perpetuities and Other Restraints, pp. 87, 88, 90, that the holding in the second Windiate case establishes a rule contrary to 4 Restatement, Property, § 413, and the rule in effect in England and in many other jurisdictions, but not all, e. g., Blakeman v. Miller, 136 Cal. 138, 68 P. 587; Mineral Land Investment Co. v. Bishop Iron Co., 134 Minn. 412, 159 N.W. 966, L.R.A1917D, 900; In re Upper New York Bay, 246 N.Y. 1, 157 N.E. 911, even application of the Restatment position concerning the invalidity of fixed price preemptive options to the option here involved would leave it intact because it is not preemptive. It is not a first-right-to-buy option to arise only if the optionors desire to sell, that being an essential characteristic of a preemptive provision. 2 Simes, Future Interests, § 462, p. 305; Fratcher, Perpetuities and Other Restraints, p. 87; 4 Restatement, Property, § 393, Comment F, and § 413; Schnebly, 'Restraint Upon the Alienation of Property', 6 American Law of Property, § 26.64, pp. 506-7. The mere fact that the option is to arise if the optionors do not at any time wish to use the property as a home does not make it equivalent to an option arising only if the optionor desires to sell and, therefore, preemptive. Rather, this is an ordinary option to arise on a condition precendent, i. e., when the optionors do not wish to use the property as a home. That options may be created to arise on various conditions precedent appears in 4 Restatement, Property, § 393, Comment F. Such an option, exercisable upon the happening of a condition precedent, is not regarded as a direct restraint on alienation and is everywhere held valid even though it specifies a fixed price, except that in jurisdictions where the rule against perpetuities is in effect as to lands, it would be void if exercisable beyond lives in being and 21 years. Bates v. Bates, 314 Ky. 789, 236 S.W.2d 943; Winstanley v. Chapman, 325 Mass. 130, 89 N.E.2d 506. The fact that an ordinary option, to arise upon the condition precedent that optionor ceases to use the land for a certain purpose, contains a fixed price does not make it any more a direct restraint on alienation or any less valid on that account. Livonia Township School District v. Wilson, 339 Mich. 454, 64 N.W.2d 563. For a case recognizing the validity of a fixed price option not made dependent on the happening of a condition precedent, see Watkins v. Minor, 214 Mich. 380, 183 N.W. 186. Accordingly, it must be held that the option is valid, even under application of the Restatement rule.

I am aware of the line of Michigan decisions holding void provisions which work a direct restraint on alienation of lands. Typical are those relied upon in Mr. Justice Sharpe's opinion, namely, Mandlebaum v. McDonell, 29 Mich. 78; Smith v. Smith, 290 Mich. 143, 287 N.W. 411, 124 A.L.R. 215; Sloman v. Cutler, 258 Mich. 372, 242 N.W. 735; Porter v. Barrett, 233 Mich. 373, 206 N.W. 532, 42 A.L.R. 1267; Braun v. Klug, 335 Mich. 691, 57 N.W.2d 299, 36 A.L.R.2d 1434. In none was the question presented, as here, of...