Lohmann v. Adams, 47088

• Decision Date: 03 June 1975
• Docket Number: No. 47088,47088
• Citation: 1975 OK 86,540 P.2d 552
• Parties: A. W. LOHMANN, III, and Charles Lohmann, Appellants, v. Dorothy Glynn ADAMS et al., Appellees.
• Court: Oklahoma Supreme Court

Page 552

540 P.2d 552

A. W. LOHMANN, III, and Charles Lohmann, Appellants, v. Dorothy Glynn ADAMS et al., Appellees.

No. 47088.

Supreme Court of Oklahoma.

June 3, 1975.

Rehearing Denied Sept. 30, 1975.

T. F. Dukes, Hominy, for appellants.

Brewer, Worten & Robinett, Bartlesville, for appellees.

IRWIN, Justice:

Appellants, A. W. Lohman, III and Charles Lohman, commenced proceedings on February 20, 1973, to cancel deeds, recover possession, secure rents and to quiet title to a 200 acre tract that had been sold and conveyed to appellee, K. S. Adams. The other appellees are nominal parties. Adams answered and then moved for judgment on the pleadings and admitted facts. The trial court rendered judgment for Adams under Rule 13, Rules for District Courts, 12 O.S.Supp.1973, Ch. 2--App. The Court of Appeals, Division No. 1 reversed the trial court. Adams seeks certiorari.

Adams died after the petition for certiorari was filed. By order of this Court on May 30, 1975, Dorothy Glynn Adams, Stephen Stanley Adams, Kenneth Glen Adams, Gary Clark Adams, and First National Bank in Bartlesville, as Co-Executors of the Estate of K. S. Adams, deceased, were substituted for Adams, as appellee.

The 200 acre tract (Elm Creek) was originally owned by A. H. Lohman (Grandfather), appellants' grandfather. Grandfather left this property by will to three of his sons (Uncles), appellants' uncles. On April 24, 1948, after Grandfather's death but before probate of his will, Uncles made a contract with Grandfather's fourth son (Father), appellants' father, to convey Elm Creek to Father with a restriction against alienation during his lifetime and to convey the remainder to appellants (Sons) 'with like restrictions against alienation by them, or either of them, until May 8, 1970.' This contract was made a part of Grandfather's will and incorporated therein when probated.

On July 22, 1948, Uncles deeded Elm Creek to Father for 'his natural life' and upon his death, the remainder to Sons. Father was restrained from alienating the property during his lifetime. This deed also restrained Sons from alienating the property before January 1, 1970, (the contract said May 8, 1970).

The Uncles' deed contained 'forfeiture' clauses not contained in the contract. The clauses provided that upon any attempt to alienate the property by Father, his estate would terminate and the remainder would vest immediately in Sons. In the event Sons attempted to alienate the property before January 1, 1970, the estate of Sons would terminate and the title would revert to Uncles, of their heirs, devisees, successors or assigns.

The order approving the final report of executors and distributing the assets of Grandfather's estate was filed on April 3, 1950.

On February 21, 1955, Sons, then 17 and 20 years old, were granted rights of majority by the district court, Kay County. On the same day, Father conveyed his interest in Elm Creek by warranty deed to Sons. The following day Sons conveyed by warranty deed to Uncles, who in turn, conveyed to Adams by warranty deed. Adams took possession of Elm Creek on March 31, 1955 and had been in possession ever since.

Father died November 14, 1956.

The trial court quieted title in Elm Creek in Adams and dismissed Sons' claim for money judgment.

On appeal, Sons alleged, inter alia:

(1) The property in question was inalienable under the terms of the contract, until May 8, 1970. Therefore, the deed to Adams in 1955 was illegal and void because it violated the alienation provision of the probated contract;

(2) The contract between Uncles and Father controls the deed executed in 1948 by Uncles to Father. Therefore, the forfeiture clause put in the deed by Uncles should be non-effective and not binding upon Father or Sons;

(3) Property in Oklahoma can be made 'nonalienable' under 60 O.S.1971 § 31 and § 35; and,

(4) The trial court erred in granting judgment to Adams under Rule 13.

The Court of Appeals held that the terms of the contract were controlling and found the contract provisions appeared to be a disabling type of restraint. The court said that if the purpose of the contract was to disable appellants from alienating the property until May 8, 1970, their 1955 deed to Uncles would be null and void; the defense of estoppel by deed would not be available; and the statute of limitations would not start to run until May 8, 1970. The Court of Appeals reversed the judgment of the trial court and remanded the case to determine the purpose of the restraint provisions in the contract.

Sons argue that real property in Oklahoma can be made 'nonalienable' under 60 O.S.1971 § 31 and § 35.

Section 31 has been part of Oklahoma Statutes since 1910 and provides:

'The absolute power of alienation cannot be suspended, by any limitation or condition whatever, for a longer period than during the continuance of the lives of persons in being at the creation of the limitation or condition * * *.'

The above section is a prohibition against the suspension of the absolute power of alienation as therein prescribed and is not applicable here. We are concerned here with the validity of restraints on alienation and § 31 cannot be construed to mean that any and all restraints on alienation are valid if such restraints are not 'for a longer period than during the continuance of the lives of persons in being at the creation of the limitation or condition.'

Section 35, supra, inter alia, provides:

'* * * a remainder of a freehold or an estate for years, either contingent or vested may be created, expectant on the termination of a term of years; * * *.'

This section is not applicable. The validity of Father's life estate and Sons' remainder in the case at bar is not in issue. The issues presented concerns the restraints on alienation imposed on those estates and not the validity of their creation.

Appellants also contend that Waldon v. Baker, 184 Okl. 492, 88 P.2d 352 (1939), holds that the power of alienation may be suspended and relies on this language: 'A remainder in fee limited to the children of the heirs of the life tenant's body, though such heirs be unborn at the time of the grant, is recognized by statute as a valid grant. § 11766, O.S.1931.' (now 60 O.S.1971 § 41). Again, we are not concerned with the validity of the creation of the estates but are concerned with the restraints on alienation imposed upon those estates.

Without determining whether the contract or the deed is controlling, we will address the issues raised by the restraints on alienation imposed by the contract and also by the deed.

A restraint on alienation attempts to make vested interests, present or future, inalienable. These attempts have taken two general forms. 6 Amer.Law of Prop. § 26.2; Mee, Estates in Land: The Rule Against Perpetuities in Oklahoma, 17 Okla.L.Rev. 438 (1964). One form of restraint is a 'disabling restraint' which withholds from the conveyee the right or power to alienate. If valid, an attempt by the conveyee to alienate the property in violation of the restraint would be null and void. If void, the restraint would be rejected and the conveyee could alienate the property in violation of the void restraint.

The other from of restraint is a 'forfeiture restraint' which consists of a provision in the conveyance whereby an attempted alienation shall cause a forfeiture of the conveyee's interest. If valid, an attempted conveyance of the property by the conveyee in violation of the restraint would be void, but the forfeiture provision would be operative and the conveyee's interest would be terminated. If void, the conveyee could validly alienate the property in violation of the void restraint without a forfeiture of his interest.

We will first consider the validity of the restraints in the April 24, 1948, contract. Father was restrained from alienating his life estate and Sons were restrained from alienating their remainder, or the fee upon Father's death, until May 8, 1970. Because there are no provisions for forfeiture or reversion and no one having any beneficial interest in enforcing the restraints, we hold them to be 'disabling restraints'.

According to the Restatement of the Law of Property, § 404(1)(a) (1944), a 'disabling Restraint' is a restraint upon alienation which is an attempt 'by otherwise effective conveyance or contract to cause a later conveyance to be void.'

The Restatement of the Law of Property § 405, states:

'All restraints on alienation run counter to the policy of freedom of alienation so that to be upheld they must in some way be justified. But disabling restraints have an additional objection to their validity since to be effective they must enable the person restrained to deny the validity of his own conveyance and also, * * * to deny his creditors resort to the property interests which he is enjoying.'

The position of the Restatement of the Law of Property is that all 'disabling restraints, other than those imposed on equitable interests under a trust, are invalid.' § 405.

In effect, a disabling restraint is a naked restraint attempted in terms of a prohibition or withholding of right or power to alienate. This method of restraint does not provide for a forfeiture of the property in the event of alienation. As a result disabling restraint provisions have been held void because there remains no one who has any beneficial interest in their...