Maguire's Estate, In re, 45551

• Decision Date: 07 March 1970
• Docket Number: No. 45551,45551
• Citation: 204 Kan. 686,466 P.2d 358
• Parties: In the Matter of the ESTATE of John F. MAGUIRE, Deceased. Darlene Maguire SCARBROUGH, Appellant, v. Lillian Maguire McNUTT, Individually and as Administrator, c. t. a., d. b. n.of the Estate of John F. Maguire, Deceased, jean I. Cecil, Kathleen I. Duncan,and William S. Green, Appellees.
• Court: Kansas Supreme Court

Page 358

466 P.2d 358

204 Kan. 686

In the Matter of the ESTATE of John F. MAGUIRE, Deceased.

Darlene Maguire SCARBROUGH, Appellant, v. Lillian Maguire McNUTT, Individually and as Administrator,

c. t. a., d. b. n.of the Estate of John F.

Maguire, Deceased, jean I. Cecil,

Kathleen I. Duncan,and William

S. Green, Appellees.

No. 45551.

Supreme Court of Kansas.

March 7, 1970.

Rehearing Granted April 2, 1970.

Syllabus by the Court

1. An option for the purchase of real estate which has been created by will is personal to the optionee designated therein and must be exercised by the optionee in person.

2. Where no time limit is set by the testator for the exercise of an option contained in his will the same must be exercised within a reasonable time.

3. A testamentary option, being personal in character and exercisable only during the optionee's lifetime, does not violate or contraven the rule against perpetuities.

4. An option does not suspend the power of alienation where the parties thereto are in existence and ascertainable, and can together convey the entire title.

5. As a general rule questions of law must be determined by the court, unlimited by agreement of the litigants, and their stipulations as to what the law is are ineffective to bind the court.

6. An option granted two or more optionees must be exercised by all the optionees jointly.

7. The record is examined in an action contesting the validity of a testamentary provision granting the testator's two daughters the right to purchase certain real estate at a specified sum, and for reasons appearing in the opinion it is held: (1) The option does not violate the rule against perpetuities or create an unreasonable restraint upon alienation, and (2) the option, being joint, cannot be exercised by the surviving optionee.

Howard A. Spies, of Schroeder, Heeney, Groff, Spies & Craig, Topeka, argued the cause, and John F. Gernon, Hiawatha, with him on the brief for appellant.

Harry E. Miller, of Finley & Miller, Hiawatha, argued the cause on the brief for appellees.

FONTRON, Justice:

In this appeal we are concerned with the interpretation of the last will and testament of John F. Maguire. The foremost and primary question is stated by the parties to be whether the seventh paragraph violates the rule against perpetuities and is an unreasonable restraint on alienation.

Mr. Maguire died December 26, 1932, being survived by his wife, Kathryn, who died July 8, 1966, and the following children: a daughter, Nellie Maguire Green, former Nellie Maguire Idol, who died January 9, 1945; a son, John F. Maguire, Jr., who died November 18, 1966; and a daughter, Lillian Maguire McNutt, who is still living. In his will the testator devised a life estate in all his real property to his wife, Kathryn, and devised the remainder interests therein to his children in separate parcels.

Paragraph seven of the will, whose construction triggered this litigation, reads as follows:

'Subject to the life estate of my said wife, Kathryn Maguire, and also subject to the life estate of my son, John F. Maguire, Jr., therein, I will, devise, and bequeath the south one half of the north west quarter of section seventeen (17), in township two (2), range eighteen (18), Brown county, Kansas, to the issue of the body of John F. Maguire, Jr., surviving him with the understanding that Nellie Maguire Idol, and Lillian Maguire McNutt, may, if they so desire, elect to take said above-described real estate, and pay to the issue of the body of John F. Maguire, Jr., deceased, the sum of ten thousand dollars, with interest thereon at the rate of four percent per annum, from the date of the death of said John F. Maguire, Jr., equally between them, share and share alike.'

The will was admitted to probate in January, 1933, and the estate remained open for more than a year after Kathryn's death in July, 1966. A petition for final settlement of the estate was heard in probate court on July 28, 1967. Prior to that date, however, written defenses to the petition were filed by Darlene Maguire Scarbrough, the sole issue of John F. Maguire, Jr., who had died the preceding November. Mrs. Scarbrough (who is sometimes referred to herein as Darlene) alleged she was entitled to the land described in paragraph seven, and that the provisions giving Nellie Maguire Idol (now Green) and Lillian Maguire McNutt the right to take the same upon payment of ten thousand dollars was void and unenforceable.

Darlene's contention was rejected by the probate court, which proceeded to assign the testator's real estate in accordance with the several provisions of the will. The probate court's decision was appealed to district court, which also held that the provisions of paragraph seven did not violate the rule against perpetuities; that Nellie's rights under the option descended to her heirs; and that notice to exercise the option was given Darlene within a reasonable time. Mrs. Scarbrough has appealed to this court from that decision.

No extended dissertation on the rule against perpetuities will be attempted at this time. The rule has been recognized in this state from early statehood and considerable litigation has followed in its wake. For present purposes it will be sufficient to observe that the purpose of the rule is to prevent the creation of future interests in property which will not vest within twenty-one years after some life or lives in being, plus the usual period of gestation. (In re Estate of Freeman, 195 Kan. 190, 404 P.2d 222.)

As to application of the rule against perpetuities in the area of options, we find the test set forth in Restatement, Property, Volume IV, p. 2315:

'Subject to exceptions (none of which appear applicable here) * * * the limitation of an option in favor of a person other than the conveyor is invalid because of the rule against perpetuities when, under the language and circumstances of the limitation, such option

'(a) may continue for a period longer than the maximum period described in § 374; and

'(b) would create an interest in land, or in some unique thing other than land, but for the rule against perpetuities.'

In the 'Comment' which follows the foregoing statement of the rule, certain requirements are shown. Subparagraph b. thereof, 'Requirement of Clause (a)' reads in part as follows:

'Under the rule stated in this Section, the option must be one which 'may continue for a period longer than the maximum period described in § 374.' This requirement is not satisfied when the option is found, from the language and circumstances of its creation, to have been intended to be exercisable only by an already conceived optionee himself, and not by any successor in interest to such optionee. In any such case the duration of the option is measured by a life in being, namely, the life of the optionee and the rule stated in this Section is inapplicable. * * *' (p. 2316.)

The rule appears to be quite general in this country that a testamentary option, that is, an option granted or created by will, confers a right which is personal to the optionee himself, and which will not survive his death. Formal expression is given to this principle in an annotation appearing in 28 A.L.R.2d: Wills-Option-Who May Exercise, where on pages 1167, 1168, the author says:

'* * * (A) majority of the courts have held that a right or option given by will to purchase estate property was personal to the optionee, and did not survive his death so as to become exercisable by his successors in interest.'

This prevailing rule concerning the exercise of options created by will is stated in 96 C.J.S. Wills § 1104, p. 834, in these words:

'* * * The option is personal to the optionee; it cannot be exercised by a stranger or assignee or by the heirs or personal representative of the optionee, * * *.'

Being personal to the optionee who is designated in the will, a testamentary option must be exercised, if at all, by the named optionee within his own lifetime-a lifetime in existence. Thus, the requirement of the rule respecting options which we have heretofore quoted from Restatement, supra, is not fulfilled, and the rule against perpetuities is not offended. This corollary is reflected in the text of the annotation in 44 A.L.R.2d: Option Created By Will, p. 1228, where it is said:

'In the majority of the cases in which the question has arisen it has been held or recognized that the option in question which was created by will for the purchase of real estate was not void as contrary to the rule against perpetuities.'

For cases supporting this position see, among others, Ludwick's Estate, 269 Pa. 365, 112 A. 543; Weitzmann v. Weitzmann, 87 Ind.App. 236, 161 N.E. 385; Brown v. Brown, 53 N.M. 379, 208 P.2d 1081; Austin Presbyterian Theological Sem. v. Moorman, 391 S.W.2d 717 (Tex.), cert. den., 382 U.S. 957, 86 S.Ct. 434, 15 L.Ed.2d 361.

We have been unsuccessful in our search to discover cases from this jurisdiction directly in point, and none have been called to our attention by counsel on either said. However, in Campbell v. Warnberg, 133 Kan. 246, 299 P. 583, we believe there is tacit recognition of the principle that an option granted by will to purchase real estate does not violate the rule against perpetuities.

The testamentary scheme in the Campbell case was somewhat complicated, but essentially the will provided that certain of the testator's children, i.e., the sons, should have the right to purchase the interest of their sisters at a price fixed by the will. Some fifteen months after the father's death, and after oil had been discovered on parts of the land, greatly increasing the value of the whole, the optionees, for the first time, and in an outstanding display of brotherly solicitude, sought to exercise the option. This court held, in that case, that since the option contained no limit of time for its exercise, the law required that it be exercised within a reasonable time; and that the optionees'...