Martin v. Prairie Rod and Gun Club

• Decision Date: 31 May 1976
• Docket Number: No. 75--287,75--287
• Citation: 348 N.E.2d 306,39 Ill.App.3d 33
• Parties: Iola MARTIN et al., Plaintiffs-Appellees, v. PRAIRIE ROD AND GUN CLUB, an Illinois not for profit Corporation, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 306

348 N.E.2d 306

39 Ill.App.3d 33

Iola MARTIN et al., Plaintiffs-Appellees, v. PRAIRIE ROD AND GUN CLUB, an Illinois not for profit Corporation, Defendant-Appellant.

No. 75--287.

Appellate Court of Illinois, Third District.

May 31, 1976.

Kritzer, Stansell & Critser, Richard L. Whitman, Counsel, Monmouth, McLaughlin & Hattery, Galesburg, for defendant-appellant.

Standard & Tenold, James R. Standard, Counsel, LaMarr Evans, State's Atty., Oquawka, for plaintiffs-appellees.

BARRY, Justice:

In the trial court plaintiffs brought an action against the Prairie Rod and Gun Club to obtain specific performance of a contract to sell real estate located in Henderson County and to compel an accounting. The trial court granted plaintiffs' motion for summary judgment and ordered defendant to convey the real estate and render an accounting. The defendant has perfected this appeal.

Defendant has raised several issues on appeal. It is only necessary that we consider one of those issues in order to resolve the conflict presented. Defendant contends that the contract in question is void ab initio as violative of the rule against perpetuities.

In order to fully understand the rights claimed by both parties to this appeal in the real estate involved we must briefly set forth a history of the transactions which eventually resulted in this lawsuit. On September 29, 1932, the defendant purchased a 111 acre farm from Charles and Rena Pence. In connection with this sale a written agreement was entered into between defendant and Charles and Rena Pence which was itself recorded along with the deed in the Henderson County land records. This agreement recited the above mentioned conveyance of the Pence farm and further provided that defendant lease back to Charles and Rena Pence approximately 70 acres of the 111 acre farm which had just been conveyed to defendant. The term of this lease agreement was for the lives of Charles and Rena Pence. In addition to the lease for life to the original grantors, the 1932 agreement provided that the defendant promised and agreed that if it thereafter at any time wished to sell any part or all of the real estate involved, Charles and Rena Pence had the option to purchase the lands upon such terms and conditions as defendant would 'name and prescribe.' The agreement set out further that '(i)f after the death of (Charles and Rena Pence), (the defendant) shall wish to sell all the (farm) or any part thereof, then The (defendant) promises and agrees to give to the heirs of (Charles and Rena Pence) the option to purchase said lands or any part thereof, upon the conditions and terms to be prescribed by (the defendant); provided however, that if said heirs be unknown to the (defendant) at that time, then and in that case publication in a newspaper of general circulation in Henderson County, Illinois, giving notice to the heirs of Charles and Rena Pence, as the case may be, that said real estate is to be sold, which publication shall be made once each week for four weeks prior to the making of any sale, shall be sufficient notice to the heirs for the exercise of their option.' (Emphasis added.)

Both Charles and Rena Pence died prior to 1971. In November of 1971 the defendant decided to sell the Pence farm and solicited bids for that purpose. Invitations to bid were sent to several interested persons including some of the Pence heirs. The highest bid, $36,000, was that of someone not a Pence heir. The terms contained in the invitation to bid provided that the bids remain open for 60 days specifically to allow for the operation of the option and/or first pre-emptive right in the Pence heirs pursuant to the 1932 agreement. Following the terms of the 1932 agreement the defendant published a notice of sale in the local newspaper informing the Pence heirs of the sale and the prerequisite that they notify defendant by January 6, 1972. Subsequently 2 groups of Pence heirs appeared and attempted to exercise their first preemptive right to purchase the farm, including making a tender. ^* The defendant then abandoned a desire to sell the farm to any-one and has refused to sell to the highest bidder or to any of the Pence heirs either collectively or individually. Plaintiffs sued for specific performance and were successful on a motion for summary judgment. Defendant appealed claiming the summary judgment in favor of plaintiffs was improperly granted. We must agree.

The rule against perpetuities is a substantive rule of property law and not a rule of construction. Therefore we must decide whether the terms of the 1932 agreement creating a preemptive right of first refusal to repurchase any part or all of the farm property violates the technical provisions of the rule. Traditionally the rule against perpetuities can be stated as follows: 'No interest in property is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.' The interest in the Pences' and their heirs was created upon the execution of the 1932 agreement and to fall within the time limit the pre-emptive right of first refusal must not by any remote possibility become exercisable beyond the lives in being at the execution of the 1932 agreement plus 21 years. Obviously the preemptive right of first refusal cannot be exercised until the defendant, here, chose to sell the farm property. This pre-emptive right could, then, remain contingent ad infinitum if the defendant chose to never sell. Therefore the rights created in the Pence heirs by the 1932 agreement fall outside the time limits prescribed by the common law rule against perpetuities and are void ab initio from the 1932 agreement.

The Illinois statutory version and modification of the common law rule against perpetuities is contained in Ill.Rev.Stat.1975, ch. 30 § 191 et seq. Said statute modifies the common law rule against perpetuities in Illinois from its effective date of September 22, 1969, hence. By its own terms the act applies only to instruments which become effective after the effective date of the statute which makes the common law rule against perpetuities applicable to the present case.

Several theories are urged by plaintiffs which would except the rights created in them by the 1932 agreement from violating the rule. Initially plaintiffs attach special significance to the practical difference between an option to purchase realty as opposed to a preemptive right of first refusal. 'In a typical option (to purchase) the optionee has the absolute right to purchase something for a definite consideration.' Atchison v. City of Englewood, 170 Colo. 295, 463 P.2d 297, at 301 (1969) as modified on denial of rehearing (1970). The optionee has the right to compel a sale on the agreed terms whenever he desires. To the contrary, a pre-emptive right to purchase real estate, involves the creation of a privilege to buy only on the formulation of a desire by the owner to sell and usually upon the terms and price at which the owner is willing to sell to a third person. See 61 Am.Jur.2d Perpetuities and Restraints on Alienation, § 54. It is argued that a pre-emptive right in no way...