McQueen v. Branch Banking & Trust Co., 676

• Decision Date: 01 February 1952
• Docket Number: No. 676,676
• Citation: 234 N.C. 737,68 S.E.2d 831
• Court: North Carolina Supreme Court
• Parties: McQUEEN et al. v. BRANCH BANKING & TRUST CO. et al.

Page 831

68 S.E.2d 831

234 N.C. 737

McQUEEN et al. v. BRANCH BANKING & TRUST CO. et al.

No. 676

Supreme Court of North Carolina.

Feb. 1, 1952

N. H. Person, Malcolm McQueen, Clark & Clark, and Robert H. Dye, all of Fayetteville, for plaintiffs.

McLean & Stacy, Lumberton, for W. E. McArthur and wife, Bessie McArthur, and W. E. McArthur, as trustee.

N. H. McGeachy, Jr., and Nance & Barrington, all of Fayetteville, for other defendants named.

BARNHILL, Justice.

Is the devise in trust contained in the will of Annie McArthur too uncertain, vague, and indefinite to be enforceable, or does it offend the rule against perpetuities, or does it constitute an unlawful and unreasonable restraint against alienation? These are the three questions posed by the appeal of the defendants.

The plaintiffs take the position that the provision in the will that the trust shall continue for a period of twenty-five years from the date of the filing of the will for probate, or from the date of the death of the life tenant, 'whichever may be the later date' makes the date of the commencement of the twenty-five year period so uncertain as to render the devise too vague and indefinite to be enforceable, and that it also brings the devise within the condemnation of the rule against perpetuities. On this record the contention thus advanced in support of the judgmen entered in the court below is untenable.

The testatrix first devised the property in question to her sister for life, and then to the named trustees for the uses and purposes therein named. The devise to the trustees is unequivocal and constitutes a devise of the remainder subject to the life estate of Margaret McArthur. Legal title vested in the trustees immediately upon the death of the testatrix. Their right of possession, and the beginning of the twenty-five year period during which the trust shall remain active, was necessarily dependent upon whether the life tenant survived the testatrix. The provision in the will in this respect is merely expressive of the law which, in the absence of such provision, would have fixed the identical date as the date upon which the right of the trustees to assume possession of the trust property accrued.

Unquestionably the testatrix used the expression 'the date of filing this, my last will and testament for probate' to mean upon her death and the performance of the formalities in respect to her will which would entitle the trustees to assert the rights accruing to them under the terms of the trust. In any event we are dealing with the situation as it is, not as it might have been under other circumstances which did not and cannot arise. The will was promptly admitted to probate, and the date of the death of the life tenant marks the beginning of the twenty-five year period of the trust. So then, we find no vagueness or uncertainty here such as would render the devise to the trustees void and unenforceable.

In so holding, we are not inadvertent to the Illinois case, Johnson v. Preston, 226 Ill. 447, 80 N.E. 1001, 10 L.R.A.,N.S., 564, cited by plaintiffs. But that case is clearly distinguishable. There title was to vest in the trustees upon the probate of the will. Here it vested at the date of the death of the testatrix and the probate of the will merely fixes the beginning date of the trust. Neither is Closset v. Burtchaell, 112 Or. 585, 230 P. 554, in conflict with what is here said.

But the status of the devisees and their present interest, if any, in the property devised in trust is determinative of the question whether the devise is violative of the rule against perpetuities.

The right to create contingent interests in property, title to which is to vest at some time in the future, and to postpone the full enjoyment of vested interests, has always been recognized. Even so, the creation of a future interest in property necessarily fetters the estate and tends to affect its marketability. The courts therefore, at an early date, recognized that a rule which would hold the exercise of this right within reasonable bounds was imperative. To this end the rule against perpetuities was devised. While modified by statute in some states, it has been consistently followed in this and a majority of the other jurisdictions in this country.

It is concededly a rule which draws an arbitrary line of demarcation between what shall be deemed reasonable and what unreasonable. No other type of rule would have sufficed to accomplish the purpose in mind.

It prescribes the time within which title to a future interest in property must vest. Under this rule, no devise or grant of a future interest in property is valid unless title thereto must vest, if at all, not less than twenty-one years, plus the period of gestation, after some life or lives in being at the time of the creation of the interest. If there is a possibility such future interest may not vest within the time prescribed, the gift or grant is void. Gray On Perpetuities, 4th ed., p. 191, sec. 201; Mercer v. Mercer, 230 N.C. 101, 52 S.E.2d 229; American Trust Co. v. Williamson, 228 N.C. 458, 46 S.E.2d 104; Springs v. Hopkins, 171 N.C. 486, 88 S.E. 774; In re Estate of Friday, 313 Pa. 328, 170 A. 123, 91 A.L.R. 766; Camden Safe Deposit & Trust Co. v. Scott, 121 N.J.Eq. 366, 189 A. 653, 110 A.L.R. 1442, and Annotation p. 1450; 41 A.J. 53, § 6, § 23, p. 67, § 29, p. 73.

It does relate to and is not concerned with the postponement of the full enjoyment of a vested estate. The time of vesting of title is its sole subject matter. Springs v. Hopkins, supra; Camden Safe Deposit & Trust Co. v. Scott, supra; In re Estate of Friday, supra; 41 A.J. 73, § 29; ibid, § 23, p. 67.

A mere statement of the rule demonstrates its inapplicability here. The will under consideration creates no contingent future interest. The beneficiaries of the trust are named in the will and are persons who were in being at the time the will took effect and the estate was created. They are, under the terms of the will, to have and receive the income from the property quarterly, subject to the right of the trustees to make use thereof in their discretion for other designated purposes; and upon the termination of the trust they are to receive their respective shares, freed of the trust provisions. Thus there is no postponement of the vesting of their title to the property. Instead, title thereto vested in them, subject to the life estate and the terms of the trust, immediately upon the death of the testatrix. The trust served merely to postpone their right to the full enjoyment of the estate devised until the termination of the trust.

'Where an active trust is created for the use and benefit of named beneficiaries, or there is a gift of all or a part of the income therefrom to the beneficiaries, pending final division, or there is other language in the will evidencing a clear intent that a beneficial interest in the estate shall vest in the parties named immediately upon the death of the testator, with directions to the trustees to divide and deliver the estate at a stated time in the future, the interest vests immediately upon...