Pace v. Culpepper, 49403
| Decision Date | 06 July 1977 |
| Docket Number | No. 49403,49403 |
| Citation | 347 So.2d 1313 |
| Parties | Doris Elizabeth PACE and James C. Walker v. James Lamar CULPEPPER and wife, Louise Shirley Culpepper. |
| Court | Mississippi Supreme Court |
Warner, Ray & Cobb, Harvey B. Ray, Meridian, for appellant.
Witherspoon, Compton & Mason, William B. Compton, Meridian, for appellees.
Before PATTERSON, SUGG and WALKER, JJ.
SUGG, Justice, for the Court:
The appeal and cross appeal in this case are from a decree of the Chancery Court of Lauderdale County. The primary question is whether the rule against perpetuities applies to an option to purchase land.
On March 28, 1970 Mr. and Mrs. C. B. Walker conveyed by warranty deed 2.54 acres to James L. and Louise S. Culpepper for the consideration of $1,000 per acre. On the same date the Walkers and Culpeppers signed an option 1 giving the Culpeppers the first option to purchase an additional .6 of an acre owned by the Walkers at $1,000 per acre.
On March 28, 1973, following the death of his wife, C. B. Walker conveyed by quitclaim deed the .6 of an acre covered by the option to his daughter, Doris Elizabeth Pace, who then conveyed an undivided one-half interest to her brother, James C. Walker on June 21, 1973. C. B. Walker died on June 30, 1973.
Doris Elizabeth Pace and James C. Walker filed suit in the Chancery Court against James Lamar Culpepper and wife, Louise Shirley Culpepper, seeking to set aside the option and warranty deed on the grounds that (1) the consideration was so inadequate as to shock the conscience, (2) the option was void because it violated the rule against perpetuities; (3) the option is void as a restraint upon the alienation of property, and (4) the option and the deed together form a single integral transaction and if the option is void and set aside the deed must also be set aside. The Culpeppers answered and denied the essential allegations of appellants' lawsuit and the matter was submitted to the chancery court without testimony based upon the pleadings and documents involved.
No proof was offered on the question of inadequacy of consideration so this question was not before the trial court and is not before this Court on appeal.
The chancery court held that the deed was valid but the option was void and should be cancelled. Complainants appealed from the holding that the warranty deed was valid and defendants cross appealed from the holding that the option was void.
At the outset the difference between an ordinary option and a pre-emptive right should be noted. In a typical option the optionee has the absolute right to purchase for a definite consideration. A pre-emptive right involves the creation of the privilege to purchase only on the formulation of a desire on the part of the owner to sell.
In considering whether the option violated the rule against perpetuities two questions are presented: (1) was the pre-emptive right granted the Culpeppers personal; namely, would it die with them and therefore not violate the rule against perpetuities; and (2) even if the pre-emptive right was not personal, did it violate the rule against perpetuities?
In considering the first question, we do not experience difficulty in concluding that the right was not personal because the option grants to the Culpeppers and "their heirs, executors, administrators and/or assigns the first option to purchase said .6 of an acre at the rate of $1,000 per acre." By the express terms of the option, the pre-emptive right to purchase extends not only to the Culpeppers but to their heirs, executors, administrators or assigns without limit as to time.
We have never decided whether the rule against perpetuities applies to options to purchase real estate; however, the Court has been confronted with the rule in other contexts. In Magee v. Magee's Estate, 236 Miss. 572, 111 So.2d 394 (1959), we held that a testamentary trust was not in violation of the rule against perpetuities and in so holding the following definition of the rule was given:
'The rule against perpetuities prohibits the creation of future interests or estates which by possibility may not become vested within a life or lives in being at the time of the testator's death or the effective date of the instrument creating the future interest, and twenty-one years thereafter, . . .' (236 Miss. at 591, 111 So.2d at 402).
In Carter v. Berry, 243 Miss. 321, 136 So.2d 871, Sugg. of Error, 140 So.2d 843 (1962), this Court stated:
The rule against perpetuities is the law limiting the time within which future interests can be created. Gray, The Rule Against Perpetuities, Fourth Edition, Sec. 4, p. 4. It is stated as follows: 'No interest subject to a condition precedent is good, unless the condition must be fulfilled, if at all, within twenty-one years after some life in being at the creation of the interest.' And also: 'No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.' Sec. 201, p. 191, ibid. But, a true vested interest is never obnoxious to that Rule, while a contingent interest not only may be, but often is, violative of the Rule. Sec. 99, p. 88, ibid. And again, 'A vested interest is not subject to the Rule against Perpetuities.' Sec. 205, p. 194, ibid. See also 70 C.J.S. Perpetuities § 10, p. 585. (243 Miss. at 343, 136 So.2d at 875-876).
The rule against perpetuities is a rule invalidating interests which vest too remotely. It is not a rule against suspension of the power of alienation of property through the creation of interests in unborn or unascertained persons. It is not satisfied by the fact that there are persons in being who can together give a complete title to a purchaser. However, both principles stem from the general policy against withdrawal of property from commerce. Leach and Tudor, The Rule Against Perpetuities (1957), Sec. 24.3. In other words, an interest violating the rule against perpetuities fails because it vests too remotely; it may be, and usually is, freely alienable at all times. We are not concerned here with the 'succession of donees' statute. Miss.Code 1942, Rec., Sec. 838; see Custy and Brand, Future Interests The Mississippi Two Donee Statute and the Common Law Rule Against Perpetuities, 30 Miss.L.J. 221 (1959). (243 Miss. at 357-358, 140 So.2d at 846).
Applying our decisions to this case, it is readily apparent that the option violates the rule. At the time of its inception the option vested no immediate interest in the Culpeppers. To the contrary there was a mere possibility that the Culpeppers would ever acquire an interest to the .6 of an acre. This possibility depended on whether the Walkers, or their heirs, ever decided to sell the property. Magee and Carter are but two of our many cases holding that the rule does not apply to vested interests but does apply to future interests or estates which by possibility may not become vested within the time required.
It is not necessary for us to rely solely on the general rules announced by this Court to determine whether the option is void because there is an abundance of authority in other jurisdictions supporting the view that the rule against perpetuities is applicable to options to purchase real estate. Skeen v. Clinchfield Coal Corp., 137 Va. 397, 119 S.E. 89 (1923); Turner v. Peacock et al., 153 Ga. 870, 113 S.E. 585 (1922); Barton v. Thaw, 246 Pa. 348, 92 A. 312 (1914).
In 61 Am.Jur.2d, Perpetuities § 50 at 51 (1972), the rule is stated as follows:
Options given to purchase real estate are regarded as having the effect of creating future interests depending on the contingency of the exercise of the option. Hence if there is a possibility that the option may not be exercised within the limits of time allowed by the rule against perpetuities, the option is void as a violation of this rule. Such is held to be the case where no time is fixed within which the option must be accepted. So, according to the generally prevailing view, an option to purchase real property, unlimited as to the time for its exercise, or extending beyond the period limited by the rule against perpetuities, violates such rule and is invalid.
The rationale behind this rule is explained in Morris and Leach, The Rule Against Perpetuities, Ch. 8, at 213 (1956):
But it has been held both in England and the United States that an option to purchase land is too remote if it can be exercised beyond the perpetuity period. The reasoning by which this result was reached was as follows. An option to purchase land is specifically enforceable. This gives the option-holder an equitable interest in the land; this interest is contingent upon his election to exercise the option. Contingent interests in land are void unless they must vest (if at all) within the perpetuity period. Therefore an option to purchase which may be exercised beyond the perpetuity period is void to the extent that it creates an interest in land.
To continue reading
Request your trial
-
Old Port Cove Holdings v. Condo. Ass'n
...Perpetuities to such rights."); see, e.g., Stuart Kingston, 596 A.2d at 1384; Gore, 867 P.2d at 338; Martin, 348 N.E.2d at 309; Pace, 347 So.2d at 1317; Melcher, 435 P.2d at 114; McHugh, 380 S.E.2d at 874; Smith, 296 S.E.2d at 854. In Florida, however, an option does not create a legal or e......
-
John D. Stump & Associates, Inc. v. Cunningham Memorial Park, Inc.
...Cal.App.2d 167, 170, 40 Cal.Rptr. 803, 805 (1964). See, e.g., Anderson v. Armour & Co., 205 Kan. 801, 473 P.2d 84 (1970); Pace v. Culpepper, 347 So.2d 1313 (Miss.1977); Beets v. Tyler, 365 Mo. 895, 290 S.W.2d 76 (1956). See generally 77 Am.Jur.2d Vendor & Purchaser § 49 (1975 & Our cases co......
-
Murphy Exploration & Production v. Sun Operating Ltd. Partnership
...v. Gulf Transport Co., 526 So.2d 526, 528 (Miss.1988) (the rule against perpetuities applies to preemptive options); Pace v. Culpepper, 347 So.2d 1313, 1317 (Miss.1977) (same). See also Fallschase Development Corp. v. Blakey, 696 So.2d 833, 835 (Fla.App.1997); Estate of Royer v. Wineland Eq......
-
Duke v. Whatley
...the creation of the privilege to purchase only on the formulation of a desire on the part of the owner to sell. Pace v. Culpepper, 347 So.2d 1313, 1315-16 (Miss.1977). Williston on Contracts describes the distinction between options and first refusal contracts as While options and the so-ca......
-
CHAPTER 11 PREFERENTIAL PURCHASE RIGHTS
...435 P.2d 107, 114 (Okla. 1967). [14] E.g., Martin v. Prairie Rod & Gun Club, 348 N.E.2d 306, 309 (Ill. App. 1976); Pace v. Culpepper, 347 So.2d 1313, 1317 (Miss. 1977); Phalen v. Rilley, 159 Mont. 239, 496 P.2d 295, 298 (1971). But see Windiate v. Leland, 246 Mich. 659, 225 N.W. 620, 621-22......