Smith v. VanVoorhis
| Citation | 296 S.E.2d 851,170 W.Va. 729 |
| Decision Date | 15 October 1982 |
| Docket Number | No. 15544,15544 |
| Court | Supreme Court of West Virginia |
| Parties | Jessie SMITH, a Widow, Appellee, v. William H. VanVOORHIS, et al., Defendants Below, Monongalia County Development Authority, Appellant. |
Syllabus by the Court
1. 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; and the holder of the right must purchase for the price at which the owner is willing to sell to a third person.
2. A pre-emptive right is a sufficient executory interest to make it subject to the rule against perpetuities.
3. "The rule against perpetuities requires that every executory limitation, in order to be valid, shall be so limited that it must necessarily vest, if at all, within a life or lives in being, ten months and twenty-one years thereafter, the period of gestation being allowed only in those cases in which it is a factor." Syllabus Point 5, in part, Brookover v. Grimm, 118 W.Va. 227, 190 S.E. 697 (1937).
Jackson, Kelly, Holt & O'Farrell, George R. Farmer, Jr. and Allen R. Prunty, Morgantown, for appellant.
Wilson, Frame & Poling, Clark B. Frame and Richard D. Poling, Morgantown, for appellee.
In this appeal from the Circuit Court of Monongalia County we are asked to decide whether a clause in a deed extending a right to purchase certain real estate violates the rule against perpetuities. We believe the clause does not violate the rule and affirm the decision of the lower court.
Six living descendents of Morton VanVoorhis were owners of several hundred acres of real estate located in Monongalia County. This property passed to them as tenants in common upon the death of VanVoorhis in 1925. On December 2, 1971, these six descendants entered into a voluntary partition of the real estate whereby each party became the owner in fee of a specific parcel. One such partition deed is in controversy. It conveyed fifty-seven acres of the property to William H. and Ann VanVoorhis. This partition deed contained this provision:
"It is further agreed that none of the parties hereto, nor their heirs or assigns, will convey any part of the described real estate without first offering the same to the other heirs of Morton VanVoorhis at the same price and upon the same terms as the best offer received therefor by such owner desiring to sell, and the heirs of Morton VanVoorhis shall have the equal right to purchase said real estate for a period of thirty (30) days after the notice of such offer, and in the event two or more of the heirs of Morton VanVoorhis desire to purchase said real estate, the right to purchase shall be determined by lot."
On July 11, 1977, William H. and Ann VanVoorhis granted a two-year option to purchase their real estate with provisions for extensions and renewals to the Monongalia County Development Authority (hereinafter Development Authority) which exercised this option on August 11, 1980. Only after this occurred did they offer to sell the property to the other parties in the partition deed as required by the above-quoted provision.
One of the heirs, Jessie Smith, elected to exercise her right to purchase the property. She notified William H. and Ann VanVoorhis on September 25, 1980. Due to the uncertainty created by the two exercised options on the same property, they refused to convey the property to either party.
On October 14, 1980, Smith filed an action for declaratory judgment as to her rights under the December 2, 1971 partition deed, naming William H. and Ann VanVoorhis and the Development Authority as defendants. The Development Authority cross-claimed against VanVoorhis praying that its option be specifically enforced and that the real estate be conveyed to it.
The circuit court sitting without a jury granted the declaratory judgment in Smith's favor holding that the language of the December 2, 1971 deed established a right personal only to the six heirs and did not violate the rule against perpetuities and was therefore valid, thus, Smith could legally exercise her option to purchase the property. The Development Authority's cross-claim was dismissed.
In the present case we first clarify the identity of the contested provision. Both parties as well as the circuit court have labeled the clause as an "option." We, however, view the clause as a "pre-emptive right" also known as a "right of first refusal" or "first call." In Atchinson v. The City of Englewood, 170 Colo. 295, 463 P.2d 297, 301, 40 A.L.R.3d 904, 914 (1970), the Supreme Court of Colorado made this distinction between these two provisions:
Such a distinction has also been made by other courts. 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 61 Am.Jur.2d Perpetuities and Restraints on Alienation § 65 (1981).
Most courts that have had occasion to consider a pre-emptive right conclude that it is a sufficient executory interest to make it subject to the rule against perpetuities. E.g., Atchinson v. The City of Englewood, supra; Neustadt v. Pearce, 145 Conn. 403, 143 A.2d 437 (1958); Pace v. Culpepper, supra; Davies v. McDowell, 549 S.W.2d 619 (Mo.Ct.App.1977); Forderhouse v. Cherokee Water Company, 623 S.W.2d 435 (Tex.Civ.App.1981); Robroy Land Co. v. Prather, 95 Wash.2d 66, 622 P.2d 367 (1980); Annot., 40 A.L.R.3d 920 (1971).
Our usual formulation of the rule against perpetuities is found in Syllabus Point 5 of Brookover v. Grimm, 118 W.Va. 227, 190 S.E. 697 (1937):
1
See also Berry v. The Union National Bank, 164 W.Va. 258, 262 S.E.2d 766 (1980); 2 Conley v. Gaylock, 144 W.Va. 457, 108 S.E.2d 675 (1959); Goetz v. Old National Bank of Martinsburg, 140 W.Va. 422, 84 S.E.2d 759 (1954); Starcher Bros. v. Jeff Duty, 61 W.Va. 373, 56 S.E. 524 (1907). IN STARCHER BROS. V. JEFF DUTY, 61 W.VA. AT 379, 56 S.e. at 526, wE said:
In that case, this Court struck down an option to purchase that was perpetually renewable by the optionee upon paying ten dollars each year. Even though the pre-emptive right in the present case does not create a...
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