Watson v. Dalton

Chappell, J. This is an action by plaintiffs, appellants, to quiet title to certain lands in Knox County, Nebraska, obtain an accounting- for rents thereof, and the partition of such real estate. The petition sets forth plaintiffs’ claims as above recited in three separate causes of action. The issues were complete but at the trial evidence was adduced only upon the first cause of action wherein plaintiffs prayed that they each, excepting their respective spouses, be decreed to be the owner of an undivided one-sixteenth interest, and defendant Charles S. Dalton the owner of an undivided one-half interest, in the property.' By’ agreement, trial of the second and third causes of action was deferred pending decision of the first which, if against plaintiffs, would be decisive of the other two. The trial court, 'in conformity with its written findings and memorandum opinion filed therein, entered its decree finding generally for defendant Charles S. Dalton. The decree quieted title to all of the property in him, dismissed plaintiffs’ first cause of action, and continued their second and third causes of action until further order of the court. The cross-petitions of defendants Rosell A. Watson and — 81 — Miles W. Watson, children of a deceased uncle of Fern M. Dalton, deceased, were also dismissed but they did not appeal or cross-appeal. The plaintiffs appealed to this court contending, in effect, that the judgment of the trial court is contrary to law and not sustained by the evidence. We find that these contentions cannot be sustained. There are only questions of law presented for decision. The facts are not in dispute. One Addie E. Watson, a widow, for a consideration of $1 and other valuable considerations conveyed different parcels of real estate, each of which is particularly described in plaintiffs’ petition, to her daughter Fern M. Dalton by two deeds, each dated February 11, 1936, and recorded June 25, 1936. Each of the deeds contained identical restrictive provisions, except the restrictive provision in one was for 5 years and in the other for 12 years. The provision in the former is, “The grantor reserves unto herself the use of said premises during her life time and further as a part of the consideration for the execution of this deed the grantor restricts the grantee for a period of 5 years from this date, from- selling or mortgaging said premises or in any manner during said period from placing or causing to place a lien of any kind against said premises. To have and to hold the premises above described, together with all the Tenements, Heriditaments and Appurtenances thereunto belonging unto the said Fern M. Dalton and to her heirs and assigns forever. * * * And the said Addie E. Watson, widow hereby relinquishes all her right, title, and interest in and to the above described premises, subject to the conditions above stated.” There were no clauses in the deeds expressly providing .for reentry, termination, reverter, or limitation over. Thereafter, but before the conditions were broken or the restrictions violated, the mother, Addie E. Watson, died, and in short form administration proceedings the county court entered its decree of heirship- adjudging that her daughter, Fern M. Dalton, grantee in each of the restrictive deeds, was her sole and only heir at law. From this decrée no appeal was taken. — 82 — By quitclaim deed dated August 5, 1940, Fern M. Dalton conveyed to her husband, defendant Charles S. Dalton, all of the property previously conveyed to her by her mother. Thereafter on October 2, 1940, Fern M. Dalton died, leaving a will which was duly admitted to probate by the county court, from which no appeal was taken. By the will she devised and bequeathed all her real and personal property to her husband. The probate proceedings in her estate were all complete except for decree of distribution and final decree, which were withheld pending decision of this case. Therein the heirs of Fern M. Dalton were adjudged to be her husband, defendant Charles S. Dalton, and eight aunts and uncles who are the plaintiffs in this case. The question involved is the legal effect of the two restrictive clauses contained in the deeds from Addie E. Watson to Fern M. Dalton. The answer to this question depends primarily upon the character of the estate conveyed. As stated in 33 Am. Jur., sec. 10, p. 469: “The rule is well settled in the modern law that if the instrument is not testamentary in character and passes a present interest although enjoyment of the fee is postponed, a grantor may, in a conveyance, either specifically or by lang-uage which by construction brings about the same result, reserve to himself a life estate in property in which the fee is granted.” Therefore, it must be conceded in the case at bar that there was an effective reservation by the grantor, Addie E. Watson, of a life estate in the premises which in itself did not prevent the passing of the fee to the grantee, Fern M. Dalton, but only postponed the enjoyment thereof. This court recently held in Majerus v. Santo, 143 Neb. 774, 10 N. W. 2d 608: “Where the owners of an interest in real property convey the same but by agreement contained in the instrument of conveyance retain an interest in the premises such interest will support the imposition of a restriction on alienation where it is reasonably necessary to protect the interest retained.” A statement of the factors to be considered in determining the reasonableness of restrictions on alienation in such cases will be found in Re — 83 — statement, Property, sec. 406, p. 2406. In the instant case the grantor retained a life estate in the property and imposed a restriction upon the grantee of the fee conveyed which we find under the circumstances presented was reasonably necessary to protect the interest retained; We believe that the record could not sustain any other conclusion. However, a decision that the restrictions were valid limitations does not solve the matter. That is only an introduction to the problem. The final solution in this case depends upon the character of the estate conveyed and the unusual circumstances presented. The trial court found that the grantee, Fern M. Dalton, received a fee simple title subject to a condition subsequent. We believe that conclusion to be correct. “The term ‘condition subsequent’ denotes that part of the language of a conveyance, by virtue of which upon the occurrence of a stated event the conveyor, or his successor in interest, has the power to terminate the interest which has been created subject to the condition subsequent, but which will continue until this power is exercised.” Restatement, Property, sec. 24, p. 59. More simply stated, “Conditions subsequent are such as by the failure or nonperformance of which an estate already vested may be defeated,” by an exercise of the power of termination. 26 C. J. S., sec. 141, p. 467. While conditions subsequent are not favored in the law no particular words are necessary to. create them in a deed, although such conditions must be fairly expressed and apt, and sufficient words employed. The intention of the parties must be clearly expressed importing that the estate is to depend upon a contingency provided for but it must be gathered from the entire instrument and the contract must be construed according to its terms especially where there are express words used. 26 C. J. S., sec. 141, p. 468. In this connection, it is generally held that a forfeiture clause or a provision for re-entry or termination is not required or necessary for the validity of a condition subsequent. A condition, the breach of which is good ground in equity for cancelling the conveyance of which it is a part, will be held to — 84 — be a condition subsequent unless there is something in the instrument showing a contrary intent. 26 C. J. S., sec. 141, p. 471, sec. 142, p. 475. As stated in Restatement, Property, sec. 45, p. 140: “In an otherwise effective conveyance, the phrase ‘upon express condition that’ usually indicates an intent to create an estate in fee simple subject to a condition subsequent, even when no express clause for re-entry, termination or reverter accompanies it * * * .” An equivalent phrase, “subject to the conditions above stated,” was used in both the deeds here involved. Other pertinent and significant factors which may also be considered in determining whether a limitation is couched in appropriate words to manifest the intent of the grantor to create a power of termination, are the nature of the event specified in the limitations, their importance to the grantor in protecting* the estate retained, the consideration recited or actually paid, the relation of the parties, and the purposes of the conveyance. Restatement, Property, sec. 45, pp. 137-143. In view of all the language employed in the deeds, and other factors presented here, we conclude that the grantor, Addie E. Watson, intended to and did transfer to Fern M. Dalton, grantee, a fee simple title, subject to a condition subsequent, of all the property described in the two original deeds. In Restatement, Property, sec. 24, p. 59, the statement is made that, “Whenever an estate subject to a condition subsequent is created, some person has the power to terminate this estate upon the occurrence of the stipulated event. Thus such an estate does not end automatically and by expiration * * * . On the contrary, it is cut short, or divested, if, but only if, the person having the power chooses to exercise it. This option to terminate an estate upon breach of a condition subsequent is referred to in this Restatement as a ‘power of termination’.” See, also, 26 C. J. S., sec. 147, p. 482. We turn then to the question, who has the power to terminate? Under circumstances similar to the case at bar. — 85 — it is the general rule that nonperformance of a condition can be taken advantage of only by the grantor and his heirs, or by the grantor and his legal representatives. The benefit of a condition or breach thereof cannot be availed of by a stranger, by a person who has no present right, legal or equitable, to the part reserved. 26 C. J. S., sec. 148, p. 482, sec. 157, p. 496. Since there were no provisions in the deeds for reversion or limitation over, the conditions were promissory restraints and personal to the grantor to protect her life estate. Therefore, the right of “re-entry for condition broken” or, “the power of termination” is not any estate in land but a mere right or chose in action, merely a right or power to terminate the estate of the grantee if there were a breach of condition. It is the rule that the death of the creator of an estate subject to a condition subsequent does not extinguish the power to terminate for condition broken but the right to take advantage of it passes to his heirs because they enforce the condition in the right of the ancestor. 33 Am. Jur., sec. 208, p. 688, sec. 209, p. 689. Whether such right can be devised is not an issue in this case. Bearing these rules in mind, we call attention to the fact that plaintiffs are admittedly not the heirs of the grantor, Addie E. Watson, but are the heirs of the grantee, Fern M. Dalton, who was the sole heir of the grantor. Therefore, there could be no termination of title except at the election of the grantor or the grantee, her sole heir. The grantor having died before condition broken, her life estate was extinguished or merged in the title of the grantee. The grantee’s enjoyment of the fee was then no longer postponed and as sole heir the power of termination passed to her. It is affirmatively stated in Restatement, Property, sec. 423, p. 2465: “An otherwise valid restraint or alienation ceases to exist * * * in the case of a promissory restraint or a forfeiture restraint in the form of a condition subsequent, upon a union of the power to enforce the restraint and the interest so restrained in the same person; * * * .” This statement is on all fours with the case at bar, and governs its decision, for the reason that: “Whenever a restraint has — 86 — been terminated by the happening of events at or prior to the time of the alleged violation, one against whom enforcement is sought has a defense to that enforcement.” Restatement, Property, Introductory Note to Chapter 31, p. 2456. 20 N. W. 2d 610 Filed November 16, 1945. Other interesting questions of law were ably presented in the briefs of counsel but we do not deem it necessary to discuss them. We- conclude that the trial court properly held that plaintiffs could not prevail in this action, and rightly quieted the title of Charles S. Dalton to all the real estate described in plaintiffs’ petition. For the reasons stated herein the judgment of the trial court is affirmed. Affirmed.