Friday, February 10, 2012

City of Klamath Falls v. Bell case brief

City of Klamath Falls v. Bell

-1925: a corporation gift deeded land to the City of Klamath Falls “as long as” the city used the land for a library, and thereafter unto Fred Schallock and Floyd Daggett, their heirs and assigns.
-City closed the library in 1969 when the books were moved to another library. Thereafter, the city sued to quiet title in fee as to the land.
-D’s were all of the heirs of Schallock and Daggett. The grantor corporation, Daggett-Schallock Investment Company had been dissolved and the assets (including any interest in the property) were transferred to Fred Schallock and Floyd Daggett. Thereafter, all of the remaining heirs transferred their interest, if any, in the property to Defendant Marijane Flitcraft.
The trial court found for the city based on its finding that the gift over to Fred Schallock and Floyd Daggett was void under the rule against perpetuities. The Defendants appealed.

-Executory limitation violates the rule against perpetuities.
-Rule against perpetuities is a limit on the grantor to give gifts to ‘remote parties’.  (I.e., people not in existence).
-The rule’s purpose is to defeat the intent of the grantor; if anything could defeat the rule, it does.
-Only an executory interest can follow a grant in fee simple.
-“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.”

-The language of the deed passed to the city a fee simple determinable in the land. That is true due to the use of the specific words of “as long as.”  
-Court found that the breach of the condition causes the fee simple to terminate automatically.
-The language of the deed which called for the gift over in case of breach of the condition of use to be made to Fred Schallock or Floyd Daggett or their heirs and assigns was an attempt to convey an executory interest.
-The rule against perpetuities applies to executory interests.  In this case the city might have used the land for a library indefinitely which would make the gift over to Fred Schallock and Floyd Daggett void ab initio.  This violated the Rule against Perpetuities.
-The Court found that a possibility of reverter was retained by the grantor corporation. Oregon had a law against the alienation of possibilities of reverter. The grantor corporation did attempt to alienate the possibility of reverter through its abortive gift over the Schallock and Daggett.
-An attempt of a grantor to transfer a possibility of reverter does not cause its destruction. Therefore, the possibility of reverter was retained in the grantor, the corporation which was dissolved.
-Here, the corporation was lawfully dissolved and that all the remaining assets went to the sole shareholders, Fred Schallock and Floyd Daggett, and then, of course to their heirs and assigns. The possibility of reverter was then in the heirs who conveyed their rights to Flitcraft.

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