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Ford, 36 Md. 168; Barnum v. Bamum, 26 Md. 119 : 90 Am. Dec. 88. In
these cases, however, it will also be found that if the trusts in question
had been declared valid, they must have operated in favor of persons
not in being within twenty-one years and nine months after the vest-
ing of the estate in the trustee, and therefore that the decisions might,
and ought to have been, put upon the ground that as to those persons no
equitable interest could vest in them, because it mi|;ht not vest within
the time permitted by the rule. So, in other decisions, though they
were partially based on statutory prohibitions of the power of alien-
ation, the trust was not only intended to be kept open for a period
beyond lives in being, but the final distribution of the property waa
directed to be made at that remote time to persons who should then be
entitled thereto, though their interests could not have vested within
the time permitted by the rule : Penfield v. Tower, 1 N. Dak. 216 ; Smith
v. Edwards, 88 N. Y. 92, 102. The doctrine proclaimed in the princi-
pal case is, that though ttie interest of the beneficiaries may be said ta
be vested, and relieved "from uncertainty as to persons and event,''
yet, if for the purpose of the trust, the estate must remain in the trus-
tees, so that they are forbidden to convey, "there is not such vesting^
nor yet such an interest as removes the bar of the statute, since all of
the interests and estates, contingent and vested, cannot convey the fee,
so long as the terms of the trust from which alone their interests are
derived stand in the way. The perpetuity here does not result from
too remote limitations or the failure of future estates to vest, but it
arises by the direct act of the testator in forbidding his trustees ta
alien for a period not tolerated by the law": In re Walkerly, 108 Oal.
650; ante, p. 97.^ If this is true and applicable to every class of trusts,
it must follow that many trusts, commonly supposed to be valid, will
be declared unlawful in those states in which the suspension of the
power of alienation beyond lives in being is prohibited. For it cannot
De said that any persons in being will surely survive for any definite
period, and, therefore, every trust which for its execution necessarily
requires any definite period forbids alienation during that time, ancl
hence forbids it for a time which may be beyond lives in being.
Though the instrument creating the trust may direct the trustees to-
retain the property for a specified period, yet other directions may
show that the purpose is to nave it retained for the benefit of persons
named and then in being, and here the trust may be saved by constru-
ing it as terminating with such lives: Montignani v. Blade, 145 N. Y.
111. In Pennsylvania a devise was made to trustees to hold and
manage the property for the benefit of certain of the testator's heirs,
and, when two-thirds of the persons interested in the estate should so-
demand, to sell it and divide the proceeds among them. It is clear
that two-thirds of the perRons to interested might not have united in
demanding a division within lives in being, and, therefore, that the-
power of alienation was, so far as the trustees were concerned, so sus-
pended ; but the court paid : *' We do not regard this trust as in any way
an illegal restraint upon alienation, for the reason that there ia »



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Sept 1895.] Ih rk Walublt. 131

Tttted interest in the deyisee wbicb he can sell or dispose of at pleasare,
and it is only the time of enjoyment of the profits o! the same which is
provided for. We are nnable to see anything in this trast which is in
conflict with the law in r^ard to perpetuities. The mere fact that no
time is fixed within which the power of sale mnst be exercised does
not, of irself, create a perpetnity. It is sufficient to say that a power to
leli and distribute the proceeds, created bj a will, must be exercisetl
within a reasonable time. It is always within the power of the orphan's
eoart to control the exercise of a discretion, in aach cases, upon the
tpplication of the parties in interest. A power of sale is good, although
no time is limited for its exercise. Aside from this, it was competent
for all the parties In interest at any time to defeat the power, and to
take tlie property discharged thereof. Under these circumstances, we
cannot say that the truet created a perpetuity" : Cooper's Estate, 150
Pa. St. 576; 30 Am. St. Rep. 829.

TfutU to Secure the Payment of Loani, etc. — It is the frequent practice in
America to convey property to accompiisb some purpose whicli the truB«
tees, by the terms of the trust, have not the power to accom plish at once,
and which they may therefore not accomplish within lives in being, as
where property is conveyed as security for specific debts not due until a
fmnre date, and with a power to sell for the payment of these debts, if
there is default in paying them at maturity. It is certain that these
and other cases in which, in effect, a charge is interposed upon prop-
erty, and trustees or other persons are invested with power to sell to
ntiafy such charge, and in which the interest of the debtors may re*
main sahject to the charge for a period beyond lives in being, consti-
tate an exception to the rule that an estate must necessarily vest or be
free from contingency within the period designated in the rule. In all
such cases, if the trustees or other persons authorized to exercise the
power of sale are not forbidden to exercise it at once, or at such period as
they may deem reasonable, there is no suspension of the power of alien-
ation, and the authorities also agree that there is no violation of the rule
against perpetuities: Brandenburg v. Thorndike, i39 Mass. 102; At-
waterv. Russell, 49 Minn. 57; In re Sudeley (1894), 1 Ch. 334. If an
estate is siven to trustees to pay debts, and, subject to such payment,
isdevisea or conveyed to others, it is possible that it may be necessary
for the trustees to retain the estate beyond lives in being and twenty-
one years. Nevertheless, the beneficiaries are regarded as having
rested estates which they may at any time convey, or, in other words, as
hoidinean estate subject to the charge, and the tact that it is so subject
is not deemed to be violative of the rale against perpetuities: Bacon v.
Proctor, Turn. & R. 31 ; Bagshaw v. Spencer, 1 Ves. Sr. 142. In every
instance coming within our observation in which property has been
Tested in trustees with the power to sell to raise moneys for any specifio
purpose, such power has not been regarded as involving either a per-
petuity or a restraint upon tlie oower of alienation, where the time
within which it was to be exercised was not necessarily to be postponed to
a fntnre definite period, though it was clear that the creator of the trust
understood that the sale would not take place at once, and though the
directions concerning the sale showed a desire on his part thnt it should
be postponed to a propitious time. In such cases it is said that the
power must be exercised within a reasonable time, and, therefore, that
It isnot within the rule against perpetuities: Hope v. Brewer, 13G N Y.
128; Deegan v. Wade, 144 N. Y. 573; In re Cooper's Estate, 150 Pa. St.
676; 30 Am. St. Rep. 829; In re Tower's Estate, 49 Minn. 371. See,
also, South Hampton v. Hertford, 2 Ves. & B. 54, 65; Bateman v.
Hotchkin, 10 Beav. 426. In each of the cases to which we have referred
it was within the discretion of the trustees to sell and convey the prop-
erty at any time, and, ther fore, as to them, there was no restraint upon
th? power of alienation, bu^ it must be conceded that, through their
failure to exercise the power, it was uncertain when the interests de-
pendent upon its exercise would come into being or would cease to exist.
Bat there are many trusta in which it is clear that if they are respected.



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132 In re Walkerly. [Cal.

the trustees must hold the property for some period which may, or per-
haps must, be beyond that specified in the rule against perpetuities.
Notwithstanding what is said in the principal case, we think that the
weight of authority sustains the rule that if the beneficiaries have a
vested interest — one they may release or assign — the trust is valid.
Thus, where property was hel>i subject to an annual charge, and, upon
the nonpayment of such charge, the right was reserved to enter and dis-
train as tor nonpayment of rent, an objection wa^ interposed that such
charge was void lor renioteness, it was held thai such could not be the
case, for tlie reason that the person entitled to the charge might at any
time release it: Gilbertson v. Richards, 4 Hurl. & N. 276; 5 Hurl. & N.
453. . A similar decision resulted from a conveyance of real property,
in which the grantee agreed that, in the event of his opening any mines
for the purpose of obtaining coal, he would yearly render a true account
of all coal mined by him, and pay two shillings for every ten tons raised
or obtained by him : Morgan v. Davey, 1 Cababe & E. 114. On the same
reasoning, a power to raise money to pay debts and legacies was held
not to be obnoxious to the rule against perpetuities, because the bene-
ficiaries might compel the exercise of the power within a reasonable
time, and l^cause it gave them a present assignable interest in the prop-
erty: Silk V. Prime, 1 Brown On. 138, note; Briggs v. Oxford, 1 De
Gex. M. <& G. ^i63. Speaking, in the case last cited, of the power given
to trustees so long as there should be any encumbrances existing upon
property to cut and sell timber trees thereon, and to apply the money
resulting toward the discharge of such encumbrances, the court said:
"The power is one to be exercised solely by virtue of a contract between
the parties to the settlement, a contract to this effect, that that which
was a debt upon the estate should he liquidated in a particular mode.
It appears to me that to whatever extent of time the operation of that
contract extends, it is not a contract within the doctrine of perpetuity.
The person who enjoys the estate has only to pay off the encumbrance,
and tliere is an end of it." So, in New York, where real property was
vested in trustees to be held until from the rents and profits a specified
sum should be realized, and the objection was made that this inter-
posed a restraint upon the power of alienation and offended the rule
against perpetuities, the objection was overruled, because ''where the
Bale by the trustee is to pay a sum in gross by collecting and accumulat-
ing rents, etc., to a specific amount, the cestui que trust may release or
assign. If the sum required to make the payment is provided in any
other way, the trustee is not guilty of any violation of his trust by
uniting with the cestui que trust in a conveyance or release of the land.
The purpose of the trust would have been accomplished. There is no

S revision o: the statute which prohibits such an alienation": Radley v.
luhn, 97 N. Y. 2fi; Bailey v. Bailey, 97 N. Y. 470. See, also, Cochrane
V. Schell, 140 N. Y. 527, sustaining a trust to pay annuities. On the
other hand are American cases tending to show that the imposition of a
charge upon real property, for the nonpayment of which it may be sold,
or may without sale vest in another, is within the rule against perpe-
tuities, if the charge may continue longer than lives in being and such
other time as is permisnible by the local rule against perpetuities: Dean
V. Mumford, 102 Mich. 510; Merritt v. Bucknam, 77 Me. 253.

In many parts of the Unite<l States it is the custom of persons loan-
ing money to take as security conveyances to trustees who are author-
ized, upon default in the payment of the indebtedness, according to the
terms of some bond or proininsory note, to sell so much of such prop-
erty as may be necessary to discharge the obligation and the costs of
the sale, and thereupon to convey to the purchaser the property so sold.
In every case in which the note or other obligation is not payable at once
the trustees are without power to convey, and must, unless the parties
interested in the trust in some way release them from their obligations
as trustees, retain the title for an indefinite perio<l, which may be
beyond lives in lieing, and, if it be true that the purposes of the trust
must be such that they must be accomplished within lives in beingf



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Sept 1895.] In rb Walkeblt. 133

then all these securities are worthless. Yery singularly this question
does not seem to have been presented for decision in any oourt o last
resort. In our judgment, these securities neither offend the lav against
perpetaitiea nor involve an unlimited suspension of the power of alien-
ation. In the first place they are not within the reason of the rule.
They cannot result in the tying up of property or the keeping of it in
one family for an unlimited period of time. In the second place, he
to whom the debts are payable, though they are not due, may consent
to their immediate payment, or he majr, even without such payment.
direct the tmstees to convey the legal title to the creators of the trust
or their sncoesaors in interest, or the creditors mav unite with the
trustees and the debtors in a conveyance of the whole title, and such
transfer, having been assented to by all the parties in interest, is not
forbidden as in contravention of the trust. A trust deed of this class
differs essentially from the trust involved in the principal case. There
conceding that the interests of the beneficiaries were vested and assign-
able, stin the trustees were required to retain the proi>erty for the
Seriod of twentv-flve years, and it was not within the power of the bene-
ciaries to absolve them from this duty, and therefore the united action
of all the parties in interest could not transmit a perfect title.

A Power to Sell and Convey may exist though there is no trust estate,,
and the existence of the power may, in some instances, save a disposi-
tion of property from the operation of the rule, and in others bring the
disposition within it. Thus, if an estate is destructible by a single
person, there can be no perpetuity, though he is not bound to exercise,
and, in fact, does not exercise, his power to destroy. Hence, il an estate
is limited to the grantee for life with a general power of appointment by
him, with full power also to convey in fee or by mortgage, this power,,
though not used, renders the life estate destructible by the grantee,,
and prevents any future limitation from offending the rule against per-
petuities. " The element of indestructibility of the estate of the person
who, for the time being, is entitled to the property subject to a future
limitation is essential to a perpetuity": Mifflin's Appeal, 121 Pa. St.
205; 6 Am. St. Rep. 781. If, however, upon the exercise of the power
of sale, the proceeds are to be held in violation of the rule, the existence
of the power cannot render the trust valid: Estate of Hinckley, 58 Gal.
457, 481; In re Walkerlv, 103 Gal. 656, ante, p. 97. Generally a power
cannot be sustained unless it must be exercised within the limits of the
rule against perpetuities: Lawrence's Estate, 136 Pa. St. 854; 20 Am.
St. Rep. 925; Gray on Perpetuities, sec. 473.

Mortgaaee. — If it be true, as stated above, that a power which can be
exerciseof beyond Che limits of the rule against perpetuities cannot be
sustained, then it must follow that a mortgage with a power of sale can-
not authorise the exercise of such power, except within the same limits,
and, therefore, in those ttates where the rule is res|;ricted to lives iu
being, a mortgage to secure a debt due at some time in the future, not
measured by lives in being, cannot confer the power to sell upon default
in the pavment of the debt. It is un:iuestionably true that the mort-
fragor and the mortgagee may, by joint action, convey a perfect title.
It has been assumed, rather than decided, that a power of sale in a
mortgage is valid though the mortgage authorizes such power to be ex-
ercised at a period beyond lives in being and twenty-one years: Gilbert-
son v. Richards, 5 Hurl. & N. 653; but this case was so much criticised
in a subsequent decision that its weight as authority is but slight: Lon-
don etc. Ry. Co. v. Gomni. L. R. 20 Ch. Div. 562. Nevertheless, we
think that upon this subject it is likely to be ultimately sustained ; for
the practice of incorporating powers of sale in mortgages has been so
general and so long continued (Jones on Mortgages, sees. 1764-1768),
that we shall be surprised to hereafter learn that thev are forbidden
by the rule against perpetuities where, by the terms of the mortgage,
they may be exercised bdvond lives in bning, when, as is the case in
many parts of the United States, the rule is restricted to that short



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134 In bb Walkeblt. [CaL

period, and a mortgage debt due one day after date may be beyond that
time. .

ReMwal Right8.-^ln England it seems to be possible to create a right
in lessees and their successors in interest to perpetual renewals of their
leases: Hare v. Burgess, 4 Kay & J. 45; Bridges v. Hitchcock, 1 Brown
Pari. 0. 522. In Oalilornia, a lease for years, with a covenant for per-
petual renewal was held to be void aa an attempt to create a perpetuity :
Morrison v. Rossi gnol, 5 Oai. 65. Even in England the covenant for
renewal in a lease will not be permitted to create a perpetuity. Thus
it wan claimed that, by virtue of an indenture dated in the year 1529
conveying lands to a municipal corporation, it covenanted that when a
term of ninety-nine years in a part of the lands should expire, if any
heirs of the body of a person named in the grant, being of consanguinity
or kindred of the grantor, should come, claim, and make lawful request
t3 tiie mayor and burgesses to have a new grant and lease to him or her,
then, and as olten as any such chance should fall, the mayor and bur-
gesses, upon the request to them so made, should make a new lease and
grant of the premises to such owner so making the request for thirty-
one years. It was held that this provision directly tended to create
a perpetuity, and was therefore not enforceable, and it seems that the
only instance in which a covenant for renewal can be sustained is where
it, in effect, creates an estate tail or other vested interest in the person
in whose favor the right of renewal is reserved: Hope v. Gloucester, 7
De Gex, M. & G. 647.

Conditiota SubsequerU.^Optiaru to Purchase and Rights of Re-entry or
Reverter dependent upon contingencies which may not occur within the
time allowed by the rule against perpetuities, must fail, if it be true
that it is the nonvesting of the estate within that time, and not the
suspension of the power of alienation, which brings a limitation within
the rule. Of course, every person entitled to exercise an option of pur-
chase or to re-enter and resume an estate on breach ox some condition
subsequent, or upon the happening of some other cause of forfeiture of
which he has the right to take advantage, may release that rieht and
unite in a conveyance of the property, and hence it is clear that the
existence of his right does not lead to a suspension of the power of
alienation, however remote may be the contingency upon which he
is authorized to act, and by acting, to acquire or resume an estate. If
he who grants an estate reserves to himself and bis heirs the right to
re-enter and determine the estate granted upon the happening of a
future contingency, there are many cases regarding his reservation to
himself as an estate or interest in the lands granted, and which, there-
fore, hold that he retains a present interest, consisting of his right of
reverter, which at some future time majr be converted into an estate in
fee. '*This possibility of reverter, as it is termed, remains in the
grantor or devisor immediately on the creation of the conditional
estate," and is therefore held not to violate the rule against perpetui*
ties. Hence, conditions subsequent, the eCfect of which is to reserve to
the grantor or devisor and his heirs the right to resume an estate
granted or devised, are sustained and enforced, however distant in
point of time may t)e the contingency upon the happening of which
the estate granted is to revest: Brattle Square Church v. Grant, 8 Gray,
142, 148; 63 Am. Dec. 725; Giles V. Boston Soc, 10 Allen. 355; Piper
y. Moulton, 72 Me. 155; Ooit v. Comstock, 51 Conn. 352; 60 Am. Rep.
29; Hunt v. Wright, 47 N. H. 396; 93 Am. Dec. 451; Jones V. Postell,
Harp. 92; In re Macleay, L. R. 20 Eq. 186. If, however, instead of re-
serving a right of reverter to himself and his heirs, the grantor or devisor
should merely limit the estate to be held by the grantee or devisee for a
specific purpose and until the happening of a future contingencv, after
which it is to vest in some other person, the limitation is within the rule,
for such person does not have any interest in the property except that
dependent upon a condition which may not occur witnin the time
allowed by the rules First Universalist Soc. v. Boland, 155 Mass. 171;



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Sept 1895.] In be Walkerlt. 1S5

Bnttle Square Church v. Grant, 3 Gray, 142, 148; 63 Am. Dec. 725.
Hence, a condition that the grantee of a pew should forfeit it to the
grantor aooiely if he should leave the meetinghouse without first offering
it at a certain price, was sastained: French v. Old South Soc, 106 Mass.
<(79. The court said: '*It is objected that the rule against perpetuities
makes the conditions of the piamtiCf's deed void. If a perpetuity may
bedefined as 'an estate unalienable though all mAnkind join in the con-
yeyance' (see Scattergoo*! v. Edge, 1 Selk. 299), 'or where, if all that have
interest join, yet they cannot biaror pass the estate' (see v^asbborn v.
Downs, I Cas. Cb. 213). here is no violation of the rule, for the plaintiff
and defendants could at any time join in a conveyance of the property.
The grantee took an estate on condition subsequent, and the possibility
of reverter remaining in the grantor on* breach of the condition is not
sabject to the rule against peipetuities, even if the pew is held ai
real estate." The more recent decisions in England, however, seem to
overthrow what had formerly been supposed to be the law u[)on thii
subject, and to refuse to recognize the aistinction that had been made
between those cases in which the right of re-entry or reverter had been
reserved to the grantor and his heirs, and those in which, on the hap-
pening oi a remote contingency, he had provided for the vesting of the
properly in some third person. They hold that if a grantor conveys
property, reserving to himself the right to repurchase at a future tims
at a specified price, or provides that it shall be used for certain pur-
poses only, and if not so used, shall revert to him, that his only interest
in the property is <iependent upon an unoertam contingency, and, if it
may not happen within the time ullow.ible by the rule againnt perpetui-
ties, no estate can revert to him : Grav on Restraint of Alienation, sees.
299-302: Dunn v. Flood, 25 Gh. Div. 629; London etc. By. Co. ▼. Gomm,
20 Ch. Div. 581.

Lands are often granted with restrictive covenants in the conveyance
that they shall be used for a specified purpose only, or, on the other
hand, that thev shall not be u.'-ed for some designated purpose, and
sometimes the language of the deed is such that the breach of the cove-
nant or condition is made a cause of forfeiture, conferring upon the
grantor and his heirs the right to re-enter as for breach of a condition
eatjsequent and to resume the estate granted. That a restrictive cove-
nant or condition of this kind, so far at least an it may be regarded as
a contract, may, in a proper case, be enforced in equity, and that its
enforcement cannot be prevented by urging the rule against perpetui-
ties, art conceded both in this country and in England: Parker v.
Nightinjrale, 6 Allen. 341; 83 Am. Dec. 632; Whitney v. Union B. B.
Co., 11 Gray, 359; 71 Am. Dec. 715; Barrow v. Richard, 8 Paige, 351;
as Am. Dec. 713 ; Tobey v. Moore. 130 Mass. 448; Bullard v. Shirley,
153 Mass. 559; Mackenzie v. Childers, L. B. 23 Gh. Div. 265; Coles v.
Sims, 5 De Gex, M. dc G. 1. In the latter country, however, we should
judge from the cases already cited that the use of the property for a
particular purpose could not be made a condition subsequent, so that



Online LibraryAbraham Clark FreemanThe American state reports: containing the cases of general value and ... → online text (page 15 of 121)