Alienation
Case Analysis
May
7, 2007
The
case illustrates the caveat, “Be careful what you wish for; you just might
get it.”
Lester
has managed to keep the property in the family (and keep it intact except for
Sue), but at what cost? Sue sold her share for far below market value (possibly
because she believed this provision barred her from getting a fair price), and
the other three are obviously not on good terms.
When
confronted with a client who wishes to insert a similar provision in his will,
to preserve the family vacation property for all his children, citing this case
may be effective in dissuading him from doing so.
Bequeathing
the property to the children with rights of first refusal may not be a perfect
solution, but it’s far better than doing what Lester did.
The
case also illustrates a wise principle: “Don’t own property with family
members.”
The
court’s core holding — that the restraint in the will is reasonable
— is dubious and could cause inequity in other cases.
From
the court’s statement of facts, it appears that David wants partition so
that he can get that part of the property with the “cabin and most of the
property’s dry land for himself.”
But
what if he wanted partition because of objectively oppressive behavior by his
siblings? Equity would weigh in his favor, but the restriction would bar a partition
that is undeniably reasonable. The court found that keeping the property intact,
and in the family, is a reasonable purpose, and that the length of the children’s
lifetimes is a reasonable duration.
The
court adopted a rule that, if the restraint is reasonable, the effect of the testator
will be given effect, and that “no partition suit will lie before the date
so fixed or the happening of the event named.” 85 A.L.R. 1321, 1324 (1933).
Thus,
where the restriction was reasonable originally, partition cannot happen, even
if it is desirable in light of subsequent events.
The
court seems to ignore that it is an invitation to trouble to bequeath vacation
property to all your children, including a provision that, if one wishes to sell
his interest, he can only do so for a tiny fraction of the fair market value of
his share.
Suppose
one child moves far from Wisconsin, and it is not practicable for him to use the
property.
Suppose
that paying the property taxes is a genuine burden for one of the children.
Suppose
the children have so many children and grandchildren of their own that joint ownership
between four families overburdens the property, and the most sensible solution
is for one to buy out the others, at whatever price they place on it.
Suppose
one child and his family just makes life miserable for the other children and
their families.
Contrary
to the court’s holding, a good case could be made that this restraint on
alienation is inherently unreasonable. Just because a restraint doesn’t violate
the rule against perpetuities doesn’t mean it’s reasonable.
Maybe
in a future case, the court will hold differently, if the party seeking partition
can show that, even though the restraint was reasonable when made, subsequent
events have made it unreasonable in practice, and it is equitable for him to seek
partition. But the opinion in this case will not give him much support.
Thus,
the effect of the court’s holding is more likely in future cases to impede
equitable results.
Click
here for Main Story.
David
Ziemer can be reached by email.
