Anti-alienation
clause upheld
Alienation
restraint also precludes partition of property
By
David Ziemer
david.ziemer@wislawjournal.com
May
7, 2007
| What
the court held Case:
Fohr v. Fohr, No. 2006AP1559. Issue:
Does a restraint on alienation also restrain partition?
Is a restraint
on alienation and partition in a will, for the lifetime of the beneficiaries,
a reasonable restraint? Holding:
Yes. Where
the testator's intent to restrain partition is clear, the restraint can be inferred.
Yes. Where the restraint is only for the length of lifetimes in being,
it is not unreasonable in duration. Attorneys:
For Appellant:
Olson, Jeff Scott, Madison; For Respondent: Kost, Keith K., Rhinelander; Strutz,
Sven W, Rhinelander. |
An
anti-alienation clause in a will is enforceable, the Wisconsin Court of Appeals
held on May 1.
But
that doesn’t mean such clauses aren’t fraught with peril.
In
1984, Lester Fohl executed a will, granting the residue of his property to his
four children, in equal shares, share and share alike.
The
provision added, “In the event that either Sally, Gerald, David or Sue desire
to sell their share in the property up north, it must be sold to one of the four
and for the amount of the appraisal in 1973, namely $8,000 total.”
Lester
died in 1988, and the property was distributed accordingly.
In
2001, despite the provision in the will, David bought Sue’s share for $8,500.
A 2003 appraisal revealed the property was worth $175,000.
David
tried unsuccessfully to convince Gerald and Sally to sell their shares to him,
and then sought partition.
Vilas
County Circuit Court Judge Robert E. Kinney granted summary judgment in favor
of Gerald and Sally, holding that partition would conflict with the will. The
court also found partition would be inequitable, because David had purchased Sue’s
share for far below market value.
David
appealed, but the court of appeals affirmed in a decision by Judge Michael W.
Hoover.
The
court first rejected David’s argument that the will restricts only alienation,
not partition. Citing 68 C.J.S. Partition sec. 25 (1998), for the proposition
that a limitation on partition can be implied or express, and the clear intent
of the testator that the property remain intact, the court concluded that the
restriction implicitly restricts partition, as well.
Second,
the court rejected David’s argument that the restriction is an unlawful restraint
on alienation, because it is not reasonably limited in its effect to a proper
time period.
David
analogized his situation to that in a Florida case, Vinson v. Johnson, 931 So.2d
245 (Fla.App.2006). In that case, the will only permitted sale by the heirs if
all nine agreed.
The
court of appeals distinguished Vinson, however, because there, some of the heirs
lived on the property while others were merely burdened with taxes, and thus,
their right to enjoy the property was illusory.
In
the case at bar, in contrast, none of the parties uses the property as a primary
residence, but each is allowed to use the property for vacations as they wish.
In addition, David has a way to dispose of his interest by selling to a sibling.
Third,
the court considered the application of arguably applicable Wisconsin statutes.
Section
842.02(1) prohibits a partition action if there is an agreement between the parties
prohibiting partition for a period not to exceed 30 years.
The rule
against perpetuities, sec. 700.16(1)(a), provides, “A future interest or
trust is void if it suspends the power of alienation for longer than ... a life
or lives in being plus a period of 30 years.”
The
court questioned whether sec. 842.02(1) applied, because the relevant document
was a will, not an agreement between the parties.
If
the rule against perpetuities applies, on the other hand, the restraint is valid,
because it is only for four lives in being, when it could be for those lives,
plus 30 years.
Ultimately,
however, the court declined to decide what time limit exists, because partition
is an equitable remedy, rather than a legal remedy, and the court concluded that
David was bound by equitable principles.
The
court found that the restrictions were for a reasonable purpose and a reasonable
time. Thus, because David was free to decline the bequest, the court held he was
bound by it. The court also noted that David had obtained Sue’s share for
far below market value.
Accordingly,
the court affirmed.
Click
here for Case Analysis.
David
Ziemer can be reached by email.
