Law School Case Brief
Buck v. Banks - 668 N.E.2d 1259 (Ind. Ct. App. 1996)
The Rule Against Perpetuities is an ancient, but still vital, rule of property law intended to enhance marketability of property interests by limiting remoteness of vesting. Indiana has adopted the Uniform Statutory Rule Against Perpetuities at Ind. Code §§ 32-1-4.5-1 to 32-1-4.5-6. However, Ind. Code § 32-1-4.5-2 limits the applicability of the rule and specifically provides that the chapter does not apply to nonvested property interests arising out of a nondonative transfer.
In 1958, appellants-plaintiffs Donald Buck and Margaret Buck (Bucks) entered into a contract to purchase a 500-acre parcel of land from Lillian E. Allen (Allen). Included in the contract was a provision giving the Bucks a right of first refusal to purchase an additional 14 acres from Allen should she decide to sell that property. Additionally, the contract contained a clause which made its provisions binding on each party’s heirs, executors, administrators, and assigns. Almost five years later in 1964, the Bucks paid the final installment on the purchase price for the 500 acres. Several years later, Allen entered into an agreement with appellees-defendants Carolyn Banks and Thomas Chipman (Banks) for the sale of the remaining 14 acres. In 1993, prior to the completion of the sale, Allen died. The Bucks, upon learning that Allen had contracted with Banks for the sale of the 14 acres, filed a claim against Allen's estate and the Banks for breach of the pre-emptive right provision of the Bucks' contract with Allen. Specifically, the Bucks sought specific performance of the portion of the contract which gave them the right to purchase the 14 acres. In response, the Allen Estate filed a motion for summary judgment alleging that the pre-emptive right provision of the 1958 contract was void because it violated the Rule Against Perpetuities. The Bucks filed a response to the motion for summary judgment and a motion requesting that the court permit them to reform the contract. Additionally, the Bucks sought summary judgment in their favor. Following a hearing, the trial court granted the Estate's motion for summary judgment and denied the Bucks' motions for summary judgment and for reformation of the contract. In its order, the trial court found that the facts were not in dispute, that the pre-emptive right provision of the 1958 contract violated the Rule Against Perpetuities and therefore, the provision was void in its creation. The Bucks appealed.
Did the pre-emptive right provision of the 1958 contract violate the Rule Against Perpetuities?
The Court held that the trial court correctly found that the pre-emptive right to purchase the 14 acres violated the Indiana common-law Rule Against Perpetuities, Ind. Code §§ 32-1-4-1 to 32-1-4-6 (1979), when it extended to the parties' heirs and assigns. Moreover, the Court held that the trial court did not err by refusing the Bucks’ request to reform the contract because the purchase of the 500 acres had already been fully performed and the Uniform Statutory Rule Against Perpetuities, Ind. Code §§ 32-1-4.5-1 to 32-1-4.5-6, did not apply to the purchase of the 14 acres.
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