Hall v. Crocker - 192 Tenn. 506, 241 S.W.2d 548 (1951)

Rule:

A contract by which a grantor retains in himself the right to buy property at a fixed price within a certain time may be taken unless it violates the rule against perpetuities. An option must be fulfilled within the period of lives in being and 21 years and the period of gestation. If the option may extend beyond such a time, it is void, but if it must take effect at all events within a life or lives in being and 21 years and the period of gestation, it is valid.

Facts:

The grantor conveyed land to the grantee and her heirs. The deed reserved to the grantor and his heirs the exclusive right to buy the land at the actual cost of improvements "should" the grantee die. After the grantee died, the grantor's heirs filed an action against the grantee's heirs seeking a construction of the deed to give effect to their right to purchase the land. The chancery court entered a decree sustaining the demurrer of the grantee's heirs on the ground that the deed provision was an unlawful restraint on alienation of the property that violated the rule against perpetuities. The grantor’s heirs sought review of the judgment.

Issue:

Was the deed provision an unlawful restraint on alienation of property that violated the rule against perpetuities, thereby justifying the chancery court’s decree sustaining the demurrer of the grantee’s heirs?

Answer:

No.

Conclusion:

The court reversed the decree and remanded the action for further proceedings. The court held that the Tennessee courts were required to disregard the technical rules of common law as to formal parts of a deed and examine the deed in all its parts to ascertain the grantor's intention. In this case, the deed provision was merely an option to repurchase retained by the grantor in the deed, which did not violate the rule against perpetuities because the grantee's death was certain, and the option must have taken effect within a life or lives in being and 21 years and the period of gestation.