Where property is conveyed in fee with a proviso that it is to be used only for a specified use and that the property shall revert to the grantor if such specified use ceases, it would appear reasonable to conclude that the property would so revert when its appropriation by eminent domain proceedings prevents that specified use.
After plaintiff grantors conveyed a tract of land by deed to defendant city for the express purpose of using the land as a city park, defendant improved and developed the land as a public park in accordance with the deeds. When the state instituted eminent domain proceedings to appropriate much of the park land, a trial court awarded the proceeds from the condemnation to defendant, holding that the state's appropriation did not constitute a breach by defendant of the restrictive deeds or a forfeiture of the remainder of the grant. The court of appeals affirmed.
Does eminent domain proceedings against land obtained by grant, resulting in the payment of money, extinguish the reversionary interest the grantor possesses?
The court reversed and held that, by accepting the grant, defendant undertook a fiduciary obligation to use the property only for park purposes. Thus, defendant was required to hold any interests in the property not taken from it subject to the fiduciary obligations imposed upon it by the two deeds conveying that property to it. In addition, whatever money defendant received in the eminent domain proceedings could only be held by defendant so long as it proposed to use, could reasonably use, and did use that money for park purposes, and any remaining money should have reverted to plaintiffs.