Future Interests – Rule Against Perpetuities – Applicability of the Rule to an Option to Purchase Incident to a Lease

Plaintiffs’ testator ”leased” certain land to the defendants’ assignor for a period of twenty-eight years, the latter contracting to pay $1,200 annually and to pay all taxes and assessments against the land during that period. The instrument also contained a clause whereby plaintiffs’ testator contracted to convey in fee to defendants’ assignor at the expiration of the twenty-eight year period, upon the latter’s making a payment of one dollar. During the twenty-eight year period considerable improvements were made on the land. At the expiration of the period plaintiffs sought a declaration of rights and obligations of the parties under the written instrument The trial court determined the instrument to be a lease with an option, the latter violating the rule against perpetuities, and declared that defendants had no further right or interest in the property. On appeal to the Supreme Court of Appeals of West Virginia, held, affirmed, two judges dissenting. On its face the instrument purported to be a lease, and evidence showing it to be actually a contract for the sale of land was inadmissible. The option, since it would not necessarily operate to vest the fee in the optionee within the period of the rule, was void. First Huntington National Bank v. Gideon-Broh Realty Co., (W.Va. 1953) 79 S.E. (2d) 675.