Mountain Brow Lodge No. 82 v. Toscano

California Court of Appeal · 1967 · Property

Propertyfuture interestscondition subsequentrestraint on alienationlodgedefeasible feefee simple subject to condition subsequentrestraint on alienation

Facts

In 1950, James V. Toscano and Maria Toscano conveyed real property by gift deed to Mountain Brow Lodge No. 82, a nonprofit corporation organized for lodge, fraternal, and similar purposes. The deed stated that the property was restricted for the use and benefit of the grantee only, and that if the property failed to be used by the grantee, or if the grantee sold or transferred any part of it, the property would revert to the grantors, their successors, heirs, or assigns. The grantors were deceased, and their trustees and administrators claimed an interest under those conditions. The lodge sought to quiet title, arguing the restrictions were void restraints on alienation.

Issue

Whether the deed language was entirely void as an absolute restraint on alienation, or whether the invalid anti-transfer clause was severable and the remaining use restriction validly created a defeasible estate. More specifically, the question was whether the requirement that the property be used by the nonprofit lodge was a valid use condition rather than merely an impermissible restraint on who could use the land.

Rule

Conditions restraining alienation, when repugnant to the interest created, are void. But if a deed contains a severable use restriction and the grantor's intent is clear from the deed and surrounding circumstances, that use restriction may create a fee simple subject to a condition subsequent, enforceable by reverter or power of termination, even though it may hamper alienation.

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In Fresno, Elena Ruiz conveys a vacant lot by gift deed to Cedar Lantern Arts Guild, a nonprofit corporation formed to promote community theater. The deed states: "The property is for the use and benefit of the Guild only; and if the Guild ceases to use the property for its organizational purposes, or if the Guild sells or transfers any part of the property, title shall revert to Elena Ruiz, her heirs, or assigns."

If the Guild brings a quiet title action arguing that the entire clause is void because it includes a ban on sale, what is the best result?

Explanation. The majority opinion treats an absolute restraint on alienation as void, but allows a separate and severable use restriction to stand if the deed, read as a whole and in light of surrounding circumstances, shows clear grantor intent. Because the clauses are stated disjunctively here, the invalid anti-transfer language does not necessarily nullify the use condition. That remaining condition can create a fee simple subject to a condition subsequent enforceable by power of termination.