Rutledge v. Feher, COA 16-1287 9/5/2017
Calling the Roll on Contingent Remainders
Chris Burti, Vice President And Senior Legal Counsel

This case involves a general warranty deed conveying a life estate to the grantors' children and a future interest to certain of the grantors' grandchildren. One of the grandchildren brought this action, seeking a declaratory judgment as to their rights and interest in the subject property and an injunction prohibiting Defendants from transferring any ownership interest they have in the property.

Based on the language of the deed at issue, the trial court concluded that Plaintiff Linnie Price Rutledge and Defendant Lisa Viele Feher both hold a contingent remainder interest in the property. Further, the trial court concluded that the class of grandchildren will not close and cannot be determined until the death of Helen Viele Price, nor can the individuals in which the remainder interest vests be determined until the death of Helen Viele Price. 1 After careful review, we affirm the trial court's decision.

Background
A couple owned land in North Carolina (the "Property"). They had four children together, three of whom had several grandchildren. The couple executed a general warranty deed (the "Deed") to the Property retaining a life estate for themselves, conveying a life estate to their four children and a fee simple remainder interest to their grandchildren. In pertinent part, the precise language of the Deed reads:

That [the couple] . . . have given, granted, bargained, sold and conveyed and by these presents do hereby give, grant, bargain, sell and convey unto [the four children], subject to the exceptions, reservations and restrictions, if any, and together with any rights-of-way, if any, hereinafter state, a life estate, said life estate to continue until the death of the last survivor of the four above-named children; and upon the death of the last of the four above-named children, fee simple title is to vest in our grandchildren, the living issue of the four above-named children, all of that certain piece, parcel or tract of land, situate[d], lying and being ... but reserving, however, unto Grantors, a Life Estate in said lands . . . .(Emphasis added).

The husband and wife couple died in 1987 and in 2002 respectively. For simplicity, we will not lay out in detail how intestate title would have devolved among the respective children and grandchildren via intestacy, however at the time of execution of the Deed, all seven of the children and grandchildren in the case were alive.

One grandchild joined by her spouse, (collectively, "Plaintiffs") commenced this action seeking declaratory judgment resolving the parties' respective rights and obligations in the Property pursuant to the Deed. They contended that she and her brother were the sole owners of the property upon the passing of their mother, the last of the life tenant children to die. At the time the complaint was filed, the last life tenant was living, but passed away after the entry of the trial court's judgment and the appeal. The plaintiff and her brother were the only living grandchildren of the grantor couple. The rest of the defendants were, or putatively claimed through, the living great-grandchildren of the grantor couple.

After considering the pleadings, stipulations, and the Deed, the trial court concluded:

1. The plaintiff and her brother each hold a contingent remainder interest in the subject property (the last living life tenant, their mother, had not yet passed away).
2. The class of grandchildren will not close and cannot be determined until the death of [the last living life tenant].
3. The individuals in which the remainder interest vests cannot be established until the death of [the last living life tenant].

Three issues were raised on appeal: (1) whether the trial court erred in determining that the plaintiff and her brother hold a contingent remainder interest in the Property rather than a vested remainder subject to open or partial divesture; (2) whether the trial court erred in determining that the class of grandchildren cannot be determined until the death of the last living life tenant; and (3) whether the trial court erred in determining that the individuals in which the remainder interest vests cannot be determined until the last life tenants death.

The Court of Appeals determine that the outcome of the case depends upon the interpretation of the granting language of the Deed based on the canons of construction under North Carolina common law. The cornerstone canon dictates that in construing deeds, the court must determine the intent of the parties based on the written language they used and give that intent effect. (citations omitted) this doctrine has been consistently applied by our appellate courts and stated succinctly by the North Carolina Supreme Court as follows:

Whatever the technicalities of the law may formerly have required in the construction of deeds, the modern doctrine does not favor the application of such technical rules as will defeat the obvious intention of the grantor - not the unexpressed purpose which may have existed in his mind, of course, but his intention as expressed in the language he has employed; for it is an elementary rule of construction that the intention of the parties shall prevail, unless it is in conflict with some unyielding canon of construction or settled rule of property, or is repugnant to the terms of the grant. Such intention as a general rule must be sought in the terms of the instrument; but if the words used leave the intention in doubt, resort may be had to the circumstances attending the execution of the instrument and the situation of the parties at that time . . . .

Seawell v. Hall, 185 N.C. 80, 82, 116 S.E. 189, 190 (1923) (emphasis added).

The Court of Appeals recognized that where the terms of the deed are unambiguous, they are to be followed exactly without admitting parol evidence. (citations omitted). The appealing defendants argued that the Deed conveyed to them a vested remainder subject to partial divestment by after-born children rather than. As argued by the plaintiffs, a contingent remainder in the grand children subject to partial divestment by increasing the class of grandchildren, and also by full divestment by any grandchild's failure to survive the life tenant.

As the opinion states: "Appellants contend that, as heirs of the Vieles' son Dwight, interest at the moment of its creation. Their argument rests on Buchanan v. Buchanan, 207 N.C. App. 112, 698 S.E.2d 485 (2010), in which this Court stated,

[A] remainder is vested, when, throughout its continuance, the remainderman and his heirs have the right to the immediate possession whenever and however the preceding estate is determined; or, in other words, a remainder is vested if, so long as it lasts, the only obstacle to the right of immediate possession by the remainderman is the existence of the preceding estate; or, again, a remainder is vested if it is subject to no condition precedent save the determination of the preceding estate.

Id. at 118, 698 S.E.2d at 489 (citation omitted). Accordingly, Appellants claim that the Vieles' seven then-living grandchildren obtained a vested remainder subject to open or partial divesture at the moment of the Deed's execution and that the class of grandchildren intended to take pursuant to the Deed was therefore immediately ascertainable."

In like manner: "Plaintiffs counter that the plain language of the Deed instructs that title shall not vest in any grandchildren until the death of the last of the Vieles' children. To conclude that title vests at any point prior to the death of the last of the Vieles' living children would blatantly disregard the grantors' intent as expressed in the Deed. Furthermore, because title cannot vest until the last of the Vieles' children dies, the Vieles' living grandchildren have only a contingent remainder interest in the Property as they must outlive the last of the living children in order for their title to the Property to vest.

Hence, the dispute is whether the grandchildren's interest is vested or contingent.

The distinction between a vested and a contingent remainder is the capacity to take upon the termination of the preceding estate. Where those who are to take in remainder cannot be determined until the happening of a stated event, the remainder is contingent. Only those who can answer the roll immediately upon the happening of the event acquire any estate in the properties granted.

Strickland, 259 N.C. at 84, 130 S.E.2d at 25 (citing Wimberly v. Parrish, 253 N.C. 536, 117 S.E.2d 472 (1960); Parker v. Parker, 252 N.C. 399, 113 S.E.2d 899 (1960); Wachovia Bank & Trust Co. v. Schneider, 235 N.C. 446, 70 S.E.2d 578 (1952)) (citations omitted); see also Hollowell v. Hollowell, 107 N.C. App. 166, 174, 420 S.E.2d 827, 832 (1992) ("The triggering event for the passage or vesting of the contingent remainder in this case is the death of each of the two life tenants. (citation omitted))."

The opinion may have been clearer if this court had employed the same analysis used in prior appellate decision that not only analyzed 'when' the triggering even occurs, but also limits who takes because of a 'survival' requirement. While the opinion properly concludes that the trial court did not err in concluding that "[t]he class of grandchildren will not close and cannot be determined until the death of [the last living life tenant]," and "[t]he individuals in which the remainder interest vests cannot be established until the death of [the last living life tenant]" it does not clearly note that this is a survival requirement and the analysis may have benefited from a study of Justice Branch's opinion in Kale v. Forrest, 278 N.C. 1, 178 S.E.2d 622 (1971).

When struggling with the interpretive issues presented by class gifts in remainder, we recommend a review of Class Gifts in North Carolina-when Do We "Call the Roll" 21 Wake Forest L. Rev 1 (1985-1986) (Wake Forest Law Review) as illuminating.