Article by John Makdisi
It is accepted doctrine among future interest scholars that an executory interest cannot vest in interest until it vests in possession. As a basic rule inculcated in the mind of the first-year property student, this proposition is a crucial factor for determining the validity of executory interests under the Rule against Perpetuities. It is therefore startling to be informed by one academic that this rule no longer exists in certain types of cases:
In [one] group of cases executory interests have been held to vest in interest. These cases have to do with gifts that are vested in interest with possession postponed. Take a bequest of ‘$10,000 to A, to be paid at twenty-one.’ The gift is said to be vested with possession postponed. While few, if any, courts have called the gift an executory interest, essentially that is what it is. The basic difference between present interests and future interests is that the former are entitled to possession whereas the latter are not. If A has no right to possession, his interest is not properly a present interest, but a future interest. His interest cannot be a remainder. It must be an executory interest. If A is age eleven at testator's death, the gift is not distinguishable from a gift of ‘$10,000 to A ten years after my death,’ which would create an executory interest in A.
This rejection of the orthodox view that executory interests can vest only in possession is supported by the Texas Court of Civil Appeals, which states:
[W]e overrule appellees' proposition: ‘Executory interests are not vested until they take effect in possession’; and their proposition: ‘The executory devise to the grandchildren, to be good, must vest in possession within twenty-one years after lives in being.’ Whatever may be the law on this point in other states . . . it is our conclusion that in Texas equitable executory devises can vest prior to the termination of the trust. So, an estate, whether a remainder or an executory devise or interest is vested within the Rule when it is vested in interest; it can vest in interest before it vests in possession; the requirements of the Rule in this respect are complied with when a future estate or interest becomes vested in interest, regardless of when it becomes vested in possession.
Is this rejection of the orthodox view legitimate? Are there in fact some executory interests that are not subject to the rule that vesting takes place only in possession? Professor Dukeminier's argument is basically that there is no such thing as a present interest with possession postponed since a present interest entitles one to possession, therefore, the bequest to A to be paid at age twenty-one is not distinguishable from an executory interest. This is not technically true. For example, a person who owns land and rents it to another individual retains a present interest with possession postponed. He has a present fee simple absolute subject to a term of years.
It is interesting to note, however, that Professor Dukeminier classifies the present interest with possession postponed as an executory interest in order to further his argument that executory interests are like vested remainders and therefore should be called such. The question that actually needs to be answered is why the $10,000 bequest should be treated as vested in interest in the first place. This bequest resembles in all apparent particulars the traditionally conceived executory interest which takes in possession at some future date and which has no intervening estate to support it. Such an executory interest vests only in possession and, unlike a vested remainder, would be void under the Rule against Perpetuities if it could take in possession more than twenty-one years after a life in being at the creation of the interest. Why is the $10,000 bequest not treated as such? An answer to this question may shed some light on whether one can justifiably call the $10,000 bequest to A to be paid at age twenty-one an executory interest or whether there is some distinguishing characteristic which sets it apart. For this, a little history is appropriate.
The distinction between executory interests and interests like the bequest described above finds its basis, according to Professors Leach and Logan, ‘in the Roman Law, which was imported in England via the Canon Law, the Ecclesiastical Courts, Swinburne on Wills (1590) and the priestly status of the early Chancellors.’ Present interests with possession postponed developed along a path influenced by the civil law totally different from that of executory interests in the common-law courts. The reason for this bifurcation is found in the dual court system. Between the time of William the Conqueror and Henry II, the jurisdiction of the ecclesiastical courts was separated from that of the lay courts, and the ecclesiastical courts exercised jurisdiction over testamentary and intestate succession to personal property. The ecclesiastical courts did not administer the common law, which recognized the king as sovereign, but rather canon law, which recognized the Pope and which was studied in conjunction with Roman civil law, drawing on the latter for many of its doctrines and procedures. As a result, the divergence in doctrine between the secular and the church courts produced different rules for the property interests governed by each court. The interests governed by the ecclesiastical courts consisted primarily of chattels bequeathed to the Church, as opposed to the freehold interests governed by the common-law courts. The development of the concept of seisin provides one of the earliest examples of divergence between the property laws of these two judicial systems.
About the Author
John Makdisi. Assistant Professor of Law, Cleveland-Marshall College of Law, Cleveland State University; B.A. 1971, Harvard College; J.D. 1974, University of Pennsylvania Law School; S.J.D. 1985, Harvard Law School.
Citation
59 Tul. L. Rev. 366 (1984)