Anti-alienation clause upheld

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An anti-alienation clause in a will is enforceable, the Wisconsin Court of Appeals held on May 1.

But that doesn’t mean such clauses aren’t fraught with peril.

In 1984, Lester Fohl executed a will, granting the residue of his property to his four children, in equal shares, share and share alike.

The provision added, “In the event that either Sally, Gerald, David or Sue desire to sell their share in the property up north, it must be sold to one of the four and for the amount of the appraisal in 1973, namely $8,000 total.”

Lester died in 1988, and the property was distributed accordingly.

In 2001, despite the provision in the will, David bought Sue’s share for $8,500. A 2003 appraisal revealed the property was worth $175,000.

David tried unsuccessfully to convince Gerald and Sally to sell their shares to him, and then sought partition.

Vilas County Circuit Court Judge Robert E. Kinney granted summary judgment in favor of Gerald and Sally, holding that partition would conflict with the will. The court also found partition would be inequitable, because David had purchased Sue’s share for far below market value.

David appealed, but the court of appeals affirmed in a decision by Judge Michael W. Hoover.

The court first rejected David’s argument that the will restricts only alienation, not partition. Citing 68 C.J.S. Partition sec. 25 (1998), for the proposition that a limitation on partition can be implied or express, and the clear intent of the testator that the property remain intact, the court concluded that the restriction implicitly restricts partition, as well.

Second, the court rejected David’s argument that the restriction is an unlawful restraint on alienation, because it is not reasonably limited in its effect to a proper time period.

David analogized his situation to that in a Florida case, Vinson v. Johnson, 931 So.2d 245 (Fla.App.2006). In that case, the will only permitted sale by the heirs if all nine agreed.

The court of appeals distinguished Vinson, however, because there, some of the heirs lived on the property while others were merely burdened with taxes, and thus, their right to enjoy the property was illusory.

In the case at bar, in contrast, none of the parties uses the property as a primary residence, but each is allowed to use the property for vacations as they wish. In addition, David has a way to dispose of his interest by selling to a sibling.

Third, the court considered the application of arguably applicable Wisconsin statutes.

Section 842.02(1) prohibits a partition action if there is an agreement between the parties prohibiting partition for a period not to exceed 30 years.

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The rule against perpetuities, sec. 700.16(1)(a), provides, “A future interest or trust is void if it suspends the power of alienation for longer than … a life or lives in being plus a period of 30 years.”

The court questioned whether sec. 842.02(1) applied, because the relevant document was a will, not an agreement between the parties.

If the rule against perpetuities applies, on the other hand, the restraint is valid, because it is only for four lives in being, when it could be for those lives, plus 30 years.

Ultimately, however, the court declined to decide what time limit exists, because partition is an equitable remedy, rather than a legal remedy, and the court concluded that David was bound by equitable principles.

The court found that the restrictions were for a reasonable purpose and a reasonable time. Thus, because David was free to decline the bequest, the court held he was bound by it. The court also noted that David had obtained Sue’s share for far below market value.

Accordingly, the court affirmed.

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David Ziemer can be reached by email.