Story Case

Helen Grant owned a large tract of land in the city of Momence, Nebraska. She granted five acres of this land lying within the heart of the property to the Eastern and Atlantic Railroad Company. The deed contained the following words, "it being expressly understood by the parties that the said tract or parcel of land is not to be put to any other purpose than that of depot square, and that no business or improvements are to be put on the tract, except that which is immediately connected with the Western and Atlantic Railroad Company." Subsequently, the Western and Atlantic Railroad attempted to sell the property to the Great Northern Iron Company, the latter proposing to build one of its plants thereon. Helen Grant now contended that the stipulation in the deed was in the nature of a condition subsequent, and that this breach amounted to a forfeiture of the land, and gave her a right thereto. How should the court decide this point?

Ruling Court Case. Papst Vs. Hamilton, Volume 133, California Reports, Page 631; Volume 66 Pacific Reports, Page 10

An ancestor of Papst made a conveyance of land to a school association by a deed which contained the following stipulation: "Upon the condition, however, that the premises shall be used solely for the purpose of erecting, furnishing, keeping and maintaining thereon an academic or collegiate school for the purpose of educating the younger people and students in the higher as well as the more common and useful branches of education, and for no other purpose whatsoever." Subsequently the land came into the possession of Hamilton, and was not used for the purpose outlined in the deed. Papst now maintained that the clause created the conditioned estate, and, therefore, as an heir, he had a right to enter upon the land.

The opinion of the court: It was held that the clause contained in the deed created a conditioned estate in the grantees, and that a re-entry clause was not essential to authorize the grantor or his heirs to terminate the estate by re-entry after a breach of the condition!. Therefore, Papst should have possession of the land following his attempt to re-enter.

Ruling Court Case. Drucker Vs. Mclaughlin, Volume 235, Illinois Reports, Page 367

An ancestor of Drucker was the original owner of the property in question, and also that which surrounded it. He subdivided the entire property, selling a certain private way with the express condition that it should be kept open forever by the owner as a private way for access and egress for all the lot owners of the sub-division. Mr. McLaughlin became the owner of this private right of way and closed it. Thereupon Drucker, as an heir, asked for possession and demanded the property on the ground that it was a fee subject to this condition which had now come to pass, giving title to him. The question is, whether the stipulation in the deed, granting the private way was a condition with right of forfeiture to the heirs, or whether it was a mere covenant or promise running with the land.

Justice Vicker gave the opinion: "The presence of a re-entry clause, while not indispensable, is always important as evidence of an intention to impose a condition subsequent. Such a clause may make certain that which in its absence is left open to construction. The law, however, frowns upon forfeitures and will constitute the deed as not containing a condition subsequent, if the words can reasonably be interpreted to contain a covenant running with the land. It is reasonable to construe the deed in question as containing a covenant solely for the benefit of the contiguous land owners, and, therefore, the grantor's heirs had no interest in the property sold by the contiguous land owners." Judgment was given for McLaughlin.

Ruling Law. Story Case Answer

It is sometimes difficult to determine whether a stipulation in a deed amounts to a condition subsequent, resulting in a forfeiture if the condition happens, or whether the stipulation is a mere covenant running with the land for the benefit of contiguous land. If contiguous land has been retained by the grantor or sold to other persons, the stipulation will usually be construed as a covenant or promise running with the land, provided, of course, it is open to this construction. It may be upon this difference in the facts of the two Ruling Court Cases given above that we can base the difference in the conclusion of the courts in each one. Where a right of forfeiture, however, is expressly reserved and is reasonable, the courts will construe the stipulation as a condition subsequent, and give the right of re-entry, although the latter is not expressly reserved. This is true because re-entry is a necessary incident to forfeiture.

Thus, in a Missouri case, a deed contained an express stipulation that a failure to pay royalties, or an idleness of the mind for sixty consecutive days, should constitute ground upon which the grantor might declare a forfeiture. This was held to be lawful and reasonable, and would be enforced on breach of conditions subsequent.

In the case of Shreave vs. Norfolk the Western Bail-way Company, Volume 23 Law Reports Annotated, Page 771, we have a case similar to the Story Case. This was a conveyance of land to the railroad company for "depot and other railway purposes," and stated to be in consideration of the railway company agreeing to erect and maintain a depot on the land, but not containing any clause of forfeiture or re-entry for failure to do so. The court held that the deed vested a fee simple estate in the railroad company, and that the statement of the purposes for which the land was conveyed constituted merely an agreement or covenant on the part of the grantee to use the land for that purpose. A breach of this covenant gave right to an action for damages or an injunction, but not a forfeiture of the estate. This is our conclusion as to the law in the Story Case.