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Keywords

appealtrialcorporation

defendantappealtrialcorporation

Related Cases

City of Klamath Falls v. Bell, 7 Or.App. 330, 490 P.2d 515

Facts

In 1925, the Daggett-Schallock Investment Company conveyed land to the City of Klamath Falls for use as a library, stipulating that the city would hold the land 'so long as' it complied with the conditions of use. The city built a library on the site in 1929, which operated until 1969 when the city ceased library services at that location. Following the closure, the city filed a complaint against the heirs of the corporation's shareholders to determine the rights under the deed, as the corporation had been dissolved in 1927.

In 1925, a corporation conveyed certain land to the city of Klamath Falls as a gift for use as the site for a city library. The deed provided, among other things, that the city should hold the land ‘so long as' it complied with that condition with regard to its use.

Issue

Did the termination of the city's use of the land as a library cause the title to pass to the descendants of the shareholders of the donor corporation, or did the title remain with the city?

The question presented by this appeal is, ‘Does the title to the land remain in the city or did the termination of use as a library cause title to pass to the descendants of the shareholders of the donor-corporation (now dissolved)?’

Rule

The court applied the principle that a fee simple determinable automatically terminates upon breach of the condition, reverting the title to the original grantor or their heirs.

We conclude that the estate that passed to the city under this deed was a fee simple on a special limitation, which is also known as a fee simple determinable, or a base or qualified fee.

Analysis

The court found that the deed created a fee simple determinable in favor of the city, which terminated when the city ceased to use the land for library purposes. The court noted that the attempted gift over to the shareholders' heirs was void under the rule against perpetuities, but this did not grant the city an absolute interest in the property. Instead, the possibility of reverter remained with the heirs of the original grantor corporation.

The trial judge correctly found that the gift over to Fred Schallock and Floy R. Daggett, their heirs and assigns, was void Ab initio under the rule against perpetuities.

Conclusion

The Court of Appeals reversed the trial court's decision, ruling that the title to the land passed to the heirs of the shareholders of the donor corporation upon the city's termination of library use.

Reversed.

Who won?

The heirs of the shareholders of the Daggett-Schallock Investment Company prevailed because the court determined that the city's title to the land reverted to them upon the cessation of library use.

The parties further agree that the defendants in this case were all of the heirs of Daggett and Schallock.

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