Davis v. DavisÂ
250 N.C. App. 185
N.C. Ct. App.2016Background
- Mrs. Dorothy C. Davis and her husband owned a Dare County beach property; in 2009 they reserved a life estate for themselves and conveyed the remainder to an LLC owned by three children (including Melvin L. Davis, Jr. and J. Rex Davis).
- The Deed reserved a life estate "personal to the use of the Grantors" and provided it "may not be utilized by any other person, nor may it be reduced to a cash value," and must "remain . . . available for their individual and personal use without interference from either the remaindermen."
- Mr. Davis died in 2012, leaving Mrs. Davis as sole life tenant. Plaintiffs (two children/remaindermen) sent a letter asserting the Deed forbids Mrs. Davis from renting the property for income.
- Mrs. Davis subsequently rented the property through a real estate agency, prompting Plaintiffs to sue for declaratory relief and an injunction to prevent her from renting without LLC consent.
- Cross-motions for summary judgment were filed; the trial court granted summary judgment to Mrs. Davis, holding the Deed’s restrictive language was void as an unreasonable restraint on alienation. Plaintiffs appealed and the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Deed’s language prohibiting use of the life estate for income (including renting) is valid | The Deed creates a valid restriction: because Mrs. Davis reserved the life estate herself, the restraint should be enforceable against her | The restraint is an unreasonable, unlimited restriction on alienation and therefore void under public policy | The restraint is an unlimited restraint on alienation and is per se void; summary judgment for Mrs. Davis affirmed |
| Whether a self-imposed restraint (reservee also the life tenant) changes the analysis | The fact Mrs. Davis created and signed the reservation validates the restriction | Signature or self-imposition does not cure an otherwise invalid restraint | Self-imposition does not validate an otherwise invalid unlimited restraint; precedent bars enforcement |
Key Cases Cited
- Smith v. Mitchell, 301 N.C. 58, 269 S.E.2d 608 (1980) (establishes that unlimited restraints on alienation are per se invalid but reasonable restraints may be upheld)
- Lee v. Oates, 171 N.C. 717, 88 S.E. 889 (1916) (applies restraints-on-alienation doctrine to life estates and rejects argument that a life tenant’s assent validates an otherwise void restraint)
- Crockett v. First Fed. Sav. & Loan Assoc. of Charlotte, 289 N.C. 620, 224 S.E.2d 580 (1976) (reaffirms that restraints doctrine applies to life estates)
- Pilley v. Sullivan, 182 N.C. 493, 109 S.E. 359 (1921) (voids unlimited restraint on alienation attached to life estate as contrary to public policy)
- Wool v. Fleetwood, 136 N.C. 460, 48 S.E. 785 (1904) (invalidates will provision prohibiting a life tenant from selling the life estate)