Trear v. Chamberlain
388 P.3d 607
| Kan. Ct. App. | 2017Background
- In 1986 Trear purchased land from Leonard and Susan Chamberlain; the written contract (drafted by the sellers' attorney) included a right of first refusal (ROFR) on adjoining Chamberlain land and a clause making the contract binding on heirs, legal representatives, and assigns.
- The ROFR provided that if the Chamberlains offered the adjoining land for sale, they would extend the first right of refusal to Trear to purchase at a price and terms mutually agreed; if no agreement, the ROFR would lapse.
- Leonard died in 2013; Susan offered the adjoining tract to Trear for $289,000 with a response deadline; Trear did not accept or counter; Susan later listed the property and ultimately sold a large portion (64 acres excluding the house tract) to third parties for $91,125.
- Trear sued to enforce his ROFR and to have title transferred; defendants moved for summary judgment.
- The district court held the ROFR (combined with the heirs/assigns clause) violated the common-law rule against perpetuities and thus was void, but found the statute of frauds satisfied; both sides appealed.
- The appellate court reversed the perpetuities ruling (holding the ROFR is a personal right that expires with Trear), affirmed the statute-of-frauds ruling, and remanded for further proceedings on factual issues including good faith of the sale.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ROFR violates the common-law rule against perpetuities | Trear: ROFR is valid (personal right) and vests in him | Chamberlain: ROFR plus heirs/assigns clause creates a transferable interest violating perpetuities | ROFR is a personal right to Trear, vests within lives in being; does not violate perpetuities (reversed) |
| Whether the contract satisfies the statute of frauds (identification of the land) | Trear: writing sufficiently identifies adjoining land and parties | Chamberlain: description "adjoining property" is too uncertain | Statute of frauds satisfied—party signed and adjoining property is sufficiently identifiable (affirmed) |
| Whether Trear lost ROFR by failing to respond to Chamberlain's $289,000 offer | Chamberlain: Trear’s inaction terminated his right | Trear: the offer did not trigger a bona fide third-party sale that would allow Chamberlain to sell without allowing him to match | Court: Trear was entitled to notice and opportunity to purchase at price of a bona fide third-party offer; initial $289,000 letter alone did not extinguish his ROFR; summary judgment on this issue inappropriate |
| Whether Chamberlain’s sale to third parties was in good faith (price disparity) | Trear: sale for $91,125 suggests bad faith and denial of ROFR | Chamberlain/Buyers: sale was lawful | Court: Good faith is a material factual issue precluding summary judgment for defendants; remand for further proceedings |
Key Cases Cited
- Henderson v. Bell, 103 Kan. 422 (1918) (older decision finding a perpetual preemptive right and fixed price violated the rule against perpetuities)
- Crawn v. French, 7 Kan. App. 2d 672 (1982) (preemptive right held personal to the buyer and not assignable, avoiding perpetuities problem)
- Barnhart v. McKinney, 235 Kan. 511 (1984) (court favors interpretations that make preemptive rights personal so they vest within lives in being)
- Gore v. Beren, 254 Kan. 418 (1994) (cotenancy preemption right treated as personal to signatories and not extending to successors, thus not violating perpetuities)