Smith v. Mitchell , 44 N.C. App. 474 ( 1980 )

261 S.E.2d 231 (1980) 44 N.C. App. 474

W. Osmond SMITH, III
v.
Jack MITCHELL and wife, Laura Mitchell, and Thomas G. Barber and wife, Sandra M. Barber.

No. 7917SC323.

Court of Appeals of North Carolina.

January 8, 1980.

W. Osmond Smith, III, Yanceyville, and Ramsey, Hubbard & Galloway, by Mark E. Galloway, Roxboro, for plaintiff appellant.

Latham, Wood & Balog, by B. F. Wood, Graham, for defendants appellees.

HEDRICK, Judge.

This case presents squarely for our resolution the question of whether any restriction on a landowner's right to freely alienate his property, even though limited as to time and certain as to price, is void as an invalid restraint on alienation. We hold that it is. Summary judgment, therefore, was properly entered for defendants.

We are cognizant that, in so holding, we stand in apparent opposition to the jurisprudence of a number of jurisdictions which recognize so-called "pre-emptive rights" whereby the grantee, if he wishes to sell, must first offer the property to the grantor at a given price or at a price which can be determined according to a prearranged formula. See Annot., 40 A.L.R. 3d 943 (1971) and cases cited therein. Plaintiff urges that such is the law in North Carolina and that the restrictive provision in question here constitutes such a pre-emptive right in his favor. We reject plaintiff's view of the rule in our State. Moreover, we are confident that the long-standing principles laid down in Hardy v. Galloway, 111 N.C. 519, 15 S.E. 890 (1892), represent the better-reasoned and more enlightened view.

In Hardy, vendors of a tract of land sought to retain for themselves, their heirs and assigns, the right to repurchase the land "when sold." The trial court found the provision void, and our Supreme Court affirmed. Pointing out that the right of alienation is "an inseparable incident to an estate in fee", the Court held as follows:

The provision, . . . can . . . take effect, if at all, as a condition subsequent, and viewed in this light we cannot hesitate in deciding that the restriction upon alienation attempted to be imposed after the grant of the fee, is repugnant to the nature of the estate granted, contrary to the policy of the law, and therefore inoperative. . . . [T]he law does not recognize or enforce any condition which would directly or indirectly limit or destroy [the] privilege [of free alienation]. . .

Id. at 523, 15 S.E.at 890. [Our emphasis]

Plaintiff insists that Hardy is different from and does not control the resolution of this case for the reason that, in Hardy, no amount was fixed as purchase-money, nor was the right to repurchase definite as to time. While we recognize that the two cases are distinguishable on those grounds, we do not agree that the holding of Hardy is so narrow. We interpret Hardy to establish for this State the sound policy that a grant of the estate in fee vests the owner with the inseparable and unlimited right of free alienation. No restraint, however slight, whether direct or indirect, express or implied, may be imposed to frustrate or diminish that right. As was noted in Christmas v. Winston, 152 N.C. 48, 67 S.E. 58, 59 (1910), restraining the right of "free and unlimited alienation" for even a single day is repugnant to the fee, unreasonable and void.

Our interpretation of the law as established by Hardy is bolstered by the fact that numerous opinions of our Courts, as well as the observations of annotators and legal commentators, have construed the case to so hold. See, for example, Annot., 40 A.L.R. 3d 942 (1971) which cites Hardy as a successful attempt "to invoke the common-law rule concerning restraints on alienation to invalidate pre-emptive rights contained in deeds." Professor Webster has noted that North Carolina law, as laid down by Hardy, rejects restraints on alienation disguised as "pre-emptive rights." Webster, Real Estate Law in North Carolina § 346 (1971). A survey of North Carolina case law in 1955 cited Hardy as holding "void a right reserved in the grantor and his heirs to repurchase the land when sold." Third Annual Survey of North Carolina Case Law, 34 N.C.L.Rev. 1, 72 (1955). See also Christopher, Spendthrift and Other Restraints in Trusts: North Carolina, 41 N.C.L.Rev. 49 (1962). Accord, Norwood v. Crowder, 177 N.C. 469, 99 S.E. 345 (1919); Lee v. Oates, 171 N.C. 717, 88 S.E. 889 (1916) [quoting approvingly from Dick v. Pitchford, 21 N.C. 480, where Justice Gaston observed: "The capricious regulations which individuals would fain impose on the enjoyment and disposal of property must yield to the fixed rules which have been prescribed by the supreme power as essential to the useful existence of property."]; Schwren v. Falls, 170 N.C. 251, 87 S.E. 49 (1915); Latimer v. Waddell, 119 N.C. 370, 26 S.E. 122 (1896).

As recently as 1974, this Court confirmed the principle that any restraint on alienation is void. Jenkins v. Coombs, 21 N.C.App. 683, 205 S.E.2d 728 (1974) [citing with approval Hardy v. Galloway]. In our opinion, public policy dictates that we reconfirm the rule today. To allow the "pre-emptive right" which the plaintiff herein proposes obviously would deprive the owner of the fee from selling it to whomever he wishes, or from selling at a low price to family or friends, or from giving the land away if he chooses. The inescapable conclusion follows that such a deprivation frustrates his right of free and unlimited alienation, and thereby contravenes public policy.

We hold that the "pre-emptive right" contained in Article XIV of the restrictive covenants sought to be imposed by plaintiff is repugnant to the fee, unreasonable and void. Accordingly, the judgment of the trial court granting the defendants' motion for summary judgment is

Affirmed.

ROBERT M. MARTIN and WELLS, JJ., concur.