Storke v. Penn Mutual Life Insurance
61 N.E.2d 552, 390 Ill. 619, 1945 Ill. LEXIS 329 (1945)
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Rule of Law:
Estates upon conditional limitation terminate automatically upon the happening of a prescribed contingency, while estates upon condition subsequent require re-entry by the grantor or heirs to defeat the estate upon breach. Courts disfavor conditions subsequent and require an express right of re-entry where not provided, and will not enforce such conditions where there has been waiver, acquiescence, or significant changes in neighborhood conditions.
Facts:
- In 1889, Jay E. Storke and Bernard Timmerman subdivided approximately forty acres of land in Cook County, outside the city limits of Chicago, into lots.
- Part of the subdivided property was conveyed by deeds containing a covenant stipulating that 'no saloon shall be kept and no intoxicating liquors be sold or permitted to be sold' on the premises, and that 'in case of breach... said premises shall immediately revert to the grantors, and the said party of the second part shall forfeit all right, title and interest'.
- Between 1904 and 1924, heirs-at-law of Timmerman or Storke had numerous instances of releasing and waiving the restriction contained in the deeds for other properties in the subdivision.
- In 1926, Penn Mutual Life Insurance Company purchased a first mortgage on the premises involved in this dispute for $42,500.
- On November 19, 1934, Penn Mutual Life Insurance Company acquired title to the premises by quitclaim deed, which did not contain the covenant prohibiting saloons, and subsequently released the mortgage lien and the mortgagor's personal liability.
- Since 1934, Edward Walsh occupied the premises as a tenant of Penn Mutual Life Insurance Company and operated it as a saloon or tavern.
- The subdivision has become a built-up business section of Chicago, with at least sixteen saloons in the neighborhood of the property involved or in adjoining blocks, and liquor has been almost continuously sold in this subdivision since 1933 (the date of the repeal of the prohibition amendment).
- The plaintiffs are the heirs-at-law of Jay E. Storke.
Procedural Posture:
- Appellants (plaintiffs), as heirs-at-law of Jay E. Storke, prosecuted an action in the Circuit Court of Cook County, Illinois (trial court/court of first instance).
- On December 29, 1942, plaintiffs filed their complaint asking the court to establish title in the plaintiffs and the unknown heirs of Timmerman, decree that defendant Penn Mutual Life Insurance Company had no right or title, ascertain the interests of the plaintiffs and Timmerman's heirs, partition the premises, and perpetually enjoin the defendant Edward Walsh from maintaining a tavern.
- The case was tried upon a stipulation of facts.
- The Circuit Court of Cook County denied the plaintiffs' right to recover and confirmed the title of the appellee, Penn Mutual Life Insurance Company.
- The plaintiffs (appellants) appealed the decision of the Circuit Court to the Supreme Court of Illinois.
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Issue:
Does a deed covenant providing for immediate reversion and forfeiture of all interest upon breach of a restriction against selling intoxicating liquors create an estate upon conditional limitation, allowing for automatic termination, or an estate upon condition subsequent, requiring re-entry to revest title, and can such a condition be enforced by remote heirs given a history of waiver and changed neighborhood conditions?
Opinions:
Majority - Mr. Justice Gunn
No, the deed covenant did not create an estate upon conditional limitation but rather a condition subsequent, which the plaintiffs are not entitled to enforce due to the absence of a right of re-entry provision, their waiver of the condition, and the changed neighborhood circumstances. The court distinguished between an estate upon conditional limitation and a condition subsequent. A conditional limitation defines the maximum duration of an estate, causing it to terminate automatically upon the happening of a contingency without any action from the grantor (it is self-operative). In contrast, a condition subsequent renders an estate liable to be defeated upon a breach, requiring an affirmative act (entry or claim) by the grantor or their heirs to revest title. Courts disfavor forfeitures and prefer to construe provisions as conditions subsequent, strictly construing them against forfeiture. The deeds in question provided for 'immediate reversion' but did not contain an express right of re-entry. Without a right of re-entry, title does not automatically revest in the original grantor or heirs upon breach of a condition subsequent, and a court of equity will not aid a forfeiture where no such right is provided. Therefore, the restriction did not constitute a conditional limitation, and as a condition subsequent, the plaintiffs had no title to support their partition suit without having exercised a right of re-entry that was not reserved. Furthermore, the court found that the plaintiffs had actual or constructive knowledge of liquor sales for a significant period, rendering it inequitable to divest the defendant's title, which was purchased for valuable consideration and in good faith. Additionally, the plaintiffs and their attorneys had given releases to other property owners in the subdivision, contributing to a substantial change in the neighborhood from that contemplated in the original grant. This change in circumstances and the grantors' (or their assigns') own acts in allowing breaches would bar enforcement even if the provision were construed as a restrictive covenant. Finally, even if the appellants' contention that the deed contained a conditional limitation were correct, the action would be barred by the Statute of Limitations, as the saloon operation commenced before the appellee obtained the deed, and the appellee held color of title in good faith and paid taxes for more than seven years.
Analysis:
This case is critical for clarifying the distinction between conditional limitations and conditions subsequent, emphasizing that courts disfavor forfeitures and will strictly construe language creating such interests. It highlights that the absence of an explicit right of re-entry, coupled with grantor acquiescence, waiver, or significant changes in neighborhood conditions, can render even an otherwise valid condition subsequent unenforceable. For law students, this case underscores the importance of precise drafting in deeds to achieve intended future interests and illustrates how equitable doctrines and statutes of limitation can preclude enforcement of long-dormant restrictions, impacting land use and title certainty.
