Chisholm died and left land to his two sons on the condition that they were not allowed to sell or transfer it for 25 years. Further, he states that they are not allowed to create a mortgage on the land, and that no other ordinary debts will allow creditors to seize the land. One of the sons mortgages his interest in the land, and defaults on his payments. The creditor seizes the property and sells it in an auction. Does this new purchaser take good title, or were the conditions in the will valid?
- Can conditions be placed on an absolute transfer of land?
Appeal allowed, limiting conditions void.
Davies, writing for the majority, states that the general rule is that no substantial restraints can be annexed to an absolute gift of property (alienation) that are inconsistent with its absolute character, or "repugnant". Placing a time-restriction on when the absolute rights come into effect is not an exception to this rule. Therefore this condition is void and the sons are allowed to sell the land if they wish as they have the absolute title in it.
- One cannot place "substantial" restraints on an absolute transfer of property (alienation) that are contrary to the absolute character of the interest; partial restrictions are permissible.
- Prohibition against incurring debt on the land is void for public policy; all of one's property is always liable for any debt incurred.
- There are four things to look at to determine if a restraint is "substantial":
- mode (types of transfer that have been limited);
- class of recipients;
- time period; and