Spring Semester 2013
Life Estates and Waste; An Introduction to Trusts
1. In Melms v. Pabst Brewing Co., the life tenant of a old mansion tore down the mansion to expand its brewery operations (which were located on the adjacent property). The mansion itself was in livable condition, and would've cost $250,000 if rebuilt, but the adjacent property was used for industrial purposes (brewery and related businesses), and the land's value if used to expand the brewery was substantially higher than if had continued to be used as a house. The holders of the remainder sued the life tenant to recover damages equal to the cost of rebuilding the mansion. The court refused to award damages, characterizing the life tenant's action as "ameliorating waste" and concluding that the life tenant's conduct was not actionable given the change in circumstances.
Is that an appropriate result? Should the holders of the future interest be able to have the land preserved as it was before the life estate was created? Why or why not?
2. Consider the following questions about the dispute in Baker v. Weedon:
a. Why was the trial court willing to order a sale of the property in fee simple absolute over the objection of John's grandchildren? In contrast, why was the state supreme court unwilling to order such a sale?
b. John's grandchildren argue that the land's current value is approximately $168,000, and that the land is expected to be worth approximately $336,000 in four years due to expected appreciation associated with the highway construction. If this is accurate, is this a legitimate basis upon which the court should refuse to order an immediate sale of the land in fee simple (over the grandchildren's objection)? If you were arguing the case on behalf of Anna, how would you respond to the grandchildren's evidence regarding the valuation of the land (both today and four years hence)?
3. Is there any good reason to continue to allow the creation of legal life estates in land? Would it be preferable instead to adopt the English approach (under which one can no longer create a legal estate for life)? What would be the benefits and/or shortcomings of that sort of approach?
4. Suppose that O, owner of Blueacre, dies, leaving a will that devises Blueacre "to First Bank, as Trustee for my wife for her life, then to my children." Six months later, First Bank decides to sell Blueacre (previously used as a farm and on which the wife and children have been living) to Wal-Mart, which is planning to open a Supercenter. O's wife and children file suit against the Trustee to block the sale, making three arguments: (a) O hated Wal-Mart and would not have agreed to have the land sold to Wal-Mart (assume this is true), (b) the Trustee is breaching its duty to the beneficiaries of the trust by selling Blueacre and forcing them out of possession, and (c) the Trustee is breaching its duty to the beneficiaries of the trust because the price for the proposed sale is not high enough. Which, if any, of these arguments should entitled O's wife and children to relief?