Rule in Shelley's Case
Encyclopedia
The Rule in Shelley's Case is a rule of law that may apply to certain future interests
in real property
and trusts created in common law
jurisdictions. It was applied as early as 1366 in The Provost of Beverly's Case but in its present form is derived from Shelley's Case (1581), in which counsel stated the rule as follows:
The Rule was reported by Lord Coke
in England
in the 17th century as well-settled law
. In England
, it was abolished by the Law of Property Act 1925
. During the twentieth century, it was abolished in most common law
jurisdictions, including the majority of the United States. However, in states where the abrogation has been interpreted to apply only to conveyances made after abrogation, the relevance of the Rule today varies from jurisdiction to jurisdiction and in many states remains unclear.
The Rule is still in operation in all Canadian
common law jurisdictions (Quebec
being a civil law jurisdiction) with the exception of Manitoba
though it has made an appearance in case law only a few times in the last century.
was brought about because of a settlement made by Sir William Shelley
(1480–1549), an English judge, on an estate he purchased when Sion Monastery was dissolved. The decision was rendered by Lord Chancellor
Sir Thomas Bromley, who presided over an assembly of all the judges on the King's Bench
to hear the case during Easter term
1580–81. The rule existed in English common law long before this case was brought to the court, but Shelley's case gave the law its most famous application.
in the form of a remainder
in the heirs of that life tenant. It was the intention of the landowner or testator to allow the heirs of the life tenant, once ascertained at the natural expiration of his life estate, to take as purchasers by way of the original executed conveyance, and not by descent, avoiding the tax.
Thus, in a basic conveyance, "O grants Blackacre to B for life, then to B's heirs," absent the rule there was a life estate in B, and a contingent remainder in B's heirs. The Rule converted the contingent remainder in B's heirs into a vested remainder in B.
The Rule's effect ended there. After that, the doctrine of merger operated on the two successive freehold estates placed in the same purchaser (B's life estate and B's remainder in fee simple) and converted them into a single fee simple absolute in B.
B's heirs, necessarily ascertained only at B's death, could only take B's fee simple by descent and had to pay the tax.
Note: Living people have no heirs. B's children and B's heirs are not the same set of individuals. If B has children, they will only become B's heirs if they survive B, which is not guaranteed. It is important not to confuse "heirs presumptive" (which children probably are under most intestacy
statutes) and "heirs" (which children might become provided they survive the ancestor whose property to which they are entitled, absent contrary intent expressed in a will).
Thus, a conveyance to B for life, then to B's children, where B has living children C, D, and E, does not violate the Rule because the class members are ascertained, and new ascertained members may join the class so long as B, the class member producer, lives (plus nine months if he is male).
Discussion: The conveyance purports to create the following interests: life estate
in B, remainder in B's heirs. The remainder in B's heirs must be a contingent remainder because B's heirs are unascertained, the condition to be satisfied in order for the remainder to vest presumably being the death of B (see note to problem 1). The Rule in Shelley's Case operates on this transaction to defeat the intent of the grantor and change the interests that the grantor purported to give to B and (separately) to his 'heirs. After application of the Rule, the state of the title is now life estate in B, vested remainder in B in fee simple absolute. Because B has been conveyed two successive freehold estates, a second and independent doctrine, the Doctrine of Merger, operates on the life estate and remainder to turn B's interest into a fee simple absolute.
The court finally reads the transaction as "O conveys Blackacre to B and his heirs." That is, B takes a fee simple absolute.
Note to Problem 1: B is necessarily alive at the time of this conveyance; otherwise he could not take a life estate. If B were dead the transaction would be improbable; suffice it to say that any contingent remainder supported by such a hypothetical life estate would be destroyed, and the fee simple would remain in O as if no transfer occurred. Assuming then the necessary inter vivos
nature of this transfer, B's heirs are unascertained because living individuals have no heirs. Be sure you understand this. Only the dead have heirs. B must die in order for the world (and the court especially) to know who his heirs are. At the time of the transaction, a living person B may have an heir apparent
X, but if it were the intent of the grantor O to create a future interest in B's heir apparent X, the court will not read that intent into the phrase "to B's heirs;" it will apply the Rule and place the remainder in the ancestor. At his death, his properly ascertained heirs will be forced to take his fee simple absolute by descent or devise.
by deed. A remainder is a right "carved out" of the fee simple
(or what might be termed absolute ownership in plain English) which has some future interest (an interest of which the holder cannot yet make use at the time of the granting of the deed) so that, at some later date, the holder of the remainder (the future interest) would have ownership rights in the property and those future rights would have to be preserved. The rights could not be sold. It has been explained as an attempt to prevent the sale of property once transferred by putting such limiting words in the deed of transfer.
It is a classic example of common law
legal reasoning and the logic involved in the interpretation of legal text which is why it continues to be an important teaching tool in the study of the common law. However, while it is an important interpretation tool, it should not be confused with a rule of construction (such as the Doctrine of worthier title
) as it is a rule of law. The distinction is that a rule of law cannot be overcome by proof of the grantor's intent, while a rule of construction can be.
, Autumn 2003) believe that this explanation (to promote the right to transfer the land) of the origin of the Rule is inaccurate. In their view the Rule originated as the courts' response to an estate-planning technique in the 14th century, long before the litigation in Shelley's Case. A tax known as the "relief" had to be paid to the feudal lord (the Crown) when a tenant's heir inherited the land. To avoid this estate tax, if the grant to the land were framed in term of a life estate in the grantee followed by a remainder in the grantee's heirs, then upon the grantee's death his heirs would not inherit the land, but received it as a vested remainder. As a consequence, the heir would take the land without having to pay the relief. The courts could not abide such a transparent attempt to circumvent the tax system, and the Rule was invented to deal with this problem by converting these transfers into fee simples absolute so as to allow the relief to be collected upon the grantee's death. Later, when the relief was abolished, the Rule continued to survive in the common law due to inertia ("it is the genius of the common law to add, but not to subtract"), the "promote the right to transfer the land" explanation was concocted to explain the continued existence of the Rule. Note that it is not at all uncommon for rules of common law, once their original motivation falls away, to acquire a new justification, and in the process also, sometimes, a new meaning. Many examples of such processes are given in Oliver Wendell Holmes's The Common Law
.
As stated by Lord Edward Coke
in his argument for the defendant in the case:
Future interests
Future interests is the subset of actuarial math that divides enjoyment of property -- usually the right to an income stream either from an annuity, a trust, royalties, or rents -- based usually on the future survival of one or more persons ....
in real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
and trusts created in common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
jurisdictions. It was applied as early as 1366 in The Provost of Beverly's Case but in its present form is derived from Shelley's Case (1581), in which counsel stated the rule as follows:
The Rule was reported by Lord Coke
Edward Coke
Sir Edward Coke SL PC was an English barrister, judge and politician considered to be the greatest jurist of the Elizabethan and Jacobean eras. Born into a middle class family, Coke was educated at Trinity College, Cambridge before leaving to study at the Inner Temple, where he was called to the...
in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
in the 17th century as well-settled law
Precedent
In common law legal systems, a precedent or authority is a principle or rule established in a legal case that a court or other judicial body may apply when deciding subsequent cases with similar issues or facts...
. In England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
, it was abolished by the Law of Property Act 1925
Law of Property Act 1925
The Law of Property Act 1925 is a statute of the United Kingdom Parliament. It forms part of an interrelated programme of legisation introduced by Lord Chancellor Lord Birkenhead between 1922 and 1925. The programme was intended to modernise the English law of real property...
. During the twentieth century, it was abolished in most common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
jurisdictions, including the majority of the United States. However, in states where the abrogation has been interpreted to apply only to conveyances made after abrogation, the relevance of the Rule today varies from jurisdiction to jurisdiction and in many states remains unclear.
The Rule is still in operation in all Canadian
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
common law jurisdictions (Quebec
Quebec
Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
being a civil law jurisdiction) with the exception of Manitoba
Manitoba
Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...
though it has made an appearance in case law only a few times in the last century.
History
The litigationLawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
was brought about because of a settlement made by Sir William Shelley
Sir William Shelley
-Life:Born about 1480, he was the eldest son of Sir John Shelley and his wife Elizabeth , daughter and heir of John de Michelgrove in the parish of Clapham, Sussex...
(1480–1549), an English judge, on an estate he purchased when Sion Monastery was dissolved. The decision was rendered by Lord Chancellor
Lord Chancellor
The Lord High Chancellor of Great Britain, or Lord Chancellor, is a senior and important functionary in the government of the United Kingdom. He is the second highest ranking of the Great Officers of State, ranking only after the Lord High Steward. The Lord Chancellor is appointed by the Sovereign...
Sir Thomas Bromley, who presided over an assembly of all the judges on the King's Bench
King's Bench
The Queen's Bench is the superior court in a number of jurisdictions within some of the Commonwealth realms...
to hear the case during Easter term
Easter term
Easter term is the name of the summer term at the University of Cambridge, the University of Wales, Lampeter, University of Durham, and formerly University of Newcastle upon Tyne , in the United Kingdom...
1580–81. The rule existed in English common law long before this case was brought to the court, but Shelley's case gave the law its most famous application.
Issue
When an owner of land in fee simple died, the lord of the fee was entitled to "incidents of tenure" deriving from the descent to the heir (analogous to the modern day estate tax). Large landowners who desired the life tenant (who was perhaps the landowner himself, conveying through a straw party) to avoid the estate tax attempted to create a future interestFuture interest
In property law and real estate, a future interest is a legal right to property ownership that does not include the right to present possession or enjoyment of the property. Future interests are created on the formation of a defeasible estate; that is, an estate with a condition or event...
in the form of a remainder
Remainder (law)
A remainder in property law is a future interest given to a person that is capable of becoming possessory upon the natural end of a prior estate created by the same instrument...
in the heirs of that life tenant. It was the intention of the landowner or testator to allow the heirs of the life tenant, once ascertained at the natural expiration of his life estate, to take as purchasers by way of the original executed conveyance, and not by descent, avoiding the tax.
Thus, in a basic conveyance, "O grants Blackacre to B for life, then to B's heirs," absent the rule there was a life estate in B, and a contingent remainder in B's heirs. The Rule converted the contingent remainder in B's heirs into a vested remainder in B.
The Rule's effect ended there. After that, the doctrine of merger operated on the two successive freehold estates placed in the same purchaser (B's life estate and B's remainder in fee simple) and converted them into a single fee simple absolute in B.
B's heirs, necessarily ascertained only at B's death, could only take B's fee simple by descent and had to pay the tax.
Note: Living people have no heirs. B's children and B's heirs are not the same set of individuals. If B has children, they will only become B's heirs if they survive B, which is not guaranteed. It is important not to confuse "heirs presumptive" (which children probably are under most intestacy
Intestacy
Intestacy is the condition of the estate of a person who dies owning property greater than the sum of their enforceable debts and funeral expenses without having made a valid will or other binding declaration; alternatively where such a will or declaration has been made, but only applies to part of...
statutes) and "heirs" (which children might become provided they survive the ancestor whose property to which they are entitled, absent contrary intent expressed in a will).
Thus, a conveyance to B for life, then to B's children, where B has living children C, D, and E, does not violate the Rule because the class members are ascertained, and new ascertained members may join the class so long as B, the class member producer, lives (plus nine months if he is male).
Problems
1. O conveys Blackacre to B for life, then to B's heirs.Discussion: The conveyance purports to create the following interests: life estate
Life estate
A life estate is a concept used in common law and statutory law to designate the ownership of land for the duration of a person's life. In legal terms it is an estate in real property that ends at death when there is a "reversion" to the original owner...
in B, remainder in B's heirs. The remainder in B's heirs must be a contingent remainder because B's heirs are unascertained, the condition to be satisfied in order for the remainder to vest presumably being the death of B (see note to problem 1). The Rule in Shelley's Case operates on this transaction to defeat the intent of the grantor and change the interests that the grantor purported to give to B and (separately) to his 'heirs. After application of the Rule, the state of the title is now life estate in B, vested remainder in B in fee simple absolute. Because B has been conveyed two successive freehold estates, a second and independent doctrine, the Doctrine of Merger, operates on the life estate and remainder to turn B's interest into a fee simple absolute.
The court finally reads the transaction as "O conveys Blackacre to B and his heirs." That is, B takes a fee simple absolute.
Note to Problem 1: B is necessarily alive at the time of this conveyance; otherwise he could not take a life estate. If B were dead the transaction would be improbable; suffice it to say that any contingent remainder supported by such a hypothetical life estate would be destroyed, and the fee simple would remain in O as if no transfer occurred. Assuming then the necessary inter vivos
Inter vivos
Inter vivos is a legal term referring to a transfer or gift made during one's lifetime, as opposed to a testamentary transfer ....
nature of this transfer, B's heirs are unascertained because living individuals have no heirs. Be sure you understand this. Only the dead have heirs. B must die in order for the world (and the court especially) to know who his heirs are. At the time of the transaction, a living person B may have an heir apparent
Heir apparent
An heir apparent or heiress apparent is a person who is first in line of succession and cannot be displaced from inheriting, except by a change in the rules of succession....
X, but if it were the intent of the grantor O to create a future interest in B's heir apparent X, the court will not read that intent into the phrase "to B's heirs;" it will apply the Rule and place the remainder in the ancestor. At his death, his properly ascertained heirs will be forced to take his fee simple absolute by descent or devise.
Example
Suppose Joe has a rich parent named "Grandpa" who considers Joe a feckless wastrel, but who wishes to ensure that Joe's children are provided for. Grandpa might try to deed a house "to Joe for life, and then to Joe's heirs", thus ensuring that Joe and his family could live in the house, but Joe could not sell it to pay gambling debts. The "remaindermen" in this case are the grandchildren. The Rule in Shelley's Case states that, this language notwithstanding, Joe is the absolute owner of the property.The Rule Generalized
Simply stated, the Rule deals with remainders in the transfer of real propertyReal property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
by deed. A remainder is a right "carved out" of the fee simple
Fee simple
In English law, a fee simple is an estate in land, a form of freehold ownership. It is the most common way that real estate is owned in common law countries, and is ordinarily the most complete ownership interest that can be had in real property short of allodial title, which is often reserved...
(or what might be termed absolute ownership in plain English) which has some future interest (an interest of which the holder cannot yet make use at the time of the granting of the deed) so that, at some later date, the holder of the remainder (the future interest) would have ownership rights in the property and those future rights would have to be preserved. The rights could not be sold. It has been explained as an attempt to prevent the sale of property once transferred by putting such limiting words in the deed of transfer.
It is a classic example of common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
legal reasoning and the logic involved in the interpretation of legal text which is why it continues to be an important teaching tool in the study of the common law. However, while it is an important interpretation tool, it should not be confused with a rule of construction (such as the Doctrine of worthier title
Doctrine of worthier title
In the common law of England, the doctrine of worthier title was a legal doctrine that preferred taking title to real estate by descent over taking title by devise or by purchase...
) as it is a rule of law. The distinction is that a rule of law cannot be overcome by proof of the grantor's intent, while a rule of construction can be.
Analysis
Some scholars (e.g., see John V. Orth, "The Rule in Shelley's Case," The Green BagThe Green Bag
The Green Bag: An Entertaining Journal of Law is a legal journal supported in part by George Mason University School of Law and is dedicated to publishing "good writing" about the law. Founded in 1997 by three former-classmates of the University of Chicago Law School , The Green Bag is published...
, Autumn 2003) believe that this explanation (to promote the right to transfer the land) of the origin of the Rule is inaccurate. In their view the Rule originated as the courts' response to an estate-planning technique in the 14th century, long before the litigation in Shelley's Case. A tax known as the "relief" had to be paid to the feudal lord (the Crown) when a tenant's heir inherited the land. To avoid this estate tax, if the grant to the land were framed in term of a life estate in the grantee followed by a remainder in the grantee's heirs, then upon the grantee's death his heirs would not inherit the land, but received it as a vested remainder. As a consequence, the heir would take the land without having to pay the relief. The courts could not abide such a transparent attempt to circumvent the tax system, and the Rule was invented to deal with this problem by converting these transfers into fee simples absolute so as to allow the relief to be collected upon the grantee's death. Later, when the relief was abolished, the Rule continued to survive in the common law due to inertia ("it is the genius of the common law to add, but not to subtract"), the "promote the right to transfer the land" explanation was concocted to explain the continued existence of the Rule. Note that it is not at all uncommon for rules of common law, once their original motivation falls away, to acquire a new justification, and in the process also, sometimes, a new meaning. Many examples of such processes are given in Oliver Wendell Holmes's The Common Law
The Common Law
The Common Law is a book that was written by Oliver Wendell Holmes, Jr. in 1881. Holmes later became an Associate Justice on the Supreme Court of the United States....
.
As stated by Lord Edward Coke
Edward Coke
Sir Edward Coke SL PC was an English barrister, judge and politician considered to be the greatest jurist of the Elizabethan and Jacobean eras. Born into a middle class family, Coke was educated at Trinity College, Cambridge before leaving to study at the Inner Temple, where he was called to the...
in his argument for the defendant in the case:
-
- It is a rule of law, when the ancestor by any gift or conveyance takes an estate in freehold, and in the same gift or conveyance an estate is limited mediately or immediately to his heirs in fee or in tail; that always in such cases the heirs are words of limitation of the [ancestor's] estate and not words of purchase.
See also
- Rule against perpetuitiesRule against perpetuitiesThe common law rule against perpetuities forbids some future interests that may not vest within the time permitted; the rule "limit[s] the testator's power to earmark gifts for remote descendants"...
- Lawrence W. Waggoner, Estates in land and future interests in a nutshell 2nd ed. (West Publishing: St. Paul, 1993), ch. 11
- David A. Smith, "Was There a Rule in Shelley's Case?" The Journal of Legal History, Volume 30, Number 1, April 2009 , pp. 53-70.