CHAPTER 17 POWERS AND THE RULE AGAINST PERPETUITIES PRELIMINARY Rule applies to the future interest and not to the power.... §386 General application of the rule to limitations under a special Summary of law as to the application of the rule to limita tions under special powers of appointment.. $399 General powers of appointment Application of the rule to limitations under a general power of appointment. $400 Mifflin's Appeal... $401 Direction to sell with no disposition of the proceeds.. $405 Preliminary discussion as to application of the rule....... §415 $412 8413 Preliminary discussion of application of the rule where 8416 Legal reasons why the period begins to run from the time of the exercise of the power.... 8417 Equitable reasons why the period begins to run from the Pennsylvania cases and law on power of sale in a trustee Hutchison's Appeal..... Summary of the law as to powers in a trustee as to the legal title... Powers of revocation.. Summary of chapter.. $435 $436 $437 $438 The Rule Applies to the Future Interests and Not to the Power 386. The rule against perpetuities has for its object the destruction of future interests which may vest at a remote period. The rule, therefore, does not apply to a power, but it applies, if it applies at all, to the future interest limited under the power. There is nothing in the terms of the rule, whichever way it is stated, or in its history, to warrant the notion that it has anything to do with the validity or operation of a power of any kind. The questions to be considered are: (1) Is the power valid, i. e., can it be lawfully exercised? (2) If it can, has it been exercised according to its terms, and are the limitations thereunder such as are thereby authorized? (3) If these two questions are answered in the affirmative, can the limitations take effect? The rule against perpetuities is involved in the answer to the third question only. The answers to the first and second are to be found in the law of powers. The rule, therefore, has no concern with the circumstance that the power may be exercised at any future period, whether remote or not. It has never been supposed that the rule applied, for instance, to the birth of the greatgrandchild of the testator, or to the return of B. from Rome, although it may apply to the interests limited to take effect on the happening of those events. How then can it be said that the rule applies to the power? It appears, therefore, that the rule against perpetuities touches powers only in so far as the interests limited under them may violate the rule. 1See $8332, 333, ante. 2 See §§328,329, ante. 3 See 3326, ante. It is submitted, therefore, that Mr. Gray's language in several instances, e. g., Rule Perp., 2 ed. (1906), §§473, 475, 476, 535, when he speaks of a power as being void because remote, overlooks the precise point involved. It is, of course, true that as the rule destroys the interest limited under the power, it produces the practical consequence that the power is nugatory. If the power is exercised and an attempted limitation made, the per This principle, which is of the utmost importance, cannot be too clearly borne in mind, although it has been generally overlooked in the books. The only difficulty is in fixing the date from which the period prescribed by the rule begins to run, whether from the time of the exercise of the power or from some prior time. Division of Powers 8 в 387. For the purposes of this discussion powers may be divided into (a) powers of appointment which may be general or special; (b) powers in trust; (c) powers in a trustee," and (d) powers of revocation. The application of the rule against perpetuities to the interests limited under these powers will be discussed with reference to each of the headings in the order named. Preliminary Discussion of Powers of Appointment 388. Powers of appointment are of two kinds: (1) a special power of appointment, which is where the donee of the power can appoint only to particular persons or classes of persons, and (2) a general power of appointment, which is where he can appoint to any person or in any way.10 It will be necessary, in order to understand the application of the rule against perpetuities, to consider special and general powers of appointment separately. General Application of the Rule to Limitations Under a Special Power of Appointment 389. The rule applies to the interests limited under the power, if they may vest at a remote period.' The period son specified has no title; not, however, because the power is bad, but because the rule against perpetuities prevents him from taking the gift. 5 Discussed $8388-401, post. 6 Discussed §§402-409, post. 7 Discussed §§410-436, post. 8 Discussed $437, post. 9 Thus, where there is a devise to A. for life, and at his death to such persons as he shall by will appoint, there is a special power of appointment appendant. Where there is a devise to A. for life, and at his death to B. and his heirs, or to such persons as C. shall by his will appoint, there is a special naked power of appointment. The latter is a rare case; for an illustration, see Ingersoll's Est., 167 Pa. 536 (1895). 10 Thus, where there is a devise to A. for life, and after his death to such persons as he may appoint by deed or will, there is a general power of appointment. 1 See $386, ante. prescribed by the rule begins to run from the date of the creation of the interest.2 The limitations under a special power of appointment are to be considered as created by the donor of the power; consequently the period prescribed by the rule begins to run from the date of the creation of the power, or, as is commonly stated, the remoteness of a limitation under a special power of appointment depends on its distance in time from the creation of the power and not from the time of the exercise thereof. The rule against perpetuities is to be applied to the limitations in question as if they were the actual limitations of the donor of the power. The law as to this is clear and well-settled both in England and in Pennsylvania. The application of the rule calls for a distinction between (1) limitations under a power exercisable at a remote period; (2) limitations under a power exercisable only within the period prescribed by the rule computing the period in each case from the time of the creation of the power. 2 See §342, ante. 3 The reasons are not so plain. Mr. Gray, Rule Perp., 2 ed. (1906), §514, gives as a reason that if this were not so, each tenant for life might appoint for life, and an indefinite series of life estates be created, and thus the very evil at which the rule is aimed, would exist. It is submitted, however, that this is simply saying that the exercise of the power does create a remote estate, whereas, the question is whether the limitation is remote, and does not, therefore, solve the problem. Mr. Lewis, Perp., Chap. XX., p. 482 (1843), says it is because "the maxim quod facit per alium facit per se necessarily implies that that which it is not allowable for an individual to do himself, must be equally improper when effected in the person of another." Consequently, a remote limitation is equally objectionable when made by another to whom has been entrusted a power of appointment not commensurate with the entire ownership of the property. This reason does not go far enough. It does not explain why the maxim quod facit applies. It is submitted that the maxim applies because the tenant of the particular es tate is enabled to do something not incident to his estate, and his capacity to so act depends on the power, not on his title; consequently, he is doing something on the authority of another person in right of that person, and not in his own right. The act, therefore, of the donee of the power is considered very properly as the act of the donor of the power. The case is really that of a gift to a person unascertained, and that ascertainment is left to the discretion of the donee of the power. That this is so appears from the wording of all powers, e. g., to A. for life, and after his death to such persons as he shall by will appoint. The limitation here is directly to the persons to be appointed by A., and they become certain immediately upon his death having exercised the power. The case, therefore, comes squarely within the wording of the rule, because the future interest is limited at the time of the creation of the interest to such persons as shall be ascertained, the limitations under which ascertainment must vest within life or lives, etc., from the time of the creation of the power under which they are to be ascertained. |