The Testamentary Contract

June 28, 2017 § Leave a comment

When is a contract really a will?

That was the question before the COA in the case of Estate of Greer: Oakes v. Ball, about which I posted a little over a year ago at the link. In that case, Greer had included this provision in a lease with the Nunnerys:

In the event of the death of the Lessor, this lease agreement shall not terminate, rather the rights and limitations of Lessor shall immediately be transferred to Linda Ball, who will also have the right to receive payments hereunder.

When the case went to trial, the chancellor concluded that the provision was merely a transfer of the Lessor’s interest, and was not testamentary.

On appeal, the COA reversed, holding that the provision was, indeed, testamentary in nature and, therefore, was unenforceable because it did not meet the requirements of a testamentary instrument such as subscription and being witnessed by two witnesses. The COA’s decision is at this link.

The MSSC granted cert., and on June 1, 2017, affirmed the COA. You can read the court’s opinion at this link; it includes so many footnotes that I simply do not have time to reformat to accommodate all of them.

The important point from this case is that, if the grantee’s right will vest only upon the death of the grantee, then the instrument is is testamentary and must meet the formal requirements of a will in order to enforceable according to its terms.

The court rejected the argument that Ball could validly enforce the contract as a third-party beneficiary.

Justices Kitchens, King, and Chamberlin would have distinguished the case from prior case law on the basis that this one involved a lease contract as opposed to a deed. They make several other compelling arguments that you might find helpful when dealing with similar issues.

The Better Chancery Practice Blog