Station Associates, Inc. v. Dare County

Brief Fact Summary.

Plaintiff sued Defendant to regain possession of land from Defendant. The trial court granted judgment Defendant. The court of appeals reversed. Defendant appealed.

Synopsis of Rule of Law.

A deed specifying a property’s intended use does not create an estate in fee simple determinable unless there is express and unambiguous language that the estate will revert or terminate when the property is put to a non-conforming use.

Facts.

In 1897, Jessie Etheridge conveyed 10 acres on a North Carolina island to the United States for $200. The deed stated that the land was conveyed to the United States to operate a lifeboat station on it, but did not state what would happen if the United States ceased operating the station. The United States constructed and operated a lifeboat station on the land until 1989, when it abandoned the station. In 1992, the United States quitclaimed its interest in the property to the local government of Dare County (Defendant). Station Associates, Inc. (Plaintiff) had purchased an ownership interest in the land from Etheridge’s heirs, and along with the heirs sued in state court to regain possession of the land from the County. The trial court granted judgment to the County, holding that the United States had held title to property in fee simple absolute. The court of appeals reversed, holding that the United States had only held title in fee simple determinable. The County then appealed to the Supreme Court of North Carolina.

Issue.

Whether a property is held in fee simple determinable if the deed to the property specifies its intended use but does not contain clear and unambiguous language that the estate will revert or terminate when the property is put to a non-conforming use, is the.

Held.

No. The court of appeals’ ruling is reversed and the case is remanded to the trial court for reinstatement of its original judgment. A deed specifying a property’s intended use does not create an estate in fee simple determinable unless there is express and unambiguous language that the estate will revert or terminate when the property is put to a non-conforming use.

Discussion.

An estate in fee simple determinable arises when an estate in fee simple is conveyed with the condition that the estate will automatically terminate when a specified condition is broken. Estates in fee simple determinable are disfavored, and courts in this state will only find an estate in fee simple determinable when there is express and unambiguous language in the deed that the estate will revert or terminate when the condition is broken. A simple statement in a deed that the property is to be used for a particular purpose does not create an estate in fee simple determinable unless there is also a clear statement that the estate will terminate when the property is no longer used for that purpose. This rule is followed even though the ultimate goal of a court is to determine the intent of the parties to the conveyance, regardless of the words used to express that intent. The plaintiffs point to a case, United States v. Etheridge, 218 F. Supp. 809 (E.D.N.C. 1963), in which a federal court faced with almost identical facts interpreted North Carolina law to allow courts to infer an intent by the parties to create an estate in fee simple determinable. But this court is not bound by a federal court interpreting state law, and will not follow that precedent. The deed at issue here contains no language stating that the United States’ estate will terminate or revert if the property ceases to be used as a lifeboat station. Because there is no such language in the deed, this court will not find an intent by the parties to make an estate in fee simple determinable. Because the United States held the estate in fee simple, it validly conveyed title to the estate to Dare County.