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Real Property - Rule Against Perpetuities. Essex (County of) v. Enbridge Gas Inc.
In Essex (County of) v. Enbridge Gas Inc. (Div Court, 2023) the Divisional Court considered an appeal from the decision of the OEB where it had "found that the pre-existing 1957 franchise agreement between Essex and Enbridge had expired by operation of the common law rule against perpetuities" and ordered it's renewal under the Municipal Franchises Act (MFA).
In these quotes the court summarizes neatly the 'law of perpetuities':A. Legal principles
[48] The rule against perpetuities places a limit on the powers of property owners to designate who may enjoy beneficial ownership in the future. It does not directly seek to prevent restraints on alienation. It merely seeks to stop the creation of future interests that may take effect at too remote a time in the future: Canadian Encyclopedic Digest, “Perpetuities and Accumulations”, (Thomson Reuters Canada, 4th ed.) (“CED”), at I.1, citing Aldercrest Developments Ltd. v. Hunter, 1970 CanLII 234 (ON CA), [1970] 2 O.R. 562 (Ont. C.A.). The rule against perpetuities does not deal with the duration of property interests, but rather with their commencement: CED, at II.A.2, citing Aldercrest.
[49] The rule against perpetuities applies to the disposition of real or personal property by any means: CED, at II.B.7. It applies to equitable or legal contingent interests, both in realty and personalty: CED, at II.B.15. The rule applies to contingent easements, profits à prendre and similar interests in real property: CED, at II.B.9, II.B.15. The rule is not otherwise applicable to contractual rights and has no application to personal contracts: CED, at II.B.7.
[50] The common law rule against perpetuities requires that an interest in property must vest, if at all, not later than 21 years after the determination of some “life in being” at the time of the interest’s creation that limits (or is a relevant factor in limiting) the period in which the interest will vest: CED, at II.A.2. Where no life in being is referenced, the perpetuity period is 21 years: Reyhani v. Karimov, 2019 ONSC 5290, at para. 12.
[51] If a property interest does not necessarily vest within the perpetuity period, it would be void at common law: CED, at II.B.9. In Ontario, that aspect of the rule against perpetuities has been varied by statute (to the extent applicable[1]), under which there is a “wait and see” approach to determining if the rule against perpetuities is offended. If a contingent interest in property is capable of vesting either within or beyond the perpetuity period, it will generally be treated as valid at any particular time unless actual events establish that the interest is incapable of vesting within the perpetuity period: see Perpetuities Act, s. 4(1). . Essex (County of) v. Enbridge Gas Inc.
In Essex (County of) v. Enbridge Gas Inc. (Div Court, 2023) the Divisional Court considered an appeal from the decision of the OEB where it had "found that the pre-existing 1957 franchise agreement between Essex and Enbridge had expired by operation of the common law rule against perpetuities" and ordered it's renewal under the Municipal Franchises Act (MFA).
In these quotes the court considers the 'rule against perpetuities' issue, here regarding whether the franchise agreements had expired:[3] Essex submits that the OEB exceeded it jurisdiction and erred in law in determining that the 1957 franchise agreement had expired by the operation of the rule against perpetuities. Essex asks the court to set aside the OEB’s order and grant a declaration that the rule against perpetuities does not apply to the 1957 franchise agreement, which has not expired and remains in effect.
[4] The appeal is allowed. As explained below, the OEB did not exceed its jurisdiction in determining whether the 1957 franchise agreement had expired by the operation of the rule against perpetuities but erred in law in finding that the agreement did expire by the operation of that rule. Enbridge’s rights under the 1957 franchise agreement do not constitute a future contingent interest in property that is subject to the rule against perpetuities.
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III. OEB Decision under appeal
[20] During the fall of 2021 and spring of 2022, Enbridge and Essex corresponded regarding Enbridge’s request that a renewal of its gas franchise with Essex be put in place in the form of the Model Franchise Agreement. Essex did not agree.
[21] In July 2022, Enbridge applied to the OEB under s. 10 of the MF Act for a renewal of its franchise with Essex, based on the terms of the Model Franchise Agreement. Essex was granted intervenor status as a party in the application and opposed it. Essex took the position that the 1957 Agreement remained in place as the governing agreement for the franchise. As part of the hearing before the OEB, Essex and Enbridge filed evidence and written submissions, and made oral submissions. OEB staff also made submissions.
[22] On March 30, 2023, the OEB released the OEB Decision, finding that the 1957 Agreement had expired by the application of the rule against perpetuities. The OEB ordered the renewal of the franchise for a period of 20 years based on the terms and conditions of the Model Franchise Agreement, in accordance with public convenience and necessity: OEB Decision, at p. 2.
[23] In reaching the conclusion that the 1957 Agreement had expired by the application of the rule against perpetuities, the OEB found as follows (at p. 8):[T]he OEB finds that the 1957 Agreement has not vested Enbridge Gas with the perpetual rights and obligations conferred by that agreement. The franchise right is a contingent interest, contingent on the former Union Gas Limited’s (now Enbridge Gas’s) continued transportation of gas, and cannot be held and exercised in perpetuity without a violation of the common law rule against perpetuities. The operation of this rule in Ontario has been confirmed in the provisions of the Perpetuities Act [R.S.O. 1990, c. P.9] and applied by the Ontario Divisional Court in the decision in Dawn-Euphemia [(Township) v. Union Gas Ltd., 2004 CarswellOnt 3909 (Ont. Div. Ct.), leave to appeal refused, 2004 CarswellOnt 3861 (Ont. C.A.)]. [24] On the question of the OEB’s jurisdiction to decide whether it had the jurisdiction to decide whether the 1957 Agreement had expired, the OEB found as follows (at p. 8):The OEB also finds that its conclusion that the 1957 Agreement has expired is within its jurisdiction to determine. Section 5(1) of the Perpetuities Act is permissive not mandatory with respect to applications to a court of competent jurisdiction to determine the validity of a provision challenged as a potential violation of the rule. The OEB’s powers under the OEB Act are clear in determining the issue of renewals as required by the Municipal Franchises Act and can be exercised with respect to the 1957 Agreement. ....
VI. Application of rule against perpetuities – jurisdiction
[35] Did the OEB exceed its jurisdiction in determining whether the 1957 Agreement had expired by the operation of the rule against perpetuities?
[36] Essex submits that the OEB exceeded its jurisdiction in determining that the 1957 Agreement had expired. Among other things, Essex argues that the OEB exceeded its jurisdiction in determining whether the rule against perpetuities applied to the 1957 Agreement. Essex relies on s. 5(1) of the Perpetuities Act, which provides as follows:Applications to determine validity
5(1) An executor or a trustee of any property or any person interested under, or on the validity or invalidity of, an interest in such property may at any time apply to the court for a declaration as to the validity or invalidity with respect to the rule against perpetuities of an interest in that property, and the court may on such application make an order as to validity or invalidity of an interest based on the facts existing and the events that have occurred at the time of the application and having regard to sections 8 and 9. [Emphasis added.] [37] The term “court” is defined as the Superior Court of Justice: Perpetuities Act, s. 1.
[38] Essex submits that the Perpetuities Act expressly provides jurisdiction to the Superior Court to determine issues with respect to the validity and invalidity of property interests that are engaged by the rule against perpetuities. That Act does not delegate any authority to the OEB or any other administrative body to make such determinations. Essex therefore submits that the OEB exceeded its jurisdiction in determining whether the 1957 Agreement had expired by the operation of the rule against perpetuities. In those circumstances, Enbridge would be required to first bring a court application under the Perpetuities Act to determine whether the 1957 Agreement has expired before applying to the OEB for any renewal or extension under the MF Act.
[39] We disagree.
[40] There is no dispute that the standard of review for questions of jurisdiction is correctness. Contrary to Essex’s position, s. 5(1) of the Perpetuities Act is not expressed in mandatory language. As the OEB correctly found, the wording of s. 5(1) is “permissive”: OEB Decision, at p. 8. An application “may” be brought under s. 5(1) in certain circumstances relating to the application of the rule against perpetuities and the Superior Court “may” make an order. When the appeal of the OEB renewal order in Dawn-Euphemia came before the Divisional Court (discussed further below), there was no suggestion that a prior court application under the Perpetuities Act should have been brought and determined before the OEB renewal application could proceed under s. 10(2) the MF Act: Dawn-Euphemia, at para. 18.
[41] In any event, s. 5(1) of the Perpetuities Act does not oust the OEB’s broad and exclusive statutory authority under the MF Act and the OEB Act, which includes the exclusive authority to hear and determine all questions of law and of fact in all matters within the OEB’s jurisdiction: OEB Act, ss. 19(1), 19(6). As well, the OEB Act expressly provides that in the event there is a conflict between the OEB Act and any other general or special Act, the OEB Act prevails: OEB Act, s. 128(1). Therefore, even if the Perpetuities Act purported to grant the Superior Court exclusive jurisdiction over the application of the rule against perpetuities in the present context, the OEB’s jurisdiction pursuant to the OEB Act and the MF Act would still take precedence.
[42] Accordingly, we have concluded that the OEB did not exceed its jurisdiction in determining whether the 1957 Agreement had expired by the operation of the rule against perpetuities.
[43] We have reached the foregoing conclusion relating to the OEB’s jurisdiction without reference to s. 19 of the Perpetuities Act, under which that statute has only limited retroactive effect. The parties’ counsel did not bring that provision to the court’s attention in their written or oral submissions relating to jurisdiction (although the OEB’s factum referred to s. 19 in another context). Section 19 provides as follows:Application of Act
19. Except as provided in subsection 12 (2) and in section 18, this Act applies only to instruments that take effect on or after the 6th day of September, 1966, and such instruments include an instrument made in the exercise of a general or special power of appointment on or after that date even though the instrument creating the power took effect before that date. [Emphasis added]. [44] The 1957 Agreement took effect prior to September 6, 1966. Since ss. 12(2) and 18 of the Perpetuities Act appear to have no application in this case, the effect of s. 19 would be that it would not have been open to the parties to make an application to the Superior Court under s. 5 of Perpetuities Act to determine validity of their interests under the 1957 Agreement with respect to the rule against perpetuities. That being the case, had we considered s. 19 of the Perpetuities Act in deciding the above jurisdictional issue, that provision would have provided further support for the conclusion that the OEB did not exceed its jurisdiction in determining whether the 1957 Agreement had expired by the operation of the rule against perpetuities.
[45] Essex also makes an alternative jurisdictional argument if this court finds (as we have) that the OEB did not exceed its jurisdiction in determining whether the 1957 Agreement had expired by the operation of the rule against perpetuities, and further finds that the OEB did not err in law in concluding that the 1957 Agreement had expired on that basis. In those circumstances, Essex submits that the OEB had no jurisdiction to hear Enbridge’s renewal application, since the 1957 Agreement’s expiration pre-dated December 2, 1969. Section 10(6) of the MF Act provides that a franchise renewal application may not be made in respect of a right that expired before December 2, 1969, the date that s. 10 of the MF Act came into effect.
[46] As explained below, we have concluded that the OEB erred in law in determining that the 1957 Agreement had expired by the operation of the rule against perpetuities. Therefore, even though we see no merit to Essex’s submission regarding s. 10(6) of the MF Act, it is unnecessary to decide whether there were other valid bases for setting aside the OEB Decision, including other grounds for concluding that the OEB did not have jurisdiction to determine that the 1957 Agreement had expired.
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D. Analysis and conclusion
[65] We have concluded that the OEB erred in law in determining that the 1957 Agreement had expired by the operation of the rule against perpetuities.
[66] We agree with the respondents that the application of legal principles to the evidence is a question of mixed fact and law and are mindful that an appeal court should exercise caution in identifying extractable questions of law. However, as explained below, we have concluded that in applying the rule against perpetuities in this case, the OEB made an extricable legal error (reviewable on a correctness standard) relating to the nature of the interest that is subject to the rule against perpetuities.
[67] In ClubLink, at para. 2, the Court of Appeal stated as follows:Of ancient origin, the rule [against perpetuities] arises out of the public policy against the fettering of real property with future interests dependent upon unduly remote contingencies. It applies to extinguish an interest in land if the interest does not vest within 21 years. The rule does not apply to a contractual right that does not create an interest in land. It serves only to invalidate contingent interests in land that vest too remotely. [Emphasis added.] [68] In ClubLink, at para. 44, the Court of Appeal adopted the following description of the underlying reason for the rules against perpetuities:The rule against perpetuities springs from considerations of public policy. The underlying reason for and purpose of the rule is to avoid fettering real property with future interests dependent upon contingencies unduly remote which isolate the property and exclude it from commerce and development for long periods of time, thus working an indirect restraint upon alienation, which is regarded at common law as a public evil. [Emphasis added.] [69] Based on the foregoing, we agree with Essex that the effect of the rule against perpetuities is to extinguish “future” property interests dependent upon “unduly remote contingencies”. Such future contingent interests are extinguished if they “vest too remotely”, that is longer than the 21-year perpetuity period: ClubLink, at para. 2. We also agree that the rule is not intended to restrict the duration of vested property interests, but rather the length of time that may elapse between the creation of a contingent interest and the vesting of that interest: Clarke, at para. 15.
[70] Applying those principles, we find that the OEB erred in law in determining that Enbridge’s franchise right to use of the County's Roads for the transmission of gas is a future contingent interest that is caught by the rule against perpetuities. The alleged contingent aspect of Enbridge’s franchise right was that its continuation beyond the initial ten-year period was contingent on the former Enbridge’s continued transportation of gas. That franchise right was a vested right and not contingent. The franchise right vested with the use of the County Roads for the supply of natural gas actually occurring under the 1957 agreement and continuing to the present. The rule against perpetuities does not restrict the duration of vested property rights: Clarke, at para. 15.
[71] The respondents argue that in the OEB Decision, the OEB properly followed the 2004 decision of this court in Dawn-Euphemia, relating to the appeal of a franchise renewal application under s. 10 of the MF Act. The relevant terms of the franchise agreement at issue in that case were substantially the same as the terms of the 1957 Agreement.
[72] As noted above, the court in Dawn-Euphemia considered two principal issues relating to the application of the rule against perpetuities. Most of that decision (as it related to the rule against perpetuities) addressed the first issue, that is, did the franchise agreement create an interest in land (which may be subject to the rule against perpetuities if the interest is contingent), as the gas utility argued, or was it a licence agreement (creating contractual rights not subject to the rule), as the municipality argued?: Dawn-Euphemia, at para. 21. While it appears that the first issue was vigorously contested in that case, counsel in the current appeal did not take issue with the court’s finding that the gas utility’s rights under the franchise agreement constituted an interest in property, rather than a licence.
[73] The second issue in contention in Dawn-Euphemia (as it was before the OEB and this court in the current appeal) was whether the rights conveyed under the franchise agreement were future contingent rights that exceeded the 21-year perpetuity period or whether they were vested rights: Dawn-Euphemia, at para. 21. The court’s consideration of this issue in Dawn-Euphemia was more cursory. The court found that the rights conferred by the franchise agreement constituted a future contingent interest in land, noting that the gas utility’s rights to enter the land and build further transmission lines were contingent on future needs and not automatic: Dawn-Euphemia, at paras. 38-40.
[74] In making that finding, the court in Dawn-Euphemia (like the OEB in the current appeal) failed to appreciate the nature of interest that is subject to the rule against perpetuities. As indicated by the Court of Appeal in ClubLink and Clarke, the rule against perpetuities extinguishes future contingent property interests that may vest beyond the 21-year perpetuity period. It restricts the length of time that may elapse between the creation of a future contingent interest and the vesting of that interest. The rule does not restrict the duration of vested rights. Under the franchise agreement in Dawn-Euphemia (as in the current appeal), those rights vested with the use of the municipal land for the supply of natural gas actually occurring once the franchise agreement was entered into and continuing to the time of the franchise renewal application. Therefore, the gas utility’s franchise rights were not extinguished by the operation of the rule against perpetuities.
[75] We agree with Essex that the principles set out in ClubLink and Clarke are authoritative and binding on this court and the OEB. To the extent that the decision of this court in Dawn-Euphemia is inconsistent with those principles, the OEB should not have followed that decision.
VIII. Disposition
[76] Accordingly, judgment will issue (i) certifying this court’s opinion to the OEB in accordance s. 33(4) of the OEB Act that the 1957 Agreement has not expired and remains in effect, (ii) setting aside the OEB Decision, (iii) declaring that the common law rule against perpetuities does not apply to the 1957 Agreement, and (iv) ordering Enbridge to pay Essex’s costs of the appeal in the agreed amount of $15,000, with no costs being payable for or against the OEB. . Ottawa (City) v. ClubLink Corporation ULC
In Ottawa (City) v. ClubLink Corporation ULC (Ont CA, 2021) the Court of Appeal considered the rule against perpetuities:[2] The rule against perpetuities is not controversial. Of ancient origin, the rule arises out of the public policy against the fettering of real property with future interests dependent upon unduly remote contingencies. It applies to extinguish an interest in land if the interest does not vest within 21 years. The rule does not apply to a contractual right that does not create an interest in land. It serves only to invalidate contingent interests in land that vest too remotely. See: Canadian Long Island Petroleums Ltd. et al. v. Irving Industries Ltd., 1974 CanLII 190 (SCC), [1975] 2 S.C.R. 715, at pp. 726-27, 732-33; 2123201 Ontario Inc. v. Israel Estate, 2016 ONCA 409, 130 O.R. (3d) 641 at para. 20; London and South Western Railway Co. v. Gomm (1882), 20 CH. D. 562 (C.A.), at pp. 580-82.
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[33] Respectfully, the application judge erred in using the expectation that a contingency would materialize as a factor to distinguish between an intent to create an interest in land and a contractual right. As earlier noted, the rule against perpetuities applies only to contingent interests in land that vest too remotely. Whether the contingent interest in ss. 5(4) and 9 was intended to materialize is not the question; it is the nature of all contingent interests that they may never materialize. Moreover, the lack of control over the triggering of the conveyances does no more here than emphasize the contingent nature of the interests in issue.
[34] The governing case law establishes that a contingent interest in land can be created without the intention that it will one day “crystallize” and that control over the triggering event is not determinative.
[35] In City of Halifax v. Vaughan Construction Company Ltd. and the Queen, 1961 CanLII 105 (SCC), [1961] S.C.R. 715, Weinblatt v. Kitchener (City), 1968 CanLII 31 (SCC), [1969] S.C.R. 157,[1] and Jain v. Nepean (City) (1992), 1992 CanLII 7629 (ON CA), 9 O.R. (3d) 11 (C.A.), leave to appeal refused, [1992] S.C.C.A. No. 473, three decisions that are factually similar to the present case, the courts found an interest in land even though there was no expectation that the interest would “crystallize”. Like here, the contractual provisions in issue allowed the municipalities to control development and were not intended to ensure the land would one day be conveyed to the municipalities. In all three cases, the conveyance of the properties to the municipalities was contingent on the owners failing to fulfil their core contractual obligations. As here, the owners’ default, which triggered the right to conveyance, was not in the interest holders’ control. While the rule against perpetuities was not found to be infringed in these cases, they establish that an expectation that the interest will “crystallize” is not required to create an interest in land.
[36] In Halifax, the Supreme Court interpreted an agreement between the City of Halifax and the Maritime Telegraph and Telephone Company. The latter made certain covenants, which were later assumed by Vaughan Construction Company Limited upon purchasing the property, to either build within a reasonable time or reconvey the property for a specific sum if it decided not to build. The deed provided that the covenant would run with the lands until the construction of the building. The court affirmed that the City of Halifax held an equitable interest even though it was not the holder of an option that it could exercise at any time. Importantly, the court held that Vaughan had no uncontrolled right to determine whether it would reconvey; unless it complied with the building covenants within a reasonable time, the City of Halifax could have enforced a reconveyance. Therefore, the City of Halifax had an interest in the land because the construction company could not prevent the exercise of the City of Halifax’s right under the covenant by doing nothing; they had to build the building or reconvey the property.
[37] Similarly, in Weinblatt, the parties entered into an agreement that provided for the reconveyance of property to the City of Kitchener for the purchase price if the purchaser failed to commence construction of a seven-story building within a specified period. The builder applied to construct a two-story building instead but was refused. Weinblatt then purchased the property from the builder but his proposal to erect a building was also not in conformity with the agreement and was likewise rejected. The City of Kitchener’s claim for reconveyance of the property was successful. The court held that the City of Kitchener had a contingent interest in property that ran with the land because the covenant provided that Weinblatt had to meet the building conditions under the agreement or reconvey the property.
[38] Finally, this court’s decision in Jain is apposite. In issue was the interpretation of a contract that contained a condition, which was included in the deed, designed to ensure development: the City of Nepean would be entitled to repurchase the property for a particular amount if Jain did not start constructing a building of a specific size within 12 months of registration of the transfer. The court found the City of Nepean had an equitable interest in the land that always existed even though the right of reconveyance was contingent on the default of the development conditions. In this case, the mortgagee took its interest with notice of the City’s equitable interest in the property.
[39] The application judge adverted to Halifax, Weinblatt, and Jain in his review of relevant case law but only as examples of “[t]he more traditional circumstances where a right to repurchase has been found to create a contingent interest in land”. These decisions, in which the circumstances are almost identical to those of the present case, found an interest in land arose notwithstanding the absence of an expectation that the right to the reconveyance would crystallize and the lack of the municipalities’ control over triggering the reconveyance. The trial judge’s conclusion that there was no contingent interest in land because there was no expectation the right to the reconveyance would crystallize constitutes an error of law: Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2016 ONCA 246, 130 O.R. (3d) 418, at para. 41, aff’d 2017 ONCA 293, 135 O.R. (3d) 241, leave to appeal to refused, [2016] S.C.C.A. No. 249.
[40] The City submits that Halifax, Weinblatt, and Jain are distinguishable from the present appeal because all three cases involve provisions for a re-conveyance of property to the original vendor. The argument follows that since Kanata never owned the golf course lands, this is not the case of a landowner who is controlling the use of their land after they have sold it. I disagree that this factual difference distinguishes these cases. Whether the municipalities were the original vendors does not change the nature of the right: the municipalities were able to control development of the land through a covenant that ran with the land. The contingent interest fettered the land by controlling development, regardless of whether the interest holder was a former owner.
[41] The application judge applied the Superior Court decision in Loyalist (Township) v. The Fairfield-Gutzeit Society, 2019 ONSC 2203, relied on by the City, for the proposition that no interest in land arises where there is no expectation that the right to repurchase will crystallize. He determined that the court in Loyalist (Township) used this factor to distinguish this court’s decision in 2123201, put forward by ClubLink. In 2123201, this court concluded that an option to repurchase was an equitable interest in land; the court in Loyalist (Township) characterized the right to repurchase as a contractual right. The application judge explained at para. 72 of his reasons that in 2123201, “there was an expectation that the option to repurchase would crystallize at some point (i.e., once the gravel was removed)”; whereas, in Loyalist (Township), there was no such expectation: “the right to repurchase arose only if the Society wished to dispose of its interest to an organization that had different objectives from those of the Society … [t]hus, there was no expectation that the right to repurchase would crystallize”. As a result, the application judge reasoned that the 1981 Agreement was similar to the agreement in Loyalist (Township) and distinguishable from the agreement in 2123201 because Kanata did not expect its right to call for a conveyance of the golf course lands would “crystallize”.
[42] As I earlier explained, a contingent interest in land may never materialize. Moreover, I do not read Loyalist (Township) as standing for the proposition relied upon by the application judge: the expectation that a contingent interest would materialize was simply “[a] distinguishing feature” noted by the court in Loyalist (Township) between that case and 2123201, and not a determining factor in the court’s analysis: at para. 35. Notably, the court in Loyalist (Township) made no reference to Halifax, Weinblatt, and Jain. Moreover, the court’s determination in Loyalist (Township) that the right in question was a contractual right and not an interest in land flowed from the court’s conclusion that the agreement creating the right did not purport “to impose rights that would attach to the land”: at para. 36.
[43] The court’s reasoning in Loyalist (Township) reflects the well-established distinction that a contingent interest in land differs from a mere contractual right insofar as the agreement giving rise to the rights purports to attach the rights to the land, such as the right to call for a conveyance, which affect the landowner’s rights to freely use, manage, develop or dispose of its property: Gomm, at pp. 580-82; Loyalist (Township), at para. 36.; Manchester Ship Canada Company v. Manchester Racecourse Company, [1901] 2 Ch. 37 (C.A.), at pp. 50-51.
[44] A return to the public policy underpinning the rule against perpetuities further assists in distinguishing between a contingent interest in land and a mere contractual interest. The public policy attempts to prevent “the grasp of the dead hand to be kept on the hand of the living” in the form of restrictions on the subsequent landowner’s ability to use or dispose of its property that run with the land: Thomas Edward Scrutton, Land in Fetters, (Cambridge: Cambridge University Press, 1896), at p. 108; Canadian Long Island Petroleums, at pp. 726-27. As stated in Weber v. Texas Co., 83 F.2d 807 (5th Cir. 1936), at p. 808, and affirmed by the Supreme Court in Canadian Long Island Petroleums, at p. 732:The rule against perpetuities springs from considerations of public policy. The underlying reason for and purpose of the rule is to avoid fettering real property with future interests dependent upon contingencies unduly remote which isolate the property and exclude it from commerce and development for long periods of time, thus working an indirect restraint upon alienation, which is regarded at common law as a public evil. [45] In consequence, a contingent interest in land “fetters” real property, excluding it from “commerce and development” and working “an indirect restraint upon alienation”. It is this “public evil” that the rule against perpetuities targets by imposing a 21-year limitation. A mere contractual right is “within neither the purpose of nor the reason for the rule” because it does not forestall or “restrain free alienation” and is therefore not objectionable: Weber, at p. 808; Canadian Long Island Petroleums, at pp. 732-733.
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