Property Law Keyed to Kurtz
Alby v. Banc One Financial
Facts
Eugene and Susan Alby (Plaintiffs) sold a portion of the family farm to their niece and her husband for $15,000, $85,000 below market value. The contract and deed stated that the land would revert to the Plaintiffs automatically if the purchasers subdivided, mortgaged, or otherwise encumbered the property. The niece and her husband took out two mortgages on the property and then defaulted. Banc One Financial (Defendant) held one of the mortgages and purchased the property in foreclosure. Plaintiffs filed a quiet title action against Defendant, claiming that under the terms of the deed, the property had automatically reverted to the Plaintiffs when the purchasers encumbered the property. The trial court found the reversion clause to be an unreasonable restraint on alienation of property and therefore void as against public policy. The court of appeals reversed, finding the restraint reasonable. Defendant appealed to the state supreme court.
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