QUESTION I (60 minutes)

On his deathbed in June of 1994 Carl Rasch made an astounding confession to his wife, Lana. In 1950 when he was 23 years old he stole a Stradivarius violin from Wilhelm Klaus, a famous Austrian violinist of the time. While Klaus was on stage at Carnegie Hall in New York, Carl entered his dressing room and took the violin. Carl had access to backstage at the hall because he himself was a gifted violinist who then aspired to great fame. He knew that Klaus was playing a less valuable instrument that night and planned his theft carefully. When Klaus went on, Carl went to the stage entrance and started talking to the guard with whom he was acquainted. Carl gave the guard an expensive cigar and told him that he could go outside to smoke it. Carl would be happy to mind the door in the meantime. As soon as the guard stepped outside, Carl ran upstairs, took the Stradivarius from the closet where he knew it was kept and came down to the stage door with it under his coat. When the guard returned, Carl exchanged greetings and left with the violin undetected.

Klaus discovered the theft later that evening, but Carl was never suspected. Klaus reported the theft to police that night, but the authorities never questioned Carl or found any useful leads in their attempt to find the violin. The police file was declared dormant in 1956, and the only word of the theft in public after that time was an article about the incident in the New York Times in 1980, 30 years after it occurred. The article noted that the Stradivarius had not been found. Klaus had not searched himself because his claim for the loss had been paid by Reliable Insurance. Reliable had monitored the police investigation but had not done an independent search.

Carl went on to have a successful career as a musician. He never achieved fame as a classical performer, but he did gain much notoriety as a night club performer in New York and other major cities. During his career, which lasted until his death in 1994, Carl used the Stradivarius in most of his public performances. Other musicians and knowledgeable audience members often commented on the beautiful instrument, but although thousands saw it in use, apparently no one suspected its true pedigree.

Just before he died in 1994, Carl told Lana the story. They had married in 1975, long after the theft. Carl's will left all of his property to "my wife, Lana, and my daughter, Rose, in equal shares." After Carl's death, Lana had possession of the violin, but when she became seriously ill in 1995, Rose took many things from her house including the violin. Lana died on October 15, 1995, never having told Rose of her father's confession. She did tell the story to her friend, Mara Smith. In January, 1996, Rose, who needed money, took the violin to the Starr pawn shop where she pawned it for $150. Neither she nor Jay Starr, the owner of the shop, had any idea of its value. Rose had serious drug problems and never returned to retrieve the violin or pay her debt. Under the terms of her agreement with Starr, the shop had the right to sell the violin beginning on May 12, 1996.

In June, 1996, Doug Kerchief, a Cajun fiddler who admired fine musical instruments, saw the violin at Starr's shop for sale at $500. He knew instantly that it was an incredible piece of art and that Jay Starr did not know its true value. He asked Starr where he had gotten the piece, but Starr pointed to a sign behind the counter which read, "We carefully screen all pawned items but respect the privacy of our customers. WE DON'T ASK QUESTIONS SO DON'T ASK ANY." Kerchief paid the $500 asking price and took the violin. Only after he had the instrument appraised did Kerchief discover the true significance of his purchase. When he did, he called local newspapers and news of his good fortune spread throughout the country. Mara Smith then came forward to tell the story of Carl's confession and how the violin came to be in the pawn shop.

Lana's sole heir is her son by a previous marriage, Craig. When Craig found out about Doug Kerchief's purchase he brought suit against Kerchief to recover the violin or its value basing his suit on his rights as Lana's heir. Rose had since gone through drug treatment and became aware of the circumstances. She, too, brought suit against Kerchief seeking the same relief. In addition, Reliable Insurance Company, which had paid Wilhelm Klaus's insurance claim many years before, also sued for the same relief. Discuss the theories on which each of the plaintiffs might rely. Discuss the defenses to each that might be raised by Kerchief. Who should prevail and why?

QUESTION II (60 minutes)

A. (30 minutes) The following questions deal with future interests and the Rule Against Perpetuities. Remember that a conveyance denotes an inter vivos transfer and that a devise is a transfer by will at the death of the testator. For each example you are asked questions. Be sure to answer all of the questions and briefly explain your answer. Assume that the Rule Against Perpetuities in its common law form applies.

1. O conveys to "A for life, and then to B, but if the property is ever used for commercial purposes, then to C and her heirs." What interests are created? Does any interest fail under any of the rules limiting creation of interests that we have studied?

2. O who has one child, A, conveys property "to my child, A, for life, then to my grandchildren who reach the age of 21." A has no children at the time of the conveyance. What interests are created? Does any interest fail under the Rule Against Perpetuities?

3. T devises property "to A for life, then to A's children for their lives, and at the death of the last surviving child of A, to A's grandchildren who are then living." A predeceased T leaving 4 children who did survive T. What interests are created? Does any interest fail under the Rule Against Perpetuities?

4. O conveys property "to A for life, then to B, but if B does not survive A, to B's children in equal shares." At the time of the conveyance B has no children. What interests are created? If B has a child, X, two years later while A is still alive, what interests are there in the property? Does any interest fail under the Rule Against Perpetuities?

5. T devised property in trust to pay income of the trust "to A for life, and at the death of A, to pay the trust principal to the children of B who reach the age of 25." A and B are both alive at T's death and B has one child, X, who is 6 years old at that time. What interests are created? Does any interest fail under the Rule Against Perpetuities?

B. (30 minutes) In Jee v. Audley the devise by T was in effect as follows:

"To Mary Hall for as long as her line of descent continues, and if her line of descent dies out, to the daughters of John and Elizabeth Jee who are then living."

Mary Hall was alive with no issue at the time, and John and Elizabeth Jee were also alive and had 4 daughters who were alive. Explain in detail why the interest of the daughters of John and Elizabeth Jee failed under the Rule Against Perpetuities. What assumptions made by the court caused the gift to fail? (It may help to state the gist of the Rule and then apply it to the facts.

QUESTION III (60 minutes)

A. (30 minutes) Terry Miller is an avid deer hunter who lives in the state of Mitchell. Last October he was standing in a meadow on the back of his property preparing to go into the wooded bluff area behind his property in hopes of bagging a deer. The land behind his is owned by the state. Just as he was heading into the bluff area he heard five shots coming from the east up the bluff. A few seconds later he saw a deer running down the wooded hill toward him. Terry shot the deer and it dropped immediately though he had hit it only in the shoulder. Terry then went up to the deer and killed it instantly with a shot to the neck. He then went into his house for a cup of coffee before dressing out the deer.

When Terry returned to the deer, he found Meg Smith standing over it. Meg claimed that she had "gutshot" the deer about 100 yards up the bluff only seconds before she heard the 2 shots that must have been Terry's. Meg claimed the deer was hers because there was an unwritten rule among hunters that the first hunter to administer a killing shot owned the animal. After considerable argument Terry reluctantly let Meg have the deer. He did see that she had shot the deer in the "gut."

Several days passed during which time Terry talked to several friends about the incident. Most of them agreed that he should have been the owner of the deer. One pointed out when Terry described the large size of the deer that a gutshot large buck was likely to remain alive for a day or two. Since Meg probably would not have gotten another shot at the deer, it is unlikely that she would have followed and found it when it died. In any case, if it took her time to find the deer, its meat likely would have been spoiled.

Terry has come to you for advice. He knows that the value of the deer is not worth the money he would spend paying your fees for legal services in a lawsuit against Meg, but he thinks he should sue her for the value as a matter of principle. He has asked you to assess his chances of recovering from Meg.

What are Terry's chances of recovering from Meg? Explain.

B. (30 minutes) Laura Tennant had always wanted to own a restaurant. She was an excellent cook and while working as a computer programmer went to cooking school to learn professional techniques. In 1993 she finally tried her first venture into the restaurant business. She wanted to find a small space to start, preferably one with cooking facilities already built in. She wanted to start slowly without risking too much capital.

After much looking, she found the perfect place. It was in an old brick building on a street in the city that had recently been taken over by many small shops and businesses. The street was in a residential area that had become popular with young wealthy persons and attracted exactly the kind of person who might like her restaurant. She would keep it small and serve healthy, flavorful food using all fresh ingredients. She was looking to attract the "foodies" who prided themselves on finding the best modern food.

The building was owned by Jack Lord who was happy to have a tenant like Laura. The previous tenant had run a traditional breakfast place and did not fit in with the clientele Jack hoped to attract. He wanted tenants who attracted the new young professional group. That way he was sure he would be able to increase rents over time.

Laura signed a lease for three years and went into possession on October 1, 1993. Things started slowly, but by the Christmas season she was doing a wonderful business. She had received some good reviews, and the customers came. The quality of her food and word of mouth did the rest.

Her problems began in September of 1994 when the Hortense Day Spa leased the space across the hall from her restaurant and moved in. The Spa was a hair salon with additional services including massage, mud baths and other beauty treatments. Its owner featured a line of hair and skin care products that were sold nation wide. Laura's problem was that the spa emitted perfume odors from morning to night. The odors crossed the hall and permeated her restaurant. For some places this might not have been so bad, but she served gourmet food and the aroma was very important to its enjoyment. The perfume odors interfered with the dining experience to such an extent that a local food critique stated in print that she could not recommend the restaurant because of it.

Laura complained to Lord who at first dismissed her fears. When she persisted, he told her it was not his problem; she should talk to the spa about it. She did so, but they would not or could not decrease the odors. Because the problem was hurting her business, Laura decided to move and found a replacement tenant, The Downtown Diner, whose food was such that the odors would not matter. She assigned her lease to McCarney, the owner of Downtown, but when she sent the assignment to Lord, he sent her a letter saying that he did not approve the assignment. He pointed out the provision in the lease that required his approval of any assignment.

Laura moved out anyway in February, 1995. Downtown moved in on March 1, 1995, and paid one month's rent. Lord did not cash the check but instead sent a letter to McCarney telling him that Downtown was not an acceptable tenant. McCarney did not need much prompting. Once it moved in, it became apparent that its food was not suitable for the area. Business was disastrous, nonexistent in fact. McCarney moved out in May of 1995, and the property has been vacant since.

Lord did not advertise the property for rent during the remainder of the lease and when the lease ended on September 30, 1996, brought suit against Laura and McCarney for the unpaid rent under the lease.

What is the likelihood that Lord will prevail in his actions? What defenses might you expect from Laura and McCarney?