Bauermeister v. Waste Mgmt. Co.

cases determined
in the
sUPreme cOUrt OF nebraska
()
D orothy L. Bauermeister et aL., appeLLees , v.
Waste management C o. of neBraska , inC.,
appeLLant, anD nature’s Works , LLC,
et aL., appeLLees.
783 n.W.2d 594
Filed June 8, 200. 	no. s-09-09.
. Judgments: Appeal and Error. When reviewing questions of law, an appellate
court has an obligation to resolve the questions independently of the conclusion
reached by the lower court.
2. Estates: Perpetuities. the common-law rule against perpetuities prohibits the
creation of future interests or estates which, by possibility, may not become
vested within a life or lives in being and 2 years, together with the period of
gestation when necessary to cover cases of posthumous birth.
Petition for further review from the court of appeals, inBoDy,
chief Judge, moore , Judge, and hannon, Judge, retired, on
appeal thereto from the district court for douglas county,
gary B. ranDaLL, Judge. Judgment of court of appeals
reversed, and cause remanded with directions.
thomas a. Grennan and Francie c. riedmann, of Gross
& Welch, P.c., L.L.O., and ronald r. Volkmer, of mcGill,
Gotsdiner, Workman & Lepp, for appellant.
david a. domina, of domina Law Group, P.c., L.L.O., and
matt r. deaver, of deaver Law Office, for appellees dorothy
L. bauermeister et al.
heaviCan, 	C.J., 	Wright, 	C onnoLLy, 	gerrarD, 	stephan,
mCC ormaCk, and miLLer-L erman, JJ.
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:47 AM CST

miLLer-L erman, J.
natUre OF the case
in 	this 	case 	on 	further 	review, 	Fred 	and 	dorothy 	L.
bauermeister and richard and clara e. deaver sought to repur-
chase their land from Waste management co. of nebraska,
inc. (Waste management), pursuant to the “seller’s Option to
buy” clause in the purchase agreement. the district court for
douglas county concluded that the clause was enforceable and
quieted titled in favor of Fred, dorothy, richard, and clara. On
appeal, the nebraska court of appeals concluded that because
the option violated the rule against perpetuities, it was void,
and reversed the order of the district court. On further review,
we conclude that because the rule against perpetuities is inap-
plicable to this contractual option, the option is enforceable.
We therefore reverse the ruling of the court of appeals and
remand with directions to consider the remaining assignments
of error.
statement OF Facts
the following facts, which are supported by the record,
come largely from the memorandum opinion of the court of
appeals. see Bauermeister v. Waste Mgmt. Co., no. a-09-09,
2009 WL 647372 (neb. app. dec. 8, 2009) (selected for
posting to court Web site). On march 22, 989, Fred, dorothy,
richard, and clara executed a purchase agreement, pursuant
to which Waste management purchased 280 acres of sepa-
rately owned but contiguous tracts of real property in douglas
county, nebraska. Waste management purchased the property
to develop a landfill site, and the property was so used by
Waste management from 989 until 2003.
in the agreement, the word “seller” referred to Fred, dorothy,
richard, and clara and their heirs, successors, and assigns, and
the word “Purchaser” referred to Waste management. the
purchase agreement between the parties contained a “seller’s
Option to buy,” in paragraph 30, which stated:
if seller(s), their successors or heirs so choose, seller(s)
shall have the option to repurchase all or any portion of
the Premises from Purchaser in consideration for the sum
of One dollar . . . at the termination, for any reason, of
this agreement, and Purchaser shall be obligated to sell
2 	280 nebraska rePOrts

the Premises to seller(s), their successors or heirs, if they
so choose. seller’s option may be exercised from the
date of termination of the Landfill until two years after
the date of termination of the required monitoring of the
Landfill pursuant to Paragraph 6.
separate option agreements were executed evidencing the
parties’ agreement and for recordation purposes. the agree-
ment 	also 	provided 	at 	paragraph 	20 	that 	Fred, 	dorothy,
richard, and clara could sell the options, upon the same con-
ditions as enjoyed by them, upon satisfactory notice to Waste
management.
Fred died in 2004, and on april 6, 2005, dorothy, as
trustee of Fred’s trust, executed an “instrument of distribution
of Personal Property” conveying the interest in the Waste
management purchase agreement and option to Fred and
dorothy’s sons, subject to dorothy’s life use.
richard died in 2002. clara was named in richard’s will as
his personal representative, and his estate was closed in 2007.
clara died during these proceedings, and the case was revived.
in 2003, Waste management discontinued using the land at
issue as a landfill, which prompted the required monitoring
time period as discussed in the option set forth above. Pursuant
to federal and state laws, a landfill’s postclosure care and
monitoring must begin after a landfill is closed and continue
for 30 years after that closure date.
On august 3, 2006, dorothy and clara signed a document
entitled “notice of intent to exercise seller’s Option to buy.”
the notice attempted to put Waste management on notice
that dorothy, in her own behalf and as surviving spouse of
Fred, and clara, in her own behalf and as surviving spouse of
richard, were jointly and severally exercising the option to
repurchase the land pursuant to the purchase agreement with
Waste management. Waste management took the position
that the “seller’s Option to buy” was not properly executed,
and did not deliver the deed to the land to either dorothy
or clara.
On October 7, 2006, dorothy and clara filed a complaint
in the district court for douglas county seeking specific per-
formance and an accounting. dorothy and clara alleged that
baUermeister v. Waste mGmt. cO. 	3
cite as 280 neb. 

they had properly executed the option to repurchase and that
Waste management was obligated to execute the deed for the
land back to them. Waste management denied the allegations in
the complaint and alleged that dorothy and clara were not the
real parties in interest.
On October 8, 2007, dorothy and clara made a second
attempt to exercise the option to repurchase by sending three
letters to Waste management. in late 2007, dorothy, Fred
and dorothy’s sons, and clara (collectively appellees) filed
an amended complaint in the district court for specific per-
formance, accounting, quiet title, and declaratory judgment.
Waste management answered and, inter alia, asserted affirma-
tive defenses, including that some or all of the appellees were
not real parties in interest or lacked standing, the option to
repurchase was void because it violated the common-law rule
against perpetuities, and the amended complaint failed to state
a claim upon which relief could be granted.
a trial was held. the district court entered an order filed
december 0, 2008, in which it determined that dorothy and
clara, and their heirs, clearly intended to exercise the option
to repurchase in each of their respective capacities and that
therefore, as real parties in interest, they had validly exercised
the option. the district court ordered Waste management to
immediately convey title to the land through a warranty deed
back to appellees. the district court found no merit to Waste
management’s affirmative defenses. accounting issues are the
subject of another action. Waste management appealed.
On appeal, the court of appeals concluded that the “seller’s
Option to buy,” sought to be exercised by appellees, violated
the rule against perpetuities and was void. because resolution
of this issue invalidated the option and resolved the case, the
court of appeals did not reach the remaining assignments
of error. the court of appeals reversed the order of the dis-
trict court. appellees petitioned for further review, which this
court granted.
assiGnment OF errOr
in their petition for further review, appellees claim, restated
and summarized, that the court of appeals erred by concluding
4 	280 nebraska rePOrts

that the option to repurchase was void under the common-law
rule against perpetuities.
standard OF reVieW
[] When reviewing questions of law, an appellate court has
an obligation to resolve the questions independently of the
conclusion reached by the lower court. see Kuhn v. Wells Fargo
Bank of Neb., 278 neb. 428, 77 n.W.2d 03 (2009).
anaLYsis
For purposes of our review, the sole issue before this court
is whether the rule against perpetuities invalidates the option
to repurchase in the agreement between appellees and Waste
management. the court of appeals concluded that because the
agreement was signed a few months prior to the effective date
of the nebraska statutory rule against perpetuities, this case
is governed by the common-law rule against perpetuities. the
parties do not dispute this conclusion, and we agree that the
common law governs.
[2] as an initial matter, we note that the common-law rule
against perpetuities prohibits the creation of future interests or
estates which, by possibility, may not become vested within a
life or lives in being and 2 years, together with the period of
gestation when necessary to cover cases of posthumous birth.
In re Trust Estate of Darling, 29 neb. 705, 365 n.W.2d 82
(985). it has been observed that the rule is based on the pub-
lic policy against restricting the alienability of land. see Stuart
Kingston, Inc. v. Robinson, 596 a.2d 378 (del. 99).
in deciding this case, the court of appeals understandably
relied on our opinion in Rice v. Lincoln & N. W. R. Co., 88
neb. 307, 29 n.W. 425 (9). Rice, however, was decided
nearly a century ago, and that portion of Rice to which the
court of appeals referred was dictum. Rice suggested that the
rule against perpetuities would be applicable to an option under
certain facts.
relying on Rice, the court of appeals determined that the
lives in being at the creation of the option, which is the future
interest at issue in this case, were Fred, dorothy, richard,
and clara and that the option also could be exercised by their
baUermeister v. Waste mGmt. cO. 	5
cite as 280 neb. 

“successors or heirs.” the court of appeals stated that the
inclusion of the successors or heirs “ensures that there is a
possibility that the option to purchase would reach beyond the
[seller’s] death and 2 years, thus violating the rule against per-
petuities and rendering the option void.” Bauermeister v. Waste
Mgmt. Co., no. a-09-09, 2009 WL 647372 at *4 (neb. app.
dec. 8, 2009) (selected for posting to court Web site).
the court of appeals further observed that the language
limiting the option to 2 years after the date of termination
of the required monitoring of the landfill did not prevent the
option from violating the rule against perpetuities. the court
of appeals noted that the evidence showed federal and state
regulations require a 30-year landfill postclosure monitoring
period and reasoned that because the option gave the “seller”
an additional 2 years after the monitoring period to exercise
the option, the total duration of the option in this case was
extended to 32 years.
On further review, appellees, as sellers and holders of the
option to repurchase, argue that the decision by the court of
appeals should be reversed because the modern trend in the
common law applicable to this case, with respect to the appli-
cation of the rule against perpetuities to contractual options,
is to avoid strict application of the rule. appellees suggest the
better reasoned cases show that the rule against perpetuities
is not appropriately applied to options and that effectuation
of the parties’ intentions to create a commercially viable and
enforceable option is sound law. appellees also note that the
option at issue can be sold, which shows that its objective was
commercial in nature and not donative. Waste management
argues that the rule against perpetuities applies to options and
that the option contained in the purchase agreement is void.
accordingly, Waste management urges us to affirm the ruling
of the court of appeals. For the reasons explained below, we
reverse the decision of the court of appeals.
Our analysis is informed by reviewing the context and
timeframe during which the option at issue in this case was
negotiated by the parties. the option was created in a contract
signed and agreed to by the parties in march of 989. in the
agreement, Fred, dorothy, richard, and clara agreed to sell
6 	280 nebraska rePOrts

280 acres of their land to Waste management to develop as a
landfill. Paragraph 30 of the agreement included the “seller’s
Option to buy,” stating in relevant part that
seller(s) shall have the option to repurchase all or any
portion of the Premises from Purchaser in consideration
for the sum of One dollar . . . . seller’s option may be
exercised from the date of termination of the Landfill until
two years after the date of termination of the required
monitoring . . . .
Paragraph 20 of the agreement provides that the “seller” had
the right to sell the option if “such purchaser, transferor or
lienholder takes, subject to all terms and conditions of this
agreement,” and Waste management is provided proper notice.
separate option agreements were also signed.
subsequent to the execution of the agreement, and the sepa-
rate option agreements, the nebraska version of the Uniform
statutory rule against Perpetuities act (act) became effec-
tive. see neb. rev. stat. §§ 76-200 through 76-2008 (reissue
2009). the effective date of the act was about 5 months after
the option at issue was agreed upon. the act excluded from
the rule’s coverage options such as the one in this case. see
§ 76-2005() (stating that rule against perpetuities does not
apply to “[a] nonvested property interest or a power of appoint-
ment arising out of a nondonative transfer”). the act has been
widely adopted. after the enactment of the act elsewhere, a
california appellate court succinctly stated, “the rule is now
irrelevant to [commercial] transactions . . . .” Shaver v. Clanton,
26 cal. app. 4th 568, 574, 3 cal. rptr. 2d 595, 598 (994).
the california court explained the purpose of this exclusion by
citing commentators as follows:
“it makes no sense to apply a rule based on family-oriented
donative transfers to interests created by contract whose
nature is determined by negotiations between the parties.”
[see Recommendation Relating to Uniform Statutory Rule
Against Perpetuities, 20 cal. Law revision com. rep.
(990) 250, 256.] “the rationale for this exclusion is
that the rule against perpetuities is a wholly inappropriate
instrument of social policy to use as a control over such
arrangements. the period of the rule—a life in being plus
baUermeister v. Waste mGmt. cO. 	7
cite as 280 neb. 

2 years—is not suitable for nondonative transfers. . . .”
(99 addition to Law revision com. com., 54a West’s
ann.Prob.code § 2225 (994 pocket supp.) p. 60 . . . .
Shaver, 26 cal. app. 4th at 574, 3 cal. rptr. 2d at 598.
the provision in the act excluding the application of the
rule against perpetuities to commercial options was the logical
outcome of years of jurisprudence critical of applying the rule
against perpetuities to commercial transactions. as early as
952, one commentator stated that applying the rule to options
completely disregards the purpose of the rule, namely, to pre-
vent extraordinarily protracted family settlements and devolu-
tion of decedents’ estates. see W. barton Leach, Perpetuities
in Perspective: Ending the Rule’s Reign of Terror, 65 harv. L.
rev. 72 (952).
in a similar vein, the restatement (third) of Property:
servitudes § 3.3, comment b. at 428 (2000), explains as
follows:
in the late 9th century, . . . courts began to apply [the
rule against perpetuities] to commercial land transactions,
including options [and] rights of first refusal . . . . the
virtue of the rule was that it invalidated all interests that
lacked a durational limit, thus clearing titles without any
need to inquire into the utility of the arrangement. its vice
was that it operated arbitrarily, applying a time period
totally unsuited to commercial transactions. . . .
although commentators had long complained that the
rule against perpetuities should not be applied to commer-
cial transactions, it was not until the 980s that courts in
any number followed suit.
in Pathmark Stores v. 3821 Associates, L.P., 663 a.2d 89
(del. ch. 995), the delaware court of chancery determined
that the rule against perpetuities was not offended by the con-
tractual option at issue in that case. in support of its conclu-
sion, the delaware court referred to various commentators
and stated:
the application of the rule against perpetuities to options
is subject to severe criticism. See Vi thomas e. atkinson
et al., American Law of Property § 24.56 at 4 (a. James
casner ed. 952) (“the application of the rule against
8 	280 nebraska rePOrts

perpetuities to options was a step of doubtful wisdom.”);
Lewis m. simes et al., The Law of Future Interests § 244
at 59 (2d ed. 956) (“as an original proposition, it might
have been better for the courts to hold that all option
contracts are outside the rule against perpetuities.”); see
also t. bergin et al., Preface to Estates in Land and
Future Interest at 207-08 (2d ed. 984) (“[t]he rule
against perpetuities is obviously not suited to the com-
mercial transaction.”).
Pathmark Stores, 663 a.2d at 92-93.
the delaware court further noted:
the common law rule against perpetuities time period,
lives in being plus twenty-one years, is well suited for
keeping family transfers of property within a reasonable
time period. this common law time period is tied to
notions of when a person will attain the age of majority.
commercial transactions, however, have absolutely no tie
to either lives in being or twenty-one years.
Id. at 93.
reflecting this evolution recounted above, the restatement,
supra, determined that the rule against perpetuities is inap-
plicable to options to repurchase such as the one at issue in
this case.
as noted, the Legislature enacted the act in 989. the act
demonstrates the policy adopted by the Legislature, and pursu-
ant to the act, the option at issue would not be subject to the
rule against perpetuities. the act adopted in nebraska reflected
the scholarly opinion and jurisprudence which had evolved
over the decades prior to its passage. the instant case is our
first opportunity to comment on the application of the rule
against perpetuities to a commercial option since passage of the
act. We conclude that the application of the common-law rule
against perpetuities which governs this case is no broader than
that imposed by the statutory rule enacted by the Legislature,
and thus, the option at issue is not subject to the rule against
perpetuities. Our decision is consistent with the courts and
commentators, noted above, who have observed that the pur-
poses supported by the rule against perpetuities do not logically
apply to commercial transactions such as options.
baUermeister v. Waste mGmt. cO. 	9
cite as 280 neb. 

there are sound public policy reasons which support the
conclusion that contractual options to repurchase, such as the
one at issue in this case, are not subject to the rule against
perpetuities. the option at issue is the result of a commercial
transaction. it is more appropriately analyzed “based upon
the realities of commerce in land, not upon a borrowing from
the law of family settlements.” Vi thomas e. atkinson et al.,
american Law of Property § 24.56 at 42 (a. James casner
ed. 952). in Pathmark Stores v. 3821 Associates, L.P., 663
a.2d 89, 93 (del. ch. 995), the delaware court of
chancery stated:
it would be inequitable to declare this option void ab
initio. two commercial entities have bargained for the
option to repurchase, each presumably gaining and losing
contractual advantages during the negotiation process to
reach this agreement. here Pathmark not only attempts to
exercise the option within the duration of the option, but
even within the time limit required by the common law
rule against perpetuities. allowing defendants to escape
the terms of the contract because Pathmark might exer-
cise the option in an unreasonably remote way defies the
contract’s terms, logic, common sense, public policy and
principles of equity.
the same reasoning applies to the instant case.
it would not be prudent to now deny appellees the benefit of
their bargain while allowing Waste management to avoid the
terms of the agreement. in concluding that the rule against per-
petuities does not apply to this option, we merely hold the par-
ties to the terms of their contractual arrangement. based on the
foregoing, we reverse the decision of the court of appeals.
cOncLUsiOn
because we conclude that the common-law rule against per-
petuities is inapplicable to the option at issue, we reverse the
decision of the court of appeals and remand with directions
to consider the remaining assignments of error not previously
considered by the court of appeals.
reverseD anD remanDeD With DireCtions.
0 	280 nebraska rePOrts