Browse Previous Page | Table of Contents | Browse Next Page

Constitution of North Carolina

ARTICLE I Declaration of Rights

Sec. 34. Perpetuities and monopolies.

Perpetuities and monopolies are contrary to the genius of a free state and shall not be allowed.

Cross References. - For prohibition against exclusive emoluments other than in consideration of public services, see N.C. Const., Art. I, § 32.

History Note. - The provisions of this section are similar to those of Art. I, § 31, Const. 1868.

Legal Periodicals. - For article, "A Proposal for a Simple and Socially Effective Rule Against Perpetuities," see 66 N.C.L. Rev. 545 (1988).

For article, "Does the Fee Tail Exist in North Carolina?," see 23 Wake Forest L. Rev. 767 (1988).

For article, "Allowing Perpetuities in North Carolina," see 31 Campbell L. Rev. 399 (2009).

CASE NOTES

Editor's Note. - Some of the cases cited below were decided under former Art. I, § 31, Const. 1868.

The common-law rule against perpetuities is recognized and enforced in this State. The rule is not one of construction, but a positive mandate of law, to be obeyed irrespective of the question of intention. Its primary purpose is to restrict the permissible creation of future interests and prevent undue restraint upon or suspension of the right of alienation. Whenever the future interest takes effect or the right of alienation is suspended beyond the period stipulated in the rule, it is violative thereof. Mercer v. Mercer, 230 N.C. 101, 52 S.E.2d 229 (1949); Parker v. Parker, 252 N.C. 399, 113 S.E.2d 899 (1960).

The common-law rule against perpetuities has been long recognized and enforced in this jurisdiction, and its application has the continuing sanction of this section. North Carolina Nat'l Bank v. Norris, 21 N.C. App. 178, 203 S.E.2d 657 (1974).

Early Vesting of Estates Favored. - Where, by a correct interpretation of a will, it will reasonably be allowed, the law will favor the early vesting of estates against the interests of a contingent remainderman. Walker v. Trollinger, 192 N.C. 744, 135 S.E. 871 (1926).

The rule against perpetuities applies to private trusts. And when a private trust violates the rule, the court will not limit the duration of the trust, but will declare the whole trust invalid. Mercer v. Mercer, 230 N.C. 101, 52 S.E.2d 229 (1949).

Trust Created Pursuant to G.S. § 41-23 Did Not Violate Constitutional Prohibition Against Perpetuities. - Because N.C. Const., Art. I, § 34, does not require application of the common law rule against perpetuities, G.S. § 41-23(a) does not violate the North Carolina Constitution as a result of its repeal of the common law rule; G.S. § 41-23(a) is consistent with the constitutional prohibition of perpetuities in N.C. Const., Art. I, § 34, because it provides a mechanism for preventing unreasonable restraints on alienation. Rather than addressing alienability of property indirectly by regulating the vesting of remote interests, as does the common law rule against perpetuities, G.S. § 41-23 directly preserves alienability of property by prohibiting suspension of the power of alienation for longer than the period provided; thus, G.S. § 41-23 is a constitutional, valid exercise of the General Assembly's authority. Brown Bros. Harriman Trust Co. v. Benson, 202 N.C. App. 283, 688 S.E.2d 752 (2010), dismissed and review denied 2010 N.C. LEXIS 514 (2010).

In the historical context of the passage of the North Carolina Constitution, a perpetuity was the attempt to forbid the alienation of lands under any circumstances, and to provide for their descent or disposition in a fixed, unchangeable way. G.S. § 41-23(a) adopted the approach of requiring the existence of the power of alienation rather than requiring that remote future interests vest or terminate within a certain time period; thus, under G.S. § 41-23, a trust may remain valid in perpetuity as long as the appropriate rights of sale or termination are held. Brown Bros. Harriman Trust Co. v. Benson, 202 N.C. App. 283, 688 S.E.2d 752 (2010), dismissed and review denied 2010 N.C. LEXIS 514 (2010).

The General Assembly has modified both the common law rule and the Uniform Statutory Rule Against Perpetuities (USRAP) as each applies to trusts by adopting G.S. § 41-23, which expressly supersedes both the common law rule against perpetuities and the USRAP. G.S. § 41-23 contains no requirement regarding the time period in which a remote future interest must vest, but maintains the marketability of property. Brown Bros. Harriman Trust Co. v. Benson, 202 N.C. App. 283, 688 S.E.2d 752 (2010), dismissed and review denied 2010 N.C. LEXIS 514 (2010).

Because a trust complied with the statutory requirements of G.S. § 41-23 by granting the trustee the power to transfer title to trust property, the trust was valid and did not violate the North Carolina Constitution's prohibition of perpetuities, N.C. Const., Art. I, § 34. Brown Bros. Harriman Trust Co. v. Benson, 202 N.C. App. 283, 688 S.E.2d 752 (2010), dismissed and review denied 2010 N.C. LEXIS 514 (2010).

Statute Failing to Provide for Successors to Office Did Not Create Perpetuity. - The General Assembly having failed to appoint or provide for the election of successors to the highway and sinking fund commissioners of Madison County, who were appointed for a four or six-year term by Public-Local Laws of 1931, c. 341, the General Assembly would be presumed to acquiesce in their continuance in office, and the General Assembly having power to terminate, change or continue the appointments, it would not be held that it intended to create perpetuities or exclusive emoluments in violation of any of the provisions of this article; said commissioners thus would continue to hold office with power to discharge the duties thereof. Freeman v. Board of County Comm'rs, 217 N.C. 209, 7 S.E.2d 354 (1940).

The State Constitution forbids the granting of an exclusive license. Durham v. North Carolina, 395 F.2d 58 (4th Cir. 1968).

And the holder of a nonexclusive franchise has no monopoly, and cannot complain of competition from a publicly created utility system. Phrased another way, the creation by a state of a competing public utility does not amount to a "taking" compensable under U.S. Const., Amend. XIV. Durham v. North Carolina, 395 F.2d 58 (4th Cir. 1968).

The distinctive characteristics of a monopoly are (1) control of so large a portion of the market of a certain commodity that (2) competition is stifled, (3) freedom of commerce is restricted and (4) the monopolist controls prices. American Motors Sales Corp. v. Peters, 311 N.C. 311, 317 S.E.2d 351 (1984).

An act authorizing the grant of an exclusive franchise to operate a race track was held unconstitutional as being in violation of this section. State ex rel. Taylor v. Carolina Racing Ass'n, 241 N.C. 80, 84 S.E.2d 390 (1954).

An act which provided for the granting of an exclusive franchise to operate a dog race track was held unconstitutional in State v. Felton, 239 N.C. 575, 80 S.E.2d 625 (1954).

City's refusal to grant cable television franchises to private applicants did not violate the exclusive emoluments and monopoly clauses of N.C. Const., Art. I, § 32 and this section, or the antimonopoly and unfair trade practices of Chapter 75. Madison Cablevision, Inc. v. City of Morganton, 325 N.C. 634, 386 S.E.2d 200 (1989).

As to prohibitive regulations upon engaging in business, see State v. Harris, 216 N.C. 746, 6 S.E.2d 854, 128 A.L.R. 658 (1940).

Statute Providing for Tile Contractor's License. - Statute requiring a license for any person, firm or corporation undertaking to lay, set or install ceramic tile, marble or terrazzo floors or walls violated this section. Roller v. Allen, 245 N.C. 516, 96 S.E.2d 851 (1957).

Statute Requiring Examination of Former Dentists Returning to State. - Statute providing that a licensed dentist who retired or removed from the State had to pass an examination upon returning to the State did not confer exclusive emoluments and privileges on continuously practicing dentists contrary to the provisions of this section and N.C. Const., Art. I, § 33. Allen v. Carr, 210 N.C. 513, 187 S.E. 809 (1936).

Statute Regulating Practice of Optometry. - A portion of G.S. § 90-115, relating to the practice of optometry, was held violative of this section. Palmer v. Smith, 229 N.C. 612, 51 S.E.2d 8 (1948).

Statute relating to licensing and supervision of photographers tended to create a monopoly in violation of this section. State v. Ballance, 229 N.C. 764, 51 S.E.2d 731 (1949).

Regulation of Ambulance Service. - For case holding county ordinance regulating ambulance service unconstitutional, see Whaley v. Lenoir County, 5 N.C. App. 319, 168 S.E.2d 411 (1969).

Former G.S. § 153-9(58)(a)(6) was not void as being in contravention of constitutional prohibitions against monopolies and exclusive emoluments, since the paragraph did not provide that liability insurance would be the exclusive method of indemnifying persons or property against loss due to negligent operation of the ambulance service. Whaley v. Lenoir County, 5 N.C. App. 319, 168 S.E.2d 411 (1969).

Because of the possible retroactive application of the grandfather rights provided for, former G.S. § 153-9(58)(a)(2) was unconstitutional, since it invaded the personal and property rights guaranteed and protected by the Constitution. Whaley v. Lenoir County, 5 N.C. App. 319, 168 S.E.2d 411 (1969).

As to selection of persons qualified to act as pilots by a commission, see St. George v. Hardie, 147 N.C. 88, 60 S.E. 920 (1908).

As to ordinance granting the exclusive privilege to construct and maintain waterworks within the corporate limits of a town, see Elizabeth City Water & Power Co. v. City of Elizabeth City, 188 N.C. 278, 124 S.E. 611 (1924).

As to stipulations in partial restraint of trade, see Tobacco Growers Coop. Ass'n v. Jones, 185 N.C. 265, 117 S.E. 174, 33 A.L.R. 231 (1923).

As to the regulation of cleaning and pressing plants, see State v. Harris, 216 N.C. 746, 6 S.E.2d 854, 128 A.L.R. 658 (1940).

Denying a nonprofit corporation the right to construct and operate its proposed hospital on its own property with its own funds with adequate staff and equipment establishes a monopoly in the existing hospitals contrary to the provisions of this section. In re Aston Park Hosp., 282 N.C. 542, 193 S.E.2d 729 (1973).

Plaintiff's Monopolistic Conduct No Defense to Defendant's Unfair Competition. - Even if plaintiff's conduct in protecting its property was a monopolistic practice, it was not a defense to an action for injunctive relief and compensatory damages brought by plaintiffs against defendants for alleged unfair competition where defendants' conduct had been determined to be unfair competition. United Artists Records, Inc. v. Eastern Tape Corp., 19 N.C. App. 207, 198 S.E.2d 452 (1973), cert. denied, 284 N.C. 255, 200 S.E.2d 653 (1974).

Automobile Dealer Franchise. - The State can require that if an automobile manufacturer gives a franchise to a dealer to sell automobiles, that the manufacturer include in the terms of the franchise agreement the right that the dealer have an exclusive franchise in a certain trade area so long as the dealer abides by the terms of the franchise agreement. American Motors Sales Corp. v. Peters, 58 N.C. App. 684, 294 S.E.2d 764 (1982), rev'd on other grounds, 311 N.C. 311, 317 S.E.2d 351 (1984).

Grant of franchise to automobile dealer is not an agreement between competitors not to compete, but a contract between a manufacturer and a dealer. The State has enacted legislation which gives automobile dealers some protection after they have made investments and taken other action, relying on contracts they have made, and the State has the power to do this. American Motors Sales Corp. v. Peters, 58 N.C. App. 684, 294 S.E.2d 764 (1982), rev'd on other grounds, 311 N.C. 311, 317 S.E.2d 351 (1984).

Under G.S. § 20-305(5), an automobile manufacturer may give a dealer the exclusive right to sell its automobiles in a trade area without violating this section. For the General Assembly to require the manufacturer to do what it could bargain to do if it desired to execute a contract is not the granting of a monopoly. American Motors Sales Corp. v. Peters, 58 N.C. App. 684, 294 S.E.2d 764 (1982), rev'd on other grounds, 311 N.C. 311, 317 S.E.2d 351 (1984).

Section § 20-305(5) is not unconstitutional on its face as allowing monopolies. American Motors Sales Corp. v. Peters, 58 N.C. App. 684, 294 S.E.2d 764 (1982), rev'd on other grounds, 311 N.C. 311, 317 S.E.2d 351 (1984).

Cooperative Stabilization Corporation. - Tobacco warehouses were not able to assert constitutional claims of deprivation of property rights and prohibition against monopolies against a tobacco cooperative stabilization corporation because the corporation was not a State actor. Bailey v. Flue-Cured Tobacco Coop. Stabilization Corp., 158 N.C. App. 449, 581 S.E.2d 811 (2003).

Section § 53-229, relating to the acquisition and control of certain nonbank banking institutions, does not violate the commerce clause of the U.S. Constitution, nor the equal protection, exclusion emoluments and antimonopoly provisions of the State Constitution. Citicorp v. Currie, 75 N.C. App. 312, 330 S.E.2d 635, cert. denied and appeal dismissed, 314 N.C. 537, 314 N.C. 538, 335 S.E.2d 15, 335 S.E.2d 16 (1985).

Exclusive Right to Conduct Bail Bondsmen Training Under G.S. § 58-71-71 Unconstitutional. - Session Laws § 2012-183, the act amending G.S. § 58-71-71 to make the North Carolina Bail Agents Association the exclusive provider of creditable bail bondsmen training, was unconstitutional because it violated Article I, Section 34 of the North Carolina Constitution on perpetuities and monopolies. Rockford-Cohen Group, LLC v. N.C. Dep't of Ins., 230 N.C. App. 317, 749 S.E.2d 469 (2013).

Cited in Hajoca Corp. v. Clayton, 277 N.C. 560, 178 S.E.2d 481 (1971); North Carolina State Bd. of Registration v. IBM Corp., 31 N.C. App. 599, 230 S.E.2d 552 (1976); In re Arcadia Dairy Farms, Inc., 43 N.C. App. 459, 259 S.E.2d 368 (1979); In re DeLancy, 67 N.C. App. 647, 313 S.E.2d 880 (1984); State ex rel. Banking Comm'n v. Citicorp Sav. Indus. Bank, 74 N.C. App. 474, 328 S.E.2d 895 (1985); Coastal Neuro-Psychiatric Assocs. v. Onslow Mem. Hosp., 795 F.2d 340 (4th Cir. 1986); Jetstream Aero Servs., Inc. v. New Hanover County, 672 F. Supp. 879 (E.D.N.C. 1987); Empire Distribs. of N.C. Inc. v. Schieffelin & Co., 677 F. Supp. 847 (W.D.N.C. 1988); Nursing Registry, Inc. v. Eastern N.C. Regional Emergency Medical Servs. Consortium, Inc., 959 F. Supp. 298 (E.D.N.C. 1997).

Browse Previous Page | Table of Contents | Browse Next Page