Texaco Refining & Marketing, Inc. v. Samowitz

On June 3, 1964, Kay Realty Corporation and Texaco Refining & Marketing, Inc. (Texaco) (plaintiff) entered into a 15-year lease agreement for property located in Southington, Connecticut. The lease agreement contained the option to renew for three additional five-year periods. The lease also provided that Texaco would have the exclusive right at any time after the fourteenth year of the lease, or during any extension thereof, to purchase the premises for $125,000. On August 14, 1987, Texaco sent notice to Kay Realty Corporation of its intent to purchase the premises. Texaco’s request was denied. Texaco then filed for specific performance. At trial, the district court found that (1) Texaco had established that it was ready, willing, and able to perform under the contract; (2) the purchase option contained in the lease agreement was supported by consideration; and (3) the contract was negotiated in an arm’s-length transaction. The district court therefore found the lease and its option to purchase enforceable. Jack Samowitz, Alex Klein, Sheila Klein, Gloria Walkoff, and Marilyn Moss (collectively, the successors in interest) (defendants), who were the successors in interest to Kay Realty Corporation, asserted that the option was unenforceable because it violated the rule against perpetuities. The district court found that because the lease agreement contained a series of discrete transactions, each of which was less than the statutory 21-year period, the lease agreement did not violate the rule against perpetuities. The successors in interest appealed the district court’s judgment, asserting that the option did not automatically vest within a 21-year period.