## Facts

- A trustee conveyed a 30-acre parcel to the City by grant deed conditioned on perpetual use solely as the “McCallum Desert Preserve and Equestrian Center.”
- The deed provided that if the property was not so used, the interest would pass to Living Desert Reserve and the City would forfeit its rights.
- The City accepted the deed and, within three years, decided to use the land to expand a municipal golf course, a use inconsistent with the deed condition.
- After failed negotiations to eliminate or purchase Living Desert’s interest, the City adopted a resolution of necessity to acquire Living Desert’s interest for golf-course expansion.
- The City filed an eminent domain action to condemn Living Desert’s future interest and obtained immediate possession after depositing an amount based on an appraisal valuing that interest at $200,000.
- Living Desert recorded a notice of breach of condition subsequent and filed a cross-complaint to quiet title, asserting the City’s actions triggered forfeiture and vested fee title in Living Desert.
- After a bench trial, the superior court ruled for the City, finding no breach as of the condemnation filing and treating Living Desert’s reversionary interest as non-compensable.
- Living Desert appealed.

## Issues

1. Whether the deed created a charitable trust or a fee simple subject to a condition subsequent in the City with a power of termination in Living Desert.
2. Whether breach of the condition had occurred, or was reasonably probable or imminent, at the time of the taking.
3. Whether Living Desert’s power of termination was a compensable property interest in the City’s eminent domain action.
4. Whether the superior court had jurisdiction to determine the nature and enforceability of the interests created by the deed.

## Decision

- The Court of Appeal reversed and remanded.
- The deed created a fee simple subject to a condition subsequent in the City, and a power of termination in Living Desert, not a charitable trust.
- Living Desert’s power of termination was a compensable property interest on these facts because the City’s planned use and condemnation actions made violation of the condition reasonably probable or imminent.
- The trial court erred by treating the power of termination as non-compensable and permitting the City to eliminate the donor’s use restriction without paying just compensation.

## Legal Principles

- A grant conditioned on specified use with a forfeiture provision upon nonuse creates a fee simple subject to a condition subsequent in the grantee and a power of termination in the named beneficiary.
- In condemnation, a future interest tied to breach of a condition may be compensable when the violation of the condition is reasonably probable or imminent.
- When the condemning authority’s own formal actions (including a resolution of necessity and immediate-possession proceedings) evidence commitment to an inconsistent use, the probability-of-breach requirement can be satisfied even if a technical breach has not yet occurred.
- Courts may adjudicate property interests created by a conditional deed in the condemnation action when the instrument establishes private future interests rather than a charitable trust regime.

## Conclusion

The court held that the City took a conditional fee and that Living Desert held a power of termination with compensable value because the City’s condemnation and intended golf-course use made breach of the deed condition reasonably imminent; the judgment for the City was reversed and the matter remanded for proceedings consistent with that compensability ruling.


City of Palm Springs v. Living Desert Reserve, 70 Cal. App. 4th 613 (Ct. App. 1999)