Idaho Reaffirms the Common-Law Ban on Unreasonable Restraints on Alienation and Adopts the Restatement (Third) Utility-vs-Harm Test

1. Introduction

Smallwood v. Little arises from a multigenerational family land division in Teton County, Idaho. After Edith Little’s farmland was placed into a family partnership and later dissolved, the land was split into three parcels and deeded in 1993 to her three children (and, through later transfers, to their descendants and related entities).

The dispute centers on near-identical deed clauses (the “Restrictions”) that prohibited each grantee and “[their] heirs now living” from selling, conveying, or encumbering the property during the lifetimes of those persons—except transfers/encumbrances in favor of the other two parcel owners or “their heirs.” Functionally, for as long as any 1993 “measuring lives” (grantees and heirs alive in 1993) remained living, each parcel could be transferred only to siblings/nieces/nephews—not to spouses, children, or grandchildren.

Appellants (owners of two parcels) sought declaratory relief and to quiet title, arguing the Restrictions were unreasonable restraints on alienation under Idaho common law. Respondents (owners aligned with the third parcel) defended the Restrictions and argued Idaho Code section 55-111A displaced the common law. The district court agreed with Respondents, granted summary judgment, and held the common-law rule against unreasonable restraints on alienation had been abrogated. The Idaho Supreme Court reversed.

2. Summary of the Opinion

The Court vacated the judgment, reversed summary judgment for Respondents, and remanded for further proceedings, awarding costs to Appellants under Idaho Appellate Rule 40(a).

3. Analysis

3.1 Precedents Cited (and How They Shaped the Decision)

A. Statutory interpretation / common-law abrogation framework

• Farber v. Idaho State Ins. Fund (with “abrogated on other grounds by Verska v. Saint Alphonsus Reg'l Med. Ctr.): The Court relied on Farber for baseline interpretive method—start with plain text; read provisions in context; avoid surplusage; if unambiguous, enforce as written. This disciplined textual approach made it difficult for Respondents to prevail on “implied abrogation” absent express statutory language.
• McCann v. McCann (quoting Baker v. Ore-Ida Foods, Inc.): These cases supplied the principle that the Legislature can abrogate common law, but courts recognize modification only where the implication is clear.
• Mickelsen v. Broadway Ford, Inc. (quoting Statewide Constr., Inc. v. Pietri): The Court emphasized that common law is not changed by “doubtful implication.” This maxim functioned as a thumb on the scale against reading Idaho Code § 55-111A as silently eliminating the unreasonable-restraint doctrine.
• Moon v. Bullock (superseded on other grounds; referenced through Doggett v. Boiler Eng'g & Supply Co.): The Court invoked the canonical constraint that statutes alter common law only as far as their “words and circumstances import.”
• Cox v. St. Anthony Bank & Tr. Co.: Provided the presumption that no change to common law is intended unless the statute clearly indicates otherwise—critical to rejecting Respondents’ “complete governance” theory.

B. Idaho restraint-on-alienation doctrine and property-policy anchors

• Lake v. Equitable Sav. & Loan Ass'n: The Court used Lake to define “restraint on alienation” by adopting Restatement (First) of Property § 404(1). That definition framed the Restrictions as classic direct restraints limiting later transfers/encumbrances.
• Funk v. Funk: Cited for two propositions: (i) restraints on alienation are disfavored and strictly construed against the restricting party; and (ii) the litigant invoking unreasonableness bears the burden of proof. Even though Appellants bore the burden, the Court found unreasonableness established on the undisputed record.
• Intermountain Realty Co. v. Allen: This case supported the practical consequence that a lease is a “conveyance or encumbrance.” The Court used that proposition to illustrate the Restrictions’ real-world severity: they likely bar leasing, not just sales or mortgages.
• Easterling v. Clark (quoting Backman v. Lawrence): These cases supplied a policy backdrop—Idaho public policy favors “the full use of lands.” The Court treated the Restrictions’ interference with financing and productive use as inconsistent with that policy.

C. The pivotal “complete system” dispute: narrowing Locklear v. Tucker

Respondents’ main precedent was Locklear v. Tucker, where the Court described the then-statute as “a complete system governing alienation of real property” while rejecting a rule-against-perpetuities challenge to an option/right of first refusal.

Smallwood cabined Locklear in three ways:

• Issue alignment: Locklear addressed whether statute supplanted the rule against perpetuities, not whether it abolished the distinct doctrine of unreasonable restraints on alienation.
• Contextual reading: The “complete system” phrase was read as limited to the perpetuities problem the statute targeted—particularly where Locklear distinguished vesting from alienability.
• Legislative evolution: The Court noted statutory amendments over time (including 1957 and 2008 changes), reducing the persuasive reach of a 1949 gloss for today’s text and dispute.

The upshot: Locklear could not bear the weight of Respondents’ argument that § 55-111A occupies the entire field of alienation restraints.

3.2 Legal Reasoning

A. Distinguishing two doctrines: perpetuities vs. unreasonable restraints

The Court treated the common-law rule against perpetuities and the common-law rule against unreasonable restraints on alienation as related but distinct doctrines. Idaho Code § 55-111 expressly abolishes the perpetuities rule (“There shall be no rule against perpetuities…”), and § 55-111A replaces it with a statutory duration limit (lives in being plus 25 years) on suspending the “absolute power of alienation.”

Critically, the Court reasoned that addressing duration (how long alienability can be suspended) is not the same as addressing reasonableness (whether the form and effects of a restraint are acceptable given utility vs. harm). Because the statutes did not expressly abrogate reasonableness review—and because doubtful implication cannot displace common law—the Court held the unreasonable-restraint doctrine survives.

B. Adoption of a new Idaho reasonableness test (Restatement Third balancing)

Idaho had not previously articulated a general standard for determining when a restraint becomes “unreasonable.” The Court adopted Restatement (Third) of Property (Servitudes) § 3.4:

“Reasonableness is determined by weighing the utility of the restraint against the injurious consequences of enforcing the restraint.”

This was not merely a citation; it was an express adoption of a balancing framework that invites courts to evaluate (i) the restraint’s purpose and benefits, and (ii) the concrete burdens and distortions it creates in operation.

C. Applying the balancing test to the Restrictions

On utility, the Court inferred a legitimate family-preservation aim (“keep the property within the family for at least the lifetime of one generation”), but found the clause’s drafting undermined that purpose.

On injury, the Court identified multiple practical harms that outweighed any utility:

• Misalignment with the presumed family-transfer goal: The clause bizarrely permits transfers to siblings/extended heirs but forbids transfers to spouses and lineal descendants (children/grandchildren), producing a family-hostile result inconsistent with the likely intent.
• Easy circumvention undermines utility: Because permissible transferees are not bound in the same way, an owner can route the land through a “sympathetic intermediary,” effectively dissolving the restraint and defeating any “keep it in the family” function.
• Economic/operational impairment: A sweeping bar on “encumber[ing] the property in any way” blocks operating loans and other financing fundamental to farming/ranching and improvements.
• Likely prohibition on leasing: Under Intermountain Realty Co. v. Allen, leasing is a conveyance/encumbrance—so the clause likely blocks ordinary agricultural leasing as well.

Anchored by Idaho’s policy favoring the full use of lands (Easterling v. Clark quoting Backman v. Lawrence), the Court concluded the Restrictions are unreasonable restraints on alienation “as a matter of law.”

3.3 Impact

A. Doctrinal impact: a two-step validity inquiry in Idaho

After Smallwood, parties evaluating transfer restrictions in Idaho should treat validity as at least a two-step inquiry:

1. Statutory duration compliance (Idaho Code § 55-111A): even if a restraint fits within “lives in being + 25 years,” that is not the end of the analysis.
2. Common-law reasonableness review (Restatement Third balancing): the restraint may still be invalid if its harms outweigh its utility.

B. Transactional impact: drafting family-land restrictions

The opinion sends a clear caution to drafters of family-ownership restrictions: broad bans on sale/encumbrance—especially those that (i) exclude spouses and lineal descendants, (ii) prevent financing and leasing, or (iii) contain structural loopholes that defeat their own purpose—are highly vulnerable.

It also suggests that courts will scrutinize whether a restriction’s text actually effectuates its purported utility, not merely whether the goal sounds legitimate.

C. Litigation impact: summary judgment posture and “as written” consequences

The Court’s willingness to hold unreasonableness “as a matter of law” on an undisputed record indicates that, where a restraint’s burdens are obvious from the instrument’s language and ordinary property practice (financing, leasing, marketability), courts may invalidate without trial—particularly where the record lacks evidence supporting a concrete, proportionate utility.

4. Complex Concepts Simplified

• Restraint on alienation: A clause that limits an owner’s ability to transfer property (sell, gift, mortgage, lease, etc.). Idaho recognizes restraints are disfavored and strictly construed against the party seeking to enforce them.
• Rule against perpetuities vs. unreasonable restraints: The perpetuities rule is about when interests must vest (or, in statutory substitutes like § 55-111A, how long alienation can be suspended). The unreasonable-restraint doctrine is about whether a restraint is too burdensome or harmful given its purpose—even if it is time-limited.
• “Lives in being”: People alive at the time a legal limitation is created; statutes sometimes use those lives as measuring sticks for permissible durations.
• Balancing test (utility vs. injury): Courts weigh the benefits of enforcing the restraint (e.g., preserving family ownership) against the harms it causes (e.g., blocking loans, blocking leasing, depressing value, creating irrational inheritance outcomes).
• Summary judgment / de novo review: Summary judgment is granted only if no material facts are disputed and the movant wins as a matter of law. On appeal, the Idaho Supreme Court reviews that decision without deference on legal questions.

5. Conclusion

Smallwood v. Little is a significant Idaho property decision for two reasons. First, it definitively rejects the notion that Idaho Code §§ 55-111 and 55-111A silently displaced the common-law rule against unreasonable restraints on alienation. Second, it supplies a long-missing statewide standard by adopting Restatement (Third) of Property (Servitudes) § 3.4’s utility-versus-injury balancing.

Applying that standard, the Court invalidated sweeping intra-family deed restrictions that (as written) both frustrate their own purported purpose and materially impair productive land use—reinforcing Idaho’s policy preference for the full use and marketability of land.