Daily Development for Wednesday, March 22, 2000

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

JOINT TENANCY; SEVERANCE: A declaration of severance is not a "transfer" of property violative of an injunction against such transfers issued in conjunction with a pending marital dissolution.

Mitchell v. Mitchell, 76 Cal. App. 4th 1378, 1999 Cal. App. LEXIS 1100, 91 Cal. Rptr. 2d 192 (Cal. App. 1999)

Robert and Shirley, who were married, owned four properties as joint tenants. Their marriage, in the words of the court, "soured," and a dissolution proceeding was filed. Under California law, upon filing of a dissolution two things happen relevant to this dispute.

First, an automatic preliminary injunction goes into effect prohibiting the "transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate. . . ." Later, at an ex parte hearing, the court issued a separate and similar preliminary injunction.

Second, the service of process in such matters contains a statutorily mandated "warning" concerning jointly owned assets. This warns potential divorcees of what the court calls the "Hilke/Allen/Blair conundrum." Under California law, property held in joint tenancy is presumed not to be community property during the pendency of a dissolution proceeding. This means that the survivorship provision of the joint tenancy estate would be effective. After there is a final judgment of dissolution and before there is a distribution of property, the presumption is reinstated. This means that if one spouse dies druing this period, the half interest held in joint tenancy will not pass by survivorship, but will pass to that spouse's estate.

This puts a spouse in a dissolution proceeding into what the court describes as a "macabre choice." Since the neither spouse likely does not really want to give up property rights to the other spouse without compensation at this point, the spouses must weigh the economics of preserving the joint tenancy. The spouses may want to take a gamble that it is more likely the other divorcing spouse will die prior to final dissolution, thus leaving the whole property to the surviving spouse, and therefore elect not to sever the joint tenancy. Or the spouses may reject the gamble and take steps to eliminate the survivorship.

The "Warning" in the service of process that Robert received told him that the community property presumption (negating the survivorship) might not apply during the dissolution proceeding, and that he ought to consult an attorney if he wanted that presumption written into the recorded title. Instead of "writing in" the presumption, Robert recorded a declaration of severance of the joint tenancy. Apparently he didn't want to ask Shirley to alter the deed or for some other reason felt that the severance filing was more to his liking.

Robert then died prior to final decree of dissolution. A battle then ensued between Shirley and Robert's estate. Shirley argued that Robert's purported severance was invalid because it was in violation of the injunction.

Robert's estate threw up a number of arguments based upon the apparent legislative intent in providing for the issuance of the Warning, but the court found that the legislative intent was not clear enough to support the conclusions the estate wished to draw.

Ultimately, however, the court bought the estate's argument that the severance was valid because it was not a "transfer of property." The court noted that under prior California law there had been some doubt as to whether a joint tenant could make a deed to himself or herself and thus sever a joint tenancy. The enactment of a statute permitting a simple declaration of severance cured that problem, but the court pointed out that old case law discussed in the question was uniform on the point that a deed to oneself was not a "transfer." Further the court held that there was no "disposition of property" either. It noted that a transfer required a receipt by a separate party, while a disposition did not. It gave as the example of an act that would be a prohibited "disposition of property" the deliberate burning of an automobile (stranger things have happened in divorces). But, still, the filing of the severance was not a "disposition of property" because there was no "property" affected. Shirley retained her half interest in the property. The survivorship interest is a "mere expectancy" and not "property " - more analogous to the expectation of received property under a will.

The court noted an Arizona case in which a party in a dissolution proceeding actually had transferred to a straw party and received a deed back in order to effect a severance of a joint tenancy. There was an injunction in effect similar to the one in this case, but the Arizona court still concluded that no prohibited "transfer" or "disposition" had occurred. It admitted that there was a "transfer" but concluded that it was "only technical."

Comment: The editor can't quarrel with the outcome, but notes some trepidation at the court's conclusion that an expectation of survivorship in a joint tenancy is not "property." This mischievous little conclusion may cause more trouble than it's worth in future times.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

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