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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