Daily Development for Tuesday, September 16, 2008
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri
JOINT TENANCY; PARTITION: Upon the death of one of two joint tenants with right of survivorship, the entire undivided property interest automatically vests in the surviving individual, thereby eliminating any pending partition action.
Rusnak v. Phebus, ___ S.W.3d ___, 2008 Westlaw 2229514 (Ten. Ct. App. 2008).
In 1995, Oliver executed a durable power of attorney in favor of Phebus, her daughter, giving Phebus the right to manage Oliver’s property. Oliver became ill and moved closer to Phebus, and Phebus attempted to obtain Medicaid benefits to defray the cost of Oliver’s nursing care at Northside Health Care Center. However, Oliver’s financial assets prevented her from qualifying for the program. Acting on the advice of an attorney, Phebus used her power of attorney to transfer $45,000 of Oliver’s assets to Phebus in return for a 45% share in Phebus’s Nashville condominium. A deed was executed, which created a joint tenancy with right of survivorship.
Subsequently, Phebus stopped making full payments to Northside (though she did pay the entire amount of Oliver’s monthly social security income and the rental income attributed to her 45% ownership of the Nashville condominium) and applied for Medicaid benefits. When her application was denied due to Oliver’s husband’s assets, Northside petitioned the circuit court for appointment of a conservator. The court found that the deed for the Nashville condominium was a self-serving transaction, and that when coupled with Phebus’ failure to bring Oliver’s account current with Northside, court assistance was necessary. Therefore, the court appointed Rusnak as conservator, terminated Phebus’ rights under the power of attorney, and ordered Rusnak to submit an inventory of Oliver’s property within 60 days. Rusnak filed a complaint for partition of the Nashville condominium. Shortly thereafter, Oliver died.
Phebus filed a motion to dismiss the complaint, asserting that the conservatorship ended when Oliver died, and that Phebus (as the survivor) held the undivided title to the condominium by operation of law. Rusnak argued that the suit should be allowed to continue due to a state statute providing that civil actions “do not abate by the death, or other disability of either party, or by transfer of any interest therein, if the cause of action survives or continues.” Northside filed a motion to intervene and also requested that the court not dismiss the claim. The court granted Northside’s motion to intervene and denied the motion to dismiss the partition action. In granting Northside’s motion for summary judgment, the circuit court held that “[b]ecause the suit was commenced before the death of Ms. Oliver, we find that the action may continue now . . . .” It therefore ordered the condominium to be sold, with 45% of the proceeds payable to Oliver’s estate.
On appeal, Phebus argued that when considering this issue as a matter of first impression, the Tennessee Court of Appeals should follow the “well-established rule” applicable to joint tenancies with right of survivorship, that “the death of a joint tenant during the pendency of a partition action extinguishes the partition action, leaving 100% of the ownership with the surviving tenant.” To address this issue, the court first discussed Cobb v. Gilmer, 365 F.2d 931 (D.C. Cir. 1966), which analyzed the rationale for the general rule. Specifically, at the moment of death, title to property vests exclusively in the surviving tenant, and severance of the joint tenancy does not occur until the suit for partition reaches final judgment.
The court concluded that “the [general] rule is a sound one that was created to protect the integrity of survivorship interests in joint estates,” and it held in favor of Phebus that “a partition action abates upon the death of a joint tenant where ownership of the whole vests in the other joint tenant by operation of law.”
Comment: We have set forth previously a number of cases that have recognized a severance of a joint tenancy by relatively minor transfers by one of the joint tenants without the knowledge or consent of the other.
In the situation in this case - an action for partition - one joint tenant actually addresses the other joint tenant through court proceedings and demands that the court not only sever but actually divide the property. Note that a necessarily implied part of any partition is a severance. In the situation in this case - an action for partition - one joint tenant actually addresses the other joint tenant through court proceedings and demands that the court not only sever but actually divide the property. Note that a necessarily implied part of any partition is a severance. Note that if the partition suit were a severance, then of course there would be no survivorship and the partition could proceed against the deceased mother’s estate.
It seems odd to the editor that a joint tenant can accomplish by a secret, even sneaky, act what the joint tenant cannot accomplish by an open declaration that it chooses to end the joint tenancy. What is the rationale for such a rule?
The authorities cited by the Tennessee court certainly support its contention that the rule exists, but, except for relatively formalistic pronouncements, none propounds a thoughtful policy rationale.
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