Property
Class Notes
Secret severance
One
of the problems with joint tenancies is that they are easy to sever. It’s even possible to sever them secretly!
Let’s
say a husband and wife own property as joint tenants with the right of
survivorship. The husband executes a
deed conveying his interest in the property to a straw and then the straw
reconveys the property to the husband.
The husband never tells the wife.
What if the wife dies first? He
could pretend that the deed never happened and get everything! What if the husband dies first? He’ll leave the deed where his folks can find
it, which would mean that the wife only gets half. This seems unfair! But it’s certainly possible to do.
Harms v.
Sprague
Here
is a mortgage on a farm held as joint tenants by two brothers. The brothers have a falling out. One brother moves out and lends money to a
friend by taking out a mortgage on his share of the farm. But then he dies, and it turns out that the
mortgage is worthless because the other brother gets the whole farm. The moral of the story is that the bank must
require either to have the joint tenancy severed, or have both joint tenants
sign off on a loan. In that case, if all
tenants join in to sell the property, that doesn’t sever the joint tenancy,
they’ll just have a joint tenancy in the proceeds of the sale. In order to have a severance, there must be
an intent to sever.
What
happened here? A couple is
divorcing. The wife sought a restraining
order to try to keep him from withdrawing money from two survivorship
accounts. The husband closed the joint
accounts, withdrew the money, and then put them into accounts in his name
only. He was served with the complaint
the next day. Not long after, the wife
went into a coma and later died. Her
daughter wants to get the money.
Joint
accounts are a very common way of holding wealth. But usually, it’s just for convenience. Couples will put money in joint checking
accounts because they pay the bills jointly.
A lot of times they have no idea what will happen when one of them dies!
Also,
joint accounts are frequently used to make gifts to children. Litigation arises over the parties’ actual
intent very frequently. What did they
intend when they made the contribution to the joint account? (1) What did they intend when they’re both
alive? (2) What did they intend upon the
death of one of the contributors? You
must be able to answer both questions.
How
does this court deal with it? The court
eventually concludes that the husband should get basically just that money
which he put in.
What
is the effect of the
This
court is concerned that joint tenancy accounts were being used as will
substitutes. The court is suspicious of them
even though they are very commonly used.
The normal formalities of a will are not complied with in the case of
these accounts. However, the court will
recognize them anyway as an exception to the
What
about the Uniform Probate Code sections that are quoted? What is their function? A rebuttable presumption is created that
during the lifetimes of the joint tenants they mean to own shares proportional
to how much money they put in rather than in the form of a present gift. There is also a rebuttable presumption that the
whole shebang goes to the survivor upon the death of the other tenant. But there are other reasons you could have a joint
tenancy account. You would just
introduce evidence to show a contrary intent to the one presumed.
But
what’s the problem with this rule? Who
will introduce the evidence? The one who
isn’t dead! If one of the joint tenants
is dead, it will be difficult rebutting the evidence of the living joint tenant. During the lifetime of the parties, things
will be easier to handle.
Here’s
an example: A, B, and C each contribute $5,000 to a joint account. So all three of them own $5,000, unless there
is clear and convincing evidence that one of them intended to make a gift to
another one. Now C dies. A and B both own $7,500. C has nothing. This is consistent with the two presumptions
that the court adopts.
The
rule of Thompson has since been overruled
in Wright v. Bloom because this rule
led to a lot of litigation in
The
later case found that the second rebuttable presumption of Thompson actually should not
be rebuttable. Once one of the joint
tenants dies, the presumption in favor of a survivorship account is
irrebuttable. The problem was one of
endless litigation. They have gone back
to a situation where there will be lower administrative costs, though more of a
chance of injustice.
Williams v.
Studstill
At
the time the will was made,
Furthermore,
did the joint tenancy get severed when Mary transferred her interest to
Williams?
The
court reads the devise of
The
Goldacre
goes to A and B jointly with the right of survivorship. Amy transfers her interest to her nephew Norman. Betty dies, willing her estate to “Environmental
Awareness”.
What
is the first issue? What do A and B
have? There’s a presumption in favor of
the tenancy in common. In that case,
they each have half of the estate. The
environmental group would get Betty’s half.
But is this a tenancy in common?
The language of the deed seems clear that the right of survivorship is
intended, which is inconsistent with the tenancy in common. The language is likely enough to overcome the
presumption for tenancy in common. If it
was a joint tenancy with right of survivorship, there’s an issue as to whether
Amy severed the joint tenancy when she gave her interest to her nephew. After severance, Betty’s half would still go
to the environmental group.
But
it turns out that it won’t be a joint tenancy because
In