Diamond v. Diamond

Citation467 A.2d 510,298 Md. 24
Decision Date01 September 1982
Docket NumberNo. 144,144
PartiesWillard R. DIAMOND, II, et al. v. Lois F. DIAMOND. ,
CourtCourt of Appeals of Maryland

Ronald B. Katz, Baltimore (Melvyn J. Weinstock and Weinberger & Weinstock, P.A., Baltimore, on the brief), for appellants.

Dean P. Gunby, Baltimore (Leslie L. Gladstone, Baltimore, on the brief), for appellee.

Argued before MURPHY, C.J., and SMITH, ELDRIDGE, COLE, DAVIDSON, RODOWSKY and COUCH, JJ.

COLE, Judge.

The primary issue presented in this case is whether a check payable to a man, his wife and their attorney tendered by an insurance company in settlement of the husband's claim for personal injuries and the husband's and wife's claim for loss of consortium may be attached to satisfy the husband's individual debt.

On January 30, 1978, a judgment was entered in the Circuit Court for Baltimore County in favor of Lois Diamond Daniels against her former husband, Willard R. Diamond, II, in the amount of $28,589.80. During the same year Willard and his new wife, Sondra, brought a law suit against Atkinson Freight Lines, Inc., and Albert Durant, claiming damages in the amount of $2,000,000 for personal injuries to Willard and $85,000 for loss of consortium on behalf of Willard and Sondra. In both suits Willard was represented by Leonard Orman, Esquire.

Interrogatories answered by Willard indicated that he had lost approximately $60,000 in wages and suffered permanent back injuries which disabled him by 25%. In addition he had spent approximately $1,240.00 in medical expenses. Fireman's Fund Insurance Company (hereinafter Fireman's Fund), the defendants' insurer, settled the entire claim with the Diamonds for $30,600.00 without apportioning the proceeds among the individual claims.

On November 21, 1980, Fireman's Fund issued a check payable to Willard and Sondra Diamond and their attorney in the amount of $30,600.00. The check was forwarded to the attorney. On that same day Lois filed an attachment on all funds in Orman's possession which were payable to Willard. Orman responded to the attachment and prayed judgment for costs, asserting that he had notified the garnishor that he did not possess any assets of Willard to which Willard was entitled individually but possessed only assets owned as tenants by the entireties by Willard and Sondra Diamond. Subsequent to the service of the attachment Orman deposited the check in his business account.

Lois also served a writ of attachment upon Fireman's Fund. The insurer stopped payment on the check and the $30,600.00 which it represented was deposited with the clerk of the Circuit Court for Baltimore County following consolidation of the Writs of Attachment.

After an evidentiary hearing, the Circuit Court for Baltimore County issued a Memorandum Opinion and Order on December 14, 1981, stating that the settlement funds were not owned by Willard and Sondra Diamond as tenants by the entireties. Therefore, the funds were severable and Willard's share could be attached. The court apportioned the funds according to the ad damnum clauses contained in the original suit and determined that the value of Willard's individual claim for damages was $29,300 and that the value of the joint claims for lost consortium was $1,300. The court further ruled that the claim for attorney's fees was preempted by the attachment. On December 15, 1981, the court ordered that the unpaid balance of Lois' judgment be paid from the funds which Fireman's Fund had paid to the clerk of the circuit court.

The Court of Special Appeals affirmed the judgment of the circuit court in an unreported per curiam opinion, Diamond v. Diamond, No. 107 filed September 23, 1982. Willard, Sondra and Leonard Orman petitioned this Court for a writ of certiorari, raising three basic issues:

[I] Did the Court of Special Appeals err in upholding the Circuit Court's decision that Willard and Sondra Diamond did not own the settlement funds as tenants by the entireties?

[II] Did the Court of Special Appeals err in upholding the Circuit Court's apportionment of the settlement funds?

[III] Did the Court of Special Appeals err in upholding the Circuit Court's finding that Appellant, Leonard Orman's attorney's lien against the settlement funds was preempted by the judgment of Appellee?

We shall address these questions separately.

I

Willard and Sondra first assert that the Court of Special Appeals erred in ruling that there was no evidence of an intent to create a tenancy by the entireties in the settlement funds. They contend that the settlement proceeds clearly were intended to be held as tenants by the entireties because the money was for their total claims. They point to the testimony of Sidney Leech, attorney for Fireman's Fund, which indicates that the claims were not discussed separately and that there was never an apportionment of the settlement funds. The settlement consisted of only one check which was made payable to a husband and wife. Thus, they argue that property transferred to a husband and wife jointly is presumed to be held as tenants by the entireties.

This Court recently examined the law of tenancy by the entireties in this State in Beall v. Beall, 291 Md. 224, 234, 434 A.2d 1015 (1981). We stated:

Maryland retains the estate of tenancy by the entirety in its traditional form. By common law, a conveyance to husband and wife does not make them joint tenants, nor are they tenants in common; they are in the contemplation of the law but one person, and hence they take, not by moieties, but by the entirety. Neither can alienate without the consent of the other, and the survivor takes the whole. Tenancy by the entirety may not be severed by the consent of one of the parties or by their individual judgment creditors during their joint lives; except in the case of absolute divorce, during the lifetime of both tenants their estate may be terminated only by the joint action of both and a conveyance by both to a third person. [Citations omitted.]

It is well established that this Court recognizes that a tenancy by the entireties may be created in personal property. See M. Lit, Inc. v. Berger, 225 Md. 241, 170 A.2d 303 (1961); Schildt v. Schildt, 201 Md. 10, 92 A.2d 367 (1952); Beard v. Beard, 185 Md. 178, 44 A.2d 469 (1945); Brewer v. Bowersox, 92 Md. 567, 48 A. 1060 (1901). A number of our sister states are in agreement with this view. See, e.g., Ramsey v. Ramsey, 259 Ark. 16, 531 S.W.2d 28 (1975); Widder v. Leeds, 317 A.2d 32 (Del.Ch.1974); Tingle v. Hornsby, 111 So.2d 274 (Fla.App.1959); Matter of Estate of Au, 59 Haw. 474, 583 P.2d 966 (1978); Saylor v. Saylor, 389 S.W.2d 904 (Ky.1965); Campagna v. Campagna, 337 Mass. 599, 150 N.E.2d 699 (1958); Murphy v. Michigan Trust Co., 221 Mich. 243, 190 N.W. 698 (1922); Runco v. Ostroski, 361 Pa. 593, 65 A.2d 399 (1949); First American National Bank v. Evans, 220 Tenn. 393, 417 S.W.2d 778 (1967); Swanton Sav. Bank & Trust Co. v. Tremblay, 113 Vt. 530, 37 A.2d 381 (1944); Oliver v. Givens, 204 Va. 123, 129 S.E.2d 661 (1963); Wambeke v. Hopkin, 372 P.2d 470 (Wyo.1962).

It also is well settled in this State that property held in a tenancy by the entireties cannot be taken to satisfy individual debts of a husband and wife. Lake v. Callis, 202 Md. 581, 97 A.2d 316 (1953); Hertz v. Mills, 166 Md. 492, 171 A. 709 (1934); McCubbin v. Stanford, 85 Md. 378, 37 A. 214 (1897). As we stated in Hertz, supra, 166 Md. at 496, 171 A. 709:

The essential nature of an estate by the entireties precludes the recognition of any burden upon it resulting from the separate act or obligation of either of the co-owners. To regard a judgment against one of them as a lien upon his or her interest in such an estate would be in derogation of the entirety of title with which each is invested.

Thus, if the settlement check was held by the couple as tenants by the entireties then Lois could not attach the check. However, Willard and Sondra did not own the check as tenants by the entireties.

Both the trial court and the Court of Special Appeals relied on our decision in Jones v. Jones, 259 Md. 336, 270 A.2d 126 (1970), as controlling. We agree.

In Jones, a husband and wife retained an attorney to represent them relative to injuries sustained by the wife in an automobile accident. The wife's claim was for personal injuries while the husband's claim was for reimbursement of certain medical expenses paid by him. The couple separated prior to settlement of their claims. The problem in this case was that a single settlement was reached in satisfaction of both claims and the husband and wife could not agree as to the allocation between them of the sum collected. As in the case at hand, the settlement check was payable to the husband, wife, and attorney.

The wife instituted a declaratory judgment action to determine ownership of the funds. The husband asserted that the court lacked jurisdiction on the ground that the sum obtained in settlement was owned as tenants by the entireties and therefore could not be divided. The Court recognized that "a tenancy by the entirety might be created in personal property." Id. at 338, 270 A.2d 126. However, the Court found prior Maryland cases, including Banking & Trust Co. v. Neilson, 164 Md. 8, 164 A. 157 (1933) (suggesting that a conveyance to husband and wife gives rise to a presumption of a tenancy by the entireties), to be distinguishable. The Court noted that in the real estate and personal property settings examined by Maryland cases, there was a discernible intent to transfer property to a husband and wife as tenants by the entireties:

When a husband and wife purchase real estate and it is conveyed to the two of them as tenants by the entireties there is a positive direction for the creation of the estate. If one spouse has contributed the entire purchase price, then by directing that it be titled as tenants by the entireties he has manifested a positive intent to create the estate. Likewise,...

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