Estate of Knickerbocker, In re

• Decision Date: 23 February 1996
• Docket Number: 940222,Nos. 940206,s. 940206
• Citation: 912 P.2d 969
• Parties: In re Estate of Christine Cannon KNICKERBOCKER, Decedent. Bradford E. KNICKERBOCKER, Plaintiff and Appellant, v. James Q. CANNON, Defendant and Appellee. Anthony J. CANNON, Elaine A. Cannon, and James Q. Cannon, as Trustees of the Christine C. Knickerbocker Trust, and Anthony J. Cannon, as Special Administrator of the Estate of Christine C. Cannon Knickerbocker, Cross-Appellants, v. Bradford E. KNICKERBOCKER, Cross-Appellee.
• Court: Utah Supreme Court

Page 969

912 P.2d 969

In re Estate of Christine Cannon KNICKERBOCKER, Decedent.

Bradford E. KNICKERBOCKER, Plaintiff and Appellant, v. James Q. CANNON, Defendant and Appellee.

Anthony J. CANNON, Elaine A. Cannon, and James Q. Cannon, as Trustees of the Christine C. Knickerbocker Trust, and Anthony J. Cannon, as Special Administrator of the Estate of Christine C. Cannon Knickerbocker, Cross-Appellants, v. Bradford E. KNICKERBOCKER, Cross-Appellee.

Nos. 940206, 940222.

Supreme Court of Utah.

Feb. 23, 1996.

Ralph D. Crockett, James E. Bugden, Salt Lake City, for plaintiff.

Steven H. Gunn, Gerald T. Snow, Salt Lake City, for the Cannons and the Estate.

HOWE, Justice:

This appeal is from a judgment entered in several consolidated actions involving the validity of a will, a revocable trust agreement, the severance of a joint tenancy in real estate, a change of beneficiary designation on a life insurance policy, ownership of a Thunderbird automobile, and a personal representative's conversion of household furnishings and an AMC Jeep.

Plaintiff Bradford E. Knickerbocker and Christine Cannon Knickerbocker married on July 2, 1984. During their marriage, they purchased a life insurance policy from MML Bay State Life Insurance Company on Mrs. Knickerbocker's life in the amount of $325,000. The policy named Mrs. Knickerbocker as owner, Mr. Knickerbocker as primary beneficiary, and Mrs. Knickerbocker's two minor children from a previous marriage, Isaac and Abigail Jacobsen, as secondary beneficiaries. On July 22, 1991, Mrs. Knickerbocker filed a divorce action against her husband. The trial court awarded her exclusive temporary use of the house that she owned in joint tenancy with Mr. Knickerbocker and issued a temporary restraining order prohibiting him from contacting her. On August 7, 1991, the court issued another order prohibiting the parties from "selling, encumbering or mortgaging" their assets. Thereafter, Mr. Knickerbocker left the state and did not return to Utah until after Mrs. Knickerbocker's death on December 7, 1991. The divorce action was pending at that time.

About the time she filed for divorce, Mrs. Knickerbocker learned that she was suffering from a potentially life-threatening disease, diagnosed after her death as malignant intravascular lymphomatosis, a rare blood disease. As Mrs. Knickerbocker's condition worsened, she expressed concern about the welfare of her two children to her attorney, Joseph Henriod, her mother, cross-appellant Elaine Cannon, and her brother, defendant and cross-appellant James Q. Cannon. ¹ In an effort to preserve her assets for her children, she decided to establish an inter vivos trust for their benefit, execute a will naming them as her beneficiaries, and appoint Mr. Cannon as her attorney-in-fact. On August 21, 1991, while she was a patient at the University of Utah Medical Center, she executed (1) a declaration of trust and agreement establishing a trust for the benefit of her children and naming herself, Anthony J. Cannon, and Elaine Cannon as trustees; (2) her last will and testament naming Mr. Cannon as the personal representative of her estate; and (3) a durable power of attorney naming Mr. Cannon as her attorney-in-fact.

A few days before executing these documents but after the trial court had prohibited Mr. and Mrs. Knickerbocker from "selling, encumbering or mortgaging" their assets, Mrs. Knickerbocker executed a quitclaim deed "as a Joint Tenant," conveying to herself "as a Tenant in Common" her interest in the house. The deed was promptly recorded. After establishing the trust, she executed a deed conveying her one-half interest in the house to the trustees. She also told Mr. Cannon that she wished to transfer all her other assets to the trust and name the trustees as the primary beneficiaries of any life insurance policy which she held. In accordance with this direction, Mr. Cannon, acting under a durable power of attorney, transferred her "right, title and interest" in personal property, shares of stock, mutual funds, and bank accounts to the trustees. In addition, on December 6, 1991, he executed three change-of-beneficiary documents and entrusted them to Mr. Henriod to send to Mrs. Knickerbocker's insurers. Mrs. Knickerbocker died the next day.

In the days following Mrs. Knickerbocker's death, Mr. Cannon took several steps which formed the basis for actions later filed against him by Mr. Knickerbocker. In reviewing Mrs. Knickerbocker's affairs, Mr. Cannon and Mr. Henriod discovered that MML Bay State Life Insurance Company was one of her insurers. Mr. Henriod sent the company one of the change-of-beneficiary documents which Mr. Cannon had signed the day before Mrs. Knickerbocker's death. The company received the document on December 16, 1991. In keeping with Mrs. Knickerbocker's desire to leave her personal property for the benefit of the trust, Mr. Cannon arranged for the removal of the furnishings from the house. He kept them in storage until approximately nine months later when the trial court ordered them returned to the house. Mr. Cannon also sold an AMC Jeep which Mr. and Mrs. Knickerbocker had owned jointly and used the proceeds to pay funeral and legal expenses associated with the administration of Mrs. Knickerbocker's estate.

Mr. Cannon filed a petition for formal probate of Mrs. Knickerbocker's will and formal appointment of himself as personal representative of her estate. The petition was ultimately granted. Meanwhile, Mr. Knickerbocker filed actions against Mr. Cannon challenging the validity of the change-of-beneficiary document sent to MML Bay State Life, the durable power of attorney, the severance of the joint tenancy in the house, and the revocable trust agreement. He also sought damages for Mr. Cannon's conversion of the household furnishings and the Jeep. The court consolidated these actions, and Mr. Knickerbocker moved for partial summary judgment on the conversion and joint tenancy issues. The court granted this motion, holding that Mr. Cannon's removal of the household furnishings constituted conversion and ordered him to mitigate damages by returning them. The court also found that Mrs. Knickerbocker's attempt to sever the joint tenancy in the house was legally ineffective because (1) she did not effectively convey the property to a third party, and (2) it violated the August 7, 1991, order prohibiting the parties from "selling, encumbering or mortgaging" their assets.

After further discovery, the court held a jury trial. However, the jury was dismissed by stipulation after the second day, and the court issued findings of fact and conclusions of law disposing of all remaining issues. Relevant to this appeal, the court held that Mr. Cannon successfully changed the designation of beneficiary on Mrs. Knickerbocker's MML Bay State life insurance policy from Mr. Knickerbocker to Anthony J. and Elaine Cannon as trustees of Mrs. Knickerbocker's trust. The court also ordered Mr. Cannon to pay nominal damages in the amount of $2 to Mr. Knickerbocker for the conversion of the items of household furnishings in which he held an interest. Finally, the court ruled that upon Mrs. Knickerbocker's death, Mr. Knickerbocker became the sole owner of the Jeep by right of survivorship and that its sale by Mr. Cannon constituted conversion. Mr. Cannon was ordered to pay Mr. Knickerbocker damages in the amount for which the Jeep was sold.

Mr. Knickerbocker appeals, contending that the trial court erred in finding that Mr. Cannon effectively changed the designation of beneficiary. He also challenges the court's award of nominal damages for the conversion of the household furnishings, arguing that the proper measure of damages is the fair rental value of the furnishings. Finally, he contends that the amount of damages for the conversion of the Jeep should be measured by the blue book value, not by the amount for which it was sold.

Mr. Cannon, Anthony J. Cannon, and Elaine Cannon cross-appeal, asserting that the trial court erred in ruling that Mrs. Knickerbocker failed to sever the joint tenancy in the house. In their brief, they also contend that the court erred in ruling that Mr. Knickerbocker became the sole owner of the Jeep and a Thunderbird automobile at his wife's death. However, at oral argument, they conceded that this ruling was correct as to the Jeep pursuant to Utah Code Ann. § 75-6-201(4).

I. THE JOINT TENANCY

Before examining Mr. Knickerbocker's assignments of error, we address cross-appellants' argument assailing the trial court's ruling that Mrs. Knickerbocker failed to sever the joint tenancy. This issue is most appropriately addressed in three parts. In the first part, we will determine whether Mrs. Knickerbocker's quitclaim deed from herself as joint tenant to herself as tenant in common was valid. Second, we will examine whether the deed violated the trial court's order in the divorce proceeding prohibiting the parties from "selling, encumbering or mortgaging" their assets. Finally, we will determine whether Mrs. Knickerbocker's conveyance of her interest in the house to the trustees violated the order.

A. The Unilateral Severance

Historically, a joint tenant could unilaterally terminate a joint tenancy by destroying one of the four unities essential to joint tenancy--time, title, interest, and possession. II American Law of Property § 6.2, at 8-9 (1952). A joint tenant could destroy the unities of title and interest by selling or mortgaging his interest to a third party. Tracy-Collins Trust Co. v. Goeltz, 5 Utah 2d 350, 356-57, 301 P.2d 1086, 1089-90 (1956). Alternatively, a joint tenant could arrange a "strawman" transaction, in which he would convey his interest to a third party who would immediately convey it back to the grantor. However, a joint tenant could not terminate a joint tenancy by executing a unilateral self-conveyance because such a conveyance had no legal effect and could not destroy any of the four...