Hutchinson Nat. Bank and Trust Co. v. Brown

• Decision Date: 05 May 1988
• Docket Number: No. 60645,60645
• Citation: 12 Kan.App.2d 673,753 P.2d 1299
• Parties: HUTCHINSON NATIONAL BANK AND TRUST COMPANY, Appellant, v. Ida M. BROWN, Appellee.
• Court: Kansas Court of Appeals

Page 1299

753 P.2d 1299

12 Kan.App.2d 673

HUTCHINSON NATIONAL BANK AND TRUST COMPANY, Appellant, v. Ida M. BROWN, Appellee.

No. 60645.

Court of Appeals of Kansas.

May 5, 1988.

Review Denied June 22, 1988.

A unilateral pledge of a certificate of deposit held in joint tenancy severs the unity of interest thereby dissolving the joint tenancy as a matter of law and creating a tenancy in common.

William F. Bradley, Jr., and Joan M. Saylor, of Martindell, Swearer, Cabbage, Ricksecker & Hertach, Hutchinson, for appellant.

Stanley R. Juhnke, Hutchinson, for appellee.

Before BRISCOE, P.J., RULON, J., and ROBERT L. BISHOP, District Judge, assigned.

RULON, Judge:

Plaintiff, Hutchinson National Bank and Trust Company, appeals from the declaratory judgment granted defendant, Ida Brown, by the Reno County District Court. The primary issue on appeal is whether a unilateral pledge of a certificate of deposit, held in joint tenancy, severs any one of the four unities required for the continued existence of a joint tenancy. We find that the unity of interest is severed and reverse.

The essential facts are not disputed by the parties. The district court summarized the facts as follows:

"On May 22, 1981, Harry Brown purchased a $15,000 certificate of deposit at the Hutchinson National Bank. It was issued, at his request, in the names of Harry and his wife, Ida, as joint tenants. On May 21, 1984, the grandson of Harry, Dale Brown, applied for a loan of $15,000 at Hutchinson National Bank. Harry was with Dale. The Bank indicated that it would need some security for such a loan, and Harry agreed to pledge the certificate of deposit. Harry and Dale both signed the note and security agreement. Harry told Ida what he had done shortly afterwards. Harry died on January 19, 1985, and the Bank paid the interest on the certificate of deposit to Ida until this case was filed. On March 27, 1986, Dale Brown filed a petition in bankruptcy. On July 11, 1986, the Bank filed this suit, asking that it be allowed to apply the $15,000 certificate of deposit against the note of Dale Brown."

The district court concluded that (1) the pledge of the certificate of deposit in joint tenancy did not sever the joint tenancy; (2) Ida had no duty to inform the Bank that she did not consent to the pledge by Harry and was not estopped to contest the pledge; and (3) at Harry's death, the certificate of deposit passed, by operation of law, to Ida free and clear of any lien or security interest of the Hutchinson National Bank.

Judgment was entered for Ida.

This court's review of conclusions of law is unlimited. Utility Trailers of Wichita, Inc. v. Citizens Nat'l Bank and Tr. Co., 11 Kan.App.2d 421, 423, 726 P.2d 282 (1986) (citing Baker v. R.D. Andersen Constr. Co., 7 Kan.App.2d 568, 571, 644 P.2d 1354, rev. denied 231 Kan. 799 [1982].

It is well settled that the creation and continued existence of a joint tenancy requires the coexistence of four unities: time, title, interest, and possession. Neaderhiser v. State Dept. of Social & Rehab. Serv., 9 Kan.App.2d 115, 117, 673 P.2d 462 (1983) (citing Simonich, Executrix v. Wilt, 197 Kan. 417, 421, 417 P.2d 139 [1966].

A joint tenancy may be terminated (1) by mutual agreement of the parties; (2) by any conduct or course of dealing sufficient to indicate that all the parties have mutually treated their interests as belonging to them in common; or (3) by operation of law upon the destruction of any one or more of the necessary unities. Carson, Executrix v. Ellis, 186 Kan. 112, 115, 348 P.2d 807 (1960); Federal National Mortgage Ass'n v. Elliott, 1 Kan.App.2d 366, 370, 566 P.2d 21 (1977). The record in the present case does not indicate that (1) Harry and Ida mutually agreed to terminate the joint tenancy or (2) they mutually engaged in any conduct or course of dealing that would indicate they both treated their interest in the CD as belonging to them in common. The question, therefore, is whether the pledge destroyed one of the four required unities.

A pledge, by definition, "is a bailment of personal property as security for a debt ..., the property being redeemable on specified terms and subject to sale in the event of default." Columbia Casualty Co. v. Sodini, 159 Kan. 478, 484, 156 P.2d 524 (1945). Our Supreme Court has held that a pledge constitutes a lien on the property pledged, Walton v. Piqua State Bank, 204 Kan. 741, 754, 466 P.2d 316 (1970), and that a mortgage creates a lien upon real...