In re Abdallah

• Decision Date: 12 April 1984
• Docket Number: Bankruptcy No. 80-01759-L.
• Citation: 39 BR 384
• Parties: In re George ABDALLAH, Debtor.
• Court: U.S. Bankruptcy Court — District of Massachusetts

39 B.R. 384 (1984)

In re George ABDALLAH, Debtor.

Bankruptcy No. 80-01759-L.

United States Bankruptcy Court, D. Massachusetts.

April 12, 1984.

James M. Langan, Langan, Dempsey & Brodigan, Boston, Mass., for Eva Abdallah (non-debtor surviving spouse of the above-named debtor).

S. James Boumil, Lowell, Mass., for Richard Drury (administrator of the estate of Mary T. Abdallah, mother of the debtor).

Jordan L. Shapiro, Shapiro & Shapiro, Malden, Mass., for George Abdallah, Jr. (son of the debtor).

Allen H. Roffman, Chelsea, Mass. (Chapter 7 Trustee).

Charles P. Bennett, Jr., Riemer & Braunstein, Boston, Mass., special counsel to the Trustee.

MEMORANDUM AND ORDER RE MOTION TO COMPEL SALE OF ASSETS

THOMAS W. LAWLESS, Chief Judge.

The issue before the Court is whether the trustee can sell, pursuant to 11 U.S.C. § 363(h), property that was held by the debtor and his non-debtor spouse as tenants by the entirety on the day of the bankruptcy filing where the debtor died prior to the filing and allowance of the § 363(h) action.

This internecine feud of the Abdallah family came into this Court when George Abdallah (the "Debtor") filed a Chapter 7 petition on October 8, 1980. Most, but not all, of the family members involved and their relationship with the Debtor are set forth above and will not be repeated. Nor will the various allegations by and between the Abdallahs be addressed other than to state that the battle began in 1965 when the Debtor assumed the duties as executor under his mother's will and allegedly began to misappropriate assets from his mother's estate. In the decade and a half preceding the filing of this bankruptcy proceeding, various family members/creditors of the Debtor had commenced actions in the Probate and Family Court, the Middlesex Superior Court, and the District Court of Lowell, and obtained in those actions various attachments, judgments and levies against various parcels of real estate which they claimed were owned by the Debtor and/or fraudulently conveyed by the Debtor to various third parties.

On July 28, 1981, approximately nine months after the filing of the Debtor's Chapter 7 petition and while the bankruptcy case was still pending, the Debtor died. On or about July 30, 1982, the trustee in bankruptcy brought an Adversarial Motion for Leave to Sell at public auction various parcels of real estate either owned by the Debtor and his non-debtor spouse as tenants by the entirety or by third persons who had purchased the property from them prior to the bankruptcy. After several continuances, a hearing was held on January 13, 1983 on the Trustee's motion and the seven written objections thereto, whereupon the Court denied the Trustee's motion without prejudice as being an improper vehicle to effectuate a disposition of property standing in the name of third parties. Subsequently, on June 13, 1983, Richard Drury, Esq., administrator of the estate of Mary T. Abdallah (the Debtor's mother), by his attorney S. James Boumil, Esq. (the Debtor's nephew), brought a motion to compel the sale of only those parcels of real estate that were held by the Debtor and his non-debtor spouse as tenants by the entirety at the time of the filing of the bankruptcy petition (the "creditor's motion"). The property is alleged to consist of three rental properties and the personal residence of the late Debtor and his wife, including twenty-five acres of land.

After hearing the creditor's motion, the objections thereto, and having afforded all interested parties an opportunity to submit briefs on the issue (the last of which was filed on January 10, 1984), I find as follows:

A debtor's undivided interest in property held as tenants by the entirety is included in his estate in bankruptcy as are all of his legal and equitable interests in property, however held. 11 U.S.C. § 541(a). See In re Ford, 3 B.R. 559 (Bkrtcy.Md.1980), aff'd per curiam sub nom, 638 F.2d 14 (4th Cir.1981); D'Avignon v. Palmisano, 34 B.R. 796 (D.Vt.1982). The undivided interest passes to the estate without any severance of the unities of time, title, identity of interest and possession, intact and unaltered, and may thereafter be exempted¹ from the estate. See In re Ford, supra, at 571; In re Panholzer, 11 B.C.D. 447, 36 B.R. 647 (Bkrtcy.D. Md.1984). This is characteristic of entireties property and not of property held as joint tenants with a right of survivorship, which is severed by the filing of a bankruptcy petition. See In re Panholzer, supra, at 449.

State law defines the nature and extent of a debtor's and, therefore, the estate's interest in property. "Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding." Butner v. U.S., 440 U.S. 48, 54-55, 99 S.Ct. 914, 917-18, 59 L.Ed.2d 136 (1979). Accordingly, the nature of the Debtor's interest in the property held as tenants by the entirety is determined by the law of Massachusetts. See In re Ignasiak, 22 B.R. 828, 829 (Bkrtcy.E.D.Mich.1982).

The husband's interest in tenancy by the entirety property, under the classic form of tenancy by the entirety prevailing in Massachusetts,² consists of his exclusive right of control, possession, and income during their joint lives, see Raptes v. Pappas, 259 Mass. 37, 155 N.E. 787 (1927), together with an "indestructible" right to the remainder if he survived his wife; and the husband's interest could be reached by his creditors. See West v. First Agricultural Bank, 382 Mass. 534, 536, 419 N.E.2d 262 (1981). The wife's interest consisted only of a corresponding right of survivorship, but this interest was neither alienable nor subject to levy by her creditors or her husband's. Id. The survivorship right in either spouse is indestructible in the sense that partition is not available to a tenant by the entirety. See M.G.L. c. 241 § 1. However, the husband could dispose alone of his survivorship right, while the wife could not so dispose of her survivorship. See Licker v. Gluskin, 265 Mass. 403, 404-407, 164 N.E. 613 (1929); Raptes v. Pappas, 259 Mass. 37, 38-39, 155 N.E. 787 (1927). Both spouses, acting together, could convey the estate, destroying both survivorships. See Bernatavicius v. Bernatavicius, 259 Mass. 486, 487, 156 N.E. 685 (1927). Unless the parties intended or agreed otherwise, upon divorce the tenancy dissolved and becomes a tenancy in common. Id. at 490.

In the event that the wife survived her husband, upon his death she took no new title by survivorship, but held under the deed by virtue of which she was originally seized by the whole. Palmer v. Treasurer & Receiver General, 222 Mass. 263, 265, 110 N.E. 283 (1915). The right of survivorship is an attribute of the ownership by each spouse of the entire estate from the time it was conveyed to them; it is not a contingent future interest in the surviving spouse, superadded to a joint life estate. C. Moynihan, Introduction to the Law of Real Property, at 230 (1962). In Palmer, supra, at 265, 110 N.E. 283, the court held that on the death of either the husband or the wife who held real estate as tenants by the entirety, no beneficial interest accrued to the other by survivorship so as to create succession, and so no part of the estate was subject to tax. "Upon the testator's (the husband's) death the estate was simply freed from participation by him. The complete title of a surviving tenant by the entirety is not acquired by intestate succession, but by reason of the nature of the estate." Id. While this tax ruling has subsequently been overturned by statute, the basis of the court's decision —that the survivor takes by virtue of the title and not by the death of the spouse—has as its basis the common law concept that tenants by the entirety are seized of the whole and not of a share, per tout et non per my. Judge Moynihan has said:

If you find this concept difficult to grasp, you are not alone. In his dissenting opinion in King v. Greene, 30 N.J. 395, 413, 153 A.2d 49, 60 (1959) Chief Justice Weintraub had this to say: "The estate by the entirety is a remnant of other times. It rests upon the fiction of a oneness of husband and wife. Neither owns a separate distinct interest in the fee; rather each and both as an entity own the entire interest. Neither takes anything by survivorship; there is nothing to pass because the survivor always had the entirety. To me the conception is quite incomprehensible."

C. Moynihan, Introduction to the Law of Real Property, 229, at note 1 (1962). Comprehensible or not, this is the law in Massachusetts under which the estate's interest in this property must be determined.

In Raptes v. Pappas, 259 Mass. 37, 155 N.E. 787 (1927), the creditor levied on the husband's interest in property held as tenants by the entirety and it was sold at sheriff's sale. The creditor purchased the interest at the sale and proceeded to bring a writ of entry, alleging that she was entitled to what amounted to an estate for the joint lives of the husband and wife with a contingent remainder in fee. The Massachusetts Supreme Judicial Court affirmed judgment for the creditor, saying:

A tenancy by the entirety may be taken on an execution against the husband, and the purchaser at the sale on execution may maintain a writ of entry against him for possession and title. Such possession and title will fail in the event of the wife surviving him. The purchaser may maintain the writ against the wife for possession but not for her title; if she survives her husband she will have an absolute title with the right to possession. If the husband survives the wife the demandant\'s title will be absolute.

Id. at 38-39, 155 N.E. 787. Thus, the trustee's status as a lien creditor does not prevent the extinguishment of the estate's interest in the tenancy by the entirety property upon...