In re Killman, Case No. 08-61703 (Bankr. W.D. Mo. 2/26/2010)

Decision Date26 February 2010
Docket NumberAdversary No. 09-6075.,Case No. 08-61703.
CourtU.S. Bankruptcy Court — Western District of Missouri

ARTHUR B. FEDERMAN, Bankruptcy Judge

The Chapter 7 Trustee in the Debtors' bankruptcy case filed this adversary proceeding seeking turnover of, and authority to sell, residential real property which is partially owned by Debtor Reitha May Killman, but which is occupied by her mother, Elaine Kissee, as her residence. The Defendants include Reitha Killman, Elaine Kissee, and Reitha's sister, Judy Lambeth, who also has an ownership interest in the property.1 This is a core proceeding under 28 U.S.C. § 157(b)(2)(E) over which the Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b), 157(a), and 157(b)(1). The following constitutes my Findings of Fact and Conclusions of Law in accordance with Rule 52 of the Federal Rules of Civil Procedure as made applicable to this proceeding by Rule 7052 of the Federal Rules of Bankruptcy Procedure. For the reasons that follow, Judgment will be entered in favor of the Trustee.

Elaine Kissee is ninety years old. She has two daughters, Debtor Reitha Killman, formerly known as Reitha Fowler, and Judy Lambeth. She acquired the property at issue here in 1972, after her husband had passed away, using proceeds from the sale of farm land to pay the full purchase price. She moved into the property at that time and has occupied it as her residence since then. She has never placed a mortgage on the property. Elaine was the sole record owner of the property from 1972 until 1984.

On January 17, 1984, Elaine executed a General Warranty Deed (the 1984 Deed) which transferred the residence from herself alone to herself, Reitha, and Judy as joint tenants, and not as tenants in common, with right of survivorship. She recorded the 1984 Deed on January 19, 1984.

More than twenty years later, on September 15, 2005, Elaine executed another General Warranty Deed (the 2005 Deed), this time purporting to transfer the residence from herself to Reitha and Judy, and reserving a life estate for herself. The 2005 Deed was recorded on September 17, 2005.

Elaine continues to live in the residence by herself; her daughters have never lived with her in that residence. She alone paid for the property, and she has paid all taxes, insurance, and maintenance on the property. She testified that she recalled executing both the 1984 Deed and the 2005 Deed, and her intent at each time was that her daughters receive the property at her death.

Reitha and her husband, Lonnie Dean Killman, filed a voluntary Chapter 7 bankruptcy petition on September 8, 2008. The Chapter 7 Trustee in their case filed this adversary proceeding seeking turnover of the property, and authority to sell it, with Reitha's share of the proceeds coming into the estate for the benefit of her creditors. Reitha, Judy, and Elaine all oppose the relief requested, in sum asserting that, although Reitha's and Judy's names are on the deeds, the property actually belongs to Elaine. Alternatively, if Reitha has an interest in the property by virtue of the deeds, such interest is so remote that a sale of her interest would be of inconsequential benefit to the estate. Finally, they assert that the detriment to Elaine in selling the residence outweighs any benefit to the estate, and equity requires that Elaine be permitted to remain in her long-time residence.

A debtor's bankruptcy estate is comprised of all legal or equitable interest of the debtor in property as of the commencement of the case.2 Section 541 is very broad and includes property held jointly by a debtor and a nondebtor.3 The nature of a debtor's interest in property, however, is determined by non-bankruptcy state law.4

We start with the premise that, under Missouri law, the holder of title to real property is presumed to be the owner of such property:

Real property recordation is a subject with roots in history deeper [than] the birth of our nation and, despite attempts to develop a better method. . . ., it remains largely unchanged over the centuries. The purpose of recordation is to put the world on notice that someone claims an interest in the property. In recording the deed, anyone who later desires to purchase the property can determine the true owner and any other interest claimed in the property.5

We start, therefore, with an analysis of the deeds.

Section 442.025 of the Missouri Statutes permits an owner of real estate to convey such real estate to herself and other persons in the same manner as a conveyance from a stranger who owned the real estate to the persons named as the grantees in the conveyance.6 Hence, by virtue of the 1984 Deed, Elaine validly transferred the property from herself to herself and her daughters. Subsequent to the execution of the 1984 Deed, the three of them were, therefore, co-owners of the property. The question, then, is the form in which the co-owners owned the property.

Section 442.450 of the Missouri Statutes provides that "[e]very interest in real estate granted or devised to two or more persons, other than executors and trustees and husband and wife, shall be a tenancy in common, unless expressly declared, in such grant or devise, to be in joint tenancy."7 Here, the 1984 Deed expressly transferred the property to the three women as joint tenants, and not as tenants in common, with right of survivorship.

Although the 1984 Deed was quite clear that the transfer was as joint tenants with right of survivorship, the Trustee points out that joint tenancy requires four unities: (1) the co-tenants must have one in the same interest (unity of interest); (2) the interest must accrue by one and the same conveyance (unity of title); (3) the interest must commence at one and the same time (unity of time); and (4) the property must be held by one and the same undivided possession (unity of possession).8 The Trustee has suggested that, since neither of the daughters has ever lived in the residence with their mother, the unity of possession might have been lacking and, therefore, the 1984 Deed may have instead created a tenancy in common despite its language. However, I found no authority for the premise that unity of possession requires that all of the tenants live on the property,9 and since there was no evidence that Elaine has ever excluded either of her daughters from the property,10 I find that when Elaine executed the1984 Deed, the three of them then owned the property as joint tenants with right of survivorship.

In Missouri, co-tenants are presumed to take equal undivided interests in property unless the deed specifies otherwise.11 Hence, because the 1984 Deed did not specify any other proportion of ownership, the three women are presumed to have each owned a one-third interest in the property, with a right of survivorship, from 1984 until the execution of the 2005 Deed, discussed below.

Regarding the presumption of equal ownership, the Defendants contend that, since Elaine alone paid the full purchase price, and has paid all taxes, insurance, and maintenance on the property, the presumption of equal ownership has been rebutted. As the Trustee concedes, the presumption that each co-tenant takes an equal undivided interest in the property may be rebutted, in certain circumstances, by proof that the co-tenants contributed unequal amounts toward the purchase of the property.12 However, such a presumption can only be rebutted when there is "neither a family relationship among the co-tenants nor any evidence of donative intent on the part of those who contributed more than their pro rata amounts toward the purchase price."13 In other words, "[an] unequal contribution is irrelevant in determining the joint tenants' respective shares when there is a family relationship between the tenants or when there is evidence of donative intent."14

Defendants asserted at trial that Elaine lacked donative intent because she did not intend for the property to pass to her daughters until her death. However, because Elaine, Reitha, and Judy have a family relationship, I need not reach the question of donative intent as to this issue. Because of the family relationship, the unequal contribution is irrelevant and the presumption of equal ownership stands.

Nevertheless, the Defendants rely on the case of Food Services Corp. v. Rheam.15 In that case, a mother executed a deed conveying real property to herself and her son as joint tenants with rights or survivorship, and the deed did not specify the respective ownership interests in the property. As is the case here, the son contributed nothing toward the acquisition or maintenance of the property, and the evidence was that he was added as a joint tenant for estate planning purposes. The son's creditor then registered a judgment against the son in the county where the property was located and sought partition and half of the proceeds. In ruling against the creditor, the Missouri Court of Appeals for the Southern District held that, notwithstanding Christen v. Christen's declaration that unequal contributions are irrelevant when there is a family relationship, the trial court could look at unequal contributions by the mother and son.

Rheam does support the Defendants' position on this issue. As I indicated at the conclusion of the trial, however, I agree with the Trustee that Rheam was, simply put, wrongly decided. First, Christen v. Christen, and the cases on which it relied, could not be more clear that unequal contributions are irrelevant when there is a family relationship or donative intent. In addition, in reaching its decision in Rheam, the Court of Appeals relied on cases evaluating interests in bank accounts. As the Trustee points out, the rights of joint owners...

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