Matter of Spain, Bankruptcy No. BK 79 3543
| Decision Date | 05 February 1988 |
| Docket Number | Bankruptcy No. BK 79 3543,Adv. No. 83 1122. |
| Citation | 83 BR 61 |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
| Parties | In the Matter of William Harold SPAIN, Debtor. John P. WHITTINGTON, Trustee of the Estate of William H. Spain, Plaintiff, v. GILBRALTER SAVINGS & LOAN ASSOCIATION, North Shelby County Fire District, Tax Collector of Shelby County, and Mary P. Spain, Defendants. |
Milton G. Garrett, Birmingham, Ala., for debtor.
John P. Whittington, Birmingham, Ala., trustee.
J.N. Holt, Birmingham, Ala., for trustee.
Toffel & Wainscott, Birmingham, Ala., for Mrs. Spain.
The mystery in this case is, "where is Mrs. Spain's right of survivorship?" and if she has lost it, "how did she do it"?
An apology must go to the Court of Appeals for not properly bringing before the Court the facts which rival the confusion discussed by Dickens in his novel, Bleak House. There were many ways to decide this case, but the Court conceived that the unanswered question of the trustee's lack of title needed to be dealt with, and was one of the main reasons for denying the trustee's Complaint.
Mrs. Spain is a long-time school teacher. She purchased her home with her husband, within walking distance of the Mountain Brook High School where she was teaching, on the 13th day of August, 1973. At the time of the purchase of their home, due to the confusion in the law and its unsettled state, the Spains employed a reputable title lawyer to draft the deed, expressing their desire to be sure that if one died, the other would, by operation of law, succeed to full ownership without further court action and despite what the other, unilaterally, would do. The deed followed form 5 described by Circuit Judge Carl in his article hereafter discussed, and as drafted, contained the following language in the granting clause, "for and during their joint lives and upon the death of either of them, then to the survivor of them in fee simple, together with every contingent remainder and right of reversion", and the following language in the habendum clause, "for and during their joint lives and upon the death of either of them, then to the survivor of them in fee simple, and to the heirs and assigns of such survivor forever, together with every contingent remainder and right of reversion," making the language in form 5 and the language in the Spain deed identical, and we quote from Judge Carl's article as follows:
That language clearly creates a concurrent ownership and a survivorship interest. It\'s not as clear which one it creates and thus whether such survivorship interest is destructible or indestructible. The language uses the word "joint" in its reference to the "joint lives" of the grantees, but it also provides that upon the death of one of the grantees the interest will pass to the survivor "in fee simple". The deed also refers to contingent remainders. Technically, under a joint tenancy the survivor takes nothing by survivorship because he had always owned the whole. The death of the other joint tenant merely removes an impediment to the survivors (sic) complete ownership. The other deeds that create joint tenancies do use language to the effect that if one grantee survives the other "the entire interest in fee simple shall pass to the surviving grantee," but those deeds clearly establish that they intended to create a joint tenancy, with right of survivorship. The language in the fifth form will very likely have to be interpreted by the courts some day and the courts may very well look beyond the language in the deed to other evidence in order to determine the intent of the parties at the time the deed was executed.1
If the purchase had been made nine months earlier, these questions would not have arisen and many questions raised by this case would not need to be dealt with.
The Spains paid Eleven Thousand Two Hundred and no/100 Dollars ($11,200.00) cash and executed a purchase money mortgage for Forty Four Thousand Eight Hundred and no/100 Dollars ($44,800.00), with monthly payments of approximately Three Hundred to Four Hundred and no/100 Dollars ($300.00 or $400.00). They executed a second mortgage on the house to Peoples Bank & Trust, Booneville, Mississippi, for Fifteen Thousand and no/100 Dollars ($15,000.00), and at the time of bankruptcy, had no equity.2
William Harold Spain filed a Chapter 7 petition on the 9th day of October, 1979, and John Whittington qualified and served as Trustee. Although Spain claimed the home exempt, the trustee apparently never dealt with this claim of exemption and this fact is discussed later in this Opinion.
Mr. Spain had been in the automobile sales business with his father in Mississippi. The Court has struggled with the bankruptcy case through eleven adversary proceedings, as well as a suit between Spain and Nissan Motors, which ended up in a trial by jury in the District Court after several years. There were other suits involving Spain in the Mississippi State Courts and an administrative matter involving considerable litigation is still pending in the state court in Mississippi.
The trustee has accumulated a very small cash estate, but the case is essentially no-asset unless the trustee can sell the home.
In the eight years of the trustee's tenure, no effort was made by the trustee to gain possession of the real estate. He testified he drove by the house in his car with a real estate agent, Jane Clements, on one occasion, but never went into the house.
Rarely has such a controversy been created by a decision dealing with the important question of the title to land as by the case of Nunn v. Keith, 209 Ala. 518, 268 So.2d 792 (1972).
As explained in Nunn, the law recognizes two estates in land, among others, by which a husband and wife may hold title to their home, both dating from the English common law. In 1945, the Alabama legislature revived survivorship by joint tenancy by amending Title 47, § 19 of the Code of Alabama 1940, by adding as follows:
. . . provided, however, that in the event it is stated in the instrument creating such tenancy, that such tenancy is with right of survivorship, or other words used therein showing such intention, then upon the death of one joint tenant, his interest shall pass to the surviving joint tenant or tenants according to the intent of such instrument. Code of Alabama, 1940 (Recomp.1958), Title 47 Section 19 Code of Alabama 1975 Section 35-4-7.
One of the purposes was to protect the wife by insuring her a safe ownership of a home for her life at the possible disadvantage of the husband's would-be heirs, including sometimes his children.
The "right of survivorship" was held indestructible in the case of Bernhard v. Bernhard, 278 Ala. 240, 177 So.2d 565 (1965), and immune from any ex parte acts of the husband, but subject to their joint voluntary desire. This statutory indestructibility was nullified by Nunn v. Keith, supra, holding that certain ex parte acts by the husband alone could deprive the wife of her rights. Simply put, Nunn returned to joint tenancy as defined at common law, in effect changing the law of Alabama and declaring a legislative purpose different from that declared in Bernhard. The Nunn decision created consternation, confusion and frustration among the Bench and the Bar. Lawyers had written hundreds of deeds for clients in the eight year "window" in reliance on Bernhard. All of this is revealed in the Nunn decision and many articles, treatises and opinions were written.3
Since the two named decisions give a comprehensive and learned discussion and history of joint tenancies, it should be sufficient to merely refer to them. Many articles, treatises and opinions have dealt with this subject and it is fair to say that confusion seems to reign supreme.
Justice James Coleman, in his dissenting opinion in the Nunn case foresaw of the discord, dismay and dissension that followed:
I do not agree that the legislature intended to forbid the conveyance or devise of land to two or more persons during their joint lives with the entire fee to pass to the last survivor on the death of the other grantees. Such a conveyance creates an estate different from a common law joint tenancy. Nunn v. Keith, 268 So.2d at 801.
Since the title to land must go somewhere, it was declared that the destruction of the joint tenancy left the landowners as tenants in common. Chief Justice Torbert, in Durant v. Hamrick, 409 So.2d 731 (Ala. 1981), declared a solution for the dilemma by recognizing another form of concurrent ownership of property with provisions for survivorship, to wit:
. . . as tenants in common for life with cross-contingent remainders in fee, indestructible as at common law. Durrant v. Hamrick, 409 So.2d at 738.
Since joint tenancy is now destructible, and thereby anathema to lawyers, they have shunned the use of that method of holding land by husband and wife. It is hoped the legislature will come to the rescue. In the meantime, drafters of deeds do so at their peril and some malpractice suits have been filed.
J.N. Holt, attorney for the trustee, is perhaps the most resourceful and knowledgeable bankruptcy lawyer in the state. John Whittington, the trustee, is recognized as the authority on Chapter 11 petitions in Alabama and possibly the nation. There are newspaper articles to support these assertions. Mr. Holt openly asserts that the trustee is a co-owner with Mrs. Spain of her home and has the right to occupy, jointly, with her. Fortunately, for him, he has not tried to put this notion in practice.
Section 70(a) of the former Bankruptcy Act provided:
The trustee of the estate of a bankrupt and his successor or successors, if any, upon his or their appointment and qualification, shall in turn be vested by operation of law with the title of the bankrupt as of the date of the filing of the petition initiating a proceeding under this Act, except insofar as it is to...
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