Taylor v. Canterbury, No. 03SC294.

• Decision Date: 28 June 2004
• Docket Number: No. 03SC294.
• Citation: 92 P.3d 961
• Parties: Noah TAYLOR, as personal representative of the Estate of Terrell Taylor, Petitioner v. Lucy I. CANTERBURY, Respondent.
• Court: Colorado Supreme Court

92 P.3d 961

Noah TAYLOR, as personal representative of the Estate of Terrell Taylor, Petitioner v. Lucy I. CANTERBURY, Respondent.

No. 03SC294.

Supreme Court of Colorado, En Banc.

June 28, 2004.

Frederickson & Johnson, P.C., Bryan T. Fredrickson, Canon City, Colorado, Attorneys for Petitioner.

Dufford & Brown, P.C., Joanne Herlihy, Denver, Colorado, Attorneys for Respondent.

Montgomery Little & McGrew, P.C., Frederick B. Skillern, for Amicus Curiae for the Real Estate Law Section of the Colorado Bar Association.

Justice KOURLIS delivered the Opinion of the Court.

I. INTRODUCTION

The question we address in this case is whether one joint tenant may extinguish a joint tenancy by conveying his interest in real property back to himself as a tenant in common. In the past, courts did not honor such transactions because of two premises: one, that someone could not be both a grantor and a grantee in the same real property transaction; and two, that in order to extinguish a joint tenancy, a joint tenant had to destroy one of the "four unities" of time, title, interest, or possession.

What is not at issue in this opinion is whether a joint tenant may destroy a joint tenancy without the consent of the other joint tenant or tenants. It is indisputable under Colorado law that one joint tenant may unilaterally dissolve the survivorship interest by creating a tenancy in common in lieu of a joint tenancy. However, for a joint tenant to sever the joint tenancy yet remain an owner of the property, courts required the use of a "strawman" transaction whereby the joint tenant executed a deed to a third person, and then a deed back from that third person to the joint tenant—this time as a tenant in common. By transferring legal title to the property held in joint tenancy to a third party, the transferor destroyed the unities of time and title and severed the joint tenancy.

We conclude that this circuitous process is no longer required under Colorado law because the two premises undergirding it are no longer valid. In Colorado and other jurisdictions around the country, joint tenancy law has evolved. The four unities are no longer the compass; rather, the polestar by which joint tenancies are now measured is the intent of the parties. For this reason, we have recognized in recent cases that acts inconsistent with the right of survivorship operate to sever the joint tenancy. Similarly, by operation of statute, the notion that a property owner may not be both the grantor and grantee in the same transaction has evaporated. Currently, the owner of real property may create a joint tenancy by conveying real property back to himself and one or more persons as joint tenants. Hence, the common law notions that once drove the jurisprudence of joint tenancy are gone. In their place are principles that focus on the intent of the property owners.

Therefore, we find no common law or legislative support for preventing a landowner from doing directly what he can do indirectly. We hold that a joint tenant who unilaterally conveys his interest in real property back to himself, with the intent of creating a tenancy in common, effectively severs the joint tenancy as to that joint tenant and the remaining joint tenant or tenants. We reverse the court of appeals and remand the case for further proceedings consistent with this opinion.

II. FACTS AND PROCEDURAL HISTORY

Terrell Taylor (Taylor) was the owner in fee simple of a 666-acre ranch in Fremont County, Colorado.¹ The Petitioner, Noah Taylor, is the personal representative for Taylor, now deceased. On March 4, 1991, Taylor executed a warranty deed that conveyed that property from Taylor as sole owner to Taylor and Lucy I. Canterbury (Canterbury) as joint tenants. The validity of that deed is not in dispute.

In 1997, Taylor executed a second deed: this time a quitclaim deed purporting to transfer the property back to himself and Canterbury as tenants in common. Taylor's manifest intent to sever the joint tenancy between himself and Canterbury, and to create a tenancy in common, could not have been clearer. The second deed stated: "It is my intention by this deed to sever the joint tenancy created by [the 1991 deed], and to create a tenancy in common." The deed was duly recorded on June 16, 1997—the same day it was executed. Taylor died on August 20, 1999.

Canterbury filed an action to quiet title to the property to herself as surviving joint tenant. In that complaint, she also asked the trial court to set aside the 1997 conveyance and award her damages arising out of Taylor's attempted conveyance. Following a bench trial, the trial court found that "as a matter of law, the right of survivorship interest of a joint tenant is an estate in land which vests on the creation of the joint tenancy." Relying on our decision in Lee's Estate v. Graber, 170 Colo. 419, 462 P.2d 492 (1969), the court concluded "that the rights of a joint tenant or joint tenants are vested and fixed at the time of the creation of the joint tenancy" and therefore the 1997 deed failed to effectively sever the joint tenancy between Canterbury and Taylor. On that basis, the court determined that "all interests which Taylor owned ... at the time of his death passed to [Canterbury] pursuant to the 1991 deed."

The court of appeals affirmed the trial court's judgment in Canterbury v. Taylor, 74 P.3d 457 (Colo.App.2003), holding that a joint tenant cannot effectively sever a joint tenancy by executing a deed which purports to convey title back to the two individuals as tenants in common. Id. at 459. Like the trial court, the court of appeals also relied on our decision in Graber to conclude that once a joint tenancy is created, the rights of each joint tenant are "fixed and vested." Id. Thus, the court concluded that Taylor's unilateral effort to sever the joint tenancy was an improper "form of dominion" over Canterbury's rights to the property. Id. The court also noted that Taylor's conveyance to himself was contrary to the general rule that a grantor and grantee cannot be the same person for purposes of conveying property. Id.

We granted certiorari to address the issue of whether it is "permissible for a joint owner of real estate to sever the joint tenancy by unilaterally conveying his interest in the property back to himself to create a tenancy in common with the other joint tenant." We answer that question in the affirmative. Therefore, we reverse the court of appeals and remand this case for further proceedings consistent with this opinion.

III. ANALYSIS

This case presents an issue of first impression in Colorado: whether the holder of an interest in joint tenancy may unilaterally sever that joint tenancy by conveying property back to himself as a tenant in common. We begin our analysis by discussing the basic characteristics of the two forms of concurrent ownership implicated in this case: tenancies in common and joint tenancies. Next, we analyze the law regarding the termination of joint tenancies in Colorado. Finally, we examine the specific subject of the validity of the transaction at issue in this case and conclude that, in light of the evolution of joint tenancy law in Colorado and other jurisdictions throughout the country, the common law principles that once supported the prohibition against a unilateral self-conveyance no longer have vitality.

A. Tenancy in Common and Joint Tenancy

A tenancy in common is a form of ownership in which each co-tenant owns a separate fractional share of undivided property. United States v. Craft, 535 U.S. 274, 279-80, 122 S.Ct. 1414, 152 L.Ed.2d 437 (2002) (citing to 7 R. Powell & P. Rohan, Real Property § 50.01[1] (M. Wolf ed.2001) (hereinafter Powell)). All co-tenants share a single right to possession of the entire interest. 7 Powell, supra, § 50.01[1]. Each co-tenant also possesses the right to: unilaterally alienate his or her interest through sale, gift or encumbrance; to exclude third parties from the property; and to receive a portion of any income derived from the property. Craft, 535 U.S. at 280, 122 S.Ct. 1414.

Conversely, joint tenancy is a form of ownership in which each joint tenant possesses the entire estate, rather than a fractional share. Id. Upon the death of one joint tenant, the remaining joint tenant or tenants automatically inherit that tenant's share in the property. Id. ("Upon the death of one joint tenant, that tenant's share in the property does not pass through will or the rules of intestate succession; rather, the remaining tenant or tenants automatically inherit it."). This feature, called the "right of survivorship," is the principal distinction between a joint tenancy and a tenancy in common. Bradley v. Mann, 34 Colo.App. 135, 525 P.2d 492, 493 (1974) ("Upon the death of one of the co-tenants in joint tenancy, the entire undivided interest of the deceased passes, by operation of law, to the surviving co-tenant.").

At common law, joint tenancies were the favored form of concurrent ownership of real property. Smith v. Greenburg, 121 Colo. 417, 218 P.2d 514, 519 (1950). If property was conveyed to two or more persons, the law presumed that a joint tenancy was intended. 4 David A. Thomas, Thompson on Real Property § 31.06(a) (David A. Thomas ed.1994) (hereinafter Thompson). For purposes of establishing a joint tenancy, the "four unities" of time, title, interest, and possession were essential components. 7 Powell, supra, § 51.01[2] (citing to 2 Blackstone, Commentaries 180); see also Tabor v. Sullivan, 12 Colo. 136, 20 P. 437, 441 (1889) (Elliott, J., concurring) (noting that joint tenancies require the four unities of time, title, interest, and possession). This requirement meant that to create a joint tenancy, "a conveyance had to convey to two or more persons at the same time the same title to the same interest with the same right of possession." 7 Powell, supra, § 51.01[2]. If one of the four unities ceased to exist, a tenancy in common...