West v. First Agr. Bank

• Decision Date: 09 October 1980
• Parties: Ruby W. WEST v. FIRST AGRICULTURAL BANK. Joan McDOUGALL v. S & S OF N. E., INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 262

419 N.E.2d 262

382 Mass. 534

Ruby W. WEST v. FIRST AGRICULTURAL BANK.

Joan McDOUGALL v. S & S OF N. E., INC.

Supreme Judicial Court of Massachusetts, Berkshire and Middlesex.

Argued Oct. 9, 1980 (Berkshire).

Argued Oct. 8, 1980 (Middlesex).

Decided Feb. 12, 1981.

George M. Nassar, Springfield, for plaintiff Ruby West.

David O. Burbank, Pittsfield, for defendant First Agr. Bank.

John J. Lynch, Billerica, for defendant S & S of N. E., Inc.

Walter E. Chambers, Lowell, for plaintiff Joan McDougall.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, KAPLAN, WILKINS, LIACOS and ABRAMS, JJ. (Berkshire).

Before HENNESSEY, C. J., and KAPLAN, WILKINS, LIACOS and ABRAMS, JJ. (Middlesex).

KAPLAN, Justice.

For convenience, we discuss in one opinion two cases in which the respective plaintiff wives sought to present constitutional challenges to the Massachusetts form of tenancy by the entirety as it existed before its reformulation by legislation that became effective in 1980 (St.1979, c. 727, amending G. L. c. 209, § 1, effective February 11, 1980). ¹ Invoked by the plaintiff Ruby West was the equal protection clause of the Fourteenth Amendment, and by both plaintiffs, Pt. 1 Art. 1, of the Massachusetts Declaration of Rights, as amended by Art. 106 of the Articles of Amendment, effective November 2, 1976, which states in part, "Equality under the law shall not be denied or abridged because of sex ..." (hereafter E.R.A., the Equal Rights Amendment).

We shall conclude by giving effect to the older form of the tenancy as to the pre-1980 transactions at bar in both cases. That form encounters some constitutional problems which we recognize and analyze. But the retroactive alteration of incidents of the tenancy which are sought in these cases, and which would apply in many like cases, is not required and would be undesirable. The Legislature has provided for the present and future.

1. Facts and proceedings. West case. The defendant First Agricultural Bank on August 7, 1979, recovered a deficiency judgment of $36,179.52 upon a mortgage foreclosure against Ernest L. West, the plaintiff's husband. On September 15, 1979, the bank caused execution to be levied under the judgment on three parcels of land in which the husband had ownership interests, and notice was given of a sheriff's sale to occur on December 21, 1979. One of these properties was an improved parcel on Lafayette Street, Pittsfield, which had been held by the husband and the present plaintiff Ruby West as tenants by the entirety since 1954, and evidently was their residence. ²

On December 7, 1979, the plaintiff commenced her action in Superior Court to enjoin the sale of the husband's interest in the Lafayette Street property. ³ That interest, under the classic form of tenancy by the entirety prevailing in Massachusetts, would consist of his exclusive right of control, possession, and income during the joint lives, together with an "indestructible" right to a remainder if he survived his wife; and the interest could be reached by the husband's individual creditors. The wife's interest consisted only of a corresponding right of survivorship, but this was not subject to levy by her creditors (or her husband's). ⁴ The wife in the West case was asserting that the Massachusetts tenancy as described was unconstitutionally discriminatory as based on sex; therefore she must be accorded some (not clearly expressed) rights of control, possession, and income in association (not clearly defined) with those of the husband, only joint obligations of both spouses being leviable by creditors, and then (presumably) against the entire estate. The court, rejecting the wife's contention, allowed the defendant bank's motion to dismiss the complaint for failure to state a claim, and we allowed an application for direct appellate review. ⁵

McDougall case. These were the facts, as found by a master, with some amplification by the judge. The plaintiff Joan McDougall and her husband Duncan became tenants by the entirety of the property 615-631 Dutton Street, Lowell, on March 4, 1974. Before that date the premises were occupied by several businesses owned or controlled by the husband, including a corporation, S & S of New Eng., Inc. (hereafter New England). Just before the date of purchase, according to the master, New England was a tenant at will of the entire premises, paying rent to the prior owner, and allowing the other McDougall businesses to share occupancy with it. After March 4, 1974, the date of purchase, there was no agreement for payment of rent and no rent was paid; the husband simply withdrew from the businesses monthly the $1,500 needed to meet the mortgage requirements.

In May, 1976, the defendant corporation S & S of N.E., Inc. (hereafter S & S), acquired the assets and assumed the obligations of New England. The husband owned 700 of S & S's 1,000 shares; the plaintiff McDougall, one John Finnegan, and Doris Finnegan (his wife), each owned 100 shares. S & S remained an occupant of the premises. Still there was no agreement as to payment of rent by any occupant, and no rent was paid.

On May 12, 1977, the plaintiff and her husband, advised by the husband's attorney, executed a deed transferring the property to the plaintiff as an individual, and the plaintiff, in turn, executed a deed transferring the property back to the plaintiff and her husband as tenants by the entirety. ⁶ The former deed was recorded on May 17, 1977. The latter deed was not recorded. It was left in the custody of the attorney. The husband later obtained the deed, and sometime in spring, 1978, tore it into pieces, and handed the pieces to the plaintiff. She produced the pieces (taped together to form the entire deed) at the master's hearing.

On September 9, 1977, the husband sold his 700 shares in S & S to John Finnegan for $20,000. The purchase agreement stated that S & S "occupied" as a tenant at will. At that time Finnegan asked the husband about future rent, but the husband refused to discuss the question and never thereafter raised the question. Finnegan had no discussion at the time with the plaintiff about rent.

On the September, 1977, date of the sale of stock to Finnegan, the plaintiff and her husband had been separated for over a month, and the husband sued for divorce on November 9, 1977. In early November the plaintiff approached Finnegan about rent. He gave her two checks totalling $300 but then declined to pay any more. On November 5, 1977, the plaintiff served on S & S a fourteen-day notice under G. L. c. 186, § 12, to vacate for nonpayment of rent.

On February 14, 1978, the plaintiff commenced the present action against S & S for rent from June 1, 1977. ⁷ On February 17, 1978, the husband brought his separate action against S & S for rent for the same period. ⁸ On March 1, 1978, the Union National Bank took possession of the Dutton Street property upon foreclosure of a mortgage held by it which had been given by Joan and Duncan McDougall when they acquired the property in 1974.

On March 6, 1978, the two actions were referred to a master to report his findings of fact and conclusions of law without returning a transcript of the evidence. But on April 21, 1978, the husband's complaint against S & S was dismissed for his failure to appear for a deposition after notice by S & S, ⁹ so the master was confined to the wife's action for rent, the subject of the present appeal.

The master reported in August, 1978, his findings of fact and conclusions of law, and a general finding for the defendant. As matter of law, the master held that the second deed of May 12, 1977, constituted a legal reconveyance of the property to husband and wife as tenants by the entirety. It followed, according to the master, that only the husband, in his right of control, possession, and income during the joint lives, could claim rent from the property. See Cunningham v. Ganley, 267 Mass. 375, 377, 166 N.E. 712 (1929); Wingrove v. Leney, 312 Mass. 683, 684, 45 N.E.2d 837 (1942). Therefore he concluded for the defendant S & S in the action.

The judge of the Superior Court accepted the master's findings of fact but expressed no opinion as to his conclusion about the validity of the reconveyance. If that conveyance was ineffective, then the plaintiff was the individual owner and in a position to demand all the rent. But, said the judge, if the conveyance recreated a tenancy by the entirety, that estate was unconstitutional under the E.R.A. in so far as it vested in the husband the sole right to control, possession, and income during the joint lives. Therefore, the judge reasoned, the wife must be accorded a corresponding right. This might have suggested that she should recover one-half the rent. Yet the judge, holding that a rent obligation arose from the plaintiff's demand, which in the judge's view changed S & S's status as a tenant at will without rent into the status of a tenant at sufferance, allowed the plaintiff a recovery against S & S of $6,000, being the full reasonable rental (as found by the master) of $1,500 per month for the four months, November, 1977, through February, 1978 (to the date of foreclosure of March 1, 1978). From a judgment to this effect, S & S appealed, and we brought the case here on our own motion. ¹⁰

2. Constitutional questions as tendered by the parties. In neither case has it been argued that the 1980 legislation is operative, and we accept for purposes of these cases that it is not operative. Then in the West case, the wife's claim that creditors could levy only for defaulted joint obligations of the spouses seek and is predicated upon changes in fixed rules of property on constitutional grounds.

As to the McDougall case, a constitutional issue would not arise if the reconveyance could be considered ineffective, leaving the whole fee in the plaintiff wife. We are not bound to accept the master's conclusion of law to the contrary (see Mass.R.Civ.P. 53...