Brief Fact Summary. The Appellant Elaine Wilson and Calvert Wilson (now deceased) owned property as joint tenants until the death of Calvert in 1955. Prior to Calvert’s death, the couple separated in July of 1954, and thereafter, without Elaine’s knowledge or consent, Calvert executed a promissory note to his parents (Respondents) for $6,440, and then delivered a mortgage to his parents on the property in question.
Synopsis of Rule of Law. In this jurisdiction the act of mortgaging property by one of the tenants in a joint tenancy is not sufficient to sever the tenancy, and the interest of the mortgagee will terminate if the mortgaging tenant dies before the non-mortgaging tenant.
So long as these unities exist the right of survivorship is an incident of the tenancy and upon the death of one joint tenant the survivor becomes the sole owner in fee by right of survivorship and no interest in the property passes to the heirs, devisees or personal representatives of the joint tenant first to die.View Full Point of Law
Issue. Does the execution of a mortgage by one joint tenant terminate the joint tenancy?
Held. No. Judgment reversed.
The Court begins by stating the rule that, in this jurisdiction, the act of mortgaging property does not transfer title to the mortgagee, but only creates a charge or lien upon the property. Thus, the mortgagee (Calvert’s parents) had no rights in possession nor title.
The Court cited a prior case involving a judgment lien on the interest of one tenant in a joint tenancy. In that case it was held that while the joint tenants were alive each had a specialized type of life estate with a contingent remainder in fee, the contingency being which person survives the other. In that case the court held that the judgment lien attached only to the interest of the debtor and terminated at his death. The Court then held that the case of a mortgage interest where only one tenant has mortgaged an interest cannot be distinguished from a judgment lien against one tenant only.
The Court notes that other jurisdictions have found that a joint tenant has a right to mortgage his interest and that such an act severs the joint tenancy. However, the Court noted that those cases were in jurisdictions in which the act of mortgaging property did pass title to the mortgagee, as opposed to the law in this jurisdiction. Also, the Court found the logic in those decisions to be wanting, and failed to find the cases cited by Respondents to be persuasive.
The Court noted that the promissory note was payable upon demand and that the Respondents (Calvert’s parents) could have enforced their lien by foreclosure and sale prior to Calvin’s death and that would have severed the joint tenancy. Since the parents chose to await the contingency of which joint tenant died first they did so at their peril. The Court found that there was nothing unfair about this result.
Discussion. Consider the equities present in this case. Elaine was an innocent spouse who had no idea that the property had been mortgaged. The Court seemed to desire a result which would not harm Elaine’s interest and reward Calvert and his parents for Calvert’s non-disclosure of the mortgage and promissory note.