Citation. 22 Ill.164 Cal.App.2d 591, 330 P.2d 858 (Ct. App. 1958)
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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.
Facts.
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. In 1956 the People of the State of California commenced this action to condemn the property. The People, in its complaint, alleged that Elaine Wilson was the owner of the real property in question and that the parents of Calvert were the mortgagees thereof. Elaine answered the complaint and alleged that she was the owner of the property and that the Respondents had no right or interest or title to the property. The parents of Calvert alleged that they were the owners and holders of the mortgage executed by Calvert and that the mortgage should be satisfied from the proceeds of the conde
mnation award (condemnation being an action where the state gains title to real property by paying to the property owner the fair market value of the property). The fair market value was agreed to be $13,800 and that amount was paid into the court by the People. Then a trial was had to determine the rights of Elaine and the Respondents. The trial court found that the Respondents were owed $6,440 on the promissory note secured by mortgage and that that amount plus interest should be paid to Respondents from the proceeds of the condemnation out of 50% of the funds remaining with the county clerk after certain liens which were legitimately the debt of both Elaine and Calvert were satisfied. The Respondents, as a result, were to receive 50% of the money left after the satisfaction of the liens because the amount due to them was in excess of one-half the balance remaining after the other liens had been paid. The Appellant, Elaine, argued that the execution of the mortgage by Calvert did no
t terminate the joint tenancy and sever his interest from Elaine’s, but that the mortgage was a lien against his interest as a joint tenant only, and that when he died, his interest ceased to exist and the lien of the mortgage terminated. That the result would be that Elaine was entitled to the entire award exclusive of the money due to satisfy legitimate liens.
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.
