Citation. 57 Haw. 608,561 P.2d 1291, 1977 Haw.
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The driver of a motor vehicle involved in a car accident conveyed land to his sons with no consideration after a suit was filed against him.
Synopsis of Rule of Law.
In a tenancy by the entirety, the interest of a spouse is not subject to the claims of creditors during the joint lives of the spouses.
Facts.
Masako Sawada and Helen Sawada (Plaintiffs) were injured when struck by a car driven by Kokichi Endo (Defendant). Defendant owned, along with his wife, a parcel of land as of the date of the accident (November 30, 1968). On July 26, 1969, he deeded the property to his sons, but received no consideration in return. Defendant and his wife continued to live on the property. Plaintiffs received a judgment in their favor on January 19, 1971. Defendant’s wife died on January 29, 1971. Plaintiffs brought suit to set aside the conveyance in an attempt to obtain satisfaction of the judgment. The trial court refused and Plaintiffs appeal.
Issue.
When spouses hold property in tenancy by the entireties, will the interest of one spouse be subject to the claims of his or her creditors while both spouses are alive?
Held.
No. Judgment affirmed.
Under the Married Women’s Property Act, the interest of a spouse in an estate by the entireties is not subject to the claims of his or her creditors during the joint lives of the spouses.
A tenancy by the entirety is held by the husband and wife in a single legal ownership. Both and each are seized of the whole estate. At common law, the wife had no right to use and enjoy her ownership; all she possessed was her contingent right of survivorship. The Married Women’s Property Act places the wife on an equal level as her husband in regards to the exercise of ownership over the whole estate. Both spouses must consent to a conveyance of the real property. Neither has a separate divisible interest in the property.
In a tenancy by the entirety, the interest of a spouse is not subject to the claims of creditors during the joint lives of the spouses. There is no unfairness to creditors with this rule.
There is a high demand for single family residential homes. When a family owns a home, it is often their single most important asset. As long as it remains whole, it is always available for the benefit and use of the entire family. But, if a third party is allowed to make claims against it, the needs of the family would not be served.
The tenancy by entirety has an indestructible right of survivorship, which will not allow one spouse to alienate his interest. More importantly, it also has a broad immunity from the claims of creditors. Thus, the conveyance of the property in this case was not in fraud of Plaintiffs.
Dissent.
The separate interest of a husband in a tenancy by entirety, at least to the extent of his right of survivorship, is alienable by him and subject to attachment by his separate creditors. When the husband fraudulently conveys his property, the conveyance should be set aside.
Discussion.
Creditors cannot reach property when it is held as a tenancy by the entirety to satisfy debts when the other spouse has not consented.
