Posting for

Tuesday, October 19, 1999

by: Bert Rush

JOINT TENANCY/TENANCY IN COMMON/ESCROW AND CLOSING

The Supreme Court of Vermont has held that a joint tenancy must be created by "clear and definite" language, else it won't fly in the Green Mountain State--intentions of the parties notwithstanding.

This curious case is Kipp v. Chips Estate, 732 A.2d 127 (1999).

In August 1987 there was recorded a warranty deed conveying the subject land from Byllee Gould to Ervin W. Chips and June Kipp. The granting clause of the deed provided the land was conveyed to "Ervin W. Chips and June Kipp, joint tenants, and their heirs and assigns forever." But the habendum clause (the portion of the deed following the granting clause, beginning with the words "To have and to hold...") described the grantees as "tenants in common, and their heirs and assigns."

After Mr. Chips died in October 1994, a dispute arose between June Kipp and Mr. Chips' son over the son's claim to have inherited his father's undivided one-half interest in the property. In January 1997, June Kipp filed suit seeking a declaratory judgment that the 1987 deed created a joint tenancy--so that upon Mr. Chips' death Ms. Kipp acquired a 100% interest in the property as the surviving joint tenant.

The trial court ruled in favor of the son (the Chips Estate), deciding that the language of the habendum clause was governing and it created a tenancy in common.

Ms. Kipp appealed, arguing that the wording of the granting clause should be controlling, and in the event the deed was found to be ambiguous she should be permitted to introduce extrinsic evidence (in the form of her testimony and that of the attorney who prepared the deed) to show the intent of the parties.

But the Supreme Court affirmed the trial court, holding first that the rule of deed construction urged by Ms. Kipp was outweighed by other rules of contract interpretation and public policy.

First, said the Court, the "rule" that wording of a granting clause should be controlling is "actually an aid to construction and not a positive rule of law." As such, it should be used along with other such aids.

Second, the Court said the rule espoused by Ms. Kipp must be "assessed in light of the role of a habendum clause to modify, to limit or to explain...the granting clause."

Third, the Court said the rule applies only if the granting clause is "expressed in clear and unambiguous language."

(Citation omitted.)

And, fourth, the Court said the Vermont legislature has made clear that the tenancy in common is to be preferred to a joint tenancy (citing 27 V.S.A. section 2), so "legislative policy requires that we resolve ambiguity in favor of a tenancy in common rather than a joint tenancy." (Citing cases interpreting similar statutes in Maine, Massachusetts, and New Hampshire.)

With this as background, the Court held that the wording of the granting clause was internally inconsistent, and is ambiguous, because after the term "joint tenants" there is added "and their heirs and assigns forever." Said the Court:

"The additional language suggests that upon

the death of one of the grantees, the grantor

intended that the grantee's undivided one-half

interest would pass to his or her heirs and assigns,

rather than to the surviving grantee."

Since the granting clause was found "unclear," the Court turned to the habendum clause to support its holding that the deed created a tenancy in common.

As for Ms. Kipp's second argument, that she should be permitted to introduce extrinsic evidence to show the intent of the parties, the Court held it was proper to exclude the extrinsic evidence because it "would not be helpful." Said the Court:

"(W)e do find internal inconsistency in the

wording of the granting clause, but the meaning

of that clause is fully explained by the habendum.

We conclude that the writing as a whole is

unambiguous, and the trial court acted within its

discretion in refusing to admit the proffered

evidence."

The Court went on to repeat its conviction that "legislative policy" weighs heavily in favor of the tenancy in common in Vermont, and concluded:

"Even if the extrinsic evidence was

overwhelming that the parties to the deed

in this case intended to create a joint

tenancy, that intent was inadequately

expressed to allow us to find such a

property interest."

Comment: This case reminds me of one of the things I miss about being in private practice: Trying to explain decisions like this to your client.

My first disconnect occurs where the Court holds that the wording of the granting clause is internally inconsistent. A fundamental rule of contract interpretation is that if language is capable of having a reasonable interpretation then it should be given that interpretation. Cannot the wording of the granting clause be interpreted to convey to Mr. Chips and Ms. Kipp, as joint tenants, and to the surviving joint tenant's heirs and assigns forever?

Either way--another fundamental rule is that the courts should interpret contracts so as to enforce legitimate and lawful intentions of the parties.

It's surprising to see how strongly motivated the Court is to enforce the perceived "legislative policy" to favor the tenancy in common.

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Following Tuesday's posting, Paul Trefz (Valley Forge/Philadelphia) writes:

Goodbye Mr. Chips!

The VT court's analysis echoes our traditional practice here in PA; to overcome the presumption in favor of tenancy in common requires clear and unambiguous language. The deed in the reported case is an enigma wrapped in a mystery (to mis-quote Churchill on another subject altogether); not only does the language of the grant conflict with that in the habendum, but even within the grant the phrases "joint tenants" and "their heirs and assigns" are mutually exclusive.

The intent of the parties may be relevant as between themselves, but the rest of the world is stuck with the terms of the recorded document. If asked to insure this title I would have required the joinder of the estate/heirs of the departed Mr. Chips.

Frank Melchior (Iselin, NJ) writes:

This ruling is totally consistent with every case I've ever read on joint tenancy. Unless the survivorship right is clearly and unambiguously set forth, courts will deem the conveyance to create a TIC. In the instant case there was a clear ambiguity.

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Following up on Tuesday's posting, Joe Attura (South Portland, ME) writes:

Unfortunately, what we see here is further substantiation of a theory I have espoused for years to Hal Miller (our Vermont savant) which explains his Supreme Court decisions: That is, the significant dope cloud created by Woodstock in '69 drifted east with the prevailing winds and got stuck in the Vermont hills and mountains, and Vermonters (and their justices) have been breathing the stuff ever since!

Kidding aside, since the court cited a Maine case (probably Palmer v. Flint, a 1960 case holding that the intent to create a jt must be clear and convincing), I am a bit disturbed by the decision. Prior to 1968 when the Maine legislature abolished the need for "words of inheritance"-- and habendum clauses, by the way--the custom in Maine was to create jt's in the same manner as the Vermont deed.

The primary reason for this was that deeds in general use for a considerable time were on forms printed by one company which included the suspect language. The result is that title attorneys in Maine consider the Vermont language historically acceptable, interpreting it to mean the heirs and assigns of the survivor. However, the current practice is to simply state "as joint tenants."

Fortunately, the court went beyond a mere interpretation of the jt language, assigning considerable weight to the contradictory habendum clause (pre-printed?) and the statutory presumption of tenancies in common. I suppose that will keep me from getting hives over the thought of countless policies we have issued relying on that language.

Maybe we should just give Vermont back to the Abenakis....

Reply: Yes, the Maine case cited in Kipp v. Chips Estate is Palmer v. Flint, 161 A.2d 837 (1960). I don't see anything in Kipp about whether the deed was a pre-printed form.

Gary Casaly (Boston) writes:

How about this one: A testator left property to "my son Thomas . . . and my son William . . . . share and share alike, or to the survivor of them." The court said that the sons took the title equally upon the testator's death as tenants in common, noting that "[t]he expression "share and share alike," standing alone would create a tenancy in common [citations omitted]." The Supreme Judicial Court of Massachusetts rejected the notion that a joint tenancy had been created but said, with respect to the question of a class gift among the brothers, "we think that the purpose of the latter words 'or to the survivor of them' was to provide for the contingency where only one son might be living [at the testator's death].

In such case the surviving son was to take all. [Citation omitted]. As both sons were [living at the testator's death], the controlling words are those creating a tenancy in common, and the sons took equally." Cross v. Cross, 324 Mass. 186, 85 N.E.2d 325 (1949).

And how about this one: Where a deed granted property to "James Miller, being unmarried, and Dimitri Katsowney and Elfena Katsowney, his wife, as joint tenants and not as tenants in common" the same court said: "The deed is ambiguous as to the estate granted to Miller. As a matter of syntax the words 'as joint tenants and not as tenants in common' are applicable to all three grantees or only Dimitri and Elfena Katsowney. In determining the intent of the grantors we are not assisted by evidence of the circumstances of the mutual relation of the grantees. [The presumption is that a tenancy in common is created, so we conclude] that the deed conveyed a one-half interest in the property to Miller to be held as a tenant in common with the respondents."

Fulton v. Katsowney, 342 Mass. 503, 174 N.E.2d 366 (1961).

The presumption as to a tenancy in common is one of "public policy," so declared the court. In another decision the court said: "Joint tenancy and its doctrine of survivorship are not in harmony with the genius of our institutions, nor are they much favored in law. It is unlikely that as between themselves [the parties] intended that a relation so different and so speculatively uncertain in its nature as joint tenancy [would be created]." Park v. Parker, 216, Mass. 405, 103 N.E 936 (1914).

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Following up on last Tuesday's posting, David Dickson (Memphis) writes:

In 1784 the Tennessee legislature enacted what is now TCA 66-1-107 which reads as follows:

"In all estates, real and personal, held in joint

tenancy, the part or share of any tenant dying

shall not descend or go to the surviving tenant

or tenants, but shall descend or be vested in

the heirs, executors, or administrators, respectively,

of the tenant so dying, in the same manner as

estates held by tenancy in common."

This was followed by a long line of cases which held essentially as follows, "This section does not prohibit the creation of estates of SURVIVORSHIP and where in the instrument there is an intention to create such, this section is inapplicable." The courts reasoned that the intent of the legislature was to do away with the four unities concept of joint tenancy which basically held that if the four unities were present a conveyance to A & B created a joint tenancy.

Many older lawyers argue that a conveyance to A & B with right of survivorship creates a "tenancy in common with right of survivorship."