Title: ESTATE OF RICKNER

State: montana

Issuer: Montana Supreme Court

Document:

No. 12621 I N THE S U P R E M E COURT O F THE STATE O F M O N T A N A I N THE M A T T E R O F THE ESTATE O F MARTHA E. RICKNER, Deceased. Appeal from: District Court of the Tenth Judicial D i s t r i c t , Honorable LeRoy L. McKinnon, Judge presiding. Counsel of Record: For Appellant : Pedersen and Herndon, Billings, Montana Donald Herndon argued, Billings, Montana P. Bruce Harper argued, Billings, Montana For Respondent: Peter L. Rapkoch argued, Lewistown, Montana Submitted: January 17, 1974 Decided : # = 13 1974 Mr. Chief Justice James T. Harrison delivered the Opinion of the Court. This is an appeal from a judgment in favor of the admin- istrator of the estate of Martha E. Rickner. Martha E. Rickner died intestate in April, 1970. On December 26, 1972, John A. Rickner, petitioner and respondent and the husband of deceased (hereinafter referred to as Rickner) petitioned for letters of administration. The petition shows, among other facts, that Rickner believed that the estate would not exceed the value of $10,000 and that deceased was the owner of certain property held in joint tenancy with Rickner. In his petition Rickner sought termination of the joint tenancy. Rickner was appointed administrator of his deceased wife's estate on January 10, 1973. Agnes Birkeland, objector and appellant and the daughter and heir-at-law of the deceased (hereinafter referred to as Birke- land) objected to the issuance of letters of administration. On May 23, 1973, the inventory and appraisement was filed showing that deceased owned real and personal property as a joint tenant with Rickner. Included in the personal property was de- ceased's portion of the seller's interest in that part of a con- tract for deed, dated November 19, 1969, (hereinafter referred to as contract) which pertained to 147 acres of land owned jointly by deceased and Rickner. On June 5, 1973, Birkeland filed her objection to the inventory and appraisement. The grounds for this objection was that the inventory and appraisement mistakenly appraised the value and character of the deceased's interest in the contract. The contract, wherein deceased and Rickner were sellers, and Sylvan Anderson was the buyer, covered two parcels of agri- cultural land. One parcel owned by Rickner alone consisted of 306 acres. The other parcel owned by Rickner and deceased, as j o i n t tenants, comprised 147 acres. The t e r m s of t h e c o n t r a c t i n d i c a t e t h a t t h e s e l l e r s re- ceived $2,000 upon t h e execution of t h e c o n t r a c t and t h a t an a d d i t i o n a l $10,000 w a s t o be paid t o t h e s e l l e r s without i n t e r e s t on o r before December 1, 1969. The balance of $48,00O,together with i n t e r e s t a t 6% per annum commencing March 1, 1970, was t o be paid t o s e l l e r s i n 20 annual installments with t h e f i r s t in- stallment due on o r before December 1, 1970. The c o n t r a c t extended t o and became binding upon t h e h e i r s , executors, administrators and assigns of t h e respective p a r t i e s thereto. A warranty deed from sellers t o buyer was t o be placed i n escrow a t t h e Miners and Merchants Bank, Roundup, Montana. Any n o t i c e t o s e l l e r s t o be served pursuant t o t h e c o n t r a c t w a s t o be s e n t t o Rickner and t h e deceased. Both t h e deceased and Rickner signed t h e contract. A t t h e t i m e of deceased's death, $48,000 p l u s i n t e r e s t a t t h e r a t e of 6% from March 1, 1970, re- mained unpaid. O n June 1 4 , 1973, Birkeland f i l e d and served her p e t i t i o n f o r amendment of t h e inventory and appraisement, s t a t i n g t h a t t h e inventory and appraisement erroneously r e f l e c t e d t h a t t h e deceased had a j o i n t tenancy i n t e r e s t i n t h e c o n t r a c t , t h e whole contract. O n J u l y 16, 1973, a hearing was held i n t h e d i s t r i c t c o u r t of t h e t e n t h j u d i c i a l d i s t r i c t i n and f o r t h e county of Fergus. The d i s t r i c t c o u r t admitted i n t o evidence a copy of t h e c o n t r a c t and heard o r a l argument of t h e objection. O n August 2 0 , 1973, t h e d i s t r i c t court entered its findings of f a c t , conclusions of law, and judgment which denied irke el and's objection and granted Rickner's p e t i t i o n f o r termination of j o i n t tenancy. The d i s t r i c t c o u r t concluded "That absent any evidence of i n t e n t t o terminate t h e j o i n t tenancy t h e proceeds of t h e property so held should be deemed held i n j o i n t tenancy" and decreed "That t h e proceeds of t h e j o i n t tenancy acreage sold was held i n j o i n t tenancy." There has been expressed i n argument some confusion a s t o t h e exact nature of the i s s u e presented both i n t h e d i s t r i c t c o u r t and f o r review here. Simply s t a t e d t h e i s s u e is: Was t h e deceased a tenant i n common a s t o t h e proceeds of t h e whole c o n t r a c t o r was t h e deceased merely a j o i n t tenant as t o t h e proceeds of t h e c o n t r a c t r e s u l t i n g from t h e s a l e of t h e j o i n t tenancy property? The d i s t r i c t court held t h a t t h e deceased's i n t e r e s t i n t h e c o n t r a c t was t h a t of j o i n t tenancy a s t o t h e 147 a c r e s , and thus, terminated t h e j o i n t tenancy. W e agree with t h e d i s t r i c t court. Birkelandts contention is t h a t t h e c o n t r a c t is personal property and t h a t by t h e t e r m s of t h e c o n t r a c t , deceased during her l i f e t i m e had a r i g h t t o receive one-half of t h e proceeds being paid pursuant t o t h e c o n t r a c t and t h a t upon her death t h e i n t e r e s t t h a t deceased held i n t h e c o n t r a c t passed t o her personal repre- s e n t a t i v e a s an asset which should be included upon t h e inventory and appraisement as estate property and subsequently d i s t r i b u t e d t o her h e i r s . It i s Birkeland's p o s i t i o n t h a t t h e c o n t r a c t created a tenancy i n common as t o t h e whole c o n t r a c t . Rickner contends t h a t t h e p a r t of t h e c o n t r a c t r e l a t i n g t o t h e 306 a c r e s owned by him separately was not owned by t h e de- ceased and Rickner a s tenants i n common, but i s separate property and t h a t p a r t of t h e c o n t r a c t r e l a t i n g t o t h e 147 a c r e s of land under t h e c o n t r a c t owned i n j o i n t tenancy i s j o i n t tenancy property and went t o Rickner upon deceased's death by reason of survivorship. I n i t s judgment t h e d i s t r i c t c o u r t r e l i e d on Hewitt v. Biege, 183 Kan. 352, 327 P.2d 8 7 2 , 875. I n t h e H e w i t t case Ray and Pearl Biege, husband and wife, owned land i n j o i n t tenancy and sold it under c o n t r a c t , placing t h e c o n t r a c t , together with a warranty deed t o t h e property, i n escrow. The escrow agent was t o deposit t h e monthly payments i n a j o i n t account of t h e s e l l e r s . The c o n t r a c t contained no provision as t o t h e nature of t h e sellers' i n t e r e s t s i n t h e r i g h t t o receive payments. M r s . Biege died while t h e contract was s t i l l i n e f f e c t . The Kansas c o u r t s t a t e d t h e i s s u e t o be whether such c o n t r a c t c o n s t i t u t e d a severance of t h e j o i n t tenancy and held t h a t mere change i n t h e form of t h e property is not conclusive proof of t h e i n t e n t t o sever t h e j o i n t tenancy. The executors of P e a r l Biege's e s t a t e claimed t h a t t h e c o n t r a c t of s a l e not specifying otherwise created a tenancy i n common. The Kansas c o u r t , a f t e r noting t h a t under t h e Kansas s t a t u t e a j o i n t tenancy may be created i n personal a s w e l l a s r e a l property, said: " * * * It appears t o us much more l o g i c a l t o say t h a t when a l l j o i n t tenants concur i n an a c t and none d i s s e n t t h e r e has been no h o s t i l e o r adverse a c t which would terminate t h e tenancy. Changing t h e form of t h e property i s an a c t unrelated t o t h e holders' s t a t u s a s j o i n t tenants. J o i n t ten- ancy i s a r e l a t i o n s h i p between c e r t a i n people who have a s a r e s u l t of t h a t tenancy c e r t a i n r i g h t s i n t h e res. I f under our s t a t u t e j o i n t tenancy - may be had i n both personalty and r e a l t y , t h e r e is no reason t o alter the personal r e l a t i o n of j o i n t tenancy because of an a c t done j o i n t l y t o t h e property. "It would appear t h a t i n view of our s t a t u t e a j o i n t tenancy is severed only i n t h e manner i n which it was created, i . e . , by c l e a r i n t e n t of t h e p a r t i e s . * * *" It has long been established by t h i s Court t h a t a c o n t r a c t f o r t h e sale of r e a l property converts t h e s e l l e r ' s i n t e r e s t from an owner of r e a l property t o t h a t of an owner of personalty, t h i s being t h e doctrine of equitable conversion. Kern v. Robertson, 92 Mont. 283, 12 P.2d 565; S t a t e v. Kistner, 132 Mont. 437, 318 P.2d 223; McDonald v. Hoffman, 133 Mont. 65, 320 P.2d 357. Section 36-108, R.C.M. 1947 provides t h a t a husband and wife may hold personal a s well a s r e a l property i n j o i n t tenancy. The e f f e c t of t h e d i s t r i c t c o u r t ' s holding is t h a t t h e proceeds of t h e s a l e of j o i n t tenancy property pursuant t o a c o n t r a c t a r e owned i n j o i n t tenancy, i n t h e absence of an agree- ment t o t h e contrary. I n addition t o Hewitt, t h e d i s t r i c t c o u r t a l s o r e l i e d on Lawrence v. Andrews, 84 R . I . 133, 122 A.2d 132. A s urged by Birkeland, t h e r e i s a u t h o r i t y which is contrary t o t h e p o s i t i o n taken by t h e d i s t r i c t court. See I n r e Baker's E s t a t e , 247 Iowa 1380, 78 N.W.2d 863 and Buford v. Dahlke, 158 Neb. 3 9 , 62 N.W.2d 252. I n Montana t h e r e is no case d i r e c t l y i n p o i n t , but it is t h i s Court's opinion t h a t t h e b e t t e r l i n e of reasoning i s t h a t followed by t h e d i s t r i c t c o u r t , and i n t h e absence of an agree- ment t o t h e contrary, proceeds of a s a l e of j o i n t tenancy property pursuant t o a c o n t r a c t a r e held i n j o i n t tenancy. Mere change of form through equitable conversion does not automatically change t h e nature of t h e i n t e r e s t . I n t h e i n s t a n t case, however, t h e r e appear f a c t s not present i n t h e above c i t e d cases, f o r here t h e c o n t r a c t not only included property held i n j o i n t tenancy, but it a l s o included property owned s o l e l y by Rickner. Having established t h a t de- ceased's i n t e r e s t i n t h e proceeds of t h e c o n t r a c t w a s t h a t of j o i n t tenancy as t o t h e 147 a c r e s held i n j o i n t tenancy, absent a contrary i n t e n t i o n , it is only l o g i c a l t o conclude t h a t t h e deceased's i n t e r e s t i n t h e proceeds of t h e c o n t r a c t r e s u l t i n g from t h e s a l e of t h e 307 a c r e s owned s o l e l y by ~ i c k n e r is t h e same a s t h e deceased's o r i g i n a l i n t e r e s t , which is no i n t e r e s t a t a l l . Birkeland, however, a s s e r t s t h a t deceased was an equal party t o t h e c o n t r a c t and r e l i e s upon t h e following f a c t s : both Rickner and deceased were named p a r t i e s t o t h e c o n t r a c t as sellers; both acknowledged r e c e i p t of t h e i n i t i a l payment; payments w e r e made t o both of them by making payments t o t h e i r escrow agent; deceased w a s one of t h e p a r t i e s t o whom n o t i c e s concerning t h e c o n t r a c t could be sent; deceased bound h e r s e l f t o t h e r e l e a s e of her dower i n t e r e s t i n a l l t h e r e a l property which is t h e subject of t h e contract; and, t h e contract was binding upon t h e h e i r s , executors, administrators and assigns. I n addition, Birkeland contends t h a t co-sellers a r e e i t h e r sellers a s j o i n t tenants o r they a r e s e l l e r s as t e n a n t s i n common. Birkeland f u r t h e r con- tends t h a t since t h e r e i s no express d e c l a r a t i o n appearing i n t h e c o n t r a c t t o i n d i c a t e an i n t e n t t o c r e a t e a j o i n t tenancy property i n t e r e s t , t h e deceased's i n t e r e s t t h e r e i n must be held t o be a tenancy i n common. W e r e f e r t o t h e case of Moxley v. Vaughn, 148 Mont. 30, 35, 416 P.2d 536, wherein Cora Read Pew was t h e s o l e owner of real property. She entered i n t o a c o n t r a c t f o r t h e s a l e of t h e property. Charles E. Pew, her husband, joined i n t h e execution of t h e contract. Payments pursuant t o t h e c o n t r a c t were t o be made t o an account upon which e i t h e r Cora Read Pew o r Charles E. Pew o r t h e i r survivor could draw. This Court held t h a t no j o i n t tenancy i n t e r e s t was created i n t h e c o n t r a c t by requiring t h e payment t o be made t o a j o i n t account. I n t h e Moxley case, w e construed s e c t i o n s 67-308 and 67-313, R.C.M. 1947 and with reference t o t h e s e p a r t i c u l a r s t a t - u t e s s a i d a t page 35: "The above-quoted s t a t u t e s provide i n e f f e c t t h a t a tenancy i n common w i l l be created unless t h e i n t e n t t o c r e a t e a j o i n t tenancy is c l e a r l y shown. The r u l e of law i s c l e a r , t h e d i f f i c u l t y is i n applying it. "In order t o conclude t h a t a j o i n t tenancy was created it must be established t h a t it was t h e i n t e n t of t h e grantor t o c r e a t e such an i n t e r e s t . * * * "The application of t h e law t o t h i s p a r t i c u l a r case r e q u i r e s c a r e f u l s c r u t i n y of t h e c o n t r a c t of sale of t h e F u l l e r Avenue property. It is from t h i s instrument t h a t t h e i n t e r e s t of t h e grantor must be gleaned. * * * I f a j o i n t tenancy i n t e r e s t is t o be established i n t h e c o n t r a c t , and t h e prop- e r t y s u b j e c t t o it, evidence of such i n t e n t on t h e p a r t of t h e grantor must c l e a r l y show from t h e language used. A provision f o r payments t o be made i n t o a j o i n t account does not by i t s e l f operate t o c r e a t e a j o i n t tenancy i n t h e i n t e r e s t being conveyed. Section 67-308, supra, r e q u i r e s an express d e c l a r a t i o n t h a t t h e i n t e r e s t being created i s t o be a j o i n t tenancy, and i n t h e absence of such express d e c l a r a t i o n s e c t i o n 67- 313, supra, provides t h e i n t e r e s t created, i f any, s h a l l be an i n t e r e s t i n common. The c o n t r a c t f o r t h e s a l e of t h e F u l l e r Avenue property does not contain an express d e c l a r a t i o n e s t a b l i s h i n g a j o i n t tenancy i n t h e property being sold thereunder. "Thus, no i n t e r e s t having been created by t h e c o n t r a c t i n Charles E. Pew, t h e vendor's i n t e r e s t i n t h e F u l l e r Avenue property, upon t h e death of Cora Read Pew passed i n t o her e s t a t e . * * *" (Emphasis supplied. ) I n l i g h t of our decision i n Moxlev we f i n d no m e r i t i n Birkeland's contention t h a t t h e s e l l e r s a r e e i t h e r j o i n t ten- a n t s o r t e n a n t s i n common a s t o t h e proceeds of t h e c o n t r a c t . There is no provision i n t h e c o n t r a c t i n t h e i n s t a n t c a s e show- ing an i n t e n t by deceased and Rickner t o c o n s t i t u t e a severance of t h e j o i n t tenancy. I n addition, t h e r e w a s no i n t e r e s t created by t h e c o n t r a c t i n t h e deceased a s t o t h e property s o l e l y owned by Rickner. The only i n t e r e s t t h a t deceased had i n t h e c o n t r a c t was a j o i n t tenancy a s t o t h e proceeds of t h e property held i n j o i n t tenancy p r i o r t o t h e s a l e . Accordingly, t h e judgment of t h e d i s t r i c t c o u r t i s a f f irmed. I i Chief J u s t i c e i W e concur: / I