Case Name: Gary PEYTON and Joseph Peyton, Movants, v. Mark YOUNG, Administrator of the Estate of Phyllis Hill, et al., Respondents
Court: Supreme Court of Kentucky
Jurisdiction: Kentucky
Decision Date: 1983-11-02
Citations: 659 S.W.2d 205
Docket Number: 
Parties: Gary PEYTON and Joseph Peyton, Movants, v. Mark YOUNG, Administrator of the Estate of Phyllis Hill, et al., Respondents.
Judges: AKER, LEIBSON, STEPHENSON and VANCE, JJ., concur.
Reporter: South Western Reporter Second Series
Volume: 659
Pages: 205–209

Head Matter:
Gary PEYTON and Joseph Peyton, Movants, v. Mark YOUNG, Administrator of the Estate of Phyllis Hill, et al., Respondents.
Supreme Court of Kentucky.
Nov. 2, 1983.
William R. Whitledge, Madisonville, for movants.
Ronald K. Bruce, Madisonville, for respondent, Mark Young.
Richard A. Dennis, Asst. U.S. Atty., Louisville, for respondent, I.R.S.
Joe A. Evans, III, Madisonville, for respondent, Madisonville Bldg. & Loan.
James C. Brantley, Dawson Springs, for respondent, estate of William Hill.

Opinion:
LEIBSON, Justice.
The Estate of Phyllis Hill appealed from a judgment directing distribution of certain funds derived from the sale of a residence owned by Phyllis Hill at the time of her death. The Court of Appeals affirmed in part and reversed in part.
On January 30,1975, William and Phyllis Hill purchased a residence by deed vesting title in them jointly with the right of sur-vivorship. At the time of purchase they executed a first mortgage to Madisonville Building & Loan Association. At a later date, December 23,1977, William Hill mortgaged the same property to Gary and Joseph Peyton. The Peytons concede that Phyllis Hill did not join in this mortgage.
Subsequently William and Phyllis Hill were divorced and William conveyed his interest in the property to Phyllis. The deed specified that Phyllis was to assume the indebtedness owed to Madisonville Building & Loan Assn., but made no mention of the mortgage to the Peytons. Shortly after this conveyance, William Hill murdered Phyllis and killed himself.
In a foreclosure action, the property was sold by the Master Commissioner. After payment of the costs and the first mortgage to Madisonville Building & Loan Assn., the sum of $28,616.80 remained in the hands of the Master Commissioner for distribution. This amount was claimed both by the Estate of Phyllis Hill and the Peytons. There is also a claim by the United States Internal Revenue Service against these proceeds, but the IRS claim is not involved in the issues before this Court.
Phyllis Hill's estate maintains that she owned the property at her death, had not signed the second mortgage, and is entitled to the proceeds. The Peytons claim an interest under the note and mortgage executed by William Hill. The trial court concluded that the mortgage William Hill had executed to the Peytons embraced the entire property and therefore the Peytons were entitled to the entire proceeds. On appeal the Court of Appeals held that William Hill "could encumber no more than he held, a one-half interest," and reversed the trial court to the extent of one-half of the proceeds.
We granted discretionary review to consider the nature of the various property interests that have been asserted and how they are affected by the strange series of events that have taken place: (1) a second mortgage by only one spouse of his interest in a tenancy by the entirety, (2) followed by an attempt to convey his interest by deed to his spouse, (3) followed by the tragic killing of both his spouse and himself.
There is certain language in the Court of Appeals' opinion which can be interpreted as treating the property interest of the husband and wife as a tenancy in common, which it was not, rather than as a tenancy by the entirety, which it was. Nevertheless, the final result reached by the Court of Appeals is correct and we affirm. William Hill held an undivided in terest m the whole of the property subject to the right of survivorship. He encumbered this interest to the Peytons. His subsequent conveyance to his ex-wife did not defeat the Peyton's mortgage against his interest, nor did it enlarge the extent of the interest that was encumbered by the Peyton's mortgage. But did William Hill's murder of his wife enlarge the Peyton's interest?
We consider that our decision in Cowan v. Pleasant, Ky., 263 S.W.2d 494 (1953) is dis-positive of the issue in this case. In Cowan, husband and wife held property under a tenancy by the entirety. The husband murdered his wife and then himself. The issue was whether the heirs of the wife or the heirs of the husband were entitled to the property. The court took an equitable approach, adopting language from Barnett v. Coney, 224 Mo.App. 913, 27 S.W.2d 757, in a similar case, as follows:
"Under the peculiar circumstances here present, neither divestiture of interest nor survivorship exists in contemplation of law as to either. The fund should go just as provided where there is a common calamity and both tenants die simultaneously." 263 S.W.2d at 496.
The essence of the Cowan holding is that the husband's heirs who were innocent of wrongdoing should not be deprived of a right to his interests because of his wrongful act; that the case should be treated as if husband and wife both died at the same time in "a common calamity." There is no reason to treat the Peytons, who are creditors innocent of any wrongdoing, any different than we treated innocent heirs in Cowan.
On the other hand, we do not consider that William Hill's conveyance to his wife at the time of the divorce should affect the result. This conveyance was subject to the Peyton's mortgage interest which could not be defeated by his effort to convey title. There is no reason, legal or equitable, to consider that the conveyance from William Hill to Phyllis Hill which was subject to the mortgage served either to enlarge or defeat that mortgage.
For the reasons stated herein, the decision of the Court of Appeals is affirmed.
AKER, LEIBSON, STEPHENSON and VANCE, JJ., concur.
WINTERSHEIMER, J., dissents by a separate opinion.
STEPHENS, C.J., joins in this dissent.
GANT, J., not sitting.