Opinion ID: 2614081
Heading Depth: 3
Heading Rank: 1

Heading: The Palmer Property

Text: The deed D.A. executed on December 30, 1988, conveyed her interest in the Palmer property to herself and D.M. It does not specify the particular interest that each was to receive. A deed to two or more people of a single piece of property creates a tenancy in common in that property. AS 34.15.110(a). Tenants in common are presumed to take equal undivided interests in the property, although this presumption may be rebutted. Sanders v. Knapp, 674 P.2d 385, 387 (Colo. App. 1983); Sack v. Tomlin, 110 Nev. 204, 871 P.2d 298, 304 (1994); Cummings v. Anderson, 94 Wash.2d 135, 614 P.2d 1283, 1287 (1980); see also Annotation, Presumption and proof as to shares of respective grantees or transferees in conveyance or transfer to two or more persons as tenants in common, silent in that regard, 156 A.L.R. 515, 516 (1945) [hereinafter, Annotation, Shares of tenants in common ]. Therefore, on its face and without additional evidence, the deed D.A. executed conveyed undivided one-half interests in the Palmer property to both D.A. and D.M. The trial court held that D.M. received no interest, however, because it found, by a preponderance of the evidence, that D.A. only intended to allow D.M. to be able to take legal tax deductions on the property. Although neither the parties nor the court identified a legal basis for denying the grantee on a deed her interest in the property based on a finding that the grantor only intended to allow for tax deductions, we assume that the court intended to reform the deed. [3] Reformation of an instrument is the proper remedy where it is alleged that the instrument does not conform to the actual intentions of the parties. [4] See Oaksmith v. Brusich, 774 P.2d 191, 197 (Alaska 1989) (Reformation is a means of correcting mutual mistakes and of conforming a contract to the clear intention of the parties.); Riley v. Northern Commercial Co., 648 P.2d 961, 969 (Alaska 1982). Reformation may be granted, however, only when it is shown by clear and convincing evidence that it is appropriate. Fireman's Fund Mortg. Corp. v. Allstate Ins. Co., 838 P.2d 790, 797 (Alaska 1992); Oaksmith, 774 P.2d at 197. The trial court did not apply this evidentiary standard. Instead it repeatedly stated that it found the parties' intent by a preponderance of the evidence. Remand is therefore necessary so that the superior court might consider D.A.'s reformation claim under the proper evidentiary standard. On remand, the trial court should first determine whether the deed was executed in accordance with a contract between the parties or was a gift conveyance. [5] D.A.'s claim for reformation of the deed depends on the resolution of this question. If the property was conveyed by contract, then D.A. must prove by clear and convincing evidence 1) that the actual agreement between herself and D.M. did not call for conveyance of an undivided one-half interest in the property, as the deed indicates, and 2) what specific interest the parties had agreed that D.A. would convey. Oaksmith, 774 P.2d at 197. If the conveyance to D.M. was a gift conveyance, then D.A. must prove by clear and convincing evidence 1) that she did not intend to transfer an undivided one-half interest in the property and 2) what specific interest she did intend to convey. See Yano v. Yano, 144 Ariz. 382, 697 P.2d 1132, 1135-36 (App. 1985) ([R]eformation may be granted on the application of the grantor of a voluntary conveyance on the basis of unilateral mistake.); 66 Am.Jur.2d Reformation of Instruments § 45 (1973); 76 C.J.S. Reformation of Instruments § 10 (1952). If, on remand, the trial court determines that D.M. did receive some interest in the property, it must partition or sell the property. AS 09.45.260, .290. As part of this action, the court must determine the rights of each party in the property. AS 09.45.280. In this regard, if the court has not reformed the deed to show the specific interest D.M. and D.A. each received in the property, it must determine the respective interests of the two parties in accordance with the regular rules of cotenancy as modified by Wood v. Collins, 812 P.2d 951, 956-57 (Alaska 1991). As already stated, the initial presumption is that each of the parties owned an equal undivided share. Tomlin, 871 P.2d at 304. If, however, it is shown in rebuttal that the parties contributed unequally to the equity in the property, a presumption arises that they intended to share the property in proportion to their respective contributions. [6] Id. at 304-05; Cummings, 614 P.2d at 1287; Annotation, Shares of tenants in common, at 517-18. Where the parties cohabit, the court must also examine the intent of the parties with respect to the ownership of the property. Wood v. Collins, 812 P.2d at 956. If an intent to hold the property in a particular proportion or to determine the proportion by a particular method can be discovered, this intent controls over the regular rules of cotenancy. [7] Id.; see also Beal v. Beal, 282 Or. 115, 577 P.2d 507, 510 (1978). Therefore, D.A.'s intention of allowing D.M. to take legal tax deductions is relevant as one possible indicator of whether she intended to transfer an equal or lesser interest in the Palmer property to D.M. Other relevant factors in determining the intent of the parties regarding their respective interests in common property, in the absence of an express agreement, include their cohabitation; other joint financial acts, such as joint savings or checking accounts; and the manner in which they treated other property held individually at the beginning of their relationship. See, e.g., Beal, 577 P.2d at 510.