Opinion ID: 1291145
Heading Depth: 2
Heading Rank: 1

Heading: The sale proceeds.

Text: Appellant argues that the personalty proceeds of entirety property are held in common rather than by the entirety. [4] She contends that HRS §§ 509-1, 2 (1976) [hereinafter cited without (1976)], establish a presumption in favor of the creation of a tenancy in common in any property whenever property is granted, conveyed, or devised. [5] That presumption, she declares, is rebutted only by a clear intent in the instrument granting, conveying, or devising the property to create a different kind of tenancy. Since the agreement to sell the land showed no intent that decedent and appellee would take the sale proceeds as tenants by the entirety, she concludes that the $180,000 in sale proceeds was held in common tenancy. We reject appellant's argument. HRS § 509-1 provides in part: All grants, conveyances, and devises of land, or of any interest therein, made to two or more persons, shall be construed to create estates in common and not in joint tenancy or by entirety, unless it manifestly appears from the tenor of the instrument that it was intended to create an estate in joint tenancy or by entirety... . (Emphasis added.) Not only does HRS § 509-1 on its face apply solely to real property but the legislative history of this statute discloses that it concerned the ownership of real property. The Judiciary Committee Report, 1903 Hawaii Senate Journal 149 (commenting on the earlier and virtually identical version of this statute). Therefore, personal property such as $180,000 is unaffected. HRS § 509-2 [6] provides in part: Land, or any interest therein, or any other type of property or property rights or interests or interest therein, may be conveyed ... and each such instrument shall be construed as validly creating a joint tenancy, tenancy by the entirety, tenancy in common, or single ownership, as the case may be, if the tenor of the instrument manifestly indicates such intention. (Emphasis added.) As it presently reads, HRS § 509-2 states no presumption in favor of a tenancy in common. [7] Cf. RLH § 345-2 (1955). Thus, neither HRS §§ 509-1 nor 509-2 will aid appellant. Even assuming that there is a presumption in favor of the creation of a tenancy in common in personal property, it would not apply to personalty proceeds from the sale of property held by the entirety because such proceeds are a derivative or an extension of the entirety property, and are not a newly created interest. [8] Furthermore, we observe that [w]here ... personalty can be held by the entireties, the great weight of authority is that, absent a contrary arrangement by the parties, an estate by the entireties preexisting in [real] property continues automatically in its [personal property] derivatives on disposition. That rule has been applied in a variety of contexts, including cash sales of realty... . In re Estate of Wall, 142 U.S.App.D.C. 187, 192, 440 F.2d 215, 220 (1971) (footnotes omitted); accord, Crawford v. United States Fidelity and Guaranty Co., 139 So.2d 500, 502 (Fla. Dist. Ct. App. 1962); Smith v. Tipping, 349 Mass. 590, 592, 211 N.E.2d 231, 232 (1965); In re Baker's Estate, 359 S.W.2d 238, 244 (Mo. Ct. App. 1962); Burt v. Edmonds, 224 Tenn. 403, 409-10, 456 S.W.2d 342, 345 (1970); Oliver v. Givens, 204 Va. 123, 126-27, 129 S.E.2d 661, 663 (1963); Annot., 64 A.L.R.2d 8, 47-57 (1959) & supp. We find these cases more persuasive than those cited by appellants. [9] Since proceeds from the sale of land held by the entirety are, in effect, a substitute for the land, we presume that these proceeds retain the entirety characteristic that the land itself had. This presumption seems especially appropriate under the facts of this case for at the time decedent and appellee executed the agreement to sell their land, decedent was terminally ill. It should have been expected that appellee would survive decedent and thereby obtain sole title to the land. In fact, decedent died seventeen days after the agreement was executed. It appears unlikely that appellee and decedent, at the time of decedent's illness, would have wanted the $180,000 in sale proceeds to be treated as common property. This would have defeated their purpose in having the land held by the entirety, which was to give sole ownership of the land to the survivor upon the death of either decedent or appellee. As the sole owner, the survivor would then be entitled to all the proceeds from the sale of the land. Of course, if decedent and appellant both intended that the $180,000 in sale proceeds would pass to them as tenants in common, that intention would prevail. [10] But we find no such intention. [11] Absent a contrary intent by both spouses, personalty proceeds from a sale of land held by the entirety are also property held by the entirety. We therefore hold that the $180,000 in sale proceeds was entirety property.