Court Opinion

ID: 9523867
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:47:50.959806+00
Date Added: 2024-06-11T13:08:22.745789
License: Public Domain

MESCHKE, Justice,
concurring and dissenting.
Except for one blemish, I concur in Justice Levine’s thorough and thoughtful opinion. But, I cannot agree that a security agreement by a joint tenant, as to his undivided interest, suddenly becomes ineffective upon that joint tenant’s death prior to default. Therefore, I respectfully dissent.
It is a grave judicial action to void any voluntary agreement. This one makes no sense to me.
As Justice Levine recognizes, the notion of invalidating an agreed but executory mortgage of the undivided interest of one joint tenant seems to be a throwback to an antiquated attitude of real property law. That notion has been rejected in this state for real property. Renz v. Renz, 256 N.W. 2d 883 (N.D.1977). See also, NDCC 35-03-01.2(1)1 and Adamsen Construction Company v. Altendorf, 152 N.W.2d 576, 579 (N.D.1967). The notion should be rejected for personal property, as well.
North Dakota has not recognized a tenancy by the entireties,2 and has not adopted community property law.3 Nor has North Dakota adopted the Uniform Marital Property Act, which would likewise limit management and control of marital property “held in the names of both spouses ... only if they act together.”4
Legal encyclopedias recognize that a joint tenant can effectively sever the joint tenancy by mortgaging his undivided share. 20 Am.Jur.2d Cotenancy and Joint Ownership § 102 (1965); Annotation, Joint Tenancy — Termination, 64 A.L.R.2d 918, 934 (§ 14 on Mortgage or pledge by one or some of joint tenants). These general authorities do not mention the aberrant cases decreeing subsequent “extinguishment” upon death of that joint tenant.
I cannot agree with either the result or the reasoning (or lack of it) in Franke v. Third National Bank & Trust Co., supra, the principal authority relied on by Justice Levine. The Ohio Court of Appeals for Montgomery County is hardly a source of precedent entitled to our deference. The simplistic conclusion of Franke (“extinguished”) is unconnected to any statutory directive in this state.
Furthermore, Franke involved a certificate of deposit, which is a “joint account” under North Dakota law. NDCC 30.1-31-01(1) and (4). North Dakota would not *834treat a joint account as Franke does. NDCC 30.1-31-13.5 See also 30.1-31-07.6 Similarly, the older Holzer decision cited at footnote 6, as well as the more recent decision of Commercial Banking Company v. Spurlock, supra, both cited by Justice Levine, deal with joint accounts, and thus are of little usefulness.
“Extinguishment” should not happen for a joint tenancy in goods any more than for a joint tenancy in bank accounts or in real estate. The Uniform Commercial Code principles, cited but not followed by Justice Levine, should prevail. A specific statutory directive voids only a few security agreements if made by only one spouse, while expressly declaring that a security interest in personal property is governed by the Uniform Commercial Code.
“A security interest in personal property is governed by chapter 41-09 [Uniform Commercial Code], except that a bill of sale or security agreement, that is not a purchase money security interest, with respect to household goods, effects, furniture of married persons, or personal property exempt from execution is void unless the instrument by which it is transferred or encumbered is jointly executed by the husband and wife, if both are living.” NDCC 35-01-04, in part.
For these reasons, I would hold that Fraases should not be held liable for correct legal advice as to the security agreement by Robert on his undivided joint interest in the car. Up to the value of that undivided interest, pledged as collateral for Robert’s debt to the bank, Mavis should not recover.
While today’s novel ruling, “extinguishing” a voluntary security agreement without a statutory reason to do so, may be of small consequence here, it may have significant and unhappy consequences hereafter.

. NDCC 35-03-01.2(1) says:
"A mortgage is a lien upon everything that would pass by a grant of the property, and upon nothing more.”

. Meschke, Estates in North Dakota, 30 N.D.L. Rev. 289, 301-03 (1954).

. 15A Am.Jur.2d Community Property § 78 (1976).

.See section 5(2) of House Bill 1049 introduced in the 1987 Session of the North Dakota Legislature, proposing adoption of the Uniform Marital Property Act, which was defeated 25-75. For legislative action, see 50th Legislative Assembly (1987) House Journal 111, 517, 533, 1141, 1437.

. NDCC 30.1-31-13 says:
“Financial institution protection — Setoff.— Without qualifying any other statutory right to setoff or lien and subject to any contractual provision, if a party to a multiple-party account is indebted to a financial institution, the financial institution has a right to setoff against the account in which the party has or had immediately before his death a present right of withdrawal. The amount of the account subject to setoff is that proportion to which the debtor is, or was immediately before his death, beneficially entitled, and in the absence of proof of net contributions, to an equal share with all parties having present rights of withdrawal.”

. NDCC 30.1-31-07 says:
"Rights of creditors. — No multiple-party account will be effective against an estate of a deceased party to transfer to a survivor sums needed to pay debts, taxes, and expenses of administration, including statutory allowances to the surviving spouse, minor children, and dependent children, if other assets of the estate are insufficient. A surviving party, P.O. D. payee, or beneficiary who receives payment from a multiple-party account after the death of a deceased party shall be liable to account to his personal representative for amounts the decedent owned beneficially immediately before his death to the extent necessary to discharge the claims and charges mentioned above remaining unpaid after application of the decedent’s estate. No proceeding to assert this liability shall be commenced unless the personal representative has received a written demand by a surviving spouse, a creditor, or one acting for a minor or dependent child of the decedent, and no proceeding shall be commenced later than two years following the death of the decedent. Sums recovered by the personal representative shall be administered as part of the decedent’s estate. This section shall not affect the right of a financial institution to make payment on multiple-party accounts according to the terms thereof, or make it liable to the estate of a deceased party, unless before payment the institution has been served with process in a proceeding by the personal representative.”