Court Opinion

ID: 9573497
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:56:02.937704+00
Date Added: 2024-06-11T12:41:25.345363
License: Public Domain

O’CONNELL, J.,
dissenting.
Inasmuch as OES 93.240 provides that the surviving spouse is entitled to the unpaid purchase money under circumstances such as we have here, the rule adopted by the majority of the court will not affect future transactions. But the rule does apply to all past land sale contracts executed by husband and wife where provision has not been made for the right to the proceeds upon the death of one of the sellers. Undoubtedly there are many such contracts and the injustice which will be worked by the rule adopted by the court is likely to be felt by a substantial number of our citizens. For this reason, I venture to express my conviction that the result reached in the present case is not only unjust, but that it is arrived at through the application of legal principles which are not apposite.
I shall state my position briefly because I feel that with OES 93.240 controlling contracts entered *165into after its enactment there is little chance that what I might say more specifically would influence the court to change its stand in a future case unaffected by the statute. A detailed criticism of the view adopted by the majority can be found in the law journals. Comment, 37 Colum L Rev 1023 (1938); Note, 41 Cornell L Q 154 (1955); Note, 46 Tale L J 1077 (1937). See, Comment, 7 Brooklyn L Rev 256 (1937); Comment, 50 Harv L Rev 842 (1937).
I begin with the assumption that in most instances in which a husband and wife take real property as tenants by the entirety they do so with the object of providing for survivorship upon the death of one of them. The important fact to notice is that ordinarily the arrangement is consciously related to the death of the grantee spouses; it is a modest form of estate planning understood by most people. The nature of the interest which each is to have in the event that the land is sold when both spouses are living is not ordinarily a matter of concern to the parties when the entirety estate is created. It is likely that the rule in this state recognizing that the proceeds from the sale of an estate by the entireties inures to the husband and wife as tenants in common comports with the usual understanding of laymen. If the proceeds come to them during their joint lives ordinarily there would be no reason for them to regard such proceeds any differently than other cash held by them without provision for survivorship. Where there is an outright sale by husband and wife upon a security basis, the grantors taking a note for the unpaid balance of the purchase price, their purpose is not quite so clear. In re Bramberry’s Estate, 156 Pa 628, 27 A 405 (1893). See: Ciconte v. Barba, 19 Del Ch 6, 161 A 925 (1932). It can be reasoned that since the *166estate sold was held under a survivorship arrange^ ment the unpaid balance was intended to be subject to the same arrangement. It has been so held. Allen v. Tate, 58 Miss 585 (1881); In re Bramberry’s Estate, supra. See: Ciconte v. Barba, supra; 41 Cornell L Q, op cit supra at page 155. A contrary result was reached in Stout v. Van Zante, 109 Or 430, 219 P 804, 220 P 414 (1923). I think that Allen v. Tate, supra, and In re Bramberry’s Estate, supra, represent the better view. But we need not disturb the holding in the Stout case in deciding the present case in favor of the surviving spouse. Here the vendors continued to hold their estate by the entireties up to the time of the death of Edward Panushka, and the interest of the surviving spouse in the proceeds paid after the death of her husband can be predicated upon her sole ownership of the land subject to the vendee’s interest. If the vendors had not entered into a contract for the sale of their interests, the death of Edward Panushka would have left his surviving spouse with the entire estate. How does the contract for the sale of the land work a change in this right of survivorship incident to an estate by the entirety? The majority of the court takes the position that the doctrine of equitable conversion forces the conclusion. That is the fundamental error upon which the majority builds its opinion. The doctrine of equitable conversion originated out of a need to adjust the traditional categories of property interests so that'a just result could be reached through the application of accepted principles of law. The doctrine does not demand that contracts for the sale of land shall in all instances convert the interest of the vendor from real to personal property.
“When we speak of conversion we are not de*167scribing a condition of the property for all purposes with respect to everybody but are giving a name to a situation resulting from the application of equitable doctrines to a state of facts between certain parties.” Pound, The Progress of the Law 1918-1919, 33 Harv L Rev 813 at 831 (1920)
To the same effect see Stone, Equitable Conversion by Contract, 13 Colum L Rev 369 (1913). Commissioner of Internal Revenue v. Hart, 76 F2d 864 (6th Cir 1935); Detroit & Security Trust Co. v. Kramer, 247 Mich 468, 226 NW 234 (1929). The fiction is indulged in so that an equitable result may be reached; it is not appropriately used if it defeats the intention of the parties. Numerous cases have recognized this principle. Thus, in Sands v. Church of Ascension, etc., 181 Md 536, 30 A2d 771 (1943) the court said:
“* # * The basis of the doctrine, under which real estate is considered for certain purposes as personal property, and personal property as real estate, is the intention of the party creating a right in the property. The doctrine is not a fixed rule of law, but proceeds upon equitable principles which take into account the result whieh-its application will accomplish. Anderson v. Yaworski, 120 Conn. 390, 181 A. 205, 101 A.L.R. 1232.” 30 A2d at page 776.
And in National Bank of Topeka v. Saia, 154 Kan 740, 121 P2d 251, 138 ALR 1290 (1942), the following statement is made:
“* * * What necessity is there then for asking a court of equity to invoke the equitable doctrine of conversion? That doctrine is a fiction invented by courts of equity to promote justice and, as a fiction, it is applied only for the purpose of doing justice. The doctrine is not aunlicable under all circumstances. It does not exist as a matter of right but exists only when necessity and justice require that it be invoked.” 121 P2d at page 254.
*168For other cases see 1 Tiffany on Beal Property (3d ed), § 296 and supplement.
Consistent with the foregoing principle, it has been held that the proceeds from the surplus in excess of the mortgage debt upon a foreclosure sale of land held by the entirety is regarded as being held by the entirety. Stretz v. Zolkoski, 118 Misc 806, 195 NYS 46 (1922), Germania Savings Bank v. Jung, 64 Hun 11, 18 NYS 709 (1892); that the proceeds of a condemnation award of land held by the entirety go to the surviving tenant by the entirety, In re 115th and Vistula Aves., Etc., 137 Misc 358, 242 NYS 6 (1930); and that the ownership of the proceeds payable under a fire insurance policy covering a building held by the entirety vests in the survivor of the tenancy, Scutella v. County Fire Ins. Co. of Philadelphia, 231 App Div 343, 247 NYS 689 (1931).
The majority applies the doctrine without inquiry as to whether its application will defeat or carry out the intention of the parties; the conversion of real into personal property is regarded as an inevitable conclusion once it is determined that a contract for the sale of land was entered into. We should not misapply an equitable principle to produce an inequitable result.
There were no circumstances in the instant case suggesting the need for indulging in the fiction that the real property interest of Edward and Bess Panushka was personal property. As a matter of fact, the circumstances point to the probability that the use of the fiction operates to defeat the intention of the vendors. It is reasonable to assume that the vendors intended the survivorship feature which characterized their interest in the land to continue as to the unpaid purchase money falling due after the *169death of one of the spouses. If that assumption is sound, it is no answer to say that they might have had some other intention with respect to the proceeds. We should adopt the rule which conforms to the vendors’ intent in the majority of cases. We have no data which proves that husbands and wives normally wish to have the unpaid proceeds accrue to the survivor, but I believe that the assumption that they so intend is a reasonable one. As stated above, the creation of estates by the entirety is usually a part of a plan for the disposition of property upon death. It is not reasonable to assume that the parties intended that the mere alteration in the form of the property should work a change in their basic dispositive plan. Note, 41 Cornell L Q 154 (1955).
Our refusal to apply the doctrine of equitable conversion to the facts of the present case would not in any way weaken our previous cases recognizing the doctrine. In the absence of circumstances indicating a contrary intent, it is not unreasonable to proceed on the theory that the vendor intends that his interest in the land sold under contract should take the form of the property which he has bargained to receive. This, I take it, is the basis for the application of the doctrine in the cases, previously decided by this court. But where there are circumstances indicating a contrary intent our cases do not demand that we convert real property into personal property. Where tenants by the entirety sell their interests through a contract of sale I think that there is a firm basis for implying an intent that until the proceeds are received the respective interests of the husband and wife should continue to be characterized by the incident of survivor-ship. This appears to be the view taken by all those who have written extra-judicial comments on the prob*170lem. See notes cited above. The draftsman of ORS 93.240 apparently made the same assumption as evidenced by the statutory dictum that the act is “declaratory of existing law.”
Nor is the view that survivorship operates in circumstances such as we have here incompatible with ■the rule that a tenancy by the entirety in personal property cannot be created in Oregon. If the doctrine of equitable conversion is not applied then, obviously, the interest of the spouses continues to be real property and we need not concern ourselves with the rule relating to tenancies by the entirety in personal property. •
On the other hand, if we treat the spouse’s interest as personal property the right of survivorship can readily be implied from the fact that the land sold was held with the incident of survivorship. Our cases such as Manning v. U. S. National Bank, 174 Or 118, 148 P2d 255, 153 ALR 922 (1944) and Erickson v. Erickson, 167 Or 1, 115 P2d 172 (1941), recognize that the right of survivorship can be created by the agreement of the parties. The agreement need not be express; it may be implied. There is no reason why we should not imply it here. There is no policy in this state against the creation of survivorship interests in personal property. We have the rule precluding the creation of tenancies by the entirety merely because it was felt' that the common law must be followed in the absence of a statute providing differently. See: Note, 10 Ore L Rev 388 (1931); Note, 3 Ore L Rev 163 (1923).
In Stout v. Van Zante, supra, the court recognized that if an agreement had been entered into by' the parties a survivorship interest could be created. ’ It is my opinion that the court in that case erred in not *171finding an implied agreement from the fact that the estate sold was held by the entireties. Bnt, as I have indicated above, the Stout case need not be overruled because the present case is distinguishable in that the vendors continued to hold as tenants by the entirety, and from that fact an implication of survivorship in the proceeds can be made. Nor will our recognition of a right of survivorship in the proceeds disturb our previous cases such as Marchand v. Marchand, 137 Or 444, 3 P2d 128 (1931), where it was held that the proceeds received by tenants by the entirety during their joint lives is held by them as tenants in common. As explained above, the implication of survivorship in the proceeds arises from the fact that the vendors have made a plan for the vesting of their respective interest on the death of one of them. Proceeds received during their joint lives do not fall within that plan.
We can, then, without disturbing our previous eases recognize the surviving spouse’s right to the proceeds in this case. I think that we should do so by adopting the view expressed in the better decided eases. Commissioner of Internal Revenue v. Hart, supra; In re Estate of Jogminas, 246 Ill App 518 (1927); Hewitt v. Biege, 183 Kan 352, 327 P2d 872 (1958); Foy v. King, 248 Mich 650, 227 NW 541 (1929); Detroit & Security Trust Co. v. Kramer, supra; Allen v. Tate, supra; In re Keyworth’s Estate, 13 Misc2d 502, 180 NYS2d 37 (1958); In re De Witt’s Will, 202 Misc 167, 114 NYS2d 81 (1952); McArthur v. Weaver, 129 App Div 743, 113 NYS 1095 (1909); In re Bramberry’s Estate, supra.
The judgment should be reversed.