Court Opinion

ID: 4406965
Source: CourtListenerOpinion
Date Created: 2019-06-14 15:04:12.040467+00
Date Added: 2024-06-11T07:49:55.636144
License: Public Domain

FILED
                                                                           Jun 14 2019, 9:28 am

                                                                                CLERK
                                                                            Indiana Supreme Court
                                                                               Court of Appeals
                                                                                 and Tax Court

      ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEES
      Patrick C. Badell                                          Jack A. Tandy
      Badell & Wilson, P.C.                                      Tandy Law, LLC
      Rushville, Indiana                                         Shelbyville, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Flatrock River Lodge,                                      June 14, 2019
      Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                                 18A-CC-1919
              v.                                                 Appeal from the Rush Circuit
                                                                 Court
      Morris Stout and Tonia Sue                                 The Honorable David E. Northam,
      Stout,                                                     Judge
      Appellees-Defendants.                                      Trial Court Cause No.
                                                                 70C01-1609-CC-294

      Najam, Judge.

                                         Statement of the Case
[1]   Flatrock River Lodge (“Flatrock”) appeals the trial court’s order denying

      Flatrock’s motion to execute on its judgment lien upon Morris Stout’s interest

      in real estate previously owned by Morris and Tonia Stout as joint tenants with

      right of survivorship. Flatrock presents a single issue for our review, namely,

      whether Morris’ interest in the real estate as a joint tenant was exempt from
      Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019                             Page 1 of 9
      execution on Flatrock’s judgment lien during his lifetime. Tonia counters that

      Flatrock’s appeal was moot upon Morris’ death when she became the sole

      owner of the real estate. We hold that Flatrock’s appeal is not moot and that

      the real estate is not exempt from execution on the judgment lien.

[2]   We reverse.

                                  Facts and Procedural History
[3]   In 1985, Maurice and Lucille Stout deeded forty-six acres of real estate in Rush

      County to their son Morris and their granddaughter Tonia as joint tenants with

      right of survivorship (“the real estate”). On September 2, 2016, Flatrock, a

      health care provider, filed a complaint on account against Morris seeking

      judgment for a balance Morris owed Flatrock in the amount of $39,238.28 plus

      attorney’s fees. Flatrock also filed a notice of lis pendens with respect to the real

      estate in the Rush County Recorder’s Office. On September 16, Tonia moved

      to intervene, and the trial court granted her motion. Thereafter, Flatrock and

      Morris entered into an agreed judgment, approved by the trial court on

      September 23, whereby judgment was entered against Morris and in favor of

      Flatrock in the amount of $40,144.28. The Rush County Clerk entered the

      judgment in the record of judgments and orders (“RJO”) on September 27.

[4]   On January 18, 2018, Flatrock filed a Trial Rule 69 motion for execution and

      foreclosure on the judgment lien. In response, Tonia filed a memorandum

      stating that, because she and Morris had acquired title to the real estate as joint

      tenants with right of survivorship, their joint interest should be treated like a

      Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019            Page 2 of 9
      tenancy by the entireties. Thus, Tonia asserted that Morris’ interest in the real

      estate was exempt by statute from execution. Following a hearing on March

      12, the court denied Flatrock’s motion. Flatrock filed a motion to correct error,

      which the court also denied. On August 14, Flatrock filed a notice of appeal.

      And on October 14, Morris died. 1

                                      Discussion and Decision
[5]   Flatrock contends that the trial court erred when it denied its motion to execute

      on the judgment lien. While the trial court did not state a reason for its denial,

      the parties agree that the trial court must have concluded that Morris’ interest in

      the real estate was exempt by statute from execution. Where, as here, the

      relevant facts are not in dispute and the interpretation of a statute is at issue,

      such statutory interpretation presents a pure question of law, and our review is

      de novo. Clem v. Watts, 27 N.E.3d 789, 791 (Ind. Ct. App. 2015).

[6]   We first address Tonia’s contention that, because Morris died in October 2018,

      this appeal is moot. Tonia maintains that because she was a joint tenant with

      right of survivorship in the real estate, Morris’ interest in the real estate became

      hers at his death free and clear of any judgment lien. Tonia would disregard the

      fact, however, that Flatrock’s money judgment against Morris became a lien on

      Morris’ interest in the real estate when the Rush County Clerk entered the

      1
         We note that no party has appeared in this appeal as a successor to Morris. Only Flatrock and Tonia have
      filed briefs in this matter.

      Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019                                Page 3 of 9
      agreed judgment in the RJO on September 27, 2016, two years before Morris’

      death. See Arend v. Etsler, 737 N.E.2d 1173, 1175 (Ind. Ct. App. 2000) (stating

      that a money judgment becomes a lien on the debtor’s real property when the

      judgment is recorded in the judgment docket in the county where the realty held

      by the debtor is located). Thus, Tonia takes Morris’ interest in the real estate

      subject to Flatrock’s judgment lien. Jones v. Chandler, 40 Ind. 588, 590 (1872).

      The lien was not extinguished at Morris’ death, and this appeal is not moot.

[7]   The dispositive issue presented on appeal is whether Indiana Code Section 34-

      55-10-2(c)(5) (2018), which provides that “[a]ny interest that the debtor has in

      real estate held as a tenant by the entireties” is exempt from execution of a

      judgment lien, also exempts from execution an interest in real estate held as a

      joint tenant with right of survivorship. Flatrock contends that the trial court

      erred when it denied its motion to execute its judgment lien on the real estate.

      In particular, Flatrock maintains that, contrary to Tonia’s assertion to the trial

      court, subsection 2(c)(5) of the exemption statute does not apply to Morris’ and

      Tonia’s interests in the real estate, which they owned as joint tenants with right

      of survivorship. We must agree.

[8]   In Indiana, and generally, there are three forms of concurrent ownership of real

      estate, including joint tenancy, tenancy in common, and tenancy by the

      entireties. Powell v. Estate of Powell, 14 N.E.3d 46, 48 (Ind. Ct. App. 2014). A

      joint tenancy is a single estate in property owned by two or more persons under

      one instrument or act. I.C. § 32-17-2-1; Poulson v. Poulson, 691 N.E.2d 504, 506

      (Ind. Ct. App. 1998) (citing 17 I.L.E. Joint Tenancy § 1, p. 60 (1959)). Upon

      Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019          Page 4 of 9
      the death of any one of the tenants, his share vests in the survivors. Poulson, 691
N.E.2d at 506. When a joint tenancy is created, each tenant acquires an equal

      right to share in the enjoyment of the land during their lives. Grathwohl v.

      Garrity, 871 N.E.2d 297, 301 (Ind. Ct. App. 2007) (citation omitted). “It is well

      settled that a conveyance of his interest by one joint tenant during his lifetime

      operates as a severance of the joint tenancy as to the interest so conveyed, and

      [it] destroys the right of survivorship in the other joint tenants as to the part so

      conveyed.” Morgan v. Catherwood, 95 Ind. App. 266 167 N.E. 618, 622 (1929).

      Each joint tenant may sell or mortgage his or her interest in the property to a

      third party. Grathwohl, 871 N.E.2d at 301. And the interest of each joint tenant

      “is subject to execution.” Thornburg v. Wiggins, 135 Ind. 178, 34 N.E. 999, 1002

      (1893).

[9]   On the other hand, a tenancy by the entireties exists only between spouses and

      is premised on the legal fiction that husband and wife are a single entity.

      Underwood v. Bunger, 70 N.E.3d 338, 342 (Ind. 2017).

              Once an entireties estate has vested, each spousal tenant
              “becomes seized of the entire estate, but neither is seized of any
              divisible part thereof.” Kilgore v. Templer, 188 Ind. 675, 682, 125
N.E. 457, 459 (1919). Thus, an entireties estate cannot be
              severed by the unilateral action of one of the tenants. Neither
              spouse has a separable interest in property held by such a
              tenancy, so a conveyance by just one tenant is insufficient to pass
              legal title. Pension Fund of Disciples of Christ v. Gulley, 226 Ind.
415, 419, 81 N.E.2d 676, 678 (1948). An essential trait of this
              tenancy is that it “devolves upon the surviving spouse the
              ownership of the property in real estate, free and clear of the
              individual indebtedness of the other spouse.” Whitlock v. Public
      Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019              Page 5 of 9
               Service Co. of Ind., 239 Ind. 680, 159 N.E.2d 280, 284 (1959).
               When one spouse dies, the survivor, “being already seized of the
               whole, can acquire no new or additional interest” due to the
               survivorship. Kilgore, 188 Ind. at 682, 125 N.E. at 459. Rather,
               the survivor “holds the entire estate, not by virtue of any right
               which he acquires as survivor, but by virtue of the original
               grant.” Id. (citation omitted).

       Id. at 342-43.

[10]   As our Supreme Court explained in 1871,

               [t]he same difference which existed at common law between joint
               tenants and tenants by entireties continues to exist under our
               statute. In both, the title and estate are joint, and each has the
               quality of survivorship, but the marked difference between the
               two consists in this: that in a joint tenancy, either tenant may
               convey his share to a co-tenant, or even to a stranger, who
               thereby becomes tenant in common with the other co-tenant;
               while neither tenant by the entirety can convey his or her interest
               so as to affect their joint use of the property during their joint
               lives, or to defeat the right of survivorship upon the death of
               either of the co-tenants; and there may be a partition between
               joint tenants, while there can be none between tenants by
               entireties. See sec. 1 of “an act concerning the partition of lands,”
               2 G. & H. 361.

       Chandler v. Cheney, 37 Ind. 391, 396-97 (Ind. 1871).

[11]   Tonia asserts broadly and without qualification that “the law is clear that jointly

       held property is exempt from execution.” Appellant’s App. Vol II at 19. Thus,

       she asks that we apply subsection 2(c)(5) of the exemption statute, which refers

       only to an interest held as a tenant by the entireties, to the interest she and

       Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019           Page 6 of 9
       Morris held “as joint tenants with the right of survivorship.” In so doing, she

       equates the two tenancies. Tonia reasons that “[to] allow Flatrock to force a

       sale of the real estate would violate and frustrate the intent” of her

       grandparents. Appellee’s Br. at 9. But it is not the subjective intent of the

       grantors which controls the operation and effect of the instrument of

       conveyance. The phrase “joint tenants with the right of survivorship,” which

       appears in the deed from Tonia’s grandparents, is a term of art with a distinct

       meaning in the common law which has not been altered by statute. Appellant’s

       App. Vol. II at 21.

[12]   The goal of statutory interpretation is to discern and further the intent of the

       legislature. West v. Off. of Ind. Sec’y of State, 54 N.E.3d 349, 353 (Ind. 2016).

       When a statute is clear and unambiguous, we need not apply any rules of

       construction other than to require that the words and phrases be taken in their

       plain, ordinary, and usual sense. Clem, 27 N.E.3d at 791. Clear and

       unambiguous statutes leave no room for judicial construction. Id. And, in any

       case, we exercise caution so as not to add words or restrictions where none

       exist. West, 54 N.E.3d at 353.

[13]   Subsection 2(c)(5) of the exemption statute clearly and unambiguously applies

       only to a tenancy by the entireties. I.C. § 34-55-10-2(c)(5). We decline Tonia’s

       invitation to read words into the statute that are not there, and we hold that

       subsection 2(c)(5) does not exempt from execution interests held in a joint

       tenancy with right of survivorship. Indeed, the differences between a tenancy

       by the entireties and a joint tenancy with right of survivorship are clear and

       Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019            Page 7 of 9
       well-established. In a tenancy by the entireties, one spouse may not unilaterally

       convey or mortgage his interest to a third party. See Estate of Grund v. Grund,

       648 N.E.2d 1182, 1185 (Ind. Ct. App. 1995), trans. denied. And an estate by the

       entireties is immune to seizure for the satisfaction of the individual debt of

       either spouse. Eilts v. Moore, 117 Ind. App. 27, 68 N.E.2d 795, 796 (1946).

[14]   In contrast, a joint tenant may alienate his interest in real estate or his interest

       may be alienated by another. As we have noted, a joint tenant may sell or

       mortgage his interest to a third party, and his interest is subject to execution by

       a judgment lien creditor. Grathwohl, 871 N.E.2d at 301; Thornburg, 34 N.E. at

       1002. Had the legislature intended to exempt from execution real estate owned

       as joint tenants with right of survivorship it would have done so. We hold that

       the trial court erred when it denied Flatrock’s motion to execute on its

       judgment lien.

[15]   In sum, Flatrock’s judgment lien against Morris was a valid and subsisting lien

       upon his interest in the real estate, which he owned with Tonia as joint tenants

       with right of survivorship. The judgment lien was not extinguished when

       Morris died. As the surviving joint tenant, Tonia acquired Morris’ interest in

       the real estate by operation of law, subject to the lien. The lien is subject to

       execution and judicial foreclosure in the manner provided under Trial Rule 69.

       And, if another party is the purchaser of Morris’ interest at an execution sale,

       Court of Appeals of Indiana | Opinion 18A-CC-1919 | June 14, 2019            Page 8 of 9
       Tonia and the purchaser will each own an undivided interest as tenants in

       common. 2 See Chandler, 37 Ind. at 397.

[16]   Reversed.

       Pyle, J., and Altice, J., concur.

       2
         “Four requisites must exist to constitute a joint tenancy[.]” Richardson v. Richardson, 121 Ind. App. 523, 98
N.E.2d 190, 192-93 (1951) (citation omitted). “First[, t]he tenants must have one and the same interest.
       Second[, t]he interests must accrue by one and the same conveyance. Third[, t]he interests must commence
       at one and the same time. Fourth[, i]t must be held by one and the same undivided possession.” Id. at 193
       (citation omitted). Here, upon a sale of Morris’ interest in the real estate, the second and third elements will
       not exist.

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