Bruce v. Dyer

MARVIN H. SMITH, Judge, Retired, Specially Assigned. Here a separation and property settlement agreement provided that certain real property of the parties held as tenants by the entireties should be sold and the proceeds divided between the estranged spouses. We shall hold that it created an enforceable interest in that real property which formed part of the estate of the spouse who unex ⁴²⁴ pectedly died prior to any sale’s being negotiated. The facts are not in dispute.

On October 11, 1984, Horace Allen Bruce and Nancy Lee Bruce, husband and wife, executed a voluntary separation and property settlement agreement. It first stated that the parties had separated. It then said: “It is the mutual desire of the parties in this agreement to formalize their voluntary separation and to settle all questions of ... their respective rights in the property or estate of the other, and in property owned by them jointly or as tenants by the entireties, and in marital property, and all other matters of every kind and character arising from their marital relationship.” Paragraph 6 of the agreement recited that the parties owned their marital home as tenants by the entireties. The paragraph continued: “The parties shall sell the Home putting it up for sale and putting it on the market by October 15, 1984, either directly or through a broker of their choice, at a price agreed upon by the parties, or, if they are unable to agree, at a price determined by a broker selected by Husband and Wife or their counsel.

The parties shall execute any contract to make a sale of the Home and any deed and/or other document necessary to consummate the sale under contract and in accordance with this Paragraph. If for any reason either party does not, within 21 days of delivery to him, execute any listing contract or contract to make a sale of the Home, in accordance with the provisions of this Paragraph, or any deed, instrument or other such document, then the other party may execute the same on his or her behalf as his or her agent pursuant to any agency coupled with an interest, and each party hereby irrevocably appoints the other with the full power of an attorney-in-fact for him or her to execute, acknowledge and deliver any and all necessary or desirable contracts, deeds, releases, mortgages, instruments or documents for the purpose of listing, conveying, clearing or waiving any interest or right in the Home as ⁴²⁵ fully as he could do personally, with full power of substitution and confirming all that the agent and attorney-in-fact or substitute may do or cause to be done. Upon the sale of the Home in accordance herewith, the net proceeds of sale shall be divided 55% to Husband and 45% to Wife.” The agreement concluded, “As to these covenants and promises, the parties hereto severally bind themselves, their heirs, personal representatives and assigns.” The husband died on December 14, 1984, as a result of injuries sustained in an automobile accident. At that time no divorce had been obtained and the home had not been sold.

The wife brought a suit in the Circuit Court for Frederick County in which she alleged that the personal representative of the estate of the husband had made claim for a 55% interest in the parcel. She requested the court to pass an order declaring her to be the sole owner of the entire parcel of real estate. The widow maintained that the tenancy by the entireties never terminated during the lifetime of the parties and that sole ownership of the land in question thus vested in her upon her husband’s demise. The personal representative, on the other hand, posited that no right of survivorship existed because the separation agreement converted the tenancy by the entireties into a tenancy in common.

Following oral argument on the personal representative’s motion for summary judgment, the trial judge ruled in favor of the estate: “There’s no question, in my mind, anyway, that the tenancy, the estate can be terminated by contractual agreement between the parties. It’s clear that the intent of the parties by the agreement was to, in effect, terminate the tenancy by the entireties; that they each spelled out their respective rights in the estate, fifty-five/forty-five percent, as shown; and contractually, I see no reason, by reference to any of the cases, why the parties cannot terminate the estate by a valid contract. ⁴²⁶ “And for that reason I will find that the estate was terminated by the valid contract between the parties, and that Mrs. Bruce did not take the entire property by operation of law upon the death of Mr. Bruce, while they were still married; and I will grant the motion for summary judgment filed by the defendant.” In Bruce v. Dyer, 67 Md.App. 499, 503 , 508 A.2d 510, 512 (1986), the Court of Special Appeals determined that execution of the separation and property settlement agreement did not convert the tenancy by the entireties into a tenancy in common. As a result, “on the death of her co-tenant by the entireties, [Nancy Lee Bruce] gained sole legal title to the property.” The court went on to hold, however, that the wife’s contractual obligation with respect to the property did not terminate upon the husband’s death. In other words, the personal representative was entitled to compel a sale of the property and division of the proceeds in accordance with the terms of the agreement.

Id. at 507 , 508 A.2d at 514 . We granted cross petitions for a writ of certiorari. In this Court the personal representative insists that the separation and property settlement agreement converted the tenancy by the entireties into a tenancy in common. Thus, she argues, the Court of Special Appeals “achieved the correct result, but by an incorrect theory.” The widow, on the other hand, does not take issue with the first portion of the intermediate court’s holding.

Rather, she argues that her husband’s death operated to terminate the separation and property settlement agreement, thereby “eliminating any cause of action in the husband’s heirs to enforce said agreement to sell real property as against the wife.” I Although some states have either abolished or significantly altered the estate of tenancy by the entireties, see, e.g., Columbian Carbon Co. v. Kight, 207 Md. 203, 207 , 114 A.2d 28, 30 (1955), Maryland retains the estate in its traditional form. Id. at 208 , 114 A.2d at 31 ; accord Arbesman ⁴²⁷ v. Winer, 298 Md. 282 , 468 A.2d 633 (1983) (discussing at length the nature of the estate and reviewing cases illustrative of its continuing validity in Maryland). 2 H. Tiffany, The Law of Real Property § 430 (B. Jones 3d ed. 1939 & Supp.1987) defines tenancy by the entireties as “the tenancy by which husband and wife at common law hold land conveyed or devised to them by a single instrument which does not require them to hold it by another character of tenancy. The title of both husband and wife arises out of the instrument, whether deed, devise or gift, by virtue of which they become seized of the estate. A tenancy by the entirety cannot be created unless the four essential common law unities, namely, interest, title, time and possession, co-exist.

Some districts may require the concurrence of a fifth unity, ‘person.’ A tenancy by the entirety, though differing from a joint tenancy in some particulars, as seizin, possibility of severance and the nature of the survivor’s interest, is essentially a form of joint tenancy, modified by the common-law theory that husband and wife are one person. This unity is, it has been said, the distinctive feature of the estate. There are no moieties in a tenancy by the entirety, as each party holds the entire estate. Thus, neither spouse owns an undivided half interest in entirety property; the whole entirety estate is vested and held in each spouse and continues in the survivor.” (Footnotes omitted.) The “unities” mentioned by Tiffany have reference to the creation of the estate.

They consist of requirements that the tenants enjoy identical interests; enjoy identical, undivided possession; and that the tenancy commence at the same time via the same instrument. Alexander v. Boyer, 253 Md. 511, 519 , 253 A.2d 359, 364 (1969) (quoting 2 American Law of Property § 6.1, at 4 (J. Casner ed. 1952)); 2 Tiffany, supra, § 418. Maryland law is in accord with the principles set forth in Tiffany. In Marburg v. Cole, 49 Md. 402 (1878), Judge Alvey said for the Court: ⁴²⁸ “By the common law of England, which is the law of this State, except where it has been changed or modified by statute, a conveyance to husband and wife does not constitute them joint tenants, nor are they tenants in common.

They are, in the contemplation of the common law, but one person, and hence they take, not by moieties, but the entirety. They are each seised of the entirety, and the survivor takes the whole. As stated by Blackstone, ‘husband and wife being considered as one person in law, they cannot take the estate by moieties, but both are seised of the entirety, per tout, et non per my; the consequence of which is, that neither the husband nor the wife can dispose of any part without the assent of the other, but the whole must remain to the survivor.’ 2 Bl. Com. 182.” 49 Md. at 411 , quoted in Arbesman, 298 Md. at 286-87 , 468 A.2d at 635 .

A tenancy by the entireties may be terminated or severed while both spouses are alive. In that event, the estate becomes a tenancy in common, and, among other things, the right of survivorship is extinguished. See, e.g., Meyers v. Loan & Sav. Assn., 139 Md. 607 , 116 A. 453 (1922); Reed v. Reed, 109 Md. 690 , 72 A. 414 (1909).

The granting of an absolute divorce will sever a tenancy by the entireties. 1 Failing that, some form of joint action by the husband and wife is necessary in order to achieve a severance. 2 See, e.g., Beall v. Beall, 291 Md. 224 , 434 A.2d 1015 (1981); East. Shore v. Bank of Somerset, 253 Md. 525, 532 , ⁴²⁹ 253 A.2d 367, 371 (1969); Schilbach v. Schilbach, 171 Md. 405, 407-08 , 189 A. 432, 433-34 (1937). In East. Shore Judge Barnes said for the Court: “The important thing to observe is that during the lifetime of both, the tenancy by the entireties can be terminated by the joint action of both and a conveyance by both to a third person does terminate a tenancy by the entireties in the land, but the proceeds ordinarily continue to be held by the entireties.

Beard v. Beard, 185 Md. 178 , 44 A.2d 469 (1945); Brell v. Brell, 143 Md. 443 , 122 A. 635 (1923).” 253 Md. at 532, 253 A.2d at 371. Divorce and joint conveyance to a third person, however, do not constitute the only means by which a tenancy by the entireties in real property may be terminated. Maryland Code (1974) § 4-108(b), Real Property Article, provides: “Any interest in property held by a husband and wife in tenancy by the entirety may be granted, (1) by both acting jointly, to themselves, or to themselves and any other person, in joint tenancy or tenancy in common; (2) by both acting jointly, to either husband or wife and any other person in joint tenancy or tenancy in common; and (3) by either acting individually to the other in tenancy in severalty, without the use of a straw man as an intermediate grantee-grantor. These grants, regardless of when made, are ratified, confirmed, and declared valid as having created the type of ownership that the grant purports to grant.” Section l-101(e) of the Real Property Article, in turn, defines “grant” as including “conveyance, assignment, and transfer.” 3 Section 4-108(b) was originally enacted by ch. ⁴³⁰ 484, § 13A of the Acts of 1931 as Code (1924) Art. 50, § 10.

It contained substantially different language, making no reference to tenancy by the entireties: “A conveyance, release or sale may be made to or by two or more persons acting jointly and one or more, but less than all, of these persons acting either by himself or themselves or with other persons; and a contract may be made between such parties.” In 1970 the General Assembly repealed and reenacted the statute for the purpose of “clarifying] the law with respect to direct conveyances between husband and wife.” Ch. 492 of the Acts of 1970 (codified as Code (1957, 1968 Repl. Yol., 1970 Cum.Supp.) Art. 50, § 10(b)) expressly authorized tenants by the entireties to terminate the estate via direct conveyance: “This section shall be construed to authorize a conveyance of any interest in real or leasehold property (1) by husband and wife as tenants by the entireties, as joint tenants, or as tenants in common to the husband alone, the wife alone, or to the husband and wife as tenants by the entireties, as joint tenants, or as tenants in common, and (2) by either husband or wife alone, or as a tenant by the entireties, a joint tenant, or as a tenant in common to the other spouse alone, or to the husband and wife as tenants by the entireties, as joint tenants, or as tenants in common. All conveyances described in this subsection, whether made before or after the effective date hereof, are ratified, confirmed, and declared valid.” Ch. 371 of the Acts of 1971 added language specifically abrogating the need for “the use of a straw man as an intermediate grantee-grantor.” By Ch. 349 of the Acts of ⁴³¹ 1972 the statute was recast in language virtually identical to that of current § 4-108(b). Section 4-108 is in derogation of the common law.

Under the common law a husband and wife were generally forced to resort to the use of a straw man as an intermediate grantee-grantor if they desired to create or terminate an estate by the entireties and the estate did not arise or terminate by operation of law. 4 See, e.g., Tizer v. Tizer, 162 Md. 489 , 160 A. 163 (1932) (holding that husband and wife, holding as tenants by the entirety, cannot lease the property so held to the wife or to the husband); Hale v. Hale, 332 Mass. 329 , 125 N.E.2d 142 (1955); Runco v. Ostroski, 361 Pa. 593 , 65 A.2d 399 (1949); Annotation, Validity and Effect of Conveyance by One Spouse to Other of Grant- or’s Interest in Property Held as Estate by Entireties, 8 A.L.R.2d 634 (1949, Later Case Service 1985, & Supp.1986) (and cases cited therein). But see Lang v. Wilmer, 131 Md. 215 , 101 A. 706 (1917) (dictum) (straw man grantor not necessarily required to create tenancy by the entireties— grantor might validly convey to himself and spouse as tenants by the entireties; Lang is not irreconcilable with Tizer , which involved a purported lease between tenants by the entireties and hence an attempted diminution of the estate). In determining whether the separation and property settlement agreement in the case at bar was a “grant” of an interest permitted under § 4-108(b) of the Real Property Article, it should be borne in mind that statutes in der ⁴³² ogation of the common law are to be strictly construed. See, e.g., James v. Prince George’s County, 288 Md. 315, 335 , 418 A.2d 1173, 1184 (1980); MacBride v. Gulbro, 247 Md. 727, 729 , 234 A.2d 586, 588 (1967).

As a consequence, unless it could be said that the separation and property settlement agreement meets the requirements of a conveyance, transfer, or assignment of property interest as contemplated by §§ 1-101 and 4-108 of the Real Property Article, the agreement did not effect a termination of the tenancy by the entireties in the realty. Code (1974) § 5-103, Real Property Article provides: “No corporeal estate, leasehold or freehold, or incorporeal interest in land may be assigned, granted, or surrendered, unless it is in writing signed by the party assigning, granting, or surrendering it, or his agent lawfully authorized by writing, or by act and operation of law.” The agreement in question is devoid of expressions such as “grant,” “convey,” “transfer,” “assign,” and their equivalents. In no respect does the agreement provide for a present conveyance, transfer, or assignment of interest in realty as between the spouses; rather, it provides for the realty to be placed on the market and the sale proceeds to be divided. Consequently, even if the husband and wife here intended to effect an immediate termination of their estate by the entireties in the realty, the agreement fails to comply with the requirement of § 5-103 that a grant of a corporeal estate or incorporeal interest in land be in writing.

Two additional principles support this conclusion. First, although in doubtful situations joint tenancies are disfavored by the courts, see, e.g., East. Shore, 253 Md. at 532, 253 A.2d at 371; Register of Wills v. Madine, 242 Md. 437, 445 , 219 A.2d 245, 250 (1966); Williams v. Dovell, 202 Md. 351, 358 , 96 A.2d 484, 488 (1953); Code (1974) § 2-117, Real Property Article (“Presumption against joint tenancy”), tenancies by the entireties are favored by the law. 5 ⁴³³ East. Shore, 253 Md. at 532, 253 A.2d at 371; see also Marburg, 49 Md. 402 .

Second, property settlement agreements, like other contracts, are to be interpreted in light of the plain meaning of the language used. In Goldberg v. Goldberg, 290 Md. 204 , 428 A.2d 469 (1981), Judge J. Dudley Digges explained: “Property settlement agreements, as all other contracts scrutinized under the law of this State, are subject to interpretation in light of the settled and oft-repeated principles of objective construction. Orkin v. Jacobson, 274 Md. 124, 128 , 332 A.2d 901, 903 (1975). ‘The written language embodying the terms of an agreement will govern the rights and liabilities of the parties, irrespective of the intent of the parties at the time they entered into the contract, unless the written language is not susceptible of a clear and definite understanding____’ Slice v. Carozza Prop., Inc., 215 Md. 357, 368 , 137 A.2d 687, 693 (1958). ‘[WJhere a contract is plain and unambiguous, there is no room for construction, and it must be presumed that the parties meant what they expressed.’ Kasten Constr. v. Rod Enterprises, 268 Md. 318, 328 , 301 A.2d 12, 18 (1973); Little v. First Federated Life, 267 Md. 1, 6 , 296 A.2d 372, 375 (1972); Devereux v. Berger, 253 Md. 264, 269 , 252 A.2d 469, 471 (1969). Thus, when interpreting a separation agreement, this Court is ‘bound to give effect to the plain meaning of the language used.’ Woodham v. Woodham, supra at [356] 360, 201 A.2d at [674] 676; Sands v. Sands, 252 Md. 137 , 249 A.2d 187 (1969).” 290 Md. at 212 , 428 A.2d at 474-75 .

In the instant case, to read the contract as providing for an immediate termination of the entireties estate would amount to supplying a term completely absent from the existing written language. As stated earlier, the agreement provides for a division of proceeds but does not state ⁴³⁴ that the interest in the realty is to be affected in the interim. It is noteworthy that proceeds from the sale of land held by the entireties ordinarily, but not inevitably, continue to be held by the entireties. East.

Shore, 253 Md. at 532, 253 A.2d at 371; Beard v. Beard, 185 Md. 178, 186 , 44 A.2d 469, 472 (1945); Brell v. Brell, 143 Md. 443, 450 , 122 A. 635, 637 (1923). At most, then, this agreement evidences an intent that tenancy by the entireties would not continue in the proceeds. Few in number, cases from other jurisdictions demonstrate a split of authority as to whether an agreement to sell realty held in tenancy by the entireties and to divide the proceeds causes an immediate conversion of the estate into a tenancy in common, especially where the agreement remains silent as to its immediate effect. In Jonas v. Logan, 478 So.2d 410 (Fla.Dist.Ct.App.1985), a creditor (mortgage holder) of one spouse contended that the following language in a property settlement agreement converted a tenancy by the entireties into a tenancy in common upon execution of the agreement: “The Husband agrees to forthwith produce the deed on said marital home to the Wife and execute a Quit-Claim Deed to the Wife, thereby giving up any right, title or interest which he may claim in the said property within fourteen (14) days from the date of signing this Agreement.” 478 So.2d at 411 .

The Florida court disagreed, stating: “The property settlement agreement discloses