Chambers v. Cardinal

HOLLANDER, J. In this case, we must decide whether a judgment creditor may levy against real property that was held by the judgment ⁴²² debtor in joint tenancy, and conveyed by the joint tenants to third parties, pursuant to a contract of sale and deed, before execution on the judgment. Elizabeth Powers Chambers, appellant, was divorced from Richard Chambers on April 17, 2003. On August 18, 2003, in the course of ongoing domestic proceedings, appellant obtained a judgment against Mr. Chambers in the amount of $21,950. By that time, Richard Chambers had remarried.

He and his new wife, Alon Chambers (the “Chambers”), owned a parcel of real property at 336 Oak Knoll Drive in Rockville (the “Property”), as joint tenants. The Chambers subsequently entered into a contract dated October 17, 2004, to sell the Property to Michael Cardinal and Jamie M. Gross, appellees. Pursuant to that contract, they conveyed the Property to appellees, by deed, on February 8, 2005. As of then, appellant had no t attempted to execute o n her judgment.

On June 30, 2006, appellant sued appellees in the Circuit Court for Montgomery County, seeking a declaratory judgment that she had a valid and enforceable lien on the Property. The circuit court granted appellees’ Motion to Dismiss on November 28, 2006. This appeal followed. Appellant presents one question: “Did the trial court err as a matter of law when it granted appellee’s motion to dismiss?” We answer in the negative and shall affirm the circuit court.

I. FACTUAL AND PROCEDURAL SUMMARY On August 18, 2003, several months after appellant and Mr. Chambers were divorced, appellant obtained a judgment against Mr. Chambers in the amount of $21,950. The judgment arose out of the divorce litigation. By the time that appellant obtained the judgment against Mr. Chambers, he had already remarried. It is undisputed that he and his new wife owned the Property in issue as joint tenants.

About a year later, on October 17, 2004, Mr. and Ms. Chambers signed a contract of sale for that Property. Pursuant to that con ⁴²³ tract, they conveyed the Property to appellees, by deed, on February 18, 2005. 1 Appellant filed suit on June 30, 2006, seeking a declaration that she had a valid lien on the Property. In a motion to dismiss filed on August 3, 2006, appellees argued that “[blecause Plaintiff never executed on the Judgment before the Property was transferred to Defendants, the joint tenancy was never severed. Thus, judgment never attached to the Property....” 2 Appellant’s opposition to the motion was not filed until August 23, 2006.

On that date, the circuit court, without having received appellant’s opposition, granted appellees’ motion, without prejudice. 3 That order was docketed August 28, 2006. By that time, appellees had filed, on August 24, 2006, a Reply in Further Support of their Motion to Dismiss. On Sept. 6, 2006, appellant moved to vacate the court’s order of dismissal. After argument, the court granted the motion to vacate the order of dismissal, and set the case for argument on appellees’ motion to dismiss.

The court heard the motion to dismiss on November 28, 2006. In its ruling granting the motion, the court reasoned that “it was too late, that the judgment had not been executed, and that ... the defendant purchasers were bona fide purchasers for value. The joint tenancy now could not be severed.” The court relied on Eastern Shore Building and Loan Corp. v. Bank of Somerset, 253 Md. 525 , 253 A.2d 367 (1969), ⁴²⁴ which the court described as standing “for the proposition that a joint tenancy may not be severed when the property is sold before a judgment is executed.” II. DISCUSSION Maryland law provides that real property may be held in joint tenancy, a form of common ownership.

Md.Code (2003 & 2007 Supp.), § 2-117 of the Real Property Article (“R.P.”). See also Cooper v. Bikle, 334 Md. 608, 621-22 , 640 A.2d 1120 (1994); Eder v. Rothamel, 202 Md. 189, 192 , 95 A.2d 860 (1953). In a joint tenancy, each tenant “owns an undivided share in the whole estate, has an equal right to possess, use, and enjoy the property, and has the right of survivor-ship.” Downing v. Downing, 326 Md. 468, 474 , 606 A.2d 208 (1992). Under common law, the creation of a joint tenancy is dependent on “the four unities”: unity of interest, unity of title, unity of time, and unity of possession.

Id.; see also Eder, 202 Md. at 192 , 95 A.2d 860 ; Chew v. Chew, 1 Md. 163, 171 (1851). That is, the co-owners must have “one and the same interest, accruing by one and the same conveyance, commencing at one and the same time, and held by one and the same undivided possession.” Chew, 1 Md. at 171 ; accord Bruce v. Dyer, 309 Md. 421, 427 , 524 A.2d 777 (1987). Additionally, Maryland provides by statute that a deed, will, or other instrument creating an interest in land does not create a joint tenancy unless the intention to create a joint tenancy is clearly expressed. R.P. § 2-117; see also Register of Wills for Montgomery County v. Madine, 242 Md. 437 , 443-44 n. 1, 219 A.2d 245 (1966).

A joint tenancy can be terminated in a variety of ways. If the joint tenants convey the real property to another party and no longer own an interest in it, the joint tenancy terminates. Madine, 242 Md. at 441-42 , 219 A.2d 245 . A joint tenancy also ends once there is only a single surviving joint tenant.

Cooper, 334 Md. at 621 , 640 A.2d 1120 (“[I]f property is held by joint tenants and one of the tenants dies, ⁴²⁵ that individual’s interest in the property is immediately extinguished. The surviving joint tenant becomes the sole owner of the property pursuant to the right of survivorship.... ”). And, a joint tenancy can also be severed if one or more of the four unities is destroyed. Helinski v. Harford Memorial Hosp., Inc., 376 Md. 606, 616 , 831 A.2d 40 (2003) (citing Eder, 202 Md. at 192 , 95 A.2d 860 ).

Severance occurs voluntarily if a joint tenant takes an action that destroys one of the four unities. This occurs, for example, if one of the joint tenants sells his interest in the property, Alexander v. Boyer, 253 Md. 511, 520 , 253 A.2d 359 (1969), or mortgages his interest, Eder, 202 Md. at 192 , 95 A.2d 860 ; or leases it, Alexander, 253 Md. at 523 , 253 A.2d 359 . Severance can also occur involuntarily, such as when a court partitions the property by order, Eder, 202 Md. at 192 , 95 A.2d 860 , or when a creditor obtains a judgment against one of the joint tenants and levies upon the property in execution on the judgment. Id. at 193 , 95 A.2d 860 .

As noted, it is undisputed that, when appellant obtained her judgment against Mr. Chambers, the Chambers held the Property as joint tenants. It is also uncontroverted that appellant did not move to levy or execute on her judgment until well after the Chambers conveyed the Property to appellees by deed. In the leading case of Eder v. Rothamel, the Court made clear that “a judgment lien, without levy or execution on the judgment, does not sever a joint tenancy....” Eder, 202 Md. at 193 , 95 A.2d 860 . Indeed, the Court determined in Helinski, 376 Md. at 620-21 , 831 A.2d 40 , that mere delivery of the writ of execution to the sheriff is not sufficient to sever the joint tenancy and attach the lien.

There, the Court found that no severance occurred, and no lien attached, where a judgment debtor died after her creditor had delivered the writ to the sheriff, but before the sheriff executed upon property held in joint tenancy with the debtor. Id. at 620-21 , 831 A.2d 40 . ⁴²⁶ In this case, the circuit court agreed with appellees that appellant’s failure to enforce her judgment prior to appellees’ acquisition of the Property was dispositive of her claim. As noted, the circuit court cited Eastern Shore, supra, 253 Md. 525 , 253 A.2d 367 , for “the proposition that a joint tenancy may not be severed when the property is sold before a judgment is executed.” Appellant argues, however, that “Eastern Shore is supportive of Appellant’s position.” In Eastern Shore , Otho and William Sturgis purchased a parcel of real property as joint tenants. Id. at 527 , 253 A.2d 367 .

Some time after the purchase, Otho obtained a bank loan from the Bank of Somerset, upon which he later defaulted. Id. at 528 , 253 A.2d 367 . The bank then obtained a judgment against him, which it did not immediately attempt to enforce. Id.

Nearly a year after the bank obtained its judgment, the Sturgises conveyed the real property in fee simple to two married couples, the Hytches and the Penders, “without having executed any prior contract of sale.” Id. A month later, the bank attempted to levy on the property. Id. The Eastern Shore Building and Loan Corporation, the Hytches’ and Penders’ purchase money mortgagee, intervened as a defendant.

Id. The Court held that the bank’s judgment lien did not attach. It reasoned that, under these facts, “[tjhere was never a time ... that Otho and William ever held title to the subject property as tenants in common so that there was no estate in the land which Otho, alone, held in severalty to which the lien of a judgment against him alone could attach.” Id. at 531 , 253 A.2d 367 . The Court explained, id. at 530-31 , 253 A.2d 367 (emphasis in original): [T]he mere entry of a judgment against one of the joint tenants does not destroy any of the four unities ... and hence, until there is an execution on the judgment which will destroy one or more of these unities, there is no severance of the joint tenancy.

If there is a severance of the joint tenancy by way of an execution upon the judgment of one of the joint tenants, the judgment then becomes a lien upon the interest of the judgment debtor in the tenancy ⁴²⁷ in common which then arises. If, however, the judgment creditor does not execute upon the judgment against the judgment debtor-joint tenant during his life, the entire joint estate is held by the surviving joint tenant or tenants by survivorship and without any lien of the judgment against the property thus held by them.... [T]he joint tenants hold “per my et per tout ” [4] and the nature of the tenancy is that [a] judgment lien cannot attach to the estate in joint tenancy until after severance and the creation of a separate estate in title and possession to which [a] judgment lien can then attach. Appellant suggests that Eastern Shore is distinguishable from the instant case because the Sturgises, in Eastern Shore , unlike the Chambers here, conveyed their jointly held property “without having executed any prior contract of sale.” Id. at 528 , 258 A.2d 367 . According to appellant, Eastern Shore is in harmony with Register of Wills v. Madine, supra, 242 Md. 437 , 219 A.2d 245 , on which she also relied.

She contends that Madine “stands for the proposition that although a transfer of property from joint tenants alone does not sever the joint tenancy and allow a judgment against one of them to attach to the property, a contract will destroy the unity of title and destroy the joint tenancy.” In Madine , Rose Hutton and her niece, Helen Madine, held a property known as Woodlands in joint tenancy. Id. at 439-40 , 219 A.2d 245 . The State filed condemnation proceedings against Woodlands, in order to acquire it by eminent domain for use as part of a park. Id. at 440 , 219 A.2d 245 .

Once the State and the joint tenants had agreed on a purchase price, Hutton and Madine gave the State a fully executed deed to ⁴²⁸ Woodlands, in fee. Id. But, within weeks after the execution of the deed, and before the State had recorded the deed or paid the agreed price, Hutton died. Id.

The State then tendered the purchase price to Madine, but subtracted an amount of money that Hutton had owed as back taxes. Id. Madine sought and received a declaratory judgment that she, as the surviving joint tenant of Woodlands, was entitled to the full purchase price for Woodlands, free of the tax lien against Hutton. Id. at 440-41 , 219 A.2d 245 .

The Court of Appeals reversed. It determined that the State’s tax lien had not severed the joint tenancy in Woodlands, because the State had not moved to enforce the lien until after Hutton’s death. Id. at 441 , 219 A.2d 245 . But, the Court went on to hold that the joint tenancy had nevertheless been terminated, not by the mere existence of the tax lien, but by the execution of the deed of sale.

Id. at 446 , 219 A.2d 245 . The Court reasoned: [T]he deed, after delivery and prior to recordation, would have operated as a contract to convey which would pass to the State equitable title and the right to formal legal title. Generally it has been held that a contract to convey will terminate a joint tenancy under circumstances in which a transfer of legal title would do so. Id. at 443 , 219 A.2d 245 (internal citations omitted).

The Court noted that there was no indication that Hutton and Madine had intended to hold the proceeds from the sale in joint tenancy. Id. at 444-45 , 219 A.2d 245 . It said, id. at 446 , 219 A.2d 245 : [WJhen Miss Hutton and Mrs. Madine delivered the fully executed deed to the State the joint tenancy in the property ended and the ladies held a bare legal title as trustees for the State and the State owed the ladies, as tenants in common, the agreed purchase price. This being so, the State had full right to offset against the amount it owed Miss Hutton for her part of the purchase price the amount she owed the State for inheritance taxes.... ⁴²⁹ Appellant seeks further support in Alexander v. Boyer, supra, 253 Md. 511 , 253 A.2d 359 , in which the Court held that an unexercised option contract did not terminate a joint tenancy.

In Alexander, two sisters held a piece of farmland in joint tenancy. Id. at 513-14, 253 A.2d 359 . They entered into a contract to sell a portion of the land to a third party, Levine, contingent upon rezoning of the land for a townhouse development. Id. at 515 , 253 A.2d 359 .

Under the contract, if Levine did not successfully obtain the rezoning, he would have the option either to purchase the land at the contract price, or to void the contract, in which case the sisters would return his deposit if he had made bona fide efforts to obtain the rezoning. Id. at 515-16 , 253 A.2d 359 . Levine chose not to purchase. Id. at 516 , 253 A.2d 359 .

In a subsequent lawsuit, it was determined that he was not entitled to the return of his deposit. Id. Thereafter, one of the sisters died, survived by her husband, whom she named as her sole devisee. Id.

She was followed in death by the second sister, who died intestate, leaving her husband as her only heir. Id. The husband of the predeceased sister sued his brother-in-law, arguing that the contract with Levine (among other transactions) had severed the joint tenancy, converting it to a tenancy in common, 5 in which the -widowers held equal half shares as the heirs of their respective wives. Id. at 516-17 , 253 A.2d 359 .

The brother-in-law responded that the joint tenancy had never been terminated, and thus he had complete ownership of the property as the sole heir of his wife, the last surviving joint tenant, who had acquired complete ownership via right of survivorship upon her sister’s death. Id. at 517 , 253 A.2d 359 . ⁴³⁰ The Alexander Court reasoned that the option contract could not “in itself, result in a termination of the joint tenancy if [the joint tenancy] had existed on the date of the agreement.” Id. at 521, 253 A.2d 359 (emphasis added). 6 Of import here, the Court distinguished Madine , stating, id. (emphasis added): We pointed out in Madine that in Maryland and in accordance with the law generally, a contract to convey will terminate a joint tenancy under circumstances in which a transfer of legal title would do so, so that the executed and delivered deed [in Madine] transferred the full equitable interest in the land (the grantor holding a bare legal title for the benefit of the State) and resulted in a termination of the joint tenancy. In the instant case, however, the [contract] was an option contract and until the conditions precedent were met and the option was exercised by Dr. Levine, no equitable interest or estate passed to Dr. Levine on which specific performance could be granted____ Under these circumstances, the [contract] would not impair any of the four unities and would not result in a severance or termination of the joint tenancy.

According to appellant, although an unexercised option contract does not terminate a joint tenancy, a binding contract of sale does. Summarizing her argument, she asserts: The respective cases upon which the parties to this matter rely are consistent and support Appellant’s position.... The Court in Eastern Shore differentiated the facts of that case, where there- was no prior contract for sale and thus the unity of title was intact until conveyance, from a situation where there was a contract, as in Madine . In the present case, the contract of October 16, 2004 severed the unity of title and created a tenancy in common between Richard and ⁴³¹ Alon Chambers.

Appellant’s judgment could attach at that point, and transfer to Appellees with the Subject Property. Appellees respond that Madine “is wholly inapposite.” They reason that in Madine the Court “decided the question of whether parties intended to hold the proceeds of the sale of property as joint tenants. The holding of Madine , therefore, has no application in this case, where the question is whether the joint tenancy in which the Property was held was ever severed.” (Emphasis in original). Appellees characterize appellant’s contention that the contract of sale on the Rockville Property severed the Chambers’ joint tenancy as “an attempt to avoid the explicit holding of Eastern Shore.” Noting that a joint tenancy is severed when one of the four unities is destroyed, they argue that “it is plainly obvious that a contract of sale executed by both joint tenants does not destroy any of the four unities because both joint tenants continue to hold the same title and interest and the other unities are unaffected.” (Emphasis in original).

According to appellees, because “both joint tenants entered into a contract to sell the Property,” it follows that “there was no action that destroyed any of the four unities, and the joint tenancy was never severed.” (Emphasis in original). They analogize to the impact of a mortgage on a joint tenancy, pointing out that in Downing, supra, 326 Md. at 479 , 606 A.2d 208 , the Court reaffirmed that a mortgage by a single joint tenant severs the joint tenancy, but concluded that “where all joint tenants join in the mortgage, none of the unities are destroyed, and there is no reason why the joint tenancy should not continue.” Appellant is correct that, but for the fact that Mr. Chambers owned the Property in joint tenancy with his wife, appellant’s properly indexed and recorded judgment would have attached as a lien on the Property. “In Maryland, a creditor obtains a vested interest in the form of a lien against the debtor’s realty at the time of judgment.” Van Royen v. Lacey, 262 Md. 94, 100 , 277 A.2d 13 (1971). See also Md.Code (2006 & 2007 Supp.), § ll-402(b), (c) of the Courts and ⁴³² Judicial Proceedings Article (“C.J.”) (“If indexed and recorded as prescribed by the Maryland Rules, a money