Opinion
NO. 2019-CA-001155-MR
06-12-2020
U.S. BANK NATIONAL ASSOCIATION, AS SUCCESSOR BY MERGER TO U.S. BANK NATIONAL N.D. APPELLANT v. ALLEN KINSLOW; CITY OF SCOTTSVILLE; AND UNKNOWN SPOUSE OF ALLEN KINSLOW APPELLEES
BRIEFS FOR APPELLANT: Chris Wiley Amy E. Gardner John R. Cummins Matthew P. Curry Nicholas M. Smith Ryan F. Hemmerle Columbus, Ohio BRIEF FOR APPELLEE ALLEN KINSLOW: Christopher D. Minix Bowling Green, Kentucky
NOT TO BE PUBLISHED APPEAL FROM ALLEN CIRCUIT COURT
HONORABLE JANET J. CROCKER, JUDGE
ACTION NO. 18-CI-00184 OPINION
AFFIRMING
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BEFORE: CLAYTON, CHIEF JUDGE; ACREE AND LAMBERT, JUDGES. CLAYTON, CHIEF JUDGE: U.S. Bank National Association (the "Bank") appeals from the Allen Circuit Court's order granting summary judgment in favor of Allen Kinslow and determining that a mortgage is extinguished upon the death of a joint tenant where the other joint tenant does not join or otherwise participate in the granting of the mortgage. Upon review of the record and applicable law, we discern no error on the part of the circuit court, and therefore affirm.
BACKGROUND
On August 4, 1982, Robert and Lucille Lyons conveyed a property in Scottsville, Kentucky (the "Property") to William Bradford "Bill" Kinslow, his wife Marie Kinslow, and their son Allen Kinslow. The three Kinslow parties took title to the Property via a deed which conveyed the Property "for their joint lives, with remainder in fee simple to the survivor of them, his or her heirs and assigns forever."
Marie passed away in 2002 and, in October of 2004, Bill executed a line-of-credit promissory note in favor of the Bank (the "Note") on his interest in the Property. On that same day, Bill executed a mortgage in favor of the Bank which provided the Property as security for the Note (the "Mortgage"). For reasons not reflected by the record, Allen did not sign either the Note or the Mortgage, nor did the Mortgage express the intent to otherwise affect Allen's interest in the Property.
In June of 2017, Bill passed away. After Bill's death, Allen made no monthly payments towards the satisfaction of the Note. In June of 2018, the Bank filed a complaint seeking foreclosure of the Property and requesting the receipt of half of the proceeds from the sale of the Property.
In March of 2019, both the Bank and Allen filed motions for summary judgment, and the circuit court held a hearing in May of 2019. On June 27, 2019, the circuit court entered an order granting summary judgment in favor of Allen and dismissing the Bank's complaint with prejudice. Specifically, the court found that any lien that the Bank may have had against the Property during Bill's lifetime was extinguished upon Bill's death. The Bank filed a timely notice of appeal.
ANALYSIS
a. Standard of Review
In reviewing a grant of summary judgment, our inquiry focuses on "whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996) (citing Kentucky Rules of Civil Procedure (CR) 56.03). The trial court must view the record "in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991) (citations omitted). Further, "a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial." Id. at 482 (citations omitted).
On appeal, "[a]n appellate court need not defer to the trial court's decision on summary judgment and will review the issue de novo because only legal questions and no factual findings are involved." Hallahan v. The Courier-Journal, 138 S.W.3d 699, 705 (Ky. App. 2004) (citations omitted).
b. Discussion
The Bank argues on appeal that Bill's interest in the Property was not extinguished upon his death, but instead was transferred to Allen subject to the Mortgage. On the other hand, Allen contends that a valid joint tenancy existed at the time of Bill's death, and therefore that any rights that the Bank had pursuant to the Mortgage were extinguished at the time of Bill's death.
Under Kentucky law, a joint tenancy with right of survivorship is defined as:
an estate held by two or more persons jointly with equal rights to share in its enjoyment during their lives, and having as its distinguishing feature the right of survivorship *** by virtue of which the entire estate upon the death of any of the joint tenants goes to the survivors, and the last survivor who takes by inheritance.McLeod v. Andrews, 196 S.W.2d 473, 477 (Ky. 1946) (emphasis added) (internal quotation marks and citation omitted). Therefore, an inherent and vital feature of the estate of joint tenancy is the "right of survivorship" between each joint tenant, as well as the ultimate right of the last surviving joint tenant to take the whole of the estate "by inheritance." Id.
Further, Kentucky courts have made clear that such right of survivorship is "free and exempt from all charges made by . . . deceased co-tenants." Stambaugh v. Stambaugh, 156 S.W.2d 827, 831 (Ky. 1941). Any conveyance or other estate given in relation to property is "measured by the relative lifetimes of the initial grantees[.]" Sanderson v. Saxon, 834 S.W.2d 676, 680 (Ky. 1992). It follows from the foregoing language that a mortgage from one joint tenant to a person who is not a joint tenant is conditioned on the survivorship of the grantor of such mortgage.
As a result, in this case, Bill possessed no more than a lifetime interest in the Property; indeed, he took title under the deed to the Property "for [his] . . . li[fe]." Bill could not execute a mortgage which would encompass a greater interest than the interest that he actually possessed in the Property. The only interest held by the Bank was one that was conditioned upon Bill's survival and, consequently, the Bank's mortgage interest was terminated upon Bill's death.
The Bank's argument that the mortgage survived Bill's death is premised almost exclusively on the Kentucky Supreme Court's decision in Peyton v. Young, 659 S.W.2d 205 (Ky. 1983). In Peyton, William and Phyllis Hill were a married couple who owned a residence as tenants by the entirety with a first mortgage executed by both parties at the time of purchase. Id. at 206. Subsequently, William executed a mortgage to the Peytons, to which Phyllis did not join. Id.
Thereafter, William and Phyllis divorced, and William conveyed the property to Phyllis subject to the first mortgage but with no mention of the second mortgage to the Peytons. Id. William subsequently murdered Phyllis and then committed suicide. Id. The first mortgagee foreclosed on the residence, and both Phyllis's estate and the Peytons claimed the proceeds remaining after the payment of the first mortgage. Id. The Kentucky Supreme Court held that the Peytons were entitled to one-half of the proceeds. Id. at 206-07.
Peyton, however, is distinguishable from this case. When tenants by the entirety divorce, one essential element of the tenancy—spousal unity—is destroyed. Nelson v. Mahurin, 994 S.W.2d 10, 14 (Ky. App. 1998). As stated in Nelson, "[a]s a result, a decree of dissolution, by operation of law, terminates a tenancy by the entirety and the concomitant right of survivorship to the entire estate." Id.
Unlike in this case, where the parties remained joint tenants with the right of survivorship at all applicable periods of time during their joint ownership of the Property, the parties in Peyton were not tenants in the entirety with survivorship rights either at the time of William's post-divorce conveyance of the property to Phyllis or upon the parties' deaths. Peyton, 659 S.W.2d at 206-07. Therefore, we do not find Peyton to be applicable in this situation.
Moreover, our decision is buttressed by the fact that, at the time Bill executed the mortgage, the Bank had constructive notice that Bill and Allen owned the Property as joint tenants with survivorship rights based on the validly recorded deed to the Property. See AEP Industries, Inc. v. B.G. Properties, Inc., 533 S.W.3d 674, 680 (Ky. 2017). As stated in AEP Industries, Inc., "[s]ignificant legal consequences flow from the language used to convey interests in real property, and because the deed gives 'notice to the world,' its effects extend beyond the limited interests of the parties." Id. at 680-81.
CONCLUSION
For the foregoing reasons, we find that the circuit court correctly found that the Bank's interest was extinguished upon Bill's death, and therefore affirm the Allen Circuit Court.
ALL CONCUR. BRIEFS FOR APPELLANT: Chris Wiley
Amy E. Gardner
John R. Cummins
Matthew P. Curry
Nicholas M. Smith
Ryan F. Hemmerle
Columbus, Ohio BRIEF FOR APPELLEE
ALLEN KINSLOW: Christopher D. Minix
Bowling Green, Kentucky