Grothe v. Cortlandt Corp.

Opinion

Defendants Cortlandt Corporation and James S. Davis (hereafter referred to collectively for convenience as defendant) appeal from an order of the Superior Court of Riverside County, granting a

Statement of Facts

In 1983, plaintiff and Ribis purchased real property in Riverside County, taking title as joint tenants. In 1987, Julio Acosta and Lucille Acosta obtained default judgments against plaintiff and Ribis. Plaintiff successfully moved to set aside the default judgment as to her; however, the judgment against Ribis remained outstanding. The Acostas assigned the judgment to defendant in March 1990. Defendant began proceedings to levy on the property, and in July 1990 the Riverside County Sheriff recorded a notice of levy under writ of execution against the property.

Ribis died in October 1990, before expiration of the 120-day grace period staying sale of the property under Code of Civil Procedure section 701.545. Believing herself entitled to the property as the surviving joint tenant, plaintiff filed an affidavit of death of joint tenant in conjunction with the opening of an escrow to purchase a mobilehome for the property. During the course of the escrow, plaintiff learned for the first time of the judgment lien and levy. Upon discovering that the property had been noticed for sale on March 5,1991, plaintiff obtained a temporary restraining order enjoining the sale of the property, and subsequently obtained a preliminary injunction halting the sale. The order granting preliminary injunction was entered June 10, 1991, and the notice of appeal was timely filed on June 12, 1991.

Discussion

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. (Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536 , 1542 [ 253 Cal.Rptr. 344 ].) The decision whether to grant a preliminary injunction is a matter within the sound discretion of the trial court. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63 , 69 [ 196 Cal.Rptr. 715 , 672 P.2d 121 ], The ruling is based on the trial court’s determination of two related issues: the likelihood that the plaintiff

Defendants, who here challenge the injunction, bear the burden of showing an abuse of discretion; that is, that the trial court’s determination to grant the preliminary injunction “ ‘ “exceeded the bounds of reason or contravened the uncontradicted evidence.’’ ’ ” (IT Corp. v. County of Imperial, supra, 35 Cal.3d at p. 69; see also Scaringe v. J.C.C. Enterprises, Inc., supra, 205 Cal.App.3d at p. 1542.) On appeal we view the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in favor of the trial court’s order. (Triple A Machine Shop, Inc. v. State of California (1989) 213 Cal.App.3d 131 , 138 [ 261 Cal.Rptr. 493 ].)

An analysis of the legal issue presented, based on the evidence adduced, leads us to conclude that the joint tenancy was not severed by the sheriff’s levy. Defendants thus fail to demonstrate the trial court abused its discretion in issuing the preliminary injunction to preserve the plaintiff’s rights.

A joint tenancy is a joint interest owned by two or more persons, who have equal interests among themselves. (Civ. Code § 683; Cole v. Cole (1956) 139 Cal.App.2d 691 , 695 [ 294 P.2d 494 ].) The joint tenants must share unity of time, title, interest and possession. A distinctive feature of joint tenancy, as opposed to other interests in land, is the right of survivorship. This means that when one joint tenant dies, the entire estate belongs automatically to the surviving joint tenant(s). (Cf. Estate of Blair (1988) 199 Cal.App.3d 161 , 166 [ 244 Cal.Rptr. 627 ]; Santoro v. Carbone (1972) 22 Cal.App.3d 721 , 729 [ 99 Cal.Rptr. 488 ] overruled on other grounds in Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18 , 30 [ 216 Cal.Rptr. 130 , 702 P.2d 212 ].) Nothing “passes” from the deceased joint tenant to the survivor; rather, the survivor takes from the instrument by which the joint tenancy was created. (Rupp v. Kahn (1966) 246 Cal.App.2d 188 , 196 [ 55 Cal.Rptr. 108 ]; Zeigler v. Bonnell (1942) 52 Cal.App.2d 217 , 219-220 [ 126 P.2d 118 ].)

If, however, one of the four unities of time, title, interest and possession is destroyed before the death of a joint tenant, the joint tenancy is severed. (Tenhet v. Boswell (1976) 18 Cal.3d 150 , 155 [ 133 Cal.Rptr. 10 , 554 P.2d 330 ].) “A joint tenancy [may be] terminated by a voluntary conveyance ... by a judgment in partition, or by an execution sale.” (Clark v. Carter (1968) 265 Cal.App.2d 291 , 294 [ 70 Cal.Rptr. 923 ] disagreed with on another point in Estate of Carpenter (1983) 140 Cal.App.3d 709 , 711 [ 189

By contrast, the mere imposition of a lien or encumbrance does not sever the joint tenancy. (Tenhet v. Boswell, supra, 18 Cal.3d at pp. 159-160; People v. Nogarr (1958) 164 Cal.App.2d 591 , 594 [ 330 P.2d 858 , 67 A.L.R.2d 992 ].) “[A] joint tenant may, during his lifetime, grant certain rights in the joint property without severing the tenancy. But when such a joint tenant dies his interest dies with him, and any encumbrances placed by him on the property become unenforceable against the surviving joint tenant.” (Tenhet v. Boswell, supra, 18 Cal.3d at pp. 159-160 [alease by one joint tenant of his interest did not sever the joint tenancy, and expired upon his death]; see People v. Nogarr, supra, 164 Cal.App.2d at pp. 594-595 [mortgage lien did not sever joint tenancy]; see also, Dando v. Dando (1940) 37 Cal.App.2d 371 , 372-373 [ 99 P.2d 561 ] [mere pendency of an action in partition does not sever a joint tenancy].)

The question before us, then, is whether a recorded levy which has not yet resulted in an execution sale will sever a joint tenancy.

We have found no California cases which directly address the problem, but Zeigler v. Bonnell, supra, 52 Cal.App.2d 217 , is instructive. There, as here, the property was held by two joint tenants, one of whom was a judgment debtor. The court faced the question “[If] the judgment debtor dies prior to a levy of execution but after an abstract of the judgment has been recorded, and a levy of execution is made after the death of the judgment debtor . . . does the purchaser at the execution sale secure any rights in the property, or does the surviving joint tenant take the entire property free and clear of the lien of the judgment?” (Id. at p. 219.) The court held that the judgment lien “prior to execution” (ibid.) did not sever the joint tenancy. Upon the death of the debtor joint tenant, there remained no interest or property right against which the judgment lien could be operative. The creditor could “immediately execute and sell” the debtor’s interest, which would sever the joint tenancy. (Id. at p. 221, italics added.) But the creditor

Thus, under the present statutory scheme the “levy,” as opposed to the ultimate sale of the property, does not destroy the unities any more than any other kind of lien against a specific property. As the Nogarr court stated, although a mortgage was a lien attached to a specific parcel of property, “as it did not operate to transfer the legal title or any title to the mortgagees or entitle the mortgagees to possession it did not destroy any of the unities and therefore the estate in joint tenancy was not severed . . . .” (People v. Nogarr, supra, 164 Cal.App.2d at p. 594.) Similarly, the sheriff’s levy does not effect a change in title or right to possession up to the moment of sale.

Cases from other jurisdictions bear out this distinction. In Van Antwerp v. Horan (1945) 390 Ill. 449 [ 61 N.E.2d 358 , 161 A.L.R. 1133 ], the court concluded that “the levy gives no greater interest than that which the judgment creditor already possessed” namely, “a lien which might or might not ripen into title, . . .” (Id., 61 N.E.2d at p. 360.) The court distinguished cases in which the levy involved actual seizure of the property, noting that “seizure would of necessity interfere with the possession of the joint tenant” and thereby sever the joint tenancy. (Ibid:, see also fn. 2, ante.) However, under Illinois procedure, as here, “it appears that the levy is just another step in the process directed toward a final sale.” (Ibid.) It does not divest title or otherwise diminish the interest of one joint tenant so as to sever the joint tenancy. (Ibid.) Under Illinois law the joint tenancy is preserved “until a conveyance divesting one tenant of his interest has been executed by the sheriff following a judgment sale . . . .” (In re Estate of Woodshank (1975) 27 Ill.App.3d 444 [ 325 N.E.2d 686 , 689].)

In Knibb v. Security Ins. Co. of New Haven (1979) 121 R.I. 406 [ 399 A.2d 1214 ], a case remarkably like this one, the joint tenant died after his

In addition, the Colorado Supreme Court has recognized, in dictum, that “ ‘[w]hile interest of a joint tenant is subject to levy, it is not severed until sale.’ ” (First Nat. Bank v. Energy Fuels Corp. (1980) 200 Colo. 540 [ 618 P.2d 1115 , 1118].)

We have found no case, on the other hand, adopting defendant’s view that a levy on real property accomplished by merely recording documents evidencing an intent to take and sell the property, without more, severs the joint tenancy. Defendant relies on Davidson’s Lessee v. Heydom (1799 Pa.) 2 Yeates 459 , an old Pennsylvania case, for the proposition that issuance of an execution severs the joint tenancy if the land may be sold without further proceedings. (See Musa v. Segelke & Kohlhaus Co., supra, 272 N.W. 657 , 659 citing Davidson’s Lessee.) While Davidson’s Lessee may be correct in its context, it is inapposite here, because the California statutory scheme requires further proceedings after levy before the land may be sold.

Although some cases from other states appear unclear as to exactly when in the execution process a joint tenancy is severed, nothing in these cases is inconsistent with our conclusion that a recorded levy alone, signifying nothing more than an official designation of the property subject to execution, does not sever the joint tenancy. Szelenyi v. Miller (Me. 1989) 564 A.2d 768 , 770, states that the “end result” of execution—presumably the change of title resulting from a sale—is a severance of the joint tenancy. In Eastern Shore Bldg. & Loan Corp. v. Bank of Somerset (1969) 253 Md. 525 [ 253 A.2d 367 , 370], the court stated that “the mere entry of a judgment against one of the joint tenants does not destroy any of the four unities of interest, title, time and possession 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.” Although the court did not elaborate on the nature of the execution proceedings under Maryland law, the distinction

Defendant objects that the levy did interfere with the essential unities, asserting that “[a]s of the date of the levy the debtor has lost control of the property.” Defendant does not explain, and we fail to see, how this is so. As observed by the Knibb court, the levy does not disturb the essential elements of the owner’s possession: physical control over and the ability to exclude others from, the land. (Rest., Property, § 7.)

It is true that after the levy, prior to the sale, the party in possession can be restrained from committing waste on the property pursuant to Code of Civil Procedure section 745. However, the mere availability of an action for waste does not disturb possession or sever the joint tenancy. Mortgagors can also be restrained from committing waste (Civ. Code, § 2929), but as we have seen, a joint tenant who mortgages his interest does not sever the joint tenancy. Moreover, a separate court order is required to allow the levying officer to take possession of the property, and the court must determine that the property is perishable or will greatly depreciate in value or that the order will otherwise best serve the interests of the parties. (Code Civ. Proc., § 699.070.)

Neither does the sheriff have constructive possession of the property. The sheriff is not immediately entitled to sell the property and has no interest in the property beyond an intent to sell it if it survives the 120-day period unredeemed. This is analogous to the threat of foreclosure imposed by a mortgage lien, which does not sever a joint tenancy. (Cf. People v. Nogarr, supra, 164 Cal.App.2d at p. 595.)

We also doubt that the Legislature, when it created the grace period, intended to wrest control of the property from the owner during this time and give it to the levying officer. Rather, the legislative history states that the provision is designed to give the judgment debtor “time to redeem the property from the judgment creditor’s lien before the sale, to sell the property, or to seek the attendance of other potential purchasers at the judicial sale.” (16 Cal. Law Revision Com. Rep., supra, p. 1112.) The grace period thus allows the debtor “an opportunity to retain the property.” (Id. at p. 1120.) The statutory revision was thus designed to preserve the debtor’s rights in his or her property, not to diminish them.

We also reject defendant’s suggestion that because the title of the purchaser at an execution sale relates back to the date of the lien, “the levy and not the sale severs the title.” A similar contention was raised and rejected in Zeigler v. Bonnell, supra, 52 Cal.App.2d at page 220. Prior to the sale, there is no title in a purchaser to relate back and the existing title in the joint tenants remains undisturbed except for the lien, which as we have repeatedly shown, does not sever the joint tenancy. Moreover, the “relation back” doctrine “only applies when the rights of innocent third parties have not intervened. Here the rights of the surviving joint tenant intervened between the date of the lien and the date of the sale.” (Ibid.) Finally, defendant urges that the creditor in this situation is penalized in favor of the surviving joint tenant. This is “unfair” only in the sense that one party or the other must lose. Defendant forgets that, as stated above, the surviving joint tenant is enjoying a right fixed when the joint tenancy was created, and does not take anything from the decedent or the decedent’s creditor. Moreover, as the court pointed out in Zeigler v. Bonnell, supra, 52 Cal.App.2d at page 221, in the aggregate, creditors stand an equal chance of winning this particular gamble, since the nondebtor joint tenant could die first, leaving the debtor with a larger share upon which to execute. The Zeigler court has thus already resolved the policy issue in favor of the surviving joint tenants, concluding that “[tjhis rule is sound in theory and fair in its operation.” (Ibid.) We see no compelling reason to depart from the underlying reasoning of that case.

Plaintiff has moved for an order admitting additional evidence (including copies of the writ of execution, notice of levy, etc.) in support of her argument that unity of possession was not disturbed because the property was levied upon and the sale noticed as to the interests of both joint tenants, apparently by mistake. However, since plaintiff was not in fact subject to the default judgment, only Ribis’s interest was subject to execution, and we

Disposition

The order is affirmed.

Hollenhorst, J., and Timlin, J., concurred.