HOIT v. RANKIN

ng evidence of a relationship from which donative intent can be presumed as a per se basis for rendering the presumption of equal ownership irrebuttable. Unfortunately, the language used by the authors of THE LAW OF PROPERTY (1984) to paraphrase Varel unwittingly did just that by elevating a common sense principle of evidence into a principle which reads like an irrebuttable presumption. That "error" has been perpetuated, beginning with Montgomery. The application of the Montgomery principle in subsequent Missouri cases

In Montgomery, the Eastern District found that an unmarried couple named as tenants by the entirety on a deed were in fact tenants in common. 714 S.W.2d at 236. One of the tenants in common had contributed the entire purchase price to acquire the property. Id. at 235. The court found that as "there was no evidence of donative intent . . . nor the existence of a family relationship, the property had to be apportioned according to the contribution of each towards the acquisition of the property." Id. at 236. Whether intended or not, the court seemed to be suggesting that had there been evidence of a family relationship and donative intent, the trial court would have been conclusively bound to treat the cotenants as equal owners of the property.

Two Western District cases have since cited Montgomery. In Lemay v. Hardin, 48 S.W.3d 59, 63 (Mo.App. W.D. 2001), we favorably cited Montgomery but were not required to analyze or apply the principle relating to "neither a family relationship nor donative intent." In Clark, we favorably cited Montgomery. 131 S.W.3d at 387. After noting that "the record discloses that the parties were not related and there is nothing to suggest that there was any donative intent," we looked to the evidence of disproportionate contributions toward acquisition of a mobile home and concluded that the presumption of equal ownership had been rebutted. Id. at 389 (emphasis added). Though not expressly stated, Clark suggested, as had Montgomery, that had evidence of both a family relationship and donative intent been present, the court would have been bound by the conclusive presumption that all cotenants held equal shares in the ownership of the property. Id.

The Eastern District and the Southern District have also favorably cited Montgomery but have read the "neither/nor" reference to family relationship and donative intent to mean that "either" circumstance will render the presumption of equal ownership conclusive. In Snyder v. Snyder (In re Estate of Snyder), 880 S.W.2d 596, 599 (Mo.App. E.D. 1994), the Eastern District concluded that the presumption of equal ownership "may be rebutted by proof that the parties contributed unequal amounts to acquisition of the property or where there is no family relationship between the parties." (Emphasis added.) In Christen v. Christen, 38 S.W.3d 488, 492 (Mo.App. S.D. 2001), the Southern District held that "unequal contribution is irrelevant in determining the joint tenants' respective shares when there is a family relationship between the tenants or when there is evidence of donative intent." (Emphasis added.) In Johannsen v. McClain, 235 S.W.3d 86, 87-88 (Mo. App. S.D.2007), the Southern District held that the presumption of equal ownership may be rebutted with evidence of disproportionate contributions to the purchase of the property "as long as there is also neither a family relationship between the cotenants or evidence of donative intent by the party who contributed more than his pro rata amount towards the purchase price." (Emphasis added.)

The full impact of the evolution from the "neither-nor" principle described in Montgomery to the "either-or" principle described in Christen, Estate of Snyder, and Johannsen was realized in Nelson v. Killman (In re Killman), Bankr. No. 08-61703, Adversary No. 09-6075, 2010 WL 743685 (Bankr.W.D.Mo. Feb.26, 2010). In Kill-man, the court, after quoting Montgomery verbatim, then stated "[i]n other words, `[an] unequal contribution is irrelevant in determining the joint tenants' respective shares when there is a family relationship between the tenants or when there is evidence of donative intent.'" Id. at *3 (quoting Christen, 38 S.W.3d at 492). The court then found that because the involved parties "have a family relationship, I need not reach the question of donative intent." Id. (emphasis added).

The Rankins rely heavily on Christen, Estate of Snyder, Johannsen, and Killman. The Rankins maintain that "the original presumption of equal ownership cannot be rebutted by evidence of unequal contributions towards the purchase of the real estate, if there is [ either] evidence of a family relationship or evidence of donative intent." (Appellants' Br. 19) The Rankins thus argue that their family relationship with the Hoits rendered the presumption of equal ownership irrebuttable and that the trial court was powerless to consider the uncontested evidence that the Hoits contributed 100% of the purchase price for the House in determining the relative interests of the parties in the House. We do not agree.

First, we believe it obvious that Montgomery's reference to "neither" a family relationship "nor" donative intent cannot be read to permit "either" a family relationship "or" donative intent to render the presumption of equal ownership irrebuttable. The ordinary and common definition of "neither" is:

[N]ot either of two . . . . not one of two or more: not either . . . . not the one and not the other of two. . . .

[U]sed as a function word before two or more coordinate words, phrases, or clauses now joined usu. by nor or sometimes by or or archaically by neither to indicate that what immediately follows is the first of two or more alternatives both or all of which are rejected.

MERRIAM-WEBSTER DICTIONARY 1514 (3rd ed. 1993). "Neither/nor," therefore, means "both" and is the antithesis of "either/or." Thus, when Montgomery stated that the presumption of equal ownership can be rebutted in the absence of neither a family relationship nor donative intent, it was necessarily stating that both conditions must be present, not merely one or the other. To the extent Christen, Estate of Snyder, Johannsen, and Killman suggest that either a family relationship or donative intent will suffice to render the presumption of equal ownership irrebuttable, they should not be followed.

Notwithstanding our view that Christen, Estate of Snyder, and Johannsen should not be followed for the proposition that " either" a family relationship " or" donative intent will render the presumption of equal ownership irrebuttable, we note there is no need to over-rule these decisions as they reached a result that is consistent with the law hereinafter described in this Opinion. In Christen, there was evidence of both a family relationship (the cotenants were half-brothers) and donative intent (one half-brother included the other half-brother's name on the deed out of gratitude for an agreement to challenge the probate of his mother's estate from which the first half-brother was excluded). Though we hereinafter hold such evidence cannot be viewed as creating an irrebuttable presumption, the evidence in this case would nonetheless supported a finding that unequal contributions toward the purchase of property were otherwise explained. Christen, 38 S.W.3d at 492. In Estate of Snyder, the court found no evidence of a family relationship or of donative intent and, thus, did not apply Montgomery's principle as an irrebuttable presumption. 880 S.W.2d at 599-600. Similarly, in Johannsen, the court found no evidence of a family relationship or of donative intent, and thus Montgomery's principle was not applied as an irrebuttable presumption. 235 S.W.3d at 88.
On the other hand, Killman reached a result which cannot be reconciled with our view of the law as hereinafter described in this Opinion. Killman never discussed donative intent once it found there was a family relationship between the cotenants. 2010 WL 743685, at *3. The federal bankruptcy court thus ignored evidence of unequal contributions toward purchase of the property and deemed the presumption of equal ownership irrebuttable based solely on the presence of a family relationship among the cotenants. Id. Though we are unable to overrule Killman, we can instruct that its analysis is not accurate and should not be followed.

Second, and of even greater import, we do not believe that any rationale or reasoned basis exists to conclude that the rebuttable presumption of equal ownership becomes irrebuttable even if evidence of both a family relationship and donative intent are present. Instead, having explored the origin of the principle first cited in Montgomery, it is clear to this court that "family relationships" and "donative intent" amount to nothing more than evidence which may be considered and weighed by the court to possibly explain unequal contributions toward the acquisition of property. Unfortunately, the paraphrasing of Varel by THE LAW OF PROPERTY (1984), which was then repeated by Montgomery, has misdirected subsequent courts to the unwarranted conclusion that an inflexible litmus test exists such that either a family relationship or donative intent (in the Eastern and Southern Districts) or both a family relationship and donative intent (in the Western District) will completely negate a trial court's ability to consider and weigh all relevant evidence to determine the interests of cotenants in property. We have located no authority (other than that which has arisen out of the improvident paraphrasing of Varel in THE LAW OF PROPERTY (1984)) which supports such a proposition.

We conclude, therefore, that evidence of a relationship among cotenants suggestive of donative intent amounts to nothing more than relevant evidence which may be considered by a trial court as it determines whether the presumption of equal ownership has been rebutted. This view is in complete accord with other learned treatises on the subject. For example, 20 AM.JUR.2D Cotenancy and Joint Ownership, Section 117, at 247-48 (2005), states:

Where two or more persons take as tenants in common under an instrument silent as to their respective shares, there is a presumption that their shares are equal. Ordinarily, this presumption is not conclusive but is subject to rebuttal, and has at times been rebutted by parole evidence. A party challenging the presumption that property held in joint tenancy is equally owned has the burden of proof.

The presumption is applicable only in the absence of evidence to the contrary. Where the cotenancy property is acquired by purchase and there is evidence as to the proportion of the total purchase price paid, by each tenant in common, such evidence may be determinative, of the proportion owned by each cotenant. . . .

The fact that the tenants in common are husband and wife may lead to the conclusion that they own equal shares, regardless of any disparity in their respective contributions toward its acquisition, on the theory that the spouse furnishing the consideration, or most of the consideration, for the property intended a gift to the other. This conclusion may apply to other familial relationships, or to cotenants who are cohabitating and intend, to confer equal shares by gift despite unequal contribution.

(Emphasis added.) Clearly, this treatise does not treat any relationship between cotenants as dispositive on the issue of equal ownership. Instead, this treatise recognizes that the nature of the relationship between cotenants may be relevant to assist the trial court in determining whether unequal contributions toward acquiring property can be explained as a gift.

Ironically, other passages drawn from THE LAW OF PROPERTY (1984) also support our conclusion. The discussion of partition within the treatise states:

When a concurrent estate is created by a deed or will that does not expressly provide to the contrary, it will be presumed that each concurrent owner obtains an equal undivided interest. If the deed or will creating the concurrent estate expressly provides for unequal interests, it will necessarily create a tenancy in common and the cotenants will obtain the unequal interests specified in the instrument. But even where unequal interests are not expressly provided for in the creating instrument, the presumption of equality may be rebutted for purposes of determining the share of each cotenant in a partition action, whether the concurrent estate is a joint tenancy or a tenancy in common.

THE LAW OF PROPERTY, Section 5.13 (1984) (emphasis added). In the footnote referenced as support for the highlighted principle cited above, the treatise provides:

The rule is * * * that the interests of joint tenants being equal during their lives, a presumption arises that upon dissolution of the joint tenancy during the lives of the cotenants, each is entitled to an equal share of the proceeds. This presumption is subject to rebuttal, however, and does not prevent proof from being introduced that the respective holdings and interests are unequal. This presumption may be rebutted by evidence showing the source of the actual cash outlay at the time of acquisition, the intent of the cotenant creating the joint tenancy to make a gift of the half-interest to the other cotenant, unequal contribution by way of money or services, unequal expenditures in improving the property or freeing it from encumbrances and clouds [on title], or other evidence raising inferences contrary to the idea of equal interest in the joint estate. [Citation omitted]

THE LAW OF PROPERTY, Section 5.13 (1984) (emphasis added). Thus, the same treatise whose unfortunate paraphrasing of Varel has inadvertently lead to the existence of an irrebuttable presumption in Missouri recognizes that unequal contributions toward purchase, donative intent, and other such matters constitute no more than evidence to be collectively weighed by the trial court, along with the reasonable inferences to be drawn from the evidence, in determining whether the presumption of equal ownership afforded an otherwise silent deed has been rebutted.

We conclude that the principle first cited in Montgomery relating to "neither family relationship nor donative intent" should no longer be cited verbatim as the manner in which the principle was initially written improvidently suggests the existence of an irrebuttable presumption. Instead, we take advantage of this opportunity to clarify the principle cited in Montgomery. The presumption that cotenants hold equal ownership shares in property in the face of a deed that is otherwise silent may be rebutted. Evidence relevant to rebut the presumption may include evidence that the cotenants contributed unequally toward the purchase of the property. However, unequal contributions may be explained by evidence that the cotenant contributing a greater amount toward purchase intended the disparity as an enforceable gift, a determination which may be influenced by evidence of the nature of the relationship among the cotenants. Application of modified principle to this case

This conclusion does not require us to overrule Montgomery or Clark, as the outcome of those cases is not altered by the clarification of the law described in this Opinion. In both cases, the courts found neither a family relationship nor any evidence of donative in-tent, and thus neither court applied the principle drawn from Montgomery as an irrebuttable presumption. Montgomery, 714 S.W.2d at 236; Clark, 131 S.W.3d at 389. We also need not overrule Lemay, as its holding was not dependent upon Montgomery's discussion of "family relationships and donative intent." 48 S.W.3d at 63.

The presumption of equal ownership among cotenants on an otherwise silent deed will be more easily rebutted in an action to determine ownership when all cotenants are alive and available to testify about their intentions. Once a cotenant passes, however, it may be more difficult to present credible or unbiased evidence that a deceased cotenant did not intend an unequal contribution towards purchase of property as a gift. However, any difference in outcomes in cases involving living or deceased cotenants will merely be the result of evidence being weighed based upon the unique facts and circumstances of the case.

As applied to this case, Rankin is the son of Mrs. Hoit and the stepson of Mr. Hoit. However, Webb was Rankin's seventh wife and was barely known to the Hoits. The trial court heard uncontested evidence that the Hoits' intended the Rankins to take ownership of the House, but only on the Hoits' deaths. The Hoits testified that they never intended to give the House to the Rankins at the time of purchase.

In fact, the Rankins' counterclaim asserts that their claim for damages arises out of their claimed reliance on the promise of a gift of the House after the deaths of the Hoits.

The Rankins argue that the use of a joint tenancy deed, instead of a beneficiary deed, requires us to conclude that the Hoits knew what they were doing and intended a present gift of at least a 50% interest in the House to the Rankins. However, there was evidence which permitted the trial court to conclude to the contrary. As previously stated, the Hoits were surprised to see the Rankins' names on the deed when they appeared at closing. Mr. Hoit testified he did not under-stand the legal significance of the Rankins' names being on the deed. The Rankins secured the mortgage used to close on the House. The Rankins concede that the deed was likely prepared by their lender and that all names were on the deed at the lender's insistence to perfect its collateral position in the House.

A beneficiary deed is expressly permitted by section 461.025 and conveys property to a stated recipient on the death of the grantor, without restricting the grantor's ownership of the property during his or her lifetime.

Moreover, the Hoits would certainly have been free to revoke or modify their future donative intent had it been reflected in a beneficiary deed or in a will. We see no logical basis for differentiating between these estate planning tools and a joint tenancy deed if the evidence supports a conclusion that a present gift of ownership was not intended. See Stout v. Stout, 564 S.W.2d 89, 90 (Mo.App. 1978) ("The phrase `with right of survivorship' is meaningful only to control the disposition of the fee upon death of one of the joint tenants. Such a phrase does not, as a matter of law, indicate by implication or otherwise an agreement not to partition.").

Section 461.025.

Section 474.400; Humphreys v. Welling, 341 Mo. 1198, 111 S.W.2d 123 (1937).

We find no error, therefore, in the trial court's award of the House in its entirety to the Hoits. The presumption of equal ownership of the House afforded by the deed, which was otherwise silent on the subject of ownership shares, was rebutted by the uncontested evidence that the Hoits contributed 100% of the cost to acquire the House, and by the absence of evidence that the Hoits' unequal contribution toward purchase of the House could be explained by their intent to make a present and irrevocable gift to the Rankins.

The trial court found that based on "contributions" to the House including purchase price, taxes, and insurance, the relative "interests" of the parties in the House were 98.61% and 1.39%. However, in a partition action, a trial court is to determine the respective interests of parties in property which has been acquired by purchase by looking only at contributions toward the purchase price. See section 528.030; Clark, 131 S.W.3d at 389 ("In partition, the presumption of equal shares of tenants in common may be rebutted by proof of a disproportionate contribution of each party toward the acquisition of the property.") (emphasis added) (citations omitted). As will be discussed in our analysis of point two, contributions for taxes, insurance, repairs, and maintenance are treated separately. Here, it would have been more appropriate for the trial court to have expressly found that the Hoits had a 100% interest in the House based on their 100% contribution toward the purchase price. However, we are easily able to discern that the trial court did indeed conclude that the Hoits contributed 100% of the purchase price, a finding which is not contested by the Rankins.

The Hoits bore the burden to overcome the presumption of equal ownership. 20 AM. JUR.2d, Cotenancy and Joint Ownership, Section 117, at 247 (2005). This burden undoubtedly included the obligation to offer evidence of the unequal contributions toward acquisition of the property, and the obligation to negate that the inequality in contributions was a result of a present donative intent. There is some authority for the proposition that satisfying this burden requires clear and convincing evidence. See, e.g., 86 C.J.S. Tenancy in Common, Section 13, at 257-58 (2006) ("Parties who own property jointly are presumed to be tenants in common, but the presumption is rebuttable by clear and convincing evidence."). However, cases have relied on Missouri Supreme Court decisions which "set forth the general rule that when a presumption is operating against a party, that party need only introduce substantial controverting evidence to rebut that presumption." Johannsen, 235 S.W.3d at 88 (relying on Wills v. Townes Cadillac-Oldsmobile, Inc., 490 S.W.2d 257, 260 (Mo. banc 1973) and Michler v. Krey Packing Co., 363 Mo. 707, 253 S.W.2d 136, 140 (1952)). We believe, therefore, that the required burden of proof to overcome the presumption of equal ownership is substantial evidence. The Hoits met this burden and, in any event, would have satisfied their burden even assuming application of the more stringent clear and convincing evidence standard.

Point One is denied.

Point Two

For their second point on appeal, the Rankins complain that the trial court erred in awarding the House outright to the Hoits and in entering a judgment in the Rankins' favor and against the Hoits, imposing same as a lien on the House. The Rankins claim the trial court's only options in this partition action were to partition the House in kind or to order the House sold with the proceeds to be divided. We disagree.

Section 528.030 provides:

In all cases where lands . . . are held in joint tenancy, tenancy in common, or coparcenary . . . it shall be lawful for any one or more of the parties interested therein . . . to file a petition in the circuit court of the proper county, asking for . . . partition . . . if the same can be done without great prejudice to the parties in interest; and if not, then for a sale of the premises, and a division of the proceeds thereof among all of the parties, according to their respective rights and interests.

In addition, as we noted in Clark, "[i]t is well settled that in a partition proceeding, the parties are entitled to reimbursement for expenditures with respect to the property for taxes, insurance and necessary repairs and improvements." 131 S.W.3d at 390 (citing Hahn v. Hahn, 297 S.W.2d 559, 567 (Mo. banc 1957); Cmty. Bank of Chillicothe v. Campbell, 870 S.W.2d 838, 841 (Mo.App. W.D. 1993); Bass v. Rounds, 811 S.W.2d 775, 782 (Mo.App. E.D. 1991); Hartog v. Siegler, 615 S.W.2d 632, 636 (Mo.App. E.D. 1981)). "[R]eimbursement is available where [expenditures] are `made in good faith, are of a necessary and substantial nature, materially enhance the value of the property, and the circumstances show that it would be equitable to do so.'" Clark, 131 S.W.3d at 390 (quoting Hartog, 615 S.W.2d at 636).

This line of cases lends further support to the proposition that the determination of the ownership interests held by cotenants focuses on the contributions of the parties to the acquisition of the property. Other "contributions" which may have benefitted the property after it was purchased, but which were not incurred in the initial acquisition of the property, are not factored into the determination of relative ownership interests, though said contributions may be otherwise eligible for reimbursement. See footnote 21.

Thus, in a partition action, a trial court must declare the interests of the purported cotenants in the property and must then either divide the property in kind or sell the property with the proceeds divided accordingly. A trial court may also reimburse a cotenant for contributions made to improve or repair the property, even though this "relief is not expressly described in section 528.030. If property is partitioned in kind, such reimbursements are made by placing an equitable lien on the property partitioned to the other party. Clark, 131 S.W.3d at 390. Reimbursements are effectuated in the event of a partition sale by "offsetting the reimbursable expenditures against the sale proceeds partitioned to the other party." Id. A trial court is not authorized, however, to enter an in personam money judgment for the reimbursements. Lemay, 48 S.W.3d at 62 (holding that the award of property in kind in its entirety to one cotenant while requiring that cotenant to pay the other party for repairs and improvements to the property is not authorized by partition statute); see Clark, 131 S.W.3d at 391 (holding, after discussing Lemay, that although a money judgment may not be appropriate, it is appropriate to award 100% of the property in kind to one party, while imposing an equitable lien on the property for any repairs and improvements made to the property by the other party).

Here, the trial court partitioned the House in kind. It awarded the House 100% to the Hoits given their 100% contribution toward its acquisition. This represented the trial court's proper exercise of one of the two options expressly envisioned by section 528.030. The trial court also awarded the Rankins a "judgment of $2,757.48, against both Plaintiffs [the Hoits]. Said judgment is a lien against the property." The trial court was authorized to enter this judgment to the extent the judgment did no more than impose a lien against the House.

Given the manner in which the judgment in favor of the Rankins was written, it is not entirely clear whether the trial court intended to impose both an in personam judgment against the Hoits and an equitable lien against the House, or whether the trial court intended to only impose a lien on the House. The trial court did make a separate finding, however, which sheds light on its intention. The trial court found that "the judgment for owelty should be the full amount of the moneys contributed by Defendants [the Rankins]." As previously noted, owelty is a lien imposed on property partitioned in kind. BLACKS LAW DICTIONARY 996 (5th ed. 1979). The trial court's finding that an owelty judgment should be imposed suggests that the trial court only intended to award the Rankins an in rem judgment imposing a lien on the House.

Owelty is actually a means of equalizing the relative value of property that has been divided in kind among cotenants and is not the label applied to an equitable lien imposed to "reimburse" for expenditures which improve a property. See footnote 8. However, the fact that the trial court used the wrong legal term to identify the lien it desired to impose on the House is immaterial.

We thus conclude that the trial court did not err in reimbursing the Rankins by imposing an equitable lien on the House. See Clark, 131 S.W.3d at 391 ("Inasmuch as the appellant made no contribution to the acquisition of the property, the trial court, under the law of partition . . . was authorized to award 100% of the property in kind to the respondent and to place an equitable lien thereon in favor of the appellant . . . for repairs and improvements."). Point Two is denied.

We do acknowledge that the Judgment could be misread to impose an in personam judgment on the Hoits. As we have concluded this was not the trial court's intent, and as to avoid any confusion, we will exercise our authority pursuant to Rule 84.14 to "give such judgment as the [trial] court ought to give," as the record here permits us to do so. The Judgment is modified to delete the judgment granted the Rankins in the amount of $2,757.48 and to substitute the following: "IT IS FURTHER ORDERED, ADJUDGED AND DECREED by the Court that Defendants are granted an in rem judgment in the amount of $2,757.48, which judgment shall be imposed as an equitable lien against the House, legally described as Lot 163, Brooke Haven Fourth Plat, A Subdivision in Kearney, Clay County Missouri."

Judgments imposing liens against real property should provide the legal description of the property to permit proper recordation of the lien interest.

Conclusion

The trial court's judgment as herein modified is affirmed.

All concur.

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