Coraccio v. Lowell Five Cents Savings Bank
612 N.E.2d 650, 1993 Mass. LEXIS 257, 415 Mass. 145 (1993)
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Rule of Law:
Under Massachusetts General Law c. 209, § 1, either spouse may unilaterally convey or encumber their individual interest in property held as tenants by the entirety, but such an encumbrance is subject to the non-debtor spouse's indestructible right of survivorship.
Facts:
- Nancy Coraccio purchased property and, at the insistence of the Lowell Five Cents Savings Bank, conveyed it to herself and her husband, Stephen Coraccio, as tenants by the entirety.
- Both Nancy and Stephen Coraccio then granted a first mortgage on the property to the bank.
- Subsequently, the bank loaned money to Stephen Coraccio alone, taking a second mortgage on the property from him as security.
- Nancy Coraccio did not know about, nor did she consent to, this second mortgage transaction.
- The bank later made another, larger loan to Stephen Coraccio alone, again receiving a second mortgage from him without Nancy's knowledge or consent.
- Stephen Coraccio defaulted on the second mortgage, and the bank initiated foreclosure proceedings against his interest in the property.
- Nancy Coraccio only learned of the second mortgage and the foreclosure when she read the notice in a newspaper.
Procedural Posture:
- Nancy Coraccio (plaintiff) filed an action in the Superior Court (trial court) against the Lowell Five Cents Savings Bank (defendant).
- The bank filed a motion to dismiss Coraccio's complaint.
- The Superior Court judge granted the bank's motion, dismissing all of Coraccio's claims.
- Coraccio (appellant) filed an appeal in the Appeals Court (intermediate appellate court).
- The Supreme Judicial Court of Massachusetts (highest court) transferred the case from the Appeals Court on its own initiative.
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Issue:
Does Massachusetts General Law c. 209, § 1, which equalized spousal rights in property held by the entirety, prohibit one spouse from mortgaging his or her interest in the property without the other spouse's knowledge or consent?
Opinions:
Majority - Liacos, C.J.
No, G. L. c. 209, § 1 does not prohibit one spouse from unilaterally encumbering their interest in property held as tenants by the entirety. At common law, a husband could alienate his interest in such property—subject to his wife's indestructible right of survivorship—while a wife could not. The statute was enacted to equalize the rights of spouses, granting the wife the same rights the husband always possessed. It did not alter the fundamental characteristics of the tenancy, which include unitary title and the right of survivorship. Therefore, either spouse may now convey or encumber their individual interest, but any such conveyance is subject to the other spouse's right of survivorship. Should the non-debtor spouse survive the debtor spouse, the creditor's interest in the property is extinguished. The statute also protects the non-debtor spouse's possessory rights in the couple's principal residence from seizure by the debtor spouse's creditors.
Analysis:
This decision clarifies that the Massachusetts statute equalizing spousal rights in a tenancy by the entirety did not create a requirement for joint consent to encumber an individual spouse's interest. It harmonizes the traditional common law attributes of the tenancy with modern principles of gender equality. The ruling affirms the alienability of an individual spouse's interest while strongly protecting the non-consenting spouse's core rights: the indestructible right of survivorship and possession of the principal residence. This provides guidance for lenders, establishing that while such a unilateral mortgage is not void, it represents a defeasible interest, significantly impacting its value as security.
