Estate of Phillips v. Nyhus
1994 Wash. LEXIS 331, 874 P.2d 154, 124 Wash. 2d 80 (1994)
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Rule of Law:
The mere execution of an earnest money agreement by all joint tenants to sell property held in a joint tenancy with right of survivorship does not, by itself, sever the joint tenancy. Severance requires evidence of an intent by the parties to terminate the right of survivorship.
Facts:
- Theodore P. Phillips and Charles and Christina Nyhus were involved in business together, including real estate transactions.
- On July 24, 1989, Phillips executed a quitclaim deed transferring certain real property to himself and the Nyhuses.
- The deed explicitly stated that the grantees intended to acquire the premises 'as joint tenants with right of survivorship and not as tenants in common.'
- Both Phillips and the Nyhuses signed the deed, accepting its terms.
- On July 19, 1990, Phillips and the Nyhuses jointly signed an earnest money agreement to sell part of the property to Jeffrey and Carol Wiley.
- The earnest money agreement did not specify how the proceeds from the sale would be divided or held, nor did it mention the joint tenancy.
- On July 28, 1990, Theodore P. Phillips died before the real estate transaction with the Wileys was completed.
Procedural Posture:
- Charles and Christina Nyhus filed an action in Clallam County Superior Court against the Estate of Theodore P. Phillips.
- The Nyhuses sought a declaratory judgment that they were entitled to all proceeds from a pending property sale.
- James W. Morse, as Administrator of the Phillips Estate (Appellant), answered and counterclaimed for one-half of the proceeds.
- A superior court commissioner granted summary judgment in favor of the Nyhuses (Respondents).
- The Clallam County Superior Court denied the Estate's motion to revise the commissioner's ruling.
- The Estate appealed the Superior Court's decision to the Court of Appeals, Division Two.
- The Washington Supreme Court accepted certification from the Court of Appeals to hear the case.
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Issue:
Does a joint tenancy with right of survivorship sever when all joint tenants subsequently execute an earnest money agreement to sell the property to a third party?
Opinions:
Majority - Smith, J.
No. A joint tenancy with right of survivorship is not severed merely because all joint tenants execute an earnest money agreement to sell the subject property. The court's reasoning is grounded in the principle that severing a joint tenancy requires a clear intent by the parties to terminate the right of survivorship. The original quitclaim deed unambiguously established a joint tenancy. The subsequent earnest money agreement contained no language indicating an intent to alter this status or terminate the right of survivorship. The court distinguished this case from precedents like Reilly v. Sageser, where a subsequent agreement was found to be 'inconsistent with the common law survivorship' because it created a buyout provision upon a co-tenant's death. Here, the agreement to sell was not inconsistent with the survivorship right continuing to apply to the contractual right to the sale proceeds. At the time of Phillips' death, the joint tenancy remained intact, so his interest automatically passed to the surviving joint tenants, the Nyhuses, along with the contractual rights from the earnest money agreement.
Analysis:
This decision clarifies that in Washington, the severance of a joint tenancy depends on the demonstrated intent of the parties, not on the mere change in the form of the asset from real property to a contractual right to receive proceeds. It establishes that executing a contract to sell, an act consistent with the powers of co-owners, does not inherently destroy the right of survivorship. This ruling provides stability for joint tenants, ensuring that their survivorship rights are not inadvertently terminated by routine property transactions. Future courts will require clear evidence that the parties intended to sever the tenancy, such as language in a subsequent agreement that is inconsistent with the right of survivorship.
