Harms v. Sprague
105 Ill. 2d 215, 473 N.E.2d 930 (1984)
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Rule of Law:
In a lien theory jurisdiction, a mortgage granted by one joint tenant on their interest in the property does not sever the joint tenancy. Consequently, the mortgage does not survive the mortgagor's death, and the surviving joint tenant acquires the entire property unencumbered by the mortgage lien.
Facts:
- On June 26, 1973, brothers William H. Harms and John R. Harms took title to real estate as joint tenants with right of survivorship.
- Charles Sprague entered an agreement to purchase property from Carl and Mary Simmons, for which he needed to provide security for a $7,000 promissory note.
- To help Sprague, John Harms co-signed the note and executed a mortgage on his undivided one-half interest in the joint tenancy property in favor of the Simmonses.
- William Harms was unaware of the mortgage executed by his brother.
- On December 10, 1981, John Harms died.
- By the terms of his will, John Harms left his entire estate to Charles Sprague.
- The mortgage given by John Harms to the Simmonses was recorded on December 29, 1981, after his death.
Procedural Posture:
- William Harms filed a complaint to quiet title in the circuit court of Greene County against Charles Sprague (executor of John Harms's estate) and Carl and Mary Simmons (mortgagees).
- Sprague filed a counterclaim asserting his interest as a tenant in common.
- The trial court held that the mortgage severed the joint tenancy and survived as a lien.
- William Harms, as appellant, appealed to the Illinois Appellate Court.
- The appellate court reversed, finding the joint tenancy was not severed and the mortgage lien did not survive.
- Charles Sprague and the Simmonses, as appellants, petitioned the Supreme Court of Illinois for leave to appeal, which was granted.
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Issue:
In a lien theory jurisdiction, does a mortgage executed by one joint tenant on their interest sever the joint tenancy and survive the mortgagor's death as a lien on the property?
Opinions:
Majority - Justice Moran
No. A mortgage executed by one joint tenant does not sever the joint tenancy, and the lien is extinguished upon the death of the mortgaging tenant. Illinois is a lien theory state, meaning a mortgage is not a conveyance of title but merely creates a lien on the property. Severance of a joint tenancy requires the destruction of one of the four unities (interest, title, time, or possession). Because a mortgage as a mere lien does not convey title, the unity of title is preserved, and no severance occurs. The right of survivorship is an inherent feature of joint tenancy, so upon John Harms' death, his interest in the property was extinguished. Consequently, the mortgage lien attached to his interest was also extinguished, and the surviving joint tenant, William Harms, took the entire estate unencumbered, by operation of the original deed that created the tenancy.
Analysis:
This decision firmly establishes in Illinois that the act of mortgaging an interest in a joint tenancy does not, by itself, sever the tenancy. It distinguishes between the 'lien theory' and 'title theory' of mortgages, aligning Illinois with the modern trend of viewing a mortgage as a security interest rather than a transfer of ownership. The ruling significantly impacts creditors, making a joint tenant's interest risky collateral, as the creditor's lien can be completely extinguished if the debtor joint tenant dies before the surviving tenant. This strengthens the right of survivorship, making it a powerful tool for property owners who wish to pass property directly without it being subject to the deceased's individual debts.
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