2015 Ohio 5347
Ohio Ct. App.2015Background
- Vernon and Theresa Brown held title to a house as joint tenants with right of survivorship; Theresa alone signed the mortgage and was the sole borrower on the note.
- Theresa’s signature appears on the mortgage; Vernon’s signature appears only with a handwritten note saying he signed "with the sole intent of releasing dower."
- CitiMortgage (assignee of the lender) later filed foreclosure; it also sought reformation alleging mutual mistake and unjust enrichment.
- Theresa died while the foreclosure action was pending. The magistrate found the mortgage encumbered Theresa’s one-half interest and could be enforced against sale proceeds; the trial court reversed, ruling Theresa’s death extinguished the mortgage and Vernon took title free of the mortgage.
- CitiMortgage appealed, arguing the mortgage survived Theresa’s death (relying on the Twelfth District’s decision in Fannie Mae v. Winding) and alternatively sought reformation or an equitable lien on Vernon’s interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a mortgage granted by only one joint tenant survives the mortgagor’s death and encumbers the surviving joint tenant’s title | Mortgage survives and may be enforced against the deceased tenant’s one-half interest (CitiMortgage, relying on Winding) | Mortgage terminated on mortgagor’s death under R.C. 5302.20(C)(2); surviving tenant takes free of mortgage (Brown) | Mortgage terminated at mortgagor’s death; Vernon owns property free of mortgage |
| Whether R.C. 5302.20(C)(2) applies to mortgages (i.e., whether mortgage is a "conveyance" conditioned on survivorship) | Mortgage is a lien/security interest and not governed by §(C)(2) (per Winding) | Mortgage is a conveyance conditioned on survivorship under §(C)(2) and FirstMerit precedent; statute applies | §(C)(2) applies; mortgage interest conditioned on mortgagor’s survival and terminated when she died |
| Whether R.C. 5302.20(C)(4) (court determination/marshalling liens) required the estate to convert to tenancy in common before creditor enforcement | Foreclosure action suffices to allow lien enforcement against one-half interest under §(C)(4) | §(C)(4) requires a court determination before converting survivorship tenancy; Theresa died before any determination | §(C)(4) inapplicable because no court determination occurred before mortgagor’s death; tenancy remained survivorship |
| Whether equitable remedies (reformation or equitable lien) should be imposed to bind Vernon’s interest | Reformation justified by handwritten note; equitable lien needed to prevent unjust enrichment | No evidence parties intended Vernon to mortgage his interest; bank’s negligence caused omission; equitable relief inappropriate | Trial court did not err: denied reformation and equitable lien due to lack of intent and inexcusable negligence by mortgagee; no equitable relief imposed |
Key Cases Cited
- Murphy v. Murphy, 77 Ohio App.3d 573 (transferee’s interest extinguished upon death of transferring joint tenant)
- Certificates of Deposit Issued by Hocking Valley Bank, 58 Ohio St.3d 172 (security interest granted by one joint tenant terminates at death)
- FirstMerit Bank, N.A. v. Inks, 138 Ohio St.3d 384 (mortgage operates both as lien and conditional conveyance)
- Fannie Mae v. Winding, 10 N.E.3d 799 (12th Dist.) (contrasting decision that mortgage survives cotenant’s death)
- Wells Fargo Bank v. Mowery, 187 Ohio App.3d 268 (mortgagee negligence may bar equitable relief)