Federal National Mortgage Ass'n v. Pace
2013 Mo. App. LEXIS 1143
| Mo. Ct. App. | 2013Background
- Harvey and Christine Pace received title as "Harvey L. Pace and Christine Pace, husband and wife" to residential property in June 2002 (tenancy by the entirety).
- Harvey alone executed and initialed a promissory note and a deed of trust securing a $197,000 loan; the deed of trust names only Harvey as grantor/borrower.
- Christine signed an "Assent to Execution of Deed" (not the note or deed of trust) and testified she did not know she owned the property and had no role in the loan.
- The loan went into default, Fannie Mae (successor) foreclosed, obtained the property at sale, then sought to quiet title declaring the deed of trust a valid, first-priority lien on the entire property; alternatively it sought an equitable lien.
- Trial court granted summary judgment for Fannie Mae; the Paces appealed, arguing the deed of trust was void as to the wife’s entirety interest because she was not named or a signatory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a deed of trust signed/naming only husband conveyed a valid first-priority lien on property owned by husband and wife as tenants by entirety | Fannie Mae: parties intended deed to encumber full fee; wife’s assent and conduct show intent to encumber whole property; no genuine issue of intent | Paces: deed of trust is void as to wife because she was not named grantor/borrower nor did she sign; tenancy by entirety requires both spouses’ conveyance | The deed of trust did not convey a valid lien on the entire property; it conveyed only what the husband could grant (not the wife’s entirety interest). |
| Whether the wife’s signed assent waived her inchoate or ownership interest so the deed could encumber the entirety | Fannie Mae: assent authorized husband to execute loan documents without wife’s joinder, showing intent | Paces: wife lacked knowledge of ownership and thus could not knowingly waive or assent to convey her interest | Assent did not waive or substitute for naming/signature on the deed; wife lacked requisite knowledge to effect a waiver of an ownership interest. |
| Whether the Paces ratified the consent judgment in the unlawful-detainer action such that they are estopped from denying the lien | Fannie Mae: consent judgment estops Paces; they ratified prior proceedings | Paces: consent judgment was obtained when unrepresented and without knowledge; wife lacked knowledge to ratify | Ratification requires knowledge of material facts; wife did not have knowledge of her ownership and did not ratify. |
| Whether an equitable lien was available to Fannie Mae on the wife’s interest | Fannie Mae: alternatively seek equitable lien on proceeds because parties intended property as security | Paces: wife did not incur the debt; no obligation exists against her to support equitable lien | Equitable lien unavailable: wife did not sign the note and did not owe the obligation, so essential elements of an equitable lien are lacking. |
Key Cases Cited
- Ethridge v. TierOne Bank, 226 S.W.3d 127 (Mo. banc 2007) (deed signed by one spouse cannot convey entirety interest; interpret deed language to determine parties’ intent)
- ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) (summary judgment standard; de novo review and drawing all inferences for non-movant)
- U.S. Bank Nat’l Ass’n v. Cox, 341 S.W.3d 846 (Mo.App. W.D. 2011) (tenancy by the entirety characteristics: single entity ownership; neither spouse can unilaterally convey or encumber entire estate)
- Wilkinson v. Tarwater, 393 S.W.2d 538 (Mo. 1965) (equitable lien requires an express or implied intent that specific property serve as security)