819 F.3d 1067
8th Cir.2016Background
- Matthew and Marilynn Peet held real property as joint tenants with Marilynn’s parents; Marilynn and her father held a Ford pickup as joint tenants.
- The Peets filed Chapter 13 bankruptcy, later converted to Chapter 7; after conversion, Marilynn’s parents died.
- The Chapter 7 trustee sought to sell the real property and pickup, asserting survivorship made the bankruptcy estate sole owner.
- Bankruptcy Court and the Bankruptcy Appellate Panel ruled the joint tenancies remained intact and approved the trustee’s sale.
- The Peets appealed, arguing the bankruptcy filing severed the joint tenancies into tenancies in common (eliminating survivorship), so the deaths did not enlarge the estate’s share.
- The Eighth Circuit reviewed questions of law de novo and affirmed the BAP and bankruptcy court decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing bankruptcy severs joint tenancy into tenancy in common (destroying right of survivorship) | Peet: filing creates estate that “immediately transfers” assets, severing unities of title/time and creating tenancy in common | Trustee: Section 541 creates bankruptcy estate of debtor’s interests but does not automatically sever joint tenancy; severance requires trustee action or conveyance | Filing bankruptcy does not automatically sever the joint tenancies; trustee’s ownership of the estate includes the joint tenancy and the trustee may sell, so survivorship effect stands |
| Whether state law determines transferability of property to estate after filing | Peet: reliance on descriptive language in Harris v. Viegelahn to argue immediate transfer/severance | Trustee: Section 541’s removal of Bankruptcy Act vesting language means state law defines debtor’s pre-petition interest but does not prevent estate from holding that interest; nonbankruptcy conveyance rules do not automatically change upon filing | Court: Section 541 differs from former Bankruptcy Act vesting; state law defines prepetition interests, but Code does not require that nonbankruptcy law permit a transfer to the estate for the estate to hold that interest |
Key Cases Cited
- Harris v. Viegelahn, 135 S. Ct. 1829 (2015) (description of when assets become part of the bankruptcy estate; court noted the phrasing was not dispositive here)
- Butner v. United States, 440 U.S. 48 (1979) (state law determines property interests unless displaced by federal bankruptcy law)
- In re Peet, 529 B.R. 718 (B.A.P. 8th Cir. 2015) (BAP affirmed bankruptcy court’s sale of property held in joint tenancy)
- Remax of Blue Springs v. Vajda & Co., 708 S.W.2d 804 (Mo. Ct. App. 1986) (defines joint tenancy and right of survivorship under Missouri law)
- In re Estate of Gerling, 303 S.W.2d 915 (Mo. 1957) (sets out the four unities required for joint tenancy)
- Johnson v. Woodard, 356 S.W.2d 526 (Mo. Ct. App. 1962) (severance of any unity converts joint tenancy to tenancy in common)