In re Ann Marie SUMMERS, Debtor.
Richard J. Hanf, Chapter 7 Trustee, Appellant,
v.
Eugene Summers, Appellee, and
David Burchard, Chapter 13 Trustee for the Estate of Eugene Summers; Ann Marie Summers; Charles E. Sims, Chapter 7 Trustee for the Estate of Aurora Summers.
No. 02-16146.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted May 15, 2003.
Filed June 20, 2003.
Byron Lee Lynch, Redding, CA, for the appellant.
Stanley Zlotoff, San Jose, CA, for the appellee.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel, Perris, Brandt and Marlar, Bankruptcy Judges, Presiding.
Before CANBY, KLEINFELD, and RAWLINSON, Circuit Judges.
OPINION
RAWLINSON, Circuit Judge.
This case requires us to determine whether the requirements of California's transmutation statute, Cal. Fam.Code § 852(a), must be met when realty is transferred from a third party to spouses as joint tenants. We affirm the decision of the Bankruptcy Appellate Panel ("BAP"), that the transmutation statute does not apply in such a circumstance, and that the property in issue is therefore held in joint tenancy rather than as community property.
I. BACKGROUND
During their marriage, Eugene and Ann Marie Summers, along with their daughter Aurora Summers, purchased a parcel of real estate with a $10,000 down payment. Eugene and Ann Marie used their savings as well as money from a personal injury award for the down payment.1 The deed stated that the Summerses were acquiring the property as joint tenants. The deed specifically conveyed the property:
TO EUGENE SUMMERS AND ANN MARIE SUMMERS, HUSBAND AND WIFE AND AURORA SUMMERS, AN UNMARRIED WOMAN, ALL AS JOINT TENANTS.
EUGENE SUMMERS AND ANN MARIE SUMMERS, HUSBAND AND WIFE, HEREBY ACCEPT THE INTEREST HEREIN CONVEYED TO THEM AS JOINT TENANTS WITH AURORA SUMMERS, AN UNMARRIED WOMAN.
Eugene, Ann Marie, and Aurora eventually filed separate bankruptcy petitions. Ann Marie's bankruptcy filing preceded Eugene's. Richard Hanf, the trustee in Ann Marie's bankruptcy case, contended that the subject property was a community asset and, therefore, became property of Ann Marie's bankruptcy estate. After a trial, the bankruptcy court ruled that the realty was held in joint tenancy. The BAP affirmed the bankruptcy court's decision. Hanf v. Summers (In re Summers),
II. STANDARD OF REVIEW
We "examine the bankruptcy court's conclusions of law de novo and its factual findings for clear error." Einstein/Noah Bagel Corp. v. Smith (In re BCE West, L.P.),
III. DISCUSSION
A. Joint Tenancy Nature of the Property
"It is well established that state law determines the nature and extent of a debtor's interest in property." Abele v. Modern Fin. Plans Svcs., Inc., (In re Cohen),
Pursuant to Cal. Fam.Code § 760, "[e]xcept as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property." "Thus, there is a general presumption that property acquired during marriage by either spouse other than by gift or inheritance is community property unless traceable to a separate property source." Haines v. Haines (In re Marriage of Haines),
The California Court of Appeal has concluded that this community property presumption is rebuttable. In particular, "when such property was acquired and title taken in joint tenancy during marriage, it is presumed to be community property; that presumption can be rebutted only by a showing of an agreement or understanding to the contrary." Tucker v. Tucker (In re Marriage of Tucker),
California law supports the bankruptcy court's and the BAP's conclusion that the community property presumption is rebutted when a married couple acquires property from a third party as joint tenants. In California, "[p]roperty cannot be held both as community property and in either a joint tenancy or a tenancy in common at the same time." Mitchell v. Mitchell (Estate of Mitchell),
There is therefore a rebuttable presumption that "where the deed names the spouses as joint tenants ... the property was in fact held in joint tenancy...." Hansen v. Hansen,
The source of funds for acquisition of the joint tenancy property is not dispositive. "[E]vidence of the source of the funds used to purchase the property is insufficient, in and of itself, to rebut the joint-tenancy presumption." Hansford v. Lassar,
In this case, the deed specifically conveyed the property to Eugene, Ann Marie, and Aurora Summers as joint tenants. Although the deed described Eugene and Ann Marie Summers as "Husband and Wife," it simultaneously specified that they were acquiring the property as joint tenants. Id. This specific conveyance bestowed joint tenant status upon the Summerses, irrespective of the "Husband and Wife" verbiage. See Estate of Petersen,
B. Transmutation Formalities — The Applicability of Cal. Fam.Code § 852(a)
Cal. Fam.Code § 852(a) provides that "[a] transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected."
California courts have defined "[a] transmutation [as] an interspousal transaction or agreement that works a change in the character of the property." Cross v. Cross (In re Marriage of Cross),
In Haines, the California Court of Appeal considered a quitclaim deed from a wife to her husband in which the husband acquired an advantageous property interest, potentially through undue influence.
Bolton v. MacDonald (Estate of MacDonald),
Similarly, Barneson is of no assistance to Hanf. In Barneson, the California Court of Appeal considered the transmutation of securities, in which the husband had a separate property interest, into his wife's separate property.
California courts have applied the rationale of MacDonald solely in the context of interspousal transactions. For example, in Bibb v. Bibb (Estate of Bibb),
Our reading of California law leads to the conclusion that the transmutation requisites had no relevance to the conveyance in this case. There simply was no interspousal transaction requiring satisfaction of the statutory formalities.
We also reject Hanf's contention that any transaction involving spouses' purchases of properties from third parties must include express declarations with respect to the funds used to purchase the property. The funds themselves were not the subject of an interspousal transaction because they were never transferred from one spouse to the other. More importantly, the source of the funds used to purchase property does not alter the property's character. See Lovetro,
IV. CONCLUSION
Applying California law, we conclude that a third party conveyed joint tenancy interests to Eugene and Ann Marie Summers, a transaction to which the transmutation statute does not apply. See In re Cross,
AFFIRMED.