Massachusetts Agencies

When Did They Change That Law?

Articles from The Massachusetts Focus

Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Fall 2005, Volume 4, Number 4

When Did They Change That Law?
by Gary F. Casaly, Special Counsel

The law is not static; it’s always changing. Even real estate law, probably one of the more “stable” areas of jurisprudence, has experienced many changes over the years. But changes in real estate law have a much more far-reaching effect than changes in other areas of the law. For example, a change in a tax law would affect how taxes are reported for a particular period; it would not ordinarily be necessary for a tax lawyer or accountant to be concerned with the law as it affected the reporting of taxes many years ago. Real estate law is completely different in this respect; a change in the law many years ago could very well affect the quality of a title in the current year. This is because in real estate law the quality of the title today depends, and is “stacked,” upon the quality of the title in years past.

We all know that when we look up a real estate law (or any other law, for that matter) we look at the “pocket” part to see if a statute was amended or we “Sheppardize” a case to see if the ruling of the court has since been modified. This tells us whether the law has changed. But just as important, especially in the case of real estate law, we need to know what the law used to be. In other words, since a title passed today stands upon the integrity of the title at any point of time in the past, we need to know and apply the law in effect when any transaction occurring in the title took place.

Before I get to specifics of significant changes in the law that can have a far-reaching impact on a title you might pass, let me drive home the point I made above by telling you a short story. I learned some things in law school, most of which I have forgotten, but I remember this story vividly. The Professor came into Equity 1.1 and said, “The most important case in equity concerning the doctrine of %&*#@$ is Jones v. Smith. It’s what’s called a landmark case. Read it!”

We all went home and read Jones v. Smith.

The next day we were all ready to answer any question about Jones v. Smith. The Professor, however, didn’t ask for a critique on the case, but rather said, “A lower court in the same jurisdiction where Jones v. Smith was decided also rendered a decision concerning the same doctrine of doctrine of %&*#@$. That lower court case is Johnson v. Johnson. Read it, too!”

We went home and read Johnson v. Johnson.

The next day the Professor asked, “I told you that Jones v. Smith was the most important case on the doctrine of %&*#@$. It was a landmark case. Why, then, did the lower court in the case of Johnson v. Johnson, which sits in the same jurisdiction, fail to cite it for authority? Well . . . . . . . .??”

We all had blank looks on our faces until the professor bellowed out: Jones v. Smith was decided after Johnson v. Johnson! The professor chastised us for not noting the dates on which the respective court decisions were rendered.

This sounds like a silly little story, but it’s not. It highlights what the professor was trying to tell us: pay attention not only to changes in the law, but also the relative times when these changes were made.

Now, let’s get down to some specific examples.

A good starting place is with G.L.c. 184, §7, which is a statute that defines tenancies between persons and that has been riddled with changes over the past thirty or so years. Most of the changes are the result of the legislature overruling the courts in a tussle between these two branches of government as to what the law is and what is fair. Here, the courts were the “bad guys,” announcing rules that, although logical and comporting with the law, raised havoc with titles. The legislature became the “white knight,” redrafting the rules and for the most part making them more fair. But the legislature’s “corrective” action was not retroactive, so if you look at the statute today and apply it as it now appears to conveyances in your title abstract that occurred in the past you might get caught in the cross-fire and find yourself in trouble. What does this statute provide? It says:

A conveyance or devise of land to two or more persons or to husband and wife, except a mortgage or a devise or conveyance in trust, shall create an estate in common and not in joint tenancy, unless it is expressed in such conveyance or devise that the grantees or devisees shall take jointly, or as joint tenants, or in joint tenancy, or to them and the survivor of them, or unless it manifestly appears from the tenor of the instrument that it was intended to create an estate in joint tenancy. A devise of land to a person and his spouse shall, if the instrument creating the devise expressly so states, vest in the devisees a tenancy by the entirety.

A conveyance or devise of land to a person and his spouse which expressly states that the grantees or devisees shall take jointly, or as joint tenants, or in joint tenancy, or to them and the survivor of them shall create an estate in joint tenancy and not a tenancy by the entirety. In a conveyance or devise to three or more persons, words creating a joint tenancy shall be construed as applying to all of the grantees, or devisees, regardless of marital status, unless a contrary intent appears from the tenor of the instrument.

A conveyance or devise of land to two persons as tenants by the entirety, who are not married to each other, shall create an estate in joint tenancy and not a tenancy in common

Let’s look at the last sentence of the statute. This sentence embodies the most recent amendment to the section. The sentences states:

A conveyance or devise of land to two persons as tenants by the entirety, who are not married to each other, shall create an estate in joint tenancy and not a tenancy in common.

This seems like a pretty logical provision, and one that would appeal to common sense. It’s so logical and sensible that it seems as though it would be unnecessary to include the provision in the statute. Both tenancies by the entirety and joint tenancies are of the “survivorship” type, and it seems logical to conclude that where two people are not married to each other (and thereby unable to hold title as tenants by the entirety), a deed to them as such would and should create a joint tenancy. It seems to stand to reason that that would carry out the intention of the parties that otherwise would not be achieved. But the reason for the amendment to the statute is that “intention” doesn’t seem to be the driving force here, at least as far as the courts are concerned. In this regard, the amendment to the statute, which became effective under Chapter 239 of the Acts of 1979 was in response to the case of Fuss v. Fuss (No. 2), 373 Mass 445, 368 N.E.2d 276 (1977).

In Fuss Marcia was married to Robert. Marcia met James, a fellow the court characterized as “causing a break-up of her marriage to Robert,” and Marcia tried to negotiate with Robert for a divorce, but the negotiations were unsuccessful. Marcia and her suitor, James, took off for Mexico and there Marcia obtained a divorce from Robert and immediately went through a ceremony of marriage with James. Of course, the Mexican divorce was void, which resulted in Marcia’s marriage to James being void as well.

When Marcia and James returned home, her father decided to give to her as a marriage gift a very valuable piece of real estate on Cape Cod. A lawyer drafted the deed, which provided that the grantees were to take title as “tenants by the entirety.” Various disputes arose between the parties, but the one that is most important here is that concerning how the parties held title. The court, citing Dane v. Walker, 109 Mass. 179 (1892) and Childs v. Childs, 293 Mass. 67, 199 N.E. 383 (1935) said:

The conveyance to Marcia and James as husband and wife, tenants by the entirety, is not defeated by a subsequent determination of the invalidity of the marriage. Express words are needed to create a joint tenancy. G.L.c. 184, §7. The judge correctly ruled that a conveyance to parties as tenants by the entirety when such parties were thought by the donor to be husband and wife takes effect as a conveyance to them as tenants in common when they were not legally married.

The legislature realized that the Fuss decision could have far-reaching effects, and therefore passed the amendment to the statute in 1979. However, it should be noted that the legislation provided that:

The provisions of the third paragraph of section seven of chapter one hundred and eighty-four of the General Laws, added by section one of this act, shall apply to conveyances or devises of land made after the effective date of this act.

So, as logical as the statute seems, its passage was necessary to effectively “overrule” the decision in Fuss. And, more importantly, the statute is effective only as to conveyances made after the amending act was passed. This is a clear example of a statute that’s “on the books,” but doesn’t necessarily apply to all conveyances in an abstract.

Something should be said at this point about the case of Morris v. McCarty, 158 Mass. 11, 32 N.E. 938 (1893). That case has on occasion been cited for the proposition that a deed to two people as tenants by the entirety who are not married to each other creates a joint tenancy between them. Indeed, that was the result in Morris, but the result was dependent upon the specific language used in the deed. In Morris the deed ran to two unmarried persons as “tenants by the entirety and not as tenants in common.” (Emphasis added.) The court stated that since the parties could not hold as tenants by the entirety (they weren’t married to each other) and since the deed excluded the possibility of title being held as tenants in common (it stated this), the only remaining option, a joint tenancy, would arise. The court said:

On looking at the deed under which the tenant claims, it is quite plain that the grantors intended to create an estate in joint tenancy, as distinguished from an estate in common. The particular form of estate in joint tenancy which they contemplated fails; but they took great pains to exclude the idea of an estate in common, and the effect of the deed is to create an estate in joint tenancy, without the special feature of an estate in entirety.

In the quote from Fuss above, the court was aware of and did cite the Morris decision, but was careful to distinguish it. So it is safe to say that the result achieved by the amended legislation would not reach back prior to 1979.

There have been other amendments to G.L.c. 184, §7 that have been in response to judicial decisions. One is contained in the second paragraph of the statute and states:

In a conveyance or devise to three or more persons, words creating a joint tenancy shall be construed as applying to all of the grantees, or devisees, regardless of marital status, unless a contrary intent appears from the tenor of the instrument.

This language was inserted in 1973. Even though that’s more than a quarter of a century ago, it’s relevant because full titles under G.L.c. 93, §70 must cover a fifty-year period. The language appears to be a direct response by the legislature to the case of Fulton v. Katsowney, 342 Mass. 503, 174 N.E.2d 366 (1961). In that case the grantees in a deed were recited as “James C. Miller, being unmarried, and Dimitri Katsowney and Elfena Katsowney, his wife, as joint tenants and not as tenants in common.” The question was what words do the words “joint tenants” modify or, stated another way, how did all of the parties hold title as between themselves. The court said:

The deed is ambiguous as to the estate granted to Miller. As a matter of syntax, the words “as joint tenants and not as tenants in common” are applicable to all three grantees or only to Dimitri and Elfena Katsowney. In determining the intent of the grantors we are not assisted by evidence of the circumstances or the mutual relation of the grantees. Certainly it does not ‘manifestly appear * * * from the tenor of the instrument’ that it was intended to extend the estate of joint tenancy in the Katsowneys to include Miller. In such case we are compelled to rely on the statutory presumption to resolve the problem of construction. It leads us to conclude that the deed conveyed a one- half interest in the property to Miller to be held as tenant in common with the respondents.

Although the Fulton decision involved a multiple tenancy between an individual and a married couple, it is clear that the result would have been the same even if the grantees were merely recited as “James Miller, Dimitri Katsowney and Elfena Katsowney, as joint tenants.” The court would have applied the words “joint tenants” only to the last two named grantees. The court acknowledged that it could have read the clause either way, but was “compelled to rely upon the statutory presumption” of the creation of a tenancy in common whenever possible. The statutory change altered this result, but again the legislation (Chapter 210 of the Acts of 1973) stated that it “appl[ied] to conveyances or devises made after the effective date of the amendment. Once again, applying the literal provisions of the statute to a conveyance that occurred before the effective date of the legislation could lead to a problematic result.

Another example of the importance of knowing the time periods during which a statute is effective, or becomes effective, is in connection with conveyances between spouses. The case of Gordon v. Gordon, 8 Mass.App.Ct. 860, 398 N.E.2d 497 (1979) is an excellent demonstration of this. Although this case is generally cited with respect to the question as to who can acknowledge a deed (the court said the wife-grantee was not disqualified to do so, provided that she was also one of the grantors), the case revolved heavily around the application of a pre-1975 statute that provided that a deed between spouses would not be effective (even as between themselves) unless it was actually recorded. Ordinarily, a deed is effective to pass title as between the parties when it is delivered, but prior to 1975 a deed between spouses would not be effective to pass title even as between them unless and until it was recorded. In other words, prior to 1975 intra-spouse transfers would depend upon, and would require the conveyancer to establish, the continued survivorship of the spouses at the time the transfer was recorded.

The law that was applied in Gordon was orchestrated by the rather interesting facts that were before the court. Harry and Cecile Gordon acquired title to property in 1969 as tenants by the entirety. Within a year the couple experienced marital discord. Cecile visited a lawyer and stated that the couple had agreed to convey the title to her. A deed was prepared and in 1970 Harry and Cecile signed a deed conveying the property to Cecile. The deed was acknowledged only by Cecile and the next year, before the parties filed for divorce, the deed was recorded.

The pivotal question was whether the acknowledgment was good. This was crucial to the outcome of the decision because, even though the deed was accepted by the register for recording, if its acknowledgment was defective the recordation would be deemed a nullity. Pidge v. Tyler, 4 Mass. 541 (1808). Ordinarily a defective acknowledgment would mean that the deed did not import constructive notice to the world of its recording; but in Gordon a defective acknowledgment would mean that no title passed, because the statute in effect at that time (G.L.c. 209, §3, before it was amended in 1975) stated:

[C]onveyances of real estate . . . between husband and wife, shall be valid to the same extent as if they were sole, except that no such conveyance of real estate shall have any effect, either in passing title or otherwise, until the deed describing the property to be transferred is duly acknowledged and recorded . . . .

The court concluded that acknowledgment was good because the wife qualified as the holder of a freehold estate, and therefore would be a grantor capable of giving an acknowledgment, citing cases and statutes to support that proposition. The court dismissed the concept of “this rather abstruse concept of a fictitious unity of persons [in a tenancy by the entirety] in view of the foregoing judicial interpretations of the word ‘grantor’.” Once having established that the deed was properly recorded, the conclusion that title passed between the spouses even under the then-applicable law was easy to make.

This old law might seem to be a curiosity at best, but personally I have run into its application a few times in abstracts that I have examined.

Another law that has changed and for the most part has gone unnoticed is the law that has extended the period during which a corporation may “wrap up” its affairs. Under prior law, a corporation had an extended life of three years after its dissolution to wrap up its affairs. The statute that governed this was G.L.c. 155, §51, which provides:

Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three years after the time when it would have been dissolved for the purpose of prosecuting and defending suits by or against it and of enabling it gradually to settle and close its affairs, to dispose of and convey its property and to divide its capital stock, but not for the purpose of continuing the business for which it was established; provided that the corporate existence of such corporation, for the purposes of any suit brought by or against it within said period of three years, shall continue beyond said period for a further period of sixty days after the final judgment in the suit.

The above “window” of time was very important, and allowed for conveyances out by the corporation within this three-year period for liquidation purposes, even though the corporation had been legally dissolved, without the necessity of first reviving the corporate entity. However, once that window expired, it was no longer possible to seize this opportunity, and further conveyances out would require a revival.

The new corporation statute, G.L.c. 156D, §14.05 provides that:

A dissolved corporation continues its corporate existence but may not carry on any business except such as is necessary in connection with winding up and liquidating its business and affairs, including:

(2) disposing of its properties that will not be distributed in kind to its shareholders.

Note that there is no three-year limitation as before regarding the continued corporate existence. Moreover, and keeping with this concept, the statute also provides that “[d]issolution of a compotation shall not transfer title to the corporation’s property.” In other words, title would not upon dissolution devolve to the shareholders.

The new corporation law applies to “domestic corporations having capital stock as were established before July 2004 and which were, on June 30, 2004, subject to chapter 156B of the General Laws.”

Changing gears for a moment, everyone who’s read the articles by Ward Graham that appeared in Volume 4, Nos. 1 and 3 of the recent editions of the Massachusetts Focus knows the new rules regarding Massachusetts tax liens. But since the title of this article is, “When Did They Change That Law?” I think it’s worth noting here again these important changes.

Massachusetts tax liens are no longer for a period of six years. They endure for ten years. The statute became effective in January, 2005, but the statute applies to tax liens created both after and before that date, unless the liens had expired by that date. This situation is what Ward accurately characterized as a “huge trap for the unwary.” The Massachusetts Focus, Vol. 4, No. 1, Winter 2005. In this regard the statute provides that:

Any notice of tax lien in favor of the commonwealth recorded on a date making it less than 6 years old as of January 1, 2005 shall, if not sooner discharged as a result of payment of the tax, continue in full force and effect for a period of 10 years from the date of assessment of the tax without the need for any notice of lien refilling by the commissioner.

The statute essentially provides that any lien that otherwise would have expired in six years (the period runs from the assessment date) but had not yet expired by December 31, 2004 would breathe new life and the term of the lien would be extended to ten years from the assessment date.

Also, with respect to Massachusetts tax liens the law as to what they would “catch” was clarified in 2002 in the case of Luchini v. Commissioner of Revenue, 436 Mass. 403, 764 N.E.2d 870 (2002) when the Supreme Judicial Court held that such liens would attach to after-acquired property. There had been a doubt up to that point (expressed in Durkin v. Ferreira, 21 Mass.App.Ct. 771 (1986)) as to whether that was the case, but it is no longer questioned.

More on this subject in Volume 5, Number 1 of The Massachusetts Focus….