Edwin Smith, L.L.C. V. Synergy Operating L.L.C. There is Nothing Which so Generally Strikes the Imagination, and Engages the Affections of Mankind as the Right of Property.: William Blackstone, Commentaries on the Laws of England 2 (1766) 285 P.3d 656 (2012) Facts The facts of this case are best understood in linear fashion. In 1924, Herman Hasselman acquired a one-half interest in a 160-acre tract in San Juan County, New Mexico (the property). Herman Hasselman died in 1931. Herman, by his will, left his one-half interest in the New Mexico property to the following: Margaret Hasselman Jones, his widow Julia Hasselman Keller, daughter May Hasselman Kouns, daughter Jennie Hasselman Hill, daughter These four individuals are referred to as "the Hasselman women." In 1951, the "Hasselman women" used a straw man transaction and conveyed their title to the property to Earl Kouns (May's husband), who then conveyed the property back to the Hasselman women "not in tenancy in common but in joint tenancy." In 1958, a quiet title action suit over the property entered judgment for the "Hasselman women". In 1959, the "Hasselman women", along with Margaret's and Jennie's husbands entered into a lease agreement with Hugh J. Mitchell to develop oil and gas on the property. In 1959, the Pan American Petroleum Corporation was made the mineral lessee for the property. May died in 1962. In 1964, the surviving "Hasselman women", along with Margaret's husband and May's four children, executed a power of attorney appointing Henry Hill, Jennie's husband, as their "true and lawful agent and attorney-in-fact for the purpose of granting and conveying easements, surface leases and mineral leases, on and over the [Property], to the extent of our right, title and interest in and to such real estate." The power of attorney gave Henry "full power and authority to do the acts aforesaid as fully as we ourselves could do such acts." Unfortunately, Henry died later in 1964, and in 1965, the same group that had given Henry authority executed a "Designation of Agent" agreement appointing Jennie as their "agent and attorney in fact for the purpose of receiving, for their account, any and all royalties." The document indicated that May's interest had passed to her children "share and share alike" and that Henry's interest was "now owned in its entirety by Jennie." The Designation also indicated that Margaret's and Jennie's husbands had also entered into the 1959 lease agreement. In 1965, Jennie entered into an oil and gas lease with Claude Smith. In 1965, Pan American Oil Corporation prepared a division order title opinion that provided: Each surviving "Hasselman" woman" owned a 1/8 share of the property. Each of May's children owned a 1/32 share. Jennie distributed royalties according to this allocation until the lawsuit began in 2006. Julia died in 1973. Margaret died in 1974. In 1981, Jennie executed a warranty deed conveying one-half interest in the property to herself and her daughter June Hill Walmsley as joint tenants. Jennie died in 1988. Before her death, June Hill Walmsley (Jennie's daughter) deeded the property through her will to a bypass trust administered by her husband, Jerry Walmsley. In 2004, 15 heirs of Julia, Margaret, and May (Respondents) assigned all of their interests to Synergy Operating LLC (Petitioner). Not surprisingly, in 2006, the Respondents filed suit seeking a judgment confirming their sole ownership of the property. Jerry Walmsley also sought sole ownership of the property as the heir, assign, and successor of the "Hasselman women". The lower court held that none of the "Hasselman women" had severed their joint tenancy despite actions taken to convey their interests. The property remained in joint tenancy, and, after Jennie died, the estate passed to her daughter June and then to June's trust. Not surprisingly, Synergy appealed. The appellate court held that "none of the alleged acts of the Hasselman women destroyed one of the four unities that is necessary . . . in New Mexico." Not surprisingly, Synergy appealed again. Judicial Opinion Serna, Justice Like other forms of concurrent ownership such as tenancies in common, in joint tenancies "all the tenants have together, in the theory of the law, but one estate in the land and this estate each joint tenant owns conjointly with the other cotenants. ... [E]ach joint tenant is regarded as the tenant of the whole for purposes of tenure and survivorship, while for purposes of alienation and forfeiture each has an undivided share only." By operation of the right of survivorship, often described as the "chief incident" of joint tenancy, "upon the death of one joint tenant, his interest does not pass to his heirs or representatives, but the entire tenancy remains to the surviving cotenants, and the last surviving tenant takes the whole." As in other states, New Mexico recognizes but disfavors joint tenancies. [W]hile joint tenancies are disfavored under New Mexico law, if they are validly created, they are entitled to legal recognitionunless and until they are terminated. It is widely accepted that a conveyance of property to a third party will terminate a joint tenancy. This is the case even if the conveyance is made over the objections of one of the joint tenants. One joint tenant can even sever the joint tenancy as to himself or herself, and therefore terminate the joint tenancy if it is held by only two people, by unilateral self-conveyance. However, termination of a joint tenancy does not in every instance require destruction of one or more of the four unities; it can also be effected by an agreement or course of conduct between the joint tenants. "[W]hen the severance depends on an inference ... without any express acts of severance" such as a conveyance, "it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested." That limitation is important because it prevents disputes over the ongoing existence of a joint tenancy from resting on self-serving testimony from a tenant about what he or she believed, felt, or even articulated, absent a mutual course of conduct by all of the tenants. The rationale for implying a termination based on the joint tenants' course of conduct is that it would be inequitable to allow the joint tenants to mutually treat the property as a tenancy in common when it suited their interests, only to have one or more of those tenants at a later time effectively renounce their earlier representations. [T]he Court of Appeals' test for severance by implication misstates the common law in two ways. First, the test ignores mutual conduct as a method of termination, instead limiting acts sufficient to effect termination only to express agreements. Second, the test restricts termination even further by requiring that the express agreement be "inconsistent with one of the unities or with the right of survivorship." While our statutes make clear that the four unities of interest, title, time, and possession must be present for a joint tenancy to be created, there is no corresponding statutory provision limiting termination to acts that destroy one or more of the four unities. We observe that unlike New Mexico, some other states have opted to restrict by statute the manner in which joint tenancies may be terminated. For example, Minnesota law recognizes termination only if (1) an "instrument of severance" is either recorded in the office of the recorder or registrar of titles where the real property is located, or executed by all of the joint tenants; (2) "the severance is ordered by a court of competent jurisdiction"; (3) the "severance is effected pursuant to bankruptcy of a joint tenant"; or (4) by virtue of a divorce decree. We hold that . . . a joint tenancy may be terminated by the owners' course of conduct. Intent per se is not determinative; the question is whether the Hasselman Women by their actions (between their reacquisition of the property as joint tenants in 1951 and Jennie's purported conveyance of the property to herself and her daughter in 1981) evidenced their mutual understanding and desire to hold the property as tenants in common rather than as joint tenants. The record shows that the Hasselman women included some of their husbands and heirs in executing legal documents affecting the property, and those third parties also received many years of royalties from oil and gas development on the property. The finder of fact is in the best position to evaluate the evidence of the Hasselman's women's conduct and to determine if that conduct rose to a level sufficient to show their intent to terminate the joint tenancy. Because the extent and intent of the Hasselman women's conduct rest on unresolved questions of fact, the district court's summary judgment was inappropriate. Reversed.

Case Questions 1. List the acts of the Hasselman women that would have severed the joint tenancy in other states.

2. What actions do you think showed intent to keep the joint tenancy? What acts show intent to sever the joint tenancy?

3. What problems with evidence do you see in establishing intent?

4. What lessons should families learn from the experience of this family on inherited, shared property?

5. Who gets what? Diagram the possible outcomes depending on the intent outcome.

Answer rating: 100% (QA)

1 Acts of the Hasselman women that would have severed the joint tenancy in other states include Conveyance of the property to a third party without th... View the full answer