## Facts

- Harry Brown purchased a $15,000 certificate of deposit (CD) from Hutchinson National Bank and had it issued to himself and his wife, Ida Brown, as joint tenants.
- Harry’s grandson, Dale Brown, sought a $15,000 loan from the Bank; the Bank required collateral.
- Harry agreed to pledge the jointly titled CD as security; Harry and Dale signed the note and security agreement. Ida did not sign.
- Harry told Ida shortly after he pledged the CD.
- Harry died in January 1985.
- After Harry’s death, the Bank paid interest on the CD to Ida until suit was filed.
- Dale filed bankruptcy in March 1986.
- The Bank filed an action in July 1986 seeking to apply the CD to Dale’s note.
- The district court entered declaratory judgment for Ida, ruling the pledge did not sever the joint tenancy and that Ida took the CD at Harry’s death free of any Bank lien; the Bank appealed.

## Issues

1. Whether one joint tenant’s unilateral pledge of a jointly held CD severs the joint tenancy by destroying a required unity.
2. If severance occurs, whether the creditor’s security interest attaches to the pledgor’s share despite the other joint tenant’s lack of consent and the pledgor’s subsequent death.

## Decision

- The Kansas Court of Appeals reversed the declaratory judgment for Ida.
- The court held that Harry’s unilateral pledge severed the unity of interest, dissolving the joint tenancy as a matter of law and converting the ownership to a tenancy in common.
- The Bank’s security interest attached to Harry’s one-half tenancy-in-common interest in the CD.
- Because the joint tenancy was severed before Harry’s death, survivorship did not transfer the entire CD to Ida free of the Bank’s lien.
- The court reviewed the district court’s legal conclusions de novo.

## Legal Principles

- A joint tenancy requires continued existence of the four unities (time, title, interest, possession); destruction of any unity terminates the joint tenancy and results in a tenancy in common.
- A unilateral pledge/encumbrance by a joint tenant can sever a joint tenancy in personal property by destroying the unity of interest.
- After severance, each tenant in common holds an undivided fractional interest, and a creditor’s lien from one cotenant reaches only that cotenant’s share.
- Termination of joint tenancy before death eliminates survivorship as to the severed property interest; the encumbered share remains subject to the lien.

## Conclusion

The court held that Harry Brown’s unilateral pledge of a jointly titled certificate of deposit severed the joint tenancy and created a tenancy in common, allowing the Bank’s lien to reach Harry’s one-half interest notwithstanding Ida Brown’s nonparticipation and Harry’s later death.


Hutchinson Nat'l Bank & Tr. Co. v. Brown, 12 Kan. App. 2d 673, 753 P.2d 1299 (Kan. Ct. App. 1988)