Andrew Kull - Memorandum

To:	The Members of the American Law Institute
From:	Andrew Kull, Reporter, Restatement Third, Restitution and Unjust Enrichment
Re:	Restatement Third, Property (Wills and Other Donative Transfers) § 8.4 ("Slayer Rule") Tentative Draft No. 3 (April 4, 2001)
Date:	May 9, 2001

During the discussion of this provision at next week’s Annual Meeting, I intend to offer the following motions, in the alternative:

Comments l and m to § 8.4 (and any accompanying illustrations) shall be revised to reflect the position of the Institute as follows:

Except where a different result is dictated by statute, the decision to treat a felonious killing as effecting a severance of a joint tenancy or a tenancy by the entirety requires an equitable justification. Such a justification may be present when the predominant consequence of a judicially-decreed severance is to adjust the rights of innocent parties. By contrast, if the predominant consequence of a judicially-decreed severance would be to benefit the slayer at the expense of the estate of the victim, treating the slayer as having accomplished by felony what the slayer did not accomplish lawfully, a decree giving homicide the effect of severance is presumptively inappropriate.

Comments l and m to § 8.4 (and any accompanying illustrations) shall be revised to reflect the position of the Institute as set forth in Restatement of Restitution § 188, Comment b.

Comments l and m and Illustration 7 to § 8.4 conflict both with the position of the Institute as adopted in the original Restatement of Restitution and with the modification of that position that (if permitted to do so) I expect to propose in Restatement Third, Restitution and Unjust Enrichment. The desirability of adopting a considered, consistent position in two contemporary Restatements makes it necessary to address the question now.

Section 8.4 addresses a topic within the law of restitution and unjust enrichment. As such it overlaps with Restatement of Restitution §§ 187-189 and with projected § 43 of Restatement Third, Restitution and Unjust Enrichment. (Extracts from a "pre-preliminary" draft of § 43 are attached as an appendix to this Memorandum.) These different treatments of the topic start from the same principles, and for the most part their proposed rules are fully consistent. The conflict between them involves a narrow and somewhat technical issue: the circumstances (if any) in which it is appropriate for a court to treat the killing of one co-tenant by another as effecting a severance of a joint tenancy or a tenancy by the entirety.

The choice lies primarily between the rule of Restatement of Restitution § 188, Comment b, and the rule of Revised Uniform Probate Code § 2-803(c)(2). According to the Restatement of Restitution, the slayer retains only that interest that was legally vested immediately before the killing: namely, a one-half interest for life (assuming two joint tenants, or a tenancy by the entirety). Under the rule of the UPC, the killing is given the effect of a lawful severance or divorce; with the result that the slayer holds a one-half interest in fee as tenant in common with the estate of the victim.

The narrow scope of the disagreement between these positions is brought into focus by observing the broad range of consensus that lies on either side of it. The competing approaches both take as their starting point the principles of unjust enrichment. By these principles it is axiomatic that the slayer shall not profit from the crime; neither, however, shall the slayer’s preexisting interest be forfeit. The controversy concerns the measurement of that preexisting interest.

Underlying agreement goes further than this, however, extending right up to the edge of the immediate controversy. Thus the competing drafts are in agreement that there is unjust enrichment if the slayer’s interest is enlarged in consequence of the crime, the prime instance of "enlargement" being the acceleration into possession of a vested remainder. So if a remainderman murders a life tenant, the court will restrict the remainder to approximate the value of the interest in the absence of the crime. See § 8.4, Comment n, Illustration 8. Moreover, it is agreed that a future interest contingent on surviving the victim is forfeit if the slayer satisfies the contingency as a result of the crime. See § 8.4, Comment n, Illustration 9.

The analogy between the last two cases and the situation of the murdering co-tenant is hard to deny. Under either joint tenancy or tenancy by the entirety, any interest beyond the killer’s fractional life estate is contingent on surviving the other co-tenant. And no matter what the co-tenants’ respective life expectancies, the killer’s remainder is necessarily accelerated into possession (and therefore "enlarged") as the result of the crime.

In short, if the joint tenancy or the tenancy by the entirety is still in existence at the time of the killing, the treatment of analogous cases strongly supports the Restatement position. The UPC avoids this conclusion by interposing a rule of deemed severance. The effect is to divide the jointly owned property as if the killer had done what he or she did not do before the killing: obtain a lawful severance of the joint tenancy, or a lawful divorce.

It is common ground that severance of a joint tenancy may be accomplished by a simple, unilateral formality; so that the killer, had he or she elected to do so, might at any time before the killing have transformed the joint tenancy into a tenancy in common without survivorship features. Murder between tenants in common presents no issue of unjust enrichment, because the preexisting estate of the killer is unaffected by the death of the other tenant.

The UPC position reasons from the ready availability of unilateral severance to imply that there is no unjust enrichment if a killer who neglects to sever is deemed to have done so:

The same analysis is then extrapolated, more controversially, to the tenancy by the entirety. "Because no-fault divorce has made divorce easier to obtain, a tenant by the entirety’s right to sever by divorce has become closer to the joint tenant’s unilateral right to sever." (Section 8.4, Comment m.) Where one spouse kills the other, the UPC divides the entirety property as if the killer had previously exercised this "right to sever by divorce."

The contrasting equitable position is simply stated. In the circumstances under consideration, a determination to treat the co-tenancy as severed by the killing — to accomplish by judicial decree, after the fact, what the killer has failed to accomplish lawfully — usually amounts to an equitable intervention on behalf of the killer. The basic objection, as Comment l correctly states, is that "equity ought not to assist a wrongdoer, and . . . treating the killing as a mode of severance would require the court to assist the wrongdoer." The UPC counterargument, that the killer was already "in substance" the owner of the interest that severance would yield, is refuted by the killer’s need for equitable relief.

It would be more accurate to say that — beyond the killer’s fractional life estate — the killer previously held one interest in the property (a contingent remainder in the whole) that might have been exchanged for a substantially different interest (a vested remainder in the killer’s own fractional share). In the case of joint tenancy, this exchange might indeed have been made at the killer’s option, though it would necessarily have involved a calculation of risks — life expectancy being only one of them. In the case of a tenancy by the entirety, the same exchange would have required a more elaborate transaction in which a variety of other interests, some of substantial public interest, are necessarily implicated. Having for whatever reason failed to sever or to obtain a divorce before killing the co-tenant, the killer learns that the omission was potentially costly. But this is not a posture from which to seek the assistance of equity.

The motion offered as Alternative I seeks approval in principle of the treatment of this issue that is currently projected for § 43 of Restatement Third, Restitution and Unjust Enrichment. The projected approach would modify the position of the original Restatement of Restitution by authorizing a remedy of judicial severance in the equitable discretion of the court. This equitable approach to severance was originally suggested in an article by John Wade; it is part of the statute law of several states and the decisional law of others. As George Palmer pointed out, cases in which courts have favored severance as the means to achieve an equitable result — as distinct from those in which severance is automatically imposed by statute — tend to be cases in which the restitution contest is between innocent claimants, rather than between the killer and the heirs of the victim.

On both sides of the present controversy, objections have been raised against a rule that would leave the disposition of survivorship interests to the court’s equitable discretion, depending on the circumstances of the particular case. But much of unjust enrichment law, like much of traditional equity doctrine, is the law of the particular case. A judgment severing the former co-tenancy, no less than a judgment applying the Restatement rule, involves a judicial intervention. A court that respects the avowed equitable basis of § 8.4 must choose its equitable remedies so as to do equity; rather than imposing a uniform, "mechanistic" solution (as George Palmer called it) in a case where the effect would be the opposite.

If the Institute rejects Alternative I and the proposition that the remedy of judicial severance be left to the equitable discretion of the court, I offer Alternative II to present a choice between Restatement of Restitution § 188 and Revised Uniform Probate Code § 2-803.

1. The Reporter’s Note to § 8.4 reflects the tendency of the more recent cases and statutes toward the UPC rule. Nevertheless, the prevailing balance of authorities would readily justify the Institute either in adhering to its existing position as set forth in Restatement of Restitution § 188, or in adopting the modification of that position that is contemplated for Restatement Third, Restitution and Unjust Enrichment § 43. Among more recent decisions, some of the most effective statements in support of the Institute’s existing position have appeared in dissenting opinions. See, e.g., Gallimore v. Washington, 666 A.2d 1200 (D.C. Ct. App. 1995) (dissenting opinion) (joint tenancy); Preston v. Chabot, 138 Vt. 170, 412 A.2d 930 (1980) (dissenting opinion) (tenancy by the entirety).

2. Statutes in a number of jurisdictions restrict the slayer’s interest in jointly-owned property to the slayer’s preexisting life estate, consistent with the rule of Restatement of Restitution § 188. See, e.g., Kan. Stat. Ann. § 59-513 (2000); N.C. Gen. Stat. §§ 31A-5, 31A-6 (2000); Or. Rev. Stat. § 112.475 (1999); 20 Pa. Cons. Stat. §§ 8805, 8806 (2000); R.I. Gen. Laws §§ 33-1.1-5, 33-1.1-6 (2001); Wash. Rev. Code § 11.84.050 (2001). The same result probably follows from a statute providing that "All property of the decedent . . . shall pass . . . as if the person who caused the death of the decedent had predeceased the decedent." Ohio Rev. Code Ann. § 2105.19 (Anderson 2001).

The statutes of Pennsylvania, Rhode Island, and Washington expressly refer to the possibility that the slayer (in a case of a joint tenancy) might apply to the court for a decree of severance or partition. Absent such a decree, the slayer’s retained interest passes to the estate of the victim on the death of the slayer. See John W. Wade, Acquisition of Property by Willfully Killing Another — A Statutory Solution, 49 Harv. L. Rev. 715 (1936).

Virginia’s version of an otherwise comparable "slayer act" provides that the slayer’s entire share of jointly-owned property passes immediately to the estate of the victim. Va. Code Ann. § 55-405 (2000). The same result has been reached elsewhere by judicial construction. See Lakatos v. Estate of Billotti, 203 W. Va. 553, 509 S.E.2d 594 (1998).

At least one court has interpreted the original Uniform Probate Code in a manner consistent with the equitable rule of the Restatement, utilizing the remedy of constructive trust. The original UPC provides that the killing of one joint tenant by another "effects a severance of the interest of the decedent so that the share of the decedent passes as his property and the killer has no rights by survivorship." Construing this provision, a New Jersey court found "no basis to change the common law rule that the remainder interest in the killer’s share should be held in [constructive] trust for the benefit of the decedent’s heirs." Estate of Karas, 197 N.J. Super. 642, 644-45, 485 A.2d 1083, 1084 (1984).

3. The equitable case for severance in cases of murder/suicide, where the restitution contest arises between competing groups of innocent heirs, is suggested as a desirable modification of the "Restatement position" in Johansen v. Pelton, 8 Cal. App. 3d 625, 87 Cal. Rptr. 784 (1970).

4. Some jurisdictions apply the UPC rule to joint tenancy and the Restatement rule to tenancy by the entirety, rejecting the suggestion that murder be given the effect of divorce. See, e.g., Estate of Mathew, 270 App. Div. 2d 416, 706 N.Y.S.2d 432 (2000). Professor Fellows, whose commentary is cited with approval in the Reporter’s Note to § 8.4, has drawn the same distinction. Mary Louise Fellows, The Slayer Rule: Not Solely a Matter of Equity, 71 Iowa L. Rev. 489, 520 (1986) (describing the purported "right to sever the tenancy by the entirety through divorce" as "wholly unpersuasive").

5. The equitable position adopted by Restatement of Restitution § 188 has had the approval of leading commentators for the last century. For the most significant authorities, see 4 George E. Palmer, Law of Restitution § 20.13 (1978); 5 Austin W. Scott, Law of Trusts § 493.2 (W.F. Fratcher 4th ed. 1989); James Barr Ames, Can a Murderer Acquire Title by his Crime and Keep It?, 36 Am. L. Reg. & Rev. (n.s.) 225, 238 (1897); John W. Wade, Acquisition of Property by Willfully Killing Another — A Statutory Solution, 49 Harv. L. Rev. 715, 728-35 (1936).

6. Restatement of Restitution § 188 is seemingly contradicted by Restatement, Second, Property (Donative Transfers) § 34.8, Comment c; but the oblique reference in the latter work makes it doubtful that the question received significant attention at the time.

[Prospective § 43, "Homicide," to be situated within Chapter 4, "Benefits Wrongfully Obtained," Topic 2, "Diversion of property rights at death." See the proposed Table of Contents in R3RUE Tentative Draft No. 1.]

(a) A person who intentionally and feloniously kills another will not be permitted to profit from the other’s death. (For purposes of this section, a person responsible for an intentional and felonious homicide is referred to as a "slayer.") The slayer’s acquisition, enlargement, or accelerated possession of an interest in property as a result of the other’s death constitutes unjust enrichment giving rise to a claim in restitution.

(2) A slayer may not receive the proceeds of insurance on the life of the victim.

(3) Where the slayer and the victim hold concurrent or successive interests in property, the slayer’s preexisting interest is not enlarged or accelerated into possession in consequence of the victim’s death; neither is it forfeit.

(4) A slayer forfeits any future interest in property that is contingent on the slayer’s surviving the victim.

[Comment a will address "General Principles and Scope." Comment b will emphasize the fact that the problems at hand are extensively though not comprehensively regulated by statute. Comment c will address the issue of defining the slayer’s level of responsibility for the homicide, relying extensively for this purpose on Restatement Third, Property (Wills and Other Donative Transfers) § 8.4, Comments d, e, f, g & h. Comment d will address the issue of identifying the proper plaintiff. A further comment on Remedies will explain that (1) restitution in these cases is sometimes achieved by saying that the defendant holds the plaintiff’s interest on a constructive trust for the plaintiff, and (2) in cases of divided ownership, whether an interest retained by the defendant should be commuted and allowed in cash is a question for the discretion of the court, depending obviously on the nature of the property and the circumstances generally.]

Comment x. Survivorship. When co-ownership of property includes a right of survivorship, as in the case of joint tenancy or tenancy by the entirety, the felonious killing of one co-owner by another presents a controversial issue in restitution. Because the consequences of killing between co-owners are less likely to be the subject of explicit statutory regulation than are the other cases within this section, they must more often be resolved on the basis of the common law of unjust enrichment. Here the governing principles are not, in fact, disputed; but their application to a killing between co-owners has been a source of significant disagreement. The difficulty lies in the choice of the appropriate baseline against which the enrichment of the defendant is to be measured.

The determining principles in unjust enrichment are that the defendant’s preexisting estate not be enlarged as a result of the wrong; and that the remedy not cause the defendant to forfeit any part of that preexisting estate. See Comment a. The disagreement concerns the measurement of the preexisting estate.

In the common case of realty owned by two joint tenants, the defendant before the slaying holds a life estate in an undivided one-half interest and a contingent remainder in the whole, the contingency being survivorship. On the traditional view of the problem, adopted by Restatement of Restitution § 188, the defendant’s wrongful act accelerates the termination of the joint tenancy, while making it impossible to ascertain the natural outcome of the survivorship contingency. The irreducible uncertainty thus created by the slaying is resolved against the slayer, on a principle akin to that governing spoliation. The result is that the slayer retains only those interests that were vested at the time of the slaying, being deprived of any that were contingent on survivorship.

An alternative view, adopted by the Uniform Probate Code, accords greater weight to the joint tenant’s unilateral right to sever the joint tenancy, thereby turning it into a tenancy in common. On this view, a one-half interest in joint tenancy plus a unilateral right to sever is the functional equivalent of an undivided one-half interest in fee. The slaying is treated as effecting a severance of the joint tenancy, with the same effect as if the slayer had in fact caused the tenancy to be lawfully severed before committing the crime. The usual result is that the slayer and the estate of the victim hold the property in equal shares as tenants in common.

This Restatement rejects the proposition of the Uniform Probate Code that judicial severance makes an equitable or an appropriate disposition of former co-tenancy property in every case. Judicial severance is appropriate as a means of avoiding unjust enrichment, but not when its effect would be the opposite. On ordinary equitable principles, it will rarely be appropriate to treat a serious crime as effecting a significant disposition of property (severance of a joint tenancy; divorce under a tenancy by the entirety) that the wrongdoer was free to make but, for whatever reasons, did not elect to make during the life of the victim. The death of the victim terminates the joint tenancy or the tenancy by the entirety, and the defendant will be allowed to retain only that part of the resulting estate that was already vested in the defendant: namely, a preexisting fractional interest for life. See Illustration 1.

Here as elsewhere, however, a claim in restitution must locate its rationale in the unjust enrichment of one party at the expense of another. Where the contest in restitution is between innocent parties, the effect of the usual rules barring the slayer might be to create (rather than to reverse) an unjust enrichment between the real parties in interest. In such circumstances, a court may choose to decree the severance of a former joint tenancy in the exercise of its equitable discretion. See Illustration 2.

1. Husband and Wife hold Blackacre as joint tenants with the right of survivorship. There are no children of this marriage. H has children by a previous marriage; W does not. W murders H. By the rule of § 43(b)(1), H’s surviving children are his sole heirs. H’s estate has a claim in restitution against W, measured by the rules of § 43(b)(3) and (4). The court will decree that H’s estate succeeds to the ownership of Blackacre in fee simple, subject to W’s preexisting life estate in an undivided one-half interest.

2. Husband and Wife hold Blackacre as tenants by the entirety. There are no children of this marriage, but both spouses have children by previous marriages. H, W, and both sets of children have lived together in Blackacre as a combined family. W murders H, then commits suicide. The parties to the action in restitution are H’s children, on the one hand, and W’s children, on the other. If the court determines that equitable considerations favor an equal division of Blackacre between the parties, the court may appropriately decree a severance of the joint tenancy. The result is that the interests of the spouses pass to their respective estates as if H and W had been tenants in common.