homestead property

In 1988, the Internal Revenue Service assessed $482,446 in unpaid income tax liabilities against Don Craft for his failure to file federal income tax returns for the years 1979 through 1986. At that time, Don Craft and his wife, respondent Sandra L. Craft, owned a piece of real property in Grand Rapids, Michigan, as tenants by the entirety. After notice of the federal tax lien was filed, the Crafts jointly executed a quitclaim deed purporting to transfer Don Craft's interest in the property to Sandra Craft for one dollar. When Sandra Craft later attempted to sell the property, a title search revealed the lien. The IRS agreed to release the lien to allow the sale on the condition that half of the net proceeds be held in escrow pending determination of the Government's interest. Sandra Craft then brought an action in the United States District Court for the Western District of Michigan to quiet title to the escrowed proceeds. The District Court granted summary judgment to the Government. On appeal, the United States Court of Appeals for the Sixth Circuit held that the tax lien did not attach to the property under Michigan law and remanded for consideration of the Government's fraudulent conveyance claim. On remand, the District Court found that the conveyance itself was not fraudulent but that the use of nonexempt funds to pay the mortgage constituted a fraudulent act, and it awarded the IRS a share of the proceeds. The Sixth Circuit affirmed that determination on the lien issue as law of the case. The Supreme Court granted certiorari to consider whether Don Craft had a separate interest in the entireties property to which the federal tax lien attached.

Roy Smith and his twin brother Ray Smith became involved in a dispute over land ownership that originated with acquisitions in the 1940s and 1950s. Ray Smith purchased an 80-acre rectangular tract in 1943. In 1950, Ray, Roy, and their mother obtained joint title to a 42-acre tract positioned cattycornered southwest of Ray's 80 acres. In 1960, Ray and their mother transferred their interests in the 42-acre tract to Roy. This allowed Roy to mortgage the property and acquire an additional 80-acre tract north of the 42 acres and west of Ray's original holding. The brothers differed on the purpose behind the 1960 conveyance of the 42-acre tract. Ray maintained that it served only to help Roy finance the northern 80-acre purchase, with the understanding that Roy would later transfer half of the 42 acres back to Ray. Roy asserted that the transfer formed part of their parents' plan for the twins to achieve equal land ownership through mutual conveyances of half their respective parcels. On December 30, 1963, Roy conveyed about 20 acres from the 42-acre tract to Ray. Roy alleged that this transfer occurred under an oral agreement whereby Ray would convey the northern half of his 80-acre tract to Roy in exchange. Ray denied entering into any such agreement. Seventeen years later, in May 1981, Roy initiated a lawsuit against Ray seeking specific performance of the alleged oral contract. The case proceeded to a bench trial without a jury, resulting in a judgment for Roy. Ray then appealed to the Supreme Court of Alabama, raising three grounds of error related to the enforcement of the oral contract.

The plaintiff and E. W. Fall were married in Indiana in 1876. Subsequently they moved to Nebraska, where by their joint efforts, accumulations, and earnings they acquired the land in controversy through a single conveyance. In 1889 the couple relocated to Washington and continued to reside there as husband and wife until their separation in January 1895. On February 27, 1895, E. W. Fall, then a resident of King County, Washington, filed suit for divorce against the plaintiff in the Superior Court of that county. He alleged that he owned the Nebraska land as his separate property purchased with money from his parents and prayed for a divorce together with a just and equitable division of the property. The plaintiff appeared by answer and cross-complaint, denied the allegations, asserted that the property was community property purchased with the proceeds of their joint labor after marriage, and prayed that the property be set apart to her as her separate property subject only to a $1,000 mortgage. The Washington Code provision then in effect authorized the court in granting a divorce to make such disposition of the property of the parties as appeared just and equitable. The Washington court entered a decree granting the plaintiff a divorce, setting apart the Nebraska land to her as her separate property forever free from any claim by E. W. Fall, and ordering him to convey all his right, title, and interest in the land within five days. When he failed to comply, the court appointed a commissioner who executed a deed conveying the land to the plaintiff. Thereafter E. W. Fall executed a mortgage on the land to W. H. Fall and subsequently conveyed the property by deed to defendant Elizabeth Eastin. In 1897 the plaintiff filed suit in Hamilton County, Nebraska, to quiet title to the land and to cancel the mortgage and deed as having been made without consideration and for the purpose of defrauding her. W. H. Fall disclaimed any interest and released the mortgage while Eastin answered putting in issue the legal sufficiency of the complaint and setting forth the loan transaction and deed in satisfaction of the debt. No personal service was had upon E. W. Fall in the Nebraska action. The Nebraska trial court entered a decree in favor of the plaintiff, but after rehearing the Supreme Court of Nebraska reversed that decree.