The opinion of the court was delivered by: Cercone, J.
Before the Court is an appeal by Deutsche Bank National Trust Company ("Deutsche Bank") from an order of the United States Bankruptcy for the Western District of Pennsylvania avoiding the lien of a mortgage held by Deutsche Bank on the residence of appellees, David E. Evans ("David") and Mary Anne Evans ("Mary Anne" together the "Evans"), husband and wife. This Court has jurisdiction of the appeal from the final order of the Bankruptcy Court pursuant to 28 U.S.C. § 158(a).
II. STATEMENT OF THE CASE
On February 2, 2004, the Evans purchased a home in Greene County, Pennsylvania, taking title to the property as tenants by the entireties by two (2) deeds which identified the grantees as "David E. Evans and Mary Anne Evans, husband and wife." The deeds were recorded with the Recorder of Deeds for Greene County on March 22, 2004. To finance the purchase, David executed a mortgage to Argent Mortgage Company on February 2, 2004, together with a promissory note in the principal amount of $63,000.00. Deutsche Bank is the current holder of the mortgage.
The parties agree that Mary Anne had knowledge of, and consented to, the granting of the mortgage, however, she never signed either the mortgage or the promissory note. Only David signed the mortgage as mortgagor. The mortgage was recorded with the Greene County Recorder of Deeds on February 24, 2004.
On February 1, 2007, the Evans filed a joint petition for relief under Chapter 13 of the Bankruptcy Code, in the United States Bankruptcy Court for the Western District of Pennsylvania (the "Bankruptcy Court"). Deutsche Bank, as holder of the mortgage and promissory note, filed a secured proof with the Bankruptcy Court on February 20, 2007. The Evans and the Chapter 13 Trustee, Ronda J. Winnecour (the "Trustee"), brought an adversary proceeding with the Bankruptcy Court seeking a declaration that the mortgage was unenforceable and subject to avoidance pursuant to the Trustee's "strong arm" powers set forth in 11 U.S.C. § 544(a). The Bankruptcy Court held that the mortgage was invalid, thus making the lien interest and claim held by Deutsche Bank wholly unsecured, and effectively avoiding the mortgage lien.
This Court has jurisdiction to hear an appeal from the Bankruptcy Court pursuant to 28 U.S.C. § 158(a). In undertaking a review of the issues on appeal, a district court applies a clearly erroneous standard to a bankruptcy court's findings of fact -- "[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous.." See Federal Rule of Bankruptcy Procedure 8013. In this instance, the Bankruptcy Court did not hold an evidentiary hearing, the parties agreed, instead, to submit the case upon a stipulation of facts. Therefore, the only issues presented in this appeal are questions of law. The legal conclusions of a bankruptcy court are subject to plenary review. In re Continental Airlines, 125 F.3d 120, 128 (3d Cir. 1997); see also In re Hechinger, 298 F.3d 219, 224 (3d Cir. 2002); In re Telegroup, 281 F.3d 133, 136 (3d Cir. 2002).
A. Pennsylvania Entireties Law and the "Entireties Presumption"
The Trustee, and the Evans, argue that Deutsche Bank's mortgage is not enforceable on its face because, though the Evans held title to the property as tenants by the entirety, only David Evans executed the mortgage. The Trustee contends that the mortgage is defective and is void by operation of the Statute of Frauds. The Bankruptcy Court, like several Pennsylvania Bankruptcy Courts*fn1 previous, held that the lien of Deutsche Bank's mortgage was unenforceable, and the Bank's interest was wholly unsecured. Based on the reasons that follow, this Court disagrees with the ruling of the Bankruptcy Court, will reverse, and find the mortgage at issue is fully enforceable and cannot be avoided by the Trustee.
The Court of Appeals for the Third Circuit reviewed two Chapter 7 bankruptcy cases in which the appellant debtors sought exemptions under 11 U.S.C. § 522(d)(5) for property held in tenancy by the entireties, and in so doing reviewed the basic principles of Pennsylvania's entireties laws that are relevant to the issues herein. See In re Bannon, 476 F.3d 170 (3d Cir. 2007).
In Pennsylvania, a tenancy by the entireties is a form of co-ownership of real or personal property by husband and wife. In re Bannon, 476 F.3d at 173. It is a venerable common law doctrine of ancient vintage, based on the legal fiction that husband and wife are one person. Id. The essential characteristic is that "each spouse is seised per tout et non per my, i.e., of the whole or the entirety and not of a share, moiety or divisible part." Id. quoting In re Gallagher's Estate, 43 A.2d 132, 133 (Pa. 1945). The Court further quoted a Pennsylvania treatise on conveyances:
[H]usband and wife are looked upon, together, as a single entity, like a corporation. The single entity is the owner of the whole estate. When the husband or wife dies, the entity continues, although it is ...