I won't say it never happens, but it's unusual. A few exceptions; in the fine arts, the 'terminal degree' is usually a Masters in Fine Arts (MFA). And obviously physicians, dentists and law professors have doctorates in their fields, not Ph.D.s.
Agreed. I have a relative who has tenure at a upstate NY private liberal arts college, teaching French. Her husband has an MA he got in his native France, and they give him some courses to teach, but will not allow him full time, permanent status because he has no Ph.D. Despite the fact that the students adore him and he is a much better teacher of french than my tenured relative.