Baker v. Baker

• Decision Date: 29 October 1985
• Docket Number: No. 2,No. 62358,62358,2
• Citation: 710 P.2d 129,1985 OK CIV APP 35
• Parties: 1985 OK CIV APP 35 Tana Rene BAKER, Appellee, v. Warren Lee BAKER, Appellant
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Page 129

710 P.2d 129

1985 OK CIV APP 35

Tana Rene BAKER, Appellee, v. Warren Lee BAKER, Appellant.

No. 62358.

Court of Appeals of Oklahoma,

Division No. 2.

Oct. 29, 1985.

Released for Publication by Order of

Court of Appeals Dec. 3, 1985.

Gary W. Wood, Tulsa, for appellee.

David A. Cotter, Broken Arrow, for appellant.

MEANS, Judge.

Defendant appeals from the trial court's order refusing to exempt a joint checking account from garnishment. Defendant contended that some of the funds belonged to his present wife and thus the entire amount of the account was exempt from garnishment. The trial court found that because the funds had been commingled in a joint checking account, the funds had lost any separate identity which they might have had and were subject to garnishment. Having reviewed the record and applicable law, we reverse and remand.

Plaintiff and Defendant were divorced in April 1982. As part of the property division, Plaintiff was granted the following:

4. That Plaintiff be and she is hereby granted a money judgment as against Defendant in the sum of Ten Thousand Two Hundred Fifty-six and 96/100 Dollars ($10,256.96). Said sum represents the unpaid balance of the Second Mortgage obligation in favor of Ford Consumer Credit Company ($10,856.96) less the sum of $600.00. Defendant shall pay said Judgment by making payments to Ford Consumer Credit Company at a monthly rate of One Hundred Eighty-five and no/100 Dollars ($185.00), and the principal amount of said Judgment shall be reduced to the same extent that the principal amount of the Second Mortgage loan obligation and payoff balance is reduced by virtue of said monthly payments. Defendant shall also be responsible and liable for any late charges or delinquent charges assessed by Ford Consumer Credit Company by virtue of Defendant's failure to make timely monthly payments.

Defendant remarried and established a joint bank account with his present wife. Both Defendant and his wife made deposits and withdrawals from the account. Defendant does not dispute that the account was a traditional joint account and that both he and his wife had the right to withdraw the entire amount.

On March 1, 1984, Defendant defaulted on his payments concerning the second mortgage. Subsequently, Plaintiff began garnishment proceedings for collection of the judgment.

Defendant responded to the garnishment with a claim for exemption and request for hearing, claiming the account was exempt because the funds were "Alimony, support, separate maintenance, or child support necessary for support of defendant or dependent--31 O.S. § 1.1." Defendant also claimed an exemption because the funds were "Separate funds of spouse Vicki Baker." Based on these alleged exemptions, Defendant declared that all the funds were exempt. Defendant did not claim the personal wage exemption of undue hardship allowed by 31 O.S.Supp. 1984 § 1.1.

At the hearing on April 16, 1984, the parties agreed that the payments on the judgment were in default. The basic facts concerning the account in question are undisputed. The checking account was a joint account between Defendant and his current wife, Vicki Baker. Defendant made deposits and withdrawals from the account with no restrictions of any type. Defendant had the right to withdraw the entire amount if he so desired. Defendant had not adopted his wife's children, nor did he have any legal responsibility to support the children.

Concerning Defendant's claim for exemption, the claim was not made under the exemption as necessary funds to maintain the household. Neither the wife nor the children sought to intervene, and Defendant claimed the exemption on the wife's behalf and not his behalf.

The court determined that the remaining balance of the judgment granted Plaintiff in the divorce decree, approximately $9,000, was the proper sum sought in the garnishment proceedings. The court further determined that the funds had lost their separate character when commingled in a joint account. The trial court found that garnishment of the joint account was proper and denied the exemption. Defendant has appealed.

Defendant raises two issues on appeal. He argues that the court erred in determining that a creditor may reach all funds in a joint tenancy bank account including individual child support funds deposited by one tenant. He further complains that because the divorce decree specified that Plaintiff's judgment was to be paid in monthly installments of $185, the court erred in determining that the entire unpaid balance was due.

I

On appeal, Defendant asserts that a joint tenancy bank account can be reached by creditors of one of the tenants only to the extent of that tenant's equitable interest in the account. Although this question has never been reached by the Oklahoma Supreme Court, it has been answered by the courts of numerous other jurisdictions.

Traditional joint bank accounts have created problems in the courts because the relationships between the depositors and the bank do not fit into common law categories. The four unities of common law joint tenancy--time, title, interest and possession--are not easily applied to property which fluctuates sometimes daily. The common law presumption of a gift of the property from each joint tenant to the other is directly at odds with the joint bank account principle allowing each party to withdraw and use the entire amount. See Leaf v. McGowan, 13 Ill.App.2d 58, 141 N.E.2d 67 (1957).

In Oklahoma, a creation of a joint tenancy establishes a present estate in which both joint tenants are seized of the whole. Clovis v. Clovis, 460 P.2d 878, 881-82 (Okla.1969). Possession of one joint tenant is possession of all the joint tenants until the joint tenancy is destroyed. Alexander v. Alexander, 538 P.2d 200, 203 (Okla.1975). One joint tenant is presumptively entitled to the entire amount. Urban v. Jackson, 434 P.2d 889 (Okla.1967) (per curiam). The controlling question in determining the presence of a joint tenancy is the "intention of the parties making the deposit." Dyer v. Vann, 359 P.2d 1061, 1063 (Okla.1961) (per curiam). A joint tenancy may be created although the funds come from only one of the parties. E.g., Jones v. Novotny, 352 P.2d 905, 908 (Okla.1960).

The law in Oklahoma setting out the rights of a judgment debtor who holds a bank account as a joint tenant with another is not clear. Compare Flesher v. Flesher, 258 P.2d 899 (Okla.1953) (joint tenant is a trustee or agent), with Fortune v. City National Bank & Trust Co., 671 P.2d 69 (Okla.Ct.App.1983) (joint tenants each presumptively possess whole property at same time). The courts have struggled with traditional property, contract, and trust theories in cases involving property held by joint tenants. See generally, Sharp, Attacking Joint Tenancy Property in Oklahoma Based on the Debt of One Joint Tenant, 54 Okla.B.J. 3021 (1983).

Although joint interest is defined in 60 O.S.1981 § 74, as an interest owned in "equal shares," this traditional property definition is derived from the common law and does not always easily fit modern banking. The only definition found in the banking statutes is 6 O.S.1981 § 2024, relating to credit unions. Defendant argues that, based on 60 O.S.1981 § 74, the presumption is that joint tenants own equal shares in a joint account. Defendant would have "equal shares" synonymous with "fifty percent." However, the presumption in Oklahoma is that one joint tenant is presumptively entitled to the entire amount. Urban v. Jackson; Shackelton v. Sherrard, 385 P.2d 898 (Okla.1963).

While there is some authority to the contrary, most courts agree that a joint tenancy bank account is garnishable by the creditor for a debt incurred by only one of the joint depositors. See Annot., 11 A.L.R.3d 1465 (1967). In Tinsley v. Bauer, 125 Cal.App.2d 724, 271 P.2d 116 (1954), the court allowed a garnishment of the joint account by the creditor of one joint tenant. The Tinsley court stated that the judgment creditor should not suffer because of the fact that the assets which the depositors claimed as exempt from the creditor's claim had been so commingled that the debtor could not demonstrate exactly how much was exempt from levy. The Tinsley court, like many other jurisdictions, allowed garnishment of a joint bank account in proportion to ownership.

Many of the courts that allow garnishment of a joint bank account in proportion to ownership hold that there is a presumption that all of the joint bank account is owned by the debtor. Hayden v. Gardner, 238 Ark. 351, 381 S.W.2d 752 (1964). Other courts are bound by statute in determining the presumption of ownership. See, e.g., Musker v. Gil Haskins Auto Leasing, Inc., 18 Ariz.App. 104, 500 P.2d 635 (1972). In overcoming this presumption that all of the joint account is owned by the debtor, most courts place the burden on the depositors to prove that the actual ownership of the funds is otherwise. E.g., Yakima Adjustment Service, Inc. v. Durand, 28 Wash.App. 180, 622 P.2d 408 (1981). A few courts have held that a garnishment of a joint tenancy bank account severs the joint tenancy, creating a tenancy in common. Walnut Valley State Bank v. Stovall, 223 Kan. 459, 574 P.2d 1382 (1978).

A small minority of jurisdictions, most notably Minnesota, hold that the entire amount of the deposit in a joint bank account is subject to garnishment by a judgment creditor of one of the depositors. Park Enterprises, Inc. v. Trach, 233 Minn. 467, 47 N.W.2d 194 (1951). The Park Enterprises court found the creditor, in effect, was subrogated to the same unconditional rights of the joint tenant.

Plaintiff would have Oklahoma join this small minority. Indeed, Plaintiff contends that the rule in Oklahoma concerning creditors and joint property was established in Gilles v. Norman Plumbing Supply, 549 P.2d 1351 (Okla.Ct.App.1975). In Gilles, the husband owed a debt to his creditor. The creditor obtained a judgment...