Browning & Herdrich Oil Co., Inc. v. Hall

• Decision Date: 12 March 1986
• Docket Number: No. 1-785A173,1-785A173
• Citation: 489 N.E.2d 988
• Parties: BROWNING & HERDRICH OIL COMPANY, INC., Plaintiff-Appellant, v. Gerald HALL, Judgment Defendant. DECATUR COUNTY BANK, Garnishee Defendant, v. F. Opal HALL, Appellee.
• Court: Indiana Appellate Court

Page 988

489 N.E.2d 988

BROWNING & HERDRICH OIL COMPANY, INC., Plaintiff-Appellant, v. Gerald HALL, Judgment Defendant.

DECATUR COUNTY BANK, Garnishee Defendant, v. F. Opal HALL, Appellee.

No. 1-785A173.

Court of Appeals of Indiana,

First District.

March 12, 1986.

Ronald L. Wilson, Badell & Wilson, P.C., Rushville, for Browning & Herdrich Oil Co., Inc.

William Orville Smith, Greensburg, for F. Opal Hall.

NEAL, Judge.

STATEMENT OF THE CASE

Plaintiff-appellant, Browning & Herdrich Oil Company, Inc. (Browning), appeals a judgment of the Decatur Circuit Court denying the garnishment of certain certificates of deposit (CDs) in the name of the judgment-defendant Gerald Hall (Gerald), and a third party, Opal Hall (Opal).

We affirm.

STATEMENT OF THE FACTS

The undisputed facts are as follows. Browning, in his suit against Gerald on an open account for goods and services, obtained a default judgment of principal and interest in the amount of $17,406.83. Omitting numerous procedural steps, the record shows that Browning, in proceedings supplemental, discovered certain CDs issued by the Decatur County Bank to "Opal Hall and/or Gerald Hall," in the amount of $19,300.00, and a savings account in the amount of $2,892.00, likewise joint between Opal and Gerald, upon which it attempted to levy.

Opal, Gerald's mother, is a 72 year old widow. She is the owner of CDs in the amount of $43,600.00 issued by the Decatur County Bank, $24,300.00 of which was issued in the names of "Opal Hall and/or Grethel Manlief," her daughter, and $19,300.00 of which was issued in the names of "Opal Hall and/or Gerald Hall." The funds for the CDs and the savings account were contributed solely by Opal, and neither Gerald nor Grethel Manlief (Grethel) contributed anything to the accounts. The source of the contributions was from a lifetime of earned income; savings; the sale of property once owned by her; the settlement of her husband's personal injury claim; the sale of stock; a profit sharing plan from where she worked; and miscellaneous rent, interest and other income. Only her social security number was registered on the CDs and the savings account, and she alone received the interest, which was reported by her on her annual income tax returns. She alone kept the CDs and passbook in her lockbox, kept the only key, entered the box alone, and renewed the CDs when they came due. She once loaned Gerald $5,000.00, taking it from a CD which she held jointly with him, thus accounting for the disparity in amounts between the children. Neither Gerald nor Grethel had ever exercised any physical control over the CDs, or the lockbox. Though Gerald knew of the CDs, he had no real knowledge even of their amounts.

Opal's intention, upon advice by the Bank itself, in placing the CDs and savings account in joint titles was testamentary in nature in order to save administration expenses and attorney fees upon her death. At no time did she ever intend to make an inter vivos gift of any part of the CDs to either Gerald or Grethel.

The trial court denied Browning's garnishment of the CDs upon findings of fact which essentially summarized the foregoing evidence. In conclusions of law, the court held that the matter was governed by IND. CODE 32-4-1.5-3(a), that Opal had never intended to make an inter vivos gift, and that Gerald had no present interest in the CDs which Browning attempted to garnish.

ISSUE

The sole issue is whether a judgment creditor has a right to garnish the interest of a joint account owner who is not a judgment debtor.

DISCUSSION AND DECISION

Browning concedes, and Opal agrees, that a judgment attaches only to the interest that the judgment debtor has, actually or effectively, in the property. The lien cannot attach to any greater interest than either the debtor himself has, or, in the exercise of his rights, that he could have voluntarily transferred. See 17 I.L.E. Judgments Sec. 465 (1959). See also IND. CODE 34-1-11-20.

There is further no dispute that a negative judgment will be reversed only where the evidence is without conflict and leads to but one conclusion which is contrary to the decision reached by the trial court. Brand v. Monumental Life Insurance Co. (1981), 275 Ind. 308, 417 N.E.2d 297. When reviewing a case in which the trial court has made findings of fact and conclusions of law, an appellate court will not set aside the trial court's judgment unless it is clearly erroneous. Ind. Rules of Procedure, Trial Rule 52; Lawrence v. Ball State University Board of Trustees (1980), Ind.App., 400 N.E.2d 179. We do not reweigh the evidence or determine the credibility of the witnesses, but will consider only that evidence and the reasonable inferences therefrom which support the judgment. Sigsbee v. Swathwood (1981), Ind.App., 419 N.E.2d 789; See also T.R. 52.

Reduced to its essence, the real question is whether Gerald has sufficient present interest in the CDs to make them subject to garnishment for a judgment against him alone. We are of the opinion that he does not.

Fundamental to the resolution of the issue at hand is IND. CODE 32-4-1.5-3(a), enacted in 1976, which reads as follows:

"A joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on deposit, unless there is clear and convincing evidence of a different intent."

An "account" includes savings accounts and CDs. IND. CODE 32-4-1.5-1(1). Under IND. CODE 32-4-1.5-3, in the official comment to the Uniform Probate Code from which this section was taken, the Indiana Probate Code Study Commission stated:

"This section reflects the assumption that a person who deposits funds in a multiple-party account normally does not intend to make an irrevocable gift of all or any part of the funds represented by the deposit. Rather, he usually intends no present change of beneficial ownership. The assumption may be disproved by proof that a gift was intended.

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The theory of these sections is that the basic relationship of the parties is that of individual ownership of values attributable to their respective deposits and withdrawals; the right of survivorship which attaches unless negated by the form of the account really is a right to the values theretofore owned by another which the survivor receives for the first time at the death of the owner. That is to say, the account operates as a valid disposition at death rather than as a present joint tenancy."

The Commission concluded that the underlying assumption is that most persons who use joint accounts want the survivors to have all balances remaining at death. The Commission further commented that under IND. CODE 32-4-1.5 a joint bank account does not qualify as a common law gift because the donor does not surrender dominion.

Browning attempts to escape the rather obvious consequences of IND. CODE 32-4-1.5-3(a) by raising a number of arguments. First, it argues that since Gerald could have cashed the CDs upon his own signature had he had possession of them, he thus was an owner of the funds, and therefore, the funds are subject to garnishment. Browning points to other sections of IND. CODE 32-4-1.5 to bolster his argument.

IND. CODE 32-4-1.5-8 provides that:

"[f]inancial institutions may enter into multi-party accounts to the same extent as that they may enter into single party accounts. Any multiple-party account may be paid on request to any one (1) or more of the parties. A financial institution shall not be required to inquire as to the source of the funds received for deposit to any multiple-party account, or to inquire as to the proposed application of any sum withdrawn from an account, for the purpose of establishing net contributions."

IND. CODE 32-4-1.5-9 provides in part that "[a]ny sums in a joint account may be paid, on request, to any party without regard to whether the other party is incapacitated or deceased at the time payment is demanded; ...."

IND. CODE 32-4-1.5-12 provides in part that:

"[p]ayment made pursuant to Section 8 [32-4-1.5-8], 9 [32-4-1.5-9], 10 [32-4-1.5-10], or 11 [32-4-1.5-11] of this chapter discharges the financial institution from all claims for amounts so paid whether or not the payment is consistent with the beneficial ownership of the account between the parties...."

Nevertheless, such provisions are merely for the protection of the bank and do not determine ownership. IND. CODE 32-4-1.5-2 provides as follows:

"The provisions of sections 3 [32-4-1.5-3], 4 [32-4-1.5-4], and 5 [32-4-1.5-5] of this chapter concerning beneficial ownership as between parties, or as between parties and P.O.D. payees or beneficiaries of multi-party accounts, are relevant only to controversies between these persons and their creditors and other successors, and have no bearing on the power of withdrawal of these persons as determined by the terms of account contracts. The provisions of sections 8 [32-4-1.5-8] through 13 [32-4-1.5-13] of this chapter govern the liability of financial institutions who make payments pursuant thereto, and their setoff rights."

Cases have construed IND. CODE 32-4-1.5-3. Kuehl v. Terre Haute First National Bank (1982), Ind.App., 436 N.E.2d 1160, involved a fact situation where the guardian took possession of a joint savings account, the funds of which were provided solely by his ward. We held that under the statute the entire amount belonged to the ward and the guardian had an affirmative duty to take control. This was so even though it defeated the right of survivorship of the joint tenant. That case also referred to IND. CODE 32-4-1.5-8, 9 and 10 as statutes defining the liability of the bank.

Rogers v. Rogers (1982), Ind.App., 437 N.E.2d 92, concerned a dispute over a joint bank account created by a father, the sole contributor of the funds, with his son. Upon the father's remarriage, the son withdrew the entire amount. In ruling for the father in his suit to reclaim the funds, we held...