Estate of Kuhn, Matter of

• Decision Date: 20 March 1991
• Docket Number: No. 17256,17256
• Citation: 470 N.W.2d 248
• Parties: In the Matter of the ESTATE of Frances T. KUHN, Deceased. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 248

470 N.W.2d 248

In the Matter of the ESTATE of Frances T. KUHN, Deceased.

No. 17256.

Supreme Court of South Dakota.

Considered on Briefs March 20, 1991.

Decided May 15, 1991.

Mark K. Kroontje of Seiler & Cain, Herreid, for appellee.

Daniel J. Todd of Bormann & Buckmeier, Mobridge (Daniel J. Todd and Laurie M. Bauer of Bormann & Buckmeier, on brief), for appellant.

SABERS, Justice.

Whether joint accounts passed to survivor upon death of original depositor or are part of decedent's estate.

Facts

Frances T. Kuhn (decedent) was born in Zeeland, North Dakota in 1910. She lived most of her life in McIntosh, South Dakota, where she and her husband owned a grocery store. When she died in 1989, she had been a widow for at least ten years. She was survived by several brothers and sisters, including Frank Ziegler (Frank), who lived in Zeeland, and Eva Jangula (Eva), who lived in Bismarck.

Between June 26, 1981 and August 9, 1988, decedent purchased eighteen certificates of deposit (C.D.'s) made payable to "Frances T. Kuhn or Frank Ziegler." These C.D.'s were purchased at various times from two different banks.

On December 19, 1988, decedent executed a will devising "all of [her] property" after expenses for last illness and funeral to Frank and Eva. The will expressly disinherited two other brothers and two other sisters. It made no reference to the C.D.'s payable to decedent or Frank. ¹

In February of 1989, decedent was hospitalized and later transferred to a nursing home. On March 2, 1989, decedent executed a power of attorney in favor of Frank. Frank then opened a checking account in the name of "Frances T. Kuhn or Frank J. Ziegler" as a convenience for paying decedent's bills.

On September 5, 1989, a final C.D. was purchased. Like the other eighteen C.D.'s decedent purchased over the years, this one was payable jointly to decedent or Frank. At the time of decedent's death on December 16, 1989, the total value of the nineteen C.D.'s was $67,148.13. In addition, the balance in the checking account which Frank established pursuant to his power of attorney was $8,734.36.

On March 16, 1990, Frank filed a petition for summary administration of decedent's estate. Eva objected to the petition because Frank failed to include the joint C.D.'s and the joint checking account among the assets of the estate. At a hearing on Eva's objections held May 29, 1990, Frank and Eva stipulated in open court that the balance in the joint checking account should be considered part of decedent's estate to be distributed equally between the two of them.

The circuit court granted Frank's petition for summary administration, finding that the nineteen C.D.'s were not part of decedent's estate but passed to Frank by right of survivorship. The court entered findings of fact and conclusions of law to this effect on June 13, 1990.

On appeal, Eva claims the C.D.'s were improperly excluded from the assets of the estate. She claims that:

(1) There was clear and convincing evidence that decedent did not intend a right of survivorship to attach to the C.D.'s held in joint tenancy but intended them to be part of the estate devised to both Frank and Eva.

(2) The circuit court misapplied SDCL 30-23-46.

(3) Frank breached his fiduciary duty to decedent by failing to disclose the legal effects of joint tenancy, and therefore he should not receive the benefit of the presumption that decedent intended the jointly held C.D.'s to pass to him by right of survivorship.

1. Intent

"[A]n account opened in joint names raises a rebuttable presumption that the creator of such an account intended ... rights of survivorship[ ] to attach to it." Wagner v. Wagner, 83 S.D. 565, 163 N.W.2d 339, 342 (1968) (quoting Estate of Pfeifer, 1 Wis.2d 609, 85 N.W.2d 370, 372 (1957)). The principle is the same whether the asset is a bank account or a C.D. Estate of Pfeifer, 85 N.W.2d at 372; SDCL 51A-10-1.

The presumption that an asset held in joint tenancy passes to the second party upon the death of the first can be rebutted only by a showing with clear and convincing ² evidence that the original depositor or purchaser did not intend rights of survivorship to attach to the joint asset, but merely intended the arrangement for her own convenience. Roth v. Pier, 309 N.W.2d 815 816 (S.D.1981); Kirsch v. First National Bank of Watertown, 298 N.W.2d 71, 72 (S.D.1980); Wagner v. Wagner, supra.

This rebuttable presumption that rights of survivorship attach to a joint account or C.D. holds true even where, as with eighteen of these nineteen C.D.'s, the words "right of survivorship" do not appear on the face of the instrument. SDCL 30-23-43(4) defines "joint account" as "any account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship [.]" (Emphasis added). SDCL 30-23-46 then attaches a presumptive right of survivorship to all such joint accounts by operation of law:

Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created.... A right of survivorship arising from the express terms of the account or under this section ... cannot be changed by will, unless the testator has clearly indicated the testator's intention that the terms of the account should be changed or modified to express the testator's true intention.

(Emphasis added). As this court stated in Karlen v. Karlen, 89 S.D. 523, 235 N.W.2d 269, 275 (1975), and repeated in Farmers State Bank of Winner v. Westrum, 341 N.W.2d 631, 633-634 (S.D.1983):

"[R]ights ought not to be jeopardized by the somewhat lax methods used by the bank in transacting its business and keeping its records. Strict formalities are not requisite in creating a joint bank account with right of survivorship."

(Quoting Equitable & Central Trust Co v. Zdziebko, 260 Mich. 366, 244 N.W. 505, 507 (1932)). The critical inquiry is what the original depositor intended.

The question of what the original depositor intended is a question of fact. Roth v. Pier, supra. As with all findings of fact, this court reviews the trial court's determination of the original depositor's intention under the "clearly erroneous" standard. Temple v. Temple, 365 N.W.2d 561, 565 (S.D.1985). "The question is not whether this Court would have made the same findings that the trial court did, but whether, on the entire evidence, we are left with a definite and firm conviction that a mistake has been committed." Kirsch, supra, at 73 (citing In re Estate of Hobelsberger, 85 S.D. 282, 181 N.W.2d 455, 459 (1970)).

The trial court found that Eva failed to prove by clear and convincing evidence that decedent did not intend the C.D.'s to pass to Frank by right of survivorship. This finding is supported by evidence in the record. Decedent discussed the concept of joint tenancy with her lawyer at the time of her husband's death, long before she purchased any of the nineteen C.D.'s in question. A short statement of the legal effects of joint tenancy was printed on the face of the first and largest C.D. decedent purchased. The banker who sold decedent this first C.D. also testified that, in accordance with his bank's standard procedure, the meaning of joint tenancy was explained orally to decedent at the time of purchase. An officer of the second bank where decedent purchased some of the other C.D.'s testified that she requested the same joint tenancy arrangement as at the first bank, and that "she knew what she was doing." All but one of the C.D.'s were purchased before decedent became physically incapacitated, most of them years before, when there was no apparent need to give Frank access to decedent's money for reasons of convenience.

There is some evidence in the record to the contrary which suggests that decedent may not have intended to exclude the C.D.'s from the property which she devised in her will to Frank and Eva. However, that is not the test. Frank does not have the burden of proving with clear and convincing evidence that decedent intended rights of survivorship to attach to the joint account she created. It is Eva who has the burden of proving with clear and convincing evidence that decedent did not intend rights of survivorship to attach to the joint account. The court was not clearly erroneous in finding that Eva failed to meet her burden, and we affirm.

2. SDCL 30-23-46

At the time of decedent's death, SDCL 30-23-46 stated in part: "A right of survivorship ... cannot be changed by will, unless the testator has clearly indicated the testator's intention that the terms of the account should be changed or modified to express the testator's true intention." ³ (Emphasis added). The trial court concluded that Eva "failed to establish by clear and convincing evidence that [decedent] did not intend at the time of the creation of her accounts to distribute the sums remaining on deposit at her death to anyone other than [Frank][.]" (Emphasis added).

Eva argues that under SDCL 30-23-46 she overcame the presumption of survivorship by a clear and convincing showing that decedent intended her will to change the express terms by which the C.D.'s were purchased. Eva claims that the court effectively concluded as a matter of law that only evidence of decedent's intent at the time the C.D.'s were purchased was relevant to the showing, and committed error in doing so.

However, it has been the law in South Dakota since 1877 that "[i]n case of uncertainty arising upon the face of a will, as to the application of any of its provisions, the testator's intention is to be ascertained from the words of the will, taking into view the circumstances under which it was made, exclusive of his oral declarations." SDCL 29-5-3. "The general principle [of SDCL 29-5-3] ... precludes a court from ascribing to a testator an intention...