Estate of Lahren, Matter of

• Decision Date: 13 December 1994
• Docket Number: No. 94-209,94-209
• Citation: 268 Mont. 284,886 P.2d 412
• Parties: In the Matter of the ESTATE OF Sylvester L. LAHREN, Deceased.
• Court: Montana Supreme Court

Page 412

886 P.2d 412

268 Mont. 284

In the Matter of the ESTATE OF Sylvester L. LAHREN, Deceased.

No. 94-209.

Supreme Court of Montana.

Submitted on Briefs Sept. 8, 1994.

Decided Dec. 13, 1994.

Joseph B. Gary and Calvin L. Braaksma, Landoe, Brown, Planalp & Braaksma, Bozeman, for appellant.

Dan L. Spoon, Reep, Spoon & Gordon, Kevin S. Jones, Christian & Samson, Missoula, for respondents.

NELSON, Justice.

This is an appeal from a Sixth Judicial District Court, Park County, order determining that the certificates of deposit at issue were held in joint tenancy with right of survivorship by Sylvester L. Lahren's (S.L. Lahren's) granddaughter, Signe Lahren (Signe). We affirm in part and reverse in part.

ISSUES

There are two issues on appeal:

I. Did the District Court err in determining that the bank certificates of deposit, which designate one depositor and one "P.O.D." beneficiary, are joint tenancy instruments?

II. Did the District Court err in determining that the P.O.D. designations on the bank certificates of deposit act to transfer the certificates outside of the probate estate at the time of the depositor's death as a non-testamentary transfer?

FACTUAL AND PROCEDURAL BACKGROUND

S.L. Lahren died testate on June 25, 1992. He bequeathed the residue of his estate, less items of personal property which he had specifically devised, to three of his four sons, namely Larry, Daniel and S.L. Lahren Jr. However, the bulk of S.L. Lahren's estate consisted of four bank certificates of deposit (CDs) at American Bank, formerly known as First Security Bank.

The four CDs include: Certificate Number 32989, issued on January 15, 1985, Certificate Number 33220, issued on June 15, 1989, Certificate Number 33493, issued on March 9, 1990, and Certificate Number 34197, issued on October 8, 1991. On three of the four CDs, the depositor was listed as S.L. Lahren P.O.D. Signe Lahren. The fourth CD named as depositor, S.L. or Signe Lahren. Signe is not only S.L. Lahren's granddaughter, but also the personal representative of S.L. Lahren's estate.

As stated in her memorandum in support of her motion for an order determining that the CDs were joint tenancy property, Signe originally retained legal counsel from Livingston as recommended by one of her uncles. Counsel informed her that he believed that the CDs were estate property. Signe sought a second opinion on the status of the CDs and came to believe through independent review and evaluation that the CDs were actually property held in joint tenancy with right of survivorship.

On June 21, 1993, with her new counsel, Signe filed her motion for an order determining whether the CDs were joint tenancy property. On June 23, 1993, the District Court filed an order requesting additional briefs on the respective positions of the parties regarding the status of the CDs at issue. Appropriate briefs were filed and on February 22, 1994, the District Court determined that the CDs were joint tenancy property. The order was certified as final and appealable on the joint tenancy question. This appeal followed.

ISSUE I--JOINT TENANCY

Appellants argue that the District Court erred in determining that the three CDs at issue were joint property with right of survivorship. (The fourth CD which named the depositor as, S.L. Lahren or Signe Lahren, is not at issue on this appeal.) They contend that Signe did not have a present interest in the CDs and therefore, she had no joint tenancy or joint interest in the CDs.

In a fairly recent opinion, Matter of Estate of Shaw (1993), 259 Mont. 117, 855 P.2d 105, we provided some guiding principles for determining whether property is held in joint tenancy. In Shaw, we held that the creation of a joint interest or joint tenancy in property is by Montana statute. Shaw, 855 P.2d at 111. "Sections 70-1-307 and 70-1-314, MCA, mandate that if parties want to create a joint tenancy (same as joint interest) in property, they must make an express declaration that they intend to create a joint tenancy or joint interest." Shaw, 855 P.2d at 111. (Emphasis added.) Absent an express declaration of intent that the ownership interest be held in joint tenancy or joint interest, then a tenancy in common or interest in common is created. Shaw, 855 P.2d at 111.

Section 70-1-307, MCA, defines joint interest as:

A joint interest is one owned by several persons in equal shares by a title created by a single will or transfer, when expressly declared in the will or transfer to be a joint tenancy or when granted or devised to executors or trustees as joint tenants.

Section 70-1-314, MCA, explains how an interest in common is created:

Every interest created in favor of several persons in their own right, including husband and wife, is an interest in common unless acquired by them in partnership for partnership purposes or unless declared in its creation to be a joint interest, as provided in 70-1-307.

We are left to determine whether S.L. Lahren made an express declaration that the property was to be held in joint tenancy or joint interest, thus creating a joint tenancy or joint interest in the property. The certificates state on the front in printed form:

'You' means the depositor(s) named above.... If more than one of you are named above, you will own this certificate as joint tenants with right of survivorship, (and not as tenants in common.) (You may change this ownership by written instructions.)

We will treat any one of you as owner for purposes of endorsement payment of principal and interest, presentation (demanding payment of amounts due), transfer and any notice to or from you. Each of you appoints the other as your agent, for the purposes described above. We will use the address on our records for mailing notices to you. You cannot transfer or assign this certificate or any rights under it without our written consent.

Signe argues that this is the express declaration required under Shaw to create a joint tenancy or joint interest. However, also included on the face of the CDs is the written designation under depositors which states "S.L. Lahren P.O.D. Signe Lahren." The P.O.D. designation is not the same as a designation that the property is held in joint tenancy or joint interest. The dissimilarity in the two designations makes the document ambiguous. In Shaw, we stated unequivocally that in the absence of an express and unambiguous declaration, no joint tenancy or joint interest is created. Therefore, in the instant case, no joint tenancy or joint interest was created because there was no express and unambiguous declaration creating a joint interest on the documents.

Moreover, "the essential characteristic of a joint tenancy is the right of survivorship. The right of survivorship--the indispensable ingredient and characteristic of the estate, and not a mere expectancy or possibility, as for example, is the inchoate right of dower--accrues as a vested right when and as soon as the joint tenancy is created...." Casagranda v. Donahue (1978), 178 Mont. 479, 483, 585 P.2d 1286, 1288. (Citation omitted.) A joint interest or joint tenancy, then, assumes a present interest in the property.

A P.O.D. designation provides that the beneficiary receives an interest in the CD only at the death of the depositor. See Official Comments to §§ 72-6-211 and 213, MCA, Annotations. The P.O.D. certificate of deposit is akin to an insurance policy--the proceeds cannot be claimed by the beneficiary until death. At any time before the depositor's death, the depositor can change the beneficiary or withdraw the account and use the funds. However, the P.O.D. beneficiary has no such right. See Official Comments to §§ 72-6-211 and 213, MCA, Annotations. Therefore, a P.O.D. designation does not entitle the beneficiary to a present interest in the CDs and accordingly, the accounts cannot be held in joint tenancy or as a joint interest.

Finally, the face of the documents contain a pre-printed statement which provides that the CDs are owned in joint tenancy but the written designation of "S.L. Lahren P.O.D. Signe Lahren" indicates a different status of ownership. Sections 1-4-105 and 28-3-205, MCA, state that when an instrument contains partly written words and partly language in pre-printed form, the written words control the pre-printed form. In the instant case, the written words which designate a P.O.D. beneficiary would control over the pre-printed form purporting to create a joint tenancy or joint interest in the CDs.

We hold that, because there was no express and unambiguous declaration that the instrument be held in joint tenancy or joint interest, and because Signe Lahren held no present interest in the subject CDs while S.L. Lahren was alive, no joint tenancy or joint interest was created in the CDs. Signe Lahren is not entitled to the proceeds of the CDs at issue under a theory of joint interest or joint tenancy. Accordingly, we reverse the District Court on this issue.

ISSUE II--P.O.D. DESIGNATION

Appellants also argue that the P.O.D. designation on the three CDs was invalid. They assert that the statutes which authorize P.O.D. designations, §§ 72-6-201 through 211, MCA, were not effective until October 1, 1993, long after the CDs were purchased, S.L. Lahren died and the estate was probated. They further contend that the statute was not retroactive and therefore, the P.O.D. designation is an invalid attempt at a non-testamentary transfer.

Signe counters that the non-testamentary transfer of the CDs by the P.O.D. designation was valid under § 72-1-110, MCA. She states that at the time the CDs were issued and S.L. Lahren died, and the estate was probated, § 72-1-110, MCA, controlled the disposition of the CD proceeds because the CDs were...