Greenwood v. Beeson

• Decision Date: 16 May 1969
• Citation: 253 Or. 318,88 Or.Adv.Sh. 415,454 P.2d 633
• Parties: Bert GREENWOOD, doing business as North Lincoln Funeral Home, Sunset Credit Service, Assignee, Appellant, v. Corrine BEESON, also known as Corrine M. Davis, Respondent, and The First National Bank of Oregon, Gresham Branch, Garnishee-Respondent.
• Court: Oregon Supreme Court

Page 633

454 P.2d 633

253 Or. 318

Bert GREENWOOD, doing business as North Lincoln Funeral Home, Sunset Credit Service, Assignee, Appellant, v. Corrine BEESON, also known as Corrine M. Davis, Respondent and The First National Bank of Oregon, Gresham Branch Garnishee-Respondent.

Supreme Court of Oregon, Department 1.

Argued and Submitted Nov. 14, 1968.

Decided May 16, 1969.

R. L. McGrew, Lincoln City, argued the cause and filed a brief for appellant.

William D. Scalf, Portland, argued the cause for respondents. With him on the brief were Robertson & Wills, Portland.

Before PERRY, C.J., and McALLISTER, O'CONNELL, DENECKE and MENGLER, ^* JJ.

O'CONNELL, Justice.

This is an action in which the assignee of a creditor seeks through garnishment proceedings to attach a joint bank account held in the name of Corrine Davis (formerly Corrine Beeson) and her husband Roy D. Davis.

Plaintiff obtained a default judgment against defendant Corrine Davis. Plaintiff sought to reach the joint account through a garnishment proceeding in which the First National Bank of Oregon was the garnishee. Plaintiff obtained an order requiring defendant garnishee to show cause why it should not be required to pay plaintiff's claim against defendant Corrine Davis out of the joint account.

In the garnishment proceedings Roy Davis testified that he had contributed all of the money making up the joint account and defendant Corrine Davis testified that she had not contributed any money to the account. The trial court then dismissed the order to show cause on the ground that the joint bank account was not subject to execution for the debt of defendant Corrine Davis.

The deposit agreement signed by Roy D. Davis and Corrine M. Davis read as follows:

'The undersigned agree between themselves and with THE FIRST NATIONAL BANK OF OREGON, Portland:

'(1) That this account has been opened and is to be carried by said bank as a joint account which Shall be owned jointly by the undersigned with right of survivorship * * *. (Emphasis added.)

'(2) * * * (A)ll deposits entered in or credited to this account shall be paid by the bank to or upon the order of either of the undersigned or the survivor, without reference to the original ownership of the moneys deposited, but the survivor agrees to notify the bank immediately upon the death of either of the undersigned before attempting to make any further withdrawals and to comply with all laws, rules and regulations relating thereto.

'* * *

'(4) That without the consent of the other, Either of the undersigned may appropriate funds deposited to this account by withdrawing the same or by transferring such funds, in whole or in part, to his individual account or in payment of his individual obligations or otherwise, And that All interest of the other in such funds shall thereby be divested. (Emphasis added.)

'(1) Roy D. Davis

'(2) Corrine M. Davis.'

The cases involving the right of a creditor to reach the interest of his debtor in a joint bank account are in conflict. ¹ The confusion in this area of the law as well as in other aspects of the law relating to joint bank accounts has been appropriately described as 'the joint bank account muddle.' ²

It is generally recognized that this confusion results from the attempt to apply traditional property concepts, particularly the theory of joint tenancy, where they do not fit. ³ It has been urged, therefore, that the courts refashion the law relating to joint bank accounts to provide rules which are more consistent with the intention of those who use the joint bank account device. ⁴

We are convinced that these criticisms and suggestions are sound and that we should cut a new path in this field of the law.

The difficult problem is to describe the relationships arising out of the creation of a joint bank account which most nearly comports with the commonly accepted functions of the joint bank account and the usual intention of the parties who employ it. Fortunately an excellent blue print for the solution of this problem has been made available to us in the article entitled 'The Joint and Survivor Account in Michigan--Progress Through Confusion,' by Richard V. Wellman in 63 Mich.L.Rev. 629 (1965). It is Professor Wellman's thesis that the joint and several account typically is not intended to be for the benefit of the donee signatory of the deposit agreement until the donor depositor's death. The typical donor depositor intends to make the donee a trustee of the donor's power to withdraw from the account. 'The trust would be for the benefit of the donor during his lifetime and, subject to the possibility of revocation or consumption by the donor, for the benefit of the donee upon the donor's death. * * * The donee, even if he exercised his right of withdrawal during the donor's lifetime, could not affect the donor's right in equity to compel the application of the proceeds of the trustee's title to the donor's benefit. If the donor died prior to revocation of the trust, his interest would cease and the donee's equitable right to the balance in the account would become present beneficial ownership.' Id. at 661--662.

We are of the opinion that the foregoing analysis is sound and therefore we adopt it. Since we take this new approach it is not necessary to reconcile our present view with the theory applied in the previous Oregon cases involving joint bank accounts. We note in passing, however, that the trust theory we have now adopted has been previously recognized. In Holbrook v. Hendrick's Estate, 175 Or. 159, 152 P.2d 573 (1944) we recognized the trust character of the relationship between the donor depositor and the co-signatory. In that case the money was deposited in a joint account under circumstances showing an intention that no beneficial interest was to pass to the other person named in the joint account. It was held that moneys drawn from the account by the donee for her own benefit violated the trust.

It will be noted that the deposit...