Johnston v. Sunwest Bank of Grant County
| Decision Date | 26 October 1993 |
| Docket Number | 21115,Nos. 20980,s. 20980 |
| Citation | 116 N.M. 422,863 P.2d 1043,1993 NMSC 60 |
| Parties | Patricia JOHNSTON, Plaintiff-Appellant, v. SUNWEST BANK OF GRANT COUNTY, Defendant-Third-Party Plaintiff-Appellee. Consolidated with: Patricia JOHNSTON, Plaintiff-Third-Party Defendant-Appellee, v. Grover WALKER, Third-Party and Cross Defendant-Appellant. |
| Court | New Mexico Supreme Court |
These consolidated appeals arise from litigation concerning the ownership of a joint bank account and the possible liability of a bank when a subsequent party is added to the account without notice to all parties listed in the original account. In the first case we determine that the trial court erred when it concluded that Patricia Johnston had an ownership interest in the joint account at the time Grover Walker closed the account and purchased a certificate of deposit in his and Anna Walker's name. In the second case we determine that Sunwest Bank of Grant County's (Sunwest) motion for summary judgment was improperly granted because genuine issues of material fact as to Sunwest's possible negligence existed. We reverse on both appeals.
Grover and Anna lived together since 1951, pooling their property and holding all of it jointly throughout their relationship. Anna was the mother of Johnston. During the time Anna and Grover lived together they put all of their paychecks into a joint checking account after which they would transfer what funds they could to two other joint accounts. The trial court found no evidence as to the respective amounts deposited into any accounts by Grover or Anna. The only records that showed deposits into the other two accounts were bank statements.
On December 4, 1980, Sunwest Bank savings account No. 13218 was opened with Anna and Johnston's name on the account. Sometime after that date, Grover's name was added to the account. Johnston made no contributions to account No. 13218.
Anna suffered a disabling stroke in May 1990, and died on June 28, 1990. On June 19, 1990, Grover took the passbook for account No. 13218 to Sunwest and closed the account. At that time there was approximately $30,523.37 in the account. With the proceeds of the account, Grover purchased a certificate of deposit in both his and Anna's name as joint tenants.
Johnston sued Sunwest under tort and contract theories, seeking the proceeds of the account. Sunwest brought a third-party complaint against Johnston and third-party defendant Grover for interpleader alleging that two parties had made a claim on a bank account. Both Grover and Johnston answered the third-party complaint, each alleging that they were entitled to the entire amount. An interpleader order was entered that did not absolve Sunwest of liability at that time. Also, motions for summary judgment were filed by all three parties. The trial court granted Sunwest's motion for summary judgment stating that Johnston had no admissible evidence to support her claim against Sunwest and, therefore, there were no genuine issues of material fact. The other motions for summary judgment were denied, although in its order, the trial court found that account No. 13218 was a joint account with rights of survivorship, and that Grover and Johnston should each receive one-half of the proceeds less any money actually contributed by Grover.
A bench trial was held October 27, 1992, to determine Grover's contribution to the account. The trial court concluded that the monies deposited by Anna and Grover into their jointly owned account were owned equally by them and that Johnston was a surviving joint tenant of the account. The court stated that the legislature, in enacting the statute sections on joint accounts, NMSA 1978, Secs. 45-6-101 to -105 (Repl.Pamp.1989), NMSA 1978, Secs. 45-6-201 to -227 (Repl.Pamp.1993), did not intend that a holder of an interest in a joint account be able to defeat the ownership rights of the other owner, simply by a unilateral act of one of them immediately prior to the death of another. The trial court also concluded that the monies held in the certificate of deposit were still owned proportionately to the rights of Anna, Johnston, and Grover prior to the closing of the account. Grover, being unable to establish how much money he and Anna respectfully contributed to the account was relegated to the status of joint owner with right of survivorship to the fund. The court equally divided the proceeds between Johnston and Grover.
Grover does not object to the trial court's findings of fact. Unchallenged findings of the trial court are binding on appeal. Cordova v. Broadbent, 107 N.M. 215, 216, 755 P.2d 59, 60 (1988). Grover contends that the trial court erred by concluding that Johnston had an ownership interest in joint account No. 13218 at the time he closed it, and that therefore, she was entitled to one-half of the account's proceeds. We agree.
Under Section 45-6-101(D), the definition of a joint account is as follows: "an account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship." Section 45-6-102(A) provides that Sections 45-6-103 through 45-6-105, "[A]re 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 relevant account terms here were set out by the signature card. The signature card stated that the signatories were joint tenants and any balance may be withdrawn upon the order of any party or survivor. Thus, Grover was within the terms of the contract when he withdrew the entire amount. The funds were payable to Grover on request. See Barham v. Jones, 98 N.M. 195, 197, 647 P.2d 397, 399 (1982).
Although Grover had the right to withdraw the entire amount in the account, we must still determine the individual parties' ownership interests in the account. Thus, while a party may withdraw any or all of the funds in a joint account, "during the lifetimes of the parties and as between themselves, the realities of ownership, the real intention of the parties and the purpose and nature of the account may be shown to determine the interest each has in the account, thus subjecting the one who has deposited none of the funds to accountability and liability." Carroll v. Hahn, 498 S.W.2d 602, 607 (Mo.Ct.App.1973) (footnote omitted).
Section 45-6-103(A) provides: "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." Section 45-6-103(A) is identical to Section 6-103(a) of the Uniform Probate Code. The drafting committee's Comment to Section 6-103 states:
This section reflects the assumption that a person who deposits funds in a multiple-party account normally does not intend to make a 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.
... 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.
Unif.Probate Code Sec. 6-103 cmt., 8 U.L.A. 524-525 (1983) (replaced in 1989 by Section 6-211, 8 U.L.A. 311-12 (Supp.1993)). Thus, Section 45-6-103, sets out the ownership rights during the "lifetime of all parties." In contrast, Section 45-6-104 sets out the ownership rights of the survivors to the remaining sums "at the death of a party to a joint account."
The trial court concluded that the legislature did not intend to allow a holder of an interest in a joint account to defeat the ownership rights of the other joint owner simply by a unilateral act. We do not disagree with this concept, where we differ is with its application. Here, Johnston had no ownership interest at the time of the transfer of funds by Grover. At most she had a mere expectation of a right of survivorship.
The accepted findings were that Anna and Grover put all of their paychecks and retirement income into a joint checking account after which they transferred what funds they could into two other accounts; that there were no records...
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