Kleinberg v. Heller

• Court: New York Court of Appeals Court of Appeals
• Writing for the Court: BREITEL; FUCHSBERG; FUCHSBERG
• Citation: Kleinberg v. Heller, 38 N.Y.2d 836, 382 N.Y.S.2d 49, 345 N.E.2d 592 (N.Y. 1976)
• Decision Date: 08 January 1976
• Parties: , 345 N.E.2d 592 In the Matter of Philip N. KLEINBERG, as Executor of Jessie Lang, Deceased, Appellant, v. Harriet HELLER, Respondent.

Page 49

382 N.Y.S.2d 49

38 N.Y.2d 836, 345 N.E.2d 592

In the Matter of Philip N. KLEINBERG, as Executor of Jessie Lang, Deceased, Appellant, v. Harriet HELLER, Respondent.

Court of Appeals of New York.

Jan. 8, 1976.

Sidney Schutz and Julius Weiss, New York City, for appellant.

Allen H. Weiss, New York City, for respondent.

Order reversed, with costs, on the opinion by Surrogate Bertram R. Gelfand, and matter remitted to the Appellate Division, First Department, 45 A.D.2d 514, 360 N.Y.S.2d 422 for review of the facts (CPLR 5613).

Opinion on remand, App.Div., 385 N.Y.S.2d 566.

BREITEL, C.J., and JASEN, GABRIELLI, JONES, WACHTLER and COOKE, JJ., concur.

FUCHSBERG, J., concurs in the following opinion.

FUCHSBERG, Judge (concurring).

Literally tens of thousands of our citizens are parties to joint savings accounts. ¹ Yet the law relating to it has been in a state of morass, many of the cases which arise being treated very much on an Ad hoc basis. Therefore, while I concur in the result here, I believe it well that the legal guidelines that have led me to that conclusion be spelled out.

The Surrogate before whom this very case was tried suggested the following summary for remarks on this subject which he delivered months after his decision here: 'Perhaps in no other area of the law governing distribution of decedent's property has so much confusion arisen as in respect of the rules to apply to a joint bank account when one depositor has withdrawn funds without the consent of the other.' (Gelfand, Litigation in the Surrogate's Court, N.Y.L.J., May 10, 1974, p. 1, col. 3, quoting Matter of Kramer, 54 Misc.2d 459, 461, 282 N.Y.S.2d 911 (Di Falco, S.)). Even more pointedly, a very recent opinion of the Appellate Division, First Department, the court from whose order the present appeal is taken, said, with respect to joint accounts, 'this area of the law requires De novo examination by the Court of Appeals or else legislative consideration' (Moyer v. Briggs, 47 A.D.2d 64, 67, 364 N.Y.S.2d 532).

Before setting out my analysis, I believe it will be useful to state the pertinent facts. Decedent Jessie Lang died on March 31, 1972 at the age of 91. From October, 1963, when her daughter passed away, until August 20, 1970, when she entered a nursing home, Mrs. Lang occupied an apartment alone. During that period, her niece, respondent Harriet Heller, resided in another apartment in the same building. In 1969, decedent opened a savings account at the Bankers Trust Company in the names of the niece and herself as joint tenants with right of survivorship. All the funds ever deposited in the account were decedent's. She lived at the nursing home until the date of her death.

On August 31, 1970, 11 days after the aunt had moved to the home, the niece withdrew $1,094.90 from the account. In March, 1971, the account was closed when the niece withdrew its entire balance, $5,469.89. At the hearing before the Surrogate she testified that the $1,094.90 had been withdrawn by bank check and paid to the home for the benefit of her aunt, a claim not borne out by the home's records. She conceded that the $5,469.89 was transferred by her to an account in the name of her husband and herself. The closing withdrawal of the account was discovered only about a week before the aunt died, when an accountant preparing her tax return had occasion to check at her bank for the amount of interest the account had earned. The aunt's estate demanded that the niece turn over to it the amount she withdrew in excess of half of the account. The Surogate decreed that she was required to do so. The Appellate Division, by a divided court, held that she is not.

The phrase 'joint tenancy', when applied to joint bank accounts, has different meanings in different jurisdictions, depending in part on Whether its creation and consequences are regulated by common-law principles alone or are subject to particular statutes as well. Such accounts were intended, among other things, to make it easier to effect the transfer of property without the strictures attached to testamentary dispositions. It was intended also to limit the need to comply with technical common law and statutory requisites for gifts, trusts, joint tenancies or contracts (see Inda v. Inda, 288 N.Y. 315, 43 N.E.2d 59). However, that quest for simplicity and certainty turned out to be elusive. (See generally, Kepner, The Joint Survivorship Bank Account--A Concept Without a Name, 41 Cal.L.Rev. 596; Kepner, Five More Years of the Joint Bank Account Muddle, 26 U. of Chi.L.Rev. 376; and see Matter of Bricker (Krimer) v. Krimer, 13 N.Y.2d 22, 241 N.Y.S.2d 413, 191 N.E.2d 795; Walsh v. Keenan, 293 N.Y. 573, 59 N.E.2d 409; Ushinsky v. Landis, 23 Misc.2d 87, 198 N.Y.S.2d 471; Matter of Libow, 46 Misc.2d 919, 261 N.Y.S.2d 115 (Bennett, S.); but see Matter of Filfiley, 63 Misc.2d 824, 313 N.Y.S.2d 793, affd. 43 A.D.2d 981, 353 N.Y.S.2d 400.)

In New York which was the first State to pass a law authorizing payment to the survivor of funds deposited in a joint account (L.1907, ch. 247), the controlling legislation (Banking Law, § 675, formerly § 239, subd. 3) ended up providing only some, not all, of the characteristics of such an account. One of these, created by the legislation itself, is that the opening of an account in the names of two people in facial form 'to be paid or delivered to either, or the survivor of them' evinces an intention to create a 'joint tenancy' (Banking Law, § 675, subd. (b)), thereby placing the burden of refutation on anyone who challenges it. (Matter of Reardon, 25 A.D.2d 370, 269 N.Y.S.2d 635.) That does not prevent a joint account from being attacked for fraud, undue influence or lack of capacity, all of which go to its inception, but the burden of proving such a claim still rests on the shoulders of whoever asserts it (Matter of Witter, 270 App.Div. 447, 450--451, 60 N.Y.S.2d 606, mot. for lv. to app. den. 295 N.Y. 994, 68 N.E. 63; Matter of Imp, 68 Misc.2d 911, 916, 328 N.Y.S.2d 595). In the present case, despite decedent's advanced age, no such claims were pressed, nor was any attempt made to overcome the prima facie evidence of intention to create such a tenancy.

Also spelled out by the statute itself is a right of survivorship. Though such right is inchoate, some decisions, followed by the majority below, have talked of it in terms of absolute inviolability (Matter of Filfiley, 63 Misc.2d 824, 830, 313 N.Y.S.2d 793, Supra ('The survivor must take all'.)). However, they overlook the uniquely hybrid genesis of the law applicable to joint tenancies in bank accounts, the fact that the maturing of the rights of survivorship which accompany them is subject to the contingency of the death of one of the tenant and the fact that the analogy with joint tenancies in real property, the source of the law of joint tenancies, is more a convenient fiction than a fact, real property hardly having the physically separable character of money (2 American Law of Property, § 6.1, p. 7; § 6.4, p. 16 Et seq.).

Experience indicates that most people who open such accounts, though lacking legal or business sophistication, do understand and intend some ultimate survivorship incident to a joint tenancy, at least with regard to funds remaining in such an account at the time of death. (Sadofski v. Williams, 60 N.J. 385, 290 A.2d 143; Matter of Imp, supra, 68 Misc.2d p. 914, 328 N.Y.S.2d 595.) But they do not usually intend the perhaps more crucial fact that, from the moment of the creation of a joint account, a present unconditional property interest in an undivided one half of the moneys deposited devolves upon each tenant (Matter of Filfiley, 63 Misc.2d 824, 825, 313 N.Y.S.2d 793, Supra). Even when one of them is the sole donor of the fund, once such a moiety comes into existence it cannot be canceled unilaterally. That consequence is not directly stated in the statute. It results from an application of common-law principles of which most laymen are unaware. ² It follows that when the aunt opened the account here, the niece, Ipso facto, gained title to half the fund. (Matter of Bricker (Krimer) v. Krimer, 13 N.Y.2d 22, 27, 241 N.Y.S.2d 413, 191 N.E.2d 795, Supra; Marrow v. Moskowitz, 255 N.Y. 219, 174 N.E. 460; Moskowitz v. Marrow, 251 N.Y. 380, 397, 167 N.E. 506; O'Connor v. Dunnigan, 158 App.Div. 334, 335, 143 N.Y.S. 373, affd. 213 N.Y. 676, 107 N.E. 1082.) The niece's half interest was not merely a 'presumed' one, as the Surrogate here suggested. It was as much hers as the remaining half was the aunt's, the latter's being no greater because she was the donor.

Since half of the account was her property, the niece had the right and power to alienate it. For either tenant had the right, during the lifetime of the other, to effectuate such an alienation by withdrawing up to the full amount of her moiety (Matter of Bricker (Krimer) v. Krimer, 13 N.Y.2d 22, 27, 241 N.Y.S.2d 413, 191 N.E.2d 795, Supra; Matter of Suter, 258 N.Y. 104, 179 N.E. 310). And, if that is all she had withdrawn, the balance remaining in the account, though it represented the moiety of the aunt, would have remained subject to the niece's inchoate right of survivorship, despite the fact that the withdrawal of the niece's own moiety served to destroy her aunt's right of survivorship in it.

Recognition that such survivorship is destroyed is the product of case law. The statute itself makes no attempt to deal directly with such an event. (Matter of Bricker (Krimer) v. Krimer, 13 N.Y.2d 22, 27, 241 N.Y.S.2d 413, 191 N.E.2d 795, Supra; Matter of Suter, 138 Misc. 85, 245 N.Y.S. 636, affd. 232 App.Div. 45, 248 N.Y.S. 624, affd. 258 N.Y. 104, 179 N.E. 310, Supra.) And, the only way the aunt could have avoided the one-sidedness of the partial obliteration of her inchoate right of survivorship in the niece's moiety was by withdrawing her own half and, by so destroying what was left of the Res, eliminating the niece's remaining right...