Lowry v. Lowry

• Decision Date: 26 July 1976
• Citation: 541 S.W.2d 128
• Parties: Fesington LOWRY, Jr., Petitioner, v. William LOWRY et al., Respondents.
• Court: Tennessee Supreme Court

Page 128

541 S.W.2d 128

Fesington LOWRY, Jr., Petitioner, v. William LOWRY et al., Respondents.

Supreme Court of Tennessee.

July 26, 1976.

Robert M. Child, Knoxville, for petitioner.

Earl S. Ailor, Asquith, Ailor & Jones, Knoxville, for respondents.

OPINION

FONES, Justice.

Petitioner in this case is the son of the decedent and held with her two (2) joint savings accounts totalling approximately $28,000. The question presented is whether those funds should be transferred to him under the right of survivorship provision of the joint accounts, or whether the funds should be divided equally among the decedent's five (5) children under her will.

Respondents, William Lowry and his three (3) sisters, filed suit in the Chancery Court of Knox County against their brother, Fesington Lowry, petitioner, who was named executor in the will of their deceased mother. Their contention in the Trial Court was that the assets of two (2) accounts owned jointly by petitioner and his mother, with rights of survivorship, should pass through the estate of Mrs. Lowry according to the terms of her will. The Trial Court found that the language used in creating the joint accounts controlled, and that the survivorship provisions were effective to pass title to petitioner at his mother's death.

The Court of Appeals reversed, holding that the burden was upon petitioner to affirmatively show that the funds in the accounts were intended as a gift; and that absent such a showing he could not rely upon the language used in creating the joint tenancy. We reverse the Court of Appeals and reinstate the judgment of the Trial Court.

Mrs. Lowry was widowed in 1962 and managed all of her own affairs until her eyesight started failing her; and petitioner, eldest of her five (5) children, began assisting her. She was very active and interested in the management of her financial assets. As her eyesight worsened, decedent depended more and more upon petitioner to handle her financial affairs. However, a concurrent finding of facts by the Trial Court and the Court of Appeals has established that decedent maintained an alert mind until her death; that there existed no confidential relationship between petitioner and his mother; and that there was no fraud practiced by petitioner which would allow him to take financial advantage of his mother.

Decedent was completely independent and lived by herself until 1968 when she moved to a retirement home because of failing eyesight.

The two (2) savings accounts in question were established by decedent without any suggestion or encouragement from petitioner. She opened these accounts in order to reinvest existing funds to realize a higher interest yield, and petitioner's only participation was the signing of the signature cards.

The first account was opened at Hamilton National Bank in September, 1969, and totaled approximately $10,000 at death. The second account was opened in November, 1971, at Home Federal Savings and Loan Association and totaled approximately $18,000 at death.

Between the opening of these accounts, decedent made out her will in which she left her estate to her five (5) children in equal shares. No mention was made in the will of the joint accounts. Petitioner was named executor of the estate, and in that position he took action to transfer the assets of the joint accounts into his own name and divided the remainder of the estate--approximately $50,000--into five (5) equal portions for distribution to the children.

Respondents rely upon the theory that if the accounts were transferred to petitioner at all, they were transferred as a gift; and petitioner must affirmatively show that all of the formal requirements of a gift were complied with. That is, there must have been an intention to make a present gift coupled with delivery by which complete dominion and control of the property was surrendered by the donor. While we accept this as a proper statement of the law of gifts, Brown v. Vinson, 188 Tenn. 120, 216 S.W.2d 748 (1949), we reject the argument that these requirements must be affirmatively proven by the survivor of a joint account in order that he may exercise his rights of survivorship under the terms of the agreement.

Although some jurisdictions have adopted the 'gift' theory, see for example Trenton Sav. Fund Soc. v. Brynes, 110 N.J.Eq. 617, 160 A. 831 (1932), we feel the better reasoned approach utilizes the 'contract' theory. See for example Agrelius v. Mohesky, 208 Kan. 790, 494 P.2d 1095 (1972). Additionally, although there is no case directly in point, the decisions of the appellate courts of this State indicate a propensity toward the contract theory.

Of primary importance is the case of Melhorn Melhorn, 208 Tenn. 678, 348 S.W.2d 319 (1961). There, John Melhorn opened a joint account with Lee Melhorn, the defendant. Lee, exercising his right of survivorship at John's death, took control of the $2,500 account, to which he had contributed only $600. This action resulted in a lawsuit brought by the administratrix of John's estate. Although the opinion contains no clearly expressed rule of law which would dispose of the case at bar, the Court looked to the intention of the parties as expressed by the joint signature card and the testimony of the bank officers, and made it clear that it considered the joint account a contractual undertaking. It noted that although common law joint tenancy with right of survivorship, had been abolished by T.C.A. § 64--107, it could still be created by contract. The contract as expressed on the signature card in that case is quoted by the Court in Melhorn as follows:

"Joint Account

'John or Lee Melhorn

'The undersigned joint depositors hereby agree each with the other and with the First National Bank in Harriman, Tennessee, that all sums now on deposit or heretofore or hereafter deposited by either or both of said joint depositors with said bank to their credit as such joint depositors with all accumulations thereon, are and shall be owned by them jointly, WITH RIGHT OF SURVIVORSHIP, and be subject to the check or receipt of either of them or the survivor of them * * *. " 208 Tenn. at 681, 348 S.W.2d at 320.

The court supported its conclusion with two (2) prior cases which relied on the contract theory: Sloan v. Jones, 192 Tenn. 400, 241 S.W.2d 506 (1951) and Peoples Bank v. Baxter, 41 Tenn.App. 710, 298 S.W.2d 732 (1957).

In Sloan the husband opened the joint account in the name of 'Joe Tatum or Wife,' and both he and his wife moved to Alabama where he predeceased his wife. The Court, in applying Tennessee Law, held that the account created a tenancy by the entirety, the proceeds of which passed to the wife immediately upon the death of the husband.

In Peoples Bank v. Baxter, supra, Mrs. Baxter made out a certificate of deposit payable to her own order or, upon her death, to her daughter, Mrs. W. A. Nippers. At Mrs. Baxter's death, the bank filed a bill of interpleader. The Court of Appeals agreed with the parties that the proceeds did not constitute a gift inter vivos or causa mortis, nor a testamentary disposition. The Court sustained the claim of Mrs. Nippers on the contract theory of donee third party beneficiary.

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