Merrill Lynch, Pierce, Fenner and Smith, Inc. v. Shackelford

• Decision Date: 03 December 1979
• Docket Number: No. KCD,KCD
• Citation: 591 S.W.2d 210
• Parties: MERRILL LYNCH, PIERCE, FENNER AND SMITH, INC., Respondent, v. Robert L. SHACKELFORD, Appellant, The First National Bank of St. Joseph, Missouri, Garnishee, Mary Alice Shackelford and Mrs. Ann Long, Appellants. 29739.
• Court: Missouri Court of Appeals

Page 210

591 S.W.2d 210

MERRILL LYNCH, PIERCE, FENNER AND SMITH, INC., Respondent, v.Robert L. SHACKELFORD, AppellantThe First National Bank of St. Joseph, Missouri, GarnisheeMary Alice Shackelford and Mrs. Ann Long, Appellants.

No. KCD 29739.

Missouri Court of Appeals, Western District.

Dec. 3, 1979.

Gregory O. Grounds, Jones, McDaniel & Frankum, Kansas City, for appellant.

William H. Utz, III, St. Joseph, for First National Bank of St. Joseph.

Michael W. Lerner, Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, for Merrill Lynch, Pierce, Fenner & Smith.

Before WASSERSTROM, Chief Judge, Presiding, WELBORN, Special Judge, and HOUSER, Senior Judge.

HOUSER, Senior Judge.

First National Bank of St. Joseph was summoned as garnishee under a general execution issued to satisfy a judgment obtained by Merrill Lynch, Pierce, Fenner & Smith, Inc. against Robert L. Shackelford in the sum of $8,473.89.The bank filed a pleading alleging that it had on its books a checking account in the names of Mr. and Mrs. R. L. Shackelford, and had in its possession a $100,000 U.S. Treasury Note registered to Robert L. Shackelford or Mrs. Alice Shackelford or Mrs. Ann Long, or the survivors or survivor; that the bank had no claim against the note; that as stakeholder the bank wanted to pay into court the amount of the checking account and deliver the treasury note to await final determination of the garnishment action and thereupon be relieved of any liability, and prayed that Mrs. Shackelford and Mrs. Long be made parties and required to plead.The Shackelfords will sometimes be referred to as "Mr. S" and "Mrs. S."In Mr. S.'s answer and in the answers of Mrs. S. and Mrs. Long, filed pursuant to order of interpleader, all three defendants claimed an ownership interest in the treasury note as joint tenants with rights of survivorship, and that the note was not subject to garnishment by Merrill Lynch.

Following trial to the court on the merits, without a jury, the trial court concluded that whatever interests Mrs. S and Mrs. Long might have in the treasury note, that interest was insufficient to prevent execution thereon for the indebtedness of Mr. S to the extent of the judgment plus interest; that, accordingly, Merrill Lynch had an immediate right to.$9,164.80 of the proceeds from the treasury note.Judgment was entered for Merrill Lynch and against Mr. and Mrs. S and Mrs. Long, directing that the treasury note be liquidated to this extent, and that the balance remaining be paid to Mr. S. The Shackelfords and Mrs. Long appealed.

Robert and Mary Alice Shackelford are husband and wife.Mrs. Ann Long is their daughter.In April, 1973 Mr. and Mrs. S sold a farm, which they had owned as joint tenants for about eighteen years, for approximately $140,000.On May 15, 1973 Mr. S, using approximately $100,000 from the sale proceeds, purchased the U.S. Treasury Note.It was issued in the face amount of $100,000 in the names of "ROBERT L SHACKELFORD(557-01-6458) OR MRS MARY ALICE SHACKELFORD OR MRS ANN LONG OR THE SURVIVORS OR SURVIVOR".Asked how much money she contributed toward the purchase of the treasury note, Mrs. S answered, "Well, we had sold the farm we owned jointly.I would guess half."There is no evidence that Mrs. Long contributed anything to the purchase of the treasury note.Asked if he made a gift of any of the value of the treasury note to his wife or daughter Mr. S answered in the negative, stating that "(i)t wasn't (his) to make a gift."

On February 19, 1976 Mr. S signed a promissory note to the bank in the sum of $37,220.Mrs. S did not sign the note.Mr. S deposited the $100,000 U.S. Treasury note with the bank as collateral security for the $37,220 note.The promissory note recited that upon nonpayment of the note the bank could sell the collateral and that "The surplus, if any, after payment of this note and all other indebtedness whether due or not, owing now (or hereafter while any part of this note is unpaid) by the undersigned to the said Bank, for the payment of which other indebtedness the undersigned does also hereby pledge said collateral, shall be paid to the maker of this note."

Between February 19, 1976 and April 1, 1976 Mr. S made payments on the $37,220 note.On the latter date Mr. S made the final payment on the note, and the bank delivered the $100,000 treasury note to Mr. S. Four days later, on April 5, 1976, Mr. and Mrs. S went to the bank with the $100,000 treasury note for the purpose of cashing it.At the bank the two assigned the treasury note in blank on the reverse side, by writing their names: "Robert L. Shackelford" and "Mrs. Mary Alice Shackelford."Mrs. Ann Long did not accompany the Shackelfords to the bank.Mrs. Long did not assign her interest in the treasury note.The assignment form was not completed by an officer of the bank in compliance with the instructions for assignment printed on the treasury note.The only writings on the assignment forms are the signatures of Mr. and Mrs. S.Instead of cashing the treasury note as requested, the bank, which had been served with garnishment process, held the note subject to the summons in garnishment.

Appellants make the point that in entering judgment for Merrill Lynchthe trial court erred as a matter of law for the reason that the treasury note was held by the Shackelfords as tenants by the entirety and therefore the note was immune from execution to satisfy the claims of a creditor of one of the spouses.

Citing Wilson v. Frost, 186 Mo. 311, 85 S.W. 375(1905), appellants contend that when Robert and Mary Alice Shackelford purchased the U.S. treasury note they held it in their joint names and therefore, being husband and wife, a presumption arose that they held it as tenants by the entirety, there being no language limiting the conveyance to a joint tenancy; that neither spouse had a separate interest in the property, under Otto F. Stifel's Union Brewing Co. v. Saxy, 273 Mo. 159, 201 S.W. 67(1918), and that under United States v. Hutcherson, 188 F.2d 326(8th Cir.1951), the property could not be attached by a judgment creditor of one of the individual spouses.

In this jury-waived, court-tried case, the appellate court is obliged to sustain the trial court unless there is no substantial evidence to support it; unless it is against the weight of the evidence; unless it erroneously declares the law, or unless it erroneously applies the law.Murphy v. Carron, 536 S.W.2d 30(Mo. banc 1976).

Where two persons who are husband and wife become joint owners of personal property a presumption arises that they hold the property as tenants by the entirety.The presumption is that each spouse owns an undivided interest in the whole of the property.15A Mo.Dig., Husband and Wife k14.(2).

Presumably the form in which the treasury note was issued created an estate by the entirety unless, as Merrill Lynch contends, (1) the inclusion of the third party(their daughter, Mrs. Long) in the designation of ownership, or (2) the listing of the names of the three owners in the disjunctive rather than in the conjunctive, or (3) the failure to include the words "his wife" after Mr. S's name indicates an intention that each of the three owners have an equal right to the proceeds of the note, or unless (4) the presumption of tenancy by the entirety has been rebutted by acts and conduct of the Shackelfords evincing an intention to create some other estate.None of these contentions may be sustained.

(1) The inclusion of Mrs. Long as one of three owners did not put the presumption to flight or dictate the conclusion that this is a conveyance of one-third shares."Deed to husband and wife and another person creates one undivided half in husband and wife as tenants by entirety, and the other undivided half in the other person as tenant in common * * *."Gill, The Missouri Law on Title to Real Property, 4th Ed., Vol. I, § 568."A conveyance or devise to husband and wife and another, under the common law rule and insofar as such rule has not been changed by statute, vests the husband and wife with one moiety and the third person with the other moiety."41 Am.Jur.2dHusband and Wife, § 63;Daniel v. Wright, 352 F.Supp. 1(D.C.D.C.1972);Adamson v. Adamson, 273 Or. 382, 541 P.2d 460(banc 1975)."Where real property is conveyed or devised to husband and wife and a third person or persons, the husband and wife, being but one person in law, will together take only an undivided moiety or half of the estate, * * *.As between themselves, husband and wife are tenants by entirety of their share, but as to the third person they are together a joint tenant or tenant in common with him."41 C.J.S.Husband and Wife, § 31,...