Sheimo's Estate, In re, 52640

Decision Date06 February 1968
Docket NumberNo. 52640,52640
PartiesIn the Matter of the ESTATE of Andrew M. SHEIMO, Deceased. Phil R. SHEIMO, Administrator, Appellee, v. Marlyn SHEIMO and Richard Sheimo, Appellants.
CourtIowa Supreme Court

John H. Greve, Northwood, for appellants.

Floyd Ensign, Northwood, for appellee.

RAWLINGS, Justice.

Asserting ownership in estate represented, plaintiff-administrator filed application in probate for determination of rights in two bank certificates of deposit, each in the name of a single designated defendant-payee, found in decedent's safety deposit box. Defendant-payees both appeared and answered resisting the claim made by plaintiff. After hearing, trial court adjudged these certificates to be property of decedent's estate. Defendants appeal. We reverse.

Plaintiff is administrator of estate of Andrew M. Sheimo, deceased. Evidence produced by him discloses two time certificates of deposit were found in decedent's bank box, No. 3160 for $6000 payable to Richard Sheimo, and No. 3161 for $2000 payable to Marlyn Sheimo.

Defendants' evidence reveals decedent originally held an $8000 certificate issued by Citizens Savings Bank of Hanlontown, on which he had written with pencil, $2000 to go to Marlyn Sheimo, $6000 to go to Richard Sheimo.

August 7, 1964, Marion O. Hall, president of the bank, talked to Andrew Sheimo and told him if anybody should die the bank could not go by the penciled writing. In the words of this banker he said to decedent: 'The only way you could do it if you wanted that--want six thousand to go to Richard and two thousand to Marlyn--is to fix out separate certificates of deposit for them and you do--you don't want your name on them. They get the interest.' Decedent replied, 'no, they are to be theirs. I don't want my name on them at all.'

Hall then told Andrew to have Richard or Marlyn come in and endorse the original certificate. Richard did so and the new ones, here in question, were issued. The banker was told by Andrew he would deliver them to Richard and Marlyn at a later date.

These new certificates were then placed in decedent's lock box, all interest on them being subsequently paid to and retained by each of above named payees.

I. Defendants assert plaintiff-administrator had the burden of proof and failed to meet it. With this we are inclined to agree although the matter of burden of proof is here of little or no significance. See rule 344(f)(5), R.C.P.

At commencement of hearing to the court, plaintiff proceeded with introduction of evidence which consisted of this stipulation: 'That Phil R. Sheimo is the Administrator of the A. M. Sheimo estate. That A. M. Sheimo for approximately a year before his death was unable to attend to his business affairs and was confined to a nursing home. That Phil Sheimo, as Administrator of this Estate, found the certificates involved, being Numbers 3160 and 3161, issued on August 7, 1964, by the Citizens Savings Bank of Hanlontown, Iowa. The certificate numbered 3160 shows the name of Richard Sheimo, and the certificate numbered 3161 shows the name of Marlyn Sheimo. These certificates of deposit were found in the decedent's safety deposit box and had been placed there by the decedent. The Administrator of the estate had no instructions concerning them. It was further stipulated that the certificates herein referred to were received into evidence.'

Defendants then proceeded with introduction of evidence to which reference will later be made.

It would thus appear plaintiff had and assumed the burden of proof. In this regard see Liberty Mutual Insurance Co. v. Sweeney, 3 Cir., 216 F.2d 209, 211.

II. Neither trial court nor the parties refer to nature of original proceeding, or our review.

In this regard it appears the matter was triable as in equity. Section 633.33, Code, 1966. That means we consider it de novo. Rule 344(f)(7), R.C.P., and Henderson v. Hawkeye-Security Ins. Co., 252 Iowa 97, 100, 106 N.W.2d 86.

III. It is to us apparent the trial court reached an erroneous conclusion as the result of a sincere but nevertheless faulty application of the gift doctrine. See Hamilton v. Wosepka, Iowa, 154 N.W.2d 164, 166, and citations.

Where appropriate, the gift or trust concept may serve a just purpose. However, in recent times they have, per se, often been found to be too rigid and unrealistic when applied to vesting of rights in a bank deposit. They frequently serve to defeat rather than effectuate an evident intent and purpose.

In re Estate of Martin, Iowa, 155 N.W.2d 401 (opinion filed January 9, 1968), reviews development of the relatively new contract theory in Iowa and its application to bank deposits, citing among others, In re Estate of Stamets, 260 Iowa 93, 148 N.W.2d 468; In re Estate of Murdoch, 238 Iowa 898, 29 N.W.2d 177; O'Brien v. Biegger, 233 Iowa 1179, 11 N.W.2d 412; and In re Estate of Winkler, 232 Iowa 930, 5 N.W.2d 153.

Reference is also there made to Andrew v. Citizens St. Bank, 205 Iowa 237, 216 N.W. 12, involving a mother or daughter joint tenancy bank deposit. Quoting from the cited case, loc. cit., 205 Iowa 243, 216 N.W. 14, 15, we said: 'Appellant also insists that the burden was upon Hazel Pent to allege and prove that a gift of the certificate was intended and made to her by her mother. While no evidence was offered for that purpose, we think the necessary inference from matters appearing in the record is that * * *. The certificate was lawfully payable to her (Hazel Pent) after her mother's death, upon the surrender thereof to the bank issuing it. Section 9267, Code of 1924. (Section 528.64, Code, 1962) No other reason for the mother's making the certifcate payable to herself or daughter than that she intended her to receive the money, unless paid out on her own order, Is suggested. The fact that the certificate remained unpaid and unchanged is some evidence of the mother's intention. The record discloses neither pleading nor proof in any way denying or explaining the purpose and intention of the mother.' (Emphasis supplied.)

Continuing, this court stated in the Martin Estate case, supra: 'And, if funds are payable to an 'or' survivor pursuant to a bank deposit certificate under the joint tenancy doctrine, the same result will surely obtain with as much if not greater force and effect by application of the tripartite contract or third party beneficiary concept. A statement in 37 Iowa L.Rev. 293, amply supported by respectable authorities, sets forth both the rationale and demonstrates the ultimate efficacy of this approach. 'The development of the contract theory may be said to have begun in Massachusetts in 1916. (Chippendale v. North Adams Savings Bank, 222 Mass. 499, 111 N.E. 371) It was fostered by the statutes protecting the bank from liability in payment to either party, and was instrumental in resolving the doctrinal confusion of the other theories. The primary doctrinal innovation brought about by the contract theory is that the interest of the court is directed solely at the bank-depositor relationship, rather than the relationship between the co-depositors. The gift, trust or joint tenancy theories, on the other hand, are concerned solely with this latter relationship. By stating the mutual rights and obligations of the co-depositors in terms of the bank's duties, the formal requirements of a gift, trust or joint tenancy are finessed, but the relationship between the parties is nevertheless fixed and certain. Actually, this relationship most nearly approximates that of joint tenancy, but differs materially in the immediate right of either depositor to withdraw the entire amount.

"The contract theory is not without its doctrinal difficulties. The problem of consideration, especially with regard to a non-contributing depositor, has been discussed by the courts, but the consideration between the bank and the contributing depositor has been held sufficient to support the contract. The transaction has been viewed as a tripartite or third party beneficiary contract, and as a contract creating the rights of the parties against the bank, with no specific name being attached to the source of these rights.' (Emphasis supplied.)'

IV. The question now to be resolved is whether the controverted certificates of deposit serve to vest in each of the named payees respectively, or to estate of decedent, all right to the funds on deposit.

We are persuaded the evident intent of the parties may be best determined and effectuated in this case by application of the previously mentioned tripartite or third party beneficiary doctrine.

Dealing with this subject, Simpson on Contracts, Second Ed., Hornbook Series, pages 242--243, states: 'There are only two types of third parties who are permitted under American law to enforce a promise. There are (1) the donee beneficiary, and (2) the creditor beneficiary. If A for a consideration exacts a promise from B to render a stated performance to C, intending thereby to confer a gift upon C, C is a donee beneficiary entitled to sue B on the promise. It is the intent or purpose of the promisee, A, to exact a promise and ultimate performance as a gift to C that controls, not the purpose of the promisor, B. B's purpose in promising is to obtain the consideration furnished by the promisee, A, as the agreed exchange. The promisee's intent to obtain a gift promise for C's benefit will appear from the terms of the promise which he exacted. If by that promise the performance is to be rendered directly to and for the third person, C, he alone will be benefitted, not A. * * *

'The strongest reason exists for permitting enforcement of the promise by the donee beneficiary, since if he cannot enforce it no one can.'

And, Williston on Contracts, Single Volume, Revised Edition, section 357, pages 332--333, in explaining and justifying application of the third party beneficiary concept, says: 'The Restatement of Contracts (section 133(1)(a))...

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  • Estate of Fanning, In re
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    ...751. 9 More recently, Iowa, South Dakota, Tennessee and Texas have adopted the third party beneficiary contract theory. In re Sheimo (1968), 261 Iowa 775, 156 N.W.2d 681; Miles v. Hanten (1969), 83 S.D. 635, 164 N.W.2d 601; Melhorn v. Melhorn (1961), 208 Tenn. 678, 348 S.W.2d 319; Peoples B......
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