Stauffer v. Henderson

• Decision Date: 31 December 1990
• Docket Number: No. C-7480,C-7480
• Parties: Mary K. STAUFFER, Petitioner, v. J.D. HENDERSON, Respondent.
• Court: Texas Supreme Court

Page 858

801 S.W.2d 858

Mary K. STAUFFER, Petitioner, v. J.D. HENDERSON, Respondent.

No. C-7480.

Supreme Court of Texas.

Dec. 31, 1990.

Rehearing Overruled Jan. 30, 1991.

William L. Rivers, Austin, for petitioner.

Mitchell G. Ehrlich, Perryton, John M. Brown, Amarillo, for respondent.

OPINION

HECHT, Justice.

We consider here whether funds in a joint account belong to the survivor of the account parties. The trial court held as a matter of law that the survivor is not entitled to the funds. The court of appeals affirmed. 746 S.W.2d 533. We affirm the judgment of the court of appeals.

I

Marian K. Henderson opened a joint bank account with her sister, Mary K. Stauffer. All funds deposited to the account belonged to Marian. The only written agreement between Marian and Mary pertaining to the joint account was contained on the signature card provided by the depository and signed by both Marian and Mary. That agreement stated in pertinent part:

JOINT ACCOUNT--PAYABLE TO EITHER OR SURVIVOR

... We agree and declare that all funds now or hereafter deposited in this account are and shall be our joint property, that either of us shall have power to act in all matters relating to such account, whether the other be living or dead, and that upon the death of either of us any balance in said account or any part thereof may be withdrawn by, or upon the order of the survivor. It is especially agreed that withdrawal of funds by the survivor shall be binding upon us and upon our heirs, next of kin, legatees, assigns and personal representatives.... [The depository] is hereby authorized to act without further inquiry in accordance with writings bearing any [signature of Marian or Mary], and any such payment or delivery or a receipt or acquittance signed by [Marian or Mary] shall be a valid and sufficient release and discharge of [the depository].

When Marian died, Mary withdrew the funds. Marian's husband, J.D. Henderson, the independent executor of her estate, then sued Mary to recover the funds, claiming that they were his and Marian's community property and that consequently half belonged to him individually and half belonged to Marian's estate. Mary answered, contending that she was entitled to the funds by right of survivorship created by her agreement with Marian contained in the signature card quoted above. J.D. and Mary both moved for partial summary judgment based entirely upon the language of the signature card. The trial court granted J.D.'s motion, holding that Mary was not entitled to the funds. The trial court severed this judgment from the remaining issues in the case. ¹

II

A

Jus accrescendi, the right of survivorship, was the "grand incident" of a joint estate held, in the ancient language of the common law, "per my et per tout". 2 W. BLACKSTONE, COMMENTARIES *183; C. MOYNIHAN, INTRODUCTION TO THE LAW OF REAL PROPERTY 210-211 (2d ed. 1988); Niles & Walsh, Concurrent Estates and Their Characteristics, in 2 AMERICAN LAW OF PROPERTY 3-11, 16-18 (J. Casner ed. 1952); J. SCHOULER, TREATISE ON THE LAW OF PERSONAL PROPERTY § 156, at 224-226 (5th ed. 1918); J. WILLIAMS, PRINCIPLES OF THE LAW OF PERSONAL PROPERTY 518-522 (1926). The right of survivorship as an essential legal incident of joint ownership has not been favored in this country, however, and consequently has been abolished in most American jurisdictions. See MOYNIHAN, supra, at 211; Niles & Walsh, supra, at 11-15; 20 AM.JUR.2D Cotenancy and Joint Ownership § 11 (1965); 48A C.J.S. Joint Tenancy § 5 (1981). The Second Legislature of Texas did so in 1848 by the following statute:

When two or more persons hold an estate, real, personal or mixed jointly, and one joint tenant dies before severance, his interest in said joint estate shall not survive to the remaining joint tenant or joint tenants, but shall descend to and be vested in the heirs or legal representatives of such deceased joint tenant, in the same manner as if his interest had been severed and ascertained.

Law of March 18, 1848, ch. 103, § 12, 1848 Tex.Gen.Laws 129, 132, 3 H. GAMMEL, LAWS OF TEXAS 129, 132 (1898).

Elimination of the right of survivorship as a necessary, legally imposed element of joint estates does not prohibit joint owners from agreeing that each will take the other's interest in the property at the other's death. Although the 1848 statute quoted above does not expressly allow joint owners to agree to a right of survivorship, it also does not prevent them "from providing among themselves that the property in question should pass to and vest in the survivor as at common law." Chandler v. Kountze, 130 S.W.2d 327, 329 (Tex.Civ.App.--Galveston 1939, writ ref'd); see Adams v. Jones, 258 S.W.2d 401 (Tex.Civ.App.--Austin 1953, no writ); Shroff v. Deaton, 220 S.W.2d 489 (Tex.Civ.App.--Texarkana 1949, no writ). The power of joint owners to agree to a right of survivorship, implicit in the 1848 statute, was made explicit when that statute was moved to section 46 of the new Probate Code adopted in 1955, and amended to provide as follows:

Where two or more persons hold an estate, real, personal, or mixed, jointly, and one joint owner dies before severance, his interest in said joint estate shall not survive to the remaining joint owner or joint owners, but shall descend to, and be vested in, the heirs or legal representatives of such deceased joint owner in the same manner as if his interest had been severed and ascertained. Provided, however, that by agreement in writing of joint owners of property, the interest of any joint owner who dies may be made to survive to the surviving joint owner or joint owners, but no such agreement shall be inferred from the mere fact that the property is held in joint ownership.

Law of Sept. 1, 1956, ch. 55, § 46, 1955 Tex.Gen.Laws 88, 103. Although the language of section 46 has been amended several times since it was adopted in 1955, its essential provisions have continued in effect to the present. ²

B

There has been little doubt before or after the adoption of section 46 that the parties to a joint account at a bank or other depository may, absent fraud or other illegal purpose, make a valid and enforceable written agreement that funds deposited by either of them will belong to the survivor. See Davis v. East Texas Sav. & Loan Ass'n, 163 Tex. 361, 354 S.W.2d 926, 929-931 (1962); Johnson v. Johnson, 306 S.W.2d 780, 781-783 (Tex.Civ.App.--Amarillo 1957, writ ref'd); Brown v. Lane, 383 S.W.2d 649, 650-651 (Tex.Civ.App.--Dallas 1964, writ ref'd). There has been considerable confusion, however, over the effect of particular agreements.

This confusion is due in part to the very different reasons parties have for opening joint accounts. It is not at all unusual for a person to deposit his or her funds into an account upon which another person is authorized to draw merely for the convenience of the depositor. The owner of the money intends only to facilitate disbursement of the funds for his or her own purposes, not to transfer title to the co-signator on the account. It is no less common for a depositor of funds into a joint account to intend that at some point in time, at the depositor's death if not before, those funds will become the property of the co-signator. Thus, both common experience, as well as the express language of section 46, prohibit an inference from the mere creation of a joint account that the parties intend for ownership of the funds to pass automatically upon the death of one of them.

Frequently, the only written agreement of the parties which might reflect their intent is the signature card or similar form provided by the depository and signed when the account is opened. The principal purpose of such forms, however, is to authorize the depository to pay funds in the account upon the direction of any party, ³ not to establish ownership of the funds as between the parties upon the death of one of them. See Reed v. Reed, 283 S.W.2d 311, 316 (Tex.Civ.App.--Dallas 1955, no writ). A joint account agreement which authorizes funds to be paid to or withdrawn by one party allows the party to insist that the depository honor a request for payment but does not establish the right of that party to the funds against other claimants. Thus, the account agreement provided by the depository and signed by the parties ordinarily authorizes delivery of the funds to any party to a joint account but may or may not settle the issue of actual ownership of the funds.

Construction of joint account agreements has been further complicated by uncertainty over the proper legal theory to be used to determine a survivor's right to account funds. A written agreement under section 46 has not been viewed as the exclusive means of transferring ownership of funds to surviving parties on joint accounts. In analyzing the right to funds in a joint account, courts have considered the surviving party as a donee, see, e.g., Ottjes v. Littlejohn, 285 S.W.2d 243, 245-246 (Tex.Civ.App.--Waco 1955, writ ref'd n.r.e.); Adams v. Jones, 258 S.W.2d at 403; as a third party beneficiary of the contract between the decedent and the depository, see, e.g., Quilter v. Wendland, 403 S.W.2d 335, 336-338 (Tex.1966); and as a trust beneficiary, see, e.g., Adams, 258 S.W.2d at 403. In considering whether a right of survivorship may be created apart from the written agreement of joint owners, the courts have, not surprisingly, looked beyond any account agreement to parol evidence of the parties' intent.

Thus, in Krueger v. Williams, 163 Tex. 545, 359 S.W.2d 48 (1962), the Court did not consider the language of the joint account receipt card provided by the bank and signed by the decedent to be dispositive of the survivor's right to the funds. The card stated only that the funds were "payable to the survivor of either" party and did not evince a clear intention to vest ownership of the funds, as opposed to mere possession, in the survivor. Nevertheless, the Court held that the...