Truax v. Southwestern College, Oklahoma City, Okl.

• Court: Kansas Supreme Court
• Citation: Truax v. Southwestern College, Oklahoma City, Okl., 522 P.2d 412, 214 Kan. 873 (Kan. 1974)
• Decision Date: 11 May 1974
• Docket Number: No. 47329,47329
• Parties: Galen TRUAX and Charles Stutzman, Co-executors of the Will of Lena H. Hogan, Appellees, v. SOUTHWESTERN COLLEGE, OKLAHOMA CITY, OKLAHOMA, et al., Appellants, and First Federal Savings & Loan Assn., Dodge City, Kansas, Appellee.

Page 412

522 P.2d 412

214 Kan. 873

Galen TRUAX and Charles Stutzman, Co-executors of the Will of Lena H. Hogan, Appellees, v. SOUTHWESTERN COLLEGE, OKLAHOMA CITY, OKLAHOMA, et al., Appellants and First Federal Savings & Loan Assn., Dodge City, Kansas, Appellee.

No. 47329.

Supreme Court of Kansas.

May 11, 1974.

Syllabus by the Court

1. An account in savings and loan association is subject to any agreement which the depositor and the association may make as to it, so long as the rights of third parties are not injuriously affected and no statute or other rule of law is violated.

2. To establish a valid gift inter vivos, there must be (a) an intention to make a gift; (b) a delivery by the donor to the donee; and (c) an acceptance by the donee. The gift must be absolute and irrevocable.

3. The burden of proving that a gift was made, including the existence of all the elements necessary to its validity, is upon the part asserting the gift.

4. Intention to create a trust and manifestation thereof, with reasonable certainty, are essential to the creation and existence of a trust. This means an intention specifically to create a trust and not to do something else, as to create a gift or to make a transfer of property.

5. The transfer of a bank account, to take effect at the death of the depositor, who retains control during his life, is testamentary in character and void if not executed as a will, whether the intention of the depositor is to provide for a trust or to make a direct gift.

6. In an action to determine ownership of savings accounts made payable to church institutions on the death of the depositor, the record is examined and it is held: The trial court properly ruled that the establishment of the accounts did not constitute inter vivos gifts, a third party beneficiary contract, an escrow agreement or a trust for the benefit of the church institutions so as to entitle them to the proceeds of the accounts; further held, that the attempted dispositions of the accounts were testamentary in character and invalid because they were not executed in compliance with the statute of wills.

Robert M. Baker, Ashland, was on the brief for appellants.

Joy Don Reynolds, Cimarron, argued the cause and was on the brief for appellees Galen Truax and Charles Stutzman.

No appearance for appellee First Federal Savings & Loan Association.

HARMAN, Commissioner:

This is a suit by the executors of the estate of Lena H. Hogan, deceased, to determine the ownership of four savings accounts created by the decedent in her lifetime. Defendants in the case are the savings and loan association (whose role in the action is that of stakeholder only) and church or church-related institutions, each of which claims the proceeds of an account by reason of having been named as a payee upon the death of Mrs. Hogan. Trial to the court resulted in judgment for the executors and the church groups have appealed.

The evidence before the trial court consisted of a written stipulation of facts plus testimony as to which there is no dispute.

On August 18, 1964, Mrs. Hogan consulted with Mrs. Neva Martin, president of the defendant First Federal Savings and Loan Association of Dodge City, Dansas, about establishing the accounts in question and on that date established the first one (Mrs. Martin died prior to trial). This account, in the amount of $2,300, was evidenced by a passbook in printed form which certified that Lena H. Hogan held an account representing share interests in the association subject to its charter, bylaws, etc. Underneath Mrs. Hogan's name on the printed form the following notation appeared: 'Payable on death to Pentecostal Holiness Conference Board (for Missionary work).' At the same time a signature card in the name of Lena H. Hogan was executed, which card bore the same account number and the same payable on death notation as the passbook. On the space provided for the account holder's signature the signature of Leans H. Hogan alone appeared. The signature card bore a printed provision on its reverse side appropriate for the establishment of a joint tenancy account but this side was never signed and the parties agree there was never any attempt to establish such an account.

Mrs. Hogan established three more savings accounts with the association. Each was made upon her direct order to the head teller. Each passbook and signature card was in the same form as the first account except as to the payee on death notation. The second such account was established by Mrs. Hogan September 2, 1964, in the amount of $1,500. The passbook and signature card bore the typed notation after Mrs. Hogan's name: 'Payable on death to: Southwestern College Oklahoma City, Okla.'

The third account, established October 1, 1964, in the amount of $3,300, carried this notation: 'Payable on death to the Pentecostal Holiness Church solely for payment of the Church Mortgage'.

The last account was establish July 2, 1965, in the initial amount of $1,500. On February 2, 1971, the sum of $800.00 was added to it. The passbook and signature card bore this notation: 'Payable on death to Pentecostal Holiness Conference Board to be divided equally between the Orphanage Childrens Home & Old Folks Home'.

During Mrs. Hogan's lifetime the savings association paid to her periodically the accumlated interest on each account.

The Kansas Conference of the Pentecostal Holiness Church is a non-profit Kansas corporation which is engaged in missionary work, maintains an orphanage children's home, an old folks' home, and operates a college under the name of Southwestern College of Oklahoma City as a separate corporation. The Pentecostal Holiness Church, 302 E. Vine, Dodge City, Kansas, is a Kansas corporation and has a mortgage in excess of $3,300.

On February 25, 1971, Mrs. Hogan executed her last will and testament. The will contained several specific devises and bequests, including a devise of a one-half interest in her Dodge City residence to the Pentecostal Holiness Church of Dodge City and a bequest of a Dodge City bank account to the building fund of the Kansas Conference of Pentecostal Holiness Churches. The will did not mention Mrs. Hogan's savings accounts. It concluded with a residuary clause naming the following legatees:

'Reverend C. W. Burpo, Mesa, Arizona; Oral Roberts Evangelistic Association, Tulsa, Oklahoma; The Billy Graham Evangelistic Association, minneapolis, Minnesota; Reverend Billy James Hargis, Tulsa, Oklahoma; Reverend J. Harold Smith, Dallas, Texas.'

Lena H. Hogan died May 31, 1971, and her will was duly admitted to probate in the probate court of Ford county, Kansas.

Mrs. Hogan's sister, Grace Truax, died February 6, 1972. Thereafter the four passbooks evidencing the accounts in question here were found in the safety deposit box of Grace Truax.

In addition to the facts already stated the parties' stipulation of evidence included the following:

'(26) That at all times during the lifetime of the said Lena Hogan that the aforedescribed accounts marked plaintiffs' exhibits 1, 2, 3 & 4 were in existence, the said Lena Hogan was empowered and able to increase, diminish or destroy or withdraw any or all parts of said accounts at her pleasure.

'(27) That the defendant, Lena Hogan, was at all times totally aware of such accounts and arrangements as set forth as plaintiffs' exhibits 1, 2, 3, & 4 and that she was in full possession of her mental and physical faculties at all times herein and when she made her last will and testament on 25 February 1971.

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'(31) That according to the bylaws of the First Federal Savings & Loan Assn., the accounts in question would not be paid without presentation of the passbooks, known as plaintiffs' exhibits 1, 2, 3 & 4.

'(32) That in addition to the passbooks, an application for withdrawal signed by some proper person and a presentation of the death certificate of the original signer, if the original signer be deceased, would be necessary to withdraw money from any of the accounts.'

When the defendant savings association declined to pay to the executors of Mrs. Hogan's estate the proceeds of the four savings accounts the latter instituted this action, claiming them as assets of the estate.

The defendant church groups filed an answer claiming the accounts. The parties now agree that under the pleadings the issues in the case are as follows:

'Did the establishment of the accounts in question by decedent Lena H. Hogan in the First Federal Savings & Loan Assn., create:

'a. A thrid party beneficiary contract for the benefit of the defendant church groups;

'b. An escrow for the benefit of the defendant church groups;

'c. An inter vivos gift for the benefit of the defendant church groups;

'd. A trust for the benefit of the defendant church groups so as to vest the final ownership of such accounts according to the designations upon the account cards and passbooks, or were the efforts of Lena Hogan testimentary in nature and void for want of the proper statutory form?'

The trial court rendered its decision in a memorandum opinion which, after a recitation of the background, stated:

'The court finds that the so-called signature cards executed as to each of the above designated accounts were not executed as joint tenancy accounts between Lena H. Hogan and the parties named in the 'death payable' clause.

'That Lena H. Hogan retained ownership and control of and over the accounts and the funds represented thereby during her lifetime, and made no delivery of the funds or accounts.

'The account signature cards of the respective accounts do not meet the requirements for a testamentary disposition of the funds represented by said accounts.

'The respective accounts were not set up as escrow accounts.

'The evidence does not support the theory of defendants that there was an inter vivos gift of the funds represented by the respective accounts.

'The evidence does not support the theory of defendants as...