Virginia Nat. Bank v. Harris

• Court: Virginia Supreme Court
• Writing for the Court: Before I'ANSON; COMPTON
• Citation: Virginia Nat. Bank v. Harris, 257 S.E.2d 867, 220 Va. 336 (1979)
• Decision Date: 30 August 1979
• Docket Number: 771503,Nos. 771478,s. 771478
• Parties: VIRGINIA NATIONAL BANK et al. v. Nina B. HARRIS, Administratrix, etc. Louise FAULKLYN, a/k/a, etc. v. Nina B. HARRIS, Administratrix, etc. Record

Page 867

257 S.E.2d 867

220 Va. 336

VIRGINIA NATIONAL BANK et al. v. Nina B. HARRIS, Administratrix, etc.

Louise FAULKLYN, a/k/a, etc. v. Nina B. HARRIS, Administratrix, etc.

Record Nos. 771478, 771503.

Supreme Court of Virginia.

Aug. 30, 1979.

Conrad M. Shumadine, Norfolk (Ross C. Reeves, Kaufman & Oberndorfer, Norfolk, on brief), for appellant in first case.

Girard C. Larkin, Jr., Norfolk (Herman A. Sacks, Stanley E. Sacks; Sacks & Sacks, Norfolk, on brief), for appellee.

Virginia Bankers Association (John W. Edmonds, III, Russell V. Palmore, Jr., Mays, Valentine, Davenport & Moore, Richmond, on brief), for appellants, amicus curiae.

Anita O. Poston, Norfolk (Joseph A. Gawrys, Vandeventer, Black, Meredith & Martin, Norfolk, on brief), for appellant in second case.

Before I'ANSON, C. J., and CARRICO, HARRISON, COCHRAN, HARMAN, POFF and COMPTON, JJ.

COMPTON, Justice.

The narrow question presented in this banking appeal is whether the designation of a beneficiary to receive the proceeds of an individual savings account upon the depositor's death is a testamentary act which is void for failure to comply with the Statute of Wills, Code § 64.1-49. ¹

Charles Harris died intestate during 1976 in Norfolk at the age of 77 years. He had previously opened four savings accounts with Virginia National Bank. Pertinent to this appeal is only one of those accounts, carrying a balance of $20,256.35 at Harris's death. Appellant Louise Faulklyn, also known as Louise Fowlkes, was the named beneficiary of that account. The signature card executed by Harris, the depositor, contained the following terms:

"X INDIVIDUAL (If payable on death to named survivors, fill in section below)

Payable on Death of Depositor to Such of the Following Named as Survive Depositor:

Louise Faulklyn-Niece Baltimore, MD"

The day after Harris's death, his widow, Nina B. Harris, qualified as Administratrix of his estate and subsequently filed the instant chancery proceeding naming as defendants the bank and the beneficiaries of the several accounts. In her bill of complaint, the appellee-personal representative alleged that the designations of beneficiary for the respective accounts were not valid as gifts and that such designations did not convey any interest in the several funds to the designees. The administratrix further alleged that the decedent was mentally incapable of disposing of his property by gift or will, thus rendering the beneficiary designations invalid. The plaintiff, in the prayer of her bill, asked the court below to decree (1) that the beneficiaries were not entitled to any part of the respective funds and (2) that the bank pay the monies on deposit to the personal representative to be administered as assets of the estate.

In responsive pleadings, the bank took no position with respect to either ownership of the funds or the mental capacity of the deceased to designate beneficiaries. Each of the other defendants denied the allegations of the bill and claimed to be entitled to the balance of the particular fund in which each was individually named as beneficiary.

During the course of the hearing below, in which no evidence was presented, the chancellor made the following rulings from the bench that were later incorporated in the July 1977 final decree from which these appeals were taken. The court decided that the designation of a beneficiary to receive the balance of the proceeds of the several accounts upon the death of Harris did not constitute a lawful gift Inter vivos or a proper gift Causa mortis, but did constitute a testamentary act on the part of the decedent which failed to comply with the requirements of the Statute of Wills, and was consequently null and void. The bank was thus ordered to pay the funds to the personal representative to be administered by her.

Of the defendants who filed notices of appeal to the final decree, only the bank and defendant Faulklyn filed petitions for appeal; these separate petitions were granted and the appeals consolidated.

The bank and the beneficiary, supported by a brief Amicus curiae of the Virginia Bankers Association, argue the trial court erred; they seek a reversal of the final decree and a remand of the cause for a factual determination of the issues relating to the decedent's intent and mental capacity. They contend the Statute of Wills is not applicable to bank accounts payable on death to a named survivor (hereinafter P.O.D. accounts). They say that with respect to such accounts, the Statute of Wills is "superseded" by Code § 6.1-77, which provides:

"A deposit in the name of a depositor payable on his death to a named survivor or survivors may be paid to the named depositor during his lifetime and the receipt of the named depositor shall be a complete release of the bank or trust company for such payment. Upon the death of the depositor, the bank or trust company may pay the deposit to the survivor or survivors, whether any such survivors be a minor at the time or not, and the receipt of the survivor or survivors shall be a complete release of the bank or trust company. If the survivor be the spouse of the named depositor at the time of the death of the named depositor, such deposit shall vest in such surviving spouse. No bank or trust company paying to such survivor or survivors shall become liable for any estate or inheritance taxes. The term 'deposit' shall include certificate of deposit."

The beneficiary and the bank also argue that P.O.D. accounts are governed by principles of contract law and not by laws relating to wills.

The personal representative argues, on the other hand, the Statute of Wills clearly is applicable to P.O.D. accounts. She contends that by enacting Code § 6.1-77, the General Assembly, recognizing that the banking industry utilized such accounts, merely intended to protect banks from liability in the event they elected to pay the balance of such an account to the named beneficiary upon the depositor's death. She says that § 6.1-77 is not determinative of ownership of funds on deposit, unless the survivor is the spouse of the deceased depositor. She points out that the statute provides: "If the survivor be the spouse of the named depositor at the time of the death of the named depositor, such deposit shall vest in such surviving spouse." She then argues: "Clearly if the funds were to vest in the survivor of every POD account it would have not been necessary for the Legislature to include the above cited language." The administratrix also contends that principles of contracts are not applicable to P.O.D. accounts.

While we agree with the administratrix that Code § 6.1-77 is not absolutely determinative of the ownership of funds in a P.O.D. account, we do not agree with her thesis that the designation of a beneficiary in such an account is void for failure to comply with the Statute of Wills, nor do we agree that § 6.1-77 may not be "used" to determine ownership of P.O.D. funds. We hold that the Statute of Wills does not apply to a deposit made in the name of a depositor payable on death to a named survivor. In our view, by enacting Code § 6.1-77 the General Assembly authorized use of the P.O.D. account as a valid method of transferring property upon death, irrespective of the provisions of Code § 64.1-49 the Statute of Wills. We construe § 6.1-77, dealing with a specific subject, to be an exception to the general provisions of § 64.1-49. Such a...