Walnut Valley State Bank v. Stovall

• Decision Date: 25 February 1978
• Docket Number: No. 48306,48306
• Citation: 574 P.2d 1382,223 Kan. 459
• Parties: WALNUT VALLEY STATE BANK, a corporation, Appellant, v. Merle J. STOVALL and Emma M. Stovall a/k/a Emma M. Medlin, Appellees, and Towanda State Bank, Garnishee, Defendant.
• Court: Kansas Supreme Court

Page 1382

574 P.2d 1382

223 Kan. 459

WALNUT VALLEY STATE BANK, a corporation, Appellant, v. Merle J. STOVALL and Emma M. Stovall a/k/a Emma M. Medlin, Appellees and Towanda State Bank, Garnishee, Defendant.

No. 48306.

Supreme Court of Kansas.

Feb. 25, 1978.

Syllabus by the Court

1. The garnishment of a joint tenancy bank account severs the joint tenancy and the parties become tenants in common.

2. There is a rebuttable presumption of equal ownership between tenants of joint tenancy property.

3. The burden of proof on a claim the account is owned other than equally between the cotenants lies with the party asserting such claim.

Morgan Metcalf, of Coutts, Coutts & Metcalf, El Dorado, argued the cause and was on the brief for appellant.

No appearance by appellee.

OWSLEY, Justice.

This is an appeal from an order dissolving a garnishment. The decision of the trial court was affirmed by the Kansas Court of Appeals. See, Walnut Valley State Bank v. Stovall, 1 Kan.App.2d 421, 566 P.2d 33. This court granted review.

Plaintiff first contends the trial court should have dismissed the appeal from the county court to the district court. The basis of the motion to dismiss was the failure to pay the docket fee prior to the hearing of the appeal and failure to provide surety on the appeal bond. Plaintiff also claims prejudicial error in the admission of certain evidence. Each of these points was considered by the court of appeals. The court of appeals concluded they were not grounds for reversal. We adhere to its opinion on these points.

The remaining issue is one of first impression. It involves the right and the extent of the right of a judgment creditor to garnishee a joint tenancy bank account to satisfy a judgment against one of the joint tenants. The court of appeals found such an account may be garnished by the creditor to the extent of the debtor's equitable interest in the account.

The facts relative to this issue are as follows: Plaintiff obtained judgment against defendants Merle J. and Emma M. Stovall. Thereafter, the Stovalls were divorced and Emma married Archer B. Medlin. The Medlins established a joint checking account at the Towanda State Bank and each of them signed the bank signature card. Thereafter, and upon application of plaintiff, an order of garnishment was issued to the garnishee, which answered stating that Emma had a checking account with that bank in the amount of $411.52. Three days later, Emma moved to vacate the order of garnishment, which motion was overruled by the county court. Emma appealed to the district court, which heard the matter and entered judgment sustaining the motion to vacate and to set aside the order of garnishment, and assessed costs to plaintiff.

The trial judge issued his opinion letter to counsel, which contained his findings of fact as follows:

"I have read the citations which you gentlemen provided me and find that the garnishment of the bank account held by the Towanda State Bank in the joint account of Archer B. Medlin and Emma Maye Medlin should be set aside. From this ruling it is obvious that I do not reach the same conclusions as the author of the note in the Washburn Law Journal and frankly I was more impressed with the cases set forth at 11 A.L.R. 3, Page 1487 under the section heading of 'Where the Funds in the Act Belong to the Husband Alone.' I feel that this is the situation here and that the funds in said bank account are the property of Mr. Medlin and that the account was established as a joint account for the convenience of Mr. Medlin when he was on the road driving a truck. It is the Court's recollection that it has been at least 6 months since Emma Medlin has been employed and that any loan made by the Liberty Loan Corporation of Hutchinson, Kansas was made primarily to Archer Medlin in March of 1975 and was not in fact made to Emma Medlin."

Through statutory enactment the legislature has sought to limit the creation of joint tenancy agreements unless by clear and convincing evidence the parties to the agreement show the intent to create such an estate. (K.S.A. 58-501). A joint tenancy bank account gives any party on the account a complete power of disposal. Upon death the survivor or survivors take all, even against lawful heirs of the decedent. Financial advisers not versed in the intricacies of the law have convinced many unlearned persons that a joint tenancy agreement is the answer to estate planning. While a joint tenancy has many laudable uses, it is not a panacea. Many injustices have resulted through use of the device. Upon proper showing we have imposed constructive trusts on property in the hands of a surviving joint tenant in order to avoid unintended results. (Winsor v. Powell, 209 Kan. 292, 497 [223 Kan. 461] P.2d 292; Agrelius v. Mohesky, 208 Kan. 790, 494 P.2d 1095; Grubb, Administrator v. Grubb, 208 Kan. 484, 493 P.2d 189.)

We have considered the cases cited at 11 A.L.R.3d 1465 and recognize there is support for the position that none of the funds in a joint tenancy account can be garnished, as well as support for the position that all the funds can be garnished. Any argument in support of either of these positions may be eliminated by reference to K.S.A. 58-501(c ):

". . . The provisions of this act shall apply to all estates in joint tenancy in either real or personal property heretofore or hereafter created and nothing herein contained shall prevent execution, levy and sale of the interest of a judgment debtor in such estates and such sale shall constitute a severance."

The statute specifically provides the right to levy on personal property to the extent of the "interest of a judgment debtor." We must construe the phrase "interest of a judgment debtor." The court of appeals has stated the phrase means the equitable interest in joint tenancy property. Its affirmance of the trial court's decision is based on the trial court's finding of fact that the judgment debtor had no equitable interest in the joint tenancy account. We do not believe the solution is that simple. We are concerned with the ownership of a joint tenancy bank account between two or more joint tenants and the burden of proof if such ownership is challenged. In Miller v. Miller, 222 Kan. 317, 564 P.2d 524, we considered the ownership of a joint tenancy property conveyed by a father to himself, his son, and his daughter-in-law. We said:

"The record establishes that each of the three parties Jessie, Ima Kaye, and Richard owned an undivided one-third interest in this tract at the time suit was commenced, and had owned such interests for almost ten years, since the recording of the deed in 1965. Jessie made a gift of one-third interest to his son and of a like interest to his daughter-in-law when the property was acquired. That Jessie paid the entire purchase price is immaterial." (p. 321, 564 P.2d p. 528.)

The statement in Miller, "(t)hat Jessie paid the entire purchase price is immaterial," is too broad. It would appear that when a party to a joint tenancy attempts to prove an intent to own joint tenancy property other than equally between the parties the issue of who provided the purchase price would be material. Support for this statement is found in Schierenberg v. Hodges, 221 Kan. 64, 558 P.2d 133, where we said:

"It is well established in this jurisdiction that, absent fraud, one spouse may make an inter vivos transfer of his or her own personal property to another person outright or to himself and another person in joint tenancy without contravening the statutory rights of a surviving spouse under K.S.A. 59-602. Malone v. Sullivan, 136 Kan. 193, 14 P.2d 647; In re Estate of Fast, 169 Kan. 238, 218 P.2d 184; Eastman, Administrator v. Mendrick, 218 Kan. 78, 542 P.2d 347. The plaintiff's deceased spouse may well have lawfully transferred the funds in question; the funds may have come from her earnings, or they may have been accumulated solely by the plaintiff. Such questions have not been litigated or determined. We conclude that the court should not have sustained the motion for summary judgment." (p. 66, 558 P.2d p. 135.)

Severance of the joint tenancy into a tenancy in common between a husband and wife gives rise to a rebuttable presumption of equal ownership; that is, the husband and wife each own one-half of the account. Such a presumption is created on the theory of donative intent. In Norcross v. 1016 Fifth Avenue Co., Inc., 123 N.J.Eq....