Wells v. Salyers, No. 2005-CA-002049-MR (Ky. App. 3/2/2007)

• Decision Date: 02 March 2007
• Docket Number: No. 2005-CA-002049-MR.,2005-CA-002049-MR.
• Parties: Jannis Sue WELLS, Appellant, v. Callie SALYERS, Appellee.
• Court: Kentucky Court of Appeals

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Jannis Sue WELLS, Appellant, v. Callie SALYERS, Appellee.

No. 2005-CA-002049-MR.

Court of Appeals of Kentucky.

March 2, 2007.

Appeal from Floyd Circuit Court, Honorable John David Caudill, Judge, Civil Action No. 03-CI-01000.

James D. Adams, Prestonsburg, Kentucky, Brief for Appellant.

Larry D. Brown, Prestonsburg, Kentucky, Brief for Appellee.

Before: STUMBO, Judge; HUDDLESTON and PAISLEY, Senior Judges.¹

OPINION

HUDDLESTON, Senior Judge.

Jannis Sue Wells appeals from a Floyd Circuit Court judgment granting partial summary judgment to Callie Salyers by adjudging the latter to be the owner of the proceeds of a certificate of deposit issued by First Commonwealth Bank and registered in the name of Jannis Sue Wells. Wells contends that Salyers was not entitled to summary judgment because there are material facts in dispute, especially concerning Salyers' intent to make a gift to her of the proceeds of a prior derivative certificate of deposit.

In May 1995, Salyers purchased a six-month certificate of deposit in the amount of $100,000.00 as the sole individual owner but designating Wells, who is his daughter and only child, as the pay-on-death (P.O.D) beneficiary. This certificate of deposit was automatically renewed until November 19, 1996, when it was allowed to expire and the principal was transferred into a new six-month certificate of deposit in the amount of $100,000.00. The November 1996 certificate of deposit differed from the original in that it was designated a joint account listing Callie Salyers and Jannis Wells as the account owners with a right of survivorship and omitting the P.O.D. designation. Both Salyers and Wells provided signatures for the account, so under the terms of the certificate, either could withdraw all or any part of the funds with a single signature, and it was automatically renewable. The quarterly interest earned on both of these certificates was automatically deposited into Salyers' checking account with the bank.

The November 1996 certificate of deposit was automatically renewed until it expired on November 19, 2000, and Salyers purchased a new twelve-month certificate of deposit in the amount of $100,000.00. This certificate was similar to the 1996 certificate in that it was a joint-with-survivorship account listing Salyers and Wells as owners with no P.O.D. designation, and it was automatically renewable. As with the prior certificates, the quarterly interest earned on this certificate was deposited automatically into Salyers' checking account.

The November 2000 certificate of deposit was automatically renewed until August 2003, when on August 1, 2003, Wells acting alone closed the account after withdrawing all of the funds in the account, $101,321.91. She immediately purchased a new twelve-month certificate of deposit with First Commonwealth Bank in the amount of $101,321.91, listing herself as the sole owner and designating her son, Mark Alan Wells, as the P.O.D. beneficiary.

On September 9, 2003, Salyers filed suit against Wells alleging intentional and wrongful conversion of the proceeds from the certificate of deposit for her own personal use.² During discovery, the parties took the depositions of Salyers, Wells, and LaDonna Arms, a Customer Service Coordinator at First Commonwealth Bank. On July 12, 2005, Salyers moved for summary judgment pursuant to Kentucky Rules of Civil Procedure (CR) 56 on the issue of ownership of the August 2003 certificate of deposit. On September 27, 2005, the circuit court granted Salyers' motion holding that Salyers was the owner of the proceeds making up the August 2003 certificate of deposit. The court ordered First Commonwealth Bank to deliver the proceeds from the certificate to Salyers. Wells appeals from this judgment.

Wells maintains that the circuit court erred when it prematurely granted summary judgment to Salyers. The standard of review on appeal when a trial court grants a motion for summary judgment is whether the court correctly found there was no genuine issue as to any material fact and that the moving part was entitled to judgment as a matter of law.³ The movant (Salyers) bears the initial burden of convincing the court by evidence of record that no genuine issue of fact is in dispute, and then the burden shifts to the party opposing summary judgment (Wells) to present "at least some affirmative evidence showing that there is a genuine issue of material fact for trial."⁴ "The party opposing summary judgment cannot rely on [her] own claims or arguments without significant evidence in order to prevent a summary judgment."⁵ The court must view the record in the light most favorable to the nonmovant and resolve all doubts in his favor.⁶ Summary judgment is not considered a substitute for a trial, so the trial court must review the evidentiary record not to decide any issue of fact, but to determine if any real factual issue exists and whether the nonmovant cannot prevail under any circumstances.⁷ "The inquiry should be whether, from the evidence of record, facts exist which would make it possible for the nonmoving party to prevail. In the analysis, the focus should be on what is of record rather than what might be presented at trial."⁸ We need not defer to the trial court's decision on summary judgment and review the issue de novo because only legal questions and no factual findings are involved.⁹

Wells contends that there are sufficient material factual issues in dispute to militate against summary judgment in favor of Salyers. Salyers' claim of ownership relies in large part on Kentucky Revised Statutes (KRS) 391.310, which provides that

(1) A joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on deposit, unless there is clear and convincing evidence of a different intent.

(2) A P.O.D. account belongs to the original payee during his lifetime and not to the P.O.D. payee or payees; if two (2) or more parties are named as original payees, during their lifetimes rights as between them are governed by subsection (1) of this section.¹⁰

There is no dispute that Salyers alone contributed the entire $100,000.00 principal amount used to purchase the various certificates of deposit. However, this statute merely creates a presumption of ownership in the contributing party that is subject to rebuttal by clear and convincing evidence.

Wells asserts that there is evidence creating a genuine dispute as to whether Salyers intended to relinquish ownership rights in the proceeds of the certificate(s) to her. She points to the fact that Salyers modified the terms of the account when he allowed the first (1995) certificate that listed him as the sole owner with Wells as the P.O.D beneficiary, and purchased the second (1996) certificate that listed both him and her as joint owners, and gave her the authority to withdraw any or all of the proceeds from the account. Salyers counters that he modified the terms of the certificate merely to allow her access to the funds and he did not intend to relinquish ownership. Salyers testified in his deposition that the funds were generally to be used for his needs as he grew older.

We agree with Salyers that the modification of the certificate associated with a joint account alone does not constitute "clear and convincing" evidence of intent to relinquish ownership in the funds.¹¹ The terms of the certificate allowing Wells to withdraw a portion or even the entire amount of the funds represented a contractual relationship between Salyers and the bank, and did not modify legal ownership rights between Salyers and Wells.¹² The existence of a joint account necessarily contemplates access to funds by multiple parties. KRS 391.310 is intended to clarify the legal ownership rights to the funds based on the contributions of the parties while maintaining the ability of the parties to accommodate use of the funds and protect financial institutions through access to the funds by non-legal owners.

However, Wells contends that the modification of terms of the certificates, along with other evidence, constituted an inter vivos gift of the certificate proceeds. An inter vivos gift is a gift or transfer of property between living persons without valuable consideration, which is perfected and becomes absolute during the lifetime of the parties.¹³ The elements of a valid inter vivos gift include: "'(a) a competent donor; (b) an intention on his part to make the gift; (c) a donee capable to take it; (d) the gift must be complete, with nothing left undone; (e) the property must be delivered and go into effect at once; and (f) the gift must be irrevocable.'"¹⁴ In addition, since claims of inter vivos gifts are susceptible to fraud, the party claiming such a gift bears the burden of establishing all of the elements by clear and convincing evidence.¹⁵ The principles applicable to inter vivos gifts in general apply as well to purported gifts of certificates of deposit.¹⁶

While the creation of a joint account alone is insufficient to conclusively prove intent to make an inter vivos gift, Wells testified in her deposition that on several occasions, Salyers told her that he wanted her to have the funds in the certificate account. In addition, although she was uncertain of the precise date, Wells testified that during the year 2000, Salyers handed her the certificate of deposit document and told her that "he wanted me to have it." She said that she took the document and put it in her lock box until August 2003 when she took it to the bank to redeem the certificate and close out the account. LaDonna Arms testified that Wells did indeed have possession of the certificate and gave it to her when she closed the account and purchased the new certificate of deposit in her name alone.

With respect to the elements for an inter vivos gift, there is little dispute that Salyers was mentally competent to make a gift of the certificate...