Wightman v. American Nat. Bank of Riverton

• Decision Date: 05 May 1980
• Docket Number: No. 4949,4949
• Citation: 610 P.2d 1001,29 U.C.C.Rep. 251
• Parties: 29 UCC Rep.Serv. 251 Michael Ross WIGHTMAN and Erin Jennell Wightman by and through their next friends Howard Wightman and Evelyn Wightman, Appellants (Plaintiffs below), v. AMERICAN NATIONAL BANK OF RIVERTON, Appellee (Defendant and Third Party Plaintiff below), v. William MALODY, Jr., a/k/a William M. Malody, and John R. Benesch, as Administrator of the Estate of Page Malody, Deceased, (Third Party Defendants below). *
• Court: Wyoming Supreme Court

Page 1001

610 P.2d 1001

29 UCC Rep.Serv. 251

Michael Ross WIGHTMAN and Erin Jennell Wightman by and through their next friends Howard Wightman and Evelyn Wightman, Appellants (Plaintiffs below), v. AMERICAN NATIONAL BANK OF RIVERTON, Appellee (Defendant and Third Party Plaintiff below), v. William MALODY, Jr., a/k/a William M. Malody, and John R. Benesch, as Administrator of the Estate of Page Malody, Deceased, (Third Party Defendants below). ^*

No. 4949.

Supreme Court of Wyoming.

May 5, 1980.

Rehearing Denied May 20, 1980.

Tom C. Toner of Redle, Yonkee & Arney, Sheridan, for appellants.

Wm. H. Brown and Claude W. Martin of Brown, Drew, Apostolos, Massey & Sullivan, Casper, and Donald P. White of White, Avery & Howard, Riverton, for appellee.

ON REHEARING

Before RAPER, C. J., McCLINTOCK, THOMAS and ROSE, JJ., and GUTHRIE, J., Retired. ^**

THOMAS, J., delivered the opinion of the court.

THOMAS, Justice.

Upon the rehearing which was granted in this case a majority of the court became convinced that the court in its original opinion arrived at an erroneous conclusion. ¹ The issue to be resolved is whether the children of a deceased owner of a certificate of deposit, upon being named as joint tenants on the certificate of deposit, acquired an interest superior to that of the bank to which the certificate of deposit was given as collateral to secure a loan. The problem between these parties arose out of the use of the certificate of deposit as collateral, and the rules of law relating to the rights of a secured party in possession under Article 9 of the Uniform Commercial Code, § 34-21-901, et seq., W.S.1977, should be invoked to resolve that problem. In the court's original opinion in this case the law of gifts coupled with rules relating to bank deposits was applied to the end that a joint tenancy in the children was recognized in the certificate of deposit. The court then concluded that the interest of the children as joint tenants was superior to the interest of the bank as a secured creditor. The prior decision which resulted in the recognition of a superior interest in the children of the debtor did not address the real question. The court now has concluded that the record fails to demonstrate facts which could lead to any conclusion other than the proposition that the debtor's children received their interest subject to the security interest of the creditor. We shall affirm the judgment of the district court.

When the appeal was first heard we noted the issues as stated by the appellants as follows:

"1. The purchase of the certificate of deposit vested in the children a joint interest in the certificate of deposit with a right of survivorship.

"2. There is evidence from which the jury could find that Page Malody intended to vest a present interest in the certificate of deposit in her children and grant them rights of survivorship in the certificate of deposit.

"3. Page Malody's interest in the certificate of deposit terminated on her death. The note which the collateral agreement was to secure was not due until after her death. The Bank's lien or set-off necessarily terminated on Page Malody's death. The execution of the collateral agreement is not inconsistent with an intent to vest the children with a present beneficial interest in the certificate of deposit."

As we will make clear, only the third question suggested by the appellants at that time purports to describe the differences that had arisen between the parties. It does not adequately state the issue. In the petition for rehearing the American National Bank of Riverton describes the question in this way:

"The principal question in the present posture of the case is WHETHER PAGE MALODY CREATED A JOINT TENANCY WITH RIGHT OF SURVIVORSHIP IN THE CD # A-1053 WHEN SHE LISTED ALTERNATE PAYEES ON THE CD WHEN THE CD WAS RE-ISSUED IN SUBSITUTION (sic) FOR CD # 540 AND AT THE SAME TIME PLEDGING THE RE-ISSUED CD AS COLLATERAL FOR A LOAN UNDER THE SUPPLEMENTAL COLLATERAL AGREEMENT?"

This statement of the issue also is wide of the mark because its focus is upon the interest which was created in her children by Page Malody. There is no necessity here to debate the law of gifts, nor to reiterate prior statements by this court as to the rights created by certain styles of bank deposits. The fundamental and narrow issue which must be resolved is whether Page Malody, at the time the joint interest in the children was created, had an unrestricted right to deal with the certificate of deposit, or whether it then was subject to a prior lien in favor of the bank to which any interest of Page Malody and her children was subject.

The facts material to the resolution of this case under Article 9 of the U.C.C. are not in dispute. They can be stated rather briefly. Page Malody was the mother of the minor plaintiffs-appellants who brought this action through their next friends. On October 28, 1974, Page Malody deposited $150,000 at the American National Bank of Riverton which was represented by a certificate of deposit # 540, which indicated on its fact that it was non-negotiable. On November 29, 1974, in connection with a loan made by the American National Bank of Riverton to Page Malody and her husband, Page Malody furnished certificate of deposit # 540 as collateral to secure a promissory note in the amount of $154,775. The document evidencing that security interest is titled a "Collateral Agreement." The American National Bank of Riverton then perfected its security interest by retaining possession of certificate of deposit # 540.

The certificate of deposit was for 120 days, and it matured on February 25, 1975. At that time certificate of deposit # 540 stopped earning interest according to its terms. On March 1, 1975, Page Malody went to the American National Bank of Riverton to renew the certificate of deposit. On that occasion a new non-negotiable certificate of deposit was issued by the American National Bank of Riverton in the amount of $154,875. This certificate of deposit was identified as # A-1053; it was for a period of six months; and it provided that it was automatically renewable. At the request of Page Malody it was issued to "Page Malody or Michael Ross Malody or Erin Jenall (sic) Malody." At that time Page Malody executed another "Collateral Agreement" which identified certificate of deposit # A-1053, and which was to secure the promissory note dated November 29, 1974. With the exception of the date, the identification of the certificate of deposit, and the reference to the specific date of the promissory note, the two "Collateral Agreements" are identical. It would appear that the person who prepared the second "Collateral Agreement" was given instruction by interlineation upon the first one. The American National Bank of Riverton retained possession of certificate of deposit # A-1053.

Nothing further was done with certificate of deposit # A-1053 prior to Page Malody's death in October of 1975. When the note to the American National Bank of Riverton became due Page Malody's husband defaulted, and the American National Bank did apply the proceeds of the certificate of deposit plus interest to the debt owed by the Malodys. When it was discovered that the appellants were named, apparently as joint owners of this certificate of deposit, this action was brought on their behalf to recover the proceeds of certificate of deposit # A-1053 from the American National Bank of Riverton. The district court granted the motion of the American National Bank of Riverton for summary judgment thereby recognizing the superior right of the American National Bank of Riverton in the certificate of deposit, although it did not specifically rely upon the provisions of the U.C.C. as adopted in Wyoming. The recognized rule in our state is that a judgment will be affirmed on appeal if sustainable on any legal ground appearing in the record. P & M Cattle Co. v. Holler, Wyo., 559 P.2d 1019 (1977); Crockett v. Lowther, Wyo., 549 P.2d 303 (1976); Zitterkopf v. Roussalis, Wyo., 546 P.2d 436 (1976); Peters Grazing Association v. Legerski, Wyo., 544 P.2d 449, rehearing denied 546 P.2d 189 (1975).

The court now concludes that the rights of these parties are controlled by the provisions of Article 9 of the U.C.C., Secured Transactions, § 34-21-901, et seq., W.S.1977. Section 34-21-905, W.S.1977, provides in pertinent part as follows:

"(a) In this article unless the context otherwise requires:

"(vii) 'Instrument' means a negotiable instrument (defined in section 3-104 (34-21-802)) or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary indorsement or assignment ;" (Emphasis supplied.)

An instrument as so defined includes a certificate of deposit. Worden v. Thornburg, Tex.Civ.App., 564 S.W.2d 480, 482 (1978); First National Bank in Grand Prairie v. Lone Star Life Ins. Co., Tex.Civ.App., 524 S.W.2d 525 (1975); Southview Corp. v. Kleberg First National Bank, Tex.Civ.App., 512 S.W.2d 817 (1974); and Howick v. Bank of Salt Lake, 28 Utah 2d 64, 498 P.2d 352 (1972). Upon analysis it would seem to be true as suggested by the Texas Court of Civil Appeals that a certificate of deposit is simply a commercially glamorous name for a promissory note. Southview Corp. v. Kleberg First National Bank, supra. ² The transaction being subject to the U.C.C., the statutory provisions spell out clearly the rights of the American National Bank of Riverton and Page Malody and her children under the undisputed facts. When the American National Bank of Riverton received certificate of deposit # 540 pursuant to the signed "Collateral Agreement" on November 29, 1974, the security interest of the American National Bank of Riverton in that certificate of deposit was perfected. Section 34-21-934, W.S.1977. It clearly had custody coupled with a right...