Worden v. Thornburg

• Decision Date: 31 March 1978
• Docket Number: No. 1225,1225
• Citation: 564 S.W.2d 480
• Parties: Ariel WORDEN and E. M. Hudspeth, Independent Co-Executors of the Estate of R. C. Mingee, Deceased, Appellants, v. Norman H. THORNBURG and First Savings Association of Corpus Christi, Appellees.
• Court: Texas Court of Appeals

Page 480

564 S.W.2d 480

Ariel WORDEN and E. M. Hudspeth, Independent Co-Executors of the Estate of R. C. Mingee, Deceased, Appellants, v. Norman H. THORNBURG and First Savings Association of Corpus Christi, Appellees.

No. 1225.

Court of Civil Appeals of Texas, Corpus Christi.

March 31, 1978.

Rehearing Denied April 27, 1978.

Allan L. Potter, Potter & Potter, Corpus Christi, for appellants.

Charles R. Cunningham, Lee Mahoney, Mahoney, Shaffer, Hatch & Layton, Corpus Christi, for appellees.

OPINION

YOUNG, Justice.

This is an action for declaratory judgment to determine ownership of a certificate of deposit bearing the notation "R. C. Mingee or Norman H. Thornburg" as depositor and representing $3,000.00 on deposit with the First Savings Association of Corpus Christi, Texas. In connection with the certificate, Mingee and Thornburg had signed as joint tenants an agreement with the Association providing for right of survivorship and for withdrawal on only one signature. Mingee later died. Thornburg thereafter made demand of the Association for the funds and was refused. This suit resulted.

After Thornburg filed suit against the Association, the Association impleaded Ariel Worden and E. M. Hudspeth as Independent Co-Executors of the Estate of Mingee. Whereupon the Executors filed a cross-action for the funds against Thornburg and the Association. Trial was to the court without a jury on stipulated evidence. The trial court rendered judgment that Thornburg, as surviving joint tenant of the account, was entitled to the funds on deposit. On the request of the Executors the trial court filed findings of fact and conclusions of law. The Executors appeal. We affirm.

On February 1, 1974, Mingee, who then lived in Corpus Christi, appeared alone at the Association and opened by deposit a savings account in his name and that of Thornburg, his nephew. Mingee then signed the signature card contract which provided for joint tenants with right of survivorship and received the certificate of deposit representing the account. That certificate is the one in controversy. Thereafter Mingee secured Thornburg's signature on the card and returned it to the Association. Sometime after the account was opened, Thornburg, who lived in Mississippi, acquired possession of the certificate.

On September 9, 1975, Mingee went to the Association and demanded withdrawal of the funds from the account. The Association denied his request because Mingee did not have in his possession, nor did he tender, the certificate. The bylaws of the Association required surrender of the certificate to effect a withdrawal from the account. Whereupon Mingee personally wrote to Thornburg demanding return of the certificate. Thornburg failed to comply with the request.

In late September of 1975, E. M. Hudspeth, a friend of Mingee and one of the Executors herein, called Thornburg and requested return of the certificate. On November 3, 1975, Mingee's attorney wrote a letter to Thornburg on Mingee's behalf requesting return of the certificate. Thornburg ignored all the requests.

Consequently, on November 5, 1975, Mingee requested the Association not to allow any withdrawals on the account. As a result the bank placed a "freeze order" on the account. On November 30, 1975, Mingee died. Then under Mingee's will Hudspeth and Worden qualified as independent co-executors of Mingee's estate. They are the appellants herein.

Appellants have brought forward 22 points of error. They have, however, summarized the points into categories for purposes of argument. We will follow appellants' format, generally, in considering their contentions.

In their first category appellants contend that the Association wrongfully refused to pay the funds to Mingee upon his demand during his lifetime and that, therefore, the trial court in its judgment should have awarded the funds to Mingee's Executors.

This case is in the nature of an interpleader action and the parties seeking the funds each has the burden of proving a prior right to the funds deposited with the court. Celanese Coating Company, Devoe Paint Division v. Soliz, 541 S.W.2d 243 (Tex.Civ.App. Corpus Christi 1976, writ ref'd n. r. e.). In order to meet this burden, Executors had to prove initially that the Association was obligated to turn over the funds to Mingee when he requested them in September of 1975, and that the refusal was a breach of this obligation.

Executors contend that the Association's obligation arises both as a matter of law and as a matter of contract. They argue, first, that the obligation arises as a matter of law from the fact that the certificate was a non-negotiable instrument and thereby it did not require presentment for Mingee to be entitled to the funds upon his request unaccompanied by the certificate. Executors cite First State Bank v. Hidalgo Land Co., 268 S.W. 144 (Tex.Comm'n App.1925, opinion adopted) which discusses a standard for determining whether a certificate of deposit is negotiable or non-negotiable. While we would agree that the instant certificate was a non-negotiable instrument, Executors have cited us to no authority, nor have we found any, which obligates a savings institution to pay out funds on all deposits evidenced by a non-negotiable instrument where the depositor orally or in writing requests the funds without tendering the instrument itself.

Second, Executors argue that the obligation arises as a matter of contract. A non-negotiable certificate of deposit represents a form of promissory note. Southview Corporation v. Kleberg First National Bank, 512 S.W.2d 817 (Tex.Civ.App. Corpus Christi 1974, no writ). As such, it represents a contractual relationship between the savings institution and the depositor. Business Aircraft v. Electronic Communications, Inc., 391 S.W.2d 70 (Tex.Civ.App. San Antonio 1965, writ ref'd n. r. e.).

In this regard, Executors contend that the bank was contractually obligated to turn over the funds because "nothing on the agreement or certificate indicates conditions other than signature for withdrawal." This argument is insufficient to demonstrate an obligation, though, for two reasons. First, the signature card contract provision to which the Executors refer provides: "one signature only required for withdrawal". This provision's clear design provides that of the two signatories on the signature card contract, only one will be required to sign when making a withdrawal. Second, the Executors had the burden to show the contractual provision which created the obligation the nonperformance of which would be a breach. Hull v. Freedman,383 S.W.2d 236 (Tex.Civ.App. Fort Worth 1964, writ ref'd n. r. e.); Blackstock v. Gribble, 312 S.W.2d 289 (Tex.Civ.App. Eastland 1958, writ ref'd n. r. e.); Mergenthaler Linotype Co. v. Herrmann, 217 S.W.2d 122, 123 (Tex.Civ.App. Fort Worth 1949, writ ref'd n. r. e.).

After reviewing the signature card contract with the Association together with the certificate, we find no provision in either which required payment of the funds on deposit solely upon written or oral request. Furthermore, the signature card contract provides that "the charter and bylaws of the Association as they now are or as they may hereafter be amended shall govern this account." Executors produced no evidence of the provisions of the charter or bylaws as they existed at the time the account was opened. Consequently, we have no way of ascertaining the total contractual rights and obligations of the parties herein. The only evidence in the record pertaining to the charter or bylaws showed that the bylaws, as amended on January 16, 1975, one year after Mingee purchased the certificate, provided "any member shall be able to withdraw his savings deposit or savings account in whole or in part . . . by presenting his deposit book or certificate of deposit." Executors have clearly failed to meet their burden of proving a contractual obligation. Appellants' contentions in their first category are overruled.

In the Executors' second category, they argue that Mingee's demanding the funds from the Association, "freezing" the savings account and his demanding the certificate from Thornburg destroyed the parties' unity of title and operated to terminate any joint tenancy with right of survivorship, leaving the parties as tenants in common with no right of survivorship. We disagree.

In considering the contention, we will show that regardless of who owned the funds used to purchase the certificate, a joint tenancy resulted; that Mingee's acts did not sever the joint tenancy; and that Mingee might have taken alternative actions to avoid the result of this case.

It is clear that a joint tenancy existed initially between Mingee and Thornburg regardless of which party owned the funds used to purchase the certificate. We will first assume that either Mingee or Thornburg separately owned all of the funds used to purchase the certificate. Under this assumption, the party contributing the money would be the "donor" and the noncontributing party the "donee-beneficiary". By taking out the certificate as a joint account with right of survivorship, the donor is deemed to have entered into a third party beneficiary contract with the Association. Davis v. East Texas Savings & Loan Association, 163 Tex. 361, 354 S.W.2d 926 (1962); Edds v. Mitchell, 143 Tex. 307, 184 S.W.2d 823 (1945). This third party beneficiary contract created a joint tenancy with right of survivorship between the donor and third party beneficiary. Calvert v. Wallrath, 457 S.W.2d 376 (Tex.Sup.1970). In Calvert the court faced a situation involving one joint checking account and one joint savings account paid for solely by Mr. Wallrath. Mr. Wallrath then executed a joint tenancy with right of survivorship contract, similar to the one in the instant case, with his sister, Miss Wallrath. Miss Wallrath later died and the comptroller assessed inheritance taxes on Mr. Wallrath for one-half the amount on...