Case Title: Oatts v. Jorgenson

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1991-11-27T00:00:00Z

Document:
Oatts v. Jorgenson1991 WY 152821 P.2d 108Case Number: 91-29Decided: 11/27/1991Supreme Court of Wyoming
MARILYN OATTS, APPELLANT 
(PLAINTIFF),

v.

VICKI JORGENSON AND 
ESTATE OF J. PHILIP OATTS, APPELLEES (DEFENDANTS).

Appeal from the District 
Court, SheridanCounty, Elizabeth A. Kail, 
J.

H.W. Rasmussen and Bruce 
P. Badley, Badley & Rasmussen, P.C., Sheridan, for 
appellant.

Robert W. Connor, Jr. and 
Debra J. Wendtland, Sheridan, for appellees.

Before URBIGKIT, C.J., 
and THOMAS, CARDINE, MACY and GOLDEN, JJ.

THOMAS, Justice.

[¶1.]     The only issue 
presented in this case is the effect of registering a book-entry treasury bill 
in the names of "Phil Oatts or Marilyn J. Oatts or Vicki Jorgenson." The 
treasury bill in question was purchased through a banking institution and was 
represented by an entry on the records of a Reserve Bank.1 After the death of J. Philip Oatts 
(Phil Oatts), his widow, Marilyn J. Oatts (Oatts), claimed sole ownership of the 
treasury bill, but the trial court, applying the law of Wyoming, held that a 
tenancy in common was created by the form of the book entry. This ruling was 
contrary to Oatts' argument that the language resulted in a joint tenancy with 
right of survivorship because of the provisions of the sections of the Code of 
Federal Regulations that relate to treasury securities. It is our conclusion 
that the trial court was correct in invoking the state law, which in this 
instance is consistent, not contrary, to applicable federal regulations, and we 
affirm the judgment of the trial court.

[¶2.]     Oatts frames the issues 
in her brief in this way:

"I. The District Court 
erred by failing to apply the controlling federal regulations to determine 
ownership of the proceeds from a United States Treasury book-entry 
procedure.

"II. The trial court 
erred in giving Vicki Jorgenson and the Estate of Philip Oatts part of the 
federal security."

Vicki Lynn Jorgenson 
(Jorgenson) and the Estate of J. Philip Oatts (Oatts Estate) relate the issues 
in this fashion:

"A. Whether appellant's 
arguments that federal regulations control the outcome of this case are properly 
before the court?

"B. Alternatively, if the 
court chooses to address appellant's arguments based on federal regulations, 
whether those arguments are supported by cogent argument and cited 
authority?

"C. Whether appellee is 
entitled to summary judgment under Wyoming law concerning the creation and 
existence of a joint tenancy?"

[¶3.]     Phil Oatts and Marilyn 
J. Townsend were married on June 6, 1986. At the time of the marriage, Phil 
Oatts had two adult daughters, Vicki Lynn Jorgenson (Jorgenson) and Janice K. 
Kane. Phil Oatts was possessed of a substantial estate, including all of the 
issued and outstanding shares in Big Horn Beverage Co., Inc. of Sheridan.

[¶4.]     On January 9, 1989, 
Phil Oatts received a distribution of approximately $153,000 from Big Horn 
Beverage Co., Inc., which he first deposited into a checking account jointly 
held with his wife at the First Interstate Bank of Sugarloaf, Sheridan. Subsequently, on 
January 26, 1989, Phil Oatts purchased a twenty-six week, $100,000 
United 
States book-entry treasury bill from the First 
Interstate Bank of Commerce, Sheridan (Sheridan bank), with a check drawn upon 
the joint account. The Sheridan bank obtained the treasury bill through its 
affiliate, the First Interstate Bank of Billings. In the form that the transaction 
took, a treasury bill was not actually issued. Instead, the transaction was 
recorded on the books of the banks, and a receipt was issued in the name of 
"PHIL OATTS OR MARILYN J. OATTS OR VICKI JORGENSON." Phil Oatts died prior to 
the maturity of the treasury bill, and Jorgenson and Janice K. Kane were named 
as the co-executrixes of his estate. About two weeks later, on June 6, 1989, 
Jorgenson redeemed the treasury bill from the Sheridan bank, receiving a 
cashier's check for its value which was made payable to "Phil Oatts or Marilyn 
J. Oatts or Vicki Jorgenson." Jorgenson subsequently negotiated the cashier's 
check.

[¶5.]     On January 4, 1990, 
Oatts filed a conversion action against Jorgenson, in which Oatts claimed that 
she was the sole owner of the treasury bill proceeds by virtue of the right of 
survivorship. Jorgenson answered, counterclaimed for interpleader, and moved to 
have the Oatts Estate joined as a party. By an order dated June 25, 1990, the 
Oatts Estate was joined as a defendant, and the proceeds from the treasury bill 
were required to be deposited with the clerk of court pending resolution of the 
case.

[¶6.]     The Oatts Estate and 
Jorgenson, respectively, filed motions for summary judgment on August 3, 1990. 
Oatts responded with a "Resistance to Summary Judgment," but she made no motion 
of her own for summary judgment. On November 21, 1990, the trial court held a 
telephone hearing in which it granted summary judgment for the Oatts Estate and 
Jorgenson.2 By an order entered December 17, 
1990, the trial court confirmed the finding announced during the telephonic 
hearing that there was no genuine issue of material fact, and it listed two 
legal issues as dispositive of the case. The trial court first considered 
whether the treasury bill created either a joint tenancy with right of 
survivorship or a tenancy by the entirety between Phil Oatts and the plaintiff, 
Oatts. Next the trial court considered whether Phil Oatts had made a valid gift 
of a one-third interest in the treasury bill to Oatts and Jorgenson, 
respectively.

[¶7.]     The trial judge applied 
Wyoming law 
and ruled that neither a joint tenancy nor a tenancy by the entirety had been 
established between Philip and Marilyn Oatts. The court next ruled that Phil 
Oatts had made a valid gift of a one-third interest in the treasury bill to 
Oatts and to Jorgenson, respectively. The court, therefore, ordered that Oatts, 
Jorgenson and the Oatts Estate held the proceeds from the treasury bill as 
tenants in common, and it ordered distribution accordingly.

[¶8.]     On December 26, 1990, 
Oatts filed her notice of appeal. She challenges the adverse summary judgment, 
essentially contending that she did enjoy a tenancy by the entirety or a joint 
tenancy with Phil Oatts that would entitle her to the full proceeds from the 
sale of the treasury bill.

[¶9.]     In reviewing the 
propriety of the summary judgment, we apply the standard recently reiterated in 
First State Bank v. American National Bank, 808 P.2d 804, 806 (Wyo. 1991), and 
TZ Land and Cattle Co. v. Condict, 795 P.2d 1204, 1208 (Wyo 1990) (quoting Boehm 
v. Cody Country Chamber of Commerce, 748 P.2d 704, 710 (Wyo. 1987)):

"`A motion for summary 
judgment places an initial burden on the movant to make a prima facie showing 
that no genuine issue of material fact exists and that summary judgment should 
be granted as a matter of law. Rule 56(c), Wyoming Rules of Civil Procedure. Once a prima 
facie showing is made, the burden shifts to the party opposing the motion to 
present specific facts showing that a genuine issue of material fact does exist. 
England v. Simmons, Wyo., 728 P.2d 1137, 1140-1141 (1986). We 
analyze challenges to a grant of summary judgment by reviewing the record in ta 
light most favorable to the party opposing the motion giving him all favorable 
inferences that can be drawn from the facts. Id. Conclusory statements or mere 
opinions are insufficient, however, to satisfy an opposing party's burden. Jones 
Land & Livestock Co. v. Federal Land Bank of Omaha, Wyo. 733 P.2d 258, 263 
(1987). "`Evidence opposing a summary judgment that is conclusory or speculative 
is insufficient to demonstrate that a material fact exists, and the trial court 
has no duty to anticipate possible proof. Nelson v. Crimson Enterprises, Inc., 
777 P.2d 73 (Wyo. 1989).'"

[¶10.]  In this case, Oatts argues that the trial 
court erred as a matter of law because it failed to apply regulations relating 
to federal securities which she contends control the issues of ownership and 
preempt state law. As a further position, she argues that there exist genuine 
issues of material fact with respect to the donative intent of Phil Oatts when 
he purchased the treasury bill. We will address first the argument relating to 
the federal regulations, in part because Jorgenson and the Oatts Estate argue 
that this issue is not properly before the court and that it should not be 
considered.

[¶11.]  There are few rules more firmly settled 
in Wyoming 
jurisprudence than the rule that this court does not consider for the first time 
on appeal issues that were neither raised in, nor argued to, the trial court. An 
exception exists for jurisdictional issues and other issues, which are of such 
fundamental nature that the court must take cognizance of them. See, e.g., Epple 
v. Clark, 804 P.2d 678 (Wyo. 1991); Thatcher 
& Sons, Inc. v. Norwest Bank Casper, N.A., 750 P.2d 1324 (Wyo. 1988); White v. Fisher, 689 P.2d 102 (Wyo. 1984); ABC Builders, Inc. v. Phillips, 632 P.2d 925 
(Wyo. 1981); Schaefer v. Lampert Lumber 
Company, 591 P.2d 1225 (Wyo. 1979). Our evaluation of the record 
causes us to agree with the position of the Oatts Estate and Jorgenson that the 
issue may not have properly been preserved.

[¶12.]  The record demonstrates that Oatts chose 
to litigate only state common law issues before the trial court. The pleadings 
and motions presented there did not advance any legal theory or argument based 
upon federal regulations. Furthermore, Oatts did not make any effort to amend 
the pleadings to conform to a claim of federal preemption. The only reference 
found in the record to the federal regulations is that made by Oatts after the 
summary judgment hearing, but prior to the entry of the order. At that time, 
Oatts sent to the trial judge portions of a photocopied letter she had received 
from a national research firm relating to the application of federal regulations 
to the issues in this case. Oatts argues in her reply brief that this effort 
sufficiently raised the issue prior to entry of summary judgment as that is 
defined by W.R.C.P. 58(b).3 She contends that this justifies 
her charge of error in the disposition by the trial court. We are not disposed 
to agree. The justification for the rule foreclosing appellate consideration is 
that it is unfair to reverse a ruling of a trial court for reasons that were not 
presented to it, whether it be legal theories or issues never formally raised in 
the pleadings nor argued to the trial court.

[¶13.]  In most cases, the consideration of the 
issue would be concluded at this juncture but, in this instance, jurisprudential 
responsibility makes it appropriate to address the federal preemption claim. Any 
claim that state law is preempted by federal law is of fundamental importance 
and may well come within the exception to the general rule that we have outlined 
above. Furthermore, the dearth of authority in this area suggests that 
resolution of the issue would be helpful to practitioners and, perhaps, other 
courts.

[¶14.]  Oatts and Jorgenson and the Oatts Estate 
agree that the property in question is a twenty-six week book entry treasury 
bill. The parties also are in accord that 31 C.F.R. § 350 (1990) entitled 
"Regulations Governing Book-Entry Treasury Bills" should control so far as 
federal law is pertinent.4 Oatts on one hand and Jorgenson and 
the Oatts Estate on the other hand disagree with respect to the specific 
regulations under Part 350 that govern and also how those regulations should be 
interpreted. Oatts cites, in her brief, 31 C.F.R. §§ 350.7(b) and 350.155 in support of her contentions that: 
(1) book-entry treasury bills may be recorded in the names of no more than two 
individuals; (2) any attempt that is made to record the treasury bill in more 
than two names results, under the federal regulations, in a conclusive 
presumption that recordation in the names of the first two listed is intended; 
and (3) therefore, Jorgenson has no right, title or interest in the proceeds of 
the treasury bill.

[¶15.]  Jorgenson and the Oatts Estate argue on 
the other hand that Oatts' assertions are incorrect because the regulations 
cited by Oatts have no application to the treasury bill at issue. This position 
is correct. Part 350 of Title 31 encompasses four subparts: Subpart A - 
Applicability and Effect - Definitions (§§ 350.0-.1); Subpart B - Book-Entry 
Treasury Bills - Federal Reserve Banks (§§ 350.2-.6); Subpart C - Book-Entry 
Treasury Bills - Department of the Treasury (§§ 350.7-.16); and Subpart D - 
Definitive Treasury Bills (§§ 350.17-.18). Sections 350.7(b) and 350.15, cited 
and relied upon by Oatts, come under Subpart C and, therefore, relate to 
book-entry treasury bills purchased directly from the Department of the 
Treasury. The record is clear that the treasury bill in this instance was 
purchased from a member bank of the Federal Reserve System, First Interstate 
Bank of Commerce, for its customer, Phil Oatts, from a Federal Reserve Branch 
Bank. The transaction clearly is controlled by the regulations in Subpart B of 
Part 350, 31 C.F.R.

[¶16.]  The difference is significant because 
unlike Subpart C, which, for purposes of uniformity contains strict interpretive 
rules preempting state law, Subpart B contains no such strict rules for 
recordation or interpretation of a treasury bill account. Instead, 31 C.F.R. § 
350.6(a)(2) provides:

"Identification of 
accounts. Book-entry accounts may be established in such form or forms as 
customarily permitted by the entity ( e.g., member bank, or other banking or 
thrift institution, or a securities dealer) maintaining them. The 
recommended identification for each such account would include data to permit 
both customer identification by name, address and taxpayer identifying number, 
as well as a determination of the Treasury bills being held in such account by 
amount, maturity date and CUSIP number, and of transactions relating thereto 
[emphasis added]."

It is evident from this 
provision of the federal regulations that member banks within the Federal 
Reserve System are permitted to maintain treasury bill accounts for their 
customers in the same manner that they maintain other accounts. Like the bank's 
regular accounts, the nature and effect of book-entry treasury bill accounts 
then are to be controlled by the law of the state where the account is located. 
See Union National Bank of Texas v. Ornelas-Gutierrez, 772 F. Supp. 962 
(D.Tex. 1991) (applying state law to determine the legal effect of a book-entry 
treasury bill account).6

[¶17.]  Oatts presents an alternative argument to 
the effect that "should this Court determine that the specific regulations 
regarding United 
States securities are not controlling [i.e., 31 
C.F.R. Part 350], a reversal * * * is still required * * * under * * * 31 C.F.R. 
§ 306.11(a)(2)(i)."7 This alternative argument is inapt 
because the specific regulations set forth in 31 C.F.R. § 350 are dispositive 
with respect to the federal preemption issue. Consequently, the regulations 
found in 31 C.F.R. § 306.0, relating to United States securities, would be 
applied only to the extent that they are not displaced by more specific 
regulations. 31 C.F.R. § 306.0 (1990); 31 C.F.R. § 350.0 (1990); see also Estate 
of Layne v. Williams, 727 S.W.2d 157 (Mo. App. 1987) (case refutes a similar 
argument brought under Section 306.11(a)(2)(i)).

[¶18.]  In summary, the applicable federal 
regulations in this instance refer the issue to the law of the state when the 
question is what is the nature and legal effect to be given to a book-entry 
treasury bill account maintained by a member bank of the Federal Reserve Bank 
System. The trial court committed no error of law in not invoking the federal 
regulations to determine the ownership issues presented below. Not only was that 
theory absent in the presentation of the case to the trial court but, if it had 
been urged, it would have led to the conclusion reached by the trial 
court.

[¶19.]  We then turn to applicable Wyoming law. In this 
context, Oatts also argues for reversal of the summary judgment contending that 
genuine issues of material fact are present with respect to Phil Oatts' actual 
intent when he purchased this treasury bill in the name of "Phil Oatts or 
Marilyn J. Oatts or Vicki Jorgenson." Oatts argues that Phil Oatts intended to 
create a joint tenancy with right of survivorship only with her, and she seeks 
at trial to present extrinsic evidence relating to this issue. We are satisfied 
that the trial court correctly applied the law of Wyoming in reaching its 
determination that the operative language created, as a matter of law, a tenancy 
in common among Oatts, Phil Oatts and Jorgenson and that tenancy in common 
continued to exist among Oatts, Jorgenson, and the Oatts estate upon Philip's 
death. 

[¶20.]  The minimum requirements for establishing 
a joint tenancy or a tenancy by the entirety were clearly articulated in Wambeke 
v. Hopkin, 372 P.2d 470, 475-76 (Wyo. 1962), in this way:

"1. Each of the four 
unities of interest, time, title, and possession must be present, with the added 
unity of person for a tenancy by the entirety; or

"2. In the absence of one 
or more of the first four unities, it must be evident from the language of the 
instrument itself that the parties thereto intended to create a right of 
survivorship."

While the case involved 
real property rather than personal property, this court relied upon the Wambeke 
case in Choman v. Epperley, 592 P.2d 714 (Wyo. 1979). There, the court had to decide 
whether a quitclaim deed to "* * * MARY CHOMAN for her natural life, remainder 
to MIKE CHOMAN of Sheridan, Wyoming, and JOE CHOMAN of Hurst, Texas, their heirs 
and assigns forever" created a joint tenancy in the remaindermen. The court held 
that the simple presence of the four unities of interest, time, title, and 
possession did not, in and of itself, result in a joint tenancy in the absence 
of a manifest intention to do so. With respect to the question of whether a 
presumption at common law that favors joint tenancies was present in the law of 
Wyoming, the 
court said:

"Although Wyoming has not, by 
statute, directly reversed the one time common law presumption favoring joint 
tenancies, * * * the * * * cases reflect that the common law has been `modified 
by judicial decisions' to accomplish such reversal."

* * * * * *

"* * * If the one time 
common law presumption prevailed in Wyoming, the joint tenancy would have resulted 
without evidence thereof in the language of the instrument. The corollary is 
that, without the express provision for a joint tenancy, a tenancy in common is 
presumed." Choman, 592 P.2d  at 717-18.

[¶21.]  In Fehling v. Cantonwine, 522 F.2d 604 
(10th Cir. 1975), the court applied Wyoming law to affirm a ruling of the United 
States District Court that a tenancy in common was created in a situation in 
which there was nothing in a promissory note executed in favor of husband and 
wife to indicate an intent to create a joint tenancy. This theory was followed 
in In re Anselmi, 52 B.R. 479 (Bankr.D.Wyo. 1985), in which Wyoming law was applied 
in reaching a determination that a joint tenancy will not be presumed in the 
absence of an express intent to create a right of survivorship. To the same 
effect was Rupe v. First National Bank at Douglas, 485 P.2d 384 (Wyo. 1971), in 
which a lower court determination that title to a vehicle held by A "and/or" B 
was not sufficient to create a joint tenancy. An example of the appropriate way 
to create a joint tenancy in a bank account can be found in National Bank of 
Newcastle v. Wartell, 580 P.2d 1142 (Wyo. 1978).

[¶22.]  These cases demonstrate that the law in 
Wyoming, with 
respect to the creation of a joint tenancy with the right of survivorship in 
personal property, is clear. Joint tenancies are not favored in Wyoming, and such an 
interest will not be presumed in the absence of a clear manifestation, on the 
face of the instrument, of the intention to create a right of survivorship in 
the account.

[¶23.]  In this case, neither Oatts nor Jorgenson 
and the Oatts Estate dispute the fact that Phil Oatts purchased the treasury 
bill in the name of "Phil Oatts or Marilyn J. Oatts or Vicki Jorgenson." Oatts 
raised no issue below with respect to the legal validity of that transaction. 
Neither did Oatts establish any genuine issue of material fact as to whether the 
operative language could possibly create a joint tenancy under Wyoming law. It is clear 
to us that, as a matter of law, it could not. Consequently, we find no genuine 
issue of material fact was presented to the trial court.

[¶24.]  The trial judge correctly applied 
Wyoming law in 
ruling that those words in the designation of the account "Phil Oatts or Marilyn 
J. Oatts or Vicki Jorgenson failed to manifest clearly an intention to create a 
joint tenancy with a right of survivorship. The result is a tenancy in common. 
The judgment of the trial court to the effect that Oatts, Jorgenson and the 
Oatts Estate hold title as tenants in common is affirmed.

FOOTNOTES

1 A book-entry treasury 
bill is defined in 31 C.F.R. § 350.1(b) as:

"* * * [A]ny Treasury 
bill issued on or after the dates specified in § 350.0(a) in the form of an 
entry on the records of a Reserve Bank or the records of the Department of the 
Treasury."

2 Marilyn Oatts alleges in 
her brief that, during the conference call on November 21, 1990, she informed 
the trial judge that research had been requested from a national research firm 
with respect to the applicability of federal regulations to the issue in the 
case, and that the trial judge requested the research and advised the parties 
that an order would not be filed until the authority had been reviewed. Vicki 
Lynn Jorgenson and the Estate of Phil Oatts deny that these events occurred. The 
record does not reflect the communications alleged in the Brief of Marilyn 
Oatts, but it does reflect that the product of the research was sent to the 
trial judge, in letter form, on or about December 5, 1990. On December 7, 1990, 
the Estate of Phil Oatts and Vicki Lynn Jorgenson filed a motion to strike that 
letter. On December 17, 1990, the trial court entered an order granting summary 
judgment in favor of the Estate of Phil Oatts and Vicki Lynn Jorgenson based 
solely upon the state law claims presented in the pleadings, motions, and 
memoranda.

3 W.R.C.P. 58(b) provides, 
in pertinent part:

"Time of Entry. - 
A judgment or final order in any case shall be deemed to be entered whenever a 
form of such judgment or final order, signed by the trial judge, is filed in the 
office of the clerk of the court in which the case is pending."

4 31 C.F.R. § 350 states, 
in pertinent part:

"(a) 
Applicability. The regulations in this part govern the issuance of, and 
transactions in, the following Treasury bills:

* * * * * *

"(2) 26-week Treasury 
bills issued after June 1, 1977; * * *."

5 31 C.F.R. § 350.7(b) 
provides:

"(b) Recordation - 
(1) Individuals. Accounts for book-entry Treasury bills may be held in 
the names of individuals in one of two forms: single name, i.e., `John A. Doe 
(123-45-6789) (address)'; or two names, i.e., `John A. Doe (123-45-6789) 
(address) or (Mrs.) Mary B. Doe (987-65-4321).' No other form of recordation in 
two names, whether individuals or others, will be permitted, except in the case 
of co-fiduciaries."

31 C.F.R. § 350.15 
provides:

"For the purposes of this 
subpart and notwithstanding any State law or any regulation or any notice to the 
contrary, it shall be conclusively presumed:

"(a) That any depositor 
in whose name, or name and title, book-entry Treasury bills are recorded, is a 
competent adult, (b) that recordation in two names, as prescribed in § 350.7(b) 
of this subpart, is intended, if there is an attempt to create some other form 
of recordation in two names, (c) that recordation in the names of the first two 
is intended, if there is an attempt to name more than two individuals, and (d) 
that the first name is the depositor in any case (not authorized and not 
otherwise provided for in this subpart) wherein an attempt is made to have 
book-entry Treasury bills recorded in two or more names, e.g., two officers of 
an organization or two partners."

6 Union National Bank of 
Texas v. 
Ornelas-Gutierrez, 772 F. Supp. 962 (D.Tex. 1991), is remarkably similar to this 
case. A had bought book-entry treasury bills and designated two payable-on-death 
beneficiaries, B and C. A died. Union National Bank then interplead A's estate, 
B, and C. A's estate claimed that the designations for beneficiaries to whom the 
account would be payable on death were inadequate as a matter of state law and 
claimed sole ownership of the treasury bills. The estate argued in the 
alternative that 31 C.F.R. § 350.7(b)(1) applied to invalidate the 
payable-on-death beneficiary status of C. The federal district court applied the 
analysis we have set forth in this opinion and held that § 350.7(b)(1) was not 
applicable to book-entry treasury bills purchased through the Federal Reserve 
Bank System. It then applied state law in resolving the ownership 
issues.

7 31 C.F.R. § 
306.11(a)(2)(i) deals with the registration of United States securities with the 
Department of the Treasury. Section 306.11(a)(2)(i) provides that when multiple 
individuals are registered on the security connected by the disjunctive "or" 
they hold the security as joint tenants with right of survivorship. This 
analysis leads Oatts to conclude that she is a joint tenant with Jorgenson, and 
each of them is entitled to one-half of the proceeds of the treasury bill.