Case Title: Lewis v. Steinreich

Citation: 1995-Ohio-133

Docket Number: 19940339

State: ohio

Court: Ohio Supreme Court

Date: 1995-08-23T00:00:00Z

Document:
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Lewis, Admr., f.k.a. Rippe, Appellant, v. Steinreich, Exr.,                      
Appellee.                                                                        
[Cite as Lewis v. Steinreich (1995),     Ohio St.3d     .]                       
Probate court -- Presentment requirements of R.C. 2117.06                        
     cannot be applied to bar claim of an owner who seeks to                     
     recover assets wrongfully held in an estate.                                
The presentment requirements of R.C. 2117.06, the creditor's                     
     claim statute, cannot be applied to bar the claim of an                     
     owner who seeks to recover assets wrongfully held in an                     
     estate.                                                                     
                                                                                 
     (No. 94-339 -- Submitted April 26, 1995 -- Decided August                   
23, 1995.)                                                                       
     Appeal from the Court of Appeals for Summit County, No.                     
16203.                                                                           
     Edwin Louis Rippe ("Rippe") died testate on April 22,                       
1986, in Dade County, Florida.  Prior to his death, Rippe had                    
opened two brokerage accounts for the purpose of managing and                    
trading various securities.  Both brokerage accounts named                       
Rippe and his only child, Karen Steinreich ("Steinreich"), as                    
joint tenants with right of survivorship.  Accordingly,                          
sometime after Rippe's death, the executor of Rippe's estate                     
delivered assets from the brokerage accounts to Steinreich, who                  
resided in Summit County, Ohio.                                                  
     In March 1988, Evelyn Rippe Lewis ("Lewis"), Edwin Rippe's                  
widow, was appointed as administrator ad litem of Rippe's                        
estate.  As administrator ad litem, Lewis was given authority                    
to institute legal actions against Steinreich to recover the                     
assets of the brokerage accounts on behalf of Rippe's estate.                    
On November 19, 1988, Steinreich died testate in Summit County,                  
Ohio.  Karen's husband, Steven Steinreich, became executor of                    
her estate.                                                                      
     On April 10, 1990, Lewis, in her capacity as administrator                  
ad litem for Rippe's estate, filed a declaratory judgment                        
action against Steinreich's estate in the Summit County Court                    
of Common Pleas, Probate Division.  Lewis sought to regain                       
possession or control of the brokerage accounts or their                         
proceeds as assets belonging to Rippe's estate.  Applying Ohio                   
law, the probate court found from the facts and evidence that,                   
at the time Rippe placed the assets in the joint and                             
survivorship brokerage accounts, he had no intent to give                        
Steinreich a present interest in the assets.1  It concluded,                     
therefore, that the  property belonged to Rippe's estate.  The                   
probate court then ordered Steinreich's estate to transfer to                    
Rippe's estate an amount equal to the combined value of the                      
assets derived from the brokerage accounts at the time                           
Steinreich took possession of the assets.                                        
     The executor of Steinreich's estate appealed to the Ninth                   
District Court of Appeals.  The appeals court reversed the                       
probate court's declaratory judgment on an entirely different                    
basis, holding that Lewis failed to present her claim to                         
Steinreich's estate within the time allowed by R.C. 2117.06,                     
the creditor's claim statute.                                                    
     The cause is now before this court upon the allowance of a                  
discretionary appeal.                                                            
                                                                                 
     Porter, Wright, Morris & Arthur, Herbert L. Braverman and                   
Joyce Metti Papandreas; Gustafson, Stephens, Ferris, Forman &                    
Knight, P.A., and Peter J. Forman, for appellant.                                
     Goldman & Rosen and Samuel Goldman, for appellee.                           
                                                                                 
     Cook, J.  This case presents several issues for review.                     
First we determine that R.C. 2117.06, a procedural statute                       
requiring the presentment of creditors' claims within a limited                  
time, does not apply to actions in which a party claims                          
ownership of property alleged to be wrongfully withheld by an                    
estate.  We also find that Florida has the most significant                      
contacts with the present case and, therefore, Florida law                       
controls the determination of the rightful ownership of the                      
brokerage account assets.  Finally, after finding that                           
competent, credible evidence supports the probate court's                        
factual determination that Rippe did not intend to give                          
Steinreich a present interest in the joint and survivorship                      
brokerage account assets, we uphold the probate court's                          
declaratory judgment that Steinreich had no valid survivorship                   
interest and that the assets derived from the joint and                          
survivorship brokerage accounts belong to Rippe's Florida                        
estate.                                                                          
                               I                                                 
                          R.C. 2117.06                                           
     With her first proposition of law, Lewis argues that the                    
appeals court erred in applying R.C. 2117.06 to preclude her                     
claim of ownership of the brokerage account assets.  At the                      
time that Lewis filed her declaratory judgment action, R.C.                      
2117.06 required that "[a]ll creditors having claims against an                  
estate, including claims arising out of contract," present                       
their claims within three months after the appointment of the                    
executor or administrator.2  R.C. 2117.06 (A) and (B). (142                      
Ohio Laws, Part I, 1021-1022.)  The appeals court reasoned that                  
because Ohio law has traditionally applied contract principles                   
in cases involving joint and survivorship interests, Lewis's                     
claim concerning whether Steinreich's estate is entitled to                      
possession and control of these joint and survivorship assets                    
was a claim "arising out of contract" for purposes of applying                   
R.C. 2117.06.  As Lewis failed to comply with R.C. 2117.06 in                    
bringing her declaratory judgment action, the appeals court                      
held that her claim was barred.  We differ with the appeals                      
court's analysis.                                                                
     We find that Lewis's ownership claim is not a creditor's                    
claim within the meaning of R.C. 2117.06.  The presentment                       
requirements of R.C. 2117.06 apply only to those claims which                    
may be allowed as debts payable out of the assets of an                          
estate.  Staley v. Kreinbihl (1949), 152 Ohio St. 315, 327, 40                   
O.O. 361, 366, 89 N.E.2d 593, 599 (interpreting G.C. 10509-112,                  
the precursor to R.C. 2117.06).  Lewis, however, is not                          
claiming an interest in any part of the assets rightfully found                  
in Steinreich's estate.  Instead, she claims a right on behalf                   
of Rippe's estate to recover assets she alleges are wrongfully                   
held in Steinreich's estate.  "'The true owner of  [property]                    
traced to the possession of another has the right to have [the                   
property] restored, not as a debt due and owing, but because it                  
is his property wrongfully withheld from him.'"  Id. at 327, 40                  
O.O. at 366, 89 N.E.2d at 600, quoting Cook v. Crider (1939),                    
63 Ohio App. 12, 14-15, 16 O.O. 256, 257, 24 N.E.2d 966, 968.                    
When property held by the decedent at the time of her death is                   
actually owned by another from whom possession is wrongfully                     
withheld, such property is not property belonging to the estate                  
and the party claiming ownership is not a creditor of the                        
estate.  Spaceway Distrib. & Storage Co., Inc. v. Williamson                     
(1987), 41 Ohio App.3d 187, 190, 535 N.E.2d 321, 324, citing                     
Service Transport Co. v. Matyas (1953), 159 Ohio St. 300, 303,                   
50 O.O. 298, 299, 112 N.E.2d 20, 22. "[E]xecutors have no right                  
or power to administer assets which do not belong to [an]                        
estate."  Staley, 152 Ohio St. at 327, 40 O.O. at 366, 89                        
N.E.2d at 599.  As Lewis asserts that the brokerage account                      
assets do not belong to Steinreich's estate, she has no debt to                  
claim against the estate's assets and, therefore, did not have                   
to present her claim to Steinreich's estate in accordance with                   
R.C. 2117.06.  Service Transport, 159 Ohio St. at 303, 50 O.O.                   
at 299, 112 N.E.2d at 22.                                                        
     While we recognize that applying R.C. 2117.06 to ownership                  
claims would further the state's legitimate interest in the                      
prompt, efficient administration of decedents' estates, we also                  
recognize that, unlike most debtor/creditor claims, claims                       
concerning title and ownership may not surface for many years                    
after a transaction takes place, making it more likely that                      
valid ownership claims will be cut off by the intervening death                  
of a principal to the transaction if R.C. 2117.06 is so                          
applied.  We do not find that the state's interest in the                        
finality of estate administration outweighs a party's interest                   
in recovering possession of property wrongfully withheld from                    
him.                                                                             
     We thus hold that the presentment requirements of R.C.                      
2117.06, the creditor's claim statute, cannot be applied to bar                  
the claim of an owner who seeks to recover assets wrongfully                     
held in an estate.  As we find that Lewis's first proposition                    
of law is well taken, we need not consider Lewis's second                        
proposition of law, in which she claims that a declaratory                       
judgment action pursuant to R.C. Chapter 2721 is an                              
independent, alternative remedy not subject to the requirements                  
of R.C. 2117.06.  We also need not consider Lewis's third                        
proposition of law, in which she asserts that she should be                      
given the opportunity to prove that she complied with the                        
presentment requirements of  R.C. 2117.06.                                       
                               II                                                
                        Conflict of Laws                                         
     As Ohio procedural law does not bar the present action, we                  
now consider whether Ohio or Florida law controls our                            
determination of which estate is entitled to possession and                      
control of the assets of the two joint and survivorship                          
brokerage accounts.  In making choice-of-law determinations,                     
this court has adopted the theories stated in the Restatement                    
of the Law 2d, Conflict of Laws.  Morgan v. Biro Mfg. Co., Inc.                  
(1984), 15 Ohio St.3d 339, 341-342, 15 OBR 463, 465, 474 N.E.2d                  
286, 288-289.  Accordingly, we look to which state has the most                  
significant contacts with the brokerage accounts and assets                      
that are the focus of this ownership dispute.  See 1                             
Restatement of the Law 2d, Conflict of Laws (1971) 10, Section                   
6.                                                                               
     In its determination of the choice-of-law question, the                     
probate court relied heavily on the fact that the assets are                     
now located in an Ohio estate to find that Ohio has the most                     
significant contacts with the present dispute and, therefore,                    
Ohio law controls.  First, we note that this case involves the                   
administration of two estates, Steinreich's in Ohio and Rippe's                  
in Florida.  Obviously, each state has a substantial interest                    
in the administration of estates within its borders by                           
application of its own laws.  Thus, we do not find the fact                      
that an Ohio estate is involved conclusive of the                                
significant-contacts test.  Furthermore, the other facts of                      
this case demonstrate that the declaratory judgment should be                    
analyzed using Florida law.                                                      
     Rippe opened both of the joint and survivorship accounts                    
at brokerage firms in Florida, where he resided.  Although                       
signatures purporting to be Steinreich's appear on the                           
documents initiating the joint and survivorship accounts,                        
Steinreich did not sign any paperwork at the Florida brokerage                   
offices and, in fact, Steinreich's estate stipulated at trial                    
that the signatures appearing on the documents are not                           
Steinreich's.  Rippe, an avid stock trader, exercised complete                   
dominion and control over the assets while living in Florida.                    
He dealt with Florida stockbrokers when managing the assets in                   
the brokerage accounts, often contacting the agents on a                         
frequent, if not daily, basis.  During the entire time that the                  
joint and survivorship accounts were active, the brokerage                       
firms neither received communications from Steinreich in Ohio                    
nor mailed information concerning the accounts to Steinreich in                  
Ohio. Rippe received all of the stock certificates and any                       
dividends paid on the accounts personally or at his address in                   
Florida.  Finally, Steinreich's claim of ownership obviously                     
arose at the time Rippe died in Florida.                                         
     From the foregoing, we conclude that no relationship                        
existed between Rippe's joint and survivorship accounts and the                  
state of Ohio.  In fact, it appears that Steinreich did not                      
know that the Florida accounts existed until she was contacted                   
by Rippe's estate after Rippe's death.  Moreover, any                            
connection between the assets and Ohio occurred only after                       
Rippe's death. Although an Ohio estate (Steinreich's) is a                       
party to the declaratory judgment, its administration is only                    
incidental to resolving this controversy.  Because Florida has                   
the most significant contacts with the account agreements and                    
assets that are the subject of this dispute, Florida law                         
controls our analysis of Lewis's claim.                                          
                              III                                                
                          Florida Law                                            
     Having concluded that Florida law, rather than Ohio law,                    
controls the resolution of this declaratory judgment action, we                  
next outline the common law of Florida delimiting joint and                      
survivorship interests.  Before discussing the relevant Florida                  
law, however, we note that, at the time the Summit County                        
Probate Court decided this claim and the Ninth District Court                    
of Appeals reviewed it, Ohio and Florida laws concerning joint                   
and survivorship interests were virtually identical.  As the                     
probate court explained, courts of both states looked to                         
evidence of the decedent's intent to transfer a present                          
interest in the joint and survivorship assets to the surviving                   
party during the decedent's lifetime to determine whether the                    
assets belonged to the surviving party upon the decedent's                       
death.  Kuebler v. Kuebler (Fla.App.1961), 131 So.2d 211, 215,                   
and In re Estate of Thompson (1981), 66 Ohio St.2d  433,  20                     
O.O.3d 371, 423 N.E.2d 90, paragraph two of the syllabus.                        
However, while the current case was pending, this court decided                  
Wright v. Bloom (1994), 69 Ohio St.3d 596, 635 N.E.2d 31, in                     
which we held that, "[t]he opening of a joint and survivorship                   
account in the absence of fraud, duress, undue influence or                      
lack of capacity on the part of the decedent is conclusive                       
evidence of his or her intention to transfer to the surviving                    
party or parties a survivorship interest in the balance                          
remaining in the account at his or her death." Id. at paragraph                  
two of the syllabus, overruling In re Estate of Thompson                         
(1981), 66 Ohio St.2d  433, 20 O.O.3d 371, 423 N.E.2d 90,                        
paragraph two of the syllabus.  Therefore, Steinreich's estate                   
correctly argues that had we found Ohio law controlling in Part                  
II of this opinion, we would have been required to reverse the                   
probate court's judgment based on the law of Bloom.  See                         
Peerless Elec. Co. v. Bowers (1955), 164 Ohio St. 209, 210, 57                   
O.O. 411, 129 N.E.2d 467, 468.  Having rejected the probate                      
court's conclusion that Ohio law controls the present case,                      
however, we now turn to our discussion of the applicable                         
Florida law.                                                                     
     Under long-standing Florida law, in order for a valid                       
joint and survivorship interest to be created in stock, the                      
decedent must make an inter vivos gift of an interest in the                     
stock to the surviving party during the decedent's lifetime.                     
Kuebler v. Kuebler, 131 So.2d at 218 (on rehearing); see, also,                  
Sullivan v. Am. Tel. & Tel. Co., Inc. (Fla.App.1969), 230 So.2d                  
18, 20.  Although registering the stock in the name of two                       
persons creates a presumption of an inter vivos gift, that                       
presumption is not conclusive and may be rebutted with evidence                  
that the decedent failed to fulfill the essential elements of a                  
valid inter vivos gift. Kuebler v. Kuebler, 131 So.2d at 218.                    
One of those essential elements is present donative intent.                      
Id.  If the evidence demonstrates that the decedent did not                      
intend to make a gift of the stock or any interest in the stock                  
to the surviving party at the time the stock was issued or at                    
any time during the decedent's life, the decedent did not have                   
present donative intent and the alleged joint and survivorship                   
interest must fail.  Id. at 218-219.  Moreover, "[i]f the                        
intention of the donor is that nothing is to vest until [the                     
donor's] death, the transaction is testamentary in character                     
and will fall unless it conforms with the formal requirements                    
of the law relating to testamentary disposition of property."                    
Id. at 215.                                                                      
     After reviewing the record in this case, we find that                       
competent, credible evidence supports the probate court's                        
factual determination that Rippe did not have the requisite                      
intent to give Steinreich a present interest in the two joint                    
and survivorship brokerage accounts during his lifetime and                      
that, at most, Rippe was attempting to make a testamentary                       
disposition of the account assets without fulfilling the formal                  
requirements for such dispositions.  See C.E. Morris Co. v.                      
Foley Constr. Co. (1978), 54 Ohio St.2d 279, 8 O.O.3d 261, 376                   
N.E.2d 578, syllabus.  According to Florida law, because Rippe                   
did not have the requisite present donative intent, he did not                   
make a valid inter vivos gift of an interest in brokerage                        
accounts to Steinreich and Steinreich's alleged joint and                        
survivorship interest must fail.  Rippe's estate, therefore,                     
erroneously transferred the accounts' assets to Steinreich.                      
Thus, we uphold the probate court's declaratory judgment that                    
Rippe's estate is the rightful owner of the assets derived from                  
the brokerage accounts and Steinreich's estate must return the                   
assets to Rippe's estate in an amount equal to the combined                      
value of the assets at the time Steinreich took possession of                    
them.  Lewis's fourth proposition of law is well taken.                          
     The judgment of the court of appeals is reversed and the                    
judgment of the probate court is reinstated based on the                         
application of Florida law.                                                      
                                 Judgment reversed.                              
     Moyer, C.J., Douglas, Wright, Resnick and F.E. Sweeney,                     
JJ., concur.                                                                     
     Pfeifer, J., concurs in part and dissents in part.                          
Footnotes:                                                                       
1  In accordance with this court's recent holding in Wright v.                   
Bloom (1994), 69 Ohio St.3d 596, 635 N.E.2d 31, paragraph two                    
of the syllabus, Ohio courts no longer consider evidence                         
concerning the present donative intent of the decedent because                   
the opening of the joint and survivorship account is conclusive                  
evidence of the decedent's intent to transfer a survivorship                     
interest in the balance of the account's assets at his death.                    
2  R.C. 2117.06(B) has since been amended to require                             
presentment of creditors' claims "within one year after the                      
death of the decedent, whether or not the estate is released                     
from administration or an executor or administrator is                           
appointed during that one-year period."  143 Ohio Laws, Part                     
III, 4549.                                                                       
     Pfeifer, J., concurring in part and dissenting in part.  I                  
dissent only from the majority's decision to reinstate the                       
probate court's judgment, which court originally decided the                     
case pursuant to Ohio law.  I would remand the case to the                       
probate court, so that it can apply Florida law to the unique                    
facts of this case.