Case Title: Caine v. NationsBank

Citation: 

Docket Number: 002615

State: virginia

Court: Virginia Supreme Court

Date: 2001-09-14T00:00:00Z

Document:
Present:  All the Justices 
 
SUSAN FREIER CAINE 
 
v.  Record No. 002615     OPINION BY JUSTICE ELIZABETH B. LACY 
 
 
 
September 14, 2001 
NATIONSBANK, N.A. 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
F. Bruce Bach, Judge 
 
 
In this appeal, we consider whether a financial 
institution breached its statutory or contractual duties when 
it allowed one party to a joint account to add unilaterally 
another party to the account. 
 
Because the trial court decided this case on demurrer, we 
will state as true all material facts alleged in the motion 
for judgment.  Robinson v. Matt Mary Moran, Inc., 259 Va. 412, 
414, 525 S.E.2d 559, 561 (2000).  In May 1989, Dr. Andrew A. 
Freier opened a joint checking account in his name and that of 
his daughter, Susan Freier Caine, at Sovran Bank, N.A., the 
predecessor to NationsBank, N.A. (the bank).  The signature 
card, signed by both parties, indicated that survivorship 
rights attached to the account. 
In 1998, when Dr. Freier's health was deteriorating, his 
wife, Amy Kelly Freier, sought to be added to the account to 
allow her to pay bills.  Although told by a bank employee that 
the signatures of all parties to the account would be 
required, Mrs. Freier returned a new signature card to the 
bank which identified Caine, Dr. Freier, and Mrs. Freier in 
the title of the account, but contained the signatures of only 
Dr. and Mrs. Freier. 
 
Upon receipt of the new signature card, the bank's branch 
manager visited Dr. Freier at his home to discuss the card and 
concluded that Dr. Freier did not intend to remove Caine from 
the account.  The manager asked Dr. Freier to again sign the 
signature card, which he did on January 14, 1998.  The bank 
determined the new signature card was sufficient to add Mrs. 
Freier to the account.  From January 2 through February 3, 
1998, Mrs. Freier wrote thirty-five checks totaling 
$100,181.13 on the account, including one check for $75,000. 
This check was written, cashed, and deposited to her own 
account on January 27, 1998, the day Dr. Freier died. 
 
Caine filed a motion for judgment against the bank 
seeking $100,181.13 plus interest, asserting that the bank 
breached its contract with her when it recognized Mrs. Freier 
as a party to the joint account.1  The trial court sustained 
the bank's demurrer, holding that Code § 6.1-125.6 authorized 
the "unilateral addition of a new owner to a multiple-party 
account."  On appeal, Caine asserts that neither Code § 6.1-
125.6 nor the joint account's contract terms authorized Dr. 
 
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Freier to add Mrs. Freier to the account without Caine's 
consent. 
 
The trial court's decision was based on its construction 
of Code § 6.1-125.6.  That statute provides: 
The provisions of § 6.1-125.5 as to rights of 
survivorship are determined by the form of the 
account at the death of a party.  This form may be 
altered by written order given by a party to the 
financial institution to change the form of the 
account or to stop or vary payment under the terms 
of the account.  The order or request must be signed 
by a party, received by the financial institution 
during the party's lifetime, and not countermanded 
by other written order of the same party during his 
lifetime. 
 
Caine argues that, as applied to an existing joint account 
with survivorship, the plain meaning of the phrase "the form 
of the account" refers to whether the account is one with or 
without survivorship rights.  Thus, Caine asserts that the 
ability to change "the form of the account" unilaterally 
pursuant to Code § 6.1-125.6 is limited to changing the 
survivorship rights attached to a joint account.  We disagree. 
Code § 6.1-125.5 sets out three categories of multiple-
party accounts – joint accounts, P.O.D. accounts, and trust 
accounts – and details the specific survivorship rights of 
each and the conditions under which such rights attach.  Code 
§ 6.1-125.6 states that the "form" of the account on the date 
                                                                
1 Caine's motion for judgment also contained an 
alternative claim that was voluntarily dismissed with 
 
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of a death of one of the parties is the operative "form" for 
determining which of the survivorship rights established in 
Code § 6.1-125.5 applies.  The word "form" is not otherwise 
defined, but in this context it refers to the type of 
multiple-party account and is not limited to whether 
survivorship rights attach to the account.2  Therefore, the 
trial court was correct when it rejected Caine's position that 
Code § 6.1-125.6 limits the "form" of the account "to the 
characterization of an account as being with or without 
survivorship provisions." 
 
However, in determining the effect of Code § 6.1-125.6, 
the trial court did not consider our decision in Jampol v. 
Farmer, 259 Va. 53, 524 S.E.2d 436 (2000).3  In Jampol, we 
considered whether certain P.O.D. accounts had been 
effectively converted to non-P.O.D. accounts.  We held that 
the language of Code § 6.1-125.6 regarding written 
notification of such a change in the form of the account 
merely prescribed a permissive method that a party could use 
to alter the form of the account.  Id. at 58-59, 524 S.E.2d at 
                                                                
prejudice and is not at issue in this appeal. 
2 We also note that rights of survivorship may be affected 
by "clear and convincing evidence" of intent and such evidence 
is not restricted to "the form" of the account.  Code § 6.1-
125.5. 
3 The trial court's holding was rendered less than one 
month after the decision in Jampol and the case was not 
discussed or cited by either the parties or the court. 
 
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439.  Thus, the language referring to a unilateral change in 
the account form was not the source of that authority, but 
rather one means of exercising such authority.  Therefore, the 
trial court's holding in this case that Code § 6.1-125.6 
"authorizes the unilateral addition of a new owner and sets 
forth the method by which this change must be made" is 
incorrect. 
Jampol is not dispositive of the issues in the instant 
case, however.  First, adding a party to an existing joint 
account is not strictly a change in the "form" of the account.  
Furthermore, in Jampol, there was no challenge to the ability 
of the party to change the form of the accounts; the dispute 
was between individuals claiming an interest in the proceeds 
from the accounts at issue.  Here, the claim is against the 
financial institution for improperly accepting the change in 
the form of the account, not against another individual 
regarding competing claims to the proceeds of the account.  
Therefore, the question remains:  is a financial institution 
liable to a party to a joint account for recognizing a third 
party to the joint account added without the consent of all 
parties to the account?  
 Resolution of this issue requires examination of 
relevant statutory and contractual provisions.  The contract 
between the bank and the parties to the joint account in this 
 
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case consists of the Retail Signature Card and the Rules and 
Regulations Governing Retail Accounts.  These documents do not 
expressly address the addition of a party to an existing joint 
account.  However, the contract does provide that "[e]ach 
owner appoints all other owners as his or her agent to 
endorse, deposit, withdraw and conduct business for the 
account."  (Emphasis added).  The bank argues that this agency 
appointment is "broad in scope" and together with the Act 
"must be construed to include the addition of a party to the 
account."  Conversely, Caine argues that the phrase "conduct 
business for the account" refers only to "ministerial" and 
"transactional" matters and does not extend to altering the 
parties to the account. 
The contract is subject to Chapter 2.1 of Title 6.1, 
Multiple-Party Accounts, Code §§ 6.1-125.1 to 125.16 (the 
Act), and thus cannot contravene the provisions of the Act.  
Fleming v. Bank of Va., 231 Va. 299, 305, 343 S.E.2d 341, 344 
(1986).  Although the Act does not expressly provide the 
method by which a party may be added to a joint account, 
neither does the Act forbid a party to an account from 
unilaterally adding another party to the account.  Both the 
Act and the contract afford the financial institution broad 
protection from liability for carrying out the requests of a 
party to a joint account relative to that account while also 
 
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vesting a party to the joint account with extensive powers to 
deal with the account without the concurrence of other parties 
to the account.  These dual provisions, broad authority to act 
and protection of the financial institution, further the 
policies underlying the purpose of the Act.  See Barbara M. 
Rose, Legislative Comment, Multiple-Party Accounts:  Does 
Virginia's New Law Correspond with the Expectations of the 
Average Depositor?, 14 U. Rich. L. Rev. 851, 859-60 
(1980) (stating that the Act protects financial institutions 
and leaves litigation of disputes over the legitimacy of 
actions taken to the parties to the account). 
For example, the Act authorizes financial institutions to 
pay all sums in a joint account on request of any party to the 
account, regardless of the parties' beneficial ownership 
interests in the account.  Code §§ 6.1-125.9 to -125.10.  In 
the absence of written notice to the contrary, such payments 
may be made without any resulting liability to the financial 
institution.  Code § 6.1-125.13.  Similarly, Paragraph 7 of 
the Rules and Regulations Governing Retail Accounts provides 
that funds in the joint account may be withdrawn by any party 
to the account and "will be a complete release of the Bank for 
any payment so made." 
Like the contract, the Act also imposes an agency 
relationship on parties to a joint account.  The Act provides 
 
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that each party to an account acts as "agent in regard to the 
ownership interest of the other party."  Code § 6.1-125.15:1.  
Although directed to a party's ownership interest in the 
account, the Act's imposition of an agency appointment is 
consistent with affording a party to such an account broad 
powers over the account. 
 
It is clear that under both the contract and the Act, 
actions by a party to a joint account, whether taken 
unilaterally or as an agent for another party to the account, 
can significantly impact the rights of such other parties.  
Thus, a contractual provision recognizing or authorizing the 
unilateral addition of a party to a joint account directly or 
through an agency relationship is consistent with the purposes 
of the Act. 
 
Considering the contractual agency provisions in the 
context of the Act and the entire contract, we find no support 
for limiting the authority granted to one party to "conduct 
business for the account" on behalf of another party to 
ministerial acts as Caine suggests.  This provision is 
sufficiently broad so as to include the ability of one party 
to the account to act as the agent of other parties to the 
account when adding a new party to the account. 
 
Accordingly, we conclude that the bank did not breach its 
contract with Caine in recognizing Mrs. Freier as a party to 
 
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the joint account based on the signature card executed by Dr. 
Freier on January 14, 1998.  Therefore, for the reasons 
expressed in this opinion, the judgment of the trial court 
will be affirmed. 
Affirmed.
 
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