Title: In Re Estate of Nichols

State: tennessee

Issuer: Tennessee Supreme Court

Document:

856 S.W.2d 397 (1993) In re ESTATE OF Ruby Lee NICHOLS, Deceased. Carol NICHOLS, Plaintiff-Appellee, v. Jerald NICHOLS, Defendant-Appellant. Supreme Court of Tennessee, at Knoxville. June 1, 1993. Tom H. Rogan, Rogersville, for plaintiff-appellee. Sharon Frankenberg, Ingram & Lowe, Knoxville, for defendant-appellant. REID, Chief Justice. This case presents an appeal from an adjudication by the trial court, affirmed by the Court of Appeals, that certain certificates of deposit, issued to the decedent, Ruby Lee Nichols, and her only child, Jerald Nichols, as joint tenants with rights of survivorship, be distributed according to the terms of the decedent's last will and testament rather than to the surviving tenant. *398 Prior to her death, the decedent purchased or renewed seven certificates of deposit in the total amount of approximately $165,000. The last certificate was purchased on February 17, 1989, less than one month prior to the decedent's death on March 7, 1989. The others were purchased or renewed prior to January 1, 1989, the effective date of T.C.A. § 45-2-703(c)-(g) (Supp. 1992), and four of the certificates were issued prior to the date on which the decedent executed her last will and testament, May 12, 1985. The funds to purchase the certificates were furnished by the decedent. The certificates were issued to the decedent and Jerald Nichols "as joint tenants with rights of survivorship and not as tenants in common and not as tenants by the entirety." Both parties signed the signature cards, which contained the terms of the deposit agreement. The decedent was survived by Jerald Nichols (the defendant-appellant) and his two children, Carol Nichols (who is now Carol Nichols Blanton, the plaintiff-appellee) and Chad Nichols. To these three persons she willed "all [her] property, real and personal." She appointed Jerald Nichols executor of her estate. The evidence includes the signature cards, the certificates of deposit, and the testimonies of Carol Nichols, Jerald Nichols, and the lawyer who prepared the decedent's last will and testament. According to the narrative transcript of the hearing, found by the trial court to be more nearly accurate than the other account submitted, the attorney who prepared decedent's will testified, apparently without objection, as follows: And, further: Appellant Jerald Nichols testified that after the death of his mother, he appropriated the certificates for his personal control, and he also testified regarding his acts as executor of the estate. He was not asked any questions regarding the issuance of the certificates of deposit. Carol Nichols filed an exception to the inventory of the estate on the ground that the inventory was incomplete because it did not include the certificates of deposit. The exception was amended to charge that Jerald Nichols was claiming the certificates as his property "in violation of his fiduciary relationship, by virtue of fraud and misrepresentation committed by him in an attempt to prevent passing of title to the estate." The trial court specifically found that there was no fraud on the part of Jerald Nichols. The court also found There is no indication in the record when, with reference to the issuance of the several certificates of deposit, the stated conversations between the testatrix and her son occurred. The court ordered that the inventory be amended to include the certificates of deposit, *399 which the court found to be "properly includable within the estate." In affirming the trial court, the Court of Appeals relied upon this Court's holding in Lowry v. Lowry, 541 S.W.2d 128 (Tenn. 1976), for the statement of the applicable rule of law: The court stated further: The court then stated the issue to be whether the evidence is sufficient to establish that the intent was expressed at the time that the certificates of deposit were obtained. The court found that there was not any direct evidence on the issue in the record, but found that Jerald Nichols "[spoke] loudly by silence" when he did not volunteer information regarding the issuance of the several certificates of deposit. The court held that Jerald Nichols' silence was "circumstantial evidence" that he was told by the decedent of her intent each time a certificate of deposit was issued and that he agreed to divide the proceeds among his children and himself equally. The court stated that Carol Nichols was absolved from any responsibility to provide evidence of an intent contrary to that expressed on the face of the certificates. The court stated, "It is not to be said that Appellee was bound at her peril to question Appellant on a matter as to which he chose not to speak." The Court of Appeals affirmed the "findings and judgment" of the trial court. Ownership of the certificate issued February 17, 1989, is controlled by the provisions of T.C.A. § 45-2-703(c)-(f) which, pursuant to subsection (g), became effective January 1, 1989. Pursuant to that statute: T.C.A. § 45-2-703(e)(1) (emphasis added). As discussed below, the record supports no disposition of that certificate contrary to this statute. The ownership of the other six certificates of deposit are controlled by the law as stated by this Court in Lowry v. Lowry. This case is similar to Lowry, in which, two joint bank accounts with rights of survivorship had been opened with funds owned by the decedent. The first account was opened prior to the date on which the decedent executed her last will and testament, whereby she, without reference to the bank account, willed all her property to her five children equally. The second account was opened after the will had been executed. The Court rejected the theory that Lowry v. Lowry, 541 S.W.2d at 130. The Court stated further: *400 Id. The Court, instead, approved the decision by the Court of Appeals in Iacometti v. Frassinelli, 494 S.W.2d 496 (Tenn. App. 1973), Lowry v. Lowry, 541 S.W.2d at 131. The Court held in Lowry that, "[a]bsent clear and convincing evidence of contrary intent expressed at the time of its execution, ... clear and unambiguous language" on a bank's signature card is sufficient proof of the joint account and the surviving tenant's ownership of the proceeds. Id. at 132. The Court further found that: Id. at 133. And further: Id. That last statement is also applicable to the case before the Court. The language of the certificates creating the joint accounts with rights of survivorship is clear and unambiguous. There is no evidence of fraud or other circumstances that would vitiate the agreements. In fact, as found by the trial court, there was "no direct evidence" regarding the execution of the certificates. The Court of Appeals found, however, that Jerald Nichols' silence was circumstantial evidence sufficient to prove "that [the decedent] told her son Jerald to divide the certificates equally between himself and his two children," and affirmed the "findings and judgment" of the trial court. The legal theory on which the decisions of the trial court and the Court of Appeals are based is not clear. The finding and judgment of the trial court, affirmed by the Court of Appeals, was that, The issue was presented in the trial court by Carol Nichols' exception to the inventory filed by Jerald Nichols as executor. The exception acknowledges that the funds were held in certificates of deposit issued to the decedent and Jerald Nichols as joint tenants with rights of survivorship. The exception charged only that the certificates were improperly omitted from the inventory of the estate. The exception was amended to allege fraud and misrepresentation; however, both the trial court and the Court of Appeals absolve Jerald Nichols of any fraudulent conduct. A decision that the certificates constitute a part of the probate estate, and therefore are includable in the inventory, can only be based on a determination that there was no intent to create a joint account with rights of survivorship. See 2 Pritchard on Wills and Administration of Estates § 629, p. 151-52 (4th ed. 1983). The funds represented by the certificates are subject to probate only if they were owned by the decedent at the time of her death. They can be owned by the decedent at the time of her death only if there was no right of survivorship. See id. Since the language of the certificates in this case is clear and unambiguous, clear and convincing evidence *401 is required to show that the certificates do not reflect the intent of the parties at the times of execution. See Lowry v. Lowry, 541 S.W.2d at 132. Since there is no such proof, the trial court's finding that the property represented by the certificates are includable in the estate cannot be sustained. Even though the Court of Appeals affirmed the findings of the trial court that the certificates are subject to probate, it relied upon the inconsistent legal theory that the disposition of the funds held jointly with rights of survivorship is subject to a trust created by agreement between the decedent, as the settlor, and the surviving tenant, as the trustee. That court stated that imposition of the trust upon the proceeds does not disturb the legal title in the surviving tenant, but is utilized as "a tool of equity to prevent failure of justice." The Court of Appeals based its decision in large measure on the holding in Wardell v. Dailey, 674 S.W.2d 293 (Tenn. App. 1983), in which that court found that a trust was imposed on the funds held by the surviving tenant. The statements regarding the purpose and characteristics of a resulting trust made in Wardell v. Dailey, have general application in many areas of the law. They have no special application to joint accounts. Perhaps a more comprehensive statement regarding the creation and application of resulting trusts is as follows: 76 Am.Jur.2d Trusts § 166, pp. 197-98 (1992). In Wardell v. Dailey, the defendant son of the deceased father testified that he was holding the proceeds received from certificates of deposit, issued to the decedent and himself with rights of survivorship, for the support of his father and mother prior to his father's death and then for the support of his mother. The surviving tenant testified that he was not claiming the certificates as his property. The court properly held, on the facts of that case, that a resulting trust had been created by the decedent. However, the facts of the present case do not support the same conclusion. As previously stated, there is no evidence in the record regarding the issuance of the certificates of deposit other than the agreement contained on the certificates showing Jerald Nichols to be a joint tenant with the right of survivorship. Nevertheless, because Jerald Nichols did not testify regarding the issuance of the certificates, the Court of Appeals "invok[ed] an inference against [him] by reason of his testimonial omission." This "inference" is found by the Court of Appeals to complete the "clear and convincing" proof necessary under Lowry, to prevail over the written agreement. *402 The rule relied upon by the Court of Appeals was discussed by this Court in Runnells v. Rogers, 596 S.W.2d 87 (Tenn. 1980), a medical malpractice case decided for the plaintiff in a three to two decision. The majority held: Id. at 90. The other side of the issue was presented in the dissent: Id. at 91. Carol Nichols has even less right to complain of Jerald Nichols' silence in the case before the Court, because Jerald Nichols was on the witness stand and Carol Nichols chose not to cross-examine him with regard to the issuance of the certificates of deposit. Contrary to the statement by the Court of Appeals, the burden to "develop the evidence" is on the plaintiff, not the defendant. Be that as it may, the rule in the form most favorable to its invocation allows the inference only in cases in which the plaintiff has made a prima facie case of liability. The appellee in the case before the Court, had not made a prima facie case. To the contrary, there was no evidence in opposition to the clear and unambiguous written agreement that the decedent and her son held the accounts as joint tenants with rights of survivorship. Consequently, the absent witness rule is not applicable in this case. The creation of a resulting trust is not a means to avoid the law with regard to joint tenancies with rights of survivorship as established in Lowry or under T.C.A. § 45-2-703, as amended. Under compelling circumstances, the courts may impose a trust. The high standard of proof upon which a trust may be imposed is well stated in Wardell v. Dailey: 674 S.W.2d at 295 (quoting Savage v. Savage, 4 Tenn. App. 277, 285 (1927)). The proof in this case does not rise to the level required to impose a resulting trust. Consequently, the equitable as well as the legal title remains in the appellant, Jerald Nichols. The judgments of the Court of Appeals and the trial court are reversed, and the case is remanded for further proceedings. The costs are taxed against the appellee, Carol Nichols. DROWOTA, O'BRIEN, DAUGHTREY, and ANDERSON, JJ., concur.